R. Miltоn YORGASON, Salt Lake County Assessor, Plaintiff and Appellant, v. COUNTY BOARD OF EQUALIZATION OF SALT LAKE COUNTY, ex rel., EPISCOPAL MANAGEMENT CORPORATION, Defendant and Respondent.
No. 18986
Supreme Court of Utah
Feb. 3, 1986
714 P.2d 653
On the day set for trial, American-Strevell and Royal Globe offered to settle the case for $175,000. Attorneys for appellant and American-Strevell and Royal Globe prepared a release agreement with the following provision:
The undersigned hereby acknowledges receipt of the sum of $175,000.00 less $_________ paid directly to Equitable Insurance Company in satisfaction of its no-fault payments claim.
The uncontroverted affidavit of counsel for American-Strevell, which was before the trial court on summary judgment, states that the blank space in the release agreement was provided at the request of appellant‘s attorney who wished to nеgotiate the figure payable to Equitable. The amount was later established at $10,800 (a reduction of $1,000 from the amount actually paid by Equitable), and that figure was inserted in the release which was then signed by appellant. Royal Globe issued two checks and appellant received $164,200.
Appellant advances two theories for recovery of the amount paid to Equitable: (1) the release was in effect an assignment of his settlement proceeds, and therefore void because such proceeds are exempt from execution and therefore not assignable, and (2) under Allstate v. Ivie, Utah, 606 P.2d 1197, 1202-03 (1980), Equitable could not take any part of the amount recovered by its insured, but could only obtain reimbursement from the liability insurer through arbitration. Both theories are patently erroneous. The plain meaning of the language of the settlement agreement, which we construe as a matter of law, is that the amount of appellant‘s recovery was $164,200, not $175,000. The agreement clearly shows that he never acquired any interest in the amount specified for reimbursement to Equitable. Therefore, the trial court correctly concluded that appellant had failed to state a cause of action and properly granted summary judgment.
Affirmed. Costs to respondent.
HALL, C.J., and STEWART, HOWE and ZIMMERMAN, JJ., concur.
Theodore L. Cannon, Bill Thomas Peters, Salt Lake City, for plaintiff and appellant.
Kevin N. Anderson, Albert J. Colton, Salt Lake City, for defendant and respondent.
The Salt Lake County Board of Equalization, the State Tax Commission and the district court all found that an apartment building for needy elderly and handicapped families and individuals, known as St. Mark‘s Tower, was exempt from real property tax because it was used exclusively for charitable purposes. The plaintiff, Salt Lake County Assessor, appeals that determination and asks that St. Mark‘s Tower be placed upon the tax rolls of Salt Lake County and taxed for the tax years 1980 and following. We affirm.
Episcopal Management Corporation is a Utah nonprofit corporation organized in April 1978. The articles of incorporation state that the corporation was organized “exclusively for charitable purposes.” The articles further state that “[t]he specific charitable purpose of this corporation is the promotion of the welfare of needy elderly and handicapped families through the provision of housing for low- and moderate-income individuals who do not possess the
The property at issue here is an apartment building known as St. Mark‘s Tower in Salt Lake City. The Tower consists of 98 rentable units together with common areas used for social and recreational activities, a resident manager‘s apartment and several offices used by the Tower‘s administration. There are no commercial businesses of any type in the building. Social programs are organized and furnished for the tenants without charge, and free counseling is offered. Volunteers take tenants grocery shopping and provide and staff blood pressure clinics, among other things. The philosophy of the Tower is to provide a total cоntinuum of care to its tenants.
In order to build the Tower, volunteers spent approximately 1,250 person hours negotiating with the Department of Housing and Urban Development (HUD) for financing and in negotiations for the building site; in consultation during construction; and in the selection of the managing agent for the Tower. Additionally, the Episcopal Diocese of Utah spent about $1,500 for travel expenses to further the negotiations.
As a result of these volunteer efforts, HUD loaned the corporation $3,638,000 for construction of the Tower under the terms of the
The Tower began accepting tenants on December 27, 1979.2 In order to be eligible to reside in the Tower, a tenant must be over 62 years of age or handicapped. Handicapped individuals cannot make up more than 10% of the tenants. As of January 1981, no tenant could have income in excess of $12,000 per year if single or $13,700 per year if married.3 At the time this action commenced, the average annual income of tenants at the Tower was $4,622.
