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Evangelical Lutheran Good Samaritan Society v. Board of Equalization of Ada County

Supreme Court of Idaho

December 21, 2016

EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY, Petitioner-Respondent,
v.
BOARD OF EQUALIZATION OF ADA COUNTY, Respondent-Appellant.

         2016 Opinion No. 152

         Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Hon. Steven J. Hippler, District Judge.

         The judgment of the district court is reversed.

          Ada County Prosecuting Attorney, Boise, for appellant. Gene Petty argued.

          Greener Burke Shoemaker Oberrecht, P.A., Boise, for respondent. Phillip S. Oberrecht argued.

          HORTON, Justice.

         This is an appeal from the district court's ruling granting Evangelical Lutheran Good Samaritan Society (Society) a charitable property tax exemption. The Board of Equalization of Ada County (Ada County) appeals from the district court's decision holding that Society qualified for a charitable property tax exemption under Idaho Code section 63-602C. We reverse.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Society is incorporated under the laws of North Dakota and has authority to conduct business in Idaho. Society is recognized as a tax exempt organization under Section 501(c)(3) of the Internal Revenue Code and a public charity pursuant to Section 509(a)(2). Society operates about 240 elder care facilities in 24 states. Society operates four facilities in Idaho.

         Boise Village is a 96-bed skilled nursing facility located in Ada County. In 1958, Society assumed ownership of Boise Village. Boise Village is one of ten skilled nursing facilities in Boise. Boise Village operations are similar to those of commercial nursing facilities in the area. During the relevant time period, Boise Village expected all residents to pay for the services they received. Boise Village charges rates comparable to those charged at local skilled nursing facilities. Boise Village has never admitted a resident knowing that resident would not be able to pay.

         Society receives donations to help operate Boise Village. Boise Village received unrestricted gifts of $72, 209 in 2012 and $39, 206 in 2013. The amount of donations is small in comparison with Boise Village's operating revenue for that time. In 2012, Boise Village had operating revenue of $9, 769, 537 and $9, 836, 951 in 2013. The vast majority of Boise Village's operating revenue came from government programs such as Medicaid, Medicare and the Veterans Administration. For the years 2011-2013 Boise Village received 87%, 90%, and 94% of its operating revenue from state and federal programs respectively. In 2012, Boise Village earned a profit of $49.84 per Medicaid resident per day, amounting to $18, 191.60 per Medicaid resident annually.

         Residents who are admitted to Boise Village are required to sign an admissions agreement in which the residents promise to pay for care and agree to late charges if their bill is more than 10 days overdue. For overdue accounts, Boise Village and Society each manage a collection team which operates similar to collection teams at commercial facilities. In 2012, Boise Village filed one lawsuit to collect on a bill but did not file any suits in 2013. Boise Village granted charitable allowances of $31, 281.88 and $7, 004.75 in 2012 and 2013 respectively for residents who were unable to pay through no fault of their own. These charitable allowances were given only after services had been provided and Society determined that it would be unable to collect the debt.

         Boise Village also has an active volunteer program and relies heavily on volunteers for its activities program. Boise Village recorded 12, 707.25 volunteer hours in 2012 and 10, 053.15 in 2013. Even though volunteers help with activities, they do not reduce staffing or the amount charged to residents at Boise Village.

         Society received charitable and religious property tax exemptions for Boise Village until 2012. Ada County denied Society's application for a tax exemption for Boise Village in 2012. Society appealed and the Idaho Board of Tax Appeals upheld Ada County's decision. Ada County again denied Society's application for 2013. Society appealed directly to the district court where the two cases were consolidated. Society then applied for a tax exemption for 2014 which was also denied. The parties stipulated that the outcome of the case regarding 2012 and 2013 would also apply to 2014. Following a six-day trial, the district court found that Society qualified for a full property tax exemption as a charitable organization and for a 12.3% property tax exemption as a religious organization. Ada County timely appealed the district court's ruling that Society qualified for a charitable tax exemption but has not appealed the finding that Society was eligible for a partial religious exemption.

         II. STANDARD OF REVIEW

         "Interpretations of requirements for charitable exemption from property tax are questions of law over which this Court exercises free review." Housing Southwest Inc. v. Washington Cnty., 128 Idaho 335, 337, 913 P.2d 68, 70 (1996) (citing Owyhee Motorcycle Club, Inc. v. Ada Cnty., 123 Idaho 962, 964, 855 P.2d 47, 49 (1993)). "Statutes granting tax exemptions must be strictly construed against the taxpayer and in favor of the state." Id. at 337-38, 913 P.2d at 70- 71. "Exemptions are never presumed; nor can a statute granting a tax exemption be extended by judicial construction to create an exemption not specifically authorized." Id. at 338, 913 P.2d at 71.

         III. ANALYSIS

         The only issue on appeal is whether Society qualifies for a property tax exemption under Idaho Code ...


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