Matter of Moses H. Cone Memorial Hosp.

EAGLES, Judge. Taxpayer appeals from the 24 November 1992 order of the Property Tax Commission (Commission) denying exemption to taxpayer’s child care center for years 1990 and 1991. In that order, the Commission reversed the decision of the Guilford County Board of Equalization and Review (Board) granting taxpayer an exemption for its child care center in 1990 and affirmed the decision of the Board denying the exemption in 1991. After careful review, we conclude that the Commission had no authority to reverse the Board’s 1990 decision because that appeal was not properly before the Commission. We also conclude that the Commission erred in denying the exemption for 1991. Accordingly, we vacate the Commission’s order reversing the 1990 decision of the Board and reinstate the Board’s 1990 order granting taxpayer an exemption for its child care center for the year 1990. We also reverse the Commission’s order affirming the Board’s 1991 decision denying the exemption to the child care center. I. We first set out the scope of appellate review for cases coming from the Property Tax Commission. G.S. 105-345.2 provides that: *570 (b) So far as necessary to the decision and where presented, the court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning and applicability of the terms of any Commission action. The court may affirm or reverse the decision of the Commission, declare the same null and void, or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the appellants have been prejudiced because the Commission’s findings, inferences, conclusions or decisions are: (2) In excess of statutory authority or jurisdiction of the Commission; or (5) Unsupported by competent, material and substantial evidence in view of the entire record as submitted; or (6) Arbitrary or capricious. (c) In making the foregoing determinations, the court shall review the whole record or such portions thereof as may be cited by any party and due account shall be taken of the rule of prejudicial error. This standard of review is known as the “whole record” test. The whole record test is not “a tool of judicial intrusion.” Rainbow Springs Partnership v. County of Macon, 79 N.C. App. 335, 341, 339 S.E.2d 681, 685 (1986) (quoting In re Rogers, 297 N.C. 48, 65, 253 S.E.2d 912, 922 (1979)). It does not allow a reviewing court to substitute its own judgment in place of the Commission’s judgment even when there are two reasonably conflicting views. Id. at 341, 339 S.E.2d at 684. Rather, the whole record test merely allows a reviewing court to determine whether the Commission’s decision has a rational basis in the evidence. Id. at 341, 339 S.E.2d at 685. Under the whole record test, the reviewing court must determine whether the Commission’s decision is supported by substantial evidence. Id. “ ‘Substantial evidence is such relevant evidence that a reasonable mind might accept as adequate to support a conclusion.’ ” Rainbow Springs Partnership v. County of Macon, 79 N.C. App. 335, 341, 339 S.E.2d 681, 685 (1986) (quoting Thompson v. Wake County Board of Education, 292 N.C. 406, 414, *571 233 S.E.2d 538, 544 (1977)). In determining whether the evidence is substantial, the reviewing court must take into account whatever in the record fairly detracts from the weight of the [Commission’s] evidence. . . . [T]he court may not consider the evidence which in and of itself justifies the [Commission’s] decision without [also] taking into account the contradictory evidence or other evidence from which conflicting inferences could be drawn. Rainbow Springs Partnership v. County of Macon, 79 N.C. App. 335, 341, 339 S.E.2d 681, 685 (1986) (quoting Thompson v. Wake County Board of Education, 292 N.C. 406, 410, 233 S.E.2d 538, 541 (1977)). If the court finds substantial evidence to support the Commission’s decision, the Commission’s decision may not be overturned. Id. at 343, 339 S.E.2d at 686. II. We begin with the 1990 appeal brought by respondent Roger C. Cotten. Respondent is also the Guilford County Tax Assessor. When the Board granted taxpayer an exemption for its child care center in 1990, respondent appealed to the Commission. The Commission reversed the decision of the Board and denied taxpayer an exemption for 1990. Taxpayer contends that respondent had no standing to appeal the decision of the Board and that the Commission had no jurisdiction to hear respondent’s purported appeal. We agree. The right of appeal to the Commission from a local county board of equalization and review is governed solely by G.S. 105-290(b). In re Appeal of Forsyth