Opinion

Plaintiff brought this action against Los Angeles County to recover property taxes on two lots for the 1964-1965 tax year paid under protest. It recovered judgment returning the taxes paid on both lots. The county appeals from this judgment.

The issue presented at the trial and on this appeal is whether these two lots were used exclusively for charitable purposes on the tax lien date (the first Monday in March 1964). If so, then the lots qualify for property tax exemption under Revenue and Taxation Code section 214 and California Constitution article XIII, section 1c.

Although this case involves the taxation of only two improved residential lots, it was necessary for the trial court to examine the entire operation of plaintiff in determining whether its use of this property was exclusively charitable. There is no dispute that plaintiff was a nonprofit corporation organized in such a way that its property would be exempt under section 214 if used exclusively for a charitable purpose. There is no substantial conflict in the evidence as to what plaintiff did. Its eligibility for tax exemption is determined by applying the law to these facts.

Plaintiff was incorporated in 1960. Its immediate purpose was to provide low-cost rental housing for persons over the age of 60. On September 12, 1960, plaintiff purchased, under contract of sale, 81 lots of tract 19421 in Lancaster. Sixty-one lots were improved with duplexes and 20 lots with four-unit buildings. This housing had been constructed for workers in an aircraft plant, but the plant had ceased operations and there was little demand for residential property in that area. The builder sold the tract to plaintiff at a price of $1,570,371, with a down payment of only one dollar, and monthly payments starting at $1,000 and gradually increasing.

In 1963 plaintiff purchased 141 single family residences in tract 21659 in Palmdale. The seller was a lender who had taken the property from the original developer by foreclosure. The price was $1,232,000, with “practically no money put down,” and monthly payments of $6,500. The 141 homes were scattered throughout the tract.

All of this property was lost to plaintiff in 1966 when, because of inability to keep up payments, it quitclaimed to the former owners.

Plaintiff’s method of operation was described by the trial court in its findings as follows:

“9. On the first Monday in March, 1964 (the 1964 assessment and tax date), the 202 apartment units in Lancaster were used as follows:

The record shows plaintiff did not equip the houses and apartments with any of the special features sometimes placed in housing especially built for the aged.

California has recognized that to provide the special care and attention required by aged persons may be a charitable activity, even though the persons served are able to make and do make substantial payment for the services rendered. (See Fredericka Home v. County of San Diego (1950) 35 Cal.2d 789 [ 221 P.2d 68 ]; Fifield Manor v. County of Los Angeles (1961) 188 Cal.App.2d 1 [ 10 Cal.Rptr. 242 ].) In the Fredericka case the court said at pages 792-793: “The concept of charity is not confined to the relief of the needy and destitute, for ‘aged people require care and attention apart from financial assistance, and the supply of this care and attention is as much a charitable and benevolent purpose as the relief of their financial wants.’ ... In short, as the word ‘charity’ is commonly understood in modern usage, it does not refer only to aid to the poor and destitute and exclude all humanitarian activities, though rendered at cost or less, which are maintained to care for the physical and mental well-being of the recipients, and which make it less likely that such recipients will become burdens on society.”

The Fredericka Home had received as gifts land and buildings and a $200,000 endowment. Applicants were admitted under life care contracts, whereby each paid an admission fee, the exact amount of which depended upon life expectancy and the applicant’s choice of accommodations. About 65 percent of the operating expense was met by admission fees and the other 35 percent was covered by the endowment and gifts from other persons. In explaining why Fredericka Home was a charitable institution the court said at pages 794-795: “There can be no doubt that arrangements for such life care contracts fill a social purpose as well as a need of the applicants for admission. Approaching those years when the physical and mental faculties normally decline over an indefinite period of time and being faced with the prospect of expending increased but indeterminable amounts for care during that period, the applicants, by means of such life care contracts, avoid the need of living in penury occasioned by the haunting fear that they will exhaust their meagre resources and become public charges.”

In Fifield Manor, supra, the record also showed a home providing life care contracts. The applicant’s payment “was designedly fixed at a sum less than actual cost. . . . No worthy person was to be denied or was in fact denied admission because of inability to make payment of all or part of an admission fee; the entrance fees of such persons were raised by seeking donations from members and friends of the First Congregational Church and of the Fifield Homes; in some instances entrance fees were waived.” ( 188 Cal.App.2d 1, 5 .)

The court there held that the home served a charitable purpose even though some of the residents might be considered wealthy.

Nothing in those cases supports tax exemption for plaintiff here. Nor has plaintiff cited any precedent anywhere for treating any activity comparable to plaintiff’s as charitable. Under the plan of operation established by plaintiff it was necessary for the tenants to pay the full cost of the housing provided. Plaintiff had no other resources. If the plan was to succeed the rents had to pay the cost of operation and amortize the purchase price of the land and buildings. As the trial court found, the rents charged were the market price except that in the Lancaster apartments plaintiff passed on to the tenants the hoped-for saving in property taxes.

The fact that some tenants were on some occasions allowed to pay their rents by performing labor is not charity. The fact that tenants were not promptly evicted when they defaulted shows only that plaintiff was not as strict and harsh as some landlords might have been. There was no plan for remitting the rents of those in financial distress and no agreement to do so. On the contrary the contemplation was that rents would be paid in accordance with the terms of the leases. Plaintiff provided no security against the elderly person’s hazard of outliving his resources.

