Case Title: Athens Cty. Aud. v. Wilkins

Citation: 2005-Ohio-4986

Docket Number: 20040594

State: ohio

Court: Ohio Supreme Court

Date: 2005-10-05T00:00:00Z

Document:
[Cite as Athens Cty. Aud. v. Wilkins, 106 Ohio St.3d 293, 2005-Ohio-4986.] 
 
 
 
 
ATHENS COUNTY AUDITOR, APPELLEE, v. WILKINS, TAX COMMR., APPELLEE; 
LEE & L’HEUREUX PROPERTIES, L.L.C., APPELLANT. 
[Cite as Athens Cty. Aud. v. Wilkins, 106 Ohio St.3d 293, 2005-Ohio-4986.] 
Property taxation – Exemption – R.C. 3357.14 – R.C. 5709.07(A)(4) – Privately 
owned dormitories for students of technical college not entitled to 
exemption for property “connected with” or “used by” college, when. 
(No. 2004-0594 — Submitted June 14, 2005 — Decided October 5, 2005.) 
APPEAL from the Board of Tax Appeals, No. 2002-A-1152. 
____________________ 
 
O’DONNELL, J. 
{¶ 1} The issue addressed in this appeal is whether two privately owned 
dormitories located adjacent to Hocking Technical College in Nelsonville, Ohio 
(“Hocking”) qualify for a property-tax exemption pursuant to either R.C. 3357.14 
or 5709.07(A)(4). 
{¶ 2} The owner of the property at issue here, Lee & L’Heureux 
Properties, L.L.C. (“L & L”), built the dormitories in 1998 and 1999.  Along with 
a parking lot and some recreational space, the dormitories are situated on a 20-
acre parcel of land directly across the Hocking River from the college campus and 
are accessible by a bridge over the river.  The college has no ownership interest or 
tax obligation with respect to the dormitories and has not applied for, and would 
not benefit from, the tax exemptions sought by L & L. 
{¶ 3} The college has, however, worked closely with L & L since the 
dormitories’ inception.  For instance, a vice president of the college assisted L & 
L in securing financing for constructing the dormitories, while the college’s 
development director assisted L & L in designing the dormitories to meet student 
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needs and promote the college’s educational mission.  The college entered into 
contracts with L & L to list the dormitories, once completed, as “campus housing” 
in student housing information. 
{¶ 4} Moreover, the college plays an active role in administrating the 
dormitories, which house only Hocking students. The college sets dormitory rules 
regarding smoking, alcohol use, pets, and quiet hours, etc., and coordinates 
student room assignments and move-in and move-out dates.  In addition, the 
college collects student rental payments—whose annual amounts are jointly 
determined by L & L and the college—deducts its management and operation 
costs plus an $8,000 annual marketing fee for promoting student occupancy in L 
& L’s dormitories, and forwards the balance to L & L.  Students who fail to pay 
rent are prohibited from registering for classes at the college. 
{¶ 5} In 2001, L & L sought an exemption with the Tax Commissioner 
for taxes owed or already paid on the property for tax years 2000 and 2001.  
Finding that the dormitories were exempt pursuant to R.C. 3357.14, the Tax 
Commissioner ordered all taxes, penalties, and interest for 2000 remitted and 
granted L & L an exemption for 2001, which the Athens County Auditor appealed 
to the Board of Tax Appeals (“BTA”).  The BTA reversed the Tax 
Commissioner’s 
decision, 
concluding 
that 
neither 
R.C. 
3357.14 
nor 
5709.07(A)(4) allows private, for-profit entities like L & L to receive tax 
exemptions for rental property used by technical college students. 
{¶ 6} L & L appealed to this court, claiming that regardless of whether 
the college or a private entity actually owns it, property “connected with” or “used 
by” a technical college is exempt from taxation under either R.C. 5709.07(A)(4) 
or 3357.14.  Conversely, the Athens County Auditor asserts that because the 
property is not “connected with” the college within the meaning of R.C. 
5709.07(A)(4), L & L is prohibited from receiving an exemption pursuant to that 
statutory provision.  And, with respect to R.C. 3357.14, the auditor argues that 
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3 
since the college does not own the property or have any obligation to pay taxes on 
it, L & L cannot claim an exemption through the college solely because its 
students are housed in L & L’s dormitories. 
{¶ 7} For the following reasons, we agree with the auditor’s position and 
affirm the BTA’s decision. 
{¶ 8} We review a decision of the BTA to determine whether it is 
“reasonable and lawful.”  Columbus City School Dist. Bd. of Edn. v. Zaino (2001), 
90 Ohio St.3d 496, 497, 739 N.E.2d 783.  Although we “will not hesitate to 
reverse a BTA decision that is based on an incorrect legal conclusion,” Gahanna-
Jefferson Local School Dist. Bd. of Edn. v. Zaino (2001), 93 Ohio St.3d 231, 232, 
754 N.E.2d 789, “[t]he BTA is responsible for determining factual issues and, if 
the record contains reliable and probative support for these BTA determinations,” 
this court will affirm the BTA’s decision.  Am. Natl. Can Co. v. Tracy (1995), 72 
Ohio St.3d 150, 152, 648 N.E.2d 483.  Moreover, any claimed tax exemption 
must be strictly construed, and the taxpayer must affirmatively establish a right to 
the exemption.  Campus Bus Serv. v. Zaino, 98 Ohio St.3d 463, 2003-Ohio-1915, 
786 N.E.2d 889, ¶ 8.  See, also, R.C. 5715.271, stating that “the burden of proof 
shall be placed on the property owner to show that the property is entitled to 
exemption.” 
{¶ 9} We turn first to L & L’s claim that R.C. 3357.14 provides an 
exemption for the property in question.  That provision states: “A technical 
college district shall not be required to pay any taxes or assessments upon any real 
or personal property acquired, owned, or used by” the district.1  In this case, 
                                                 
