Home for Aged People in Fall River v. Board of Assessors of the City of Fall River (May 4, 2011)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


  
HOME FOR AGED PEOPLE       v.		  BOARD OF ASSESSORS OF 
IN FALL RIVER		  THE CITY OF FALL RIVER
			

Docket Nos. F288407				  Promulgated:
            F296842				  May 4, 2011
            F300683	  	
				       				 
   		  				
These are appeals under the formal procedure, pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, from the refusal of the appellee Board of Assessors of the City of Fall River ("assessors" or "appellee") to abate real estate taxes on certain real estate located in Fall River, owned by and assessed to the appellant, Home for Aged People in Fall River ("appellant" or "Home"), under G.L. c. 59, §§ 11 and 38 for fiscal years 2007 through 2009 ("fiscal years at issue").  
 Commissioner Mulhern heard these appeals.  Chairman Hammond and Commissioners Scharaffa, Egan, and Rose joined him in the decisions for the appellant, which are promulgated simultaneously with these findings of fact and report. 

These findings of fact and report are made pursuant to a request by the appellant under G.L. c. 58A, § 13 and 831 CMR 1.32. 

	Stephen W. Kidder, Esq. and Diane C. Tillotson, Esq. for the appellant.  

	Burton Peltz, Esq. for the appellee.  



		        FINDINGS OF FACT AND REPORT

I.   Introduction and Jurisdiction
On the basis of the stipulated facts and documents, testimony and exhibits offered into evidence at the hearings of these appeals, the Appellate Tax Board ("Board") made the following findings of fact.  
At all times relevant to these appeals, the appellant was a Massachusetts non-profit corporation organized under G.L. c. 180. It was exempt from federal income taxes under Internal Revenue Code § 501(c)(3). The appellant's Articles of Organization stated that its purpose was "to contribute to the well-being and financial security of primarily elderly individuals by providing nursing, housing, health-care, recreational and social services in a charitable manner, in the Greater Fall River area."  
Home was the owner of two parcels of real estate located in Fall River.  The first parcel, located at 1168 Highland Avenue, was improved with a facility known as Adams House ("subject property" or "Adams House parcel").  Adams House was a nursing home which was licensed by the Department of Public Health as a Level III/IV long-term care facility.  
The second parcel, located at 4380 North Main Street ("Bay View parcel"), was improved with a facility known as Bay View.  Bay View was an independent-living community, available to individuals age sixty-two or older, consisting of a forty-six unit apartment building and twenty-two townhouse-style units, referred to as cottages ("cottages"). Residents of Bay View had the option to contract for certain services such as house cleaning, meals, and transportation, but Bay View was not licensed as an assisted-living facility.  
For fiscal year 2007, the appellant timely filed with the assessors its Form 3 ABC and a copy of its Form PC and paid the taxes due without incurring interest.  The appellant timely filed an Application for Abatement with the assessors on January 31, 2007.  The assessors denied the Application for Abatement on February 7, 2007, and the appellant timely filed its petition with the Board on May 4, 2007. 
For fiscal year 2008, the appellant timely filed its Form 3 ABC and a copy of its Form PC with the assessors and paid the taxes due without incurring interest.  The appellant timely filed an Application for Abatement with the assessors on January 30, 2008.  The assessors denied the Application for Abatement on April 17, 2008, and the appellant timely filed its petition with the Board on June 19, 2008. 
For fiscal year 2009, the appellant timely filed its Form 3 ABC and a copy of its Form PC with the assessors and paid the taxes due without incurring interest.  The appellant timely filed its Application for Abatement on January 29, 2009, and that application was denied by the assessors on March 4, 2009.  The appellant timely filed its petition with the Board on May 29, 2009.  
On the basis of these facts, the Board found that it had jurisdiction to hear and decide these appeals.
II.  Procedural History
There were two issues in these appeals:  (1) whether the assessed value of the subject property exceeded its fair cash value and (2) whether the subject property was exempt from tax under G.L. c. 59, § 5, Clause Third ("Clause Third").  Prior to the fiscal years at issue, the assessors considered the Adams House parcel to be exempt under Clause Third and assessed no real estate or personal property taxes upon it.   Beginning in fiscal year 2007, the assessors ceased treating the Adams House parcel as an exempt property and assessed taxes based on its fair cash value.  
These appeals were originally heard by the Board on June 25, 2008.  The Board issued a Decision for the appellee on January 26, 2009.  Subsequently, on August 19, 2009, the appellant filed a Motion for Reconsideration of the Board's decision, following the Appeals Court's decision in Mary Ann Morse Healthcare Corp. v. Assessors of Framingham, 74 Mass. App. Ct. 701, 705 (2009), which was promulgated on July 27, 2009.  In that case, the Appeals Court reversed the Board's finding that a corporation which operated an assisted-living facility was not a charitable organization for the purposes of Clause Third.  In consideration of this development in relevant case law, the Board allowed the appellant's Motion for Reconsideration and re-opened the hearing of these appeals to receive further evidence and hear additional arguments by the parties.  A second hearing was held before the Board on January 20, 2010.  
Following that hearing, but before the Board issued its decision, the parties reached an agreement as to the second issue, the valuation of the subject property.  The parties stipulated that the subject property's assessed value for each of the fiscal years at issue exceeded its fair cash value.  The parties' stipulations on the valuation issue are summarized in the following table:
	
