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Show WEDNESDAY, AUGUST THI 11, 1971 DAILY IECOKD PACE FIVE SUPREME COURT DECISION that the tenants pay less rent because the property is not taxed. with the rentals being fixed so as to return the amount estimated as Veins necessary to pay out the project. It is competitive with landlords offering other residential property for rent and on which taxes must be paid. Also, as the State Tax Commission found, there was no evidence that the public is relieved of any expense in comparison with the loss of tax revenue. Compare Berger v. University of New Mexico, 28 N. M. 666, 217 P. 245 (1923). We conclude the use is not charitable so as to exempt the property from taxes under Article VIII, Sec. 3, N.M. Const. It is the use to which it puts its real property which is the determination of whether or not such property is exempt. If the charitable organisation does not use its real property and building thereon exclusively for charitable purposes such property is not exempt, notwithstanding the fact that the owner thereof is a charitable organization. The fact that plaintiff is exempt from federal taxation under the provisions of the Internal Revenue Code, is not the nonprofit aspect would be a necessary ingredient determinative,-althougof a qualifying charitable operation. Article VIII, Section 3, of the New Mexico Constitution provides for exemptions from taxation all property used for "educational or charitable purposes." It did not include "exclusively for charitable purposes" as the term is incorporated In Parker v. Quinn, 23 Utah 332, 64 P. 961 (1901), the court stated the principles that apply to taxation and exemption as follows: in the Constitution of Utah. The general rule is that all property of what kind soever and by whomsoever owned is subject to taxation, and when any kind of property is exempt it constitutes an exception to this rule. The reason of the rule is that it is just and equitable that every species of property within the State should bear its equal proportion of the burdens of the government. When, therefore, an owner claims that certain property is exempt from taxation, the burden is upon him to show that it falls within the exception. And an exemption will not be aided by judicial interpretation. It must be shown to exist by express terms of the enactment which, it is claimed grants it. "The presumption is that all exemptions intended to be granted were granted in express terms. In such cases the rule of strict construction applies, and, in order to relieve any species of property from its due and just proportion of the burdens of the government, the language relied on as creating the exemption should be so clear as not to admit of reasonable controversy about its meaning; for all doubts must be resolved against the exemption. The power to tax rests upon necessity, and is essential to the existence of the state. " . . . Colorado considered the question of charitable exemption in the case of United Presbyterian Association v. Board of County Commissioners, 448 P. 2d 968 (1968). This case is factually eimilar to our case. The sole question presented for review was whether or not Highland West owned and operated by a nonprofit association as a home for physically independent elderly persons who pay for their tenancy is entitled to tax exemption. The plaintiff, the United Presbyterian Association was incorporated as a nonprofit corporation. Its formation was sponsored by three Denver area churches, each of which designated three trustees to constitute the Board of the association. The association's articles of incorporation declared the following corporate purposes: To provide elderly persons on a nonprofit basis, with housing facilities and services, specially designed to meet the physical, social and psychological needs of the aged, and contribute to their health, security, happiness and usefulness in longer living. Its bylaws provided for the disposition of the association's assets upon dissolution and prescribed that the remaining net assets shall be set over to the three sponsoring churches to be. used as they may direct in furtherance of the "charitable educational and benevolent purposes of this corporation. " property falling within the exception is released this from burden, and such release is justified on the theory that the state derives some peculiar benefit -- - whatever thay may be -- - from such property. . . . . . . Any The association built Highland West, a twelve-stor- y apartment house con121 in size to buffet from units, ranging taining apartapartments ments. The building has special construction features designed for the elderly: ramps in lieu of steps, wide doors to accommodate wheel chairs, grab bars at strategist locations, an electronic alarm system connecting each apartment with the resident manager's office, and elevators of the size to admit stretchers. The building also had a lounge, recreation room and enclosed roof deck for common use by the tenants, as well as two kitchens for group use. The building was financed by funds received from a loan in the sum of $1, 554, 790, insured by the Federal Housing Administration under Section 231 of the National Housing Act. The home was operated by the association. The trustees received no compensation, but a realty firm was employed to manage the property. The resident manager and the assistant manager were also employed. two-bedro- The court thereupon exempts the portion of the building which wae owned and managed by the "Relief Society, " stating: ... It ministers Its to the poor, sick and destitute of the purposes are excellent, and the means adopted community. commendable; and, no doubt; the state ia measurably benefited by having its poor and helpless subjects under the benign protection and care of such a society. . . . the court further ordered the portion of the building held as a source of revenue to be taxed. And In the case of Salt Lake Lodge No. 85, B. P. O. E. , v. Groesbeck, 40 Utah 1, 120 P. 192 (1911), where the question presented was whether or not property came within the provisions of the Constitution and statute exempting property exclusively used for charitable purposes from taxation, the court stated: Persons desiring to reside in Highland West were required to submit a. written application, together with a $100 fee to the Admissions Committee of the association. Application must