[Cite as Columbus City School Dist. Bd. of Edn. v. Testa, 130 Ohio St.3d 344, 2011-Ohio-
5534.]




  COLUMBUS CITY SCHOOL DISTRICT BOARD OF EDUCATION, APPELLANT, v.
                      TESTA, TAX COMMR., ET AL., APPELLEES.
               [Cite as Columbus City School Dist. Bd. of Edn. v. Testa,
                        130 Ohio St.3d 344, 2011-Ohio-5534.]
Taxation—Tax on income from property used for the support of a state
       university—R.C. 3345.17—Income-producing property may not be
       exempted under the statute unless the activity conducted on the property
       bears an operational relationship to university activities—Decision
       reversed.
  (No. 2010-1754—Submitted October 18, 2011—Decided November 1, 2011.)
               APPEAL from the Board of Tax Appeals, No. 2008-M-408.
                                __________________
       Per Curiam.
       {¶ 1} In this real property tax exemption case, the Columbus City School
District Board of Education (“school board”) appeals from the decision of the
Board of Tax Appeals (“BTA”), which affirmed the tax commissioner’s grant of
tax-exempt status to certain property owned by the “State of Ohio for the use and
benefit of the Ohio State University” (“OSU”). The dispute centers on the proper
construction of R.C. 3345.17, which provides that state-university property is
exempt from real property taxation if it is “used for the support of such
university.”
       {¶ 2} Under this statute, the tax commissioner and the BTA granted
exemption to a two-story building with basement that generates rental income
from a first-floor commercial tenant and second-floor residential tenants. OSU
received title to the building through a bequest intended to provide scholarships to
veterinary-medicine students at OSU. Before this court, the tax commissioner
                             SUPREME COURT OF OHIO




argues that income-producing property like the parcel at issue qualifies for
exemption under R.C. 3345.17 to the extent that the income generated by the
property is devoted to university purposes.     The school board contends that
income-producing property may not be exempted under the statute unless the
activity conducted on the property bears an operational relationship to university
activities. We agree with the school board, and we therefore reverse.
                             I. Factual Background
         {¶ 3} The two-story building at issue is located south of the Ohio State
University campus in Columbus. It houses four residential rental units on the
second floor and a commercial space on the first floor and in the basement that
was occupied at the time of the application by a McDonald’s, and later by a credit
union.
         {¶ 4} OSU acquired title to the property in 1992 through the estate of
Mabel Elizabeth White, who bequeathed it subject to the requirement that the
“real estate, or the proceeds from any sale therefrom” be “used to further fund, or
establish, the David Stuart White Fellowship Fund.” The testator then specified
that the fund should be “invested and the income therefrom used for providing
graduate fellowships * * * in any branch of veterinary medicine.” When OSU
acquired title, the property was subject to a 99-year renewable lease held by
Long’s College Book Company. In 2000, Long’s had transferred the leasehold
interest to Campus Partners for Community Urban Redevelopment. In October
2002, Campus Partners assigned the leasehold interest to OSU in consideration of
a payment of $500,000, which led to a merger of title and termination of the lease.
         {¶ 5} A memorandum of understanding (“MoU”) was executed on
March 26, 2004, to “document[ ] the agreement, responsibilities and
commitments of various [OSU] offices regarding the assignment of the [property
at issue] in exchange for payment for all costs incurred by [OSU].” The stated




                                         2
                               January Term, 2011




“primary goal” of the MoU is to “fund the David Stuart White Fellowship Fund
(‘Fund’) to the fullest extent allowable under University policy and the law.”
       {¶ 6} According to the MoU, income from the property at issue would be
applied first to paying down OSU’s acquisition expense, after which the property
would be assigned to the veterinary college. Under the MoU, proceeds of a sale
by OSU would be directed to the veterinary college, and that college also would
enjoy an option to occupy the building if a tenant vacated.
       {¶ 7} OSU hired a commercial property-management firm, Buckeye
Realty, to collect rents and maintain the property. Buckeye Realty retained a
portion of rent to pay its management-related fees and expenses. There was no
evidence whether the residential tenants were OSU students.
       {¶ 8} The McDonald’s lease called for the tenant to pay to the landlord
two-thirds of the real estate taxes plus 100 percent of any increased taxes
attributable to improvements made by McDonalds. Under its 2006 lease, the
credit union pays 100 percent of real estate taxes based on the square footage that
it occupies. Under these circumstances, the benefit of a tax exemption inures in
part to OSU’s commercial tenants.
                             II. Procedural History
       {¶ 9} On May 18, 2004, OSU filed an application to exempt the property
for 2004, predicating the exemption claim on R.C. 3345.17. The school board
opposed the exemption on the grounds that the property “consists of residential
apartment units and a retail establishment.”          On March 18, 2008, the
commissioner issued his final determination, which granted the exemption based
on his review of the facts in light of State ex rel. Univ. of Cincinnati v. Limbach
(1990), 51 Ohio St.3d 6, 7, 553 N.E.2d 1056.
       {¶ 10} The school board appealed the final determination to the BTA,
which held a hearing on August 14, 2009. At that hearing, OSU presented four
witnesses and several exhibits in support of the claim, and the school board’s



