Tipton Cnty. Health Care Found., Inc. v. Tipton Cnty. Assessor

Decision Date20 February 2012
Docket NumberNo. 49T10–1101–TA–6.,49T10–1101–TA–6.
Citation961 N.E.2d 1048
PartiesTIPTON COUNTY HEALTH CARE FOUNDATION, INC. f/k/a Tipton County Memorial Hospital Foundation, Petitioner, v. TIPTON COUNTY ASSESSOR, Respondent.
CourtIndiana Tax Court


Brent A. Auberry, Daniel R. Roy, Fenton D. Strickland, Faegre Baker & Daniels LLP, Indianapolis, IN, for petitioner.

Gregory F. Zoeller, Attorney General of Indiana, Lynne D. Hammer, Deputy Attorney General, Indianapolis, IN, for respondent.


This case concerns whether the Indiana Board of Tax Review (the Indiana Board) properly determined that the Tipton County Health Care Foundation, Inc. (the Foundation) failed to raise a prima facie case that its assisted living facility is exempt from property tax under Indiana Code § 6–1.1–10–16. The Court affirms.


In 1998, Tipton County Memorial Hospital (the Hospital) built Autumnwood Village (Autumnwood), an assisted living facility. It is situated on 1.94 acres of land adjacent to the Hospital and two extended care facilities. All four facilities provide Tipton County's aging residents with access to a full continuum of care.

Autumnwood has 40 apartments, a central dining room, laundry rooms, a beauty salon, and several common areas. Many of the facility's amenities are similar to those found in traditional apartment living, but because Autumnwood was designed to meet the unique needs of individuals 55 years of age and older, it also provides amenities and services specifically directed at its aging population. For example, Autumnwood's apartments and common areas have extra-wide hallways and doors for wheelchair access; the hallways, elevators, and restrooms have handrails and grab bars for safety and mobility; all apartment doors are fireproof-rated so residents can wait in their apartments for rescue in the event of fire; and there is access to special security features, weekly transportation services, an emergency response system, on-site nursing, preferential access to certain nursing homes, and a variety of entertainment opportunities.

In late December 2007, the Hospital's Board of Trustees sold Autumnwood to the Foundation. Prior to the sale, the Hospital operated Autumnwood with assistance from Miller's Health Systems, Inc. (Miller's), an Indiana for-profit corporation that owns and operates 30 nursing homes under the name “Miller's Merry Manor” and 10 assisted living communities under the name “Miller's Senior Living” throughout Indiana. Under the terms of a “Management and Consulting Agreement” (the Agreement), Miller's provided consulting services, for a monthly fee, to the Hospital and for a short period to the Foundation with respect to Autumnwood's operations.

Beginning on January 1, 2008, the Foundation leased Autumnwood to Miller's for five years pursuant to a triple net lease (Lease). ( See Cert. Admin. R. at 434–57.) Under the Lease, the Foundation agreed to deliver exclusive possession of Autumnwood to Miller's, allowing Miller's to either rename Autumnwood consistent with one of its own trade names or continue to operate the facility under its current name. (Cert. Admin. R. at 436.) Miller's in turn agreed to use Autumnwood as an assisted living facility and pay the Foundation an annual base rent and certain other expenses including all utilities and property taxes. (Cert. Admin. R. at 435, 438, 443.) The Lease further stated that:

[n]othing in th[e] Lease shall be deemed or be construed to render or constitute Landlord and Tenant, actually or constructively and in any or for any purpose, as being partners, joint venturers, or associates, or as having any relationship whatever other than that of Landlord and Tenant under th[e] Lease; nor shall anything in th[e] Lease be deemed or be construed to authorize either party to act as agent for the other party, except to the extent specifically and expressly provided otherwise in th[e] Lease.

(Cert. Admin. R. at 451.)

The Foundation timely filed an “Application for Property Tax Exemption” with the Tipton County Property Tax Assessment Board of Appeals (PTABOA) requesting a charitable purposes exemption for the 2008 and 2009 tax years. The PTABOA denied each. The Foundation filed an appeal with the Indiana Board, an administrative hearing was held, and the Indiana Board issued a final determination finding that the Foundation did not make a prima facie case that Autumnwood was entitled to a charitable purposes exemption.

On January 27, 2011, the Foundation filed this original tax appeal. The Court heard oral arguments on November 18, 2011. Additional facts will be supplied as necessary.


This Court gives great deference to final determinations of the Indiana Board when it acts within the scope of its authority. Wittenberg Lutheran Vill. Endowment Corp. v. Lake Cnty. Prop. Tax Assessment Bd. of Appeals, 782 N.E.2d 483, 486 (Ind. Tax Ct.2003), review denied. 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.

