Opinion
August 17, 1999
4 Assessors 119 Taxation — Exemptions, General 129 Taxation — Levy Assessment (ad valorem taxes) 150 Payment, release or compromise Article VII, Section 18 (D) and (E) of the 1974 Louisiana Constitution Article VII, Section 21(B)( 1)(a) Article VII, Section 24(B) R.S. 47:1957(A), 1989, 1992(F)(1)-(4) and 1998
General discussion of the responsibility for granting ad valorem tax exemptions and the procedures to be followed relating to the review of same.
Honorable Thomas L. Arnold, C.L.A. Assessor Fifth District — Orleans Parish Algiers Office, Suite 104 Algiers Court House 225 Morgan Street New Orleans, LA 70114
Dear Mr. Arnold:
You have requested an opinion of the Attorney General regarding the process for determining whether a nonprofit organization is entitled to the exemption from ad valorem taxes provided in Article VII, Section 21 of the Louisiana Constitution of 1974. You specifically ask who has the authority to determine whether or not an exemption should be granted.
In answer to your question, we refer you to Article VII, Section 24 of the Louisiana Constitution. It provides, in pertinent part, the following:
§ 24. Tax Assessors
* * *
(B) Orleans Parish. There shall be seven assessors in New Orleans, who shall comprise the Board of Assessors for Orleans Parish. Their duties and compensation shall be as provided by law.
We also refer you to Article VII, Section 18(D) which provides as follows:
§ 18. Ad Valorem Taxes
* * *
(D) Valuation. Each assessor shall determine the fair market value of all property subject to taxation within his respective parish or district except public service properties, which shall be valued at fair market value by the Louisiana Tax Commission or its successor. Each assessor shall determine the use value of property which is to be so assessed under the provisions of Paragraph (C). Fair market value and use value of property shall be determined in accordance with criteria which shall be established by law and which shall apply uniformly throughout the state.
The statutory provision relative to the listing and assessing of property is found at R.S. 47:1957(A). It provides, in pertinent part, as follows:
A. All taxable property in the state, except public service properties, shall be assessed by the several assessors. The assessors shall be responsible, under the supervision of the tax commission, for listing and assessing all property within their respective parishes, except such property as is subject to direct assessment by the tax commission.
This office has consistently opined that the authority to determine whether a particular taxpayer may be exempt from the payment of ad valorem taxes is a factual determination exclusively reserved by the Louisiana Constitution and state law to the assessor, the Louisiana Tax Commission (Commission) and, ultimately, the courts. Attorney General Opinion Nos. 98-489, 98-65, 97-211, 96-438, 95-223 and 93-632. In other words, inherent in the assessor's duties of listing and assessing taxable properties within his jurisdiction, is the authority to determine whether such properties are tax exempt. This determination will depend upon the information submitted by the taxpayer, and whether that information meets the criteria for exemptions set forth in Article VII, Section 21.
Your specific inquiry relates to religious and other nonprofit organizations. The tax exempt status of such organizations is controlled by Article VII, Section 21(B)(1)(a) which provides the following:
§ 21. Other Property Exemptions
Section 21. In addition to the homestead exemption provided for in Section 20 of this Article, the following property and no other shall be exempt from ad valorem taxation:
* * *
(B)(1)(a) Property owned by a nonprofit corporation or association organized and operated exclusively for religious, dedicated places of burial, charitable, health, welfare, fraternal, or educational purposes, no part of the net earnings of which inure to the benefit of any private shareholder or member thereof and which is declared to be exempt from federal or state income tax; and
(b) property leased to such a nonprofit corporation or association for use solely as housing for homeless persons, as defined by regulation adopted by the tax commission or its successor.
* * *
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation or association.
In interpreting the above provision, we have consistently held that in order to qualify for an exemption under § 21(B)(1)(a), the property must meet all four requirements set forth therein, to wit:
1. The organization must be a nonprofit corporation or association organized exclusively for one of the designated purposes;
2. No part of the net earnings inure to the benefit of any stockholder or member of the organization;
3. Said nonprofit corporation or association must be exempt from federal or state income tax; and
4. None of the property of the nonprofit corporation or association is owned, operated, leased or used for commercial purposes unrelated to the exempt purposes of the corporation or association.
See Attorney General Opinion Nos. 97-211, 96-438, 95-223, 95-60 and 93-488.
Thus, it is your responsibility as assessor to examine the information necessary in making your decision to exempt or not exempt the property from taxation. In making this determination, you should note that the jurisprudence of this state has consistently held that constitutional and statutory grants of exemptions from taxation must be strictly construed in favor of the taxing body and against the taxpayer desiring the exemption. Any possible doubt is fatal. Further, an exemption, constituting an exceptional privilege, must be clearly, unequivocally and affirmatively established. Zapata Haney Corp. v. Larpenter, 583 So.2d 867 (La.App. 1st Cir. 1991), writ denied.
We also bring to your attention the ruling in the case of Hotel Dieu v. Williams, 410 So.2d 1111 (La. 1982). Therein, the Louisiana Supreme Court held that property belonging to a nonprofit hospital and leased to a nonprofit corporation for operation of a restaurant, offices and a parking garage was tax exempt. The Court found that the space in the office building, except for a restaurant, was leased only for medical purposes to tenants who had some connexity to the hospital and that the restaurant was a necessary eating facility for physicians, staff members, patients and their families. While the parking lot was open to the public, the Court found that its customers were primarily those with business at the hospital or the medical office building. The net revenues from the office building and parking garage reverted to the hospital for hospital activities and the treatment of indigent persons. Thus, the nonprofit organization was deemed to be the alter ego of the hospital, and while the property was used for commercial purposes, said purposes were directly related to the exempt purposes of the nonprofit corporation. Given this connexity, the adjacent properties were afforded tax exempt status.
After considering the data submitted in connection with your consideration of the criteria necessary for tax exemption, and guided by the opinions of our judiciary as explained above, you must then decide whether you will list and assess the property in question. In the event you determine that the property is not tax exempt, the property should be assessed and listed on the tax rolls.
As you are aware, R.S. 47:1992(F)(1) requires you to give notice that the assessment list will be exposed for inspection by members of the general public. Section 1992(F)(2)-(4) sets forth the procedures to be followed by taxpayers for the filing of written complaints to the Board of Review for the Parish of Orleans (Board). After due consideration, the Board may increase or decrease the contested assessments. All determinations by the Board are final unless appealed to the Commission in accordance with rules and regulations established thereby.
Article VII, Section 18(E) provides:
(E) Review. The correctness of assessments by the assessor shall be subject to review first by the parish governing authority, then by the Louisiana Tax Commission or its successor, and finally by the courts, all in accordance with procedures established by law.
R.S. 47:1989 provides, in pertinent part, with respect to the appeals of tax-payers to the Commission:
§ 1989. Review of appeals by tax commission
A. Within ten days of receipt of the assessment lists as certified by the local board of review, the tax commission shall conduct public hearings to hear appeals of taxpayers, bona fide representatives of an affected tax-recipient body or assessors from the action of the board of review.
B. The tax commission shall consider the appeal of any taxpayer, bona fide representative of an affected tax-recipient body, or assessor dissatisfied with the determination of the local board of review and may affirm, reverse or modify the contested determination of that board of review.
C. All such hearings shall be conducted in accordance with rules and regulations established by the tax commission.
D. All decisions of the tax commission are final unless appealed to the district court within thirty days.
As can be gleaned from the above, both the assessor and the affected tax-recipient body are entitled to representation at hearings before the Commission. Further, R.S. 47:1989.1 provides for the reimbursement of expenses to the assessor in the defense of an assessment. It provides, in pertinent part, the following:
§ 1989.1. Appeals; assessor; reimbursement of expenses
A. When in the performance of his duty, an assessor must defend an assessment before the tax commission, and the tax commission upholds the valuation of the assessor within ten percent of said valuation, each affected tax recipient body shall reimburse the assessor on a pro rata basis for the amount of the expense involved in defending the assessment.
* * *
C. Should appeal be made to the courts, the same pro rata reimbursement shall apply to those expenses.
R.S. 47:1998 provides for the judicial review of decisions of the Commission by the district court of the parish where the Commission is domiciled. Paragraph (C) authorizes the assessor to bring suit, when necessary, to protect the interest of the state, including the right of appeal, and such proceedings shall be without cost to the assessor or the state.
As can be gleaned from the above, initially, it is the duty and responsibility of the assessor to determine whether sufficient data exists to render tax exempt, properties owned and/or leased by a nonprofit organization. This determination is subject to review by the local board of review, the Commission and the district court. The assessor is entitled to defend his position before the board of review, the Commission and the court. A final judgment of the district court would be binding on all parties involved.
I am attaching copies of the following Attorney General Opinions which will hopefully be of assistance to you in carrying out your constitutional and statutory duties: 97-422, 97-211, 95-223, 95-60, 93-632, 93-488, 92-740, 87-440, 86-529, 86-49, 80-219, 79-861 and 76-114.
I trust this adequately responds to your inquiry, however, in the event you have any additional questions, please do not hesitate to contact us.
With kindest regards, I am
Very truly yours,
RICHARD P. IEYOUB ATTORNEY GENERAL
By: ROBERT E. HARROUN, III Assistant Attorney General
RPI/Rob3/sfj
OPINION NUMBER 97-422
December 23, 1997
119 Taxation — Exemptions general 148 Taxation — Property taxes Art. VII, Sec. 21, LA. Const.
Property of a religious order would be exempt if it is being leased to Mr. Erroll G. Williams accommodate a religious related Assessor, 3rd Municipal entity and not simply being leased District on the general real estate market 4301 City Hall for commercial gain without New Orleans, LA 70112 restricting the use of the lessee.
Dear Mr. Williams:
This office is in receipt of your request for an opinion of the Attorney General in regard to exemption of property owned by a religious order. You indicate it had been the practice to exempt residences acquired by religious organizations under the provisions of the 1921 Constitution, but you note there was wording changes under the pertinent provision in the 1974 Constitution. Accordingly, you ask if residential property is acquired by a religious order, is it exempt or taxable as residential property under the 1974 constitution.
As you observe in Hotel Dieu v. Williams, 403 So.2d 1255 (La.App 1981) the court noted that the 1974 Constitution's system of exempting property was a change from the 1921 Constitution, pointing out the 1921 language granted property exemption to specified properties whereas the 1974 Constitution grants the exemption to property on the basis of the character of the owners.
