Jewish Geriatric Services, Inc., Jewish Nursing Home of Western Mass., Inc. and JGS Housing Services, Inc. v. Board of Assessors of the Town of Longmeadow (July 18, 2002)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


JEWISH GERIATRIC SERVICES,    v.   BOARD OF ASSESSORS OF
INC., JEWISH NURSING HOME OF		THE TOWN OF LONGMEADOW
WESTERN MASS., INC. AND JGS
HOUSING SERVICES, INC. 

     
Docket Nos. F252285, F257153,		Promulgated:
  F259030 			July 18, 2002	        			   

	These are appeals under the formal procedure pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes on certain real estate in the Town of Longmeadow assessed under G.L. c. 59, § 38 for fiscal years 1999, 2000, and 2001.
Commissioner Rose heard the appeals and was joined in the decision for the appellee by Chairman Burns and Commissioners Scharaffa, Gorton and Egan.
These findings of fact and report are made at the request of the appellants pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

Martin J. Newhouse, Esq. and Arthur W. Hughes, Esq., for the appellants.

David J. Martel, Esq., for the appellee.


	FINDINGS OF FACT AND REPORT
	On the basis of testimony and exhibits introduced at the hearing of these appeals, the Appellate Tax Board ("Board") made the following findings of fact.  Jewish Nursing Home of Western Mass., Inc. ("Jewish Nursing Home"), JGS Housing Services, Inc. ("JGS Housing"), and Jewish Geriatric Services, Inc. ("Jewish Geriatric Services") are all Massachusetts corporations organized and existing as not-for-profit charitable corporations under G.L. c. 180.  They have no capital stock, none of their net earnings, properties or other assets may inure to the benefit of, or be distributed to, any private person or individual or member, and upon their dissolutions their net assets are to be used for charitable purposes pursuant to their individual Articles of Organization and Restated By-Laws.  Additionally, Jewish Nursing Home, JGS Housing and Jewish Geriatric Services each have Internal Revenue Code ("Code") Section 501(c)(3) status, and each corporation has received Massachusetts Department of Revenue certificates of exemption from sales tax on their purchases.  
Jewish Geriatric Services is the parent corporation of Jewish Nursing Home and JGS Housing.  The primary declared purposes of Jewish Geriatric Services, as stated in its Restated Articles of Organization, are:
[t]o sponsor, develop and promote services and programs which are charitable and educational and which advance the knowledge and practice of geriatric nursing, health, rehabilitative care and services in Western Massachusetts and its environs . . . .

Jewish Nursing Home owns the real estate located at 780 Converse Street in Longmeadow ("the subject property" or "the subject").  The primary declared purposes of Jewish Nursing Home, as stated in its Articles of Organization, are: 
[t]o establish, maintain and operate one or more nursing or convalescent homes, or other facilities, including geriatric day care centers, for the provision of health care for aged, needy, sick, injured, infirm, disabled and other persons without regard to race, color, creed, national origin, ancestry, sex, age or source of    payment . . . .

Jewish Nursing Home leases the subject property to JGS Housing for a nominal fee of $1 per year under a 99-year ground lease.  The primary declared purposes of JGS Housing, as stated in its Articles of Organization, are:
[t]o establish, maintain, and operate an assisted living facility or otherwise to provide support services, including personal care, food, laundry, maintenance, and other social and recreational services, to those residing in the        facility . . . .

