Opinion
No. 1-793 / 01-0012.
Filed April 10, 2002.
Appeal from the Iowa District Court for Wapello County, RICHARD J. VOGEL, Judge.
Petitioner appeals from a district court ruling that affirmed a decision of the Wapello County Board of Review to deny its claim for a property tax exemption under Iowa Code section 427.1(8) (1999). AFFIRMED.
David Dutton and Carolyn A. Rafferty of Dutton, Braun, Staack Helman, P.L.C., Waterloo, for appellant.
Frank W. Pechacek, Jr., Michael J. Davenport, and Brett Ryan of Willson Pechacek, P.L.C., Council Bluffs, and Victoria Siegel, County Attorney, for appellee.
Considered by VOGEL, P.J., and MILLER and EISENHAUER, JJ.
Regional Retirement Living, Inc., Pennsylvania Place, d/b/a Sylvan Woods appeals the district court's ruling that it is not a charitable institution and therefore subject to taxation. We affirm.
I. Background Proceedings . Sylvan Woods is an assisted living facility operated by Regional Retirement Living, Inc. (RRL). On April 26, 1999, RRL filed a claim for a tax exemption for Sylvan Woods under Iowa Code section 427.1(8) (1999). The Wapello County Assessor denied the exemption and the property was placed on the tax rolls and assessed at $1,461,377. After a protest, the Board of Review for Wapello County denied the claim. On April 12, 2000, RRL filed another claim for exemption for the tax year 2000. It was similarly denied. Appeal was taken to the district court and the claims for 1999 and 2000 were combined for trial. The district court affirmed the decisions of the assessor and the board of review. RRL appealed.
II. Facts . The Ottumwa Regional Health Foundation is the philanthropic arm of a healthcare system that includes Regional Ventures, Inc., a nonprofit holding company; Ottumwa Regional Health Center, a nonprofit hospital; Ottumwa Regional Health Foundation, a nonprofit corporation; Regional Enterprises, Inc., a for-profit corporation; and Regional Retirement Living, Inc., the appellant in this action. In 1988, RRL was incorporated as a nonprofit corporation and qualified as a "charitable, educational, religious or scientific" organization under the Internal Revenue Code.
The Ottumwa Regional Health Foundation donated 18.5 acres of land to RRL. From 1995 to 1997, RRL built Pennsylvania Place, independent living units, Sylvan Woods, assisted living units, and Vista Woods Care Center, a nursing home on the land. Sylvan Woods opened in June 1996. As its name and location suggests, Sylvan Woods provides a level of care between independent living and nursing home. In its own words in its application for certification as an assisted living program under Iowa Code Chapter 231C, "[p]rospective residents . . . are those who: do not require more than part-time or intermittent health-related care. . . ." Residents of Sylvan Woods are guaranteed priority admission to Vista Woods when they need nursing home level care.
Residents of Sylvan Woods must be at least sixty-two (62) years old. The staff is hired with a view to assisting the residents maintain a level of independence. They include: registered nurses, licensed practical nurses, certified medication aides, certified nurses' aides, an activities director, a dietary supervisor, and a driver. It has thirty-four (34) living units; sixteen (16) "alcoves," and eighteen (18) one-bedroom apartments. All thirty-four (34) units are occupied and there is a waiting list. In 2000, the alcoves rented for $71 a day and the apartments for $77 a day. A second person in either unit is $27 a day. The rental fee covers the room, dining services, housekeeping services, laundry services, and maintenance. The Sylvan Woods Care Fund was created to assist those who cannot afford the monthly rent. The fund was established on September 3, 1998. At the time of trial, the fund contained approximately $60,000. Of this, $27,000 is borrowed money.
Admission to Sylvan Woods requires a $1,000 reservation fee. If the applicant moves in, the $1,000 is kept as a security deposit. The fee is returned to the applicant if not admitted.
III. Scope of Review . Iowa Code section 441.39 (1999) provides in part:
The court shall hear the appeal in equity and determine anew all questions arising before the board that relate to the liability of the property to assessment or the amount thereof. The court shall consider all of the evidence and there shall be no presumption as to the correctness of the valuation of assessment appealed from.
We, therefore, review tax assessment cases de novo. Iowa R. App. P. 6.4. We give weight to the fact-findings of the trial court, especially when considering the credibility of witnesses, but are not bound by them. Iowa R. App. P. 6.14(6)( g). We look at the decision of the Board of Review rather than the decision of the district court. Mayflower Homes v. Wapello County Bd. Of Review, 472 N.W.2d 632, 634 (Iowa Ct.App. 1991).
Formerly known as Rule 4.
Formerly known as Rule 14(f)(7).