Article VII, Section 21, La. Const, 1974 provides in part that in addition to the homestead exemption, the specified property and no other would. be exempt from ad valorem taxation, and states as an exemption in B(1)(a) as follows:
Property owned by a nonprofit corporation or association organized and operated exclusively for religious, dedicated places of burial, charitable, health, welfare, fraternal, or educational purposes, no part of the net earning of which inure to the benefit of any private shareholder or member thereof and which is declared exempt from federal or state income tax;
In Hotel Dieu v. Williams, 410 So.2d 1111 (La. 1982), the Louisiana Supreme Court found that an adjacent office building housing mostly physicians and a parking garage operated by a nonprofit corporation was exempt from ad valorem taxes inasmuch as the property was being used for purposes related to the exempt purpose of the non-profit hospital.
On Oct. 1, 1997 in Board of Administrators of the Tulane Education Fund v. Louisiana Tax Commission, the Court of Appeal for the Fourth Circuit, citing the Hotel Dieu case, stated it had been determined that Section 21 (B) of the 1974 Constitution granted an exemption from ad valorem taxation of all property owned by a qualifying non-profit entity unless the property was used for unrelated commercial purposes. With reference to the transcript of the Constitutional Convention, the court states the discussions demonstrate only the delegates' intent to limit a non-profit entity's ability to engage in business activity in competition with for-profit enterprises. The court finds the excerpts of the transcript "establish that it was not mere ownership of property by a non-profit association that was to be discouraged, but that property's usage in a business enterprise,such as a parking garage, an office building, or a television station." (Emphasis added.) In the Tulane Education Fund case the court held because the vacant undeveloped land inherited by the non-profit educational association and being held in hope of appreciation "is not being used for any "commercial" purpose, it is not excluded from the general tax exemption of Section 21 (B)(1)(a). Application for writs in this case is presently pending in the Louisiana Supreme Court, Docket No. 97 C 2745.
Consequently, the jurisprudence indicates a two prong test may be necessary for it must be determined if the property is being used for a "commercial" purpose, and, if so, is the commercial purpose related to the exempt purpose of the non-profit association.
To determine if property is being used for a commercial purpose should not be a difficult question, but a more difficult question would be to determine if that purpose is related to the exempt status of the property owner. Thus, from the jurisprudence it seems that a parking garage adjacent to a hospital is a commercial enterprise, but since its purpose is related to the existence of the exempt hospital, it would be exempt from ad valorem tax. However, a parking garage owned by a nonprofit exempt entity in an area unrelated to the function of the non-profit association would not be tax exempt.
Consequently, by following the reasoning of these cases in answer to your question if residential property acquired by a religious order is exempt under the 1974 constitution, we must conclude that property of a non-profit association would be exempt if it is being leased to accommodate a religious related entity and not simply being leased on the general real estate market as other property for commercial gain without restricting the use to which the lessee would utilize the residence.
You state you are confused by the vagueness of the term "religious purpose" but as can be seen this is a factual question that will have to be determined on a case by case basis.
We hope this sufficiently answers your question, but if we can be of further assistance, do not hesitate to contact us.
Sincerely yours,
RICHARD P. IEYOUB Attorney General
By: BARBARA B. RUTLEDGE Assistant Attorney General
BBR
OPINION NUMBER 97-211
July 28, 1997
4: Assessors 119: Taxation: General 119: Taxation: Exemptions 129: Taxation: Ad Valorem Taxes 148: Taxation: Property Taxes Article VII, Section 21(B)(1)(a)
Honorable Bryan D. LeJeune Property owned by a non-profit Assessor, Jefferson Davis corporation may be exempt from Parish ad valorem taxes if it meets the Room 103 Courthouse criteria found in Article VII, Jennings, LA 70546 Section 21(B)
Dear Mr. LeJeune:
You have requested an opinion of the Attorney General regarding the ad valorem tax exempt status of diagnostic equipment owned by Jefferson Davis Diagnostic Center (the "Center"), a 501 (C)(3) non-profit corporation.
This office has consistently observed that we do not possess the authority to make a decision as to whether any particular taxpayer is exempt from the payment of ad valorem taxes, since this decision is based primarily upon a factual determination. Rather, we perceive our function as that of offering advice on the applicable law which then can be applied to the particular factual scenario at hand. Thus, it is the duty of the assessing authorities, particularly the Louisiana Tax Commission (the "Commission"), to make, subject to judicial review, determinations as to tax exemptions. See Attorney General Opinion Nos. 96-60, 93-632, 93-488 and 86-529.
The jurisprudence of this state has consistently held that constitutional and statutory grants of exemption from taxation must be strictly construed. See Ruston Hospital v. Riser, 191 So.2d 665 (La.App. 2d Cir. 1966). Also, in Mattingly v. Vial, 193 La. 1, 190 So. 313 (1939) our Supreme Court held:
"There is no principal of interpretation more firmly and uniformly established by the jurisprudence of this and other States than the unbroken rule that exemptions from taxation are to be strictly construed against the person claiming the exemption and that any plausible doubt is fatal."
We find that your determination of the tax exempt status of the Center is controlled by Article VII, § 21 (B)(1)(a) which provides the following:
"In addition to the homestead exemption provided for in Section 20 of this Article, the following property and no other shall be exempt from ad valorem taxation: * * *
(B)(1)(a) Property owned by a nonprofit corporation . . . organized and operated exclusively for . . . charitable, health, . . . purposes, no part of the net earnings of which inure to the benefit of any private shareholder or member thereof and which is declared to be exempt from federal or state income tax; and
* * *
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation . . ."
In interpreting the above provision, we have consistently held that in order to qualify for an exemption under § 21 (B)(1)(a), the property must meet all four of the basic requirements set forth therein, to-wit:
1. The organization must be a nonprofit corporation or association organized exclusively for one of the designated purposes;
2. No part of the net earnings inure to the benefit of any stockholder or member thereof;
3. Said nonprofit corporation or association must be exempt from federal or state income tax;
4. None of the property of the nonprofit corporation or association is owned, operated, leased or used for commercial purposes unrelated to the exempt purposes of the corporation or association.
See Attorney General Opinion Nos. 88-312, 91-298, 93-488, 93-632 and 95-60.
This office has opined that, should the assessing authorities determine that a nonprofit corporation's or association's operations, with respect to the property in question, satisfy the aforementioned requirements, exemption from ad valorem taxes is appropriate. Conversely, should the facts, as determined by the assessing authorities reflect noncompliance, the property may only be partially or totally non-exempt. Again, it is the responsibility of the Assessor, subject to review by the Commission and/or judiciary, to make the factual determination as to whether the above requirements have been met.
In making the above determination, you may examine the actual activities of the organization in question, the use of the property under consideration and the purpose clause in the Center's Charter and/or Articles of Incorporation. Further, you may employ the traditional test developed by the judiciary — i.e., it is the use of the property and not the nature and purpose of the corporation which constitutes the right to a tax exemption. Faust v. Mitchell Energy Corp., 437 So.2d 339 (La.App. 2d Cir. 1983) and State v. Anderson, 116 So.2d 80 (La.App. 1st Cir. 1959).
We also bring to your attention the ruling in the case of Hotel Dieu, et al. v. Williams, et al., 410 So.2d 1111 (La. 1982). Therein, the Louisiana Supreme Court held that property belonging to a nonprofit hospital and leased to a nonprofit corporation for operation of a restaurant, offices and a parking garage was tax exempt. The Court found that the space in the office building, except for a restaurant, was leased only for medical purposes to tenants who had some connexity to the hospital and that the restaurant was a necessary eating facility for physicians, staff members, patients and their families. While the parking lot was open to the public, the Court found that its customers were primarily those with business at the hospital or the medical office building. The net revenues from the office building and parking garage reverted to the hospital for hospital activities and the treatment of indigent persons. Thus, the non-profit corporation was deemed to be the alter ego of the hospital, and while the property was used for commercial purposes, said purposes were directly related to the exempt purposes of the non-profit corporation. Given this connexity, the adjacent properties were afforded tax exempt status.
The enunciation in its Charter of the purposes of the corporation is not controlling in deciding whether it is exempt from taxation. The question of exemption is determined by the real nature of the corporation's acts and business. Shreveport Surburban Ry Co. v. Hollingsworth, 131 La. 105, 59 So. 30 (1912).
Finally, we note that your letter to this office represents a copy of the original opinion request you directed to the Commission. Regarding any opinion that may issue from the Commission, we draw your attention to the fundamental judicial maxim that the construction of a statute or constitutional provision by those charged with its administration ( i.e., the Commission) must be given substantial weight. Cooper Stevedoring Company, Inc. v. Secretary of the Louisiana Department of Revenue and Taxation, 555 So.2d 32 (La.App. 1st Cir. 1989).
In summary, should you find, using the above guidelines, that the corporation and/or the property thereof meets the criteria set forth hereinabove, then it should be considered exempt for ad valorem tax purposes. However, should the property, in question, fail to meet these criteria, then it would be subject to ad valorem taxation. Under the rules of contemporaneous construction, as set out in the Cooper Stevedoring case, you may find assistance through opinions issued by the Louisiana Tax Commission on this subject matter.
Trusting this adequately responds to your inquiry, I am
Very truly yours,
RICHARD P. IEYOUB ATTORNEY GENERAL
By: ROBERT E. HARROUN, III Assistant Attorney General
RPI/Rob3/cla
OPINION NUMBER 95-223
June 20, 1995
4 Assessors 119 Taxation — Property Taxes — Liability of Persons and Property La. Const. Art. VII, Sec. 21(B)( 1)(a)
Hon. Patricia Schwarz Core Assessor Discussion of the criteria St. Tammany Parish Courthouse considered regarding the ad P.O. Drawer 3200 valorem tax status of property Covington, LA 70434 owned by Catholic Faith in Action.
Dear Ms. Core:
You have requested the opinion of this office regarding the ad valorem tax status of property owned by Catholic Faith in Action ("CFA"), an organization which owns property in St. Tammany Parish.