Rent for each unit is established by HUD on the basis of fair market value for equivalent facilities in the community. In January 1981, the established rent was $433 per month per unit. This rent included all utilities except telephone. The percentage of the monthly rental paid by the tenant is based on his or her ability to pay. The tenant pays 25% of his or her gross annual income toward the rent. In 1981, the average rent paid by tenants was $96, with the highest being $199 per month. Thus, no tenant completely pays his or her own way. The difference between the rent the tenant pays and the established fair market rent is paid by HUD to Episcopal Management Corporation in the form of section 8 subsidy payments.4 Both operating expenses and mortgage payments are paid exclusively from the monthly rental proceeds with any excess applied to reduce the mortgage.5 There are no earnings over and above expenses.
Upon dissolution of the corporation, the assets of the corporation must be disposed of to benefit an exempt organization under
In 1980, the Salt Lake County Assessor assessed and taxed St. Mark‘s Tower.6 The tax assessment on the Tower was approximately $40,000 per year. Episcopal Management Corporation sought review of that assessment before the Salt Lake County Bоard of Equalization, which found the Tower to be exempt from real property tax because it was used exclusively for charitable purposes within the meaning of
Plaintiff contends that the use of the Tower to provide housing for needy elderly and handicapped families and individuals is not a truly charitable one and that the finding of a charitable use by both the tax commission and the district court impermissibly expands the language of
This Court has adopted the general rule that the language of the сlause exempting property “used exclusively . . . for charitable purposes” from taxation should be strictly construed.8 This does not mean however that purposes exclusively charitable are limited to the mere relief of the destitute or the giving of alms.9 In fact, what qualifies as a purpose exclusively charitable is “subject to judgment in the light of changing community mores.” 10 With this in mind, a number of states have recognized that provision of low-cost housing to low-income handicapped and elderly people in a proper environment constitutes charity.11
In Utah County v. Intermountain Health Care, Inc.,15 the Court articulated six factors which consolidate some of the trаditional factors considered by this Court and provide useful guidelines in determining whether a particular institution is using its property exclusively for charitable purposes. These are:
- whether the stated purpose of the entity is to provide a significant service to others without immediate expectation of material reward;
- whether the entity is supported, and to what extent, by donations and gifts;
- whether the recipients of the “charity” are required to pay for the assistance received, in whole or in part;
- whether the income received from all sources (gifts, donations, and payment from recipients) produces a “profit” to the entity in the sense that the income exceeds operating and long-term maintenance expenses;
- whether the beneficiaries of the “charity” are restricted or unrestricted and, if restricted, whether the restriction bears a reasonable relationship to the entity‘s charitable objectives; and
- whether dividends or some other form of financial benefit, or assets upon dissolution, are available to private interests, and whether the entity is organized and operated so that any commercial activities are subordinate or incidental to charitable ones.16
As can be seen from the foregoing facts and the following discussion, the Tower qualifies as a charitable use under all six of these guidelines and under the Court‘s traditional analyses.
Both this state and the Congress of the United States have recognized that the community benefits from efforts made to provide adequate housing for the low-income elderly and handicapped members of our society. The Utah State Legislature has stated:
It is declared to be the policy of the state of Utah to promote the general welfare of its citizens that it is necessary to remedy the unsafe and unsanitary housing conditions and the acute shortage of decent, safe, and sanitary dwellings for families of low income, in urban and rural areas. These conditions cause an increase and spread of disease and crime, and constitute а menace to the health, safety, morals and welfare of the state. It is the policy of the state of Utah to make adequate provision of housing for persons of low income, for elderly persons of low income, for handicapped persons of low income, for veterans of low income unable to provide themselves with decent housing on the basis of benefits available to them through certain government guarantees of loans for purchase of residential property, and during limited periods, housing for disaster victims. The provision of safe and sanitary dwelling accommodations at rents or prices which persons of low income can afford will materially assist in developing more desirable neighborhoods and alleviating the effects of poverty in this state. The purposes of this act are to meet these problems by providing low-cost housing for low-in-
come persons and to encourage co-operation between political subdivisions thereby making available low-cost housing facilities in all areas of the state. It is in the public interest to utilize the broad financial resources and technical services available to government in co-operation with the ingenuity and expertise of private enterprise to alleviate this lack of safe and sanitary dwellings while stimulating local industry.17
It should be noted that the above statement of policy not only applies to actions by government, but encourages “co-operation with the ingenuity and expertise of private enterprise.”