We strictly construe the statutes exempting property from taxation. Atrium Vill. v. Bd. of Review, 417 N.W.2d 70, 72 (Iowa 1987). Any doubt concerning an exemption must be resolved in favor of taxation. Id. The burden of proof is on the party claiming the exemption to show the property should not be taxed. Id.
IV. Analysis . Iowa Code section 427.1(8) states the classes of property which are exempt from taxes and provides in pertinent part:
The following classes of property shall not be taxed: Property of religious, literary and charitable societies. All grounds and buildings used . . . by . . . charitable, benevolent . . . institutions and societies solely for their appropriate objects, . . . not leased or otherwise used . . . with a view to pecuniary profit.
As such, there are three requirements RRL must meet in order to gain tax-exempt status for Sylvan Woods. First, the property must be used by a charitable, benevolent or religious institution or society. Iowa Code § 427.1(8).
The second requirement narrows the kind of use which qualifies property for exemption: the use by charitable [and other listed types of] institutions and societies must be " solely for their appropriate objects." (Emphasis added.) Third, the property must not be used or leased "with a view to pecuniary profit."
Holy Spirit Ret. Home, Inc. v. Bd. of Review, 543 N.W.2d 907, 910 (Iowa Ct. App. 1995) ( citing St. Ambrose Univ. v. Bd. of Review, 503 N.W.2d 406, 407 (Iowa 1993)). It is the second and third requirements that are in dispute.
RRL points to several factors to support its position that Sylvan Woods is used solely for charitable objects and not for profit. They include the existence and use of the care fund for needy residents, a higher level of care than other nursing homes, its level of support from volunteers and charitable contributions, and its failure to make a profit.
Sylvan Woods is part of a single site operation. It provides part of a continuum of care for the elderly. The test for property tax exemption for a single site operation turns on the "actual use" of the property. Carroll Area Child Care Ctr., Inc. v. Carroll County Bd. of Review, 613 N.W.2d 252, 255 (Iowa 2000). Our courts have suggested factors to determine whether the actual use of the property is charitable. They include: (1) whether the property is actually used to provide care to the needy, (2) the financial policies regarding provision of services, (3) the institution's policies regarding the payment of fees, (4) whether there exists and people are informed of a separate and established fund to help pay fees, (5) whether the facility relieves a burden of government, (6) how fees are determined and whether they are above or below cost, and (7) whether donations make up a significant portion of the operation of the facility and whether this results in a reduction of the payments each individual using the facility is required to make. See Friendship Haven, Inc. v. Webster County Bd. of Review, 542 N.W.2d 837, 841 (Iowa 1996); Holy Spirit Ret. Home, Inc., 543 N.W.2d at 911; Mayflower Homes, Inc., 472 N.W.2d at 634; Atrium Vill. 417 N.W.2d at 73; Iowa Lakes Found. v. Bd. of Review, 387 N.W.2d 377, 378 (Iowa Ct.App. 1986); Dow City Senior Citizens Hous. v. Bd. of Review, 230 N.W.2d 497, 499 (Iowa 1975).
Sylvan Woods' stated purpose is to provide housing and care for the elderly. It charges a monthly rent and all residents pay the full price, except for three who receive a partial subsidy. Residents who wish additional services, such as additional housekeeping, pay an additional charge. Although it has created a care fund to subsidize needy residents, only three residents require a subsidy. The total subsidy provided to all three is $1800 per month. The residents of Sylvan Woods do not have a need for charity. They are capable of paying the full price to rent a unit. While it is not fair to compare monthly rent at Sylvan Woods with apartment rent, it is clear that the monthly rental is designed to cover the costs of operating the facility.
Evidence was presented that Sylvan Woods charges less than some other assisted care facilities; however, how much less was never stated. We conclude that, generally, Sylvan Woods operates as any other business, attempting to cover its costs and profit with the price of its product. Although it has not made a profit to date, it has had the aid and resources of its affiliated corporate entities. It has also had the aid of volunteers who have helped with many of the activities of the residents. There is no doubt Sylvan Woods has been well received in the Ottumwa community. None of this, however, entitles it to tax-exempt status.
The trial court noted the difficulty in discerning the relationship of the corporate entities related to RRL. Sylvan Woods is the middle stop in a continuum of care. The complex was in existence for only four years at the time of trial. Any attempt to decide how many subsidized residents Sylvan Woods will have in the future is speculation. Because of the relationship of the entities, it is likely some residents of Pennsylvania House will make the move to Sylvan Woods. These residents make substantial deposits when entering Pennsylvania House. This further indicates the residents of Sylvan Woods are not indigent or in need of charity.
RRL has failed to prove its case. The assessor, the board of review, and the district court found it is operated with a view to profit and that it does not operate solely for the objects of the institution or society. We agree.
AFFIRMED.