Indiana Property Tax – Commercial space leased to University exempt; ATV park taxable

Indiana Property Tax – Commercial space leased to University exempt; ATV park taxable

In a pair of decisions issued last month, the Indiana Board of Tax Review granted a property tax exemption for space leased by Purdue University, but it denied a request to exempt an “ATV park.”

Off the Bucket list.  In REIN Warsaw Associates, LP v. Kosciusko County Assessor, Pet. Nos. 43-032-11-2-8-00001 and 43-032-12-2-8-00001 (March 1, 2011 and 2012 assessment dates), Taxpayer leased 13% of its commercial building to Purdue University for use as classrooms in Fort Wayne.  The Assessor argued that Taxpayer – a for-profit entity in the business of leasing property – under the Indiana Supreme Court’s decision in Hamilton County PTABOA v. Oaken Bucket Partners, LLC must show that it has its “own exempt purpose.”  (Page 6, ¶ 18.)  The Board disagreed.  Here, Taxpayer requested an exemption under Ind. Code § 21-34-8-3, which exempts property leased to a state educational institution.  Oaken Bucket dealt with a different exemption statute altogether, Ind. Code § 6-1.1-10-16, which exempts property “owned, occupied, and used” by a person for educational, literary, scientific, religious, or charitable purposes.  The Board observed that the Supreme Court in Oaken Bucket “did not purport to address any other statutory exemptions.”  (Page 8, ¶ 26.)  Taxpayer proved that 13% of its property qualified for exemption under Ind. Code § 21-34-8-3.

ATV park not used for charitable and educational purposes.  Taxpayer in Lawrence County Recreational Park, Inc. v. Lawrence County Assessor, Pet. Nos. 47-007-08-2-8-00001 et al. (March 1, 2008 and 2012 assessment dates), owned an off-road recreational park on approximately 400 acres.  The park consists of, among other things, trails, camping facilities, storm shelters, a shop, concession stand, utility shed, a trailer used as an office and a stage structure.  Taxpayer, a non-profit entity, asserted that it used the property “to provide a safe environment for members of the public to ride motorcycles and all-terrain vehicles (ATVs).” (Page 4, ¶ 10.)  It offered rider education courses for adults and children.  And three other non-profit organizations used the property as part of their charitable missions.  Taxpayer charged a $15 admission fee and additional fees for camping.  Accordingly, Taxpayer claimed the property was “owned, occupied, an used for charitable and educational purposes” and therefore should be deemed exempt under Ind. Code § 6-1.1-10-16.  (Page 7, ¶ 25.)

Exemptions are justified, the Board observed, because they help “accomplish some public purpose.”  (Page 8, ¶ 27) (citation omitted).  Furthermore, “Indiana courts have generally denied charitable- and educational-purpose exemptions to facilities used primarily for social or recreational activities.”  (Page 9, ¶ 29) (citations omitted).  The Board concluded that Taxpayer’s use of its ATV park was “analogous to the types of social and recreational activities” denied exemption in other cases.  Id.  According to the Board:  “While promoting social or recreational activities may be a noble venture, and may even relieve human want to some degree, it does not provide the level of public benefit that Ind. Code § 6-1.1-10-16 . . . contemplate[s] as justifying an exemption.”  (Page 9, ¶ 30.)  To the extent any activities at the park did support an exemption, they didn’t “come close to occupying the park” for more than half the time the park was opened.  (Page 11, ¶ 34.)  Such activities “were only incidental to the park’s predominate social and recreational use.”  Id.

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