[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 250 

Shoup Mill, L.L.C. v. Testa, Slip Opinion No. 2016-Ohio-5012.] 

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. 2016-OHIO-5012

250 SHOUP MILL, L.L.C. , APPELLANT, v. TESTA, TAX COMMR., APPELLEE. 

[Until this opinion appears in the Ohio Official Reports advance sheets, it 

may be cited as 250 Shoup Mill, L.L.C. v. Testa, Slip Opinion No. 

2016-Ohio-5012.] 

Taxation―Real property―“Public schoolhouse” exemption―Former R.C. 

5709.07(A)(1) ―Exclusive-charitable-use exemption―R.C. 5709.12(B) and 

5709.121―Taxpayer-lessor cannot claim vicarious exemption based on 

nature of activities of lessee community school―Record shows evidence of 

view to profit in form of surpluses realized through leases―Denial of claims 

for exemption affirmed.

(No. 2015-0340—Submitted April 19, 2016—Decided July 20, 2016.) 

APPEAL from the Board of Tax Appeals, No. 2011-2226. 

____________________ 

O’NEILL, J. 

{¶ 1} The appellant property owner, 250 Shoup Mill, L.L.C. (“Shoup”), 

applied to exempt real property used as a public “community school” for tax year 
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2

2010. Shoup challenges a decision of the Board of Tax Appeals (“BTA”) that 

affirmed the tax commissioner’s denial of exemption to the property that Shoup 

leased to the community school. Shoup itself is wholly owned by a 501(c)(3) 

nonprofit corporation whose members include the very community school to whom 

the property is leased. Shoup argues that the nonprofit and charitable character of 

the ownership arrangement decisively distinguishes this case from AndersonMaltbie v. Levin, 127 Ohio St.3d 178, 2010-Ohio-4904, 937 N.E.2d 547, and that 

that arrangement should qualify the property for exemption under the publicschoolhouse exemption in former R.C. 5709.07(A)(1). Shoup additionally claims 

exemption for exclusive charitable use under R.C. 5709.12(B) and 5709.121. 

{¶ 2} Both the tax commissioner and the BTA rejected the exemption 

claims primarily on the grounds that the record showed a “view to profit” on the 

part of the lessor. The gravamen of Shoup’s argument on appeal is based on the 

financial arrangement involving Shoup, New Plan Learning, Inc., and the various 

community schools supported by New Plan who have similar leases on other 

properties. Under this arrangement, any excess of rental income is used to subsidize 

the operations of those community schools. Thus, the argument goes, Shoup and 

New Plan, the sole member of its L.L.C., are nonprofit entities that function as 

nothing more than instrumentalities of the community schools that they serve. 

Because the income realized by Shoup and New Plan consists of nothing but 

payments from the very community schools on whose behalf those funds are 

expended, or to whom they are later distributed, this scheme does not involve a 

“view to profit.” Through its corporate affiliation and financial interconnection 

with the community school, Shoup seeks to derive a tax benefit from the public 

educational nature of its lessee. 

{¶ 3} To accept this argument would require us to view the landlord as an 

adjunct of the community-school tenant. The argument thereby runs into an 

insuperable legal barrier: the case law that bars a claim of “vicarious exemption,” 
January Term, 2016 

3

meaning that the property owner’s entitlement to the exemption must be judged by 

its own activities, and not by the activities engaged in by the lessee of the property. 

Under our case law, Shoup is a lessor and nothing more and must be judged on the 

basis of that activity alone. 

{¶ 4} Although Shoup contends that the surpluses realized through the 

leases should not be viewed as profit and that no intent to profit has been shown, 

the BTA, in light of the record that is now before us, found that a view to profit was 

indeed in evidence. Because the findings of fact lie within the BTA’s discretion, 

and because the record contains sufficient support for its view-to-profit finding, we 

affirm the decision of the BTA. 

THE PUBLIC-SCHOOLHOUSE AND EXCLUSIVE-CHARITABLE-USE EXEMPTIONS

{¶ 5} The first statute at issue here is former R.C. 5709.07(A)(1), which 

provided as follows: 

(A) The following property shall be exempt from taxation: 

(1) Public schoolhouses, the books and furniture in them, 

and the ground attached to them necessary for the proper occupancy, 

use, and enjoyment of the schoolhouses, and not leased or otherwise 

used with a view to profit. 

