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HomeMy WebLinkAbout01-5659 CIVILALLIANCE HOME OF CARLISLE, PA t/a CHAPEL POINTE, APPELLANT IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA BOARD OF ASSESSMENT APPEALS, CARLISLE AREA SCHOOL DISTRICT BOROUGH OF CARLISLE and CUMBERLAND COUNTY, APPELLEES 01-5659 CIVIL TERM IN RE: PETITION FOR EXEMPTION FROM REAL ESTATE TAXES BEFORE BAYLEY, J. OPINION AND ORDER OF COURT Bayley, J., January 31, 2002:-- Alliance Home of Carlisle, PA, t/a Chapel Pointe, filed a petition for an exemption from real estate taxes for ninety-three apartments at 770 South Hanover Street, Carlisle, Cumberland County. After petitioner was unsuccessfully at the administrative level, the case was tried on December 6, 2001. The issues were then briefed and argued on December 18, 2001. In addition to the ninety-three apartments, Chapel Pointe contains a fifty-nine bed skilled nursing home, and an assisted living compound, both of which have been exempted from real estate taxes. Chapel Pointe holds a Sales and Use Tax Exemption Certificate issued by the Pennsylvania Department of Revenue. It operates as a single 01-5659 CIVIL TERM financial entity. Its annual operation expenses for 2000 were $549,197.00.1 The facility as a whole showed a loss of $368,421. The loss was made up by charitable contributions of $368,421. Chapel Pointe was chartered in 1944. The first apartments were constructed in the late 1970s. The ninety-three apartment units for which an exemption is now sought are the Colonial Apartments (eleven units), Jarrett Apartments (three, four-unit townhouses), Heritage & Harmony Suites (two, twelve-unit apartment buildings), Cornerstone Manor (twenty-three units), and Bedford Terrace (twenty-three units). The ninety-three apartments are assessed at $2,593,350, for one hundred percent of the market value in 2000. The minimum age requirement for a resident in an apartment is 62. All the units are private pay. No government program supports the apartments. A perspective resident must provide Chapel Pointe with a detailed financial statement. Chapel Pointe does not admit any resident who (1) cannot pay, up front, the entrance fee, and (2) whose financial data does not reflect that they can pay the monthly rental fees charged for an apartment. The lowest entrance fee, $37,000, is for an efficiency apartment. The highest entrance fee, $73,000, is for some two-bedroom apartments.: Chapel Pointe uses one apartment unit as a model. The total entrance fees for the ninety-two 1 Of that figure, $541,175 was depreciation. : If a resident is admitted, and it is determined that there was a submission of false financial information, that constitutes grounds for termination. -2- 01-5659 CIVIL TERM apartments it utilizes for residents is $5,721,000. As of the hearing on December 6, 2001, four apartments were vacant. Chapel Pointe places each apartment on a forty-year depreciation schedule. The average stay for a resident in an apartment is three to four years.3 Residents may stay in their apartment for as long as they are safe, as determined by Chapel Pointe. Apartment residents are given priority to move to either the assisted living compound or the nursing home within Chapel Pointe. Chapel Pointe amortizes all entrance fees over the life expectancy of the resident. There is a recalculation each year so, that for accounting purposes, a resident never outlives his or her life expectancy. For the residents, Chapel Pointe amortizes the entrance fee at twenty percent each year prorated monthly for five years. If a resident leaves the apartment within five years, a prorated amount of the entrance fee is refunded. All income earned on an entrance fee is retained by Chapel Pointe. After five years, no portion of the entrance fee is refundable. If a refund is due, the Apartment Residency Agreement, which each resident must sign, provides: ·.. [A]ny applicable refund will be made.., only after the Resident's... vacated apartment unit has been reoccupied by another resident and the Entrance Fee for the reoccupied apartment unit has been paid in full,... or after the lapse of six months from the Resident's surrender of the apartment unit, whichever occurs first .... The refund shall be paid to Resident in the following manner: Fifty percent (50%) of any refund due shall be paid on the six month anniversary date of the surrender of the apartment unit, and the remaining balance of fifty percent (50%) of the 3 The length of residency has been decreasing because more people are coming in who are older and frailer. -3- 01-5659 CIVIL TERM refund shall be paid on the one year anniversary date of the surrender of the apartment unit .... As long as Resident... continues to occupy and living accommodation within Chapel Pointe, including accommodations in the Assisted Living Residence or Health Center, no refund shall be due and no refund shall be paid until the death, permanent transfer outside of Chapel Pointe, discharge or voluntary departure outside Chapel Pointe by Resident .... In the event the Resident leaves the community and voluntarily terminates this Agreement at any time within the first four years of occupancy, then the refund that otherwise would be due, shall be