Beginning in July of 1998 and at all times relevant to these appeals, JGS Housing operated on the subject property  an assisted living residential development known as "Ruth's House."  Ruth's House was a three-level structure which contained sixty-four resident apartments.  Fifty-five of the apartments were two-room units, and the remaining nine apartments were one-room units.  The two-room apartments were often used by one individual who wanted a living room in addition to a bedroom.  Fourteen of the apartments were occupied as "companion suites" specifically designed for a two-bedroom roommate situation.  Every apartment included a bathroom and a small kitchenette with a half-size "dormitory" refrigerator, a counter with a sink, a few cabinets, and a microwave.  The apartments did not contain stoves or range-tops because of safety concerns.  Ruth's House also contained some common living areas, including dining and social areas, activity areas, a wellness center, common balconies, and landscaped grounds with gardens and walking paths.  
Each resident of Ruth's House required some degree of assistance with daily living.  To this end, Ruth's House staff provided a range of services to its residents, including three meals a day, transportation to medical appointments, health monitoring, laundry, housekeeping, and social activities.  As part of its basic service, Ruth's House staff provided assistance with up to three activities of daily living like bathing, dressing, eating, and toileting.  At an additional cost, the "Assisted Living Plus" program was offered for residents who required assistance with more than three activities of daily living.  Also at an additional cost, the "Renaissance Neighborhood" provided specialized assistance within a secure environment for residents with Alzheimer's Disease and other forms of memory-impairment and dementia.  Ruth's House also provided other services and supplies for additional fees, including incontinence products, hairdressing services, and snacks in between the daily meals.  These fees would be included on the residents' monthly bills.
While it offered daily-living assistance, however, Ruth's House was designed to provide elders with a residential setting that emphasized their independence to the greatest extent possible.  According to its brochure, "Ruth's House is a safe, dignified and home-like setting for seniors who value their independence, but may need some assistance with day-to-day living."  Applicants signed a Resident Agreement prior to taking residence at Ruth's House.  The Resident Agreement assigned the resident to a particular suite and provided a one-year term of occupancy with automatic month-to-month renewal thereafter.  
All of the apartments at Ruth's House were equipped with locks, including the apartments in the Renaissance Neighborhood.  Pursuant to the Resident Agreement, residents were required to allow Ruth's House staff to enter their apartments only for the following purposes:  (1) to perform necessary inspections and repairs, and to fulfill the staff's obligations to provide assisted living services; (2) during the last sixty days of residency to show the apartment to prospective residents; (3) when there is "good reason" for the staff to believe that the resident requires assistance, including if the resident has used an emergency signaling device or has failed to respond; and (4) when there is "good reason" for the staff to believe that the resident has damaged the apartment.  The Resident Agreement further provided that "Ruth's House personnel will respect the Resident's privacy and make their presence known (except in an emergency) when entering the Suite and will schedule the entry in advance whenever possible."  Larry Steinhauser, the Executive Director of Ruth's House, testified that the standard policy was that staff were to knock and wait for a response before entering a resident's apartment.  
Mr. Steinhauser also testified that residents did not have an exclusive right to any particular apartment, citing as an example the case of a resident whose care needs change over the course of residency and required transfer to the Renaissance Neighborhood or to a different facility that is licensed to provide the needed level of care.  However, the Resident Agreement required residents to carry their own liability insurance coverage, including renter's and property insurance, indicating that the residents retained responsibility for their own unit.  More importantly, as will be discussed in the Opinion, Massachusetts law affords residents of assisted living residences the same legal rights and protections against eviction as afforded to tenants of traditional housing arrangements.
Ruth's House did not discriminate on the basis of race, gender, religion or any similarly suspect factor.  The average age of residents at Ruth's House was in the mid-eighties, with some over ninety years old.  As an assisted living residence, Ruth's House was not licensed to offer around-the-clock nursing care.  Therefore, by Massachusetts law, prospective residents were subjected to a screening process to determine whether they met the physical and medical requirements of Ruth's House.  This process included a prior physical examination by a physician, an interview with a Ruth's House "wellness nurse coordinator," and completion of a "Resident Assessment" form.  Ruth's House staff also used the initial interview and resident's assessment to develop an Individual Service Plan ("ISP") for each resident.  Additionally, the Resident Agreement required the residents to maintain their own health insurance coverage "in adequate amounts."
	Ruth's House provided a fee schedule as follows.  The base rate for Assisted Living in a resident apartment ranged from $63.00 to $85.00 per day for one room in a companion suite, $94.00 to $101.00 per day for a one-room private suite, and $105.00 to $140.00 per day for a two-room private suite.  These rates were increased by $23 per day for residents in the Assisted Living Plus program, or by $33 per day for residents of the Renaissance Neighborhood.  In addition, a one-time community fee equal to sixty days (two months) of the resident's Assisted Living rate, which included the additional fees for the Assisted Living Plus and the Renaissance Neighborhood, was required to be paid prior to residency.
