2009-491, Appeal of City of Concord

Rath, Young & Pignatelli, P.C.

(New Hampshire Board of Tax and Land Appeals)

No. 2009-491

exempt organization under section 501(c)(3) of the Internal Revenue Code. See Board of Tax and Land Appeals is a voluntary corporation organized under RSA chapter 292 and is a tax The following facts were found by the BTLA or appear in the record. HCA

board member. We vacate and remand. 72:23 (Supp. 2010) and denying the City’s motion to have an attorney sit as a New Hampshire (HCA), is entitled to a charitable tax exemption under RSA and land appeals (BTLA) ruling that the taxpayer, Home Care Association of HICKS, J. The City of Concord (City) appeals orders of the board of tax

Gardner Fulton & Waugh, P.L.L.C.

objectives are: 26 U.S.C. § 501(c)(3) (2006). According to its articles of association, HCA’s

brief and orally), for the City of Concord. THE SUPREME COURT OF NEW HAMPSHIRE

Association of New Hampshire. Jason M. Tanguay on the brief, and Mr. Sullivan orally), for Home Care

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E-mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as members. The BTLA found that “[t]he governance, staffing and activities of p. 2 Association (GSHHA), that lobbies the state legislature on behalf of HCA’s HCA has a wholly-owned subsidiary, Granite State Home Health

about home health care. maintains a toll free telephone number for inquiries from the general public only home care providers that are members of HCA. In addition, HCA education programs designed to further [HCA’s] objectives.” The website lists health care delivery, . . . search for home care providers, and . . . learn about the general public, can obtain “information about home care and its role in BTLA also found that HCA maintains a website through which users, including the general public, that are intended to further [HCA’s] stated objectives.” The home health care related education and training programs, which are open to leadership, and public policy advocacy.” The BTLA found that HCA “provides HCA performs its “mission through education, networking, research, services to New Hampshire residents.” The statement further provides that enhances the ability of agencies providing home health care to deliver quality HCA’s mission statement states that HCA is an “organization which

one-quarter of the members of HCA are for-profit agencies.” pays the prescribed membership dues. The BTLA found that “[a]pproximately category, “who subscribes to the stated purpose and objectives of” HCA and any person, not associated with an agency eligible under another membership membership associations”; and (3) individual membership, which is open to mission . . . , such as insurers, intermediaries and other trade and organizations doing business with home care providers or interested in [HCA’s]

licensed providers of home care products and/or services and other organizations providing products and/or services to home care providers; non-

“home medical equipment providers; case management providers; home medical equipment providers”; (2) affiliate membership, which is open to of home health, homemaker, hospice, or other home care services exclusive of (1) provider membership, which is open to New Hampshire licensed “providers organization.” Its bylaws provide for three categories of membership:

HCA describes itself in its mission statement as “a membership

Hampshire. availability of human services for all residents of the State of New

individuals toward coordination, increased effectiveness and

3. To work with other groups, associations, agencies and

and the overall protection of the public’s health.

prevention of illness, the encouragement of good health practices

2. To promote programs and services directed toward the

services. 1. To promote not-for-profit home health care and related p. 3 Appeal of Kiwanis Club of Hudson questions of fact shall be deemed to be prima facie lawful and reasonable.” clearly unreasonable or unlawful, and all findings of the [BTLA] upon all On appeal, the City “has the burden of showing that the . . . decision is

then appealed to the BTLA. See from taxation: unsuccessfully sought an abatement from the Concord Board of Assessors, and requirements. RSA 72:23, V provides that the following property is exempt In 2006, however, the City denied HCA’s request for tax exemption. HCA requirements for a charitable tax exemption. We begin by reviewing those The City first challenges the BTLA’s conclusion that HCA satisfies the

Town of Wolfeboro, 152 N.H. 455, 458 (2005). misapprehended or misapplied the law, its order will be set aside.” Appeal of be decided ultimately by this court. Therefore, if we find that the board then brought this appeal. is unjust or unreasonable.” RSA 541:13. “The interpretation of a statute is to City unsuccessfully moved for reconsideration of the BTLA’s decisions, and satisfied, by a clear preponderance of the evidence before [us], that such order attorney member was involved as a plaintiff in litigation against the City. The set aside or vacate a BTLA decision “except for errors of law, unless [we are] to sit on cases involving the City. The BTLA denied the motion, noting that the decisions may be appealed in accordance with RSA chapter 541). We will not City requested that the BTLA appoint another attorney as a temporary member ellipsis omitted); RSA 541:13 (2007); see reason for the attorney’s recusal, it would waive that cause. RSA 71-B:12 (2003) (providing BTLA Otherwise, the his residency in Concord.” The City offered that if residency were the sole, 140 N.H. 92, 93 (1995) (quotation and the half of the property that it uses. only attorney member of the BTLA “ha[d] been recusing himself . . . based on exemption. From 1984 to 2005, HCA was given a property tax exemption for requesting that an attorney sit as a board member. The City believed that the or approximately half of the space, to a third party not eligible for a tax During the course of the appeal before the BTLA, the City filed a motion only office. It shares that office space with GSHHA. It leases the second floor, HCA owns a building at 8 Green Street in Concord, which it uses as its

