          IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA


                                 January 2014 Term                  FILED
                                                              March 26, 2014
                                                               released at 3:00 p.m.
                                     No. 13-0120               RORY L. PERRY II, CLERK
                                                             SUPREME COURT OF APPEALS
                                                                 OF WEST VIRGINIA


                       UNITED HOSPITAL CENTER, INC.,

                           Petitioner Below, Petitioner


                                          v.

           CHERYL ROMANO, ASSESSOR OF HARRISON COUNTY,

               AND CRAIG GRIFFITH, TAX COMMISSIONER,

                     Respondents Below, Respondents

                                   _


                  Appeal from the Circuit Court of Harrison County

                      Honorable John Lewis Marks, Jr., Judge

                            Civil Action No. 11-C-124-1


                                    REVERSED



                             Submitted: January 28, 2014

                               Filed: March 26, 2014


Michael S. Garrison, Esq.                            Patrick Morrisey, Esq.

Kelly J. Kimble, Esq.                                Attorney General

Spilman Thomas & Battle, PLLC                        Katherine A. Schultz, Esq.

Morgantown, West Virginia                            Senior Deputy Attorney General

                                                     Charleston, West Virginia
Dale W. Steager, Esq.                                Counsel for Respondent Griffith
Spilman Thomas & Battle, PLLC
Charleston, West Virginia                            James Armstrong, Esq.
Counsel for Petitioner                               Harrison County Courthouse
                                                     Counsel for Respondent Romano

JUSTICE LOUGHRY delivered the Opinion of the Court.

CHIEF JUSTICE DAVIS dissents and reserves the right to file a dissenting opinion.

                              SYLLABUS BY THE COURT




              1. “Under section 1, art. 10, Const., the exemption of property from taxation

depends on its use. To warrant such an exemption for a purpose there stated, the use must

be primary and immediate, not secondary or remote.” Syllabus, State ex rel. Farr v. Martin,

105 W.Va. 600, 143 S.E. 356 (1928).



              2. “In order for real property to be exempt from ad valorem property taxation,

a two-prong test must be met: (1) the corporation or other entity must be deemed to be a

charitable organization under 26 U.S.C. § 501(c)(3) or 501(c)(4) as is provided in 110

C.S.R. § 3-19.1; and (2) the property must be used exclusively for charitable purposes and

must not be held or leased out for profit as is provided in W. Va. Code § 11-3-9.” Syl. Pt.

3, Wellsburg Unity Apartments, Inc. v. County Comm’n of Brooke County, 202 W.Va. 283,

503 S.E.2d 851 (1998).



              3. “A constitutional provision authorizing legislative exemption of property

from taxation is strictly construed and nothing can be exempted that does not fall within its

terms; but rational construction within the terms used is required as well as permitted.” Syl.

Pt. 3, State v. Kittle, 87 W.Va. 526, 105 S.E. 775 (1921).




                                              i
              4. A healthcare corporation, qualified as a charitable organization under

federal law, whose construction of a replacement hospital facility is substantially complete

on the legal date of assessment and who has significant departmental staff on site working

to fulfill the organization’s charitable purposes, comes within the spirit, purpose, and intent

of the constitutional framers for purposes of entitlement to exemption from ad valorem

property taxation pursuant to West Virginia Code § 11-3-9(a)(12) (2013).




                                              ii
LOUGHRY, Justice:



              The petitioner, United Hospital Center, Inc. (the “Hospital”), appeals from the

January 7, 2013, order of the Circuit Court of Harrison County by which the respondents,

Cheryl Romano, the Assessor of Harrison County, and Craig Griffith, the West Virginia Tax

Commissioner,1 were granted summary judgment with regard to the Hospital’s dispute of

its 2011 assessment of ad valorem property taxes for its newly-constructed facility located

in Bridgeport, West Virginia. Given the charitable purpose of its operations, the Hospital

challenges the circuit court’s ruling that it was not entitled to exemption from property taxes

for the subject tax year. In rejecting the Hospital’s appeal, the circuit court focused on the

fact that the Bridgeport location was not physically housing and treating patients on July 1,

2010.2 The Hospital argues that not only was the lower court’s application of the statutory

exemptions at issue contrary to legislative authorization, but it produced a result clearly

adverse to the spirit, purpose, and intent of exempting charitable organizations from ad

valorem taxation. We agree.




       1
        When this matter was initiated, Mark W. Matkovich was a named party as he was
then serving as the acting tax commissioner. Mr. Griffith was automatically substituted as
a party upon being named as tax commissioner. See W.Va. R. App. P. 41(c).
       2
       By law, July 1 is the date used for property tax assessment purposes. See W.Va.
Code § 11-3-1(2013). Due to delays precipitated by a water line break, the transfer of the
Hospital’s patients from its Clarksburg facility to the Bridgeport facility did not occur until
October 3, 2010.

