6Upreme C.Ourt of Obio

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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."

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. 19

Cincinnati Nature Center Ass 'n v. BTA, 48 Ohio St.2d 122 (1976) ...... 26

Cogswellllall, Inc. v. Kinney, 30 Ohio St.3d 43 (1987) ...... 24, 2

Columbus Metro. Housing Autli. v. Thatcher, 140 Ohio St. 38 (1942) ...... 23

Commissioner v. Duberstein, 363 U.S. 278 (1960) ...... 35, 36, 39

Croixdale, Inc. v. County of Washington, 726 N.W.2d 483 (2007) (Minnesota) ...... 35

Denison Univ. v. Bd. of Tax Appeals, 173 Ohio St. 429 (1962) ...... >...... 24

Dialysis Clinic v. Levin, 127 Ohio St.3d 215, 2010-Ohio-5071 ...... 33, 34, 36

Dialysis Clirtic, Inc. v. Wilkins BTA Case No. 2006-V-2389 (Nov. 24, 2009), unreported ...... 33, 34, 36

Doctors Hosp. v. Bd. of Tax Appeals, 173 Ohio St. 283 (1962) ...... 24

Faith Fellowship Ministries, Inc, v. Limbach, 32 Ohio St.3d 432 (1987) ...... passim

First Baptist Church of Milford v. Wilkins, 110 Ohio St.3d 496, 2006-Ohio-4966 ...... passim

Full Gospel Apostolic Church v. Limbach, 46 Ohio St.3d 195 (1989) ...... 10, 27

Galvin v. Masonic Toledo Trust, 34 Ohio St.2d 157 (1973) ...... 16

Gerke v. Purcell, 25 Ohio St. 229 (1874) ...... 9, 11, 26

vi Herb. Soc. ofAmerica, Inc. v. Tracy, 71 Ohio St.3d 374 (1994) ...... 16

Hernandez v. Commissioner, 490 U.S. 680 (1989)...... 36

Hubbard Press v. Tracy, 67 Ohio St.3d 564 (1993) ...... 31

Jewish Hospital Ass'n v. BTA, 5 Ohio St.2d 179 (1966) ...... 24

Lutheran Book Shop v. Bowers 164 Ohio St. 359 (1955) ...... 31

Moraine Ileights Baptist Church v. Kinney, 12 Ohio St.3d 134 (1984) ...... passim

NBC-USA Housing, Inc.-Five v. Levin, 125 Ohio St.3d 394, 2010-Ohio-1553 ...... 24. 32

New Haven Church ofMissionary Baptist v. Bd. of Tax Appeals, 9 Ohio St.2d 53 (1967)...... 9, 26

Ohio Masonic Home v. Bd. of Tax Appeals 52 Ohio St.2d 127, 130 (1977) ...... 31

Ohio Presbyterian Homes v. Kinney, 9 Ohio St.3d 90 (1984) ("[t]he purpose of R.C. 5701.13(B) is to ensure that a home for the aged is to some extent operated in a charitable manner[.]") ...... 25

Olmstead Falls Bd. o f L'd. v. Tracy, 77 Ohio St.3d 393 (1997) ...... 21, 22, 30, 32

Philada Home Fund v. Bd. of Tax Appeal, 5 Ohio St. 135 (1966) ...... 32

Philada Home Fund v. Bd. of Tax Appeals, 5 Ohio St.2d 135 (1966) ...... 24

Planned Parenthood Associates v. Tax Commissioner, 5 Ohio St.2d 117 (1966) ...... passim

Provena Covenant Med. Center v. Dept. of Revenue, 236 I11.2d 368 (2010) ...... 33, 35

Provena Covenant Med. Ctr. v. Dept. of Revenue 384 I11.App.3d 734 (2008) ...... 32, 33

V11 Retirement Homes of the Detroit Annual Conference of the United Methodist Churcla v. Sylvan Township, 416 Mich. 340, 348-49 (1982) ...... 34

Robertson v. US., 343 U.S. 711, 714 (1952) ...... 36

Satullo v. Wilkins, 111 Ohio St.3d 399, 2006-Ohio-5856 ...... 20

Seven Hills Schools v. Kinney 28 Ohio St.3d 186, 188 (1986) ...... 30

Socialer Turnverein v. Bd. of Tax Appeals, 139 Ohio St. 622 (1942) ...... 21, 30

Society vf the Precious Blood v. Bd. of Tax Appeals, 149 Ohio St. 62 (1948) ...... 21

True Christianity Evangelism v. Zaino, 91 Ohio St.3d 117 (2001) ...... 15, 16

United Presbyterian Assn v. Bd. of Cty. Commrs. 167 Colo. 485, 494-95 (Colo.l968) ...... 35

Utah County v. Intermountain Health Care, Inc. 709 P.2d 265 (1985) ...... 34

Vick v. Cleveland Memorial Hospital Medical Foundation, 2 Ohio St.2d 30 (1965) ...... 21

Warman v. Tracy, 72 Ohio St.3d 217 (1995) ...... 26

Watterson v. Halliday, 77 Ohio St. 150 (1907) ...... passim

Wellsville v. Kinney, 66 Ohio St.2d 136 (1981) ...... 26

Western Mass. Lifecare Corp. v. Bd. of Assessors of Springfield 434 Mass. 96, 102-03 (2001) ...... 35

White Cross Hosp. Ass 'n v. Bd. of Tax Appeals, 38 Ohio St.2d 199 (1974) ...... 19

Youngstonjn Metro. Ilousing Auth. v. Evatt, 143 Ohio St. 268 (1944) ...... 23

viii Stattites

I.R.C. § 102 ...... 35,36,38

No. 71, 142 Ohio Laws 147-150, Part I(1988) ...... 11

R.C. 1.47 11

R. C. 5701.13 ...... 25

R.C. 5709.07 ...... :...... passim

R.C. 5709.12 ...... passim

R.C. 5715.121 ...... 25, 37

R.C. 5717.02 ...... :...... 1

R.C. 5717.04 ...... :....._...... ,....,...... 5

Other Authorities

Grace Cathea'ral v. Testa, BTA Case No. 2012-2168 BTA (Feb. 12, 2014), unreported ("BTA Decision & Orcler") ...... ::...... passim

ix GRACE CATHEDRAL, INC.,

Appellant, Case No. 2014-0373 V.

Appeal from Ohio Board of Tax Appeals JOSEPH W. TESTA, TAX COMMISSIONER OF OHIO

Appellee.

1. STATEMENT OF CASE AND FACTS

A. Statement of Relevant Facts

Grace Catliedral, Inc. ("GCI") is a North Carolina non-profit corporation qualified and

registered to do business in Ohio. S.T. 28-29, Hr. Tr. 35, Supp. 62-63, 10.1 GCI operates two

church locations in Summit County, one in Akron, Ohio and one in Cuyahoga Falls, Ohio. Hr.

Tr. 39-40, Supp. 11. According to GCI Finance Manager and Media Director Cathy Shupe,

"Grace Cathedral's mission is to preach and teach the gospel of Jesus Christ according to the

Bible by means of television, Internet, the printed page, and missionary work." Hr. Tr. 35,

Supp. 10.

Towards these ends, GCI and its founder Ernest Angley maintain a broad following,

including thousands of regular church attendees and worldwide membership. Hr. Tr. 14, 26,

Supp. 5, 7. In fact, GCI's flagship television program, The Frnest Angley I-Iour, is available in many major U.S. markets and international markets including Asia, Africa, Europe, and Canada.

For purposes of this brief, the statutory transcript of evidence certified by the appellee Tax Commissioner to the Board of Tax Appeals pursuant to R.C. 5717.02 will be referred to as "S.T. ,' ; the transcript of the Board of Tax Appeals hearing of additional evidence will be referred to as "Hr. Tr._' ; and the appellee's supplement will be referred to as "Supp. given that the appellant, Grace Cathedral, Inc. chose not to file its own supplement. Hr. Tr. 36, Supp. 10. In addition, GCI sends international missionaries to such places as Africa

and South America to spread the gospel. Hr. Tr. 13, 38, Supp. 4, 10. Ernest Angley even has his

own 747 Jumbo Jet and a personal pilot to fly him on international crusades and elsewhere. Hr.

Tr. 11, 24, Supp. 4, 7(testiTnony of his pilot, Paul Machamer).

GCI also wholly owns three subsidiary corporations, including two foY profit subsidiary

corporations. Hr. Tr. 64-65, Supp. 17. The two for-profit subsidiaries are each engaged in for-

profit businesses, namely, a television station and a buffet restaurant, both located near GCI's

Cuyahoga Falls location. Hr. Tr. 64-69, Supp. 18-19. The television station subsidiary, an

affiliate of the CW television network2 that airs The Ernest Angley Hour, generates its income

largely through advertising revenue. Hr. Tr. 66-69, Supp. 18-19. GCI's restaurant subsidiary

generates its revenues from buffet restaurant operations. In the words of GCI Financial Manager

Shupe, the buffet restaurant provides a good value for its patrons, particularly for families with

children, including those attending services at GCI's Akron church location, which is located

about twenty miles away from the restaurant, as well as GCI's Cuyahoga Falls location, which is

located near the restaurant. Hr. Tr. 66-71, Supp. 18-19.

The realty at issue is a dormitory building made available for lodging to traveling visitors

of GCI's Akron location. The dormitory is two stories high with 23 rooms. Hr. Tr. 15, Supp. 5.

The lodging rooms contain regular living accommodations, including a bed, desk, table, and

bathroom. Hr. Tr. 15, Supp. 5. The dormitory also has a lobby on the first floor which is

` The CW television network is a limited liability joint venture between CBS Corporation, the former owners of the United Paramount Network (UPN), and Time Warner subsidiary Warner Bros. Entertainment, former majority owner of The WB Television Network. The "CW" name is derived from the first letters of the names of these corporations (CBS and Warner Bros.). BLOOMBERG BUSINESSWEEK, Conzpany Overview of The CW Network, LLC, available at http//Lnv^_ sinessweek.com/research/stock^s/pt:ivaLt;s^^^^^^p2V^9711.

