Summer Rays, Inc. v. Testa
Decision Date | 28 September 2017 |
Docket Number | 17AP–34,No. 17AP–32,17AP–32 |
Citation | 98 N.E.3d 935,2017 Ohio 7901 |
Parties | SUMMER RAYS, INC., Appellant–Appellant, v. Joseph W. TESTA, Tax Commissioner of Ohio, Appellee–Appellee. |
Court | Ohio Court of Appeals |
On brief: Ronald B. Noga, Columbus, for appellant. Argued: Ronald B. Noga.
On brief: Michael DeWine, Attorney General, Daniel W. Fausey, and Kody R. Teaford, Columbus, for appellee. Argued: Kody R. Teaford.
DECISION
{¶ 1} Appellant, Summer Rays, Inc. ("Summer Rays"), appeals from a decision of the Ohio Board of Tax Appeals ("BTA") affirming the final determination of appellee, Joseph W. Testa, Tax Commissioner of Ohio ("commissioner"), denying Summer Rays' request for property tax exemption pursuant to R.C. 5709.12. For the following reasons, we affirm.
{¶ 2} Summer Rays is an Ohio not-for-profit corporation with Internal Revenue Code 501(c)(3) status, and Chuck Kirk is the corporation's president and executive director. Summer Rays provides "Christian Access Living homes that are safe and affordable" to individuals transitioning from lives of addiction. (Summer Rays Mission Statement, attached to Dec. 19, 2014 Summer Rays Submission to Tax Commissioner.) In addition to providing sleep accommodations, Summer Rays provides spiritual support services, financial planning services, an on-site library, and other facilities and services. Summer Rays owns the property at 7480 East Main Street, Reynoldsburg, Ohio ("7480 East Main Street"), and it operates a fitness studio, "Rev Studio," at that location. Rev Studio is open to the public and is available for use by participants of Summer Rays' residential program. Summer Rays also owns approximately 20 residential properties that are used as part of its program.
{¶ 3} In December 2014, Summer Rays applied for property tax exemption for 7480 East Main Street pursuant to R.C. 5709.12, the charitable use exemption. The Ohio Department of Taxation ("department") designated the matter as department case No. WE 2704 and requested that Summer Rays provide additional information regarding its use of 7480 East Main Street. Summer Rays complied with the request and submitted a package of documents regarding the use of that property. On May 27, 2015, the commissioner issued a final determination regarding case No. WE 2704. The commissioner concluded that the 7480 East Main Street property does not qualify for property tax exemption under R.C. 5709.12.
{¶ 4} On July 22, 2015, the BTA received a notice of appeal indicating Summer Rays was challenging the commissioner's final determination in case No. WE 2704. The BTA docketed the notice of appeal as BTA case No. 2015–951. An identical additional copy of Summer Rays' notice of appeal challenging the commissioner's final determination in case No. WE 2704 was also filed with the BTA on July 22, 2015, and the BTA separately docketed that copy of the notice of appeal and assigned it BTA case No. 2015–1108. It is unclear from the record why identical copies of Summer Rays' notice of appeal were separately submitted and docketed as case Nos. 2015–951 and 2015–1108.
{¶ 5} On November 20, 2015, the commissioner filed a "motion to consolidate or dismiss and to withdraw the statutory transcript." The request states:
The BTA granted both the motion to consolidate the appeals and the motion to substitute a transcript.
{¶ 6} On September 14, 2016, a hearing was held before a BTA hearing examiner regarding BTA case Nos. 2015–951 and 2015–1108. At the hearing, the Attorney General's office represented the commissioner, and, Kirk, Summer Rays' president and executive director appeared without counsel. Evidence was presented regarding Summer Rays, generally, and Rev Studio, the fitness facility operated under the Summer Rays umbrella at the particular property at issue, 7480 East Main Street. In late September 2016, the commissioner filed a complete transcript of the record of proceedings before the commissioner, including all evidence considered, in case No. WE 2704.