reduced by an early withdrawal assessment fee equivalent of ten percent (10%) of the original entrance fee .... Chapel Pointe charges a uniform monthly rental fee for each apartment. It maintains that it sets the amount of the monthly fee to cover costs. The fees are raised as needed. The fee is currently $599 for one person, and an additional $130 for each additional occupant. The Residency Agreement provides: In the event that a single Resident wishes to marry or have another person not admitted to Chapel Pointe under an Apartment Residency Agreement share Resident's apartment unit as a Co-Resident, the proposed Additional Occupant must file an application for admission and meet all age, medical and other requirements for admission applicable to residents of the residential apartment unit. Admittance of an Additional Occupant shall be at the sole discretion of Chapel Pointe. If the proposed Additional Occupant receives approval to occupy the apartment unit, this Agreement will be amended and the Additional Occupant shall pay one- half of the Entrance Fee in effect at the time Additional Occupant moves into the apartment unit, and the Monthly Fee shall be increased to be equivalent to the Monthly Fee for double occupancy of the apartment unit. The Entrance Fee paid by the Additional Occupant shall be amortized at the rate of twenty (20%) percent per year from the date of occupancy.4 4 Any additional occupant entrance fees collected pursuant to this provision are in addition to the $5,721,000 for initial occupant entrance fees for the ninety-two apartments utilized for residents. -4- 01-5659 CIVIL TERM Chapel Pointe provides maintenance for all common areas, and for each apartment. It pays all utilities and real estate taxes. If a resident wants to have Chapel Pointe provide housekeeping services, meals or transportation, those services are provided for a charge. If the monthly rental fee is not timely paid, Chapel Pointe may terminate the residency. A resident is required to annually prepare and submit a current financial statement to Chapel Pointe, to include a statement of physical and mental health. The failure to make such disclosures constitute grounds for termination. No resident has ever been asked to leave an apartment because of financial problems. If a resident's income becomes insufficient to pay the rental fee, the resident is required to "[i]mmediately apply for financial assistance either from Resident's family, church, or public welfare agencies .... "There are currently (1) four residents who, because of financial problems, have not had their monthly fee raised, and (2) there are three residents who, because of financial problems, are receiving some financial assistance from Chapel Pointe toward their monthly fees? The Residency Agreement provides that Chapel Pointe may seek repayment of any such assistance from the estate of the residence. On its 2000 financial statement, Chapel Pointe allocates its administrative costs on the basis of total operating costs. Sixty-eight percent of administrative costs were allocated to the nursing home, twenty-two percent to the assisted living compound, and ~ Chapel Pointe did not admit evidence of the amount of the benefit that these residents were receiving. -5- 01-5659 CIVIL TERM nine percent for the apartments. The administrative costs as allocated are based on Medicaid and Medicare programs, not actual financial data. Chapel Pointe, through the testimony of its CPA, maintains that fifty-four percent of the apartment residents receive some type of uncompensated services. The accountant mistakenly included in that calculation, ancillary services for general transportation, housekeeping and meals which are paid for by residents. Actually, the only uncompensated services are for such things as assistance with the timely taking of medications, participation in some social activities, and advice regarding family or financial problems, and for the few people for whom the monthly rental fees have been adjusted. Article 8, Section 2(a)(v) of the Pennsylvania Constitution provides that "[t]he General Assembly may exempt from taxation... Institutions of purely public charity, but in the case of any real property tax exemptions only that portion of real property of such institution which is actually and regularly used for the purposes of the institution." (Emphasis added.) In Hospital Utilization Project v. Commonwealth of Pennsylvania, 507 Pa. 1,487 A.2d 1306 (1985), the Supreme Court of Pennsylvania held that an entity qualifies as a "purely public charity," under the constitution, if it: 1. Advances a charitable purpose; 2. Donates or renders gratuitously a substantial portion of its services; 3. Benefits a substantial and indefinite class of persons who are legitimate subjects of charity; -6- 01-5659 CIVIL TERM 4. Relieves the government of some of its burden; and 5. Operates entirely free from profit motive. The Institutions of Purely Public Charity Act, 10 P.S. §§ 371-385, sets forth criteria by which an institution may satisfy these constitutional requirements to qualify as a purely public charity. At 10 P.S. Section 375(d), the Act provides seven methods by which an institution may satisfy the requirement that it