2 available for seating. The dormitory building is not used to congregate for worship in a group

setting. Hr. Tr. 32, Supp. 9.

The guests who stay at the dormitory are usually visiting GCI temporarily, either for a

weekend or a longer stay that is never for more than two weeks. Hr. Tr. 42, Supp. 12. The

dormitory guests are church members and supporters who travel to Akron, often on holidays, to

participate in GCI's worship services. Hr. Tr. 40-41, 60, Supp. 12, 16. As Finance Manager

Shupe testified that the dormitory serves as a convenient alternative to a hotel for church

meinbers and supporters visiting GCI. Hr. Tr. 41-42, Supp. 12. Because the dormitory is used

primarily on weekends for traveling visitors, the dormitory remains vacant roughly 50-60 percent

of the time. Hr. Tr. 20, Supp. 6.

The church supporters staying at the dormitory are not charged a specific fee for lodging,

but are strongly encouraged to donate to GCI. Hr. Tr. 60-61, Supp. 16. For federal income tax purposes, Finance Manager Shupe testified that GCI keeps records of the dorinitory visitors who make monetary donations (exclusive of coins and dollars thrown in the offering plate). Despite these records, Finance Manager Shupe explained that she had never undertaken to quantify, for herself, the extent to which dormitory visitors made monetary donations. Nor did she present any of the records of those donations to the Commissioner or to the Board of 'Tax Appeals. Hr.

Tr. 61-62, Supp. 16. Through the donations solicited from church supporters staying at the dormitory, then, GCI uses the dormitory to raise revenue. In addition, as noted, dormitory visitors frequent the buffet restaurant that GCI's for-profit subsidiary owns and operates roughly twenty miles away near GCI's Cuyahoga Falls location. Hr. Tr. 68-69, Supp. 18-19.

3 B. Procedural Posture

GCI timely applied for property tax exemption for the 2010 tax year for two newly

constructed buildings, a study hall and a dormitory building. S.T. 9-11 (application for real.

property tax exemption), Supp. 43-45. On its application and continuously through these

proceedings, GCI has sought exemption pursuant to the "house of public worship" exemption

and the "charitable exemption," specifically R.C. 5709.07(A)(2) and R.C. 5709.12. Id. at S.T. 9-

11, Supp. 43-45. The cliurch building on the 14-acre property was previously granted exemption

in 1996. See the Commissioner's final determination at 1, reproduced at S.T. 1, Supp. 35.

Upon review of the application for the two newly constructed buildings, the

Commissioner granted exemption for the study hall but denied exemption for the dormitory

building. S.T. 1-3 (final determination), Supp. 35-37. The Commissioner found the study hall to be exempt as a"house of public worship." S.T. 2, Supp. 36.

The Commissioner denied exemption to the dormitory building. First, the Commissioner rejected GCI's "house of public worship" exemption claim on the basis of well-established precedent, pursuant to which similar church-owned residences, such as parsonages, have long been held not to qualify for the "house of public worship" exemption. Tax Commissioner's final determination at 2-3 (citing with approval to Watterson v. Halliday, 77 Ohio St. 150 (1907); and Fulton v. Tracy, B.T.A. No. 91-Z-911 (April 12, 1993), unreported, Appx. 9-12), S.T. 2-3,

Supp. 35-36.

Second, the Commissioner held that the dormitory failed to qualify for the "charitable" exemption because the use of the property as temporary living quarters did not constitute a charitable use (citing with approval to several Ohio Supreme Court decisions, inchading Planned

Parenthood Associates v. Tax Commissioner, 5 Ohio St.2d 117 (1966); Philada Home Fund v.

4 Bd. of Tax Appeals, 5 Ohio St.2d 135 (1966); and Cogswell Hall, Inc. v. Kinney, 30 Ohio St.3d

43, (1987)). GCI then appealed the Commissioner's final determination to the BTA.

Following an evidentiary hearing and briefing, the BTA rejected GCI's contention that

the dormitory was used in a principal, primary and essential way for public worship and, thus,

failed to qualify under the "house of public worship" exemption. Instead, the Board expressly

found that the dormitory is used as temporary living quarters for attendees of GCI's church

services and that, as such, it is "merely supportive of public worship" and, thus, failed to qualify

for exemption under R.C. 5709.07(A)(2). BTA Decision & Order at 3-4 (citing with approval to

Faith Fellowship Ministries, Ine. v. Limbach, 32 Ohio St.3d 432 (1987); and Allegheny West

Conference Seventh-Day Adventists v. Limbach, BTA No. 1990-K-507 (Aug. 21, 1992),

unreported, Appx. 13-16).

Likewise, the BTA denied exemption of the dormitory under R.C. 5709.12, holding that

the realty was not used exclusively for charitable purposes. In so holding, the BTA followed the

Court's established case law, under which realty that is merely supportive of public worship does

not constitute a charitable-use activity. BTA Decision & Order, at 4, citing Church of God in N.

Ohio v. Levin, 124 Ohio St.3d 36, 2009-Ohio-5939.

On appeal as of right to the Court pursuant to R.C. 5717.04, GCI argues, wrongly, that

the BTA's decision and order denying exemption is unreasonable and unlawful. Once again,

GCI argues that the dormitory building is exempt because it is used "exclusively for charitable purposes" under R.C. 5709.12, and as a "house of public worship" under R. 5709.07(A)(2). For the reasons that follow, the Court should affirm the BTA's Decision and Order upholding the appellee Commissioner's denial of exemption for the realty at issue under R.C. 5709.07(A)(2) and R.C. 5709.12.

5 II. LAW AND ARGUMENT

Proposition of Law No. I:

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; Cdzristian Church of Ohio v. Limbach, 53 Ohio St.3d 270, 271 (1990); Moraine Heights Baptist Church v. Kinney, 12 Ohio St.3d 134, 136 (1984), followed.

Most fundamentally, GCI's dormitories are not exempt as a "house of public worship"

under R.C. 5709.07(A)(2) because they are used in a manner that is "merely supportive" of

public worship, and not in a manner that facilitates public worship in the requisite "principal,

primary, and essential way." Church of God in Northern Ohio, Inc. v. Levin, 124 Ohio St.3d 36,

2009-Ohio-5939, T, 29, citing Faith Fellowship Ministries v. Limbach, 32 Ohio St.3d 432, 436

(1987).

Pursuant to the house of public worship exemption in R.C. 5709.07(A)(2), the following property is exempt from real property taxation:

Houses used exclusively for public worship, the books and furniture in them, and the ground attached to them that is not leased or otherwise used with a view to profit and that is necessary for their proper occupancy, use, and enjovment (Emphasis added.)

Exemption as a "house of public worship" is not available to GCI's dormitory building for at least three independent reasons: (1) the dormitory is not used in a principal, primary, and essential way to facilitate public worship; (2) private housing has never been held exempt as a house of public worship under a unbroken line of controlling Ohio Supreme Court precedent; and (3) public worship does not occur on the premises of the dormitories.

6 First, GCI's dorinitories are not exempt under R.C. 5709.07(A)(2) because they are not

used in a principal, primary, and essential way to facilitate public worship. Property must be

used in a principal, primary, and essential way to support public worship in order to be entitled to

exemption under R.C. 5709.07(A)(2). Faith Fellowship Ministries v. Limbach, 32 Ohio St.3d

432, 437 (1987). Property that is "merely supportive" of public worship, on the other hand,

does not qualify for exemption. Moraine Heights Baptist Church v. Kinney, 12 Ohio St.3d 134,

136 (1984).

In fact, the Ohio Supretne Court has identified several activities that are designed to

encourage public worship, but do not constitute activities essential. to public worship so as to

qualify under the R.C. 5709.07(A)(2) exemption. Such non-qualifying activities include: (1)

entertaining young children while their parents attend church service, (2) use of a church

building for Boy Scout meetings, and (3) preparation of food for a church supper. Moraine

Heighis Baptist Church, 12 Ohio St. 3d at 135, citing In re Bond Hill-Roselawn Hebrew School,

151 Ohio St. 70 (1949) ("Bond Hill").

Likewise, in a line of cases including Church of God in Northern Ohio ("COGNO") and

Christian Church of Ohio v. Limbach, 53 Ohio St.3d 270 (1990), the Court uniformly has held that church administrative offices used to coordinate meetings, prepare materials, and facilitate communication among member congregations do not qualify for the "house of public worship" exemption. COGNO, 124 Ohio St. 3d 36, at ¶ 29; Christian Church of Ohio, 53 Ohio St.3d at

271.

The "off-premises" dormitories in this case are not "essential" to public worship.

Instead, as reasonably and lawfully determined by the BTA below, the activities conducted on the premises of the dormitories -- to temporarily house out-of-state church attendees -- are

7 merely "supportive" of public worship." These passive, off-premises activities are not nearly as

facilitative of public worship as the activities conducted at the administrative offices in COGNO

and Christian Church of'Ohio, or, for that matter, the other activities that the Court has identified

as "merely supportive" of public worship in Moraine Heights and Bond I-Kll.

GCI does not hold church services at the dormitories or depend upon the dormitories in

order to hold services. Hr. Tr. 32; Supp. 9. GCI's own experience establishes this -- as a matter

of past history. The dormitories were constructed in 2008. Yet, for several decades preceding

the existence of the dormitories, dating back to the 1950's, GCI held church services in Summit

County. Hr. Tr. 58-59; Supp. 16. If the dorinitories were closed tomorrow, GCI's church

services would continue, just as they had for the vast majority of GCI's existence.

