Westminster Gerontology Foundation, Inc. v. State Tax Commission

• Decision Date: 14 April 1975
• Docket Number: Nos. 58413,58414,No. 1,s. 58413,1
• Citation: 522 S.W.2d 754
• Parties: WESTMINSTER GERONTOLOGY FOUNDATION, INC., Appellant, v. STATE TAX COMMISSION, Respondent. JOHN CALVIN MANOR, INC., Appellant, v. STATE TAX COMMISSION, Respondent
• Court: Missouri Supreme Court

Page 754

522 S.W.2d 754

WESTMINSTER GERONTOLOGY FOUNDATION, INC., Appellant, v. STATE TAX COMMISSION, Respondent.

JOHN CALVIN MANOR, INC., Appellant, v. STATE TAX COMMISSION, Respondent.

Nos. 58413, 58414.

Supreme Court of Missouri, Division No. 1.

April 14, 1975.

Motion for Rehearing or to Transfer to Court En Banc Denied

May 12, 1975.

Charles L. Bacon, Shook, Hardy & Bacon, Kansas City, Eugene T. Hackler and Robert C. Londerholm, Hackler, Londerholm, Speer, Vader & Austin, Olathe, Kan., for appellants.

Stanley Christopher, Jackson County Counselor, Leland Shurin, Special County Counselor, Kansas City, for respondent.

WELBORN, Commissioner.

Consolidated appeals in proceedings for review of denial by State Tax Commission of exemption from taxation of property devoted to housing and care of older persons. Circuit court affirmed decision of Commission. Taxpayers appeal.

Westminster Gerontology Foundation, Inc., was organized under the Missouri Not For Profit Corporation Law in 1964. It was formed by the Northwest Missouri Presbytery of the Presbyterian Church as an agency to assist in meeting the needs of the aging. The members of the Presbytery are the members of Westminster.

The first project undertaken by Westminster was the construction and operation of John Calvin Manor, located in Lee's Summit, Missouri. A separate not-for-profit corporation, John Calvin Manor, Inc., was formed to take title to the property, on which residential units were constructed under § 202 of the Federal Housing Act, which makes available a 3% 50-year loan to an acceptable sponsor to provide low-cost housing for low-income elderly. The Presbyterian Church contributed $25,000 to help start the project. $40,000 was paid for the land and $975,681 for construction of the building which provides 100 residential units. The building was built in 1969. Residents must be at least 62 years old. Income limits for residents in John Calvin Manor are: $4,500 for a single elderly person; $5,400 combined income for two elderly persons; and $6,600 for two unrelated elderly persons sharing an apartment.

Taxes on this property based upon the assessment by Jackson County for the year 1970 were the subject of a recent decision by this court in the case of John Calvin Manor, Inc. v. Aylward et al., 517 S.W.2d 59, decided December 16, 1974. That case involved the reduction of a $225,500 assessed valuation to $500 because of lack of proper notice of the increase. In 1971, the property was again assessed at $225,500. The taxpayers made a claim of exemption before the Jackson County Board of Equalization, which denied the claim. On appeal to the State Tax Commission, that body, after a hearing, affirmed the denial of relief. The Jackson County Circuit Court affirmed the ruling of the Commission. That judgment is the subject of the appeal by John Calvin Manor, Inc. in Cause No. 58,414.

A second project of the Westminster Foundation involves the Vista Del Rio apartment building, located in Kansas City. That building is a 20-story building containing 239 residence units of varying sizes. It was built in 1966 by the Kansas City Education Association to provide housing for retired teachers. It was financed by a $4,310,000 loan under § 231 of the Federal Housing Act. The Kansas City Education Association operation was not successful and in 1968 an agreement was entered into by which Westminster took over the project. Westminster caused a Missouri not-for-profit corporation, Vista Del Rio, Inc., to be formed for operation of the project. The minimum age for residents at Vista Del Rio is 65 years. Residents of Vista Del Rio pay an entrance fee, ranging between $8,480 to $19,393, depending upon the size and location of the apartment provided, plus a monthly service charge ranging between $134 and $234 per month. The residents occupy their apartments under a life care contract, which provides for a lifetime occupancy in the home, various stipulated services, medical-related assistance and participation in various activities and programs of the house.

