[Cite as Summer Rays, Inc. v. Testa, 2017-Ohio-7901.]

                             IN THE COURT OF APPEALS OF OHIO

                                  TENTH APPELLATE DISTRICT


Summer Rays, Inc.,                                      :

                Appellant-Appellant,                    :         No. 17AP-32
                                                                (BTA No. 2015-951)
v.                                                      :             and
                                                                    17AP-34
Joseph W. Testa, Tax                                    :      (BTA No. 2015-1108)
Commissioner of Ohio,
                                                        :    (REGULAR CALENDAR)
                Appellee-Appellee.
                                                        :


                                           D E C I S I O N

                                  Rendered on September 28, 2017


                On brief: Ronald B. Noga, for appellant.                Argued:
                Ronald B. Noga.

                On brief: Michael DeWine, Attorney General, Daniel W.
                Fausey, and Kody R. Teaford, for appellee. Argued:
                Kody R. Teaford.

                         APPEALS from the Ohio Board of Tax Appeals

LUPER SCHUSTER, J.
        {¶ 1} Appellant, Summer Rays, Inc. ("Summer Rays"), appeals from a decision of
the Ohio Board of Tax Appeals ("BTA") affirming the final determination of appellee,
Joseph W. Testa, Tax Commissioner of Ohio ("commissioner"), denying Summer Rays'
request for property tax exemption pursuant to R.C. 5709.12. For the following reasons,
we affirm.
I. Factual and Procedural Background
        {¶ 2} Summer Rays is an Ohio not-for-profit corporation with Internal Revenue
Code 501(c)(3) status, and Chuck Kirk is the corporation's president and executive
director.    Summer Rays provides "Christian Access Living homes that are safe and
Nos. 17AP-32 and 17AP-34                                                                   2

affordable" to individuals transitioning from lives of addiction. (Summer Rays Mission
Statement, attached to Dec. 19, 2014 Summer Rays Submission to Tax Commissioner.) In
addition to providing sleep accommodations, Summer Rays provides spiritual support
services, financial planning services, an on-site library, and other facilities and services.
Summer Rays owns the property at 7480 East Main Street, Reynoldsburg, Ohio ("7480
East Main Street"), and it operates a fitness studio, "Rev Studio," at that location. Rev
Studio is open to the public and is available for use by participants of Summer Rays'
residential program. Summer Rays also owns approximately 20 residential properties
that are used as part of its program.
       {¶ 3} In December 2014, Summer Rays applied for property tax exemption for
7480 East Main Street pursuant to R.C. 5709.12, the charitable use exemption. The Ohio
Department of Taxation ("department") designated the matter as department case No.
WE 2704 and requested that Summer Rays provide additional information regarding its
use of 7480 East Main Street. Summer Rays complied with the request and submitted a
package of documents regarding the use of that property.           On May 27, 2015, the
commissioner issued a final determination regarding case No. WE 2704. The
commissioner concluded that the 7480 East Main Street property does not qualify for
property tax exemption under R.C. 5709.12.
       {¶ 4} On July 22, 2015, the BTA received a notice of appeal indicating Summer
Rays was challenging the commissioner's final determination in case No. WE 2704. The
BTA docketed the notice of appeal as BTA case No. 2015-951. An identical additional copy
of Summer Rays' notice of appeal challenging the commissioner's final determination in
case No. WE 2704 was also filed with the BTA on July 22, 2015, and the BTA separately
docketed that copy of the notice of appeal and assigned it BTA case No. 2015-1108. It is
unclear from the record why identical copies of Summer Rays' notice of appeal were
separately submitted and docketed as case Nos. 2015-951 and 2015-1108.
       {¶ 5} On November 20, 2015, the commissioner filed a "motion to consolidate or
dismiss and to withdraw the statutory transcript." The request states:
              The statutory transcript that the Commissioner filed on
              September 8, 2015 in Case No. 2015-951 includes materials
              considered in issuing final determinations for two cases
              before the Commissioner, namely DTE Case Nos. WE 1596
              and WE 2704. However, only DTE Case No. WE 1596 is at
Nos. 17AP-32 and 17AP-34                                                                3

                issue in BTA Case No. 2015-951.             Accordingly, the
                Commissioner respectfully moves this Board to withdraw his
                statutory transcript filed on September 8, 2015 and forthwith
                substitute a new transcript with only those materials
                considered in issuing a final determination for DTE Case No.
                WE 1596, as R.C. 5717.02 provides.