                                         3
                            SUPREME COURT OF OHIO




counsel cross-examined the OSU witnesses. On September 14, 2010, the BTA
issued its decision upholding the commissioner’s determination. Columbus City
School Dist. Bd. of Edn. v. Levin (Sept. 14, 2010), BTA No. 2008-M-408, 2010
WL 3614560, *6. Reiterating the commissioner’s reliance on Univ. of Cincinnati
and citing Ohio State Univ. Bd. of Trustees v. Kinney (1983), 5 Ohio St.3d 173, 5
OBR 392, 449 N.E.2d 1282, the BTA rejected the school board’s contention that
the use of property under R.C. 3345.17 may not be predicated solely on the use of
the proceeds derived from purely commercial, income-producing property.
Columbus City School Dist. at * 5.       According to the BTA, the distinction
between “use of property” and “use of proceeds derived from property” pertains
to the charitable-use exemption at R.C. 5709.12(B), but not to R.C. 3345.17. Id.
       {¶ 11} The school board has appealed, and we now reverse.
                                  III. Analysis
       {¶ 12} R.C. 5717.04 requires us to determine whether the BTA’s decision
was “reasonable” and “lawful.”      Under this standard, we acknowledge that
“ ‘[t]he BTA is responsible for determining factual issues and, if the record
contains reliable and probative support for these BTA determinations,’ ” we will
affirm them.   Satullo v. Wilkins, 111 Ohio St.3d 399, 2006-Ohio-5856, 856
N.E.2d 954, ¶ 14, quoting Am. Natl. Can Co. v. Tracy (1995), 72 Ohio St.3d 150,
152, 648 N.E.2d 483. In the present case, however, we are not called upon to
review factual determinations of the BTA, but rather the scope of exemption
under R.C. 3345.17. Because this analysis requires us to construe and apply the
language of the statute, we confront a question of law, and our review is de novo.
Akron Centre Plaza, L.L.C. v. Summit Cty. Bd. of Revision, 128 Ohio St.3d 145,
2010-Ohio-5035, 942 N.E.2d 1054, ¶ 10.




                                        4
                               January Term, 2011




           A. The language of R.C. 3345.17 ties the exemption to the
                use of the property, not to the use of the proceeds
        1. OSU had the burden to show clear entitlement to the exemption
        {¶ 13} R.C. 3345.17 provides a tax exemption for “[a]ll property * * * of
the boards of trustees and of the housing commissions of the state universities, * *
* and of the state held for the use and benefit of any such institution,” if that
property is “used for the support of such institution,” and the exemption continues
“so long as such property is used for the support of such university.” Uncontested
is the ownership qualification: the property at issue is owned by the state for the
benefit of OSU. The dispute in this case centers on whether using income derived
from rent paid by commercial and residential tenants qualifies the property at
issue as being “used for the support of such university” under R.C. 3345.17.
        {¶ 14} In construing statutory language, we “must ascertain and give
effect to the intent of the legislature,” which we determine by “ ‘read[ing] words
and phrases in context and constru[ing] them in accordance with rules of grammar
and common usage.’ ” HIN, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 124 Ohio
St.3d 481, 2010-Ohio-687, 923 N.E.2d 1144, ¶ 15, quoting State ex rel. Russell v.
Thornton, 111 Ohio St.3d 409, 2006-Ohio-5858, 856 N.E.2d 966, ¶ 11.
        {¶ 15} In Univ. of Cincinnati, 51 Ohio St.3d at 7, 553 N.E.2d 1056, fn. 1,
we cited a dictionary definition of “support”: support means “ ‘actively promote
the interest or cause of,’ ” “ ‘give assistance to,’ ” and “ ‘pay the costs of:
maintain.’ ” Id., quoting Webster’s Third New International Dictionary (1986)
2297. But while “support” unquestionably could encompass the use of proceeds
to defray costs incurred by the university, the statute subordinates the concept of
support to the concept of use: to qualify for exemption, the property must be used
for the support of the university. The statute notably does not explicitly allow or
tie the exemption to the use of income from the property, but rather to the use of
the property itself.



