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Supreme Court sends tax dispute back to Merrimack Superior Court

The New Hampshire Supreme Court did not resolve a tax dispute yesterday between the city of Concord and a student loan servicer. Instead, the court sent the case back to Merrimack County Superior Court.

Granite State Management & Resources initially appealed its 2008 and 2009 property tax bills, arguing it is exempt from property taxes because it is a charitable organization that supports higher education and provides financial assistance to students. The city claims the corporation has no charitable purpose in its primary function as a student loan servicer and administrator.

The city appealed to the Supreme Court after a Merrimack County Superior Court judge ruled last year that Granite State Management & Resources is exempt from taxes.

Still at issue, according to yesterday’s ruling, is whether Granite State Management & Resources qualifies as a charitable organization. The ruling found there are still “genuine issues of material fact.” For example, the ruling said Granite State Management & Resources did not provide enough information to prove that its profits and surplus support a charitable purpose. The corporation had a surplus of $37 million and $40 million in 2008 and 2009, respectively, according to court filings.

“It is not apparent from the record whether the amount and purported use of GSMR’s surplus to protect itself from future contractual liability is consistent with its stated charitable purpose of ‘supporting the development of higher education and educational opportunities’ for students and parents,” the ruling stated.

But the court did not agree with either side; the ruling also dismissed some of the city’s arguments.

The corporation’s properties located off Regional Drive in Concord have a total assessed value of $8.57 million, according to the city’s assessment records. Granite State Management & Resources owns the property and provides management services for three other nonprofit corporations. Together, they form the NHHEAF Network Organizations.

As a loan servicer, Granite State Management & Resources contracts with lenders to service federally guaranteed loans and some private program loans.

The corporation offers a number of outreach services, including a Center for College Planning to help students obtain loans and search for grants or scholarships, free seminars for families and online resources, according to its court filings. However, the city had argued that the outreach services were not offered by Granite State Management & Resources, which should not be permitted to “piggy-back” on the work of its affiliate organizations.

The Supreme Court ruling also disagreed with the city’s argument about the NHHEAF Network Organizations’ structure.

“Making another organization’s activity more efficient does not disqualify an organization from a charitable tax exemption: a charitable organization may benefit the public indirectly,” the ruling states.

But the court also found that Granite State Management & Resources had not proven that it serves its purpose of advancing education.

“Thus, not only does the record provide no factual support for GSMR’s assertion that its structure results in savings for borrowers, and that these savings exceed those that a for-profit entity would provide, but the record in fact reflects that the organizations’ structure is novel and one for which few direct comparisons may be possible,” the ruling states.

The case will go to Merrimack County Superior Court, where a judge will take into account the court’s findings.

“Overall we’re pleased with the decision and we look forward to continuing this matter in Merrimack County Superior Court,” City Solicitor Jim Kennedy said yesterday.

Rene Drouin, president and CEO of the NHHEAF Network Organizations, declined to comment yesterday.

(Laura McCrystal can be reached at 369-3312 or or on Twitter @lmccrystal.)

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