According to your correspondence, CFA, through Mr. Robert and Mrs. Penny Lord, have requested a tax exemption as a non-profit corporation for religious purposes of property (the "Property") located at 112 Monticello Court, Pearl River, in St. Tammany Parish. You have advised that the Lords reside at the property, as well as conduct operations for the reproduction of videos and/or books (the subject matter of which is religious) which videos and/or books are sold and distributed worldwide. You further advised that the Lords are "not organized or affiliated with any church, neither directly or indirectly". Furthermore, you have been advised by the Catholic Diocese of New Orleans that CFA "is not listed in the National Catholic Directory and thus is not entitled to the tax exempt status afforded to the catholic church by the Internal Revenue Service."
The determination of whether property is subject to an ad valorem tax exemption is a factual determination which is the responsibility of the various tax assessors, subject to review by the Louisiana Tax Commission. Ultimately, such decisions are subject to review by the courts. La. Const. Art. VII, Sec. 18; R.S. 47:1952. In accord: Atty. Gen. Ops. Nos. 95-60, 93-632.
In making a determination regarding a particular exemption request, assessing authorities may examine the actual activities of the organization in question, the use of the property under consideration and the purpose clause found in the organization's charter. Atty.Gen.Op. No. 95-60. It appears that with regard to the property in question, proper regard has been given by your office and the Tax Commission to these items.
As you are aware, the ad valorem tax exemption sought on CFA's behalf is provided for at La. Const. Art. VII, Sec. 21, which pertinently provides:
"In addition to the homestead exemption provided for in Section 20 of this Article, the following property and no other shall be exempt from ad valorem taxation.
* * *
(B)(1)(a) Property owned by a non-profit corporation or association, organized and operated exclusively for religious . . . purposes, no part of the net earnings of which inure to the benefit of any private shareholder or member thereof and which is declared to be exempt from federal or state income tax; and
* * *
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the association." (Emphasis supplies)
This office has consistently opined that in order to qualify for an exemption under Art. VII, Sec. 21 (B), the property must meet all four of the basic requirements of that constitutional provision, to wit: (1) The organization must be a nonprofit corporation or association organized exclusively for one of the desgnated purposes, (2) No part of the net earnings inure to the benefit of any stockholder or member thereof, (3) Said nonprofit corporation or association must be exempt from federal or state income tax, and (4) The property is not owned, operated, leased or used for commercial purposes unrelated to the exempt purposes of the corporation or association. Atty. Gen. Ops. Nos. 93-488, 86-529.
Due consideration must also be given to the jurisprudence of this state, which has consistently held that exemptions from taxation must be strictly construed against the person(s) claiming the exemption. Mattingly v. Vial, 190 So. 313 (1939); Ruston Hospital v. Riser, 191 So.2d 665 (La.App. 2nd Cir. 1966).
We have been provided with a copy of the Louisiana Tax Commission's letter of April 11, 1995, wherein CFA's request for exemption as a nonprofit organization for religious purposes was found "inapplicable and denied" (copy attached). The Tax Commission, along with your office, has apparently done an extensive review of CFA's application and the facts and circumstances pertaining to that application. This office defers to the Tax Commission's decision in this regard, and finds that determination to be in accord with the legal authorities cited herein.
We trust the foregoing adequately addresses your concerns. Should you need assistance with other areas of the law, please do not hesitate to contact us.
Yours very truly,
RICHARD P. IEYOUB Attorney General
BY: JEANNE-MARIE ZERINGUE BARHAM Assistant Attorney General
RPI:JMZB:jv Attachment
cc: Louisiana Tax Commission
April 11, 1995
MR. ADAM CHASE, ATTORNEY Adams and Johnston Law Corporation Vectra Bank Building 1919 14th Street, Suite 609 Boulder, Colorado 80302
RE: MR. ROBERT AND MRS. PENNY LORD INDIVIDUALLY AND D/B/A CATHOLIC FAITH IN ACTION
Dear Mr. Chase:
The Louisiana Tax Commission (LTC) has diligently reviewed the dual ad valorem applications of: (1) Mr. Robert and Mrs. Penny Lord Residential Homestead Exemption (Article VII, Section 20 (A) (1) and (2) the Nonprofit corporation for Religious Purposes of Mr. Robert and Mrs. Penny Lord d/b/a Catholic Faith In Action; which are both located at 112 Monticello Court, Pearl River, St. Tammany Parish, Louisiana 70452.
On April 4, 1995, a physical inspection of the above referenced property was done by myself, Executive Secretary, on behalf of the LTC and Hon Assessor Patricia Schwartz Core, St. Tammany Parish, in the presence of Mr. Robert and Mrs. Penny Lord and Mr. Norm Pizza, an attorney located in New Orleans. At that time, the Lord's verbally advised that they had sold their properties located in the Sate of California and were now residing and operating at the referenced Louisiana address.
The 1974 Constitution provides for Homestead Exemption in Article VII, Section 20 (1) (A) and is limited to one bona fide homestead exemption. Citation is excerpted from Attorney General Opinion No. 92-143, March 26, 1992, "Only one homestead exemption is allowed per family and, thus, owners who were not permanent residents of . . . area could not be granted homestead exemption if they were claiming exemption on their permanent residences." Currently and since 1979, Mr. and Mrs. Lord enjoy homestead exemption on their Ventura County, California residence located at: 5253 Sealane, Post Office Box 5675, Oxnard, California 93031. Therefore, the Homestead (Residential) Exemption applied for Louisiana is inapplicable and denied.
Addressing the Nonprofit religious property exemption request, both the 1974 Louisiana Constitution (Article VII, Section 21(B)( 1)(a)) and the United States Internal Revenue Service (501 (C) (3) Code) require that the property in question must be "organized and operated exclusively for religious purposes". And, as cited in the LTC prior opinion of December 13, 1994, Louisiana does not allow exemption on any property "if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation or association".
Section II of the Catholic Faith In Action Articles of Incorporation, cites the following purpose:
Purpose The purpose of the corporation is a religious corporation and is not organized for the private gain of any person. It is organized under the Nonprofit Religious Corporation Law, primarily for religious purposes (Underlined for emphasis as primarily vs exclusively.)
The 1974 Constitutional Convention transcript relative to the intent of law regarding the "religious" and "nonprofit organizations" are explicitly found in the 71st, 72nd, and 73rd Day Proceedings; which provide for the religious exemption for"church or church related properties". Enclosed is an official letter by the Catholic Church from the Archdiocese of New Orleans that has Catholic religious jurisprudence over the St. Tammary Parish area, in which the said Diocese states: "the organization `Catholic Faith in Action' is not listed in the National Catholic Directory and thus is not entitled to the tax exempt status afforded to the catholic church by the Internal Revenue Service". In conjunction with this statement, the Lord's verbally admitted their non affiliation with the Catholic Church during the said April 4, 1995, property inspection. Therefore, the nonprofit organization for religious purposes request is found inapplicable and denied.
Thanking you for your attention, I remain,
Sincerely,
Ann R. Laurence Executive Secretary
ARL Enclosure
C: HON. ASSESSOR PATRICIA SCHWARTZ CORE LTC Chairman, Members, and Attorney
May 8, 1995
HON. ASSESSOR PATRICIA S. CORE Parish of St. Tammany Post Office Drawer 3200 Covington, LA 70434
RE: 112 Monticello Court Pearl River, LA 70452
Dear Assessor Core:
The Louisiana Tax Commission has received a letter from Chief Deputy Assessor — Services Daryl R. Brown, County of Ventura, California, dated April 27, 1995 (copy enclosed), advising and confirming that the Robert Lord having homestead exemption at 5253 Sealane Way, Oxnard, California, is in fact a different Robert Lord, attested by social security numbers of both Robert Lords. In addition, the Ventura County Assessor's Office advises that Robert and Penny Lord did have homestead exemption on their residence located at 1655 Hawksway Court, Westlake Village, Ventura County, California, until June 4, 1991, at which time The County Recorder's douments indicate that the Hawksway Court residence was sold and there currently exists no homestead exemption on file in the said county assessor's records for Robert and Penny Lord.
Therefore, based upon this information, Robert and Penny Lord are found to be entitled to a residential homestead exemption, pursuant to the 1974 Constitution, Article VII, Section 20 (A)(1), for their owner occupied residence located at 112 Monticello Court, Pearl River, Louisiana 70452.
Thanking you for your attention and assistance in correcting the St. Tammany Parish homestead exemption on behalf of Robert and Penny Lord, I remain,
Sincerely,
Ann R. Laurence Executive Secretary
ARL/rb Enclosure
c: Mr. Daryl R. Brown, Ventura County Assessor's Office Mr. Robert and Penny Lord Chairman Malcolm B. Price, Jr.
OPINION NUMBER 95-60
March 3, 1995
4 — Assessors 119 — Taxation — Exemptions, General 148 — Taxation — Property Taxes — Liability of Person and Property Article VII, Section 21 (B)(1)(a)
General discussion of the criteria Honorable Charles A. Abels to be considered in the Attention: Mr. Gene Williams determination of the tax exempt Assessor Livingston Parish status of St. John's University and P.O. Box 307 the Congregational Church of Livingston, LA 70754 Practical Theology.
Dear Mr. Abels:
You have requested an opinion of the Attorney General regarding the ad valorem tax exempt status of two organizations — The Congregational Church of Practical Theology (Church) and St. John's University (University) — both of which own property in Livingston Parish.
You state that your investigation of these properties did not show evidence of a church or church affiliation even though the charter is on record with the Secretary of State of Louisiana. With regard to the University, you found that a correspondence school is being operated from its location in Livingston Parish; however, the school is not recognized by the Board of Regents. You request this office to provide you with criteria to assist you in making your determination as to the taxable status of the properties.
Initially, it should be noted that the authority to determine whether a particular taxpayer may be exempt from the payment of ad valorem taxes is a factual determination exclusively reserved by Article VII, Section 18 (E) of the 1974 Louisiana Constitution to the Louisiana Tax Commission (Commission). The Commission's determinations are, of course, subject to judicial review. In accord are Attorney General Opinion Nos. 93-632, 93-488 and 86-529.
The jurisprudence of this state has consistently held that constitutional and statutory grants of exemption from taxation must be strictly construed. See Ruston Hospital v. Riser, 191 So.2d 665 (La.App. 2nd Cir. 1966). Also, in Mattingly v. Vial, 193 La. 1, 190 So. 313 (1939) our Supreme Court held:
"There is no principal of interpretation more firmly and uniformly established by the jurisprudence of this and other States than the unbroken rule that exemptions from taxation are to be strictly construed against the person claiming the exemption and that any pausable doubt is fatal."
