Thе property tax status of a building located on the campus of a nonprofit educational organization has thus far produced decisions at two administrative levels and two court levels. The Property Tax Review Board of Baltimore City and the Maryland Tax Court held that the residence of the building superintendent on the campus of Friends School does not meet the statutory requirements for exemption from real property taxes. On appeal, the Circuit Court for Baltimore City held that the Tax Court had applied an incorrect legal standard and reversed, directing the Tax Court to grant the exemption. On further appeal, the Court of Special Appeals agreed that the Tax Court hаd applied an incorrect standard, but held that the application of the correct standard would necessarily result in denial of the exemption.
Supervisor v. Friends School,
The building superintendent’s residence was planned and built as an integral part of the Friends School campus in 1947. According to the uncontroverted evidence' offered by Friends School, the residence is located so that its occupant has a clear view of most of the school buildings. The home is equippеd with a school phone for communication with the other school buildings, and with spot lights and a portable spot light system for use by the superintendent in campus surveillance. Other school buildings are equipped with a system of flashing lights designed to indicate the existence and nature of problems within the buildings, and these signal lights are visible to the occupant of the superintendent’s home. As a condition of employment, the superintendent is required to reside in this home. The superintendent *197 is chаrged with maintenance of all buildings, and is expected to make regular inspections of the buildings to ensure that the heating systems are functioning and that there are no other mechanical problems. The superintendent is expectеd to patrol the campus from time to time in a pick-up truck furnished by the school, to provide security for the buildings and to remove trespassers from the campus. The superintendent is also responsible for prompt snow removal on campus.
The business manager of Friends School testified that the proper maintenance of the physical plant was an important component in carrying out the educational function of the school. He opined thаt the presence of the superintendent on campus as a resident was “essential” to the proper operation of the school, but conceded that the various functions of a resident superintendent could be accomplished by others, albeit in a less efficient and more expensive manner.
The statute which governed the exemption of property of a qualifying educational institution at the time this controversy arose was codified at Article 81, § 9, Maryland Code (1957, 1980 Repl. Vol.). 1 Section 9(e) granted an exemption for
[pjroperty owned by ... any nonprofit ... educational ... institutions or organizations ... when any of such property ... is actually used exclusively for and necessary for ... educational purposes (including athletiс programs and activities of an educational institution) in the promotion of the general public welfare of the people of the State.
The parties agree that Friends School is a qualifying educational institution. They disagrеe, however, on whether *198 this particular campus building is “actually used exclusively for and necessary for ... educational purposes.”
This building was granted an exemption from the time of its construction in 1947 until the assessment in question for the 1983-84 tax year. In denying the exemption at that time, the supervisor of assessments relied in part upon a change in the language of the exemption statute effected in 1972. Prior to the 1972 change, the exemption was granted for
[b]uildings, furniture, equipment and librаries owned and used exclusively by educational ... institutions ... and the ground ... appurtenant thereto, and necessary for the respective uses thereof. Md.Code (1957, 1969 Repl. Vol.) Art. 81, § 9(8).
As we noted in
Supervisor v. Trs., Bosley Meth. Ch.,
In denying the exemption, the supеrvisor also relied upon, and the Tax Court found “controlling,” our decision in Supervisor v. Trs., Bosley Meth. Ch., supra. In Bosley, we held that a caretaker’s residence owned by a religious organization was not entitled to an exemption. Although certain of the facts of Bosley are similar to those of the case before us, the criteria for exemption in the two cases are not the same. Bosley involved § 9(c), which dealt with the property of religious groups. The case before us involves § 9(e), which dealt with the property of charitable, benevolent, and educational organizations.
Section 9(c), upon which Bosley turned, granted an exemption for
*199 [property owned by a religious group or organization and actually used exclusively for public religious worship, including parsonages and convents____
We held that a caretaker’s home, in which no public worship actually took place, could not qualify as a property “used for public religious worship.”
By contrast, § 9(e), upon which this case turns, does not require that educational activities take place on the property for which the exemption is sought. It requires, rather, that the property is used for, and necessary for, educational purposes. Use for “educational purposes’* is a broader concept than use for “public religious worship.” Moreover, the “necessary for” language upon which earlier and more liberal exemptions were based, and which we noted in Bosley had been omitted from § 9(c), was retained in § 9(e). The Tax Cоurt erred in its interpretation of the law when it found that the changes made in § 9(e) were “virtually identical” to those made in § 9(c), and in requiring proof of academic activities on the property as an absolute prerequisite to the grant of an exemption.
As we noted earlier, the circuit court and the Court of Special Appeals similarly found that the Tax Court erred in its determination of the appropriate legal standard. Each court then proceеded to apply the correct legal standard to the facts of record, and to reach a conclusion concerning the tax status of the property. In so doing, we think each court erred, not because of the conclusions reached, or the fact that each court reached a different conclusion, but because the application of the law to the facts of this case involves an exercise of judgment that must first be made by the аdministrative agency charged with that responsibility.
We are not to be understood as holding that a reviewing court can never reverse an administrative agency on a matter of law and then proceed to determine the outcоme of the case by applying the proper law to the facts. We have done so. In
Supervisor v. Chase Associates,
When, howеver, we have determined that the agency has made an error of law, but that there is a need for additional fact-finding, or that different inferences may be drawn from established facts, or that judgment must be exercised in the application of the law to the facts, we have reversed the decision because of the error, but remanded the case for further proceedings before the agency.
2
See, e.g., Wash
*201
ington Nat’l Arena v. Comptroller,
Even though the facts of this case are not disputed, we are persuaded that the inferences to be drawn from those facts and the initial exercise of judgment that is required with respect to the application of the law to those facts should be accomplished by the Tax Court. The corrеct legal standard, as we have pointed out, is whether the property is “actually used exclusively for and necessary for 3 ... educational purposes ... in the promotion of the general public welfare of the peoрle of the State.” Reasonable minds could differ in the conclusion to be reached by applying this test to the facts of this case, and that determination should be made by the Maryland Tax Court.
JUDGMENT OF THE COURT OF SPECIAL APPEALS REVERSED; CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO REMAND TO THE CIRCUIT *202 COURT OF BALTIMORE CITY WITH INSTRUCTIONS TO REVERSE THE ORDER OF THE MARYLAND TAX COURT AND TO REMAND THE CASE TO THAT COURT FOR FURTHER PROCEEDINGS. COSTS TO BE PAID BY RESPONDENT.
Notes
. Section 9 of Art. 81 has since been amended, without apparent substantive change, and is now codified at § 7-202 of the Tax-Property Article, Md. Code (1986). Hereinafter, all references to statutory sections shall be to Art. 81 of the Md. Code as it existed at the time of this assessment for the 1983-84 tax year.
.
When the agency has correctly interpreted the law, a deferential standard of review is applied by the courts to the agency’s findings of fact, drawing of inferences, and application of the law to the facts. In those сases, a reviewing court will affirm when there is substantial evidence of record to support the agency decision.
Supervisor v. Asbury Methodist Home,
. The terms "actually used," “exclusively,” and "necessary,” as used in this and similar exemption provisions, have been the subject of prior interpretation by this Court. The word “actually” inserted beforе the word “used” evinces an intention that the use must be actual and present as opposed to anticipated or expected.
Supervisor v. Trs., Bosley Meth. Ch., supra,