ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
RHONDA S. MILLER BARTON T. SPRUNGER
BRUCE A. SMITH KATRINA M. CLINGERMAN
STURM, SMITH & PARMENTER ICE MILLER
Vincennes, IN Indianapolis, IN
INDIANA TAX COURT
KNOX COUNTY PROPERTY TAX )
ASSESSMENT BOARD OF APPEALS, )
v. ) Cause No. 49T10-0403-TA-15
GRANDVIEW CARE, INC., )
ON APPEAL FROM A FINAL DETERMINATION OF
THE INDIANA BOARD OF TAX REVIEW
April 29, 2005
The Knox County Property Tax Assessment Board of Appeals (PTABOA) appeals the final
determination of the Indiana Board of Tax Review (Indiana Board) granting Grandview Care,
Inc. (Grandview) a property tax exemption for the 2002 tax year (the year
at issue). The sole question before the Court is whether Grandviews nursing
home and assisted living facility, known as the BridgePointe Health Campus (BridgePointe), qualifies
for the charitable purposes exemption as provided in Indiana Code § 6-1.1-10-16.
FACTS AND PROCEDURAL HISTORY
Grandview is an Indiana not-for-profit corporation.
It owns BridgePointe, a nursing home
and assisted living facility in Vincennes, Indiana. BridgePointe provides various levels of
care for its approximately 98 residents, ranging from short-term/transitional (with the intent on
returning the patient to his/her home) to long-term/skilled.
While BridgePointe residents
are charged a monthly fee to cover the costs of their living quarters,
meals, laundry, and medical services, BridgePointe will not turn a resident away due
to an inability to pay the monthly fee.
During the year at issue, Grandview contracted with Trilogy Health Services, LLC (Trilogy),
a for-profit organization, to operate BridgePointe. For a monthly fee of $17,000,
Trilogy was not only responsible for operating BridgePointe, but for maintaining its buildings,
hiring (and firing) its employees, and ensuring compliance with all licensing and regulatory
requirements as well. Trilogy was also responsible for paying all of BridgePointes
operating expenses, including payroll.
On May 14, 2002, Grandview filed a
Form 136 Application for Property Tax Exemption (Form 136) for the year at
issue with the Knox County Auditor. In its Form 136, Grandview claimed
that BridgePointe was entitled to the charitable purposes exemption because it provided decent
housing with safety and security, a sense of community, and attention to [the]
emotional stability and physical wellness of the elderly and needy in Knox County,
Indiana. (Cert. Admin. R. at 117, 122.) On July 24, 2003,
the PTABOA denied the application, stating that due to Grandviews contract with Trilogy,
the facility is being operated as a for-profit entity. We are [therefore]
unable to relate Grandview . . . as being charitable[.] (Cert. Admin.
R. at 11.)
Grandview appealed the PTABOAs determination to the Indiana Board. After conducting an
administrative hearing on the matter, the Indiana Board issued a final determination on
February 12, 2004, in which it reversed the PTABOA. Specifically, the Indiana
Board held that
[w]hether Grandview manages the facility itself, or contracts with a management company, the
purpose of the property is the operation of a nursing home and assisted
living facility to provide housing and care for the elderly.
[Grandview] owns, occupies and uses the property to provide housing and care for
the elderly. The Tax Court has [previously] stated that a charitable purpose
is accomplished by meeting the needs of the aging.
(Cert. Admin. R. at 55.) STANDARD OF REVIEW
On March 23, 2004, the PTABOA filed an original tax appeal. Both
the PTABOA and Grandview subsequently agreed to have the case resolved on the
basis of the administrative record and their briefs. The Court heard the
parties oral arguments on February 18, 2005. Additional facts will be supplied
This Court gives great deference to final determinations of the Indiana Board when
it acts within the scope of its authority. Miller Village Prop. Co.,
LLP v. Indiana Bd. of Tax Review, 779 N.E.2d 986, 988 (Ind. Tax
Ct. 2002). Consequently, the Court will reverse a final determination of the
Indiana Board only if it is:
(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(2) contrary to constitutional right, power, privilege, or immunity;
(3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory jurisdiction,
authority, or limitations;
DISCUSSION AND ANALYSIS
(4) without observance of procedure required by law; or
(5) unsupported by substantial or reliable evidence.
