Title: Southside Community Dev. Corp. v. Levin

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Southside Community Dev. Corp. v. Levin, 119 Ohio St.3d 521, 2008-Ohio-4839.] 
 
 
 
SOUTHSIDE COMMUNITY DEVELOPMENT CORPORATION, APPELLEE, v. LEVIN, 
TAX COMMR., ET AL., APPELLEES; MAHONING COUNTY, APPELLANT. 
[Cite as Southside Community Dev. Corp. v. Levin, 
 119 Ohio St.3d 521, 2008-Ohio-4839.] 
Real property taxation — Appeal to the Board of Tax Appeals from denial of 
exemption — Intervention by successor in ownership to appellant denied. 
(No. 2007-1722—Submitted June 24, 2008—Decided October 1, 2008.) 
APPEAL from the Board of Tax Appeals, No. 2006-T-635. 
__________________ 
 
LANZINGER, J. 
{¶ 1} Mahoning County appeals an interim order of the Board of Tax 
Appeals (“BTA”) denying the county’s motion to intervene in an appeal of the 
Tax Commissioner’s denial of a tax-exemption application for 2004 filed by  
Southside Community Development Corporation.  Southside had filed for 
bankruptcy after applying for the exemption, and the bankruptcy trustee had 
appealed the denial of the exemption to the BTA.  Because the county purchased 
the property from the bankruptcy trustee and is the current owner whose rights are 
affected by the past tax liens, the county claims that it has standing and seeks to 
pursue the exemption by intervening at the BTA. 
{¶ 2} The BTA denied the county’s motion to intervene, and the county 
filed an interlocutory appeal in this court.  We previously overruled the Tax 
Commissioner’s motion to dismiss the appeal.  Southside Community Dev. Corp. 
v. Levin, 116 Ohio St.3d 1209, 2007-Ohio-6665, 878 N.E.2d 1048.  We now 
address the procedural issue presented by the appeal:  whether Mahoning County 
as current owner of the property has standing to intervene at the BTA and to 
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pursue the exemption application.  We hold that the county lacks standing, and we 
therefore affirm the interim order of the BTA. 
Case Background 
{¶ 3} The property at issue consists of eight parcels and improvements, 
located in the Youngstown School District. This tract includes a building with 
273,219 square feet of net leasable area and parking facilities.  When the 
application was filed, tenants included a mix of nonprofit, governmental, and for-
profit entities.  The property’s taxable or exempt status as of January 1, 2004, the 
lien date, will be the subject of the BTA’s determination. 
{¶ 4} On December 28, 2004, Southside Community Development 
Corporation filed an application to exempt the property for the 2004 tax year.  
Southside predicated its claim of exemption on exclusive charitable use under 
R.C. 5709.12.  The Tax Commissioner ultimately denied the application on April 
7, 2006. 
{¶ 5} Southside then went into bankruptcy, and the bankruptcy trustee 
appealed to the BTA from the Tax Commissioner’s denial of the exemption.  
Mahoning County purchased the property from the bankruptcy trustee on July 27, 
2006, and almost 11 months later filed a motion to intervene in the BTA appeal. 
The Tax Commissioner opposed the motion, and on August 24, 2007, the BTA 
issued its interim order denying intervention.  The BTA held that the county had 
no statutory right to participate because (1) it did not own the property when the 
application was filed and (2) it did not qualify as a person with a right to appeal to 
the BTA when that appeal was filed.  The county appealed the interim order to 
this court.  The Tax Commissioner filed a motion to dismiss, alleging that the 
appeal was premature and that the interim order was not a final, appealable order. 
We denied that motion. 
The Privity Argument 
January Term, 2008 
3 
{¶ 6} Mahoning County argues primarily that because it purchased the 
property, it stands in privity with Southside and succeeds to Southside’s right to 
pursue the application for tax exemption.  Ultimately, however, no common-law 
concept of privity or successorship controls this case.  The right to prosecute an 
application for exemption involves an administrative procedure statutorily created 
and delimited.  See Performing Arts School of Metro. Toledo, Inc. v. Wilkins, 104 
Ohio St.3d 284, 2004-Ohio-6389, 819 N.E.2d 649, ¶ 19; Victoria Plaza Ltd. Liab. 
Co. v. Cuyahoga Cty. Bd. of Revision (1999), 86 Ohio St.3d 181, 183, 712 N.E.2d 
751, quoting State ex rel. Tubbs Jones v. Suster (1998), 84 Ohio St.3d 70, 77, 701 
N.E.2d 1002, fn. 4 (in administrative proceedings “ ‘parties must meet strict 
standing requirements in order to satisfy the threshold requirement for the 
administrative tribunal to obtain jurisdiction’ ”).  As a result, the question is 
whether the statutes permit a later owner to intervene in a pending application 
proceeding as a successor or substitute for the original applicant. 
{¶ 7} The statutes do not permit either intervention or substitution.  The 
right to obtain exemption for a particular tax year depends upon the particular 
applicant’s ownership and use of the property on the lien date of that year.  See 
Sylvania Church of God v. Levin, 118 Ohio St.3d 260, 2008-Ohio-2448, 888 
N.E.2d 408, ¶ 4, 6, 9, citing Episcopal School of Cincinnati v. Levin, 117 Ohio 
St.3d 412, 2008-Ohio-939, 884 N.E.2d 561, ¶ 23.  If exempt use begins in earlier 
years, the statutes allow an applicant to obtain remission of taxes for up to three 
preceding years, subject to a limitation that is crucial for purposes of this case.  
R.C. 5713.08(B).1  That limitation relates to the time of ownership:  the applicant 
                                                 