No financial information was asked of prospective residents unless they were applying for a subsidy.  However, Ruth's House required that a third party sign a Responsible Party Agreement to give an assurance that someone guaranteed payment of the required fees in the event that the resident did not make payments when due.  Ruth's House did not accept Medicaid supplements.
Paul Salvage, an attorney who served as chairman of the board of JGS Services, testified that fundraising had enabled Ruth's House to provide a program of subsidies for certain residents.  Of the total number of residents, subsidies were granted to no more than seventeen residents in each of the three years at issue, with subsidies granted to only fourteen residents during the first five months of 2001.  Moreover, the amount of the subsidies awarded to some of these residents was hardly substantial, with several residents receiving less than $25 per day in subsidies and a few receiving less than $10 per day.  In 1999, only one resident received more than $15,000 in subsidies for the entire year, and in 2000, no resident received $15,000 in subsidies for the entire year.  Mr. Salvage testified that a committee reviewed the subsidy applications and granted subsidies "on an as needed basis,"  and that Ruth's House was able to provide subsidies to all who applied for them.  However, Ruth's House awarded far less than the budgeted amount for subsidies.  The program contemplated a maximum in the range of between $180,000 to $250,000 to be paid annually as subsidies.  Yet total subsidies actually awarded were approximately $144,000 in 1999, $130,000 in 2000, and $50,000 for the first five months of 2001.  Mr. Salvage testified to the reasons for this short-fall.  First, the committee "just didn't receive as many applications for subsidies as there were monies available," and second, the committee wished to reserve money for current residents who might need subsidies in the future because "[w]e don't want to be in a position of ever having to evict somebody from Ruth's House because they can't pay the monthly fees."  Upon questioning by the hearing office, Mr. Salvage admitted that if a resident could no longer pay the monthly fees, Ruth's House would resort to the eviction process. 
The Board of Assessors of the Town of Longmeadow ("Assessors") valued the subject property at $3,909,100 for fiscal year 1999, and at $5,639,600 for fiscal years 2000 and 2001.  The Assessors accordingly assessed a tax thereon at the rate of $19.94 per $1,000 for a total of $77,947.45 for fiscal year 1999, at the rate of $19.08 per $1,000 for a total of $107,603.56 for fiscal year 2000, and at the rate of $19.60 per $1,000 for a total of $110,536.16 for fiscal year 2001.  The taxes were timely paid with no interest and the appellants timely applied to the Assessors for an abatement of the taxes and exemption of the subject property.  The Assessors denied each of the applications.  The appellants seasonably filed petitions with the Board seeking an abatement and exemption for the subject property.  On this basis, the Board found that it had jurisdiction over these appeals.
On the basis of all of the evidence offered at the hearing of these appeals, the Board made the following findings of fact.  The Board first found that while Ruth's House offered specialized services and some common living areas, Ruth's House essentially offered its residents full, legal tenancy.  The Board found that beyond extenuating health circumstances that governed the level of care that a resident required, residents had a protected right to live in their own apartments.  For example, the Board found that the policies of Ruth's House, as evidenced by the Resident Agreement, emphasized and ensured respect for the residents' privacy.  Ruth's House staff had limited rights to enter the residents' apartments for emergencies, repairs, or to show the apartment to prospective tenants at the remainder of the residents' occupancy, similar to a traditional tenancy.  All employees were expected to schedule appointments with the residents in advance and to knock before entering the residents' apartments except in emergencies.  Finally, the Board found that the safeguard granted to residents under Massachusetts law that any attempted eviction would have to be pursued through a court proceeding and in accordance with landlord-tenant laws bestowed upon the Ruth's House residents the legal status and protection of traditional tenants.  Therefore, the Board found that JGS Housing doing business as Ruth's House was not the actual occupant of the subject property.  Rather, the Board found that the residents of Ruth's House were tenants of the complex and, accordingly, they were the actual occupants of the subject property.  
Aside from the fact that the appellants did not "occupy" the subject property, the Board further found that the property was not operated as a charitable endeavor.  Ruth's House did not benefit the community at large, because it provided services only to a limited segment of the population.  The screening processes of Ruth's House, including the minimum health standards as verified by a medical examination, the requirement that the residents carry health insurance "in adequate amounts," and the requirement that a third party guarantee payment to Ruth's House, created barriers to the provision of services to those elders in poor health and with limited financial means.  The amount of financial assistance actually awarded to Ruth's House residents was insufficient to demonstrate the affordability of the facility for a broad spectrum of the elderly population, and in fact, the slim demand for subsidies actually demonstrated that Ruth's House's screening procedures were successful in limiting the pool of potential applicants.  The Board thus found that the appellants failed to meet their burden of proving that Ruth's House benefited a sufficiently inclusive section of the community.  
Moreover, elders of poor health and limited financial means are the ones who most likely would require nursing home or other government-provided services. The appellants thus failed to prove that, but for Ruth's House, the government would have been charged with the burden of caring for the elders who resided at Ruth's House.  Therefore, the Board found that the appellants failed to meet their burden of proving that Ruth's House relieved or lessened any burden government would have been under an obligation to assume.  
Accordingly, the Board found that the appellants did not "occupy" the property, nor did they operate the property for charitable purposes. Therefore, the Board issued a decision for the appellee in these appeals.  

