ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
DAVID B. HUGHES STEVE CARTER
ATTORNEY AT LAW ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
JOHN D. SNETHEN
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
COMMUNITY DEVELOPMENT CORP., )
v. ) Cause No. 49T10-0210-TA-119
PROPERTY TAX ASSESSMENT )
BOARD OF APPEALS OF )
MARION COUNTY, INDIANA, )
ON APPEAL FROM THREE FINAL DETERMINATIONS OF
THE INDIANA BOARD OF TAX REVIEW
NOT FOR PUBLICATION
April 6, 2004
Community Development Corporation (CDC) appeals the Indiana Board of Tax Reviews (Indiana Board)
three final determinations denying its claims for property tax exemptions for the 2000
tax year. The issue for the Court to decide is whether the
Indiana Board erred when it determined that CDCs parcels were not entitled to
property tax exemptions.
FACTS AND PROCEDURAL HISTORY
CDC is an Indiana not-for-profit corporation and auxiliary of the Pentecostal Assemblies of
the World, Inc. (PAW). The CDC was formed to renovate real estate
in an economically depressed area of Indianapolis[.] (Cert. Admin. R. at 50.)
CDC owns four parcels of land in the Meadows area of Indianapolis.
Two of these parcels are located to the east of the PAW
buildings; the other two parcels are across Meadows Drive to the west.
For the 2000 tax year, CDC filed Application for Property Tax Exemption Form
136s for its four parcels.See footnote The Marion County Property Tax Assessment Board
of Appeals (PTABOA) denied CDCs applications. Consequently, CDC appealed the PTABOAs decision
to the State Board of Tax Commissioners (State Board). The State Board
held a hearing on November 19, 2001.
On September 4, 2002, the Indiana BoardSee footnote issued three final determinations affirming the
PTABOAs denial of the exemptions. On October 17, 2002, CDC initiated an
original tax appeal. This Court heard the parties oral arguments on January
9, 2004. Additional facts will be supplied as necessary.
ANALYSIS AND OPINION
Standard of Review
This Court gives great deference to final determinations of the Indiana Board when
it acts within the scope of its authority. Wittenberg Lutheran Vill. Endowment
Corp. v. Lake County Prop. Tax Assessment Bd. of Appeals, 782 N.E.2d 483,
486 (Ind. Tax Ct. 2003), review denied. Consequently, the Court may reverse
a final determination of the Indiana Board only if it is:
arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
contrary to constitutional right, power, privilege, or immunity;
in excess of statutory jurisdiction, authority, or limitations, or short of statutory jurisdiction,
authority, or limitations;
without observance of procedure required by law; or
unsupported by substantial or reliable evidence.
Ind. Code Ann. § 33-3-5-14.8(e)(1)-(5) (West Supp. 2003). The party seeking to
overturn the Indiana Boards final determination bears the burden of proving its invalidity.
See Osolo Township Assessor v. Elkhart Maple Lane Assocs., L.P., 789 N.E.2d
109, 111 (Ind. Tax Ct. 2003).
Tax exemption statutes are strictly construed in favor of the state and against
the taxpayer. Foursquare Tabernacle Church of God in Christ v. State Bd.
of Tax Commrs, 550 N.E.2d 850, 854 (Ind. Tax Ct. 1990). Therefore,
the burden is upon the one claiming the exemption to show that the
property clearly falls within the exemption statute. Id. (citing LeSea Broadcasting Corp.
v. State Bd. of Tax Commrs, 525 N.E.2d 637, 638 (Ind. Tax Ct.
1988) (quoting Indiana Assn of Seventh-Day Adventists v. State Bd. of Tax Commrs,
512 N.E.2d 936, 938 (Ind. Tax Ct. 1987))). Furthermore, the underlying purpose
in granting a tax exemption is that there is a present benefit to
the general public from the operation of the charitable institution sufficient to justify
the loss of tax revenue. Id. (quoting White Cross Hospital Assn
v. Bd. of Tax Appeals, 311 N.E.2d 862, 863 (Ohio 1974)). Accordingly,
if there is no reasonable expectation of property owned by a charitable organization
ever being used for its intended purpose, there is no entitlement to the
exemption because the public does not derive any benefit from unused and untaxed
CDC claims that its parcels are entitled to property tax exemptions under Indiana
Code § 6-1.1-10-16, which provides in pertinent part:
A tract of land, including the campus and athletic grounds of an educational
institution, is exempt from property taxation if:
a building which is exempt under subsection (a) or (b) is situated on
the tract does not exceed:
fifty (50) acres in the case of:
an educational institution; or
a tract that was exempt under this subsection on March 1, 1987; or,
fifteen (15) acres in all other cases.
