OPINION BY JUDGE MacPHAIL, September 3, 1986:
The Board of Assessment Appeals of Lehigh County (Board) appeals here from a decision of the Court of Common Pleas of Lehigh County which sustained the real estate tax exemption claim of the Lutheran Home at Topton, Pennsylvania (Home) with respect to its Luther Crest retirement residence.
The Home, a non-profit corporation, owns and operates Luther Crest as well as several other retirement facilities. Luther Crest consists of 310 residential apartments, a common dining room, an auditorium, a gift shop, an activity room, a library, administrative offices, and a 60-bed nursing facility.
On September 20, 1982, the Board exempted Luther Crest from the payment of all real estate taxes effective January 1, 1983 pursuant to an appeal filed by Luther Crest on September 1, 1982. On December 23, 1982, our Supreme Court handed down its decision in Appeal of Marple Newton School District, 500 Pa. 160, 455 A.2d 98 (1982). On March 4, 1983, the County of Lehigh (County) filed with the Board a request for reconsideration of the September 20, 1982 decision averring as the sole grounds therefore that Marple Newton mandated a reversal of the Board's decision. The Board granted the County's request for reconsideration, and following a hearing, reversed itself and held that Luther Crest was not entitled to a real estate tax exemption.
The Home appealed the Board's decision to the Court of Common Pleas of Lehigh County, claiming (1) that because the County did not appeal from the September 20, 1982 decision, the Board was without the power to rehear the case and (2) assuming the Board properly heard the matter, the Marple Newton School District decision did not warrant the Board's reversal of Luther Crest's tax exempt status.
A hearing was held by the court November 14-15, 1984. By decision dated January 25, 1985, the court first held that "where . . . the County seeks reconsideration by the Board, and authority exists for the County to ask the Board to correct allegedly erroneous and/or improper assessments after the normal time for appeal has run, we are not inclined to dismiss the substantial substantive question because of possible procedural imperfections." Appeal of the Lutheran Home at Topton, Pennsylvania, (Opinion) (No. 83-C-1988 Assessment Appeal, filed January 25, 1984), slip op. at 8 (emphasis in original). The court, however, then went on to hold that the residential units and health center at Luther Crest are devoted to charitable purposes and that the facility was founded and maintained by private charity.
The County filed an appeal to this Court from the trial court's order sustaining the Home's tax exemption claim; the Home cross-appealed on the issue of the timeliness of the County's request for reconsideration of the original Board decision.
This appeal is No. 512 C.D. 1985 and was consolidated with No. 498 C.D. 1985 for our disposition.
We shall first address the issue of whether the Board properly reconsidered its original decision. The Home argues that the County had thirty days from which to appeal the Board's September 20, 1982 decision granting Luther Crest tax exempt status, and when the County failed to appeal within that time frame, it was precluded from thereafter appealing the decision in the form of a "Petition for Reconsideration." The Home further points out that the right to petition an administrative agency, such as the Board, to reconsider its decision after a statutorily prescribed appeal period has expired, must be a right that is conferred by statute or regulation, and no such statute or regulation permits the County to petition the Board to reconsider the original decision. See Olson v. Borough of Homestead, 66 Pa. Commw. 120, 443 A.2d 875 (1982). The County concedes that it did not file a timely appeal from the Board's original decision but argues that Appeal of Marple Newton School District changed the law applicable to Luther Crest, and that therefore the Board was obliged to "correct" its error in law.
See 42 Pa. C. S. § 5571(b).
Assessments in third class counties, such as Lehigh County, are governed by the provisions of the Third Class County Assessment Law (Assessment Law), Act of June 26, 1931, P.L. 1379, as amended, 72 P. S. § 5342-5350k. The Assessment Law provides that the Board must make annual assessments, 72 P. S. § 5344 (a). Section 7 of the Assessment Law, 72 P. S. § 5348 further provides that:
(a) The said board shall, on or before the first day of July, examine and revise the said annual assessments and valuations, increasing or decreasing the same as in their judgment may seem proper . . .; and such added assessments may be used for the taxation of the property . . . for the following calendar and fiscal tax years for which the assessment roll is being prepared, for the current year and for the preceding three years if there was liability for such taxes under existing law.
(b) The board shall, on or before the fifteenth day of July, prepare an assessment roll or list of persons and property subject to local taxation, together with the value placed upon each person and each parcel or tract of real property. The board shall at the same time prepare a list of all property exempted by the law from taxation.
. . . .
