Opinion ID: 2221626
Heading Depth: 1
Heading Rank: 6

Heading: Application of Actual Use Test to Facts.

Text: The record shows that the Center is a state-licensed day care. It furnishes routine custodial care to children of parents who cannot personally supervise their children during the daytime. Unlike unlicensed, in-home day care providers, the Center is required to meet specific staff-to-child ratios designed to ensure the safety and health of the children, and its employees must have annual training in first aid and CPR. In addition to day care services, the Center has a pre-school program that is licensed by the Iowa Department of Human Services (DHS). Meals are served to all the children. The Center is nondiscriminatory with respect to the families it serves. No evaluation of need or ability to pay is made and families that receive subsidies from the DHS are accepted. The director testified that forty to fifty per cent of the children who attend the Center qualify under the state's child and adult food care program for free or reduced-cost meals. The Center sets its charges to clients below its actual cost of providing care for the children. [1] The director testified that if the Center charged what it actually cost to care for the children, many of its clients could not afford to bring their children to the Center's day care. (According to the director, most of the parents of the children the Center serves receive minimum wage.) To make up the difference, the Center receives cash and in-kind contributions from local businesses and individuals, the local United Way, and local governmental entities; it also conducts frequent fundraising events. [2] All families are charged at the same rate, without regard to their financial resources, except those families who qualify for assistance from DHS. Because the Center accepts DHS clients, it must offer its services to such clients at the rate set by DHS. The DHS rates for child care services have ranged between thirteen and seventy cents per hour less than the rates charged other families using the Center's day care. Approximately, five per cent of the children at the day care participate in the DHS program. It is not the policy of the Center to provide free day care services. If a family has difficulty in paying the charges, the Center will attempt to work out a payment plan. In one case, for example, it waived payment until the family's financial situation had improved. In other cases, the Center has allowed a parent to work at the day care to reduce the family's child care bill. Payment is, however, expected at some point. There were only four cases in 1996 and 1997 where the Center wrote off charges as uncollectable because it knew the families in question could not pay; these charges totaled $372.48. When the Center believes a family has the resources to pay charges that are due, it has sought to collect overdue amounts in court. On the other hand, the Center has never refused to provide care to a family having difficulty paying its bill so long as the parents are employed and attempt to make some payment on their account. From these facts, we conclude, first of all, that the Center furnishes more than mere housing or a place where children can reside while their parents are at work. It provides care in the form of supervision, recreational activities, and meals. Second, we conclude that all clients of the Center are receiving subsidized child care and, accordingly, all clients are receiving partly gratuitous services. This conclusion is based on two facts: (1) the Center charges less than it costs to provide the care; and (2) it obtains contributions from the community to make up the difference. The charitable nature of the Center's activities is further established by the additional concessions it makes for low-income families who participate in the DHS program. As we noted earlier, the Board argues that the Center's exemption should be limited to that percentage of its clients who qualify for DHS assistance. But as our review of this court's prior cases shows, charity is not limited to the needy. See, e.g., South Iowa Methodist Homes, 173 N.W.2d at 533 (holding that retirement home did not lose its tax exempt status because some of its residents were financially able to pay for their care); accord Hilltop Manor, 346 N.W.2d at 39 (noting the fact that residents could pay facility's charges was not a basis to deny a charitable exemption where evidence showed that some services to residents were provided gratuitously and residents made no payment to cover cost of building or equipment, as those had been totally paid by donations). The fact that care for all clients is subsidized by charitable donations from the community entitles the Center to a full exemption, as determined by the trial court. Accordingly, the judgment of the district court is affirmed. AFFIRMED.