In its final determination, the
Indiana Board explained that it found that New Life occupied and used the
property for a charitable purpose because the parties did not appear to dispute
the issue. (See Cert. Admin. R. at 64.) Now, on appeal, the Assessor contends
that this finding is erroneous because she indeed disputed the issue, and SPD’s
evidence showed that New Life merely operated a business that provided health
services for a fee. (See Pet’r Br. 8-10; Oral Arg. Tr. at 7-12.) (See also
Pet’r Reply Br. at 2-5 (arguing that SPD therefore failed to make a prima facie
case that New Life occupied and used the property for a charitable purpose as
required under Indiana Code § 6-1.1-10-16).)
It is well-established that
exemption statutes are to be strictly construed against the taxpayer, and thus,
the taxpayer bears the burden of proving that it is entitled to the exemption
that it seeks. Fraternal Order of Eagles #3988, Inc. v. Morgan Cnty. Prop. Tax
Assessment Bd. of Appeals, 5 N.E.3d 1195, 1200 (Ind. Tax Ct. 2014).
Accordingly, a taxpayer must show that all the elements of the charitable
purposes exemption have been met for the property to be exempt. See id.
Nonetheless, when the parties agree that property is owned, occupied, and used
for charitable purposes, the taxpayer’s burden to offer probative evidence as
to each agreed upon element is obviated. See Sangralea Boys Fund, 686 N.E.2d at
955-60 (determining only whether a unity of ownership, occupancy, and use was
required for exemption because the parties did not dispute that both the owner
and occupant of the property had a charitable purpose). See also, e.g.,
Freudenberg-NOK Gen. P’ship v. State Bd. of Tax Comm’rs, 715 N.E.2d 1026, 1031 (Ind. Tax Ct. 1999)
(explaining that the parties’ agreement on an obsolescence issue negated the
taxpayer’s burden to offer probative evidence on that issue), review denied.
Consequently, the critical question here is whether the record supports the
Indiana Board’s finding that New Life occupied and used the property for a
charitable purpose.
At the Indiana
Board hearing, SPD argued that New Life had a charitable purpose and presented
evidence that New Life recovers and distributes human tissue for medical
purposes; that tissue donation relieves the human suffering and want of medical
patients who need skin grafts, orthopedic, reconstructive, neurological,
cardiovascular, and oral surgeries; and that in providing these services, New
Life receives reimbursements that cover only its skin acquisition costs. (See,
e.g., Cert. Admin. R. at 104, 158-62, 326, 333-37.) SPD also presented evidence
showing that prior to New Life’s creation, the supply of transplantable human
tissue and the number of tissue banks in Indiana was inadequate to meet demand.
(See Cert. Admin. R. at 335-37.)
The Assessor’s
presentation, however, did not challenge SPD’s claims regarding New Life’s
charitable purpose or present evidence to the contrary, but instead, focused
primarily on whether SPD had a charitable purpose. (See, e.g., Cert. Admin. R.
at 181-229, 293-309, 353-70, 385-406.) Moreover, the Assessor’s opening
statement that “[w]e are not in any way, shape, or form conceding that New Life
uses or occupies th[e] property for an exempt purpose” did not put the issue in
dispute. (See Cert. Admin. R. at 322-23.) Indeed, this statement alone, without
supporting evidence and argument, is insufficient to create an actual dispute
as to whether New Life had a charitable purpose because an opening statement
generally is not substantive evidence; rather, it is designed to acquaint the
fact-finder with the facts that a party intends to prove. See Luphahla v.
Marion Cnty. Sheriff’s Dep’t, 868 N.E.2d 1155, 1158-59 (Ind. Ct. App. 2007).
Accordingly, there is substantial evidence to support the Indiana Board’s finding
that New Life occupied and used the property for a charitable purpose.
2.
The Indiana
Board also determined that the totality of the evidence demonstrated that SPD
owned the property for a charitable purpose. (See Cert. Admin. R. at 64-66.)
The Assessor asserts, however, that the evidence regarding SPD’s close
relationship with New Life and its status as New Life’s landlord contradicts
this finding. (See Pet’r Br. at 10-11; Oral Arg. Tr. at 14-15.)
The evaluation
of whether property is owned, occupied, and predominately used for a charitable
purpose is a fact sensitive inquiry; there are no bright-line tests because
every exemption case stands on its own facts. Jamestown Homes of Mishawaka,
Inc. v. St. Joseph’s Cnty. Assessor, 914 N.E.2d 13, 15 (Ind. Tax Ct. 2009),
review denied. In this case, the administrative record reveals that the same
individuals that created and own New Life created and own SPD. (See Cert.
