Court Opinion

ID: 6787785
Source: CourtListenerOpinion
Date Created: 2022-07-21 01:06:13.079075+00
Date Added: 2024-06-11T16:02:59.083449
License: Public Domain

Lundberg Stratton, J.,
dissenting.
{¶ 50} I believe that Magnolia House should be exempt from taxation because the House “is made available under the direction” of CWRU and used “in furtherance of or incidental to” CWRU’s educational purposes under R.C. 5709.121. Therefore, I respectfully dissent.
{¶ 51} Pursuant to R.C. 5709.121 and 5709.121(B), property that is “used exclusively for charitable or public purposes” by an educational institution includes property that “is made available under the direction or control of such institution * * * for use in furtherance of or incidental to its * * * educational * * * purposes and not with the view to profit.” (Emphasis added.)
{¶ 52} Thus, in order to be tax exempt under this provision, the property (1) must be “made available under the direction or control” of a charitable or educational institution, (2) must be made available “for use in furtherance of or incidental to” the institution’s charitable, educational, or public purposes, and (3) must be made available without an intent to profit. Cincinnati Nature Ctr. Assn. v. Bd. of Tax Appeals (1976), 48 Ohio St.2d 122, 125, 2 O.O.3d 275, 357 N.E.2d 381.
{¶ 53} The majority’s holding turns primarily on its determination that the House was not used exclusively for CWRU’s educational purposes. The majority states that “CWRU is providing housing for the exclusive use of a private fraternal organization. We do not believe that it is a function of a college or university to furnish a dwelling to a private social organization to use at its discretion.” In support the majority cites Denison Univ. v. Bd. of Tax Appeals (1962), 173 Ohio St. 429, 20 O.O.2d 63, 183 N.E.2d 773.
{¶ 54} The majority also supports its holding by pointing out that the House is available only to members of Alpha Phi as opposed to the general student population. The majority cites White Cross Hosp. Assn. v. Bd. of Tax Appeals (1974), 38 Ohio St.2d 199, 201, 67 O.O.2d 224, 311 N.E.2d 862, for the proposition that the rationale for granting tax exemptions is that the recipient’s operation is a present benefit to the general public that justifies the loss of tax revenue.
A. Under R.C. 5709.121(B), Use Need Not Be Exclusive
{¶ 55} In Denison, Denison University sought tax exemptions under R.C. 5709.12 for nine buildings that were leased to nine fraternities. The BTA determined that the buildings were “ ‘operated under lease by fraternities for fraternity purposes, and but one of the many uses, for which the fraternities use these buildings, is that of providing lodging for fraternity members only.’ ” (Emphasis sic.) Id., 173 Ohio St. at 434, 20 O.O.2d 63, 183 N.E.2d 773. The board also found that “ ‘these buildings were not used exclusively for charitable *285purposes within the meaning of those words as used in the Ohio Constitution and in Revised Code Section 5709.12.’ ” (Emphasis sic.) Id. at 439, 20 O.O.2d 63, 183 N.E.2d 773. This court affirmed the BTA’s decision.
{¶ 56} Denison relied on R.C. 5709.12. However, seven years after the court decided Denison, the General Assembly enacted R.C. 5709.121. 133 Ohio Laws, Part III, 2646. R.C. 5709.12(B) still provides that in order to be tax exempt, property belonging to any institution must be used exclusively for charitable purposes.1 However, R.C. 5709.121(B) provides that property belonging to a charitable or educational institution or the state or a political subdivision is “used exclusively for charitable or public purposes” if “[i]t is made available under the direction or control of such institution * * * for use in furtherance of or incidental to” the institution’s educational purpose. As Justice Herbert stated, “By the enactment of R.C. 5709.121, the General Assembly has announced its desire that certain types of tax exemptions for the institutions mentioned in that statute should not be restrictively considered.” White Cross Hosp. Assn., 38 Ohio St.2d at 205, 67 O.O.2d 224, 311 N.E.2d 862 (Herbert, J., dissenting). Thus, under the broadened definition of the phrase “used exclusively for charitable or public purposes” in R.C. 5709.121, property belonging to a charitable or educational institution or the state or political subdivision may be exempt from taxation even if its use is not “exclusively” charitable. Galvin v. Toledo Trust (1973), 34 Ohio St.2d 157, 159-160, 63 O.O.2d 242, 296 N.E.2d 542.
{¶ 57} Therefore, cases that rely on the exclusive-use test under R.C. 5709.12, such as Denison, are not persuasive in determining whether property is exempt from taxation under R.C. 5709.121(B). See Galvin, paragraph one of the syllabus. Accordingly, I believe that the majority’s reliance on Denison is misplaced.