                                              1

                             I. Factual and Procedural Background

                  For years, the Hospital owned and operated a hospital in Clarksburg, West

Virginia, which was exempt from ad valorem property taxes. This exemption was premised

on the undisputed operation of the Hospital for charitable purposes.3 In 2006, the Hospital

began construction on a new hospital in Bridgeport to replace the aging Clarksburg facility.4



                  On July 1, 2010–the date used for property tax assessment purposes–the

transfer of patients from the Clarksburg facility to the Bridgeport facility had not yet

occurred. Due to unexpected issues,5 the physical relocation of patients and physicians was

delayed until October 3, 2010.6 Although the doors were not open to patients on July 1,

2010, the Bridgeport facility was 95% complete from a construction standpoint. Prior to

July 1, 2010, the Hospital’s information technology (“IT”) department was both situated

and operating to support the Clarksburg hospital facility’s needs from the Bridgeport locale.

In addition to the IT employees, security employees were on site working at the new hospital

as well as housekeeping staff and climate engineers.


        3
       As a qualifying charitable corporation, the Hospital was not required to pay federal
income tax, state franchise tax, or state income tax with regard to its Clarksburg operation.
        4
        An alternate location was chosen for the new facility as there was insufficient real
estate on which to expand or build a new hospital at the Clarksburg locale.
        5
            See supra note 2.
        6
            The original plan was for the relocation of patients and staff to occur prior to July 1,
2010.

                                                   2

              In timely filing its commercial property tax report on June 30, 2010, the

Hospital reported the cost of building materials and other tangible personal property

incorporated into the Bridgeport facility as having a cumulative cost of $108,006,015.80.

The Assessor determined that this tangible personal property had an assessed value of

$62,895,013.00 and the real estate had an assessed value of $1,219,260.00.



              Pursuant to West Virginia Code § 11-3-24a (2013), the Hospital inquired of

the respondent assessor by written correspondence dated October 18, 2010, as to whether

its Bridgeport facility was subject to ad valorem property taxes for 2011.7 In a letter dated

October 25, 2010, the assessor concluded the property was taxable, reasoning that “the

property was not being used for any purpose; let alone a charitable purpose” on the July 1st

assessment date. The Hospital requested a tax ruling from the State Tax Commissioner,

who, by letter dated February 28, 2011, similarly advised that the property was taxable.8



              On March 29, 2011, the Hospital filed its petition for appeal of the State Tax


       7
       Respondents agree that the Bridgeport hospital facility is exempt from ad valorem
property taxation for the 2012 tax year and all subsequent years provided its “use remains in
conformity with provisions of West Virginia Code § 11-3-9(a)(12).”
       8
       In reaching its decision, the tax commissioner relied heavily on a regulation that
addresses when construction initiated on vacant land intended for hospital purposes shall be
viewed as exempt from ad valorem taxation. See 110 C.S.R. § 3-24-17.3 (providing that
“such property shall not be exempt . . . until it has been put to such actual use as to make the
primary and immediate use of the property charitable”).

                                               3

Commissioner’s ruling on the issue of taxability in the Circuit Court of Harrison County.9

The circuit court, without the benefit of an evidentiary hearing, issued its ruling on January

7, 2013, granting summary judgment to the respondents. It is from this adverse ruling that

the petitioner seeks relief.



                                    II. Standard of Review

                 Because this case involves both the interpretation of statutes and regulations,

our review is de novo. See Syl. Pt. 1, Appalachian Power Co. v. State Tax Dep’t, 195 W.Va.

573, 466 S.E.2d 424 (1995) (“Interpreting a statute or an administrative rule or regulation

presents a purely legal question subject to de novo review.”); see also Syl. Pt. 1, Chrystal

R.M. v. Charlie A.L., 194 W.Va. 138, 459 S.E.2d 415 (1995) (“Where the issue on an appeal

from the circuit court is clearly a question of law or involving an interpretation of a statute,

we apply a de novo standard of review.”); Syl. Pt. 1, Painter v. Peavy, 192 W.Va. 189, 451

S.E.2d 755 (1994) (“A circuit court’s entry of summary judgment is reviewed de novo.”).

With this plenary standard in mind, we proceed to consider whether the circuit court erred

in ruling that the Hospital was not entitled to a property tax exemption for its Bridgeport

facility for the tax year 2011.10




       9
       See W.Va. Code § 11-3-25 (2013) (providing relief in circuit court from erroneous
assessments).
       10
            2011 is the only tax year in dispute. See supra note 7.