Fiscal    Year	Assessed
Value ($)	Fair Cash   Value ($)	Over-valuation ($)	Tax Rate ($/$1,000)	Abatement Amount ($)	
2007	3,794,000	2,200,000	1,594,000	16.37	26,093.78	
2008	3,784,300	2,000,000	1,784,300	16.31	29,101.93	
2009	3,771,300	1,800,000	1,971,300	17.49	34,478.04	

III. The Exemption Issue 
At the June 25, 2008 hearing, the appellant offered the testimony of David Westgate, a longtime member of Home's Board of Trustees and Finance and Executive Committee, and the testimony of William Girrier, Home's Chief Executive Officer.  At the January 20, 2010 hearing, the appellant offered the testimony of James H. Kay, who was serving on a volunteer basis as the Chairman of Home's Board of Trustees.  On the basis of the stipulated facts and documents, testimony and exhibits offered into evidence at the hearings of these appeals, the Board made the following subsidiary findings of fact. 
A. Adams House
Adams House was established in 1891 and has provided care for the elderly continuously since that time.  The current Adams House building was built in 1898, and is a three-story, brick Victorian-style building.  At all relevant times, its residential floors were organized by varying levels of care.  The first floor housed the most independent residents, those who received some assistance with activities of daily living, but who could "pretty much get along on their own," according to Mr. Girrier.  The second floor housed residents needing more extensive assistance with activities of daily living, and the third floor was home to residents needing the most intensive level of care.  
Although Adams House was licensed for up to fifty-nine beds, Mr. Westgate testified that Adams House operated at a fifty-four bed capacity.  In 2007, Adams House had forty-one residents.  In 2008, it had forty-seven residents. 
Mr. Westgate testified that the philosophy of Adams House was "to provide care that is extraordinary in nature and is of the highest quality that we can do."  Part of that "extraordinary" care involved maintaining very low staff-to-resident ratios.  Because of the superior staffing ratios which it maintained, Adams House was able to provide on average 4.6 hours of daily care to each resident, in comparison to the statewide average at long-term care facilities of 3.8 hours.  
Adams House did not accept Medicaid.  Mr. Westgate testified that Adams House declined to participate in the Medicaid program because the low reimbursement rates associated with that program would prevent Adams House from maintaining the level of staffing it wished to maintain.  
Mr. Westgate described the admission process at Adams House.  Individuals seeking admission to Adams House were screened by an admissions committee to ensure that they were appropriate candidates for admission.  The health of the applicant was an important consideration in the admission process.  Mr. Westgate explained that health was an important consideration because of the need to ensure that Adams House could provide the appropriate level of care for all residents.  
Once it was determined that the applicant was an appropriate candidate for residency at Adams House, Home requested financial information so that it could determine whether the applicant had sufficient assets to pay the fees charged by Adams House.  Upon admission to Adams House, residents were required to pay a one-time admission fee of $10,000; after admission, the daily fee at Adams House was $270, or approximately $8,000 per month.  Mr. Girrier testified that Adams House tried "to be competitive in the market rate.  [Home tried] to make sure that we're not overpriced so that, you know, we alienate people from coming in who would otherwise go to another nursing home.  We feel our rates are competitive."
 Mr. Westgate stated that Adams House generally drew its residents from the greater Fall River area and that the residents came from diverse backgrounds.  A roster of residents entered into evidence showed that, during the years at issue, Adams House residents included people retired from a variety of professions.  
Home had an endowment totaling nearly $7 million, which allowed it to subsidize the care of those residents whose assets had been depleted and who therefore could not pay the full daily rate.  Mr. Westgate testified that Home's goal was to have thirty-two of its beds occupied by full-paying residents, with the remaining twenty-two beds earmarked for residents needing financial assistance - the so-called "supported" residents.  However, no written policy to that effect was introduced into evidence.  In 2007, approximately 29% of the care provided at Adams House was supported care.  In 2008, approximately 33% of the care provided at Adams House was supported care.  
Prior to 2007, the Adams House Admission Agreement ("Admission Agreement") expressly provided that "once admitted, a Resident will not be discharged for reasons of financial ability."  Mr. Westgate testified that Adams House had never evicted a resident because of an inability to pay.  However, in 2007 the Admission Agreement was amended and that language was removed.  The language inserted into the Admission Agreement, as amended in 2007, provided: "once admitted to Adams House under this Agreement, a RESIDENT becomes eligible for charitable assistance from [Home] in the event that RESIDENT becomes financially unable to pay for his or her own care for reasons beyond his or her own control and [Home] determines in its sole discretion that sufficient . . . funds for such charitable assistance are available."  The amended Admission Agreement also provided for a right of recovery of funds - with interest - from a resident who received supported care, or the estate of such a resident, in the event that the resident terminated occupancy at Adams House.  
Further, Mr. Westgate testified that it was Home's goal that incoming residents have the financial resources to sustain at least three years worth of living expenses at Adams House.  However, no written policy to that effect was offered into evidence.  Although Mr. Westgate testified that "there have been times in [Home's} history" when people with no assets were admitted," he did not elaborate on this statement, or even approximate how many times in Home's more than 115-year history that people with no assets were admitted.  In addition, no documents evidencing such admissions were introduced into evidence.  Both the original and amended Admission Agreements stated that incoming residents should have sufficient resources to pay for their care for their entire life expectancy:
The Resident shall have furnished information to [Home] with respect to the Resident's financial resources demonstrating that the Resident has the financial ability to pay the nonrefundable Application Fee, the daily Residency Rate for the accommodation provided, charges for additional services, and personal living expenses for the life expectancy of the Resident.  

