DocketNumber: Docket No. 19537-84X
Judges: Gerber,Simpson,Chabot,Nims,Whitaker,Korner,Shields,Hamblen,Cohen,Clapp,Swift,Wright,Parr,Wells,Jacobs,Williams
Filed Date: 1/6/1987
Status: Precedential
Modified Date: 11/14/2024
*1 P is a
C is a private real estate development with a population of more than 100,000 residents. It is a planned community which offers low, middle, and high income housing integrated with business, industrial, and recreational facilities. C is neither incorporated as a city nor is it a political subdivision of any State or county. P was incorporated as a not-for-profit civic organization to develop and operate utilities, systems, services, and facilities "for the common good and social welfare" of the people of C. C deeded about 10 percent of its 14,600 acres to P.
The facilities and services developed and operated by P include, among others, pathways (bicycle and pedestrian), parks, swimming*2 pools, neighborhood and community centers, tennis courts, golf courses, a zoo, ice rink, boat docks, and athletic clubs. P charges fees of varied amounts for the use of some of the facilities and services; with nonresidents of C paying higher rates. The lower rates paid by residents are subsidized through their additional payments based upon real property ownership within C. Upon dissolution of P, its assets, including the facilities, would either go to the county government within which C is located, or to another not-for-profit corporation to be used for the benefit of residents and property holders within C.
*2 This is an action for declaratory judgment pursuant to
*3 OPINION
Columbia Park & Recreation Association, Inc. (petitioner or association), was incorporated as a nonprofit organization under the laws of the State of Maryland on December 10, 1965. At the time its petition was filed, petitioner was located (had its "principal place of business") in Columbia, Maryland. Petitioner was created by the developers of Columbia, Howard Research & Development Corp. (the Development Corp.), *5 Columbia (Columbia or the development) is a large, private development of residential, commercial, and industrial real property located in Howard County, Maryland. *6 $ 600 million assessable real property. Approximately 20 percent of the 14,600 acres (2,920 acres) is designated for industrial purposes.
*4 The Development Corp. intended to and did develop Columbia as a community that offered a new living style: "a job opportunity for every residence; a dwelling for every job situation: houses and apartments in a wide variety of size and cost, and a chance to live, work, shop and play in the same place." Petitioner was created in an effort to achieve some of these goals. *7 exchange.
Petitioner's purposes as set forth in its articles of incorporation *8 and operated exclusively for the promotion of the common good and social welfare of the people of the community of Columbia and its environs * * *
* * * *
For the general purpose aforesaid, and limited to that purpose * * *, the corporation shall have the following
(1) To aid, promote, and provide for the establishment, advancement and perpetuation of any and all utilities, systems, services and facilities within Columbia which tend to promote the general welfare of its people with regard to health, safety, education, culture, recreation, comfort or convenience to the extent and in the manner deemed desirable by the Board of Directors;
(2) To exercise all the rights, powers and privileges, and to perform all of the duties and interests of the Corporation * * *
* * * *
(5) To do any and all lawful things and acts that the Corporation may from time to time, in its discretion, deem to be
[Emphasis supplied.]
*5
Petitioner owns and maintains pedestrian and bicycle pathways, parks and open-space areas, 15 neighborhood centers, 16 neighborhood pools, 4 village community centers, 2 tennis clubs, 10 tennis courts, 4 softball fields, a horse center, 2 athletic clubs, *11 The system operates eight buses on nine routes within Columbia. Howard County has been instrumental in securing both State and Federal funding for the system, which constituted 60 percent of ColumBus' 1982 *10 wheelchair-equipped buses to make the system more accessible.
The before- and after-school program has been available in Columbia's 14 elementary schools since 1972. This program is designed to provide care and supervision on a regular *6 basis for school-age children of parents residing in Columbia who either work, attend school or training programs, or have special needs. Children enrolled in the program must be registered, and fees must be paid 1 month in advance of attendance. The fee structure is based on operating a break-even service, including administrative overhead and an energy surcharge. *12 Families may qualify for a half-price fee for this service. Financing -- Assessments, Fees, and Debt Part of the cost of providing the desired facilities and services is financed through liens and assessments on all real property in Columbia. *14 The assessment system is petitioner's principal source of revenue. The *7 required annual assessment is embodied in the ownership of property in*13 Columbia. This right to ownership carries an inherent right to use the facilities and services offered by petitioner. The payment of the assessed fees is the equivalent of a quid pro quo for the owner's right to use the facilities and services petitioner offers. *15 *17 because petitioner's facilities and services are financially *8 backed by the assessment system. Columbia's lower income families who are unable to pay the user fees may work in public service jobs to earn the use of these facilities through petitioner's Earn-a-Membership Program. *16 as "public," free of charge. Even though petitioner has incurred substantial operating losses, the level of income generated by assessments and recreational facilities has steadily increased, *18 Petitioner has incurred substantial debt for construction and operation of its facilities. *9 incurred to finance the facilities and services offered. Petitioner's 1982 debt service was $ 4,680,000 or 37.7 percent of total expenses. All funds collected by petitioner must be applied as mandated by article IV of the "Deed, Agreement and Declaration of Covenants, Easements, Charges and Liens" (declaration), which provides, as follows: Section 4.01. [Columbia Park & Recreation Association] shall apply all funds received by it pursuant to these Restrictions, and all other funds and property received by it from any source * * * to the following, (i) the payment of all principal and interest, when due, on all loans borrowed by [Columbia Park & Recreation Association] * * *; (ii) the costs and expenses of [Columbia Park & Recreation Association]; and (iii) any or all projects, services, facilities, studies, programs, systems and properties relating to: parks, recreational facilities or services; *20 drainage systems; streets, roads, highways, walkways * * * and any and all other improvements, facilities and services that the Board shall find to be necessary, desirable or beneficial to the interest of the Property, Owners and Residents. [Emphasis supplied.] The following schedule reflects the revenues and expenditures for fiscal year 1983. This is representative of petitioner's revenue and expenditure pattern:
*10 Statement of revenues Percent of Source Amount total revenues Assessments $ 4,750,000 44.14 Package plans and recreational facilities 5,118,000 47.57 Community service programs 362,000 3.36 Transportation 263,000 2.44 Community centers 235,000 2.18 Land management 32,000 0.30 Totals 10,760,000 99.99
*21 Statement of expenditures Percent of Purpose Amount Package plan and recreational facilities $ 4,043,000 32.57 Debt service 4,680,000 37.70 Open-space maintenance 862,000 6.94 Community and neighborhood 841,000 6.77 Centers and village association general administration 631,000 5.08 Depreciation 540,000 4.35 Transportation 320,000 2.58 Community service programs (before- and after-school care, nursery schools, etc.) 297,000 2.39 Operating reserve 200,000 1.61 Totals 12,414,000 99.99
"
Petitioner's operations are controlled by a democratic decision-making process. Residents of Columbia elect 16 representatives annually who make up petitioner's board of directors (board). *22 The board is responsible for formulating policy as well as budget and financial matters. A number of voluntary resident advisory committees *11 on issues that involve formulating the budget or defining goals and policies. The board meets biweekly to discuss policy and budget matters. Additionally, it operates as a forum for the residents to express their concerns. Residents and village chairpersons are invited to speak out on issues of concern at these meetings. The board does not participate in petitioner's day-to-day operation. This is managed by a paid staff of 100 full-time and 500 part-time employees. The staff is managed by petitioner's officers appointed by the board.
Petitioner's articles of incorporation provide that "no member, director, or officer of the corporation, or any private person shall be entitled to share in the distribution of the corporate assets upon dissolution of the corporation or otherwise." Article five further provides:
(2) In the event of the liquidation or winding up of the Corporation (whether voluntary or involuntary) all of the assets of the Corporation (after payment of debts) shall be transferred to and contributed to and shall vest in (a) Howard County, Maryland, a body politic and corporate and a political subdivision of the State of Maryland, or the agency, subdivision or instrumentality of said County appropriate to take title to each of such assets, or (b) any of the Associations or other non-profit civic organizations which are devoted to the social welfare of Columbia or a part thereof as the Board of Directors shall determine.
Moreover, the declaration provides that petitioner shall have the power to assign its rights created under the declaration to any successor nonprofit membership corporation, and upon such assignment the successor corporation*24 shall have all the rights and be subject to all the duties of petitioner. It further provides:
If for any reason [Columbia Park & Recreation Association] shall cease to exist without having first assigned its rights hereunder to a Successor Corporation, the covenants, easements, charges and liens imposed hereunder shall nevertheless continue and any Owner may petition a court of competent jurisdiction to have a trustee appointed for the purpose of organizing a non-profit membership corporation and assigning the rights of [Columbia Park & Recreation Association] hereunder with the same *12 force and effect, and subject to the same conditions, as provided in this Section 7.04 with respect to an assignment and delegation by [Columbia Park & Recreation Association] to a Successor Corporation.
Petitioner sought exemption from Federal income tax under
You are neither organized nor operated exclusively for exempt purposes as required by
Respondent's*26 final adverse ruling has no effect upon the association's current
Petitioner's central motivation in seeking
*27
The requirement that the organization be "organized and operated exclusively for an exempt purpose" involves two mutually exclusive tests: (1) The organizational test and (2) the operational test, both of which must be satisfied. See
An organization's assets will be considered dedicated to an exempt purpose, for example, if, upon dissolution, such assets would, by reason of a provision in the organization's articles or by operation of law, be distributed for one or more exempt purposes, or to the Federal government, or to a State or local government, for a public purpose, or would be distributed by a court to another organization to be used in such manner as in the judgment of the court will best accomplish the general purposes for which the dissolved organization was organized. However, an organization does not meet the organizational test if its articles or the law of the State in which it was created provide that its assets would, upon dissolution, be distributed to its members or shareholders.
Respondent argues that petitioner fails the organizational test, in part, because its articles do not limit its purpose to an exempt purpose within the meaning of
Respondent contends that petitioner was created, as set forth in its articles, for the purpose of providing substantial recreational facilities and community services to its property owner/members. This, respondent argues, is not an exempt purpose within the meaning of
Petitioner takes the position that because it qualifies as a social welfare organization within the meaning of *16 "social welfare" status. Petitioner has failed in this regard. *33 "charitable" is used in Petitioner's interpretation of The purpose for which an organization was created, as used in the organizational test, refers to the real substance and intent of the organization. See Petitioner's articles provide that petitioner was created for the general purpose of promoting the common good and social welfare of the people of Columbia, in addition to the following specific purposes: (1) To aid, promote, and provide for the establishment, advancement and perpetuation of any and all utilities, systems, services and facilities within Columbia which tend to promote the general welfare of its people with regard to health, safety, education, culture, (2) To exercise all the rights, powers and privileges and [Emphasis supplied.] We find these purposes to be substantially nonexempt within the meaning of Petitioner contends, that because of its size and diversity, its purpose must be understood from the benefit it provides through its overall operations. We have carefully considered the scope of petitioner's operations and agree that the magnitude of its operations cannot be ignored. The estimated 110,000 residents of Columbia *36 social, and racial classes. They are served by petitioner which integrates these different classes while nourishing human growth. This, however, is incidental to petitioner's primary purpose, which is to promote the common good and social welfare of the residents of Columbia. Petitioner is an integral part of the development and was created to serve Columbia, its residents, and property owners. As petitioner's articles demonstrate, Columbia and its residents are the justification for petitioner's existence. Accordingly, any benefit to the community as a whole is merely incidental and relatively insubstantial. Columbia approximates the size of Manhattan, and has the second largest population in the State of Maryland. It is a new experiment in city planning where its developers sought to balance social goals and private profit. Columbia, despite its size, has remained a private development designed to offer *18 its residents a new living style: a job opportunity for every resident; a dwelling for every job situation; houses and apartments in a wide variety of sizes and cost; and a chance to live, work, shop, and play in the same place. This new lifestyle could not be offered*37 in its entirety without the creation of petitioner or a similar organization. Indeed, petitioner was organized by the developers of Columbia as an integral part of the development, and it so functions. Accordingly, we find that petitioner was created as the component necessary for molding the social and physical environment desired for the development. We emphasize that the term "charity," from a legal perspective, is comprised of four principal divisions: (1) Relief of poverty; (2) advancement of education; (3) advancement of religion; and (4) other purposes (not falling within any of the preceding divisions) that are beneficial to the public or the community at large. See Petitioner contends that the size of the development it benefits is so large that it qualifies under the "catch all" category of "charitable," i.e., a benefit to the public or the community at large. In essence, petitioner argues that its size causes it to be inherently charitable. We find this argument unpersuasive. Petitioner benefits what is merely an aggregation of homeowners and tenants bound together in a structural unit formed as an integral part of a plan for the development of real estate. We do not perceive such a group of people as the "community at large" within the "charitable" context because it lacks a sufficient public element. To hold otherwise would negate the requirement that petitioner must serve a public rather than a private interest. Columbia was planned as a new town and is referred to as a city. *40 We agree that Columbia resembles a city in both *19 geographic size and population and that it operates, to a large extent, like a city. Nevertheless, Columbia has remained*39 nothing more than a private development, albeit a massive one. Were petitioner operating primarily for a public rather than private interest, the people financing its operation would not have a right, based upon property ownership, to receive the benefits it offers. *41 Another important factor which serves to undercut petitioner's position is the fact that petitioner's method of financing is dissimilar from typical public organizations. Petitioner does not solicit or receive voluntary contributions from the public. Rather, its source of revenue is from the members whom it serves. Petitioner thus lacks this normal *20 trait of a *43 We note that Columbia may be able to avail itself of the very Respondent argues that petitioner's assets are not permanently dedicated to an exempt purpose and that *46 it therefore fails the organizational test. Respondent contends that petitioner's articles provide for the distribution of the assets on dissolution for a nonexempt purpose within the meaning of Although we agree with petitioner that the distribution methods enumerated in *48 Alternatively, petitioner may meet the "distribution of assets on dissolution" requirement, if by operation of law, petitioner's assets will be distributed by a "qualified" method. See Relevant Maryland law provides: Whenever any charitable or religious corporation is dissolved or about to be dissolved, or for any reason it is impracticable or inexpedient to continue the corporation activities, and all or any part of the corporate property is not needed for the payment of the corporate debts, a court of equity shall have power to determine by its decree the disposition of said property; and, in such case, insofar as any donors of property to the corporation, or their successors in interest, may not be entitled to such property as a result of the cessation of the corporate activities, or may fail to assert any claim thereto, after having received notice of the substance and object of the bill or petition either by personal summons or by such publication as the court shall direct, the court shall, *49 so far as possible, direct or provide for the transfer of such property to any other corporation or association of this or another state, having a similar or analogous character or purpose, or in some way associated or connected with the corporation to which the property has previously belonged, the intent of this section being that courts of equity may in such cases exercise the judicial power of cy pres, in order to carry out, in spite of the change of circumstances, the general purpose of the donor or donors of the property as regards the application and utilization of the gift or gifts. [ Consequently, for petitioner to qualify through the operation of Maryland law it must first qualify as a charitable organization within the meaning of Petitioner argues alternatively that should this Court find that petitioner's articles do not permanently dedicate its assets to an exempt purpose, we should not sustain respondent's adverse determination but, rather, we should enter a decision in petitioner's favor conditioned upon a proposed amendment of its articles. We find no *50 authority upon which to issue a conditional ruling, and petitioner has *24 not provided any authority in support of that result. Moreover, this Court has held that failure to meet the "distribution of assets on dissolution" requirement of In further support of his adverse determination, respondent argues that petitioner fails the operational test because it engages primarily in activities that further a nonexempt purpose by substantially serving the private interest of its owner/members. Petitioner maintains that any benefit resulting to the residents of Columbia is merely incidental to the benefit to the community as a whole. We agree with respondent. In order to satisfy the operational test, an organization must engage extensively in activities which accomplish one or more of the exempt purposes specified in *25 The user fees and the assessments each generate an estimated 48 percent of petitioner's total revenues. *52 Approximately 33 percent of petitioner's expenditures is spent on maintaining and managing the recreational facilities, with an additional 38 percent expended to service the debt incurred primarily for the construction of these facilities. In contrast, various nonrecreational activities represent an approximate percentage of total revenue, as follows: Community service programs -- 3 percent; transportation *53 and property owners of Columbia. We find it difficult to accept petitioner's contention that the residents and property owners do not have a personal interest in petitioner and the "new life style" petitioner was *26 organized to provide. Petitioner's operations are controlled by the residents and property owners of Columbia. In addition, residents' advisory committees participate in formulating petitioner's budget and defining its goals and policies. Moreover, a substantial number of petitioner's activities are solely for the purpose of providing the "new life style" promised to the residents of the development. We, therefore, find that the residents and property owners of Columbia are the intended beneficiaries of petitioner's facilities and services and that they have a personal interest in petitioner's activities. The retail, office, and commercial core of the development was integrated into the master plan to provide the residents with the opportunity to "work and shop" in the same place. Petitioner was incorporated to provide all the necessary facilities that would enable the residents*55 to "play" in the same place, thus completing the new living style that was intended by the developers. Indeed, petitioner engages substantially in activities which provide for the comfort and convenience of the residents of Columbia to "play" in the same community in which they live, shop, and work. To hold otherwise would ignore the contents of the administrative record. Not only is petitioner operated by the residents and property owners of the development but it is also financed by them in return for the benefits petitioner makes available to them. About 96 percent of petitioner's revenues is supplied by the residents and property owners of Columbia from property assessments or fees paid for admission to facilities or programs. In exchange, petitioner constructed and maintains facilities valued at approximately $ 20 million to be used at all times for the benefit and common good of the residents of this commercial development. We cannot be oblivious to the fact that residents, property owners, and employees of businesses located in Columbia must pay an admission fee to the facilities. We accord this little weight, however, because resident fees are lower than nonresident *56 fees. The residents are considered to have paid the remaining portion through the assessment levied against their property. *27 Petitioner argues that the activities in which it engages have been held to be charitable in nature, and therefore it engages substantially in activities which qualify under Petitioner, in serving Columbia, does produce socially desirable results. Nonetheless, the scope of our consideration does not include a determination of the success or effectiveness of petitioner or Development, but to decide whether petitioner should be afforded the statutory privileges of
1. All statutory references are to the Internal Revenue Code of 1954 as amended and in effect for the year in issue, unless otherwise indicated.↩
2.
3. Declaratory judgment prerequisites have been satisfied in this case: Petitioner is the organization whose qualification is at issue,
4. All Rule references are to the Tax Court Rules of Practice and Procedure.↩
5. Howard Research & Development Corp. is a private, for-profit development corporation, which is jointly owned by Connecticut General Life Insurance Co. and Community Research & Development, Inc. (also known as the Rouse Co.). James W. Rouse of the Rouse Co. was the founder of Columbia.↩
6. From the outset, the developers set three fundamental goals for Columbia: (1) To create a social and physical environment which would work for people, nourishing human growth; (2) to preserve and enhance the qualities of the land as we build; and (3) as a venture of private capital, to make a profit in the development and sale of land.↩
7. The "Deed, Agreement and Declaration of Covenants, Easements, Charges and Liens" provides in part:
"[Howard Research & Development Corp.] has caused [Columbia Park & Recreation Association] to be formed for the purpose of providing a non-profit civic organization to serve as the representative of the Owners and Residents with respect to: the assessment, collection and application of all charges imposed hereunder; the enforcement of all covenants contained herein and all liens created hereby; and the creation, operation, management and maintenance of the facilities and services * * *."↩
8. As amended Oct. 15, 1982.↩
9. One athletic club offers squash and racquetball courts, weightlifting equipment, exercise rooms, sauna and whirlpool, and a track. The other athletic club offers a racquetball clubhouse with 16 courts, a restaurant, and a Nautilus center.↩
10. The center is operated by a private educational institution and offers classes in painting, sculpture, photography, and other visual arts.↩
11. As of 1982, the association's total investment in recreational and community facilities and open-space areas was valued at approximately $ 20 million.↩
12. In 1980, the Department of Human Resources of the State of Maryland formally requested that the association establish a day care system for Howard County. Accordingly, the association contracted to provide for all day care services for the county at cost.↩
13. This transportation system serves Columbia and is called the ColumBus system. It is one of four primary types of public transportation serving Howard County. The fares charged are as follows:
Adult | $ 0.75 | Applies Monday through Friday, 9 a.m. through 2 p.m., and all day on Saturdays. | |
Senior citizen (with ID) | 0.60 | Senior citizen (with ID) | $ 0.35 |
Child (age 6 through 11) | 0.60 | Handicapped (with ID) | 0.35 |
Child (under age 6) | No charge |
14. The ColumBus system operates on the association's fiscal year ending Apr. 30.↩
15. The 1982 fiscal year transit grant was $ 160,000, increased from $ 148,000 in 1981.↩
16. Tuition includes snacks, insurance, and the school's energy surcharge.
The regular rate for children attending on a 5-days-a-week basis varies from $ 51 per month to $ 114, depending on the combination of the plan chosen; for example: the before-school program, the after-school program, or a combination of the two.
Session rates of $ 23 per month are also available for children attending less than 5 days a week.↩
17. The care services purchased at half price are purchased from the Maryland Department of Social Services. Approximately 13 families are approved for one-half price access to before- and after-school care each year. Access to half-price care services is determined by family size and total gross annual household income as provided in the Federal Government sec. 8 guidelines.↩
18. The "Deed, Agreement and Declaration of Covenants, Easements, Charges and Liens," which was adopted Dec. 13, 1966, provides:
"[Howard Research & Development Corp.] desires to subject the property (whether owned by it or by others) to the covenants, easements, charges and liens imposed hereby in order (i) to provide funds for use as specified * * *"↩
19. "Assessed valuation" is the highest valuation placed on the property for county and State real estate tax purposes.↩
20. The association is limited by the terms of the bond indentures with respect to the amount of additional debt it may issue.↩
21. For the years 1976 through 1982, operating deficits were as follows:
FISCAL YEARS | |||||||
($ 000's) | |||||||
1976 | 1977 | 1978 | 1979 | 1980 | 1981 | 1982 | |
Revenues: | $ 4,514 | $ 5,053 | $ 5,789 | $ 6,429 | $ 7,777 | $ 9,390 | $ 10,681 |
Expenses: | 7,229 | 7,266 | 7,346 | 8,193 | 9,220 | 10,696 | 11,854 |
Net loss: | 2,715 | 2,213 | 1,557 | 1,764 | 1,443 | 1,306 | 1,173 |
22. The "Deed, Agreement and Declaration of Covenants, Easements, Charges and Liens" provides, in part, as follows:
Section 5.01. * * *
Every Owner,
Section 5.02. [Columbia Park & Recreation Association] shall have the right to suspend the right of any Owner (and the privilege of each Resident claiming through such Owner) for any period during which the Annual Charge assessed under Article II hereof remains overdue and unpaid * * *
[Emphasis supplied.]↩
23. User fees represent the second largest source of income (assessment revenue is the largest) for the association. Revenue from recreation facilities rose from $ 2,844,000 in 1978 to $ 5,595,000 in 1982.↩
24. Members may purchase individual admission tickets for each time a recreational facility is used or may purchase a package plan which entitles the holder to use most of the recreational facilities. In 1982 approximately 23,000 residents held a package plan. No information was included in the administrative record regarding the number of nonresident package plans held.↩
25. The theory for this fee distinction was explained in a letter addressed to the Office of the Assistant Commissioner, dated Sept. 9, 1983, as follows:
"residents of Columbia already contribute to the income-transfer or subsidy effect of [Columbia Park & Recreation Association] through the annual assessment * * * it is thus reasonable to impose slightly higher user fees upon nonresidents who enjoy facilities to which they have not otherwise contributed."↩
26. Approximately 50 families earn their membership to the recreational facilities each year. Low and moderate income families were those families of four that earned one-half the average Columbia household income which had increased by 31 percent to $ 37,880 since 1978. For ease of administration, the Federal Government's sec. 8 income guidelines are currently used.↩
27. The Federal Government's sec. 8 income guidelines are used for this purpose as well. Approximately 190 families pay one-half price for facility membership each year.↩
28. The following schedule reflects the growth in assessment and package plan revenues over the past 4 years:
1978 | 1979 | 1980 | 1981 | |
Assessments | $ 2,867,000 | $ 3,245,000 | $ 3,775,000 | $ 4,329,000 |
Revenues from | ||||
Operations include recreational facilities, land management, and community services with approximately 85 percent of the revenue attributable to recreational facilities. | 2,844,000 | 3,010,000 | 3,680,000 | 4,669,000 |
Interest income | 78,000 | 174,000 | 278,000 | 312,000 |
Gain on sale of facilities | ||||
and equipment | 0 | 0 | 44,000 | 2,000 |
Total revenues | 5,789,000 | 6,429,000 | 7,777,000 | 9,312,000 |
Percentage of Total | ||||
Revenues: | ||||
Assessments: | 50% | 50% | 49% | 46% |
Recreational facilities: | 49% | 47% | 47% | 50% |
29. The total outstanding debt of association for the years shown was as follows:
1979 | 1980 | 1981 | 1982 | |
Long-term debt due in 1 year: | $ 226,000 | $ 355,000 | $ 457,000 | $ 582,000 |
Long-term debt due after 1 year: | 41,526,000 | 41,572,000 | 44,034,000 | 45,647,000 |
Total debt | 41,752,000 | 41,927,000 | 44,491,000 | 46,229,000 |
30. This total debt included $ 1,840,000 ($ 3,769,000 in 1981) subordinated debt payable to Connecticut General Life Insurance Co. and Community Research & Development, Inc. All other subordinated notes payable are guaranteed by the Development Corp.↩
31. In 1983, expenses exceeded revenues by $ 1,654,000.↩
32. In the initial years of Columbia, prior to March 1982, the Development Corp. had a right to designate seven of petitioner's directors. Accordingly, the Development Corp. held a voting majority on the association's board (seven of the 11.25 total votes). The remaining 4.25 votes were distributed to the nine directors elected by the residents of Columbia.↩
33. About five resident groups including village boards and various resident advisory committees assist the board. The village boards are the governing element of village associations. They are nonprofit civic organizations organized to promote the common interest of the village residents. Their creation is authorized and approved by petitioner in furtherance of its purpose. The funding and legal agreements between petitioner and the village associations are of three types:
(1) Grants to insure the viability of the associations by providing opportunities for the residents to exercise their civic responsibilities and to foster participation in the decision making process, including covenant enforcement, at the local level.
(2) Contracts for the management of certain facilities of the association. Each contract includes an agreement to allocate the use of public space in a manner that is consistent with the
(3) Contracts for the implementation of the association's community service goals, including (i) informing the residents on a city-wide basis of available services and programs; (ii) welcoming newcomers to Columbia and assisting their integration into the community life; and (iii) offering programming which fosters community building and meets the interests and needs of all age groups.↩
34. The envelope in which the application was mailed shows two postmarks, thus creating some confusion as to the actual date of mailing. Oct. 22, 1982, the latter of the two dates indicated, is used.↩
35.
36. The specified purposes include religious, charitable, scientific, testing for public safety, literary, educational, or prevention of cruelty to children or animals.↩
37.
38.
An organization is an "action" organization if a substantial part of its activities is attempting to influence legislation by propaganda or otherwise. For this purpose, an organization will be regarded as attempting to influence legislation if the organization:
(a) Contacts, or urges the public to contact, members of a legislative body for the purpose of proposing, supporting, or opposing legislation; or
(b) Advocates the adoption or rejection of legislation.
The term "legislation", as used in this subdivision, includes action by the Congress, by any State legislature, by any local council or similar governing body, or by the public in a referendum, initiative, constitutional amendment, or similar procedure. * * *↩
39. The projected "full occupancy" population of Columbia is greater than the population of any city in Maryland except Baltimore.↩
40. Columbia and its planning process was fully described in the Architects Year Book under the article entitled, "The Columbia Process: The Potential for New Towns," written by Morton Hoppenfeld. Mr. Hoppenfeld refers to being involved in the process of building a new city called Columbia and continues to refer to Columbia as a city throughout the article. Columbia was indeed planned and developed as a city. Despite its similarity to a city in size and operation, Columbia has not sought to be incorporated as a city.↩
41. We note that nothing has changed with respect to the nature of ownership since the initial private development of Columbia and the sale of Columbia as such, except for the increased number of homes and rental units completed and occupied and the pursuance of the goal of presenting Columbia as the new living experience it was intended to be.↩
42. The declaration provides that every property owner,
43. Deduction under sec. 170 of amounts contributed to a
44. Pathways, parks, open-space areas, swim complex, one golf course, tennis courts, community festivals, and the ColumBus system.↩
45. The criteria for determining whether an organization's activities lessen the burdens of government are: (1) Whether the governmental unit considers the organization's activities to be its burden; and (2) whether these activities actually lessen the burden of government. See
"The fact that an organization is engaged in an activity that is sometimes undertaken by the government is insufficient to establish a burden of government. Similarly, the fact that the government or an official of the government expresses approval of an organization and its activities is also not sufficient to establish that the organization is lessening the burdens of government. * * *"↩
46. Petitioner seeks to meet its burden of proof in this respect by contending that because it expends funds for transportation services, social services, public parks, paths and recreational facilities and preservation of open spaces, and because the major expenditure items in its budget are similar to those in the budget of a municipal governing body serving a comparable community, it directly lessens the burdens of government. This, however, does not establish that the State of Maryland or Howard County accepts any of these activities as their responsibility. On the contrary, in contributing to the maintenance of the transportation system and paths outside the boundaries of Columbia, Howard County has made it clear that it expects Columbia to bear its share of the responsibility.↩
47. Petitioner advances this argument in its effort to establish its nongovernmental status for purposes of enforcing and collecting the assessment revenue.↩
48. The following examples are given as acceptable methods of distribution: (1) For one or more exempt purposes; (2) to a state or local government for a public purpose; and (3) by a court to another organization to be used in such manner as in the judgment of the court will best accomplish the general purposes for which the dissolved organization was organized.
49. See note 28
50. Refers to the ColumBus transportation system.↩
51. Includes before- and after-school care, child care, etc.↩
52. In expending funds for the benefit of the property, owners, and residents of Columbia, the board of directors is free to determine what is
53. Petitioner incurred debt primarily to construct the facilities for the benefit of the residents of Columbia. Furthermore, because petitioner was organized to serve the Columbia residents, the operational costs are considered to be expended for the benefit of such residents.↩
54. Petitioner cites numerous revenue rulings and some case law in support of this proposition.↩
55.
56.
57.
58.
59.
60.
61.
62.
63.
64.
65.
66.
Mellon Bank, NA v. United States ( 1984 )
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