In re Town of Wolfeboro

• Decision Date: 19 July 2005
• Docket Number: No. 2004–621.,2004–621.
• Citation: 152 N.H. 455,879 A.2d 1137
• Court: New Hampshire Supreme Court
• Parties: Appeal of TOWN OF WOLFEBORO (New Hampshire Board of Tax and Land Appeals).

152 N.H. 455

879 A.2d 1137

Appeal of TOWN OF WOLFEBORO (New Hampshire Board of Tax and Land Appeals).

No. 2004–621.

Supreme Court of New Hampshire.

Argued: May 10, 2005.

Opinion Issued: July 19, 2005.

Barto and Puffer, P.A., of Concord (Mark H. Puffer on the brief and orally), for the petitioner.

Martin, Lord & Osman, P.A., of Laconia (Marshall D. Hickok on the brief and orally), for the respondent.

Mitchell & Bates, P.A., of Laconia (Walter L. Mitchell and Laura A. Spector on the brief), for the Town of Sandwich, as amicus curiae.

DALIANIS, J.

The petitioner, Town of Wolfeboro (Town), appeals a decision of the board of tax and land appeals (BTLA) granting a charitable tax exemption to property owned by the respondent, Taylor Home (Home). We reverse.

The Home operates an elderly housing complex in Wolfeboro known as Back Bay. The units at Back Bay are independent living units. The Town denied the Home's request for a charitable exemption for the tax year 2002 under RSA 72:23, V (2003). The Home appealed this decision to the BTLA, arguing that it was entitled to a charitable exemption because it was a recognized charitable organization, and the property was used and occupied directly for charitable purposes.

The BTLA relied upon our decision in Appeal of City of Laconia in granting an exemption. City of Laconia involved a similar inquiry before both the BTLA and this court, concerning the Home's elderly housing complex in Laconia. Appeal of City of Laconia , 146 N.H. 725, 726, 781 A.2d 1012 (2001). The Laconia complex includes independent living, assisted living and nursing care facilities. Id. In that case, we upheld a ruling that the Home was a charitable organization for the purposes of a property tax exemption based upon the BTLA's findings, including its finding that the Home provided a public service by alleviating the burden on the government of caring for the elderly and its finding that the Home cares for its residents for life, regardless of their ability to pay. Id. at 728, 781 A.2d 1012.

We also upheld the BTLA's ruling that the Laconia property was used and occupied directly for its charitable purpose. Id. The evidence supporting this ruling included that the Home offered its assisted living units at approximately fifty percent of the market rate, that the fees for the residents in the independent living units were between $125 and $270 per month, and that the Home had provided over $2 million in entry fee assistance, as well as $700,000 in monthly fee assistance annually. Id. The BTLA also found that the independent living units at the Laconia complex

[are] one of the main "money engines" generating funds necessary to carry out [the] Home's legislative purpose. Just as fund raising is the lifeblood of most charitable organizations, cost shifting at [the] Home provides a significant source of funds for providing charitable assistance to older residents requiring intensive assisted or nursing care services.

Id. at 729, 781 A.2d 1012. The City of Laconia did not challenge this finding by the BTLA. Id.

The distinction between Back Bay and the property in Laconia is that Back Bay is made up entirely of independent living units. There are no assisted living or nursing care facilities at Back Bay. Though all residents at Back Bay signed a life care agreement in 2002, identical to that signed by residents at the Laconia property, the Home also offered a separate residence agreement, which allows people to reside in Back Bay without contracting for the assisted living and nursing care components.

All residents, whether they enter into the contract with the Home for assisted living and nursing care or not, must pay an entry fee for the right to live at Back Bay. In addition, each resident must pay a monthly fee for occupancy. In 2002, the entry fee for Back Bay was $140,000; the average monthly fee, which varied according to the size of the unit was $900. Twenty percent of the entry fee was non-refundable, the remaining eighty percent was refundable over a period of ten years.

Residents of independent living units are responsible for paying for all of their utilities, except curbside trash pickup. There are services available to the residents of Back Bay that may not be available to residents of an ordinary housing development; for example: a service that delivers frozen meals, housekeeping services, laundry services, some transportation services and care management services, which "[help] Residents to arrange for and coordinate needed services." All Back Bay residents must pay additional costs above their monthly fee for these services, except for the care management services.

