|
|
2007-0126. Episcopal School of Cincinnati v. Levin, Slip Opinion No. 2008-Ohio-939.
Board of Tax Appeals, No. 2004-R-230. Decision affirmed.
Pfeifer, Lundberg Stratton, O'Connor, O'Donnell, and Cupp, JJ., concur.
Moyer, C.J., concurs in judgment only.
Lanzinger, J., dissents.
Opinion: http://www.supremecourtofohio.gov/rod/docs/pdf/0/2008/2008-Ohio-939.pdf
Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions: http://www.supremecourtofohio.gov/ROD/newpdf/. In the Full Text search box, enter the eight-digit case number at the top of this summary and click "Submit."
(March 12, 2008) In a decision announced today, the Supreme Court of Ohio ruled that a property owner is entitled to an exemption from state property tax for a given tax year based on the owner’s plans and demonstrated efforts to develop the property for an exempt purpose as of the tax lien date for that year, even though the owner subsequently abandoned its plans and never actually used the property for the exempt purpose stated in the application for exemption.
The case involved a non-profit corporation formed by the Episcopal Diocese of Southern Ohio that applied for exemption from 2001 property tax liability for land and a building the corporation acquired in 2000. As of Jan. 1, 2001, the corporation was actively attempting to convert the property from a museum to a church-affiliated school. In ensuing months, the owners received higher than anticipated cost estimates for renovating the building and staffing the planned school, and eventually abandoned their plans. In November 2002, the corporation sold the property to a for-profit buyer, which demolished the building and constructed a television broadcast facility on the site.
In a 2003 decision, the State Tax Commissioner denied the corporation’s application for exemption from property tax liability for 2001 on the basis that the property had never actually been used for the claimed exempt purpose of operating a school, and would never be used for that purpose because it had since been sold to another owner and redeveloped.
The school corporation appealed the commissioner’s determination to the State Board of Tax Appeals (BTA), which reversed the commissioner’s ruling and granted the requested exemption. In its opinion, the BTA cited a 1961 decision, Holy Trinity Protestant Episcopal Church v. Bowers, in which the Supreme Court of Ohio held that a property owner was entitled to a tax exemption for a tax year in which the subject property was not actually being used for the stated exempt purpose, as long as there was evidence that the owner was actively engaged in preparing the property for the claimed exempt purpose on the tax lien date that determined the tax status of the property for the year for which exemption was sought.
The commissioner exercised his right to appeal the BTA’s ruling to the Supreme Court.
In today’s 6-1 opinion, authored by Justice Evelyn Lundberg Stratton, the Court held that the BTA acted reasonably and lawfully when it reversed the commissioner’s determination and granted a prospective-use exemption for tax year 2001.
Justice Stratton wrote: “We regard as settled the general proposition that the taxable or exempt status of property should be determined as of the tax lien date, which is January 1 of whatever tax year is at issue. ... (T)he Tax Commissioner advocates a two-pronged test, in which the first prong examines the situation on January 1, and the second prong examines the situation on the later date upon which the exemption application is filed. The second prong of this proposed test would require that we also look at the prospects for exempt use as of the date of application, but we find the BTA’s decision to look exclusively at the tax lien date is far more reasonable.”
Citing a hypothetical situation in which a property owner filed for a prospective use exemption on a date when its prospects for actually achieving that use were not good, but then found the needed resources to move forward a few months later, Justice Stratton observed that the second prong of the Tax Commissioner’s proposed test could lead to the “absurd” result that “the ... test would operate to deprive ESC of the exemption for the 2001 year even if the project were to come to full fruition the following year. We see no reason to impose such an arbitrary requirement.”
Justice Stratton’s opinion was joined by Justices Paul E. Pfeifer, Maureen O’Connor, Terrence O’Donnell and Robert R. Cupp. Chief Justice Thomas J. Moyer concurred in judgment only.
Justice Judith Ann Lanzinger dissented. She cited specific language in the Court’s earlier Holy Trinity decision holding that, in order to qualify for a prospective use exemption, “‘(I)t must be shown that the entity, at the time the application for exemption is made, is actively working toward the actual use for the public benefit.’” Applying that rationale to the facts of this case, she wrote: “Because the BTA determined that the Episcopal School of Cincinnati had abandoned the plan to use the site for the school by the time the application was filed, the applicant was not entitled to the exemption.”
Contacts
Janyce C. Katz, 614.466.5967, for the State Tax Commissioner.
Joseph J. Dehner, 513.651.6800, for the Episcopal School of Cincinnati.