Case Title: NBC-USA Hous., Inc.& Five v. Levin

Citation: 2010-Ohio-1553

Docket Number: 20090919

State: ohio

Court: Ohio Supreme Court

Date: 2010-04-12T00:00:00Z

Document:
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
NBC-USA Hous., Inc.–Five v. Levin, Slip Opinion No. 2010-Ohio-1553.] 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2010-OHIO-1553 
NBC-USA HOUSING, INC.–FIVE, APPELLANT, v. LEVIN, TAX COMMR., ET AL., 
APPELLEES. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as NBC-USA Hous., Inc.–Five v. Levin,  
Slip Opinion No. 2010-Ohio-1553.] 
Real property taxation — Charitable-use exemption unavailable for residential 
property — R.C.5709.12(B). 
(No. 2009-0919 — Submitted February 16, 2010 — Decided April 12, 2010.) 
APPEAL from the Board of Tax Appeals, No. 2006-N-1492. 
__________________ 
LANZINGER, J. 
{¶ 1} 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 R.C. 5709.12(B).  The tax commissioner denied the 
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exemption, the Board of Tax Appeals affirmed that denial, and NBC has appealed 
to the court.  Because we agree with the BTA that the case law forecloses NBC’s 
claim of charitable exemption, we affirm. 
Facts 
{¶ 2} 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. 
{¶ 3} 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 
{¶ 4} On June 23, 2004, NBC filed an application for exemption under 
R.C. 5709.12 for tax year 2003 and remission for preceding years.  The tax 
commissioner denied the exemption by final determination dated August 8, 2006.  
In that determination, the commissioner held that as property leased for residential 
                                                 
1.  These criteria reflect the requirements of the federal subsidy program but do not qualify it as a 
“home for the aged” that would be explicitly exempt under R.C. 5709.12(B).  R.C. 5701.13 
defines “home for the aged” to include nursing homes, “adult care facilities,” and “residential care 
facilities” that must be licensed or be provided only for members eligible by reason of service to 
an institution.  Some independent-living facilities associated with the licensed facilities are 
included in the exemption under R.C. 5709.12(C). 
January Term, 2010 
3 
 
purposes, the property at issue could not qualify for exemption in spite of the 
nonprofit status of the owner and the charitable-minded motives behind the 
endeavor. 
{¶ 5} 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 R.C. 
5709.12(B).”  NBC-USA Hous., Inc.–Five v. Wilkins (Apr. 21, 2009), BTA No. 
2006-N-1492, at 10.  As for NBC’s additional claim that it was entitled to 
exemption as a charitable institution under R.C. 5709.121, the board held that 
there was no jurisdiction because NBC had not presented the claim to the 
commissioner and had not specified it as error in the notice of appeal.  Id. at 5, fn. 
1. 
Analysis 
{¶ 6} 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: 
{¶ 7} “Real property owned by a nonprofit 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 the corporation.” 
{¶ 8} 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 “ 
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‘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”). 
{¶ 9} 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 
{¶ 10} NBC’s first proposition of law advances a claim under the 
expanded scope of charitable exemption pursuant to R.C. 5709.121.  The BTA 
held that this argument was barred because NBC “did not specify R.C. 5709.121 
in its notice of appeal [to the BTA] or in its application for exemption.”  NBC-
USA Hous., Inc.–Five v. Wilkins (Apr. 21, 2009), BTA No. 2006-N-1492, at 5, fn. 
1.  We agree with the BTA that NBC did not specify as error the commissioner’s 
failure to exempt the property under R.C. 5709.121, with the result that the claim 
under that section is jurisdictionally barred. 
January Term, 2010 
5 
 
{¶ 11} 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 R.C. 5709.12 or 5709.12(B), but none that cite R.C. 5709.121.  Nor do any of 
the assignments otherwise assert an entitlement to exemption based on the status 
of the claimant as a charitable institution under R.C. 5709.121.  Accordingly, 
although the notice of appeal specifies a claim of error directly under R.C. 
5709.12(B), it does not raise a claim of error under 5709.121. 
{¶ 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 R.C. 5709.12(B), NBC 
attempts to bring its case outside the rule of Philada Home Fund through three 
main arguments.  First, NBC argues that it provides its tenants with services over 
and above the rental of apartments.  Second, NBC argues that it “operates the 
subject property as part of its religious mission to help the needy and the 
community in general.”  Third, NBC argues that the existence of “public policies” 
favoring its activities entitles it to a charitable exemption. None of these 
circumstances, however, permit NBC to escape the rule of Philada Home Fund.2 
                                                 