(f) The board is authorized to make additions and revisions to the assessment roll of persons
and property subject to local taxation at any time in the year, so long as the notice provisions of subsection (b) of section 8 are complied with. All additions and revisions shall be a supplement to the assessment roll for levy and collection of taxes for the tax year for which the assessment roll was originally prepared, in addition to being added to the assessment roll for the following calendar or fiscal tax years.
Section 8 of the Assessment Law, 72 P. S. § 5349 states:
(b) The board shall cause to be mailed to each owner of property . . . assessed and taxing district having any interest therein, . . . the value of whose property . . . assessment has been changed from that finally fixed in the preceding assessment roll . . . , a notice of such change . . . and the amount of the new assessment. . . . Such notice shall be mailed within five days from the date the board made such change . . . and shall state that any person aggrieved by any assessment and the said taxing districts may appeal to the board for trial by filing with the board, within forty days of the date of such notice, an appeal, in writing, designating the assessment or assessments by which such person is aggrieved. . . .
[(c)] Any person or such taxing district desiring to make an appeal shall, on or before the first day of September, file with the board an appeal.
. . . .
. . . .
(d.4) When the board has completed the hearing of appeals and has in each case entered its order it shall make such changes in the assessment
roll as will make it conform to such orders.
A further appeal to court is provided in Section 9 of the Assessment Law, 72 P. S. § 5350.
It is apparent that no provision of the Assessment Law authorizes the Board to reconsider its September 20, 1982 decision. The County failed to timely appeal the September 20, 1982 decision and is therefore foreclosed from challenging the merits of the September 20, 1982 decision. We hold that the Board acted without authority in reconsidering Luther Crest's tax exempt status for the 1983 tax year, and the September 20, 1982 decision is hereby reinstated.
The September 20, 1982 decision exempted Luther Crest from the payment of real estate taxes effective January 1, 1983, "[s]aid exemption to continue as long as the use justifies the exemption." As noted, the Assessment Law authorizes the Board to re-examine and change assessments on an annual basis. Since the Board would have the authority to change Luther Crest's tax exempt status for 1984 and subsequent tax years, in the interest of judicial economy we will undertake to evaluate whether the Home is entitled to real estate tax exemption for years subsequent to 1983 with respect to Luther Crest as provided for in Section 204(a)(3) of The General County Assessment Law (Law), Act of May 22, 1933, P.L. 853, as amended, 72 P. S. § 5020-204(a)(3).
Whether Luther Crest is entitled to an exemption is a mixed question of law and fact. Hill School Tax Exemption Case, 370 Pa. 21, 87 A.2d 259 (1952); General Conference Mennonite Church Appeal, 72 Pa. Commw. 96, 455 A.2d 1274 (1983), and the Home bears the heavy burden of bringing itself within the ambit of the exemption. Presbyterian-University of Pennsylvania Medical Center v. Board of Revision of Taxes, 24 Pa. Commw. 461, 357 A.2d 696 (1976). The decision of the trial court sustaining the Home's entitlement to an exemption will be affirmed unless we find abuse of discretion or lack of supporting evidence. Appeal of Bucks County Board of Assessment Appeals, 55 Pa. Commw. 195, 423 A.2d 760 (1980).
To sustain its claim for real estate tax exemption for Luther Crest, the Home must have affirmatively shown that Luther Crest "(1) is one of 'purely public charity'; (2) was founded by public or private charity; (3) is maintained by public or private charity." Appeal of the Episcopal Community Services of the Diocese of Pennsylvania, 90 Pa. Commw. 409, 415, 495 A.2d 653, 656 (1985), quoting Woods School Tax Exemption Case, 406 Pa. 579, 584, 178 A.2d 600, 602 (1962). It is the County's position here that Luther Crest is not one of "purely public charity."
Our Supreme Court's most recent pronouncement of what constitutes a purely public charity, Hospital Utilization Project v. Commonwealth, 507 Pa. 1, 487 A.2d 1306 (1985) provides that for an entity to qualify as a purely public charity, it must possess the following characteristics:
(a) Advances a charitable purpose;
(b) Donates or renders gratuitously a substantial portion of its services;
(c) Benefits a substantial and indefinite class of persons who are legitimate subjects of charity;
(d) Relieves the government of some of its burden; and
(e) Operates entirely free from private profit motive.
