Athens Cty. Aud. v. Wilkins, 2004-0594.

• Decision Date: 05 October 2005
• Docket Number: No. 2004-0594.,2004-0594.
• Citation: 2005 Ohio 4986,834 N.E.2d 804,106 Ohio St.3d 293
• Court: Ohio Supreme Court
• Parties: ATHENS COUNTY AUDITOR, Appellee, v. WILKINS, Tax Commr., Appellee; Lee & L'Heureux Properties, L.L.C., Appellant.

834 N.E.2d 804

106 Ohio St.3d 293

2005-Ohio-4986

ATHENS COUNTY AUDITOR, Appellee, v. WILKINS, Tax Commr., Appellee; Lee & L'Heureux Properties, L.L.C., Appellant.

No. 2004-0594.

Supreme Court of Ohio.

Submitted June 14, 2005.

Decided October 5, 2005.

Rich, Crites & Dittmer and James R. Gorry, Columbus, for appellee Athens County Auditor.

Bricker & Eckler, L.L.P., Mark A. Engel, and Alan D. Duffy, Columbus, for appellant.

O'DONNELL, J.

{¶ 1} The issue addressed in this appeal is whether two privately owned dormitories located adjacent to Hocking Technical College in Nelsonville, Ohio ("Hocking") qualify for a property-tax exemption pursuant to either R.C. 3357.14 or 5709.07(A)(4).

{¶ 2} The owner of the property at issue here, Lee & L'Heureux Properties, L.L.C. ("L & L"), built the dormitories in 1998 and 1999. Along with a parking lot and some recreational space, the dormitories are situated on a 20-acre parcel of land directly across the Hocking River from the college campus and are accessible by a bridge over the river. The college has no ownership interest or tax obligation with respect to the dormitories and has not applied for, and would not benefit from, the tax exemptions sought by L & L.

{¶ 3} The college has, however, worked closely with L & L since the dormitories' inception. For instance, a vice president of the college assisted L & L in securing financing for constructing the dormitories, while the college's development director assisted L & L in designing the dormitories to meet student needs and promote the college's educational mission. The college entered into contracts with L & L to list the dormitories, once completed, as "campus housing" in student housing information.

{¶ 4} Moreover, the college plays an active role in administrating the dormitories, which house only Hocking students. The college sets dormitory rules regarding smoking, alcohol use, pets, and quiet hours, etc., and coordinates student room assignments and move-in and move-out dates. In addition, the college collects student rental payments—whose annual amounts are jointly determined by L & L and the college—deducts its management and operation costs plus an $8,000 annual marketing fee for promoting student occupancy in L & L's dormitories, and forwards the balance to L & L. Students who fail to pay rent are prohibited from registering for classes at the college.

{¶ 5} In 2001, L & L sought an exemption with the Tax Commissioner for taxes owed or already paid on the property for tax years 2000 and 2001. Finding that the dormitories were exempt pursuant to R.C. 3357.14, the Tax Commissioner ordered all taxes, penalties, and interest for 2000 remitted and granted L & L an exemption for 2001, which the Athens County Auditor appealed to the Board of Tax Appeals ("BTA"). The BTA reversed the Tax Commissioner's decision, concluding that neither R.C. 3357.14 nor 5709.07(A)(4) allows private, for-profit entities like L & L to receive tax exemptions for rental property used by technical college students.

{¶ 6} L & L appealed to this court, claiming that regardless of whether the college or a private entity actually owns it, property "connected with" or "used by" a technical college is exempt from taxation under either R.C. 5709.07(A)(4) or 3357.14. Conversely, the Athens County Auditor asserts that because the property is not "connected with" the college within the meaning of R.C. 5709.07(A)(4), L & L is prohibited from receiving an exemption pursuant to that statutory provision. And, with respect to R.C. 3357.14, the auditor argues that since the college does not own the property or have any obligation to pay taxes on it, L & L cannot claim an exemption through the college solely because its students are housed in L & L's dormitories.

{¶ 7} For the following reasons, we agree with the auditor's position and affirm the BTA's decision.

