Here, the Petitioner is an individual and Little Lamb is a for-profit entity. Nevertheless, the involvement of a for-profit entity does not necessarily preclude this exemption. See College Corner v. Dep’t of Local Gov’t Finance, 840 N.E.2d 905, 908 (Ind. Tax Ct. 2006). “As early as 1879, the Indiana Supreme Court scrutinized our Constitution and its focus with respect to tax exemption statutes. The Court said our Constitution, ‘contemplates the character and purpose of the property that may be exempted from taxation, not the character and purpose of the owner of the property.’” Sangralea Boys Fund, Inc. v. St. Bd. of Tax Comm’rs, 686 N.E.2d 954, 956 n.2 (Ind. Tax Ct. 1997) (quoting St. ex rel. Tieman v. City of Indianapolis, 69 Ind. 375, 377 (1879)).
40. The evidence indicates that Mr. Duke owned the subject property while Little Lamb occupied and used it. Being owned, occupied, and used by a single entity, however, is not a requirement for exemption. The Indiana General Assembly did not intend to require that a single entity “achieve a unity of ownership, occupation, and use.” Sangralea, 686 N.E.2d at 958. “Importantly however, ‘when a unity of ownership, occupancy, and use is lacking (as is the case here), both entities must demonstrate that they possess their own exempt purposes….’” Hamilton Co. Property Tax Assessment Bd. of Appeals v. Oaken Bucket Partners, 938 N.E.2d 654, 657 (Ind. 2010).
41. According to the evidence, Mr. Duke acquired the subject property for the specific purpose of operating a “faith-based early learning center.” The Little Lamb facility was constructed pursuant to the plans approved by Debbie Duke, President of Little Lamb, specifically for the purpose of facilitating Little Lamb’s early learning programs. Further, Mr. Duke does not charge rent to Little Lamb. Under these circumstances, the use by Mr. Duke and Little Lamb is indistinguishable for purposes of Ind. Code § 6-1.1-10-16.
42. Is the use of the subject property predominantly (or 84% as claimed by the Petitioner) religious? The Board must look to the “predominate use” test as outlined in Ind. Code § 6-1.1-10-36.3(a). In order to meet the “predominate use” requirements, the facility must be used for the stated purpose “more than fifty percent (50%) of the time.” While it is true that the mission behind the Little Lamb facility is that of a religious nature, the “predominate use” of the facility is not religious. On average, at most only 3.5 hours per day involve programs and materials that could be considered religious. Pet’r Ex. P8. While the hours of operation for the Little Lamb are 11.5 hours per day. Id.
43. The Petitioner attempts to draw the Board’s attention to a Supreme Court case where the Court held “[w]e simply recognize that a dedicated religious person, teaching in a school affiliated with his or her faith and operated to inculcate its tenets, will inevitably experience great difficulty in remaining religiously neutral.” Pet’r Reply Brief; citing Lemon v. Kurtzman, 403 U.S. 602, 618 (1971). The Petitioner goes on to argue that “education can and does have a religious purpose when it is conducted by religious persons with a religious purpose.” Pet’r Reply Brief. The problem that the Board finds with this argument is that in Lemon the Court addressed parochial schools taught by nuns, and some lay teachers, but were operating within the hierarchy of the Catholic Church. When looking at the Lemon decision, the teachers were employed by the Catholic Church, subject to the direction and discipline of religious authorities, and working in a system dedicated to rearing children in the Catholic faith. Lemon, 403 U.S. at 618. Little Lamb however is not directly affiliated with any church, further the evidence does not establish Little Lamb is subject to the direction and discipline of religious authorities. Little Lamb consists of Christian individuals integrating Christian beliefs into activities at the facility. This comparison presented by the Petitioner falls short.
