Opinion ID: 2833082
Heading Depth: 2
Heading Rank: 1

Heading: Charitable Association

Text: [¶11] The Department of Revenue’s rules define charity as follows: “Charity” is a gift for the benefit of an indefinite number of persons in Wyoming, by bringing their minds or hearts under the influence of education or religion, by relieving their bodies from disease, suffering or constraint, by assisting them to establish themselves in life, or by erecting or maintaining public buildings or works. The fundamental basis for this exemption is the benefit conferred upon the public, and the consequent relief, to some extent, of the burden upon the state to care and advance the interests of its citizens. Department of Revenue Rules, ch. 14, § 13 (a)(ii) (2014). [¶12] The County Board affirmed the county assessor’s determination that Mountain Vista is not a charitable association, and we agree and find that substantial evidence exists in the record to support the finding that Mountain Vista is not a charitable association. A strong presumption favors the county assessor’s valuation. Britt, ¶ 20, 126 P.3d 124. “In the absence of evidence to the contrary, we presume that the officials 5 charged with establishing value exercised honest judgment in accordance with the applicable rules, regulations, and other directives that have passed public scrutiny, either through legislative enactment or agency rule-making, or both.” Amoco Prod. Co. v. Dep’t of Revenue, 2004 WY 89, ¶ 7, 94 P.3d 430, 435 (Wyo. 2004). Here, Mountain Vista had the initial burden of presenting evidence sufficient to overcome the presumption. Id., ¶ 8, 94 P.3d 435. If successful, then the County Board was “required to equally weigh the evidence of all parties and measure it against the appropriate burden of proof.” Colo. Interstate Gas Co. v. State Dep’t of Revenue, 2001 WY 34, ¶ 10, 20 P.3d 528, 531 (Wyo. 2001). The burden of going forward would then have shifted to the county assessor to defend her valuation. Id. Mountain Vista carried “the ultimate burden of persuasion to prove by a preponderance of the evidence that the valuation was not derived in accordance with the required constitutional and statutory requirements for valuing … property.” Id. [¶13] The County Board considered the testimony and exhibits presented in the context of § 39-11-105 and the Department of Revenue rules and concluded: a. Regarding the first factor, whether the purpose of the Taxpayer’s operation is charitable in nature, has not been proven by the taxpayer. Their membership is for a finite number of members who must have the financial, physical and mental capabilities to be accepted which is targeting a specific group of persons and is therefore not an indefinite number of persons as required by DOR rules Chapter 14 § 12(a)(ii). This property simply does not meet the threshold intended by the Wyoming Legislature to qualify for taxexempt status as a charitable organization. The County Board notes that a potential applicant who “is not known by a Board Member, Staff Member or Resident, a personal interview may be required.” . . . b. The purpose of the Taxpayer’s property is for housing which their members must pay for and is not subsidized in any fashion. c. The Assessor’s argument that the taxpayer’s property is used for a commercial purpose is also compelling, but not necessary as the County Board finds this is not a charity. (see DOR Rules, Chapter 14, § 13(a)(ii)). d. The dissenting County Board member notes that the taxpayer does relieve a burden on the citizens of Wyoming by fulfilling an intermediate stage of living between a personal home and a nursing home[.] [¶14] Mountain Vista never overcame the presumption favoring the county assessor’s 6 valuation. The county assessor reviewed the exemption statutes and determined that Mountain Vista was not a charitable association. The county assessor concluded that the exclusivity of Mountain Vista’s membership, the membership fees, security deposit, and monthly fees and charges for additional services, in addition to the health requirements and the fact that the residents do not own the property and must provide their own furnishings, established the use of the property as commercial and disqualified it for exemption. We are in total agreement. While Mountain Vista does provide beneficial services to its occupants, those services cannot be classified as a gift such that Mountain Vista is then classified as a charity. Mountain Vista’s policies require residents to pay for the costs of operating the property, as well as extra amenities. It is difficult to view such an arrangement as charitable. See Friendship Manor Corp. v. Tax Comm’n, 26 Utah 2d 227, 487 P.2d 1272 (1971) (requiring that a charity relieve the burden of government or benefit the general welfare); United Presbyterian Asso. v. Board of County Comm’rs, 167 Colo. 485, 448 P.2d 967 (1968) (where material reciprocity between alleged recipients and their alleged donor exists -- then charity does not). [¶15] Mountain Vista also argues that it should be classified as a charitable organization because the services it provides are “for the benefit of an indefinite number of persons.” We disagree. As testified to by the county assessor, Mountain Vista’s facility “is for a finite number of individuals who have adequate financial resources and the gift of good health.” Mountain Vista’s facility consists of 19 units and thus serves a very limited number of residents. However, Mountain Vista argues that “all charities benefit only a limited number of persons” and refers to Department of Revenue & Taxation v. Casper Legion Baseball Club, 767 P.2d 608 (Wyo. 1989) where this Court determined that in deciding whether an organization is eligible for a charitable tax exemption, the focus must be “on whether the charity primarily engages in activities providing an indefinite number of persons in the general public with benefits designed to aid them in an educational, moral, physical, or social manner” and “whether the charity provides access to those benefits in an equal and nondiscriminatory way.” Id., 767 P.2d at 611. There, all youth who chose to participate positively benefit from the “physical,” “social,” and “moral” experience of trying out for a baseball team. Here, there is no public benefit to the members of the general public that apply for membership and are theoretically denied. [¶16] Other courts have spoken on this very subject. In