Congress articulated a similar purpose when it passed the
The Congress finds that there is a large and growing need for suitable housing for older people both in urban and rural areas. Our older citizens face special problems in meeting their housing needs because of the prevalence of modest and limited incomes among the elderly, their difficulty in obtaining liberal long-term home mortgage credit, and their need for housing planned and designed to include features necessary to the safety and convenience of the occupants in a suitable neighborhood environment. The Congress further finds that the present programs for housing the elderly under the Department of Housing and Urban Development have proven the value of Federal credit assistance in this field and at the same time demonstrated the urgent need for an expanded and more comprehensive effort to meet our responsibilities to our senior citizens.18
Congress reaffirmed these purposes in the
It is the policy of the United States to promote the general welfare of the Nation by employing its funds and credit, as provided in this chapter, to assist the several States and their political subdivisions to remedy the unsafe and unsanitary housing conditions and the acute shortage of decent, safe, and sanitary dwellings for families of low income and, consistent with the objectives of this chapter, to vest in local public housing agencies the maximum amount of responsibility in the administration of their housing programs . . . .19
Undisputed testimony before the tax commission indicated that there was a very high proportion of low-income displaced elderly in Salt Lake County. This situation is due largely to the trend of converting older apartment buildings, where many elderly lived, to modern condominium complexes whose rental fees or purchase prices were well beyond the financial capabilities of individuals who had lived in the older apartment buildings for 20, 30 or even 50 years and who are on low fixed incomes. Low-cost, privately owned housing for those displaced individuals is simply not available.
It was undisputed that none of the residents of the Tower would be able to live in comparable housing to that provided at the Tower anywhere else in Salt Lake County for the amount of rent each resident paid at the Tower. In fact, many tenants of the Tower were taken from substandard housing situations, including apartments or rooms infested with cockroaches, with dirt floors, without running water or with minimal facilities.
A project such as the Tower plainly serves an important social need both to the community as a whole, for the reasons stated by the Utah Legislature, and to the individuals residing in the Tower.20 Such projects are designed and operated to encourage continued activity and further development on the part of its tenants. Testi-
In addition to the benefit provided to the community and the individuals residing in the Tower, the Tower provides a gift to the community.
First of all, Episcopal Management Corporation has made and continues to make substantial contributions of both money (defendant is responsible for the repayment of the loan made by HUD for construction of the Tower no matter what the source of income or shortfall in income; $1,500 unreimbursed travel expenses) and services (the initiative to conceive and then follow through and build the Tower; 1,250 person hours contributed by volunteers from idea to opening; volunteer members of the Board of Directors meet monthly to set policy; continuing volunteerism at the Tower providing a variety of services to residents). Second, there is a substantial imbalance in the exchange between Episcopal Management Corporation and the tenants of the Tower. No tenant begins to pay for the total cost of renting an apartment and for the various services provided.
In Friendship Manor Corp. v. Tax Commission,23 this Court, in refusing to exempt from taxation a home for the elderly, established a test for determining what characteristics a home for the elderly would have to possess in order to be properly used exclusively for charitable purposes. Friendship Manor involved an apartment building of 228 units. Tenants in the building had to be ambulatory, and 80% of them had to be over 62 years of age. Each tenant had to be financially able to fully pay the rent established and for all servicеs provided to them. The Manor would not accept tenants if they were not financially able to pay the rent and for all services received or if they could not maintain the standard of living required. Rents were established so that the total amount collected met all expenses plus amortization of interest and principal on the mortgage. Certain commercial businesses were also allowed to operate in the building. The Utah Supreme Court ruled that under these facts the Manor should not be exempt from taxation:
Where the senior citizen is paying for all of the services he receives and the rental of the apartments is not determined by need, but is determined by what is required to retire the principle and interest of the mortgage, together with all upkeep and operation expenses, no charitable purpose is involved. The State does not have the obligation to provide living accommodations to persons well able and willing to pay for their needs.24
(Emphasis added.)