OPINION
"[S]tatutes granting exemption from taxation are strictly construed."  Animal Rescue League of Boston v. Assessors of Bourne, 310 Mass. 330, 332 (1941).  Therefore, "[a] taxpayer is not entitled to an exemption unless he shows that he comes within either the express words or the necessary implication of some statute conferring this privilege upon him."  Milton Hospital & Convalescent Home v. Board of Assessors of Milton, 360 Mass. 63, 67 (1971) (quoting Boston v. Quincy Mkt. Cold Storage & Warehouse Co., 312 Mass. 638, 654 (1942)) (other citations omitted). The relevant provision of G.L. c. 59, § 5, Third, the exemption at issue in these appeals, exempts from taxation the following:
real estate owned by . . . a charitable organization and occupied by . . . another charitable organization or organizations . . . for the purposes of such other charitable organization or organizations . . . .

Pursuant to this provision, the appellants must establish, inter alia, two criteria: (1) that JGS Housing doing business as Ruth's House was the occupant of the subject property, and (2) that its occupation was in furtherance of the charitable purposes for which it was organized.  See Board of Assessors of Hamilton v. Iron Rail Fund of Girls Club of America, Inc., 367 Mass. 301, 306 (1975).  The Assessors did not challenge the status of any of the appellants as charitable organizations.  However, they challenged whether JGS Housing doing business as Ruth's House was the actual occupant of the subject property and whether the operation of the property was in furtherance of the charitable purposes for which JGS Housing was organized.  As will be discussed below, the Board found and ruled for the Assessors on both issues.

The subject property was occupied by the individual Ruth's House tenants and not by JGS Housing.

The Board found and ruled that the subject property was not occupied by JGS Housing doing business as Ruth's House; rather, the property was occupied by the individual Ruth's House residents.  The Board based its decision on its finding that the residents were legal tenants of Ruth's House who enjoyed the full range of rights and protections associated with legal tenancy.  
The assisted living facility is a unique hybrid governed by G.L. c. 19D, enacted by the Legislature in 1994.  Assisted living residences must be certified by the Massachusetts Office of Elder Affairs ("Elder Affairs"), and accordingly, these residences must meet the many requirements of G.L. c. 19D, including the provision of certain services for their elderly residents.  However, the Legislature clearly intended to emphasize the residential character of these establishments, and so in enacting G.L. c. 19D, it "further recognize[d] that assisted living residences should be operated and regulated as residential environments with supportive services and not as medical or nursing facilities."  St. 1994, c. 354,  § 1.  Accordingly, the crux of G.L. c. 19D is to ensure that assisted living residences "compensate for the physical or cognitive impairment of the individual while maximizing the individual's dignity and independence."  Id.  
	To this effect, G.L. c. 19D affords elderly residents of assisted living residences the rights and protections enjoyed by traditional tenants.  For example, § 14 requires the sponsor to "enter into a written residency agreement with each resident, clearly describing the rights and responsibilities of the resident and the sponsor," to be signed by both parties, like a lease for a traditional tenancy.  Moreover, § 16 requires each residency unit to be equipped with the basic amenities of a traditional apartment, including locks on the entry doors to all units, private bathrooms with a minimum of a toilet and a lavatory and a requisite number of bathing facilities, and a kitchenette "or access to cooking capacity" for every unit.  G.L. c. 19D, § 16.  These requirements underscore the legislature's concern that assisted living residences respect the privacy of elderly tenants and provide them a residential environment to the greatest extent possible, thereby "maximizing the individual's dignity and independence."  St. 1994, c. 354, § 3. 
 
