Nuci Phillips Mem'l Found. Inc. v. Athens–clarke County Bd. of Tax Assessors.

• Decision Date: 14 December 2010
• Docket Number: No. S10G0448.,S10G0448.
• Citation: 703 S.E.2d 648,288 Ga. 380
• Parties: NUCI PHILLIPS MEMORIAL FOUNDATION, INC.v.ATHENS–CLARKE COUNTY BOARD OF TAX ASSESSORS.
• Court: Georgia Supreme Court

288 Ga. 380

703 S.E.2d 648

10 FCDR 4059

NUCI PHILLIPS MEMORIAL FOUNDATION, INC.

v.ATHENS–CLARKE COUNTY BOARD OF TAX ASSESSORS.

No. S10G0448.

Supreme Court of Georgia.

Nov. 8, 2010.Reconsideration Denied Dec. 14, 2010.

Timmons, Warnes & Anderson, James C. Warnes II, Athens, for appellant.William C. Berryman, Jr., Amy S. Gellins, Athens, for appellee.Nelson, Mullins, Riley & Scarborough, Stanley S. Jones, Jr., Atlanta, Sarah A. Whalin, amici curiae.CARLEY, Presiding Justice.

Linda Phillips established the Nuci Phillips Memorial Foundation, Inc. in honor of her son, Nuci Phillips, a talented young musician who suffered from depression, which ultimately led to his suicide while he was a student at the University of Georgia. The Foundation owns and operates a facility called Nuci's Space, which provides a healthy, safe place for the Athens community where musicians and others may come to seek help for anxiety, depression or other emotional disorders. The Foundation applied for an exemption from ad valorem taxation for the property on which its facility is located, and the exemption was granted by the Athens–Clarke County Board of Equalization. The Athens–Clarke County Board of Tax Assessors (Board) challenged the grant of exemption in the trial court, which affirmed the exemption. The Board appealed from the trial court's ruling to the Court of Appeals, which reversed in Athens–Clarke County Bd. of Tax Assessors v. Nuci Phillips Memorial Foundation, 300 Ga.App. 754, 686 S.E.2d 371 (2009). The Court of Appeals found that since the Foundation rents out rehearsal space as well as space for private birthday parties and wedding receptions, then the Foundation does not use its property exclusively in furtherance of its charitable pursuits as required by OCGA § 48–5–41(d)(2) in order to qualify for an exemption from ad valorem taxation. Athens–Clarke County Bd. of Tax Assessors v. Nuci Phillips Memorial Foundation, supra at 755, 686 S.E.2d 371. We granted certiorari to consider whether the Court of Appeals erred in applying OCGA § 48–5–41(d)(2).

1. “[W]hen we are interpreting a statute, we must presume that the General Assembly had full knowledge of the existing state of the law and enacted the statute with reference to it. [Cits.]” Chase v. State, 285 Ga. 693, 695(2), 681 S.E.2d 116 (2009). Furthermore, when construing statutes, “ ‘their meaning and effect is to be determined in connection, not only with the common law and the constitution, but also with reference to other statutes and the decisions of the courts.’ [Cit.]” Chase v. State, supra at 695–696(2), 681 S.E.2d 116. Therefore, in order to discern the meaning and effect of the 2006 and 2007 amendments to OCGA § 48–5–41, we must look to the history of the statute and the decisions of the courts that have interpreted it.

The General Assembly, pursuant to the Georgia Constitution of 1877, exempted from ad valorem taxation the property of “all institutions of purely public charity ... provided, the ... property so exempted be not used for purposes of private or corporate profit or income.” (Emphasis in original.) Ga. L. 1878–1879, pp. 32, 33, § 1. Thereafter, the decisions of this Court construed the statute as disallowing the use of exempted property from any type of private or corporate income-producing activity, whether the activity was charitable or non-charitable. Mundy v. Van Hoose, 104 Ga. 292, 299, 30 S.E. 783 (1898) (superseded by statute as stated in Elder v. Henrietta Egleston Hosp. for Children, 205 Ga. 489, 492, 53 S.E.2d 751 (1949)).

