Case Title: Case W. Res. Univ. v. Tracy

Citation: 1999-Ohio-355

Docket Number: 19972118

State: ohio

Court: Ohio Supreme Court

Date: 1999-01-20T00:00:00Z

Document:
[Cite as Case W. Res. Univ. v. Tracy, 84 Ohio St.3d 316, 1999-Ohio-355.] 
 
 
 
 
 
CASE WESTERN RESERVE UNIVERSITY, APPELLEE AND CROSS-APPELLANT, v. 
TRACY, TAX COMMISSIONER, APPELLEE; CLEVELAND BOARD OF EDUCATION, 
APPELLANT AND CROSS-APPELLEE. 
[Cite as Case W. Res. Univ. v. Tracy (1999), 84 Ohio St.3d 316.] 
Taxation — Real property — Exemptions — R.C. 5709.121 applied to four-story 
office building and attached parking garage owned by Case Western 
Reserve University. 
(No. 97-2118 — Submitted May 20, 1998 — Decided January 20, 1999.) 
APPEAL and CROSS-APPEAL from the Board of Tax Appeals, No. 95-K-1280. 
 
This exemption case for tax year 1993 concerns a four-story office building 
and attached parking garage owned by Case Western Reserve University 
(“CWRU”).  The building, which is referred to as the University West Building, is 
located in Cleveland at 1100 Cedar Avenue. 
 
As of January 1, 1993, there were five tenants leasing space from CWRU.  
The two primary tenants in the building as of January 1, 1993 were 501(c)(3) 
nonprofit corporations, Enterprise Development, Inc. (“EDI”) and Edison 
Biotechnology Center (“EBTC”).  EDI subleased space in the basement, or ground 
floor, and on the fourth floor to other corporations.  Two for-profit corporations, 
Data Basics and AI Ware, leased space on the first and second floors.  A nonprofit 
corporation known as FES occupied space on the third floor.  The balance of the 
space not occupied by CWRU or University Hospitals of Cleveland was vacant. 
 
EDI is a subsidiary of CWRU and a cooperative venture with CWRU’s 
Weatherhead School of Management.  EDI was established to stimulate 
entrepreneurial activity and the creation and growth of new businesses in northeast 
Ohio.  EDI is also home to one of six Edison Technology Incubators (“Incubator 
 
 
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Program”) in Ohio.  The Incubator Program provides a full range of services, 
counsel, and direction to the tenant companies to help them achieve commercial 
success. 
 
To be considered as a candidate for the Incubator Program, a corporation 
must be less than two years old or recently restructured, be oriented towards 
growth, be incorporated in Ohio, have a technology orientation, and expect to 
remain in the Cleveland area.  When a corporation is accepted into the Incubator 
Program, it is expected to enter into a memorandum of understanding and a long-
term success fee agreement with EDI.  The memorandum of understanding 
describes the agreement between parties and is also the rental agreement.  The 
rental rate which EDI charges the tenants in the Incubator Program is less than the 
rate EDI is charged for the space by CWRU.  The long-term success fee is 
intended to recover some of the value of the assistance a corporation receives 
through the Incubator Program.  Although they are start-up corporations, most of 
which are in a position of negative equity, all Incubator Program tenants are for-
profit corporations. 
 
EDI provides the Incubator Program tenants with managerial advice and 
technical assistance plus office services, including conference rooms, secretarial 
help, fax machines, and copy machines.  EDI also assists clients in finding sources 
of funding, either as loans or grants.  In the area of marketing assistance, EDI 
helps design market surveys and helps analyze the results.  Graduate students from 
CWRU’s Weatherhead School of Management are also available to help in 
collecting market data and conducting library and literature searches.  EDI 
provides media exposure to Incubator Program tenants through a magazine and 
newsletter it publishes.  EDI also arranges recognition events for entrepreneurs in 
northeast Ohio. 
 
