RI Supreme Court rules in favor of East Providence in $1.2M tax exemption case
Last Tuesday the Rhode Island Supreme Court determined that PACE Organization of Rhode Island (PACE-RI) is not eligible to receive a refund on a total of $1.2 million in personal and real estate taxes it has paid on property it owns at 10 Tripps Lane; nor will it be entitled to a tax exemption in the future.
PACE (Program of All-inclusive Care for the Elderly), is a healthcare facility that specifically strives to provide outpatient care for senior citizens, primarily those reliant on Medicaid and Medicare. They provide services to more than 450 patients statewide, and moved their headquarters to Riverside in 2021.
On Aug. 22, 2022, PACE-RI applied for tax exempt status on the property, according to the Supreme Court Decision reached on April 28, 2026. They did so under the argument that the PACE-RI’s facility fell into the definition of properties eligible for such status under Rhode Island General Laws § 44-3-3(a)(12), which states:
“…Property, real and personal, held for, or by, an incorporated library, society, or any free public library, or any free public library society, so far as the property is held exclusively for library purposes, or for the aid or support of the aged poor, or poor friendless children, or the poor generally, or for a nonprofit hospital for the sick or disabled[.]”
Specifically, PACE maintained that they were eligible for tax exempt status because their organization specifically provides assistance to the “aged poor”, and that most of their clients were people on Medicare and Medicaid.
East Providence Tax Assessor Sarah Frew denied that request on Nov. 18, 2022, citing that PACE was neither a library or a nonprofit hospital, as outlined in the statute. She further argued that PACE does not exclusively treat elderly people reliant on Medicare or Medicaid.
PACE appealed that denial to the East Providence Board of Assessment Review, arguing “[i]n Rhode Island, 98% of the people served by PACE are low-income elderly, and almost all of the rest are low-income, but just above the limits of Medicaid. Only one or two participants at any time are fully self-pay.”
PACE then delved into semantics of the law, arguing that the statute does not necessarily require an organization be a library or nonprofit hospital, since it specifically mentions the standalone word “society”, and that it does not require any organization to exclusively serve the “aged poor.”
The review board, however, upheld the denial. PACE then took the appeal to the Superior Court on March 10, 2023, with both sides making largely the same argument in two hearings held on Feb. 5 and March 6 of 2024.
Ultimately, the Superior Court found that the language of the statute — which was first passed in 1857 — was somewhat open to interpretation (ambiguous) in its writing and could potentially mean that other types of entities were eligible for tax exempt status.
However, due to established state law and legal precedent, such an ambiguity when it comes to tax exemptions triggers an automatic outcome — and not one in favor of PACE.
“The hearing justice ultimately rejected PACE’s interpretation, denied PACE’s motion for summary judgment, and granted the tax assessor’s cross-motion,” the Supreme Court decision reads. “‘[b]ecause exemption is not to be presumed and any doubt or ambiguity must be resolved in favor of taxation.’”
PACE’s appeal to the Supreme Court wound up with a similar outcome, where the court admitted to finding ambiguity in the statute language, but that finding only meaning they are legally obligated to defer to the entity seeking a tax exemption paying their taxes, and not be granted an exemption.
“Because we are bound to construe statutes which grant tax exemptions strictly… ‘if a doubt or ambiguity exist[s] in a statute granting an exemption, such doubt must be resolved in favor of taxation[,]’ … Therefore, we need not engage in any further analysis to resolve the ambiguity. ‘To say more would be to paint the lily.’”
Both sides respond
Mayor Bob DaSilva issued a press release following the ruling last week.
“While PACE is a great institution in our community which we helped relocate here through a zone change, my job as mayor is to look out for the best interests of all our taxpayers to ensure that everyone is paying their fair share,” DaSilva said in the release. “By litigating this claim all the way to our state’s highest court by my Solicitor Michael J. Marcello, we have ensured that PACE, and other institutions like it in our city, will continue to pay taxes which help support services like police, fire, and EMS that they use.”
PACE-RI issued a statement as well.
“We are deeply disappointed by the state Supreme Court's decision, which was based on the Court's perceived ambiguity in the law rather than questioning the merit of our work,” said Joan Kwiatkowski, CEO of PACE-RI. “With a growing number of impoverished, frail elders needing services and wanting alternatives to institutional care, programs like PACE should be resourced to grow. This property tax exemption case will force us to direct critical resources toward city government rather than provide care and jobs in the community. We call on Rhode Island lawmakers and leaders to work with us to codify locally what the US government has long recognized — that PACE services to frail elders with low income are so critical that they deserve to be tax exempt.”