State Teachers Retirement Bd. v. Kinney

• Decision Date: 30 December 1981
• Docket Number: No. 81-470,81-470
• Citation: 429 N.E.2d 1069,68 Ohio St.2d 195,22 O.O.3d 434
• Parties: , 22 O.O.3d 434, 1 Ed. Law Rep. 1265 STATE TEACHERS RETIREMENT BOARD, Appellee, v. KINNEY, Commr., Appellant.
• Court: Ohio Supreme Court

Page 195

68 Ohio St.2d 195

429 N.E.2d 1069, 22 O.O.3d 434, 1 Ed. Law Rep. 1265

STATE TEACHERS RETIREMENT BOARD, Appellee, v. KINNEY, Commr., Appellant.

No. 81-470.

Supreme Court of Ohio.

Dec. 30, 1981.

Syllabus by the Court

Real property comprising a parking lot owned by the State Teachers Retirement Board and used exclusively by its employees is neither used by the state for "a public purpose" nor used by the state "in furtherance of or incidental to its public purposes and not with the view to profit" within the meaning of the language of subsections (A)(2) and (B) of R.C. 5709.121 and 5709.08, and is, therefore, not exempt from taxation.

Folkerth, Calhoun, Webster, Mauer & O'Brien, Jack W. Folkerth and Jeffrey T. Folkerth, Columbus, for appellee.

William J. Brown, Atty. Gen., and Mark A. Engel, Columbus, for appellant.

This proceeding began with an application for exemption from taxation of five parcels of real property located at 320-330 East Gay Street, Columbus, Ohio, for the tax year 1978. The parcels in question, owned by the State Teachers Retirement Board, are used exclusively as an employee parking lot by the Board's employees. The property is located a short distance from the office building owned and occupied by the retirement board. This court, in State Teachers Retirement Bd. v. Bd. of Tax Appeals (1964), 177 Ohio St. 61, 202 N.E.2d 418, held the office building exempt from taxation as "public property used exclusively for a public purpose" within the meaning of R.C. 5709.08.

The Commission of Tax Equalization determined that the employee parking lot was not similarly exempt from taxation. Upon appeal, the Board of Tax Appeals reversed.

The cause is now before this court upon an appeal as of right.

CLIFFORD F. BROWN, Justice.

Government and public property, in certain circumstances is exempt from real property taxation, as provided in R.C. 5709.08. ¹ This court has held that for property to be exempt from taxation under R.C. 5709.08, three conditions must be met. The property must be public property, the use thereof must be for a public purpose, and the property must be used exclusively for a public purpose. Carney v. Cleveland (1962), 173 Ohio St. 56, 180 N.E.2d 14, paragraph one of the syllabus. Since the parking lot at issue is owned by a state agency, the first condition for exemption has been met. Muskingum v. Walton (1970), 21 Ohio St.2d 240, 257 N.E.2d 392.

The retirement board, by investing, conserving and disbursing funds contributed by our state's teachers, indisputably serves a public purpose, helping to secure and retain qualified teachers, and thereby improving the quality of instruction in the public school system. See State Teachers Retirement Bd., supra, 177 Ohio St. at 62, 202 N.E.2d 418. The issue facing this court, however, is whether a parking lot designed to be used only by employees of the retirement board, is property used for a public purpose, and exclusively for such public purpose. We conclude it is not.

General laws exempting real or personal property from taxation are to be strictly construed and exemption may not be granted unless the right thereto is clearly shown. Youngstown Metro. Housing Auth. v. Evatt (1944), 143 Ohio St. 268, 55 N.E.2d 122, paragraph two of the syllabus. See, also, White Cross Hospital Assn. v. Bd. of Tax Appeals (1974), 38 Ohio St.2d 199, 201, 311 N.E.2d 862. Goldman v. Bentley Post No. 50 (1952), 158 Ohio St. 205, 207, 107 N.E.2d 528. The property sought to be exempted here is used to provide free parking for employees. Access is limited by a fence and by control gates which are operated by inserting a plastic "key card." There is no evidence in the record which indicates that anyone but employees have been issued such cards. We fail to see how this employee-only parking lot constitutes a use exclusively for a public purpose. While this court has, in the past, granted exemptions for parking structures, such structures were found essential to the function of the public facility, and were accessible to the public using the facility. Bowers v. Akron City Hospital (1968), 16 Ohio St.2d 94, 96, 243 N.E.2d 95. ² There is no evidence here that provision of a free parking lot is essential to retaining high caliber employees. The central business district in which the retirement board headquarters is located contains numerous parking facilities, and is well served by the regional transit system.

