KNOX CTY PROP. TAX ASSES. BD. OF APPEALS v. GRANDVIEW CASE, INC.

• Decision Date: 29 April 2005
• Docket Number: No. 49T10-0403-TA-15.,49T10-0403-TA-15.
• Citation: 826 N.E.2d 177
• Parties: KNOX COUNTY PROPERTY TAX ASSESSMENT BOARD OF APPEALS, Petitioner, v. GRANDVIEW CARE, INC., Respondent.
• Court: Indiana Tax Court

826 N.E.2d 177

KNOX COUNTY PROPERTY TAX ASSESSMENT BOARD OF APPEALS, Petitioner, v. GRANDVIEW CARE, INC., Respondent.

No. 49T10-0403-TA-15.

Tax Court of Indiana.

April 29, 2005.

Rhonda S. Miller, Bruce A. Smith, Sturm, Smith & Parmenter, Vincennes, IN, Attorneys for Petitioner.

Barton T. Sprunger, Katrina M. Clingerman, Ice Miller, Indianapolis, IN, Attorneys for Respondent.

FISHER, J.

The Knox County Property Tax Assessment Board of Appeals (PTABOA) appeals the final determination of the Indiana Board of Tax Review (Indiana Board) granting Grandview Care, Inc. (Grandview) a property tax exemption for the 2002 tax year (the year at issue). The sole question before the Court is whether Grandview's nursing home and assisted living facility, known as the BridgePointe Health Campus (BridgePointe), qualifies for the charitable purposes exemption as provided in Indiana Code § 6-1.1-10-16.

FACTS AND PROCEDURAL HISTORY

Grandview is an Indiana not-for-profit corporation.¹ It owns BridgePointe, a nursing home and assisted living facility in Vincennes, Indiana. BridgePointe provides various levels of care for its approximately 98 residents, ranging from short-term/transitional (with the intent on returning the patient to his/her home) to long-term/skilled.² While BridgePointe residents are charged a monthly fee to cover the costs of their living quarters, meals, laundry, and medical services, BridgePointe will not turn a resident away due to an inability to pay the monthly fee.

During the year at issue, Grandview contracted with Trilogy Health Services, LLC (Trilogy), a for-profit organization, to operate BridgePointe. For a monthly fee of $17,000, Trilogy was not only responsible for operating BridgePointe, but for maintaining its buildings, hiring (and firing) its employees, and ensuring compliance with all licensing and regulatory requirements as well. Trilogy was also responsible for paying all of BridgePointe's operating expenses, including payroll.³

On May 14, 2002, Grandview filed a Form 136 Application for Property Tax Exemption (Form 136) for the year at issue with the Knox County Auditor. In its Form 136, Grandview claimed that BridgePointe was entitled to the charitable purposes exemption because it provided "decent housing with safety and security, a sense of community, and attention to [the] emotional stability and physical wellness" of the elderly and needy in Knox County, Indiana. (Cert. Admin. R. at 117, 122.) On July 24, 2003, the PTABOA denied the application, stating that due to Grandview's contract with Trilogy, "the facility is being operated as a for-profit entity. We are [therefore] unable to relate Grandview... as being charitable[.]" (Cert. Admin. R. at 11.)

Grandview appealed the PTABOA's determination to the Indiana Board. After conducting an administrative hearing on the matter, the Indiana Board issued a final determination on February 12, 2004, in which it reversed the PTABOA. Specifically, the Indiana Board held that

[w]hether Grandview manages the facility itself, or contracts with a management company, the purpose of the property is the operation of a nursing home and assisted living facility to provide housing and care for the elderly.

[Grandview] owns, occupies and uses the property to provide housing and care for the elderly. The Tax Court has [previously] stated that a charitable purpose is accomplished by meeting the needs of the aging.

(Cert. Admin. R. at 55.)

On March 23, 2004, the PTABOA filed an original tax appeal. Both the PTABOA and Grandview subsequently agreed to have the case resolved on the basis of the administrative record and their briefs. The Court heard the parties' oral arguments on February 18, 2005. 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. Miller Village Prop. Co., LLP v. Indiana Bd. of Tax Review, 779 N.E.2d 986, 988 (Ind.Tax Ct.2002). Consequently, the Court will reverse a final determination of the Indiana Board 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 ANN. § 33-26-6-6(e)(1)-(5) (West 2005).

