Capital for Change, Inc. v. Board of Assessment Appeals

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CAPITAL FOR CHANGE, INC. v. BOARD OF
ASSESSMENT APPEALS OF THE
TOWN OF WALLINGFORD
(AC 44404)
Alvord, Prescott and DiPentima, Js.

Syllabus

The plaintiff appealed to the trial court from the decision by the defendant
board of assessment appeals upholding the denial of the plaintiff’s appli-
cation for a charitable organization real property tax exemption pursuant
to statute (§ 12-81 (7)). The plaintiff, a tax-exempt charitable organiza-
tion for federal tax purposes, used the subject property to engage in
commercial lending, consumer lending, loan servicing and third-party
contract administration. The plaintiff provided to developers and home-
owners financial services, inter alia, to improve and increase the supply
of affordable housing and, through a subsidiary, contracted with utility
companies to administer energy efficient loan programs. The trial court
rendered judgment dismissing the appeal from the board’s decision,
and the plaintiff appealed to this court, claiming that the trial court
improperly concluded that, because it is not organized exclusively and
the property is not used exclusively for charitable purposes, the property
is not tax-exempt pursuant to § 12-81 (7). Held that the trial court prop-
erly dismissed the plaintiff’s appeal from the board’s decision: pursuant
to § 12-81 (7) and as required by the test set forth in Isaiah 61:1, Inc.
v. Bridgeport (270 Conn. 69), and further explicated in St. Joseph’s
Living Center, Inc. v. Windham (290 Conn. 695), for a property to
receive a charitable tax-exempt status, it must be owned by or be held
in trust for a corporation organized exclusively for charitable purposes
and used exclusively for carrying out one or more of such purposes,
and the undisputed evidence demonstrated that the subject property was
not used exclusively for charitable purposes as the plaintiff’s activities
involved in administering energy efficient loan programs at the subject
property, including marketing, intake and processing of applications,
reporting to investors, and collecting delinquent accounts for utility
companies, benefited consumers, commercial entities and industrial
customers without the imposition of income limitations and any demon-
stration of financial need and, thus, were not charitable.
Argued May 25—officially released October 11, 2022

Procedural History

Appeal from the decision of the defendant affirming
the decision of the defendant’s tax assessor denying
the plaintiff’s application for a charitable tax exemption
with respect to certain real property, brought to the
Superior Court in the judicial district of New Haven
and tried to the court, Hon. Jon C. Blue, judge trial
referee; judgment dismissing the appeal, from which
the plaintiff appealed to this court. Affirmed.
Lori Welch-Rubin, with whom was J. Michael Sulz-
bach, for the appellant (plaintiff).
Janis M. Small, corporation counsel, for the appellee
(defendant).
Opinion

ALVORD, J. The plaintiff, Capital for Change, Inc.,
appeals from the judgment of the trial court dismissing
its appeal from the decision of the defendant, the Board
of Assessment Appeals of the Town of Wallingford
(board), which upheld the denial of the plaintiff’s appli-
cation for a charitable organization real property tax
exemption. On appeal, the plaintiff claims that the court
improperly concluded that the plaintiff’s property is
not exempt pursuant to General Statutes § 12-81 (7)
because its mission to support affordable housing for
low and moderate income persons is not a charitable
purpose and, therefore, it is not organized exclusively,
and its property is not used exclusively, for carrying
out charitable purposes. We affirm the judgment of the
trial court on the ground that, regardless of whether
the plaintiff’s mission to support affordable housing is
a charitable purpose, the undisputed evidence demon-
strates that the plaintiff’s property is not used exclu-
sively for such a purpose, as required to qualify for the
exemption.
The following facts, as stipulated by the parties or
undisputed in the record, and procedural history are
relevant to our resolution of this appeal. The plaintiff,
a community development financial institution, is a tax-
exempt charitable organization for federal tax purposes
that owns real property located at 10 Alexander Drive
(property) in Wallingford. The plaintiff uses the prop-
erty to engage in commercial lending, consumer lend-
ing, loan servicing, and third-party contract administra-
tion. The plaintiff primarily provides its services to (1)
developers and homeowners ‘‘to improve and increase
the supply of housing affordable to Connecticut resi-
dents,’’ (2) consumers, commercial entities and indus-
trial customers, including utility companies, related to
the administration of energy efficiency loans, and (3)
nonprofits, small businesses, and municipalities.1
The plaintiff provides ‘‘flexible financing’’ for the
development of affordable housing through its social
impact investment program. With that program, invest-
ors ‘‘are seeking to obtain not just a financial yield on
their investment, but they want to see that the activity
they’re funding has . . . other social impact[s].’’ In
addition to the return on their investments, therefore,
the investors receive a report from the plaintiff on the
different impacts associated with the plaintiff’s lending
activities. The investments are ‘‘[l]ow return to the
investor’’ but also ‘‘[low] cost to [the plaintiff].’’ In addi-
tion, numerous banks lend money to the plaintiff. The
plaintiff, in turn, makes loans to consumers and com-
mercial entities to use toward the acquisition, construc-
tion and/or renovation of affordable housing.2 Some of
the banks require a direct assignment of the loans made
by the plaintiff with their funds. In those circumstances,
the plaintiff services the loan for the bank. The plain-
tiff’s loan servicing for these banks, and other lenders,
consists of payment processing, principal and interest
disbursement, default management, and debt collec-
tion.3
In addition to its services related to the development
of affordable housing, the plaintiff also is involved in
providing financial services for certain energy effi-
ciency loan programs. The plaintiff created its sole
member subsidiary, CT Energy Efficiency Finance
Company (CEEF Co.), to ‘‘develop and finance clean
energy, energy conservation and load management, and
energy efficiency projects.’’4 CEEF Co. contracts with
utility companies, specifically, Eversource and Avan-
grid, to help oversee statutorily mandated programs
such as Home Energy Solutions, the Energize CT Heat
Loan program, and the Energy Conservation Loan pro-
gram.5 The programs are essentially ‘‘self funded revolv-
ing loan fund[s],’’ in that they are funded by the utility
companies’ customers, i.e., the ratepayers, through
mandatory charges added to their utility distribution
fees. The utility companies collect the mandatory rate-
payer fees and forward them to CEEF Co. to administer
the energy efficiency loan programs. The energy effi-
ciency loans funded through these programs are made
to consumers, commercial entities, and industrial cus-
tomers.