2.  NBC’s third proposition of law asserts that the BTA erred by not accepting at face value some 
if its witness’s testimony regarding the ownership interest and the involvement of the local church 
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{¶ 14} First, we have rejected the existence of a judicial “services 
exception” to that rule.  In a sequence of two cases, we first established such an 
exception and then determined that it had been preempted by legislative action.  
In Carmelite Sisters, St. Rita’s Home v. Bur. of Unemployment Compensation Bd. 
of Review (1969), 18 Ohio St.2d 41, 47 O.O.2d 159, 247 N.E.2d 477, we 
addressed the issue whether the doctrine of Philada Home Fund prohibited a 
charitable exemption from unemployment-compensation taxes.  We determined 
that the provision of on-call physician and nursing services meant that the home 
could qualify for charitable exemption.  Id. at 44-45. 
{¶ 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 
                                                                                                                                     
in the housing project.  To the extent that there is any error, however, the error would be 
inconsequential and harmless because, as the BTA also correctly stated, proof of church 
ownership of NBC and involvement in predevelopment costs “would not disprove that appellant is 
used primarily for federally subsidized housing purposes,” a use of property that does not qualify 
as charitable under Philada Home Fund.  NBC-USA Hous., Inc.–Five v. Wilkins (Apr, 21, 2009), 
BTA No. 2006-N-1492, at 11. 
January Term, 2010 
7 
 
to R.C. 5701.13 – or not qualify at all.3 Since NBC does not and cannot claim that 
it satisfies the criteria for a “home for the aged” as defined at R.C. 5701.13, its 
claim of charitable-use exemption must fail when considered directly under R.C. 
5709.12(B). 
{¶ 17} Second, the status of NBC as carrying out a religious mission does 
not by itself entitle it to a charitable exemption.  R.C. 5709.12(B) exempts from 
taxation “[r]eal and tangible personal property belonging to institutions that is 
used exclusively for charitable purposes.”  Under this provision we have 
emphasized that the entitlement of a particular parcel to exemption depends on the 
use of the property, not the nature of the institution.  First Baptist Church of 
Milford, Inc. v. Wilkins, 110 Ohio St.3d 496, 2006-Ohio-4966, 854 N.E.2d 494, ¶ 
15, citing White Cross Hosp. Assn. v. Bd. of Tax Appeals (1974), 38 Ohio St.2d 
199, 203, 67 O.O.2d 224, 311 N.E.2d 862 (Stern, J., concurring); True 
Christianity Evangelism v. Tracy (2001), 91 Ohio St.3d 117, 118, 742 N.E.2d 638 
(under R.C. 5709.12, “whether the institution is religious or charitable is not a 
relevant factor” because the relevant factor is “whether the institution is using the 
property exclusively for charitable purposes”); Church of God in N. Ohio v. 
Levin, 124 Ohio St.3d 36, 2009-Ohio-5939, 918 N.E.2d 981, ¶ 32 (religious 
institution may obtain charitable exemption for real property that is used 
exclusively for charitable purposes). 
{¶ 18} 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 
                                                 
3.  As noted, R.C. 5701.13 defines “home for the aged” as certain facilities such as nursing homes 
that are licensed or are provided only for members eligible by reason of service to an institution. 
SUPREME COURT OF OHIO 
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Christianity does not control in a case like the present, where the dissemination of 
religious messages is secondary to the property’s primary use:  the provision of 
low-cost residential apartments to the tenants. 
{¶ 19} 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. 
{¶ 20} 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 Ohio St.3d 564, 568, 747 N.E.2d 814 (no exemption available where 
federal law recognized no immunity); Vought Industries, Inc. v. Tracy (1995), 72 
                                                 