The testimony of GCI's own witness cements the non-essential nature of the dormitories

to public worship. At the BTA hearing, GCI Finance Manager Cathy Shupe testified on direct

examination that the dormitories were merely "helpful" to out-of-state church attendees. She informed her own counsel that the dormitories are not necessary to enabling visiting church members to attend. Rather, Finance Manager Shupe explained that regardless of whether the temporary lodging accommodations afforded by the dormitories were made available or not, out- of-state church attendees "would try to find a way" to attend. Hr. Tr. 40-41; Supp. 11.

On cross-examination, Finance Manager Shupe amplified her conclusion that the dormitories were not essential to public worship. She admitted that visiting supporters may, and often do, stay in nearby hotels as an alternative to the dormitories. Hr. Tr. 41-42; Supp. 11-12.

Due to the non-essential relationship between the dormitories and GCI's church services, the dormitories fail to qualify for exeinption as a house of public worship.

8 Second, and independently, longstanding and controlling Ohio Supreme Court precedent

precludes (sCI's claim to the house of public worship exemption for residential facilities. Such

property does not is not used primarily to facilitate public worship. Faith Fellowship Ministries

v. Limbach, 32 Ohio St.3d at 437. In over a century and a half of jurisprudence on the house of

public worship exemption, has the Ohio Supreme Court has never granted exemption to

residential facilities under that provision.

In the leading cases, Gerke v. Purcell and Watterson v. Halliday, the Court denied

exemption to property used as parsonages. 25 Ohio St. 229 (1874). In the Gerke and Watterson

cases, the Court held that even if parsonages are essential to a church, still parsonages are not

exempt because the primary use is private residential use, not use for public worship or any other

public use. Watterson v. Halliday, 77 Ohio St. 150, 177-78 (1907), quoting Gerke v. Purcell, 25

Ohio St. 229, 248 (1874); ("Instead of its being used exclusively for public worship, [a

parsonage] becomes a place of private residence. Nor does it make any difference that, by the

usages of the church, the presence of a priest or pastor is essential to conduct the services of

public worship.").

The Ohio Supreme Court has consistently and uniformly reaffirmed Gerke and Watterson

to hold that residential facilities are not exempt as a house of public worship. See, e.g., .In re

Bond Hill-Roselawn Hebrew School, 151 Ohio St. 70 (1949) (affirming the denial of the "house of public worship" exemption for the second floor of a building used as the permanent residence of the building caretaker and his fatnily, despite the exclusive use of the first floor of the building as a house of public worship); New Haven Church of Missionary Baptist v. Bd. of Tax Appeals, 9

Ohio St.2d 53 (1967) (affirming denial of exemption to the residence of a church janitor); Bishop v. Kinney, 2 Ohio St.3d 52 (1982) (affirming denial of exemption for the priest's residence

9 located on the second floor of the church building) 3 ; Moraine Heights Baptist Church v. Kinney,

12 Ohio St.3d 134, 136 (1984) (affirming denial of exemption for realty used as teinporarily

lodging for boys and girls at a church camp); Faith Fellowship Ministries v. Limbach, 32 Ohio

St.3d 432, 437 (1987) (affirming denial of exemption for twelve sleeping rooms used for church

retreats); Full Gospel Apostolic Church v, Limbach, 46 Ohio St.3d 195 (1989) (affirming denial

of exemption for vacant land and a parsonage); .

In contravention to well-settled and controlling precedent, GCI nevertheless argues that

its dormitory is used for temporary housing and should be exempt as a house of public worship.

According to GCI, its dormitory "is not a residence for purposes of tax exemption" because it

does not contain luxurious amenities and is available only on a short-term basis. GCI opening

brief, at 8-10. But the Court has already held that short-term lodging, cafeteria, and shower

facilities at a youth church camp are "functionally equivalent to the parsonages previously

denied exemptions" in the long line of public worship exemption cases. Moraine Heights

Baptist Church, 12 Ohio St.3d at 136-37 (citing references omitted). Witliout question, the

facilities analogous to parsonages in Moraine Heights are likewise available on a short-term

basis and without amenities. Thus, GCI's effort to distinguish the housing facilities in this case

from those that the Court has always denied exemption under the house of public worship

exemption is without rnerit.

Undeterred, GCI argues that the Fifth District Court of Appeals decision in Round Lake

Christian Assembly, Inc. v. Commission of Tax Equalization is dispositive in this case. 4 Ohio

3 In fact, by the time of the Bishop v. Kinney decision (in 1982), the non-exempt status of residential living quarters under the "house of public worship" exemption was so well- established that, in appealing to the Board of Tax Appeals, the church did not even bother to seek exemption for the priest's living quarters, constituting the second floor of the church building. Instead, the church sought to challenge only the Tax Commissioner's denial of exemption regarding certain other portions of the building, primarily used for religion classes). 10 App.3d 189 (1982), Appx.. 33-40. There, the Fifth District found exempt temporary lodging used

as a church camp, distinguishing the Court's line of parsonage cases on the basis that church

camp facilities are only available on a temporary basis. But just two years later, in Moraine

Heights, the Court held, contrary to Round Lake, that temporary housing facilities at a church

camp are "functionally equivalent" to parsonages in this context. 12 Ohio St.3d at 136-37.

Shortly thereafter, in Faith Fellowship Ministries, the Court similarly denied exemption for

twelve sleeping rooms used for church retreats. 32 Ohio St.3d at 437.

More fundamentally, the General Assembly itself has effectively rejected the Fifth

District's holding in Round Lake by enacting a real property tax exemption for church camps. In

1988, shortly after Round Lake, Moraine Heights, and Faith Fellowship 1vlinistries, the General

Assembly enacted R.C. 5709.07(A)(3) to provide exemption for property used as a church camp.

Am. Sen. Bill No. 71, 142 Ohio Laws 147-150, Part 1(1988), Appx. 17-32. Had real property used as a church camp qualified under the existing house of public worship exemption, this

amendment to R.C. 5709.07(A) would have been unnecessary and superfluous to the statutory scheme. In order to give effect to all statutory language, as tools of statutory interpretation require, temporary housing such as that in Round Lake must not be exempt under R.C.

5709.07(A)(2), else the enactment of R.C. 5709.07(A)(3) would have been superfluous and unnecessary. R.C. 1.47; COGNO, 124 Ohio St,3d 36, 2009-Ohio-5939, ¶ 30.

Th as yet another independent basis for denying exemption, GCI's exemption claim fails because there is no public worship at the dormitory building itself. Hr. Tr. 32, Supp. 9.

Through the seminal case Gerke v. Purcell, the Ohio Supreme Court in 1874 set forth the narrow construction for the house of public exemption currently codified as R.C. 5709.07(A)(2), as follows: "The exemption [now R.C. 5709.07] is not of such houses as may be used for the

ll support of public worship, but of houses used exclusively as places of public worship." Moraine

Heights Baptist Church v. Kinney, 12 Ohio St.3d 134, 137 (1984), citing Gerke v. Purcell, 25

Ohio St. 229 (1874) (Emphasis deleted).

More recently in COGNO, the Court reaffirmed the principle that the house of public

worship exemption is applicable only to property that "facilitates the public worship occurring

on the premises." Id. at T 11 (Emphasis in original), citing Christian Church of Ohio v. Limbach,

53 Ohio St.3d 270, 271 (1990) (holding religious headquarters are taxable).

To be certain, the bedrock principle that public worship must occur on the premises

flows from the very foundation of Ohio real property tax exemption law; law that is rooted in the

narrow focus on the use of the property and the strict construction of tax exemption statutes in

derogation of equal rights. Cincinnati College v. State, 19 Ohio 110 (1850) ("We think,

however, that all laws that exempt any of the property of the community from taxation should receive a strict construction. All such laws are in derogation of equal rights."); Benjamin Rose

Institute v. Myers, 92 Ohio St. 252 (1915) ("It is the use of the property which renders it exempt or nonexempt, not the use of the income derived from it.").

As this principle is applied to GCI's dormitories, exemption fails simply because no public worship or worship services occurs at the dormitory itself. Hr. Tr. 32, Supp. 9. Like the adininistrative offices in COGNO and Cliristian Church of Ohio, GCI's dorinitory located off- premises from church buildings is not used exclusively for public worship within the meaning of

R.C. 5709.07(A)(2).

Based upon these three independent bases, GCI dormitories are not used in a principal, primary, and essential way to facilitate public worship and therefore fails to qualify for exemption pursuant to R.C. 5709.07(A)(2). The BTA reasonably and lawfully so held.

12 Proposition of Law No. IIe

Thus, real property that is used primarily to support pulilic worship fails to constitute a qualifying use under the "charitable" 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, ¶ 26-32 (citing with approval to Watterson v. Halliday, 77 Ohio St. 150 (1907)), followed.

Just as the "merely supportive of public worship" use of the dormitories as temporary

living quarters for out-of-state church attendees does not qualify GCI's dormitories for the

"house of public worship" exemption in R.C. 5709.07(A)(2), so, too, it does not qualify the

dormitories for the "charitable" exemption in R.C. 5709.12. The BTA correctly so held,

applying the Court's controlling precedent in Church of God in Northern Ohio, Inc. v. Levin

("COGNO"), 124 Ohio St.3d 36, 2009-Ohio-5939. See the BTA's Decision and Order at 4

(quoting from COGNO at ¶ 26).

In COGNO, the Court rejected the exemption claimant's contention that its use of its administrative offices to disseminate public worship materials constituted a "charitable activity."

The COGNO Court set forth two independent, but related, reasons why real property that facilitates public worship fails to qualify as an "exclusively charitable use" within the meaning of the "charitable" exemption in R.C. 5709.12.

