It is quite surprising that the two court cases had to have varying outcomes despite having almost similar legal backgrounds. According to Greater Anchorage Area Borough tax assessors, Providence Professional Building was valued at $2, 134200 in 1973 with a tax assessment of $43,416.02 (Green, 1998). The sisters of charity wrote an appeal to the court arguing that the doctors that occupied the first, second and third floors, though owned their private entities, also serve the same purpose as the hospital and thus should be tax exempt (Reed, 2018). According to the sisters, when deciding whether or not the property was exclusive, the owner’s use rather than the actual use should be placed in consideration. According to the sisters’ appeal, the tax exemption was to cover everything they owned. The sisters sited Matanuska-Susitna Borough v. King’s Lake Camp, 439.P.2d 441 (Alaska, 1968) and Harmon v. North Pac. Union Conference of Seventh Day Adventists to justify why the business conducted in their building ought to have been exclusive (Clement, 1980).
Upon hearing the two parties’ arguments, the court decided to side with the Greater Anchorage Area Borough consequently rejecting the sisters’ appeal on the basis that it was not in accordance with AS 29.53.020(a) (3). This section involves two steps, Sec.020 (a) (3) stating that a property is tax exempted*470” if it is used exclusively for nonprofit, charity, religious or hospital purposes. Since the property received income, they had to meet the requirements of sec.020 (c0 (10) imposed on properties exempt under Sec.020 (a) (3) (Clement, 1980).The whole organization ought to be used for hospitalization purposes only or else it would not qualify to be tax exempt under AS 29.53.020(c) and independent test derives from Cedars of Lebanon Hospital v. Los Angeles County, 35 Cal. 2d 729, 221 P.2d 31 (1950) (Clement, 1980). The private doctors did not provide services of incidental benefits to the hospital meaning the building was not entirely used for hospital purposes. I, therefore, believe that the court’s judgment was fair. The private doctors were making a lot of money in their private entities and were trying to hide behind the charity organization to skip taxes (Spurgeon, 2017).
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Ad Valorem tax exemption only applies to the personal properties owned by the exempt organization. Under AS 29.53.020(c), a property is rendered tax exempt if the income is solely from the use of the property by nonprofit religious, charitable, hospital or educational groups for classroom space (Green,1998). Therefore, it does not matter whether the Barnes Hospital owned the property in question or leased it to the Sisters. In case there was a garage with daily or hourly fees used by employees, patients, families, and visitors located on a parcel of land owned by and adjacent to the hospital property, it would be exempted from taxation because it served hospital business (Clement, 1980). It would not matter the accrued revenue from the parking garage. The garage would only be taxed if it were used by patrons of local businesses and other individuals not related to the hospital (Nelson,1995). In conclusion, an exempted entity’s property is exclusive so long as it only serves the organization’s purpose.
References
A Bowen, AF Emergency, AF Saks, A Pugh .(2016) Table of Cases Cited in Text hein online pg. 27-57
BJ TRIBBLE, PJ WARREN.( 1991). CUMULATIVE INDEX-VOLS. V-VIII 315 - Arctic - HeinOnline; Alaska pg. 15-107
Clement JW. (1980). Taxation: Barnes Hospital v. Leggett-Partial Tax Exemption of Charitable Organizations in Missouri . Hein Online pg. 56-108.
Green SK(1998). Freedom of Religion in Alaska: Interpreting the Alaska Constitution . Hein Online pg. 10-34
J Witte Jr (1990). Tax exemption of church property: Historical anomaly or valid constitutional practice – HeinOnline pg. 34-89
Reed FI (2018). Anchorage 1910-1940 Legends & Legacies .Alaskahistory pg. 43-59
RL Nelson.(1995). Welcome to the Last Frontier, Professor Gardner: Alaska's Independent Approach to State Constitutional Interpretation . HeinOnline pg. 24-87
Spurgeon (2017). Partial exemption from property taxes . Hein online pg. 15-77