County, 104 N.C. App. 635, 410 S.E.2d 533 (1991). G.S. 105-290(b) provides that “Any property owner of the county may except to an order of the county board of equalization and review or the board of county commissioners concerning the listing, appraisal, or assessment of property and appeal the order to the Property Tax Commission.” In In re Appeal of Forsyth County, 104 N.C. App. 635, 410 S.E.2d 533 (1991), this court held that G.S. 105-290(b) “conspicuously omits a right of appeal to the Commission by a county or any county official on behalf of a county.” Id. at 637, 410 S.E.2d at 534. Although respondent here is also the Guilford County Tax Assessor, respondent argues that he did not file his appeal on behalf of the county or in his official capacity as Guilford County *572 Tax Assessor. Instead, respondent argues that he filed his appeal individually and in his own behalf as a property owner of Guilford County. Accordingly, respondent contends that as a property owner in Guilford County, he is entitled to appeal under G.S. 105-290(b). We disagree. In Forsyth County, this court stated that when the legislature repealed former G.S. 105-324(b), which had previously allowed “a member of the board of county commissioners or board of equalization and review” to appeal to the Commission, the legislature clearly intended to restrict the class of persons who could appeal to the Commission. In re Appeal of Forsyth County, 104 N.C. App. 635, 637, 410 S.E.2d 533, 534 (1991). We then held that a county or a county official acting on behalf of a county could not appeal to the Commission under G.S. 105-290(b). Id. Here, respondent is attempting to appeal in his individual capacity a decision of the Board that he could not appeal in his official capacity as Tax Assessor. We do not think that the legislature, in restricting the county’s right to appeal under G.S. 105-290(b), intended for county officials to circumvent G.S. 105-290(b) by filing appeals in their individual capacities. Allowing respondent here to appeal in his individual capacity a decision of the Board he could not otherwise appeal would eviscerate the legislature’s intent and this court’s holding in Forsyth County. Accordingly, we hold that respondent had no standing to appeal to the Commission and that the Commission had no jurisdiction to hear respondent’s appeal. G.S. 105-345.2(b)(2); cf. In re Appeal of Forsyth County, 104 N.C. App. 635, 410 S.E.2d 533 (1991). Since the Commission had no jurisdiction to hear respondent’s appeal, we vacate the Commission’s order reversing the Board’s 1990 decision and reinstate the Board’s 1990 decision granting taxpayer an exemption for 1990. III. We now address the merits of the 1991 appeal. Taxpayer contends that the Commission erred by denying taxpayer an exemption for its child care center in 1991. A. Taxpayer first contends that the Commission erred in concluding that taxpayer was not a charitable hospital pursuant to G.S. 105-278.8. The Commission in its conclusions of law concluded that “The Hospital [taxpayer] failed to establish, by the greater *573 weight of the evidence or by any stipulated facts, that the subject property was owned by a qualifying hospital as described in G.S. 105-278.8.” G.S. 105-278.8 provides that: (a) Real and personal property held for or owned by a hospital organized and operated as a nonstock, nonprofit, charitable institution (without profit to members or their successors) shall be exempted from taxation if actually and exclusively used for charitable hospital purposes. (c) Within the meaning of this section, a charitable hospital purpose is a hospital purpose that has humane and philanthropic objectives; it is a hospital activity that benefits humanity or a significant rather than limited segment of the community without expectation of pecuniary profit or reward. However, the fact that a qualifying hospital charges patients who are able to pay for services rendered does not defeat the exemption granted by this section. At the hearing before the Commission, the parties stipulated to the following facts: A. The Moses H. Cone Memorial Hospital [taxpayer] is organized as a North Carolina nonstock, nonprofit hospital and is licensed as a general acute care hospital by the North Carolina Department of Human Resources. B. The Moses H. Cone Memorial Hospital [taxpayer] operates the Moses H. Cone Memorial Hospital and Women’s Hospital of Greensboro and they are open to all citizens of Guilford and adjacent counties without regard to race, religion, creed, or national origin. They do not deny emergency treatment to