After passage of the Georgia Constitution of 1945, the General Assembly amended the above-quoted statute to allow exempt institutions to raise income as long as “any income from such property is used exclusively for religious, educational and charitable purposes, or ... for the purpose of maintaining and operating such institution....” Ga. L.1946, pp. 12, 13, § 1(a). In York Rite Bodies of Freemasonry of Savannah v. Bd. of Equalization of Chatham County, 261 Ga. 558(2), 408 S.E.2d 699 (1991), this Court summarized the requirements for an institution to qualify as a “purely public charity” for an ad valorem tax exemption under the exemption statutes from 1946 to the pre–2006 exemption statute, OCGA § 48–5–41. “First, the owner must be an institution devoted entirely to charitable pursuits; second, the charitable pursuits of the owner must be for the benefit of the public; and third, the use of the property must be exclusively devoted to those charitable pursuits.” York Rite Bodies of Freemasonry of Savannah v. Bd. of Equalization of Chatham County, supra. Under the exemption statutes from 1946 to 2006, those institutions that qualified as purely public charities were allowed to use their property to produce income as long as the primary purpose of the property was not to secure income, the income-producing activity was consistent with its charitable activities, and the income was used exclusively for the institution's charitable purposes. Former OCGA § 48–5–41(a)(4), (c), (d). As long as these three income rules were satisfied, then a charitable organization that raised income would be considered as using its property “exclusively” for its charitable purposes and thus remain a purely public charity. See Fulton County Bd. of Tax Assessors v. Visiting Nurse Health System of Metropolitan Atlanta, 256 Ga.App. 475, 477(2)(b), 568 S.E.2d 798 (2002); Chatham County Bd. of Tax Assessors v. Southside Communities Fire Protection, 217 Ga.App. 361, 364–365, 457 S.E.2d 267 (1995). Compare Rabun Gap–Nacoochee School v. Thomas, 228 Ga. 231, 235, 241(1) (a), (e), 245–246(2)(c), 184 S.E.2d 824 (1971); Cobb County Bd. of Tax Assessors v. Marietta Educational Garden Center, 239 Ga.App. 740, 741, 745(2), 521 S.E.2d 892 (2000).

In response to a referendum approved in November 2006, the General Assembly amended OCGA § 48–5–41 to add subsection (d)(2), which, according to its terms, applied only to institutions that qualify as “purely public charities” pursuant to OCGA § 48–5–41(a)(4), and provided that

real estate or buildings which are owned by a charitable institution that is exempt from taxation under Section 501(c)(3) of the federal Internal Revenue Code and used by such charitable institution for the charitable purposes of such charitable institution may be used for the purpose of securing income so long as such income is used exclusively for the operation of that charitable institution.

Ga. L.2006, pp. 376, 377, § 1. However, not long after this amendment was passed, the legislature further amended OCGA § 48–5–41(d)(2) to state that

a building which is owned by a charitable institution that is otherwise qualified as a purely public charity and that is exempt from taxation under Section 501(c)(3) of the federal Internal Revenue Code and which building is used by such charitable institution exclusively for the charitable purposes of such charitable institution, and not more than 15 acres of land on which such building is located, may be used for the purpose of securing income so long as such income is used exclusively for the operation of that charitable institution.

Ga. L. 2007, p. 341, § 1.

According to the Board and the dissent, the amendments to OCGA § 48–5–41(d)(2) in 2006 and 2007, more than 15 years after this Court's decision in York Rite, did not alter the requirements for exemption of an institution that has qualified as a “purely public charity” under OCGA § 48–5–41(a)(4) but also uses its property to produce income. However, this interpretation would render the amendments completely meaningless and would contravene the intent of the legislature and contradict basic principles of statutory construction. “All statutes are presumed to be enacted by the legislature with full knowledge of the existing condition of the law and with reference to it.' [Cit.]” Inland Paperboard & Packaging v. Ga. Dept. of Revenue, 274 Ga.App. 101, 104, 616 S.E.2d 873 (2005). Furthermore, “when a statute is amended, ‘ “(f)rom the addition of words it may be presumed that the legislature intended some change in the existing law.” ’ [Cit.]” Board of Assessors of Jefferson County v. McCoy Grain Exchange, 234 Ga.App. 98, 100, 505 S.E.2d 832 (1998).

As a result of the added language in OCGA § 48–5–41(d)(2), the only changes to the qualifications for exemption status for a charitable institution are that it must be designated a Section 501(c)(3) organization under federal law, and any building and not more than 15 acres of land owned by the institution may now be used “for the purpose of securing income so long as such income is used exclusively for the operation of that charitable institution.” Following the principles of statutory interpretation set out above, we must presume that the General Assembly had full knowledge that statutory law and case law has, for over sixty years, allowed charitable institutions to use their property to raise income as long as that income was raised by acts consistent with the charitable purpose of the institution and used exclusively for those charitable pursuits. See Roberts v. Ravenwood Church of Wicca, 249 Ga. 348, 353–354, 292 S.E.2d 657 (1982); Church of God of the Union Assembly v. City of Dalton, 216 Ga. 659, 662, 119 S.E.2d 11 (1961); Peachtree on Peachtree Inn v. Camp, 120 Ga.App. 403, 410–411, 170 S.E.2d 709 (1969); Central Bd. on Care of Jewish Aged v. Henson, 120 Ga.App. 627, 630(1), 171 S.E.2d 747 (1969). Furthermore, we must assume that by adding new language to the statute, the General Assembly intended to broaden the ability of charitable institutions to use their property to raise income. Therefore, the General Assembly must have intended to allow those institutions that otherwise qualify as a purely public charity to use their property to raise income from activities that are not necessarily charitable in nature so long as the “primary purpose” of the property was charitable and...