1.  R.C. 5713.08(B) provides:  “Any taxes, interest, and penalties which have become a lien after 
the property was first used for the exempt purpose, but in no case prior to the date of acquisition 
of the title to the property by the applicant, may be remitted by the commissioner * * *.”  
(Emphasis added.) 
 
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must own the property on the lien date of the prior year for which the tax benefit 
of an exempt use is claimed. 
{¶ 8} Although R.C. 5713.08(B) pertains only to remission and does not 
directly address the question of intervention or substitution, this statutory 
limitation reflects a broader legislative intent that a later owner may not, through 
its own litigation, obtain the tax benefit of exemption for a prior year, when it did 
not own the property on the lien date of that year.  Mahoning County, the 
subsequent owner, may not intervene or step into the shoes of the applicant, 
Southside Community Development Corporation, because it did not own the 
property on the lien date, which was January 1, 2004.  Allowing intervention 
would contravene the statute’s intent. 
{¶ 9} In determining legislative intent, we note that our reading of the 
statutes accords with the substantive nature of an exemption claim.  A property’s 
taxable or exempt status typically depends upon a close examination of the 
property’s owner and its particular use; an owner must offer proof of exemption 
for each tax year in which the property’s taxable status is at issue.  R.C. 5715.271.  
In the present case, an exemption for exclusive charitable use is sought under R.C. 
5709.12.  Such an exemption is available under two circumstances: if the owner is 
an institution and its own use qualifies as “exclusive charitable use,” or if an 
owner is a charitable or educational institution and the property is used by others 
“in furtherance of or incidental to” the owner’s charitable or educational mission.  
R.C. 5709.12(B) and 5709.121; see, e.g., First Baptist Church of Milford, Inc. v. 
Wilkins, 110 Ohio St.3d 496, 2006-Ohio-4966, 854 N.E.2d 494, ¶ 12; Community 
Health Professionals, Inc. v. Levin, 113 Ohio St.3d 432, 2007-Ohio-2336, 866 
N.E.2d 478, ¶ 18, 22, 23; Cincinnati Community Kollel v. Levin, 113 Ohio St.3d 
138, 2007-Ohio-1249, 863 N.E.2d 147, ¶ 10, 20, 21.  It is logical that the General 
Assembly would decide that only an entity whose ownership and use of a 
January Term, 2008 
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property establish its exempt status on a particular tax-lien date should be 
permitted to pursue the application that relates to that date. 
{¶ 10} Furthermore, the exemption statutes do not require that notice be 
given to later owners, such as purchasers, of the property.  The exemption statutes 
differ in this regard from the property-valuation statutes.  In a valuation 
proceeding, a new owner of the property must be notified of hearings and 
decisions, and that notice entitles the later owner to participate in the 
proceedings.2  For example, in Columbus City School Dist. Bd. of Edn. v. 
Franklin Cty. Bd. of Revision, 114 Ohio St.3d 1224, 2007-Ohio-4007, 871 N.E.2d 
602, ¶ 4, we held that under R.C. 5717.03(B), “the ‘person in whose name the 
property is listed or sought to be listed’ is the person whom the record shows to be 
the owner of the property as of the time that the BTA was required to certify its 
decision.” 
{¶ 11} In contrast, there are no comparable notice requirements in 
proceedings on exemption applications, and that omission leads to the conclusion 
that later owners were not intended by the General Assembly to participate in 
application proceedings on tax exemptions.  Because the statutes do not permit 
intervention by or substitution of a property’s purchaser in an exemption 
proceeding, the BTA correctly denied the county’s motion to intervene. 
The Statutory Argument — R.C. 5717.02 
                                                 
