The respondent, City of Concord (City), appeals an order of the Superior Court {McNamara, J.) granting summary judgment to the petitioner, Granite State Management & Resources (GSMR), and denying summary judgment to the City, based upon a finding that GSMR is a charitable organization eligible for a tax exemption under RSA 72:23, V (2012) for the tax years 2008 and 2009. We affirm in part, reverse in part, and remand.
I. Facts
The summary judgment record supports the following facts. GSMR is a New Hampshire nonprofit corporation that is exempt from federal income tax under 26 U.S.C. § 501(c)(3). Article 2 of its Articles of Agreement (articles) sets forth GSMR’s purpose as:
providing low cost or alternative financial assistance to eligible students and to parents, custodians or guardians of such students who are attending educational institutions or participating in educational programs in the United States of America and its territories . . . and of supporting the development of higher education and educational opportunities for the citizens of the United States of America and its territories.
(Emphasis added.)
According to its chief financial officer (CFO), Dean Grondin, GSMR has two primary functions: student loan servicing and staffing. First, GSMR contracts with its nonprofit affiliate, New Hampshire Higher Education Loan Corporation (NHHELCO), to service loans originated under the Federal Family Education Loan Programs (FFELP), a federally guaranteed student and parent educational loan program. NHHELCO is a nonprofit organization that is also еxempt from federal income tax under 26 U.S.C. § 501(c)(3); it is a qualified lender under FFELP and supplements FFELP loans when they provide insufficient funding. See 20 U.S.C. § 1078. GSMR services education loans for several lenders in addition to NHHELCO, including private organizations.
Second, GSMR provides “all administrative and management services and all staff necessary to enable” NHHELCO and two other nonprofit affiliates of GSMR “to carry out their charitable and educational] purposes.” Together with NHHELCO, these nonprofit affiliates — the New Hampshire Higher Educational Assistance Foundation (NHHEAF) and NHHEAF Network Educational Foundation (NNEF) — comprise the so-called NHHEAF Network. NHHEAF is a nonprofit organization exempt from federal income tax under 26 U.S.C. § 501(c)(3) that serves as an in-state guarantor of loans originated under the federal guaranteed student and parent educational loan programs. NNEF was a tax-exempt charitable trust that suspended operations in 2008 and transferred its assets to NHHELCO. But for the staffing services provided by GSMR, the NHHEAF Network organizations do not have any employees.
According to GSMR, as a result of its activities in 2008 and 2009, “New Hampshire students and parents were able to obtain access to lower cost funds to finance the cost of educatiоn,” “New Hampshire educational institutions were assured of the flow of funds necessary to allow them to continue their educational activities,” and “New Hampshire lenders were provided with a convenient means to provide families with educational financing.”
II. Procedural Background
GSMR owns four parcels of land located at 1-4 Barrell Court in Concord. Lots 17 and 20 are used for parking. Office buildings are located on Lots 18 and 19, which were consolidated in 2001.
In 2008, the City assessed taxes on Lots 17 and 20 based on their full value. Although Lot 17 was subject to a payment-in-lieu-of-taxes (PILOT) agreement entered into by the City and GSMR in February 2001 (February 2001 PILOT), the City informed GSMR in 2003 that the PILOT had expired, and began taxing Lot 17 at its full value. The City taxed consolidated Lots 18 and 19 pursuant tо a separate PILOT agreement entered into in September 2000 (September 2000 PILOT). Although the September 2000 PILOT applied solely to Lot 18, in 2003 the City started using the combined value of Lots 18 and 19 when appraising the consolidated lot for PILOT purposes. In 2008, the City assessed taxes on consolidated Lots 18 and 19 under the September 2000 PILOT using the lots’ combined value. GSMR paid the assessed taxes on all four lots, but informed the City that it believed the tax bill “include[d] a substantial overpayment.” GSMR subsequently brought a petition for declaratory judgment.
In 2009, the City determined that GSMR did not qualify for the charitable tax exemption because it did not meet the statutory definition of “charitable.” See RSA 72:23, V, :23-( (2012). After applying, unsuccessfully, for a full abatement of its 2009 taxes, GSMR filed a second petition for declaratory judgment.
The trial court consolidated GSMR’s petitions, and the parties filed cross-motions for summary judgment. GSMR argued that it “fully meets the standards for a charitable exemption under RSA 72:23, V and that the City’s decision in 2009 to . . . [deny] GSMR such a tax exemption was incorrect.” As regards 2008, GSMR contended that the City improperly taxed: (1) Lot 17 at its full rate, even though it was subject to the February 2001 PILOT; and (2) Lot 19 under the terms of the September 2000 PILOT, which was applicable only to Lot 18. The City argued in its motion for summary judgment that GSMR was not eligible for a charitable tax exemption under RSA 72:23, V for 2008 and 2009 because it is not a charitable organization.