 
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In addition to the services provided to the Incubator Program tenants, EDI 
also assists other entrepreneurs in developing businesses in northeast Ohio that are 
not Incubator Program tenants.  The object of EDI’s assistance program is to help 
each entrepreneur develop a business plan and to provide information on funding 
sources and funding alternatives.  EDI also conducts seminars and conferences for 
Incubator Program tenants and the public, presenting information on topics of 
interest to entrepreneurs.  While EDI charges for some of its seminars and 
conferences, the charges go only toward covering expenses.  EDI is funded in part 
by grants from the Department of Development through the Thomas Alva Edison 
Program established by R.C. 122.33(C).  Additional funding is provided to EDI by 
private sources and foundations. 
 
While there are plans for EDI to expand into additional space, these plans 
for expansion were not formed until 1994. 
 
The second largest tenant, EBTC, is affiliated with research universities and 
hospitals in Ohio, including Case Western Reserve University, Cleveland Clinic 
Foundation, University Hospitals of Cleveland, Metro-Health Medical Center, 
Ohio State University, Ohio University, University of Cincinnati, Children’s 
Hospital Research Foundation in Cincinnati, Cleveland State University, Summa 
Foundation in Akron, and Wright State University.  EBTC is funded from several 
sources; however, the major source of EBTC’s funding is the state of Ohio 
through the Ohio Department of Development’s Thomas Alva Edison program.  
The remainder of EBTC’s funding comes from foundations and from membership 
fees from universities and member companies. 
 
EBTC’s mission, as set forth in its 1993 annual report, is “to facilitate and 
accelerate the commercial development of biomedical technology throughout Ohio 
to enhance the competitiveness and economic growth of the state.”   EBTC’s 
 
 
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activities fall into four general categories.  The first category is technology 
development, which means finding the most promising technology in Ohio’s 
research institutions, assessing it, and helping to transfer it to the commercial 
sector.  For instance, EBTC provides funding for projects at research universities 
involving new, high-risk technologies.  EBTC funds technology development by 
giving money to universities for research, with the requirement that an Ohio 
company be involved as a partner.  In addition, EBTC also provides gap funding 
for research at very early stages of product development with funds from the 
Cleveland Foundation through its Innoloan program. 
 
The second category of EBTC activity is business assistance.  Either 
through direct assistance or by referral, EBTC provides assistance and services to 
researchers and emerging biomedical technology companies.  EBTC’s assistance 
includes advice regarding regulatory protocols, licensing, intellectual property 
protection, technology evaluations, and commercialization strategies. 
 
The third category of EBTC activity involves programs in the form of 
seminars and activities where speakers address topics of concern to Ohio’s 
biotechnology industry. 
 
The fourth category includes information and education.  EBTC 
publications feature member activities and summaries of EBTC’s technical 
programs and funded research.  EBTC also publishes a directory of Ohio 
biomedical and biotechnology companies.  Part of EBTC’s educational program is 
aimed at the high school level to promote life sciences to teachers and students.  
As part of that program, EBTC has established an equipment lab at CWRU to 
teach high school teachers to use biotechnology equipment. 
 
When EBTC provides funding to a university, it does so under a contract 
which requires that EBTC receive some revenue if the product becomes 
 
 
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commercial.  A second requirement is that the technology be commercialized in 
Ohio, if possible. 
 
The Board of Tax Appeals (“BTA”) held that the University West Building 
and the land under it was exempted from taxation; however, the BTA held that 
neither the garage nor the land under it was exempt from taxation. 
 
Appellant, the Cleveland Board of Education (“BOE”), filed a notice of 
appeal contesting the exemption granted by the BTA as it relates to the space 
occupied by EBTC and EDI and the vacant space.  A cross-appeal filed by CWRU 
contests the BTA’s holding that the garage and the land are not exempt from 
taxation. 
 
This cause is now before the court upon an appeal and a cross-appeal as of 
right. 
__________________ 
 
Kelly, McCann & Livingstone, L.L.P., Fred J. Livingstone and Robert A. 
Brindza,  for appellee and cross-appellant Case Western Reserve University. 
 