The evidence showed that no residents admitted in 2007 or 2008 received supported care immediately upon admission.    The record indicated that the vast majority of Adams House residents had sufficient funds to pay the $10,000 admission fee and $270 daily fee and did not receive financial assistance.  
B. Bay View
Bay View was an independent-living community consisting of a forty-six unit apartment building and twenty-two cottages.  Residency at Bay View was available to individuals age sixty-two or older.
Home first acquired Bay View's apartment building in 1991.  The apartment building had been a condominium project which failed.  Most of the units were two-bedroom, two-bathroom units with approximately 1,300 square feet of gross living area.  Mr. Girrier testified that Bay View was conceived as an independent-living community offering limited services to its residents.  As its resident population aged, Bay View began to offer a more comprehensive menu of optional services, including meals, transportation, cleaning services and social and recreational activities, for additional fees.  However, Bay View was not licensed as an assisted-living facility, and the services that it offered did not include assistance with activities of daily living.  
In light of these changes at Bay View, Home decided to expand its offerings to include housing for more active adults.  In 2005, Home began construction on twenty-two independent-living units, known as cottages.  As of the June 25, 2008 hearing of these appeals, five of the cottages were occupied and a sixth cottage was being utilized as a "model" unit; the remaining sixteen units were not yet completed or occupied.  
The entrance fees for the apartment complex at Bay View ranged from $125,000 to $350,000, depending on the unit.  The entrance fees for the cottages ranged from $425,000 to $500,000, depending on the unit.  Optional services were available for prices ranging from $1,600 to $2,500 per month.  A mandatory, monthly fee of $390 was charged for residence in the cottages, which the "Residence and Use Agreement" described as covering concierge services.  Utilities were separately metered for each unit, and were not covered by the entrance or monthly fees.  Bay View did not accept Medicaid, and it was undisputed by the parties that Bay View was not exempt from tax under Clause Third during the fiscal years at issue.
Home's Dominant Purposes and Methods Were Not Traditionally Charitable 

On the basis of all of the evidence, the Board found that Home provided housing and other services to a variety of individuals in two different settings, Bay View and Adams House.  With respect to Adams House, the Board found that Home provided housing and nursing care to the elderly.  The Board found that the residents of Adams house had varying levels of need.  Some residents were relatively independent and active, while others required considerable support for medical issues and assistance with activities of daily living.  The majority of residents had sufficient financial means to pay for their care.  A minority of residents received subsidized care from Home, usually after having lived at, and paid full fees to, Adams House for a number of years.  Neither Adams House nor Bay View accepted Medicaid, and therefore the population served by Home did not include individuals dependent on Medicaid.  
With respect to Bay View, the Board found that it was an independent-living community primarily for independent individuals age sixty-two or older.  Bay View was not licensed to operate as an assisted-living facility, and the Board found that it was not an assisted-living facility.  Entrance fees at Bay View ranged from $125,000 to $500,000, depending on the unit. Bay View offered to its residents certain services, such as house cleaning, meals, and transportation, but those services were optional and residents were required to pay additional fees for them.  The optional services were available for between $1,600 and $2,500 per month.  Further, a mandatory, monthly fee of $390 for concierge services was charged to residents of the cottages.  Based on the foregoing, the Board found that the accommodations and amenities offered at Bay View made it more akin to a luxury living milieu than a facility which provided assistance with activities of daily living, such as dressing and bathing.  Therefore, the Board found that the operation of Bay View was not a traditionally charitable activity. 
In making its determination as to Home's dominant purposes and methods, the Board looked at Home's overall operations and the population which it served.  Bay View was the larger of Home's two facilities.  The apartment building at Bay View contained forty-six apartments and there were twenty-two cottages, for a total of sixty-eight units at Bay View.  Adams House, in contrast, operated on a fifty-four bed capacity.  Bay View's residents did not require assistance with activities of daily living or other medical issues, nor did Home offer those services at Bay View.  Even within Adams House, the evidence showed that a number of its residents were relatively physically independent, and the majority of its residents were financially independent.  Home's dominant purposes and methods were to provide housing and other services at both Bay View and Adams House, and the Board found that the majority of the persons served by Home were not traditional objects of charity.  Rather, the population served by Home largely consisted of comparatively independent persons who paid market-rate fees for Home's services.  Based on these facts, the Board concluded that, although some of the services provided by Home at Adams House may have been traditionally charitable, Home's dominant purposes and methods were not traditionally charitable.   
The Board next considered and weighed the established factors relevant to the determination of an organization's charitable status in light of its finding that Home's dominant purposes and methods were not traditionally charitable.  Entrance fees for Bay View ranged from $125,000 to $350,000 in the apartment building and $425,000 to $500,000 for the cottages, depending on the unit. In addition, a $390 mandatory monthly fee for concierge services was charged to residents of the cottages.  That fee did not cover utilities, which residents were responsible for and which were separately metered for each unit.  The Board found that the fees charged at Bay View barred access to individuals of limited financial means, and therefore, it was not accessible to a large and fluid class of people.  
In addition, Bay View offered to its residents a menu of optional services, such as meals, transportation, and house cleaning, for prices ranging from $1,600 to $2,500 per month.   As stated above, a mandatory monthly fee of $390 was charged for concierge services at the cottages.  The Board found that the charging of these fees did not advance a charitable purpose, but instead merely facilitated the delivery of premium lifestyle services akin to services available in a luxury living setting.  
Residents at Adams House paid $10,000 for admission and $8,000 per month thereafter.  Despite their diverse professional backgrounds, the Board found that the residents at Adams House by and large shared one commonality, i.e., the financial means to pay for their care at Adams House.  The vast majority of the individuals on the resident roster had assets totaling hundreds of thousands of dollars upon admission to Adams House.  Most residents also had monthly incomes between $1,000 and $3,000.  The financial information of some residents listed on the resident roster was omitted and replaced with the notation that their financial resources were adequate or that their family members were paying for their care. 
 Although Home subsidized the care of a minority of Adams House residents, the evidence indicated that the residents receiving subsidized care at Adams House were not elders of limited financial means upon entry to Adams House.  Rather, they were persons who had resided at, and paid full fees to, Adams House for a number of years prior to receiving subsidized care.  The Board found that the fact that Home subsidized the care of a minority of residents at Adams House did not prove that its services were accessible to a large and fluid class of persons.  In fact, Mr. Girrier essentially conceded in his testimony, excerpted below, that it was not:
[Mr. Peltz]: By placing more emphasis on admitting people with  means, hopefully meeting the three-year litmus test that you mentioned, are you not prejudicing admission for people of limited or no means?