In so holding, the Court adopted whаt has been characterized as the “material reciprocity” test for determining whether a housing complex for elderly and handicapped people is a charitable use.25 If rental payments are insufficient to cover the cost of the complex and are adjusted to reflect each tenant‘s ability to pay, then a charitable exemption is available; otherwise, it is not. In the case of St. Mark‘s Tower, none of the tenants are able to fully pay for their needs. The rental paid by each tenant is based on ability to pay, and no tenant begins to pay for the total cost of rental and services received.
The Tower also provides a gift to the community since it lessens a government burden. Undisputed testimony before the tax commission indicated that at least eleven residents of the Tower, and probably more, would have to be in nursing homes if the Tower, together with its services and philosophy, was not available. Nursing home costs in Salt Lake County ranged between $1,000 and $1,500 per month at the time this action commenced. Those eleven-plus residents of the Tower would be totally dependent on Medicaid to pay all costs within six months of entering a nursing home. The lessening of the government‘s burden from this one aspect alone, even deducting the government subsidies, more than outweighs the tax benefits that would be realized by assessing the Tower.29
Additional testimony before the tax commission indicated that there wеre also substantial savings to the government from reduced use of food stamps, lessened medical care, reduced home delivery community services to isolated individuals, and so on. Finally, the executive director of the Salt Lake County Housing Authority testified that if the Tower did not exist, the County, in one fashion or another, would have to provide those services to the residents.
Plaintiff, however, contends that the fact that the Tower accepts government subsidies in order to operate precludes the Tower from being accorded a charitable exemption. This argument fails for several reasons. First, and most importantly, as this Court said in Friendship Manor: “It is the use to which it puts its real property which is the determination of whether or not such property is exempt.” (Emphasis added.)30 The use of the property is obviously a charitable one as discussed previously.
Second, the section 8 government subsidy payments are provided to the project. Thus, those payments are like a gift or donation of any other kind except they come from the government. In both Intermountain Health Care and the present case, the crux is the presence or absence of material reciprocity. It is entirely irrelevant to this analysis that the government, rather than a private benefactor, chose to make up the deficit resulting from the exchange between St. Mark‘s Tower and the tenants by making a contribution to the landlord, just as it would have been irrelevant in Intermountain Health Care if the patients’ income supplements had come from private individuals rather than the government.
Therefore, the fact that subsidization of part of the cost of furnishing such housing is by the government rather than private charitable contributions does not dictate
Operation of St. Mark‘s Tower by the Episcopal Management Corporation clearly meets all of the tests established by this Court to determine whether or not a given property is used exclusively for charitable purposes. Therefore, we conсlude that the tax commission and the district court were correct in exempting the Tower from property tax. Affirmed.
DURHAM, J., concurs.
ZIMMERMAN, Justice: concurring separately.
I join in the majority opinion, but add several observations.
I agree that the six variables set out in Utah County v. Intermountain Health Care, Inc., Utah, 709 P.2d 265 (1985), are useful in focusing on the general factors relevant to a determination of the presence or absence of a gift, the critical element in deciding whether a charitable exemption is available. However, for the purposes of determining whether a housing project has demonstrated the presence of a gift and, therefore, qualifies for the exemption, I consider the fact-specific analytical framework set forth in Friendship Manor Corp. v. Tax Commission, 26 Utah 2d 227, 487 P.2d 1272 (1971), to be of more use.1
In Friendship Manor, this Court held that although the property in question, a housing project, was operated on a nonprofit basis, it was not used exclusively for charitable purposes because the landlord did not confer a gift upon both the public and the tenants.2 See Friendship Manor Corp. v. Tax Commission, 26 Utah 2d at 239, 487 P.2d at 1280; cf. Salt Lake Lodge No. 85 v. Groesbeck, 40 Utah 1, 8-9, 120 P. 192, 194 (1911), overruled on other grounds, Loyal Order of Moose, No. 259 v. County Board of Equalization, Utah, 657 P.2d 257 (1982). Even without reference to the six-factor analysis of Utah County, Friendship Manor providеs ample guidance for determining whether St. Mark‘s Tower meets this two-pronged gift test.
The second prong of the gift test is that there must be a gift or benefit to the public. The statement in Friendship Manor that “[t]he state does not have the obligation to provide living accommodations to persons well able and willing to pay for their needs,” 26 Utah 2d at 239, 487 P.2d at 1280, amounted to a finding that the state had not received any benefit or “gift” from the operation of the project because absent the project, the tenants would not have been objects of public charity.
