Sioux Center Community Hospital & Health Center v. Board of Review of Sioux County, No. 6-169/05-1278 (IA 4/26/2006), 6-169/05-1278
| Decision Date | 26 April 2006 |
| Docket Number | No. 6-169/05-1278,6-169/05-1278 |
| Parties | SIOUX CENTER COMMUNITY HOSPITAL & HEALTH CENTER, Plaintiff-Appellant, v. BOARD OF REVIEW OF SIOUX COUNTY, IOWA, Defendant-Appellee. |
| Court | Iowa Supreme Court |
Appeal from the Iowa District Court for Sioux County, Dewie Gaul, Judge.
Sioux Center Community Hospital and Health Center appeals from the district court's ruling that denied a property tax exemption for two assisted and independent living facilities owned by the hospital.
AFFIRMED.
Ivan T. Webber of Ahlers & Cooney, P.C., Des Moines, for appellant.
Melissa R. O'Rourke, County Attorney, Orange City, for appellee.
Heard by Vogel, P.J., and Zimmer and Vaitheswaran, JJ. Huitink, J., takes no part.
Sioux Center Community Hospital and Health Center (Hospital) appeals from the district court's ruling that denied a property tax exemption for two assisted and independent living facilities that belong to the Hospital. On our review, we affirm the district court.
The Hospital is a nonprofit corporation organized under Iowa Code chapter 504A. The Hospital owns and operates two assisted and independent living facilities, Crown Pointe and Franken Manor.1 Crown Pointe has twenty-two assisted living units and twenty-four independent living units. Franken Manor has thirty mixed independent and assisted living units.
The Hospital financed the construction of the $5 million Crown Pointe building with the sale of twenty-year revenue bonds and $132,000 in community donations. It purchased Franken Manor with $400,000 in internal funds and $250,000 in private donations.2
Individuals wishing to be placed on a waiting list for either facility must provide a $250 application fee, and Crown Pointe residents pay an additional $750 deposit if they move into the facility.3 Crown Pointe tenants on the "Independent Living Service Plan" pay $1310 per month for a one-bedroom unit, including one meal per day, a yearly health assessment, and "all the activities." Crown Pointe tenants on the "Assisted Living Service Plan" pay $1325 per month for basic assisted living services. Additional charges include $425 for board, a room charge of $310 for a studio, $675 for a one-bedroom, and $725 for a bedroom deluxe. Thus, the basic charges for an individual living in a one-bedroom assisted living unit at Crown Pointe would total $2425.4
The Sioux County Assessor classified both properties as residential for tax purposes,5 and the Hospital challenged the classification, claiming both properties should be completely tax exempt. The Board of Review of Sioux County sustained the assessor's classification, and the Hospital appealed to the district court. In an order filed July 12, 2005, the court found the properties were not tax exempt and affirmed the assessor's classification and the decision of the board of review.
The Hospital has appealed. It contends the facilities should be tax exempt because the Hospital is a charitable institution, the facilities are not operated with a view toward pecuniary profit, and the actual uses of the facilities are charitable objectives of the Hospital.
The parties agree that we review tax assessment cases de novo. Iowa R. App. P. 6.4. We give weight to the trial court's fact findings, especially when considering the credibility of witnesses, but we are not bound by them. Iowa R. App. P. 6.14(6)(g). The Hospital, as the taxpayer seeking the exemption, has the burden of proving its entitlement to tax exempt status. Van Buren County Hosp. & Clinics v. Board of Review, 650 N.W.2d 580, 585 (Iowa 2002). The Hospital must establish its tax exempt status by a preponderance of the evidence. Id. Generally, we strictly construe statutes that exempt property from taxation, and we resolve any doubts in favor of taxation. City of Oskaloosa v. Board of Review, 490 N.W.2d 542, 545 (Iowa 1992).
Iowa Code section 427.1(8) (2003) defines tax exempt property of religious, literary, and charitable societies as "[a]ll grounds and buildings used . . . by . . . charitable, benevolent . . . institutions and societies solely for their appropriate objects, [and] . . . not leased or otherwise used . . . with a view to pecuniary profit." The Hospital contends Crown Pointe and Franken Manor are tax exempt because they meet the three-factor test outlined in Carroll Area Child Care Center, Inc. v. Carroll County Board of Review, 613 N.W.2d 252, 254-55 (Iowa 2000), which requires the Hospital to prove the following by a preponderance of the evidence: (1) the Hospital was a charitable institution at the time of the claimed exemption, (2) the Hospital did not operate the facilities with a view toward pecuniary profit, and (3) the actual uses of the facilities are charitable objectives of the Hospital. If the Hospital fails to meet this burden of proof on a single factor, its claim for property tax exemption must fail. Partnership for Affordable Hous., Ltd. P'ship Gamma v. Board of Review for the City of Davenport, 550 N.W.2d 161, 164 (Iowa 1996).
In this case, we are not concerned with whether the Hospital itself is a charitable institution. The issue here is whether the Hospital operates its assisted and independent living facilities as charitable enterprises. Iowa Methodist Hosp. v. Board of Review, 252 N.W.2d 390, 392 (Iowa 1977). The character of the use to which the facilities are put controls our analysis, not the identity of the owner. Id.
After reviewing the record, we conclude Crown Pointe and Franken Manor are not charitable enterprises. Neither Crown Pointe nor Franken Manor offer tenants a sliding scale of fees based on income. A variety of documents generated by the Hospital inform tenants that if they fail to pay the facilities' charges, they cannot live at the facilities. For instance, all tenants must sign a lease agreement providing that failure to pay entitles the Hospital to terminate the agreement and reenter the apartment; this agreement also holds the tenant liable for attorney's fees and costs incurred in enforcing this right. The "Crown Pointe/Franken Manor Service Agreement," which tenants must sign, states they may be required to vacate the facilities for failure to pay, and if a tenant engages in a wrongful holdover, the facilities may bring an action for possession and hold the tenant liable for attorney fees and costs. The tenants' "Bill of Rights" states that tenants have "the right to remain in Crown Pointe or Franken manor unless. . . [they] fail to pay for services." This document must be signed by the tenant and a legal representative of one of the facilities. Finally, although the Hospital maintains it does not screen applicants for Crown Pointe or Franken Manor for their ability to pay prior to admission, the "Crown Pointe Handbook" suggests otherwise. The handbook informs the reader that "[i]ndividuals who may not be appropriate for residency are those who . . . are not willing or able to access the resources needed to pay the necessary rent and/or service charges." A similar handbook is given to Franken Manor residents.
The chief operations officer of the Hospital testified that neither Crown Pointe nor Franken Manor has evicted a tenant for...
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