Armstrong, Mitchell, Damiani & Zaccagnini, Timothy J. Armstrong and 
Maura Norton, for appellant and cross-appellee Cleveland Board of Education. 
__________________ 
 
Per Curiam.  In its application for exemption, CWRU claimed that the 
University West Building and its attached parking garage should be exempted 
from real property taxation under R.C. 5709.12 and 5709.121.  R.C. 5709.12(B), 
provides: 
 
“Real * * * property belonging to institutions that is used exclusively for 
charitable purposes, shall be exempt from taxation.” 
 
Thus, under R.C. 5709.12, property belonging to an institution and used 
exclusively for charitable purposes is exempt from taxation.  No challenge has 
 
 
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been raised here as to CWRU’s status as an institution within the meaning of R.C. 
5709.12.  Likewise, no challenge has been made to the exempt status of CWRU’s 
own use of the space within the University West Building.  However, by its 
appeal, the BOE challenges the exempt status granted by the BTA to the vacant 
space and the space which CWRU rents to EDI and EBTC.  The BOE contends 
that space rented by EDI and EBTC is not being used exclusively for charitable 
purposes.  The BOE contends that neither EDI nor EBTC is a charitable or 
educational institution. 
 
In 1969, the General Assembly enacted R.C. 5709.121 to clarify the phrase 
“used exclusively for charitable purposes” as used in R.C. 5709.12.  As in effect 
on January 1, 1993, R.C. 5709.121 provided: 
 
“Real property * * * belonging to a charitable or educational institution * * 
* shall be considered as used exclusively for charitable * * * purposes by such 
institution * * * if it is either: 
 
“(A) used by such institution * * *, or by one or more other such institutions 
* * * under a lease, sublease, or other contractual arrangement: 
 
“ * * * 
 
“(2) for other charitable, educational * * * purposes.”  133 Ohio Laws, Part 
III, 2646. 
 
In his concurring opinion in White Cross Hosp. Assn.  v. Bd. of Tax Appeals 
(1974), 38 Ohio St.2d 199, 203, 67 O.O.2d 224, 226, 311 N.E.2d 862, 865, Justice 
Stern stated that the overall purpose of R.C. 5709.121 was to “declare that the 
ownership and use of property need not coincide for that property to be tax 
exempt.” 
 
In the context of this case, R.C. 5709.121(A)(2) requires that (1) the 
property must belong to a charitable or educational institution, (2) the property 
 
 
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must be used by the institution, or by one or more such institutions under a lease, 
sublease, or other contractual arrangement, and (3) the institution or other 
institutions must be using the property for charitable or educational or public 
purposes.  EDI and EBTC meet the first two conditions; the third condition is 
disputed. 
 
In Planned Parenthood Assn. of Columbus, Ohio, Inc.  v. Tax Commr. 
(1966), 5 Ohio St.2d 117, 34 O.O.2d 251, 214 N.E.2d 222, we held in paragraph 
one of the syllabus that “ ‘charity,’ in the legal sense, is 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.”  In Herb Soc. of Am., Inc. v. 
Tracy (1994), 71 Ohio St.3d 374, 376, 643 N.E.2d 1132, 1134, we stated, “The 
dissemination of useful information to benefit mankind is, traditionally, charity.”  
Likewise, In Battelle Mem. Inst. v. Dunn (1947), 148 Ohio St. 53, 60, 35 O.O. 9, 
12, 73 N.E.2d 88, 92, we stated, “Generally, the dissemination of knowledge for 
the edification and improvement of mankind is regarded as a charitable object.” 
 