Admin. R. at 106, 152-53, 329-30, 338-40.) In fact, SPD exists as an outgrowth
of New Life because SPD was formed for the sole purpose of acquiring and
renting the subject property to New Life in furtherance of its charitable
tissue bank operations.4 (See Cert. Admin. R. at 338-40.) In
this instance, therefore, the evidence of the close relationship between these
two entities does support the Indiana Board’s finding that each has a similar
charitable purpose. See Amax Inc. v. State Bd. of Tax Comm’rs, 552 N.E.2d 850,
852 (Ind. Tax Ct. 1990) (stating that a final determination of the Indiana
Board determination is supported by substantial evidence (i.e., more than a
scintilla of evidence) when a reasonable person could view the record in its
entirety and find enough relevant evidence to support the Indiana Board’s
determination).
Nonetheless,
the Assessor further contends that because SPD charges New Life above-market
rent, SPD has a profit motive similar to that of commercial landlords, not a
charitable purpose. (See Pet’r Br. at 10-11.) The record evidence reveals that
SPD, unlike some commercial landlords, owns and rents just one property, the
property it rents to New Life. (See Cert. Admin. R. at 340-41.) The evidence
also shows that SPD has never enforced a provision in its lease with New Life
that calls for annual rental increases. (Compare Cert. Admin. R. at 163 with
371.) Moreover, SPD’s evidence reveals that the amount of rent it charged New
Life was designed to cover just the mortgage costs and operational expenses,
not to generate profits for SPD. (See Cert. Admin. R. at 341, 348-49, 371-72.)
Finally, SPD explained that unlike a typical commercial landlord its owners
paid the immediately prior installment of property taxes from their own
personal accounts because neither SPD nor New Life had sufficient funds to
cover the liability. (See Cert. Admin. R. at 371-73.)
The totality
of the evidence indicates that the arrangement between SPD and New Life was not
a typical landlord-tenant relationship and that SPD did not have a profit
motive. Thus, to the extent that the Assessor has invited the Court to reweigh
the evidence in her favor, the Court must decline to do so. See Grant Cnty.
Assessor v. Kerasotes Showplace Theatres, LLC, 955 N.E.2d 876, 883 (Ind. Tax
Ct. 2011) (providing that the Court may not reweigh the evidence nor judge the credibility
of witnesses when reviewing the Indiana Board’s final determinations).
Therefore, the Court has no basis for reversing the Indiana Board’s finding
that SPD owns the property for a charitable purpose.
3.
Lastly, the
Assessor claims that the Indiana Board’s finding that SPD’s property was
predominately used for charitable purposes is contrary to law. More
specifically, the Assessor argues that while New Life used the property for
four months of the 2009 tax year, Indiana Code § 6-1.1-10-36.3 requires that
the property be used for charitable purposes for more than half of that year.
(See Oral Arg. Tr. at 15-18.) Accordingly, the Assessor argues that even
assuming that SPD and New Life have a charitable purpose, the Indiana Board’s
final determination is contrary to law.
When the
interpretation of a statute is at issue, the Court first looks to the plain
language of the statute. Charwood LLC v. Bartholomew Cnty. Assessor, 906 N.E.2d
946, 949 (Ind. Tax Ct. 2009) (citation omitted). “When a statute is susceptible
to more than one interpretation, it is ambiguous and the [C]ourt must interpret
the statute to effectuate the intent of the legislature.” Howser Dev. LLC v.
Vienna Twp. Assessor, 833 N.E.2d 1108, 1110 (Ind. Tax Ct. 2005) (citation
omitted). In other words, the Court is not at liberty to construe an
unambiguous statute. Id.
Indiana Code §
6-1.1-10-36.3(a) states that “property is predominantly used or occupied for
[charitable] purposes if it is used or occupied for . . . [those] purposes during
more than fifty percent (50%) of the time that it is used or occupied in the
year that ends on the assessment date of the property.” I.C. §
6-1.1-10-36.3(a). This language clearly requires that a property be used or
occupied for charitable purposes for more than 50% of the time that it is
actually used or occupied during the tax year at issue. See id. Here, the
evidence shows that in the four months the property was used and occupied, it
was used 100% of the time for the charitable purpose of operating a tissue
bank. Therefore, the Indiana Board’s final determination that SPD’s property
was predominately used for charitable purposes is not contrary to law.