                                                4

                                      III. Discussion

              At the core of this appeal is the availability of an exemption from ad valorem

property taxation that is premised on the organization’s charitable purposes. After first

requiring that “taxation shall be equal and uniform throughout the State,” our constitution

further recognizes that “property used for educational, literary, scientific, religious or

charitable purposes . . . may by law be exempted from taxation.” W.Va. Const. art. X, § 1;

see In re Hillcrest Mem’l Gardens, Inc., 146 W.Va. 337, 341, 119 S.E.2d 753, 755 (1961)

(“Constitution . . . does not of itself exempt any property from taxation[;] it merely

authorizes legislative exemption thereof.’”) (quoting State v. Kittle, 87 W.Va. 526, 533, 105

S.E. 775, 777 (1921)).



              Pursuant to authority reposed by article X, section 1, the Legislature enacted

West Virginia Code § 11-3-9 (2013) for the purpose of specifying which classifications of

property are exempt from taxation. The Hospital relies on two separate subsections of

section nine to assert its entitlement to exemption: subsections (a)(12) and (a)(17). Under

the more generic provisions of subsection 12, a tax exemption is extended in broad fashion

to all “[p]roperty used for charitable purposes and not held or leased out for profit.” W.Va.

Code § 11-3-9(a)(12). Under a more specific provision directed at hospitals, a tax

exemption exists for “[p]roperty belonging to . . . any hospital not held or leased out for

profit.” W.Va. Code § 11-3-9(a)(17). A qualification which applies solely to “educational,


                                             5

literary, scientific, religious or other charitable corporations” seeking a tax exemption is that

“such property . . . [must be] used primarily and immediately for the purposes of the

corporations or organizations.” W.Va. Code § 11-3-9(d) (emphasis supplied).



              In support of its position that the Hospital was not entitled to the subject tax

exemption for the 2011 tax year, the respondents focus primarily on the fact that as of July

1, 2010, the Bridgeport facility did not have its doors physically open to the public. As a

result, the respondents maintain that no charitable purpose was being achieved which would

permit a tax exemption. Upon a careful examination of the issues presented by this case, we

are compelled to conclude that the analytical approach taken by the respondents is unduly

narrow in scope. To suggest that the cynosure of demonstrating an organization’s charitable

purpose hinges on the swinging of its doors–especially in this day of voluminous regulations

which govern both qualification as a charitable organization and approval to construct and

operate a hospital facility–indicates a rather myopic view of the realities of both construction

and health care law. With full awareness of the regulatory complexity of modern corporate

existence, the determination of the Hospital’s entitlement to exemption from ad valorem

property tax requires a seemingly anachronistic examination of the historical basis of tax

exemptions in this state against the purposes which they continue to serve today.




                                               6

                        A. Historical Recap of Tax Exemption

              In State v. Kittle, 87 W.Va. 526, 105 S.E. 775 (1921), this Court was called

upon to decide whether a parsonage that was no longer occupied by a minister was entitled

to a tax exemption from ad valorem property taxes that applied then to “property used

exclusively for divine worship; parsonages, and the household goods and furniture

pertaining thereto.”11 Id. at 532, 105 S.E. at 777. Because the statutory language requiring

that such property must be used primarily and immediately for the use of the corporation or

organization was not then a part of our judicial or codified law,12 we do not rely on the

reasoning the Court employed to find that the parsonage property was tax exempt.13 See



       11
        The current version of the statutory exemption is framed separately in terms of
“[p]roperty used exclusively for divine worship” and “[p]arsonages and the household goods
and furniture pertaining thereto.” W.Va. Code § 11-3-9(a)(5), (6).
       12
        While not codified until 1945, this Court recognized in the syllabus of State ex rel.
Farr v. Martin, 105 W.Va. 600, 143 S.E. 356 (1928), that exemption from taxation required
usage that was “primary and immediate, not secondary or remote.”
       13
        In answering the pivotal question in Kittle of whether non-ministerial occupancy
transformed the status of the parsonage, this Court observed:

              Acquisition and disposition of parsonages are necessarily
              incident to the right to hold them and, while they are owned and
              used as such, they are exempt. Unrestrained exemption of
              parsonages clearly extends to property in course of preparation
              for such use and to property in process of disposition, after
              discontinuance thereof, or held in vacancy pending
              determination as to its ultimate disposition. Exemption does not
              . . . depend upon use of the property for parsonage purposes.

87 W.Va. at 533, 105 S.E. at 777.

                                             7

W.Va. Code § 11-3-9(d). What we find instructive, however, is the general discussion

regarding our parent state’s liberal policy with respect to exemption. Looking to Virginia

law as a source of history, progress, and development with regard to tax exemptions we

observed the following:

                        No reason is perceived why the history and development
                of the organic provision in question, as disclosed by previous
                legislation in Virginia, the parent state, and provisions of its
                constitutions, may not be considered upon this inquiry. . .
                While, technically, constitutional provisions may not be acts in
                pari materia, they are of the same nature as such acts. They
                reveal the history, progress and development of the
                constitutional provision and thus cast light on its true meaning.
                . . . Hence we do not hesitate to resort to the Virginia statutes
                and constitutional provisions relating to this subject.
                        Turning to them, we find the state’s policy respecting
                exemption was liberal. . . .