A tract of land is exempt from property taxation if:*****
it is purchased for the purpose of erecting a building which is to
be owned, occupied, and used in such a manner that the building will
be exempt under subsection (a) or (b);
(3) [and] not more than three (3) years after the
property is purchased, and for each year after the three (3) year period,
the owner demonstrates substantial progress towards the erection of the intended building and
use of the tract for the exempt purpose.
Ind. Code Ann. § 6-1.1-10-16(c),(d) (West 2000) (amended 2003).
CDC acquired Parcel I in 1979; it has been exempt from property tax
since its acquisition. (See Cert. Admin. R. at 793.) The parcel
is an approximately 17 acre tract of land located on the west side
of Meadows Drive, across the street from the PAW buildings. At the
time Parcel I was obtained, it contained a vacant shopping center that has
since been torn down; what remains is a parking area . . .
grassy areas and strips . . . no improvements . . .
other th[a]n asphalt[.] (Cert. Admin. R. at 793, 795-96.)
In 1996, CDC granted PAW a parking easement for an approximately 3.5 acre
section of the parcel that runs along Meadows Drive and across from the
PAW buildings. (See Cert. Admin. R. at 533-550; 791-92.) Approximately 1.8
acres of the northern-most section of the parcel is an improved roadway known
as Meadows Parkway; the Parkway is the only direct means of vehicular ingress
and egress from a public street to the west of the parcel to
the PAW buildings. (Petr Br. at 8.)
On its exemption application, CDC stated that the [p]roperty is undeveloped at this
time. (Cert. Admin. R. at 30.) On its petition for review
to the State Board, CDC stated that [a] portion of such tract has
been used, and is being used today, for parking for the [PAW] buildings[.]
(Cert. Admin. R. at 34.) CDCs petition also stated that it
[is] doing due diligence with respect to plans envisioning the eventual occupancy and
use of the subject tract of real estate for exempt purposes consisting, among
other things, of possible use by the City of Indianapolis or other federal,
state, or local governmental agency. As is well known, the development of
this tract for commercial purposes has proved impossible
See footnote  [but the CDC] believe[s]
in good faith that the [tract] [is] capable of being renovated and used
for [exempt] purposes within three (3) to six (6) years[.]
(Cert. Admin. R. at 34 (footnote added).)
At its administrative hearing, CDC asserted that it had no intent aside
from maintaining the parking easement areas and roadway, to use the land at
present other than as part of a campus and part of the real
estate of the [PAW] building[s]. (Cert. Admin. R. at 797-98.) In
response, the PTABOA explained that it denied CDCs exemption request because there had
been no ground broken or building permits issued for the sections of the
parcel not dedicated for parking. (
See Cert. Admin. R. at 801.)
In its final determination, the Indiana Board stated that [CDC] has been using
the parcel for parking since 1997, but there have been no plans developed
to construct a building or any other improvement on the property. (See
Cert. Admin. R. at 166.) Consequently, the Indiana Board ultimately determined that:
In a nutshell, [CDC] has failed to submit sufficient evidence that the parcel
is going to be developed. The record is devoid of probative evidence
of any organized viable short or long-term plan for any development of a
building, including a proposed completion date. In addition, the record is silent
as to an estimate of the amount of funds necessary to complete the
construction of a building, or of the amount of funds currently escrowed solely
for the construction of a building.