Both EDI and EBTC receive funding from the state of Ohio through the 
Department of Development’s Thomas Alva Edison Grant Program (“Edison 
Program”).  The purpose of the Edison Program, as set forth in R.C. 122.33(C), is 
“to provide grants to foster cooperative research and development efforts 
involving enterprises and educational institutions that will lead to the creation of 
jobs.”  The grants may be “made to a public or private educational institution, 
department, college, institute, faculty member, or other administrative subdivision 
or related entity of an educational institution when the director finds that the 
 
 
8
undertaking will benefit the people of the state by supporting research in advanced 
technology areas likely to improve the economic welfare of the people of the state 
through promoting the development of new commercial technology.”  R.C. 
122.33(C)(1). 
 
It is abundantly clear from the testimony and evidence in this case that the 
goal of both EDI and EBTC is to promote and develop emerging technologies and 
emerging companies in order to provide jobs for people and to strengthen the 
economy of the state, especially in northeastern Ohio.  Both EDI and EBTC 
provide unique resources for entrepreneurs by providing information, knowledge, 
and, in the case of EBTC, sometimes even money, to aid in developing advanced 
technological concepts and the organizations developing these technologies.  The 
state has chosen to help support EDI and EBTC as one of the means to encourage 
the development of technology in Ohio in order to promote economic growth.  The 
fact that EDI and EBTC may require that some of their aid be returned at a later 
time to help others is of no consequence.  See Planned Parenthood, supra, 
paragraph three of the syllabus. 
 
We find the BTA’s determination that EDI’s and EBTC’s use of the 
property falls “within the gambit [sic] of charitable, educational and/or public 
purposes” as set forth in R.C. 5709.121(A) to be supported by the evidence and to 
be reasonable and lawful.  However, we limit our decision as regards EDI to the 
administrative area occupied by it.  We do not include within the exempt area the 
space occupied by EDI’s Incubator Program tenants, all of which are for-profit 
corporations.  While the companies in the Incubator Program may be struggling, 
and may even be in a negative equity position, they are, nevertheless, for-profit 
corporations that are themselves subtenants of CWRU.  We do not interpret R.C. 
5709.121 to include within the meaning of “used exclusively for charitable 
 
 
9
purposes” real property contractually occupied by for-profit corporations whose 
activities are not shown to be charitable, educational, or for a public purpose.  We 
are unable to discern any charitable, educational, or public purpose being 
performed by EDI’s for-profit Incubator Program tenants. 
 
We have considered CWRU’s argument that because the for-profit 
corporations occupy their spaces only for a few years, their use is incidental.  We 
disagree with that reasoning.  It is quite apparent from the testimony that although 
the time each Incubator Program tenant spends in the University West Building 
may be relatively short, the plan is for each tenant to be replaced by another for-
profit tenant.  Thus, the Incubator Program space is continuously being occupied 
by for-profit corporations.  The time each for-profit company occupies the space is 
irrelevant.  The important concept is that the Incubator Program tenants are using 
the space in the University West Building, and their use as regards exemption 
must be compared to R.C. 5709.121, the same as EDI and EBTC.  A review of the 
evidence in this case does not disclose any support for a finding that the area 
occupied by the for-profit Incubator Program tenants is for a charitable, 
educational, or public purpose. 
 
The BOE’s second contention is that the vacant space in the University 
West Building should not be exempted under R.C. 5709.12 and 5709.121.  We 
agree. 
 
This court has granted exemption in the past to vacant property.  For 
instance, in Holy Trinity Protestant Episcopal Church v. Bowers (1961), 172 Ohio 
St. 103, 15 O.O.2d 173, 173 N.E.2d 682, we held that under R.C. 5709.07 vacant 
property purchased by a religious institution could be exempted, where there is 
tangible evidence that the property will be devoted to an exempt use.  In this case, 
we are faced with a different situation. When asked when plans for expansion 
 
 
10
were formed the witness from EDI responded: “Probably ‘94, late ‘94.”  Thus, as 
of January 1, 1993, which is the critical date for a 1993 tax year exemption, there 
were no plans for expansion.  In addition, the testimony concerning expansion into 
the vacant areas was not clear as to how much space would be occupied by such 
expansion. 
 
Finally the cross-appeal filed by CWRU contends that the garage should be 
exempted.  We disagree. 
 
