ATTORNEYS FOR PETITIONER:                      ATTORNEYS FOR RESPONDENT:
MICHAEL N. RED                                 CURTIS T. HILL, JR.
MORSE & BICKEL, P.C.                           ATTORNEY GENERAL OF INDIANA
Indianapolis, IN                               WINSTON LIN
                                               ZACHARY D. PRICE
PAUL M. JONES, JR.                             DEPUTY ATTORNEYS GENERAL
PAUL JONES LAW, LLC                            Indianapolis, IN
Greenwood, IN
                                               JOHN P. BUSHEMI
                                               ALFREDO ESTRADA
                                               BURKE COSTANZA & CARBERRY, LLP
                                               Merrillville, IN

                                                                                 FILED
                                IN THE                                      Oct 28 2019, 11:40 am

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




HEBRON-VISION, LLC,                              )
                                                 )
       Petitioner,                               )
                                                 )
              v.                                 ) Cause No. 18T-TA-00019
                                                 )
PORTER COUNTY ASSESSOR,                          )
                                                 )
       Respondent.                               )


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

                                   FOR PUBLICATION
                                    October 28, 2019

FISHER, Senior Judge

       Hebron-Vision, LLC appeals the Indiana Board of Tax Review’s final determination

that Hebron-Vision failed to establish that it qualified for a charitable purposes exemption

for the 2012 through 2015 tax years. Upon review, the Court reverses the Indiana Board’s

final determination.
                          FACTS AND PROCEDURAL HISTORY1

       On April 19, 2006, Hebron-Vision, a single-member limited liability company, was

formed pursuant to the Indiana Business Flexibility Act. (See Cert. Admin. R. at 711-15,

2293-94, 2348.) See also, e.g., IND. CODE § 23-18-2-4(a) (2019) (providing that a person

“may form a limited liability company by causing articles of organization to be executed

and filed for record with the office of the secretary of state”). Its Articles of Organization

require Vision Communities, Inc. (“Vision Communities”),2 its sole member, to manage

the company in accordance with its stated purposes:

           [T]o acquire, own and operate the Misty Glen Apartments in Porter
           County, Indiana and to perform the following additional activities in
           connection with the properties:

               (a)     To expand opportunities available to disadvantaged
           residents to obtain adequate affordable housing accommodations by
           constructing, rehabilitating, operating and providing decent, safe and
           sanitary housing for said residents who otherwise would not be able
           to find or afford a suitable place to live;

               (b)   To help relieve the poor, distresse[d], underprivileged and
           indigent by enabling them to secure the basic human needs of
           decent shelter and to thus lessen the burdens of government and
           promote the social welfare;

              (c)     To provide such housing through rehabilitation of existing
           substandard buildings and construction of new facilities in the place
           of blighted structures or blighted adjacent vacant sites for the
           purpose of combating the deterioration of the community and
           contributing to its physical improvement; and

1
    Portions of the administrative record in this case have been designated as confidential;
consequently, this opinion will only provide the information necessary for the reader to understand
its disposition of the issues presented. See generally Ind. Administrative Rule 9.
2
  Vision Communities is a domestic nonprofit public benefit corporation and a tax-exempt public
charity under sections 501(c)(3) and 509(a)(2) of the Internal Revenue Code. (See Cert. Admin.
R. at 689-90, 701-06.) Its Articles of Incorporation provide its purposes are “[t]o develop,
construct, own and lease safe, decent, sanitary housing for low- and moderate-income individuals
and families; [and t]o make grants to public charities that are exempt from federal income tax[.]”
(Cert. Admin. R. at 690.)
                                                2
               (d)   In furtherance of the aforesaid purposes to conduct any
           and all lawful business and activities for which limited liability
           companies may be organized under the [Indiana Business Flexibility]
           Act, provided such business or activity is not inconsistent with the
           charitable purposes or status of [Hebron-Vision’s] sole member,
           [Vision Communities].”

(Cert. Admin. R. at 711-12, 717.)

       To that end, at some point in 2007, Hebron-Vision purchased Misty Glen

Apartments (“Misty Glen”), a Section 423 80-unit apartment complex situated on 6.45

acres of land in Porter County, Boone Township, Hebron, Indiana.4 (See Cert. Admin. R.

at 423, 426, 2294, 2651-52.) Although Hebron-Vision did not receive any tax credits when

it acquired the property, it continued to operate Misty Glen as a Section 42 apartment

complex. (See Cert. Admin. R. at 2307-09, 2327, 2341, 2451-53, 2531-34.) As such,

approximately 95% of the residents’ annual incomes were at or below 60% of the area

median income (adjusted for family size) during the years at issue.5 (See Cert. Admin.