‘‘CEEF Co. . . . has no employees. They contract
with [the plaintiff] to do the work. [The plaintiff] pro-
vides all administrative services to its sole member
subsidiary in the execution of CEEF Co.’s contracted
services to Eversource. Reimbursement is provided by
scheduled, contracted fees for service. [The plaintiff]
performs various duties in consumer lending, loan ser-
vicing and finance and administration for CEEF Co.
These services are contracted under fee for services
agreements executed by and between [the plaintiff],
CEEF Co., Eversource and Avangrid. These services
include marketing, intake and processing of applica-
tions, managing a contractor network to provide ser-
vices, monitoring work completion, funding loans,
receiving payments, reimbursing funding sources,
reporting to funders, and collections of delinquent
accounts. [The plaintiff] also provides on bill repayment
(OBR) services to Eversource for these loans. OBR is
shadow accounting of loan payments invoiced through
the utility’s distribution bills and collected by the utili-
ties. Current agreement terms provide a closed loan
origination fee, a monthly per loan servicing fee, and
an annual fee to administer periodic financial reporting,
audits, obtain insurances, and other required adminis-
trative services.’’ The plaintiff is compensated for its
services to CEEF Co. ‘‘under fee for services agree-
ments that stipulate either per item charges (e.g.,
closed/funded loan, serviced loan/month) or set
amounts for monthly administrative costs/reimburse-
ments (e.g., accounting/reporting, insurances, audit).’’
Apart from its services related to affordable housing
and energy efficiency loans, the plaintiff also provides
certain financial services to small businesses, nonprof-
its, and municipalities. For small businesses, the plain-
tiff ‘‘work[s] with all the micro lenders around the state
to have accelerator training programs for early stage
businesses to help grow them and . . . to provide them
capital to be able to help those businesses get launched
. . . and to grow.’’6 For nonprofits, the plaintiff offers
‘‘bridge loans to provide interim capital where there’s
. . . a funding obligation [from a third party] that’s
going to be delivered at some point in time,’’ which
‘‘help[s] smooth the operational expenses of the non-
profits.’’ The plaintiff offers loan servicing to nonprofits
such as Habitat for Humanity and other neighborhood
housing services ‘‘that are smaller [and] do some lend-
ing [but] don’t have the ability . . . to do debt collec-
tion and don’t have the adequate systems to do it accu-
rately so they outsource it to [the plaintiff].’’ The
plaintiff also provides loan servicing to municipalities
such as the towns of Rocky Hill, Enfield, West Hartford,
and the city of Norwalk.
In 2018, the plaintiff filed an application for a tax
exemption with respect to the property pursuant to
§ 12-81 (7). The assessor for the town of Wallingford
denied the plaintiff’s application, and the plaintiff filed
an appeal with the board. The board denied the plain-
tiff’s appeal, and the plaintiff subsequently filed the
present action in the Superior Court, appealing from
the board’s decision.
During a trial to the court, the plaintiff presented
testimony from its president and chief executive officer,
Calvin Vinal. The parties stipulated to certain undis-
puted facts and offered several documents as exhibits,
including the plaintiff’s and CEEF Co.’s foundational
documents, certain federal tax forms, and summaries
of the plaintiff’s loan products, which the court admit-
ted into evidence.
On November 2, 2020, the court issued a memoran-
dum of decision dismissing the plaintiff’s appeal from
the board’s decision. At the outset, the court recognized
that ‘‘[t]here is no genuine issue as to any material fact.
The parties differ on the proper characterization of that
evidence and the application of . . . § 12-81 (7) to the
facts established by the evidence.’’
In its analysis, the court first focused on certain lan-
guage set forth in § 12-81 (7) (B),7 specifically, that
‘‘housing for persons or families of low and moderate
income shall not constitute a charitable purpose under
this section.’’ 8 The court explained its view that ‘‘[s]ub-
section (B) makes the statutory term ‘charitable pur-
poses’ a term of art for purposes of . . . § 12-81. No
matter how ‘charitable’ a purpose might be in common
parlance—or, for that matter, for purposes of the Inter-
nal Revenue Code—‘housing for persons or families of
low and moderate income shall not constitute a charita-
ble purpose under this section.’ . . . The term ‘section’
facially applies to the entire text of [§] 12-81. A fortiori,
it applies to subsection (7), paragraph (A) of that sec-
tion. The statutory text is unambiguous.’’ (Emphasis in
original.)
The court then focused on the following relevant
language set forth in § 12-81 (7) (A): ‘‘[T]he real property
of . . . a corporation organized exclusively for . . .
charitable purposes or for two or more such purposes
and used exclusively for carrying out one or more of
such purposes . . . .’’ The court determined that ‘‘[t]he
repeated use of the word ‘exclusively’ in subsection [7]
(A) has independent significance. For its property to be
exempt from taxation, a corporation must be ‘organized
exclusively’ for ‘charitable purposes.’ The property
must also be ‘used exclusively’ for charitable purposes.
This means that if a corporation is organized exclusively
for multiple charitable purposes (in the common par-
lance), but one of those purposes is housing for persons
or families of low and moderate income, the corpora-
tion is not ‘organized exclusively’ for ‘charitable pur-
poses’ within the meaning of subsection [7] (A). Simi-
larly, if real property is used exclusively for charitable
purposes (in the common parlance), but one of those
purposes is housing for families of low and moderate
income, the real property is not ‘used exclusively’ for
‘charitable purposes’ within the meaning of subsection
[7] (A).’’