2006 Am.Sub.S.B. No. 66, 151 Ohio Laws, Part II, 2868, and Part III, 4397. 

“Public schoolhouses” was undefined. 

{¶ 6} In 2011, the General Assembly amended the exemption extensively. 

Am.Sub.H.B. No. 153, 129th General Assembly. The amendment (1) eliminated 

the phrase “public schoolhouses,” opting instead for language exempting “[r]eal 

property used by a school for primary or secondary education purposes,” R.C. 

5709.07(A)(1), (2) defined “school” as a public or nonpublic school and explicitly 

included community schools in the definition of “public school,” R.C. 
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4

5709.07(A)(1)(a) and (b), and (3) eliminated the reference to a “view to profit.” 

But the new language was not in effect for tax year 2010, which is the tax year 

before the court in this appeal. 

{¶ 7} Shoup also claims entitlement to the expanded scope of exemption for 

exclusive charitable use of the property under R.C. 5709.12(B) and 5709.121. 

Whereas R.C. 5709.12(B) provides exemption for property “belonging to 

institutions that is used exclusively for charitable purposes,” R.C. 5709.121(A) 

provides a broader scope of exemption when the property owner qualifies as a 

charitable or educational institution. 

FACTUAL BACKGROUND

The property’s ownership and use 

{¶ 8} The property at issue is a 41,000-square-foot building located on a 

3.7-acre parcel, which was acquired and renovated for use as the Horizon Science 

Academy-Dayton High School, Inc., an Ohio community (i.e., charter) school. 

Under a routine arrangement for the Horizon schools, the property is owned by a 

nonprofit L.L.C. named after the street address: 250 Shoup Mill, L.L.C., in this 

instance. Shoup itself had a single member, New Plan, which itself is a nonprofit, 

501(c)(3) qualified corporation. Shoup qualified as a “disregarded entity” for 

purposes of federal taxation. See 26 C.F.R. 301.7701-2(c)(2). As a result, Shoup 

did not separately obtain 501(c)(3) status or file separate IRS returns from the sole 

member, New Plan; instead, Shoup’s activity as lessor appeared on the Form 990 

tax returns for exempt organizations filed by New Plan as activity of New Plan 

itself. 

{¶ 9} The community school itself is also a nonprofit 501(c)(3) entity. It, 

along with the other community schools who are tenants of L.L.C.s similar to 

Shoup, control New Plan as its directors. Thus, the community school/tenants and 

their landlords are part of a nonprofit, 501(c)(3) “loop” whereby the landlords 

provide real estate services on behalf of the community schools. Those services 
January Term, 2016 

5

include identifying sites for the community schools, qualifying and arranging for 

construction or renovation loans for the projected schools, and collecting rent in 

amounts sufficient to make loan payments. 

{¶ 10} New Plan’s president explained the arrangement as follows: 

We are forming a new charter school. A charter school gets 

their authorization from the sponsor authorizer. This is a brand new 

entity. It does not have any track record, no financial history, no 

operating history, and no money. They go out on the field and they 

need this facility. 

* * * 

If they go and talk to the banks, lenders, financial 

institutions, they ask for three years’ of tax returns. They ask for a 

down payment. The school doesn’t have neither [sic]. 

* * * 

* * * They need somebody to help them out. New Plan 

Learning is an organization. It is controlled by―the charter school 

tenants comes [sic] into play here. 

{¶ 11} In seeking out facilities for a projected community school, New Plan 

would arrange for loans and supervise construction. It would enter into a lease 

under which the rent was computed to cover the real estate costs, particularly of 

paying the loan with a surplus amount, the debt coverage ratio, demanded by the 

lender. The rent was set at the minimum possible amount. If a tenant school ran 

into financial difficulty, New Plan deferred rent payments. No tenant was ever 

notified of past-due rent, hit with a late charge, or evicted for nonpayment. The 

contrary is true: New Plan would provide affirmative assistance during a troubled 
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6

period. New Plan would defer rent or even write it off; in one instance, New Plan 

made a cash donation to help with financial difficulties. 