R. at 2531-34, 2997-3001.)

       In 2008, Hebron-Vision applied for, and eventually received, a charitable purposes


3
   USC § 42 generally provides that the U.S. Department of Housing and Urban Development
(“HUD”), via the Indiana Housing and Community Development Authority (“IHCDA”), may award
dollar for dollar tax credits to developers to finance the construction of qualifying housing projects.
(See Cert. Admin. R. at 495, 1085-95, 2302-05, 2446-48, 2467-68, 2473-76.) In exchange, the
developer agrees to operate its property subject to income and rent restrictions that benefit low-
income individuals and families. (See Cert. Admin. R. at 495, 1092-94, 2302-05, 2446-48.)
4
   Specifically, Misty Glen has 16 one-bedroom units, 40 two-bedroom units, and 24 three-
bedroom units. (Cert. Admin. R. at 428.) In addition, the property’s amenities include a business
center, newly renovated clubhouse, 24-hour fitness center, playground, and a barbeque area with
picnic tables and grills. (Cert. Admin. R. at 2960-61.)
5
     HUD determines and reports area median incomes for metropolitan statistical areas and
nonmetropolitan counties. (See, e.g., Cert. Admin. R. at 1031-34, 2506-11.) For example,
individuals and families living at 60% of the 2012 area median income for Porter County were
established at $27,780 for a single person, $31,740 for a family of two, and $35,700 for a family
of three. (Cert. Admin. R. at 502.)
                                                  3
exemption for Misty Glen for that year. (See Cert. Admin. R. at 34-58, 2311-12.) In 2010

and 2012, Hebron-Vision submitted a statement to the Porter County Assessor stating

that its property should remain exempt because its use of the property had not changed

since 2008. (Cert. Admin. R. at 27-28, 32-33.)

       On May 30, 2013, the Porter County Property Tax Assessment Board of Appeals

(the “PTABOA”) determined that the property was ineligible for the exemption in 2012.

(Cert. Admin. R. at 6-26.) Consequently, Hebron-Vision filed a petition for review with the

Indiana Board on June 21, 2013. (Cert. Admin. R. at 1-73.) Thereafter, Hebron-Vision

filed applications for exemption for the 2014 and 2015 tax years,6 which the PTABOA

denied, and Hebron-Vision sought review with the Indiana Board for those years as well.

(Cert. Admin. R. at 74-253.)         In January 2017, the Indiana Board conducted a

consolidated two-day hearing on all of Hebron-Vision’s appeals.

       During the hearing, Hebron-Vision presented to the Indiana Board nearly forty

separate exhibits and the testimony of four witnesses to demonstrate that it owned,

occupied, and used its property solely for charitable purposes during the years at issue.

(See, e.g., Cert. Admin. R. at v-vi.) More specifically, Hebron-Vision claimed that it

qualified for a charitable purposes exemption because all the evidence showed that

         1) the government had assumed the burden of providing affordable
            housing to those who were in need;

         2) Hebron-Vision’s operation of Misty Glen, via Vision Communities,
            lessened the government’s burden because it provided safe,
            decent, and sanitary housing at below-market rental rates to people
            who were in need;

         3) the motives of Hebron-Vision and Vision Communities were

6
  The Indiana Board explained that Hebron-Vision did not need to file an application for exemption
for 2013 because Indiana Code § 6-1.1-11-3.5 would extend the 2012 exemption to 2013. (See
Cert. Admin. R. at 2061 n.2.)
                                                4
             altruistic because neither received government funding to operate
             Misty Glen as a Section 42 apartment complex nor improperly
             profited from the operation of the property; and

         4) Hebron-Vision used Misty Glen to satisfy the needs and wants of
            its residents by promoting a sense of brotherhood for them through
            its provision of several services7 that typically were not offered by
            for-profit/market rate apartment complexes.

(See, e.g., Cert. Admin. R. at 2257-61, 2289, 2292-2302, 2306-08, 2342-43, 2364-65,

2371-73, 2384-87, 2393, 2404-05, 2440-43, 2459, 2509-34, 2794-2828, 2882-85, 2984-

07, 3022-23, 3174-77.) (See also, e.g., Cert. Admin. R. at 419-60 (Rent Analysis), 707-

10 (Conflict of Interest and Excess Benefit Policies), 1018-84 (HUD’s rental information

and median income limit documentation for Porter County).)

       In response, the Assessor objected to Hebron-Vision’s Rent Analysis and the

testimony of its preparer, claiming that the evidence was inadmissible because Hebron-

Vision failed to comply with the disclosure requirements of 52 IAC 2-7-1.8 (See Cert.

Admin. R. at 2770-74.) The Assessor also presented two exhibits9 and his own testimony

to demonstrate that the totality of the evidence showed

       1) Hebron-Vision did not relieve any governmental burden because it
          received indirect subsidies (e.g., rent or utility assistance) from
          government and non-governmental sources;