On the basis of its interpretation of § 12-81 (7), the
court determined that the plaintiff failed to meet the
first two prongs of the test first set forth by our Supreme
Court in Isaiah 61:1, Inc. v. Bridgeport, 270 Conn. 69,
851 A.2d 277 (2004) (Isaiah 61:1), and further eluci-
dated in St. Joseph’s Living Center, Inc. v. Windham,
290 Conn. 695, 966 A.2d 188 (2009) (St. Joseph’s), uti-
lized to determine entitlement to a charitable organiza-
tion property tax exemption, and, accordingly, dis-
missed the plaintiff’s appeal.9 The plaintiff filed a motion
to reargue, which the court summarily denied. This
appeal followed. Additional facts will be set forth as
necessary.
We begin by setting forth the applicable standard of
review. ‘‘The scope of the charitable exemption in § 12-
81 (7) is a question of statutory construction, over which
we exercise plenary review.’’10 Rainbow Housing Corp.
v. Cromwell, 340 Conn. 501, 511, 264 A.3d 532 (2021).
Our review of the plaintiff’s claim also is informed by
the ‘‘rule of strict construction applicable to statutory
provisions granting tax exemptions.’’ Id., 511–12. ‘‘It is
. . . well established that in taxation cases . . . provi-
sions granting a tax exemption are to be construed
strictly against the party claiming the exemption, who
bears the burden of proving entitlement to it. . . .
Exemptions, no matter how meritorious, are of grace
. . . . [Therefore] [t]hey embrace only what is strictly
within their terms. . . . We strictly construe such stat-
utory exemptions because [e]xemption from taxation
is the equivalent of an appropriation of public funds,
because the burden of the tax is lifted from the back
of the potential taxpayer who is exempted and shifted
to the backs of others. . . . [I]t is also true, however,
that such strict construction neither requires nor per-
mits the contravention of the true intent and purpose
of the statute as expressed in the language used.’’ (Cita-
tions omitted; internal quotation marks omitted.) St.
Joseph’s Living Center, Inc. v. Windham, supra, 290
Conn. 707.
In order to qualify for an exemption under the rele-
vant portions of § 12-81 (7) (A), the property must be
owned by, or held in trust for, ‘‘a corporation organized
exclusively for scientific, educational, literary, histori-
cal or charitable purposes or for two or more such
purposes and used exclusively for carrying out one or
more of such purposes,’’ and no ‘‘officer, member or
employee’’ may ‘‘receive any pecuniary profit from the
operations thereof, except reasonable compensation
for services in effecting one or more of such purposes
. . . .’’ General Statutes § 12-81 (7) (A). Subdivision (B)
of § 12-81 (7) ‘‘creates an exclusion to this tax exemp-
tion for housing subsidized, in whole or in part, by
federal, state or local government and housing for per-
sons or families of low and moderate income’’ by provid-
ing that such housing ‘‘shall not constitute a charitable
purpose under this section,’’ but it also ‘‘carves out an
exception to this exclusion for five specified categories
of temporary housing.’’ (Internal quotation marks omit-
ted.) Rainbow Housing Corp. v. Cromwell, supra, 340
Conn. 513; see footnote 7 of this opinion.
On the basis of the foregoing statutory language, our
Supreme Court set forth a five-pronged test in Isaiah
61:1 that must be satisfied in order for property to
qualify for tax exemption under § 12-81 (7). ‘‘[T]he prop-
erty must: (1) belong to or be held in trust for a corpora-
tion organized exclusively for charitable purposes; (2)
be used exclusively for carrying out such charitable
purposes; (3) not be leased, rented or otherwise used
for a purpose other than the furtherance of its charitable
purposes; (4) not be housing subsidized by the govern-
ment; and (5) not constitute low or moderate income
housing.’’ Isaiah 61:1, Inc. v. Bridgeport, supra, 270
Conn. 77.
In the present case, like the trial court, we confine
our analysis to the first two prongs of Isaiah 61:1,
which ‘‘precisely track the statutory language’’; St.
Joseph’s Living Center, Inc. v. Windham, supra, 290
Conn. 709; and were further explicated by our Supreme
Court in St. Joseph’s.11 We address each prong in turn.
I
The first prong set forth in Isaiah 61:1 for a property
to receive tax-exempt status under § 12-81 (7) is that
the property must ‘‘belong to or be held in trust for a
corporation organized exclusively for charitable pur-
poses . . . .’’ Isaiah 61:1, Inc. v. Bridgeport, supra, 270
Conn. 77. In St. Joseph’s, our Supreme Court explained:
‘‘We consider three factors in making this determina-
tion. The first, and most important, factor requires an
examination of the corporate entity itself to determine
if it is organized to carry out an exclusively charitable
purpose. The second factor that we previously have
considered, to a lesser extent, is whether an entity
claiming charitable status for tax exemption purposes
is self-supporting. The third factor asks whether an
organization’s activities serve to relieve a burden on the
state.’’12 St. Joseph’s Living Center, Inc. v. Windham,
supra, 290 Conn. 713.
‘‘The first [factor]—whether a corporation is orga-
nized exclusively for charitable purposes—can be bro-
ken into two parts.’’ Id. ‘‘First, we must determine for
what purposes a particular corporation has been ‘orga-
nized’ . . . by examining the entity’s foundational doc-
uments,’’ such as its charter, certificate of incorpora-
tion, or bylaws. (Footnote omitted.) Id., 713–14; see
also Rainbow Housing Corp. v. Cromwell, supra, 340
Conn. 518 n.9. ‘‘We then must decide whether that pur-
pose is, in fact, ‘charitable.’ ’’ St. Joseph’s Living Center,
Inc. v. Windham, supra, 290 Conn. 713.