contain information .as to the .personal history, ... financial-statuand health of the applicant. The Admissions Committee screened all applicants as to standards prescribed by the association's bylaws, and admissions to residents is contingent upon the committee's approval. . s self-sustaini- ng The Colorado court enunciated the doctrine that the established rule is the that presumption is against tax exemption, and the burden is on the one claiming the exemption to establish clearly his rights thereto. The court felt that the special facilities and services differed only in type, but not in nature, from those al provided by commercial buildings. They stated the corporation1! presumed to receive benefits from the property equivalent at least to the public revenue that would otherwise be derived from it. And manifestly the purpose of the statute in exempting property used exclusively for charitable purposes is to encourage the promotion of institutions and organizations having for their multi-residenti- nonprofit status cannot be equated with charitableness, but is one factor which merits consideration in the determination of whether property is being used for strictly charitable purposes. The court felt the amount and nature of the fees and rentals which plaintiff required the elderly tenants to pay negated a charitable purpose, as did the fact that nothing imposed an obligation upon the association to care for persons if they became ill or without financial resources. The court further felt that Highland West was not performing what would otherwise be a governmental function, stating: object the care and maintenance of the indigent and destitute citizen, the helpless orphan and the poor who are sick and afflicted, and whose charity and ministrations in these respects Emphasis correspondingly relieve the state of such burdens. added. In the case of Mountain View Homes, Inc., v. State Tax Commission, 77 N. M. 649, 427 P. 2d 13, the Supreme Court of New Mexico had before it a question of the exemption of a multi-famil- y housing complex in Albuquerque bed-roofrom 316 units ranging in size efficiency apartments to three containing with two baths renting for $105 per month. The project was financed and administered under the National Housing Act, as amended. The maximum income for tenants occupying the dwelling was regulated and controlled under multi-housithe provisions of the National Housing Act. The sponsor of the of New Mexico complex was a nonprofit corporation organized under the laws families income and low to provide dwelling accommodations for moderate of incorpoand for families displaced by urban renewal areas. Its articles of benefit to the of its any of earnings any ration prohibited distribution the of officer corporation. stockholder, individual member or The justification for charitable tax exemption, especially insofar as the rights of the body politic are involved, is that if the charitable work were not being done by a private party, it would have to be undertaken at public expense . ms ' .. v '' . And further; Although care for the aged is a proper concern of government, government obligation: does not extend to the care of physically and financially independent elderly persons who alone can qualify for admission to Highland West . . . . The furnishing of homes to older adults is not in itself a charitable ng The New Mexico Supreme Court stated: om Although partially handicapped persons would be admitted they must be fully physically, because Highland West was not a nursing home. was in the association's articles of incorporation, bylaws, or in There nothing its agreement with the tenant, which imposed any obligation upon the association with respect to a resident who loses either his financial or physical independence. The general ruls is that when private property is claimed to be exempt from taxation the law under which the exemption is claimed will be strictly construed. . . . There is, however, an exception to this general rule, and statutes exempting property used for educational and charitable purposes or for publica worship, under the great weight of authority, should receive broad and more liberal construction than those exempting property used with a view to gain or profit only. The reason for the rule is that the state, by exempting property used exclusively for one or more of the purposes mentioned from taxation, is " "; , purpose. The Colorado court in holding that the operation known as Highland West was not to be pt stated: tax-exem- Tru- -, no one makes a pecuniary profit, and certain "low-incopersons and families who may be described as workers, " "aged, " or "underprivileged" are provided better to housing at lower prices than would otherwise be available . . . me benefit is thus bestowed. However, the recipients are certainly in no sense sick or indigent, and we would venture that most would be (surprised to learn they are considered as It of charity. being proper objects for, or as recipients the to amount an at pay necessary is clear that rents are fixed all and the expenses of mainpay amortize principal interest, should not include taining the property. Dy what theory this taxes on the same basis as other comparable properties is not clear to us. That the federal government does not tax income derived from the property is in no way persuasive. Here, we housing to a certain have an enterprise to furnish low-coto be segment of our population. It was intended were involved. The or that charity without any thought gifts the for occupied to by them premises pay tenants are required them. A ... st self-supporti- ng, and Where material reciprocity between alleged recipients their alleged donor exists . . . then charity does not. In 1968 the Texas court4 analyzed cases where similar activities have been recognized as qualifying for tax exemption in the jurisdictions of California, Minnesota and Kansas and cases from Ohio, Nebraska, Oregon and Florida where such exemptions have been disallowed. The Texas court stated (947): It is apparent from a careful review of these decisions that they are not of controlling persuasion in determining the problems of exemptions with us. The cases in other present substantial variations in the organization and manner of operation of the institutions under review. The governing provisions of th Constitution and statutes of these jwcfcb-dictio- ns Continued on Page ! . a |