7
  For example, Misty Glen residents had on-site access to free tax preparation services, resumé
writing assistance, and blood pressure screenings. (See Cert. Admin. R. at 512-13, 2984-92.)
Hebron-Vision also maintained a list of, and provided referrals to, social services providers for
rent, food, or utility assistance. (See, e.g., Cert. Admin. R. at 516-17, 3053-68.)
8
  52 IAC 2-7-1 requires litigants to exchange copies of their documentary evidence, witness lists,
and exhibit lists within certain prescribed periods. See 52 IND. ADMIN. CODE 2-7-1(b) (2017). The
rule further provides that a litigant’s failure to comply with the disclosure requirements “may serve
as grounds to exclude the evidence or testimony at issue.” 52 I.A.C. 2-7-1(f).
9
  The Assessor actually presented a total of six exhibits, but only two of his exhibits addressed
Hebron-Vision’s eligibility for an exemption. (See Cert. Admin. R. at vi, 2071 ¶¶ 31-34, 2149-72,
2578-93, 3244-61 (indicating that one exhibit was withdrawn, two exhibits were offered solely to
support the Assessor’s evidentiary objections, and one exhibit was not admitted into evidence).)
                                                 5
       2) Hebron-Vision used its property for a noncharitable profit motive by
          paying excessive management fees to its offsite property manager,
          Flaherty & Collins Properties,10 a for-profit company whose owners
          helped form Hebron-Vision and Vision Communities;

       3) Misty Glen’s rental rates were not below-market;

       4) Hebron-Vision’s policies mirrored those of a typical landlord because
          it screened prospective tenants based on their ability to pay rent on
          time, excluding those with poor credit histories and unsatisfactory
          landlord references; required security deposits; charged late fees;
          evicted tenants for nonpayment of rent; and did not have a rent
          forgiveness program;

       5) Misty Glen’s tenants were not truly in need of charity because the
          evidence did not show their income levels were any different than
          those of other area renters; and

       6) Hebron-Vision’s provision of other services, while noble, actually
          reflected the charitable acts of those agencies only and was merely
          incidental to its noncharitable purpose of providing affordable
          housing to moderate- to low-income individuals and families.

(See, e.g., Cert. Admin. R. at 2272-73, 2344-47, 2615-2633, 2839-73, 3053-90, 3105-18,

3203-42, 3262-69, 3278.) (See also, e.g., Cert. Admin. R. at 1992 (the Assessor’s Market

Study), 2026-38 and 2049-55 (the Assessor’s post-hearing submissions).)

       On May 23, 2018, the Indiana Board issued a final determination, concluding that

Hebron-Vision failed to prove that its property was predominately owned, occupied, and

used for charitable purposes during the years at issue. (See Cert. Admin. R. at 2089-90

¶¶ 93-96.) Specifically, after overruling the Assessor’s objection, the Indiana Board

determined that the evidence regarding the a) management fees, b) rental rates, c)

residents’ income levels and screening process, and d) provision of additional services



10
   Flaherty & Collins has been in the business of developing, building, and managing multi-family
properties since 1993. (Cert. Admin. R. at 2269-70.) It has developed approximately 56
apartment complexes and manages about 15,000 individual apartment units in eight states. (Cert.
Admin. R. at 2270-71.)
                                               6
failed to show that the property qualified for a charitable purposes exemption. (See Cert.

Admin. R. at 2071 ¶ 30, 2086-89 ¶¶ 84-94.)

       On July 6, 2018, Hebron-Vision initiated this original tax appeal. The Court heard

oral argument on August 9, 2019. Additional facts will be supplied as necessary.

                                STANDARD OF REVIEW

       The party seeking to overturn an Indiana Board final determination bears the

burden of demonstrating its invalidity.    Osolo Twp. Assessor v. Elkhart Maple Lane

Assocs., 789 N.E.2d 109, 111 (Ind. Tax Ct. 2003). Accordingly, Hebron-Vision must

demonstrate to the Court that the Indiana Board’s final determination is arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with the law; contrary

to constitutional right, power, privilege, or immunity; in excess of or short of statutory

jurisdiction, authority, or limitations; without observance of the procedure required by law;

or unsupported by substantial or reliable evidence. See IND. CODE § 33-26-6-6(e)(1)-(5)

(2019).

                                           LAW

       The charitable purposes exemption, set forth in Indiana Code § 6-1.1-10-16,

provides that “[a]ll or part of a building is exempt from property taxation if it is owned,

occupied, and used . . . for . . . charitable purposes.” IND. CODE § 6-1.1-10-16(a) (2012)

(amended 2016). The exemption also extends to the land on which an exempt building

is situated and the personal property that is contained therein. See I.C. § 6-1.1-10-16(c),

(e).   Accordingly, when a taxpayer seeks a charitable purposes exemption, it must

demonstrate that it owns, occupies, and predominately uses its property for charitable

purposes. See 6787 Steelworkers Hall, Inc. v. Scott, 933 N.E.2d 591, 595 (Ind. Tax Ct.



                                             7
2010); IND. CODE § 6-1.1-10-36.3(a) (2012) (defining “predominate use”).

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

understood in its broadest, constitutional sense. Knox Cty. Prop. Tax Assessment Bd. of

Appeals v. Grandview Care, Inc., 826 N.E.2d 177, 182 (Ind. Tax Ct. 2005). “A charitable

purpose is established when a taxpayer provides probative 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.” Starke

Cty. Assessor v. Porter-Starke Servs., Inc., 88 N.E.3d 814, 817 (Ind. Tax Ct. 2017)

(citations omitted).