‘‘The modern approach to defining a charitable use
or purpose is rather broad and liberal.’’ Id., 715. ‘‘The
definition of a charitable use or purpose is not restricted
to mere relief of the destitute or the giving of alms but
comprehends activities, not in themselves self-support-
ing, which are intended to improve the physical, mental
and moral condition of the recipients and make it less
likely that they will become burdens on society and
more likely that they will become useful citizens. . . .
Thus, [c]harity embraces anything that tends to pro-
mote the well-doing and the well-being of social man.’’
(Citation omitted; internal quotation marks omitted.)
Rainbow Housing Corp. v. Cromwell, supra, 340
Conn. 513.
Under the second factor set forth in St. Joseph’s, we
consider whether the plaintiff is self-supporting. ‘‘[I]n
order to serve a charitable purpose, an organization
must not be completely self-supporting.’’ St. Joseph’s
Living Center, Inc. v. Windham, supra, 290 Conn. 721.
‘‘In other words, to constitute a charitable organization,
the entity must be structured in such a way that it is
intended to function with the aid of at least some private
charitable support and must, in fact, seek out and
receive such support.’’ Id., 723.
The third factor requires that we consider ‘‘whether
the organization’s activities relieve the state of a burden
it otherwise would be compelled to bear.’’ Id., 729–30.
‘‘[Exemptions] are granted in aid of the accomplishment
of a public benefit and for the advancement of the
public interest. It is in recognition of their position as
an agency in the doing of things which the public, in
the performance of its governmental duties, would oth-
erwise be called upon to do at its own expense, or
which ought to be done in the public interest and with-
out private intervention would remain undone. . . .
This requirement compels an organization . . . to give
something to the state in return for the privilege, either
by relieving it of a financial burden or by pursuing a
publicly mandated moral obligation.’’ (Citations omit-
ted; internal quotation marks omitted.) Id., 730–31.
Turning to the facts of the present case, the plaintiff’s
purpose, as set forth in its restated certificate of incor-
poration and repeated in its bylaws, is: ‘‘a. To provide
financial products and services to support activities
that primarily benefit low and moderate income persons
and geographies, and minority and otherwise
underserved individuals and businesses;
‘‘b. To promote economic and community develop-
ment, improve economic conditions and economic
opportunities, increase and preserve affordable housing
options, promote energy efficiency and use of alterna-
tive energy, and improve access to health, food and
educational resources and other services benefitting
low-and moderate-income persons and geographies;
‘‘c. To lessen the burdens of local, state and federal
governments, generally;
‘‘d. To solicit, accept, hold, invest, reinvest and admin-
ister any contributions, grants, investments, donations,
gifts, bequests, devises, benefits of trusts (but not act
as trustee of any trust), and property of any sort, without
limitation as to amount or value, and to use, disburse or
donate the income or principal thereof for exclusively
charitable, scientific and educational purposes in such
manner as, in the judgment of the Board of Directors
of the Corporation (the ‘Board’) will best promote the
purposes of the Corporation; and
‘‘e. To contract for, purchase, receive, develop, own,
manage, operate or lease property, real, personal and
mixed, to employ or otherwise retain such persons and
to borrow funds as may be necessary to promote and
further the purposes and objectives of the Corporation.’’
(Emphasis omitted.)
The trial court, in considering whether the plaintiff
is ‘‘a corporation organized exclusively for charitable
purposes’’ under Isaiah 61:1’s first prong, examined
the plaintiff’s foundational documents and found that
‘‘an important foundational purpose of [the plaintiff] is
to provide housing for persons or families of low and
moderate income.’’ The court determined that ‘‘[the
plaintiff] is not self-supporting and . . . its activities
serve to relieve a burden on the state’’ but that, on the
basis of its interpretation of the ‘‘housing’’ exclusion
set forth in § 12-81 (7) (B), ‘‘the first St. Joseph’s factor
is not established by the evidence. [The plaintiff] is
not organized to carry out an exclusively charitable
purpose.’’ (Emphasis in original.) Accordingly, it con-
cluded that the plaintiff did not satisfy the first prong
of Isaiah 61:1.
On appeal, the plaintiff contends that the trial court
erred in determining that its ‘‘mission to provide
affordable housing’’ fell within the exclusion to the
exemption set forth in § 12-81 (7) (B), and, therefore,
improperly concluded that it was not organized exclu-
sively for charitable purposes under the first prong of
the Isaiah 61:1 test. The plaintiff argues that the statu-
tory language is ambiguous and that the legislative his-
tory supports its view that there is a distinction between
residential properties used for actually ‘‘housing’’ low
and moderate income persons, to which it contends
the exclusion applies,13 and its property, which simply
‘‘helps facilitate the funding and development of
affordable housing,’’ without being a residential facility.
The plaintiff further argues that the court, in its interpre-
tation of the statute, improperly applied the language
set forth in subdivision (B) of § 12-81 (7) to the language
of subdivision (A) of § 12-81 (7), and, in doing so, effec-
tively eliminated the fourth and fifth prongs of the
Isaiah 61:1 test.
The board, in response, contends that the trial court
properly interpreted § 12-81 (7) and correctly con-
cluded that the plaintiff’s property was excluded from
the exemption pursuant to the unambiguous language
of § 12-81 (7) (B).14 The board also argues, however,
that, regardless of whether the plaintiff’s mission to
support affordable housing is a charitable purpose, the
undisputed evidence demonstrates that the property is
not used exclusively for charitable purposes as required
under the second prong of Isaiah 61:1. Because we
agree with the board’s contention that the requirement
under the second prong of Isaiah 61:1 is not met, which
is dispositive of this appeal, we do not reach the ques-
tion of whether the plaintiff’s mission to support
affordable housing is a ‘‘charitable purpose’’ under § 12-
81 (7).