Ind. Code Ann. § 33-26-6-6(e)(1)-(5) (West 2005).
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). In order
to meet that burden, the party seeking reversal must have submitted, during the
administrative hearing process, probative evidence regarding the alleged assessment error. Id.
(footnote omitted). Probative evidence is evidence sufficient to establish a given fact
that, if not contradicted, will remain sufficient. Id. at n.4.
Article 10, § 1 of the Indiana Constitution provides:
The General Assembly shall provide, by law, for a uniform and equal rate
of property assessment and taxation and shall prescribe regulations to secure a just
valuation for taxation of all property, both real and personal. The General
Assembly may exempt from property taxation any property . . .
being used for municipal, educational, literary, scientific, religious, or charitable purposes.
Ind. Const. art. X, § 1(a)(1). Acting pursuant to this grant of
authority, the legislature has enacted Indiana Code § 6-1.1-10-16, which provides that [a]ll
or part of a building is exempt from property taxation if it is
owned, occupied, and used  for educational, literary, scientific, religious or charitable purposes.
See Ind. Code Ann. § 6-1.1-10-16(a) (West 2005). This exemption also
generally extends to the land on which the exempt building is situated, as
well as personal property that is contained therein. See A.I.C. § 6-1.1-10-16(c),
(e). 1. The Lack of an Identifiable Charity
The PTABOA claims that the Indiana Boards determination that a charitable purpose exists
in this case is erroneous for three reasons. First, it argues that
because Grandview is not affiliated with any religious organization, there is the lack
of an identifiable charity. (Petr Br. at 4-5.) Second, it claims
that while Grandview may own BridgePointe, it does not occupy or use it,
as required by the exemption statute. (Petr Br. at 6.) Finally,
the PTABOA argues that the evidence indicates that Grandview and Trilogy are clearly
in business to generate a profit, which contradicts the existence of a charitable
purpose. (See Petr Br. at 9-10.) The Court will address each
of these arguments in turn.
In essence, the PTABOA argues that because Grandview is not a religious organization,
it cannot be a charity, and because it is not a charity, it
cannot have a charitable purpose. The Court disagrees.
As early as 1879, the Indiana Supreme Court explained that a propertys exempt
status was tied to its use, and not to its owner. Indeed,
as the Supreme Court explained, Article X, § 1 of the Indiana Constitution
clearly contemplates the character and purpose of the property that may be exempted
from taxation, not the character and purpose of the owner of the property.
State ex rel. Tieman v. City of Indianapolis, 69 Ind. 375, 376
(1879). This Court has repeatedly recognized that principle in its own jurisprudence.
See, e.g., Indianapolis Osteopathic Hosp., Inc. v. Dept of Local Govt Fin.,
818 N.E.2d 1009, 1015-19 (Ind. Tax Ct. 2004) (applying a predominant use test
to determine whether property was exempt from taxation); Sangralea Boys Fund, Inc. v.
State Bd. of Tax Commrs, 686 N.E.2d 954, 959 (Ind. Tax Ct. 1997)
(stating that a propertys exempt status is tied to its use); Lincoln Hills
Dev. Corp. v. State Bd. of Tax Commrs, 521 N.E.2d 1360, 1361 (Ind.
Tax Ct. 1988) (holding that a corporations not-for-profit status did not automatically qualify
it for an exemption under Indiana Code § 6-1.1-10-16; rather, the corporation had
to show that the property was used for one of the listed purposes
found in the statute). Accordingly, BridgePointes entitlement to the charitable purposes exemption
is not dependent on Grandviews status as a religious organization. Rather, the
relevant question is whether BridgePointe is owned, occupied, and used for a charitable
The term charitable purpose is to be defined and understood in its broadest,
constitutional sense. Indianapolis Elks Bldg. Corp. v. State Bd. of Tax Commrs,
251 N.E.2d 673, 682 (Ind. Ct. App. 1969). Consequently, a charitable purpose
will generally be found to exist 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 of a benefit that will inure to
the public by the
accomplishment of such acts.