Section 9 outlines the many rights afforded to the inhabitants of assisted living residences.  The most important of these for tax purposes is the right "[t]o not be evicted from the assisted living residence except in accordance with the provisions of landlord tenant law as established by chapter one hundred and eighty-six or chapter two hundred and thirty-nine."  G.L. c. 19D, § 9(18).  It is this legal protection against eviction that distinguished Ruth's House tenants from the residents of other properties that have been found to be occupied by charitable institutions instead of by the residents.  For example, the residents in M.I.T. Student House, Inc. v. Board of Assessors of Boston, 350 Mass. 539, 540 (1966), were M.I.T. students living in "a dormitory and boarding house" for needy students, who had no rights and protections under landlord-tenant law.  See also Franklin Square House v. Boston, 188 Mass. 409, 411 (1905) (in determining whether a corporation organized "to provide a home for working girls at moderate cost" was entitled to an exemption, the Supreme Judicial Court found that "[t]he occupation of the property is that of the corporation itself, and not of those to whom it affords a home, just as the occupation of a college dormitory or refectory is that of the institution of learning rather than that of its students.")(quoted in M.I.T. Student House, 350 Mass. at 542) (other citations omitted).  Similarly, the residents of a nursing home are not lawful tenants and, accordingly, they are not considered the occupants of the property for purposes of G.L. c. 59, § 5, Third.  See H-C Health Services, Inc. v. Board of Assessors of South Hadley, 42 Mass. App. Ct. 596 (1997)(accepting without question the Board's finding that the nursing home operators were the occupants of the subject property).  
The Board thus found that the rights granted to the elderly residents, including the legal protection against eviction in accordance with landlord-tenant laws, secured for the residents the legal status as tenants of the subject property.  Therefore, the facts of these appeals are similar to those of Charlesbank Homes v. City of Boston, 218 Mass. 14 (1914) and warrant the same result.  The appellant in Charlesbank Homes was a charitable corporation whose charitable purpose was "to provide wholesome and sanitary homes for working people and people of small means at moderate cost."  Id. at 16.  The Supreme Judicial Court found that the tenants "are not mere lodgers" but rather, they "have an interest in the respective apartments let to them" and accordingly "they are themselves the occupants thereof."  Id.  Therefore, while it "[did] not doubt that the plaintiff [was] a charitable corporation" within the meaning of the applicable statute and that its purpose "to provide wholesome and sanitary homes for working people and people of small means at moderate cost" was noble, the Supreme Judicial Court nonetheless found that the appellant did not meet the occupancy requirement and accordingly, it denied the charitable exemption for the apartment house at issue.  Id.
The fact that Ruth's House employees were present on the premises with some frequency to coordinate meals, appointments and other activities with the residents, while the Charlesbank Homes employees were not so present, does not detract from the applicability of Charlesbank Homes to these appeals.  The presence of Ruth's House employees does not equate with "occupancy" for purposes of G.L. c. 59, § 5, Third, where the elderly residents were lawful tenants of Ruth's House.  As evidenced by the Resident Agreement, Ruth's House respected the privacy of the tenants to the highest degree possible while still enabling its employees to provide services to the tenants for which the parties had contracted, including assistance in the event of an emergency or providing necessary repairs and improvements to the apartments.  Like tenants of traditional apartment complexes, Ruth's House residents carried their own apartment insurance.  Most importantly, pursuant to G.L. c. 19D, § 9(18), Ruth's House tenants could not be evicted except through formal, legal proceedings, and they were afforded all the rights and protections granted under landlord-tenant laws.  Therefore, the Board found that the appellants did not occupy the property, but rather, the individual residents occupied the property as tenants.  Accordingly, in conformity with Charlesbank Homes, the Board found and ruled that the charitable exemption was not available to the appellants.   
The implementation of the tenancy protections under G.L. c. 19D distinguishes these appeals from Island Elderly Housing, Inc. v. Board of Assessors of the Town of Tisbury, 20 Mass. App. Tax Bd. Rep. 232 (1997), where the Board found an assisted living residence to be occupied by the charitable corporation that owned and managed the facility.  Those appeals, however, pertained to fiscal years 1990 and 1991, prior to the passage of G.L. c. 19D.  Since that time, the Legislature has created specific legal rights for renters of assisted living residences, thereby clarifying their status as tenants armed with the full array of protections against eviction under landlord-tenant laws.  
In the present appeals, the Board found that while Ruth's House, as an assisted living residence, was required to provide certain services to its residents, the residents were nonetheless lawful tenants of the property and, therefore, the tenants were the actual occupants of the property.  Accordingly, the Board ruled that the appellants were not entitled to a charitable exemption for the subject property, because JGS Housing did not occupy the property as required under G.L. c. 59, § 5, Third.

The subject property was not operated as a charitable endeavor for purposes of the real property tax exemption at G.L. c. 59, § 5, Third.

"A corporation claiming that its property is exempt under § 5, Third, has the burden of proving that it comes within the exemption, and that it is in fact operated as a public charity."  Town of Norwood v. Norwood Civic Association, 340 Mass. 518, 525 (1960) (citing American Inst. For Economic Research v. Assessors of Great Barrington, 324 Mass. 509, 512-14 (1949)).  In the instant appeals, the appellants were organized as charitable corporations pursuant to their Articles of Organization.  However, an organization's Code Section 501(c)(3) status is not dispositive in determining whether its property qualifies for the Massachusetts property tax exemption.  See H-C Health Services v. Board of Assessors of South Hadley, 42 Mass. App. Ct. 596, rev. denied, 425 Mass. 1104 (1997).  "The mere fact that the organization claiming exemption has been organized as a charitable corporation does not automatically mean that it is entitled to an exemption for its property. . . .  Rather, the organization 'must prove that it is in fact so conducted that in actual operation it is a public charity.'"  Western Massachusetts Lifecare Corp. v. Board of Assessors of Springfield, 434 Mass. 96, 102 (2001) (quoting Jacob's Pillow Dance Festival, Inc. v. Assessors of Becket, 320 Mass. 311, 313 (1946)).  The organization bears the burden of proving that its occupation of the property is in furtherance of the charitable purposes for which it was organized.  See Iron Rail Fund of Girls Club of America, 367  Mass. at 306.    
In determining whether an organization is in fact occupying property in furtherance of its charitable purpose, a court must consider whether the organization's benefits are readily available to a sufficiently inclusive segment of the population.  While charging a fee for services will not necessarily preclude charitable exemption, "the organization's services must still be accessible to a sufficiently large and indefinite class of beneficiaries in order to be treated as a charitable organization."  Western Massachusetts Lifecare, 434 Mass. at 105.  In other words, it is necessary that "the persons who are to benefit are of a sufficiently large or indefinite class so that the community is benefited by its operations."  Harvard Community Health Plan, Inc. v. Assessors of Cambridge, 384 Mass. 536, 543 (1981) (citing Children's Hospital Medical Center v. Board of Assessors of Boston, 353 Mass. 35, 44 (1967), Assessors of Boston v. Garland School of Home Making, 296 Mass. 378, 388-89 (1937), and 4 A. Scott, Trusts at 2897-2898 (3d ed. 1967)).  Another key factor to be considered is whether the operation of the program "'lessen[s] any burden government would be under any obligation to assume.'" Western Massachusetts Lifecare, 434 Mass. at 105 (quoting Boston Chamber of Commerce v. Assessors of Boston, 315 Mass. 712, 717 (1944)).  
In the present appeals, the Board found that Ruth's House provided services to those elderly tenants who could afford the services or who requested only a minimal amount of financial assistance.  Moreover, the Board found that the appellants failed to show that, but for Ruth's House, these elderly tenants would be residing in a nursing home and depending on government assistance to finance their care.  Therefore, the Board found that the appellants failed to meet their burden of proving the charitable purpose of Ruth's House, because they failed to prove that its operation benefited a sufficiently large or indefinite class of people and that its operation provided relief to government of any burden to care for the Ruth's House tenants.
Ruth's House did not meet its burden of proving its services were available to a sufficiently inclusive segment of the population.
 