[Mr. Girrier]: Yes.
[Mr. Peltz]: You're then limiting the scope of the community that can be admitted?

[Mr. Girrier]: At that point in time, because of the necessity with the business, we have no other recourse.

  Based on all of the evidence, the Board found that the fees charged by Home barred access to elders of limited financial means, and, therefore, its services were not accessible to a large and fluid class of people.  
In addition, the Board found that Home did not benefit the public or serve to relieve a burden of government in the manner intended by Clause Third.  Neither Bay View nor Adams House accepted Medicaid, and the Board found that they were not accessible to elders dependent on government assistance.  The evidence indicated that a majority of the residents at Bay View and Adams House either had sufficient resources to pay for their care and lodging, or had family members who were able to pay for them.  The Board found that the residents of Adams House and Bay View were primarily individuals with many options for their care, not individuals who would otherwise be dependent upon government support.  
Moreover, the evidence established that the accommodations and fees at Adams House were designed to make it an attractive alternative to other area nursing homes.  The Board found that the fees and policies in place at Adams House were guided by a desire to remain competitive with other local nursing homes, rather than to relieve the government of any burden.  The Board found that Home operated more like a typical commercial enterprise, by charging market-rate fees for its services, rather than a charitable organization.  Only a minority of residents at Adams House received subsidized care, and those residents comprised just a fraction of the overall population served by Home.  Furthermore, some of the residents receiving supported care received only modest financial assistance from Home; many of the subsidized residents continued to pay a portion of the daily fee.  The record further established that, typically, residents of Adams House were eligible to receive subsidized care only after residing at, and paying full fees to, Adams House for a number of years.
The Board therefore found that any benefit provided to the public by Home was merely incidental to Home's dominant purposes and methods, which were the provision of housing and services in return for market-rate fees.  Accordingly, the Board found that Home did not benefit the public or relieve a burden of government in the manner intended by Clause Third.  
IV.  The Board's Ultimate Findings of Fact  		
After considering and weighing the relevant factors in light of its finding that Home's dominant purposes and methods were not traditionally charitable, the Board found that Home was not a charitable organization for the purposes of Clause Third.  The Board therefore found that the subject property was not exempt under Clause Third for the fiscal years at issue because it was not owned by a charitable organization.  
Additionally, as stipulated by the parties, the Board found that the subject property's assessed value for each of the fiscal years at issue exceeded its fair cash value.  The Board's findings of fair cash value and the corresponding abatement amounts are set forth in the following table:



Fiscal    Year	Assessed
Value ($)	Fair Cash   Value ($)	Over-valuation ($)	Tax Rate ($/$1,000)	Abatement Amount ($)	
2007	3,794,000	2,200,000	1,594,000	16.37	26,093.78	
2008	3,784,300	2,000,000	1,784,300	16.31	29,101.93	
2009	3,771,300	1,800,000	1,971,300	17.49	34,478.04	

Based on the foregoing, the Board decided these appeals for the appellant and granted abatements as set forth above.  

