Housing Partnership v. Town of Rollinsford

• Decision Date: 29 July 1996
• Docket Number: No. 94-786,94-786
• Citation: 683 A.2d 189,141 N.H. 239
• Parties: The HOUSING PARTNERSHIP v. TOWN OF ROLLINSFORD.
• Court: New Hampshire Supreme Court

Page 189

683 A.2d 189

141 N.H. 239

The HOUSING PARTNERSHIP v. TOWN OF ROLLINSFORD.

No. 94-786.

Supreme Court of New Hampshire.

July 29, 1996.

Rehearing Denied Oct. 18, 1996.

Sanders and McDermott, of Hampton (Lawrence M. Edelman on the brief), and Morris, Forsley & Eggleston, P.A., of Hampton (Lawrence S. Forsley, orally), for plaintiff.

Gregoire, Calivas, Morrison & Indorf, of Dover (Chris W. Calivas on the brief and orally), for defendant.

H. Bernard Waugh, Jr., of Concord, by brief, for New Hampshire Municipal Association, as amicus curiae.

HORTON, Justice.

The defendant, Town of Rollinsford, appeals the order of the Superior Court (Fauver, J.) holding that property owned by the plaintiff, the Housing Partnership, at 466 and 488 Beccaris Drive in the Town of Rollinsford is exempt from local real estate taxes. The defendant asserts that the trial court erred in concluding that the plaintiff was a charity within the meaning of RSA 72:23-l (Supp.1995). The defendant also contends that, even if the trial court was correct in concluding that the plaintiff is a charity, it erred in finding that the plaintiff occupied and used the property for the purposes for which the charity was established as required by RSA 72:23, V (1991) (amended 1994). We reverse.

The plaintiff was incorporated as a nonprofit corporation in New Hampshire in 1988. It is exempt from federal taxes under section 501(c)(3) of the Internal Revenue Code. 26 U.S.C. § 501(c)(3) (1995). Its stated purpose is "[t]o facilitate the development and preservation of decent, safe, and affordable housing for low and moderate income persons." Since its inception, the plaintiff has acquired thirteen multi-family dwellings, with a total of 117 rental units. Among the property owned by the plaintiff are two apartment buildings containing twelve apartments, located at 466 and 488 Beccaris Drive in Rollinsford, acquired by the plaintiff in 1991. In April 1992, the plaintiff filed a property tax exemption/abatement claim with the defendant for the Beccaris Drive properties, asserting an exemption under RSA 72:23, V, which provides a general real estate tax exemption for property occupied and used by charitable organizations. In April 1993, the defendant notified the plaintiff that its application for a property tax exemption/abatement was denied because it failed to meet the requirements of RSA 72:23-k (Supp.1995), which provides a real estate tax exemption for elderly and disabled nonprofit community housing facilities. The plaintiff subsequently filed a petition with the superior court seeking an exemption/abatement for 1992 and 1993. After a hearing, the trial court concluded that the plaintiff was a charitable organization and qualified for an exemption/abatement for 1992 and 1993 pursuant to RSA 72:23, V. The defendant appealed.

The defendant first contends that the trial court erred by concluding that the plaintiff is a charity. The legislature has defined charitable organization to mean

a corporation, society or organization established and administered for the purpose of performing, and obligated, by its charter or otherwise, to perform some service of public good or welfare advancing the spiritual, physical, intellectual, social or economic well-being of the general public or a substantial and indefinite segment of the general public that includes residents of the state of New Hampshire, with no pecuniary profit or benefit to its officers or members, or any restrictions which confine its benefits or services to such officers or members, or those of any related organization. The fact that an organization's activities are not conducted for profit shall not in itself be sufficient to render the organization "charitable" for purposes of this chapter, nor shall the organization's treatment under the United States Internal Revenue Code of 1986, as amended.

RSA 72:23-l. This section is consistent with the common law definition of charitable organization. Id.; see Nature Conservancy v. Nelson, 107 N.H. 316, 319, 221 A.2d 776, 778-79 (1966).