4.  The Columbus City School District Board of Education states that the United States Congress 
“provided that all HUD 202 projects would be subject to real property taxation by the states and 
local subdivisions.”  In support, the school board cites one statute and one administrative 
regulation.  Those provisions authorize the Housing and Urban Development Department to make 
rental assistance payments to defray property taxes, among other costs.  12 U.S.C. 1701q(c)(2); 24 
C.F.R. 891.105(5).  Neither the statute nor the administrative rule purports to control whether or 
not Ohio can impose property taxes on subsidized projects.  It follows that federal law does not 
control the availability of a charitable-use exemption for the property. 
January Term, 2010 
9 
 
Ohio St.3d 261, 266, 648 N.E.2d 1364 (because the General Assembly “has the 
power to grant a tax exemption and has chosen not to clearly express an 
exemption for corporations reorganizing under Chapter 11,” the court had a duty 
to apply the plain meaning of the exemption statute and deny the exemption). 
{¶ 21} Nor does NBC’s citation of Section 16, Article VIII of the Ohio 
Constitution fare any better.  That provision authorizes the General Assembly to 
pass laws assisting with the provision of housing to the citizenry without 
interference from specified constitutional limitations.  Nothing about that grant of 
authority conflicts with the well-settled exclusion of residential use from the 
charitable-use exemption or otherwise mandates that real property be exempted 
based on the provision of low-income housing. 
Conclusion 
{¶ 22} 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.,5 and PFEIFER, O’CONNOR, O’DONNELL, and CUPP, JJ., 
concur. 
 
LUNDBERG STRATTON, J., concurs separately. 
__________________ 
LUNDBERG STRATTON, J., concurring. 
{¶ 23} 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. 
                                                 
5.  The late Chief Justice Thomas J. Moyer participated in the deliberations in, and the final 
resolution of, this case prior to his death. 
SUPREME COURT OF OHIO 
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{¶ 24} Some property used for subsidized housing for the elderly is 
exempt from taxation under R.C. 5709.12(B) and 5701.13 as being used for a 
charitable purpose.  Christian Benevolent Assn. of Greater Cincinnati, Inc. v. 
Limbach (1994), 69 Ohio St.3d 296, 631 N.E.2d 1034.  However, property used 
for subsidized housing for the underprivileged is not exempt from taxation 
because “[a] long line of Ohio cases hold that property partly or incidentally used 
for private residence is nonexempt as not used exclusively for charitable 
purposes.”  Philada Home Fund v. Bd. of Tax Appeals (1966), 5 Ohio St.2d 135, 
137, 34 O.O.2d 262, 214 N.E.2d 431. 
{¶ 25} It is difficult to reconcile why using property to provide subsidized 
housing for the elderly is a charitable use of property, while using property to 
provide subsidized housing for the underprivileged is not.  Subsidized housing for 
both groups would seem to fall within the definition of a charitable use, which 
this court has defined as “the attempt in good faith, spiritually, physically, 
intellectually, socially and economically to advance and benefit mankind in 
general, or those in need of advancement and benefit in particular, without regard 
to their ability to supply that need from other sources, and without hope or 
expectation, if not with positive abnegation, of gain or profit by the donor or by 
the instrumentality of the charity.”  Planned Parenthood Assn. of Columbus, Ohio 
v. Tax Commr. (1966), 5 Ohio St.2d 117, 34 O.O.2d 251, 214 N.E.2d 222, 
paragraph one of the syllabus.  However, the authority to create tax exemptions “ 
‘is lodged exclusively in the General Assembly.’ ”  Christian Benevolent Assn. of 
Greater Cincinnati, Inc., 69 Ohio St.3d at 299, quoting Toledo Business & 
Professional Women’s Retirement Living, Inc. v. Bd. of Tax Appeals (1971), 27 
Ohio St.2d 255, 258, 56 O.O.2d 153, 272 N.E.2d 359.  Therefore, I would invite 
the General Assembly to examine this inconsistency and consider whether 
providing housing for the poor should also be considered to be a charitable use of 
property that is exempt from taxation. 
January Term, 2010 
11 
 
{¶ 26} 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. 
______________________