                                        ANALYSIS

       On appeal, Hebron-Vision claims that the Indiana Board’s final determination must

be reversed for three reasons. First, it claims that the Indiana Board failed to consider its

main legal argument that the federal and state governments had assumed the burden of

providing affordable housing to certain individuals. (See Pet’r Br. at 45-46; Oral Arg. Tr.

at 4-5.) Second, Hebron-Vision claims that the Indiana Board’s findings regarding the a)

management fees, b) rental rates, c) residents’ income levels and screening process, and

d) additional services are not supported by substantial evidence. (See Pet’r Br. at 22-

45.) Finally, Hebron-Vision maintains that the Indiana Board erred in concluding that it

did not establish it qualified for a charitable purposes exemption during the years at issue

because the totality of the evidence established that its ownership, occupancy, and use

of Misty Glen lessened a governmental burden. (See, e.g., Pet’r Br. at 45-48; Oral Arg.

Tr. at 5-10.)



                                              8
                             I. The Government’s Burden

       During the Indiana Board hearing, Hebron-Vision argued, in both its opening and

closing statements, that both the federal government and the State of Indiana had

assumed the burden of providing affordable housing to certain individuals and families.

(See Cert. Admin. R. at 2257-61 (citing IND. CODE § 5-20-1-1 (2012)), 3281-88.) (See

also Cert. Admin. R. at 2014-21 (Hebron-Vision’s post-hearing submissions (citing, e.g.,

IND. CODE § 5-20-4-5 (2012)).) The statutory provisions upon which Hebron-Vision relied

declare

          that there exists in the state of Indiana a need for safe and sanitary
          residential housing within the financial means of low and moderate
          income persons and families, a need which unmet is a threat to the
          health, safety, morals and welfare of Indiana residents and which will
          require an excessive expenditure of public funds for the social
          problems thus created;

                                          *****

          [and] that the provision of decent, safe and sanitary housing for
          persons and families of low and moderate income who would
          otherwise be unable to obtain adequate housing at costs they could
          afford is a valid public purpose for which public money may be
          spent[.]

I.C. § 5-20-1-1(1), (3). The Indiana Supreme Court has explained that the purpose of

these provisions, to provide suitable housing for Indiana’s low and middle income

residents, is public in nature and a valid exercise of the legislative police power because

the benefits received by private individuals are incidental to the execution of a legitimate

public purpose. Steup v. Indiana Hous. Fin. Auth., 402 N.E.2d 1215, 1220-22 (Ind. 1980).

The Supreme Court observed:

          “‘It requires little evidence and less imagination to realize the effect
          upon communities and the state generally when housing is
          inadequate and substandard. The lack of adequate housing

                                             9
           underlies many of the problems suffered by a state. . . . All citizens
           are then called upon to bear the cost of combating the evils which
           are inevitable in the absence of good, adequate, clean, and
           financially possible housing. Nothing could be more of a public
           purpose.’”

Id. at 1221 (citation omitted).

       To effectuate the purposes of these statutes, the General Assembly created the

Indiana Housing and Community Development Authority (“IHCDA”) (f/k/a/ the Indiana

Housing Finance Authority), “‘which is an instrumentality or agency of the state although

it is not the state in its sovereign corporate capacity.’” See id. at 1218 (citation omitted).

See also IND. CODE § 5-20-1-3(a) (2012); P.L. 235-2005, § 217 (eff. May 15, 2005). The

IHCDA’s mission is “[t]o provide housing opportunities, promote self-sufficiency, and

strengthen communities” by, for example, “[c]reat[ing] and preserv[ing] housing for

Indiana’s most vulnerable population[ and e]nhanc[ing] self-sufficiency initiatives in

existing programs.” (Cert. Admin. R. at 988.) To that end, the IHCDA allocates state and

federal funds to private organizations to facilitate the development of low-income housing

for certain individuals and families. See, e.g., IND. CODE §§ 5-20-1-4, -4-1 et seq. (2012);

I.C. § 5-20-4-5 (defining “lower income families” as “families whose income does not

exceed eighty percent (80%) of the median income for the area”). (See also Cert. Admin.

R. at 495, 1085-95, 2302-05, 2446-48, 2467-68, 2473-76.)

       The Assessor did not challenge Hebron-Vision’s theory; instead, he claimed that

Hebron-Vision did not alleviate any government burden because it received subsidies

from various governmental sources. (See, e.g., Cert. Admin. R. at 2261-64, 3290-97.)

(See also Cert. Admin. R. at 2020-40, 2049-57 (the Assessor’s post-hearing

submission).) The Indiana Board’s final determination only recites the parties’ arguments



                                             10
on this issue. (See Cert. Admin. R. at 2076 ¶ 50, 2086 ¶ 84, 2084-89 ¶¶ 80-92.) Thus,

to the extent it does not contain any specific findings regarding the validity of Hebron-

Vision’s legal argument, it is erroneous. See infra Part III.

       This Court has previously explained that the Indiana Board may not simply refuse

to consider probative evidence but must deal with it in some meaningful manner. Clark

v. State Bd. of Tax Comm’rs, 694 N.E.2d 1230, 1235 (Ind. Tax Ct. 1998). Similarly, the

Indiana Board must address the validity of a party’s legal argument, not simply ignore it.