2.  See R.C. 5715.12 (no increase in value is to be ordered unless “the person in whose name the 
property affected thereby is listed” has the opportunity to be heard), 5715.19(B) (when the amount 
of value at issue is great enough, the board of revision must give notice of the filing of a valuation 
complaint to “each property owner whose property is the subject of the complaint” if the 
complaint was not filed by the owner), 5715.19(C) (notice of hearing at the board of revision is to 
be given to the complainant and to the property owner), 5715.20 (the board of revision is to certify 
its decision to the “person in whose name the property is listed or sought to be listed”), 5717.03 
(in a valuation case, the BTA must certify its decision to the “person in whose name the property 
is listed or sought to be listed”), 5717.04 (the party who appeals from the BTA to the court must 
join as appellees and serve its notice of appeal on those persons to whom the BTA must certify its 
decision, including the person in whose name the property is listed).   
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{¶ 12} In addition to arguing that it stands in privity with its seller, 
Mahoning County claims that because it is “the taxpayer,” it has standing under 
R.C. 5717.02,3 which authorizes appeals to the BTA from determinations of the 
Tax Commissioner.  The BTA disposed of this claim by observing that the county 
“did not have an interest in the subject either at the time the commissioner issued 
the final determination or at the time the determination could be appealed to this 
board.”  Southside Community Dev. Corp. v. Wilkins (Aug. 24, 2007), BTA No. 
2006-T-635, at 6.  In the BTA’s view, because the county had no interest in the 
property during the time the denial of exemption could be appealed, the county 
could not participate in the appeal.  We agree with the BTA’s disposition of this 
issue, because R.C. 5717.02 does not authorize intervention as an appellant or 
provide for a substitution of a later purchaser for the current appellant. 
{¶ 13} As already discussed, those who seek party status in administrative 
proceedings “must meet strict standing requirements.”  Tubbs Jones, 84 Ohio 
St.3d at 77, 701 N.E.2d 1002, fn. 4.  R.C. 5717.02 states who may appeal a 
determination of the Tax Commissioner but simply does not authorize any person 
to enter the case later as an appellant. 
{¶ 14} Moreover, an appellant’s intervention cannot be reconciled with 
R.C. 5717.02’s separate requirement that those who appeal to the BTA from final 
determinations of the Tax Commissioner must “specify the errors * * * 
complained of” in that determination.  Failure to do so means that the BTA 
acquires no jurisdiction to grant the party relief on the basis of the unspecified 
error.  See Cleveland Elec. Illum. Co. v. Lindley (1982), 69 Ohio St.2d 71, 75, 23 
O.O.3d 118, 430 N.E.2d 939; Lenart v. Lindley (1980), 61 Ohio St.2d 110, 114, 
15 O.O. 3d 152, 399 N.E.2d 1222. 
                                                 
