Building Operated by Salvation Army Exempt

Facts: The Salvation Army, a charitable organization, bought a building in 1954, which it operated as a residence for low- to moderate-income women. The residence was run on a nonsectarian basis, providing lodging and meals along with hotel services and other amenities at rates of $121 to $134 per week. Some religious services were offered at the residence on a volunteer basis. There was no church or chapel there. Between 1983 and 1989, the residence was operated at a cumulative deficit of over $300,000. Landlord Salvation Army sued to evict several residents for nonpayment of rent. The residents claimed they were subject to rent stabilization and that the petitions should be dismissed. The trial court ruled for residents, finding that the religious purposes of the Salvation Army pervaded its operation to such a significant extent that it couldn't claim exemption from rent stabilization. Landlord appealed. Court: Landlord wins. Landlord operates the residence exclusively for a charitable purpose on a not-for-profit basis; it is, therefore, exempt from rent stabilization. Residents had claimed that the residence wasn't ''exclusively'' charitable because the Salvation Army was a religious organization. But the exclusive use is the principal or primary one. The principal purpose of the operation of the residence is to provide secure lodging and meals on a nonsectarian basis to working women of modest means. This is clearly a charitable purpose. The voluntary religious services offered are organized by residents, not by management, and are only incidental.

The Salvation Army, Inc. v. Cruz: NYLJ, p. 29, col. 3 (5/6/94) (App. T. 1 Dept.; Ostrau, PJ, Miller, McCooe, JJ)