                In addition, the Commissioner respectfully moves this Board
                to consolidate BTA Case Nos. 2015-951 and 2015-1108 or,
                alternatively, dismiss BTA Case No. 2015-1108 as duplicative
                of BTA Case No. 2015-951. Both cases have identical notices
                of appeal from the Commissioner's final determination on
                DTE Case No. WE 1596. Since the cases are duplicative of one
                another, there is no need to have separately pending cases on
                the same matter.

The BTA granted both the motion to consolidate the appeals and the motion to substitute
a transcript.
       {¶ 6} On September 14, 2016, a hearing was held before a BTA hearing examiner
regarding BTA case Nos. 2015-951 and 2015-1108. At the hearing, the Attorney General's
office represented the commissioner, and, Kirk, Summer Rays' president and executive
director appeared without counsel. Evidence was presented regarding Summer Rays,
generally, and Rev Studio, the fitness facility operated under the Summer Rays umbrella
at the particular property at issue, 7480 East Main Street. In late September 2016, the
commissioner filed a complete transcript of the record of proceedings before the
commissioner, including all evidence considered, in case No. WE 2704.
       {¶ 7} On December 13, 2016, the BTA issued its decision in BTA case Nos. 2015-
951 and 2015-1108.      The BTA affirmed the commissioner's denial of Summer Rays'
request for a tax exemption for the 7480 East Main Street property. Summer Rays timely
appealed to this court from the decision of the BTA. Two appeals were docketed, and this
court consolidated the appeals. Before the appeals were briefed, Summer Rays filed a
"motion to remand to correct defective record." (Mar. 2, 2017 Appellant's Mot.) In
support, Summer Rays asserted that the commissioner and the BTA mishandled his
applications for exemption and the corresponding appeals, and that a remand was
necessary to correct the various errors resulting from that mishandling. This court denied
Summer Rays' motion to remand the appeals for purposes of correcting the record, and
the parties then submitted their briefs regarding the appeals.
Nos. 17AP-32 and 17AP-34                                                               4

II. Assignments of Error
      {¶ 8} Summer Rays assigns the following errors for our review:
             [1.] The Board of Tax Appeals acted unreasonably and
             unlawfully in denying Appellant's exemption claim on the
             ground that it had failed to meet its Burden of Proof based on
             an erroneous interpretation of the exclusive use element of
             O.R.C. Section 5709.12 that any contribution by Appellant's
             residents no matter how small or indirect defeated Appellant's
             charitable use.

             [2.] The Board of Tax Appeals erred as a matter of law by
             1) affirming a Final Determination of the Tax Commissioner
             which is defective on its face as it references and pertains to
             two separate and distinct properties which were the subject of
             separate applications and 2) in the process of consolidating
             two separate appeals, eliminating the statutory transcript it
             had ordered consolidated pertaining to WD 1596 while issuing
             its Decision based on an entirely different statutory transcript
             pertaining to WD 1204 [sic].

III. Discussion
      A. First Assignment of Error – Tax Exemption under R.C. 5709.12
      {¶ 9} Summer Rays' first assignment of error challenges the BTA's substantive
determination that the commissioner correctly concluded that the 7480 East Main Street
property does not qualify for tax exemption under R.C. 5709.12. Summer Rays argues
that the BTA erroneously reasoned that, because Summer Rays generates some revenue
by charging a program fee, it legally cannot constitute a charitable institution. This
assignment of error lacks merit.
      {¶ 10} The BTA has jurisdiction over appeals from final determinations of the
commissioner. R.C. 5717.02. An appellate court may reverse a BTA decision only "when
it affirmatively appears from the record that such decision is unreasonable or unlawful."
Witt Co. v. Hamilton Cty. Bd. of Revision, 61 Ohio St.3d 155, 157 (1991). Thus, legal
conclusions are reviewed de novo. Terraza 8, L.L.C. v. Franklin Cty. Bd. of Revision, __
Ohio St.3d __, 2017-Ohio-4415, ¶ 7; see Bd. of Edn. v. Zaino, 93 Ohio St.3d 231, 232
(2001) ("[W]e will not hesitate to reverse a BTA decision that is based on an incorrect
legal conclusion."). As to factual findings, an appellate court may not substitute its
judgment for that of the BTA. Bethesda Healthcare, Inc. v. Wilkins, 101 Ohio St.3d 420,
Nos. 17AP-32 and 17AP-34                                                                   5

