July 22, 2018

Colorado Court of Appeals: Child Care Center Not Eligible for Property Tax Exemptions

The Colorado Court of Appeals issued its opinion in Children’s Hospital Colorado v. Property Tax Administrator on Thursday, June 28, 2018.

Child Care Center—Property Tax—Exemption—Sliding Scale—Charitable Purpose.

Children’s Hospital Colorado (the Hospital) owns and operates a child care facility (the Center) on the University of Colorado Anschutz Medical School (CU Anschutz) campus. The Center provides child care to constituents of the Hospital and CU Anschutz as an employee benefit. The Center has a written tuition assistance policy that gives all families with an income below 150% of the federal poverty level a flat 10% discount. It also provides a flat 5% discount for siblings of enrolled children, regardless of the family’s income. The Hospital filed an application for exemption from property tax for the Center, which the Division of Property Tax considered under the charitable purposes exemption, C.R.S. § 39-3-108(1)(a), and an exemption for qualified child care centers, C.R.S. § 39-3-110. The Property Tax Administrator denied the application, and the Board of Assessment Appeals (BAA) upheld the order.

On appeal, the Hospital argued that the BAA exceeded its authority in interpreting C.R.S. § 39-3-110(1)(e) to conclude that the Center’s tuition discount policy did not qualify the Center for an exemption under that section. It argued that the BAA misinterpreted the rule regarding the definition of “charges on the basis of ability to pay.” C.R.S. § 39-3-110(1)(e) requires that the Center charge for its services based on the recipient’s ability to pay. Here, the family tuition reduction policy was based solely on whether a family’s income falls above or below the federal poverty line; it was not a scale that provides a range of tuition options, and it did not account for more than one factor in determining a family’s ability to pay. Similarly, the sibling discount is provided regardless of income or another factor indicating ability to pay. The BAA properly interpreted C.R.S. § 39-3-110(1)(e) to conclude that the Center’s tuition discount policy did not qualify as offering services “on the basis of ability to pay.”

The Hospital also contended that the BAA erred by finding that the Center is not operated for strictly charitable purposes. Here, the Center was operating for a business purpose—providing an employee benefit and recruitment tool—and not for a charitable purpose. Additionally, the Center did not benefit an indefinite number of persons and did not lessen the burdens of government. Therefore, it was not operated strictly for charitable purposes, as required by C.R.S. § 39-3-108(1).

The order was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Property Need Not be Used Exclusively for Religious Purposes for Tax Exemption

The Colorado Court of Appeals issued its opinion in Grand County Board of Commissioners v. Colorado Property Tax Administrator on Thursday, January 14, 2016.

This appeal after remand concerned a religious exemption from property taxes. The YMCA owns properties in Grand County and Larimer County for which it applied for property tax exemptions based on religious purposes and charitable use. The state property tax administrator determined the properties were being used for religious purposes and granted an exemption. The Grand and Larimer County Boards of County Commissioners appealed, contending the YMCA’s use was not sufficiently religious to justify an exemption. The Board of Assessment Appeals held a hearing and found the properties were not used exclusively for religious purposes, reversing the property tax administrator’s determination. The YMCA appealed to the court of appeals and a division reversed the Board’s findings, concluding the Board failed to apply the proper legal standard and setting forth the statutory and constitutional framework for religious exemptions.

On remand, the Board found the YMCA properties qualified for the exemption because the properties furthered the YMCA’s stated religious mission and purposes and the properties were not being used for private gain or corporate profit. The counties appealed, arguing that because the use of the properties was not inherently religious, they should not qualify for the exemption. The court of appeals disagreed, finding the Board applied the correct legal framework on remand.

The court of appeals affirmed the Board’s decision to grant the YMCA properties tax exemptions.