ATTORNEY FOR PETITIONER:                           ATTORNEYS FOR RESPONDENT:
MARTIN R. LUCAS                                    KEVIN G. KERR
ATTORNEY AT LAW                                    TODD A. LEETH
North Judson, IN                                   HOEPPNER WAGNER & EVANS LLP
                                                   Valparaiso, IN


                                                                                 FILED
                                 IN THE                                     Dec 08 2017, 11:48 am

                           INDIANA TAX COURT                                     CLERK
                                                                             Indiana Supreme Court
                                                                                Court of Appeals
                                                                                  and Tax Court



STARKE COUNTY ASSESSOR,                          )
                                                 )
       Petitioner,                               )
                                                 )
                      v.                         ) Cause No. 71T10-1701-TA-00002
                                                 )
PORTER-STARKE SERVICES, INC.,                    )
                                                 )
       Respondent.                               )


                     ON APPEAL FROM A FINAL DETERMINATION OF
                         THE INDIANA BOARD OF TAX REVIEW

                                   FOR PUBLICATION
                                    December 8, 2017

WENTWORTH, J.

       The Starke County Assessor challenges the Indiana Board of Tax Review’s final

determination that Porter-Starke Services, Inc. was entitled to an 81% charitable

purposes exemption for real property it owned during the 2015 tax year. The Court affirms

the Indiana Board’s final determination.

                           FACTS AND PROCEDURAL HISTORY

       Porter-Starke is an Indiana and federal non-profit corporation that provides, among

other things, mental health services. (Cert. Admin. R. at 2, 84.) Its real property at issue

is an 8,239 square-foot medical building situated on a 1.147 acre lot located in Starke
County, Indiana. (Cert. Admin. R. at 5, 11-12.) During 2015, Porter-Starke leased 1,591

square-feet of its building to a third party. (Cert. Admin. R. at 31 ¶ 11, 71, 82.)

       During the year at issue, Porter-Starke operated a community mental health center

(“CMHC”) certified by the Indiana Family and Social Services Administration. (See Cert.

Admin. R. at 103-04.) As a CMHC, Porter-Starke administers programs that provide,

among other things, medical and psychiatric care, addiction treatment, nursing,

counseling, therapy, and training to mentally ill, chronically addicted, and emotionally

disturbed individuals. (Cert. Admin. R. at 200-03, 206, 229-30.) It provides these services

to long- and short-term patients of all ages. (Cert. Admin. R. at 201-02, 208-09.) These

services are overseen by an unpaid board of directors and provided by both volunteers

and paid employees, including a licensed psychiatrist and a medical doctor. (Cert. Admin.

R. at 205-06, 222-23, 241.) Moreover, as a CMHC, Porter-Starke is subject to oversight

by the State Board of Accounts, which requires an annual audit, and the State, which

audits its medical records. (Cert. Admin. R. at 233-34.)

       Porter-Starke receives subsidies and other financial assistance from various

governmental sources, including Starke County, the state of Indiana, and federal grants.

(Cert. Admin. R. at 213-14, 220, 226-27, 235-41.) In addition, Porter-Starke charges its

patients fees for its services, but it discounts those fees based on the patient’s ability to

pay and does not refuse service to those unable to pay. (Cert. Admin. R. at 154, 230,

240-41.)

       On April 15, 2015, Porter-Starke filed an Application for Property Tax Exemption

with the Starke County Property Tax Assessment Board of Appeals (PTABOA) for the

2015 tax year seeking a charitable purposes exemption for 100% of its property, claiming



                                              2
it was used exclusively to operate the CMHC. The PTABOA denied the exemption, and

Porter-Starke appealed to the Indiana Board.

       The Indiana Board held a hearing on August 10, 2016, and issued its final

determination on December 7, 2016. The Indiana Board found that Porter-Starke had

established 1) that 81% of its property was used exclusively for charitable purposes,

providing mental health services as a certified CMHC, and 2) that it provided a public

benefit by fulfilling an essential government obligation that lessened the burden that would

otherwise fall on local law enforcement and correctional resources to address mental

health issues.1 (Cert. Admin. R. at 37-38 ¶¶ 35-38, 40-41 ¶¶ 44-48.) Accordingly, the

Indiana Board granted Porter-Starke a charitable purposes exemption for 81% of its real

property.2 (Cert. Admin. R. at 41 ¶ 50.)

