ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT: MARILYN S. MEIGHEN MICHAEL N. RED ATTORNEY AT LAW REBEKAH L. PHILLIPS Carmel, IN MORSE & BICKEL, P.C. Indianapolis, IN BRIAN A. CUSIMANO ATTORNEY AT LAW Indianapolis, IN
FILED IN THE Aug 03 2020, 3:09 pm
INDIANA TAX COURT CLERK Indiana Supreme Court Court of Appeals and Tax Court
BARTHOLOMEW COUNTY ASSESSOR, ) ) Petitioner, ) ) v. ) Cause No. 18T-TA-00021 ) HOUSING PARTNERSHIPS, INC., ) ) Respondent. )
ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX REVIEW
FOR PUBLICATION August 3, 2020
WENTWORTH, J.
The Bartholomew County Assessor appeals the Indiana Board of Tax Review’s
final determination that Housing Partnerships, Inc. qualified for a charitable purposes
exemption during the 2008, 2010, 2012, 2014, and 2016 tax years. 1 Upon review, the
Court affirms the Indiana Board’s final determination.
1 Portions of the administrative record in this case have been designated as confidential. Consequently, this opinion will only provide the information necessary for the reader to understand its disposition of the issues presented. See IND. ST. ACCESS RULE 9(A)(2)(d) (2020). FACTS AND PROCEDURAL HISTORY
During the late 1980s, members of an adult Sunday school class of the First
Presbyterian Church in Columbus, Indiana discussed how they could animate the biblical
principle that they were “blessed to be a blessing to others in all eyes.” (See Cert. Admin.
R. at 4278, 4918-19.) After studying their community, they determined that there was a
need for affordable housing and home rehabilitation services. (See Cert. Admin. R. at
4919.) Consequently, they solicited donations and began to rehabilitate the homes of
people who, due to their age, physical condition, or financial means, were unable to do
the work themselves. (See Cert. Admin. R. at 4278, 4919-20.) In 1990, they organized
Housing Partnerships as an Indiana not-for-profit corporation. 2 (See Cert. Admin. R. at
1147-52, 4920.)
The founders organized Housing Partnerships exclusively for charitable purposes,
declaring its “mission [was] to help neighbors rebuild their neighborhoods and improve
their quality of life, with a primary focus on developing affordable housing.” (See Cert.
Admin. R. at 1150, 4278, 5062-65.) To further that mission, Housing Partnerships
operates several programs, including 1) a homeownership program for low-income, first-
time homebuyers; 2) a home construction program that provides various development,
construction, and repair services on properties owned by municipalities, other not-for-
profit organizations, and the elderly; and 3) a home rental program that provides
affordable housing for low-income individuals and families. (See, e.g., Cert. Admin. R. at
1168, 4922-24, 4939-40, 5075-87, 5099-101, 5188-89.) Housing Partnerships funds its
2 Housing Partnerships has also been designated a 501(c)(3) organization by the Internal Revenue Service and is therefore exempt from federal income tax. (See Cert. Admin. R. at 1162- 65.) 2 programs with the income it receives from donations, public and private grants, and the
sale and rental of its properties. (Compare, e.g., Cert. Admin. R. at 4930 with Cert. Admin.
R. at 1175, 1239, 1446, 1452, 1479, 1485-86.) (See also, e.g., Cert. Admin. R. at 5073-
74, 5081-82, 5156-57.) This case concerns only Housing Partnerships’ home rental
program. (See, e.g., Cert. Admin. R. at 4922-23, 5188-90, 5195-96.)
During the years at issue, Housing Partnerships owned an office building, vacant
lots, and several residential properties (i.e., single family homes, duplexes, and small
apartment buildings) in both Columbus and Hope, Indiana (Bartholomew County). (See
Cert. Admin. R. at 4080-226.) Under its home rental program, Housing Partnerships
rented its residential 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). 3 (See Cert.
Admin. R. at 4939-40.) Its rental rates, which were annually verified, typically
corresponded to 30% or less of an individual’s or family’s income. (See Cert. Admin. R.
at 3058-60, 3072, 3074-79, 4964, 4996-97, 5046, 5048.)
Housing Partnerships filed Applications for Property Tax Exemption on its office
building, vacant lots, and a varying number of its residential properties for one or more of
the years at issue. (See Cert. Admin. R. at 12-55, 191-267, 426-92, 650-724, 774-1037.)