First, the Court properly recognized the importance of the General Assembly's enactment of the specific real property tax exemption statute in R.C. 5709.07(A)(2), as follows:

The constitutional and statutory provisions just cited refute COGNO's contention that public worship may be equated with a

13 charitable dissemination of religious information or viewed as equivalent to the charitable provision of spiritual edification to mankind in general. First, if COGNO's theory were correct, there would as a general matter be no need for a separate exemption for houses of public worship, because such buildings would already be exempt as "real property ersed exclusively for charitable purposes." The second point is a corollary to the first: if public worship constituted a charitable use, then the limited scope the legislature prescribed for the exemption of houses of public worship could be avoided simply by claiming exemption under the charitable-use statute rather than the house-of-public- worship provision itself. Taken together, these circumstances would amount to a violation of the precept that we should construe statutes to give effect to all the enacted language. See R.C. 1.47(B); State ex rel. Bohan v. Indus. Comm. (1946), 147 Ohio St. 249, 251 (recognizing the "duty of courts to accord meaning to each word of a leglislative [sic] enactment if it is reasonably possible so to do"). Indeed, we have recognized a general principle that a property owner may not evade the limitations imposed with respect to a specific tax exemption by claiming exemption under a broad reading of other exemption statutes. Rickenbacker Port Auth. v. Limbach (1992), 64 Ohio St.3d 628, 631-632.

(Emphasis added.) COGNO, 2009-Ohio--5939, at ¶ 30.

Second, and even more fundamentally, the COGNO Court applied well-established

precedent in holding that "public worship does not fall within the definition of charity (emphasis

added)." The Court explained that this holding "comports with the constitutional and statutory

provisions that control property tax exemption, as well as the case law that applies those

provisions." Most prominently, the COGNO Court undertook a detailed discussion of the

Watterson v. Halliday decision as established authority on the issue. The Court concluded its

discussion and analysis of Watterson v. Halliday, as follows: "[t]he necessary but unstated premise of that decision is that the activity of public worship by itself does not constitute a

charitable activity *** (emphasis added)." COGNO at ¶ 31 (citing with approval to Hubbard

Press v. Tracy, 67 Ohio St.3d 564, 566 (1993)). Accordingly, the COGNO Court concluded its

14 analysis by holding that "property primarily used to support public worship that is conducted at

other locations by local congregations *** does not by itself constitute a charitable use of the

property." Id. at 132.

Despite the dispositive nature of COGNO in favor of the Commissioner's and BTA.'s

rejection of GCI's "charitable" exemption claim, GCI insists that its dormitories are exempt as

used exclusively for charitable purposes because it "disseminates a message for the spiritual

advancement and benefit of mankind." GCI initial brief at 7. To support its "church in the air"

theory, GCI cites True Christianity Evangelism v. Zaino, 91 Ohio St.3d 117 (2001), where the

Court held that property used primarily for the preparation and dissemination of religious

literature to the general public (not to a particular religious denomination) may be used

charitably.

Unfortunately for GCI, however, the Court in COGNO expressly rejected the

applicability of True Christianity regarding property used to facilitate public worship. In

COGNO, the Court distinguished True Christianity on two grounds, both applicable here.

First, unlike the administrative offices at issue in COGNO, which were used, in part to

prepare and disseminate religious materials directly connected to public worship, the religious

materials at issue in True Christianity were of a general religious nature only, rather than being

directed to a particular religious denomination. COGNO at ¶ 24, citing True Christianity, 91

Ohio St.3d 117 ("Quite simply, the use of the property at issue in True Christianity involved no direct connection with public worship. The doctrine of True Christianity does not apply to the present case.").

In the present case as was true of the administrative offices at issue in COGNO, GCI's dormitories are not used to prepare and disseminate religious materials of a general nature, not

15 directly connected to public worship. Rather, as GCI itself urges in asking the Court to grant

exemption under the "house of public worship" exemption, the dormitories at issue are

supportive of the public worship conducted at GCI's Summit County church locations.

Second and of even greater significance, as emphasized above, COGNO held that the

activity of public worship in itself does not constitute a charitable activity. See COGNO at

26-32 and the immediately preceding paragraphs of this brief.

Notwithstanding the clear inapplicability of True Christianity here, GCI clings to its

"church in the air" theory. For support, GCI relies on charitable exemption cases involving

realty with no direct relation to public worship, namely True Christianity; Herb. Soc. ofAmerica,

Inc. v. Tracy, 71 Ohio St.3d 374 (1994); American Chemical Society v. Kinney, 69 Ohio St.2d

167 (1982); and Galvin v. Masonic Toledo Tnust, 34 Ohio St.2d 157 (1973). GCI initial brief, at

6-8. Unfortunately for GCI, the cases it cites for support are inapposite as applied to dormitories that facilitate public worship. GCI's dorXnitories here are akin to the administrative offices at issue in COGNO and the priest's living quarters at issue in Watterson v. Halliday, in that the realty at issue does bear a connection to public worship, as was completely absent in True

Christianity.

To be sure, if GCI had devoted the building at issue to a primarily charitable use unrelated to public worship, such as a soup kitchen or clothing distribution center for the poor, the property may qualify for the "charitable" exemption. COGNO, at T 32. In The Chapel v.

Testa, for example, the Court held property exempt under the "charitable" exemption where a religious organization provided recreational areas to the general public, for use substantially by non-church members. 129 Ohio St.3d 21, 2011-Ohio-545, T¶ 4-8. To affrrn the limited scope of the True Christianity doctrine articulated in COGNO, the Court in The Chapel reiterated the

16 principle that exclusive charitable use exemption is not available in situations where it would

impermissibly expand the scope of the "public worship" exemption. Id. at T 22. Instead,

religious organizations may obtain charitable exemption only where the activities on the property

itself are charitable and held open to the public, as with a soup kitchen or sports league held open

to the public. Id. at ^, 23.

In sum, the Court should affirm the BTA's application of the Court's controlling

guidance and reject GCI's "charitable" exemption claim. In so holding, the Court not only will

be following its own well-established precedent in GOGIVC7 and Watterson v. HaPliday, it will

further be applying the principle that tax exernption statutes are in derogation of the equal rights

of all other taxpayers, and thus must be "strictly construed," with any doubt as the application of

the exeniption to be resolved against the exemption claimant. Bethesda Healthcare, Inc, v.

Wilkins, 101 Ohio St.3d 420, 2004-Ohio-1749, ^, 19; Anderson/1'4ilaltbie Partnership v. Levin, 127

Ohio St.3d 178, 2010-Ohio-4904, T 16.

The Court should properly affirm the BTA's affirmance of the Commissioner's denial of

real property tax exemption for GCI's dormitories on the basis of Proposition of Law No. I

(rega.rding the "house of public worship" exemption in R.C. 5709.07(A)(2)) and Proposition of

Law No. II (regarding the "eharitable" exemption in R.C. 5709.12)). As noted, these

Propositions of Law simply follow the Court's controlling precedence.

Also, in the following Propositions of Law Nos. III-IV, the appellee Commissioner provides the Court with independent grounds for affirmance, based on the same core definition

of "charity" that pervades Ohio tax exemption law, as applied to the pertinent facts adduced in the Commissioner's and BTA's proceedings below.

17 Proposition of Law No. III:

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 generaly or those in need of advancement and benefit in particular, without regard 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 Church of Milforcl v. Wilkins, 110 Ohio St.3d 496, 2006-Ohio-4966, T 21.

GCI's claim to charitable exemption is defeated not only because public worship does not

constitute charity, but additionally and independently because church member's own private use

of the dormitory does not constitute "charity" under the Court's established precedent. As set

forth in Planned Parenthood Ass'n v. Tax Commissioner, charity must advance and benefit either, one, mankind in general, or two, those with a particularized need. 5 Ohio St.2d 117

(1966).

But here, GCI's dormitory is not used in a manner that satisfies the definition of "charity" set forth in Planned Parenthood and its progeny. The dormitories are not "open to the general public," but instead are made available only to church members and supporters. In addition, the dormitories do not benefit anyone with a particularized need for shelter, but instead benefit those

GCI members and supporters who choose to attend church services in Summit County, Ohio.

Since the residential use of the dormitory building does not constitute "charity" under Ohio law,

GCI has not satisfied its burden to show exempt charitable use and its claim to charitable exemption under R.C. 5709.12 must fail.

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 tax revenue.

First Baptist Church of Milford T. Wilkins, 110 Ohio St.3d 496, 2006-(.l►hio- 4966, ¶ 10, followed.

For well over one hundred years, the Ohio Supreme Court has uniformly held that

charitable tax exemption is applicable only where there is a public benefit sufficient to justify the

loss of general tax revenue. First Baptist Chaxrch of Milford v. Wilkins, 110 Ohio St.3d 496,

2006-Ohio-4966, ¶ 10, citing White Cross Hosp. Ass'n v. Bd. of Tax Appeals, 38 Ohio St.2d 199,

201 (1974) ("[t]he rationale justifying a tax exemption is that there is a present benefit to the

general public *** sufficient to justify the loss of tax revenue.").

As early as the 1850, the Ohio Supreme Court recognized that tax exemption burdens

non-exempt property and taxpayers, as follows: "If property, employed in one kind of business,

is exempted from taxation, the burden will necessarily fall more heavily on property employed in

other pursuits." Cincinnati College v. State, 19 Ohio 110, 115 (1850). Because tax exemption

places a burden on the tax base, tax exemption is only appropriate where there is a public benefit

sufficient to justify loss in revenue.

The Court has long adhered to Cincinnati College by uniformly recognizing in its real property tax exemption decisions that tax exemption statutes are in "derogation of the equal rights of all other taxpayers," and thus must be "strictly construed," with any doubt as to the application of the exemption to be resolved against the exemption claimant. Bethesda

Healthcare, Inc. v. Wilkins, 101 Ohio St.3d 420, 2004-Ohio-1749, T 19; Anderson/Maltbie

Partnership v. Levin, 127 Ohio St.3d 178, 2010-Ohio-4904, ^ 16; The White Cross Hospital

Ass'n v. BTA, 38 Ohio St.2d 199, 203-204 (1974).