In 1970, the property was assessed for tax purposes at $500. In 1971, the assessment increased to $800,000. Westminster sought exemption of the property. The Jackson County Board of Equalization denied the exemption. The State Tax Commission affirmed such denial. The Jackson County Circuit Court affirmed the order of the Commission. Appeal from that judgment is the subject of Cause No. 58,413.

In both instances, the taxpayer claimed relief on the grounds that the property was used for religious and purely charitable purposes within the meaning of § 6, Art. X, Const. of Mo., V.A.M.S., and § 137.100, RSMo 1969, V.A.M.S. The tax commission denied the claims on both grounds. The appeals here are premised on the claim that the property is 'used exclusively * * * for purposes purely charitable,' within the meaning of the constitutional and statutory provisions.

The question of exemption from taxation of property of nonprofit corporations providing residential facilities and accompanying services for older persons has been before the courts frequently in recent years. This court considered the question in the cases of Defenders' Townhouse, Inc. v. Kansas City, 441 S.W.2d 365 (Mo.1969), and Paraclete Manor of Kansas City v. State Tax Commission, 447 S.W.2d 311 (Mo.1969). The tax commission relied largely upon Defenders' Townhouse in denying the claimed exemptions in these cases.

Turning first to Vista Del Rio, appellant would distinguish that operation from those involved in Defenders' Townhouse and Paraclete Manor on the grounds that the facilities there involved 'were essentially mere housing for the elderly, with little else provided in the overall program for health care and health maintenance.' Vista Del Rio, appellant asserts, involves 'a modern home for the aged operating under a life care concept' with 'a heavy religious emphasis maintained throughout the operation.'

Among the findings of the tax commission was: 'Vista is committed to care for its people the remainder of their lives.' Appellant points out the emphasis on medical care and health maintenance which the Vista program provides. An eight-bed infirmary is located in the building. Specialized medical care in the infirmary is provided for in the occupancy agreement for up to 10 days each year at no extra charge. In actual operation, no charge has been made persons requiring more than 10 days infirmary care in a year.

Vista Del Rio has two registered nurses, five licensed practical nurses and five nurses' aides, working various shifts. A registered nurse resides at the facility and is on call at all times. The nursing staff serves all residents of the facility. They assist patients in the infirmary and also in the apartments when they are ill or physically handicapped. Medication is distributed to infirmary patients and to residents of apartments who are unable to follow directions for medication. Practical nurses check residents in their apartments who are ill with minor problems. The registered nurses observe and evaluate the health care of the residents; make daily reports to the administrator and weekly reports to a staff physician who makes regular weekly visits during which he normally sees between 15 and 25 residents per visit. The physician also examines patients in the infirmary.

The facility provides two meals per day for the residents. One is a basic meal, designed to provide essential nutritional needs, which all residents who are physically able are required to take in the dining room. The cost of the meals is included in the regular monthly charge. Residents requiring special diets are provided such diets.

Operation of Vista Del Rio includes various social activities for residents, including movies, card parties, fellowship gatherings and social gatherings. Shopping tours are provided, as well as tours to points of interest within and beyond the city.

The Executive Director of Westminster is a minister with 27 years' experience as a parish minister. He serves as Chaplain for the residents. Regular religious services are conducted in the home by area ministers and transportation is provided to area churches of the resident's choice. Admission to the home is not related to religious preference. In 1971, the residents represented 13 different religious denominations.

Vista Del Rio is not a nursing home. A physician examination is required for all applicants for residence. Admission is limited to persons in reasonably good health who are able to look after themselves in their own apartments. Residents who become unable to care for themselves by reason of infirmities are cared for in their apartments. When the need for nursing home care arises, persons are transferred to nursing homes not operated by Vista. Vista has borne the cost of such cases, although its occupancy agreement does not require it to do so.

Occupants assign their Medicare and private hospitalization insurance to Vista. Vista does provide outside hospital care at no extra charge.

There would appear to be little room for argument that a facility such as Vista does fulfill an important social need. A combination of circumstances has caused attention to be focused on the needs of the elderly. There can be no doubt that providing them with comfortable housing in pleasant surroundings and providing them with counseling, a program of social activities and health facilities and care is beneficial not only to the persons for whom such services are provided, but also to society in general.

However, for purposes of exemption from taxation, attention must be directed not only to the objects of an organization seeking exemption, but also to the means by which such objects are to be accomplished, particularly from an economic point of view.

Some reference has previously been made to the mode of financing Vista's operations--the entrance fees and monthly service charges....