The Board first found and ruled that the appellants failed to meet their burden of proving that Ruth's House benefited a sufficiently inclusive segment of the population.  The high cost of Ruth's House created a barrier to the provision of services to a wide variety of elderly prospective residents.  Although charging fees for services will not necessarily preclude an organization's charitable status (see New England Sanitarium v. Inhabitants of Stoneham, 205 Mass. 335, 342 (1910)), the Supreme Judicial Court has nonetheless found that providing services at a lower cost, thereby making services available to a broader spectrum of the community, supports a finding that an organization is providing a charitable service.  See Harvard Community Health Plan, 384 Mass. at 540 ("At the same time, we noted the 'evidence which establishes that HMO enrollees receive high quality care at a lower cost - as much as one-fourth to one-third lower than traditional care in some parts of this country.'")(quoting S. Rep. No. 93-129, 93rd Cong., 1st Sess. 1, 2 (1973)); see also New England Legal Foundation v. City of Boston, 423 Mass. 602, 610 (1996).  For example, in finding that a nursing home was charitable, the Appeals Court emphasized the affordability of the organization's services to limited-income elders by specifically noting that "[t]he population at the nursing home [was] predominantly Medicaid patients."  H-C Health Services, 42 Mass. App. Ct. at 597.  
The courts' attention to the costliness of fees reflects the well-established principle that "selection requirements, financial or otherwise, that limit the potential beneficiaries of a purported charity will defeat the claim for exemption."  Western Massachusetts Lifecare, 434 Mass. at 104 (citing Boston Symphony Orchestra v. Board of Assessors of City of Boston, 294  Mass. 248, 255-256 (1936) (finding that the charitable exemption was properly denied where an educational organization charged substantial admission fees and gave seating preferences to season ticket holders)).  For example, in disallowing a charitable exemption to a retirement community corporation, the Supreme Judicial Court in Western Massachusetts Lifecare focused on selection requirements which limited the availability of the organization's services to the elderly population at large.  
The residential community at issue in Western Massachusetts Lifecare, Reeds Landing, was a facility offering three different types of elderly housing: independent living units ("ILU"); assisted living units ("ALU") providing some assistance with activities of daily living and certain safety and security features for a limited number of residents with impaired memory; and a skilled nursing facility ("SNF") providing twenty-four hour nursing care to residents.  Western Massachusetts Lifecare, 434 Mass. at 99-100.  Entry into the ILU's required a resident to pay a high initial entrance fee ranging from $100,200 to $230,500, which was only partially refundable if the resident vacated Reeds Landing, or from $128,000 to $290,200 for a guaranteed refund of eighty-five per cent, and then monthly service fees ranging from $1,325 to $2,050.  Id. at 99.  For entry into the ALU's, an existing ILU resident could transfer for "a slightly increased monthly fee," and thus avoid the entrance fee, or new ALU residents could contract for guaranteed future entrance into an SNF and thereby pay an ALU entrance fee of $75,000 and monthly service fees ranging from $2,200 to $2,800.  Id. at 100.  
The SNF facility, with daily fees ranging from $165 to $185 per day, was in theory open to the public on a per diem basis.  Id., n.3.  However, the Court affirmed the Board's finding that "access to the SNF was, as a practical matter, only available to those who had entered Reeds Landing by way of an ILU or an ALU (and thus had already paid substantial entry fees)."  Id. at 100-01 (emphasis added).  In the Court's opinion, the substantial fees created an insurmountable barrier to the provision of Reeds Landing's services to a sufficiently broad spectrum of the elderly population:
The benefits of Reeds Landing are limited to those who pass its stringent health and financial requirements, requirements that make most of the elderly population ineligible for admission.  The class of elderly persons who can pay an entrance fee of $100,000 to $300,000 and have, from their remaining assets, monthly income of $2,000 to $7,000 is a limited one, not a class that has been "drawn from a large segment of society or all walks of life." 
	
