Before Wagner, Chief Judge, and Schwelb, Associate Judge, and
King, Senior Judge.*fn1
The opinion of the court was delivered by: Wagner, Chief Judge
Appeal from the Superior Court of the District of Columbia (Hon. Kaye K. Christian, Trial Judge)
Dissenting opinion by Senior Judge King at p. .
Appellants, The Sisters of the Good Shepherd of the City of Washington, D.C. (Good Shepherd) and the Selma M. Levine School of Music (Levine School), both non-profit organizations, appeal from a decision of the trial court denying a tax exemption for real property owned by Good Shepherd and leased to the Levine School. The principal issue presented for review is whether the subject real property qualifies for tax exemption under D.C. Code § 47-1002 (10) (1997 repl.), which exempts from taxation "[b]uildings belonging to and operated by schools . . ." where the property is operated by a non-profit school, but owned by a different type of non-profit entity. Also presented for review is whether the property is exempt under D.C. Code § 47-1002 (8), which exempts property of a non-profit entity which is "used for purposes of public charity principally in the District of Columbia." The trial court concluded that the District of Columbia's Department of Finance and Revenue (DFR) reasonably interpreted D.C. Code § 47-1002 (10) to require concurrence of ownership and use by the same type of non-profit entity in order to qualify for exemption. The court also rejected the alternative request for exemption under D.C. Code § 47-1002 (8) on the grounds that § 1002 (8) is a general exemption provision, and only the more "specific" provision of § 1002 (10) could apply. We conclude that the real property qualifies for the exemption under D.C. Code § 47-1002 (10) and reverse.
The facts are not in dispute. Good Shepherd is a religious order, incorporated as a non-profit organization in the District, which owns the real property involved in this litigation.*fn2 Good Shepherd operates residential treatment centers for women and children to address their medical and psychological needs. Since 1984, Good Shepherd has rented a part of its property to the Levine School. The Levine School is also a District of Columbia non-profit corporation. It is a community-based school which provides musical education, including training to qualified students regardless of their ability to pay. The Levine School is funded by tuition and charitable contributions.
During the tax years at issue here (1993-1995), Good Shepherd has leased the subject property, located at 1690 - 36th Street, N.W., to the Levine School for an annual rental amount. The lease for the property provides that the Levine School may use the property for a "music school and related services and for no other purpose whatsoever, including residential use, without the prior written consent of the landlord." The lease provides for Good Shepherd to pay the real property taxes and for the Levine School to reimburse Good Shepherd for any real estate taxes assessed for the property. Good Shepherd has paid all of the tax assessments at issue in this case, and the Levine School has reimbursed Good Shepherd as required by the lease.
In 1992, Good Shepherd applied for an exemption from property taxes for the Levine School under D.C. Code §§ 47-1002 (8) and (10) and other statutory provisions which are not at issue in this appeal. The District's DFR denied the request, concluding that: (1) subsection 10 was inapplicable to exempt the property because the school did not own it; and (2) the property did not qualify for any other exemption because its use as a school meant that "the use requirements of other subsection[s] have not been met."
The parties filed cross-motions for summary judgment in the trial court. In granting the District's motion, the trial court concluded that D.C. Code § 47-1002 (10) is a "specific" provision which addresses tax exemptions for school property, while § 47-1002 (8) is a more general provision, applying to charitable institutions. Therefore, the court analyzed the question of the exemption under §1002 (10). Finding the language of § 1002 (10) to be ambiguous, the court deferred to the agency's interpretation, concluding that it was reasonable and consistent with the statutory language and the legislative history of the statute. Thus, it denied the exemption because the Levine School, which was using the property as a school was not the owner of the property for which the exemption was sought. Specifically, the trial court explained that:
the property is owned and operated by two different types of nonprofit entities. Good Shepherd is a nonprofit religious organization. Levine School is a nonprofit music school. Each entity is guided by different subsections of the exemption statute. There is no question that if the property was owned and operated by Levine School, that the property would be exempt. The same would be true if Good Shepherd were a nonprofit school, college or university, that recognized the generally recognized relationship of teacher and student. . . . [T]he Court concludes that the DFR was reasonable in interpreting that concurrence of ownership and use by the same type of entity is required to obtain exempt status under § 47-1002 (10).
Appellants argue that the trial court erred in determining that D.C. Code § 47-1002 (10) requires that the same type of non-profit entity both own and operate the property in order to qualify for the property tax exemption. They contend that the property is tax-exempt under § 1002 (10) because it is owned by a non-profit religious organization and operated by a non-profit school. They take the position that the statutory language does not compel the interpretation that concurrent ownership ...