2004-Ohio-1749, ¶ 18. However, facts determined by the BTA must be supported by
sufficient probative evidence. First Baptist Church of Milford, Inc. v. Wilkins, 110 Ohio
St.3d 496, 2006-Ohio-4966, ¶ 9.
       {¶ 11} In Ohio, all real property is subject to taxation unless it is expressly
exempted. R.C. 5709.01(A). Because exemption is the exception to the general rule,
statutes granting exemptions must be strictly construed. Seven Hills Schools v. Kinney,
28 Ohio St.3d 186, 186 (1986). It is the taxpayer's burden to prove entitlement to an
exemption. 250 Shoup Mill, L.L.C. v. Testa, 147 Ohio St.3d 98, 2016-Ohio-5012, ¶ 24.
The policy rationale for granting tax exemptions is that the recipient's operation is a
present benefit to the general public that justifies the loss of tax revenue. White Cross
Hosp. Assn. v. Bd. of Tax Appeals, 38 Ohio St.2d 199, 201 (1974).
       {¶ 12} Summer Rays claims that 7480 East Main Street should be exempt from
taxation pursuant to R.C. 5709.12(B), which states in pertinent part: "Real * * * property
belonging to institutions that is used exclusively for charitable purposes shall be exempt
from taxation[.]"   For the purpose of R.C. 5709.12(B), when the property at issue
"belong[s] to, i.e. [is] owned by, a charitable or educational institution or the state or a
political subdivision," R.C. 5709.121 defines the term "used exclusively for charitable * * *
purpose." (Emphasis sic.) First Baptist Church of Milford, Inc. at ¶ 15; see Dialysis
Clinic, Inc. v. Levin, 127 Ohio St.3d 215, 2010-Ohio-5071, ¶ 22 (when the property owner
is a "charitable or educational" institution, R.C. 5709.121 "links certain property uses to
R.C. 5709.12(B)'s exclusive-charitable-use exemption"). R.C. 5709.121 does not, however,
"itself grant any exemption." First Baptist Church of Milford, Inc. at ¶ 16. "Special
treatment under R.C. 5709.121 depends on the owner's qualifying as a 'charitable or
educational' institution." Dialysis Clinic, Inc. at ¶ 22. Thus, R.C. 5709.121 "has no
application to noncharitable institutions seeking tax exemption under R.C. 5709.12."
First Baptist Church of Milford, Inc. at ¶ 15. Consequently, in analyzing whether a
property is exempt under the charitable use provisions, tax authorities first must
determine whether the institution is a charitable institution. Olmsted Falls Bd. of Edn. v.
Tracy, 77 Ohio St.3d 393, 396 (1997).
       {¶ 13} Even though Summer Rays has federal tax-exempt status under Internal
Revenue Code 501(c)(3), that fact is not determinative of whether it is a "charitable
Nos. 17AP-32 and 17AP-34                                                                   6

institution" under Ohio law. Dialysis Clinic, Inc. at ¶ 28. "The determination whether a
property owner qualifies as a charitable institution under R.C. 5709.121 requires
examination of the 'core activity' of the institution and determining whether that activity
qualifies as charitable for property-tax purposes." Rural Health Collaborative of S. Ohio,
Inc. v. Testa, 145 Ohio St.3d 430, 2016-Ohio-508, ¶ 23, citing Dialysis Clinic, Inc. at ¶ 28-
30. Whether an applicant qualifies as a "charitable institution" is "primarily an issue of
fact, the determination of which lies within the province of the taxing authorities." Rural
Health Collaborative of S. Ohio, Inc. at ¶ 24; see Summit United Methodist Church v.
Kinney, 7 Ohio St.3d 13, 15 (1983).
       {¶ 14} " '[C]harity,' in the legal sense, 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 gain or profit by the donor or by the instrumentality of the
charity." Planned Parenthood Assn. v. Tax Commr., 5 Ohio St.2d 117 (1966), paragraph
one of the syllabus. "That one or more persons receiving the benefits of a charitable
institution have the means, in whole or in part, to purchase those benefits in the market
place or that some consideration is exacted from them on receipt of the benefits does not
detract from the charitable character of the institution." Id. at paragraph three of the
syllabus. However, "[a]n institution qualifies as a charitable institution when its core
activities involve the provisions of its services 'on a nonprofit basis to those in need,
without regard to race, creed, or ability to pay.' " Craftsmen Recreation Club, Inc. v. Tax
Commr. of Ohio, 9th Dist. No. 27357, 2015-Ohio-1247, ¶ 9, quoting Church of God in N.
Ohio, Inc. v. Levin, 124 Ohio St.3d 36, 2009-Ohio-5939, ¶ 19. Ultimately, "[w]hether an
institution renders sufficient services to persons who are unable to afford them to be
considered as making charitable use of property must be determined on the totality of the
circumstances." Bethesda Healthcare, Inc. at ¶ 39.
       {¶ 15} Here, the BTA found that Summer Rays is not a charitable institution.
Contrary to Summer Rays' argument, the BTA did not find that any contribution, no
matter how small, from program participants defeats its possible status as a charitable
institution. Instead, the BTA based its finding that Summer Rays is not a charitable
Nos. 17AP-32 and 17AP-34                                                                    7