II
Whether the property for which an exemption is
claimed is ‘‘actually and exclusively used for [charita-
ble] purposes’’ is ‘‘an intensely fact-bound inquiry.’’
(Internal quotation marks omitted.) St. Joseph’s Living
Center, Inc. v. Windham, supra, 290 Conn. 741. In order
to satisfy the ‘‘exclusive use’’ requirement of § 12-81
(7), ‘‘[a]n institution must be exclusively charitable, not
only in the purposes for which it is formed and to which
its property is dedicated, but also in the manner and
means it adopts for the accomplishment of those pur-
poses.’’ (Emphasis in original; internal quotation marks
omitted.) Id. A charitable organization must ‘‘use its
property in such a manner that its activities are entirely
dedicated to serving its stated charitable purpose.’’
(Emphasis added.) Id., 745.
The following additional undisputed facts provide
context for our resolution of this issue. The plaintiff
first became involved in energy efficiency loan pro-
grams when it provided loan servicing for the Energy
Conservation Loan program, which was run by the state
and ‘‘was income targeted at that point.’’15 The purpose
of the program was ‘‘to decrease energy costs, but more
importantly to help homeowners who needed to con-
duct energy related repairs to their homes to . . . have
a source of lower cost capital to be able to do that.’’
There were ‘‘very high energy costs . . . [and] the
state’s concern was that there were people who didn’t
have access to resources to be able to alleviate some
of those costs . . . and needed repairs.’’
In 2011, the plaintiff created a subsidiary, CEEF Co.,
‘‘to support energy conservation and load management
and clean energy and energy efficiency projects by
developing and administering the financing of loans to
consumers.’’ The energy efficiency loan programs that
the plaintiff currently is involved in, through CEEF Co.,
support the state’s energy conservation plan and are
operated under the approval of, or in partnership with,
the utility companies and several state agencies and
regulatory bodies, including the Department of Energy
and Environmental Protection, the Public Utilities Reg-
ulatory Agency, the Connecticut Green Bank, and the
Connecticut Energy Efficiency Board.
Vinal testified at trial and during his deposition that
the plaintiff became involved in administering the statu-
torily mandated programs after being contacted by
Eversource. Eversource initially had selected an out-of-
state for-profit bank to run the Home Energy Solutions
program, but ‘‘the state said to Eversource you need
to find a lower cost local source because it was very
expensive. The ratepayer money was being exhausted
very rapidly.’’ The plaintiff subsequently submitted a
proposal and, through a competitive bidding process,
a regulatory agency selected CEEF Co. to administer
the program. Vinal further testified during his deposi-
tion that the plaintiff provided ‘‘a very cost effective
solution to be able to . . . create the opportunity to
meet the state’s energy conservation goals and support
the companies in doing that.’’
Currently, the plaintiff, through CEEF Co., is involved
in five different energy efficiency loan programs. The
utility companies contract with CEEF Co. to provide
program administration, marketing, contract network,
underwriting and funding of loans. CEEF Co. then con-
tracts with the plaintiff ‘‘to do the work,’’ i.e., to provide
loan servicing and third-party contract administration
for those companies. The plaintiff provides services
such as marketing, intake and processing of applica-
tions, managing a contractor network to provide ser-
vices, monitoring work completion, funding loans,
receiving payments, reimbursing funding sources,
reporting to funders, and collections of delinquent
accounts. Vinal testified that the plaintiff’s loan servic-
ing is ‘‘really debt collection’’ and consists of ‘‘the collec-
tion of required payments from borrowers for loans
and then the recordation of that and the distribution
of the proceeds to the appropriate sources, whether
it’s principal and interest, and to the original lender or
owner of the loan. It also includes collections or default
management which is if they don’t make a payment,
you have to pursue payment, so you become a debt
collector and those are the primary functions.’’
The energy efficiency loans funded through these
programs are made to consumers, commercial entities,
and industrial customers. According to Vinal, the plain-
tiff is essentially a ‘‘clearinghouse’’ that ‘‘help[s] people
. . . get the best price for the best product that they
have.’’ Only one of the programs, the Energy Conserva-
tion Loan program, has an income limitation for its loan
recipients. The Energize CT Heat Loan program also
reserves a portion of its loans to assist persons or fami-
lies of low and moderate income. For example, during
the fiscal year ending March 31, 2020, the plaintiff dis-
tributed approximately $17.4 million in loans directed
toward the Energize CT Heat Loan program, and only
40 percent of that amount, or approximately $7 million,
was intended to assist persons or families of low and
moderate income. Otherwise, the programs do not limit
income in their eligibility requirements.
On appeal, the board contends, among other things,
that the work that the plaintiff does for CEEF Co.
related to the energy efficiency loan programs is not
charitable. Specifically, the board argues that ‘‘[t]he
work [the plaintiff] performs is paid by CEEF Co.
through those contracts with ratepayer funds. With the
exception of one program, there are no limits on income
eligibility for these loans. In fact, the loan programs
developed under [General Statutes] § 16-245m (d) (1)
require the program to be available to all customers
of the electric and gas companies. There is nothing
charitable about these services.’’ We agree with the
board.16
We are guided by our Supreme Court’s analysis in
St. Joseph’s Living Center, Inc. v. Windham, supra,
290 Conn. 740–50. In St. Joseph’s, the plaintiff was a
nonprofit skilled nursing facility organized to provide
long-term health care to the elderly, without regard to
individual financial circumstances. Id., 702, 715–18. Our
Supreme Court determined that such a purpose was
charitable, and that the plaintiff satisfied the first prong
of Isaiah 61:1. Id., 718, 739–40. In an attempt to expand
its patient base, however, the plaintiff also offered
short-term rehabilitative care to the general public. Id.,
706, 741. Our Supreme Court determined that such a use
of the property was outside the scope of the plaintiff’s
charitable purpose and, therefore, defeated the plain-
tiff’s claim for a property tax exemption under the
‘‘exclusive use’’ requirement of § 12-81 (7), as reflected
in Isaiah 61:1’s second prong. Id., 746–47.