{¶ 8} We review a decision of the BTA to determine whether it is "reasonable and lawful." Columbus City School Dist. Bd. of Edn. v. Zaino (2001), 90 Ohio St.3d 496, 497, 739 N.E.2d 783. Although we "will not hesitate to reverse a BTA decision that is based on an incorrect legal conclusion," Gahanna-Jefferson Local School Dist. Bd. of Edn. v. Zaino (2001), 93 Ohio St.3d 231, 232, 754 N.E.2d 789, "[t]he BTA is responsible for determining factual issues and, if the record contains reliable and probative support for these BTA determinations," this court will affirm the BTA's decision. Am. Natl. Can Co. v. Tracy (1995), 72 Ohio St.3d 150, 152, 648 N.E.2d 483. Moreover, any claimed tax exemption must be strictly construed, and the taxpayer must affirmatively establish a right to the exemption. Campus Bus Serv. v. Zaino, 98 Ohio St.3d 463, 2003-Ohio-1915, 786 N.E.2d 889, ¶ 8. See, also, R.C. 5715.271, stating that "the burden of proof shall be placed on the property owner to show that the property is entitled to exemption."

{¶ 9} We turn first to L & L's claim that R.C. 3357.14 provides an exemption for the property in question. That provision states: "A technical college district shall not be required to pay any taxes or assessments upon any real or personal property acquired, owned, or used by" the district.¹ In this case, neither Hocking nor its technical college district is "required to pay any taxes or assessments" on L & L's property. Since L & L is the sole property owner, it alone is responsible for paying taxes on that property.

{¶ 10} While we recognize that the facts suggest that the college maintains a substantial relationship to the property, the BTA correctly concluded that the dormitories are not "used by" the college within the meaning of R.C. 3357.14. Instead, Hocking students use dormitories owned, insured, and operated by L & L through its agreements with the college, and, as the BTA noted, "[w]hile L & L may have chosen not to exercise all of its rights on a consistent basis under its agreements with Hocking Tech, there has been no evidence offered to indicate that it has `given up' its rights under said agreements or amended the agreements in such a manner as to permanently relinquish the rights and responsibilities it contracted for under said agreements."

{¶ 11} L & L has no education-related mission; it exists to earn a profit by renting temporary housing accommodations to students attending the college. The BTA reasonably determined that the General Assembly promulgated R.C. 3357.14's tax exemption to reduce the tax burden on higher education facilities; not to shelter private property owners who build and maintain student housing near college campuses. The General Assembly has enacted similar tax exemptions for state and municipal colleges and universities, community college districts, and university branch districts. See R.C. 3345.17, 3349.17, 3354.15, and 3355.11. None of these statutes, however, exempt private landowners from paying taxes on property located near, or even on, a college or university campus.

{¶ 12} Accordingly, we agree with the BTA's decision and hold that because R.C. 3357.14 grants a tax exemption only to "technical college districts," and because L & L's property is not "used by" the college within the meaning of the statute, L & L is prohibited from receiving a tax exemption pursuant to R.C. 3357.14.

{¶ 13} We turn now to L & L's contention that it is entitled to a property-tax exemption pursuant to R.C. 5709.07(A)(4). In reviewing this claim below, the BTA, citing Rickenbacker Port Auth. v. Limbach (1992), 64 Ohio St.3d 628, 631, 597 N.E.2d 494, concluded that because "a property, to be exempt, must qualify under the criteria of the statute specifically applicable to that property," and because R.C. 3357.14 is the only statutory provision directly related to property-tax exemptions for technical colleges, R.C. 5709.07(A)(4) cannot provide L & L with a property-tax exemption. While we agree that R.C. 3357.14 is the only appropriate statutory provision under which to consider L & L's application for exemption, like the BTA, we will address L & L's argument regarding the applicability of R.C. 5709.07(A).

{¶ 14} R.C. 5709.07(A) states:

{¶ 15} "The following property shall be exempt from taxation:

{¶ 16} "* * *

{¶ 17} "(4) Public colleges and academies and all buildings connected with them, and all lands connected with public institutions of learning, not used with a view to profit."

{¶ 18} Since L & L is not itself a public college, academy, or public institution of learning, the critical...