Property it occupies pursuant to RSA 72:23, V and RSA 72:23-l.” and is entitled to receive a charitable tax exemption for that portion of the concluded that HCA “met its burden to prove it satisfies the requirements for

and inextricably intertwined.” HCA and GSHHA, as well as their use of . . . [office space], are interdependent p. 4 In ElderTrust of Florida, Inc. v. Town of Epsom

RSA 72:23- l (2003).

organization “charitable” for purposes of this chapter . . . . conducted for profit shall not in itself be sufficient to render the organization. The fact that an organization’s activities are not

services to such officers or members, or those of any related

ElderTrust or members, or any restrictions which confine its benefits or New Hampshire, with no pecuniary profit or benefit to its officers

may not derive any pecuniary profit or benefit. segment of the general public that includes residents of the state of well-being of the general public or a substantial and indefinite advancing the spiritual, physical, intellectual, social or economic

Under the fourth factor, the organization’s officers or members

otherwise, to perform some service of public good or welfare for the purpose of performing, and obligated, by its charter or a corporation, society or organization established and administered

than the purpose for which the organization was established. organization’s income or profits are used for any purpose other HCA operates in a manner that bestows a public benefit. For example, the City directly for the stated charitable purposes; and (4) any of the administered.” The City argues that the evidence fails to support a finding that “when it decided that HCA has charitable goals but ignored how those goals are The City contends that in finding the first factor satisfied, the BTLA erred or other organization within the scope of” RSA 72:23 is defined to mean: RSA 72:23, V. The term “‘charitable’ as used to describe a corporation, society

being owned by the organization, is occupied by it and used simply to members of the organization; (3) the land, in addition to perform the organization’s stated purpose to the public rather than administered for a charitable purpose; (2) an obligation exists to , 154 N.H. at 697-98.

purpose than the purpose for which they are established. that none of the income or profits thereof is used for any other directly for the purposes for which they are established, provided

(1) the institution or organization was established and is

under RSA 72:23, V and RSA 72:23- l must satisfy; namely, whether: set forth four factors that an organization seeking a charitable tax exemption

organizations and societies organized, incorporated, or legally

The buildings, lands and personal property of charitable directly assist and benefit only agencies

p. 5 and Hospice Services”. These topics were obviously designed to an agency is properly reimbursed”; or “Marketing Home Care, HME the organization.” ElderTrust organization’s stated purpose to the public rather than simply to members of BTLA’s finding on the second factor, that “an obligation exists to perform the As framed, the City’s argument is closely related to its challenge to the

indirectly satisfies the requirement that the organization must be obligated to “PPS Billing Bootcamp” which is a “step by step process to ensure N.H. at 6. The obligation to provide the service by which the public benefits exemption without providing some service of public good.” Eldertrust Examination”; “Introducing Financial Thinking to Clinical Minds”; provided to certain individuals (there, the Colony fellows). See even if they operate for charitable purposes, from obtaining the benefits of a tax MacDowell, 157 of art) by means of a service (there, the artist-in-residence program) that is “The purpose of the obligation requirement is to prevent organizations, organization can indirectly provide a benefit to the public (there, the promotion required for a charitable tax exemption. As MacDowell demonstrates, an all.” MacDowell, 157 N.H. at 8. Thus, direct service to the public is not is provided but to whether the organization is required to provide the service at stated that the “obligatory service requirement relates not to whom the service disagree. In Town of Peterborough v. MacDowell Colony, 157 N.H. 1 (2008), we to the general public has always been the touchstone of being ‘charitable.’” We N.H. at 699. The City argues that “[t]he obligation to provide services directly