1.  A “technical college district” is a political subdivision of the state “organized for the purpose of 
establishing, owning, and operating one or more technical colleges within the territory of such 
district.”  R.C. 3357.01(B).  R.C. Chapter 3357 governs the creation and operation of “technical 
colleges” in Ohio, which are described in R.C. 3357.01(A) and (D) as state-supported 
“institution[s] of education beyond the high school” in which the curriculum is designed to equip 
students to “pursue careers in which they provide immediate technical assistance to professional or 
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neither Hocking nor its technical college district is “required to pay any taxes or 
assessments” on L & L’s property.  Since L & L is the sole property owner, it 
alone is responsible for paying taxes on that property. 
{¶ 10} While we recognize that the facts suggest that the college 
maintains a substantial relationship to the property, the BTA correctly concluded 
that the dormitories are not “used by” the college within the meaning of R.C. 
3357.14.  Instead, Hocking students use dormitories owned, insured, and operated 
by L & L through its agreements with the college, and, as the BTA noted, 
“[w]hile L & L may have chosen not to exercise all of its rights on a consistent 
basis under its agreements with Hocking Tech, there has been no evidence offered 
to indicate that it has ‘given up’ its rights under said agreements or amended the 
agreements in such a manner as to permanently relinquish the rights and 
responsibilities it contracted for under said agreements.” 
{¶ 11} L & L has no education-related mission; it exists to earn a profit by 
renting temporary housing accommodations to students attending the college.  
The BTA reasonably determined that the General Assembly promulgated R.C. 
3357.14’s tax exemption to reduce the tax burden on higher education facilities; 
not to shelter private property owners who build and maintain student housing 
near college campuses.  The General Assembly has enacted similar tax 
exemptions for state and municipal colleges and universities, community college 
districts, and university branch districts.  See R.C. 3345.17, 3349.17, 3354.15, and 
3355.11.  None of these statutes, however, exempt private landowners from 
paying taxes on property located near, or even on, a college or university campus. 
{¶ 12} Accordingly, we agree with the BTA’s decision and hold that 
because R.C. 3357.14 grants a tax exemption only to “technical college districts,” 
and because L & L’s property is not “used by” the college within the meaning of 
                                                                                                                                     