Additionally, R.C. 5709.121 ³ specifically defines what constitutes exclusive use of real property and tangible personal property belonging to a charitable institution or an educational institution, or to the state, or to a political subdivision of the state. As one of the criteria for the determination of the exclusive use, this section provides that property belonging to any of the above entities shall be considered as used exclusively for charitable or public purposes if "(B) otherwise made available under the direction or control of such institution, the state, or political subdivision for use in furtherance of or incidental to its charitable, educational, or public purposes and not with the view to profit." (Emphasis added.)

This definition, or explanatory section of law, was obviously enacted by the General Assembly to define the term used exclusively for charitable purposes, and the term used exclusively for public purposes as such terms are found within the total Chapter 5709, not just applicable to R.C. 5709.12. ⁴ These terms are used in a number of sections within Chapter 5709.

The five parcels comprising a parking lot owned by the State Teachers Retirement Board constitutes "real property belonging to the state" as that term is used in R.C. 5709.08. The language of subsection (B) of R.C. 5709.121 is applicable to real property "belonging to the state" as that term is used in R.C. 5709.08, but a new parking lot owned by the State Teachers Retirement Board restricted to exclusive use by its employees is not "in furtherance of or incidental to its * * * public purposes and not with a view to profit" as provided in R.C. 5709.121(B). (Emphasis added.)

Subsection (A) of 5709.121 also requires real property belonging to the state, in order to be exempt from taxation, to be "used by * * * the state * * * (2) for other charitable, educational or public purposes." For the same reasons plaintiff's parking lot does not meet the public purpose test of Subsection (A).

There is no nexus between a parking lot owned by the retirement board and used exclusively for its employees and the public purpose served by the board. We conclude, therefore, that the five parcels comprising a parking lot owned by the retirement board are not exempt from taxation. The decision of the Board of Tax Appeals determining otherwise is unreasonable and unlawful, and is, therefore, reversed.

Decision reversed.

FRANK D. CELEBREZZE, C. J., and WILLIAM B. BROWN and KRUPANSKY, JJ., concur.

SWEENEY, LOCHER and HOLMES, JJ., dissent.

HOLMES, Justice, dissenting.

I must dissent from the majority herein, in that neither the syllabus law nor the opinion accurately sets forth the law of R.C. Chapter 5709 relative to the facts presented within this case.

There is no question, even in the majority opinion, that the parking lot here is owned by a state agency, nor is there a question that the State Teachers Retirement Board serves a public purpose. Where the majority lost its way is in interpreting what the General Assembly has, in my view, clearly defined as being used exclusively for public purposes. The latter has been defined in R.C. 5709.121.

This court has previously held in State Teachers Retirement Board v. Bd. of Tax Appeals (1964), 177 Ohio St. 61, 202 N.E.2d 418, that "(t)he subject property, used solely by the board in the management of the retirement system, is 'public property used exclusively for a public purpose' and 'exempt from taxation' within the meaning of Section 5709.08, Revised Code." In that case, this court permitted tax exemption for real property which the State Teachers Retirement Board owned and on which they had built an office building to house their offices used to manage the State Teachers Retirement System.

In addition to the office building there were also 70 parking spaces used by visitors and employees at no charge. If property then owned by the retirement board was public property, it would seem that property now owned by the retirement board would be public property. The board purchased the property in question when it found it necessary to expand its existing building. The expansion consumed 50 of the existing parking spaces. The new property was purchased for use as a parking lot. If the board had built a second building on the...