Here, the statutory provisions on which Hebron-Vision relied and related record evidence,

(see, e.g., Cert. Admin. R. at 2531-34, 2997-3001), established that the federal

government as well as the State of Indiana assumed the burden of providing affordable

housing to certain individuals and families during the years at issue.

                                  II. Substantial Evidence

       Hebron-Vision also claims that the Indiana Board’s findings regarding the a)

management fees, b) rental rates, c) residents’ income levels and screening process, and

d) additional services are not supported by substantial evidence, arbitrary, capricious, and

not in accordance with the law. (See Pet’r Br. at 22-45; Pet’r Reply Br. 10-27.) The

Assessor maintains, however, that those findings are proper because they are supported

by substantial evidence, and thus, are not arbitrary, capricious, or inconsistent with the

law. (See Resp’t Br. at 21-39.)

       When reviewing an Indiana Board final determination, the Court will accept the

Indiana Board’s findings of fact so long as they are supported by substantial evidence.

Cedar Lake Conference Ass’n v. Lake Cty. Prop. Tax Assessment Bd. of Appeals, 887

N.E.2d 205, 207 (Ind. Tax Ct. 2008), review denied. In evaluating whether substantial



                                             11
evidence exists, the Court will not reweigh the record evidence or judge the credibility of

the witnesses who testified at the Indiana Board’s hearing. See Freudenberg-NOK Gen.

P’ship v. State Bd. of Tax Comm’rs, 715 N.E.2d 1026, 1030 (Ind. Tax Ct. 1999), review

denied. The Court will find that substantial evidence exists when evidence is more than

a scintilla, that is, evidence that reasonable minds might accept as adequate to support

the Indiana Board’s conclusion. See Porter-Starke Servs., 88 N.E.3d at 820.

                                 A. Management Fees

      In its final determination, the Indiana Board explained that the evidence regarding

the management fees indicated that Hebron-Vision did not own, occupy, or use Misty

Glen for charitable purposes. (See Cert. Admin. R. at 2088 ¶ 89.) Specifically, the

Indiana Board stated it was

          concerned about the founders of [Hebron-Vision/Vision
          Communities] profiting from Misty Glen by using their for-profit
          company[, Flaherty & Collins,] to manage the property. A fee of 6%
          of gross rent plus the salary of an employee, is not insignificant.
          Using [a witness’s] 10% capitalization rate, that equates to a
          $710,000 boon to Flaherty & Collins. This is contrary to the
          requirement that property be owned, occupied, and used for a
          charitable purpose.

(Cert. Admin. R. at 2088 ¶ 89.) (See also Cert. Admin. R. at 2661-65 (regarding the 10%

capitalization rate).) The Assessor contends that this finding is supported by substantial

evidence because 1) Hebron-Vision/Vision Communities and Flaherty & Collins have

common ownership, 2) Hebron-Vision’s “own uncontroverted evidence” demonstrates

that the purpose of Flaherty & Collins is to make money for its owners and investors, and

3) a “‘boon’ can be defined as a ‘bonus, benefit or financial gain[.]’” (See Resp’t Br. at

22-23; Oral Arg. Tr at 39-43.)

      At the outset, the Assessor asserts that “it is not disputed that [Hebron-

                                            12
Vision/Vision Communities] and Flaherty & Collins have common ownership.” (Resp’t Br.

22 (citing Cert. Admin. R. at 2272-73).) The evidence, however, does not support his

assertion because it indicates that Hebron-Vision is wholly owned by Vision Communities

and that Vision Communities is an Indiana nonprofit corporation formed under the Indiana

Nonprofit Corporation Act of 1991. (See Cert. Admin. R. at 690, 711, 716-18, 728.)

Consequently, Vision Communities does not have private owners, but is instead owned

by itself. See, e.g., Yogi Bear Membership Corp. v. Stalnaker, 571 N.E.2d 331, 333-34

(Ind. Ct. App. 1991) (holding that because a nonprofit corporation is a legal entity separate

and distinct from its members, it must be represented by legal counsel in judicial

proceedings).

       Moreover, in finding as it did, the Indiana Board added Flaherty & Collins’ offsite

property management fee and the onsite property manager’s annual salary (as did the

Assessor), applied a 10% capitalization rate to the result, and then attributed the entire

amount to Flaherty & Collins. (See Cert. Admin. R. at 754-55, 2088 ¶ 89, 2616-19.) The

Indiana Board erred in doing so for two reasons. First, the Indiana Board’s finding that

Flaherty & Collins received a management fee of $710,000 is not supported by substantial

evidence. Indeed, during the Indiana Board hearing, Hebron-Vision’s witnesses testified

that apartment complexes employ offsite and onsite property managers because they

perform different jobs. (See Cert. Admin. R. at 2909-14, 2397-99.) While offsite property

managers typically receive anywhere from 2.5 to 7 percent of a property’s gross rents

depending on its size, onsite property managers receive set salaries. (See Cert. Admin.

