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6Upreme C.Ourt of Obio 4:p• ^.r^yf^•. In the 6upreme C.ourt of Obio GRACE CATHEDRAL, INC., Appellant, Case No. 2014-0373 V. : Appeal from Ohio Board of Tax Appeals JOSEPH W. TESTA, TAX COMMISSIONER OF OHIO Appellee. APPELLEE TAX COMMISSIONER'S MERIT BRIEF WILLIAM G. CHRIS (0006593) MICHAEL DEWINE (0009181) BRANDON T. PAULEY ( 0088034) Attorney General of Ohio Roderick Linton Belfance, LLP DAVID D. EBERSOLE (0087896) 50 S. Main Street, l Oth Floor (Counsel of Record) Akron, Ohio 44308-1828 BARTON A. HUBBARD (0023141) Assistant Attorneys General Counsel for Appellant 30 East Broad Street, 25th Floor Grace Cathedral, Inc. Columbus, Ohio 43215-3428 Telephone: (614) 644-8909 Facsimile: (877) 636-8331 dave. ebersole@ohioattorneygeneral. gov Counsel for Appellee Joseph W. Testa, Tax Commissioner of Ohio , , ., ^a .. s :f TABLE OF CONTENTS TABLE OF AUTHORITIES .. ............................................................................................ iii I. STATEMENT OF CASE AND FACTS .................................................................1 A. Statement of Relevant Facts .........................................................................1 B. Procedural Posture .......................................................................................4 II. LAW AND ARCUMENT ..... ..................................................................................6 Proposition of Law No. 1: Real property is not "used exclusively for public worship" pursuant to R.C. 5709.07 when the property is used as temporary housing that is non- essential to and "merely supportive" of public worship occurring off the premises Church of God in Northern Ohio, Inc. v. Levin, 124 Ohio St.3d 36, 2009-Ohio-5939, T 11; Christian Church of Ohio v. Limbach, 53 Ohio St.3d 270, 271 (1990); lWoraine Heights Baptist Church v. Kinney, 12 Ohio St.3d 134, 136 (1984), followed . .........................................................................................9 Proposition of Law No. II: Because the activity of public worship is not, in itself, a charitable activity, real property is not "used exclusively for charitable purposes" when it is used to facilitate the activity of public worship. Thus, real property that is used primarily to support public worship fails to constitute a qualifying use under the "cllaritable" exemption in R.C. 5709.12. Instead, to qualify for real property tax exemption, such property must qualify under the specific exemption in R.C. 5709.07(A)(2) for "houses of public worship." Church of God in Northern Ohio, Inc. v. Levin, 124 Ohio St.3d 36, 2009-Ohio-5939, T 26-32 (citing with approval to Watterson v. Hadliday, 77 Ohio St. 150 (1907)), followed ............................13 i Proposition of Law No. III: Housing facilities made available only to members of a church congregation are not "used exclusively for charitable purposes" because housing facilities do not provide a benefit to "mankind in general" or to those with a particularized need for shelter Planned Parenthood Ass'n v. Tax Commissioner, 5 Ohio St.2d 117, syllabus, 120 (1966) ("charity is the attempt in good faith, spiritually, physically, intellectually, socially and economically to advance and benefit mankind in eneral, or those in need of advancement and benefit in particular, without regar(i to their ability to supply that need from other sources and without hope or expectation, if not with positive abnegation, of gain or profit by the donor or by the instrumentality of the charity.") (Emphasis added); see e.g. First Baptist Chaerch of Miifond v. Wilkins, 110 Ohio St.3d 496, 2006-Ohio-4966, ¶ 21 ...................................................18 A. Property owners claiming tax exemption carry an affirmative burden to show that the use of the property satisfies the elements for the claimed exemption and provides a public benefit necessary to justify the loss of the tax revenue . .. .. ... .. .. .. .. .. ... .. .. .. .. .. .. .. .. .. .. .. .. .19 B. A dormitory used solely as temporary housing for church members and supporters is not used charitably because it does not benefit "mankind in general" or "those in need of advancement and benefit in particul ar." ............... ........................................................................................20 C. Housing facilities are not used exclusively for charitable purposes where there is not a public benefit sufficient overriding the private and personal use of housing facilities . ....................................................................23 Proposition of Law No. IV: For tax exemption purposes, the Ohio case law definition of "charity" requires that the charitable activity be provided as a gift, "without hope or expectation, if not with positive abnegation, of gain or profit." Thus, where the activity is conducted with