Jewish Geriatric Services, Inc. v. Board of Assessors of Longmeadow, 02-P-1144.
| Decision Date | 04 December 2003 |
| Docket Number | No. 02-P-1144.,02-P-1144. |
| Parties | JEWISH GERIATRIC SERVICES, INC., & others v. BOARD OF ASSESSORS OF LONGMEADOW. |
| Court | Appeals Court of Massachusetts |
Present: LENK, KAFKER, & MILLS, JJ.
Martin J. Newhouse (Bonnie Schroeder McGuire with him) for the taxpayer.
David J. Martel for Board of Assessors of Longmeadow.
The plaintiffs (taxpayers) sought abatement from property taxes imposed by the board of assessors of the town of Longmeadow (town) for fiscal years 1999, 2000, and 2001.2 When the town denied abatement, the taxpayers appealed to the Appellate Tax Board (board) pursuant to G. L. c. 59, §§ 64 and 65. After the board upheld the abatement denial, the taxpayers instituted this appeal. 1. Background. We summarize the facts, as they occurred during the tax years in question, from the board's carefully written findings of fact and report, which are all supported by substantial evidence.3 See Donlon v. Assessors of Holliston, 389 Mass. 848, 851 n.3 (1983). The appellants, Jewish Geriatric Services, Inc. (Jewish Geriatric), Jewish Nursing Home of Western Mass, Inc. (JNH), and JGS Housing Services, Inc. (JGS), are all affiliated organizations, each established as a not-for-profit charitable corporation under G. L. c. 180, and each classified under § 501(c)(3) of the Internal Revenue Code. Jewish Geriatric is the parent corporation of JNH and JGS. JNH owns the real estate located at 780 Converse Street in Longmeadow, which is the subject of this appeal, and leases it to JGS. On that property, JGS operates an assisted living facility known as Ruth's House.4
The building is a three-level structure with sixty-four resident apartments of either one or two rooms. There are also common areas at Ruth's House, including dining and social areas, activity areas, a wellness center and outdoor grounds and paths.
In keeping with the philosophy of assisted living programs generally, and also with the Commonwealth's applicable law, G. L. c. 19D, Ruth's House attempts to create a dignified residential setting for seniors. See, e.g., G. L. c. 19D, § 16. Since Ruth's House does not provide twenty-four hour nursing care, residents requiring such services are not eligible for residency. Ruth's House conducts a screening process for prospective residents to assess whether they are physically and medically suited for the facility, which offers three different levels of assistance to its residents. The basic service level includes three meals per day, transportation to medical appointments, health monitoring, laundry, housekeeping, social activities, and assistance with up to three activities of daily living (ADLs) such as bathing, dressing, eating, and toileting. At the next level, the "Assisted Living Plus" program provides for additional assistance with ADLs beyond the three that are included in the basic services. Finally, in the "Reminiscence Neighborhood," Ruth's House assists residents with Alzheimer's disease or other memory impairments at the same level as the residents in "Assisted Living Plus" program, but in a more secure setting designed especially for memory-impaired residents.
According to the fee schedule that Ruth's House provided, daily rates vary depending upon the level of care (basic assisted living, assisted living plus, or reminiscence neighborhood) and the size and nature of the room (shared companion suite, private one-room suite, or private two-room suite).5 For thirty days of occupancy and care, the cost for basic assisted living ranged from $1,890 to $4,200; assisted living plus ranged from $2,580 to $4,890; and the reminiscence neighborhood, $3,000 to $5,280.6 In addition, Ruth's House charges a one-time community fee equal to sixty days at the resident's applicable base rate (amounting to between $3,780 and $8,580), which must be paid before occupancy begins.
Ruth's House, which does not accept Medicaid supplements, also requires that each resident submit a "Responsible Party Agreement," signed by a third party, guaranteeing payment in the event that the resident fails to make payments when due. The facility also offers a subsidy program, which, during the years at issue, provided assistance to between fourteen and seventeen residents per year, with only one resident ever receiving more than $15,000 per year in subsidies.7 Although Ruth's House indicated that it sought to save some of its available subsidies for current paying residents who might become unable to pay in the future, the chairman of the board of Jewish Geriatric admitted that Ruth's House would evict residents who could not pay. Under a residency agreement, Ruth's House also requires residents to maintain their own health and liability insurance in adequate amounts.8
Upon these facts, the board concluded that (1) Ruth's House offers its residents full legal tenancy; (2) the residents, rather than Ruth's House or any of the taxpayer corporations, were the actual occupants of the property; and (3) in that the facility benefited only a limited segment of the population rather than the community at large, it was not operated as a charitable endeavor.