{¶ 12} The lease between Shoup and Horizon Science Academy-Dayton 

High School, Inc., has a ten-year term with options for three five-year renewals. It 

provides for a base rent of $33,806.25 per month, with a 3 percent escalation per 

year. It has typical commercial lease terms such as fees for late payments and 

payment-default provisions. 

{¶ 13} The record contains financial statements as well. The “gross rental 

income” of New Plan (from all six properties leased to community schools) for 

fiscal 2011 was $2,921,965. The tax commissioner asserts a surplus of $150,412 

for Shoup for 2011, but a review of the financial statement indicates that the number 

is a sum of certain expense amounts, not a net surplus figure. 

{¶ 14} The balance sheet indicates a modest surplus overall. The 

revenue/expense statement for fiscal year 2010 showed an upward “change in net 

assets” of $168,119, while the 2011 statement showed an upward change of 

$342,402. Those numbers relate to all of New Plan’s holdings of communityschool properties, a total of six properties with a total land value in 2011 of 

$3,100,288 and a total building value of $19,004,889. The financial statements 

show modest salary expenses for New Plan’s employees: a total for fiscal 2010 of 

$64,980 and for 2011 of $114,432. For tax year 2011 (New Plan’s fiscal year 

2012), the Form 990 tax return shows that New Plan’s president’s salary was 

$80,833. 

Tax commissioner proceedings 

{¶ 15} Shoup filed its application for exemption on December 10, 2010, 

seeking exemption with regard to school use beginning August 31, 2009. The 

application cited R.C. 5709.121 as the proposed basis for exemption, but the tax 

commissioner’s final determination considered not only a charitable-use exemption 

but also a public-schoolhouse exemption under former R.C. 5709.07(A)(1). As for 
January Term, 2016 

7

the charitable-use exemption, the commissioner rejected the claim based on his 

finding that the property was used “with a view to profit through leasing at a 

substantial rent,” and the property owner could not itself be deemed a “charitable 

institution” for purposes of applying R.C. 5709.121. By the same token, Shoup 

could not qualify the property for exemption as a public schoolhouse under former 

R.C. 5709.07(A)(1) because, under the holding of Anderson/Maltbie, the fact that 

Shoup, “though nominally nonprofit, is primarily acting as a landlord collecting 

substantial market-rate rent” defeated the claim for exemption. 

The BTA proceedings 

{¶ 16} Shoup appealed to the BTA. The BTA held a hearing in conjunction 

with two other hearings in related cases involving properties leased to Horizon 

community schools. At the hearing, Shoup presented the testimony of New Plan’s 

president along with numerous exhibits. 

{¶ 17} In its January 27, 2015 decision, the BTA agreed with the 

commissioner and rejected the charitable and public-schoolhouse claims of 

exemption. The BTA first rejected the claim of charitable exemption, finding that 

leasing to a charitable institution did not constitute a charitable use by the property 

owner. BTA No. 2011-2226, 2015 WL 731766, *2 (Jan. 27, 2015). Next, the BTA 

rejected the claim that Shoup could qualify as an “educational institution” based on 

the activities of the lessee, the community school that conducted its educational 

activity on the property. Id. 

{¶ 18} Finally, the BTA sustained the tax commissioner’s rejection of the 

public-schoolhouse exemption claim on the grounds that the schoolhouse property 

was leased with a view to profit. Although the BTA acknowledged the testimony 

of New Plan’s president that, in the BTA”s words, “the property is leased at a rate 

expected to cover the mortgage payments, construction costs, soft costs, debt 

service coverage ratio, and operating expenses,” the BTA nonetheless found that 

New Plan “does profit from its leases.” Id. at *1, 3. The BTA stated that “[w]hile 
SUPREME COURT OF OHIO

8

[New Plan] appears to use the profits to subsidize the operations of other tenant 

charter schools, it is not the use of any profits that determines the exempt status of 

the subject properties.” Id. at *3, citing Hubbard Press v. Tracy, 67 Ohio St.3d 

564, 566, 621 N.E.2d 396 (1993). The board found it significant that “[i]t does not 

appear that any excess revenues from a single charter school are held for the future 

benefit of that certain school,” but rather that “excess revenues are distributed 

among all of New Plan’s tenant schools,” with the result that the property’s use was 

“with a view to profit.” Id. For these reasons, the BTA concurred in denying 

exemption under former R.C. 5709.07(A)(1). 

