College Corner, L.P. v. Dlgf

• Decision Date: 19 January 2006
• Docket Number: No. 49T10-0201-TA-1.,49T10-0201-TA-1.
• Citation: 840 N.E.2d 905
• Parties: COLLEGE CORNER, L.P., Petitioner, v. DEPARTMENT OF LOCAL GOVERNMENT FINANCE,<SMALL><SUP>1</SUP></SMALL> Respondent.
• Court: Indiana Tax Court

Page 905

840 N.E.2d 905

COLLEGE CORNER, L.P., Petitioner, v. DEPARTMENT OF LOCAL GOVERNMENT FINANCE,¹ Respondent.

No. 49T10-0201-TA-1.

Tax Court of Indiana.

January 19, 2006.

Kurt F. Pantzer, III, Attorney at Law, Indianapolis, for Petitioner.

Steve Carter, Attorney General of Indiana, Ted J. Holaday, Deputy Attorney General, Indianapolis, for Respondent.

FISHER, J.

College Corner, L.P. (CCLP) appeals the final determination of the State Board of Tax Commissioners (State Board) denying its request for a property tax exemption for the 2000 tax year (the year at issue). The sole issue before this Court is whether CCLP is entitled to the charitable purposes exemption provided by Indiana Code § 6-1.1-10-16(a).

FACTS AND PROCEDURAL HISTORY

CCLP, a limited partnership, was formed on February 11, 2000. It is comprised of one general partner, the Old Northside Foundation, Inc. (ONF), and one limited partner, the National City Community Development Corporation (NCCDC). ONF is a 501(c)(3) charitable organization and an Indiana not-for-profit corporation, while NCCDC is an Ohio for-profit corporation.

CCLP was formed with the purpose of revitalizing the College Corner area of Indianapolis' historic Old Northside.² In particular, CCLP's goal is to rebuild the area's deteriorating infrastructure, renovate the existing homes there, and build new homes that will reflect the historical character of the neighborhood. To help achieve this goal, NCCDC contributed $248,000 in equity to CCLP.³ These funds were used to secure mortgages on 17 parcels in College Corner.⁴ As each property is redeveloped and sold, NCCDC is to receive a fixed 7% return on its investment. Thus, for example, if NCCDC has a $6,000 mortgage on a particular parcel, it will receive a return of $6,000 plus 7% of that amount when the parcel is sold.⁵ It is estimated that, once completed, the homes (both renovated and new) in College Corner will sell for between $180,000 to $225,000.

For the March 1, 2000 assessment date, CCLP filed Applications For Property Tax Exemption (Forms 136) for each of its 17 parcels, claiming that it was entitled to the charitable purposes exemption provided by Indiana Code § 6-1.1-10-16(a). CCLP sought this exemption only for the period of time during which it owned, used and occupied the parcels in order to rebuild College Corner's infrastructure. The Marion County Property Tax Assessment Board of Appeals (PTABOA) denied these applications on December 15, 2000. CCLP appealed the PTABOA's determination to the State Board. After conducting an administrative hearing on the matter, the State Board issued a final determination in which it affirmed the PTABOA's denial of exemption.

On January 2, 2002, CCLP initiated an original tax appeal. The Court heard the parties' oral arguments on November 26, 2002. Additional facts will be supplied as necessary.

ANALYSIS AND OPINION

Standard of Review

This Court gives great deference to final determinations of the State Board when it acts within the scope of its authority. Hamstra Builders, Inc. v. Dep't of Local Gov't Fin., 783 N.E.2d 387, 390 (Ind. Tax Ct.2003). Consequently, the Court will reverse a final determination of the State Board only if it is unsupported by substantial evidence, arbitrary, capricious, constitutes an abuse of discretion, or exceeds statutory authority. Id.

A taxpayer who seeks to overturn a State Board final determination bears the burden of proving its invalidity. Id. In order to meet that burden, the taxpayer must have submitted, during the administrative hearing process, probative evidence regarding the alleged assessment error. See Osolo Township Assessor v. Elkhart Maple Lane Assocs., 789 N.E.2d 109, 111 (Ind. Tax Ct.2003) (footnote omitted). Probative evidence is evidence sufficient to establish a given fact that, if not contradicted, will remain sufficient. Id. at n. 4. Once the taxpayer demonstrates a prima facie case, the burden shifts to the State Board to rebut the taxpayer's evidence and to support its final determination with substantial evidence. Clark v. State Bd. of Tax Comm'rs, 694 N.E.2d 1230, 1233 (Ind. Tax Ct.1998).

Discussion

In Indiana, all tangible property is subject to taxation. See IND. CODE ANN. § 6-1.1-2-1 (West 2000). Nevertheless, the Indiana Constitution provides that the legislature may exempt certain categories of property from taxation. See IND. CONST. art. X, § 1. Pursuant to this grant of authority, the legislature enacted Indiana Code § 6-1.1-10-16(a), which provides that "[a]ll or part of a building is exempt from property taxation if it is owned, occupied, and used [] for educational, literary, scientific, religious, or charitable purposes." IND. CODE ANN. § 6-1.1-10-16(a) (West 2000). This exemption also generally extends to the land on which the exempt building is situated, as well as personal property that is contained therein. See A.I.C. § 6-1.1-10-16(c), (e).