the hope or expectation of a "quid pro quo," profit, or gain, the activity fails to qualify as "charitable." Planned Parenthood Ass'n v. Tax Commissioner, 5 Ohio St.2d 117, syllabus, 120 (1966) ("charity is the attempt in good faith, spiritually, physically, intellectually, socially and economically to advance and benefit mankind in 11 general, or those in need of advancement and benefit in particular, without re2ard to their ability to supply that need from other sources and without hope or expectation, if not with positive abnegation, of gain or rofit by the donor or by the instrumentality of the charity.") (Emphasis added) ...........................................................................27 A. Private quid pro quo transactions are quintessentially non-charitable transactions that do not qualify for charitable exemption. Bethesda Healthcare, Inc. v. Wilkins, 101 Ohio St.3d 420, 2004-Ohio-1749 ...................29 B. A gift is necessary but not sufficient component of "charity," which requires intent to give with "detached and disinterested generosity." Diadvsis Clinic v. Levin, 127 Ohio St.3d 215, 2010-Ohio-5071, ¶ 32 ("The BTA [reasonably and lawfully] echoed the commissioner's position that the provision of free, unreimbursed care constitutes an essential part of a tax-exemption claim for a healthcare-services provider."); Commissioner v. Duberstein, 363 U.S. 278, 285 (1960) . ................32 C. Due to the present and future benefits that church members staying the dormitory provide to GCI, GCI lacks the charitable intent required to provide "charity" uiider Planned Parenthood .....................................................37 Proposition of Law No. V: Real property held with a view to profit does not qualify for exemption under either the R.C. 5709.12 charitable exemption or the R.C. 5709.07(A)(2) house of public worship exemption . ..................................................40 iii IV. CONCLUSION .............:............................................................................................41 CERTIFICATE OF SERVICE APPENDIX (separately attached with table of contents thereto) Iv TABLE OF AUTHORITIES Page(s) Cases Alcan Aluminum Corp. v. Limbach, 42 Ohio St.3d 121 (1989) .........................................................................................................20 American Chemical Society v. Kinney, 69 Ohio St.2d 167 (1982) ...................................................................................................16, 40 American Jersey Cattle Club v. Glander 152 Ohio St. 506, 514 (1950) ............................................................................................31, 40 American Society for Metals v. Limbach 59 Ohio St.3d 38, 40 (1991) .....................................................................................................31 Anderson/Maltbie Partnership v. Levin, 127 Ohio St.3d 178, 2010-Ohio-4904 ....................................................................17, 19, 20, 37 Benjamin Rose Institute v. Myers, 92 Ohio St. 252 (1915) .............................................................................................................12 Bethesda Healthcare, Inc. v. Wilkins, 101 Ohio St.3d 420, 2004-Ohio-1749 .............................................................................. passim Bishop v. Kinney, 2 Ohio St.3d 52 (1982) ...................................................................................................9, 10, 26 Bloch v. Bd. of Tax Appeals, 144 Ohio St. 414 (1945) ...........................................................................................................21 Board ofAssessment Appeals v. Al'VI/F'M International, 940 P.2d 338 (1997) .................................................................................................................35 Boston Chamber o f Commerce v. Assessors of Boston 315 Mass. 712, 716 (1944) ......................................................................................................35 In re Bond Hill-Roselawn Hebrew School, 151 Ohio St. 70 (1949) .....................................................................................................8, 9, 26 Case W. Res. Univ. v. Wilkins, 105 Ohio St.3d 276, 2005-Ohio-1649 ......................................................................................24 Christian Church of Ohio v. Limbach, 53 Ohio St.3d 270 (1990) .....................................................................................................7, 12 v Church of God in N. Ohio v. Levin, 124 Ohio St.3d 36, 2009-Ohio-5939 ................................................................................ passim Cincinnati College v. State, 19 Ohio 110 (1850) .............................................................................................................12.
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