Moses H. Cone Memorial Hosp., Matter of

• Decision Date: 15 February 1994
• Docket Number: No. 9310PTC230,9310PTC230
• Citation: 439 S.E.2d 778,113 N.C.App. 562
• Court: North Carolina Court of Appeals
• Parties: , 17 Employee Benefits Cas. 2603 In the Matter of the MOSES H. CONE MEMORIAL HOSPITAL (92 PTC 28) & Roger C. Cotten (90 PTC 485).

Page 778

439 S.E.2d 778

113 N.C.App. 562, 17 Employee Benefits Cas. 2603

In the Matter of the MOSES H. CONE MEMORIAL HOSPITAL (92 PTC

28) & Roger C. Cotten (90 PTC 485).

No. 9310PTC230.

Court of Appeals of North Carolina.

Feb. 15, 1994.

Moses H. Cone Memorial Hospital (hereinafter taxpayer) is a nonstock, nonprofit, general acute care hospital located in Greensboro, North Carolina. Taxpayer is open to all citizens of Guilford County and adjacent counties without regard to race, religion, creed or national origin. Taxpayer also does not deny emergency medical treatment to patients who cannot afford to pay. In October 1989, taxpayer opened a child care center in a free-standing building on the hospital campus. The child care center is available only to hospital employees and is open seven days a week from 6:00 a.m. to midnight. Taxpayer subsidizes approximately $ 160,000 of the annual operating costs of the child care center. In 1990, Guilford County assessed taxpayer $ 6,936.15 in ad valorem taxes for its child care center. Taxpayer filed an application for exemption pursuant to G.S. 105-278.8 which was denied by the Guilford County Tax Department (hereinafter Tax Department). The Guilford County Board of Equalization and Review (hereinafter the Board) reversed the decision of the tax department and determined that taxpayer's child care center was exempt from ad valorem taxation. The Guilford County Tax Assessor, Mr. Roger C. Cotten, appealed this decision to the Property Tax Commission in his individual capacity (90 PTC 485). In 1991, taxpayer's child care center was again assessed ad valorem taxes. Taxpayer filed another application for exemption which was again denied by the Tax Department. Taxpayer appealed again to the Board of Equalization and Review. Although faced with essentially the same facts about the child care center as the year before, the Board determined that taxpayer's child care center was not exempt from taxation. Taxpayer appealed this decision to the Property Tax Commission (92 PTC 28). These two appeals (90 PTC 485 and 92 PTC 28 hereinafter 1990 appeal and 1991 appeal respectively) were consolidated for hearing before the Property Tax Commission on 23 June 1992. Taxpayer presented the testimony of four witnesses: 1) Ms. Cynthia Schaub, 2) Ms. Sharon Fouts, 3) Ms. Stephanie Fanjul and 4) Ms. Beverly Randolph Harrelson. Ms. Schaub is the Vice President of Human Resources at Moses H. Cone Memorial Hospital and is responsible for the hospital's recruitment and retention of health care employees. Ms. Schaub testified that taxpayer's child care center enabled the hospital to recruit employees more competitively with other area hospitals who also offered on-site child care for their employees. Ms. Schaub named several area hospitals that also had on-site day care. Ms. Schaub also testified that commercial day care centers could not accommodate the fluctuating need of hospital employees who worked rotating shifts and that there were no commercial day care centers that offered child care after 7:00 p.m. Ms. Sharon Fouts is the director of taxpayer's child care center. Ms. Fouts testified that the child care center is able to accommodate the needs of parents who work flexible hours or need to work in the evenings. "If one week they work 6:00 a.m. to 3:00 p.m., or the next week two-thirty until twelve o'clock, we are able to accommodate those needs." Ms. Fouts testified that she did not know of any other child care facility in Greensboro that was open from 6:00 a.m. until midnight, seven days a week. Ms. Fouts testified that between 12 to 18 children used the child care center from 6:30 p.m. until midnight. Ms. Fouts also testified that the child care center had a waiting list of approximately 40 children of employees. Ms. Stephanie Fanjul is the owner of Work Place Options, a child care consulting firm. Ms. Fanjul testified that her company did a feasibility study for Wake Medical Center's child care facility and also conducted a study at Wake Medical Center which described the results of the child care facility on productivity and employee morale. Using exhibits, Ms. Fanjul testified that Wake Medical Center's on-site child care had lowered staff turnover for child care participants, reduced their unscheduled absences and shortened maternity leaves. Ms. Fanjul also testified that other national studies involving hospitals also showed that on-site child care significantly improved employee recruitment, retention and morale. Ms. Harrelson is an employee of taxpayer who has a three year old child in taxpayer's child care center. Ms. Harrelson testified to the advantages of having weekend care for her child because both she and her husband often worked on weekends. Ms. Harrelson also testified that although her scheduled hours are from 8:00 a.m. to 4:30 p.m., she knows that if she has to work past dinner time, her child will be fed and cared for at the child care center. Ms. Harrelson also testified that if taxpayer's child care center were closed, she would seek employment at one of the competing area hospitals that had on-site day care. Appellees presented no evidence. The Property Tax Commission (hereinafter Commission) concluded that taxpayer's child care center was not exempt from taxation and denied taxpayer's exemptions for both 1990 and 1991. In its order denying the exemptions, the Commission made the following findings of fact and conclusions of law:

Findings of Fact

....

7. The Moses H. Cone Memorial Hospital employs more than 3,000 employees who are eligible to place their children in the Moses H. Cone Memorial Hospital Child Care Facility.

8. The Moses H. Cone Memorial Hospital Child Care Facility is available to all employees of Moses H. Cone Memorial Hospital, strictly on a first come, first served basis. No preference at all is given to nurses or to employees with duties directly related to the provision of medical care. The Facility is equally available to cafeteria, janitorial, maintenance, and administrative personnel as to those whose duties are related directly to the provision of medical care services.

9. The Child Care Facility has a capacity of approximately 160 children (testimony of Ms. Shaub). Because some parents have more than one child in the Facility, approximately 145 to 150 employees of Moses H. Cone Memorial Hospital are served by the facility at any given time. The Facility serves less than five percent (5%) of Hospital employees; the vast majority of Hospital's over 3,000 employees does not have a child in the Facility and derive no benefit from its operations. Approximately 20% of the 150 or so employees who do use the Facility are part-time employees (testimony of Ms. Shaub).

10. The rates charged by the Facility are comparable to those of "average" daycare centers in the Greensboro area. The services and amenities provided by the Facility, however, are clearly above average. The Facility is therefore a benefit to employees who are allowed to place a child there. Because of the first come, first served policy, however, this benefit tends to accrue to employees on the basis of seniority, without regard to their duties. Administrators, maintenance workers and cafeteria workers have the same right to place children in the Facility as do nurses on rotating shifts.

11. The Facility competes directly with commercial, for-profit providers of child care services in the Greensboro area. Because the Facility is subsidized by the Hospital, it has two great attractions for Hospital employees: (1) it is located adjacent to their place of work; and (2) it offers better facilities and services, at a lower price, than competing commercial daycare centers.

12. Commercial for-profit child care centers located in Guilford County are subject to ad valorem taxation.

13. While the provision of child care services may aid the Hospital in retaining those employees (a small minority of the total) who are able to place a child in the Facility, the Facility, despite the Hospital's assertions to the contrary, is of little or no benefit to the Hospital in recruitment because the Facility has a substantial waiting list (testimony of Ms. Fouts), and no empty spaces. The Hospital therefore cannot use the Facility as a recruitment tool. This problem is addressed Hospital Exhibit 4 (at unnumbered page 8) which deals with the experience of Wake Medical Center in this regard.

14. The property under appeal is used by the Hospital to provide an employee benefit to a small minority of the Hospital's employees. Under the Hospital's operating policies, no preference is given to employees whose duties are directly related to the provision of medical care. Instead, the waiting list method favors long-term employees, regardless of the nature of their duties, over new hires.

15. Commercial child care for parents who work the day shift is readily available in the Greensboro area; see Hospital Exhibit 1.

Conclusions of Law

....

7. The Hospital failed to establish, by the greater weight of the evidence or by any stipulated facts, that the subject property was owned by a qualifying agency as described in G.S. 105-278.7 on either 1 January 1990 or 1 January 1991. In particular, the Commission concludes as a matter of law that the facts contained in Stipulation paragraphs A and B do not support the conclusion that the Hospital was a qualifying owner under the provisions of G.S. 105-278.7(c). The Hospital did not establish that it was a charitable association or institution pursuant to G.S. 105-278.7(c)(1), or that it was one of the organizations described in G.S. 105-278(c)(2) through (c)(7).

8. The Hospital failed to establish, by the greater weight of the evidence or by any stipulated facts, that the subject property was owned by a qualifying hospital as described in G.S. 105-278.8 on either 1 January 1990 or 1 January 1991. In particular, the Commission concludes as a matter of law...