City of Harrisburg v. Presbyterian Apartments, Inc.

Dissenting Opinion by

Judge Kramer:

I respectfully dissent. I find myself in somewhat of an embarrassing position of opposing a tax exemption for what is undoubtedly a worthwhile charitable project offering low-cost housing for our elderly, at a time when our society is so conscious and concerned over the need for such programs. Nevertheless, I feel constrained under my reading of the law to file this dissent.

*437The majority concludes that the holding of our Supreme Court in Four Freedoms House of Philadelphia, Inc. v. Philadelphia, 443 Pa. 215, 279 A.2d 155 (1971), controls the result here. My review of that decision permits me to distinguish it from the case before us. In Four Freedoms, supra, the stated facts were that, “ [i] n order to qualify as a tenant, a person must be over sixty-two, in good health and with a limited income of $4,500.00 per annum per single person, $5,400.00 for married couples and $6,600.00 for two persons.” As noted in the majority opinion, the facts in the instant case are as follows:

“Federal law does not impose an upper income requirement for admission. There are no legal or policy limitations with reference to wealth, affluence, income, or resources, and the Board of Trustees has no written guidelines for admission. There are no mandatory tenant income levels applicable to the apartment building. It is legally possible that a tenant could have $100,000 in a checking account, and an income of $20,000 per year, and still be eligible for admission as a tenant. Appellee’s admissions policy does not impose any firm requirements with respect to resources or income for admission to the apartment building.”

The lower court summarized the facts in the instant case as follows:

“The only donations made to this apartment building were $20,000.00 for furniture for the office and public rooms and $5,000.00 for a generator as an auxiliary power source which together represent less than one percent of the original capital costs; the full balance was paid with the proceeds of a federal mortgage. All operating costs, including debt service, are paid from rental income, some of which represents a rent subsidy for individual tenants from the federal government. Thus the entire costs and its operating income may be said to come from the federal government and rents paid by tenants. The primary objective of the *438federal program is to furnish, rental housing for ‘middle income’ elderly persons. Moreover, there are no legally binding guidelines for admission to the project and no mandatory standards limiting entry to persons of any particular income level. And no inquiry is made nor requirements imposed with respect to financial or property resources available to prospective tenants. Finally, there is no investigation of accuracy of the income stated by applicants for admittance.”

My review of the law leads me to conclude that these facts prohibit a tax exemption for the appellee in this case.

Statutory provisions exempting property from taxation are subject to a strict construction. See Four Freedoms, supra. Whether the appellee is an institution of “purely public charity” within the meaning of the constitution is a mixed question of fact and law. Hill School Tax Exemption Case, 370 Pa. 21, 87 A.2d 259 (1952).

The Supreme Court in Four Freedoms stated that: “[T]here can be no doubt that providing low-cost housing for elderly persons with limited incomes constitutes a public charity.” (Emphasis added.) 443 Pa. at 219, 279 A.2d at 157.

I believe that the proviso “with limited income” is the controlling factor and I cannot agree that the apartments in the instant case, which have no income limitation, are a purely public charity. It is true that the home involved in the Presbyterian Homes Tax Exemption Case, 428 Pa. 145, 236 A.2d 776 (1968), had no income requirement, but in that case admission was available specifically to those who were unable to meet the usual charges as well as to those who could afford to pay. Also, the home involved in Presbyterian Homes, supra, was established by gifts and contributions, and it had always operated at a loss. I recognize that the Supreme Court, in Presbyterian Homes, supra, used some very broad *439language and indicated that a liberal interpretation should be given to the words “charity” and “public charity.” Nonetheless, my reading of Presbyterian Homes, supra, leads me to believe that in that case the Supreme Court was primarily concerned with low-cost housing for the needy aged and the aged who are unable to adequately care for themselves. Both of these factors are absent in the instant case. There is no requirement in the instant case that a tenant have any sort of need (financial, physical or otherwise) for the advantages offered by the apartments. Absent some sort of entrance requirements, it is possible that the population of the apartments could be composed entirely of persons with no real need for the facilities.1 If the apartments in the instant case would have some sort of admissions requirement based upon need or at the very least require that some high percentage of the tenants make a showing of need, then I could agree that they might qualify as a “purely public charity.” Absent such standards or requirements, I simply cannot agree with the majority’s conclusion that these apartments are a “purely public charity.”

This Court recently, in Robert Morris College v. Board of Property Assessment, 5 Pa. Commonwealth Ct. 648, 655, 291 A.2d 567, 572 (1972) set forth the principles behind charitable exemptions. We stated:

“We must begin with an understanding of the underlying philosophy of the constitutional-legislative grant of tax exemption. ‘Taxes are not penalties but are contributions which all inhabitants are expected to make (and may be compelled to make) for the support of the manifold activities of government. Every inhabitant and every parcel of property receives gov-*440mental protection. Such protection costs money. When an inhabitant fails to contribute his share of the cost of this protection, some other inhabitant must contribute more than his fair share of that cost. . . . Any institution which by its charitable activities relieves the government of part of this burden is conferring a pecuniary benefit upon the body politic, and in receiving exemption from taxation it is merely being given a ‘quid pro quo’ for its services in providing something which otherwise the government would have to provide. . . . The measure of an institution’s gratuitous aid to those requiring it is the measure by which the government is relieved of its responsibilities.’ YMCA of Germantown v. Philadelphia, 323 Pa. 401, 413-14, 187 A. 204, 210 (1936).” (Footnote omitted.)

In Robert Morris we pointed out that “ ‘[p]urely’ to us means it must be entirely or wholly a public charity in every sense of the word, which would include all of the elements found in the word ‘eleemosynary’.”

In summary, my reading of the facts in this case leads me to conclude that the apartments are not operated as a “purely public charity” and therefore do not qualify for a tax exemption. I would reverse the court below.

President Judge Bowman and Judge Mencer join in this dissent.

. I recognize that the record in this case indicates that the present inhabitants of the apartments are primarily low or middle income but absent admission standards I see no guarantee that the status quo will be maintained.