The exemption applicable to the two properties, in question, is found at Article VII, Section 21 of the Louisiana Constitution of 1974. It provides, in pertinent in part, the following:
"Section 21. In addition to the homestead exemption provided for in Section 20 of this Article, the following property and no other shall be exempt from ad valorem taxation.
* * *
(B)(1)(a) Property owned by a nonprofit corporation or association, organized and operated exclusively for religious, dedicated places of burial, charitable, health, welfare, fraternal, or educational purposes, no part of the net earnings of which inure to the benefit of any private shareholder or member thereof and which is declared to be exempt from federal or state income tax; and
* * *
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation or association."
In answer to your question, this office has consistently held that in order to qualify for an exemption from ad valorem taxes under Article VII, Section 21 (B), the property must meet all four of the basic requirements of said Article, to wit:
"1. The organization must be a nonprofit corporation or association organized exclusively for one of the designated purposes;
2. No part of the net earnings inure to the benefit of any stockholder or member thereof
3. Said nonprofit corporation or association must be exempt from federal or state income tax; and
4. None of the property of the nonprofit corporation or association is owned, operated, leased or used for commercial purposes unrelated to the exempt purposes of the corporation or association."
These criteria have been discussed by this office within the context of educational and health uses. The most significant consideration to be made is the manner in which the property is being used. In this regard, I am enclosing copies of Attorney General Opinion Nos. 93-488, 91-298, 86-529, 79-861 and 76-114 for your reference and convenience.
This office has consistently opined that, should the assessing authorities (i.e. the assessor and/or the Commission) determine that a nonprofit corporation's or association's operations, with respect to the property in question, satisfy the aforementioned requirements, exemption from ad valorem taxes is appropriate. Conversely, if all or a portion of the property is used for commercial purposes unrelated to the exempt purposes, there is no, or only a partial, exemption. Again, it is your responsibility as assessor, subject to review by the Commission and/or judiciary, to make the factual determination as to whether the above requirements have been met.
In making the above determination, you may examine the actual activities of the organizations in question, the use of the property under consideration and the purpose clause in the organizations' charters.
We also bring to your attention the ruling in the case ofHotel Dieu et al. v. Williams. et al. 410 So.2d 1111 (La. 1982), to which special attention must be paid. In the Hotel Dieu case, the Louisiana Supreme Court held that an office building and parking garage operated by a nonprofit corporation for purposes related to an adjacent nonprofit hospital were exempt from ad valorem taxes. The nonprofit corporation operating these properties was determined to be the alter ego of the hospital. The court also found that the space in the office building, except for a restaurant, was leased only for medical purposes and to tenants who had some connexity to the hospital and that the restaurant was a necessary eating facility for physicians, staff members, patients and their families. While the parking lot was open to the public, the court found that its customers were primarily those with business at the hospital or the medical office building and that 181 out of 281 of its parking spaces were contracted by physicians, other employees at the hospital, the medical office building and the L.S.U. medical education program conducted at the hospital. Given this connexity, the adjacent properties were also afforded tax exempt status.
We trust that the above information will assist you in making your determination as to the tax exempt status of the subject properties. Should you have any additional questions concerning these matters please do not hesitate to contact us.
Yours very truly,
RICHARD P. IEYOUB ATTORNEY GENERAL
BY: ROBERT E. HARROUN, III Assistant Attorney General
RPI/ROB3/gbe
OPINION NUMBER 93-632
September 27, 1993
15-A CONSTITUTIONAL LAW 119 TAXATION (EXEMPTIONS) — General 129 TAXATION — Ad valorem taxes 148 TAXATION — Property Taxes Art. VII, Sec. 21 (1974 La. Const.)
Real property owned by a nonprofit Mr. Russell L. Benoit corporation/foundation is exempt Assessor, Acadia Parish from ad valorem taxes if it meets P.O. Box 1329 the four criteria found in the La. Crowley, LA 70527-1329 Constitution.
Dear Mr. Benoit:
You have requested an opinion of the Attorney General regarding the ad valorem tax exempt status of a private foundation/nonprofit corporation called "Le Petit Chateau De Luxe" (Foundation). You state that a property owner in Acadia Parish, Mr. Lovic C. Desormeaux, has donated all of his real property in Ward 5 of Acadia Parish to the Foundation. He has been named, as president of the Foundation and is asking that all of the real property, including improvements thereon, be tax exempt. You enclose with your opinion request a printout of the property assessment which includes several hundred acres of farmland and two rural houses, a copy of the donation, a copy of the Articles of Incorporation, and a written ruling from the Internal Revenue Service granting a federal income tax exemption to the Foundation. You ask whether the Foundation should be exempt from the payment of ad valorem taxes.
Initially, it should be noted that the authority to determine whether a particular taxpayer may be exempt from the payment of ad valorem taxes is a factual determination exclusively reserved by Article VII, Section 18 (E), of the 1974 Constitution to the Louisiana Tax Commission (Commission). See Attorney General Opinion Nos. 93-488, 93-392, 92-660, 89-599, 86-529, and 76-114. While the Attorney General does not have the authority to grant tax exemptions, we would like to assist you and the Commission as to the applicable law which may be used in making such a determination.
The jurisprudence of this state has consistently held that constitutional and statutory grants of exemption from taxation must be strictly construed in favor of the taxing body, and against the taxpayer desiring the exemption. Any plausible doubt is fatal. Thus, an exemption, being an exceptional privilege, must be clearly, unequivocally, and affirmatively established.Zapata Haynie Corp. v. Larpenter, 583 So.2d 867 (La.App. 1st Cir. 1991), Writ Denied.
A review of the Donation Inter Vivos by Lovic C. Desormeaux, Sr., to the Foundation reveals that the consideration for the donation is "love of God and religion, education and charity". Further, the Articles of Incorporation of the Foundation state that it is to be operated "exclusively for religious, charitable and educational purposes".
Article VII, Section 21 provides, in pertinent part, the following:
"§ 21. In addition to the homestead exemption provided for in Section 20 of this Article, the following property and no other shall be exempt from ad valorem taxation:
* * *
(B)(1)(a) Property owned by a nonprofit corporation or association organized and operated exclusively for religious, dedicated places of burial, charitable, health, welfare, fraternal, or educational purposes, no part of the net earnings of which inure to the benefit of any private shareholder or member thereof and which is declared to be exempt from federal or state income tax;
* * *
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation or association."
Addressing the issue of exemption, this office has consistently held that in order to qualify for an exemption from ad valorem taxes under La. Const. Art. VII, Section 21 (B), the property must meet all of the four basic requirements of said Article, to wit:
1. The organization must be a nonprofit corporation organized exclusively for one of the designated purposes;
2. No part of the net earnings inure to the benefit of any stockholder or member thereof;
3. Said nonprofit corporation must be exempt from federal or state income tax;
4. None of the property of the nonprofit corporation is owned, operated, leased or used for commercial purposes unrelated to the exempt purposes of the corporation.
As previously discussed, the Federation's Articles of Incorporation state that it is a nonprofit corporation operated exclusively for religious, charitable and educational purposes, the net earnings or assets of which will not be distributed to the benefit of its stockholders, directors, or officers. Further, it is exempt from the payment of federal income tax. This brings us to the fourth and final criterion — i.e., that the property seeking exemption be used soley for the exempt purposes of the Foundation.
We again emphasize that it is your responsibility, as assessor, subject to review by the Commission and/or the judiciary, to resolve the use issue. In making this determination, we recommend you apply the simple test derived by our courts. Thus, the traditional test of exemption is based upon the actual use of the property for a tax exempt purpose, rather than whether title to the property is vested in a tax exempt institution. Faust v. Mitchell Energy Corp., 437 So.2d 339 (La.App. 2nd Cir. 1983) and State v. Anderson, 116 So.2d 80 (La.App. 1st Cir. 1959). It would appear that you may need to examine the activities of the Foundation to verify an appropriate use for tax exempt purposes.
I am enclosing copies of Attorney General Opinion Nos. 75-270, 78-1522, 79-861, 84-159, 85-359, 92-408, 92-740, 93-488 for your reference to illustrate uses that have been determined permissible and impermissible for purposes of tax exemption.
Trusting this adequately responds to your inquiry, I am
Yours very truly,
RICHARD P. IEYOUB Attorney General
BY: ROBERT E. HARROUN, III Assistant Attorney General
RPI/ROB3/bb Enc. 0174R
OPINION NUMBER 93-488
August 24, 1993
4 ASSESSORS 119 TAXATION — Exemptions, general 148 TAXATION — Property taxes — liability of persons and property. Art. VII, Sec. 21(B)(1)(a)
An apartment complex owned by a non-profit corporation for the Honorable Thomas L. Arnold poor, handicapped, and elderly Assessor is exempt from ad valorem taxes Fifth District if a determination is made by Parish of Orleans the assessor that the Suite 104 — Algiers Courthouse constitutional requirements for 225 Morgan Street exemptions have been met. New Orleans, LA 70114
Dear Mr. Arnold:
You have requested an opinion of the Attorney General regarding the ad valorem tax exempt status of a 307-unit apartment complex owned by New Orleans Towers Affordable Housing Corporation, Inc. (Corporation), a non-profit corporation formed by the Volunteers of America (Volunteers), to purchase said complex.
It is the position of the Volunteers that the purchase was made with the intent of further servicing the poor, the handicapped, and the elderly residents of the complex (e.g., instituting programs for exercise, crafts, Bible study, etc.). Occupants of the housing units are eligible for rent subsidies provided by H.U.D. In other words, the volunteers' mission in Housing is to provide service above and beyond that of rent subsidies.
Volunteers further represent that neither the corporation nor its Board of Directors will benefit in any way from the income derived from the corporation. Excess income will remain in the project operating account for providing services. In the event the property is sold, no profits will be distributed to any officer or director of the Corporation.
You question the tax exempt status of the Corporation's acquisition. It is my understanding from your opinion request letter that, on December 17, 1992, the Louisiana Tax Commission (Commission) approved a change order exempting the subject property from ad valorem taxes.