Kittle, 87 W.Va. at 530-31, 105 S.E. at 776.



                As we explained in Kittle, there was little “restraint upon legislative authority

to exempt property,” noting that a simple majority vote by each house of the general

assembly of Virginia was all that was necessary to create a tax exemption. Id. at 531, 105

S.E. at 776. In contrast or, more accurately, in direct response to what was viewed as

unfavorable tax treatment of western Virginia’s citizenry,14 this state’s first constitution


       14
            As one commentator has observed:

                More than differences over slavery and possibly more than the
                                                                                    (continued...)

                                                8

identified with specificity the permissible “subjects of legislative exemption.”15 Id. After

characterizing this state’s initial actions with regard to tax exemptions as “cutting down this

[formerly] unlimited power,” we observed that our founding fathers “used the most general

terms conceivable, in the enumeration of permissible subjects of exemption.” Kittle, 87

W.Va. at 532, 105 S.E. at 777. Those subjects denominated in this state’s first constitution

continue to comprise the scope of legislative exemption from ad valorem taxation.16




       14
            (...continued)
                  location of the Union and Confederate forces in 1862, the
                  rankling feeling that Virginia legislation and administration had
                  consistently given the western counties the short end of the stick
                  sparked the movement for separation. The reports of the
                  constitutional convention make it quite plain that, on this
                  specific matter of taxation, the feeling obtained generally that
                  the plenary legislative discretion had been so exercised as to
                  discriminate against western Virginia, inducing in the delegates
                  a purpose to restrict that discretion so as to preclude regional
                  favoritism in the new state. Accordingly the constitution
                  particularized the categories exemptable by specifying, after the
                  routine equality and uniformity clause, “but property used for
                  educational, literary, scientific, religious or charitable purposes,
                  and public property, may by law be exempted from taxation.”

Albert S. Abel, Public and Public Welfare Property Tax Exemption in West Virginia, 55
W.Va. L. Rev. 170, 172 (1953) (quoting W.Va. Const. art. VIII, § 1 (1863) and omitting
footnote).
       15
         The delineated subjects of tax exemption were educational, literary, scientific,
religious or charitable purposes, cemeteries, and public property. See W.Va. Const. art. VIII,
§ 1 (1863).
       16
            See supra note 15.

                                                   9

              As we recognized in Reynolds Memorial Hospital v. Marshall County Court,

78 W.Va. 685, 90 S.E. 238 (1916), “[w]hether or not property may be exempted from

taxation . . . depends on the use to which it is applied.”17 Id. at 687, 90 S.E. at 239. The

nature of the property’s usage is critical, as we clarified in the syllabus of State ex rel. Farr

v. Martin, 105 W.Va. 600, 143 S.E. 356 (1928): “Under section 1, art. 10, Const., the

exemption of property from taxation depends on its use. To warrant such an exemption for

a purpose there stated, the use must be primary and immediate, not secondary or remote.”

At issue in Farr was whether income realized from a school’s lease of property held in trust

for it to third parties was tax exempt. Of significance to the Court was the fact that use of

the property directly benefitted the lien holders rather than the school.18 105 W.Va. at 602,

143 S.E. at 356. After observing that “[t]he statute excludes the exemption of property or

income which redounds to private profit,” the Court denied the exemption in Farr because

neither “the property or its income was used for educational purposes during that year.” Id.



              In Central Realty Co. v. Martin, 126 W.Va. 915, 30 S.E.2d 720 (1944), we

addressed the effect that commercial use of property owned by a charitable organization had

on tax exemption. The property’s use by “four purely commercial enterprises operat[ing]

       17
        For purposes of entitlement to tax exemption, the use of a cemetery or public
property is immaterial. See Reynolds Mem’ Hosp., 78 W.Va. at 687, 90 S.E. at 239; W.Va.
Const. art. X, § 1.
       18
        The taxpayer admitted that none of the rental income was applied to the school for
the subject tax year.

                                               10

for private profit” served to remove the subject property from the “letter or spirit of the

constitutional provision relating to the exemption of property from taxation.” Id. at 921, 30

S.E.2d 724. Attempting to distill the parameters of “immediate and primary use,” this Court

stated:

              [W]here real estate is used solely by an organization for
              educational and charitable purposes and such use is immediate
              and primary the constitutional exemption from taxation applies,
              and the statute enacted in pursuance thereof inhibits any
              assessment for taxation; but real estate is not exempt where
              owned by a like organization and is leased for private purposes,
              notwithstanding the application of the income from rentals to
              charitable and benevolent purposes and upkeep of the premises.

