Monday, July 28, 2014

Board Finds Conservation Club Property Exempt Despite Fact Rent is Collected for Camping and Some Property is Leased for Farming

Excerpts of the Board's Determination follow:

23. VCCC argues that the subject property is exempt under Ind. Code § 6-1.1-10-16(c)(3) and Ind. Code § 6-1.1-10-7. Because the Board finds the first claim dispositive, it need not decide the second.

24. Although, as the Assessor points out, VCCC’s exemption applications to the PTABOA did not cite to any Indiana statute under which it was claiming an exemption, those applications included references to the “conservation of wildlife, forest, lands, lakes.” Thus, there was enough information in the applications to put the PTABOA on notice that VCCC was claiming an exemption under Ind. Code § 6-1.1-10-16(c)(3), which provides:  

(c) A tract of land, including the campus and athletic grounds of an educational institution, is exempt from property taxation if:
(3) the tract:
(A) is owned by a nonprofit entity established for the purpose of retaining and preserving land and water for their natural characteristics;
(B) does not exceed five hundred (500) acres; and
(C) is not used by the nonprofit entity to make a profit.

I.C. § 6-1.1-10-16(c)(3).

25. It is undisputed that VCCC is a not-for-profit organization and that the subject property is less than 500 acres. The appeal turns instead on whether VCCC was “established for the purpose of retaining and preserving land and water for their natural characteristics.” VCCC’s articles and by-laws show that it was established for those purposes. For example, its by-laws list “protect[ing] the trees, shrubs, and lakes” as one of its purposes. Pet’r Ex. 2. And its articles of incorporation refer to opposing pollution of steams and lakes. VCCC also took various steps to preserve the property, such as managing the forested areas in compliance with DNR guidelines, clearing the area of invasive plants, and maintaining the proper balance of specie in the lakes.

26. On the other hand, VCCC rented part of its property to campers and other parts to a farmer. The Assessor therefore argues that VCCC did not use the property for exempt purposes. VCCC counters that the statute has only one use requirement—that it not use the property to make a profit.

27. The Board need not decide that question today. While renting part of the property to campers and maintaining a shooting range may be consistent with other purposes, such as recreation, those activities are also closely related to maintaining the subject property for its natural characteristics. One of the reasons to retain and preserve land and water for their natural characteristics is for people to be able to admire and enjoy them. There is little evidence that the camping and other activities at the subject property interfered with, rather than enhanced, VCCC’s overall efforts to retain and preserve the property for its natural characteristics. Although both campers and VCCC have built some improvements on part of the property, the Assessor did not offer any evidence to support the notion that those improvements significantly interfered with VCCC’s ability to preserve the property’s natural characteristics.

28. Granted, the same may not be said for renting tillable land to a farmer. While farming may be deeply rooted in this State’s history and culture, it almost by definition involves exploiting land rather than preserving it for its natural characteristics. But renting the tillable land, which comprises only about 11% of the property as a whole and which is interspersed throughout portions of several parcels, was incidental to VCCC’s overall use of the property.

29. Finally, the mere fact that VCCC charges rent to campers and farmers, by itself, does not defeat VCCC’s exemption claim. The Assessor does not claim that VCCC uses the property to make a profit. To the contrary, VCCC uses all the revenue from the property to pay expenses. As the Indiana Tax Court has noted in a slightly different context, the fact that a retirement home charges a fee for its service is not a bar to charitable status, “as charities often need to charge reasonable and sufficient fees to cover the cost of their operation.” Raintree Friends Housing, Inc. v. Ind. Dep’t of State Revenue, 667 N.E.2d 810, 815 (Ind. Tax Ct. 1996) (citing, State Bd. of Tax Comm’rs v. Methodist Home for the Aged, 143 Ind. App. 419, 241 N.E.2d 84, 88 (1968).

30. The Board therefore finds that the subject property qualifies for exemption under Ind. Code § 6-1.1-10-16(c)(3).