The conclusion to be drawn from Friendship Manor and the cases upon which it relied is that both prongs of the gift test are satisfied where property is used by a nonprofit entity to provide housing for the poor under circumstances where there is a lack of material reciprocity between the tenants and the landlord. The unequal exchange of value provides the necessary element of gift to the recipient,3 and the provision of decent housing for those unable to pay for it confers a benefit on the state. In the present case, these criteria are obviously satisfied, as the Chief Justice ably documents.
The dissenters take the position that this case is not distinguishable from Utah County, from which they dissented also, and that if the hospitals in Utah County could not qualify for the exemption, then St. Mark‘s Tower cannot either. I think they misperceive what Utah County held.
First, the dissent argues that there is no difference between the medicare payments made to the hospitals and the subsidy paid to St. Mark‘s Tower. The majority in Utah County took the medicare payments into account in determining that there was no lack of material reciprocity between the hospitals and their patients; if the federal subsidy to St. Mark‘s Tower is considered, there is also no lack of material reciprocity between the Tower and its tenants.
The dissent ignores the nature of the material reciprocity requirement of Friendship Manor, which was used by the Utah County Court. See 709 P.2d at 269, 274. It does not weigh all the monies received from all sources, on the one hand, and the cost of the services provided, on the other, and determine that a gift occurs only when the result is a net material flow of wealth to the recipient. Such a test would be useless because it could not be satisfied by any viable charitable entity. Only those entities that could demonstrate a fatal hemorrhaging of assets and their candidacy for sure bankruptcy could show a lack of material reciprocity. By looking rather
When a person receives an income supplement from any source that can be used in the open market to pay for services from any number of providers, and an exchange of money and/or the supplement for services takes place, the supplement should be included in determining whether there is material reciprocity in the exchange. The provider is willing to furnish the service for money and does not care whether the recipient‘s ability to pay comes from a steady job, a rich uncle, a charitable foundation, or an income supplement provided by the government. To exclude the income supplement from consideration would be to ignore a relevant fаctor in the decision of the provider to serve that particular recipient. The medicare payments in Utah County come within this analysis.
The subsidy received by St. Mark‘s Tower is distinguishable. When a person does not have an income supplement that can be discretionarily spent in the market, the only element of exchange he or she brings to a transaction with a provider of services is his or her personal assets. If the person is unable to pay the full cost of the services and the provider is nonetheless willing to furnish them, then the provider has conferred a gift upon the individual recipient sufficient to satisfy Friendship Manor and Utah County. This is the classic way charities operate. Obviously, if the provider is to continue to operate in this manner, someone must make up the asset drain that results from such transactions, yet that fact certainly does not bar the presence of a gift, as I am sure the dissenters would acknowledge. If the government, rather than a private benefactor, chooses to make up the deficit by a contribution to the provider, that does not alter the character of the exchange between the provider and the recipient. It also does not change the charitable character of the use to which the provider‘s property is being put. The exemption should be available.
The second argument advanced by the assessor and adopted by the dissent to defeat the exemption is that there is no gift to the public. The dissent contends that the Salt Lake County taxpayers’ financial burden of caring for the poor who are elderly and handicapped has not been lessened by the activities of St. Mark‘s Tower because there has been a simple “shifting [of] financial burden from local and state government to the federal government.” This position is without merit for several reasons.
First, it seems clear that financially, Salt Lake County residents, as local and state taxpayers, benefit financially from St. Mark‘s Tower. As the Chief Justice notes, there is ample record evidence to support the proposition that the property taxes lоst by reason of St. Mark‘s Tower‘s exemption would not have been sufficient for the county or the state to provide equivalent housing and services for the Tower‘s tenants.
Second, the assessor and the dissent assume that before the public benefit prong of the gift test can be satisfied, a detailed financial analysis must be made to determine whether the granting of a property tax exemption produces a net financial gain for the taxpayers of the governmental entity in question: absent a net gain, the exemption should be unavailable. As I understand the argument of the assessor and the dissent, to show a net financial gain would require proving that the public entity could not have furnished services equiv-
Brief reflection demonstrates the unworkability of the “net financial gain” test seemingly advocated by the dissent. First, it would be very difficult in most cases to determine whether the government could have performed a charity‘s work for the same or less than the amount the government lost by reason of the charity‘s tаx exemption. Few charitable entities could be sure from year to year that the net gain calculus would entitle them to a property tax exemption. Moreover, this test would hit hardest those performing charitable works primarily through the use and occupancy of real estate having a high value, such as housing projects. Second, excluding the amount of any governmental subsidies from the net gain calculation would add additional year-to-year uncertainties regarding the availability of an exemption, for it is common knowledge that many such entities receive some governmental support and that the amount of support varies from year to year, depending on the vagaries of governmental budgets and policies.