3. R.C. 5717.02 specifies who may appeal a final determination of the Tax Commissioner.  Those 
persons include “the taxpayer,” the person to whom the Tax Commissioner must give notice of his 
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{¶ 15} In this case, Southside Community Development Corporation’s 
bankruptcy trustee filed the only notice of appeal conferring jurisdiction on the 
BTA.  Mahoning County as a later purchaser may not jurisdictionally piggyback 
its own claim for relief onto a notice of appeal filed by another entity.  To permit 
a party to do so would, in effect, allow an end run around both the filing and the 
specification requirements set forth in R.C. 5717.02.  This is particularly true 
where, as here, the original appellant may abandon its claims.  Indeed, if the party 
that originally filed a notice of appeal were to dismiss that appeal altogether, there 
would be no specifications of error that would permit the BTA to take jurisdiction 
over the case.  See Queen City Valves v. Peck (1954), 161 Ohio St. 579, 53 O.O. 
430, 120 N.E.2d 310.  In such a situation, the appeal would jurisdictionally 
evaporate, even if intervention had been granted to another party to litigate as an 
appellant. 
{¶ 16} R.C. 5717.02 also contains no authority for the assertion that the 
county may substitute itself for Southside.  Indeed, to permit the substitution 
would imply that the original applicant is actually divested of authority to pursue 
the appeal once it sells the property.  Such a limitation has not been recognized in 
the past, and the statute does not impose it.  See, e.g., Episcopal School of 
Cincinnati v. Levin, 117 Ohio St.3d 412, 2008-Ohio-939, 884 N.E.2d 561, ¶ 4 (the 
exemption applicant continued to pursue its exemption before the Tax 
Commissioner, the BTA, and the court, even though it had sold the property while 
the application was pending before the commissioner). 
{¶ 17} R.C. 5717.02 does not authorize the county to intervene in this 
case. 
Fundamental Fairness 
                                                                                                                                     
determination, the director of the state Office of Budget and Management if state revenues are 
primarily affected, and the county auditors of counties whose revenues are primarily affected. 
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{¶ 18} Mahoning County also contends that “fundamental fairness” 
demands that it be accorded the right to pursue Southside’s application for 
exemption at the BTA.  In its notice of appeal to the court, the county asserts that 
denial of intervention violates constitutional due process.  We disagree. 
{¶ 19} Although the county, as current owner of the property, is subject to 
the tax lien of prior years and must make sure that back taxes are paid to enjoy 
continued ownership and possession of its property, the county is in the same 
position as any purchaser of real property, even one whose predecessor had not 
applied for a property tax exemption.  When the county purchased the property, it 
knew or had reason to know that the Tax Commissioner had denied the exemption 
claim and that the tax lien would have to be satisfied.  Nothing prevented the 
county from protecting itself in the purchase agreement against past tax liabilities.  
If the county had, for example, conditioned its purchase on Southside’s obtaining 
the exemption, it would be free to walk away from the purchase if Southside 
failed to do so. 
{¶ 20} Because the county was on actual or constructive notice of the 
property taxes when it purchased the property, it has no constitutional due process 
right to challenge those tax liabilities now. 
Conclusion 
{¶ 21} We conclude that the BTA reasonably and lawfully determined 
that Mahoning County had no right to intervene.  Accordingly, we affirm the 
interim order of the BTA and allow the BTA freedom to conduct further 
proceedings in the case. 
Order affirmed. 
 
MOYER, C.J., and O’DONNELL and CUPP, JJ., concur. 
 