{¶ 7} On December 13, 2016, the BTA issued its decision in BTA case Nos. 2015–951 and 2015–1108. The BTA affirmed the commissioner's denial of Summer Rays' request for a tax exemption for the 7480 East Main Street property. Summer Rays timely appealed to this court from the decision of the BTA. Two appeals were docketed, and this court consolidated the appeals. Before the appeals were briefed, Summer Rays filed a "motion to remand to correct defective record." (Mar. 2, 2017 Appellant's Mot.) In support, Summer Rays asserted that the commissioner and the BTA mishandled his applications for exemption and the corresponding appeals, and that a remand was necessary to correct the various errors resulting from that mishandling. This court denied Summer Rays' motion to remand the appeals for purposes of correcting the record, and the parties then submitted their briefs regarding the appeals.
{¶ 8} Summer Rays assigns the following errors for our review:
{¶ 9} Summer Rays' first assignment of error challenges the BTA's substantive determination that the commissioner correctly concluded that the 7480 East Main Street property does not qualify for tax exemption under R.C. 5709.12. Summer Rays argues that the BTA erroneously reasoned that, because Summer Rays generates some revenue by charging a program fee, it legally cannot constitute a charitable institution. This assignment of error lacks merit.
{¶ 10} The BTA has jurisdiction over appeals from final determinations of the commissioner. R.C. 5717.02. An appellate court may reverse a BTA decision only "when it affirmatively appears from the record that such decision is unreasonable or unlawful."
Witt Co. v. Hamilton Cty. Bd. of Revision , 61 Ohio St.3d 155, 157, 573 N.E.2d 661 (1991). Thus, legal conclusions are reviewed de novo. Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision , 150 Ohio St.3d 527, 2017-Ohio-4415, 83 N.E.3d 916, ¶ 7 ; see Bd. of Edn. v. Zaino , 93 Ohio St.3d 231, 232, 754 N.E.2d 789 (2001) ( ). As to factual findings, an appellate court may not substitute its judgment for that of the BTA. Bethesda Healthcare, Inc. v. Wilkins , 101 Ohio St.3d 420, 2004-Ohio-1749, 806 N.E.2d 142, ¶ 18. However, facts determined by the BTA must be supported by sufficient probative evidence. First Baptist Church of Milford, Inc. v. Wilkins , 110 Ohio St.3d 496, 2006-Ohio-4966, 854 N.E.2d 494, ¶ 9.
{¶ 11} In Ohio, all real property is subject to taxation unless it is expressly exempted. R.C. 5709.01(A). Because exemption is the exception to the general rule, statutes granting exemptions must be strictly construed. Seven Hills Schools v. Kinney , 28 Ohio St.3d 186, 186, 503 N.E.2d 163 (1986). It is the taxpayer's burden to prove entitlement to an exemption. 250 Shoup Mill, L.L.C. v. Testa , 147 Ohio St.3d 98, 2016-Ohio-5012, 60 N.E.3d 1254, ¶ 24. The policy rationale for granting tax exemptions is that the recipient's operation is a present benefit to the general public that justifies the loss of tax revenue. White Cross Hosp. Assn. v. Bd. of Tax Appeals , 38 Ohio St.2d 199, 201, 311 N.E.2d 862 (1974).
{¶ 12} Summer Rays claims that 7480 East Main Street should be exempt from taxation pursuant to R.C. 5709.12(B), which states in pertinent part: "Real * * * property belonging to institutions that is used exclusively for charitable purposes shall be exempt from taxation[.]" For the purpose of R.C. 5709.12(B), when the property at issue "belong[s] to, i.e. [is] owned by , a charitable or educational institution or the state or a political subdivision," R.C. 5709.121 defines the term "used exclusively for charitable * * * purpose." (Emphasis sic.) First Baptist Church of Milford, Inc. at ¶ 15 ; see Dialysis Clinic, Inc. v. Levin , 127 Ohio St.3d 215, 2010-Ohio-5071, 938 N.E.2d 329, ¶ 22 (...
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