Our Supreme Court reasoned: ‘‘[W]e agree with the
trial court that the [plaintiff’s] provision of short-term
rehabilitative services to patients of all ages, drawn
from the community at large, is outside the scope of
the [plaintiff’s] stated purpose . . . . Providing short-
term rehabilitative care to the general public, although
a necessary service and surely helpful to the [plaintiff’s]
bottom line, simply cannot be characterized as falling
within the [plaintiff’s] charitable purpose.’’ Id. The court
noted, ‘‘[b]y way of example . . . that the [plaintiff]
would presumably provide rehabilitative services to a
sports superstar, such as Tiger Woods, working to over-
come an injury or to recover from surgery. Such ser-
vices simply cannot be considered charitable in any
sense of the word.’’ Id., 747 n.49. Our Supreme Court
further explained: ‘‘If the [plaintiff] limited its provision
of rehabilitative care to its existing population of
elderly, long-term residents, we would be inclined to
conclude that such services are within the scope of its
charitable purpose as expressed in its corporate char-
ter. Alternatively, the [plaintiff] could amend its charter
to broaden the availability of rehabilitative services for
those elderly persons who are not part of its long-term
patient population but who are drawn from the commu-
nity at large. In such a case, the use of the [plaintiff’s]
facility in furtherance of that charitable purpose would
not defeat a claim for property tax exemption under
the exclusive use requirement of § 12-81 (7). The record,
however, does not support such a characterization of
the [plaintiff’s] operation with respect to the rehabilita-
tive services that it advertises and promotes. These
services are neither indispensable nor incidental to the
[plaintiff’s] stated charitable purpose. We conclude,
therefore, that the trial court properly determined that
the [plaintiff’s] property is not used exclusively for its
charitable purpose.’’ (Footnote omitted.) Id., 747.17
In the present case, the undisputed evidence demon-
strates that most of the energy efficiency loan programs
administered by the plaintiff benefit consumers, com-
mercial entities, and industrial customers, without the
imposition of income limitations or demonstration of
financial need. Indeed, at oral argument before this
court, counsel for the plaintiff acknowledged that a
privately owned, for-profit real estate holding company
would be eligible to participate in these energy effi-
ciency programs. Just as the plaintiff in St. Joseph’s
exceeded the scope of its charitable purpose by offering
services to ‘‘the general public’’ and ‘‘to patients of all
ages, drawn from the community at large,’’ rather than
just to the elderly; St. Joseph’s Living Center, Inc. v.
Windham, supra, 290 Conn. 746–47; that aspect of the
plaintiff’s business in the present case that focuses on
energy efficiency loan programs with no income limita-
tions is distinct from its purpose of providing ‘‘financial
products and services to support activities that primar-
ily benefit low and moderate income persons and geog-
raphies,’’ and ‘‘promot[ing] energy efficiency and use
of alternative energy . . . and other services benefit-
ting low-and moderate-income persons and geogra-
phies.’’ (Emphasis added.)
The plaintiff nevertheless contends that its work for
CEEF Co. related to the energy efficiency loan pro-
grams is charitable because it ‘‘lessen[s] the burdens
of [the] government’’ by assisting the state in achieving
its energy goals and promoting energy efficiency which,
in turn, combats climate change. We are not persuaded.
First, although the programs themselves may be
designed, at least in part, to promote the state’s energy
conservation goals and to positively impact the environ-
ment, the plaintiff’s involvement in the energy efficiency
programs is limited to fulfilling financial and administra-
tive needs, as confirmed by Vinal’s testimony about the
plaintiff’s role in providing lower cost capital for the
energy efficiency projects and helping program partici-
pants ‘‘get the best price for the best product that they
have.’’ Accordingly, we reject the plaintiff’s attempt to
broaden the scope of its purpose to encompass govern-
mental climate change initiatives. See St. Joseph’s Liv-
ing Center, Inc. v. Windham, supra, 290 Conn. 740–41
(rejecting plaintiff’s attempt to take ‘‘a broad view’’ of
its charitable purpose by urging court to conclude that
providing short-term rehabilitative care to general pub-
lic was within charitable purpose of ‘‘provid[ing]
[health] care’’ (internal quotation marks omitted)).
Second, although the energy efficiency loan programs
are statutorily mandated and state agencies are involved
in their regulation, the plaintiff’s activities include,
among other things, marketing, intake and processing
of applications, reporting to investors, and the collec-
tion of delinquent accounts for the utility companies.
In other words, the plaintiff’s services relieve a burden
that would otherwise be borne by the utility compa-
nies, not by the state itself.18 Indeed, the evidence dem-
onstrates that the plaintiff does not undertake any
financial burden, given that the loans distributed
through these programs are fully funded by the ratepay-
ers themselves. The plaintiff contends that, ‘‘without
[its] activities, the government could not continue its
present program, unless it undertook to [employ] work-
ers itself given that the state has not found any other
cost-effective option over the years.’’ Even if the plain-
tiff provides a more ‘‘cost-effective’’ servicing option
for the utility companies, however, nothing in the record
indicates that the programs would no longer be avail-
able, especially considering that such programs are stat-
utorily mandated; see General Statutes § 16-245m (d)
(1); or that any financial burden would fall on the state,
rather than on the utility companies, to administer the
programs.
In summary, the plaintiff simply has not demon-
strated how the financial services it sells to utility com-
panies, services which include debt collection and the
facilitation of loans to consumers, commercial entities,
and industrial customers that do not have any income
limitations or financial need, are charitable. See St.