2. Discussion. In reviewing a decision of the board, we will not reverse or modify if the decision "is based on substantial evidence and a correct application of the law." Erving Paper Mills Corp. v. Commissioner of Rev., 49 Mass. App. Ct. 14, 17 (2000). RHI Holdings, Inc. v. Commissioner of Rev., 51 Mass. App. Ct. 681, 685 (2001). We recognize the board's expertise in tax matters and give some deference to its decisions, and in mixed questions of fact and law, we deem the evidence insufficient only where "a contrary conclusion is not merely a possible but a necessary inference from the findings." Erving Paper Mills Corp. v. Commissioner of Rev., 49 Mass. App. Ct. at 17, quoting from Olympia & York State St. Co. v. Assessors of Boston, 428 Mass. 236, 240 (1998). As to questions of law, we consider those raised before the board and set out separately and particularly on appeal. G. L. c. 58A, § 13. Assessors of Worcester v. Knights of Columbus Religious Educ. Charitable & Benevolent Assn. of Worcester, 329 Mass. 532, 534 (1952).
The board ruled that Ruth's House did not qualify for a property tax exemption for two independently dispositive reasons: (1) the individual residents, rather than the organization, actually occupied the premises as tenants; and (2) Ruth's House was not operated as a charitable endeavor in that it did not benefit a sufficiently inclusive section of the community. We hold that the board correctly determined the second factor, and we decline to consider the first.
To qualify for the exemption, taxpayer organizations bear the burden of establishing "clearly and unequivocally," Boston Symphony Orchestra, Inc. v. Assessors of Boston, 294 Mass. 248, 257 (1936), that they are "literary, benevolent, charitable or scientific institution[s] or temperance societ[ies] incorporated in the commonwealth." Western Mass. Lifecare, 434 Mass. at 101, quoting from G. L. c. 59, § 5, Third. Although the Legislature expressly recognized the social value of assisted living facilities in its preamble to G. L. c. 19D,9 that social value does not necessarily import a charitable purpose. See Western Mass. Lifecare, 434 Mass. at 103. Nor is it sufficient for a taxpayer to rest on its nonprofit status. Id. at 102, citing American Inst. for Economic Research v. Assessors of Great Barrington, 324 Mass. 509, 513 (1949). In assessing whether an organization is a charity for purposes of property tax exemption, courts apply a "functional test" that considers "the declared purposes and the actual work performed" by the organization.10H-C Health Servs., Inc. v. Assessors of S. Hadley, 42 Mass. App. Ct. 596, 598-599 (1997), citing Assessors of Boston v. Vincent Club, 351 Mass. 10, 12 (1966). "[T]he organization `must prove that it is in fact so conducted that in actual operation it is a public charity.'" Western Mass. Lifecare, 434 Mass. at 102, quoting from Jacob's Pillow Dance Festival, Inc. v. Assessors of Becket, 320 Mass. 311, 313 (1946). Factors in the functional test include an assessment whether the organization serves "a sufficiently large or indefinite class so that the community is benefited by its operations," Western Mass. Lifecare, 434 Mass. at 103-104, quoting from Harvard Community Health Plan, Inc. v. Assessors of Cambridge, 384 Mass. 536, 543 (1981), and whether the purported charity lessens a burden that would otherwise be assumed by the government. Western Mass. Lifecare,supra, at 105-106, and cases cited.
Here, as the town conceded that the taxpayers were charitable in nature, the board considered specifically whether they used the property for charitable purposes, properly applying the same test to the use of the property as it would to the nature of the organizations owning and using it.
In Western Mass. Lifecare, supra, the court determined that a particular continuing care retirement community (Reeds Landing), which included independent living units, assisted living units, and a skilled nursing facility, did not qualify for the property tax exemption because its entrance fees and monthly fees made it inaccessible to a large segment of the population and because the population it served would not otherwise require governmental assistance with housing or health care. 434 Mass. at 105-106. The court held that:
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Lasell Village v. Bd. of Assessors of Newton, 05-P-528.
...Mass. Lifecare Corp. v. Assessors of Springfield, 434 Mass. at 104-105, 747 N.E.2d 97; Jewish Geriatric Servs., Inc. v. Assessors of Longmeadow, 61 Mass.App.Ct. 73, 78-80, 807 N.E.2d 194 (2004).9 4. Discussion. Lasell's first argument on appeal is that because it was determined in 1993 to b......