United Church of Christ v. Town of West Hartford, 13127

• Citation: 206 Conn. 711,539 A.2d 573
• Decision Date: 29 March 1988
• Docket Number: No. 13127,13127
• Court: Connecticut Supreme Court
• Parties: UNITED CHURCH OF CHRIST v. TOWN OF WEST HARTFORD.

Page 573

539 A.2d 573

206 Conn. 711

UNITED CHURCH OF CHRIST v. TOWN OF WEST HARTFORD.

No. 13127.

Supreme Court of Connecticut.

Argued Jan. 12, 1988.

Decided March 29, 1988.

Michael J. O'Sullivan, with whom, on the brief, was Richard T. Stabnick, Hartford, for appellant (plaintiff).

Marjorie S. Wilder, Corp. Counsel, Hartford, for appellee (defendant).

Before PETERS, C.J., and ARTHUR H. HEALEY, SHEA, GLASS and COVELLO, JJ.

ARTHUR H. HEALEY, Associate Justice.

The plaintiff United Church of Christ was denied a local property tax exemption under General Statutes § 12-88 ¹ when the trial court found, on an appeal from the local board of tax review, that the land involved in its housing project in West Hartford was not being used exclusively for charitable purposes under General Statutes § 12-81(7). ² The sole issue on this appeal is whether, on the facts found by the trial court, the plaintiff sustained its burden of proving that its housing project was being used exclusively for charitable purposes. ³

The town assessor of West Hartford placed certain housing units then constructed on the plaintiff's property on the tax list of October 1, 1982. The plaintiff church appealed to the board of tax review for the town of West Hartford, requesting a tax exemption on the ground that the property was being used exclusively for a charitable purpose. The board denied the petition and the plaintiff appealed to the Superior Court. Hon. Charles S. House, state trial referee, acting as the court, found that the property was not eligible for an exemption and dismissed the appeal. The plaintiff then appealed to the Appellate Court, which, with one judge dissenting, sustained the trial court's decision. United Church of Christ v. West Hartford, 9 Conn.App. 448, 519 A.2d 1217 (1987). The plaintiff successfully petitioned for certification from this court and this appeal followed.

The trial court found the following facts which are not in dispute. The plaintiff, incorporated as a nonstock corporation in 1958, acquired approximately six acres of land on Flagg Road in West Hartford. It constructed a church building on two acres, leaving about four acres of the property unused, on which it paid property tax to the town of West Hartford. The plaintiff, perceiving a need for elderly housing in the community, created a committee in 1978 to make a feasibility study of the use of the land for such housing. In November, 1979, the congregation voted to approve the project. ⁴ The plaintiff obtained a zoning change and proceeded to develop the four acres into an elderly housing project known as Hart Meadow Village (Hart Meadow). The plaintiff planned to construct sixteen residential units, each with two bedrooms and equipped with range, refrigerator, air conditioning, carpeting, garbage disposal and master television antenna. Grounds maintenance, project lighting and on-site parking were also included in the plans. It was anticipated that the project would be administered by Church Homes, Inc., as a subsidiary of its Avery Heights project on New Britain Avenue in Hartford. It was also planned that a full range of recreational, support and health services would be provided for the project's occupants, including pastoral counseling provided by the church minister, support in arranging convalescent services, use of church facilities for cultural and recreational affairs and coordination of public and private transportation.

The plaintiff anticipated that 87 percent of the projected total cost of $1,212,483 would be funded by gifts, with the balance provided by a commercial loan to the church, which would hold title to all of the real estate. The "gifts" would consist of a one-time unrestricted payment of $73,000 by individual donors, each of whom would receive the privilege of occupying one housing unit as long as he or she was able to live there independently. The occupants would be charged a monthly maintenance fee of $350 per unit, ⁵ with the only other requirement being that one of the occupants be at least sixty-two years of age. There would be no lease or written contract concerning the occupancy other than a letter from the church specifying the occupant's right, privileges and commitments for the maintenance costs. When a unit was vacated, Church Homes, Inc., would choose another tenant, who would be able to occupy the unit under the same restrictions and subject to the same commitment to pay the maintenance fee but not the up-front charge of $73,000.