III. Standard of Review
In reviewing the trial court’s rulings on cross-motions for summary judgment, “we consider the evidence in the light most favorable to each party in its capacity as the nonmoving party and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law.” N.H. Assoc. of Counties v. State of N.H.,
IV. Charitable Exemption
RSA 72:23, V exempts from taxation:
[t]he buildings, lands and personal property of charitable organizations and societies organized, incorporated, or legally doing business in this state, owned, used and occupied by them directly for the purposes for which they are established, provided that none of the income or profits thereof is used for any other purpose than the purpose for which they are established.
Pursuant to RSA 72:23-l:
The term “charitable” . . . shall mean a corporation, society or organization established and. administered for the purpose of performing, and obligated, by its charter or otherwise, to perform some serviсe of public good or welfare advancing the spiritual, physical, intellectual, social or economic well-being of the general public or a substantial and indefinite segment of the general public that includes residents of the state of New Hampshire, with no pecuniary profit or benefit to its officers or members, or any restrictions which confine its benefits or services to such officers or members, or those of any related organization.
In ElderTrust of Florida v. Town of Epsom,
[T]he plain language of RSA 72:23, V and RSA 72:23-l requires the institution [applying for a charitable tax exemption] to satisfy each of the following four factors; namely, whether: (1) the institution or organization was established and is administered for a charitable purpose;(2) an obligation exists to perform the organization’s stated purpose to the public rather than simply to members of the organization; (3) the land, in addition to being owned by the organization, is occupied by it and used directly for the stated charitable purposes; and (4) any of the organization’s income or profits are used for any purpose other than the purpose for which the organization was established. Under the fourth factor, the organization’s officers or members may not derive any pecuniary profit or benefit.
ElderTrust,
A. The City’s Motion for Summary Judgment
On appeal, the City argues that GSMR cannot satisfy any of the four ElderTrust factors. The City argues that GMSR is not administered for a charitable purpose, lacks an enforceable obligation to perform a charitable purpose, does not use its land for a charitable purpose, and benefits its officers rather than the public. See id. The main thrust of the City’s argument is that GSMR’s activity of “administer[ing] and servicing] student loans for both non-profit entities and for-profit entities, earning a significant profit” does not qualify it as a charitable organization. We address each ElderTrust factor in turn.
First, in order to qualify for a charitable tax exemption under RSA 72:23, V, an organization must be established and administered for a charitable purpose. Id. at 697. Generally, charitable purposes fall into the following categories: (1) relieving poverty; (2) promoting health; (3) advancing education; (4) aiding religion; (5) providing governmental or municipal facilities and services; and (6) other purposes that are beneficial to the community. Town of Peterborough v. MacDowell Colony,
The trial court found that GSMR serves a charitable purpose because it “benefits]... the public at large by providing highly efficient streamlined loan services to New Hampshire lenders,” and that its “key benefit is its efficiency.”
The City argues that efficiently managing and servicing student loans does not constitute a charitable purpose. We decline to view GSMR’s charitable purpose so narrowly. According to its articles, GSMR serves the purpose of “providing low cost or alternative financial assistance to eligible students and to parents . . . and
The City argues that GSMR is not administered for a charitable purpose because it does not originate or service loans of its own, but instead manages and services loans originated and guaranteed by NHHEAF, NHHELCO, and other lenders. The City contends that, “[e]ven if NHHEAF and NHHELCO were deemed charitable, GSMR is not permitted to ‘bootstrap’ or ‘piggy-back’, on the charitable activities of аnother organization to demonstrate that it qualifies as a charity, even if it makes those organizations more efficient.” We disagree.
Making another organization’s activity more efficient does not disqualify an organization from a charitable tax exemption: a charitable organization may benefit the public indirectly.
[D]ireet service to the public is not required for a charitable tax exemption.. .. [A]n organization can indirectly provide a benefit to the public ... by means of a service . . . that is provided to certain individuals .... The obligation to provide the service by which the public benefits indirectly satisfies the requirement that the organization must be obligated to perform its stated purpose to the public and provide some service of public good.
Appeal of City of Concord,
The authority that the City cites in support of its argument that GSMR does not
In Sacred Heart Healthcare System, the Commonwealth Court of Pennsylvania denied a charitable tax exemption to a corporation, Sacred Heart Healthcare System (SHHS), in part because the direct beneficiaries of its services were its affiliated organizations rather than the public. Sacred Heart Healthcare System,
benefitting, supporting, and performing functions of Sacred Heart Hospital. . . and other subordinate units of the Corporation . . . [and] such support will enable such organizations to improve the quality, breath [sic] and diversity of health care delivered to the public in Lehigh County . . . ; and to contain consumer and governmental costs of such health care, through more efficient utilization all [sic] allocation of health care resources . . .