PFEIFER, LUNDBERG STRATTON, and O’CONNOR, JJ., dissent. 
__________________ 
LUNDBERG STRATTON, J., dissenting. 
January Term, 2008 
9 
{¶ 22} I believe that Mahoning County has a right to intervene in the tax 
appeal pending before the BTA.  Therefore, I respectfully dissent. 
{¶ 23} The majority holds that neither the tax laws nor privity justifies 
Mahoning County in intervening in the tax appeal.  The majority also holds that 
preventing Mahoning County from intervening is not fundamentally unfair. 
R.C. 5717.02 and Privity 
{¶ 24} As the majority recognizes, the tax statutes do not expressly 
prohibit intervention in a tax appeal.  Instead, the majority holds that the tax 
exemption statutes imply a legislative intent to prevent a later owner, through its 
own litigation, from obtaining a tax benefit of exemption for a prior year, when it 
did not own the property on the lien date of that year.  The majority relies in part 
upon R.C. 5713.08(B), which requires that an applicant for an exemption must 
own the property on the lien date of the prior year for which the tax benefit of an 
exempt use is claimed to support the conclusion that the purchaser of real 
property may not intervene in a pending appeal before the BTA to contest the 
denial of an exemption.  The majority recognizes that R.C. 5713.08(B) applies 
only to remission, but nevertheless holds that it “reflects a broader legislative 
intent that a later owner may not, through its own litigation, obtain the tax benefit 
of exemption for a prior year, when it did not own the property on the lien date of 
that year.” 
{¶ 25} The issue here is whether a property owner has standing to 
intervene in a pending tax appeal filed by the prior owner of the property.  
Therefore, the requirements for a property owner applying for an exemption are 
not persuasive in determining whether a property owner can intervene in a 
pending appeal. 
{¶ 26} R.C. 5717.02 provides that a “taxpayer” may appeal a final 
determination by the Tax Commissioner to the BTA.  Although the owner of real 
property is not personally responsible for any tax obligations on that land, the 
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owner has a substantial interest, in that tax liens affect the property’s value and 
can ultimately result in a judicial sale to satisfy them.  See S. Ohio Sav. Bank & 
Trust Co. v. Bolce (1956), 165 Ohio St. 201, 208, 59 O.O. 290, 135 N.E.2d 382 
(obligations for real property tax are not personal but “run with the land”).  In 
other words, the current owner of real property is the taxpayer.  Thus, I would 
hold that for purposes of intervening in a pending tax appeal filed by the 
property’s prior owner, R.C. 5717.02 indicates that the owner of real property has 
standing to intervene and to litigate a pending appeal filed by the prior owner of 
the property. 
{¶ 27} Common-law principles also support the notion that a buyer of real 
property has a right to join and litigate a pending tax appeal pertaining to the 
property.  The buyer and seller of real property are in privity, and consequently, 
the buyer of real property “ ‘stands in the same shoes’ as to the rights of the prior 
owner in the same property, thereby giving the [buyer] the same rights and 
obligation as the original owner had in regard to the property.”  Berardi v. Ohio 
Turnpike Comm. (1965), 1 Ohio App.2d 365, 370, 30 O.O.2d 385, 205 N.E.2d 23, 
see also Columbus v. Union Cemetery Assn. (1976), 45 Ohio St.2d 47, 74 O.O.2d 
79, 341 N.E.2d 298.  Thus, I would also hold that privity supports the proposition 
that a property owner should be allowed to intervene in a pending tax appeal filed 
by the prior owner. 
Fundamental Fairness 
{¶ 28} The majority holds that denying Mahoning County the right to 
intervene in the instant tax appeal does not violate fundamental fairness.  I 
disagree.  Even though Mahoning County knew or should have known of the 
potential tax obligation on the property, I believe that as the new owner of the 
property, it had an expectation that it could pursue the pending tax appeal by 
stepping into the shoes of Southside.  Therefore, I believe that denying Mahoning 
County the right to intervene in the tax appeal violates fundamental fairness. 
January Term, 2008 
11 
{¶ 29} Accordingly, I would hold that R.C. 5717.02, the common-law 
principle of privity, and fundamental fairness justify permitting Mahoning County 
to intervene in the pending tax appeal.  Accordingly, I respectfully dissent. 
 
PFEIFER and O’CONNOR, JJ., concur in the foregoing opinion. 
__________________ 
 
Nancy Hardin Rogers, Attorney General, and Damion M. Clifford, 
Assistant Attorney General, for appellee Tax Commissioner of Ohio. 
 
Harrington, Hoppe & Mitchell, Ltd., and Carmen V. Codjoe, for appellant. 
______________________