managerial persons.”  See, also, R.C. 3357.15, which provides that the state will furnish funds for 
operating costs. 
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5 
the statute, L & L is prohibited from receiving a tax exemption pursuant to R.C. 
3357.14. 
{¶ 13} We turn now to L & L’s contention that it is entitled to a property-
tax exemption pursuant to R.C. 5709.07(A)(4).  In reviewing this claim below, the 
BTA, citing Rickenbacker Port Auth. v. Limbach (1992), 64 Ohio St.3d 628, 631, 
597 N.E.2d 494, concluded that because “a property, to be exempt, must qualify 
under the criteria of the statute specifically applicable to that property,” and 
because R.C. 3357.14 is the only statutory provision directly related to property-
tax exemptions for technical colleges, R.C. 5709.07(A)(4) cannot provide L & L 
with a property-tax exemption.  While we agree that R.C. 3357.14 is the only 
appropriate statutory provision under which to consider L & L’s application for 
exemption, like the BTA, we will address L & L’s argument regarding the 
applicability of R.C. 5709.07(A). 
{¶ 14} R.C. 5709.07(A) states: 
{¶ 15} “The following property shall be exempt from taxation: 
{¶ 16} “* * * 
{¶ 17} “(4) Public colleges and academies and all buildings connected 
with them, and all lands connected with public institutions of learning, not used 
with a view to profit.” 
{¶ 18} Since L & L is not itself a public college, academy, or public 
institution of learning, the critical inquiry with respect to this issue is whether L & 
L’s buildings are “connected with” Hocking.  As we noted in Cleveland State 
Univ. v. Perk (1971), 26 Ohio St.2d 1, 55 O.O.2d 1, 268 N.E.2d 577, privately 
owned buildings can be “connected with” a college and can thus qualify for the 
R.C. 5709.07(A)(4) tax exemption. 
{¶ 19} In Perk, we concluded that “buildings located on the campus of a 
state university and used exclusively for classrooms and faculty offices are 
exempt from taxation, even though such buildings are not owned by the 
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university, but are leased for a term of years, with provision for rental therefor, 
from a corporation for profit.”  Id. at paragraph two of the syllabus.  The court 
added, “[W]e think it clear that the buildings in question * * * are buildings 
‘connected’ with a public college.”  Id. at 5, 55 O.O.2d 1, 268 N.E.2d 577. 
Significantly, however, Cleveland State University had “obligated itself 
financially for the full amount of any real property taxes imposed on the 
buildings.”  Id. at 4, 55 O.O.2d 1, 268 N.E.2d 577.  Because it leased the 
buildings and was contractually obligated to pay the taxes associated with them, 
the university, rather than the private owner, became the true beneficiary of the 
tax exemption in Perk. 
{¶ 20} The dormitories at issue here are different.  While privately owned 
buildings received the tax exemption in Perk, the taxpayer who benefited from the 
exemption was the public university rather than the separate private owner of the 
buildings—a significant distinction.  In the case before us, the college does not 
own or lease the dormitories, is not contractually obligated to pay the taxes on the 
buildings, and has not applied for and would not benefit from the tax exemption 
sought by L & L. 
{¶ 21} In examining the tax exemption now codified in R.C. 
5709.07(A)(4), Ohio courts have repeatedly determined that the exemption must 
benefit the public college itself, not a separate private entity.  See, e.g., Denison 
Univ. v. Bd. of Tax Appeals (1965), 2 Ohio St.2d 17, 31 O.O.2d 10, 205 N.E.2d 
896 (exempting Denison University from taxation on property it owned, including 
a carpentry shop, a storage shed, and the home of the university president); Bexley 
Village, Ltd. v. Limbach (1990), 68 Ohio App.3d 306, 588 N.E.2d 246 (exempting 
Capital University from taxation on a privately owned parking lot that the 
university had leased and on which the university had agreed to pay any taxes); 
Ohio N. Univ. v. Tax Commr. (1970), 21 Ohio App.2d 113, 50 O.O.2d 214, 255 
N.E.2d 297 (exempting Ohio Northern University from taxation on its student 
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7 
union building when a private caterer hired by the university provided food 
service);   Kenyon College v. Schnebly (1909), 21 Ohio C.D. 150, 31 Ohio C.C. 
150, 1909 WL 1138, *3 (exempting Kenyon College from taxation on buildings it 
owned that served as the homes of faculty members and a janitor), affirmed 
without opinion, Schnebly v. Kenyon College (1909), 81 Ohio St. 514, 91 N.E. 
1138. 
{¶ 22} Although L & L has presented evidence that the college provides 
some administrative and marketing support to the dormitories, it cannot overcome 
its status as a private, for-profit company not engaged in the business of 
education.  As indicated above, the General Assembly has never demonstrated 
any intent to provide private parties with such tax exemptions, and neither this 
court nor the BTA has ever interpreted these statutes in the manner suggested by 
L & L.  See, e.g., Cleveland Student Hous. Assn. v. Tracy (1995), BTA No. 93-P-
1192, 1995 WL 312638, in which a private nonprofit owner of a student housing 
facility near Case Western Reserve University could not receive a tax exemption 
under R.C. 5709.07(A)(4) when the university did not own or lease the property 
and was not obligated to pay any taxes on it.  Therefore, even assuming R.C. 
5709.07(A)(4) applies to technical colleges, L & L cannot establish that its 
dormitories are “connected with” the college, and L & L does not qualify for the 
statutory exemption. 
{¶ 23} Accordingly, because neither R.C. 3357.14 nor 5709.07(A)(4) 
permits L & L to qualify for a tax exemption, we affirm the decision of the BTA. 
Decision affirmed. 
 
MOYER, C.J., RESNICK, PFEIFER, LUNDBERG STRATTON, O’CONNOR, and 
LANZINGER, JJ., concur. 
__________________ 
 
Rich, Crites & Dittmer and James R. Gorry, for appellee Athens County 
Auditor. 
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Bricker & Eckler, L.L.P., Mark A. Engel, and Alan D. Duffy, for 
appellant. 
______________________