R. at 2619-20, 2882-83, 2911.) For instance, Misty Glen’s offsite property manager,

Flaherty & Collins, received 6% of the gross rents for collecting rental payments; paying



                                             13
the bills; providing accounting services; and hiring, overseeing the training of, and

supervising certain staff. (See Cert. Admin. R. at 793, 834, 879, 927, 2910-11, 2934,

2938-41.) Misty Glen’s onsite property manager, however, received an annual salary of

over $30,000 for handling the day-to-day operations of the complex and the distinct needs

of the tenants. (See Cert. Admin. R. at 794, 835, 880, 928, 2625-26, 2911-12.) The

witnesses further explained that although the onsite property manager was an employee

of Flaherty & Collins, in order to provide her with better healthcare benefits, Hebron-Vision

ultimately paid her salary by reimbursing Flaherty & Collins. (See Cert. Admin. R. at

2624-26, 2883-85.)

       In addition, the witnesses testified that Flaherty & Collins, who served as the offsite

property manager before Hebron-Vision even purchased the property, did not receive any

of the tax credits from the original owner/developer. (See Cert. Admin. R. at 2346, 2453.)

Indeed, during the years at issue Flaherty & Collins merely broke even or lost money in

managing Misty Glen because the management fee did not cover its overhead. (See

Cert. Admin. R. at 2289-92, 2396-97, 2402, 2406-08.) In addition, there was no evidence

that the owners of Flaherty & Collins, who also served on the Board of Directors for Vision

Communities, had disclosed any conflict of interest or received any excess benefits due

to its operation of Misty Glen. (See Cert. Admin. R. at 707-10, 2408-10, 2364-65, 2372-

73, 2384-87, 2393, 2405 (defining an “excess benefit” as “a benefit or payment provided

that exceeds the value of services that were provided in return”).) Moreover, there is no

indication that the services for which the offsite and onsite property managers were

compensated were not actually performed.           Collectively, this unrebutted evidence

demonstrates that 1) the offsite property management fee and the onsite property



                                             14
manager’s salary are legitimate business expenses; 2) the offsite and onsite management

expenses are not excessive; and 3) neither Flaherty & Collins nor its owners profited from

the operation of Misty Glen during the years issue.

       Second, neither party could explain why the Indiana Board capitalized the

aggregated offsite property management fee and onsite property manager’s salary. (See,

e.g., Oral Arg. Tr. at 11-12, 39.) To the extent the Indiana Board sought to apply the

income approach, a method for valuing real estate, its methodology was flawed. See

2011 REAL PROPERTY ASSESSMENT MANUAL (incorporated by reference at 50 IND. ADMIN.

CODE 2.4-1-2 (2011)) at 2 (providing that the income approach, which is “used for income

producing properties that are typically rented[,] converts an estimate of income, or rent,

[a] property is expected to produce into value through a mathematical process known as

capitalization”). Indeed, in this context, the capitalization of Hebron-Vision’s expenses

has no basis. As stated above, the capitalization of net income is used to arrive at the

value of property using the income approach, such is not the case here. See, e.g.,

Madison Cty. Assessor v. Sedd Realty Co., 125 N.E.3d 676, 678-79 (Ind. Tax Ct. 2019)

(illustrating the application of the income approach). Consequently, the Indiana Board’s

methodology failed to produce a reliable estimate of value and thus lacks probative value.

See Tipton Cty. Health Care Found., Inc. v. Tipton Cty. Assessor, 961 N.E.2d 1048, 1051

n.3 (Ind. Tax Ct. 2012) (providing that “‘[p]robative evidence is evidence that tends to

prove or disprove a point in issue’”) (citation omitted).

       The Indiana Board’s final determination does not explain its basis for disregarding

the uncontroverted record evidence regarding the offsite property manager’s fee and the

onsite property manager’s salary or for capitalizing the aggregated earnings of the offsite



                                             15
and onsite property managers. Consequently, its finding that Hebron-Vision used Misty

Glen for its own profit rather than charitable purposes is not only unsupported by

substantial evidence, but also arbitrary and capricious. See, e.g., Sedd Realty, 125

N.E.3d at 681 (providing that an Indiana Board final determination is “‘arbitrary and

capricious when there is no basis in the record that would lead a reasonable person to

the same conclusion’”) (citation omitted).

                                    B. Rental Rates

       The Indiana Board also determined that the evidence concerning Misty Glen’s

rental rates did not establish that its rental rates were below-market during the years at

issue, explaining that

          [a]lthough [Hebron-Vision] claims to offer its tenants “affordable”
          apartments, affordability does not equate to charitable. [Hebron-
          Vision] presented conflicting evidence making it difficult for the Board
          to definitively conclude that the rents charged at Misty Glen are in
          fact “below market.” In fact, according to . . . [one of Hebron-Vision’s
          witnesses], Misty Glen[’s] rents are actually higher than The Pines, a
          nearby Section 515 property.