			     OPINION
Clause Third provides an exemption for "real estate owned by or held in trust for a charitable organization and occupied by it or its officers for the purposes for which it is organized or by another charitable organization or organizations or its or their officers for the purposes of such other charitable organization or organizations."  Thus, a taxpayer claiming exemption under Clause Third must prove first that the property is owned by a charitable organization, and second, that a charitable organization occupies it for charitable purposes.  See Jewish Geriatric Services, Inc. v. Longmeadow, Mass. ATB Findings of Fact and Reports 2002-337, 351, aff'd, 61 Mass. App. Ct. 73 (2004) (citing Assessors of Hamilton v. Iron Rail Fund of Girls Club of America, 367 Mass. 301, 306 (1975)). 
 Merely espousing a recognized charitable purpose does not mean that an organization is a charitable organization for the purposes of Clause Third. See American Inst. For  Economic Research v. Assessors of Great Barrington, 324 Mass. 509, 513 (1949).  The organization "must prove that it is in fact so conducted that in actual operation it is a public charity." Jacob's Pillow Dance Festival, Inc. v. Assessors of Becket, 320 Mass. 311, 313 (1946).
I. Home's Dominant Purposes and Methods Were Not      Traditionally Charitable

An organization will be considered a charitable organization for the purposes of Clause Third if
"the dominant purpose of its work is for the public good and the work done for its members is but the means adopted for this purpose.  But if the dominant purpose of its work is to benefit its members or a limited class of persons it will not be so classed, even though the public will derive an incidental benefit from such work." 

Harvard Community Health Plan v. Assessors of Cambridge, 384 Mass. 536, 544 (1981) (quoting Mass. Medical Soc'y v. Assessors of Boston 340 Mass. 327, 332 (1960)).  For several decades, courts have used the following factors to determine whether an organization is operating as a public charity:
[W]hether the organization provides low-cost or free services to those unable to pay, see New England Legal Found. v. Boston, 423 Mass. 602, 610 (1996); whether it charges fees for its services and how much those fees are, see Assessors of Boston v. Garland Sch. of Home Making, 296 Mass. 378, 390, (1937); whether it offers its services to a large or "fluid" group of beneficiaries and how large and fluid that group is, see New England Legal Found., 423 Mass. at 612; Cummington Sch. of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 601, (1977);  whether the organization provides its services to those from all segments of society and from all walks of life, see Harvard Community Health Plan, Inc., 384 Mass. at 544; and whether the organization limits its services to those who fulfil certain qualifications and how those limitations help advance the organization's charitable purposes, see Western Mass. Lifecare Corp. v. Assessors of Springfield, 434 Mass. 96, 103-104 (2001); Boston Symphony Orchestra, Inc. v. Assessors of Boston, 294 Mass. 248, 256 (1936).

New Habitat, Inc. v. Tax Collector of Cambridge, 451 Mass. 729, 732 (2008).  
In 2008, the Supreme Judicial Court decided the New Habitat case, in which it considered whether a non-profit organization providing long-term housing for persons with acquired brain injury was a charitable organization for the purposes of Clause Third.  It was undisputed that the residents served by New Habitat, Inc. were unable to care for themselves or live independently, and required 24-hour support.  Moreover, there was no question that the provision of housing and services to persons with acquired brain injury was New Habitat, Inc.'s dominant purpose because that was its sole activity.  "[I]n light of these facts, [the Court] conclude[d] that New Habitat's dominant purposes and methods were traditionally charitable."  Id. at 734 (internal citations omitted).  
Because New Habitat's dominant purposes and methods were traditionally charitable, the Court placed less significance on the above-referenced factors in concluding that it qualified for the exemption.  Thus, although New Habitat, Inc. served only a small number of individuals and charged considerable fees, the Court held that it was a charitable organization for purposes of Clause Third.  Compare Boston Symphony Orchestra, 294 Mass. at 256 (holding that organization which charged significant fees for admission and whose services were not accessible to a large segment of the public was not a charitable organization for purposes of Clause Third).     
In 2009, the Appeals Court had its first opportunity to decide a case involving the Clause Third exemption following the New Habitat decision.  In Mary Ann Morse Healthcare, the Appeals Court considered whether property owned and used by the taxpayer as an assisted-living facility, a substantial portion of which served Alzheimer's and dementia residents, was entitled to the Clause Third exemption.  Id. at 702.  The Appeals Court held that New Habitat provided a new "interpretive lens" with which to view cases arising under Clause Third.  Mary Ann Morse Healthcare, 74 Mass. App. Ct. at 703.  The Appeals Court noted that, although New Habitat left intact the previously-established factors, it "emphatically condition[ed] the importance of previously established factors on the extent to which the 'dominant purposes and methods of the organization' are traditionally charitable."  Mary Ann Morse Healthcare, 74 Mass. App. Ct. at 703 (citing New Habitat, 451 Mass. at 733) ("The closer an organization's dominant purposes and methods are to traditionally charitable purposes and methods, the less significant these factors will be in our determination of the organization's charitable status . . .  [t]he farther an organization's dominant purposes and methods are from traditionally charitable purposes and methods, the more significant these factors will be.").  Thus, the Appeals Court in Mary Ann Morse Healthcare ruled that, where the majority of the taxpayer's activities were dedicated to serving the needs of Alzheimer's and dementia residents, it was entitled to the Clause Third exemption because it was indisputably performing a "traditional public charitable function."  Id. at 705.  