44. The Petitioner also attempts to persuade the Board that it is entitled to a religious exemption by drawing a comparison to a Colorado Supreme Court decision. Maurer v. Young Life, 779 P.2d 1317 (Colo. 1989). The Maurer decision involved a non-profit corporation seeking a religious exemption based on “camping programs during which Christian teachings are related to camping experiences in a low-key, informal manner.” Maurer, 779 P.2d at 1319. The decision from Colorado, while it may be persuasive, is not controlling. Further, the requirements for a religious exemption could be drastically different in Colorado than they are in Indiana. The Board cannot draw conclusions from this Colorado case to find that the Petitioner is entitled to a religious exemption.
45. The Board must also look to the “reasonably necessary” standard when deciding if a property is used for a religious purpose. LeSea Broadcasting Corp. v. St. Bd. of Tax Comm’rs, 525 N.E.2d 637, 639 (Ind. Tax Ct. 1988) (citing State Bd. of Tax Comm’rs v. Wright, 139 Ind. App. 370 (Ind. App. 1966) (finding “cabins were necessary and were used exclusively to effectuate the religious purpose and activities of the Church.”)). The use of the subject property does not “effectuate the religious purpose” of any Church. Even though religious themes are present and the subjects taught at the facility have religious connotations, the use of the facility is not elevated to one that should be granted a religious exemption. Further, the petitioner must show a public benefit sufficient enough to warrant an exemption. Foursquare Tabernacle Church of God in Christ, 550 N.E.2d 850, at 854. From the evidence presented, the Petitioner failed to meet this burden.
46. The existence of religious beliefs is not enough to qualify for a religious exemption. The activities must be different from the everyday purpose of man in general. If the existence of a religious belief was enough to qualify, every taxpayer that had any religious belief would qualify for an exemption. Religious exemptions should be restricted to those facilities that meet the requirements as outlined in Ind. Code §6-1.1-10-36.3(a). The Little Lamb facility is not directly associated with any religious organization. The only religious affiliation is that the owners are Christians and that the lessons taught at Little Lamb have a religious connotation. The Little Lamb does not meet the requirements necessary for a religious exemption. Similar to the holding in National Association of Miniature Enthusiasts, by Little Lamb simply declaring itself religious does not make its activities and endeavors the sort that the law recognizes as religious and therefore entitled to tax exemption. See Nat’l Ass’n of Miniature Enthusiasts, 671 N.E.2d 218 (stating that “[y]et declaring itself a charity does not make NAME’s activities and endeavors the sort the law recognizes as charitable and therefore entitled to tax exemption” citing Indianapolis Elks Bldg. Corp. v. St. Bd. of Tax Comm’rs, 145 Ind. App. at 539, 251 N.E.2d at 683 (Ind. App. 1969)). The Petitioner failed to prove that it is entitled to a religious exemption.
47. Is the use predominantly (or 84%) educational? As the term is broadly understood, “education” can occur anywhere, including private homes, but a more restrictive definition is required to avoid irrationally applying the exemption. See Fort Wayne Sports Club, Inc. v. St. Bd. of Tax Comm’rs, 258 N.E.2d 874, 881 (Ind. App. 1970).
48. Exemptions from property tax are generally granted based on the expectation that the public will derive a corresponding benefit that justifies the loss of tax revenue. Accordingly, applicants for the educational exemption must show their use of the property provides some public benefit. See Oaken Bucket, 938 N.E.2d at 657; Dep’t of Local Gov’t Finance v. Roller Skating Rink Operators Ass’n, 853 N.E.2d 1262, 1266 (Ind. 2006); Indianapolis Osteopathic Hospital, Inc., 818 N.E.2d at 1014; Foursquare Tabernacle Church of God in Christ, 550 N.E.2d 850, at 854; Ft. Wayne Sports Club, 258 N.E.2d at 881. Examining “the public benefits that accrue from a property’s use [is] a method of determining whether the predominant use of a property is educational.” Trinity School of Natural Health, Inc. v. Kosciusko Co. Property Tax Assessment Bd. of Appeals, 799 N.E.2d 1234, 1237 (Ind. Tax Ct. 2003). “If a property owner’s use of property does not serve the public good, the property is taxable.” Roller Skating Rink Operators Ass’n, 853 N.E.2d at 1265 (citing Travelers’ Ins. Co. v. Kent, 50 N.E. 562, 564 (Ind. 1898)).
