May 28, 2011; Source: Philadelphia Inquirer | Dunwoody Village, a continuing care retirement community (CCRC) in Pennsylvania, contends its work in subsidizing senior care meets the criteria for a “purely public charity.” School and township officials question their definition of a charity for a facility that charges entrance fees up to $400,000. At stake is over 2 million tax dollars targeted for local schools and government programs.

Dunwoody has filed briefs in Delaware County stating their work as a public charity exempts them from paying a $506,000 annual school tax bill and $232,000 township bill. They also want the school to pay back their $1.5 million previous tax payment, which could grow to $2 million if the lawsuit isn’t settled before July 1. The school district’s current deficit is $1.5 million.

School and government officials counter that the company caters to the affluent customer, boasting a masseur, beauty salon and luxurious accommodations for entrance fees ranging from $82,000 to $409,000. They contend that only 10 out of the 425 residents receive any financial aid. Their property is valued at $43.2 million.

As senior care centers continue to expand while local and state governments look for more revenue, CCRC cases like this will multiply. “It’s just going to continue to get bigger and bigger,” said Denise Elliot, a tax specialist attorney. “Dunwoody is a case people will take notice of.”

Exemptions and tax laws vary from state to state. In 2007, the State Supreme Court of Pennsylvania declared that CCRC facilities should be either entirely taxable or entirely exempt. Many CCRC’s still pay part of their real estate taxes. CCRC and local school districts have been quietly challenging each other, but the Dunwoody case is the first to go to trial.

Whatever happens, legal experts agree that this case will be appealed and similar lawsuits will be filed as schools, townships, and senior complexes all struggle to find new sources of revenue.—Nancy Knoche