       On January 10, 2017, the Assessor initiated this original tax appeal. On June 30,

2017, the Court heard the parties’ oral arguments. Additional facts will be provided as

necessary.

                                 STANDARD OF REVIEW

       The Court gives great deference to decisions by the Indiana Board when it acts

within its authority. Marineland Gardens Cmty. Ass’n v. Kosciusko Cnty. Assessor, 26

N.E.3d 1087, 1089 (Ind. Tax Ct. 2015).          The Court, however, may reverse a final

determination by the Indiana Board only if it is arbitrary, capricious, an abuse of discretion,



1
 Porter-Starke conceded in its Memorandum of Law before the Indiana Board that it did not claim
an exemption for the leased portion of its property. (See Cert. Admin. R. at 71, 82.) Thus, that
portion of the property is not at issue in this matter.
2
 The Indiana Board denied Porter-Starke an exemption for its personal property due to a lack of
evidence regarding that personal property. (See Cert. Admin. R. at 41 ¶¶ 48-50.) Porter Starke
has not appealed this determination.
                                               3
or otherwise not in accordance with law; contrary to constitutional right, power, privilege,

or immunity; in excess of or short of statutory jurisdiction, authority, or limitations; without

observance of procedure required by law; or unsupported by substantial or reliable

evidence. IND. CODE § 33-26-6-6(e)(1)-(5) (2017). As the party appealing the Indiana

Board’s final determination, the Assessor bears the burden to prove it is invalid based on

the evidence presented to the Indiana Board. See Johnson Cnty. Prop. Tax Assessment

Bd. of Appeals v. KC Propco LLC, 28 N.E.3d 370, 374 (Ind. Tax Ct. 2015).

                                             LAW

       As a general rule, all tangible property in Indiana is subject to taxation. IND. CODE

§ 6-1.1-2-1 (2015); Hamilton Cnty. Prop. Tax Assessment Bd. of Appeals v. Oaken

Bucket Partners, LLC, 938 N.E.2d 654, 656 (Ind. 2010). Nevertheless, the Indiana

Constitution allows the Legislature to exempt property from taxation if it is used for

municipal, educational, literary, scientific, religious or charitable purposes. IND. CONST.

art. 10, § 1(c)(1). To that end, the Legislature has enacted a property tax exemption for

property “owned, occupied, and used” for charitable purposes. IND. CODE § 6-1.1-10-

16(a) (2015). The “charitable purposes exemption” includes the land on which an exempt

building is situated and the personal property used in pursuit of a charitable purpose. See

I.C. § 6-1.1-10-16(c), (e).

       The charitable purposes exemption is not susceptible to bright-line tests or other

abbreviated inquiries, and each exemption request stands on its own facts. See, e.g.,

Jamestown Homes of Mishawaka, Inc. v. St. Joseph Cnty. Assessor, 914 N.E.2d 13, 15

(Ind. Tax Ct. 2009), review denied.        Thus, property is exempt only if the evidence

presented to the Indiana Board shows that it is owned, occupied, and used for a charitable



                                               4
purpose. Trinity Episcopal Church v. State Bd. of Tax Comm’rs, 694 N.E.2d 816, 818-19

(Ind. Tax Ct. 1998).

       For purposes of the exemption, the term “charitable purpose” is defined and

understood in its broadest constitutional sense. Indianapolis Elks Bldg. Corp. v. State

Bd. of Tax Comm’rs, 251 N.E.2d 673, 682 (Ind. Ct. App. 1969). A charitable purpose is

established when a taxpayer provides evidence to the Indiana Board showing 1) “relief of

human want . . . manifested by obviously charitable acts different from the everyday

purposes and activities of man in general[ ]” and 2) that a benefit sufficient to justify the

loss of tax revenue inures to the public through these acts. Id. at 683; see also Tipton

Cnty. Health Care Found., Inc. v. Tipton Cnty. Assessor, 961 N.E.2d 1048, 1051-52 (Ind.