(Citation and ellipsis omitted.) interests of its members,” rather than the interests of the general public. fact, a trade association” with its primary focus on advancing “the common interrelated and ultimately urge a single conclusion; namely, that “HCA is, in the City’s arguments on both factors together, as the arguments are are seen more readily in light of this second factor.” We accordingly address “[t]he [BTLA’s] errors in failing to examine the administration of HCA’s objects

coding” which is “a key element in determining accurate payments entitled “ICD-9 CM Coding: Update and Review” for “diagnosis

health care and not the needs of the general public.

family member would not have any reason to take a seminar The average individual in the general public providing care to a

Citing program materials contained in the record, the City argues: responsible for serving those who use or who may use home care services.” through the education and training of home health care providers who are challenges the BTLA’s specific finding of fact that “[t]he general public benefits charitable tax exemption.” The City cites Nature Conservancy p. 6 gave . . . [are] too attenuated, speculative and incidental to qualify for the The City contends that “[t]he indirect public benefits that HCA argued it

general public.

assistance, should they enter nursing care,” was insufficient to show “use and taxpayer’s elderly housing complex who “might develop the need for [such] services available,” namely, financial assistance to those residents of the Wolfeboro, we concluded that “a theoretical future use of the charitable exemption.” Housing Partnership, 141 N.H. at 244. In Appeal of Town of mission.” The BTLA relied heavily on MacDowell 72:23, V requires in order for a charitable organization to receive a tax feature of [its] practice but rather a pragmatic approach to accomplishing its of rent stability, “is not the direct use and occupation of the property that RSA benefit to the public primarily through its members is not a disqualifying (1996), we determined that an “indefinite and prospective benefit,” in the form efficient manner, to provide home health care services to the [HCA’s] activities” and concluded that “[t]he fact that [HCA] provides this instance, in The Housing Partnership v. Town of Rollinsford, 141 N.H. 239 Here, the BTLA found that “the general public is the beneficiary of negligible or insignificant.” We reached similar conclusions in other cases. For charitable purposes” and that “[t]his occupation and use cannot be slight, “property must be occupied and used by [the organization] for its public 320, in which we noted that to qualify for a charitable tax exemption, the

Working with and through its members, [HCA] is able, in an the ultimate beneficiary of [HCA’s] activities is the general public. general public. As the court found in MacDowell, the board finds artists benefited from their stay at the colony rather than the MacDowell where the town, in that case, argued the resident raised by the Town of Peterborough and answered by the court in The board sees [HCA’s] situation as analogous to the questions

must be examined. We noted in Society of Cincinnati v. Exeter members and “[a]ny benefit to the public is incidental to that primary purpose” Nevertheless, the City’s contention that HCA primarily benefits its

members”). charitable organization if its purposes are confined mostly to benefiting its own Nelson, 107 N.H. 316, 319 (1966) (stating taxpayer “cannot be considered a legal charity.” Society of Cincinnati, 92 N.H. at 356; see Nature Conservancy v. self-interest for their own betterment lacks the altruistic spirit inherent in a (1943), that “[a] group of persons selecting their membership and combining in

public good.” Eldertrust, 154 N.H. at 697, 699. “perform [its] stated purpose to the public” and “provid[e] some service of p. 7 Massachusetts Medical Soc.

from such work.

so classed, even though the public will derive an incidental benefit is to benefit its members or a limited class of persons it will not be adopted for this purpose. But if the dominant purpose of its work

public good and the work done for its members is but the means classed as charitable if the dominant purpose of its work is for the purposes and the actual work performed. An institution will be

declared purposes and the actual work performed.”). Thus, notwithstanding purpose,” ElderTrust its character literary, benevolent, charitable or scientific will depend upon the the requirement that it was “established and is administered for a charitable p. 7 Massachusetts Medical Soc., 164 N.E.2d at 328 (“Whether an institution is in Accordingly, we conclude that for an institution or organization to meet Church of America v. Town of Swanzey, 146 N.H. 658, 662 (2001); see pursuant to those statements.” E. Coast Conf. of the Evangelical Covenant we “look to both its charter or organizational statements and its actions taken “established and . . . administered” requirement, ElderTrust benevolent, charitable or scientific will depend upon the declared, 154 N.H. at 697, obligation requirement, to determine whether an organization meets the from such work.” Massachusetts Medical Soc., 164 N.E.2d at 328. As with the meet this requirement “even though the public will derive an incidental benefit is to benefit its members or a limited class of persons,” the organization will not dominant or primary purpose; if the dominant or primary “purpose of its work

its sole or primary engagement, the Society does not qualify.”). definition of a charitable institution that it is one dispensing public charity as of Cincinnati Whether an institution is in its character literary,, 92 N.H. at 356 (“If there may be additions in broadening the

