Hous. Partnerships, Inc. v. Owens

• Decision Date: 06 June 2014
• Docket Number: No. 49T10–1005–TA–23.,49T10–1005–TA–23.
• Parties: HOUSING PARTNERSHIPS, INC., Petitioner, v. Tom OWENS, Bartholomew County Assessor, Respondent.
• Court: Indiana Tax Court

10 N.E.3d 1057

HOUSING PARTNERSHIPS, INC., Petitioner,

v.Tom OWENS, Bartholomew County Assessor, Respondent.

No. 49T10–1005–TA–23.

Tax Court of Indiana.

June 6, 2014.

Sandra K. Bickel, Morse & Bickel P.C., Indianapolis, IN, Attorney for Petitioner.

Gregory F. Zoeller, Attorney General of Indiana, Jessica E. Reagan, Deputy Attorney General, Indianapolis, IN, Attorneys for Respondent.

Paul M. Jones, Jr., Matthew J. Ehinger, Indiana Association for Community Economic Development, Inc., Indianapolis, IN, Attorneys for Amicus Curiae.

WENTWORTH, J.

This case asks the Court to determine whether the Indiana Board of Tax Review erred when it held that for the 2006 tax year, Housing Partnerships, Inc. failed to show that its rental properties qualified for the charitable purposes exemption provided in Indiana Code § 6–1.1–10–16. The Court affirms the Indiana Board's holding.

FACTS AND PROCEDURAL HISTORY

Housing Partnerships, an Indiana corporation, was formed in 1990. Its articles of incorporation state that it “is organized and operated not for profit but exclusively for charitable purposes.” (Cert. Admin. R. at 548.) More specifically, Housing Partnerships' stated purpose is “to undertake, promote, develop, and encourage any activity or means to ameliorate the housing needs of disadvantaged persons without regard to race, religion, sex, or national origin; and to that end, to sponsor, support and promote, and to undertake housing projects” in Bartholomew County, Indiana. (Cert. Admin. R. at 548, 566.) In accordance with that stated purpose, Housing Partnerships' objectives are

[ ] To build or cause to be built, and to rehabilitate or cause to be rehabilitated, housing units for persons of low-income or moderate-income ... and to rent or sell such housing units, without profit; to persons and families not otherwise able to obtain housing that is decent, safe and sanitary [; and]

* * * * * *

[ ] To determine and investigate standards of housing; to foster any means for finding more efficient means of housing production which reduce the costs of housing for disadvantaged persons; to make available to the public general information relating to the conditions in which disadvantaged persons are compelled to live; and to promote within the community such goals as may complement the activities of [Housing Partnerships].

(Cert. Admin. R. at 548.) Housing Partnerships funds its housing projects by using money from several different sources: the income it receives from both the sale and the rental of its housing units, donations from individuals and businesses, and monies received from various public and private grants. ( See, e.g., Cert. Admin. R. at 637, 1251–57, 1268.) In 2005 alone, Housing Partnerships received over $1 million in federal grant money. ( See Cert. Admin. R. at 637, 1250–59.)

In 2006, Housing Partnerships owned numerous single family homes, duplexes and small apartment buildings in Bartholomew County. Housing Partnerships rented these properties (or the units in them) to individuals whose annual incomes were at or below 60% of the area median income (adjusted for family size). ¹

On February 3, 2006, Housing Partnerships filed an Application For Property Tax Exemption on each of its rental properties and its administrative office (the subject properties). The applications claimed that the subject properties were entitled to the charitable purposes exemption set forth in Indiana Code § 6–1.1–10–16 because they were used to provide housing to low-income individuals and families. ( See, e.g., Cert. Admin. R. at 8–9.) On March 13, 2007, the Bartholomew County Property Tax Board of Appeals (PTABOA) denied the applications.

Housing Partnerships subsequently appealed to the Indiana Board. The Indiana Board conducted a hearing on the appeal on January 30, 2009. On April 6, 2010, the Indiana Board issued a final determination affirming the PTABOA's exemption denial because Housing Partnerships' evidence failed to establish a prima facie case that the subject properties were entitled to the charitable purposes exemption. ( See, e.g., Cert. Admin. R. at 475 ¶ 35.) The Indiana Board's final determination also stated that to the extent Housing Partnerships had received a substantial amount of money through federal grants, but did not explain what, if any, terms and conditions were attached to that financial support, an exemption was not proper. (Cert. Admin. R. at 476–77 ¶¶ 37–39.)

On May 21, 2010, Housing Partnerships initiated this original tax appeal. The Court heard oral argument on November 15, 2011. Additional facts will be supplied as necessary.

