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Volume 10 - Opinions of Counsel SBRPS No. 100

Opinions of Counsel index

Nonprofit organizations exemption (charitable) (apartment complex for the elderly) - Real Property Tax Law, § 420-a:

For a housing project to be exempted pursuant to section 420-a of the Real Property Tax Law, a large percentage of the clients (or tenants) must be in need of and receive a real and substantial charitable benefit.

We have been asked whether a “senior facility” operated by a not-for-profit company may qualify for the mandatory nonprofit organizations exemption (Real Property Tax Law, § 420-a). At present all residents are “private pay,” but that an “indigent fund” has been established for use by clients who run out of funds while a relocation process is conducted.

In 6 Op.Counsel SBEA No. 33, we concluded that, “unless the organization can be shown to be benefitting people in need, it does not qualify as a charitable organization.” The conclusion reached in that 1978 opinion was based on several then-recent judicial decisions (e.g., Matter of 141 Parkhill Corp., 173 N.Y.L.J. (No. 48), p.16 (3/12/75); Matter of Bedford-Stuyvesant Restoration Corp., 172 N.Y.L.J. (No. 23), p.11 (8/1/74), aff’d, 50 A.D.2d 815, 376 N.Y.S.2d 912 (2d Dept. 1975)). More recent decisions prompt us to reiterate our earlier conclusion.

Housing is not one of the purposes listed as being an exempt purpose in either section 420-a or 420-b (the latter being the nonprofit organizations; permissive class exemption). {1}  However, “charitable” is included in the former statute, “benevolent” in the latter.

Based upon judicial decisions, we believe that it is possible for housing to be a charitable or benevolent use. However, the operation of a housing project for what may commonly be considered a charitable object does not, per se, qualify the property as an exempt charitable use (Presbyterian Residence Center Corporation v. Wagner, 66 A.D.2d 998, 411 N.Y.S.2d 765 (4th Dept. 1978), aff’d, 48 N.Y.2d 885, 400 N.E.2d 1348, 424 N.Y.S.2d 896 (1979); Greer Woodycrest Children’s Services v. Fountain, 138 A.D.2d 709, 526 N.Y.S.2d 780 (2d Dept. 1988), aff’d, 74 N.Y.2d 749, 543 N.E.2d 722, 545 N.Y.S.2d 79 (1989)). For example, in Presbyterian Residence, supra, the Court denied the exemption to an apartment complex where the elderly tenants were self-supporting and paid substantial admission fees, regular rents and service charges designed to make the apartments self-sustaining.

In other cases, however, courts have held that the provision of care and services to the indigent elderly on a nonprofit basis is a charitable activity, even though some of the elderly pay for the services with government benefits and a small percentage are able to pay for the services with private income (Belle Harbor Home of the Sages v. Tishelman, 101 Misc.2d 911, 420 N.Y.S.2d 343 (Sup.Ct., Queens Co., 1979), aff’d, 81 A.D.2d 886, 441 N.Y.S.2d 413 (2d Dept. 1981), mot. for lv. to app. den., 55 N.Y.2d 602, 447 N.Y.S.2d 1025 (1981); Marino P. Jeantet Residence for Seniors, Inc. v. Commissioner of Finance, 105 Misc.2d 1080, 430 N.Y.S.2d 545 (Sup.Ct., Queens Co., 1980), aff’d, 86 A.D.2d 650, 449 N.Y.S.2d 933 (2d Dept. 1982); Church Home of Protestant Episcopal Church v. Wagner, 58 A.D.2d 972, 397 N.Y.S.2d 478 (4th Dept. 1977)). Thus, it appears and remains our opinion that, for a housing project to be exempted pursuant to section 420-a, a large percentage of the clients (or tenants) must be in need of and receive a real and substantial charitable benefit.

Although few facts were provided here, it appears that any charity in this case is of limited duration, occurring while a resident no longer capable of paying the required rent is seeking alternative accommodations. Whether the assessor (as the initial trier of fact) or a board of assessment review or court (as a subsequent fact finder) would consider this to be charitable or benevolent seems unlikely.

March 22, 2000

{1}  There are, of course, numerous other statutes in the RPTL (e.g., § 422) and elsewhere (e.g., Private Housing Finance Law) granting or authorizing wholly or partially tax exempt status to housing organizations. The courts in both Parkhill and Bedford-Stuyvesant, supra, made special note of this fact, raising the issue of whether these other statutes pre-empted exemption under what is now section 420-a.