The taxpayer bears the burden of proving that it is entitled to the exemption it seeks. State Bd. of Tax Comm'rs v. New Castle Lodge # 147, Loyal Order of the Moose, Inc., 765 N.E.2d 1257, 1259 (Ind.2002). Accordingly, a taxpayer seeking a charitable purposes exemption pursuant to Indiana Code § 6-1.1-10-16(a) must demonstrate that it owns, occupies, and uses its property for a charitable purpose and that the charitable purpose is the property's predominant use. Indianapolis Osteopathic Hosp., Inc. v. Dep't of Local Gov't Fin., 818 N.E.2d 1009, 1014 (Ind. Tax Ct.2004) (citation omitted), review denied. If the predominant use of the property furthers a charitable purpose, exemption may be granted even if income deemed incidental to the charity's exempt purpose was received. See State Bd. of Tax Comm'rs v. Indianapolis Lodge # 17, Loyal Order of Moose, Inc., 245 Ind. 614, 200 N.E.2d 221, 225 (1964).

Although exemptions in general are to be strictly construed against the taxpayer and in favor of the State,⁶ the term "charity," as used in the property tax exemption statute, is to be defined and understood in its broadest constitutional sense. Indianapolis Osteopathic Hosp., 818 N.E.2d at 1014 (footnote added). Accordingly, a charitable purpose will generally be found to exist if: (1) there is "evidence of relief of human want. . . manifested by obviously charitable acts different from the everyday purposes and activities of man in general[;]" and (2) there is an expectation that a benefit will inure to the general public sufficient to justify the loss of tax revenue.⁷ See Indianapolis Elks Bldg. Corp. v. State Bd. of Tax Comm'rs, 145 Ind.App. 522, 251 N.E.2d 673, 683 (1969); Foursquare Tabernacle Church of God in Christ v. State Bd. of Tax Comm'rs, 550 N.E.2d 850, 854 (Ind. Tax Ct.1990) (citation omitted) (footnote added).

CCLP argues that it is entitled to the charitable purposes exemption for the period of time it spent rebuilding College Corner's infrastructure during the year at issue. Specifically, CCLP claims that by rebuilding the neighborhood's infrastructure, it has preserved the area's historic character, prevented community deterioration, and relieved the burdens of government, all of which are charitable purposes. (See Pet'r Br. at 8-9.) The DLGF contends, on the other hand, that CCLP has not established that it has used the property to provide "relief of human want" as Indiana law requires, and thus has not shown that it is using the property to fulfill a charitable purpose. (See Resp't Br. at 10-11.)

It is true, as the DLGF suggests, that CCLP is not providing relief of human want in the sense that it is helping those less fortunate or those who lack the means and/or ability to help themselves.⁸ As previously stated, however, the term "charity" must be broadly construed and, thus, encompasses more than simply providing relief to the needy. See Indianapolis Osteopathic Hosp., 818 N.E.2d at 1014; cf. Knox County Prop. Tax Assessment Bd. of Appeals v. Grandview Care, Inc., 826 N.E.2d 177 (Ind. Tax Ct.2005) (holding that the provision of care and comfort to the elderly constitutes a charitable purpose); Sangralea Boys Fund, Inc. v. State Bd. of Tax Comm'rs, 686 N.E.2d 954 (Ind. Tax Ct.1997) (holding that the provision of guidance and education for troubled children constitutes a charitable purpose), review denied. See also Clubs of California for Fair Competition v. Kroger, 7 Cal.App.4th 709, 9 Cal.Rptr.2d 247, 251 (1992) (observing that "charity is not confined solely to the relief of the needy and destitute, but comprehends as well activities which are humanitarian in nature and rendered for the general improvement and betterment of mankind") (internal quotation marks and citation omitted), review denied. Bearing this in mind, it is clear that CCLP provides a general benefit to the community that is charitable in nature.

According to CCLP, restoration of the infrastructure serving the College Corner area will help to combat community deterioration. (Pet'r Br. at 9; Cert. Admin. R. at 281-82, 289-91.) Prior to the start of CCLP's efforts in College Corner, the area had seen virtually no development in the previous twenty years. (Cert. Admin. R. at 281.) Financial institutions had "redlined" mortgages in the area, which was riddled with abandoned homes and vacant lots. (See Pet'r Br. at 2; Cert. Admin. R. at 240-45, 289.) As Kurt Pantzer, Director of CCLP, explained, "the detrimental effects of this neglect spill[ed] out into surrounding neighborhoods and provide[d] fertile ground for drug sales and crime." (Cert. Admin. R. at 281.) Rebuilding the neighborhood's infrastructure by renovating and adding sidewalks and alleys will serve as the foundation for further development in the area and, according to CCLP, lead to revitalization and repopulation of the historic neighborhood. In addition, as homes are developed and sold, the area's tax base will increase. (See Pet'r Br. at 9-10; Cert. Admin. R. at 293.)

Another benefit resulting from CCLP's...