donate or render gratuitously a substantial portion of its services. The requirement is satisfied if the institution benefits the community by actually providing any one of the following: (i) Goods or services to all who seek them without regard to their ability to pay for what they receive (based upon three criteria set forth). (ii) Goods or services for fees that are based upon the recipient's ability to pay for them (based on four criteria set forth). (iii) Wholly gratuitous goods or services to at least 5% of those receiving similar goods or services from the institution. (iv) Financial assistance or uncompensated goods or services to at least 20% of those receiving similar goods or services from the institution if at least 10% of the individuals receiving goods or services from the institution either paid no fees or fees which were 90% or less of the costs of the goods or services provided to them, after consideration of any financial assistance provided to them by the institution. (v) Uncompensated goods or services which in the aggregate are equal to at least 5% of the institution's costs of providing goods or services. (vi) Goods or services at no fee or reduced fees to government agencies or goods or services to individuals eligible for government programs (based on two criteria set forth). (vii) Fundraising on behalf of or grants to an institution of purely public charity, an entity similarly recognized by another state or foreign jurisdiction, a qualifying religious organization or a government agency and actual contribution of a substantial portion of the funds raised or contributions received to an institution of purely public charity, an entity similarly recognized by another state or foreign jurisdiction, a qualifying religious organization or a government agency. -7- 01-5659 CIVIL TERM Chapel Pointe asserts that it is entitled to a presumption under the Act that it is an institution of purely public charity. Section 376(b) of the Act provides: Burden of Proof--If an institution of purely public charity asserts a presumption under Section (a), a political subdivision challenging that institution before a government agency or court shall bear the burden of proof, by a preponderance of the evidence, of proving that the institution of purely public charity does not comply with the requirements of section ,5. (Emphasis added.) This provision does not allow Chapel Pointe a presumption that it is an institution of purely public charity. As set forth in Community Options, Inc. v. Board of Property Assessment, Appeals and Review, 764 A.2d 645 (Pa. Commw. 2000): It]he question of whether an entity seeking or defending a tax exemption is a "purely public charity", within the meaning of Article 8, Section 2(a)(v) of the Pennsylvania Constitution, is a preliminary question which must be addressed before the question of whether that entity meets the qualifications of a statutory exemption can be reached. In Appeal of Lutheran Social Services, 114 Pa. Commw. 628 (1988), the Lutheran Social Services, East Region, a Pennsylvania non-profit corporation, appealed from the order of the Court of Common Pleas of Lancaster County that denied a real estate tax exemption for its 96 unit apartment building called Luther Townehome Apartments, and 81 cottage units operated as part of a retirement community for the elderly known as Luther Acres, which also contained a nursing facility. The Lancaster County Board of Assessment reclassified the apartment building and the cottages from tax exempt to taxable but did not change the status of the nursing facility from tax exempt. The Commonwealth Court accepted the following -8- 01-5659 CIVIL TERM findings of fact of the trial court: The trial court found that applicants for admission to the Luther Townehome Apartments fill out an application form that does not request any financial information, nor is such information requested orally or received if volunteered during the application process, according to LSS's witnesses. The admission policy for the apartments is open and nondiscriminatory, with the only requirements being that the applicant be at least 62 years old and not in need of medical care; vacancies are filled from a waiting list in chronological order of application. Apartment applicants pay a processing fee of $250, but they do not pay an admission fee. Each resident pays a single monthly fee that covers (1) rent (i.e., a portion of the amortized loan for the facility), (2) utilities and (3) maintenance. For 1986 the total monthly fee averaged $360. The monthly fee may be changed at any time on thirty days' notice. Some residents are exonerated from paying increases in the monthly fee; there were seventeen such residents in 1986. The monthly fees do not cover the operating expenses for the apartments; in 1986 the apartments operated at a deficit of more than $69,000. LSS receives contributions from the Lutheran congregations of Lancaster and Lebanon Counties as financial support for Luther Acres. The Executive Director of LSS, Reverend Charles Scott, testified that, in addition to exonerating some individuals from paying increases in the monthly maintenance fee, LSS subsidizes all apartment residents, because the utility and