Id. at 923, 30 S.E.2d 725. Central Realty makes clear that the introduction of a profit-

making element, despite application of a portion of those profits to the upkeep of the

otherwise charitable property, fully extinguishes the constitutional basis for the exemption.



                       B. Modern Application of Tax Exemption

              More recently, this Court examined the elements necessary for a charitable

organization’s entitlement to exemption from ad valorem property taxation in Wellsburg

Unity Apartments, Inc. v. County Commission of Brooke County, 202 W.Va. 283, 503

S.E.2d 851 (1998). After restating the use test announced in Reynolds Memorial Hospital

and later clarified in Central Realty, we declared as “indisputable” the precept “that property

used for charitable purposes which is not held or leased for profit is exempt from ad valorem

real property taxation.” Id. at 287, 503 S.E.2d at 855. In syllabus point three of Wellsburg,

                                              11

we resolved that

                     [i]n order for real property to be exempt from ad valorem
              property taxation, a two-prong test must be met: (1) the
              corporation or other entity must be deemed to be a charitable
              organization under 26 U.S.C. § 501(c)(3)19 or 501(c)(4) as is
              provided in 110 C.S.R. § 3-19.1; and (2) the property must be
              used exclusively for charitable purposes and must not be held
              or leased out for profit as is provided in W. Va. Code § 11-3-9.

202 W.Va. at 284, 503 S.E.2d at 852 (footnote added).



              Because there is no dispute as to the Hospital’s qualification as a charitable

organization pursuant to federal law, we proceed to examine whether the second prong of

the test adopted in Wellsburg has been established. This second prong derives from the

language of West Virginia Code § 11-3-9(a)(12), which extends tax exemption to “property

used for charitable purposes and not held or leased out for profit.” Just as there is no dispute

over the Hospital’s qualification as a charitable organization for purposes of federal tax law,

the respondents similarly do not raise an issue with regard to the subject property being

“held or leased out for profit.” W.Va. Code § 11-3-9(a)(12). The respondents’ sole focus

is whether the Bridgeport hospital facility was being used for charitable purposes on the




       19
        In syllabus point one of Wellsburg, we held that “[w]hen a corporation is granted a
tax exempt status under Section 501(c)(3) of the Internal Revenue Code of 1986, that
corporation is deemed to be a charitable organization under 110 C.S.R. § 3-19.1.” 202
W.Va. at 284, 503 S.E.2d at 852.

                                              12

legal date of assessment.20



              In deciding whether the subject property was being used for charitable

purposes in Wellsburg, we began our analysis with a review of what constitutes “charity”

for tax purposes. Pursuant to legislative regulation, “charity” is defined to include:

              a gift to be applied consistently with the existing laws, for the
              benefit of an indefinite number of persons, either by bringing
              their hearts under the influence of education or religion, by
              relieving their bodies from disease, suffering or constraint, by
              assisting them to establish themselves for life, or by erecting or
              maintaining public buildings or works, or otherwise lessening
              the burdens of government. It is immaterial whether the
              purpose is called charitable in the gift itself if it is so described
              as to show that it is charitable. Any gift not inconsistent with
              existing laws which is promotive of science or tends to the
              education, enlightenment, benefit or amelioration of the
              condition of mankind or the diffusion of useful knowledge, or
              is for the public convenience is a charity.

202 W.Va. at 287, 503 S.E.2d at 855 (quoting 110 C.S.R. § 3-2.10 (1989)). An additional

regulation, directed specifically at property used for charitable purposes, provides that:

              [c]harities must be operated on a not-for-profit basis, must
              directly benefit society, must be for the benefit of an indefinite
              number of people, and must be exempt from federal income
              taxes under 26 U.S.C. § 501(c)(3) or 501(c)(4). Morever, in
              order for the property to be exempt, the primary and immediate
              use of the property must be for one or more exempt purposes.

110 C.S.R. § 3-19.1 (1989).


       20
         The respondents recognize that charitable purposes were being met as of October
3, 2010, when the hospital doors were open to the public. See supra note 7.

                                               13

              Applying those regulatory definitions to the facts in Wellsburg–a charitable

organization that provided housing for the elderly or low income individuals–this Court

affirmed the trial court’s finding that the property was used for charitable purposes as it was

“being used for purposes of relieving poverty and for other purposes which are beneficial

to the community.” 202 W.Va. at 289, 503 S.E.2d at 857. In similar fashion, we concluded

in Appalachian Emergency Medical Services, Inc. v. State Tax Commissioner, 218 W.Va.