The applications claimed that all or a portion of the properties, along with the personal
property in the office building, were entitled to the charitable purposes exemption because
3 The U.S. Department of Housing and Urban Development determines and reports area median incomes for metropolitan and statistical areas and nonmetropolitan counties. (See Cert. Admin. R. at 1608.) For example, individuals and families living at 80% of the 2014 area median income for Bartholomew County were established at $37,450 for a single person, $42,800 for a family of two, $48,150 for a family of three, and $53,500 for a family of four. (Cert. Admin. R. at 1623-24.) In contrast, those living at 50% of the area median income were set at $23,450 for a single person, $26,800 for a family of two, $30,150 for a family of three, and $33,450 for a family of four. (Cert. Admin. R. at 1622.) 3 the properties were used to provide housing to low-income individuals and families. (See,
e.g., Cert. Admin. R. at 874-81.) The Bartholomew County Property Tax Assessment
Board of Appeals denied the applications. (Cert. Admin. R. at 9-11, 71-190, 298-425,
516-649, 770-73.)
Housing Partnerships subsequently filed several Petitions for Review with the
Indiana Board, seeking a charitable purposes exemption on 40 properties for the 2008
tax year, 61 properties for the 2010 tax year, 65 properties for the 2012 tax year, 66
properties for the 2014 tax year, and 70 properties for the 2016 tax year. 4 (See, e.g.,
Cert. Admin. R. at 1-3, 5-8, 56-67, 268-84, 504-15, 729-43.) The Indiana Board
conducted a two-day hearing on Housing Partnerships’ petitions in August of 2017.
During the hearing, Housing Partnerships claimed that it qualified for the charitable
purposes exemption because, among other things, its evidence showed that:
1) the government had assumed the burden of providing affordable housing to low-income persons and families;
2) it rehabilitated residences in blighted areas and rented housing at below-market rents to people living at or below 60% of the area median income;
3) it maintained below-market rents after it was no longer obligated to do so;
4) it helped its low-income tenants become financially independent and provided them with access to credit counseling, childcare referrals, and food, clothing, and utility assistance;
4 The actual number of properties at issue for the 2016 tax year, however, is not clear. More specifically, although Housing Partnerships sought an exemption on parcel numbers 03-95-24- 420-142.000-005 (646 Franklin Street), 03-95-24-440-007.400-005 (613 Chestnut Street), 03-96- 29-210-001.505-005 (Lot #5 McKinley Court), and 03-96-29-210-001.506-005 (Lot #6 McKinley Court) for the 2016 tax year, the certified administrative record does not contain either an exemption application or a final determination by the Bartholomew County Property Tax Assessment Board of Appeals on any of those parcels for that year. (Compare Cert. Admin. R. at 733-39 with Cert. Admin. R. at 770-1037.) 4 5) it provided tenants with rent concessions rather than evicting them for non-payment of rent and rented to tenants with poor credit histories, non-violent criminal offenses, and prior evictions even though other landlords declined to do so;
6) it used its own funds (secured from private donations, grants, the value of volunteer time, and the sale of certain homes) to operate its home rental program; and
7) its annual audits indicated that there was no private inurement.
(See, e.g., Cert. Admin. R. at 4903-07, 4922-23, 4927-29, 4932-59, 4963-72, 4888-5017,
5021-23, 5028-32, 5046-53, 5059-65, 5161-62, 5174-76, 5249-62, 5265-73, 5314-28,
5359-60, 5362-68, 5371-72.) (See also, e.g., Cert. Admin. R. at 1443-1602 (Housing
Partnerships’ audited financial statements) 1603-05 (Indiana Housing and Community
Development Authority’s (“IHCDA”) mission statement), 2036-38 (Bartholomew County
Section 8 properties), 2988-3011 and 4585-4609 (rental rate reports).)
In response, the Assessor characterized Housing Partnerships’ evidence as
speculative and conclusory, claiming, among other things, that it failed to show that 1) the
government had assumed the burden of providing affordable housing, 2) it relieved any
government burden when the government provided it with substantial amounts of grants
and subsidies, or 3) its rental rates were consistently below-market. (See, e.g., Cert.