institution on the fact that all participants must pay the moderately priced weekly
program fee, either in cash or with labor that benefits the institution and Kirk. This
finding is supported by the record. Evidence demonstrated that Summer Rays charges a
mandatory program fee starting at $100 per week for each participant. The cost of the
program depends on the type of accommodations: a shared room is $100 per week, a
private room is $125 per week, and a couple's suite is $150 per week. Further, the
participants in the program must sign a form acknowledging that Summer Rays "is NOT a
free housing program." (Summer Rays House Rules, attached to Dec. 19, 2014 Summer
Rays Submission to Tax Commissioner.)          While not all participants pay the weekly
program fee in cash, those participants who cannot fully pay with cash must provide labor
for the benefit of Summer Rays and Kirk. Thus, Summer Rays does not provide its
program to participants regardless of their ability to pay.
       {¶ 16} Even though the evidence supports the BTA's finding that Summer Rays is
not a charitable institution under R.C. 5709.121, and thus special treatment under that
statute is not available, 7480 East Main Street would be exempt from tax under R.C.
5709.12 if Summer Rays could demonstrate that its activity at that particular property
constitutes an exclusively charitable use of the property. See Dialysis Clinic, Inc. at ¶ 36
("It is well established that even if it does not qualify as a charitable institution, [a
taxpayer] would be entitled to exemption from tax if it showed that the operations at a
particular facility constitute an exclusively charitable use of that particular parcel of real
property."). For the purpose of R.C. 5709.12, the term "used exclusively," means "primary
use, not secondary or ancillary." Church of God in N. Ohio, Inc. at ¶ 22; True Christianity
Evangelism v. Zaino, 91 Ohio St.3d 117, 121 (2001).
       {¶ 17} The BTA found that Summer Rays primarily uses 7480 East Main Street to
operate Rev Studio, a personal training business. The record supports this finding. The
evidence demonstrated that Summer Rays offers personal training at Rev Studio to the
general public and to Summer Rays program participants. The Summer Rays personal
trainer at Rev Studio testified that pricing for the general public was based on suggested
donation amounts. However, the BTA reasonably was not persuaded by that
characterization of payments for personal training services at Rev Studio, as other
evidence demonstrated that there is a market rate "Membership Fee Schedule" for
Nos. 17AP-32 and 17AP-34                                                                      8

members of the general public. (Rev Studio Membership Fee Schedule, attached to
Summer Rays Feb. 15, 2015 Submission to Dept. of Taxation.) Additionally, although
Summer Rays program participants are not charged an additional Rev Studio fee beyond
the mandatory general program fee starting at $100 per week (paid either in cash or
labor), their eligibility to use the facility is essentially contingent on their payment of that
weekly fee. In sum, there is no evidence that Summer Rays has provided personal
training services for free to anyone. Thus, evidence supported the BTA's finding that
7480 East Main Street was not primarily used for charitable purposes.
       {¶ 18} Accordingly, we overrule Summer Rays' first assignment of error.
       B. Second Assignment of Error – Administrative Handling of Requests
          for Exemption
       {¶ 19} Summer Rays' second assignment of error contends it was error for the BTA
to affirm the final determination of the commissioner because the BTA and the
commissioner mishandled its exemption applications and the corresponding appeals
from the denials of its applications. Summer Rays claims that it has been materially
prejudiced by actions of the BTA and the commissioner that "confused" and "corrupted"
the record.   (Appellant's Brief at 17.)     In particular, Summer Rays argues that the
commissioner's final determination regarding case No. WE 2704 contains a prejudicial
error because the commissioner misidentified the parcel under consideration.                We
disagree.
       {¶ 20} Summer Rays is correct that the commissioner's May 27, 2015 final
determination regarding case No. WE 2704 contains a mistake regarding the parcel
number at issue. In the factual background section of that final determination, the
commissioner mistakenly stated that the property located at 7480 East Main Street is
parcel No. 060-003978-00. The property at 7480 East Main Street is actually parcel No.
060-000081-00.       However, when the reference to parcel No. 060-003978-00 is
considered in the context of the entire final determination, it is clear that the mistaken
reference to that parcel was merely a scrivener's error. The substance of that final
determination concerns the property located at 7480 East Main Street, the site of Rev
Studio.
       {¶ 21} Summer Rays also argues that it has been prejudiced by the BTA's
mishandling of its administrative appeals from separate final determinations of the
Nos. 17AP-32 and 17AP-34                                                                  9

