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
    Indianapolis, IN
______________________________________________________________________
     IN THE INDIANA TAX COURT

COMMUNITY DEVELOPMENT CORP.,                                           )
                                                                            )
    Petitioner,                                                             )
                                                                            )
    v.                                                                      )   Cause No. 49T10-0210-TA-119
                                                                            )
PROPERTY TAX ASSESSMENT                                                     )
BOARD OF APPEALS OF                                                         )
MARION COUNTY, INDIANA,                                                     )
                                                                            )
    Respondent.                                                             )    
______________________________________________________________________

ON APPEAL FROM THREE FINAL DETERMINATIONS OF
THE INDIANA BOARD OF TAX REVIEW

NOT FOR PUBLICATION
April 6, 2004

FISHER, J.
    Community Development Corporation (CDC) appeals the Indiana Board of Tax Review’s (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 CDC’s 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. See footnote 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 136’s for its four parcels.See footnote The Marion County Property Tax Assessment Board of Appeals (PTABOA) denied CDC’s applications. Consequently, CDC appealed the PTABOA’s 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 PTABOA’s 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 Board’s 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).

Discussion

    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 Comm’rs, 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 Comm’rs, 525 N.E.2d 637, 638 (Ind. Tax Ct. 1988) (quoting Indiana Ass’n of Seventh-Day Adventists v. State Bd. of Tax Comm’rs, 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 Ass’n 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 property. Id.
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 it; and
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).
PARCEL I

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. (Pet’r 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.) CDC’s 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 CDC’s 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.)
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 CDC’s argument in its entirety, the Court finds that the Indiana Board’s final determination was arbitrary and capricious and must be reversed.

PARCEL II

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 is exercising
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.)
    The Indiana Board denied CDC’s 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 Board’s 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 Board’s 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 CDC’s 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 CDC’s 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 Comm’rs, 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 Board’s final determination is not supported with substantial or reliable evidence and must be reversed.

PARCEL III

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 CDC’s 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 was
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 CDC’s acquisition of the parcels. (Cert. Admin. R. at 586.) CDC’s 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 787.)
    In response, the PTABOA emphasized that the basis for denying CDC’s 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 use).
    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 Board’s 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 CDC’s 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.)

CONCLUSIONS

Consequently, because the Indiana Board did not consider the entirety of CDC’s argument, the Court REVERSES and REMANDS the Indiana Board’s three final determinations. Upon remand, the Indiana Board is ordered to instruct the local assessing officials to determine whether CDC’s land qualifies for an exemption under Indiana Code section 6-1.1-10-16(c) and consistent with this opinion.


Footnote: 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.

Footnote: 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 CDC’s appeal in September 2002, they were issued by the Indiana Board.

Footnote: CDC also testified to, and submitted, a plan drawn up in the 1980’s 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 PAW’s administrator, John Hampton. (Cert. Admin. R. at 752, 794.)

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 Comm’rs, 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 Comm’rs, 550 N.E.2d 850, 854 (Ind. Tax Ct. 1990)).