                                         5
                             SUPREME COURT OF OHIO




       {¶ 16} In light of the foregoing discussion, an expansive reading of the
phrase would permit the use of income by itself to qualify the property for
exemption. But reading R.C. 3345.17 expansively would contravene the usual
manner of construing exemption statutes. As the proponent of a tax exemption,
OSU had the burden to “show that the language of the statute ‘clearly express[es]
the exemption’ in relation to the facts of the claim.”            Anderson/Maltbie
Partnership v. Levin, 127 Ohio St.3d 178, 2010-Ohio-4904, 937 N.E.2d 547, ¶ 16,
quoting Ares, Inc. v. Limbach (1990), 51 Ohio St.3d 102, 104, 554 N.E.2d 1310.
Indeed, R.C. 3345.17 creates an “exclusion from taxation” that as such “must be
construed strictly against the taxpayer.” (Emphasis sic.) H.R. Options, Inc. v.
Wilkins, 102 Ohio St.3d 1214, 2004-Ohio-2085, 807 N.E.2d 363, ¶ 2. We have
enforced this principle to the point of declaring that “ ‘ “[i]n all doubtful cases
exemption is denied.” ’ ” Anderson/Maltbie Partnership, ¶ 16, quoting A.
Schulman, Inc. v. Levin, 116 Ohio St.3d 105, 2007-Ohio-5585, 876 N.E.2d 928,
¶ 7, quoting Youngstown Metro. Hous. Auth. v. Evatt (1944), 143 Ohio St. 268, 28
O.O. 163, 55 N.E.2d 122. Our review of the record in light of the language of
R.C. 3345.17 and the case law leads us to conclude that OSU did not sustain its
burden.
          2. The legislative process negates an intent to permit property to
             qualify for exemption based solely on the use of its income
       {¶ 17} The need to focus on the use of the property itself, as opposed to
the use of the proceeds from the property, is underscored by the existence of a
much older companion provision to R.C. 3345.17 that exempts property of
municipal universities. R.C. 3349.17. That statute explicitly exempts “property
* * * located within the county in which a university, college, or other educational
institution of any municipal corporation is located” when the “rents, issues,
profits, and income of [that property] are used exclusively for the use,
endowment, or support of such institution.” This provision on its face provides an




                                          6
                                January Term, 2011




exemption primarily if not exclusively to income-producing property.              By
contrast, R.C. 3345.17 makes no mention of income-producing property—with
the result that any extension of the exemption to such property requires an
expansive reading of its language.
       {¶ 18} The state-university provision in this case, R.C. 3345.17, was
enacted by the 105th General Assembly in 1963. Am.S.B. No. 271, 130 Ohio
Laws 783, 1515 (“S.B. 271”). By contrast, the municipal-university exemption
was enacted by the 79th General Assembly in 1911 as G.C. 7915-1. H.B. No. 65,
102 Ohio Laws 32. Given that the provision at issue was enacted against the
background of the earlier provision, the focus of R.C. 3345.17 on the use of the
property rather than its proceeds is striking and significant.
       {¶ 19} Any doubt that the legislature enacted R.C. 3345.17 in 1963 with
R.C. 3349.17 in mind is eliminated by the background of the 1963 enactment. As
originally introduced on March 25, 1963, S.B. 271 contained language exempting
state-university property based on the use of “the rents, issues, profits, or income”
derived from the property, just as R.C. 3349.17 exempts municipal-university
property on that basis. But amendments deleted the reference to rents, issues,
profits, or income from state-university property. Thus, the legislature appears to
have specifically contemplated an exemption for income-producing property at
the outset, only to change its mind during deliberations. The General Assembly
ultimately opted for an exemption based on the use of the property, not on the use
of its proceeds.
       {¶ 20} The tax commissioner characterizes the language of R.C. 3349.17
as “restrictive” compared to R.C. 3345.17. R.C. 3345.17, he asserts, exempts
property from taxation based on the use of its proceeds as well as the use of the
property itself. But the suggestion that the process of legislative amendment
supports applying R.C. 3345.17 in the present case is anomalous. As originally
introduced, the statute would grant an exemption to income-producing property