19 Accordingly, real property owners claiming tax exemption bear the burden to show that

the property is clearly entitled to exemption, including the burden to show that the claimed

exempt use of the property provides a public benefit sufficient to justify the loss of tax revenue.

R.C. 5715.271 ("the burden of proof shall be placed on the property owner to show that the

property is entitled to exemption"); Anderson/Maltbte Partnership, at ¶ 16. This burden is

particularly heavy where, as here, the taxpayer must show that the BTA acted unreasonably and

unlawfully in failing to find that the Commissioner's denial of exemption is clearly unreasonable

or unlawful. Satullo v. Wilkins, 111 Ohio St.3d 399, 2006-Ohio-5856, ¶ 14, Alcan Aluminum

Corp. v. Limbach, 42 Ohio St.3d 121, 123 (1989).

Planned Parenthood Ass'n v. Tax Commissioner, 5 Ohio St.2d 117, syllabus, 120 (1966).

The definition of "charity" in Ohio tax cases reflects the long-held principle that tax exemption is appropriate only where there is a general public benefit to justify the loss of tax revenue. First Baptist Church o,f?llalford v. Wilkins, 110 Ohio St.3d 496, 2006-Ohio-4966, ¶ 10.

That is, pursuant to Planned Parenthood, charity is present only where there is a legally cognizable benefit to "mankind in general," or, to a sub-class of those of the general public with a particularized need. Planned Parenthood Ass 'n v. Tax Commissioner, 5 Ohio St.2d at 120. The use of GCI's dormitories as temporary housing fails to meet this element of the definition of

"charity" for several reasons.

F'irst, GCI's dormitory building is not used exclusively for charitable purposes because the dormitory is available only to church members and does not benefit "mankind in general."

To provide a benefit to "mankind in general" or those with a particularized need, an institution

20 must not limit the availability of goods and services to only its members. Olmsted Falls Bd. of

Ed. v. Tracy, 77 Ohio St.3d 393, 397 (1997); see also Socialer Turnverein v. Bd. of Tax Appeals,

139 Ohio St. 622 (1942). Recognizing this principle in Olmstead Falls Bd of Ed., the Court

expressly denied charitable exemption because "[the taxpayer] does not advance or benefit

mankind in general or those in need of advancement or benefit in particular; it benefits its

members." 77 Ohio St.3d 397. There, a fraternal club did not qualify as a charitable institution

because its core activities primarily benefitted its members. Id. at 397-98.

Other Ohio Supreme Court cases have likewise held that property is not "used for a

charitable purpose" where an institution provides benefits only to its members. Bloch v. Bd. of

Tax Appeals, 144 Ohio St. 414 (1945) (school open only to members of a private religious

denomination was not "used exclusively for a charitable purpose."); Society of the Precious

Blood v. Bd. of Tax Appeals, 149 Ohio St. 62, 65 (1948) (building used to house and train newly

ordained "priests" in a religious sect did not qualify for exemption).

In Planned Parenthood itself, the Court held that the The Planned Parenthood

Association of Columbus was "an institution for purposes only of public charity" in large part because its services were available to the general public, "irrespective of race, religion, or financial level." 5 Ohio St.2d at 120. To buttress its holding, the Planned Parenthood Court further cited Vick v. Cleveland Memorial Hospital Medical Foundation with approval. Planned

Parentlaood, 5 Ohio St.2d at 121-22. Vick, in turn, holds that charity requires charitable services to be available to the public generally, specifically "to those in need, without regard to race, creed, color or ability to pay." Vick v. Cleveland Memorial Hospital Medical Foundation, 2

Ohio St.2d 30, 32 (1965).

21 Here, GCI does not use its dormitory to benefit mankind in general because the dormitory

is available only to GCI members and supporters. The dormitory is not open and available to the

general public. As GCI Finance Manager and Media Director Cathy Shupe testified, the

dormitory visitors are church members and supporters who travel to participate in GCI's worship

services. Hr. Tr. 40-41, 60, Supp. 11, 16. Members of the public at-large do not enjoy the

benefit of GCI's housing accoinmodations at the dormitory. Like the subject property in

Olmsted Falls Bdo of Ed., the use of the dormitory does not constitute "charity" because the

dormitory is made available only to GCI members and supporters.

Second, GCI's dormitory is not used exclusively for charitable purposes because it does

not provide a benefit to those with a particularized need, but instead to its members. Olmstead

Falls Bd. of Ed. v. Tracy, 77 Ohio St.3d 393, 397 (1997) ("[the taxpayer] does not advance or

benefit mankind in general or those in need of advancement or benefit in particular; it benefits its

members.").

Plaraned Parenthood provides that charity may be present where goods or services are

provided "to those in need of advancement and benefit in particular." 5 Ohio St.2d at 120. In

this case, GCI has not claimed, let alone shown, that the church members and supporters staying

at the dormitory have a particularized need for shelter. In fact, the record strongly supports a

finding that the dormitory guests do not have a particularized need for shelter because they have

the financial means to afford lodging. Finance Manager Shupe testified that GCI solicits and receives donations from church members and supporters staying at the dormitory, money that

could otherwise be spent on lodging if needed. Hr. Tr. 60-61, Supp. 16.

Moreover, there is conceptually great difficulty identifying situations where there is a particularized need for shelter because shelter is a basic necessity of human life. As a necessity

22 of life, shelter is something that is common to all without clear application "to those in need of

advancement and benefit in particular" under Planned Parenthood. Thus, GCI's dormitory does

not constitute charity under Planned Parenthood as a benefit to those with a particularized need.

Taken together, GCI's failure to use its dormitory to benefit mankind in general or those

with a particularized need, the dormitory is not used exclusively for charitable purposes within

the meaning of "charity" set forth in Planned Parenthood.

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.

More fundamentally, there is little question that purely private residential use is primarily

personal and private rather than pttblic. First Baptist Church of 1llilford, 110 Ohioo St.3d 496,

2006-Ohio- 4966, at i[ 21, quoting Western Reserve Academy v. Bd, of Tax Appeals, 153 Ohio St.

133, 136 ( 1950). Residential activities that are private rather than public in nature include

personal hygiene activities attended to in bathrooms, cooking meals and preparing food in

kitchens, sleeping in bedrooms, and leisure in living areas. Youngstown Metro. Housing Auth. v.

Evatt, 143 Ohio St. 268, 278 (1944) ("'It seems to us clear that where dwellings are leased to

family units for the purposes of private homes, the use of such dwellings is private and not

public. "') (internal citations omitted). The Ohio Supreme Court succinctly described the private

nature of residential property in Columbus lVetro. I-lousing Auth. v. Thatcher, 140 Ohio St. 38

(1942), as follows:

That every man's house is his castle has not yet been erased from our laws.

Generally speaking, activities occurring in a residence provide benefits that primarily inure to an individual or family rather than public generally.

23 Indeed, the Ohio Supreme Court has consistently and uniformly upheld the requirement

that exemption requires a public benefit. Most recently in First Baptist Church of Milford v.

Wilkins, the Court denied charitable exemption to residential apartments attached to a print shop

and occupied by persons associated with the print shop. 110 Ohio St.3d 496, 2006-Ohio-4966,

¶ 21. The Court expressly recognized that residential property is not exempt because it is used

privately, as follows:

Residence in a dwelling with a family must necessarily be a private use of the premises. Where the exercise of such private rights constitutes the primary use of property, *** such property is no longer used exclusively for charitable purposes.

Id., quoting W. Res. Academy v. Bd. o f Tax Appeals, 153 Ohio St. 133 (1950).

Likewise in Philada Home Fund v. Bd. of Tax Appeals, residential apartments provided

to aged and needy persons at below-cost rent did not qualify for charitable exemption because private residential use, in and of itself, does not provide the public benefit necessary to justify tax

exemption. 5 Ohio St.2d 135, 139 (1966). And, several other cases have likewise denied

charitable exemption for residential facilities. NBC-USA Housing, Inc.-Five v. Levin, 125 Ohio

St.3d 394, 2010-Ohio-1553, ¶22; Jewish Hospital Ass'n v. BTA, 5 Ohio St.2d 179, 181 (1966);

Cogswell Hall, Inc. v. Kinney, 30 Ohio St.3d 43, 44 (1987); Case W. Res. Univ. v. Wilkins, 105

Ohio St.3d 276, 2005-Ohio-1649, at ¶ 31; Denison Univ. v. Bd. of Tax Appeals, 173 Ohio St.

429, syllabus (1962); Doctors Hosp. v. Bd. of Tax Appeals, 173 Ohio St. 283 (1962).

Despite the presence of primarily private use of residential property, ancillary public

benefits are sometimes present, for example assisting aged and needy persons to alleviate

poverty and social welfare concerns. But ancillary benefits generally do not rise to the level of

exempt use where there is primarily private residential use. Watterson v. Halliday, 77 Ohio St.

150, 177-78 (1907), quoting Gerke v. Purcell, 25 Ohio St. 229, 248 (1874); ("Instead of its being

24 used exclusively for public worship, [a parsonage] becomes a place of private residence. Nor

does it make any difference that, by the usages of the church, the presence of a priest or pastor is

essential to conduct the services of public worship.") (emphasis added).

To be sure, residential property may be exempt under the "charitable" exemption in

extraordinary situations where the General Assemblv has set forth specific criteria statutorily

required for exemption. The content of those specific requirements function to expressly limit

the scope of the exemption only to those conducted as "charitable" activities. For example,

pursuant to R.C. 5709.12 and R.C. 5701.13 (defining "homes for the aged"), the General

Assembly has carved out a narrow "homes for the aged" exemption for qualifying residential

nursing facilities. Ohio Presbyterian Homes v. Kinney, 9 Ohio St.3d 90, 93 (1984) ("[t]he

purpose of R.C. 5701.13(B) is to ensure that a home for the aged is to some extent operated in a

charitable manner[.]").