Admin. R. at 4642-49, 4680-89, 5067-97, 5136-44, 5147-54, 5178-80, 5373-77, 5442-76,
5504-25, 5545-46.) Moreover, the Assessor claimed that the evidence showed Housing
Partnerships was nothing more than a typical landlord because its leases gave it the same
rights to evict tenants and impose late fees as landlords in general. (See, e.g., Cert.
Admin. R. at 4633-47, 4688.)
On June 29, 2018, the Indiana Board issued a final determination, explaining that
although this was a “close case,” the totality of the evidence demonstrated that Housing
5 Partnerships owned, occupied, and used its properties exclusively for charitable purposes
during the years at issue. (See Cert. Admin. R. at 4770 ¶ 101, 4771-72 ¶ 105, 4778-79.)
Specifically, the Indiana Board determined that the record evidence showed that 1) the
government had assumed the burden of providing affordable housing to low-income
individuals and families in Bartholomew County, 2) Housing Partnerships provided relief
from human want by using its properties in a manner unlike that of a typical landlord, and
3) Housing Partnerships relieved some of the government’s burden even though it
received government grants and subsidies. (See Cert. Admin. R. at 4761-70 ¶¶ 76-101.)
On August 10, 2018, the Assessor initiated this original tax appeal. The Court
heard oral argument on June 13, 2019. Additional facts will be supplied as necessary.
STANDARD OF REVIEW
The party seeking to overturn an Indiana Board final determination bears the
burden of demonstrating its invalidity. Osolo Twp. Assessor v. Elkhart Maple Lane
Assocs., 789 N.E.2d 109, 111 (Ind. Tax Ct. 2003). Accordingly, the Assessor must
demonstrate to the Court that the Indiana Board’s final determination is arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with the law; contrary
to constitutional right, power, privilege, or immunity; in excess of or short of statutory
jurisdiction, authority, or limitations; without observance of the procedure required by law;
or unsupported by substantial or reliable evidence. See IND. CODE § 33-26-6-6(e)(1)-(5)
(2020).
LAW
As a general rule, all tangible property in Indiana is subject to taxation. IND. CODE
§ 6-1.1-2-1 (2008). Nonetheless, Indiana’s Constitution provides that the General
6 Assembly may exempt property from taxation if it is used for municipal, educational,
literary, scientific, religious, or charitable purposes. IND. CONST. art. 10, § 1(c)(1). To that
end, the General Assembly enacted a property tax exemption for real and personal
property that is owned, occupied, and used for charitable purposes. See IND. CODE § 6-
1.1-10-16(a), (c), (e) (2008) (amended 2016).
The term “charitable purpose” is defined and understood in its broadest
constitutional sense. Starke Cty. Assessor v. Porter-Starke Servs., Inc., 88 N.E.3d 814,
817 (Ind. Tax Ct. 2017). Consequently, a charitable purpose generally will be found to
exist “when a taxpayer provides probative evidence to the Indiana Board showing 1) ‘relief
of human want . . . manifested by obviously charitable acts different from the everyday
purposes and activities of man in general[ ]’ and 2) that a benefit sufficient to justify the
loss of tax revenue inures to the public through these acts.” Id. (citations omitted).
ANALYSIS
On appeal, the Assessor contends that the Indiana Board’s final determination
must be reversed because it is not supported by substantial evidence. 5 (See, e.g., Pet’r
Br. at 7-16; Pet’r Reply Br. at 1-6.) More specifically, the Assessor claims that the Indiana
Board erred in finding Housing Partnerships’ “minimal, unclear, [] anecdotal[, and
conclusory] evidence” satisfied the requirements for exemption. (See, e.g., Pet’r Br. at
10-15; Pet’r Reply Br. at 1-2.) (See also Pet’r Br. at 1 (stating Housing Partnerships “put
a few shiny objects in front of the [Indiana] Board, but [it] did not offer evidence to meet
5 The Assessor also has claimed that the Indiana Board’s final determination is contrary to law because it misapplied the charitable purposes exemption requirements. (See Pet’r Br. at 1-2, 7; Oral Arg. Tr. at 6.) More specifically, the Assessor’s contrary to law claim is that the evidence is insufficient to demonstrate that Housing Partnerships has a charitable purpose. (See, e.g., Pet’r Br. at 10.) The Assessor, however, has done nothing more than dress up a substantial evidence argument in contrary to law clothing. (See, e.g., Oral Arg. Tr. at 6-32.) 7 the requirements for exemption”); Pet’r Reply Br. at 2 (claiming that Housing Partnerships
failed “to present ‘meat on the bones’ evidence” to establish its activities differed from the
everyday purposes and activities of man in general and conferred a public benefit).) To
support her claim, the Assessor explains, for example, that Housing Partnerships’
evidence was insufficient because it did not:
1) compare Housing Partnerships’ financial contributions with those of the government to show Housing Partnerships significantly benefited the public;
2) compare the income levels of Housing Partnerships’ tenants to the income levels of tenants in conventional/for-profit/non-subsidized rental properties;
3) compare the actual market rent with Housing Partnerships’ rents during each of the years at issue;
4) identify the number of Housing Partnerships’ properties with below- market rents that had required as opposed to voluntary rent or income restrictions;
5) identify the percentage of Housing Partnerships’ tenants who received rent concessions, relaxed payment plans, or escaped eviction due to non-payment of rent during each of the years at issue; and
6) provide the number of potential tenants who were not rejected due to prior evictions, poor credit histories, or their criminal backgrounds.