“occupied . . . and used directly for the stated charitable purposes,” Eldertrust N.E.2d 325 (Mass. 1960): Although these cases dealt with the requirement that the property be statement in Massachusetts Medical Society v. Assessors of Boston, 164 members, we find instructive the Massachusetts Supreme Judicial Court’s charitable purpose or the provision of benefits to the public as opposed to its 152 N.H. at 461. To apply this principle in terms of the organization’s Partnership, 141 N.H. at 244, or “theoretical,” Appeal of Town of Wolfeboro, Nature Conservancy, 107 N.H. at 320, “indefinite and prospective,” Housing requirements therefor is no more than “slight, negligible or insignificant,” exemption is not warranted when the asserted compliance with any of the 154 N.H. at 698, we believe they more broadly express the principle that a tax

organization.” Appeal of Town of Wolfeboro, 152 N.H. at 461. occupation [of the property] directly for the charitable purposes of the and occupancy of the property is relevant to determining the extent, if any, to p. 8 ignore its use and occupancy of the real estate.” We agree that GSHHA’s use fact a separate corporation,” and arguing that it was erroneous for the BTLA “to The City changes tack somewhat on appeal, asserting that “GSHHA is in

impacted” HCA’s mission and thereby disqualified HCA for a tax exemption. City’s premise that GSHHA’s lobbying efforts overshadowed or negatively noted, however, that it could find no support in New Hampshire law for “the organization for purposes of analyzing the use of the real estate.” The BTLA 8 that “HCA and GSHHA are, for all intents and purposes, one and the same finding by neither granting nor denying it. The City argued before the BTLA not a charitable organization, having disposed of the City’s request for that The City next argues that the BTLA erred in failing to find that GSHAA is services.” We accept these finding as prima public’s health”; and (3) “from increased effectiveness and availability of human encouragement of good health practices and the overall protection of the

with this opinion. we vacate the BTLA’s decision and remand for further proceedings consistent association. See programs and services directed toward the prevention of illness, the Massachusetts Medical Soc., 164 N.E.2d at 328. Accordingly, the manner in which it is operated, more akin to a trade or professional those who use or who may use home care services”; (2) “from the promotion of members. Nor did it determine, more specifically, whether HCA is, in fact, in and training of home health care providers who are responsible for serving negligible or insignificant when compared to the benefit derived by HCA’s found that HCA’s services benefit the general public: (1) “through the education benefiting HCA’s members, or whether these benefits to the public are slight, public is “the ultimate beneficiary of [HCA’s] activities.” Specifically, the BTLA (as opposed to the sole purpose as intimated in the rejected finding of fact) of HCA’s activities “benefit [its] members directly,” but found that the general whether these benefits are merely incidental to a dominant or primary purpose involved in the home health care industry.” The BTLA acknowledged that corporate purpose is to promote the common interests of its members who are Club, 140 N.H. at 93; RSA 541:13. The BTLA did not determine, however, Here the BTLA denied the City’s proposed factual finding that “HCA’s facie lawful. See Appeal of Kiwanis

principles we enunciate herein are entirely consistent with MacDowell organization is not entitled to a charitable tax exemption. We note that the

MacDowell, 157 N.H. at 6 (quotation omitted; emphasis added). residence program did, in fact, “primarily benefit[] society as a whole.” which we agreed with the trial court’s conclusion that MacDowell’s artist-in-

compared to the benefit derived by the organization’s members, the negligible or insignificant,” Nature Conservancy, 107 N.H. at 320, when organization is actually administered so that any public benefit is “slight, that an organization’s stated purpose is to primarily benefit the public, if the adequately developed record.” Appeal of State Employees’ Assoc. p. 9 case are based on actual facts and are capable of being adjudicated on an In part, “ripeness relates to the degree to which the defined issues in a

the City’s broader challenge because the issue as raised is not ripe for review. perceived continued or future unfairness.” We agree, and decline to address challenge the recusal in this case but “[i]nstead . . . appears to focus on clearly unreasonable or unlawful, particularly where the City does not HCA argues that the City has not shown that the BTLA’s order was

legislature. skills and resources available for appeals that were intended by the — and will continue to be — denied the opportunity to have all for many years (even to date), the City and its taxpayers have been litigation against the City. However, as the recusal has continued

DALIANIS, C.J.