See id. at 683; State Bd. of Tax
Commrs v. Methodist Home for the Aged, 241 N.E.2d 84, 89 (Ind. Ct.
App. 1968) (footnote added).
To that end, Indiana courts have long recognized that providing care and comfort
to the aged constitutes a charitable purpose. See Wittenberg Lutheran Village Endowment
Corp. v. Lake County Property Tax Assessment Bd. of Appeals, 782 N.E.2d 483
(Ind. Tax Ct. 2003); Raintree Friends Housing, Inc. v. Indiana Dept of State
Revenue, 667 N.E.2d 810 (Ind. Tax Ct. 1996); Methodist Home for the Aged,
241 N.E.2d 84; Wilson v. Dexter, 192 N.E.2d 469, 474 (Ind. Ct. App.
1963). Indeed, as this Court once explained:
Caring for the aged is a recognized benefit to the community at large
and society as a whole. Indiana law recognizes that the aged require
care and attention entirely independent of financial needs, and that present day humanitarian
principles demand that those in their declining years have the opportunity to live
with as much independence as their strength will permit, in as pleasant and
happy surroundings as their finances will reasonably justify. Thus, by meeting the
needs of the aging, namely, relief of loneliness and boredom, decent housing that
has safety and convenience and is adapted to their age, security, well-being, emotional
stability, and attention to problems of health, a charitable purpose is accomplished.
Raintree Friends Housing, Inc., 667 N.E.2d at 814-15 (internal citations and punctuation omitted).
The facts in this case clearly demonstrate
that BridgePointes provision of
comfort and care to the elderly accomplishes a charitable purpose.
2. Own, Occupy, and Use
The PTABOA next argues that under Indiana Code § 6-1.1-10-16, Grandview is required
to own, occupy, and use BridgePointe for a charitable purpose. The PTABOA
asserts, however, that while Grandview may own BridgePointe, Trilogy occupies and uses it.
As a result, the PTABOA maintains that Grandview has failed to satisfy
the mandatory requirements of Indiana Code § 6-1.1-10-16(a).
This Court has previously held that Indiana Code § 6-1.1-10-16 is not to
be read so strictly as to require a single entity to own, occupy,
and use a piece of property before it can be exempted from taxation.
If one seeks to reward charities for their activities and to encourage beneficial
public service, drafting a statute that severely limits the ability of a charity
to organize and operate in an efficient and cost-effective manner would be illogical.
To be sure, the words own, occupy, and use restrict the activities
that may be conducted on the property before an entity will qualify for
an exemption. However, the intent of the legislature is not to force
a single charitable entity to achieve a unity of ownership, occupation, and use,
but to ensure that the particular arrangement involved is not driven by a
Sangralea Boys Fund, Inc., 686 N.E.2d at 958. Consequently, Indiana Code §
6-1.1-10-16 simply requires that property be dedicated to furthering charitable purposes. Stated
differently: a piece of property must be owned for charitable purposes; a
piece of property must be occupied for charitable purposes; a piece of property
must be used for charitable purposes. Once these three elements have been
met, regardless of by whom, the property can be exempt from taxation.
Id. at 959. 3. Profit Motive
Indiana courts have determined that caring for the aged constitutes a charitable purpose.
Grandview owns BridgePointe for the purpose of caring for the aged.
In order to carry out that purpose, Grandview uses and occupies BridgePointe as
a nursing home and assisted living facility.
Consequently, BridgePointe is owned, occupied,
and used for a charitable purpose.
Finally, the PTABOA argues that despite any claims to the contrary, the reality
is that BridgePointe is owned, occupied and used for the sole purpose of
generating a profit. This reality, the PTABOA asserts, is evidenced by the
fact that Grandview is able to pay a $17,000.00 monthly management fee directly
to Trilogy. (See Petr Br. at 5.) Thus, [i]t is clear
that the residents of BridgePointe pay in excess of what is needed to
maintain the facility; there is at least $17,000 per month in profit that
is paid [first to Grandview and then] to Trilogy. (Petr Reply Br.
