NBC-USA HOUSING, INC.-FIVE, D.B.A. LOVE ZION MANOR, APPELLANT, v. LEVIN, TAX COMMR., ET AL., APPELLEES.
No. 2009-0919
Supreme Court of Ohio
Submitted February 16, 2010—Decided April 12, 2010.
125 Ohio St.3d 394, 2010-Ohio-1553
PFEIFER, J., concurs in judgment only.
Manley Burke, Matthew W. Fellerhoff, and Daniel J. McCarthy, for appellants and cross-appellees.
John P. Curp, Cincinnati City Solicitor, and Paula Boggs Muething and Terrance A. Nestor, Assistant City Solicitors, for appellees and cross-appellants.
LANZINGER, J.
{11} Appellant, NBC-USA Housing, Inc.-Five, d.b.a. Love Zion Manor (“NBC“), appeals from the denial of its application to exempt its real property from taxation. The property is improved with government-subsidized apartments that NBC leases to low-income handicapped and aged tenants, and NBC seeks exemption on the ground that the property is “used exclusively for charitable purposes” pursuant to
{12} NBC is a nonprofit 501(c)(3) entity that is jointly operated by the National Baptist Convention and a local church, Love Zion Baptist. NBC owns and operates a federally subsidized apartment complex for low-income tenants in northeast Columbus. The local church sponsors the project pursuant to a memorandum of understanding with the national convention. The complex consists of 25 one-bedroom units, and the property is maintained by NBC itself, not by the tenants. NBC and the local church also offer Bible study and social events for the tenants. Other services include blood-pressure and diabetes screening, but those services are not provided by NBC. Instead, NBC helps its tenants obtain those services from third-party providers.
{13} The complex is federally subsidized through the Section 202 program, administered by the Department of Housing and Urban Development. To qualify to be a tenant of NBC under federal guidelines, applicants must have low income and be 62 or older or physically disabled. Rent is adjusted in accordance with income. All proceeds are used to provide a safe and sanitary place for tenants to live.1
{14} On June 23, 2004, NBC filed an application for exemption under
{15} NBC appealed to the BTA, and at the evidentiary hearing, the owner presented testimony of the property manager along with supporting exhibits. In a decision issued on April 21, 2009, the BTA affirmed the commissioner‘s denial of the exemption. In doing so, the BTA observed that the Supreme Court and the BTA “have previously held that property used for private residential housing, including properties where low-income individuals are not fully responsible for their rent, is not entitled to exemption under
Analysis
{16} More than 40 years ago in Philada Home Fund v. Bd. of Tax Appeals (1966), 5 Ohio St.2d 135, 34 O.O.2d 262, 214 N.E.2d 431, syllabus, we articulated the principle that controls the present case:
{17} “Real property owned by a nonprofit charitable corporation the stated purpose of which is to secure and operate resident apartments for aged and needy persons is not exempt from taxation under Section 5709.12, Revised Code, even though it is shown that the rent intended to be charged is at or below cost, and in no event to result in a profit, and that it is expected that some persons unable to pay the full rental will be assisted by subventions from corporate funds.”
{18} See also Cogswell Hall, Inc. v. Kinney (1987), 30 Ohio St.3d 43, 44, 30 OBR 85, 506 N.E.2d 209 (real property exemption denied because the “furnishing of low-cost housing at or below market prices, where residents pay a part or all of their rental costs, is not, in and of itself, an exclusive use of property for charitable purposes’ “), quoting Natl. Church Residences v. Lindley (1985), 18 Ohio St.3d 53, 55, 18 OBR 87, 479 N.E.2d 870 (same pronouncement in connection with denying a sales-tax exemption that would apply to purchases made by “organizations operated exclusively for charitable purposes“).
{19} This principle reflects the consistent and longstanding doctrine that a distinctly residential use of real property defeats a claim of charitable exemption, even where attendant circumstances indicate the existence of charitable motives. See also W. Res. Academy v. Bd. of Tax Appeals (1950), 153 Ohio St. 133, 41 O.O. 192, 91 N.E.2d 497 (houses supplied as residences for faculty members of preparatory school held not exempt); Doctors Hosp. v. Bd. of Tax Appeals (1962), 173 Ohio St. 283, 19 O.O.2d 154, 181 N.E.2d 702 (property adjacent to and owned by hospital that was used as residences by married interns held not exempt); Toledo Business & Professional Women‘s Retirement Living, Inc. v. Bd. of Tax Appeals (1971), 27 Ohio St.2d 255, 56 O.O.2d 153, 272 N.E.2d 359; Quaker Apts. of Wilmington, Inc. v. Kosydar (1974), 38 Ohio St.2d 20, 67 O.O.2d 36, 309 N.E.2d 863.
