THE WILLIAM W. BACKUS HOSPITAL v. TOWN OF STONINGTON, SC 20805

Judicial District of New Britain

 

Administrative Appeal; Tax; Hospitals; Whether Personal Property Used by Hospital in Providing Outpatient Services at Leased Satellite Location Is Exempt from Taxation by Municipality. The plaintiff is a licensed hospital and registered public charity and is exempt from federal taxation pursuant to 26 U.S.C. 501 (c) (3) as a corporation "organized and operated exclusively for . . . charitable . . . purposes." The plaintiff's principal location is in Norwich, but it leases real property (premises) in the town of Stonington (town), at which it provides outpatient rehabilitative services. In 2020, the town assessor denied the plaintiff a tax exemption for certain personal property that it owns and uses at the premises in connection with its provision of rehabilitative services. The town's assessment appeals board upheld this decision, and the plaintiff appealed to the Superior Court. The plaintiff later amended its complaint to also challenge the taxation of its personal property in 2021. The plaintiff claimed that the personal property was exempt from taxation under General Statutes 12-81 (7) and/or 12-81 (16). Section 12-81 (7) generally exempts from taxation real and personal property owned by a tax-exempt charitable organization and used exclusively for charitable purposes. Section 12-81 (16) generally exempts from taxation real and personal property owned by a "hospital society or corporation." The plaintiff subsequently moved for summary judgment, in response to which the town argued that the plaintiff did not satisfy the requirements for either exemption and that, even if it did, the plaintiff's personal property was taxable pursuant to General Statutes 12-66a, which provides in relevant part that a municipality may tax real property "acquired" by a "health system" and the personal property used at such real property. The trial court rejected the town's arguments and rendered summary judgment in favor of the plaintiff. The town appealed the trial court's judgment to the Appellate Court, and the Supreme Court then transferred the appeal to itself. On appeal, the town first claims that the trial court erred in concluding that the plaintiff's personal property was exempt from taxation under 12-81 (7). The town argues that there was insufficient evidence to prove that the plaintiff is not entirely self-supporting, as required by our case law to establish that an entity is organized exclusively for charitable purposes. The town also argues that the personal property at issue is not used exclusively for charitable purposes because the plaintiff uses it to provide rehabilitative services to both non-paying and paying patients. The town next claims that the trial court improperly determined that the plaintiff constitutes a "hospital" for purposes of 12-81 (16). Relying on a definition provided in General Statutes 19a-490, the town argues that the plaintiff cannot be considered a hospital because it does not offer "lodging" in conjunction with the outpatient rehabilitative services that it provides at the premises. Lastly, the town claims that the trial court erred in determining that the plaintiff had not "acquired" the premises and that, therefore, its personal property at the premises was not taxable under 12-66a. The town argues that the court improperly construed "acquire" to mean "purchase" and that the term "acquire" has a more expansive meaning in the context of 12-66a.