Breeze, Inc. v. Testa (Slip Opinion)
106 N.E.3d 1204
| Ohio | 2017Background
- Breeze, Inc., a title-holding entity controlled by nonprofit New Plan Learning, purchased commercial property and leased it to a community (charter) school, Horizon Science Academy–Columbus High School.
- The lender dictated loan terms and rent calculations; Breeze testified rent was set at the minimum necessary to cover debt service and was sometimes adjusted, deferred, or written off to accommodate the school.
- Breeze sought tax-exemption for the property for 2011 (granted) and remission of taxes for 2008–2010 (denied by the Tax Commissioner as the lease was "with a view to profit").
- The Board of Tax Appeals (BTA) affirmed denial based primarily on evidence that rental income exceeded property expenses and surplus funds were distributed to affiliated schools.
- The Supreme Court reviewed whether the proper inquiry is the lessor’s intent to profit (the statutory phrase "with a view to profit") and whether the BTA unreasonably disregarded Breeze’s evidence about its intent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a lease is excluded from public-schoolhouse/charitable-use exemptions when made "with a view to profit" | Breeze: "With a view to profit" means intent to generate profit; Breeze lacked such intent because rent was set to meet lender requirements and minimized to support the school | Testa (Tax Commissioner/BTA): Excess rental income over expenses shows a view to profit; distribution of surplus supports profit motive | The court held the operative inquiry is the lessor’s intent to generate profit; remanded because BTA unreasonably ignored Breeze’s evidence of intent |
| Whether an excess of rental income over expenses conclusively establishes a view to profit | Breeze: Surplus is relevant but not dispositive; must be considered with intent evidence | Testa: Surplus is sufficient evidence to infer a profit motive | The court held surplus is relevant but not dispositive; must be weighed against direct evidence of intent |
Key Cases Cited
- Anderson/Maltbie Partnership v. Levin, 127 Ohio St.3d 178, 2010-Ohio-4904, 937 N.E.2d 547 (construing "with a view to profit" to focus on lessor's intent)
- 250 Shoup Mill, L.L.C. v. Testa, 147 Ohio St.3d 98, 2016-Ohio-5012, 60 N.E.3d 1254 (BTA may infer view-to-profit from rental income exceeding expenses; factual sufficiency review)