Plaintiff contends that the services it afforded the elderly, in addition to housing, entitled it to be treated as charitable, within the meaning of the Fifield case.

The only services which the trial court found were furnished by plaintiff itself were the recreational, social, religious and cultural activities conducted ai and through the community centers which were under the direction of a Lutheran deaconess. These centers were for the benefit of the community as a whole. Plaintiff applied for and received tax exemption for the community centers upon the representation that each was a “meeting place for Senior Citizens in the entire Antelope Valley Area.” The fact that plaintiff provided this kind of community service nearby did not make its business of renting homes charitable.

Plaintiff did arrange with local physicians to provide medical services in emergencies, and for a hospital in Pacoima (approximately 50 miles away) to make itself available. These services were provided at the expense of the tenant and, so far as the record shows, were no different from the services the physicians and hospital were prepared to furnish to other groups of persons. If the physician made any reduction in his charges, that was his own charitable act.

The trial court found “Small discounts were made available through local merchants,” but there is no showing that this was other than an effort by the merchants to stimulate trade. There is no evidence that plaintiff made any substantial contribution of services or otherwise to obtain this benefit for its tenants.

When plaintiff’s operation is viewed as a whole, .the service it actually rendered was to assemble a congenial group of persons over 60 years of age in an area where low-rental housing was available, in the vicinity of a Lutheran community center. This service, and the activities incidental to it, could just as well have been offered to adults of any age group, or to persons of all ages. This is not what is meant in the cases which talk about the charitable purpose of providing the services especially required by the elderly.

The trial court’s memorandum of decision expressed the view that the 1968 amendment to Revenue and Taxation Code section 214, and the legislative declaration in the bill which made the amendment, indicated a public policy to exempt from property taxation all nonprofit corporations which provided low-cost rentals for elderly and handicapped families. The new language in section 214 declared that property financed under title 12, United States Code section 1701q, should be deemed within the charitable exemption. Section 1701q authorizes long-term low-interest federal loans of 90 or 100 percent of the cost of development of rental housing for elderly and handicapped families. That statute makes it possible to develop housing which might not be built at all with private financing, and which is subsidized by the federal treasury to the extent that the loan terms are more generous than the cost of private financing. That saving of cosí can be passed along to the tenants in the form of lower rents. Plaintiff received no such federal subsidy, and had no such saving to pass along to its tenants, who were expected to pay rent sufficient to cover the full market cost of purchasing and operating the rental units.

The 1968 amendment to Revenue and Taxation Code section 214 did not say that all low-rental housing provided by nonprofit corporations for the elderly should be tax exempt. The amendment referred specifically to housing built under section 1701q of title 12 of the United States Code. It carried no implication of the kind assumed by the trial court.

The judgment is reversed with instructions to enter judgment for defendant.

Kingsley, J., and Dunn, J., concurred.

A petition for a rehearing was denied November 12, 1970, and respondent’s petition for a hearing by the Supreme Court was denied December 17, 1970.

California Constitution article XIII, section 1c, provides: “In addition to such exemptions as are now provided in this Constitution, the Legislature may exempt from taxation all or any portion of property used exclusively for religious, hospital or charitable purposes and owned by community chests, funds, foundations or corporations organized and operated for religious, hospital or charitable purposes, not conducted for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.” Revenue and Taxation Code section 214 provides: “Property used exclusively for religious, hospital, scientific, or charitable purposes owned and operated by community chests, funds, foundations or corporations organized and operated for religious, hospital, scientific, or charitable purposes is exempt from taxation. . . .” The new language added in 1968 is as follows: “Property used exclusively for housing and related facilities for elderly or handicapped families and financed by the federal government pursuant to Section 202 of Public Law 86-372 (12 U.S.C. 1701q), as amended, and owned and operated by religious, hospital, scientific or charitable funds, foundations or corporations meeting all of the requirements of this section shall be deemed to be within the exemption provided for in Section 1c of Article XIII of the Constitution of the State of California and this section.” Stats. 1968, ch. 645, § 4: “The Legislature finds and declares that there has been some misconception concerning the scope of the welfare exemption from property taxation among tax officials. The overwhelming majority of assessors and the State Board of Equalization have ruled that property financed by the federal government pursuant to Section 1701q of Title 12 of the United States Code, which is owned and operated by nonprofit corporations to provide housing and related facilities for elderly or handicapped families, comes within the welfare exemption from property taxation. However, some assessors have not so determined, and this has caused inequality in that this property is assessed in some parts of the state and not in others. “If obligated to pay taxes on this property, the purpose for which these nonprofit corporations have been established—to provide low-cost rentals to elderly and handicapped families—will be defeated, as the amount of tax added to the rent payments will make such rental units too expensive for the families which need them most. This act will remedy the situation by, in effect, making clear that the Legislature intends that the welfare exemption from property taxation shall apply to such property. In so doing, the public policy of the state as expressed in Section lc of Article XIII of the Constitution will be fulfilled and the state as a whole will benefit.”