patients on the basis of their immediate need [sic] to pay for their care. We conclude that these stipulations of fact satisfy the requirements of G.S. 105-278.8 and that the Commission made an error of law in concluding that taxpayer failed to show by any stipulated facts that taxpayer is a charitable hospital pursuant to G.S. 105-278.8. B. Taxpayer further contends that the Commission erred in finding that taxpayer’s child care center “competes directly with com *574 mercial, for-profit providers of child care services in the Greensboro area” and that taxpayer’s child care facility “is of little or no benefit to the hospital in recruitment.” Under the whole record test, the Commission’s findings of fact must stand if they are supported by competent, material and substantial evidence in view of the entire record. G.S. 105-345.2(b)(5). Taxpayer contends that these findings are unsupported by the record. We agree. We can find no evidence in the record that taxpayer’s child care center competes directly with other area commercial day care centers. We conclude that there is no direct commercial competition between taxpayer’s child care center and other area commercial day care centers for two reasons. First, in order for there to be direct commercial competition, taxpayer’s child care center must compete directly with other commercial day care centers for patrons from the general public. All of the evidence before the Commission, however, showed that taxpayer’s child care center was open only to hospital employees. Ms. Cynthia Schaub, taxpayer’s Vice President of Human Resources, stated twice on cross examination that taxpayer’s child care center was open only to hospital employees. The Commission presented no contrary evidence and we find no evidence in the record that taxpayer’s child care center was open to anyone other than hospital employees. Second, taxpayer’s child care center meets a need of its employees that could not be fulfilled by the other commercial day care centers. Taxpayer’s child care center is open seven days a week, and on holidays from 6:00 a.m. to 12:00 midnight to accommodate the needs of its employees. Ms. Schaub testified that taxpayer’s child care center was needed because there were no commercial day care centers open after 7:00 p.m. and that commercial day care centers could not accommodate hospital employees who worked rotating shifts. Ms. Sharon Fouts, the director of taxpayer’s child care center, testified that taxpayer’s child care center accommodated the needs of hospital employees who worked rotating shifts and that she did not know of any other child care facility in Greensboro open until 12:00 midnight. Ms. Beverly Harrelson, an employee of taxpayer who has a three year old son in taxpayer’s child care center, testified that at her previous day care, she would have had to make arrangements with her sister or her mother to pick up her son if she had to stay past 6:00 p.m. for an emergency *575 at the hospital. Ms. Harrelson also testified that the child care center’s weekend hours allowed her to work weekends at the hospital. Appellees again presented no evidence to dispute this testimony. For these reasons, we conclude that the Commission’s finding that taxpayer’s child care center competes with other area commercial day care centers is unsupported by substantial evidence in view of the entire record. Likewise, we also conclude that the Commission’s finding that taxpayer’s child care center “is of little or no benefit to the hospital in recruitment” is also unsupported by substantial evidence in the record. Ms. Schaub, as Vice President of Human Resources, is responsible for the recruitment of hospital employees. Ms. Schaub testified that taxpayer’s child care center enabled the hospital to be more competitive in recruiting employees with other area hospitals who also offered on-site child care for their employees. Ms. Stephanie Fanjul, the owner of a child care consulting firm, testified that other national studies showed that on-site child care significantly improved employee recruitment, retention and morale. Since ap-pellees presented no contrary evidence, we conclude that taxpayer’s child care center aided the hospital in the recruitment and retention of hospital employees. C. Finally, taxpayer contends that the Commission erred in concluding that “No part of the Moses H. Cone Memorial Hospital Child Care Facility is used for a charitable hospital purpose as required by G.S. 105-278.8.” We agree that the Commission erred. Under G.S. 105-278.8, real property owned by a charitable hospital is exempt from