Court Opinion

ID: 6769508
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:41:47.410822+00
Date Added: 2024-06-11T16:02:43.290355
License: Public Domain

Francis E. Sweeney, Sr., J.,
dissenting. I respectfully dissent from the majority’s finding that the prospective use rule does not apply to exempt charitable use property from taxation where the property is acquired and prepared for use as a home for the aged. R.C. 5709.12(B) provides an exemption from property tax for certain property used for charitable purposes, including “homes for the aged,” as defined in R.C. 5701.13. The language of R.C. 5701.13(A), which is set forth by the majority,, defines a “home for the aged” as a place of residence for aged and infirm persons that is licensed by the Ohio Director of Health under R.C. 3721.02 as either a nursing home or a rest home. While it is admitted that the definition of a home for the aged under R.C. 5701.13(A) provides that the nursing home or rest home obtain a license upon completion, nothing in the statute supports the majority’s conclusion that this technical requirement should be interpreted as an intent to deny the application of the prospective use doctrine prior to the completion of the nursing home or rest home. The prospective use rule recognizes that a taxpayer will not be able to complete a plan to convert property to an exempt use immediately after deciding upon the use.
The critical analysis under the prospective use rule is not whether tax-exempt status has been finalized, but instead whether the taxpayer has taken substantial steps to prepare the property for tax-exempt status. Thus, the prospective use rule can still be applied in the present case, as the focus should be on the fact that the properties have been acquired and prepared for tax-exempt use, i.e., licensed nursing or rest homes, and not on whether tax-exempt status has been reached.
This court set forth the prospective use doctrine in Carney v. Cleveland City School Dist. Pub. Library (1959), 169 Ohio St. 65, 8 O.O.2d 33, 157 N.E.2d 311, in which we upheld the exemption of property for future use as a public library under the public use exemption of R.C. 5709.08. This exemption was granted even though the property was not yet being used for the exempt purpose. We held the following: “Where an entity, which under the law is entitled to have its property exempted from taxation, acquires real property with the intention of devoting it to a use exempting it from taxation, such property is entitled to be exempted from taxation, * * * even though actual physical use of the property for the exempt purpose has not yet begun.” Id. at paragraph one of the syllabus. The prospective use doctrine has been consistently applied to property to be used for charitable purposes, including public libraries, schools, hospitals, and places of public worship. See Ohio Operating Engrs. Apprenticeship Fund v. Kinney (1980), 61 Ohio St.2d 359, 15 O.O.3d 440, 402 N.E.2d 511; Lake Cty. Bd. of Commrs. v. Supanick (1972), 32 Ohio St.2d 45, 61 O.O.2d 279, 289 N.E.2d 902; Holy Trinity Protestant Episcopal Church of Kenwood v. Bowers (1961), 172 Ohio St. 103, 15 O.O.2d 173, 173 N.E.2d 682.
*301Based on the foregoing, I must disagree with the majority’s conclusion that the statute’s requirement of a license prohibits the application of the prospective use rule. This is an erroneous interpretation of the statute which limits the prospective use rule in a manner contrary to the purpose behind the rule and contrary to previous interpretations of the rule by this court. No real distinction exists between a home for the aged, which requires a license upon completion, and the other types of charitable use property to which we have applied the prospective use rule. In both, where the taxpayer has taken steps to prepare the property for an exempt use, we should apply the prospective use rule to provide an exemption from property tax prior to the actual commencement of the use.
In the present case, appellant Christian Benevolent Association, by purchasing the land and obtaining a certificate of need, has demonstrated its intention to use the property as a home for the aged. Likewise, appellant Brentwood has manifested its intention to occupy the facility as a home for the aged by not only purchasing the land and obtaining a certificate of need, but by virtually completing the home by the tax lien date and, within three months thereafter, actually occupying the facility for the intended exempt use. The acquisition of a certificate of need is tantamount to licensure until a facility is completed. Thus, for purposes of applying the prospective use rule, the critical step which was taken by the taxpayer was the issuance of the certificate of need. Based on these facts, the prospective use doctrine should be applied to provide an exemption to the appellants’ respective properties, as the appellants have demonstrated that the properties have been acquired and prepared for use as exempt property, ie., licensed nursing homes.
Accordingly, I would reverse the decisions of the Board of Tax Appeals.
Pfeifer, J., concurs in the foregoing dissenting opinion.