BOARD OF TAX ASSESSORS v. Baptist Village

• Court: Georgia Court of Appeals
• Writing for the Court: MILLER.
• Citation: BOARD OF TAX ASSESSORS v. Baptist Village, 605 S.E.2d 436, 269 Ga. App. 848 (Ga. App. 2004)
• Decision Date: 04 October 2004
• Docket Number: No. A04A1215.,A04A1215.
• Parties: BOARD OF TAX ASSESSORS OF WARE COUNTY, et al. v. BAPTIST VILLAGE, INC.

605 S.E.2d 436

269 Ga. App. 848

BOARD OF TAX ASSESSORS OF WARE COUNTY, et al. v. BAPTIST VILLAGE, INC.

No. A04A1215.

Court of Appeals of Georgia.

October 4, 2004.

Huey W. Spearman, Waycross, for appellant.

James, Bates, Pope & Spivey, Thomas C. James, III, Stephen L. Dillard, Long & Denton, Vann K. Parrott, for appellee.

MILLER, Judge.

This case involves a property tax dispute between the Board of Tax Assessors of Ware County and the Ware County Board of Equalization (which we refer to collectively as "the Board") and Baptist Village, Inc., a nonprofit charitable institution that operates a home for the aged in Waycross. In 2002, the Board attempted to collect property taxes on the Waycross property's new independent-living units. Baptist Village challenged this attempt at tax collection in Ware County Superior Court. Following a bench trial, the court held that Baptist Village's independent-living units enjoyed the same longstanding charitable exemption as the assisted-living and nursing-care parts of that property. On appeal, the Board reasserts arguments made below that the new independent-living units are substantially unrelated to Baptist Village's charitable purpose of providing care to the aged. We disagree, and therefore we affirm.

Considered in the light most favorable to the trial court's judgment, the evidence shows that Baptist Village operates homes for the elderly in Waycross, Macon, and Lake Park. According to the language of its original charter, Baptist Village is a "charitable institution" whose purpose is "the reception, care, and maintenance of persons of advanced age." Baptist Village neither issues capital stock nor pays any of its net earnings to any trustee or officer. Its bylaws describe Baptist Village as an "integrated auxiliary" of the Georgia Baptist Convention, to which its president and chief executive officer must make an annual report.

In 1961, Baptist Village received a tax determination letter from the United States Treasury Department granting it tax exempt status under Section 501(c)(3) of the Internal Revenue Code due to Baptist Village's "religious and charitable" purposes. At trial, Baptist Village's current president testified that the Internal Revenue Service has never questioned this determination of the Village's tax-exempt status. In 1997, the Georgia Department of Revenue issued its own determination that Baptist Village was exempt from Georgia income tax under OCGA § 48-7-25. Baptist Village does pay ad valorem taxes on properties in Ware and Jefferson Counties, neither of which is used in furtherance of its activities.

This case concerns Baptist Village's Waycross, Ware County facility. The original 1957 architect's plan portrayed independent-living units along the periphery of the property like those constructed decades later. The first buildings to rise on the Waycross campus were known as "the Apartments," and were occupied by independent-living retirees. Over time, and as its original residents came to need a higher level of care, both an assisted-living facility and a nursing-care facility were added. In the 1990s, Baptist Village formulated a development plan that included the construction of the new independent-living units now known as "the Villas." The first Villas units were occupied by the end of 1997. Forty-five single-family and duplex units were eventually built, covering approximately 26 acres of the 172-acre Waycross campus.

In order to move into the Villas, a person (or at least one member of a couple) must be at least 65 years old. The new resident must sign a Residency Agreement and pay a so-called "development fee" (currently $89,000 for half a duplex and $99,000 for a single-family unit) as well as a monthly maintenance fee and other charges. Residents of the Villas use many of the services offered elsewhere on the Waycross campus, including the clinic, computer club, cafeteria, and beauty shop, paying the same rates as assisted-living and nursing-care residents.

The Residency Agreement disclaims responsibility for the "lifetime" or "continuing" care of Villas residents and reserves the right to terminate those whose deteriorating health makes it impossible for them to continue living there. However, Baptist Village has always allowed Villas residents to move into either assisted living or nursing care regardless of their ability to pay as long as space was available at the higher level of care. To date, in fact, Baptist Village has "never asked [any Villas resident] to leave for any reason."