maintenance portions of the monthly fee are below actual cost of operation. Those fees are calculated by estimating actual costs, and then estimating contributions from the congregations (approximately $160,000 in 1986) and other non-operating income to determine the amount of reduction. He testified further that if any apartment resident needed nursing care, in the judgment of the medical director, the resident would be transferred to the nursing facility immediately, regardless of ability to pay medical costs; in the event that the resident could not pay those costs, part would be paid by government medical assistance and part would be absorbed by LSS. As to the operation of the cottages, the trial court found that the only requirement for admission is that the applicant not be in need of nursing care at the time of application, and vacancies are filled in chronological order. Applicants for the cottages pay an entrance fee, which, in 1986, ranged from $38,500 to $46,000, depending on the type of unit; the fee is based on the initial cost of construction for the particular unit or on the replacement value of it when possession changes. No -9- 01-5659 CIVIL TERM cottage resident has ever been admitted without paying an entrance fee or by paying a reduced fee. LSS deposits the proceeds from the entrance fees into a reserve account, from which it makes bookkeeping entry withdrawals at a rate of one percent per month per cottage. Reverend Scott testified that if a resident dies, any balance in his account becomes the property of LSS; however, if a resident leaves voluntarily, the balance is returned to him. Cottage residents pay a monthly maintenance fee, currently $85, and they pay their own utilities. In 1986 the operation of the cottages produced a profit of $91,353, which LSS deposited into its general operating account and used to pay operating expenses of all of LSS's facilities. LSS absorbs approximately $20 per month per cottage unit, representing about one-half of the taxes paid per unit, and, in 1986, the institution exonerated five cottage residents from paying part of their monthly fees. In the event that a cottage resident cannot afford the monthly maintenance fee, LSS initiates action to secure financial aid for that resident from an appropriate agency or source. Reverend Scott testified that the agreement that cottage residents sign expressly provides that if a resident cannot afford to pay his monthly fees, he shall nevertheless be entitled to remain in his cottage so long as his health permits; however, no such case of total exoneration has yet arisen--partial exonerations have been sufficient. Reverend Scott also testified that cottage residents were entitled to admission to the nursing facility in the same manner as that described above for apartment residents. Reverend Scott testified that both the apartment and the cottage agreements provide for the immediate transfer of a resident to the nursing facility in the case of medical need, as determined solely by the medical director, without regard to ability to pay medical costs, and he described various instances of such transfers. However, the agreements do not provide for transfers between the cottages and the apartments. Reverend Scott testified that some cottage residents had transferred to the apartments because apartment living requires less independence than cottage living, and that the resident and management jointly made the decision to transfer. In such a case the cottage resident's entrance fee was refunded to him, minus one percent for each month of his stay in a cottage, the same as for any other cottage resident who left voluntarily, and the resident then entered the apartment building under the standard apartment agreement. -10- 01-5659 CIVIL TERM In contrast to the trial court, the Commonwealth Court concluded that the apartments and cottages were separate uses for purposes of determining the claim for a real estate tax exemption. The Court upheld the denial of the real estate tax exemption for the cottages, holding that they did not qualify as a purely public charity because the second prong of the test in Hospital Utilization Project v. Commonwealth of Pennsylvania, supra, was not met i.e., the donating or rendering gratuitously a substantial portion of its services. The Commonwealth Court stated: The cottage operation of Luther Acres generates an operating surplus, which LSS then applies to funding the rest of Luther Acres operation. In other words, the cottages are a money-maker for the overall program. Therefore, the possibility of any individual cottage resident's receiving a subsidy from LSS is remote. The cottage operation sells something--housing for the elderly--at a profit, and LSS then uses that profit for purposes above held to be charitable in nature .... We conclude that the cottages are not institutions of purely public charity, founded and maintained by public or private charity, and hence are not entitled to an exemption from local real estate taxation. The Commonwealth Court reversed the denial of the real estate tax exemption for the apartments, stating: The apartment use appears to satisfy the elements of the constitutional test for 'purely public charity' established in