{¶ 58} Admittedly, Alpha Phi uses the House for some activities that may not be in furtherance of or incidental to CWRU’s educational purpose, such as social gatherings. However, similar social activities occur at other nonfraternal residence halls, and those activities do not disqualify those properties from being exempt from taxation.
{¶ 59} Moreover, pursuant to the agreement through which CWRU permits Alpha Phi use of the House, all the residents must be CWRU students. The fact that these students are also members of the Alpha Phi sorority does not diminish their status as CWRU students. Thus, irrespective of other uses, the House is *286used to house CWRU students, which is a use in furtherance of CWRU’s educational purpose.
{¶ 60} Finally, I also believe that Alpha Phi uses the House in other ways that are in furtherance of or incidental to CWRU’s educational purposes. Part of CWRU’s educational mission is encouraging students to become involved in the community. Greek organizations provide a formal approach to promoting community service. CWRU encourages Greek organizations, including Alpha Phi, to participate in charitable activities through the Panhellenic Council and Intrafraternal Conference in a program called “365 Days of Service” through which each Greek organization develops a quota of hours for community service. Thus, Alpha Phi certainly uses the House for activities that promote CWRU’s educational purposes.
B. Under R.C. 5709.121, the Property Need Not Be Made Available to the Public
{¶ 61} The majority seems to suggest that because the property is being used by members of a private entity to the exclusion of the general student population, a tax exemption should not apply, because “[t]he rationale for granting tax exemptions is that the recipient’s operation is a present benefit to the general public that justifies the loss of tax revenue,” citing White Cross Hosp., 38 Ohio St.2d at 201, 67 O.O.2d 224, 311 N.E.2d 862.
{¶ 62} In Cincinnati Nature Ctr., 48 Ohio St.2d 122, 2 O.O.3d 275, 357 N.E.2d 381, the Cincinnati Nature Center Association (“Nature Center”), a nonprofit entity, sought a tax exemption under R.C. 5709.121 for a parcel of property containing two houses owned by the Nature Center and used as residences by its employees. The BTA granted the exemption as to the acreage but denied the exemption as to the houses. The court of appeals reversed the BTA on the grounds that “ ‘the use of the two houses by employees of the Nature Center was in furtherance of and incidental to its charitable purpose and was not with a view to “profit” under R.C. 5709.121.’ ” Id. at 123, 2 O.O.3d 275, 357 N.E.2d 381.
{¶ 63} On appeal, the BTA argued that under R.C. 5709.121, the property must be made available for use by the public. However, after examining the language of R.C. 5709.121, the court found that “the board’s contentions that exempt property must be made available to another charitable institution or to the public are without merit.” Id. at 125-126, 2 O.O.3d 275, 357 N.E.2d 381.
{¶ 64} Therefore, the fact that residency in the House is limited to Alpha Phi members and is not open to the general student population does not preclude a finding that the house is exempt from taxation under R.C. 5709.121.
Taft, Stettinius & Hollister, L.L.P., Joel A. Makee, Bruce L. Waterhouse Jr., and Colleen G. Tremí, for appellant.
Jim Petro, Attorney General, and Janyce C. Katz, Assistant Attorney General, for appellee.
C. The House Was Not Used with View to Profit
{¶ 65} The majority did not address this issue because it found that the second prong of the Cincinnati Nature test was dispositive. However, because I believe that the House satisfies the first two prongs of the Cincinnati Nature test, I will address the third prong, which requires that the property must be made available without an intent to profit. Cincinnati Nature Ctr., 48 Ohio St.2d at 125, 2 O.O.3d 275, 357 N.E.2d 381.
{¶ 66} The record indicates that the House is not used with an intent to make a profit. The students who live at the House pay CWRU for the housing pursuant to a standard student housing contract. CWRU merely seeks to generate a revenue stream that covers the cost of operating the House. Any surplus revenue would be reinvested in the facilities.
D. Conclusion
{¶ 67} Accordingly, I would hold that Alpha Phi’s use of the House is in furtherance of or incidental to CWRU’s educational purposes and not with a view to profit under R.C. 5709.121(B). Therefore, the House should be exempt from taxation pursuant to R.C. 5709.12. Thus, I respectfully dissent.

. As the majority notes, R.C. 5709.12 applies to use of property belonging to my institution, including noncharitable institutions, but R.C. 5709.121 is limited to use of property belonging to a charitable or educational institution or the state or a political subdivision.