Reviewing the facts of the present appeals in light of the analysis of New Habitat and Mary Ann Morse Healthcare,  the Board found and ruled that Home's dominant purposes and methods were to provide housing and other services to a variety of individuals in two settings, Bay View and Adams House.  The larger of the two facilities, Bay View, was an independent-living community, as distinguished from the assisted-living facility at issue in Mary Ann Morse Healthcare.  Bay View's residents did not require assistance with activities of daily living, and Home did not provide such assistance.  Rather, Bay View's residents were relatively healthy and independent persons, age sixty-two and older, who could opt and pay for additional services such as house cleaning, meals, and transportation.  The Board thus found and ruled that Bay View was more akin to a luxury-living setting than an assisted-living facility or nursing home, and the operation of Bay View was not a traditionally charitable activity.  See Western Mass. Lifecare, 434 Mass. at 105.  
With respect to Adams House, the Board found and ruled that Home was engaged in the operation of a long-term care facility which provided housing, meals, nursing care, social opportunities, and assistance with activities of daily living to its residents, most of whom paid market-rate fees for those services.  Although the Board is cognizant that "the operation of a nursing home for the elderly and infirm" has been found to be the work of a charitable corporation, H-C Health Services, Inc. v. Assessors of S. Hadley, 42 Mass. App. Ct. 596, 599 (1997), the work conducted by Home at Adams House must be viewed within the context of Home's "dominant purposes and methods."  New Habitat, 451 Mass. at 733.  Home's dominant purposes and methods involved operating both Bay View and Adams House, and the Board found and ruled that, between Bay View and Adams House, the majority of the population served by Home consisted of financially and physically independent individuals rather than traditional objects of charity.  See Western Mass. Lifecare, 434 Mass. at 105.  
These appeals are therefore distinguishable from Mary Ann Morse Healthcare, 74 Mass. App. Ct. 701.  The Appeals Court ruled in Mary Ann Morse Healthcare that the taxpayer, which used seventy-one percent of its assisted-living facility to service the needs of its Alzheimer's and dementia residents (id. at 702), was "indisputabl[y] perform[ing] a traditional public charitable function." Id. at 705.  However, because the Board heard and issued its Decision in Mary Ann Morse Healthcare before the New Habitat case was decided, the assessors in that case did not emphasize the proximity of the taxpayer's "dominant purposes and methods" to traditional charitable purposes.  New Habitat, 451 Mass. at 733.  In contrast, the assessors in these appeals offered ample evidence demonstrating that the majority of Home's activities were devoted to the operation of Bay View, which was a luxury independent-living community.  Although the provision of services to Alzheimer's and dementia residents such as those offered by the taxpayer in Mary Ann Morse Healthcare may constitute the "indisputable performance of a traditional public charitable function," the provision of luxury housing and services for seniors does not.  See Western Mass. Lifecare, 434 Mass. at 105.  Where, as here, the majority of the appellant's efforts were devoted to non-charitable purposes, the Board found and ruled that the dominant purposes and methods of the appellant were not traditionally charitable.   
Moreover, the evidence offered by the appellant failed to persuade the Board that Home was operating as a public charity.  Much of that evidence consisted of testimony regarding Home's goals and unwritten policies, some of which were directly contradicted by the written policies introduced into evidence.  
In making its determination, the Board was mindful of the fact that organizations need not serve exclusively the poor or needy to be considered charitable, nor does the charging of fees preclude a finding that an organization is charitable.  See Western Mass. Lifecare, 434 Mass. at 104 (citing New England Legal Found., 423 Mass. at 609; Garland Sch. of Home Making, 296 Mass. at 389) (other citations omitted).   However, it is also true that many activities and services that "are commendable, laudable and socially useful [do] not necessarily come within the definition of 'charitable' for purposes of the exemption."  Western Mass. Lifecare, 434 Mass. at 103 (citing Massachusetts Med. Soc'y, 340 Mass. at 333). Though Home undoubtedly provided "commendable, laudable and socially useful" services, the Board could not find on the record before it that the dominant purposes and methods of Home were traditionally charitable.  Western Mass. Lifecare, 434 Mass. at 103.  Accordingly, the Board gave greater weight to the traditional factors used for determining whether an organization is operating as a public charity.  See New Habitat, 451 at 732.
II.  Home Did Not Relieve a Burden of Government for      Purposes of Clause Third

