Hamilton County Assessor v. Charles E. Duke
2017 Ind. Tax LEXIS 4
| Ind. T.C. | 2017Background
- Charles E. Duke owns a 5,298 sq. ft. building on 1.03 acres used by Little Lamb Daycare, a for-profit daycare he incorporated; he charged the daycare no rent.
- Little Lamb operated weekdays long hours, served children up to age six (plus before/after programs for older children), had a Paths to Quality Level II certification, used a Bible-based curriculum, and included both instructional periods and non-instructional activities (meals, naps, free play, exercise, cleaning, prayer).
- Duke applied for partial property tax exemptions for 84% of the property as used for educational and religious purposes for tax years 2009–2011; the county PTABOA denied the applications and Duke appealed to the Indiana Board of Tax Review.
- The Indiana Board granted a partial educational exemption but denied a partial religious exemption.
- The Assessor appealed to the Indiana Tax Court, which reviewed whether the Board properly applied the statutory "predominant use" (time-comparison) test in Indiana Code § 6-1.1-10-36.3(a).
Issues
| Issue | Duke's Argument | Assessor's Argument | Held |
|---|---|---|---|
| Whether property qualified for a partial educational exemption under the predominant-use (time) test | Little Lamb’s curriculum, lesson plans, certification, and instructional activities show the property was predominantly used for education; Board’s factual finding should stand | Duke failed to provide the statutorily required time comparison showing exempt use >50% of total use; Board’s grant lacked substantial evidence and misapplied the statute | Reversed: Board erred because Duke did not present the required time-usage comparison, so educational exemption cannot be upheld |
| Whether property qualified for a partial religious exemption under the predominant-use (time) test | Activities (e.g., prayer, Bible study) support a religious exemption; Board’s denial improperly required church affiliation | Like education, Duke failed to quantify time spent on religious activities vs. total use as required by statute | Affirmed: Denial upheld because Duke failed to provide the required time-comparison showing religious use predominated |
Key Cases Cited
- New Castle Lodge #147, Loyal Order of Moose, Inc. v. State Bd. of Tax Comm’rs, 765 N.E.2d 1257 (Ind. 2002) (predominant-use analysis requires time-comparison of exempt versus total use)
- Fraternal Order of Eagles #3988, Inc. v. Morgan Cnty. Prop. Tax Assessment Bd. of Appeals, 5 N.E.3d 1195 (Ind. Tax Ct. 2014) (failure to provide time log/comparison is fatal to predominant-use exemption claim)
- Hamilton Cnty. Assessor v. SPD Realty, LLC, 9 N.E.3d 773 (Ind. Tax Ct. 2014) (exemption determinations are fact-sensitive)
- Hamilton Cnty. Prop. Tax Assessment Bd. of Appeals v. Oaken Bucket Partners, LLC, 938 N.E.2d 654 (Ind. 2010) (ambiguities in exemption statutes construed against exemption)
- Johnson Cnty. Prop. Tax Assessment Bd. of Appeals v. KC Propco LLC, 28 N.E.3d 370 (Ind. Tax Ct. 2015) (distinguishes exclusive-use § 6-1.1-10-16 claims from partial predominant-use § 6-1.1-10-36.3 claims)