El Castillo home denied tax exemption

Supreme Court rules wealthy retirement community does not qualify as charitable care center

The New Mexico Supreme Court has ruled that a Santa Fe retirement community for affluent elderly residents does not qualify for a state property tax exemption offered to charitable care centers.

The decision, issued Thursday, ends an eight-year effort by the downtown El Castillo Retirement Residences to get a property tax waiver for charities under a tax code amendment the Legislature approved in 2008.

The website for El Castillo says it is a nonprofit, for which residents do not pay New Mexico gross receipts taxes, and that a portion of its monthly services may be tax deductible. But the state Supreme Court found that is where El Castillo’s tax exemptions end. The assisted living facility doesn’t qualify for the property tax waiver, the court said, because it does not benefit the general public.

El Castillo residents, ages 65 and older, apply for acceptance to the community and must have at least $300,000 in assets. Applicants are carefully screened for physical and mental health issues that may require a high level of care. Those accepted to the community pay an entry fee, as well as monthly fees to cover the costs of operating the facility and for each resident’s care.

“Prospective residents must meet physical, mental, and financial requirements to be accepted for admission,” said the court ruling by Justice Charles Daniels, and “El Castillo does not accept applicants who depend solely on Medicare or Medicaid.” It does not meet the criteria for the tax exemption under state law, Daniels said.

Allen “Al” Jahner, the CEO of El Castillo, said in an interview Thursday that he hadn’t read the court order, but he didn’t think the retirement community’s practice of rejecting Medicare and Medicaid patients would have affected the court’s decision.

El Castillo applied for the tax waiver in 2009, after learning its property was valued at more than $9.8 million. The Santa Fe County assessor denied the waiver, saying, “El Castillo’s donation of services or facilities is minimal.” El Castillo appealed to the county’s Valuation Protests Board, which upheld the assessor’s decision.

Since then, the application has been making its way through state courts.

The retirement community took its case to the state District Court, which ruled in El Castillo’s favor.

The county assessor appealed that decision, and judges on the New Mexico Court of Appeals agreed with the assessor that El Castillo did not qualify for the waiver.

Jahner said the organization thought it should qualify for the waiver under the language in the state statute. The Supreme Court decision will have an effect on “all the continuing care facilities in New Mexico,” he added, “not just us.”