Joseph’s Living Center, Inc. v. Windham, supra, 290
Conn. 730 (exemptions to charitable institutions can
be granted only to aid in ‘‘the accomplishment of a
public benefit and for the advancement of the public
interest’’ (emphasis added; internal quotation marks
omitted)). In addition, the plaintiff failed to demonstrate
that these services are indispensable or incidental to
its stated purpose.19 Accordingly, the plaintiff’s property
is not used exclusively for charitable purposes, as
required under Isaiah 61:1’s second prong. The trial
court, therefore, properly dismissed the plaintiff’s
appeal from the board’s decision.
The judgment is affirmed.
In this opinion the other judges concurred.
1
The plaintiff has ‘‘no defined eligibility’’ requirements for its services.
2
Banks are incentivized to lend money to community development finan-
cial institutions such as the plaintiff because, in return, they receive Commu-
nity Reinvestment Act credits, which are considered when the banks ‘‘seek
approval for mergers, acquisitions and/or approval for additional branches.’’
3
For loan servicing, the plaintiff charges the banks a fee ranging from
$10 to $16 per loan per month in addition to a onetime fee to transfer and
set up a portfolio.
4
CEEF Co., also a tax-exempt charitable organization for federal tax
purposes, operates its business at the same location as the plaintiff. As we
explain subsequently in this opinion, CEEF Co. has no employees of its
own and contracts with the plaintiff to provide its services.
5
General Statutes § 16-245m (d) (1) provides in relevant part that ‘‘electric
distribution companies . . . in coordination with the gas companies . . .
shall submit to the Energy Conservation Management Board a combined
electric and gas Conservation and Load Management Plan, in accordance
with the provisions of this section, to implement cost-effective energy con-
servation programs, demand management and market transformation initia-
tives. . . .’’
6
According to Calvin Vinal, the plaintiff’s president and chief executive
officer, the plaintiff ‘‘help[s] mostly lower income, minority, and women
. . . to develop . . . the [economic] capacity . . . to own and operate or
develop a business . . . .’’
7
General Statutes § 12-81 provides in relevant part: ‘‘The following-
described property shall be exempt from taxation . . . (7) . . . (B) On and
after July 1, 1967, housing subsidized, in whole or in part, by federal, state
or local government and housing for persons or families of low and moderate
income shall not constitute a charitable purpose under this section. As
used in this subdivision, ‘housing’ shall not include real property used for
temporary housing belonging to, or held in trust for, any corporation orga-
nized exclusively for charitable purposes and exempt from taxation for
federal income tax purposes, the primary use of which property is one or
more of the following: (i) An orphanage; (ii) a drug or alcohol treatment or
rehabilitation facility; (iii) housing for persons who are homeless, persons
with a mental health disorder, persons with intellectual or physical disability
or victims of domestic violence; (iv) housing for ex-offenders or for individu-
als participating in a program sponsored by the state Department of Correc-
tion or Judicial Branch; and (v) short-term housing operated by a charitable
organization where the average length of stay is less than six months. The
operation of such housing, including the receipt of any rental payments, by
such charitable organization shall be deemed to be an exclusively charitable
purpose . . . .’’
8
In its pretrial brief, the board questioned: ‘‘[G]iven that the actual
affordable housing property is not a charitable purpose under § 12-81 (7)
(B), how can it be that loaning money for the creation of such noncharitable
purpose is charitable under § 12-81 (7) (A)?’’ The board also acknowledged,
however, that its argument ‘‘is somewhat a simplistic view of the question,’’
and ‘‘assert[ed] that such facts are relevant to framing [the] issue but not
to deciding the case.’’
9
As we explain subsequently in this opinion, in order for property to
qualify for tax exemption under § 12-81 (7), it must ‘‘(1) belong to or be
held in trust for a corporation organized exclusively for charitable purposes;
(2) be used exclusively for carrying out such charitable purposes; (3) not
be leased, rented or otherwise used for a purpose other than the furtherance
of its charitable purposes; (4) not be housing subsidized by the government;
and (5) not constitute low or moderate income housing.’’ Isaiah 61:1, Inc.
v. Bridgeport, supra, 270 Conn. 77.
Despite its statutory construction of § 12-81 (7), the trial court determined
that the fourth and fifth prongs are ‘‘clearly inapplicable’’ in the present
case because ‘‘[t]here is no claim that the property is housing as that term is
ordinarily understood, nor does the record support such a characterization.’’
(Internal quotation marks omitted.) The court also determined that the third
prong is not applicable to this case and, therefore, that its analysis was
confined to the first two prongs.
10
The parties agree that our standard of review over the trial court’s
decision is plenary. Although we occasionally ‘‘review the trial court’s con-
clusion in a tax appeal pursuant to the well established clearly erroneous
standard of review’’; (internal quotation marks omitted) St. Joseph’s Living
Center, Inc. v. Windham, supra, 290 Conn. 706; the issue in the present
case involves application of the law to the undisputed facts. See, e.g., Jeweler
v. Wilton, 199 Conn. App. 842, 847, 237 A.3d 800 (2020) (where ‘‘issue
concerns the proper application of [the statute at issue] to undisputed facts,
our review of that legal question is plenary’’).
11
Because in our consideration of the first two prongs, we dispose of the
plaintiff’s appeal under prong two, we do not reach the question of whether
the remaining prongs are satisfied, or even applicable, in this case. See St.
Joseph’s Living Center, Inc. v. Windham, supra, 290 Conn. 709 (concluding
that third, fourth, and fifth prongs of Isaiah 61:1 test were inapplicable to
that case).