49. Educational use does not require providing educational programs or classes that are identical to those of tax-supported institutions. The public benefit test can be met by providing courses found in tax-supported institutions, but it also can be met by providing “related” programs and courses. Accordingly, “a taxpayer need only relieve the State’s burden ‘to some limited extent’ with programs and courses merely ‘related’ to those found in tax-supported schools.” Trinity School, 799 N.E.2d at 1238 (italics in original); see also Roller Skating Rink Operators Ass’n, 853 N.E.2d at 1266 (stating that “educational” programs need not be the same as offerings of public schools).
50. The educational use must confer a public benefit. The closer the activity is to traditional educational programs offered in public schools, the more obvious is the public benefit. Prof’l Photographers of Am., Inc., v. St. Bd. of Tax Comm’rs, 148 Ind. App. at 601, 268 N.E.2d 617 (1971); Ft. Wayne Sport Club, 258 N.E.2d at 874. “An educational exemption is available to taxpayers who provide instruction and training equivalent to that provided by tax supported institutions of higher learning and public schools because to the extent such offerings are utilized, the state is relieved of its financial obligation to furnish such instruction.” Miniature Enthusiasts, 671 N.E.2d at 221 (quoting Ft. Wayne Sport Club, 258 N.E.2d 874, 881-882).
51. The Board has made several prior determinations with similar facts that provide particularly strong guidance for the issue presented in this particular case. In Richmond Day Nursery (March 2004) the Board held that Richmond Day Nursery was entitled to an exemption in connection with its operation of a daycare and pre-school facility. In that case, the Board relied on evidence that Richmond Day Nursery provided scheduled educational training, employed teachers with educational degrees, offered educational opportunities to children from lower income families who attended the daycare on a government voucher program, and provided a program similar to the government sponsored Head Start program. Approximately five to six hours each school day were devoted to age-related education for children enrolled at Richmond Day Nursery, where a program similar to typical preschool education was provided. The Board concluded that Richmond Day Nursery “demonstrated that their educational activities and curriculum confer a benefit to the general public, (e.g. families, children, public schools, community) similar to the government based Head Start program, but with the added bonus of onsite training in conjunction with the child’s full time day care.” As a result, Richmond Day Nursery’s property was determined to be 100% exempt.
52. Another Board decision involving similar facts was KC Propco LLC, d/b/a KinderCare Learning Center (November 2011). In KC Propco LLC, the Board held that the facility was entitled to an exemption based on the educational use of the property. The Board found that the use of the subject property was substantially related to the programs and courses public schools provide. The Board also noted that the Petitioner employed teachers with educational degrees, scheduled educational training, and offered educational opportunities to children from lower income families who attended the early learning center on the government voucher program. The Petitioner also was able to show that at least to “some limited extent” the curriculum, goals, and educational and physical activities provided a benefit to the public. Thus, the Board found KinderCare Learning Center to be 100% exempt.
53. Little Lamb provides scheduled educational learning. Teachers prepare detailed lesson plans to guide the children’s learning. The lead teachers have post secondary education. The A-Beka curriculum is widely applied among Christian schools and is similar to the academic standards used by public schools. The Little Lamb has a Level II certification with Paths to Quality. The subjects taught at Little Lamb mirror those that are taught at public schools, including: reading, writing, math, science, history, physical education, language arts, social studies, music and art. Teachers evaluate their students based on academic progress and then inform the parents of that progress through progress reports and parent-teacher conferences. The atmosphere at Little Lamb is one of education, where children are learning throughout the day. All of the programs at Little Lamb are a complement to and prepare children for enrollment in school by providing the foundational elements children need to thrive in more advanced programs.
54. The Petitioner has shown that the use of the subject property is substantially related to the programs and courses public schools provide. The Petitioner has also shown that at least to “some limited extent” its curriculum, goals, and educational activities provide a benefit to the public.
