Background
PACE Organization of Rhode Island operates the only federally certified Program of All-Inclusive Care for the Elderly (PACE) in Rhode Island. It provides comprehensive healthcare and social services to Medicaid-eligible seniors aged 55 and older, with 98 percent of its participants qualifying for Medicaid. In 2022, PACE relocated its day care center and administrative offices to a property in East Providence and received a property tax bill. On August 22, 2022, PACE applied for a property tax exemption under Rhode Island General Law § 44-3-3(a)(12), arguing that it provided aid to the aged poor.
The tax assessor denied the application on November 18, 2022, reasoning that the statute exempts only specific enumerated entities—libraries, library societies, and nonprofit hospitals—and that PACE did not qualify. PACE appealed to the East Providence Tax Board of Assessment Review, which denied the appeal on February 13, 2023. PACE then appealed to Superior Court, where both parties filed competing summary judgment motions. On March 6, 2024, the Superior Court found the statute ambiguous but ruled in favor of the tax assessor, applying the canon that tax exemptions must be strictly construed in favor of taxation.
The Court’s Holding
The Rhode Island Supreme Court affirmed the Superior Court’s judgment, rejecting PACE’s tax exemption claim. The statute § 44-3-3(a)(12) lists specific entities eligible for exemptions: “an incorporated library, society, or any free public library, or any free public library society” (exempt if property is held for library purposes or aid to the aged poor, poor friendless children, or the poor generally) and “a nonprofit hospital for the sick or disabled.” PACE argued the statute allows any organization providing aid to the aged poor to claim exemption, not just enumerated entities.
The court found the statute genuinely ambiguous. The term “society” could reasonably be read either as a broadly-defined organization or as a library-specific entity, given that it appears in a list with other library-related entities. Under the doctrine of ejusdem generis, words grouped in a series should be construed to embrace similar items. However, the court declined to resolve the ambiguity in PACE’s favor. Applying Rhode Island’s strict construction canon for tax exemptions, the court held that “if a doubt or ambiguity exist[s] in a statute granting an exemption, such doubt must be resolved in favor of taxation[.]” Therefore, the property tax exemption was properly denied.
Key Takeaways
- Rhode Island strictly construes property tax exemption statutes in favor of the taxing authority; ambiguities are resolved against the exemption claimant.
- When statutes list specific entities followed by general terms, courts may apply ejusdem generis to limit the scope of those general terms to similar entities.
- An organization serving primarily low-income elderly people does not automatically qualify as a “society” under a tax exemption statute absent clear statutory language extending exemption to such organizations.
- The fact that 98 percent of an organization’s participants are Medicaid-eligible does not overcome an ambiguous statutory framework restricting exemptions to enumerated entity types.
Why It Matters
This decision clarifies Rhode Island’s approach to interpreting tax exemption statutes, particularly those involving charitable organizations serving vulnerable populations. Nonprofits seeking property tax exemptions must demonstrate that they fall clearly within the enumerated categories in the relevant statute, rather than relying on the charitable nature of their work. The court’s application of strict construction and the ejusdem generis doctrine underscores that tax exemption provisions are narrowly construed to protect municipal tax bases.
The case also illustrates the tension between legislative draftsmanship and statutory interpretation—the court acknowledged the statute’s “confusing punctuation and unclear phrasing” but still found a reasonable interpretation supporting taxation over exemption. For elderly care providers and other nonprofits in Rhode Island, the decision means that seeking explicit legislative amendment or clarity may be preferable to pursuing tax exemptions under ambiguously-drafted statutes.