The party seeking to overturn the Indiana Board's final determination bears the burden of proving its invalidity. See Osolo Township Assessor v. Elkhart Maple Lane Assocs. L.P., 789 N.E.2d 109, 111 (Ind. Tax Ct.2003)

. In order to meet that burden, the party seeking reversal must have submitted, during the administrative hearing process, probative evidence regarding the alleged assessment error. Id. (footnote omitted). Probative evidence is evidence sufficient to establish a given fact that, if not contradicted, will remain sufficient. Id. at n. 4.

DISCUSSION AND ANALYSIS

Article 10, § 1 of the Indiana Constitution provides:

The General Assembly shall provide, by law, for a uniform and equal rate of property assessment and taxation and shall prescribe regulations to secure a just valuation for taxation of all property, both real and personal. The General Assembly may exempt from property taxation any property ... being used for municipal, educational, literary, scientific, religious, or charitable purposes.

IND. CONST. art. X, § 1(a)(1). Acting pursuant to this grant of authority, the legislature has enacted Indiana Code § 6-1.1-10-16, 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." See IND.CODE ANN. § 6-1.1-10-16(a) (West 2005). 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 PTABOA claims that the Indiana Board's determination that a charitable purpose exists in this case is erroneous for three reasons. First, it argues that because Grandview is not affiliated with any religious organization, there is "the lack of an identifiable charity." (Pet'r Br. at 4-5.) Second, it claims that while Grandview may own BridgePointe, it does not "occupy" or "use" it, as required by the exemption statute. (Pet'r Br. at 6.) Finally, the PTABOA argues that the evidence indicates that Grandview and Trilogy are clearly in business to generate a profit, which contradicts the existence of a charitable purpose. (See Pet'r Br. at 9-10.) The Court will address each of these arguments in turn.

1. "The Lack of an Identifiable Charity"

In essence, the PTABOA argues that because Grandview is not a religious organization, it cannot be a charity, and because it is not a charity, it cannot have a charitable purpose. The Court disagrees.

As early as 1879, the Indiana Supreme Court explained that a property's exempt status was tied to its use, and not to its owner. Indeed, as the Supreme Court explained, Article X, § 1 of the Indiana Constitution clearly "contemplates the character and purpose of the property that may be exempted from taxation, not the character and purpose of the owner of the property." State ex rel. Tieman v. City of Indianapolis, 69 Ind. 375, 376 (1879). This Court has repeatedly recognized that principle in its own jurisprudence. See, e.g., Indianapolis Osteopathic Hosp., Inc. v. Dep't of Local Gov't Fin., 818 N.E.2d 1009, 1015-19 (Ind.Tax Ct.2004)

(applying a "predominant use test" to determine whether property was exempt from taxation); Sangralea Boys Fund, Inc. v. State Bd. of Tax Comm'rs, 686 N.E.2d 954, 959 (Ind.Tax Ct.1997) (stating that "a property's exempt status is tied to its use"); Lincoln Hills Dev. Corp. v. State Bd. of Tax Comm'rs, 521 N.E.2d 1360, 1361 (Ind. Tax Ct.1988) (holding that a corporation's not-for-profit status did not automatically qualify it for an exemption under Indiana Code § 6-1.1-10-16; rather, the corporation had to show that the property was used for one of the listed purposes found in the statute). Accordingly, BridgePointe's entitlement to the charitable purposes exemption is not dependent on Grandview's status as a religious organization. Rather, the relevant question is whether BridgePointe is owned, occupied, and used for a charitable purpose.

The term "charitable purpose" is to be defined and understood in its broadest, constitutional sense. Indianapolis Elks Bldg. Corp. v. State Bd. of Tax Comm'rs, 145 Ind.App. 522, 251 N.E.2d 673, 682 (1969). Consequently, 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 of a benefit that will inure to the public by the accomplishment of such acts.⁴ See id. at 683; State Bd. of Tax Comm'rs v. Methodist Home for the Aged, 143 Ind.App. 419, 241 N.E.2d 84, 89 (1968) (footnote added).

To that end, Indiana courts have long recognized that providing care and comfort to the aged constitutes a charitable purpose. See Wittenberg Lutheran Village Endowment Corp. v. Lake County Property Tax Assessment Bd. of Appeals, 782 N.E.2d 483 (Ind.Tax Ct.2003); Raintree Friends Housing, Inc. v. Indiana Dep't of State Revenue, 667 N.E.2d 810 (Ind.Tax Ct.1996); Methodist Home for the Aged, 143 Ind.App. 419, 241 N.E.2d 84; Wilson v. Dexter, 135 Ind.App. 247, 192 N.E.2d 469, 474 (1963). Indeed, as this Court once explained:

Caring for the aged is a recognized benefit to the community at large and society as a whole. Indiana law recognizes that the aged require care and attention entirely independent

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