55. The Board now turns its attention to the arguments made by the Respondent. The Respondent argues that the “predominate use” of the facility is not educational since it is open 11.5 hours a day, but only 3.5 hours a day are focused on education. The Respondent also argues that Little Lamb “does not fit into the general scheme of education provided by the State, and does not relieve the government of its burden of providing public education in any significant way.” Resp. Reply Brief. The evidence proves that the subjects taught at Little Lamb are similar to those taught in public schools. Further, the Petitioner was able to prove that at least to “some limited extent” its curriculum, goals, and educational activities provide a benefit to the public, relieving a burden on the government by preparing these children for the rigors of public school. The Respondent fails to take into account that the teachers at Little Lamb also spend additional time preparing for the daily curriculum. The evidence proves that education is the “predominate use” of the facility.
56. The Respondent argues that the activities taking place are the same learning activities that are taught by parents and grandparents in their homes. While it is true that parents and grandparents can teach their children to read and to write or to play games with them, the evidence shows that the A-Beka program, which is used at Little Lamb, equips children to engage in substantially similar educational activities offered in public schools. Little Lamb educates the students at its facility with many of the same academic skills otherwise taught in public schools. Further, Little Lamb provides a structured learning program where teachers have set lesson plans and they evaluate their students based on academic progress and inform the parents of their child’s progress through progress reports and parent-teacher conferences, mirroring what is seen in public schools.
57. The Respondent presented evidence showing the attendance for numerous students at Little Lamb. The Respondent argued that the attendance records show sporadic attendance patterns for the children. Nowhere in Ind. Code §6-1.1-10-16 does it state how many days individuals must attend in order for a facility to be found educationally exempt. The Respondent failed to explain how the Board was to draw a conclusion from hundreds of pages of attendance records that Little Lamb was not deserving of an educational exemption.
58. The Respondent insinuates that since a fee is charged by Little Lamb they are serving their own business interests. While it is true a fee is charged, even the Respondent admits that the fact that a fee is charged does not disqualify Little Lamb from property tax exemption. Resp. Reply Brief; citing Roller Skating Rink Operators Ass’n, 853 N.E.2d at 1266. The Board has found facilities tax exempt in the past even though a fee was charged for services provided. (See KC Propco, LLC. (November 2011)). The Board will not deny an educational exemption based on the fact a fee is charged.
59. The Respondent also argued that granting the Petitioner an exemption would in effect harm Hamilton County schools. The Respondent argued that assessed values in Hamilton County are decreasing while the student enrollments are increasing. The Respondent is attempting to persuade the Board to deny an exemption application because the school system will lose tax revenue. The Respondent is arguing that an educational exemption is granted when the government is relieved of a burden, and by granting an exemption here, that same governmental entity is actually being harmed. The Respondent has not established that the Petitioner’s exemption should be denied based on this information.
60. The Respondent’s argument that the Board should decide this appeal based on other pending appeals does not hold any weight. The Board will not decide an exemption case on the argument that “currently 116 exemption appeals pending regards [sic] to Hamilton County daycare facilities for tax years 2008 – 2012, with a potential loss of approximately $179,141,200 in real property assessed value.” Resp. Reply Brief. The Board has not, and will not, decide a case based on how many other appeals are pending. Each exemption case is based on its own facts, and not on how many appeals are pending. Here, the Respondent has simply not provided enough evidence to impeach or rebut the Petitioner’s case.
61. After weighing all of the evidence presented by both parties, it is clear that both educational programs and child care activities take place at the Little Lamb daycare facility. From the Petitioner’s point of view, the educational and religious programs are the focus and the facility provides an educational curriculum that prepares children for enrollment in school by providing foundational elements children need to thrive in more advanced programs. The Respondent, however, argues that the primary and predominate use of the facility is providing custodial care to very young children. Ultimately, in this case it is the Petitioner’s point of view that is more persuasive. The weight of the evidence establishes that the use of the subject property is most accurately characterized as educational.
62. In making its determination, the Board is not ruling that every single daycare or early learning facility is entitled to an educational exemption. The Board continues to recognize the long standing principle that each exemption application must be examined on its own facts, as it was in this case.