With respect to homes or facilities that provide comfort and care to the
aged, Indiana courts have recognized that charitable is not necessarily the equivalent of
free. Indeed, as the Indiana Court of Appeals once explained, the fact
that residents of such facilities are charged for their stays does not necessarily
negate the charitable purpose of the institution, particularly when it does not appear
that the fees are more than sufficient to pay the expenses of maintenance
or that the proprietors of the institution derive any profit therefrom. Methodist
Home for the Aged, 241 N.E.2d at 88-89 (quoting 1921-23 Op. Atty Gen.
In this case, the PTABOA has presented no evidence that the fees charged
by Grandview are more than sufficient to pay its expenses. (See Oral
Argument Tr. at 10-14 (counsel for PTABOA admitting that there was no evidence
in the record indicating that BridgePointes fees were excessive or how BridgePointes fees
compared to the fees charged at other, similar facilities).) Likewise, the PTABOA
has presented no evidence that Grandview is deriving a profit from the operation
of BridgePointe. Instead, the PTABOA merely points its finger at the fee
paid to Trilogy a BridgePointe operating expense and says theres your
proof. This does not constitute a prima facie case. See Heart
City Chrysler v. State Bd. of Tax Commrs, 714 N.E.2d 329, 333 (Ind.
Tax Ct. 1999) (stating that "this Court will not substitute conclusory statements for
probative evidence"); Herb v. State Bd. of Tax Comm'rs, 656 N.E.2d 890, 893
(Ind. Tax Ct. 1995) (stating that "[a]llegations, unsupported by factual evidence, remain mere
The PTABOA has made several other allegations which it claims point strongly to
a for profit purpose between Grandview and Trilogy, and [therefore] the lack of
a charitable purpose. (Petr Br. at 9-10.) These allegations are:
1) there are seemingly suspicious ties between Ramsey Development (the development company which
built BridgePointe), Grandview, and Trilogy; 2) Grandview has in effect, built this facility
for Trilogy . . . and now seeks to use its own nonprofit
status to provide property tax exemption status to Trilogy[;] and 3) the management
contract between Grandview and Trilogy is nothing more than a lease in disguise.
(See, e.g., Petr Br at 5, 7-10; Cert. Admin. R. at
65; Oral Argument Tr. at 14-17 (footnote added).) In turn, the PTABOA
argues that because Grandview, who bore the burden of proof at the Indiana
Board hearing, neither adequately explained the Ramsey Development/Grandview/Trilogy relationship nor entered into evidence
its management agreement with Trilogy, the Indiana Board should have denied Grandviews request
for tax-exempt status. In other words, the PTABOA maintains that because Grandview
did not offer other evidence at the administrative hearing, the Indiana Board should
have denied Grandviews exemption request (or, at very least, requested additional evidence from
Grandview). (See Petr Br. at 9; Petr Reply Br. at 4.)
The PTABOA is incorrect.
As the party challenging the propriety of an Indiana Board final determination, the
PTABOA bears the burden of demonstrating its invalidity. See Elkhart Maple Lane
Assocs., 789 N.E.2d at 113 n.6. To meet this burden requires more
than alleging Grandview should have done something else; rather, the PTABOA must show
this Court that there is probative evidence in the administrative record contradicting Grandviews
prima facie case evidence that BridgePointe was owned, occupied and used for a
charitable purpose. See id. (citation omitted). It has not, and therefore
the Indiana Boards final determination must stand.
For the foregoing reasons, the Court finds that Grandview owns, occupies, and uses
BridgePointe for a charitable purpose. Accordingly, the final determination of the Indiana
Board is AFFIRMED.
Grandview has also been recognized b
y the Internal Revenue Service as a
501(c)(3) organization. Accordingly, Grandview is exempt from federal income taxation.
BridgePointe residents must be at least 55 years old and/or mentally
or physically disabled.