The uncertainties the net financial gain standard would introduce into the exemption question would have devastating financial consequences for charitable enterprises because the outcome of the analysis would be difficult to predict in advance. An entity‘s property might be exempt one year and taxable the next, with the consequence that its costs of operation could fluctuate wildly from year to year, depending upon whether it had to pay property taxes. Certainty in financial planning is what these entities need, and that cannot be secured if the availability of a property tax exemption is dependent upon the vagaries of each year‘s funding sources and the assessor‘s determination of whether government could perform the same service for less.
For the foregoing reasons, I join in the Court‘s holding that St. Mark‘s Tower is entitled to the property tax exemption provided in
I dissent. The opinion of the Chief Justice and Justice Zimmerman are at variance with the principles set down in Utah County v. Intermountain Health Care, Inc., Utah, 709 P.2d 265 (1985). While I dissented in that case, I recognize that it constitutes the controlling law on charitable exemptions in this state. There, the two hospitals failed to qualify for a charitable exemption because they did not demonstrate that they made a substantial gift of services to their patients. The daily operating expenses of the hospitals were covered by its patients’ payments. Said this Court:
[The] current operating expenses for both hospitals are covered almost entirely by revenue from patient charges. Although a substantial donation to capital was identified in the case of Utah Valley Hospital, there was no demonstration of the impact of that donation on the current support, maintenance, and operation of that hospital in the tax year in question in this lawsuit.
The record also shows that neither of the hospitals in this case demonstrated any substantial imbalance between the value of the services it provides and the payments it receives apart from any gifts, donations, or endowments. The record shows that the vast majority of the services provided by these two hospitals are paid for by government programs, private insurance companies, or the individuals receiving care. Collection of such remuneration does not constitute giving, but is a mere reсiprocal exchange of services for money.
Id. at 273-74 (emphasis added).
In the instant case, each tenant pays a portion of the rent and the balance is made up by a government program, viz., federal subsidy. The amount of the rent is fixed at the prevailing rate in the market. The rent covers the full operating expenses of St. Marks Towers, including mortgage payments. No deficit remains which must be covered by a gift from Episcopal Management or other sources. I am unable to see how this arrangement varies from that in Utah County v. Intermountain Health Care, Inc., supra, where the hospital rendered services to patients who received medicare payments from the federal government to assist them. Indeed, the medicare payment seldom covered the hospitals’ cost of services and the hospitals absorbed the deficit. In the instant case, the payment from the federal government plus the amount paid by the tenant fully covers the tenant‘s costs. Episcopal Management contributes nothing toward the daily operating expenses. The opinions of the Chief Justice and Justice Zimmerman seek to distinguish medicare payments from federal housing subsidy on the ground that medicare is given on the basis of personal entitlement, whereas federal housing subsidy is given to the project. This attempted distinction is fallacious. The subsidy is given to the project only because eligible persons reside therein. Medicare payments, too, are paid directly to the hospital but only for eligible patients therein.
The opinion of the Chief Justice also seeks to justify the exemption in this case on the ground that a government burden is lessened. That basis, too, is faulty. In actuality, what happens here is simply shifting the burden for providing housing for the elderly and handicapped from local and state government to the federal government. The taxpayers of Salt Lake County and of the State of Utah are also taxpayers of the federal government. Shifting the financial burden from local and state government to the federal
The opinion of the Chief Justice places relianсe upon the fact that Episcopal Management Corporation is a non-profit corporation; that it is exempt from taxation under the Internal Revenue Code; that its board of trustees serves without compensation; that hundreds of hours of volunteer time were donated to negotiate the financing with HUD; and that $1,500 for travel expenses were also expended. These same things were true with Intermountain Health Care and the two hospitals involved in Utah County v. Intermountain Health Care, Inc., supra. Indeed, in the case of the Utah Valley Hospital more than $4,000,000 had been donated by members of the community to add an addition. We held that effort was not relevant to the granting of a charitable exemption because “there was no demonstration of the impact of that donation on the current support, maintenance, and operation of that hospital in the tax year in question.” The same problem exists in the instant case. It does not appear that the donation of volunteer time and $1,500 of travel expenses has in any way reduced the amount of rent paid by the tenant or the federal government. The tenant‘s total rent remains at the prevailing market rate. This was fatal to the claim for exemption in Utah County v. Intermountain Health Care, Inc., supra, where we said:
The evidence was that both hospitals charge rates for their services comparable to rates being charged by other similar entities, and no showing was made that the donations identified resulted in charges to patients below prevailing market rates.