See Ind.Code § 33–26–6–6(e)(1)(5) (2012).


The sole issue before the Court is whether the Foundation failed to raise a prima facie case that its assisted living facility is entitled to a charitable purposes property tax exemption under Indiana Code § 6–1.1–10–16.1


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 by a person for educational, literary, scientific, religious, or charitable purposes.” Ind.Code § 6–1.1–10–16(a) (2012). While unity of ownership, occupancy, and use is not required under Indiana Code § 6–1.1–10–16, when it is lacking, as is the case here, each entity must demonstrate that it has its own exempt purpose and explain the nexus between that purpose and its ownership, occupancy, and use of the property. See Hamilton Cnty. Prop. Tax Assessment Bd. of Appeals v. Oaken Bucket Partners, LLC, 938 N.E.2d 654, 657 (Ind.2010) (citation omitted); Sangralea Boys Fund, Inc. v. State Bd. of Tax Comm'rs, 686 N.E.2d 954, 955 (Ind. Tax Ct.1997), review denied.

It has long been held that exemption statutes are to be strictly construed against the taxpayer and, therefore, the burden is on the taxpayer to establish its right to an exemption. See St. Mary's Med. Ctr. of Evansville, Inc. v. State Bd. of Tax Comm'rs, 534 N.E.2d 277, 281 (Ind. Tax Ct.1989), aff'd by 571 N.E.2d 1247 (Ind.1991). To meet its burden, the taxpayer must have made a prima facie case 2 at the Indiana Board hearing by submitting probative evidence 3 sufficient to show its property qualifies for exemption. Brothers of Holy Cross, Inc. v. St. Joseph Cnty. Prop. Tax Assessment Bd. of Appeals, 878 N.E.2d 548, 550 (Ind. Tax Ct.2007) (footnotes added), review denied. Only then does the burden shift to the opposing party to rebut the taxpayer's evidence or, if uncontradicted, the taxpayer's prima facie case remains sufficient. College Corner, L.P. v. Dep't of Local Gov't Fin., 840 N.E.2d 905, 907–08 (Ind. Tax Ct.2006) (citation omitted).


On appeal, the Foundation first claims that the Indiana Board's determination is contrary to law because it provided probative evidence that Autumnwood was owned, occupied, and used as an assisted living facility. ( See Pet'r Br. at 10–24, 26–30.) More precisely, the Foundation asserts that because Autumnwood is an assisted living facility that provides for the needs of the elderly, no other evidence is necessary to show that it is entitled to a charitable purposes exemption. ( See Pet'r Br. at 36–40; Pet'r Reply Br. at 12–15.)

To qualify for a charitable purposes exemption, a taxpayer must show ‘relief of human want ... manifested by obviously charitable acts different from the everyday purposes and activities of man in general.’ National Ass'n of Miniature Enthusiasts v. State Bd. of Tax Comm'rs, 671 N.E.2d 218, 221 (Ind. Tax Ct.1996) (citation omitted). Indeed, ‘by meeting the needs of the aging, namely, relief of loneliness and boredom, decent housing that has safety and convenience and is adapted to their age, security, well-being, emotional stability, and attention to problems of health, a charitable purpose is accomplished.’ Wittenberg, 782 N.E.2d at 488–89 ( quoting Raintree Friends Hous., Inc. v. Indiana Dep't of State Revenue, 667 N.E.2d 810, 814–15 (Ind. Tax Ct.1996)). Furthermore, Indiana's courts have upheld charitable exemptions in several cases involving nursing homes and the care of the elderly.4 Nevertheless, neither the language of one case nor an apparent trend from several cases has established a per se rule that an assisted living facility that cares for the elderly is automatically considered exempt by the mere character of its deeds. Rather, as the Court has repeatedly explained, every exemption case stands on its own facts and, therefore, they are not susceptible to bright-line tests or other abbreviated inquiries. See, e.g., Jamestown Homes of Mishawaka, Inc. v. St. Joseph Cnty. Assessor, 914 N.E.2d 13, 15 (Ind. Tax Ct.2009), review denied. Accordingly, the Foundation has not shown that the Indiana Board's final determination is contrary to law merely because Autumnwood is an assisted living facility.

The Foundation also claims that the Indiana Board's determination is unsupported by substantial evidence because it presented evidence that Miller's has an individual charitable purpose.5 Specifically, the Foundation argues that the Indiana Board should have considered the content of Miller's website and the Lease...

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