25. The Petitioner claims that
the park is exempt pursuant to Ind. Code §6-1.1-10-16(a) because it was owned,
occupied, and used for charitable and educational purposes during the years in
question. Indeed, that general exemption statute exempts all or part of a building
if it is owned, occupied, and predominately used by a person for educational, literary,
scientific, religious, or charitable purposes. I.C. § 6-1.1-10-16(a); see
also, I.C. § 6-1.1-10-36.3(c)-(d) (requiring a property to be predominately
used or occupied for one or more exempt purposes in order to qualify for
exemption); Jamestown Homes 909 N.E.2d at 1141. It similarly exempts
land under an exempt building and personal property owned and used in such a
manner that it would be exempt if it were a building. I.C. § 6-1.1-10-16 (c)(1)
and -(e). Property is predominately occupied or used for an exempt purpose if
it is occupied or used for that purpose more than 50% of the total time that it
is used or occupied during the year ending on the assessment date. I.C. §
6-1.1-10-36.3(a).
26. The Petitioner predominately
uses the park to allow members of the public to ride motorcycles and ATVs in a
safe environment for a $15 entry fee.3 The Board must therefore determine whether
that use qualifies as charitable or educational under Ind. Code §
6-1.1-10-16(a). As explained below, the Board concludes that it does not.
27. Although exemption statutes
are strictly construed against the taxpayer, the term “charitable purpose” is to
be defined and understood in its broadest constitutional sense. Knox County
Property Tax Assessment Board of Appeals, 826 N.E.2d 177, 182 (Ind. Tax Ct.
2005). A charitable purpose will generally be found if: (1) there is evidence
of relief of human want manifested by obviously charitable acts different from
the everyday purposes and activities of man in general; and (2) there is an
expectation that a benefit will inure to the general public sufficient to
justify the loss of tax revenue. Id. Worthwhile activity or noble
purpose alone is not enough. Instead, an exemption is justified because it
helps accomplish some public purpose. National Ass’n of Miniature Enthusiasts
v. State Bd. of Tax Comm’rs, 671 N.E. 2d 218, 220 (Ind. Tax Ct. 1996).
28. Indiana Courts have applied
those same basic principles in interpreting the term “educational” under Ind.
Code § 6-1.1-10-16(a) and its predecessor statutes. “Education,” as that term
is broadly understood, can occur anywhere, including private homes. Thus, to avoid
irrationally applying the exemption statute, a more restrictive definition is
required. Fort Wayne Sports Club, Inc. v. State Bd. or Tax Comm’rs, 147 Ind.
App. 129, 258 N.E.2d 874, 881 (1970) (interpreting predecessor to I.C. §
6-1.1-10-16). A taxpayer must demonstrate a public benefit by showing that it
provides education that is the “substantial equivalent” to instruction offered
in Indiana’s tax-supported institutions. Dep’t of Local Gov’t Fin. v. Roller
Skating Rink Operators Ass’n, 853 N.E.2d 1262, 1266 (Ind. 2006). The closer
the taxpayer’s activity is to traditional educational programs offered in
public schools, the more obvious is the public benefit. But a taxpayer need not
offer courses that are directly analogous to courses taught in public schools;
rather, the taxpayer’s courses simply need to be related to public-school offerings.
Id. (citing Trinity School of Natural Health v. Kosciusko County
Prop. Tax Assessment Bd. of Appeals, 799 N.E.2d 1234, 1238 (Ind. Tax Ct.
2003)). And the taxpayer need only relieve the state’s burden of providing
public education to “some limited extent.” Id. (quoting Trinity
School, 799 N.E.2d at 1238).
29. Indiana courts have generally
denied charitable- or educational-purpose exemptions to facilities used
primarily for social or recreational activities. E.g. Indianapolis
Elks Building Corp. v. State Bd. of Tax Comm’rs, 145 Ind. App. 522, 251
N.E.2d 673, 681-83 (1969); Fort Wayne Sports Club, 258 N.E.2d at 882. In
Indianapolis Elks, the court denied a charitable-purpose exemption to a
property that lodge members and their families used for eating, dancing, card
games, swimming, and general relaxation. Indianapolis Elks, 251 N.E.2d
at 682-83. As the court explained, those activities undoubtedly suppress human
want and suffering in addition to promoting things like brotherly love,
justice, and fidelity. Id. at 682. But as the court further explained, “these
noble objectives can also be seen in the family home and at various other
public and private establishments, all of which are not exempt from property
taxation.” Id. Similarly, in Fort Wayne Sports Club, the court
held that two clubs, one of which was used for athletic activities, membership
meetings, and dances and the other of which was used solely as an athletic
club, were not entitled to an educational-purpose exemption. Fort Wayne
Sports Club, 258 N.E.2d at 140-41. According to the court, any educational benefits,
such as teaching light physical exercises and indoor games, were merely incidental.
See id. at 132, 140-41.
30. The Petitioner’s use of the
park is analogous to the types of social and recreational activities at issue
in Indianapolis Elks and Fort Wayne Sports Club. While promoting social
or recreational activities may be a noble venture, and may even relieve human want
to some degree, it does not provide the level of public benefit that Ind. Code
§ 6-1.1-10-16(a) or its predecessor statutes contemplate as justifying an
exemption. Indeed, with regard to its claim of educational use, the Petitioner
does not really even argue that opening the park to motorcycle and ATV riders
relates to the type of education offered by public schools.
31. The Petitioner, however,
points to its exemption under section 501(c)(3) of the Internal Revenue Code
and to the fact that it is open to the public as factors justifying a property tax
exemption. Neither of those things changes the Board’s analysis. The Tax Court
has previously rejected the Indiana Department of Revenue’s invitation to adopt
the Internal Revenue Service’s guidelines for applying section 501(c)(3) as the
standard for determining whether an entity is charitable for Indiana state tax
purposes, absent direction from the legislature. Raintree Friends Housing,
Inc. v. Ind. Dep’t of Rev., 667 N.E.2d 810, 816 n. 8 (Ind. Tax Ct. 1996).
32. Similarly, in National
Association of Miniature Enthusiasts (“NAME”), a trade association that was
exempt from federal income tax under section 501(c)(3), was organized to
promote public interest in miniatures and used part of its property as a museum
and library that was open to the public, by appointment, free of charge. It
also had space for workshops. NAME, 671 N.E.2d at 220. The Tax Court
found as a matter of law that those activities did not support a
charitable-purpose exemption. Id. at 221.
33. Indeed, the Petitioner’s
exemption claim is analogous to the claim that the Tax Court rejected in NAME.
Like the trade association in that case, the Petitioner is exempt from federal
income taxation under section 501(c)(3), and it exists largely to facilitate
and promote a recreational hobby, albeit in a safe environment. Also like the
trade association in NAME, the Petitioner made its property available to
the public as part of that promotion.
34. Finally, the Petitioner
identified several activities at the park aside from its main use—including
discrete events hosted by other not-for-profit organizations and riding classes—that
it claims qualify as educational or charitable. The Respondent argues that at
least some of those events, such as the Boogie, do not qualify. And as the
Respondent pointed out, the park was open 152 days per year. Taken together,
the events and classes that the Petitioner identified do not come close to
occupying the park for half those days. Furthermore, in most instances the
Petitioner did not even claim those activities comprised all, or even the
majority, of the park’s use on the days that they occurred. At most, any
charitable or educational activities were only incidental to the park’s predominate
social and recreational use. They do not support an exemption.