One of the factors to be considered in determining whether an organization is operating as a public charity is whether it "perform[s] activities which advance the public good, thereby relieving the burdens of government to do so."  Sturdy Memorial Foundation v. Assessors of North Attleborough, Mass. ATB Findings of Fact and Reports 2002-203, 224, aff'd 60 Mass. App. Ct. 573 (2004) (citing Molly Varnum Chapter DAR v. City of Lowell, 204 Mass. 487 (1909)).  "The fact that an organization provides some service that would, in its absence, have to be provided by the government, 'is frequently put forward as the fundamental reason for exempting charities from taxation.'"  Western Mass. Lifecare, 434 Mass. at 105 (quoting Assessors of Springfield v. Cunningham Foundation, 305 Mass. 411, 418 (1940)).  
Thus, in Straight Ahead Ministries, Inc. v. Assessors of Hubbardston, the Board found that a corporation which ran a non-profit academy for young males who had just been released from a juvenile detention center operated as a public charity, despite the fact that the academy housed less than a dozen young men at any given time and was only available to males between the ages of sixteen and twenty.  Straight Ahead Ministries, Inc. v. Assessors of Hubbardston, Mass. ATB Findings of Fact and Reports 2009-1, 13-14.  In that case, a state agency placed the young men in the academy and paid for a portion of their attendance costs; governmental grants, private gifts and donations made up the remainder of the academy's budget.  Id. at 2009-12-13.  Because the academy was partly funded by the government, because the population which it served entered the academy directly from a government-care setting, and because its goal was to prevent re-entry of the men it served into the criminal justice system, the Board found and ruled that the academy served to relieve a burden of government.  Id. at 2009-12-14.  
Unlike in Straight Ahead Ministries, there was no direct correlation between the work done by Home and the work of the government.  Adams House and Bay View were expressly off-limits to those dependent on Medicaid, as Home did not accept Medicaid payments.  Contrast H-C Health Services, 42 Mass. App. Ct. at 598, William B. Rice Eventide Home v. Assessors of Quincy, Mass. ATB Findings of Fact and Reports 2006-457, 481, rev'd on other grounds, 69 Mass. App. Ct. 867 (2007).  Because of the fees which Home charged, Adams House and Bay View were not accessible to elders of limited means, and the majority of their residents were not in the class of persons who would otherwise be dependent on government assistance.  
Further, Mr. Girrier stated that Adams House strove to maintain competitive market rates in order to avoid losing potential residents to other nursing homes.  Similarly, Mr. Westgate testified that Adams House strove to deliver "extraordinary" care, which included maintaining low staff-to-resident ratios and providing more individualized care than most nursing homes.  Mr. Westgate testified that one of the reasons that Home did not accept Medicaid was that the low reimbursement rates would have made it impossible to maintain superior staffing ratios.  Thus, the Board found that the policies and fees in place at Adams House were not dictated by a concern with preventing residents from becoming dependent upon the government, but by a desire to prevent them from going to Home's competitors. 
Lastly, Home provided subsidized care to only a minority of residents at Adams House and the amount of subsidy varied for each "supported" resident.  The care of some "supported" residents was subsidized almost completely, while other "supported" residents received only modest financial assistance.  No subsidized care was provided for residents of Bay View, which was the larger of Home's two facilities.    The Board found and ruled that, although Home provided subsidized care to a minority of residents at Adams House, the provision of subsidized care was incidental to Home's dominant purposes and methods, which was the provision of housing and other services in return for market-rate fees.  See The Mediation Group v. Assessors of Brookline, Mass. ATB Findings of Fact and Reports 2003-64, 78-79 (finding that entity which charged market-rate fees to the majority of its clients and conferred only an incidental benefit to the general public was not a charitable organization).  The Board therefore found and ruled that the appellant failed to demonstrate that it "advance[d] the public good, thereby relieving the burdens of government to do so."  Sturdy Memorial Foundation, Mass. ATB Findings of Fact and Reports at 2002-224.  
III. Home's Services Were Not Available to a Large and        Fluid Class of People 

Residents at Adams House paid $10,000 for admission and approximately $8,000 per month thereafter.  Entrance fees at Bay View ranged from $125,000 to $500,000, depending on the unit.  A mandatory fee of $390 per month was charged for residence at the cottages, while a menu of optional services was available for prices ranging from $1,600 to $2,500 per month.   The Board found and ruled that the considerable fees charged by Home, along with its failure to accept Medicaid, limited the class of persons eligible to receive its services.  "The class of elderly persons who can pay [such entrance and monthly fees] is a limited one, not a class that has been 'drawn from a large segment of society or all walks of life.'"  Id. (quoting New England Legal Found., 423 Mass. at 612).  
Although Home subsidized the care of a minority of Adams House residents, the Board found and ruled that this fact did not prove that Adams House was accessible to a large and fluid class of persons.  The evidence indicated that the residents receiving subsidized care at Adams House were not elders of limited means upon entry to Adams House.  Rather, they were persons who had resided at, and paid full fees to, Adams House for a number of years prior to receiving subsidized care.  The Board found that the fees charged by Adams House barred access to elders of limited financial means, and, therefore, it was not accessible to a large and fluid class of people.  
Accordingly, the Board found and ruled that Home's services were not accessible to a large and fluid class of persons.  
IV.  The Appellant's Arguments Were Unavailing 
The appellant introduced evidence into the record showing that Home operated at a loss during the fiscal years at issue.  However, the Board did not find this evidence to be a persuasive indication that it was a charitable organization.  Adams House was licensed for up to fifty-nine beds, yet it housed only forty-one residents in 2007 and forty-seven residents in 2008.  Similarly, during the years at issue, many of the cottages were unoccupied.  Though the appellant asserted that Home operated at a loss, there was no testimony or other evidence which addressed the impact of the significant vacancies at Adams House and Bay View upon its finances.  As there were myriad possible reasons why Home operated at a loss, the Board did not find the fact that it operated at a loss to be persuasive evidence that it was a charitable organization. 
Similarly, the facts that Home was organized under chapter 180, tax-exempt under § 501(c)(3) of the Internal Revenue Code, and that its Articles of Organization stated that its purpose was to serve the elderly in a charitable manner did not prove that Home was a charitable organization.   These facts, though germane, did not persuade the Board that Home was "conducted . . . in actual operation . . . as a public charity."  Jacob's Pillow Dance Festival, Inc., 320 Mass. at 313.  Because substance and not form must control, the Board's determination that Home was not a charitable organization was based on its findings as to Home's actual operations, the population which it served, and its dominant purposes and methods.  The Board therefore rejected the appellant's arguments. 
"Any doubt must operate against the one claiming an exemption, because the burden of proof is upon the one claiming an exemption from taxation to show clearly and unequivocally that he comes within [its] terms . . . ." Boston Symphony Orchestra, 294 Mass. at 257. "It is well established that a party claiming exemption bears a grave burden of proving the claim." Kings' Daughters and Sons Home v. Board of Assessors of Wrentham, Mass. ATB Findings of Fact and Reports 2002-427, 452, (citing Meadowbrooke Daycare Center, Inc. v. Assessors of Lowell, 374 Mass. 509, 513 (1978)).  On the basis of all of the evidence, the Board found and ruled that the appellant did not meet its burden of proving that it was a charitable organization for purposes of Clause Third.  Accordingly, the Board found that the subject property was not "owned by a charitable organization," and therefore it was not exempt under Clause Third.  	
				