Independent living residents, who have signed a life care agreement, have a contractual right to enter the nursing care facility at the Home, provided that, just as in any other nursing facility, a doctor or healthcare provider has certified their need for nursing care. These residents do not have a similar right to enter the assisted living units, but are given a preference when units are available. When such a resident needs to move from independent living to assisted living or nursing care, no additional entry fee is required. The resident is still required to pay monthly or daily fees while in the assisted living or nursing care facilities, depending upon the length of the stay. The monthly fee for assisted living at the Home in 2002 was approximately $2,000. The monthly fee for nursing home care was comparable to the average rate charged by other facilities, though the Home asserts that its accommodations and care exceed the average.

The Home is one corporation. All of its employees work for the same organization. The Home does not, and claims that it cannot, separate revenue or costs of Back Bay from its other facilities. It asserts that its satellite facilities, of which it has several, made up entirely of independent living units, were established to subsidize the operation of the Home as a whole. As its costs increased due to the number of people entering assisted living or nursing care, the Home chose to expand the number of residents, rather than pass greater costs on to its existing residents. The independent living units can also be liabilities, however, because adding more residents increases the number of those who might one day require assisted living or nursing care at the Home's expense.

It is the Home's policy that no resident be forced to leave "based solely on a financial inability to make the required monthly payments." No nursing care resident will be asked to leave the Home due to nonpayment. The Home has funds to subsidize entry fees and monthly fees if necessary. The Home takes $10,000 from each new entry fee and transfers it immediately to the charitable admission trust fund. As of the date of the BTLA hearing, however, no resident of Back Bay had received a subsidy for either entry fees or monthly fees. Finally, by its contract with the State, the Home is prohibited from seeking reimbursement from either Medicare or Medicaid for the care it provides.

Based upon the above facts, the BTLA found that the property in Wolfeboro was "an integral and inseparable component of the Taylor Home community based in the City of Laconia and, thus, qualifies for an RSA 72:23, V charitable exemption." In addition, the BTLA stated:

In summary, there is nothing in the record before the board to suggest a viable legal distinction can be drawn between [the] Home's operations in the Town and its operations in Laconia, which have already been found to be charitable. There is also no evidence [the] Home operates the Back Bay independent living units in the Town any differently than it operates The Ledges independent living units in Laconia. In each case, residents have the same access to assisted living and nursing care facilities, if and when such needs should arise, as well as the additional "care management" services noted above.

The Town challenges this ruling on appeal, arguing that Back Bay is not owned, used and occupied directly for charitable purposes as required by RSA 72:23, V. The Town argues further that the independent living units are not reasonably necessary to the Home's charitable purpose, and that there is no evidence of cost shifting or that revenue from the Back Bay is subsidizing the services provided in Laconia. The Home urges us to affirm the BTLA's findings and rulings, as Back Bay is integral to the functioning of its Laconia complex.

Appeals from BTLA decisions are governed by RSA chapter 541. RSA 71–B:12 (2003). To prevail, the Town must show that the BTLA's decision was clearly unreasonable or unlawful. Findings of fact made by the BTLA on questions properly before it are deemed prima facie lawful and reasonable. Its decision "shall not be set aside or vacated except for errors of law, unless the court is satisfied, by a clear preponderance of the evidence before it, that such order is unjust or unreasonable." RSA 541:13 (1997). The interpretation of a statute is to be decided ultimately by this court. Therefore, if we find that the board misapprehended or misapplied the law, its order will be set aside. Appeal of Kiwanis Club of Hudson , 140 N.H. 92, 94, 663 A.2d 90 (1995).

RSA 72:23 exempts the following real estate and personal property from taxation:

V. The buildings, lands and personal property of charitable organizations ... owned, used and occupied by them directly for the purposes for which they are established, provided that none of the income or profits thereof is used for any other purpose than the purpose for which they are established.

RSA 72:23, V. "The burden of demonstrating the applicability of any exemption shall be upon the claimant." RSA 72:23–m (2003).

We have had occasion to examine the use of property as residences in the past. See The Housing Partnership v. Town of Rollinsford, 141 N.H. 239, 242, 683 A.2d 189 (1996). We have recognized that the fact that property owned by a charitable...