I.
Housing Partnerships first claims that in reaching its
determination, the Indiana Board abused its discretion by simply ignoring “the
overwhelming amount of uncontroverted testimony” by its employees, its tenants,
and the executive director of the Columbus Housing Authority. (Pet’r Br. At 16.) Housing Partnerships asserts that this
testimony demonstrated that the subject properties were used to provide
low-income individuals in the distressed areas of Bartholomew County with “clean,
safe and secure housing… at affordable and below-market rents” and with services
and support designed “to assist them in becoming self-sufficient and productive
members of the community.” (Pet’r Br. at 14.)
During the Indiana Board hearing, Housing Partnerships
presented the testimony of Mark Lindenlaub, its president, and Connie Munn, its
vice president. Their testimony established that Housing Partnerships had been
recognized by the Internal Revenue Service as a 501(c)(3) organization, having
met the federal statutory criteria to be exempted from federal income taxation
as a charitable organization. (See Cert. Admin. R. at 1211-12.) (See also Cert.
Admin. R. at 551-56.) In addition, their testimony established that because
Housing Partnerships received federal grant monies, it was able to charge
below-market rental rates for the subject properties. (See Cert. Admin. R. at
1252-53, 1262, 1268, 1287-97, 1303-04.) (See also Cert. Admin. R. at 583-84, 609-26.)
Their testimony also established that Housing Partnerships not only pays for its
tenants to attend at least one credit counseling session, but it also has
offered classes to them on how to purchase a home and make home repairs. (See
Cert. Admin. R. at 1218-19, 1225-27, 1240-44.) Moreover, Housing Partnerships
has written letters of recommendation for its tenants, it has taken them to
Alcoholics Anonymous meetings, and it has provided them with referrals to
various service organizations. (See Cert. Admin. R. at 1272-80, 1300-01,
1317-20.) Finally, through their testimony they explained that Housing
Partnerships’ building and rehabilitation efforts are directed to the oldest,
poorest, and most dilapidated areas in Bartholomew County. (See Cert. Admin. R.
at 1219, 1227-29.)
Housing Partnerships also
presented the affidavits of three of its tenants (two former, one current).
(See Cert. Admin. R. at 567-82.) All of these affiants described how Housing
Partnerships and its employees have made a difference in their lives, whether
it was by assisting them in repairing their credit, by giving them confidence
to make home repairs, or simply by providing them with encouragement. (See
Cert. Admin. R. at 567-82.) Finally, Housing Partnerships presented the
testimony of Deborah Holt, the Executive Director of the Columbus Housing
Authority (CHA) and a member of Housing Partnerships’ Board of Directors. (See
Cert. Admin. R. at 1323, 1327.) Holt testified that in her position with the
CHA, she referred many of her Section 8 clients to Housing Partnerships because
she believed it was the “best” landlord in Columbus. (See Cert. Admin. R. at
1327-31.) She further testified that she believed that if Housing Partnerships
did not exist, there would be a “huge” number of homeless people in the area
because they would not be able to find good, clean, affordable housing. (See
Cert. Admin. R. at 1327-31, 1335-41.)
In evaluating all of
this testimonial evidence, the Indiana Board explained that it demonstrated
that Housing Partnerships was “a good landlord and d[id] some nice things for
its tenants,” but it did not demonstrate that the subject properties were owned,
occupied, and predominately used for a charitable purpose as that term is used
in Indiana Code § 6-1.1-10-16. (Cert. Admin. R. at 478 ¶¶ 40-42, 479 ¶ 44.) The
Indiana Board’s conclusion that a taxpayer must show more than just good deeds
and a nonprofit status is supported by this Court’s case law. See generally
Methodist Hosps., Inc. v. Lake Cnty. Prop. Tax Assessment Bd. of Appeals, 862
N.E.2d 335 (Ind. Tax Ct. 2007), review denied; Indianapolis Osteopathic Hosp.,
Inc. v. Dep’t of Local Gov’t Fin., 818 N.E.2d 1009 (Ind. Tax Ct. 2004), review
denied; Nat’l Ass’n of Miniature Enthusiasts v. State Bd. of Tax Comm’rs, 671
N.E.2d 218 (Ind. Tax Ct. 1996); St. Mary’s Med. Ctr. of Evansville, Inc. v.
State Bd. of Tax Comm’rs, 534 N.E.2d 277 (Ind. Tax Ct. 1989) (all denying an
exemption to a corporation despite its recognized federal or state nonprofit
status). Moreover, evidence that a
nonprofit corporation charges low-income individuals below-market rents for its
apartments is not enough to show that the property is used for a charitable
purpose, even when the nonprofit corporation provides free services to its
tenants. See Jamestown Homes, 909
N.E.2d at 1144. Indeed, a taxpayer still
must provide evidence that it has relieved the government of an expense that it
would have otherwise borne. See id.
Throughout the administrative process and in its
presentation to this Court, Housing Partnerships stated that it lessened the
government’s financial burden because:
1) its building and rehabilitation efforts were directed to
the distressed areas in Bartholomew County, relieving the government of its
burden to revitalize those areas;
2) it helped people “from falling through the cracks,”
relieving human want and therefore doing something the government otherwise would
have had to do;
3) its rental rates were lower than other housing units,
relieving the government (i.e., HUD) of its obligation to subsidize a greater portion
of the rents paid by Housing Partnerships’ Section 8 tenants;
4) it helped its tenants to become more financially
self-sufficient, relieving the government of its burden to support them.
