Dow City Sr. Citizens Housing, Inc. v. Board of Review of Crawford County, 2--57020

• Decision Date: 25 June 1975
• Docket Number: No. 2--57020,2--57020
• Citation: 230 N.W.2d 497
• Parties: DOW CITY SENIOR CITIZENS HOUSING, INC., Appellant, v. BOARD OF REVIEW OF CRAMFORD COUNTY, Iowa, et al., Appellees.
• Court: Iowa Supreme Court

Page 497

230 N.W.2d 497

DOW CITY SENIOR CITIZENS HOUSING, INC., Appellant, v. BOARD OF REVIEW OF CRAMFORD COUNTY, Iowa, et al., Appellees.

No. 2--57020.

Supreme Court of Iowa.

June 25, 1975.

Richard J. Vipond, of Reimer & Vipond, Denison, for appellant.

Thomas R. Eller, County Atty., for appellees.

Heard by MOORE, C.J., and MASON, REES, HARRIS and McCORMICK, JJ.

McCORMICK, Justice.

This is an appeal from denial of a property tax exemption. The question is whether plaintiff Dow City Senior Citizens Housing, Inc. proved it is a charitable and benevolent institution using its property solely for its appropriate objects without a view to pecuniary profit. § 427.1(9), The Code. Defendant Board of Review of Crawford County assessed the property for taxation in 1973. Plaintiff filed a claim of exemption which was denied by the board. An appeal was tried in district court. The trial court held plaintiff did not prove its property should be exempt. We affirm.

Plaintiff is a nonprofit corporation organized under Iowa law to construct and operate a low-rent housing facility for elderly persons in Dow City, a town of about 600 population in Crawford County. Local businessmen saw a need to provide housing for retired persons in Dow City. The only apartments available were in older homes, frequently requiring the use of stairs. The businessmen learned of a program of the Farmers Home Administration (FHA), an agency of the United States Department of Agriculture, providing financing for housing for low-income elderly persons.

They organized the plaintiff corporation in accordance with regulations of the FHA. Their efforts in doing so were uncompensated. The Dow City Businessmen's Association donated land valued at $1000 as the site for the facility. The land was cleared by volunteer labor. Cash donations of $675 were received. Memberships were sold for $25 each. Members acquired no rights other than the right to vote at stockholders' meetings. $725 was raised in this way.

Plaintiff then obtained a $41,700 FHA loan, bearing annual interest of three percent and payable over a period of 50 years. The building was constructed with the loan proceeds. It is a one-story structure containing four apartments, two having two bedrooms and two having one bedroom.

The low FHA loan interest rate precludes rental of units to persons with more than $9000 annual income. The FHA dictates the accounts which must be maintained to assure security for and repayment of its loan.

In order to provide the required security, pay operating expenses, and make loan payments plaintiff fixed the rent for the two bedroom apartments at $75 a month and rent for the one bedroom units at $65 a month. The apartments have been fully rented since July 1972. No admission fee is charged. No apartments have been rented for less than the fixed rate. No financial statements have been required from applicants. The applicants are interviewed. Those accepted have had little or no income other than social security, with one exception. One couple is receiving about $5000 annually from a sale of real estate. One resident receives financial assistance from her family. No apartments have been rented to anyone unable to pay the rent either personally or with family assistance. No one has yet been rejected for inability to pay the rent.

The facility is self-supporting. No services are provided the tenants other than those usually available to apartment residents. The rentals are comparable to those charged for other apartments in Dow City, but plaintiff's apartments are better.

Liability for property taxes would require plaintiff to raise about $900 in additional annual rental income.

Our review is governed by well established principles of law. The exemption statute must be strictly construed. Any doubt upon the question of exemption must be resolved in favor of taxation. Taxation is the rule; exemption is the exception. The claimant must prove his right to the exemption. Each case depends largely on its own facts. Northwest Community Hospital v. Board of Review of City of Des Moines, 229 N.W.2d 738 (Iowa 1975); Evangelical Lutheran G. S. Society v. Board of Rev., Des Moines, 200 N.W.2d 509 (Iowa 1972); Wisconsin Evangelical Lutheran Synod v. Regis, 197 N.W.2d 355 (Iowa 1972).

Exemption statutes are premised on the theory that benefits received by the community from exempted uses outweigh the inequality caused by exemption of the property from taxation. They are 'a legislative...