Initially, it should be noted that the authority to determine whether a particular taxpayer may be exempt from the payment of ad valorem taxes is a factual determination exclusively reserved by Article VII, Section 18 (E), of the 1974 Constitution to the Commission. Attorney General Opinion Nos. 93-392, 92-660, 89-599, 86-529, and 76-114. While the Attorney General does not have the authority to grant tax exemptions, we would like to assist you and the Commission as to the applicable law which may be used in making individual decisions.
The jurisprudence of this state has consistently held that constitutional and statutory grants of exemption from taxation must be strictly construed in favor of the taxing body, and against the taxpayer desiring the exemption. Any plausible doubt is fatal. Thus, an exemption, being an exceptional privilege, must be clearly, unequivocally, and affirmatively established.Zapata Haynie Corp. v. Larpenter, 583 So.2d 867 (La.App. 1st Cir. 1991), Writ Denied.
Article VII, Section 21 provides, in pertinent part, the following:
Section 21. In addition to the homestead exemption provided for in Section 20 of this Article, the following property and no other shall be exempt from ad valorem taxation.
* * *
(B)(1)(a) Property owned by a nonprofit corporation or association, organized and operated exclusively for religious, dedicated places of burial, charitable, health, welfare, fraternal, or educational purposes, no part of the net earnings of which inure to the benefit of any private shareholder or member thereof and which is declared to be exempt from federal or state income tax; and
* * *
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation or association." (Emphasis added.)
Addressing the issue of exemption, this office has consistently held that in order to qualify for an exemption from ad valorem taxes under La. Const. Art. VII, Section 21 (B), the property must meet all of the four basic requirements of said Article, to wit:
1. The organization must be a non-profit corporation organized exclusively for one of the designated purposes;
2. No part of the net earnings inure to the benefit of any stockholder of member thereof;
3. Said non-profit corporation must be exempt from federal or state income tax;
4. None of the property of the non-profit corporation is owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation.
These criteria have been discussed by this office within the context of housing for the poor, elderly, and handicapped on numerous occasions. We have consistently opined that should the assessing authorities (i.e., the assessor and/or the Commission) determine that a non-profit corporation's operations, with respect to the property in question, satisfy the aforementioned requirements, exemption from ad valorem taxes is appropriate. Attorney General Opinion Nos. 87-69, 82-375, 80-1488, 79-861, 79-599, 78-1522, 78-1100, 78-922, 77-1656, 77-439, and 76-114. Again, it is your responsibility as assessor, subject to review by the Commission and/or judiciary, to determine whether the necessary requirements have been met.
In making the above determination, you may examine the actual activities of the Corporation, the use of the property under consideration, and the purpose clause in the Corporation's charter.
Trusting this adequately responds to your inquiry, I am
Yours very truly,
RICHARD P. IEYOUB Attorney General
BY: ROBERT E. HARROUN, III Assistant Attorney General
RPI/ROB3/bb
cc: Mr. Malcolm B. Price, Jr. Chairman, La. Tax Commission
0148R
OPINION NUMBER 92-740
November 25, 1992
119 — Taxation — Exemptions 148 — Taxation — Property Taxes Art. VII, Sections 21(B)(1)
Land bequeathed to the Louisiana The Honorable Bryan D. LeJeune Baptist Foundation and leased by Assessor-Elect the Foundation to a farmer does Jefferson Davis Parish not meet the constitutional test Room 103 Courthouse requisite for it to be exempt Jennings, LA 70546 from ad valorem taxes.
Dear Mr. LeJeune:
You have requested an opinion of the Attorney General relative to the eligibility, vel non, for ad valorem tax exempt status of property bequeathed to, and owned by, the Louisiana Baptist Foundation (Foundation). The Foundation, a non-profit 501 (c)(3) organization, has requested you to remove this acreage from the tax roll and refund prior years' taxes it believes were erroneously paid.
Foundation staff have advised us that the land, in question, is being leased to a farmer. While the farmer pays no rent, the Foundation receives 35 percent of the proceeds derived from the sale of the crops harvested.
The exemption urged by the Foundation is found at La. Const. Art. VII, Section 21 (1974). It provides, in pertinent part, the following:
Section 21. In addition to the homestead exemption provided in Section 20 of this Article, the following property and no other shall be exempt from ad valorem taxation:
* * *
(B)(1) Property owned by a non-profit corporation or association organized and operated exclusively for religious purposes, no part of the net earnings of which inure to the benefit of any private shareholder or member thereof and which is declared to be exempt from federal or state income tax;
* * *
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation or association."
Initially, it should be noted that exemptions from taxation are strictly construed. See Ruston Hospital v. Riser 191 So.2d 665 (La.App. 2nd Cir. 1966). In Mattingly v. Vial 193 La. 1, 190 So. 313 (1939) our Supreme Court held:
"There is no principle of interpretation more firmly and uniformly established by the jurisprudence of this and other States than the unbroken rule that exemptions from taxation are to be strictly construed against the person claiming the exemption and that any plausible doubt is fatal."
Addressing the issue of exemption, this office has consistently held that in order to qualify for an exemption from ad valorem taxes under La. Const. Art. VII, Section 21 (B), the property must meet all of the four basic requirements of said Article, to wit:
1. The organization must be a non-profit corporation organized exclusively for one of the designated purposes;
2. No part of the net earnings inure to the benefit of any stockholder or member thereof;
3. Said non-profit corporation must be exempt from federal or state income tax;
4. None of the property of the non-profit corporation is owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation.
See Opinions of the Attorney General Nos. 92-361, 88-359, 84-159, and 75-270.
Assuming the Foundation and subject property meet requirement numbers 1-3, above, we find that leasing the property for agricultural purposes fails to satisfy the fourth prerequisite. In reaching this conclusion, we are guided by the jurisprudential test of exemptions set forth in Ruston Hospital, Inc. v. Riser, cited supra. Therein, the Court held:
"We find no merit in the argument on behalf of plaintiff that it is exempt from taxation on the ground that it is a non-profit institution organized for charitable purposes administered by members of a Board of Trustees who serve without compensation. It is the use of the property and not the nature and purpose of the corporation which constitutes the test of the right to exemption from taxes. . . ." (Emphasis added.)
See also Faust v. Mitchell Energy Corporation 437 So.2d 339 (La.App. 2nd Cir. 1983), Rehearing Denied.
The property in question is being leased by the Foundation for purposes wholly unrelated to the tax exempt purposes for which the Foundation was organized — religious. Neither does the property fall into the exception of being connected to the actual operation of the Foundation. See Hotel Dieu v. Williams 410 So.2d 111 (1982).
In conclusion, we are of the opinion that the property in question does not meet the constitutional test requisite for it to be exempt from ad valorem taxes.
I trust this answers your inquiry. If we can be of any further assistance, please do not hesitate to contact us.
Sincerely,
RICHARD P. IEYOUB Attorney General
BY: ROBERT E. HARROUN, III Assistant Attorney General
RPI/REH, III:lbw-0032R
OPINION NUMBER 87-440
October 13, 1987
15-A Constitutional Law 119 Taxation — exemptions, general R.S. 11:2801 Article VII, Section 21 of 1979
Mr. Ellis Dupleix, Jr. Property owned by non-profit Assessor corporation is exempt. Leased 1010 Lafayette Street, property if related to Partnership Suite 433 is collaboration for common profit Lafayette, LA 70502-3225 or commercial benefit.
Dear Mr. Dupleix:
You have requested an opinion of this office as to whether a building owned by a non-profit corporation is subject to property tax when the building is being used by a limited partnership in which the non-profit corporation owns 85% to 87% of the business and the limited partner, who is not entitled to any tax exemption owns the remaining interest.
Article VII, Section 21 of the Constitution states in part:
. . . the following property and no other shall be exempt from ad valorem taxation . . .
(B)(1) Property owned by a non-profit corporation . . . exclusively for . . . health . . . purposes
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased or used for commercial purposes unrelated to the exempt purposes of the corporation or association. (emphasis added)
The scope of this general exemption was questioned for the first time in a court in 1981 in Hotel Dieu v. Williams ( 403 So.2d 1255, La.App. 4 Cir., 1981) When the court held that property belonging to a non-profit hospital used as a support facility providing office space for the hospital's medical staff as well as a pharmacy, snack bar, and parking area all fell within the scope of commercial purposes related to the exempt purposes of the hospital. In the Hotel Dieu case the lessee was a non-profit agent of the hospital. In your question the lessee is a partnership. One partner, Our Lady of Lourdes Medical Center, is a non-profit corporation, and the limited partner, Acadiana Radiology Group is a for profit enterprise. The partnership's income is not exempt from state or federal tax as a partnership and is defined by statute as "a judicial person, distinct from its partners . . . (who collaborate at mutual risk for their common profit or commercial benefit." (R.S. 11:2801)
However, while the lessee has a profit making commercial purpose, this purpose is related to the exempt purposes of the property owner, Our Lady of Lourdes Medical Center. Records of the Louisiana Constitutional Convention of 1973: Convention Transcript 2025; Mr. Dennis, a delegate explained their intention with the following hypothetical situation:
"Now, if they (Tulane) take some property downtown and lease it out for a haberdashery or something, that's clearly not related to an educational purpose and it would not be exempt . . . Hospitals have to run some things that people make money out of in their hospitals, such as: X-ray labs, pathology labs, pharmacies. . . . If one of these purposes were to be classified as commercial, it would make the whole hospital be subject to taxes even though it is related to the operation of a hospital. . . . As long as the hospital is doing something that is related to running a hospital, I don't thing that it should lose its exemption even if someone could classify it as commercial."
The fact that the partnership is a for profit enterprise does not affect the tax exemption status of the property because its purpose is related, to the non-profit corporate owner's purpose of health care. The profits this property owner makes as a partner must, however, be used for the purposes for which the non-profit corporation was organized. It cannot "inure to the benefit of any private shareholder or member thereof . . ." La. Const. 1979, Art. VII, Section 21 (B)( 1).
In conclusion, property based by a non-profit hospital to a profit-making partnership which is used for a purpose related to the primary purpose of the non-profit corporation, is exempt fromad valorem taxes.