STANDARD OF REVIEW

{¶ 19} In reviewing a decision of the BTA, we do not sit as “a super BTA 

or a trier of fact de novo.” EOP-BP Tower, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 

106 Ohio St.3d 1, 2005-Ohio-3096, 829 N.E.2d 686, ¶ 17, citing Youngstown Sheet 

& Tube Co. v. Mahoning Cty. Bd. of Revision, 66 Ohio St.2d 398, 400, 422 N.E.2d 

846 (1981). “The BTA is responsible for determining factual issues and, if the 

record contains reliable and probative support for [the BTA’s] determinations,” we 

will affirm them. Am. Natl. Can Co. v. Tracy, 72 Ohio St.3d 150, 152, 648 N.E.2d 

483 (1995). 

A VIEW TO PROFIT DEFEATS A CLAIM OF EXEMPTION UNDER THE PUBLICSCHOOLHOUSE AND CHARITABLE-USE PROVISIONS

{¶ 20} As a matter of law, the existence of a “view to profit” in leasing the 

property to the community schools defeats Shoup’s claim for exemption under any 

of its alternative theories. First, a “view to profit” in the lease defeats the publicschoolhouse exemption under the express terms of former R.C. 5709.07(A)(1). 

Anderson/Maltbie, 127 Ohio St.3d 178, 2010-Ohio-4904, 937 N.E.2d 547. Second, 

a “view to profit” in connection with the lease forecloses any claim that Shoup’s 

property use can qualify as an exclusive charitable use directly under R.C. 

5709.12(B). Benjamin Rose Inst. v. Myers, 92 Ohio St. 252, 110 N.E. 924 (1915), 
January Term, 2016 

9

syllabus (real estate belonging to a charitable institution that is “rented for 

commercial and residence purposes” is not exempt, although the income arising 

from such use is devoted wholly to the purpose of the charity”); Northeast Ohio 

Psych. Inst. v. Levin, 121 Ohio St.3d 292, 2009-Ohio-583, 903 N.E.2d 1188, 

¶ 15-16. Third, if Shoup cannot demonstrate that its own use of the property as 

lessor is charitable, it cannot qualify as a “charitable institution” under R.C. 

5709.121 because the ownership and leasing of the property is Shoup’s only 

activity. See Northeast Ohio Psych. at ¶ 14; Rural Health Collaborative of S. Ohio, 

Inc. v. Testa, 145 Ohio St.3d 430, 2016-Ohio-508, 50 N.E.3d 486, ¶ 23 (“The 

determination whether a property owner qualifies as a charitable institution under 

R.C. 5709.121 requires examination of the ‘core activity’ of the institution and 

determining whether that activity qualifies as charitable for property-tax 

purposes”). 

{¶ 21} In a case like the present one, we consider the BTA’s finding of a 

view to profit “primarily a determination of fact that merits our deference.” 

Cuyahoga Cty. v. Testa, 145 Ohio St.3d 157, 2016-Ohio-134, 47 N.E.3d 814, ¶ 32. 

The BTA acknowledged the testimony of New Plan’s president that rent amounts 

were calculated to cover expenses, but a cursory review of the financial statements 

confirms that the rent at the Shoup Mill location, and presumably the other locations 

as well, exceeded the monthly expenses associated with the property. 