commissioner regarding case Nos. WE 1596 and WE 2704. According to Summer Rays, it
filed two separate applications for exemption, one regarding parcel No. 060-000081-00
(the 7480 East Main Street property), and another regarding parcel Nos. 060-003978-00
(a property located on Clymer Drive) and 060-001000-00 (a property located on Graham
Road). Summer Rays asserts that the commissioner issued separate final determinations
regarding these properties, including one in case No. WE 1596 pertaining to 060-003978-
00 and 060-001000-00. However, the only final determination in the administrative
record before this court pertains to case No. WE 2704 and parcel No. 060-000081-00.
       {¶ 22} We are unpersuaded by Summer Rays' argument that the BTA's actions
have prejudiced his challenge to the final determination in case No. WE 2704.            In
November 2015, the commissioner moved to consolidate case Nos. 2015-951 and 2015-
1108, or, in the alternative, to dismiss case No. 2015-1108 as duplicative of case No. 2015-
951. In support of its motion, commissioner asserted that both cases had identical notices
of appeal from the final determination in case No. WE 1596. The commissioner also
requested the filing of a substituted transcript limited to only those materials considered
in issuing the final determination in case No. WE 1596. Thus, the commissioner's motion
mistakenly referenced case No. WE 1596 as being the subject of Summer Rays' notices of
appeal that were assigned BTA case Nos. 2015-951 and 2015-1108. The BTA granted the
motion to consolidate and the motion to substitute the transcript.            Even though
technically the BTA granted the commissioner's request only to file the transcript from
case No. WE 1596, the transcript that the commissioner actually subsequently filed in case
Nos. 2015-951 and 2015-1108 related to the commissioner's final determination regarding
case No. WE 2704, the subject of Summer Rays' duplicative notices of appeal. Thus, any
BTA error in ordering the filing of the case No. WE 1596 transcript in case Nos. 2015-951
and 2015-1108 was inconsequential because the proper transcript ultimately was filed and
considered in those BTA cases.
       {¶ 23} Summer Rays further argues that its appeal regarding case No. WE 1596 has
been "lost in the administrative shuffle." (Appellant's Brief at 21.) The certified BTA
record does not include a notice of appeal from a final determination regarding case No.
WE 1596, but it does include an August 5, 2015 letter to the BTA from Kirk, on behalf of
Summer Rays, thanking the BTA for its "speedy reply to [his] appeal packets for WE 1596
Nos. 17AP-32 and 17AP-34                                                               10

and WE 2704." The letter further states that he "would like to request a hearing for both
of [his] case packets that [he] submitted on July 22, 2015 to both" the BTA and the
commissioner. The contents of this letter and its reference to case No. WE 1596 support
Summer Rays' assertion that it attempted to (or at least intended to) appeal from two
separate final determinations of the commissioner. We also note that Summer Rays
attached in support of its motion to remand filed in this court what appears to be a
July 22, 2015 time-stamped copy of a notice of appeal filed with the BTA regarding case
No. WE 1596. Despite the apparent existence of this document, the commissioner argues
there was never an appeal properly filed regarding a final determination as to case No.
WE 1596. Conversely, Summer Rays contends that the BTA improperly did not proceed
forward with his appeal regarding case No. WE 1596.
      {¶ 24} Regardless of whether Summer Rays invoked the jurisdiction of the BTA as
to a final determination regarding case No. WE 1596, or whether the BTA failed to take
appropriate administrative action with respect to that appeal, those issues are not before
this court in this appeal.   According to Summer Rays, case No. WE 1596 involved
properties other than 7480 East Main Street. While any BTA decision regarding case No.
WE 1596 may parallel, to some degree, the BTA's analysis regarding the exemption of the
7480 East Main Street property, the matters would be separate and distinct. The BTA
fully considered Summer Rays' appeal from the final determination regarding 7480 East
Main Street, and our review of the BTA's decision regarding that property is not limited
due to any action of the BTA concerning case No. WE 1596.
      {¶ 25} For these reasons, we overrule Summer Rays' second assignment of error.
IV. Disposition
      {¶ 26} Having overruled Summer Rays' first and second assignments of error, we
affirm the decision of the Ohio Board of Tax Appeals.
                                                                       Decision affirmed.

                          BROWN and BRUNNER, JJ., concur.