taxation only if it is “actually and exclusively used for charitable hospital purposes.” G.S. 105-278.8. Generally, statutes exempting specific property from taxation are construed strictly against exemption and in favor of taxation when there is room for construction. Wake County v. Ingle, 273 N.C. 343, 346, 160 S.E.2d 62, 64 (1968). The Commission argues that taxpayer’s child care center does not fall within a strict construction of a charitable hospital purpose pursuant to G.S. 105-278.8. However, notwithstanding the Commission’s reliance on its strict construction of the statute, we have evaluated the statute in the context of the whole record and conclude that the child care center serves a charitable hospital purpose as contemplated by G.S. 105-278.8. *576 The Commission relies on the North Carolina Supreme Court’s holding in Rockingham County v. Elon College, 219 N.C. 342, 13 S.E.2d 618 (1941), as authority for its position that taxpayer’s child care center is not “actually and exclusively used” for charitable hospital purposes. We find Rockingham readily distinguishable. In Rockingham, the taxpayer, Elon College, was an exempt educational institution. There the taxpayer was assessed ad valorem taxes for an office building which it owned and leased to members of the public who operated private businesses. The taxpayer used the rental income generated from the property exclusively for educational purposes. The North Carolina Supreme Court concluded that the taxpayer’s building was not entitled to exemption because it was used for commercial purposes. In concluding that taxpayer’s building was used for commercial purposes, the Rockingham Court made the following observations: The defendant [taxpayer] purchased the property in question as an investment, from which it hopes to derive an income. It is held for profit or gain, i.e., for the purpose of making money. It is in a business district and devoted to rental purposes. If it did not yield an income the defendant [taxpayer] would have no use for it. Id. at 347, 13 S.E.2d at 622. The test under Rockingham then is whether the subject property is used for commercial purposes or held for profit or gain. Here, taxpayer’s child care center is not operated for the purpose of making money. Rather, taxpayer’s child care center is used to aid in the recruitment and retention of hospital employees. Ms. Schaub testified that taxpayer made no profit from its child care center and that taxpayer subsidized approximately $160,000 of the child care center’s annual operating expenses. Ms. Schaub testified that despite this loss, the child care center enabled the hospital to be more competitive in recruiting employees with other area hospitals who also offered on-site child care. Also, unlike the taxpayer’s office building in Rockingham, taxpayer’s child care center is not located in a business district but on the hospital campus. The Commission argues that Rockingham is analogous to our situation here because of its finding that taxpayer’s child care center “competes directly with commercial, for-profit providers of child care services in the Greensboro area.” As we have already *577 discussed, this finding, to the extent that it entails direct commercial competition, is unsupported by substantial evidence in the record. We reiterate that taxpayer’s child care center is not engaged in commercial competition with other area child care centers nor is it held by the taxpayer for the purpose of making money. Accordingly, Rockingham does not control here. The question of whether any of the purposes for which taxpayer’s child care center is held is a charitable hospital purpose within the meaning of G.S. 105-278.8 is one of first impression in this State. Taxpayer urges us to adopt the reasonably necessary standard applied by the Illinois Appellate Court in Memorial Child Care v. Department of Revenue, 604 N.E.2d 530 (Ill. App. Ct. 1992), and the Nebraska Supreme Court in Immanuel, Inc. v. Board of Equalization of Douglas County, 384 N.W.2d 266 (Neb. 1986). We find Memorial Child Care to be particularly analogous to the facts at issue here. In Memorial Child Care v. Department of Revenue, 604 N.E.2d 530 (Ill. App. Ct. 1992), the Illinois Appellate Court held that ap-pellee’s child care center was exempt from taxation because the child care center was reasonably necessary to accomplish the efficient administration of the hospital. Property may qualify for a charitable exemption in Illinois if the property is used exclusively for charitable purposes. Under Illinois case law, property falls within this