{¶ 22} Specifically, the financial statements in the record reveal that Shoup 

Mill was the payor on a 25-year note for a principal amount of $3,375,000 and that 

the monthly rent for the Shoup property started at $33,806.25 and amounted during 

fiscal year 2011 to $34,651.42 per month. For fiscal year 2011, the monthly 

mortgage-loan payment was $22,979. Even if we assume a debt-service coverage 

requirement imposed by the lender of 1.2 percent, the total mortgage-loan-related 

expense per month is no more than 80 percent of the rent amount. Although New 

Plan incurred additional expenses, the allocation of such expenses to the Shoup Mill 
SUPREME COURT OF OHIO

10 

property on a monthly basis adds at most a few thousand dollars to the expense side 

of the ledger; the rent amount still substantially exceeds those expenses. Moreover, 

the financial statements indicate a steady increase in “net assets” from year to year 

for New Plan. 

{¶ 23} It is well settled that in the context of a claim for charitable 

exemption, profit is defined as the excess of price over cost. Am. Soc. for Metals 

v. Limbach, 59 Ohio St.3d 38, 40, 569 N.E.2d 1065 (1991); see also Seven Hills 

Schools v. Kinney, 28 Ohio St.3d 186, 187-188, 503 N.E.2d 163 (1986), quoting 

Webster’s New International Dictionary 1976 (2d Ed.1960) (profit is the “ ‘excess 

of income over expenditure, as in a business or any of its departments, during a 

given period of time’ ”). This case law plainly construes as “profit” the revenue 

generated by a nonprofit entity from one activity in order to fund another, distinctly 

charitable, activity. 

{¶ 24} Given that it was Shoup’s burden to prove its entitlement to an 

exemption, Newman v. Levin, 120 Ohio St.3d 127, 2008-Ohio-5202, 896 N.E.2d 

995, ¶ 30, the BTA was justified in requiring Shoup to show with specificity that 

the rent did not typically generate a surplus over expenses. And it was neither 

unreasonable nor unlawful for the BTA to find a view to profit under these 

circumstances. 

{¶ 25} A finding of a view to profit in this case is consistent with this court’s 

decision in Anderson/Maltbie, 127 Ohio St.3d 178, 2010-Ohio-4904, 937 N.E.2d 

547. “If the lease is intended to generate profit for the lessor, the property does not 

qualify for exemption; similarly, the property does not qualify for exemption if the 

lessee’s use is intended to generate profit.” Id. at ¶ 33. It follows that in applying 

the public-schoolhouse exemption, the BTA properly looked at whether the lessor 

conducted its operations with a view to profit as a separate issue from whether the 

community school itself did so. 
January Term, 2016 

11 

{¶ 26} Our analysis receives support from the case law that bars a claim of 

“vicarious exemption,” meaning that the applicant for exemption must prove that 

its own activities qualify as exempt; it may not rely upon the activities of its 

customers or, as here, its lessees. See OCLC Online Computer Library Ctr., Inc. v. 

Kinney, 11 Ohio St.3d 198, 200-201, 464 N.E.2d 572 (1984), citing Joint Hosp. 

Servs. v. Lindley, 52 Ohio St.2d 153, 370 N.E.2d 474 (1977). 

{¶ 27} In OCLC, the applicant sought to exempt its real estate, relying in 

part upon the assertion that its fee-paying customers were public libraries that 

benefited from the purchase of its services, which in turn benefited the general 

public. We rejected the argument on the grounds that it “simply constitutes an 

attempt by OCLC to obtain a vicarious charitable exemption by virtue of the 

activities of its customers.” Id. at 200. 

{¶ 28} In Joint Hosp. Servs., we addressed a claim for a sales-tax charitable 

exemption in which several nonprofit hospitals pooled their resources to create a 

separate nonprofit entity that provided laundry and linen service for the hospitals 

and several other nonprofit charitable organizations, such as nursing homes. The 

jointly controlled entity sought exemption for its own purchases on the theory that 

it qualified as a nonprofit operated exclusively for charitable purposes on account 

of “its relationship to the health care functions of the institutions it serves,” that 

relationship being “so immediate, intertwined and necessary, that it effectively 

engages in the alleviation of illness, disease, or injury.” 52 Ohio St.2d at 155, 370 

N.E.2d 474. We rejected the claim, holding that “[a]ppellant’s own functions fail 

the [charitable purpose] test” inasmuch as the “laundry and linen service in itself 

neither improves health through alleviating illness, disease or injury, nor constitutes 

managing a home for the aged.” Id. 