          [Hebron-Vision] presented a [R]ent [A]nalysis prepared by . . . a
          certified general appraiser. According to [the Appraiser], in 2012
          Misty Glen rented one bedroom apartments “at the lower end of the
          range” of adjusted market rents on a per square foot basis. For two
          bedrooms, [the Appraiser] determined that Misty Glen rented “below
          average” of the adjusted market rents on a per square foot basis.
          And finally, for three bedrooms, [the Appraiser] concluded Misty Glen
          rented “at the low end of the range” of adjusted market rents on a per
          square foot basis. [The Appraiser] deduced that in 2012, Misty
          Glen[’s] rents were “below market.” [The Appraiser] went on to state
          that, based on her “continued research,” Misty Glen[’s] rents for
          2013, 2014, and 2015 were “more likely than not” also below market.
          The Board will not accept [the Appraiser’s] conclusory statement that
          based on her “continued research” 2013, 2014, and 2015 rents were
          “more likely than not” also below market. As a result, [the Appraiser]
          has failed to convince the Board that Misty Glen charged below
          market rents in 2013, 2014, and 2015. With that being said, even if
          the Board accepts that the 2012 rents were at the “low end” of the

                                             16
           range of rents charged by purportedly comparable properties, having
           a rent below the average does not make an apartment complex
           “charitable.”

(Cert. Admin. R. at 2088-89 ¶¶ 90-91.) The Assessor contends that these findings are

proper because Hebron-Vision presented “conflicting evidence” by showing that The

Pines, another rent-restricted property, had lower rental rates than Misty Glen. (See

Resp’t Br. at 26-27.) The Assessor also maintains that his Market Rent Study shows that

Misty Glen’s rental rates were higher than the average market rental rates for the area.

(See Resp’t Br. at 24-26.) Moreover, the Assessor claims that Hebron-Vision’s Rent

Analysis and the related testimony lack probative value because the Rent Analysis

conclusions are derived from an incomparable market, and the testimony regarding the

rental rates for 2013 through 2015 was “mere speculation” because the Appraiser did not

conduct a rent analysis for those years.11 (See Resp’t Br. at 23-24; Oral Arg. Tr. at 30-

31.) The Assessor’s arguments are unpersuasive for several reasons.

       First, and most importantly, Hebron-Vision presented Porter County fair market

rent (“FMR”) information developed by HUD for the years at issue. (See Cert. Admin. R.

at 989-99, 1018-30, 1035-48, 1053-65, 1069-81.) This evidence indicates that HUD uses

the FMRs to establish standard rental amounts for its rental assistance programs,

including setting the rent ceiling for the HOME/Section 42 program. (See Cert. Admin. R.

at 990, 2761 (providing that the HOME and Section 42 programs are one in the same).)


11
    The Assessor asks the Court to disregard Hebron-Vision’s Rent Analysis and the related
testimony, claiming that the Indiana Board erred in overruling his objection. (See Resp’t Br. at
27; Oral Arg. Tr. at 43-45.) The Court, however, need not address this issue because its
determination that Misty Glen’s rental rates are below market is not based on the Rent Analysis.
Moreover, even if the Court addressed the issue, it would uphold the Indiana Board’s ruling
because the Assessor failed to develop a sufficient argument on appeal. See, e.g., Scopelite v.
Indiana Dep’t of Local Gov’t Fin., 939 N.E.2d 1138, 1145 (Ind. Tax Ct. 2010) (indicating that the
Court will not resolve an issue when its proponent fails to provide sufficient legal analysis).
                                               17
The evidence further provides that HUD’s FMRs

          are gross rent estimates[ that] include the shelter rent plus the cost
          of all tenant-paid utilities, except telephones, cable or satellite
          television service, and internet service. HUD sets FMRs to assure
          that a sufficient supply of rental housing is available to program
          participants[, and therefore,] FMRs must be both high enough to
          permit a selection of units and neighborhoods and low enough to
          serve as many low-income families as possible. The level at which
          FMRs are set is expressed as a percentile point within the rent
          distribution of standard-quality rental housing units. The current
          definition is the 40th percentile rent, the dollar amount below which
          40 percent of the standard-quality rental housing units are rented.
          The 40th percentile of rent is drawn from the distribution of rents of
          all units occupied by recent movers (renter households who moved
          to their present residence within the past 15 months). HUD is
          required to ensure that FMRs exclude non-market rental housing in
          their computation. Therefore, HUD excludes all units falling below a
          specified rent level determined from public housing units in HUD’s
          program databases as likely to be either assisted housing or other
          otherwise at a below-market rent, and units less than two years old.

(Cert. Admin. R. at 990 (footnotes omitted and emphasis added).) (See also Cert. Admin.

R. at 990 (providing “[s]tandard-quality rental housing units have the following attributes:

Occupied rental units paying cash rent; Specified renter on 10 acres or less; With full

plumbing; With full kitchen; Unit more than 2 years old, and Meals not included in the

rent”).) This evidence demonstrates the federal standard used to determine a low-income

individual or family eligible for assistance, and thus, that HUD’s FMRs for Porter County

are below-market because 60% of the rental rates within that market are in excess of

HUD’s FMR rates.