exemption if the use of the property is reasonably necessary to accomplish the charitable purpose of the institution. Id. In determining whether appellee’s child care center was reasonably necessary to accomplish the efficient administration of the hospital, the Illinois Appellate Court noted the following facts: In the instant case, Child Care [appellee] operated a child-care center for the employees at Memorial Medical Center. The record indicates that Springfield had a shortage of child-care facilities, and that the employees of Memorial Medical Center had difficulty finding child-care available which met their needs and fit the hospital scheduling requirements. Child Care’s facility was specifically organized to provide a flexible child-care program for the employees of Memorial Medical Center. The hours of operation of the facility are from 5:30 a.m. to midnight, seven days a week, including holidays. Child Care offers variable services for employees, such as a daily rate for part-time employees because department schedules often include work *578 on weekends. Child Care’s hours of operation were specifically structured for Memorial Medical Center employees and are more flexible and of longer duration than those of commercial day-care centers. Child Care was created specifically as a not-for-profit corporation to alleviate the difficulty Memorial Medical Center experienced in hiring and maintaining employment of professional employees with young children. Id. at 535. The court went on to hold that appellee’s child care center was used for a purpose “reasonably necessary to accomplish the efficient administration of Memorial Medical Center as a tax-exempt charitable hospital.” Id. The court also stated that the fact that the Medical Center functioned for years without a child care center did not alone mean that a child care center for hospital employees was not essential to the hospital’s operation. Accordingly, the court held that appellee was entitled to exemption from property taxes. The Commission, however, urges us to adopt the reasoning of the Minnesota Supreme Court in Chisago Health Services v. Commissioner of Revenue, 462 N.W.2d 386 (Minn. 1990). In Chisago, the Minnesota Supreme Court took a more restrictive view of the reasonably necessary test. There, the Minnesota Supreme Court affirmed the decision of the Minnesota Tax Court holding that two hospital auxiliary outpatient medical facilities were not reasonably necessary for the hospital to accomplish its charitable purpose. The Court stated that the reasonably necessary test measures the degree to which the auxiliary facilities and the public hospital are functionally interdependent. In affirming the decision of the Tax Court, the Court rejected the appellant’s argument that the outpatient facilities were reasonably necessary to operate the hospital in a “financially sound manner.” We find the reasoning of Memorial Child Care v. Department of Revenue, 604 N.E.2d 530 (Ill. App. Ct. 1992), persuasive. Accordingly, we adopt the “reasonably necessary” test as laid out in Memorial Child Care. We now apply the reasoning of Memorial Child Care to the facts at issue here. Like the child care center in Memorial Child Care, taxpayer’s child care center here is organized to meet the specific needs of hospital employees. Taxpayer’s child care center is open seven days a week, including holidays, from 6:00 a.m. to 12:00 midnight. It accommodates the needs of employees who work rotating shifts *579 or late night hours. Its hours of operation are longer and more flexible than other area commercial day care centers. Finally, taxpayer’s child care center aids taxpayer in the recruitment and retention of hospital employees. Accordingly, we conclude that on these facts, taxpayer’s child care center is reasonably necessary to accomplish taxpayer’s charitable purpose. For the reasons stated, we hold that taxpayer’s child care center is “actually and exclusively used” for a charitable hospital purpose as required by G.S. 105-278.8 and accordingly, that taxpayer is entitled to an exemption from ad valorem taxes for its child care center. IV. In sum, we vacate the Commission’s order regarding the 1990 appeal and reinstate the Board’s 1990 order granting taxpayer an exemption from ad valorem taxes for its child care center for the year 1990. We also reverse the Commission’s order regarding the 1991 appeal and hold that taxpayer is entitled to an exemption from ad valorem taxes for its child care center under G.S. 105-278.8. Vacated in part, reversed in part. Chief Judge ARNOLD and Judge WELLS concur.