                                          7
                              SUPREME COURT OF OHIO




by its plain terms, but the amendment process specifically removed all reference
to income-producing property from the exempting language of the statute.
         {¶ 21} We conclude that the amendment process militates against, not in
favor of, granting the exemption in this case.        While the position of the
commissioner and OSU in this case would fit neatly under the originally proposed
language, it requires an expansive reading of the language that was actually
enacted. The legislative background suggests that such a reading is particularly
inappropriate in this case.
         B. The case law does not establish the availability of exemption
              under R.C. 3345.17 based solely on the use of income
         {¶ 22} Central to the appellees’ arguments is the contention that the case
law has already furnished the expansive reading that is required to justify the
grant of exemption in this case. This argument necessitates a close look at those
cases.
         {¶ 23} In Kinney, 5 Ohio St.3d 173, 5 OBR 392, 449 N.E.2d 1282, OSU
had acquired a 1.993-acre parcel adjacent to its airport. The property was part of
the airport’s “control zone” and was also used as part of the agriculture college’s
program for crop production to support animals that were “part of the teaching
and research mission in animal husbandry.” Id. at 173-174. On a small portion of
the parcel was a house that was subject to a residential lease, under the terms of
which the university received rent.          Id. at 173.     The tax-equalization
commissioner contended that the half acre with the rented house could not be
exempted, but the BTA and the court disagreed. The court characterized the
house rental as a “secondary use” and held that the primary use was “in support of
the academic mission of the Department of Aviation and Aeronautical and
Astronautical Engineering and the College of Agriculture.” Id. at 174-175.
         {¶ 24} In Univ. of Cincinnati, 51 Ohio St.3d 6, 7, 553 N.E.2d 1056, a
1.13-acre parcel improved with two buildings was donated to the university. One




                                         8
                               January Term, 2011




of the buildings housed a Laundromat, and the other was occupied in part by a
convenience store. Id. at 6-7. These two establishments occupied 12 percent of
the property and paid rent that was directed into the university’s general fund.
But the other 88 percent of the property was occupied, in part, by the university’s
College of Design, Architecture, Art, and Planning, with the remainder being
planned as either a maintenance garage for the main campus or as a residence
facility for the medical center. Id. at 7. The court affirmed the BTA’s grant of
exemption based not only on the finding that the rent went into the university’s
general operating fund, but also on the finding that “there were plans to develop
the property in a manner to serve the university’s medical center or its main
campus.” Id.
       {¶ 25} The tax commissioner (who in the earlier cases took a more
restrictive approach to R.C. 3345.17) now champions the view that Kinney and
Univ. of Cincinnati established that “the leased properties were ‘used for the
support of’ the state universities because the rental income was deposited into the
universities’ general fund and used for daily operational expenses.”          OSU
supports that position, while noting that the specific scholarship-fund purposes to
which the income would be devoted (after the university’s cost of purchasing the
leasehold interest had been reimbursed) furnished additional grounds for
exemption. Both appellees regard the earlier cases as controlling and argue that
they require the grant of the exemption here.
       {¶ 26} As the foregoing discussion of the cases reveals, however, Kinney
and Univ. of Cincinnati do not stand for the proposition advanced by the
appellees. To be sure, the use of rental income for the support of the university
was an element in each of those cases, but in neither case did the court understand
the university to be using the property solely for the production of income through
rent paid by private parties—which is the situation that we confront in the present
case. To the contrary, in Kinney, we specifically declared that the use of the