Id. at 273 (footnote omitted).
I agree with the Chief Justice that St. Marks Tower serves an important social need in its community and to the individuals residing therein. This need was conceded in Utah County v. Intermountain Health Care, Inc., supra, but we held that much more had to be shown to qualify for a charitable exemption. The opinion of the Chief Justice states that “[T]he test of charitable purpose is public benefit or contribution to the common good or the public welfare,” and that a charitable purpose is not “limited to the mere relief of the destitute or the giving of alms.” These broad principles were held not to be controlling in Utah County v. Intermountain Health Care, Inc., supra, where specific tests for a charitable institution were еnunciated. Those tests were clearly not met here and the charitable exemption should be denied.
The opinion of the Chief Justice relies heavily on out-of-state cases, particularly from Missouri, viz., Bader Realty and Investment Co. v. St. Louis Housing Authority, 358 Mo. 747, 217 S.W.2d 489 (1949), and Franciscan Tertiary Province v. State Tax Commission, Mo., 566 S.W.2d 213 (1978). Yet in Utah County v. Intermountain Health Care, Inc., supra, a majority of this Court rejected the Missouri line of authority on charitable exemptions because it was held to be inconsistent with prior decisions of this Court in that it “contains no mention of the element of gift that this Court has held crucial to the meaning of charity.” Further, the majority said
In conclusion, in Utah County v. Intermountain Health Care, Inc., supra, precise and exact requirements were laid down for a charitable exemption. Now in the next case to follow, the requirements are clearly not met but a charitable exemption is granted upon the authority of out-of-state cases and the pre-Utah County case of Friendship Manor Corp. v. Tax Commission, 26 Utah 2d 227, 487 P.2d 1272 (1971). Our tax assessors and taxing authorities are left to ponder and apply inconsistent rulings of this Court, both made in the past six months.
STEWART, J., concurs in the dissenting opinion of HOWE, J.
Notes
The six-factor analysis may be useful to this Court in determining whether any particular category of institutions qualifies for a property tax exemption, e.g., hospitals or housing for the poor. However, if the six factors are used as Utah County suggests—as guidelines only, with the liberty to accord different factors different weight and without requiring that all of them be satisfied—they may be of limited utility in determining whether any specific piece of property used by an institution within one of those categories is entitled to an exemption unless reference is also made to specific facts of cases dealing with analogous institutions. This, I take it, is the reason for the Chief Justice‘s focus on Friendship Manor. In my opinion, tax assessment bodies would be well advised to review any particular claim in light of the facts of cases decided by this Court that deal with property owned by institutions within that same general category and that are not at odds with the restrictive approach to the charitable exemption taken in our recent decisions, such as Loyal Order of Moose, No. 259 v. County Board of Equalization, Utah, 657 P.2d 257 (1982), and Utah County. Of course, in those areas where there is no case law, decisions may have to be based on general principles. However, even in such situations they should not rely solely on an abstract analysis of Utah County‘s six factors, but should also consider the role each of those factors has played in our pre-Utah County cases.
The rule in Parker will create obvious problems under today‘s decision and under Utah County. Although it might appear relatively easy for a housing project of mixed use with long-term tenants to qualify under Parker because each room could be labeled charitable or noncharitable based upon the status of its occupant, difficulties would be encountered by any institution where physical facilities are used in common by recipients of charity and by those paying in full. Examples that come to mind are common areas in mixed-use housing projects and most of the facilities of a mixed-use hospital. The rigid rule of Parker was adopted in a different environment and almost certainly will have to be modified if different types of institutions devoting similar proportions of their resources to charity are to be treated similarly.