Volume 4 - Opinions of Counsel SBEA No. 109
Nonprofit organizations exemption (charitable) (Board of Pensions of United Presbyterian Church) - Real Property Tax Law, § 421:
Real property owned by the Board of Pensions of the United Presbyterian Church and used exclusively as a home for retired ministers or missionaries of such church is entitled to exemption pursuant to section 421 of the Real Property Tax Law as charitable property where the homes are run at an annual deficit made up by contributions and donations from individuals or groups other than those occupying the premises.
Our opinion has been requested concerning the taxable status of property owned by the Board of Pensions of the United Presbyterian Church, a nonprofit corporation organized under the laws of Pennsylvania. The property in question was acquired by devise from an individual with the stipulation that the property be used as a home for retired ministers or missionaries of the United Presbyterian Church. According to information supplied by the attorney for the Board of Pensions, the property is presently occupied by a retired minister and his wife. These occupants apparently make a monthly maintenance contribution of $90, although the total operating expenses are substantially more (approximately $276 per month). According to the attorney, the payments made by the occupants are based upon their financial ability to make a contribution towards upkeep and in no case do they exceed the actual cost to the Board of Pensions of operating the property, nor do they reflect the fair rental value thereof.
First, it is clear that if this property is to be exempt it must meet the requirements of section 421 of the Real Property Tax Law. Two other statutes dealing with the taxable status of property owned or occupied by clergymen are inapplicable. Section 462 of the Real Property Tax Law provides that property owned by a religious corporation actually used by the “officiating clergymen thereof” for residential purposes is exempt from taxation. Since the occupants of the property in question are not the officiating clergymen of this religious corporation, this exemption is not applicable. Nor is the partial exemption provided by section 460 available in this case since that section requires the property to be owned by the minister himself or his unremarried widow, which is not the case here.
Section 421 of the Real Property Tax Law authorizes an exemption from real property taxation on property owned by certain nonprofit organizations. The statute requires that the property be owned by a corporation or association organized exclusively for one or more exempt purposes and that the property be used exclusively for such purposes with any portion of the property not so used being subject to taxation. In addition, no officer, member or employee of the organization may be entitled to receive any pecuniary profit from its operation, except reasonable compensation for services performed in furtherance of corporate purposes.
The first requirement of this statute, then, is that the association or corporation be “organized exclusively” for one or more of the exempt purposes enumerated therein. This is determined by examining the purposes and objects in the certificate of incorporation or charter if any (Great Neck Section, etc. v. Board of Assessors, 21 Misc.2d 142, 189 N.Y.S.2d 623; Goodwill Club of Amsterdam, New York v. City of Amsterdam, 31 Misc.2d 1096, 222 N.Y.S.2d 896). Inspection of the charter of the Board of Pensions of the United Presbyterian Church indicates that it is organized to provide housing, pensions, and other similar benefits for retired ministers and missionaries of the United Presbyterian Church, their spouses or surviving spouses, and commissioned church workers.
While the Board of Pensions is an agency of the United Presbyterian Church, the purposes for which the Board is authorized do not appear to be exclusively religious although the purposes for which the Church itself has been organized might be so. However, it may be that the Board of Pensions is organized exclusively for charitable or benevolent purposes within the meaning of section 421 and therefore its property would be entitled to an exemption.
Charity has been defied as “ . . . any act done without expectation of profit which alleviates the condition of the handicapped or unfortunate, or tends to forward the progress of mankind . . .” (Green v. Javits, 7 Misc.2d 312, 166 N.Y.S.2d 198, aff’d, sub nom., Green v. Lefkowitz, 4 App.Div.2d 198, 167 N.Y.S.2d 431, appeal denied, 4 App.Div.2d 947, 168 N.Y.S.2d 607, appeal dismissed, 4 N.Y.2d 704, 148 N.E.2d 308, 171 N.Y.S.2d 95). As was noted in In re Altman’s Estate, 87 Misc. 255, 149 N.Y.S. 601, at 605:
Charity always connotes the public generally or the public at large, or at least an indefinite section of it . . . and not, I think, a definite section of it; or, in other words, not certain beneficiaries in a particular employment, who are only uncertain because their names do not happen to be known to a charitable donor . . . The test of a charitable gift or use and a test of a charitable corporation are in law the same. . . . [Each) must be for persons as uncertain as the public at large or some general section of it, such as the poor or the needy.
Similarly, benevolence is “ . . . the doing of a kind helpful action toward another under no obligation except an ethical one . . .” (State v. Dunn, 134 N.C. 663, 46 S.E. 949; see also, 3 Op.Counsel SBEA Nos. 7 and 16). Assuming it is concluded that the Board of Pensions is organized exclusively for one or more exempt purposes, the other requirement which must be met is that the property be “used exclusively” for such purposes.
Although this appears to be a close question, we feel constrained to say that the property is entitled to an exemption from real property taxation pursuant to section 421 based on the decision in American-Russian Aid Association v. City of Glen Cove, 41 Misc.2d 622, 246 N.Y.S.2d 123, aff’d, 23 App.Div.2d 966, 260 N.Y.S.2d 589. In that case, the Association was organized to help people of Russian descent who were in distress, to establish and maintain a home for worthy and indigent aged men and women and to operate same, together with general religious objectives. As is apparently true of the present case, the homes in the American-Russian Aid case were maintained at an annual deficit made up by contributions and donations from individuals or groups other than those occupying the premises. The Court held the property of the Association to be exempt from taxation pursuant to section 421, as property used for a charitable purpose.
While the reasoning of the last cited case appears to be applicable to this inquiry, the assessor should still carefully investigate the operation and use of the property in question and make an independent determination as to whether the requirements of section 421 are being strictly adhered to, before granting an exemption on the property in question.
March 25, 1975