Footnote: While Trilogy was responsible for issuing all checks, it was merely
an authorized signatory to Grandviews bank account. In other words, Grandview paid
all of BridgePointes operating and payroll expenses.
Indeed, "[t]he rationale justifying a [charitable purposes] 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." Foursquare
Tabernacle Church of God in Christ v. State Bd. of Tax Commrs, 550
N.E.2d 850, 854 (Ind. Tax Ct. 1990) (internal citation omitted).
Nevertheless, the PTABOA attempts to argue that this Courts holdings in
Wittenberg and Raintree are not applicable in this case because the retirement homes
and assisted living facilities in those cases were affiliated with religious organizations.
(See Oral Argument Tr. at 4-8.) As a result, the PTABOA maintains
that case law clearly indicates that the charitable purposes exemption can only be
granted when a facility such as BridgePointe has been founded or organized by
a religious organization. (See Oral Argument Tr. at 5.)
Because the PTABOA has read these cases in a vacuum, however, it is
unable to see the forest from the trees. Admittedly, the facilities in
Wittenberg and Raintree were affiliated with religious organizations; however, the holdings in those
cases do not indicate that those facilities received the charitable purposes exemption because
of their religious affiliations. Instead, a thorough, and thoughtful, reading of those
cases clearly indicates that those facilities exemptions were based on how the facilities
were being used. See, e.g., Raintree Friends Housing, Inc. v. Indiana Dept
of State Revenue, 667 N.E.2d 810, 816 (Ind. Tax Ct. 1996) (stating that
the facilitys religious affiliation merely lent support to its already existent charitable purpose).
In order for property to receive a charitable purposes exemption, Indiana Code §
6-1.1-10-16 merely requires that the property be owned, occupied, and used for a
charitable purpose. The PTABOA wants the Court to read the charitable purposes
exemption of Indiana Code § 6-1.1-10-16 as requiring a religious organization to own,
occupy, and use property for a charitable purpose. That requirement is not
found in the statute and the Court will not put it there.
See F.A. Wilhelm Const. Co. v. Indiana Dep't of State Revenue, 586 N.E.2d
953, 955 (Ind. Tax Ct. 1992) (stating that when the language of a
statute is plain and unambiguous, the Court has no power to construe the
statute for the purpose of limiting or extending its operation). That is
a function proper for the legislature.
The Court notes that the parties have advanced different theories as
to who actually occupies and uses BridgePointe. (
See Petr Br. at 7
(asserting that Trilogy occupies/uses BridgePointe); Respt Br. at 9-10 (asserting that Grandview constructively
occupies/uses BridgePointe through the residents of the facility, as well as the facilitys
staff, which includes Trilogy).) Given the holding in Sangralea Boys Fund, Inc.,
however, this Court need not reach a conclusion as to which theory is
correct. See Sangralea Boys Fund, Inc. v. State Bd. of Tax Commrs,
686 N.E.2d 954, 959 (Ind. Tax Ct. 1997).
The significance of this allegation, the PTABOA argues, is that a
not-for-profit organization cannot maintain its charitable property tax exemption when it leases to
a for-profit company, because such an arrangement would be for the financial gain
of either one of the parties. (Petr Br. at 7 (citing
Code Ann. § 6-1.1-10-37(b) (West 2005) (providing that exempt property, when leased to
an entity whose property is not exempt, becomes taxable as if owned by
the lessee); Sangralea Boys Fund, Inc., 686 N.E.2d at 958 (stating it appears
clear that the aim [of Indiana Code § 6-1.1-10-37] was to prevent an
entity from qualifying for exempt status and subsequently leasing the property to another
non-exempt entity for the financial gain of either of the parties)).)
To the extent that the PTABOA believed both an explanation as
to the nature of the Ramsey Development/Grandview/Trilogy relationship, as well as the management
agreement between Grandview and Trilogy, were vital to an accurate determination by the
Indiana Board, the PTABOA not Grandview -- was responsible for getting that
information into the administrative record. The PTABOA could have accomplished this through
a variety of discovery tools. Because the PTABOA failed to do so,
the Court will not now reweigh Grandviews initial case.