Hospital Utilization Project. As to the element of advancing a charitable purpose, the Supreme Court has expressly approved a trial court's synthesis "as a general principle from these cases that 'providing Iow cost housing for elderly persons with limited incomes constitutes a public charity.'" G.D.L. Plaza v. Council Rock School District, 515 Pa. 54, 60, 526 A.2d 1173, 1175 (1987) (emphasis in the original). Here, LSS charges monthly apartment fees that are by no means exorbitant and that are below actual operating cost; it does not request or receive financial information from apartment -11- 01-5659 CIVIL TERM applicants before admission, and it routinely grants exonerations from payment of a portion of the monthly fee to residents who later demonstrate financial need. These facts tend to indicate that the apartment operation is providing Iow cost housing for elderly persons with limited income. As discussed above, the apartments subsidize all residents by charging less than actual cost for utilities and maintenance; also, the apartment management grants individual exonerations from some charges. The difference, more than $69,000 in 1986, is made up from contributions from church congregations and from other sources, such as the surplus from the cottage operation. Clearly the apartment operation is donating or rendering gratuitously a portion of its services. In our view this portion is substantial.~ The apartment operation at Luther Acres benefits a substantial and indefinite class of persons in that its admission policy is open and nondiscrimatory, and not based on any financial test. That members of this class are the legitimate objects of charity is established by the fact that the residents are elderly and by the nature of the financial arrangements involved here. This is not a case such as that in Appeal of Lutheran Home at Topton, 100 Pa. Commonwealth Ct. 244, 515 A.2d 4. The principle that a purely public charity does not cease to be such where it receives some payment for its services is firmly established. See Hill School Tax Exemption Case, 370 Pa. 21, 87 A.2d 259 (1952) and Presbyterian Homes Tax Exemption Case, 428 Pa. 145, 236 A.2d 776 (1968). As to what is a substantial portion of donated services, the Supreme Court has said: Whether or not the portion donated or rendered gratuitous is 'substantial' is a determination to be made based on the totality of circumstances surrounding the organization. The word 'substantial' does not imply a magical percentage. It must appear from the facts that the organization makes a bona fide effort to service primarily those who cannot afford the usual fee. Hospital Utilization Project, 507 Pa. 1, 19 n.9, 487 A.2d 1306, 1315 n.9 (1985). -12- 01-5659 CIVIL TERM 59 (1986), where applicants had to demonstrate a minimum level of financial ability for admission and to pay both high entrance fees and high monthly fees (exceeding those of area non-profit and profit facilities), thereby creating doubt as to whether the residents, though elderly, were the legitimate objects of charity. That the apartment operation relieves the government of some of its burden appears likely. The apartments provide decent housing and opportunities for social contact for a sizable number of elderly citizens. The operation subsidizes this activity to a substantial degree from contributions from church congregations and from other private sources, such as the cottage surplus. Although one cannot say with certainty how much of this burden will fall on the government otherwise, these circumstances again are very different from those in Appeal of Lutheran Home at Topton, where this court concluded that "[the institution] does not donate or render gratuitously any of its services: all of its residents pay fees approximating actual costs. [The institution] is not relieving the government of some of its 'burden' of taking care of the elderly: there is no 'burden' in providing services to paying customers, so to speak." 100 Commonwealth Ct. at 262-63, 515 A.2d at 68. Finally, the fact that the apartments consistently have operated at a deficit by design demonstrates that they are operated free from private profit motive. The testimony indicates that the apartment management promptly fills vacancies as they arise so this deficit cannot be attributed to failure to have the facility fully occupied rather than to subsidization, as was the case in Appeal of Lutheran Homes at Topton. See id. at 262, 515 A.2d at 67-68. In In re: Appeal of The Bethlen Home of The Hungarian Reformed Federation of America From The Westmoreland County Board of Assessment, 125 Pa. Commw. 