{¶ 29} The resemblance of Joint Hosp. Servs. to Shoup’s claim is 

indisputable; here, the community schools in some sense pool their resources so 

that excess revenues may be used by New Plan to subsidize all of its tenant schools. 
SUPREME COURT OF OHIO

12 

Under OCLC and Joint Hosp. Servs., however, Shoup cannot qualify as charitable 

based on New Plan’s activities, and under Anderson/Maltbie, Shoup cannot qualify 

for public-schoolhouse exemption so long as it is operated with a view to profit. 

{¶ 30} Shoup also argues that any surpluses attained through the leases do 

not establish the Shoup Mill property as being held with a “view to profit,” because 

the rent is held to a minimum level. But as discussed, the BTA plainly exercised 

its discretion as the finder of fact and found Shoup’s proof insufficient. 

{¶ 31} Nor can Shoup salvage its claim by drawing the distinction between 

an “intent to profit” on the one hand and surpluses that occur “unexpectedly and 

fortuitously” on the other hand. Despite Shoup’s statements disclaiming an intent 

to profit, the BTA is entitled to draw reasonable inferences from the evidence 

before it, and we will reverse its findings of fact “only when there is a total absence 

of evidence to support a particular finding.” HealthSouth Corp. v. Testa, 132 Ohio 

St.3d 55, 2012-Ohio-1871, 969 N.E.2d 232, ¶ 14. As we have noted, the record 

before us contains evidence of a view to profit. Shoup lays great store by New 

Plan’s ability and willingness to grant rent deferral or rent forgiveness to the 

community schools, but in the end its ability to do so depends upon the very excess 

of revenue over expense that, as profit, disqualifies it from exemption. 

{¶ 32} The same body of case law leads us to reject the claim that Shoup 

may qualify as an “educational institution” for purposes of availing itself of the 

expanded scope of charitable-use exemption under R.C. 5709.121. Quite simply, 

Shoup itself is a lessor and does not engage in educational activity. The prohibition 

of “vicarious exemptions” bars Shoup from relying on the activities of its lessee as 

a basis for claiming an exemption of its own. 

{¶ 33} Finally, the ownership of the property will vest, after the acquisition 

and renovation loans are paid off, the mortgages released, and the leases have 

expired, in New Plan and Shoup, its L.L.C., rather than in the community school 
January Term, 2016 

13 

itself. This fact also supports the BTA’s finding of a view to profit in the lease 

transaction. 

CONCLUSION

{¶ 34} For the foregoing reasons, we affirm the decision of the BTA. 

Decision affirmed. 

O’CONNOR, C.J., and PFEIFER and LANZINGER, JJ., concur. 

O’DONNELL, J., dissents in an opinion. 

KENNEDY, J., dissents in an opinion that O’DONNELL and FRENCH, JJ., join. 

_________________ 

O’DONNELL, J., dissenting. 

{¶ 35} Respectfully, I dissent. 

{¶ 36} I would reverse the decision of the Board of Tax Appeals because it 

errantly denied the public schoolhouse exemption because the property was not 

leased with a view to profit. 

_________________ 

KENNEDY, J., dissenting. 

{¶ 37} I respectfully dissent. Our case law and the record in this matter 

support a finding that the lease of the property by 250 Shoup Mill, L.L.C., to a 

community school is not intended to generate a profit and, therefore, is not 

inconsistent with the public-schoolhouse exemption as discussed by this court in 

Anderson/Maltbie Partnership v. Levin, 127 Ohio St.3d 178, 2010-Ohio-4904, 937 

N.E.2d 547. Therefore, the Board of Tax Appeals erred in affirming the denial of 

exemption under the public-schoolhouse exemption, former R.C. 5709.07(A)(1). 

2005 Am.Sub.H.B. No. 66, 151 Ohio Laws, Part II, 2868, and Part III, 4397. 

Moreover, the majority is improperly extending case law regarding the so-called 

“vicarious exemption” in the realm of charitable use to the public-schoolhouse 

exemption without support in our precedents. Accordingly, I would conclude that 
SUPREME COURT OF OHIO

14 

the property is entitled to exemption under the public-schoolhouse exemption under 

former R.C. 5709.07(A)(1) and reverse. 

