Johnson Co. Property Tax Assessment Board of Appeals and the Johnson Co. Assessor v. KC Propco LLC d/b/a Kindercare Learning Center
2015 Ind. Tax LEXIS 18
| Ind. T.C. | 2015Background
- KC Propco LLC owns a 6,959 sq ft KinderCare building on a 2.607-acre parcel in Greenwood, Indiana; KinderCare Learning Centers operated the day-to-day early learning program there.
- KC Propco applied for an educational-purpose property tax exemption (real and personal property) for 2009; the county PTABOA denied the application and KC Propco appealed to the Indiana Board of Tax Review.
- At the Indiana Board hearing, testimony and documentary evidence described full-day preschool and state-licensed kindergarten programs, before/after school care, summer camps, and teacher qualifications; KinderCare’s curriculum was tailored to prepare children for school and sometimes coordinated with local public schools.
- The Assessor argued KC Propco (owner) and KinderCare (occupant/operator) each needed to separately prove exempt purpose, contending corporate documents and enrollment forms emphasized childcare rather than education.
- The Indiana Board granted the exemption for the real property (but denied personal property exemption for lack of evidence), finding the facility’s primary use educational and the owner and operator functionally integrated.
- The Tax Court reviewed the Board’s determination under the administrative-review standard and affirmed, declining to reweigh witness credibility or substitute its judgment for the Board’s assessment of the evidence.
Issues
| Issue | Plaintiff's Argument (Assessor/PTABOA) | Defendant's Argument (KC Propco/KinderCare) | Held |
|---|---|---|---|
| Whether record establishes who owned, occupied, and used the property | Testimony was confusing; corporate structure unclear; ownership/occupancy not proved | Property records and testimony show KC Propco owned and KinderCare occupied/used the property; entities were affiliated | The Board’s finding was supported by substantial evidence; Court will not reweigh credibility; ownership/occupancy affirmed |
| Whether use was an educational purpose (vs. primarily childcare) | Many activities (meals, diapering, quiet time); staff credentials limited; enrollment forms say “child care center” — so primary use is childcare | Programs included accredited curricula, kindergarten, enrichment, coordination with public schools; educational programs were the focus | The Board reasonably concluded the overall use was educational despite incidental childcare activities; exemption allowed for real property |
| Whether vacant portions of the 2.607-acre parcel are exempt | KC Propco failed to prove the 1.607 acres of vacant land served an educational purpose | Statute exempts land on which an exempt building sits; entire parcel should be exempt | The statutory reading exempts the whole parcel containing the exempt building; Board’s extension to all 2.607 acres affirmed |
| Standard-of-review/credibility: may Court reweigh evidence? | Court should overturn because testimony contradicted documents and was unreliable | Board weighed evidence and credibility; Court must defer unless decision was arbitrary or unsupported by substantial evidence | Court deferred to Board; no abuse of discretion or lack of substantial evidence found |
Key Cases Cited
- Osolo Twp. Assessor v. Elkhart Maple Lane Assocs., 789 N.E.2d 109 (Ind. Tax Ct. 2003) (party seeking to overturn Board bears burden to show invalidity)
- Freudenberg‑NOK Gen. P’ship v. State Bd. of Tax Comm’rs, 715 N.E.2d 1026 (Ind. Tax Ct. 1999) (court may not reweigh evidence or judge witness credibility on review)
- Amax Inc. v. State Bd. of Tax Comm’rs, 552 N.E.2d 850 (Ind. Tax Ct. 1990) (substantial evidence standard defined for Board decisions)
- Dep’t of Local Gov’t Fin. v. Roller Skating Rink Operators Ass’n, 853 N.E.2d 1262 (Ind. 2006) (educational exemption aims to encourage non‑governmental education serving public welfare; education broadly construed)
- Sangralea Boys Fund, Inc. v. State Bd. of Tax Comm’rs, 686 N.E.2d 954 (Ind. Tax Ct. 1997) (ownership, occupancy, and use each must be for an exempt purpose)
- French Lick Twp. Tr. Assessor v. Kimball Int’l, Inc., 865 N.E.2d 732 (Ind. Tax Ct. 2007) (deference to Board absent abuse of discretion)
- DeKalb Cnty. E. Cmty. Sch. Dist. v. Dep’t of Local Gov’t Fin., 930 N.E.2d 1257 (Ind. Tax Ct. 2010) (statutory interpretation should avoid absurd results; land with exempt building may be exempt)