In Greater Portage Chamber of Commerce v. Porter County Assessor, Pet. No. 64-016-10-2-8-00001 (January 2, 2015), the Indiana Board of Tax Review confirmed the denial of a property tax exemption where the taxpayer failed to prove it owned, occupied and used the property for an exempt purpose.

The Greater Portage Chamber of Commerce claimed an 80% exemption on its office building for the March 1, 2010 assessment date on the basis that a portion of the building was used for charitable purposes.  The Porter County Property Tax Assessment Board of Appeals determined that the building was 100% taxable.

On appeal to the Indiana Board, the Chamber and Assessor agreed that whether a chamber of commerce (a 501(c)(6) nonprofit organization) qualifies for property tax exemption was a matter of first impression in Indiana.

As an initial matter, the Chamber acknowledged it only occupied 1,500 of the total 3,000 square feet of its building.  It leased the other part of the building to various tenants, one of which was Catholic Charities, a nonprofit organization.  The Indiana Supreme Court has held that even when a property owner leases property to an entity with an exempt purpose, the property is not entitled to an exemption unless the owner has a separate, distinct exempt purpose for leasing the property.  (Page 12, ¶ 41) (citing Hamilton County Property Tax Assessment Board of Appeals v. Oaken Bucket Parnters, LLC, 938 N.E.2d 654, 658 (Ind. 2010).)  The Chamber not only failed to show its own separate exempt purpose for leasing to Catholic Charities but also did not present evidence showing that Catholic Charities’ use of the property would qualify for an exemption.

Although the Chamber presented some evidence of worthwhile and philanthropic endeavors in which it participates, such activities only have a chance of being relevant if they formed the predominate use of the property.  (Page 12, ¶ 42.)  The Chamber confirmed, however, that the majority of its resources went towards helping the private businesses of its members, and the Chamber’s involvement in the community was secondary.  Id.

Given the fact that the “charitable initiatives” of the Chamber did not constitute the predominate use of the property, the question then became whether the Chamber’s primary use (work in promoting its members and economic development for the region) met the exemption statute’s (Indiana Code 6-1.1-10-16(a)) definition of “charitable.”   (Page 12, ¶ 43.)  The Chamber’s scant evidence presented on these activities did not allow the Board to find that the Chamber’s main purpose was charitable.  (Page 13, ¶ 44-45.)

Evaluating whether a property is owned, occupied, and used for exempt purposes is a fact-sensitive inquiry for which there are no bright-line tests.  (Page10, ¶ 38.)  The duty lies on the taxpayer to walk the Board through every element of its analysis, so the Chamber should not have assumed the evidence spoke for itself. Id.  Due to the lack of evidence regarding the Chamber’s primary activities and the Board’s resulting inability to find that the property in question was predominantly used for a charitable purpose, the Board ruled in favor of the Assessor.  (Page 12, ¶ 45-6.)