In support of its contention, CWRU relies on Bowers v. Akron City Hosp. 
(1968), 16 Ohio St.2d 94, 45 O.O.2d 445, 243 N.E.2d 95, and Good Samaritan 
Hosp. v. Porterfield (1972), 29 Ohio St.2d 25, 58 O.O.2d 75, 278 N.E.2d 26.  In 
Bowers, we granted tax exemption for a pay parking lot used by hospital visitors 
and patients.  In Good Samaritan Hosp., we granted exemption from sales tax for 
building materials used in the construction of a parking garage attached to a 
hospital. 
 
In opposition to CWRU’s contention, the BOE cites State Teachers 
Retirement Bd. v. Kinney (1981), 68 Ohio St.2d 195, 22 O.O.3d 434, 429 N.E.2d 
1069.  In State Teachers, we denied real property tax exemption for a remote 
parking lot used by employees of the State Teachers Retirement Board. 
 
The BTA found that the University West Building parking garage is not 
generally open to the public; instead, its use is limited to CWRU employees and 
tenants of the University West Building.  The BTA’s finding that the parking 
garage is not generally open to the public is supported by the testimony of the 
assistant treasurer of CWRU, who testified that the primary need for the garage is 
to provide parking for occupants of the building.  In addition, a letter to the 
assistant treasurer states that the university lots are not public. 
 
 
11
 
In Bowers we granted exemption, finding that the evidence showed that “the 
parking lot is an essential and integral part of the hospital’s function.”  Id., 16 
Ohio St.2d at 96, 45 O.O.2d at 447, 243 N.E.2d at 97.  In Good Samaritan we 
again found that the evidence showed that the parking lot was an “essential and 
integral part of the hospital’s function.”  Id. at 29, 58 O.O.2d at 78, 278 N.E.2d at 
29. 
 
The test for exemption for the University West Building parking garage is 
whether it is an essential and integral part of the charitable and/or educational 
activities of CWRU, EDI, and EBTC.  However, in this case the BTA made no 
finding that the parking garage was an essential and integral part of the charitable 
and/or educational activities of the tenants of the University West Building.  The 
BTA could not make a finding on the usage of the garage because “appellant 
failed to provide this Board with either a breakdown of the usage of the garage as 
of January 1, 1993 or a means by which we could accurately project such usage as 
of that date.”   The burden was on CWRU to present evidence to support its claim 
for exemption.  In Alcan Aluminum Corp. v. Limbach (1989), 42 Ohio St.3d 121, 
123, 537 N.E.2d 1302, 1304, we stated: 
 
“[I]t is error for the BTA to reverse the commissioner’s determination when 
no competent and probative evidence is presented to show that the commissioner’s 
determination is factually incorrect.” 
 
For all the foregoing reasons the decision of the BTA granting exemption 
for the space occupied by EDI and EBTC for their administrative offices is 
reasonable and lawful and is affirmed.  In addition, the BTA’s decision denying 
exemption for the garage and the land associated therewith is reasonable and 
lawful and is affirmed.  The decision of the BTA granting exemption to the vacant 
 
 
12
areas of the University West Building and the areas occupied by EDI’s for-profit 
Incubator Program tenants is unreasonable and unlawful and is reversed. 
Decision affirmed in part 
and reversed in part. 
 
MOYER, C.J., DOUGLAS, RESNICK and F.E. SWEENEY, JJ., concur. 
 
COOK and LUNDBERG STRATTON, JJ., concur in part and dissent in part. 
 