Indeed, to meet the criteria for exemption as a "home for the aged," among other stringent requirements, the facility must guarantee the "services for the life of each resident without regard to the resident's ability to continue payment for the full cost of the services

(emphasis added)." R.C. 5701.13(B)(1)(e). This requirement is a quintessentially "charitable" one. By providing that all residents must be provided the facility's services without regard to the patients' ability to pay for them, R.C. 5701.13(B)(1)(e) incorporates a key component of the

Planned Parenthood definition of "charity" quoted directly under this Proposition of Law No.

III. Namely, under the Planned Parenthood definition, the charitable activity must be provided to recipients without regard to the ability of the recipients "to supply that need from other sources." i.e., to pay for the services.

25 In addition, a narrow line of cases holds that property may be "used exclusively for

charitable or public purposes" under R.C. 5709.121 where property houses "on-call" employees

who are available to provide their services around-the-clock, as a necessary and integral

component of fulfilling the entity's exempt public or charitable activities. Cincinnati ATature

Center Ass'n v. BTA, 48 Ohio St.2d 122, 123 (1976) (charitable exemption for "housing to the

center's naturalists who were required to be `on call' 24-hours-a-day in order to prevent damage

to the property by hunters, motorcyclists and other trespassers."); Warman v. Tracy, 72 Ohio

St.3d 217 (1995) (charitable exemption for residences of nuns working at a hospital were "on-

call twenty-four hours a day, every day of the year"); Wellsville v. Kinney, 66 Ohio St.2d 136,

(1981) (public purpose exemption for the residence of an on-call caretaker of a public cemetery).

The use of the GCI's dormitoiy building as temporary housing does not meet the "on

call" employee exception. Instead, the dormitory is used in a quintessentially private manner to

support temporary daily living of GCI's members and supporters attending worship services. The record reflects that the dormitory rooms contain regular living accommodations, including a bed, desk, table, and bathroom. Hr. Tr. 15, Supp. 5. Further, the lodgers at the dormitory building are members of the audience at the worship services; they are not "24/7" workers who live on the premises of the house of public worship.

Given the distinctly non-exempt and private use of the d.orrnitory, the dormitory building fits squarely within the line of cases denying exemption for residential property that is not used in a principal, primary, and essential way to facilitate public worship. See discussion, supra,

Proposition of Law No. I; Gerke v. Purcell, 25 Ohio St. 229, 248 (1874); Watterson v. Halliday,

77 Ohio St. 150, 177-78 (1907); In re Bond Hill-Roselawn Hebrew School, 151 Ohio St. 70

(1949); New Haven Church of Missionary Baptist v. Bd. of Tax Appeals, 9 Ohio St.2d 53 (1967);

26 Bishop v. Kinney, 2 Ohio St.3d 52 (1982); Moraine Heights Baptist Church v. Kinney, 12 Ohio

St.3d 134, 136 (1984); Faith Fellowship Ministries v. Limbach, 32 Ohio St.3d 432, 437 (1987);

Full Gospel Apostolic Church v. Limbach, 46 Ohio St.3d 195 (1989).

Thus, GCI's dormitory building is not used exclusively for charitable purposes because the dormitory is used exclusively as private housing for its church members and supporters. The predominately private use of the dorxnitory as living accommodations for GCI members falls well outside the Ohio definition of "charity" in this case because the dormitory fails to "advance and benefit" "mankind in general" or those with a particularized need. Planned Parenthood

Ass'n v. Tax Commissioner, 5 Ohio St.2d 117, syllabus, 120 (1966).

Proposition of Law No. IV:

As noted, for Ohio tax exemption purposes, the Court frequently has applied the definition of "charity" as set forth in Planned Parenthood Ass'n v. Tax Commissioner, 5 Ohio

St.2d 117 (1966), as follows:

Charity is the attempt in good faith, spiritually, physically, intellectually, socially and economically to advance and benefit mankind in general, or those in need of advancement and benefit in particular, without regard to their ability to supply that need from other sources and without hope or expectation, if not with positive abnegation, of 2ain or profit by the donor or by the instrumentality of the charity.") (Emphasis added).

GCI's claim to charitable exemption is independently defeated because lodging at the dormitory is not provided "without hope or expectation, if not with positive abnegation, of gain

27 or profit." As detailed in the Statement of Case and Facts section of this brief, the evidentiary record is replete with affirmative evidence that GCI provided temporary lodging in its dormitories with the hope or expectation of gain or profit. GCI nonetheless makes the unsupported claim that "GCI receives no fmancial benefit and seeks no profit or financial reimbursement for providing the Dormitory." GCI initial brief, at S. The factual record developed before the BTA does not bear out GCI's one-sentence denial of financial benefit or gain arising from its furnishing of temporary lodging to church attendees.

Rather than make the dormitory available to church members and supporters through pure and disinterested benevolence, GCI provides dormitory rooms with the hope and expectation that church members will participate at and attend church services, attend GCl's nearby for-profit buffet restaurant, and make monetary donations. To the church members staying at the dormitory, they receive something of intrinsic and substantial value in the form of lodging accommodations. In fact, GCI Finance Manager Cathy Shupe testified that church members would otherwise have to pay to stay at a hotel. Hr. Tr. 41-42, Supp. I 1-12. Both GCI and the church members benefit from one another.

GCI demonstrates its hope or expectation of profit by specifically directing the dormitory lodging limited exclusively to its church members and supporters, not the general public, as an inducement to the church members and supporters to donate to GCI. The lodging provided to church members induces the mernbers to reciprocate with donations to GCI during their stay at the dormitory. Still further, GCI's expectations extend beyond church members stay at the dormitory to the hope and expectation that church members will return and provide benefits in the future. Due to GCI's hope and expectation that church members provided lodging will

28 benefit the church, GCI lacks the requisite charitable intent for charity under Planned

Parenthood.

A. Purely quid pro quo transactions are quintessentially non-charitable transactions that do not qualify as "charity" under Ohio law.

Bethesda Healthcare, Inc. v. Wilkins, 101 Ohio St.3d 420, 2004-Ohio-1749.

Pursuant to the definition of "charity" under Planned Parenthood, persons engaged in

charitable activities must, as a necessary but not sufficient condition for exemption, make

contributions "without hope or expectation, if not with positive abnegation, of gain or profit."

Planned Parenthood Ass'n v. Tax Commissioner, 5 Ohio St.2d 117, syllabus, 120 (1966). In

other words, giving without the hope or expectation of gain or profit is a necessary but not

sufficient condition for charitable activity in Ohio. Purely quid pro quo transactions alone,

without any form of charitable intent, are not cliaritable under Ohio law.

In Bethesda Healthcare, Inc. v. Wilkins, for example, the Ohio Supreme Court denied

charitable real property tax exemption for a state-of-the-art fitness center that charged members

market-based rates to use the fitness center. 101 Ohio St.3d 420, 2004-Ohio-1749, ¶¶ 13, 38.

The non-charitable transactions in Bethesda were private quid pro quo transactions that do not

constitute charity under Ohio law. Fitness center patrons paid a membership fee because they wished to benefit from something given in return, namely use of the fitness center. On the other side of the transaction, the fitness center provided the fitness center in order to obtain the pecuniary benefits of membership fees. In the Bethesda transactions and others like them, there is something exclianged for something else, i.e. a quid pro quo.

Parties enter into quid pro quo transactions to further their own private benefit, because they would like to receive something in exchange for what is given. Such transactions do not carry with them the "publicness" that has been the touchstone of Ohio real property tax

29- exemption lawd First Baptist Church of'Milford v. Wilkins, 110 Ohio St.3d 496, 2006-Ohio-

4966, T 10, citing White Cross Ilosp. Ass'n v. Bd. of Tax Appeals, 38 Ohio St.2d 199, 201 (1974)

("[t]he rationale justifying a tax exemption is that there is a present benefit to the general public

*** sufficient to justify the loss of tax revenue."). If Bethesda did not provide the fitness center, the fitness center patrons would not pay their membership fees. If the patrons did not pay their membership fees, Bethesda would not provide the fitness center.

There can be little doubt that the Court's well-developed charitable property tax exemption jurisprudence is replete with private quid pro quo transactions held non-charitable. In each of the following cases, among others, the Ohio Supreme Court held that property used for private quid pro quo transactions does not qualify for charitable exemption:

• In Olmsted Falls Bd. of ` Ed. v. Tracy, a social club that used property for

activities financed with membership dues paid by dues-paying members did

not qualify for charitable exernption, notwithstanding some non-member

participants in club activities. 77 Ohio St.3d, 393, 397 (1997).

• In Socialer T uy°nverein v. Bd. of Tax Appeals, a social club that used property

for activities financed with membership dues paid by dues-paying members

did not qualify for charitable exemption. 139 Ohio St. 622 (1942).

• In Seven Ilills Schools v. Kinney, a non-profit educational institution that used

property to operate a "clothing exchange" where donated used school

uniforms were sold in exchange for money did not qualify for charitable

exemption. 28 Ohio St.3d 186, 188 (1986).

30 ® In Ohio Masonic Home v. Bd. of Tax Appeals, property used for commercial

farming and the sale of crops in exchange for money did not qualify for

exemption. 52 Ohio St.2d 127, 130 (1977).

® In First Baptist Cliurch of Milford v. Wilkins, a non-profit corporation that

used property to operate a custom print shop for sales to churches and persons

affiliated with church did not qualify for charitable exemption. 110 Ohio

St.3d 496, 2006-Ohio-4966, ¶¶ 3-5.