{¶ 38} In reviewing a BTA decision, this court considers whether the 

decision was “reasonable and lawful.” R.C. 5717.04. Under this standard, we 

acknowledge that “ ‘[t]he BTA is responsible for determining factual issues and, if 

the record contains reliable and probative support for these BTA determinations,’ 

” we will affirm them. (Brackets sic.) Satullo v. Wilkins, 111 Ohio St.3d 399, 2006-

Ohio-5856, 856 N.E.2d 954, ¶ 14, quoting Am. Natl. Can Co. v. Tracy, 72 Ohio 

St.3d 150, 152, 648 N.E.2d 483 (1995). On the other hand, we “ ‘will not hesitate 

to reverse a BTA decision that is based on an incorrect legal conclusion.’ ” Id., 

quoting Gahanna-Jefferson Local School Dist. Bd. of Edn. v. Zaino, 93 Ohio St.3d 

231, 232, 754 N.E.2d 789 (2001). 

{¶ 39} Contrary to the majority’s assertion, the BTA’s decision was not 

“reasonable and lawful.” While findings of fact lie within the BTA’s discretion, 

we are not to blindly rubberstamp them. Instead, we are to ensure that the record 

contains reliable and probative support for the BTA determinations. Here, the 

record does not support the BTA’s factual findings, and its determination was based 

on an incorrect legal conclusion. 

{¶ 40} In Anderson/Maltbie, we stated that “property ‘appropriated to the 

support of education for the benefit of the public without any view to profit’ 

qualifies for [the public-schoolhouse] exemption.” 127 Ohio St.3d 178, 2010-

Ohio-4904, 937 N.E.2d 547, at ¶ 30, quoting Gerke v. Purcell, 25 Ohio St. 229, 247 

(1874). When the property at issue is subject to a commercial for-profit lease, 

whether the exemption applies despite the restriction that the property may not be 

used with a view to profit requires examination of both lessor and lessee. Id. at 

¶ 33. “If the lease is intended to generate profit for the lessor, the property does not 

qualify for exemption; similarly, the property does not qualify if the lessee’s use is 

intended to generate profit.” Id. 
January Term, 2016 

15 

{¶ 41} Accordingly, in the current matter, the focus is on whether Shoup 

Mill intended for the lease to generate a profit. The record reveals that it did not, 

and the fact-finding and legal determinations reaching the contrary conclusion are 

unreasonable and unlawful. 

{¶ 42} First, the tax commissioner’s finding that Shoup Mill was collecting 

substantial market-rate rent is devoid of any evidentiary basis. In fact, the president 

of New Plan Learning, Inc. (“New Plan”) answered “no” when asked whether New 

Plan or Shoup Mill had “scrutinized the market” to determine the rent. Instead, he 

testified that “we are driven by the school’s needs and what the lender is offering.” 

{¶ 43} Second, the BTA’s finding that the mere existence of a surplus 

establishes the intent to realize a profit is a legal error. While the record does 

support that some net surplus was realized during a couple of years for which 

documentation was supplied, such surpluses qualify as de minimus; even the 

majority recognizes it as a “modest surplus.” Majority opinion at ¶ 14. 

{¶ 44} In concluding that the mere fact that any profit is realized qualifies 

as an intent to generate a profit, the majority disregards our case law in which we 

have recognized that when the overriding purpose of a property is charitable or 

public, minor surpluses do not defeat the exemption for charitable and/or public 

use, particularly when those surpluses merely help finance the very activity that is 

public or charitable in character. See Cincinnati v. Testa, 143 Ohio St.3d 371, 2015-

Ohio-1775, 38 N.E.3d 847, ¶ 24 (minor surplus in fund for city golf course “does 

not constitute ‘profit’ that would violate the limitation of R.C. 5709.121(A)(2)”); 

South-Western City Schools Bd. of Edn. v. Kinney, 24 Ohio St.3d 184, 186, 494 

N.E.2d 1109 (1986) (renting of apartment on public golf course, operation of pro 

shop, and operation of snack shop did not violate “view to profit” limitation); Girl 