550, 625 S.E.2d 312 (2005), that leased property owned by a non-profit charitable

corporation came within the definition of “charity” because the property was being used to

further the corporate mission of assisting emergency services organizations to relieve human

suffering. Id. at 555, 625 S.E.2d at 317.



              Admittedly, neither Wellsburg nor Appalachian Emergency involved the exact

issue presented here: whether a newly constructed hospital can serve its charitable purposes

before John Q. Public walks through the door. In support of their position, the respondents

look to two additional regulations that apply solely to hospitals to reach their conclusion that

charitable purposes were not being met on the assessment date of July 1, 2010. Pursuant to

110 C.S.R. § 3-24.17.1 (1989), “[w]hen a hospital purchases land which it intends to use for

capital improvements, which will be used for charitable purposes, the land shall not be

exempt so long as the land is vacant.” In explanation of this disallowance, the regulation

provides “[s]o long as the land is vacant, it can be sold and used for noncharitable


                                              14

purposes.” Id. By regulation, land on which construction has begun for hospital purposes

falls within the scope of permissible tax exemption when “it has been put to such actual use

as to make the primary and immediate use of the property charitable in accordance with

Section 19 of these regulations.” 10 C.S.R. § 3-24.17.3 (emphasis supplied).



              The respondents have seized upon the emphasized language in the above-

quoted regulation to argue that “immediate” necessarily indicates a sense of time and that

“actual use” means the equivalent of occupancy. Based upon our exacting inquiry of the

historical basis for and development of the subject tax exemption, we are convinced that the

respondents have incorrectly interpreted the subject terminology. Their contention that

“immediate” was intended to describe a contemporaneous physical usage is wholly at odds

with how that term has been employed over the years. Rather than serving as a modifier

couched in temporal terms, its syntactic function has always been used to indicate directness.

This comports with the primary definition of “immediate” provided by the dictionary, which

is “acting or being without the intervention of another object, cause, or agency: DIRECT.”

Merriam Webster’s Collegiate Dictionary, p. 579 (10th ed. 1994). Significantly, when the

phrase “primary and immediate” first appeared on our judicial landscape with regard to ad

valorem taxation, it was followed by the explanatory phrase “not secondary or remote.” See

Syllabus, Farr, 105 W.Va. at 600, 143 S.E. at 356. Given this seminal judicial explanation

that the meaning of “primary and immediate” usage stands in contrast to “secondary or


                                             15

remote” usage combined with the fact that “direct” is a long-recognized synonym for the

term “immediate,” we conclude that the term “immediate” was not intended to connote a

temporal requirement when conjoined to “primary” for tax exemption purposes. See id.



                 We proceed to address the respondents’ claim that the regulatory inclusion of

the phrase “actual use” fully resolves the question of the Hospital’s entitlement to a tax

exemption. The respondents argue that the non-use of the Hospital for patient-treating

purposes on July 1, 2010, necessarily prohibits the Bridgeport facility from qualifying as

charitable on such date. The context in which “actual use” is employed in 110 C.S.R. § 3­

24.17.3 is tied to “mak[ing] the primary and immediate use of the property charitable within

the meaning of section 19 of the regulations.”21 While the respondents do not take issue

with the Hospital’s qualification as a charitable organization under federal law or its

operation on a non-profit basis, they do contend that it was not serving charitable purposes

on July 1, 2010, as they maintain that it could neither directly benefit society nor benefit an



       21
            Section 19.1, the foundational regulation of this section, provides as follows:

                        Charities must be operated on a not-for-profit basis, must
                 directly benefit society, must be for the benefit of an indefinite
                 number of people, and must be exempt from federal income
                 taxes under 26 U.S.C. § 501(c)(3) or 501(c)(4). Moreover, in
                 order for the property to be exempt, the primary and immediate
                 use of the property must be for one or more exempt purposes.

110 C.S.R. § 110-3-19.1.

                                                16

indirect number of people with its doors closed to the public.22 We disagree.



                 Because the Hospital had relocated its IT department prior to July 1, 2010, to

the Bridgeport facility and because that department was fully engaged in providing

technology support services necessary to keep the Clarksburg hospital operating until the

Hospital was able to fully complete its move to the new facilities, the IT employees were

utilizing the physical premises of the Bridgeport facility to accomplish the undisputed

charitable purposes of the Hospital.23 In this day and age, the integral nature of an

organization’s IT department cannot be seriously debated. Without the IT department and

its attendant corporate ability to enable the myriad uses of technology required in a modern

hospital, a healthcare facility would be incapable of retrieving patient information; meeting

the pharmaceutical needs of those patients; processing insurance and payment information;

conducting research; operating its security systems; communicating interdepartmentally; and

completing innumerable additional functions necessary to meet the quotidian needs of both

staff and patients. In addition to the IT department and its employees, the Hospital had

housekeeping employees working to prepare the facilities for the imminent arrival of

patients; security employees who were actively guarding the premises; and environmental

employees in charge of overseeing the climate needs of the facility. All of these employees

       22
            See supra note 21.
       23
        The fact that the healthcare services were being provided at the Clarksburg property
does not negate the physical use of the Bridgeport property to meet the Hospital’s IT needs.