                    Conclusion
Although it found and ruled that the Adams House parcel was not exempt under Clause Third, the Board found and ruled that, as stipulated by the parties, the Adams House parcel was assessed at greater than its fair cash value for each of the fiscal years at issue.  Accordingly, the Board decided these appeals for the appellant and granted abatements as follows:
Fiscal    Year	Assessed
Value ($)	Fair Cash   Value ($)	Over-valuation ($)	Tax Rate ($/$1,000)	Abatement Amount ($)	
2007	3,794,000	2,200,000	1,594,000	16.37	26,093.78	
2008	3,784,300	2,000,000	1,784,300	16.31	29,101.93	
2009	3,771,300	1,800,000	1,971,300	17.49	34,478.04	

  
 
  THE APPELLATE TAX BOARD


		  		   By: 				_____	____
  Thomas W. Hammond, Jr., Chairman



A true copy,


Attest:		______	_______
	     Clerk of the Board

  At the June 25, 2008 hearing of these appeals, evidence for only fiscal years 2007 and 2008 was entered into the record.  Subsequent to that hearing, the appellant filed its appeal for fiscal year 2009.  The parties stipulated that the evidence with respect to fiscal year 2009 would be substantially similar to the evidence entered for the previous two fiscal years, and they asked the Board to include fiscal year 2009 in its decision and in its Findings of Fact and Report.  Accordingly, the Board found that the evidence entered with respect to fiscal years 2007 and 2008, as it related to the exemption issue, was substantially similar for fiscal year 2009, and it included fiscal year 2009 in its Decision and Findings of Fact and Report.  
 The evidence showed that the amount of subsidy varied from resident to resident. Some of the supported residents received only modest financial assistance while others received completely subsidized care.  
 The Board noted that Mr. Westgate's passing and isolated reference that "there have been times in [Home's} history" when individuals with no assets were admitted to Adams House stood in stark contrast to the detailed and elaborate testimony that he gave on other topics.  The Board inferred from Mr. Westgate's statement, along with the lack of evidence to the contrary, that the instances alluded to by Mr. Westgate represented exceptions to Home's general practice, rather than its common practice.  This inference was further supported by the documentary evidence, including the resident roster, showing that the residents residing at Adams House generally had significant assets upon admission.  
 In cases where a unit is occupied by more than one resident, at least one of the residents must be age sixty-two or older upon admission to Bay View.  
 For example, while there was testimony that the average age of Adams House residents was in the early nineties, there was also testimony that organized trips to casinos, picnic outings, and the like were among the recreational opportunities that Home provided to residents of Adams House.  
 Despite its capacity, Adams House had just forty-one residents in fiscal year 2007 and forty-seven residents in fiscal year 2008.
 In making this finding, the Board was aware that many of the cottages were unoccupied as of the relevant determination dates.  However, by the express terms of the "Residence and Use Agreement," applicants wishing to reside at the cottages were required to furnish documentation of a physical exam establishing that they were "capable of self-maintenance"  following admission to the cottages.  Moreover, the entrance fees and mandatory monthly fees required all potential residents to have considerable financial resources.  Therefore, because the cottages could only be occupied by individuals who were physically and financially independent, the fact that some of the cottages were vacant during the fiscal years at issue did not impact the Board's finding that Home's services were predominantly available to physically and financially independent individuals.   
 The parties also stipulated that the abatement amounts had already been paid.  
 The facility at issue in New Habitat had a maximum capacity of four residents.  Since the time New Habitat began providing services, three individuals had applied to enter the program, and all three had been accepted.   At the time relevant to the appeal, New Habitat housed only two residents.  Further, the record reflected that New Habitat charged a $150,000 entrance fee and monthly fees of $17,000 to $18,000.  New Habitat, 451 Mass. at 730.  
 The Board issued its Decision, though not its Findings of Fact and Report, prior to the New Habitat decision.  
 Nor did the assessors emphasize this issue in the proceedings at the Appeals Court, in which they did not file a brief.  See Mary Ann Morse Healthcare Corp., 74 Mass. App. Ct. at 702.  
 The fact that an organization charges fees will not automatically defeat a claim for exemption.  However, "[i]n weighing this factor, we consider whether the organization's charging of fees helps to advance the organization's charitable purpose."  New Habitat, 451 Mass. at 734, (citing Boston Symphony Orchestra, 294 Mass. at 255-56).  With respect to the fees charged at Bay View, the Board found and ruled that they did not advance a charitable purpose, but merely facilitated the delivery of premium lifestyle services akin to services available in a luxury-living setting.  

 Furthermore, no evidence was presented that Home offered reduced fees to low-income elders in an effort to fill its vacancies, an indication that the provision of charitable services was not its "dominant purpose." New Habitat, 451 Mass. at 733.  

ATB 2011-370