Id. Consistent with this purpose, “SHHS provide[d] administrative and management services to only a small group of affiliated cоrporations, both for-profit and non-profit, for a fee, and not to the general public or any segment of the general public.” Id. The court reasoned that, even though SHHS aimed to “improve[e] the efficient allocation of health care resources,” it did not advance a charitable purpose because “[m]anagement and administrative services cannot be classified as educational, religious, moral, physical, or social, and are, thus, not charitable” and “because the direct beneficiaries of SHHS’ services are its affiliated organizations” rather than the public. Id.
Similarly, in Shallow River Properties, Inc., the BTLA denied a charitable tax exemption to a corporation that owned аnd rented its property to an affiliate, consistent with its purpose “to receive, purchase, lease, hold and maintain real property associated with the provision of residential treatment and administrative services,” “manage, sell or otherwise dispose of real property,” and “assist [the affiliate] and [other] affiliate corporations in carrying out their missions.” Shallow River Properties, Inc.,
In Lewistown Hospital, the Commonwealth Court of Pennsylvania found that Lewistown Hospital was eligible for a charitable tax exemption еven though its corporate structure consisted of both for-profit and non-profit organizations. Lewistown Hosp.,
Sacred Heart Healthcare System, Lewistown Hospital, and
By contrast, we have never held that, in determining whether an organization qualifies as a charity for property tax purposes, our review is necessarily constrained by the manner in which the organization has chosen to structure its legal existence, although we recognize that this consideration may have a bearing on the issue depending on the facts and circumstances of the particular ease. Cf. First Financial Group of N.H., Inc. v. State,
Accordingly, we disagree with the City’s position that, by virtue of servicing other lenders’ loans, GSMR is categorically ineligible for a charitable tax exemption. ElderTrust,
The City has not sufficiently developed its argument as to the second ElderTrust factor: that a charitable organization must be obligated to perform its stated purpose to the public. ElderTrust,
The City also appears to argue that GSMR is not obligated to perform its stated charitable purpose because, in its agreements with NHHELCO and NHHEAF, it contractually retains the right to assign or subcontract its obligations to another organization, including a for-profit entity. Our review of GSMR’s agreements with NHHELCO and
Addressing the third factor, whether GSMR’s land is “occupied by . . . and used directly for the stated charitable purposes,” ElderTrust,
The fourth ElderTmst factor prohibits a charitable organization’s officers and members from deriving any pecuniary profit or benefit. ElderTrust,
We therefore affirm the trial court’s denial of the City’s motion for summary judgment.
B. GSMR’s Motion for Summary Judgment
A party moving for summary judgment must submit in support of its motion “an affidavit based upon personal knowledge of admissible facts as to which it
Affidavits containing statements of legal conclusions and “expression[s] of purely personal opinion” are insufficient to entitle a party to summary judgment. See Brown v. John Hancock Mut. Life Ins. Co.
We find that genuine issues of material fact exist as to at least two of the four factors that GSMR must prove to qualify for a charitable tаx exemption: that it is actually administered for a charitable purpose and that its income or profits are used for its established purpose. ElderTrust,
In support of its motion, GSMR submitted Grondin’s affidavit, in which the CFO stated that, as a result of GSMR’s activities, students and parents in New Hampshire obtained access to lower-cost educational financing and New Hampshire educational institutions were assisted in securing reliable funds. In opposition to the City’s motion for summary judgment, GSMR submitted the affidavit of its CEO, René Drouin, in which he stated that GSMR “works to reduce the level of defaults and limit burdens both for the loan program and for borrowers.” At oral argument, GSMR listed the evidence demonstrating its efficiency, ie., the means by which it performs its charitable purрose, as follows: the affidavits of Grondin and Drouin and the fact that GSMR supplies employees for four enterprises, thus eliminating middle management. GSMR admitted that it had not provided to the trial court a comparative analysis of the efficiency of its services.