                                               17

who were physically present at the Bridgeport facility were either directly contributing to the

provision of charitable purposes that were taking place at another location or they were

readying the Bridgeport premises for the facility’s forthcoming admission of patients.24



            Upon analysis, we are simply not persuaded by the respondents’ contention that

on-site physical provision of charitable healthcare is the only means by which the Hospital

can demonstrate the requisite “actual use” of the Bridgeport property for charitable purposes.

While the respondents wish to view the Hospital’s entitlement to an ad valorem tax

exemption solely under the regulations that pertain to hospitals, section nineteen of the

subject regulation makes clear that the use of the property “must be for one or more exempt

purposes.” 110 C.S.R. § 110-3-19.1. In short, if the Hospital qualifies under the more

general purpose of simply using its property for charitable purposes and not being held or

leased out for profit, that is sufficient. See W.Va. Code § 11-3-9(a)(12); Reynolds Mem’l

Hosp., 78 W.Va. at 687, 90 S.E. at 239 (“If the property is used for charitable purposes



       24
         Due to the physical use of the subject property for work that qualifies as integral to
the provision of charitable healthcare services, we find it unnecessary to decide whether the
construction process itself can be viewed as a necessary part of an organization’s provision
of charitable services. We note, however, that other courts have ruled accordingly. See, e.g.,
Abbott Ambulance, Inc. v. Leggett, 926 S.W.2d 92, 95 (Mo. App. 1996) (stating that “use of
the property in constructing the facility as a prerequisite to such [charitable] use should
likewise be considered a charitable use”); Overmont Corp. v. Board of Tax Revision, 388
A.2d 311, 312 (1978) (ruling that construction of facilities by charity constitutes use for
purposes of tax exemption and observing that “[t]o hold otherwise would tend to impede the
purposes for which the tax exemption was created”).

                                              18

within the meaning of the Constitution, then it is exempt from taxation; if it is not so used

it is not exempt”); accord State ex rel. Cook v. Rose, 171 W.Va. 392, 394, 299 S.E.2d 3, 5

(1982) (“Therefore, a hospital may only be entitled to a property tax exemption for property

not held or leased out for profit and used solely for charitable purposes.”). Rather than its

operation as a hospital per se, it is the dispensation of charity that determines the Hospital’s

entitlement to an exemption in this case.



              Our conclusion on this issue is further buttressed by an examination of the

objective underlying the regulation upon which the respondents rely. In withholding a tax

exemption for property purchased by a hospital intended for construction until there is a

clear indication that charitable purposes will be accomplished on such property, the

Legislature stated its valid concern that the vacant property might be sold and used for

noncharitable purposes. See 110 C.S.R. § 3-24.17.1. As of July 1, 2010, with construction

of the Bridgeport hospital facility 95% complete and multiple departments already located

and operating on site, the possibility that the Hospital would seek to sell this property to a

profit-seeking entity had long since passed.         Consequently, we think it somewhat

disingenuous of the respondents to rely upon a regulation aimed at securing the extension

of tax exemptions to property with indisputable indicia of charitable purpose usage. On the

assessment date, it strains credulity to suggest that any doubt remained regarding the use of

the Bridgeport property for charitable purposes. And, as discussed above, the property was


                                              19

in fact currently being used to accomplish charitable purposes–albeit at another location.



                 What has always been pivotal in any determination regarding entitlement to tax

exemption is the absence of profit making combined with the concurrent incident of public

beneficence. In exchange for the indisputable benefits to society, which typically have a

consequent reduction in governmental burdens, a tax exemption is extended to the charitable

provider. See Bethesda Gen’l Hosp. v. State Tax Comm’n, 396 S.W.2d 631, 633-34 (Mo.

1965) (recognizing that charitable exemptions are given in return for performance of

functions which benefit public, and consequently relieve state’s burden to care for and

advance interests of its citizenry); Abel, supra, 55 W.Va. L. Rev. at 188 (stating that rationale

of extending tax exemption for charitable purposes “is a reciprocal of benefit conferred on

the people of the state by the exemption beneficiary”). The respondents do not challenge the

benefits that the Hospital confers on this state’s citizens through its now fully-operational

Bridgeport facility. Instead, they seek to benefit from the construction-related delays over

which the Hospital appears to have had little control.25 Not only do we find their approach

unduly restrictive, but we have little doubt that it is not in keeping with what this state’s

constitutional framers intended.