Whether as a result of these policies or not, the Villas have always operated at a loss, as in the 11-month period just before trial, when this part of the Waycross property posted a net operating loss of over $234,000. When amortized income from development fees is included, revenues in the same period amounted to just under $28,000. There was testimony at trial suggesting that the Villas' average annual percentage return on investment was 1.8 percent — a figure far below the 10 percent or more a for-profit investor would reasonably expect, and one not likely to rise substantially in the foreseeable future.

Though it had never disputed the tax-exempt status of any part of the Waycross campus before, the Board convinced the Ware County Board of Equalization in May 2002 that the Villas property should be excluded from the Waycross campus's longstanding exemption for the tax years beginning and after 1998. Baptist Village appealed to the superior court, which denied its motion for summary judgment. At the end of a bench trial, the court asked both parties to prepare drafts of findings of fact and conclusions of law in accordance with OCGA § 9-11-52(a). The court then issued a judgment order with findings of fact and conclusions of law, holding that "Baptist Village is using the Villas as part of its religious and charitable operation, consistent with its federal tax exemption," and that the Board therefore could not collect property tax on the Villas portion of Baptist Village's Waycross campus.

The Board appeals the judgment of the trial court on four grounds: (1) that Baptist Village is not entitled to a property tax exemption on the Villas section of its property because that section is not a "home for the aged" under OCGA § 48-5-41(a)(12); (2) that the Villas are not an "integrated auxiliary of a church" under OCGA § 48-5-41(a)(2.1)(B); (3) that the court erred in granting tax-exempt status to all future Villas units; and (4) that because Baptist Village presented its case first despite the court's finding after trial that the Board had the burden of proof throughout, the entire trial was procedurally defective.

1. On appeal, we are bound to defer to the trial court's findings of fact, which "shall not be set aside unless clearly erroneous, [with] due regard [ ] given to the opportunity of the trial court to judge the credibility of the witnesses." OCGA § 9-11-52(a); Bell v. Cronic, 248 Ga. 457, 459(2), 283 S.E.2d 476 (1981). "If there is any evidence to support the findings of fact by a trial court sitting without a jury, then the appellate court affirms without interference with or disturbing such factfindings." Claxton Enterprise v. Evans County Bd. of Commrs., 249 Ga.App. 870, 549 S.E.2d 830 (2001).

The section of the Georgia tax-exemption statute at the center of this case dates from 1977. It reads:

(a) The following property shall be exempt from all ad valorem property taxes in this state: ...

( 12)(A) Property of a nonprofit home for the aged used in connection with its operation when the home for the aged has no stockholders and no income or profit which is distributed to or for the benefit of any private person and when the home is qualified as an exempt organization under the United States Internal Revenue Code, Section 501(c)(3), as amended, and Code Section 48-7-25, and is subject to the laws of this state regulating nonprofit and charitable corporations;

(B) Property exempted by this paragraph shall not include property of a home for the aged held primarily for investment purposes or used for purposes unrelated to the providing of residential or health care for the aged[.]

OCGA § 48-5-41(a)(12)(A), (a)(12)(B); Ga. L. 1977, p. 1152, §§ 1, 2.

(a) Before the passage of OCGA § 48-5-41(a)(12), an organization like Baptist Village could have been termed an institution of "purely public charity," a term dating from the oldest versions of this statute, now encoded at OCGA § 48-5-41(a)(4). See York Rite Bodies of Freemasonry, etc. v. Bd. of Equalization, etc., 261 Ga. 558(1), n. 2, 408 S.E.2d 699 (1991). When it passed the 1977 portion of the statute, the General Assembly headed the new law with a caption providing that "the exemption herein granted is cumulative and not in derogation of relief granted by other laws." Ga. L. 1977, p. 1152. As this Court has recently held, this language indicates the General Assembly's understanding that a nonprofit tax-exempt corporation could be exempt under more than one provision of the Code, and that the new home-for-the-aged exemption was an expansion, not a limitation, of the category of charitable institutions entitled to an exemption under OCGA § 48-5-41. Annandale at Suwanee, v. Gwinnett County Bd. of Tax Assessors, 242 Ga. 241, 242, 248 S.E.2d 640 (1978); Lamad Ministries v. Dougherty County Bd. of Tax Assessors, 268 Ga.App. 798, 602 S.E.2d 845 (2004). When it extracted "homes for the aged" from the older and more general category of institutions of "purely public charity," then, the General Assembly was both encouraging the construction and operation of new nonprofit homes for the aged and ensuring that the creation of the homes-for-the-aged exemption would not undermine any pre-existing exemptions claimed by homes for the aged in the past. Lamad Ministries, supra, 268 Ga.App. at 802,602 S.E.2d 845 (noting statutory policy of encouraging nonprofit...