Volume 1 - Opinions of Counsel SBEA No. 55
Nonprofit organizations, exemption (home for aged owned by Methodist Church Conference) - Real Property Tax Law, § 420:
The Methodist Church Conference owns and operates a home for the aged which provides infirmary services as well as residences for aged persons. If used exclusively for charitable purposes, it would be entitled to a real property tax exemption even if the town in which it is located adopts a local law pursuant to subdivision 1 (b) of section 420 of the Real Property Tax Law subjecting certain real property to taxation.
We have received an inquiry relating to the taxable status under section 420 of the Real Property Tax Law of a home for the aged which provides infirmary services and residences for aged persons and which is owned and operated by the Methodist Church Conference.
The specific question is whether this home would be taxable if the town in which it is located adopts a local law pursuant to subdivision 1 (b) of section 420 as enacted by Chapter 414 of the Laws of 1971 providing that real property owned by an organization organized and conducted for the “moral or mental improvement of men and women” or for “infirmary” purposes and used exclusively for such purposes shall be taxable.
The answer to this question, in our opinion, will depend upon whether or not the home and infirmary are used exclusively for “charitable” purposes.
The operation of a housing project for the aged is not per se a charitable purpose. If this were so, the provision of section 422 which grants a tax exemption to the property of certain nonprofit regulated companies (limited-profit housing companies and housing development fund companies) used to provide housing for the aged of low income would have been unnecessary (see Educational Alliance Corp. v. Wagner, 28 App. Div.2d 832, 282 N.Y.S.2d 923).
Whether or not a particular housing facility is operated for charity depends upon the facts of each case. For example, if fees charged the elderly tenants are sufficient to cover all or most of the costs of the facility (including acquisition costs), there could be in our opinion no “charity”. On the other hand, where substantial deficits are incurred which are made up by contributions, subsidies from the owning organization and the like, and most of the tenants are unable to afford regular rental rates charged in comparable commercial apartments, a charitable use would probably be found even though some fees are charged (American Russian Aid Ass’n. v. City of Glen Cove, 41 Misc.2d 622, 246 N.Y.S.2d 123, aff’d w/o, 260 N.Y.S.2d 598).
Gradations in the relevant factors present in any given fact situation make it extremely difficult to judge whether an exclusive charitable purpose is present. A recent American Law Reports annotation (37 A.L.R.3d 565) which treats exhaustively the weight given the various factors in the many cases recently decided in this area throughout the United States may be of help in making such a determination.
If the subject home for the aged is not charitable in nature, we have serious doubts that the residential portion can qualify for the exemption at all under section 420, and most certainly it could not if the town exercises the option.
However, if it is charitable, then the property would be exempt even if the option is exercised.
The infirmary would also be exempt in any event if operated on a charitable basis but, if not, could be made taxable by exercise of the option.
January 12, 1972