Tax Ct. 2012).

                                        ANALYSIS

       On appeal, the Assessor claims that the Indiana Board’s final determination must

be reversed for two reasons. First, the Assessor claims that the final determination is

contrary to law because it found the provision of mental health services by an I.R.C. §

501(c)(3) non-profit corporation certified as a CMHC is entitled per se to a charitable

purposes exemption. (Appellant’s Br. (“Pet’r Br.”) at 11-13; Appellant’s Reply Br. (“Pet’r

Reply Br.”) at 2-4.) Second, the Assessor contends that the final determination is not

supported by substantial evidence because Porter-Starke failed to present evidence that




                                             5
showed a sufficient public benefit to justify the exemption.3 (Pet’r Br. at 5-6, 18-19; Oral

Arg. Tr. at 17-28.)

                                  I.      Per Se Exemptions

       The Assessor first claims that the Indiana Board erred in granting Porter-Starke a

property tax exemption based on finding mental health services provided by an I.R.C. §

501(c)(3) certified as a CMHC is entitled per se to a charitable purposes exemption. (See

Pet’r Br. at 11-13.) The Assessor maintains that Knox County Property Tax Assessment

Board of Appeals v. Grandview Care, Inc., 826 N.E.2d 177 (Ind. Tax Ct. 2005), suggests

“that elder care was essentially per se exempt from property taxation, at least when

conducted by a non-profit corporation.” (Pet’r Br. at 10 (emphasis added).) The Assessor

then explains that “[b]y per se exempt, [it] means that the taxpayer is relieved from the

burden of proving that it operates in a financially charitable manner within the ordinary

meaning of charity.” (Pet’r Br. at 10.)

       The Assessor agrees that providing mental health services constitutes good and

noble deeds like the elder care services at issue in Grandview. (Cert. Admin. R. at 261;

Oral Arg. Tr. at 48.) Nonetheless, the Assessor claims that the Indiana Board relied on

Grandview to grant a per se exemption based on good deeds alone, contrary to more

recent authority that requires “a more rigorous review of the financial operation of parties

pursuing the charitable exemption.” (Pet’r Br. at 10-12.) See also Housing P’ships, Inc.


3
  The Assessor also argues that the Indiana Board erred by determining that Porter-Starke was a
public agency and granting it an exemption on those grounds. (Appellant’s Br. at 14-18.) The
Indiana Board did not grant the exemption based on whether or not it was a public agency, but
granted the exemption because it concluded the property was used for a charitable purpose. (See
Cert. Admin. R. at 38 ¶ 39, 41 ¶¶ 48-50.) Accordingly, the Court will not address the parties’
arguments regarding Porter-Starke’s status as a public agency or whether that status would entitle
it to a property tax exemption. See IND. CODE § 33-26-6-3(b) (2017) (limiting judicial review of an
Indiana Board decision to those issues decided by its final determination).
                                                6
v. Owens, 10 N.E.3d 1057, 1060-61 (Ind. Tax Ct. 2014), reh’g granted, 17 N.E.3d 403

(Ind. Tax Ct. 2014); Tipton Cnty. Health Care Found., 961 N.E.2d at 1051-52.

      Grandview, Tipton County Health Care Foundation, and Housing Partnerships

each evaluate whether property is entitled to a charitable purposes exemption by

analyzing whether the taxpayer’s acts both relieve human want and provide a public

benefit sufficient to justify the loss of tax revenue. See Housing P’ships, 10 N.E.3d at

1061, 1064-65; Tipton Cnty. Health Care Found., 961 N.E.2d at 1051-52; Grandview

Care, Inc., 826 N.E.2d at 182. The differences in analyses and outcomes in these cases

is not due, however, to an evolving legal standard, as the Assessor urges, but to

differences in the evidence presented and the arguments made in each particular case.