PFEIFER, J., dissents and would affirm the Board of Tax Appeals in all 
respects. 
FOOTNOTE: 
1. 
EDI defined start-up companies as those less than two years old, or 
companies that have recently undergone a management change, or high 
technology companies up to ten years old that have not yet brought products to 
market. Typically, start-up companies have an eighty percent failure rate within 
five years of their inception.  Technology-based start-up companies are even more 
frail than other start-up companies.  But with the assistance of incubator programs, 
these figures are reversed, with eighty percent of the start-up companies still in 
business after five years. 
__________________ 
 
LUNDBERG STRATTON, J., concurring in part and dissenting in part.  I 
agree with the majority’s holding with two exceptions.  I believe that the parking 
garage and the below-market-cost office space made available to start-up 
technology-based companies should be exempt from taxation. 
Office Space Provided by the Incubator Program 
 
The majority reverses the BTA’s decision to exempt the office space.  The 
majority reasons that the incubator tenants do not use the office space for a 
charitable purpose and therefore the office space is not tax-exempt.  I believe a 
 
 
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more reasonable interpretation of R.C. 5709.121(A) requires examination of EDI’s 
use of the office space to determine whether it should be exempt from taxation. 
 
A statute is presumed to intend a just and reasonable result.  R.C. 1.47(C).  
Thus, courts should construe a statute to avoid an unreasonable result.  Canton v. 
Imperial Bowling Lanes, Inc. (1968), 16 Ohio St.2d 47, 45 O.O.2d 327, 242 
N.E.2d 566, paragraph four of the syllabus.  Former R.C. 5709.121 stated: 
 
“Real property * * * belonging to a charitable or educational institution * * 
* shall be considered as used exclusively for charitable * * * purposes * * * if it is 
either: 
 
“(A) Used by such institution * * *, or by one or more other such 
institutions * * *: 
 
“ * * * 
 
“(2)  For other charitable, educational, or public purposes.”  133 Ohio Laws, 
Part III, 2646. 
 
The majority examines the incubator tenants’ use of the office space to 
determine whether an exemption applies.  Instead, I would find that former R.C. 
5709.121(A) requires examination of EDI’s use of the office space.  EDI uses the 
office space to implement the facilities portion of the Incubator Program by  
offering below-market-cost office space to start-up technology-based companies.  
Thus, the incubator tenants’ occupation and use of the office space are merely a 
consequence of EDI’s use.  In other words, it is EDI’s use of the office space that 
is relevant to whether an exemption applies, not the tenant’s use.  Accordingly, I 
would examine EDI’s use of office space by making it available to start-up 
technology-based companies to determine whether that use is for a charitable 
purpose. 
 
 
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EDI is a division of Weatherhead School of Management, which is part of 
CWRU.  EDI’s mission is to encourage, support, and recognize entrepreneurial 
achievement in northeast Ohio.  EDI is partially funded by state funds from the 
Thomas Alva Edison program, established by R.C. 122.33(C).  Nonstate support is 
provided by foundation funding, grants and contracts from the federal government, 
memberships, and contract services from industrial sources, as well as rent and 
service fees from incubator tenants.  EDI developed and administers the Incubator 
Program, supported by the same mixture of funds. 
 
The purpose of EDI’s Incubator Program is to further develop and better 
establish start-up technology-based companies ultimately to create job 
opportunities.1  In support of this goal, the Incubator Program offers services 
primarily in three major categories: office and laboratory space; business 
assistance; and business training and education.  The Incubator Program provides 
numerous services to assist these companies, including managerial assistance, 
technical assistance, office services and facilities, financial assistance, marketing 
assistance, public relations assistance, and entrepreneurial education. 
 
The Incubator Program provides the sophisticated laboratory and office 
space needed by start-up technology companies at below market cost.  In the 
Cleveland area, this space is either unavailable or very expensive environments.  
Without such space for these companies, it is likely that they would fail or locate 
in another, more business-friendly environment. Thus, availability of the discount 
rental space is a crucial aspect of the Incubator Program to enable start-up 
technology-based companies to become viable and to locate in the Cleveland area. 
 
Thus, providing office space in this context is for charitable, educational, or 
public purpose because, consistent with the majority’s finding that the remainder 
of EDI’s Incubator Program serves a charitable purpose, it also serves to “promote 
 
 
15
and develop emerging technologies and emerging companies in order to provide 
jobs for people and to strengthen the economy of the state.” 
 