Id. at 104 (quoting New England Legal Foundation, 423 Mass. at 612).  Accordingly, the Court ultimately found that Reeds Landing did not benefit a sufficiently broad section of the community to satisfy the charitable exemption requirements.
Similarly, the Board in these appeals found that the appellants failed to meet their burden of proving that Ruth's House benefited a sufficiently inclusive section of the elderly community.  The selection requirements of Ruth's House limited its class of potential beneficiaries to an impermissibly limited class of elderly.  For example, Ruth's House required daily Assisted Living fees ranging from $63 to $140 per day for basic rent (slightly higher for the Renaissance Neighborhood), which translated to nearly two thousand dollars to over four thousand dollars per month for basic living fees alone, plus the $23 fee per day for Assisted Living Plus or the $33 fee per day for the Renaissance Neighborhood, plus the one-time "community fee" equal to two months of Assisted Living fees.  The Board found that these fees were not affordable to a sufficiently inclusive range of the elderly community.  
Contrary to the appellants' argument that the subsidy program was available to aid residents with these fees, the Board found that the screening procedures used by Ruth's House employees sufficiently narrowed the pool of potential applicants so that subsidies would not be awarded beyond a minimal basis.  The slim showing of actual subsidies being awarded demonstrated that the screening processes successfully narrowed the pool of applicants to an impermissibly small portion of the elderly community.  Moreover, the stockpiling of available subsidies for future reserves, even if the appellants had proven this to be the reason for the slim awarding of subsidies for Ruth's House, was not sufficient to overcome the Board's finding that the services of Ruth's House were not available to a broad cross-section of the elderly community.

The appellants failed to meet their burden of proving that Ruth's House provided relief of any burden to government.

	"The operation of a private business is not charitable, no matter how noble its pursuits." Sturdy Memorial Foundation v. Board of Assessors of the Town of North Attleborough, 2002 ATB Adv. Sh. 203, 218 (citing Massachusetts Medical Society v. Assessors of Boston, 340 Mass. 327, 333 (1960).  Private organizations operate in the furtherance of a charitable purpose when they "perform activities which advance the public good, thereby relieving the burdens of government to do so."  Id. (citing Molly Varnum Chapter DAR v. City of Lowell, 204 Mass. 487 (1909)).  "However, to the extent that a[n] [] organization is conducting a business for profit, it is not relieving government of a burden and, accordingly, its business is not charitable."  Id. (citing Hairenik Association, Inc. v. City of Boston, 313 Mass. 274, 279 (1943)).       
In another appeal similar to these, Milton Residences for the Elderly, Inc. v. Board of Assessors of the Town of Milton, 3 Mass. App. Tax Bd. Rep. 147, the Board examined a corporation operating an elderly housing unit known as Unquity House.  The corporation's charitable purposes, as set forth in its Agreement of Association and Bylaws, were: 
[t]o provide Housing facilities on a nonprofit basis for the use and occupancy of the elderly and aged persons, and other services specially designed to meet the physical, social and psychological needs of the elderly and aged and to promote their health, security, happiness in longer living, the charges for such facilities and services to be provided below the actual cost of such housing and services insofar as contributions, bequests or income of the corporation make this possible.  

Id. at 149.  The Board acknowledged that the provision of affordable housing for needy persons can be a charitable purpose.  Id. at 150 (citing M.I.T. Student House, 350 Mass. at 541).  Despite this laudable goal, however, the Board noted deficiencies in the actual operation of this corporation.  In all of the Articles of Organization, Agreement of Association, and Bylaws, "there [was] no requirement that these elderly tenants be needy.  Nor was there any evidence produced at the hearing that they were in fact needy."  Id.  Yet, "[t]he ground for the charitable exemption is that the organization alleviates some burden of government by conferring benefits which would advance the public interest."  Id. (citing Board of Assessors of Quincy v. Cunningham Foundation, 305 Mass. 411 (1940)).  Therefore, to the extent that the beneficiary of the organization would not depend on the assistance of government in the absence of the program's operation, the organization is not alleviating government of any burden:  
[i]t is not charitable in the broad sense of the word, however, to rent apartments and provide services to elderly persons who are physically and financially independent, even if it is done on a nonprofit basis. . . .  Although care of the aged is a proper concern of government, the governmental obligation does not extend to the care of physically and financially independent elderly persons who would qualify for admission to appellant's apartments. 