                                         9
                            SUPREME COURT OF OHIO




house and grounds as rental property was a secondary use, and in Univ. of
Cincinnati, we emphasized that the commercial use encompassed only 12 percent
of the property, which was also subject to both current and prospective uses that
supported university activities apart from the generation of any income.
       {¶ 27} Indeed, the principle to be derived from Kinney and Univ. of
Cincinnati is that an ancillary use of property that generates income does not
defeat exemption as long as the property is used, to some degree, either currently
or prospectively, in a way that operationally relates to university activities. The
use of the income to support university activities, whenever there is any such
income, is probably a necessary condition for exemption. But that does not mean,
as the appellees assert here, that the use of income, by itself, suffices to qualify
the property for exemption. Indeed, allowing an exemption for property leased to
a commercial tenant is particularly troubling, since it makes the tax exemption
inure to the benefit of a commercial enterprise rather than the intended nonprofit
beneficiary.
       {¶ 28} The tax commissioner also contends that the narrower reading of
R.C. 3345.17 advocated by the school board violates the precept that the court
should construe statutes to give effect to all their language. See R.C. 1.47(B). In
the commissioner’s view, the narrower reading of R.C. 3345.17 makes it largely,
if not completely, duplicative of other exemption statutes, especially the
exemption for “public colleges and academies” at R.C. 5709.07(A)(4). But the
fact that R.C. 3345.17 may substantially or completely overlap other exemptions
does not furnish a reason to override a clearly intended legislative limitation—in
this case, the limitation of R.C. 3345.17 to situations where property is used in
ways that operationally support university activities. Tellingly, the commissioner
does not cite authority for his view. Indeed, in the past, we have applied R.C.
1.47(B) not to expand the scope of real property tax exemptions but to enforce
their limitations. See Church of God in N. Ohio, Inc. v. Levin, 124 Ohio St.3d 36,




                                        10
                                January Term, 2011




2009-Ohio-5939, 918 N.E.2d 981, ¶ 30 (“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”), citing
Rickenbacker Port Auth. v. Limbach (1992), 64 Ohio St.3d 628, 631-632, 597
N.E.2d 494.
        C. Neither the location of the property nor its status as a bequest
         to provide scholarships establishes its entitlement to exemption
        {¶ 29} Although endorsing the broad view of exemption under R.C.
3345.17, OSU also advances another argument as a fallback position. Namely,
OSU suggests that an aggregation of circumstances specific to this case brings it
within the holding of the earlier cases that allowed exemption.
        {¶ 30} In particular, OSU points to (1) the location of the property on
“one of the main arteries running through campus,” Neil Avenue, as well as in the
south campus Gateway area and (2) the property’s status as a bequest intended to
generate money for veterinary-medicine scholarships. While the properties at
issue in both Kinney and Univ. of Cincinnati were near a university facility or
campus, neither decision attached overriding significance to the bare fact of
physical proximity.
        {¶ 31} In Kinney, the residential parcel at issue was close to the
university’s airport, but the overriding factor was that the parcel “was a small part
of a seventy-eight acre acquisition which was intended to and does further
teaching and research in aviation and agriculture.” 5 Ohio St.3d at 174, 5 OBR
392, 449 N.E.2d 1282. In Univ. of Cincinnati, the proximity to the nursing
college and the university hospital was significant because of the “plans for
development of the site as a maintenance service garage for the main campus or
as a residence facility for the medical center.” 51 Ohio St.3d at 7, 553 N.E.2d
1056.




                                         11
                                SUPREME COURT OF OHIO




        {¶ 32} Moreover, the fact that the ultimate destination of the property’s
income was a scholarship fund does not change the analysis. Use of income from
property can “support” the university whether the income is placed into general
revenues or into an earmarked fund. But in neither instance does the statute
permit the exemption based upon the use of income.
        {¶ 33} Nor is it insignificant that the commercial tenant who pays the tax
with respect to the square footage that it occupies receives the actual benefit of the
exemption. To be sure, the tax commissioner argues that the existence of the tax
exemption may permit OSU to extract a higher rent in future years to benefit the
scholarship fund. But OSU would be able to do so only because the exemption
allows it to enjoy a preferred tax status as a commercial landlord—a competitive
advantage that the legislature does not appear to have intended.
        {¶ 34} Because there is neither a current nor a prospective use of the
property operationally related to university activities, OSU’s exemption
application should have been denied.1
                                     IV. Conclusion
        {¶ 35} For all the foregoing reasons, the BTA acted unlawfully when it
affirmed the tax commissioner’s grant of exemption. We therefore reverse the
decision of the BTA.
                                                                         Decision reversed.
        O’CONNOR, C.J., and PFEIFER, LUNDBERG STRATTON, O’DONNELL,
LANZINGER, CUPP, and MCGEE BROWN, JJ., concur.
                                  __________________
        Rich Gillis Law Group, L.L.C., Mark Gillis, and Kelley Gorrey, for
appellant.



1. The school board also advances a constitutional argument, but our disposition of the case on
statutory grounds makes that argument moot.




                                              12
                               January Term, 2011




       Michael DeWine, Attorney General, and Julie E. Brigner, Assistant
Attorney General, for appellee tax commissioner.
       Carlile, Patchen & Murphy, L.L.P., and Jackie Lynn Hager, for appellee
state of Ohio for the use and benefit of Ohio State University.
                            ______________________




                                         13