STANDARD OF REVIEW

This Court gives great deference to final determinations of the Indiana Board when it acts within the scope of its authority. Tipton Cnty. Health Care Found. v. Tipton Cnty. Assessor, 961 N.E.2d 1048, 1050 (Ind. Tax Ct.2012). Consequently, the Court will overturn an Indiana Board final determination only if it is:

(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(2) contrary to constitutional right, power, privilege, or immunity;

(3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory jurisdiction, authority, or limitations;

(4) without observance of procedure required by law; or

(5) unsupported by substantial or reliable evidence.

Ind.Code § 33–26–6–6(e)(1)–(5) (2014). Housing Partnerships, as the party seeking to overturn the Indiana Board's final determination, bears the burden of establishing its invalidity. See Osolo Twp. Assessor v. Elkhart Maple Lane Assocs., 789 N.E.2d 109, 111 (Ind. Tax Ct.2003).

LAW

The charitable purposes exemption, set forth in Indiana Code § 6–1.1–10–16, provides that “[a]ll or part of a building is exempt from property taxation if it is owned, occupied, and used ... for ... charitable purposes.” Ind.Code § 6–1.1–10–16(a) (2006). The exemption also extends to the land on which an exempt building is situated and the personal property that is contained therein. SeeI.C. § 6–1.1–10–16(c), (e). Accordingly, a taxpayer seeking a charitable purposes exemption under Indiana Code § 6–1.1–10–16(a) must demonstrate that it owns, occupies, and predominantly uses its property for charitable purposes. See 6787 Steelworkers Hall, Inc. v. Scott, 933 N.E.2d 591, 595 (Ind. Tax Ct.2010); Ind.Code § 6–1.1–10–36.3(a) (2006).

Housing Partnerships is entitled to an exemption if it provided the Indiana Board with probative evidence ² that its ownership, occupation, and use of the subject properties as low-income housing constitute a charitable purpose. Because the provision of low-income housing is not per se a charitable purpose, see Jamestown Homes of Mishawaka, Inc. v. St. Joseph Cnty. Assessor, 909 N.E.2d 1138, 1144 (Ind. Tax Ct.2009), review denied, Housing Partnerships needed to demonstrate two things at the Indiana Board hearing. First, it must have shown that its ownership, occupation, and use of the subject properties as low-income housing provided “evidence of relief of human want ... manifested by obviously charitable acts different from the everyday purposes and activities of man in general.” See Indianapolis Elks Bldg. Corp. v. State Bd. of Tax Comm'rs, 145 Ind.App. 522, 251 N.E.2d 673, 683 (1969). Second, Housing Partnerships must have shown that through the accomplishment of those charitable acts, benefit inures to the public sufficient to justify the loss of tax revenue. See Foursquare Tabernacle Church of God in Christ v. State Bd. of Tax Comm'rs, 550 N.E.2d 850, 854 (Ind. Tax Ct.1990). In other words, an exemption is proper “when a private organization takes on a task that would otherwise fall to the government, [as] this provides a benefit to the community as a whole because it allows the government to direct its funds and attention to other community needs.” College Corner, L.P. v. Dep't of Local Gov't Fin., 840 N.E.2d 905, 910 (Ind. Tax Ct.2006).

ANALYSIS

On appeal, Housing Partnerships argues that the Indiana Board's final determination must be overturned for two reasons. First, it claims that the final determination is arbitrary, capricious, and an abuse of discretion because, in holding as it did, the Indiana Board ignored Housing Partnerships' evidence. Second, it claims that the Indiana Board's final determination is contrary to law.

I.

Housing Partnerships first claims that in reaching its determination, the Indiana Board abused its discretion by simply ignoring “the overwhelming amount of uncontroverted testimony” by its employees, its tenants, and the executive director of the Columbus Housing Authority. (Pet'r Br. at 16.) Housing Partnerships asserts that this testimony demonstrated that the subject properties were used to provide low-income individuals in the distressed areas of Bartholomew County with “clean, safe and secure housing ... at affordable and below-market rents” and with services and support designed “to assist them in becoming self-sufficient and productive members of the community.” (Pet'r Br. at 14.)

During the Indiana Board hearing, Housing Partnerships presented the testimony of Mark Lindenlaub, its president, and Connie Munn, its vice president. Their testimony established that Housing Partnerships had been recognized by the Internal Revenue Service as a 501(c)(3) organization, having met the federal statutory criteria to be exempted from federal income taxation as a charitable organization. ( See Cert. Admin. R. at 1211–12.) ( See also Cert. Admin. R. at 551–56.) In addition, their testimony established that because Housing Partnerships received federal grant monies, it was able to charge below-market rental rates for the subject properties. ( See Cert. Admin. R. at 1252–53, 1262, 1268, 1287–97, 1303–04.) ( See also

Cert. Admin. R. at 583–84, 609–26.) Their testimony also established that Housing Partnerships not only pays for its tenants to attend at least one credit counseling session, but it also has...