Therefore, I would find that EDI’s use of the office space by offering it to 
start-up technology companies at below market cost is a charitable purpose within 
the context of R.C. 5709.121(A).  Accordingly, I would affirm the BTA’s 
determination that the office space was exempt from taxation as being reasonable 
and lawful. 
CWRU’s Garage 
 
The majority also affirms the BTA’s determination that the CWRU parking 
garage is not exempt from taxation.  In denying the exemption for the parking 
garage, the BTA cited State Teachers Retirement Bd. v. Kinney (1981), 68 Ohio 
St.2d 195, 22 O.O.3d 434, 429 N.E.2d 1069, in determining that because the 
CWRU parking garage was not open to the public, it could not be exempted under 
former R.C. 5709.121.  The BTA also found that there was “insufficient 
information * * * to accurately split-list the facility in order to account for exempt 
and non-exempt use.”  I disagree with both conclusions. 
 
In Cincinnati Nature Ctr. Assn. v. Bd. of Tax Appeals (1976), 48 Ohio St.2d 
122, 2 O.O.3d 275, 357 N.E.2d 381, this court set out a three-prong test to 
determine whether property is exempt from taxation under R.C. 5709.121(B).  In 
order for the property to be exempt, it must “(1) be under the direction or control 
of a charitable institution or state or political subdivision, (2) be otherwise made 
available ‘for use in furtherance of or incidental to’ the institution’s ‘charitable * * 
* or public purposes,’ and (3) not be made available with a view to profit.”  Id. at 
125, 2 O.O.3d at 277, 357 N.E.2d at 383. 
 
In State Teachers Retirement Bd., the court, construing R.C. 5709.121(B), 
stated that “a new parking lot owned by the State Teachers Retirement Board 
 
 
16
restricted to exclusive use by its employees is not ‘in furtherance of or incidental 
to its * * * public purposes.’ ”  (Emphasis sic.)  68 Ohio St.2d at 198, 22 O.O.3d 
at 436, 429 N.E.2d at 1071.  The court reasoned, “There is no nexus between a 
parking lot owned by the retirement board and used exclusively for its employees 
and the public purpose served by the board.”  68 Ohio St.2d at 198, 22 O.O.3d at 
436, 429 N.E.2d at 1072. 
 
I disagree with this interpretation of R.C. 5709.121(B).  I would find that 
exclusive use of a charitable institution’s parking facility by its employees does 
not necessarily preclude a finding that such use is in furtherance of or incidental to 
the institution’s charitable purpose.2 
 
A better-reasoned analysis is made in Am. Chem. Soc. v. Kinney (1982), 69 
Ohio St.2d 167, 23 O.O.3d 197, 431 N.E.2d 1007.  In Am. Chem. Soc., decided 
after State Teachers Retirement Bd., the American Chemical Society (“ACS”) 
sought a tax exemption pursuant to R.C. 5709.121(B) for landscaped property 
which surrounded ACS’s office building.  In support of its contention, ACS 
submitted a study undertaken to determine the effect of the “campus-like” setting 
on its employees.  The study concluded that the beautification promoted the 
recruitment, retention, and productivity of the staff. Applying the test set out in 
Cincinnati Nature Ctr., the court in Am. Chem. Soc. held: 
 
“When landscaped and beautified property surrounding a charitable 
institution is shown to be instrumental in the recruitment, retention and 
productivity of the institution’s employees, and such employees play an integral 
role in the continued success of the institution, the property is exempt from 
taxation and falls within the purview of R.C. 5709.121.”  69 Ohio St.2d 167, 23 
O.O.3d 197, 431 N.E.2d 1007, paragraph two of the syllabus. 
 
The court reasoned, 
 
 
17
 
“Since the landscaped property surrounding Chemical Abstracts’ facilities 
has been shown to be instrumental in attracting and retaining [trained personnel] 
this land is clearly held ‘ “in furtherance of or incidental to” the institution’s 
“charitable * * * purposes.” ’ ”  Id. at 172, 23 O.O.3d at 200, 431 N.E.2d at 1010. 
 