• In Hubbard Press v. Tracy, a nonprofit corporation that used property as a

printing operation to "manufacture, print, publish, and sell" printed church

materials did not qualify for charitable exemption. 67 Ohio St.3d 564, 566

(1993).

• In American Society for Metals v. Limbach, a non-profit corporation that used

property for fee-based educational instruction and fee-based conferences for

the presentation of scientific papers and lectures on metallurgy did not qualify

for charitable exeniption. 59 Ohio St.3d 38, 40 (1991).

• In Lutlaeran Book Shop v. Bowers, a non-profit corporation that used property

as a Christian literature store and operated on a nonprofit basis did not qualify

for charitable personal property exemption. 164 Ohio St. 359 (1955).

® In American Jersey Cattle Club v. Glander, a non-profit corporation that

granted the privilege of a trademark for a milk brand ("Jersey Milk") in

exchange for money and, further, sold promotional leaflets and materials to

users of Jersey Milk trademarks did so to promote the sale of Jersey Milk and

31 did not qualify its property for charitable personal property tax exemption.

152 Ohio St. 506, 514 (1950).

And while a purely quid pro quo transaction is quintessentially non-charitable in natt.ire,

still giving "without hope or expectation, if not positive abnegation, of gain or profit" is a

necessary but not sufficient component of charity under Ohio law. Planned Parenthood Ass'n v.

Tax Commissioner, 5 Ohio St.2d 117 (1966). For instance, the Ohio Supreme Court has, time

and again, denied charitable exemption to affordable housing provided at below-cost rates due to

the "distinctly residential," and private, use of the premises. Philada Home Fund v. Bd. of Tax

Appeccl, 5 Ohio St. 135 (1966); Cogswell Hall v. Kinney, 30 Ohio St.3d 43, 44 (1987); NBC-USA

Housing, Inc. - Five v. Levin, 125 Ohio St.3d 394, 2010-Ohio-1553, ¶¶ 6-9. In these situations,

the preclominantly private use of the property defeats exemption notwithstanding "giving"

through below-cost rate rents.

Against this foundation, purely quid pro quo transactions do not fit within the definition

of "charity" set forth in Planned Parenthood or the Court's well-developed jurisprudence on

charitable property tax exemption law.

B. A gift is a necessary but not sufficient component of "charity," which requires charitable intent to give "without the hope or expectation, if not positive abnegation, of gain or profit." For charitable real property tax exemption, property must be used to provide a gift, not the proceeds from such property.

Dialysis Clinic v Levin, 127 Ohio St.3d 215, 2010-Ohio-5071, ¶¶ 32-33 ("The BTA [reasonably and lawfully] echoed the comrnissioner's position that the provision of free, unreimbursed care constitutes an essential part of a tax-exemption claim for a healthcare-services provider.").

Notwithstanding the non-charitable tiature of property used for quid pro quo transactions, use oF property often has both charitable and non-charitable characteristics, leading to a fact- intensive inquiry turning upon the "totality of the circumstances." Bethesda Healthcare, Inc. v.

32 Wilkins, 101 Ohio St.3d 420, 2004-Ohio-1749, ¶ 38. For example, in Bethesda, Olmstead Falls

Bd. of Ed, First Baptist Church of Milford, American Society for Metals, and American Jersey

Cattle Club, non-profit corporations used property in part to provide goods or services without

the expectation of profit, but not at a level sufficient to warrant exemption. As the Court held in

Bethesda, charitable exemption turns upon the "totality of the circumstances," both in the

quantity and quality of charitable activity conducted on the property. Bethesda, at ¶ 38.

To explain this fact-intensive inquiry, the Ohio Board of Tax Appeals and other state

supreme courts have adopted case law that "charity is a gift," which carries with it an element of

benevolent intent. Dialysis Clinic, Inc. v. Wilkins, BTA Case No. 2006-V-2389 (Nov. 24, 2009),

unreported, aff d Dialysis Clinic v. Levin, 127 Ohio St.3d 215, 2010-Ohio-5071 (citing Provena

Covenant Med. Center v. Dept. of Revenue, 384 Ill.App.3d 734 (2008), affd Provena Covenant

Med. Center v. Dept. of Revenue, 236 111.2d 368 (2010)), Appx. 1-8, 65-88, 41-64. In Dialysis

Clinic v. Wilkins, the BTA explained that benevolent intent is a necessary but not sufficient

condition for charity:

`Charity' is an act of kindness or benevolence. There is nothing particularly kind or benevolent about selling somebody something. `Charity' is `generosity and helpfulness[,] esp[ecially] toward the needy or suffering' (Merriam-Webster's Collegiate Dictionary 192 (10th ed. 2000)) - not merely helpfulness, note, but generosity. `Generosity' means `liber[ality] in giving.' Merriam-Webster's Collegiate Dictionary 484 (10th ed. 2000). To be charitable, an institution must give liberally. Removin2 2ivin^ from charity would debase the meaning of charity, and we resist such an assault upon language.

Id. (Emphasis added internal citations omitted). The BTA went on to explain that some transactions carry with them components of both gifts and exchanged goods or services:

[A] gift is, by definition, free goods or services: `something voluntarily transferred by one person to another without

33 compensation' (Merriam- Webster's Collegiate Dictionary 491 (10th ed. 2000)). Defining `gift' in any other way would do violence to the meaning of the word. One can make aaift by charaing nothing at all. Or one can make a2ift by undercharging a person, that is, charging less than one's cost *** and in that case, part of the goods or services is given without compensation. *** For a gift (and, therefore, charity) to occur, something of value must be given for free.

Id. (Emphasis added and internal citations omitted).

Upon appeal, the Ohio Supreme Court agreed with the BTA that a gift is a necessary but

not sufficient component of charity. The Court specifically held that 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[.]" Dialysis Clinic, Inc. v. Levin, 127 Ohio

St.3d 215, 2010-Ohio-5071, ¶ 32. In Dialysis Clinic, Inc. v. Levin, a kidney dialysis center did

not qualify for charitable exemption, in part, because it maintained a policy that care provided to

indigent patients was not a "gift" and such care could be refused based upon inability to pay.

Id. at ¶ 34. Absent the intent to give, the Court found charity to be lacking, denied charitable

exemption, and affirmed the BTA's decision and order below. Id. at ¶ 34.

Several other state supreme courts have likewise held that gifts are a necessary but not sufficient component of charity. In Retirement Homes of the Detroit Ann. Conf of the United

1Ylethodist Church v. Sylvan Township, for instance, the Supreme Court of Michigan held that

"charity is a gift." 416 Mich. 340, 348-49 (1982) (internal citations omitted), Appx. 89-94.

There, the court held that apartments designed for retirees to live independently were not entitled to charitable exemption because the retirees did not "receive any significant benefit that they did not pay for. There [was] no `gift' to residents." Id. at 350, Appx. 91.

In Utah C'ounty v. Intermountain Health Care, Inc., the Supreme Court of Utah expressly held that gifts are an essential element to the definition of "charity" for purposes of real property

34 tax exemption. 709 P.2d 265 (1985), Appx. 95-128. The court went on to explain that gifts may

be identified not only through transactions where nothing is exchanged, but also through quid

pro quo transactions where there is a "substantial imbalance in the exchange between the charity

and the recipient of its services." Id. at 269, Appx. 97-98. In the absence of a gift, the Supreme

Court of Utah denied charitable exemption to a hospital claiming exemption solely on the basis

of a non-gift "community benefit." Id. at 276, Appx. 102.

Still other state supreme courts have expressly held that gifts are an essential component

of charity for property tax exemption purposes. Provena Covenant Med. Center v, Dept. of

Revenue, 236 II1.2d 368, 401 (2010) ("If it were not a gift, it could not be charitable."), Appx.

41-64; Board of Assessment Appeals v. A.ff/FMInternationat, 940 P.2d 338, 347 (1997) (citing

United Presbyterian Ass'n v. Bd. of County Comm'rs, 167 Colo. 485, 494-95 (Colo.1968)),

Appx. 129-40, 141-50; Western Mass. Lifecare Corp. v. Board of Assessof s of Springfield, 434

Mass. 96, 102-03 (2001) (citing Boston Chamber of Commerce v. Assessors of Boston, 315

Mass. 712, 716 (1944)), Appx. 151-60, 161-66; Croixdale, Inc. v. County of Washington, 726

N.W.2d 483, 487-88 (2007) (Minnesota), Appx. 167-78.

Similarly, the U.S. Supreme Court has held that a "gift" excludable from income for

federal income tax purposes must be given with "detached and disinterested generosity."

I.R.C. § 102; Commissioner v. Duberstein, 363 U.S. 278, 285-86 (1960), Appx. 179-90. In

Duberstein, the president of an iron and metal company, Duberstein, referred potential customers to the president of another metal company, Berman. Duberstein, 363 U.S. at 280-81, Appx. 182-

83. Because Duberstein's leads were so helpful to Berman's business, Berman bought a Cadillac for Duberstein. Id: For federal income tax purposes, Duberstein then claimed that the Cadillac was a non-taxable gift.

35 The U.S. Supreme Court disagreed with Duberstein that the Cadillac was a gift because

the requisite intent was lacking. Instead, the Court held that the Cadillac was "at bottom a

recompense for Duberstein's past services, or an inducement for him to be of further service in

the future." Id. at 291-92, Appx. 186-87. As a matter of law, the Court held that a gift must be

given with "detached and disinterested generosity." Id. at 285-86, Appx. 184-85. By contrast,

quid pro quo exchanges such as the Cadillac that Berman provided Duberstein for services

rendered are the very antithesis of charity and giving. Id. at 285-86 (citing Robertson v. U.S;,

343 U.S. 711, 714 (1952) ("And, conversely, `where the payment is in return for services

rendered, it is irrelevant that the donor derives no economic benefit from it.')), Appx. 184-85,

209-12; see also Hernandez v. Commissioner, 490 U.S. 680 (1989) (charges for spiritual training

or "auditing" services are not deductible charitable contributions under I.R.C. § 170), Appx. 191-

208.