E.g., Trinity Episcopal Church, 694 N.E.2d at 818-19 (granting an exemption without

addressing whether there was a public benefit because the parties did not raise the issue).

Accordingly, the Court is not persuaded that a non-profit certified as a CMHC is exempt

per se from property tax.

      The final determination did not conclude, however, that Porter-Starke was entitled

to an exemption per se. Although the Indiana Board noted that the parties had debated

whether the subject property was exempt per se, it explicitly recognized that charitable

purposes exemption cases are fact-sensitive and have no bright-line tests for determining

outcomes. (Compare Cert. Admin. R. at 33-34 ¶ 22 and 39 ¶ 42 with 36-37 ¶¶ 30-33

(citing Jamestown Homes, 914 N.E.2d at 15.) Indeed, in this matter the Indiana Board

weighed all the evidence regarding Porter-Starke’s operations, services, and resultant

public benefits in concluding that Porter-Starke’s property was entitled to a charitable

purposes exemption. (See Cert. Admin. R. at 30-33 ¶¶ 10-19, 37-38 ¶¶ 35-36, 39 ¶¶ 40-



                                            7
41, 40 ¶¶ 44-45.) Therefore, the final determination did not grant a charitable purposes

exemption per se and was not contrary to law on those grounds.

                        II.    Substantial and Reliable Evidence

       The Assessor also contends that the Indiana Board’s final determination is not

supported by substantial and reliable evidence because Porter-Starke did not provide

evidence that it relieves burdens government would have to bear at a higher cost,

justifying the loss of tax revenue. (Pet’r Br. at 5-6, 18-19; Oral Arg. Tr. at 28-32.) Although

the Assessor does not dispute that Porter-Starke assists in meeting an essential

government obligation, it claims there is no evidence in support of the Indiana Board’s

“speculative finding” that Porter-Starke’s “provision of services also alleviates pressure

that would otherwise fall on local law enforcement and correctional resources, among

others. These are burdens the government would have to address at likely a considerably

higher cost.” (Pet’r Br. at 19 (citing Cert. Admin. R. at 40 ¶ 44).) Moreover, the Assessor

further contends that the Indiana Board failed to consider evidence that Porter-Starke

receives public funding, which it claims would be fatal to Porter-Starke’s claim that it

provides a public benefit. (See Pet’r Br. at 13-14, 18-19; Oral Arg. Tr. at 17-28.) See

also Housing P’ships, Inc. v. Owens, 17 N.E.3d 403, 405 (Ind. Tax Ct. 2014), review

denied. (“Housing P’ships II”).

       This Court has explained that a private organization provides a public benefit when

it “takes on a task that would otherwise fall to the government, [as] this provides a benefit

to the community as a whole because it allows the government to direct its funds and

attention to other community needs.” College Corner, L.P. v. Dep’t of Local Gov’t Fin.,

840 N.E.2d 905, 910 (Ind. Tax Ct. 2006). Even when a taxpayer receives government



                                              8
funds, it “fulfill[s] a charitable purpose to the extent that it lessened some part of the

government’s burden.” Id. at 910 n. 9; see also Trinity Sch. of Natural Health, Inc. v.

Kosciusko Cnty. Prop. Tax Assessment Bd. of Appeals, 799 N.E.2d 1234, 1238 (Ind. Tax

Ct. 2003).

       In Housing Partnerships, a corporation owned numerous single-family homes,

duplexes, and small apartment buildings that it rented to low-income tenants. Housing

P’ships, 10 N.E.3d at 1059. It funded its activities using income from the rental of these

properties, donations, and various public and private grants. Id. at 1059. When it sought

a charitable purposes exemption for the 2006 tax year, the Indiana Board denied the

exemption because the taxpayer had not made a prima facie case that its properties were

entitled to the charitable purposes exemption and had not explained the terms and

conditions attached to the grants. Id. at 1060. This Court affirmed the Board’s final

determination on appeal, explaining that the taxpayer had not presented evidence

establishing a governmental burden to provide low-income housing or showing that this

burden was actually relieved by the taxpayer rather than being borne by government

through its grants. Id. at 1064. Rather than creating a bright-line test that accepting public

funds prohibits a taxpayer from receiving a charitable purposes exemption, Housing