NBC‘s claim under R.C. 5709.121 is jurisdictionally barred because NBC did not raise it in the notice of appeal to the BTA
{110} NBC‘s first proposition of law advances a claim under the expanded scope of charitable exemption pursuant to
{111} In Brown v. Levin, 119 Ohio St.3d 335, 2008-Ohio-4081, 894 N.E.2d 35, we noted that even where the taxpayer does specify one or more errors in its notice of appeal to the BTA, “the BTA lacks jurisdiction to grant relief from a final determination based on other alleged errors that were not sufficiently specified in the notice of appeal.” Id. at ¶ 17. Moreover, the “specification requirement is stringent,” calling for any contention to be stated “in full and explicit terms” in order to confer jurisdiction. Id. at ¶ 18. In the present case, NBC‘s notice of appeal to the BTA sets forth six assignments of error, three that cite
{12} When a taxpayer has not specified error in the notice of appeal to the BTA, we have no jurisdiction on appeal to grant relief based on that argument. Newman v. Levin, 120 Ohio St.3d 127, 2008-Ohio-5202, 896 N.E.2d 995, ¶ 27. Accordingly, we cannot consider this particular claim.
NBC‘s claims under R.C. 5709.12(B) have no merit
{13} As for claiming exemption directly under
{15} Later we addressed a similar claim for exemption of real property. Natl. Church Residences of Chillicothe v. Lindley (1985), 18 Ohio St.3d 53, 57, 18 OBR 87, 479 N.E.2d 870. In that case, we held that a legislative amendment precluded the judicially recognized services exception because, as amended, the statutes explicitly provided a charitable-use exemption for “homes for the aged” pursuant to a statutory definition. That enactment precluded the judicially recognized services exception in Carmelite Sisters because henceforth, only those taxpayers that satisfied the statutory definition of “home for the aged” could qualify. Id., citing Toledo Business & Professional Women‘s Retirement Living, 27 Ohio St.2d 255, 56 O.O.2d 153, 272 N.E.2d 359.
{16} Under Natl. Church Residences and Toledo Business & Professional Women‘s Retirement Living, the charitable-use exemption requires a residential facility to qualify under the definition of “home for the aged” pursuant to
{17} Second, the status of NBC as carrying out a religious mission does not by itself entitle it to a charitable exemption.
{118} NBC asserts that the religious character of its activities confers a spiritual benefit upon the tenants, particularly through the Bible study and evangelistic communication with them. See True Christianity, 91 Ohio St.3d 117, 742 N.E.2d 638. But in determining whether property is “used exclusively for charitable purposes,” we look to the property‘s “primary use, not secondary or ancillary activities.” (Emphasis sic.) Church of God, ¶ 22. As a result, True Christianity does not control in a case like this one, where the dissemination of religious messages is secondary to the property‘s primary use: the provision of low-cost residential apartments to the tenants.
{119} Third, contrary to NBC‘s suggestion, the existence of a public policy favoring an activity does not establish that activity as being charitable for purposes of exempting property from taxation. In this regard, NBC notes that we have acknowledged one federal housing-subsidy program as ““expressing the judgment of Congress concerning desirable public policy.““” Woda Ivy Glen Ltd. Partnership v. Fayette Cty. Bd. of Revision, 121 Ohio St.3d 175, 2009-Ohio-762, 902 N.E.2d 984, ¶ 24, quoting Westside Mothers v. Haveman (C.A.6, 2002), 289 F.3d 852, 858, quoting Bennett v. Kentucky Dept. of Edn. (1985), 470 U.S. 656, 669, 105 S.Ct. 1544, 84 L.Ed.2d 590. Assuming that the same can be said of the federal subsidies at issue in this case, NBC asserts that its “use of the subject property is inherently charitable since it coincides with Congress‘s expressed public policy goals.” In essence, NBC argues that nonprofit use plus conformity with congressional public policy equals charitable use.
{120} But tying charitable use so tightly to Congress‘s policy goals is wrong because Congress does not define the scope of charitable use under Ohio law.4 Because we have always defined charitable use of property to exclude a primarily residential use, the existence of federal subsidies is not dispositive of NBC‘s exemption claim. See Farm Credit Servs. of Mid-America v. Zaino (2001), 91
{121} Nor does NBC‘s citation of
Conclusion
{122} For the foregoing reasons, the tax commissioner correctly denied NBC‘s application for exemption, and the BTA acted reasonably and lawfully when it affirmed that denial. We therefore affirm the decision of the BTA.
Decision affirmed.
MOYER, C.J., and PFEIFER, O‘CONNOR, O‘DONNELL, and CUPP, JJ., concur.
LUNDBERG STRATTON, J., concurs separately.
LUNDBERG STRATTON, J., concurring.
{123} Although I believe that providing subsidized housing for the underprivileged is a charitable use that should be exempt from taxation, the court is bound by a long line of cases that hold otherwise. Therefore, I reluctantly concur.
{124} Some property used for subsidized housing for the elderly is exempt from taxation under
{126} Accordingly, because the court is bound by precedent to hold that using property to provide subsidized housing for the underprivileged is not a charitable use that is exempt from taxation, I reluctantly concur.
Karen H. Bauernschmidt Co., L.P.A., Karen H. Bauernschmidt, and Charles J. Bauernschmidt, for appellant.
Richard Cordray, Attorney General, and Sophia Hussain and Lawrence D. Pratt, Assistant Attorneys General, for appellee Tax Commissioner Richard A. Levin.
Rich & Gillis Law Group, L.L.C., and Mark H. Gillis, for appellee Columbus City School District Board of Education.