Granite State Management & Resources v. City of Concord
165 N.H. 277
| N.H. | 2013Background
- GSMR is a New Hampshire 501(c)(3) nonprofit that provides student loan servicing and staffing for affiliated nonprofit lenders (NHHELCO, NHHEAF, NNEF) and other lenders; it earned substantial net profits and retained large surpluses in 2008–2009.
- GSMR owns four Concord parcels (Lots 17–20); disputes concerned whether (a) Lots 18–19 remained subject to a 2000 PILOT for 2008 and (b) Lots 17 and 20 were taxable in 2008 or 2009 or exempt as property of a charitable organization.
- The City assessed full-value taxes for certain lots (Lot 17 and Lot 20) and concluded in 2009 that GSMR did not qualify for the RSA 72:23, V charitable property tax exemption.
- GSMR sued for declaratory relief; the trial court granted GSMR summary judgment that it was a charitable organization and denied the City’s summary judgment; the City appealed.
- The Supreme Court reviewed whether GSMR met the four ElderTrust factors for a charitable exemption: (1) established/administered for a charitable purpose; (2) obligated to perform that purpose for the public; (3) property owned, occupied, and used directly for that purpose; and (4) income/profits used only for that purpose (no private pecuniary benefit).
Issues
| Issue | GSMR's Argument | City of Concord's Argument | Held |
|---|---|---|---|
| Whether GSMR is established and administered for a charitable purpose | GSMR advances education by providing low-cost loan access and efficient loan servicing that reduces costs for students/institutions | Loan servicing/administration (especially when done for non‑profits and for‑profits and yielding profit) is not a charitable purpose | Court: GSMR’s stated purpose (advancing education) can encompass efficient loan servicing as a means; triable factual disputes remain whether GSMR actually produced the public benefits claimed |
| Whether GSMR is obligated to perform its stated purpose for the public (not just affiliates) | GSMR’s articles and contracts bind it to support development of higher education and its activities benefit the public (and AG enforcement exists) | GSMR primarily benefits affiliates; it cannot "bootstrap" off affiliates’ charitable status | Court: City’s argument was undeveloped; City failed to show entitlement to summary judgment on this factor |
| Whether GSMR’s property is occupied and used directly for charitable purposes | GSMR uses lots for parking and office space to carry out services that advance education | Servicing/management is not direct charitable use; reliance on 501(c)(3) status insufficient | Court: Use-of-property question raises factual issues of directness/apportionment; City not entitled to summary judgment on this factor |
| Whether GSMR’s income/profits and compensation practices are consistent with charitable status (no private pecuniary benefit) | GSMR keeps surpluses as reserves and retained consultants’ letters showing compensation reasonable | GSMR reported multi‑million-dollar profits and large surpluses; compensation and retention raise issues of private benefit | Court: Genuine issues of material fact exist (surplus size/use and consultant letters insufficient for summary judgment); summary judgment for GSMR reversed and remanded for further proceedings |
Key Cases Cited
- ElderTrust of Florida v. Town of Epsom, 154 N.H. 693 (N.H. 2007) (sets four-factor test for charitable property tax exemption under RSA 72:23, V)
- MacDowell Colony v. Town of Peterborough, 157 N.H. 1 (N.H. 2008) (charitable purpose may be indirect and should not be construed narrowly)
- Appeal of City of Concord, 161 N.H. 344 (N.H. 2011) (an organization may indirectly benefit the public by supporting service providers; remand considerations on extent of public benefit)
- Lewistown Hospital v. Mifflin County Board, 706 A.2d 1269 (Pa. Commw. Ct. 1998) (parent/subsidiary structures and when related entities’ activities may be considered in exemption analysis)
- Sacred Heart Healthcare System v. Commonwealth, 673 A.2d 1021 (Pa. Commw. Ct. 1996) (denial of exemption where services benefitted affiliates and management/administrative services were held not to be charitable)
- Institute for Trend Research v. Brown, 100 N.H. 286 (N.H. 1956) (profit or net income does not by itself negate charitable exemption; use of income is the determining factor)