Trusting that the foregoing has sufficiently answered your inquiry, I remain
Sincerely,
WILLIAM J. GUSTE, JR. Attorney General
BY: KENNETH C. DEJEAN Chief Counsel
KCD/mac
OPINION NUMBER 86-529
October 24, 1986
119 — Taxation — Exemptions, general 15A — Constitutional Law Art. VII, Sections 20 and 21, of La. Const'n.
Ad valorem tax assessment authorities (including the La. Tax Commission) must make factual determination claimed is actually exempt under the provisions set forth in Art. VII, Section 21, of the La. Constitution. Naked fact of property owner's federal income tax exemption under Mr. Leroy A. Martin U.S. Internal Revenue Code Section Assessor 501(c)(3), without, for example, any Lafourche Parish hint as to the actual use to which Courthouse the property is put, should not alone Thibodaux, LA 70301 establish ad valorem tax exemption.
Dear Mr. Martin:
This opinion is in response to your request as to whether certain real (i.e., immovable) property owned by the Carpenters District Council of New Orleans and Vicinity Apprenticeship Educational and Training Program is exempt from ad valorem taxes because of the above program's exemption from federal income taxation under U.S. Internal Revenue Code Section 501 (c)(3).
As stated in Attorney General Opinion 76-114 (copy enclosed), this office does not have the authority to make a decision as to whether any particular taxpayer is exempt, as this decision is based upon a factual determination. Rather, the function of this office is to give advice on the applicable law. It is the function of the assessing authorities, particularly the ultimate supervising assessing authority, the Louisiana Tax Commission, to make, subject to judicial review, the initial factual determinations on particular ad valorem tax exemptions claimed, and in doing so, they may, as further pointed out in Attorney General Opinion 76-114, examine the actual activities of the applicant, the use of the particular portion of property under consideration, and if the owner is a corporate entity, its purposes as expressed in its charter.
Article VII, Section 21, of the Louisiana Constitution states, in pertinent part,
§ 21. Other Property Exemptions
Section 21. In addition to the homestead exemption provided for in Section 20 of this Article, the following property and no other shall be exempt from ad valorem taxation:
* * *
(B)(1) Property owned by a nonprofit corporation or association organized and operated exclusively for religious, dedicated places of burial, charitable, health, welfare, fraternal, or educational purposes, no part of the net earnings of which inure to the benefit of any private shareholder or member thereof and which is declared to be exempt from federal or state income tax;
(2) property of a bona fide labor organization representing its members or affiliates in collective bargaining efforts; and
(3) property of an organization such as a lodge or club organized for charitable and fraternal purposes and practicing the same, and property of a nonprofit corporation devoted to promoting trade, travel, and commerce, and also "property of a trade, business, industry or professional society or association, if that property is owned by a nonprofit corporation or association organized under the laws of this state for such purposes.
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation or association.
* * *
For your information and use as to possible examples of the application of these provisions, we are also enclosing a copy of Attorney General Opinion 79-861, wherein several types of exemptions are discussed. Moreover, subsequent to this enclosed opinion, the Louisiana Supreme Court decided the case of Hotel Dieu et al. v. Williams. etc. et al., 410 So.2d 1111 (La., 1982), to which special attention must be paid.
In the Hotel Dieu case, the Louisiana Supreme Court held that an office building and parking garage operated by a nonprofit corporation for purposes relating to an adjacent nonprofit hospital were exempt from ad valorem taxes. The nonprofit corporation operating these properties was determined to be the alter ego of the hospital. The court also found that the space in the office building, except for a restaurant, was leased only for medical purposes and to tenants who had some connexity to the hospital and that the restaurant was a necessary eating facility for physicians, staff members, patients and their families. While the parking lot was open to the public, the court found that its customers were primarily those with business at the hospital or the medical office building and that 181 out of 281 of its parking spaces were contracted by physicians and other employees at the hospital and the medical office building or in connection with L.S.U. medical education programs conducted at the hospital. The court also found that all net revenues from the office building and the parking garage would go to the hospital for treatment of indigent persons and other hospital activities.
As Article VII, Section 21, of the Louisiana Constitution states, "no other" property than that provided for in these constitutional provisions shall be exempt. Therefore, the persons responsible for the ad valorem taxes on the property in question must establish an exemption under one of the constitutional provisions for exemptions and cannot, without, for example, any hint whatsoever as to the actual use to which the property is put, rely merely on the federal Internal Revenue Code exemptions. It may well turn out to be that the property will be exempt under Subsection B of Article VII, Section 21, of the Louisiana Constitution, above, but notsolely because the owner has an established exemption for itself under federal Internal Revenue Code Section 501 (c) (3).
We trust that this opinion has satisfied your inquiry, and, with warmest regards, we remain
Very truly yours,
WILLIAM J. GUSTE, JR. Attorney General
BY: THOMAS S. HALLIGAN Assistant Attorney General
TSH/cnw Encl.
cc: Robert H. Abbott, III (w/encl.)
OPINION NUMBER 86-49
OPINION NUMBER 80-219
March 28, 1980
15-A — CONSTITUTIONAL LAW 119 — TAXATION (Exemptions) 129 — TAXATION (ad valorem) Const. 1974, Art. VII, Sec 21(B)
Mr. Claude Mauberret, Jr. Real Property owned by nonprofit Assessor corporation, a portion of which Second Municipal District is used for commerce purposes is Board of Assessors subject to ad valorem taxes. Parish of Orleans However, that portion of property 4E01 City Hall — Civic Center used for a tax exempt purpose is 1300 Perdido Street not taxable. New Orleans, LA 70112
Dear Mr. Mauberret:
Your request for our opinion to the following question has been assigned to the undersigned for answering.
Your question is as follows:
If property owned by a hospital is to be used as a parking lot, on which there will be a charge for parking, would that property be "exempt" or should it be placed on the assessment rolls as taxable property?
As we understand your question, it requires three separate legal inquiries based on the status of the hospital involved. The first inquiry is into a hospital which can be classified as "public hospitals".
A "public hospital" is one which is owned and operated by the State, an agency of the State, or a political subdivision of the State.
The second inquiry goes to "nonprofit hospitals". A "nonprofit hospital" is one which is owned and operated by an entity which, for federal or state income tax purposes, is recognized as a nonprofit corporation.
Finally, an inquiry directed at hospitals which can be categorized as "other hospitals". "Other hospitals" are those which are neither "public" or "nonprofit hospitals".
For the reasons elaborated below, it is the considered opinion of this office as follows:
I. A parking lot owned by a public hospital on which there is a charge for parking is exempt property and, therefore cannot be placed on the assessment rolls as taxable property, and is not subject to ad valorem taxation.
II. That portion of property comprising a parking lot, owned, operated, leased or used by a non-profit hospital on which there is a charge for parking, is not exempt property, and therefore, can be placed on the assessment rolls as taxable property, and is subject to ad valorem taxation.
III. A parking lot, owned, operated, leased or used by other hospitals on which there is a charge for parking, is not exempt property, and therefore, can be placed on the assessment rolls as taxable property and is subject to ad valorem taxation.
Article VII, Section 21 of the 1974 State Constitution sets forth what property is and is not exempt from ad valorem taxation. The pertinent part of this Section reads as follows:
§ 21. Other Property Exemptions
Section 21. In addition to the homestead exemption provided for in Section 20 of this Article, the following property and no other shall be exempt from ad valorem taxation:
(A) Public lands; other public property used for public purposes.
(B) (1) Property owned by a nonprofit corporation or association organized and operated exclusively for religious, dedicated places of burial, charitable, health, welfare, fraternal, or educational purposes, no part of the net earnings of which inure to the benefit of any private shareholder or member thereof and which is declared to be exempt from federal or state income tax;
* * *
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation or association.
It is through the application of these pertinent paragraphs and their underlying rationale, as revealed in the debates at the 1973 State Constitutional Convention, which provides the answer to the above three legal inquiries. Each of these inquiries will be answered separately.
"Public hospitals"
As to "public hospitals", Article VII, § 21 (A), which exempts public land from ad valorem taxation, is controlling. Therefore, if the "public hospital's" parking lot is located on land owned by the State, an agency of the State or a political subdivision of the State, it is exempt property, and cannot be placed on the assessment rolls as taxable property, nor can it be subject to ad valorem taxation.
"Nonprofit hospitals"
The Constitutional Convention was concerned about granting ad valorem tax exemptions to certain nonprofit corporations and having them operate in the commercial field in competition with private, industrial and commercial enterprises in an area unrelated to the purpose for which the nonprofit corporation was organized. (See: Const. Conv. of 1973, Vol. XXII Verbatim Transcripts, October 25, p. 1 et. seq; Vol. XXIII Verbatim Transcripts, October 26, p. 45 et. seq; and Vol XXIV Verbatim Transcripts, October 31, p. 16 et. seq.). This concern led to the adoption by the Convention of what is now Article VII, Section 21 (B) of the 1974 State Convention.
As stated in Attorney General Opinion #75-270 (copy enclosed), in order to qualify for an exemption from ad valorem taxation, the property must meet four basic requirements:
1. A nonprofit corporation organized exclusively for one of the designated purposes.
2. No part of the net earnings inure to the benefit of any stockholder or member thereof.
3. Said nonprofit corporation is exempt from federal or state income tax.
4. None of the property of the nonprofit corporation shall be exempt if owned, operated, leased or used for commercial purposes unrelated to the exempt purposes of the corporation.
Each of these four basic requirements is essential, and if one is not met, then the property is not entitled to an exemption from ad valorem taxation. For the purposes of this opinion, we shall assume that a "nonprofit hospital" meets the first three requirements.
Under basic requirement four, which is derived from Article VII, Section 21, paragraph B, property owned, operated, leased or used for commercial purposes unrelated to the exempt purpose of the nonprofit corporation, is not exempt from ad valorem taxation. The question is, therefore, whether a parking lot owned, operated, leased or used by a "nonprofit hospital" on which parking fees are charged, is a commercial purpose related to the exempt purpose of a "nonprofit hospital".
In answering this question, it is useful to examine an exchange at the 1973 Constitutional Convention between Mr. Lennox, one of the authors of basic requirement four, and Mr Stinson. We shall, therfore, quote a portion of their exchange in full:
Mr. Lennox: My interpretation of what my amendment would do; it would require that a religious or an eleemosynary organization which owns commercial properties and operated those properties or leased those properties in direct competition with enterprise would be prohibited from having ad valorem taxation exemptions.