(Cert. Admin. R. at 166.)PARCEL II
The Court agrees with the Indiana Board that CDC did not make a
prima facie case demonstrating progress in the development of its parcel as required
under Indiana Code § 6-1.1-10-16(d). However, as the CDC also alluded to,
the Indiana Board failed to consider whether the entire parcel would qualify for
exemption under Indiana Code § 6-1.1-10-16(c). CDC testified that its intended use
of the parcel was as part of the campus of PAW and the
College. Such an exemption would fall under subsection (c). Consequently, because
the Indiana Board failed to consider CDCs argument in its entirety, the Court
finds that the Indiana Boards final determination was arbitrary and capricious and must
CDC acquired Parcel II in 1979; it too has also been exempt from
property tax since the time it was acquired. This parcel is an
approximately one (1) acre tract of land adjacent to Parcel I and located
immediately north of 38th Street (which runs perpendicular to Meadows Drive.) On
its exemption application for Parcel II, CDC stated that [p]roperty is undeveloped at
this time. (Cert. Admin. R. at 30.) On its petition for
review to the State Board, CDC stated that [this] tract is for an
alternative means of ingress and egress to the [PAW buildings] and overflow parking
areas[.] (Cert. Admin. R. at 94.) Additionally, CDC asserted that it
due diligence with respect to plans envisioning the eventual use of the subject
tract for exempt purposes consisting of expansion of the [PAW] and [College], as
well as possible use by . . . other federal, state, or local
governmental organization[s]. [CDC] believe[s] in good faith that the same is capable
of being used for such purposes within three (3) to six (6) years
considering the circumstances[.]
(Cert. Admin. R. at 94.) CDC also testified at the hearing that
the tract is essentially a little driveway that provides an access to 38th
Street. (Cert. Admin. R. at 789.)PARCEL III
The Indiana Board denied CDCs exemption application for this parcel because there have
been no plans developed to construct a building or any other improvement on
the property. (Cert. Admin. R. at 151-52.) Furthermore, the Indiana Boards
findings describe the parcel as: 2.5 acres is used for overflow parking[,]
and 15.217 acres [is] undeveloped[,] and the overflow parking area located on the
.993 acre[.] (Cert. Admin. R. at 146, 151.) CDC never asserted
that its parcel was used as an overflow parking area; yet, the Indiana
Boards final determination also stated that [t]he Petitioner states that the subject property
has been used as a parking area for [the PAW buildings] since 1997[.]
(Cert. Admin. R. at 150.)
Thus, it appears to the Court that the Indiana Board confused the evidence
presented by CDC with respect to this parcel with that in regard to
Parcel I. The evidence clearly demonstrates that CDCs parcel provides ingress or
egress from 38th Street to the overflow parking area on Parcel I and
the PAW buildings. The Indiana Board failed to consider whether
CDCs stated use of the parcel as an access route qualifies it for
a charitable property tax exemption. See Alte Salems Kirche, Inc. v. State
Bd. of Tax Commrs, 694 N.E.2d 810, 815 (Ind. Tax Ct. 1998) (finding
that property reasonably necessary for an exempt purpose may qualify for exemption under
Indiana Code § 6-1.1-10-16). Consequently, the Indiana Boards final determination is not
supported with substantial or reliable evidence and must be reversed.
Parcel III was acquired in 1997; it too has been exempt from property
taxes until the 2000 assessment. (See Cert. Admin. R. at 762, 774.)
This parcel is the combination of CDCs third and fourth parcels, constituting
a total of approximately 10.566 acres, with three vacant apartment buildings on them.
(Cert. Admin. R. at 8, 20, 766.) The parcels are located
east of the PAW buildings. On its exemption applications for these parcels,
CDC stated that the [p]roperty is undeveloped at this time. (Cert. Admin.
R. at 10.)
On its petition for review to the State Board, CDC claimed that it
making substantial progress toward the eventual occupancy and use of the improvements on
the subject tract for exempt purposes consisting, specifically, of one apartment building being
used as a dormitory to house students attending the adjacent property leased to
the [College], and of the other two apartment buildings to be used for
senior citizen residences.
(Cert. Admin. R. at 12.) Furthermore, at the administrative hearing, CDC submitted
plans for Elderly Care/Residence Buildings. These plans were developed in 1996, prior
to CDCs acquisition of the parcels. (Cert. Admin. R. at 586.)
CDCs witness, PAW administrator John Hampton, testified that the church still planned to
develop Parcel III and its three buildings into dormitory and senior citizen housing
units, and was optimistic that they would obtain the necessary finances. (Cert.
Admin. R. at 769.)
CDC also provided testimony that Parcel III was contiguous to the PAW Buildings,
and that under Indiana Code § 6-1.1-10-16(c), educational institutions are entitled to have
contiguous land of up to 50 acres and religious institutions are entitled to
contiguous land of up to fifteen acres. (See Cert. Admin. R. at
In response, the PTABOA emphasized that the basis for denying CDCs exemption application
was because it stated that the parcel has no structures in use, no
rooms or areas [in use,] and no building plans or permits on file.