Partnerships emphasizes the basic litigation principle that a taxpayer must provide actual

evidence that a government burden exists and that this burden is relieved beyond the

extent of the grants. See id. at 1064 (affirming the Indiana Board’s final determination

due to lack of evidence presented by the taxpayer); see also Jamestown Homes of

Mishawaka, 914 N.E.2d at 15 (rejecting bright-line tests in the context of the charitable

purposes exemption).



                                              9
       Here, Indiana has taken on the burden of providing mental health care for the

indigent. See, e.g., IND. CODE § 12-21-2-3(5) (2015) (providing that the Indiana Family

and Social Services Administration has the duty to create rules regarding public and

private mental health care, including certifying CMHCs); see also IND. CONST. art. 9, § 1

(“It shall be the duty of the General Assembly to provide, by law, for the support of

institutions for . . . the treatment of the insane”). Thus, Indiana certifies organizations that

provide inpatient, residential, partial hospitalization, outpatient, consultation-education,

and community support services to all who seek them while maintaining a certain level of

staffing as CMHCs. See IND. CODE § 12-7-2-38 (2015); 440 IND. ADMIN. CODE 4-3-1, 4.1-

2-2 (2015). Once an organization is certified as a CMHC, it is entitled by statute to county

and state funds. See IND. CODE §§ 12-29-2-2, -20 (2015). Porter-Starke receives a

portion of these funds as a certified CMHC that provides these services.4 (Cert. Admin.

R. at 227-30, 235-41.)

       Further, the record showed that Starke County was in the bottom quartile for

providing access to clinical healthcare during the tax year, with high rates of drug or

alcohol abuse and limited access to mental health services. (See Cert. Admin. R. at 122-

29.) The record reveals that Porter-Starke took on this burden, charged fees on a sliding

scale based on ability to pay, and provided free treatment to the indigent for mental health

care needs. (Cert. Admin. R. at 154, 200-203, 229-30, 238-41.) The record further

showed that Porter-Starke worked with local law enforcement, taking on some of Starke



4
  The federal government also provides funding to organizations that provide substance abuse
treatment and mental health services in the form of block grants administered by the State. See
generally, e.g., 42 U.S.C. § 300x-2 (2015); 42 C.F.R. 485.918 (2015); 45 C.F.R. §§ 96.123, 96.135
(2015). Porter-Starke also receives a portion of these funds. (See Cert. Admin. R. at 213-15,
238.)
                                               10
County’s burden in fighting abuse and addiction, and treating the mentally ill. (See Cert.

Admin. R. at 202-04, 219-220, 229-30.) Moreover, the record contains testimony from

Porter-Starke’s CFO that Porter-Starke would provide mental health services even in the

absence of its public funding. (Cert. Admin. R. at 243-44.) Accordingly, there is more

than a scintilla of evidence supporting the Indiana Board’s determination and a

reasonable person reviewing the entire record could find relevant evidence to support

that determination. See DeKalb Cnty. Assessor v. Chavez, 48 N.E.3d 928, 931-32 (Ind.

Tax Ct. 2016) (explaining that a final determination is supported by substantial and

reliable evidence if there is more than a scintilla of supporting evidence and a reasonable

person reviewing the entire record could find enough relevant evidence to support it). The

evidence was weighed by the Indiana Board; this Court will not re-weigh the evidence on

appeal. See Kildsig v. Warrick Cnty. Assessor, 998 N.E.2d 764, 767 (Ind. Tax Ct. 2013)

(explaining that the Court may not reweigh the evidence that was presented to

the Indiana Board).   Consequently, the Court finds that the Indiana Board’s final

determination was supported by substantial evidence.

                                     CONCLUSION

      For the above stated reasons, the Indiana Board’s final determination in this matter

is AFFIRMED.




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