"[I]n order to qualify as a charitable institution, an obligation must exist to perform the organization's stated purpose to the public, rather than simply to the members of the organization." Appeal of City of Franklin, 137 N.H. 622, 625, 631 A.2d 537, 540 (1993). The defendant argues that the plaintiff's stated purpose is too indefinite to qualify it for charitable status.

[T]he public service which plaintiff is to render must be obligatory so as to enable the Attorney General or other public officer to enforce this right against it if the service is not performed. It follows that if the public benefit is limited to that which the plaintiff sees fit to provide at its option or in its uncontrolled discretion the requirements of RSA 72:23 V are not satisfied.

Id. (quotation omitted). The purposes for which the plaintiff were organized are sufficiently definite to satisfy this test.

As noted above, the plaintiff's articles of incorporation establish that its stated purpose is "[t]o facilitate the development and preservation of decent, safe, and affordable housing for low and moderate income persons." In addition, the plaintiff's by-laws establish a number of services provided by the plaintiff. These include: providing public education and advocacy in support of affordable housing; developing affordable housing projects, both home ownership and rentals, that will have long-term affordability; and obtaining financing for affordable housing projects using a combination of private, public, and charitable resources. Moreover, the board of directors are empowered to acquire, construct, or rehabilitate real property, as well as sell, convey, assign, mortgage, or lease any interest in the real property acquired.

These goals are hardly akin to the amorphous goals that we found could neither be measured nor enforced in Society of Cincinnati v. Exeter, 92 N.H. 348, 352-54, 31 A.2d 52, 55-56 (1943). In that case, we concluded that the Society's purpose of fostering patriotism "was to be only such as it might at its option and in its uncontrolled discretion see fit to furnish." Id. at 352-53, 31 A.2d at 55. In this case, the plaintiff's goals are more analogous to those at issue in Nature Conservancy, 107 N.H. 316, 221 A.2d 776. In that case, the organization was established to conserve natural resources, promote education in this field, and encourage the research of nature conservation. Id. at 320, 221 A.2d at 779. We found these goals to be sufficiently definite to establish the plaintiff's status as a charitable organization. Id. Similarly, in this case, the plaintiff's purposes are sufficiently objective so as to be enforceable. Accordingly, we conclude that the trial court correctly determined that the plaintiff has established its charitable status.

The defendant next argues that the plaintiff does not qualify for a tax exemption because the Beccaris Drive properties are not "occupied and used by [the charitable organization] for the purposes for which [it was] established" as required by RSA 72:23, V. "Only that part of the property which is used directly for charitable purposes is exempt from property tax." Appeal of C.H.R.I.S.T., Inc., 122 N.H. 982, 984, 455 A.2d 1006, 1007 (1982) (emphasis added); see RSA 72:23, V (Supp.1995) (codifying requirement that property be used directly for charitable purposes). Moreover, when the use is "slight, negligible or insignificant" or not "in performance of these public purposes," the plaintiff is not entitled to a tax exemption for the property. Nature Conservancy, 107 N.H. at 320, 221 A.2d at 779.

"To qualify for an exemption, th[e] land, in addition to being owned by the association, would have to be occupied by the association and used directly by the association for its charitable purposes." Alton Bay Camp Meeting Asso. v. Alton, 109 N.H. 44, 49, 242 A.2d 80, 85 (1968). We have recognized that simply because property owned by a charitable organization is rented to individuals who use the property as their living quarters does not prevent the property from being tax-exempt. See, e.g., Wentworth Home v. Portsmouth, 108 N.H. 514, 516-17, 238 A.2d 730, 732 (1968). In order for a residence to qualify for a tax exemption, however, the occupancy of the property must be reasonably necessary for the charitable organization to carry out its mission. See St. Paul's School v. City of Concord, 117 N.H. 243, 250-55, 372 A.2d 269, 274-77 (1977) (concluding that faculty quarters, student dormitories, and the rectory were tax-exempt, but that property occupied by other staff, parents, guests, alumni, and prospective students was not reasonably necessary to carry out educational purposes and hence not tax-exempt)....