                 While the respondents seek to offensively apply the rule of strict construction


       25
            See supra note 2.

                                                20

with regard to the extension of tax exemptions,26 they overlook the corollary requirement

that such construction must be rational. Patterson Mem’l Fund v. James, 120 W.Va. 155,

157, 197 S.E. 302, 303 (1938) (“While judicial construction of tax exemptions should be

strict, it should be rational.”) (overruled on other grounds as stated in Central Realty, see

Syl. Pt. 3, 126 W.Va. 915, 30 S.E.2d 720). As we held in syllabus point three of Kittle, “[a]

constitutional provision authorizing legislative exemption of property from taxation is

strictly construed and nothing can be exempted that does not fall within its terms; but

rational construction within the terms used is required as well as permitted.” 87 W.Va. 526,

105 S.E. 775. This Court provided additional enlightenment, stating in Kittle:

                     The only arbitrary requirement of the rule of strict
              construction, however, is that its subject matter must be within
              the terms, as well as the spirit, of the provision under
              construction. It does not require assignment to terms actually
              used, of the most restricted meaning of which they are
              susceptible, nor any particular meaning. So long as the court
              stays within the terms used, it may give effect to the spirit,
              purpose, and intent of the makers of the instrument. The rule
              permits, and other law requires, rational interpretation within
              the terms actually used.

87 W.Va. at 529-30, 105 S.E. at 776; see also Mountain View Cemetery Co. v. Massey, 109

W.Va. 473, 477, 155 S.E. 547, 549 (1930) (observing that “a strict construction must be



       26
          “Constitutional and statutory provisions exempting property from taxation are
strictly construed. It is incumbent upon a person who claims his property is exempt from
taxation to show that such property clearly falls within the terms of the exemption; and if any
doubt arises as to the exemption, that doubt must be resolved against the one claiming it.”
Syl. Pt. 2, Hillcrest Mem’l Gardens, 146 W.Va. at 337, 119 S.E.2d at 754.

                                              21

reasonable and not limited so as to defeat the underlying purpose of the statute”); accord

Trotter v. Tennessee, 290 U.S. 354, 356 (1933) (recognizing that tax exemptions “are not

to be read so grudgingly as to thwart the purpose of the lawmakers”).



              Our review of this state’s tax exemption laws reveals that the overarching

concern in looking to a property’s usage was to ensure that such usage properly fell within

the scope of the state’s enumerated subjects entitled to tax exemption. See W.Va. Const. art.

X, § 1. Given the inarguable benefits that inure to society from the provision of charitable

services, such as those provided by the Hospital, we find it doubtful that the constitutional

framers sought to deny tax exemption where such laudable eleemosynary purposes are being

achieved.27 See Prichard v. County Court of Kanawha County, 109 W.Va. 479, 486, 155

S.E. 542, 545 (1930) (observing that “it is the purpose of our state under its tax laws to deal

liberally with and foster and encourage all charitable and educational institutions when their

conduct and operation does not result in private gain”) (overruled on other grounds as stated



       27
          The Hospital observes that if it is required to pay ad valorem property taxes on the
Bridgeport property for tax year 2010, there will be a consequent reduction in funds available
to meet its charitable purposes. See Abbott Ambulance, 926 S.W.2d at 97 (observing that
“[d]enial of an exemption during construction of a facility which is to be used for an
unquestionably charitable activity necessarily increases the cost, thereby diminishing the
charity’s ability to carry out its activities for the benefit of the public”). We note that the
Hospital, in keeping with our state regulations, did pay ad valorem taxes on the Bridgeport
property from the time of the property’s purchase in 2006 through 2010. See 110 C.S.R. §
3-24.17.1. At such time, the property had not yet begun to be used for charitable purposes.
Id. at § 3-24.17.3.

                                              22

in Central Realty, see Syl. Pt. 3, 126 W.Va. 915, 30 S.E.2d 720). Rather than a “gotcha”

type of calendar-focused interpretation, we are convinced that a rational construction of the

tax exemption extended by West Virginia Code § 11-3-9(a)(12) is required by the facts of

this case. And by applying that type of a construction, we are compelled to conclude that

charitable purposes were unquestionably being achieved by the Hospital on the legal date

of assessment. Accordingly, we hold that a healthcare corporation, qualified as a charitable

organization under federal law, whose construction of a replacement hospital facility is

substantially complete on the legal date of assessment and who has significant departmental

staff on site working to fulfill the organization’s charitable purposes, comes within the spirit,

purpose, and intent of the constitutional framers for purposes of entitlement to exemption

from ad valorem property taxation pursuant to West Virginia Code § 11-3-9(a)(12).



                                       IV. Conclusion

               Based on the foregoing, the decision of the Circuit Court of Harrison County

is reversed.

                                                                                      Reversed.




                                               23