an Idaho Supreme Court case, the following discussion occurred: The question of whether a non-profit corporation provides a general public benefit, so as to be entitled to property tax exemption, is somewhat complex. Tax exemptions are disfavored generally, perhaps because they seem to conflict with principles of fairness – equality and uniformity – in bearing the burdens of government. See, Hilltop Village, Inc. 7 v. Kerrville Independent School District, 426 S.W.2d 943, 947 (Tex.1968) overruled on other grounds in City of McAllen v. Evangelical Lutheran Good Samaritan Society, 530 S.W.2d 806 (Tex.1976). They are said to be justified, in cases of a charitable or benevolent organization for example, by an offsetting benefit to the community (monetary or otherwise). Hence has arisen the test that an institution may be entitled to an exemption where it performs a function which might otherwise be an obligation of government. A nonprofit corporation may benefit only a limited group of people and still be considered “charitable” if that group of people possess a need which government might be required to fill. For example, a facility for physically handicapped persons might be “charitable” even though those persons were all members of a particular church or club because the facility is providing a general benefit to the community by relieving a potential obligation of government. However, where there is no assistance to individuals which might normally require governmental funds, as is the case with Sunny Ridge, the institution must meet a stricter test: it must provide benefits to the community at large (or, as some courts have stated it, to an “indefinite number of persons”). See, e.g., Oasis, Midwest Center for Human Potential v. Rosewell, 55 Ill.App.3d 851, 13 Ill.Dec. 97, 370 N.E.2d 1124, 1130 (1977); Benton County v. Allen, 170 Or. 481, 133 P.2d 991, 992 (1943). Since the residents at Sunny Ridge must be able to pay completely for the benefits they receive, and since they must be physically able to care for themselves, they are not a group of persons for whom any government assistance would be needed. Therefore, Sunny Ridge must provide some general benefit to the community as a whole. However, the benefits available at the center are reserved for the restricted group of persons who have met the entrance qualifications, and while in theory any member of the community who can meet those qualifications may join, in actual effect only a limited number of openings can exist during a given period of time. We find no fault in this; we simply recognize that benefits provided by Sunny Ridge must necessarily be limited to a relative few. It may be that an indirect benefit flows to the community; however, as pointed out by the court in Massachusetts Medical Society v. Assessors of Boston, 340 Mass. 327, 164 N.E.2d 325 (1960), 8 “Whether an institution is in its character literary, benevolent, charitable or scientific will depend upon the declared purposes and the actual work performed. (Citations omitted.) An institution will be classed as charitable if the dominant purpose of its work is for the public good and the work done for its members is but the means adopted for this purpose. But if the dominant purpose of its work is to benefit its members or a limited class of persons it will not be so classed, even though the public will derive an incidental benefit from such work.” Id. at 328. (Emphasis added.) We find it laudable that Sunny Ridge provides the care it does; however, as this court stated in Sunset Memorial Gardens v. Idaho State Tax Commission, 80 Idaho 206, 219, 327 P.2d 766, 774 (1958), “[t]he basis of tax exemptions is the accomplishment of public purpose and not the favoring of particular persons or corporations at the expense of taxpayers generally.” If Sunny Ridge attempted to provide its services based on need to a greater extent, there might be more of a direct public benefit, even though the center can accommodate only a limited number of persons. As the record shows, however, there is no means provided by which individuals having particular needs for the types of services Sunny Ridge can provide are singled out for admission, or for assistance. Although the record shows that Sunny Ridge provides its care at substantial savings over what would be charged at a nursing home, for example, there is nothing in the record to indicate that this benefit of reduced costs is directed toward those who particularly need it. The savings may well benefit primarily persons who could afford to pay higher costs. In any case, the type of individual who needs nursing home care could not pass the entrance qualifications at Sunny Ridge. .... Based on the factors already discussed, and after consideration of the authorities cited, we hold as a matter of law that Sunny Ridge -- under the particular circumstances of this case -- is not a “charitable corporation” under I.C. § 63105C. We emphasize that our determination is a narrow one: we are persuaded of a need to be flexible in such cases. We 9 agree with the Colorado Supreme Court when it stated: “We shall not attempt in this opinion to enunciate a fixed definition of the phrase ‘strictly charitable purposes,’ ‘lest by words of exclusion we might unintentionally seem to impose a legal restraint upon that cardinal grace which by its very nature thrives in proportion to the freedom of its proper exercise.” United Presbyterian Ass’n v. Board of County Comm’rs, 167 Colo. 485, 448 P.2d 967, 972 (1968). We leave for determination at another time whether a similar nonprofit corporation -- or, for that matter, whether this corporation, under different circumstances -- is entitled to a property tax exemption under the terms of I.C. § 63-105C as it now reads. In re Appeal of Sunny Ridge Manor, 675 P.2d 813, 817-818 (Idaho 1984) (emphasis added). [¶17] The decision of the Idaho court is on point. Here, we agree that the service Mountain Vista provides is an important one. However, it does not qualify as a charitable association. Mountain Vista’s services are not a gift pursuant to Department of Revenue rules, nor does Mountain Vista benefit an indefinite number of persons. Furthermore, Mountain Vista’s services do not provide educational or religious benefits, or relief from suffering. There is no public benefit provided, nor a public burden relieved and, accordingly, Mountain Vista does not qualify as a charitable association.