(See, e.g., Pet’r Br. at 5, 10-15; Pet’r Reply Br. at 3-6.) Accordingly, the Assessor
contends that Housing Partnerships failed to present sufficient facts to establish that it
qualified for a charitable purposes exemption, contending that the Indiana Board should
have rejected, not approved, its claim for exemption based on a lack of evidence just as
it did in a prior case. (See, e.g., Pet’r Br. at 1-3 (citing generally Housing P’ships, Inc. v.
Owens (HPI I), 10 N.E.3d 1057 (Ind. Tax Ct. 2014) (holding that Housing Partnerships’
evidence failed to show it qualified for a charitable purpose exemption during the 2006
8 tax year), review denied).) The Court, however, is not persuaded by the Assessor’s
arguments for three reasons.
First, the Assessor’s arguments merely invite the Court to ignore the Indiana
Board’s role as trier of fact and reweigh the evidence. See Madison Cty. Assessor v.
Sedd Realty Co., 125 N.E.3d 676, 680 (Ind. Tax Ct. 2019) (providing that the Indiana
Board “‘determine[s] the relevance and weight to be assigned to the evidence’” because
it is the trier of fact) (citation omitted). The Assessor’s arguments neither explain her
reasons for claiming that Housing Partnerships’ evidence, such as the HUD income
reports, county income statics, and actual income data from Housing Partnerships’ home
rental program is conclusory rather than probative, nor cite to any authority requiring a
specific type or quantity of evidence, which if absent, would not support a claim for
exemption. (See, e.g., Cert. Admin. R. at 4642-47; Pet’r Br.; Pet’r Reply Br.) See also
Garrett LLC v. Noble Cty. Assessor, 112 N.E.3d 1168, 1174 (Ind. Tax Ct. 2018) (providing
that parties must walk the Indiana Board and this Court through every element of their
analyses). Indeed, the Assessor has attacked the sufficiency and quantity of Housing
Partnerships’ evidence by simply restating the same arguments that she presented to the
Indiana Board during the administrative process. (See, e.g., Cert. Admin. R. at 4648
(stating that based on “the evidence as a whole, it is apparent that [Housing Partnerships]
has offered conclusory statements to support the exemption claimed[ and asked] the
[Indiana] Board to infer charity not proven”), 4686 (stating that Housing Partnerships “tries
to make a case for exemption based upon general and conclusory testimony and small
facts”).) Accordingly, there is substantial evidence to support the Indiana Board’s finding,
and the Court declines the Assessor’s invitation to reverse on this basis. See Monroe
9 Cty. Assessor v. SCP 2002 E19 LLC 6697, 77 N.E.3d 270, 273 (Ind. Tax Ct. 2017)
(providing that the Tax Court will not reweigh the evidence unless the Indiana Board’s
decision is clearly against the logic and effect of the facts and circumstances before it or
it misapplies the law), review denied.