To summarize, common definitions of charity identify a "gift" as a necessary but not

sufficient component of charity. A gift, in turn, is something given without consideration

therefore, or where a donor gives something of much greater value than what is received. The

inquiry into whether property is used charitably to provide a gift without the hope or expectation

of profit then turns upon whether the donor carried the requisite intent to give. Dialysis Clinic,

Inc. v. Wilkins, BTA Case No. 2006-V-2389 (Nov. 24, 2009), unreported, aff d Dialysis Clinic v.

Levin, 127 Ohio St.3d 215, 2010-Ohio-5071, Appx. 1-8. As the U.S. Supreme Court has interpreted I.R.C. § 102, the charitable intent necessary for a "gift" requires the donor to liberally give with "detached and disinterested generosity." Commissioner v. Duberstein, 363 tJ.S. 278,

285-86 (1960), Appx. 184-85.

36 C. Due to the present and future benefits that church members staying the dormitory provide to GCI, GCI does not use the dormitory to provide charity because GCI lacks the charitable intent required of "charity" under Planned Parenthood.

In light of the current and future benefits that church members staying the dormitory

provide to GCI, the charitable intent required for charity under Ohio law is lacking in this case.

GCI holds three subsidiaries, two of which are for profit companies that benefit from the church

members staying at the dormitory. Hr. Tr. 64-65; Supp. 17. That is, in addition to its church

subsidiary, GCI holds a for-profit television station and a for-profit buffet restaurant, which are

both located near GCIs Cuyahoga Falls location. Hr. Tr. 69; Supp. 18. The television station,

which airs GCI's flagship program The. Ernest Angley Hour, earns revenue largely through

advertising revenue. The buffet restaurant carns revenue through restaurant operations.

Hr. Tr. 68; Supp. 18.

The church members staying at the dormitory benefit GCI's for-profit endeavors. The

dormitory guests attend church services at GCI and thereby provide an audience for and

participate in The Ernest Angley Hour, which airs on GCI's for-profit television station. Hr. Tr.

42, Supp. 12. The presence of the church members materially adds to the value that The Ernest

Angley Hour provides to GCI's television station.

In addition, dormitory guests frequent the for-profit buffet restaurant that GCI's for-profit

subsidiary owns and operates roughly twenty miles away near GCI's church location in

Cuyahoga Falls, Ohio. Hr. Tr. 68-69, Supp. 18. As GCI Finance Manager and Media Director

Cathy Shupe testified before the BTA, the buffet restaurant operates on a purely for-profit basis and guests staying the donnitory may take their families to the buffet, "but it's not free." Hr. Tr.

68, Supp. 18. By providing patrons for GCI's buffet restaurant, the dornlitory thus benefits GCI in this additional way.

37 Still further, the dormitory benefits GCI as an induceinent for guests to make current and

future donations to the church. There is no question that GCI solicits donations from the church

members staying at the dormitory a specific fee for lodging. Hr. Tr. 60-61, Supp. 16. And

indeed, the guests frequently make donations to GCI. Hr. Tr. 60-61, Supp. 16. Through the

donations solicited from church supporters staying at the dormitory, GCI uses the dormitory to

raise revenue.

As for the church members staying at the dormitory, they receive something of value in

the for-m of lodging accommodations. In fact, GCI Finance Manager Cathy Shupe testified that

church members would otherwise have to pay to stay at a hotel. Hr. Tr. 41-42, Supp. 11-12.

Both GCI and the church members benefit from one another.

GCI has not satisfied its burden to show that lodging it provides to church members are

not a quid pro quo for the benefits that members provide while staying at the dormitory and an

inducement for church members to return and provide benefits, including donations, in the

future. R.C. 5715.271; Anderson/Maltbie Partnership v. Levin, 127 Ohio St.3d 178, 2010-Ohio-

4904, ¶ 16. In fact, GCI denionstrates its hope or expectation of profit by specifically directing the dormitory lodging only to its church members and supporters, not the general public, as an inducement to the church members and supporteYs to donate to GCI and provide an audience for church services and The Ernest Angley Hour.

With respect to the donations that dormitory guests make to GCI, Finance Manager

Shupe testified that GCI records are available to more thoroughly investigate the nature and extent of donations that dormitory guests make, but she has never undertaken to quantify, for herself, the extent to which dormitory visitors made monetary donations. Nor did Finance

38 Manager Shupe present any of the records of those donations to the Commissioner or to the

Board of Tax Appeals. Hr. Tr. 61-62, Supp. 16. GCI has not satisfied its burden.

The situation here is analogous to the exchange in Duberstein. In Duberstein, the U.S.

Supreme Court held that a business owner gave a Cadillac to his business colleague in exchange

for business leads, even over the protestations of the taxpayer that the Cadillac was given

gratuitously. The Cadillac was "at bottom a recompense for Duberstein's past services, or an

inducement for him to be of further service in the future." Commissioner v. Duberstein, 363

U.S. 278, 291-92 (1960), Appx. 186-87. The Cadillac constituted income to the recipient

taxpayer because the donor lacked the requisite charitable intent -- "detached and disinterested

generosity" -- required of a gift (excludable from federal incorne taxation under I.R.C. § 102).

Likewise here, the charitable intent required for "charity" under Planned Parenthood is

lacking. GCI's for-profit subsidiaries are clearly benefitting from the presence of church service

attendees and buffet restaurant patrons. The GCI church itself is benefitting from the donations

that dormitory guests make to GCI. Moreover, the lodging induces not just the benefits provided

while the church members are visiting GCI, but also induces church members to return and

provide such benefits in the future.

Still more fundamentally, GCI has made little or no effort to sustain its burden to show

that these benefits are provided with requisite charitable intent under Planned Parenthood.

Given the record, there has been no showing that GCI has provided the dormitory members with

a gift. GCI does not provide its church meanbers with lodging out of "detached and disinterested generosity," or "without hope or expectation, if not positive abnegation, of gain or profit."

Since GCI has not shown that it uses the dormitory with the requisite intent under Planned

Parenthood, GCI's claim to charitable exemption must fail on this independent ground.

39 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.

GCI insists throughout its brief that the dormitory is not held with a "view to profit," which is a requirement for exemption under the charitable exemption in R.C. 5709.12(B) and the house of public worship exemption in R.C. 5709.07. But again, GCI has not sustained its burden to show exemption, instead providing evidence that tends to show that property is held with a view to profit. As the pilot of Ernest Angley's private 747 Jumbo Jet, Paul Machamer, testified at BTA hearing, the dormitory building is only used for temporary housing and, as a consequence, sits vacant 50-60 percent of the time. Hr. Tr. 20, Supp. 6. In the absence of some active use, there is a strong inferenee that property is held for sale.

In American Jersey Cattle Club v. Glander, the Ohio Supreme Court held that nonprofit property owners such as GCI may profit as an entity, even if the profit is reinvested elsewhere rather than distributed to individuals. 152 Ohio St. 506, 510 (1950) ("The fact, that a corporation is one not for profit, does not mean that its enterprises may not be conducted for gain, profit or net income. It is necessary to distinguish between gain, profit or tiet income to the incorporators or members and gain, profit or net income to the corporation as a legal entity.").

40 Partially for this reason, sparsely used, vacant and/or undeveloped property is not used for an exempt purpose because such property may be held for sale in future. That is, institutions may hold exempt property with a view to profit merely by holding it tax-free as it appreciates in value and later realizing a profit upon its sale. American Chemical Soc. v. Kinney, 69 Ohio St.

2d 167, 172-173 (1982) (Brown, J., dissenting)> So, unused property not only obviously fails to be affirmatively used charitably, but also serves a non-charitable use because unused property may be held for future sale and with a vievti, to profit to the titleholder.

Here, the dormitories are tantamount to vacant property because they are not used for any purpose 50-60 percent of the time. If the property were to appreciate in value, or even if GCI merely holds the property for sale, such use does not constitute exempt use. Instead the property is held for sale and with a view to profit. As for charitable exemption, holding property for sale again fails to satisfy the requisite charitable intent under Planned Parentlaood -- to give "without hope or expectation, if not positive abnegation, of gain or profit." On this record, GCI has not sustained its burden to show that the property is not held with a view to profit, instead providing evidence of vacant property that, in the absence of an active use, suggests the property is held for sale and with a view to profit,

III. CONCLUSION

For the reasons set forth above, the Court should affirm the Board of Tax Appeals decision upholding the appellee Tax Commissioner's denial of real property tax exemption for appellant GCI's dormitory building. Under the Court's established precedent, GCI's dormitory building fails to qualify for real property tax exemption under either the "house of public worship" exemption in R.C. 5709.07(A)(2) or the "charitable" exemption in R.C. 5709.12.

41 Respectfully submitted,

Michael DeWine Attorney General of Ohio

DAV EBERSOLE (0087896) (Counsel of Record) BARTON A. HUBBARD (0023141) Assistant Attorneys General 30 East Broad Street, 25th Floor Columbus, Ohio 43215-3428 Telephone: (614) 644-8909 Facsimile: (877) 636-8331 dave.ebersoleCa)ohioattorneygeneral.gov

Counsel foN Appellee Joseph W. Testa, Tax C'onamissioner of Ohio

42 CERTIFICATE OF SERVICE

I hereby certify that copies of the foregoing Appellee Tax Commissioner's Merit Brief were served upon William G. Chris, Brandon T. Pauley, Roderick Linton Belfance, LLP, 50 S.

Main Street, 10th Floor, Akron, Ohio, 44308-1828, counsel for Appellant GCI, Inc., by U.S. regular mail this 28th day of July, 2014.

DAVI . EBERSOLE 0087896) Assistant Attorney General