Thus, in contrast to State Teachers Retirement Bd., this court in Am. Chem. 
Soc. determined that property used for the purpose of retaining and aiding its 
employees was used in furtherance of or was incidental to ACS’s charitable 
purposes.  The decision in State Teachers is an aberration, and should be 
overruled.  As the BTA has recognized, “ ‘[p]arking is essential and integral to 
such institutions’ charitable missions, for without a means to park vehicles at their 
business locations, said businesses could not operate.’ ”  Missionary Church, Ohio 
Dist., Inc. v. Limbach (Mar. 19, 1993), BTA No. 90-A-504. 
 
Therefore, in the case at bar, I would apply the three-prong test from 
Cincinnati.  I would also hold, consistent with the rationale of Am. Chem. Soc., 
that the exclusion of the public from a charitable institution’s property does not 
necessarily preclude a finding that the property is used in furtherance of or is 
incidental to a charitable purpose pursuant to R.C. 5709.121(B). 
 
Property is used in furtherance of a charitable purpose where it is shown 
that the use is integral to the institution’s charitable function.  Am. Chem. Soc. at 
paragraph two of the syllabus; Bowers v. Akron City Hosp. (1968), 16 Ohio St.2d 
94, 96, 45 O.O.2d 445, 447, 243 N.E.2d 95, 97.  Evidence that a parking facility 
provides a safe and convenient place to park is sufficient to prove that a parking 
lot is integral to the institution’s charitable purpose.  Id. 
 
In the case at bar, University Circle Incorporated is a nonprofit corporation 
established by CWRU.  Under the direction of CWRU, University Circle 
Incorporated operated the parking garage  attached to the University West 
 
 
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Building.  University Circle determined parking rates “based on the budgeted costs 
and income on a break-even basis.”  Thus, the garage is under the direction of 
CWRU, a charitable and or educational institution, and the garage is not run for 
profit.  Thus, the first two prongs of the Cincinnati Nature Ctr. test are met. 
 
The garage provides parking primarily for occupants of the University West 
Building.  Most of the approximately one hundred and seventy permits issued for 
the parking garage in 1992 were for EDI, EBTC, or CWRU employees. As 
determined above and in the majority opinion, EDI and EBTC engage in charitable 
acts and, presumably, CWRU employees serve an educational purpose. 
 
The garage is needed for these employees because the University West 
Building sits on the periphery of the campus, so there is little other available 
parking in the area.  Additionally, the area is run-down and subject to urban blight, 
so the employees feel safer parking in the enclosed garage which directly accesses 
the University West Building.  Finally, although there are public transportation 
stops nearby, most occupants of the University West Building do not use public 
transportation because it is inconvenient. 
 
Thus, there is sufficient evidence to indicate that the CWRU parking garage 
is used in furtherance of or incidental to EDI’s, EBTC’s, and CWRU’s 
charitable/educational charitable purposes because it is integral to the parking 
needs for EDI, EBTC, and CWRU employees. 
 
Therefore, I would find that there is sufficient evidence to satisfy the three-
prong Cincinnati Nature Ctr. test.  Accordingly, I would reverse the BTA’s denial 
of a tax exemption for the parking garage property as being unlawful and 
unreasonable. 
 
COOK, J., concurs in the foregoing opinion. 
FOOTNOTE: 
 
 
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2. 
State Teachers Retirement Bd. addresses whether a parking lot is used in 
furtherance of or is incidental to a public purpose, while this case involves a 
determination as to whether the garage property is used in furtherance of or is 
incidental to a charitable purpose.  But for purposes of analysis there should be no 
distinction between a charitable purpose and a public purpose in the context of 
whether exclusive use of the property by employees of the owner precludes a 
finding that the property is used in the furtherance of or is incidental to a 
charitable or public purpose pursuant to R.C. 5709.121(B).