Administrative Law:

Bethany M. Whitmarsh, LeClairRyan Providence, R.I.
Experienced litigator represented clients in a wide range of financial service and real estate litigation.

Carroll, No. 2017-0187, September 14, 2018

Reversed.

  • Whether the trial court properly upheld the Town of Effingham’s denial of organization’s request for a charitable tax exemption.

The Marist Brothers of New Hampshire (MBNH) operates Camp Marist (Camp), which is a religious residential youth summer camp on property it purchased from the Town of Effingham (Town) in 1949 (Property). The Camp attracts applicants nationally and internationally and charges tuition based on the length of stay and activities. The stated objectives of the Camp include provision of religious, educational, and charitable services with the opportunity to meet the spiritual, cultural, and physical needs of youth. In the off-season, the Property is rented, with no restrictions on who can rent or how the Property is used, to defray some costs. After the collection of tuition, fees, and rent, and paying costs, essentially no net income is received from the Property.  MBNH requested a charitable tax exemption for real property in 2015 and the Town denied the request.  MBNH sought review in the Superior Court and the Superior Court upheld the denial of a charitable tax exemption.  MBNH appealed.

The court considered the four-factor test for evaluation of whether an organization should be granted an exemption. The test includes: (1) whether the organization is established for charitable purposes, (2) the organization is obliged to enact its stated purpose as to the public rather than solely to the members of the organization, (3) the land is not only owned by the organization but occupied by it and used for its stated purpose, and (4) any income or profit is used for the organization’s stated purpose.

In finding that MBNH met all of these factors, the court first noted that there was no question that MBNH was established for a charitable purpose in providing religious, educational, and recreational opportunities to youth. Second, the court rejected the Town’s argument that the Camp only benefitted a small class of financially capable youth rather than the public because of the tuition expense. The court noted that the imposition of a tuition cost to defray costs does not alter an organization’s standing as a charity and also found that MBNH’s purpose and the performance of that purpose was directed at the public as campers were drawn from across the United States, including New Hampshire, and around the world.  The court further determined that use of the Property was for MBNH’s stated purpose and the off-season rentals were incidental to the operation and purpose of the Camp such that it did not preclude MBNH’s entitlement to a full tax exemption.  Finally, the court rejected the Town’s argument that MBNH’s annual payment, required by its by-laws, to U.S Province prevented satisfaction of the final prong of the test. The court reasoned that there was no evidence that payments to U.S. Province ministries did not help the ministries, including MBNH and the Camp, from pursuing its stated purpose.

As all of the prongs of the test were satisfied by MBNH, the court ruled that MBNH was entitled to a charitable tax exemption.

 

Jonathan A. Block and Michele E. Kenney, Pierce Atwood, Portsmouth, for plaintiff; Mathew R. Serge and Demetrio F. Aspiras, Drummond Woodsum & MacMahon, Manchester, for defendant.