Mr. Stinson: I, also, understand in New Orleans that there is a church, or churches, that operate parking lot facilities in competition with private. If they took the proceeds of that — and all churches need more money and no church operates at a profit — could they continue in that without being taxed?
Mr. Lennox: Mr. Stinson, if there is a church operating a parking lot in competition with commerce in New Orleans, then that church ought to be taxed just like its competitor. I don't care what happens with . . .
Mr. Stinson: I agree with your argument. But, will this take care of that, wouldn't this
Mr. Lennox: I think it would. That's exactly my point.
(Const. Conv., of 1973, Vol. XXIII Verbatim Transcripts, October 25, p. 22)
It is clear from this exchange that a pay parking lot owned, operated, leased or used by a "nonprofit hospital", like that of a church, does not meet the fourth basic requirement. More specifically, the providing of parking space for a fee by a "nonprofit hospital" is in competition with private commercial parking lots, and this commercial purpose of charging fees for parking is unrelated to the "nonprofit hospital's" exempt purpose of providing health care. Thus, a parking lot owned, operated, leased or used by a "nonprofit hospital" on which parking fees are charged does not meet the fourth basic requirement, and is not entitled to an ad valorem tax exemption. It should be noted that this applies only to that portion of otherwise exempt property which is used for a pay parking lot.
"Other hospitals"
A hospital parking lot on which parking fees are charged and which is not owned, operated, leased or used by "public" or "nonprofit hospitals" is not entitled to an ad valorem tax exempt status. The rationale used for "nonprofit hospitals" is equally applicable here. The pay parking lots of "other hospitals", like those of "nonprofit hospitals", would not meet the fourth basic requirement for exemption.
For the above reasons, we therefore conclude that only parking lots which are owned by "public hospitals" on which parking fees are charged are exempt from the property tax tolls, and not subject to ad valorem taxation. Similar parking lots owned, operated, leased or used by "nonprofit" or "other hospitals" can be placed on the property assessment rolls, and are subject to ad valorem taxation.
If we can be of any further assistance to you, please do not hesitate to contact our office.
Yours very truly,
WILLIAM J. GUSTE, JR. Attorney General
By: LOUIS M. JONES Assistant Attorney General
LMJ:ab encl.
OPINION NUMBER 79-861
August 14, 1979
119 — TAXATION — Exemptions La. Const. Art. VII, § 21
Mr. Brian R. Bubrig Thirteen situations analyzed President for exemption status. Mostly Louisiana Assessor's Association dealing with non-profit Pointe a la Hache, LA 70802 corporations, churches, unions.
Dear Mr. Bubrig:
Reference is made to your letter of July 24, 1979, requesting an opinion of this office on behalf of the Louisiana Assessor's Association on thirteen separate points relating to exemptions from ad valorem property taxation.
The answer to four of your questions lends itself to having those four questions answered together, and thus I will do so. Those four questions are as follows:
"(1) Is church owned property, leased as a retail store subject to ad valorem taxes?
(2) Is a building owned by a Masonic Lodge, and leased (in whole or in part) to a grocery store subject to ad valorem taxes?
* * *
(7) Are religions and/or other non-profit corporations or associations which operate book stores subject to ad valorem taxes? (Please note that we are referring to non-religious books and articles.)
* * *
(10) Is vacant land or unoccupied improved property, owned by a religious, or other non-profit corporation or association subject to ad valorem taxes?"
In answer to these questions, I would refer you to Article VII, Section 21 of the Louisiana Constitution of 1974 which reads in pertinent part as follows:
"Section 21. In addition to the homestead exemption provided for in Section 20 of this Article, the following property and no other shall be exempt from ad valorem taxation:
(A) Public lands; other public property used for public purposes.
(B) (1) Property owned by a nonprofit corporation or association organized and operated exclusively for religious, dedicated places of burial, charitable, health, welfare, fraternal, or educational purposes, no part of the net earnings of which inure to the benefit of any private shareholder or member thereof and which is declared to be exempt from federal or state income tax;
(2) Property of a bona fide labor organization representing its members or affiliates in collective bargaining efforts; and
(3) Property of an organization such as a lodge or club organized for charitable and fraternal purposes and practicing the same, and property of a nonprofit corporation devoted to promoting trade, travel, and commerce, and also property of a trade, business, industry or professional society or association, if that property is owned by a nonprofit corporation or association organized under the laws of this state for such purposes.
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation or association . . ."
Your questions number 1, 2 and 7 are covered by the last unnumbered paragraph to part B quoted above. That is, an organization which otherwise enjoys exemption on property owned by it when used for its contemplated function loses that exemption once property is used primarily for commercial purposes such as a retail store, grocery store, or unrelated book and article store. Thus if a church operates a store selling primarily religious books and some non-religious books or articles, the exemption would apply.
Even more fundamental would be the situation set forth in number 10 since vacant land or unoccupied land is not actually "operated" in any respect, and is thus not carrying out a function of the particular organization and is therefore not entitled to an exemption. No opinion is voiced regarding what type of minimal use of otherwise unimproved or unoccupied land might satisfy the operation or use requirement.
Before answering your remaining questions, I would draw to your attention the fact that according to the jurisprudence of this state an alleged constitutional or statutory grant of exemption from taxation must be strictly construed in favor of the state or the taxing body, and against the taxpayer desiring the exemption. The privilege or immunity from taxation cannot be determined by inference or implication from the wording of a statute or constitutional article, but must be clear in terms leaving no reasonable doubt. See Ruston Hospital, Inc. v. Riser, 191 So.2d 665; State v. U-Drive It Car Company, 79 So.2d 590; Roberts v. City of Baton Rouge, 108 So.2d 111, 236 La. 521; and City of New Orleans v. Heymann, 162 So. 582, 182 La. 738. This jurisprudence has been upheld by the United States Supreme Court numerous times. See, for example, Mescalero Appachi Tribe v. Jones, 93 S.Ct. 1267, 411 U.S. 145.
I would like to deal with your questions numbered 3, 4, 6, 9, and 12a together. Those questions read as follows:
"(3) Is a nursing home, owned by a nonprofit corporation or association subject to ad valorem taxes?
(4) Is a Hospital, owned by a non-profit corporation or association subject to ad valorem, taxes?
(6) Is property owned by a union, and leased to a governmental agency, such as U.S. Postal Service, or a local political subdivision subject to ad valorem taxes?
* * *
(8) Is a non-profit corporation or association which owns a Day Care Center subject to ad valorem taxes?
(9) Is a non-profit corporation or association which owns a retirement home subject to ad valorem taxes?
(12a) Is property used for Public Housing and owned by a non-profit corporation, or association which is not specifically chartered for housing, subject to ad valorem taxes?"
Assuming that the non-profit corporations mentioned in these questions were organized specifically for the purpose of carrying out the functions listed in your questions, the non-profit corporations mentioned in question numbers 3 and 4 would clearly be entitled to the exemption.
In answer to question number 6, I would refer you to Paragraph (B) (2) of Section 21 granting exemptions to labor organizations. I would also refer you to the jurisprudence analyzed above. In light of the requirement that exemptions be strictly construed, it is the opinion of this office that a labor organization's property must be used for labor related purposes before an exemption applies. Although used for a public purpose, the land is not used in such a way to lead to the (B) (2) exemption.
It is the opinion of this office that the functions of day care center operation and retirement home operation mentioned in questions 8 and 9 do not, beyond a reasonable doubt, fit under the purposes set forth in Paragraph (B)(1) of Section 21 quoted above as do a nursing home and a hospital clearly fit under the health or welfare headings. Day care centers or retirement homes could be construed to also fit under those headings but, on the other hand an argument could be made that they are really more of a convenience type operation than related directly to vital health and welfare needs. Since there is a reasonable doubt, and since according to the jurisprudence as shown above, exemptions must be construed strictly, it is the opinion of this office that even if the non-profit corporations are created for day care and retirement home purposes, these entities do not qualify for an exemption under the present wording of the constitution. A constitutional amendment making the language clearer in their favor is necessary before the exemption would apply.
Your question 12-a reads as follows:
"Is property used for Public Housing owned by a non-profit corporation, or association which is not specifically chartered for housing, subject to ad valorem taxes?"
A non-profit corporation which might otherwise enjoy an exemption on property except for the fact that the property is used for public housing while the non-profit corporation is not specifically chartered for housing at all, e.g., the American Legion, Knights of Columbus, etc., does not enjoy the exemption.
Your question number 5 reads as follows:
"Is an apartment complex, owned by a non-profit corporation or association subject to ad valorem taxes?"
I would again refer you to the language of Paragraph (B)(1) which requires that the non-profit organization be organized for certain public purpose reasons which must be reflected in the operation of the property for which an exemption is sought. Thus, a non-profit corporation owning an apartment complex is not entitled to an exemption on that property as the operation of apartments in general clearly do not come under the descriptions in the constitutional article as purposes for which exemptions are granted.
Your question number 3.1 reads as follows:
"Are Country Club and Social Clubs owned by a non-profit corporation or association subject to ad valorem taxes?"
I would refer you to the answer to your questions number 8 and 9 and state that in the opinion of this office and in light of the jurisprudence analyzed above, country club and social club activities will not usually be included under the definition of a "charitable and fraternal" organization mentioned in B(3) as the latter are generally organized for the accomplishment of public service projects rather than private activities. Thus, a country club or social club would not usually be entitled to an exemption although non-profit status may exist. The organization must be charitable and fraternal, not just fraternal.
Your question number 12 reads as follows:
"Is property used for public housing, and owned by a non-profit corporation or association, chartered specifically for furnishing low income housing, subject to ad valorem taxes?"
I would state that assuming that the public housing mentioned is in fact "low income" housing, then the exemption would apply as the corporation is organized for that specific purpose and the welfare provision in Section 21 (B)(1) would be met. In this light it would fall on the shoulders of the assessor to ascertain whether a particular housing project is clearly within the scope of the organizational purposes of the non-profit corporation and apply the exemption if there is no reasonable doubt in his mind that those purposes are being fullfilled with the property in question. Otherwise, based on the jurisprudence outlined above, an assessor is within his rights to deny an exemption when there is a reasonable doubt as to the applicability of the law granting the exemption.