507 Pa. at 22, 487 A.2d at 1317. With these principles in mind, we will examine the record facts.
Rev. Paul L. Buehrle, the Executive Director of the Home, testified at the hearings below that the Home supervises several family service operations which include nursing facilities for the elderly and retirement villages. The Board of Trustees of the Home (Trustees) decided to establish Luther Crest, because, in Rev. Buehrle's own words:
We serve a rather sizeable constituency in our North Eastern Pennsylvania Senate [sic], particularly in what is known as the lower tier of the Senate [sic] and that constituency was saying, we need some kind of service for retirement living. There are a lot of low-income projects spread throughout our area but those of us who have been a little more fortunate, who have not been able to be admitted through those low-income facilities, have the same kinds of concerns and needs in our old age, and need is not based on economics. . . .
[T]he result was Luther Crest. . . .
Notes of Testimony (N.T.) at 34-35.
To be eligible for admission into Luther Crest, the applicant must be at least 62 years of age and capable of independent living. No one is denied admission because of race, color, creed or national origin.
The admission policy requires an applicant to fill out an application, including a Financial Analysis form, and the application is reviewed by the Home's committee on admissions and services to the aging. A non-refundable application fee of $125 is charged. It is Luther Crest's policy not to refuse admission because of the applicant's financial status or assets. In practice, however, there is a minimum level of financial ability required to qualify an applicant for admission: Luther Crest uses a 1.0 ratio index, representing the estimated cost during the applicant's life expectancy over the estimated value of assets and income. Receiving a rating of 1.0 means that the estimated cost for the life expectancy of the individual who is being analyzed exactly equals the estimated value of their assets and income during their life expectancy. Of the 201 applicants admitted to Luther Crest, the Home claimed that 25% did not achieve the 1.0 ratio.
N.T. at 51.
Id.
N.T. at 36.
N.T. at 54.
N.T. at 233.
N.T. at 55.
Once admitted, each resident is charged an admission or entrance fee, which at the time of hearing ranged from $43,900.00 for a studio apartment to $85,900.00 for a two bedroom unit. Residents are also subject to monthly maintenance fees, ranging from $830.00 a month for the studio apartment to $1,838.00 a month for two residents in the two bedroom apartment. There is testimony which would indicate that these monthly service charges exceed that of other area retirement facilities, profit and non-profit alike. N.T. at 316-318.
Each resident is required to sign a "Residence and Care Agreement" which provides in pertinent part:
N.T. at 85.
N.T. at 89.
No admission or entrance fees had been waived for any of the residents, and only two residents are paying amounts less than the required monthly maintenance fee. The Trustees, who we have noted have the sole discretion to subsidize a resident or not, determined that these two residents qualified for a subsidy because both had made sizeable contributions, in one form or another, to the Lutheran Church in America prior to their admittance to Luther Crest. The Trustees reduced the financial requirements for those individuals based on their years of service in the church.
N.T. at 60, 62.
N.T. at 62. A review of the Home's Answers to the County's Interrogatories and Request for the Production of Documents, First set, reveals that one entrance fee has been waived for one of the two families receiving a monthly subsidy. Answer to Interrogatory No. 4.
N.T. at 63.
There was also testimony that the actual maintenance cost for Luther Crest exceeds the amount charged by $3.4 million and that the Home is in effect subsidizing all of the residents.
N.T. at 244.
In all, there are 201 residents occupying 169 units at Luther Crest, with 63 unoccupied but "committed" units. In order to be considered a "committed" unit, the application fee and a downpayment of $1,000.00 must be received by the Home. It follows that there are 78 unoccupied and uncommitted "empty" units. N.T. at 171-73.
The health care facility on the Luther Crest premises is a 60-bed intermediate and skilled care nursing center whose facilities are open to the community and are not restricted to residents of Luther Crest. Of the 60 available beds, 53 were occupied by the community, 5 were occupied by residents of Luther Crest, and 2 were unoccupied and "reserved" for Luther Crest residents. Of the 53 beds occupied by outside community residents, 3 were not paying the $65.00 a day fee charged by the health care facility but were receiving medical assistance.
N.T. at 73.
N.T. at 74.
N.T. at 142.
N.T. at 74.
The trial court held that the following findings compelled its conclusion that Luther Crest is entitled to tax exempt status:
(1) That the entrance fee charged is not equal to the cost of construction of the 'units'; (2) that the entrance fee is determined by the number of occupants of each unit; (3) that although every applicant is required to make a full financial disclosure, financial independence is not a prerequisite to admission; (4) that [the Home] is obligated to care for residents who become either financially unable to meet their monthly charges or physically dependent because of illness; (5) that entrance fees are wholly or partially refundable in accordance with the Residence and Care Agreement and/or the Refundable Admission Program, and (6) that the health care center is open to the public, not primarily to residents of Luther Crest.
