O'Keefe v. McClain (Slip Opinion)
2021 Ohio 2186
| Ohio | 2021Background
- The Ohio State University (OSU) Airport (Don Scott Field) sits on a 325.614-acre parcel titled to the State of Ohio and operated as a full-service general-aviation airport integrated with OSU’s College of Engineering.
- The airport provides runways, hangars, an ATC tower, fueling, rental and food services, leases space to private tenants, and hosts classrooms, simulation labs, and research facilities used by OSU students and faculty.
- Franklin County property owner John S. O’Keeffe filed a complaint (tax-lien date Jan. 1, 2016) challenging continued tax exemption of the parcel under R.C. 3345.17; the Tax Commissioner and the Board of Tax Appeals (BTA) upheld the exemption.
- Central legal questions: which party bears the burden of proof, whether changes in use affect continued exemption, whether the airport’s public and income-generating uses defeat exemption under R.C. 3345.17, and whether portions leased to private parties must be split-listed as taxable under R.C. 5713.04.
- The Supreme Court of Ohio affirmed the BTA: it held OSU proved entitlement to exemption under R.C. 3345.17 and rejected O’Keeffe’s split-listing and material-change arguments; two justices dissented.
Issues
| Issue | Plaintiff's Argument (O’Keeffe) | Defendant's Argument (OSU/Tax Commissioner) | Held |
|---|---|---|---|
| Burden of proof for continued exemption | Complainant bears burden to show exemption should end | R.C. 5715.271 places burden on property owner (OSU) to prove entitlement | Held: R.C. 5715.271 places burden on the property owner (OSU) to show exemption; BTA applied burden properly |
| Relevance of material change in use since original exemption | A substantial change in operational use since original (1943) exemption defeats continued exemption | Current-use inquiry controls; past uses irrelevant if current statutory entitlement exists | Held: Court applies statute to current use; material-change theory rejected |
| Applicability of R.C. 3345.17 (operational relationship and primary-use test) | Airport’s public and commercial operations are primary; educational uses are secondary, so exemption fails | Airport is operationally integrated with OSU (organizational + functional); ancillary income does not defeat exemption; public-airport use may itself be nontaxable | Held: OSU proved an operational relationship; primary-use test does not require exclusive educational use; airport qualifies for exemption under R.C. 3345.17 |
| Split-listing leased/income-generating portions under R.C. 5713.04 | Portions (hangars, offices) leased to private users should be split-listed and taxed | R.C. 3345.17 case law treats ancillary rental income as consistent with exemption; no split-listing required when primary use supports university | Held: No split-listing required here; rental/income-producing activities that are ancillary to an operational university use do not defeat whole-parcel exemption |
Key Cases Cited
- Columbus City School Dist. Bd. of Edn. v. Testa, 130 Ohio St.3d 344 (Ohio 2011) (income-only use lacking operational relationship to university activity is not exempt)
- Ohio State Univ. Bd. of Trustees v. Kinney, 5 Ohio St.3d 173 (Ohio 1983) (recognized primary/secondary use; ancillary rentals may be secondary and consistent with exemption)
- State for Use of Univ. of Cincinnati v. Limbach, 51 Ohio St.3d 6 (Ohio 1990) (upheld whole-parcel exemption where major portion used by university and rentals were ancillary)
- Vick v. Cleveland Mem. Med. Found., 2 Ohio St.2d 30 (Ohio 1965) (prior rule placing burden on complainant; later superseded by R.C. 5715.271)
- Ace Steel Baling, Inc. v. Porterfield, 19 Ohio St.2d 137 (Ohio 1969) (primary-use test involves quantitative and qualitative measures)
- Parisi Transp. Co. v. Wilkins, 102 Ohio St.3d 278 (Ohio 2004) (framework for weighing taxable vs nontaxable operations in primary-use analysis)
- Carney v. Cleveland, 173 Ohio St. 56 (Ohio 1962) (public-use exemption lost where airport hangars were leased to private parties)
- Cleveland v. Perk, 29 Ohio St.2d 161 (Ohio 1972) (extended public-use lease doctrine to shorter-term/percentage leases)