315 (1989), The Bethlen Home, a nonprofit corporation, operated a facility which included a nursing home which provided intermediate and advanced nursing care, and seven retirement cottages, each consisting of two separate living units. The County of Westmoreland assessed the retirement cottages, and the land on which they were erected, for real estate taxes. The Bethlen Home filed an -13- 01-5659 CIVIL TERM administrative appeal, which was denied. Its further appeal was sustained in the Court of Common Pleas of Westmoreland County, which held that the retirement cottages were tax exempt. The Commonwealth Court of Pennsylvania reversed the order of the trial court. The facts were: To reside in one of the twenty living units that are available, occupants must be 65 years of age or older. They must, according to the agreement which all must sign (agreement), submit a current physician's report on a form prepared by Bethlen, which includes an evaluation of their fitness for independent cottage living, as well as evidence of their financial ability to "sustain independent cottage living". It is stated in the agreement that Bethlen does not discriminate against anyone on the basis of race, creed, color, sex or ethnic origin. Cottage occupants pay an entrance fee for the right to occupy a living unit for the rest of their lives or until their health necessitates transfer to the nursing home. The amount that has been collected for that fee is that portion of the construction costs of the unit which Bethlen determines the occupant is financially able to pay. It has ranged from $25,000 to $44,500. No person has taken occupancy of a unit without paying an entrance fee. Person(s) currently occupying ten of the twenty units were admitted upon paying an entrance fee which is less than their unit's construction cost; that being the amount which Bethlen seeks to collect. In the event that a cottage occupant dies or moves away within ten years after having taken occupancy of the unit, a portion of the entrance fee collected is refunded to him or his estate except when he is transferred into the nursing home or is survived by a co-occupant. The amount of the refund depends upon how long he has occupied the unit. After a unit is vacated, new persons take occupancy of it upon payment of an entrance fee. Cottage occupants also pay a monthly service fee, currently $25.00, and utilities, including sewage, telephone, heat and lights. In the event that the cottages are subjected to real estate taxes, they are also required to pay their share of those taxes. The monies collected for the monthly service fee are, according to the agreement, for lawn mowing, snow removal and the cost of insuring the cottages. They are, however, insufficient to cover the costs of lawn mowing and snow removal. Cottage occupants are also responsible for living expenses including food, insurance on personal possessions and any expenses where physicians, -14- 01-5659 CIVIL TERM hospital confinement, specialists, nurses, special equipment, drugs, etc., are required. According to the agreement, any nursing visits, physical therapy, reality orientation, blood specimens, or, in extreme emergencies, visiting nurses, etc., will be billed to the occupant at the prevailing rate then in force at the nursing home. However, cottage occupants have had their blood pressure tested by nurses employed at the nursing home and those nurses, on occasion, have gone to the cottages to provide care to the occupants without charge. Cottage occupants are able to utilize certain of the nursing home's facilities and have access to certain services provided to the nursing home residents. They are able to make use of the nursing home's solarium and recreation areas. Although, according to the terms of the agreement, they must pay for meals served in the nursing home's dining room, those who come there to eat are permitted to do so free of charge. Most, however, eat meals in their apartments. Cottage occupants have access, without charge, to religious and counselling services provided at the nursing home and are also provided without charge with assistance in managing their financial affairs by the staff of both the nursing home and cottages. Under the terms of the agreement, they may attend programs and activities if transportation and space are available and may be involved in arts and crafts, if there is no conflict with the already scheduled programs for the nursing home residents. They have been able to participate in special activities and festivities that are conducted at the nursing home on holidays. In the event a cottage occupant becomes financially unable to pay the "maintenance cost of his cottage", he can, under the terms of the agreement, continue to reside in it as long as he is physically able to "maintain the cottage." As of yet, however, none of the occupants had become unable to pay the monthly service fee. Furthermore, a cottage occupant who becomes financially unable to maintain himself in his or her cottage and physically disabled is, according to the agreement, eligible for transfer to the nursing home and to reside there free of charge. However, in the event that he would be entitled to a refund of the portion of the entrance fee, this refund would be applied toward payment for his care in the nursing home. Up to the present time, two persons who were admitted for cottage occupancy have been transferred to the nursing home. The amounts that they were entitled to have refunded have been totally expended and they are now receiving free care and will continue to do so for the rest of their lives. (Footnotes omitted.) The Commonwealth Court concluded: -15- 01-5659 CIVIL TERM We do not believe that the second criterion--that of donating or rendering gratuitously a substantial portion of its services--is satisfied. In both