Six units had been completed and occupied at the time of trial and the remaining units were to be erected as the plaintiff received further donations for construction. At the hearing in the trial court, it was revealed that there had been discussions with town authorities about what would be done with the property if it were sold, but no understanding had ever been reached. The trial court found that "[i]t does not appear that any provision has been made for such a contingency or if the church ceases to function or decides to sell the property nor for any restriction against its sale." There is no restriction to occupancy by reason of race, creed, color or church membership. In fact, most of the current occupants are not members of the plaintiff church. The trial court found that "it is significant that there is no restriction or limitation whatsoever upon the extent of the wealth or income of anyone selected for occupancy of the units." The project is not limited to poor, sick, infirm or the low-income elderly. The trial court concluded that the lack of any financial qualification was of "critical significance" on the issue of charitable purpose.

After setting out the criteria for obtaining a tax exemption under General Statutes § 12-88, the trial court held that the plaintiff had failed to discharge its burden of proving that the property was used exclusively for charitable purposes. It pointed to the fact that there was nothing to indicate that (1) the project is not and will not be self-supporting, and (2) admission to those who can afford to pay for it will make it less likely that they would become burdens on society. ⁶ The Appellate Court affirmed the trial court decision. Although it recognized the modern trend of broadening the concept of charitable purpose as articulated in Camp Isabella Freedman of Connecticut, Inc. v. Canaan, 147 Conn. 510, 162 A.2d 700 (1960), the Appellate Court held that, in light of the fact that there are no limits on wealth or income and that initial tenants must pay a $73,000 up-front payment, "the claim that the plan is charitable is stretching the concept to the breaking point and beyond." United Church of Christ v. West Hartford, supra, 9 Conn.App. at 456, 519 A.2d 1217. The majority opinion also agreed with the trial court's conclusion that the church had not proven that the project is not and will not be self-supporting. Using the proper standard of whether the decision was clearly erroneous in light of the evidence and pleadings in the record as a whole; Practice Book § 4061; the Appellate Court held that the trial court could reasonably and logically conclude as it did. Id., at 459, 519 A.2d 1217.

On appeal, the plaintiff claims that, on the facts found by the trial court, it has sustained its burden of proving that the Hart Meadow project was being used exclusively for charitable purposes. We disagree.

Under our statutes, there are three requirements for a tax exemption. The property must belong to or be held in a trust for an organization exempt from taxation under the provisions of General Statutes § 12-81; it must be held for one of the purposes stated in that statute's list of exemptions; and it must produce no rent, profits or income. The trial court concluded that the plaintiff had failed to meet the exemption available in § 12-81(7) for property used exclusively for charitable purposes.

A general description of the burden of proving a tax exemption was aptly articulated in Faith Center, Inc. v. Hartford, 39 Conn.Sup. 142, 473 A.2d 342 (1982), aff'd, 192 Conn. 434, 472 A.2d 16, cert. denied, 469 U.S. 1018, 105 S.Ct. 432, 83 L.Ed.2d 359 (1984), an analysis cited with approval in the Appellate Court opinion. That court said: "Certain general principles of law govern cases such as the present ones where a party claims that property is exempt from taxation. ' "It is a settled rule of law that statutes which exempt from taxation are to be strictly construed against the party claiming an exemption." ' Crescent Beach Assn. v. East Lyme, 170 Conn. 66, 71, 363 A.2d 1045 (1976); Wiegand v. Heffernan, 170 Conn. 567, 582, 368 A.2d 103 (1976); Hartford Hospital v. Board of Tax Review, 158 Conn. 138, 147, 256 A.2d 234 (1969). 'Exemptions, no matter how meritorious, are of grace, and must be strictly construed. They embrace only what is strictly within their terms.' Hartford v. Hartford Theological Seminary, 66 Conn. 475, 482-83, 34 A. 483 (1895); Woodstock v. The Retreat, Inc., 125 Conn. 52, 56, 3 A.2d 232 (1938). As the Supreme Court noted in Snyder v. Newtown, 147 Conn. 374, 386, 161 A.2d 770 (1960), appeal dismissed, 365 U.S. 299, 81 S.Ct. 692, 5 L.Ed.2d 688 (1961): 'Exemption from taxation is the equivalent of an appropriation of public funds, because the burden of the tax is lifted from the back of the potential taxpayer who is exempted and shifted to the backs of others. Lyman v. Adorno, 133 Conn. 511, 516, 52 A.2d 702 [1947]. The owners of tax-exempt property in the community derive the same benefits from government as other property owners but pay no property taxes for those benefits.' "

"It is also well settled that the burden of proving entitlement to a claimed tax exemption rests upon the party claiming the exemption. Curly Construction Co. v. Darien, 147 Conn. 308, 160 A.2d 751 (1960); Burritt Mutual Savings Bank v. New Britain, 146 Conn. 669, 154 A.2d 608 (1959); Cooley Chevrolet Co. v. West Haven, 146 Conn. 165, ...