In further support of the foregoing interpretations of Article VII, Section 21, I would refer you to Records of the Louisiana Constitutional Convention of 1973: Convention Transcripts Volume 8, p. 1910 et seq. and p. 2022 et seq., which read in part as follows:
"Mr. Landrum. . . . Now, when I say church-related properties, I'm not talking about churches that have industries or churches that conduct and have supermarkets. These type of businesses are able to pay taxes. It's a money-making outfit, and I think they should pay taxes."
"Mr. Lennox. . . I'm not defining WWL-TV at all. I am simply saying that corporations, eleemosynary corporations engaged in commerce in competition with enterprise shall enjoy no advantage by prohibiting ad valorem taxation exemptions from those corporations."
Page 2023
"Mr. Abraham . . . Well, maybe I phrased my question wrong. Is the intent . . . I thought maybe that the intent of this was to, prevent, say, any trade organization or labor union or religious organization — whatever it means — maybe, from going out and getting a piece of commercial property and leasing it out or something like that. Is it the intent to prevent this type of thing?"
"Mr. Rayburn . . . It was put in there for that, yes, sir."
In summary I would give the following as a basic guide in determining an Article VII, Section 21 exemption:
(1) (A) Is the property owned by a non-profit corporation or association organized for a (B) (1) function; or
(B) does the property belong to a bona fide labor organization involved in collective bargaining; or
(C) does the property belong to a lodge or club organized for charitable and fraternal purposes; or
(D) does the property belong to a non-profit corporation devoted to trade, travel and commerce; or
(E) does the property belong to a trade, business, industry, or professional society or association having non-profit corporation or association status in Louisiana?
(2) If the answer is yes to any of the above, is the property owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes? If so, no exemption applies to that property or pro-rata part.
(3) If the answer is yes to any question 1 provision and no to question 2, ascertain whether the use of the property conforms to the purposes for which the organization exists. If it does not, and even if the unrelated use is public related and might be exempt if used in the same manner by an appropriate organization, the exemption does not apply.
(4) Any reasonable doubt should be resolved against the owner and in favor of taxation.
Trusting that this opinion adequately answers your questions, I am
Yours truly,
WILLIAM J. GUSTE, JR. ATTORNEY GENERAL
BY: FRED L. CHEVALIER ASSISTANT ATTORNEY GENERAL
FLC:men
OPINION NUMBER 79-861A
July 15, 1980
129 Taxation; Art. VII, Section 21, La. Const.
Country clubs are not clearly exempt from ad valorem taxes Honorable Charles R. Hennington and could thus be considered Assessor, Caddo Parish Courthouse taxable. Shreveport, LA 71101
Dear Mr. Bennington:
Reference is made to your letter of June 18, 1980, requesting clarification regarding exemption from ad valorem taxes of country clubs and social clubs owned by non-profit corporations or associations.
In Opinion Number 79-861 of this office written to Mr. Brian Bubrig of the Louisiana Assessor's Association, it was concluded that the language found in Article VII, Section 21 (B)( 3) of the Louisiana Constitution of 1974, dealing with ad valorem tax exemptions, requires blat an organization be charitable and fraternal, not just fraternal, in qualifying for an ad valorem tax exemption. Thus the opinion concludes that country clubs and social clubs would not be included.
You state in your letter that you have been contacted by several organizations citing that they are exempt from federal and/or state income tax.
This office hereby reaffirms the conclusion in Opinion 79-861 regarding these types of organizations and their status under the ad valorem tax exemptions found in the Constitution. The Constitution provides specifically for exemption from ad valorem taxation in Article VII, Section 21 and these provisions are separate and apart from any provision of law that might grant an exemption from income taxation. In addition, I would refer you again to Opinion 79-861 which states that any doubt regarding an exemption should be resolved in favor of taxation and against the person seeking the exemption based on current jurisprudence cited in the opinion.
Trusting that this response adequately answers your question, I am
Yours truly,
WILLIAM J. GUSTE, JR. ATTORNEY GENERAL
BY: FRED L. CHEVALIER ASSISTANT ATTORNEY GENERAL
FLC:mcn
OPINION NUMBER 76-114
March 29, 1976
119 Taxation — Exemptions 15A Constitutional Law Art. 10, Sec. 4(2) of 1921 Art. VII, Sec. 18(E) of 7
Question of whether Gulf South Research Institute is exempt from Mr. C. Gordon Johnson ad valorem taxes to be determined by Chairman La. Tax commission — being Louisiana Tax Commission contingent upon guidelines set out P.O. Box 44244 in accordance with Article VII, Baton Rouge, LA 70804 Section 21 of 1974 La. Constitution.
Dear Mr. Johnson:
You have requested an opinion from this office as to whether the Gulf South Research Institute is entitled to be exempt from the payment of ad valorem taxes.
Gulf South Research Institute has an appeal before your commission seeking an exemption, under the provisions of Section 21, Article VII of the Louisiana Constitution of 1974, because of its activities in the following fields:
1) Education
2) Promotion of Trade, Travel and Commerce
3) Health Research Programs
We have concluded that our office des not have the authority to make a decision as to whether any particular taxpayer is exempt, as this decision is based upon a factual determination. Your commission is granted the exclusive right to make such a decision under the provisions of Article VII, Section 18 (E) of the 1974 Louisiana Constitution.
However, as Attorney for the State of Louisiana, its officers, agencies and boards, we would like to assist you by furnishing to your commission our opinion as to the applicable law which may be used by your commission in making individual decisions regarding particular taxpayer's appeals.
Section 21, (B), (1) and (3) of Article VII, Louisiana Constitution of 1774 exempts property from ad valorem taxation belonging to certain nonprofit corporations in the following terms:
"(1) Property owned by a nonprofit corporation or association organized and operated exclusively for religious, dedicated places or burial, charitable, health, welfare, fraternal, or educational purposes, no part or the net earnings of which inure to the benefit of any private shareholder or member thereof and which is declared to be exempt from federal or state income tax.
(3) Property of an organization such as a lodge or club organized for charitable and fraternal purposes and practicing the same, and property of a nonprofit corporation devoted to promoting trade, travel, and commerce, and also property of a trade, business, industry or professional society or association, if the property is owned by a nonprofit corporation or association organized under the laws of the state for such purposes . . .
None of the property listed in Paragraph (B) shall be exempt if owned, operated, leased, or used for commercial purposes unrelated to the exempt purposes of the corporation or association".
The provisions of Louisiana's prior Constitution, in relation to the exemptions being considered, hive been changed in the 1974 Constitution and, therefore, the prior jurisprudence and opinions are not helpful in resolving this inquiry.
The Louisiana Constitution of 1921, Article 10, § 4 (2) exempted the property of schools and colleges to the extent of the property and grounds used for that purpose and not leased for profit or income.
Two changes in relation to education have been effected by the new Constitution, i.e., that property be owned by a nonprofit corporation which was organized and is operated exclusively for educational purposes.
The exemption granted in Section 21, (B) (1) (La. Const. of 1974) to the property of nonprofit corporations organized and operated exclusively for health purposes is new. The prior Constitution exempted property devoted to charitable undertakings but did not contain an exemption of property used for health purposes.
Louisiana's prior Constitution, Article 10, § 4 (18), exempted property devoted to the development and promotion of trade, travel and commerce between the peoples of the United States with the peoples of other countries. The exemption in the new Constitution applies to property of a nonprofit corporation devoted to promoting trade, travel and commerce, which is a much broader exemption.
The last paragraph of Section 21 (B) (3) provides that property used for commercial purposes unrelated to the exempt purpose of the corporation shall not be exempt. You must, therefore, consider whether the activities conducted by the applicant and the property's use is commercial and, if so, whether such activities and use are related to the exempt purposes of the corporation.
The wording of this paragraph was thoroughly debated by the Constitutional Delegates (Volume 23, October 26, page 45 and Volume 23, October 31st, page 12, Transcript of the Constitutional Convention). It will be seen from the debates that the purpose of this article was to tax property belonging to a nonprofit corporation which was used for commercial purposes unless such commercial use was related to the exempt purpose of the corporation. This test is basically the same as that used by the United States Internal Revenue Service. Under this test e.g. a hospital would not lose its exempt status because a cafeteria for the use of personnel and visitors was operated in the hospital; however, if this hospital owned land six blocks away and a commercial business was being operated thereon which was unrelated to hospital service, the property would not be exempt from taxation.
With this general recitation of the law as a guide, we suggest that, in considering any application for exempt status of property, the following factors be considered and questions asked:
1) Applications based upon educational and health activities
A) Is the property, under consideration, owned by a nonprofit corporation?
B) Is the corporation a nonprofit corporation?
C) Does any part of the net earnings inure to the benefit of any private shareholder or member?
D) Is the corporation exempt from federal and state income tax?
E) Was the corporation organized and is it operated exclusively for health or educational purposes?
F) Is the property being used for commercial purposes unrelated to the exempt purposes of the corporation?
2) Application based upon promotion of trade, travel and commerce
A) Is the property, under consideration, owned by a nonprofit corporation?
B) Is the corporation a nonprofit corporation?
C) Is the corporation devoted to promoting trade, travel and commerce?
D) Is the property being used for commercial purposes unrelated to the exempt purposes of the corporation?
Although, it will be noted, under the constitutional provisions quoted above (Section 21, B, 3 of Article VII) the requirements relating to earnings by a stockholder and the exempt status of both federal and state income tax (when are listed in Section 21, B, 2 of Article VII) are not repeated, it is our opinion that these two requirements are necessary for a corporation (devoted to trade, travel and commerce) to be considered nonprofit.
It will also be noted that the words "devoted to promoting trade, travel and commerce" are used rather than the words in sub part 1 which require corporations to be operated exclusively for various purposes listed therein. for the corporation must be "devoted" to promoting trade, travel and commerce. The word "devoted" denotes a singleness of purpose and dedication to certain objectives of such a degree as to be one of the main purposes of the corporation.
In seeking to determine the answers to the questions we have submitted, you may examine the actual activities of the applicant, the purpose clause of the corporation's charter and the use of the particular portion of property under consideration.
If we can be of any further assistance to your Board, please request any further information you may need.
With best regards, I am
Yours very truly,
WILLIAM J. GUSTE, JR. Attorney General
WJG, Jr./glp