Passavant Health Center v. Board of Assessment and Revision of Taxes of Butler County, 93 Pa. Commonwealth Ct. 575, 502 A.2d 753 (1985) and Lutheran Social Services Appeal, 114 Pa. Commonwealth Ct. 628, 539 A.2d 895 (1988), this Court held that when retirement cottage occupants were determined to be in need of nursing care and were automatically entitled to admission to a nursing home regardless of their ability to pay for such care, this evidenced a charitable purpose on the part of the nursing home, and not the cottages themselves. Thus, the fact that Bethlen's cottage occupants may be able to receive free nursing care in its nursing home at some time in the future is irrelevant to the determination of whether the cottage operation is of "purely public charity." It also follows form the aforementioned cases that the fact that cottage occupants have access without charge to services provided by Bethlen's nursing home staff to its nursing home residents, and are able to make use of certain facilities of the nursing home, also does not establish a charitable purpose on the part of the cottages themselves. Thus, it appears that the only relevant services that Bethlen provides to its cottage occupants are repair of its cottages, repair and/or replacement of items of personalty, (both of when can be interpreted as Bethlen's protection of its investment), lawn mowing and snow removal. Even though the first two of these services are provided free and the latter two provided for a nominal fee of $25.00 per month, it is the opinion of this court that the furnishing of these services is insufficient to satisfy the second criterion of Hospitalization Utilization Project. In the case sub judice, Chapel Pointe has built apartments for which it now charges and receives initial entrance fees that total $5,721,000 for the ninety-two units it rents, plus some additional entrance fees for subsequent occupants? It retains the entire entrance fee after five years and prorates the fee if a residence dies or leaves 6 The entire facility; the nursing home, assisted living compound, and the apartments, has a mortgage liability due after one year of $5,147,639. The current portion of the mortgage liability is $157,928. Chapel Pointe's financial statement does not break out what portion of the mortgage indebtedness is attributable to the apartments. -16- 01-5659 CIVIL TERM before five years. There is a significant turnover of fees. Chapel Pointe charges a resident a uniform monthly rental for both one and two bedroom apartments of $599, which is substantially higher than the norm for a rental in the Carlisle area, which is $350 per month for a one bedroom apartment, and $450 per month for a two bedroom apartment. It also charges $130 for any second person that lives in an apartment. All residents, including any who moves into an apartment after the initial residents take occupancy, must meet all financial requirements for admission. This system gives older people, at a considerable costs, a safe comfortable place to live, it provides ancillary services for a charge, and residents get priority for transition into the assisted living compound and/or nursing home if the unfortunate need arises. The system provides a substantial amount of money for Chapel Pointe, and a steady source of future occupants of its assisted living compound and nursing home. Based on this record, and the analysis made by the Commonwealth Court in Appeal of Lutheran Social Services and Appeal of The Bethlen Home of The Hungarian Reformed Federation of America, Chapel Pointe has not proven by credible evidence, under any standard, that it donates or renders gratuitously a substantial portion of its services to the residents of its apartments. No assistance is provided to any residents for the payment of their entrance fees. Very minimal assistance is provided to a few residents by adjusting their monthly rental fees. Some financially insignificant ancillary program benefits are provided for those residents who choose to participate. The apartment operation helps fund Chapel Pointe's nursing -17- 01-5659 CIVIL TERM home and assisted living compound. Chapel Pointe's convoluted effort to utilize the criteria in its unified financial statement to convenience us, based on a cost per day per resident analysis, that (1) the apartments operate as a loss, and (2) it renders gratuitously a substantial portion of services for the apartment residents, is not credible. Under Article 8 Section 2(a)(v) of the Pennsylvania Constitution, it is "only that portion of real property of [an] institution which is actually and regularly used" for "purely public charity," that is exempt from real property taxes. Thus, unlike the nursing home and the assisted living compound, the apartments and the land they are on do not quality for a statutory real estate tax exemption. ORDER OF COURT AND NOW, this day of January, 2002, the petition of Alliance Home of Carlisle, PA t/a Chapel Pointe, for an exemption from real estate taxes for its ninety- three apartments at 770 South Hanover Street, Carlisle, Cumberland County, IS DENIED. By the Court, Steven T. Hanford, Esquire For Appellant James D. Flower, Jr., Esquire For Appellees Edgar B. Bayley, J. :saa -18-