(See Cert. Admin. R. at 783.) See Foursquare Tabernacle, 550 N.E.2d
at 854 (stating that subsection (d) of IC 6-1.1-10-16 requires ownership, occupancy and
The Indiana Board determined that CDC was not entitled to an exemption for
Parcel III, stating:
In the evidence and testimony presented by the Petitioner, [CDC] has been planning
for the renovation since 1996, but there has been no financial backing and
there is a lack of finances to start the project.
In a nutshell, [CDC] has failed to submit sufficient evidence that their plan
is more than a mere dream[.] The record is devoid of probative
evidence of an organized viable short or long-term plan for renovation, including a
proposed completion date. In addition, the record is silent as to an
estimate of the amount of funds necessary to complete the renovation, or of
the amount of funds currently escrowed solely for the subject renovation.
(Cert. Admin. R. at 228 (internal citation omitted).) In arriving at its
determination, the Indiana Board relied on Indiana Code § 6-1.1-10-16(d)(3). (See supra.)
In reviewing the record, the Court agrees with the Indiana Boards analysis that
Parcel III was not entitled to an exemption under subsection 16(d).
See footnote Nevertheless,
while the information CDC provided in its application and petition to the State
Board was aimed at demonstrating progress toward renovating the vacant improvements on Parcel
III, the Indiana Board again failed to consider the entirety of CDCs claim.
CDC also raised the issue of whether the parcel qualified for an
exemption provided for under Indiana Code § 6-1.1-10-16(c). CDC referred to this
provision with respect to exempt acreage as well as to the contiguity of
its three parcels in relation to the PAW buildings. (
See Cert. Admin.
R. at 787.) The Indiana Board did not address whether Parcel III
qualified under subsection (c); therefore, its final determination was arbitrary and capricious and
must be reversed.
In sum, the Indiana Board failed to consider that CDC at the
administrative hearing and without objection by the PTABOA raised the issue of whether
its parcel would qualify for exemption under subsection (c) of Indiana Code section
6-1.1-10-16. (See Cert. Admin. R. at 742-816.)
Consequently, because the Indiana Board did not consider the entirety of CDCs argument,
the Court REVERSES and REMANDS the Indiana Boards three final determinations. Upon
remand, the Indiana Board is ordered to instruct the local assessing officials to
determine whether CDCs land qualifies for an exemption under Indiana Code section 6-1.1-10-16(c)
and consistent with this opinion.
PAW also owns two parcels in this same area, located at 3919/3939
Meadows Drive. Those two parcels contain the PAW headquarters and its auxiliary
Indiana not-for-profit corporation, Aenon Bible College, Inc. buildings (PAW buildings).
Footnote: The parcels at issue in this appeal are numbered 8052688, 8048090, 8061066,
and 8061067. (
See Cert. Admin. R. at 8-24, 28-34.) For ease
of reference in this opinion, Parcel I refers to 8052688 and Parcel II
refers to 8048090. Parcel III will refer to both 8061066 and 8061067
since the two parcels essentially form one parcel and the Indiana Board issued
one final determination.
On December 31, 2001, the legislature abolished the State Board of
Tax Commissioners (State Board). 2001 Ind. Acts 198 § 119(b)(2). Effective
January 1, 2002, the legislature created the Indiana Board of Tax Review (Indiana
Board) as successor to the State Board.
Ind. Code Ann. §§ 6-1.5-1-3;
6-1.5-4-1 (West Supp. 2003); 2001 Ind. Acts 198 § 95. Thus, when
the final determinations were issued on CDCs appeal in September 2002, they were
issued by the Indiana Board.
CDC also testified to, and submitted, a plan drawn up in the
1980s to renovate the retail center for PAW headquarters and its attempts to
attract national retailers to help finance the project. (Cert. Admin. R. at
720, 794-95.) However, the project was [n]ever economically feasible over the preceding
ten years according to PAWs administrator, John Hampton. (Cert. Admin. R. at
Footnote: Indeed, this Court has stated that mere ownership alone is insufficient to
support an exemption and that the intent to use the property for an
exempt purpose must be more than a mere dream.
Trinity Episcopal Church
v. State Bd. of Tax Commrs, 694 N.E.2d 816, 818 (Ind. Tax Ct.
1998) (internal quotation marks omitted) (citing Foursquare Tabernacle Church of God in Christ
v. State Bd. of Tax Commrs, 550 N.E.2d 850, 854 (Ind. Tax Ct.