       Second, when that evidence is considered in light of the other unrebutted

evidence, it shows that during the years at issue Misty Glen’s average rental rates for one

bedroom units ranged from about $30 to $100 less than HUD’s FMRs for Porter County,

its average rental rates for two bedroom units were about $90 to $160 lower than those



                                            18
of HUD, and its average rental rates for three bedroom units were anywhere from $200

to $240 less than HUD’s. (See Cert. Admin. R. at 1705.) (Compare also Cert. Admin. R.

at 799-802, 842-45, 887-90, 935-38 (Misty Glen’s Rent Rolls) with Cert. Admin. R. at

1018, 1035, 1053, 1069 (HUD’s FMR data for Porter County).) Furthermore, contrary to

the Assessor’s claim, and perhaps the Indiana Board’s finding,12 the fact that The Pines’

rental rates were lower than those of Misty Glen does not mean Hebron-Vision’s evidence

conflicted. (See Cert. Admin. R. at 1768.) Rather, it shows that its evidence is consistent

because the rental rates at both properties are lower than HUD’s FMRs for Porter County,

and thus, below market. (See Cert. Admin. R. at 2956, 2975, 3182 (indicating that The

Pines’ rental rates are lower than those of Misty Glen because the annual incomes of its

residents, unlike those of Misty Glen’s residents, must be at or below 30% of the area

median income).)

       Third, the Assessor’s Market Rent Study does not rebut Hebron-Vision’s evidence

that Misty Glen’s rental rates were below market because it lacks probative value. See

Tipton Cty. Health Care Found., 961 N.E.2d at 1051 n.3 (providing that probative

evidence tends to prove or disprove a point in issue). More specifically, during the Indiana

Board hearing, the Assessor explained that the rental rates set forth in his Market Rent

Study were based on a total of seven different properties located in Hebron (Porter

County) and Lowell (Lake County). (See Cert. Admin. R. at 1992, 3203-28.) The

Assessor, however, failed to establish that those seven properties were truly comparable

to Misty Glen or that his rental rate conclusions were reliable because: 1) the Market

Rent Study contains scant information regarding the amenities of the seven properties;


12
   The Indiana Board did not identify which parts of Hebron-Vision’s evidentiary presentation
conflicted. (See Cert. Admin. R. at 2088 ¶ 90.)
                                             19
2) there is no description of how the amenities of the seven properties were similar to or

different from those of Misty Glen; 3) there is no explanation of how the differences

between the seven properties and Misty Glen affected the rental rate conclusions; 4) there

is no indication whether the Hebron properties are rent-restricted; 5) no adjustments were

made for location although three of the properties were located in another county; and 6)

no adjustments were made for age even though all seven of the properties were built 10

to 44 years before Misty Glen. (See Cert. Admin. R. at 1992, 3203-28, 3228-29, 3271-

74; see also Cert. Admin. R. at 2308-09, 2801, 2845-46, 2851, 2853-56, 2942-43

(providing that apartment complexes in Hebron are all rent-restricted).) See also, e.g.,

Long v. Wayne Twp. Assessor, 821 N.E.2d 466, 470-71 (Ind. Tax Ct. 2005) (providing

that to establish comparability, litigants must explain the subject property’s

characteristics, how those characteristics compared to those of the other properties, and

how any differences in any of their characteristics affected their values), review denied.

       Fourth, the Indiana Board’s findings that the Rent Analysis properties are

“purportedly comparable” to Misty Glen is not only arbitrary and capricious, but also

unsupported by substantial evidence. More specifically, because the Indiana Board’s

final determination does not reveal why it questioned the comparability of the Rent

Analysis properties to Misty Glen, its finding on that subject is arbitrary and capricious.

To the extent the Indiana Board’s finding is premised on the Assessor’s claim that the

Valparaiso and Hebron markets are not comparable, the final determination does not

explain why the Rent Analysis, which contains adjustments for location, failed to account

for any differences between the two markets. (See Cert. Admin. R. at 2803-07, 2878-

79.) Furthermore, the final determination disregards that the Rent Analysis rental rate



                                            20
conclusions are not based exclusively on Valparaiso properties.        Indeed, the Rent

Analysis and related testimony establish that the average market rents in Portage, Crown

Point, and Merrillville, as reported in the Tikijian and Associates 2012 Indiana Apartment

Survey (the “Tikijian Survey”), were considered in developing the final Rent Analysis

rental rate conclusions. (See Cert. Admin. R. at 455-56, 2816-17.) Accordingly, the

Indiana Board’s finding that the Rent Analysis properties were “purportedly comparable”

is arbitrary and capricious and unsupported by substantial evidence. See, e.g., Sedd

Realty, 125 N.E.3d at 680-81 (explaining that the Indiana Board’s failure to explain its

rationale for reaching a conclusion that is not supported by substantial evidence is

arbitrary and capricious).

       Lastly, the Indiana Board’s finding that the Appraiser’s testimony regarding Misty

Glen’s rental rates for 2013 through 2015 was conclusory is also arbitrary and capricious

and unsupported by substantial evidence. