## Facts

- Franciscan Tertiary Province of Missouri, Inc. was a Missouri not-for-profit corporation formed to provide, on a nonprofit basis, rental housing and related facilities and services for elderly or handicapped persons.
- Franciscan participated in a federal co-sponsorship housing program to construct and operate the Chariton Apartments, an apartment building for elderly residents.
- The project’s financing and operations were subject to federal regulation, including restrictions affecting rents and use.
- Units were rented primarily to elderly persons of low or moderate income; rents were set to remain affordable and to defray operating costs rather than generate profit.
- Franciscan offered supportive and social services for residents as part of the project’s operation.
- For tax year 1973, the City of St. Louis assessor assessed the property for ad valorem taxes.
- Franciscan claimed an exemption under Mo. Rev. Stat. § 137.100(6) for property used exclusively for purposes purely charitable.

## Issues

1. Whether the Chariton Apartments was “used exclusively for purposes purely charitable” under Mo. Rev. Stat. § 137.100(6), notwithstanding that residents paid rent and the project operated under federal financing and regulatory restrictions.
2. Whether the assessed valuation had to be reduced to account for “economic obsolescence” caused by federal restrictions (if the property was taxable).

## Decision

- The Missouri Supreme Court held the Chariton Apartments was used exclusively for charitable purposes and was exempt from ad valorem taxation under § 137.100(6).
- The Court reversed the State Tax Commission and the circuit court on the exemption question.
- Because the property was exempt for 1973, the valuation and “economic obsolescence” dispute was rendered non-dispositive for that tax year.
- The case was remanded with directions consistent with the exemption holding.

## Legal Principles

- Tax exemptions are strictly construed against the taxpayer, but “charity” is not limited to free relief of the poor and may include activities that lessen governmental burdens.
- Charitable-use analysis focuses on the actual use of the property, not the owner’s corporate form alone.
- Charitable use generally requires: (1) dedication to a charitable object, (2) dominant use for that object, and (3) benefit to an indefinite class of persons without private profit.
- “Exclusively” charitable use is satisfied when the dominant or primary use is charitable; charging reasonable fees to defray costs does not negate charitable status when the enterprise is not operated for private profit.
- Providing affordable housing and supportive services for elderly persons may constitute a charitable purpose when it serves a public benefit and relieves obligations that would otherwise fall on government.

## Conclusion

The court determined that a federally regulated, nonprofit elderly-housing facility funded and operated to provide affordable housing and related services for an indefinite class of elderly residents was property used exclusively for charitable purposes and therefore exempt from Missouri ad valorem property taxation for the year at issue.


Franciscan Tertiary Province of Mo., Inc. v. State Tax Comm’n of Mo., 566 S.W.2d 213 (Mo. 1978) (en banc)