Second, the Assessor claims that Housing Partnerships’ evidence was deficient
because it did not make certain comparisons or identify certain disparities (e.g., precise
income level comparisons or rent concession information). The Assessor implies that
Housing Partnership cannot qualify for a charitable purposes exemption because it did
not follow a specific evidentiary formula. There is, however, no such formula. This Court
has repeatedly explained that because exemption cases stand on their own facts and,
ultimately, on how the parties present those facts, determining whether property is owned,
occupied, and used for charitable purposes requires undertaking a fact sensitive inquiry
that is not susceptible to bright-line tests or abbreviated inquiries. See, e.g., Porter-Starke
Servs., 88 N.E.3d at 817-19 (explaining that the holdings in exemption cases involving
similar properties differed because of the specific evidentiary presentations and
arguments presented, not because of a bright-line test or specific rule). Thus, to the
extent that the Assessor believed certain evidence for making comparisons and
identifying disparities was essential to the Indiana Board’s determination, the Assessor –
not Housing Partnerships – was responsible for getting that information into the
administrative record. Again, the Court finds substantial evidence supports the Indiana
Board’s final determination and therefore will not reverse on this basis.
Finally, the Assessor urges the Court to reject Housing Partnerships’ claim for
exemption just as it did in HPI I, asserting that Housing Partnerships has once again failed
10 to show that 1) there was something “special,” presumably something different from
man’s everyday purposes and activities in general, about the use of its properties, and 2)
it provided a benefit to the general public sufficient to justify the loss of tax revenue. (See,
e.g., Pet’r Br. at 7; Pet’r Reply Br. at 1-6.) HPI I, however, does not control the outcome
here because the parties’ evidentiary presentations to the Indiana Board in HPI I and this
case differ. See e.g., Porter-Starke Servs., 88 N.E.3d at 817-19 (explaining that the
holdings in exemption cases involving similar properties differed because of the specific
evidentiary presentations and arguments presented, not because of a bright-line test or
specific rule). More specifically, in HPI I Housing Partnerships failed to show its evidence
of good deeds provided a public benefit. See, e.g., Housing P’ships, Inc. v. Owens, 17
N.E.3d 403, 404-05 (Ind. Tax Ct. 2014) (affirming the Indiana Board’s determination that
Housing Partnerships failed to make a prima facie case for a charitable purposes
exemption for the 2006 tax year), review denied. Here, however, Housing Partnerships
provided evidence that demonstrated its activities differed from the everyday acts of other
landlords (e.g., providing below-market rental housing to individuals and families living at
60% of the area median income, granting rent concessions instead of evictions for non-
payment of rent, and renting to less than ideal tenants with poor credit histories, non-
violent criminal offenses, and prior evictions), and evidence of independent audits
established that its government funding was not used for private benefit. See supra pp.
4-5.
The Indiana Board weighed the competing evidence, and while noting it was a
“close call,” concluded that Housing Partnerships’ good deeds provided a public benefit
sufficient to justify the loss of tax revenue by lessening the government’s burden to
11 provide low income housing. (See, e.g., supra pp. 5-6.) The Indiana Board’s
determination comports with the evidence and reflects the principle that a taxpayer does
not need to show that it completely relieves the government’s obligations to qualify for a
charitable purposes exemption. See Hebron-Vision, LLC v. Porter Cty. Assessor, 134
N.E.3d 1077, 1095-96 (Ind. Tax Ct. 2019) (providing that “[e]ven when a taxpayer
receives government funds, it ‘fulfill[s] a charitable purpose to the extent that it lessened
some part of the government’s burden’”) (citations omitted); Knox Cty. Prop. Tax
Assessment Bd. of Appeals v. Grandview Care, Inc., 826 N.E.2d 177, 184 (Ind. Tax Ct.
2005) (providing that “Indiana courts have recognized that ‘charitable’ is not necessarily
the equivalent of ‘free’”). The Court cannot stand in the shoes of the Indiana Board and
reweigh the evidence; therefore, the Assessor has not persuaded the Court to reverse
the Indiana Board’s final determination on this basis either.
CONCLUSION
Based on its review of the evidence in the administrative record, the Court finds
that substantial and reliable evidence supports the Indiana Board’s determination that
Housing Partnerships’ properties qualified for a charitable purposes exemption during
each of the years at issue. See CVS Corp. v. Searcy, 137 N.E.3d 1053, 1056 (Ind. Tax
Ct. 2019) (explaining that the substantial evidence standard requires the Court to review
the administrative record to determine whether, when viewed as a whole, it provides a
reasonably sound basis of evidentiary support for the Indiana Board’s final determination).
Accordingly, the Court AFFIRMS the Indiana Board’s final determination. The Court,
however, REMANDS this matter to the Indiana Board to determine which of Housing
Partnerships’ properties were at issue during the 2016 tax year. See supra note 4.