Id.  Accordingly, the Board found that the taxpayer failed to meet its "grave burden" of proving its entitlement to an exemption for the property occupied by the elderly housing complex.  Id. at 151.
Likewise, the Board here found and ruled that the appellants failed to prove that Ruth's House lessened any burdens that government would have been under an obligation to assume in the absence of its operation.   The Board found that the appellants failed to prove that Ruth's House, an assisted living residence, serviced a segment of the population that otherwise would have required nursing home care, as opposed to a non-government alternative means of care, including at-home services.  The inability of Ruth's House to provide more extensive forms of care ensured that the residents who successfully passed the screening requirements would be in relative good health and with a sufficient income and, therefore, not a group whose care would be a burden of government.  See Milton Residences for the Elderly, 3 Mass. App. Tax Bd. Rep. at 150.  Services or supplies offered by Ruth's House were either paid as part of the resident's contractual arrangement or included on the monthly bill as additional charges.  
The fact that Ruth's House did not accept any Medicaid supplements further revealed that Ruth's House provided a service for recipients who could afford the fees.  Cf. Fairview Extended Care Servs. V. Board of Assessors of Danvers, 22 Mass. App. Tax Bd. Rep. 206, 208 (1997) (The Board rules that a nursing home was entitled to an exemption where its residents "were predominantly Medicaid patients, representing 65%-70% of the population.").  The Board thus concluded that the Ruth's House residents would not require government assistance in the absence of Ruth's House.  Accordingly, the Board found and ruled that Ruth's House failed to prove that it was relieving government of any burdens.  See H-C Health Services, 42 Mass. App. Ct. at 597.  

Conclusion
"Doubt as to whether property is dedicated to charitable or benevolent purposes so as to be exempt from taxation must be resolved against the one claiming the exemption."  Milton Residences for the Elderly, 3 Mass. App. Tax Bd. Rep. at 150-51 (citing Boston Symphony Orchestra, supra).  The Board found and ruled that the appellants here failed to meet their burden of proving that the subject property was appropriately occupied to qualify for the property tax exemption.




Accordingly, the Board issued a decision for the appellee in these appeals.


					    APPELLATE TAX BOARD	
							

By:_____________________________
				    Abigail A. Burns, Chairman





A true copy:

Attest: _____________________	
                        Clerk of the Board

 JGS Housing and its affiliated entities were rooted in the Jewish community, but approximately thirty-five percent of the residents were not Jewish.  
 The Renaissance Neighborhood offered a comparable but somewhat more limited range of residency costs:  $67.00 to $81.00 for one room in a companion suite, $97.00 for a one-room private suite, and $113.00 to $143.00 for a two-room private suite.  Mr. Steinhauser testified that the slightly higher base rate for the Renaissance Neighborhood was because of the additional security features of this portion of Ruth's House.
 This fee included all of the services of the Assisted Living Plus program.
  Only two quarterly tax bills were sent for fiscal year 1999.  It appears that the Assessors did not assess the subject property before Ruth's House began operating on July 20, 1998.
 The subject property was owned by Jewish Nursing Home for all three fiscal years.  However, for fiscal year 1999, the Assessors mistakenly assessed the real estate taxes for the subject property against Jewish Geriatric Services, which did not own the subject property.  Because Jewish Geriatric Services was identified in the assessment, all three entities timely applied for an abatement of taxes for fiscal year 1999 as a "protective measure." 
 The sponsor is defined as the person named in the certification of the assisted living residence.  G.L. c. 19D, § 1.
 All assisted living residences constructed after the effective date of G.L. c. 19D must include a private full bathroom with a bathing facility in every unit.  All other residences must include at least a private half bathroom and at least one bathing facility for every three residents.  G.L. c. 19D, § 16.
 The secretary of Elder Affairs may waive the requirements for bathrooms and kitchenettes if the secretary determines that "public necessity and convenience require and to prevent undue economic hardship."  However, in this event, the assisted living residence must "otherwise meet the purposes of assisted living to provide a home-like residential environment, which promotes privacy, dignity, choice, individuality and independence for its residents."  G.L. c. 19D, § 16.
 The refund amount decreased by one per cent for each month of residence.  Id. at 99.

 Residents wishing to enter the ALU without guaranteed entrance into an SNF could avoid paying the entrance fee, but the monthly fees were then increased to $2,700 to $2,800.  Id.  

ATB 2002-370