Opinion, slip op. at 11-12 (footnote omitted). We realize that the trial court did not have the benefit of our Supreme Court's decision in Hospital Utilization Project when it determined that the Home was entitled to the real estate tax exemption for Luther Crest, but inasmuch as Hospital Utilization Project is the most recent refinement of factors to take into consideration when determining whether a facility qualifies as a purely public charity, we will undertake to evaluate the matter in light of Hospital Utilization Project.
We do not see how the factors that the entrance fees charged by Luther Crest do not equal the cost of construction or that the entrance fees are refundable warrant an inference that Luther Crest is founded and maintained by private charity.
It is axiomatic that the elderly are a legitimate subject of charity, but the Home is not, in our view, "advancing a charitable purpose", Hospital Utilization Project. The only beneficiaries of Luther Crest are its fee paying residents. The Luther Crest application process requires the payment of a $125.00 non-refundable fee, and although the Home submitted that in certain circumstances this fee could be waived, the Home had not as yet granted a waiver.
Although the Home avers that no application would be denied solely on account of financial inability, the Home conceded that residents must demonstrate a minimum financial ability. Only 2 of 201 residents are currently receiving a subsidy. Whether some of the other residents may require a subsidy at some later point in time is not determinative because these residents are not now receiving a subsidy toward their monthly charges. Although evidence was received that the Home has granted subsidies for its residents at other facilities, this cannot be used to demonstrate its "good faith" commitment to grant future subsidies at Luther Crest. See Presbyterian Homes Tax Exemption Case, 428 Pa. 145, 236 A.2d 776 (1968) (prior cases are of limited value). Moreover, we are not persuaded that a realistic prospect of receiving a subsidy exists in the instant case: we are hard-pressed to conclude that Luther Crest will grant a subsidy to those who cannot afford its charges when more than 25% of its units remain empty. Moreover, the language in the Residence and Care Agreement reposes all waivers and decisions with respect to financial subsidies in the sole discretion of The Lutheran Home and its trustees. This reservation, while economically feasible, is incompatible with the requirement that the facility advance a charitable purpose.
N.T. at 137. Note that this figure is less than the 25% Rev. Buehrle testified to. See supra at 8. The lowest percentage accepted at Luther Crest was either .74 or .68, or 3/4 of what was needed to achieve the 1.0 rating. N.T. at 218.
The Home directs our attention to the fact that Luther Crest has been operating at a loss since its inception, and that the entrance fees and monthly maintenance charges serve no other purpose than to contribute to the support and maintenance of Luther Crest. See West Allegheny Hospital v. Board of Property Assessment, 500 Pa. 236, 455 A.2d 1170 (1982) (there need not be only nominal charges as long as charges go to support and maintenance). The Home submits that this shows that it is, in essence, subsidizing all of its residents. The County argues, however, that Luther Crest operated at a loss because it was only half occupied. The County submits that if Luther Crest were fully occupied, it would not be operating at a loss and that Luther Crest did not take into account the distinct probability that the units would be turned over and that it would be receiving additional fees from new residents. We are persuaded by the County's argument that Luther Crest operated at a loss not because it was providing subsidies to its residents but because it was not fully occupied.
Although Luther Crest has not realized a profit, and operates free from private profit motive, Hospital Utilization Project, these factors alone do not warrant the conclusion that Luther Crest is being put to a public charitable use. See Pittsburgh Institute of Aeronautics Tax Exemption Case, 435 Pa. 618, 258 A.2d 850 (1969). Luther Crest does not donate or render gratuitously any of its services: all of its residents pay fees approximating actual costs. Luther Crest is not relieving the government of some of its "burden" of taking care of the elderly: there is no "burden" in providing services to paying customers, so to speak. See West Allegheny Hospital.
Referring once again to the characteristics our Supreme Court requires an entity to have in order to qualify as a purely public charity, we conclude that the record in the instant case is insufficient to show that Luther Crest advances a charitable purpose, donates or renders gratuitously a substantial portion of its services, benefits a substantial and indefinite class of persons who are legitimate subjects of charity or relieves the government of some of its burden. Luther Crest, therefore, is not entitled to exemption from taxation.
Inasmuch as we have concluded that the purposes of Luther Crest are not charitable, the exemption with respect to the health care facility cannot be sustained as necessary to a charitable purpose. See Appeal of Marple Newton School District.
Accordingly, we reverse the order of the Court of Common Pleas of Lehigh County.
ORDER
The order of the Court of Common Pleas of Lehigh County in the above-captioned matter is reversed.