(See, e.g., Cert. Admin. R. at 528-29, 1219, 1227-29,
1337-41; Pet’r Br. at 11; Pet’r Reply Br. at 7 n.10; Oral Arg. Tr. at 22-23.)
These statements, however, are nothing more than mere conclusions. They are not
supported by any evidence in the administrative record that, for example, the
government actually bore the burden of revitalizing Bartholomew County’s
distressed areas, or that it bore the burden of “preventing people from falling
through the cracks.” See College Corner, 840 N.E.2d at 910 (referring to a
statutory provision that indicated the government bore the burden to provide
for neighborhood sidewalks and alleys). Without laying such a foundation, Housing
Partnerships’ conclusory statements do not constitute probative evidence. See,
e.g., Whitley Prods., Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1119 (Ind.
Tax Ct. 1998) (explaining that allegations, unsupported by factual evidence, remain
allegations), review denied.
The final determination shows that the Indiana Board did not
ignore Housing Partnerships’ testimonial evidence. Instead, it shows that the
Indiana Board weighed that evidence and concluded that it was not probative
because it failed to demonstrate that the subject properties were owned,
occupied, and used for a charitable purpose.
II.
Housing Partnerships also argues that the Indiana Board’s
final determination is contrary to law. Specifically, Housing Partnerships
claims that
[t]he Indiana Board misinterpreted [the Court’s holding in] Jamestown[
Homes] when it determine[d] that an owner of property, whose actions provide
numerous benefits to it[s] tenants and the community in addition to providing
safe, secure, clean and affordable housing . . . is not eligible for [a]
property tax exemption under Ind[iana] Code § 6-1.1-10-16, merely because it
receives government grants, even if the grant has nothing to do with the [subject
properties.]
(Pet’r Br. at 18.)
In Jamesown Homes, a nonprofit corporation, through
its participation in the federal government’s Section 221(d)(3) program, constructed
an apartment complex. See Jamestown Homes, 909 N.E.2d at 1139. Under that program, the federal government
covered the corporation’s mortgage insurance and subsidized a low-interest loan
in an effort “to promote the construction of affordable housing for low to
moderate-income families.” Id. In exchange for the governmental assistance, corporation
agreed both to rent its apartments to certain income-qualifying tenants and to
charge budget-based rents. Id.
In its hearing before the Indiana Board, the nonprofit
corporation argued that its property was entitled to an exemption because “the
provision of ‘safe, decent and affordable housing for persons of lower income
who could not otherwise afford such housing’ [was] a charitable purpose.” Id.
at 1140. The Indiana Board denied the exemption, and on appeal, this Court
affirmed the Indiana Board’s exemption denial. Id. at 1145. In affirming the
Indiana Board, the Court explained that the nonprofit corporation failed to
provide probative evidence to demonstrate, among other things, that it had
lessened the burden of government in meeting the need for affordable housing
“because that need [was] ultimately being met by the government through its mortgage
insurance and interest subsidy.” Id. at 1144. Moreover, the Court noted in its analysis
that numerous jurisdictions had rejected charitable exemptions on similar properties
because, ultimately, any “charitable use” was achieved solely as a condition of
the agreements with the federal government (i.e., through their use, the
properties were not relieving a government burden because the government was
providing subsidies and financial assistance to them). See id. at 1143 n.10.
Here, the Indiana Board explained in its final determination
that Housing Partnerships needed to explain whether the federal government
imposed any conditions on its receipt of the federal monies. (See Cert. Admin.
R. at 477 ¶ 38.) The Indiana Board found Housing Partnerships’ lack of evidence
or explanation on this point significant because “[an] exemption for low income
rental properties ha[d] been denied [in Jamestown Homes] based on [the]
incentives the property owner[ ] received to construct and operate such
housing.” (Cert. Admin. R. at 477 ¶ 38.) In other words, no probative evidence
was offered for the Indiana Board to determine whether Housing Partnerships
relieved the government of an expense it would otherwise have borne, or whether
the government, through its federal grants, was still bearing the expense
itself.
The Indiana Board concluded that Housing Partnerships did
not provide facts showing that its provision of low-income housing met the
legal requirements of a charitable purpose that would entitle it to an
exemption from the general duty to pay property tax. This conclusion did not
misinterpret Jamestown Homes, and it was reasonable. See, e.g., Amax Inc. v.
State Bd. of Tax Comm’rs, 552 N.E.2d 850, 852 (Ind. Tax Ct. 1990) (explaining
that this Court will not affirm a final determination if it finds that a
reasonable person, upon reviewing the administrative record in its entirety, would
not be able to find enough relevant evidence to support the decision).
http://www.in.gov/judiciary/opinions/pdf/06061401mbw.pdf
The Board's Determination can be found here:
http://www.in.gov/ibtr/files/Housing_Partnerships_Inc_03-003-06-2-8-00001_et_seq.pdf
The Board's Determination can be found here:
http://www.in.gov/ibtr/files/Housing_Partnerships_Inc_03-003-06-2-8-00001_et_seq.pdf