Scouts-Great Trail Council v. Levin, 113 Ohio St.3d 24, 2007-Ohio-972, 862 

N.E.2d 493, ¶ 17-18 (store in Girl Scout headquarters selling scout-related items at 

slight profit did not violate “view to profit” criterion). 
SUPREME COURT OF OHIO

16 

{¶ 45} Instructive here is the discussion in Girl Scouts of Bowers v Akron 

City Hosp., 16 Ohio St.2d 94, 243 N.E.2d 95 (1968), in support of its holding that 

the mere generation of a profit does not necessarily defeat the claim of exemption. 

In Bowers, a nonprofit charitable hospital owned an adjacent parking lot that 

charged a fee to help defray the cost of maintaining it; the court held that the 

generation of a profit by the lot “does not remove it from the statutory category of 

exempt property” because “the evidence shows that the parking lot is an essential 

and integral part of the hospital’s function and not property used mainly for income 

purposes.” Bowers at 96. 

{¶ 46} Likewise, the real property acquisition, financing, construction, and 

management functions that New Plan and its subsidiaries perform for the 

community schools constitute an “essential and integral part” of the community 

schools’ own operations; accordingly, the surpluses generated through rental 

income do not violate the “view to profit” criterion for the same reason that similar 

income did not in the earlier cases. After all, fiscal prudence dictates that New Plan 

must maintain its own solvency in order to perform its function of developing and 

managing the real estate assets on behalf of its director/clients. 

{¶ 47} Moreover, the majority’s reliance on “case law that bars a claim of 

‘vicarious exemption’ ” to support the denial of the public-schoolhouse exemption 

is inappropriate. An examination of the majority’s supporting authority reveals that 

the claims for exemption in those cases were not made under former R.C. 5709.07. 

In OCLC Online Computer Library Ctr., Inc. v. Kinney, 11 Ohio St.3d 198, 199, 

464 N.E.2d 572 (1984), the taxpayer abandoned its claim for exemption under R.C. 

5709.07 and contested only the BTA’s rejection of its claim under R.C. 5709.12. 

And in Joint Hosp. Servs., Inc. v. Lindley, 52 Ohio St.2d 153, 370 N.E.2d 474 

(1977), the claim for exemption was made under R.C. 5739.02(B)(12). Both of 

these cases involved exemptions for charitable institutions, not public 

schoolhouses, and both involved taxpayers who sought exemptions based upon the 
January Term, 2016 

17 

charitable status of their customers. We rejected the claims, finding that the 

taxpayers were not entitled to a vicarious charitable exemption. In neither OCLC 

nor Joint Hosp. Servs. did the taxpayer itself qualify as a charitable organization. 

See OCLC at 201; Joint Hosp. Servs. at 155. 

{¶ 48} In contrast, former R.C. 5709.07(A)(1) limited the schoolhouse 

exemption to property “necessary for the proper occupancy, use, and enjoyment of 

the schoolhouses, and not leased or otherwise used with a view to profit.” There is 

no “used exclusively” language. Instead, the property may not be “used with a view 

to a profit.” In a lease situation such as the one at bar, we are required to examine 

whether “the lease is intended to generate profit for the lessor.” Anderson/Maltbie, 

127 Ohio St.3d 178, 2010-Ohio-4904, 937 N.E.2d 547, ¶ 33. Accordingly, since 

the focus is on the intention of the lessor, who is the one claiming the exemption, 

there is no basis for extending the “vicarious exemption” analysis to the publicschoolhouse claim in this case. 

{¶ 49} Therefore, I would reverse the BTA’s decision and grant the publicschoolhouse exemption. Accordingly, I respectfully dissent. 

O’DONNELL and FRENCH, JJ., concur in the foregoing opinion. 

_________________ 

 Eastman & Smith, Ltd., M. Charles Collins, and Graham A. Blume, for 

appellant. 

 Michael DeWine, Attorney General, and Melissa Baldwin and Sophia 

Hussain, Assistant Attorneys General, for appellee. 

_________________