Grondin’s and Drouin’s assertions that GSMR’s loan servicing activity lowers the level of defaults and provides access to lower-cost funds for students and parents are general averments. Neither the affidavits nor GSMR’s motion for summary judgment reference specific facts evidencing the savings that GSMR purportedly provides. Cf. Baxter v. Szucs,
In addition, the affidavits do not support the trial court’s finding that, if a for-profit servicer performed GSMR’s functions, “th[e] cost would be passed on to the users of student loans.” In his affidavit, Drouin states in conclusory fashion that the administrative structure, whereby GSMR “perfоrms all of NHHEAF, NHHELCO’s and NNEF’s functions . . . reduces costs and supports [GSMR’s] extensive community outreach program.” Drouin also states, however, that “[t]he NHHEAF Network Organizations’ structure is different from that of counterpart organizations in Massachusetts and elsewhere where each entity had its own set of employees.” Thus, not only does the record provide no factual support for GSMR’s assertion that its structure results in savings for borrowers, and that these savings exceed those that a for-profit entity would provide, but the record in fact reflects that the organizations’ structure is novel and one for which few direct comparisons may be possible. Accordingly, we find that there exist genuine issues of material fact as to whether GSMR’s activity is efficient and provides the stated public benefit of advancing education. See MacDowell Colony,
GSMR is correct that the City did not submit any evidence to contradict Drouin’s and Grondin’s affidavits, ie., evidence that GSMR does not help borrowers save. However, the City was not required to submit such evidence because GSMR failed to establish that there is no genuine issue as to those material facts. Stewart v. Bader,
Furthermore, genuine issues of material fact exist as to the fourth ElderTrust factor — whether GSMR uses its “income or profits ... for any purpose other than the purpose for which [it] was established.” ElderTrust,
It is recognized that a corporation does not lose its exempt status under a statute which requires the payment of contributions or taxes merely because it has a net income or makes a profit or charges fees for its services. The destination of the income, and not the source of the income, determines the exemption.
Institute for Trend Research v. Brown,
In addition, genuine issues of material fact remain as to whether the salaries and benefits that GSMR pays to its employees are consistent with its charitable purpose. The compensation consultants’ letters referenced earlier fall short of the type of evidence that is required for entry of summary judgment: they do not constitute “affidavit[s] based upon personal knowledge of admissible facts as to which it appears affirmatively that the affiants will be competent to testify.” RSA 491:8-a, II.
For the foregoing reasons, we find that the trial court erred in granting GSMR summary judgment and remand for further proceedings consistent with this opinion.
GSMR argues that a determination of its eligibility for a charitable tax exemption will affect its tax liability only for 2009. This is correct as to Lots 18 and 19. The trial court affirmed the City’s use of the September 2000 PILOT for the purposes of assessing tax for 2008 on consolidated Lots 18 and 19, and GSMR has not cross-appealed that ruling. Although the City took a contrary position in its response to GSMR’s motion for summary judgment, it does not appear to argue on appeal that, if GSMR is found ineligible for a charitable tax exemption, its 2008 tax liability for Lots 18 and 19 should be revised upward from the amount the City has already assessed under the September 2000 PILOT. Insofar as it does advance such an argument, we reject it. See RSA 76:14 (2012); 16 P. LOUGHLIN, New Hampshire Practice: Municipal Taxation and Road Law § 15.07, at 15-7 (2008) (“[T]he action to correct an assessment or add an excluded piece of property must occur before the expiration of the tax year for which the tax has been assessed.”); Pheasant Lane Realty Trust v. City of Nashua,
GSMR is mistaken, however, in its assertion that its tax liability for 2008 on Lots 17 and 20 is no longer at issue. As regards Lot 17, the City assessed taxes on the lot based on its full value rather than under the February 2001 PILOT and the trial court agreed with the City that Lot 17 ceased to be subject to the February 2001 PILOT in 2004. Taxes for 2008 on Lot 20 were also assessed at full value. The trial court determined that both lots were exempt from taxation for 2008 because GSMR was a tax-exempt charitable organization that used Lots 17 and 20 for parking. The City timely appealed the dispositive determination that GSMR qualified for a tax exemption. GSMR’s argument that the City should have also appealed the trial court’s finding that GSMR used Lots 17 and 20 for parking misses the point: even if GSMR undisputedly used the lots for parking in 2008, it was exempt from taxes on the lots only if it was a charitable organization. See RSA 72:23, V. Accordingly, we leave it to the trial court to determine on remand GSMR’s tax liability for 2008 on Lots 17 and 20.
Affirmed in part; reversed in part; and remanded.
Notes
To the extent that the trial court relied on GSMR’s community outreach activities in finding that GSMR provided the public benefit of efficiency, the record does not offer factual support for or establish a connection between outreach activity and efficient loan servicing.
Our remand on this point in Appeal of City of Concord was for the purpose of having the BTLA determine whether the taxpayer’s “benefits to the public are slight, negligible or insignificant when compared to the benefit derived by [the taxpayer’s] members.” Appeal of City of Concord,