12
‘‘[O]nly the first factor, i.e., whether the purpose expressed in the organi-
zation’s fundamental documents, is the sine qua non of a charitable organiza-
tion. Once a court determines that an organization has an exclusively charita-
ble purpose, the other factors should be considered under the totality of
the circumstances to determine whether the organization is, in fact, fulfilling
its charitable purpose.’’ St. Joseph’s Living Center, Inc. v. Windham, supra,
290 Conn. 713 n.27.
13
Notably, § 12-81 (7) (B) does not exclude all housing for persons or
families of low and moderate income from receiving the exemption. Our
Supreme Court’s recent decision in Rainbow Housing Corp. v. Cromwell,
supra, 340 Conn. 501, makes clear that such housing may still ‘‘[fall] within
the scope of the charitable exemption . . . if it is ‘temporary’ and primarily
used for one of the five . . . charitable purposes [enumerated in § 12-81
(7) (B) (i) through (v)].’’ Id., 514. Nevertheless, because we affirm the trial
court’s judgment pursuant to Isaiah 61:1’s second prong, we need not
address how, if at all, the exclusion to the exemption set forth in § 12-81
(7) (B) applies to the present case.
14
The board does not challenge the trial court’s determination, under St.
Joseph’s second factor, that the plaintiff is not self-supporting, and that
conclusion is supported by the undisputed evidence. The board also does
not challenge the trial court’s determination, under St. Joseph’s third factor,
that the plaintiff’s corporate documents express a purpose which would
relieve a burden on society. Instead, the board argues that, in looking at
how the property is used, pursuant to the second prong of Isaiah 61:1, the
plaintiff failed to prove that the work it performs for CEEF Co. relieves any
burden on the state, which we address in part II of this opinion.
15
The plaintiff was operating at the time as CT Housing Investment Fund,
Inc. (CHIF). CHIF was incorporated in 1967 and changed its name to Capital
for Change, Inc., in 2016, following its merger with the Greater New Haven
Community Loan Fund, Inc.
16
The trial court, in evaluating the second prong of Isaiah 61:1, again
relied on its interpretation of the exclusion set forth in § 12-81 (7) (B). The
court considered Vinal’s testimony about the amount of commercial loan
funds dedicated to ‘‘provide housing for persons or families of low or moder-
ate income’’ and the energy efficiency loans ‘‘specifically intended to assist
persons or families of low and moderate income in providing energy efficient
heating systems for their homes.’’ The court concluded: ‘‘Vinal’s credible
testimony is dispositive of the case. Loans made for the purpose of providing
housing for persons of low and moderate income are not ‘peripheral activi-
ties’ of [the plaintiff]. . . . Such loans are central to its foundational purpose
of providing ‘housing options’ that primarily ‘benefit low and moderate
income persons.’ . . . Under these circumstances, [the plaintiff’s property]
is not ‘used exclusively’ for carrying out ‘charitable purposes’ as that term
is defined in . . . § 12-81 (7).’’ (Citations omitted.) Our determination that
the requirements of prong two were not met rests on different grounds.
Lewis v. Freedom of Information Commission, 202 Conn. App. 607, 616
n.9, 246 A.3d 507 (2021) (‘‘[i]t is axiomatic that [w]e may affirm a proper result
of the trial court for a different reason’’ (internal quotation marks omitted)).
17
Our Supreme Court’s conclusion in St. Joseph’s was indirectly supported
by its decision in H.O.R.S.E. of Connecticut, Inc. v. Washington, 258 Conn.
553, 783 A.2d 993 (2001). See St. Joseph’s Living Center, Inc. v. Windham,
supra, 290 Conn. 743–44. The plaintiff in H.O.R.S.E. of Connecticut, Inc., was
an organization dedicated to ‘‘the care of all abused, neglected, unwanted and
lost domestic hoofed animals; to provide education and training pertinent
to the care of hoofed animals for employees, members and officers, and
the community as a whole; and to safeguard, advance and promote the
safety and well-being of domestic hoofed animals by political, educational
and other community activity.’’ (Internal quotation marks omitted.)
H.O.R.S.E. of Connecticut, Inc. v. Washington, supra, 556. Although the
plaintiff used the subject property, at least in part, to board and to rehabilitate
abused, neglected or abandoned horses, certain evidence indicated that at
least some of the plaintiff’s boarders were ‘‘healthy and were not, and never
ha[d] been, in need of the special care, treatment or rehabilitation that the
plaintiff afford[ed] abused, neglected or abandoned horses in accordance
with its charitable purpose.’’ Id., 564. Accordingly, our Supreme Court
remanded the case to the trial court, which had granted the plaintiff’s motion
for summary judgment, to resolve this factual dispute and to determine
whether the plaintiff’s use of its property was, in fact, dedicated exclusively
to its charitable purpose. Id., 565–66.
18
We also note that providing a service to the government, or relieving a
state burden, does not, in and of itself, make an activity ‘‘charitable.’’ Instead,
the question of whether an organization’s activities relieve the state of a
burden it would otherwise be compelled to bear is just one factor that
‘‘should be considered under the totality of the circumstances to determine
whether the organization is, in fact, fulfilling its charitable purpose.’’
(Emphasis added.) St. Joseph’s Living Center, Inc. v. Windham, supra, 290
Conn. 713 n.27.
19
The plaintiff asserts, in a conclusory fashion, that its activities for CEEF
Co. are ‘‘necessary for the primary, tax-exempt purpose.’’ Activities that
are ‘‘ ‘necessary for’ ’’ the accomplishment of an organization’s charitable
purpose, or ‘‘merely incidental to’’ such a purpose, do not defeat a claim
for tax exemption. (Emphasis omitted.) St. Joseph’s Living Center, Inc. v.
Windham, supra, 290 Conn. 745–46. The plaintiff, however, has failed to
explain how its financial services for utility companies, which ultimately
benefit consumers, commercial entities, and industrial customers without
financial limitations, are necessary for, or ‘‘indispensable’’; id., 743; to the
accomplishment of its goal to provide financial products and services to
support activities that primarily benefit low and moderate income persons.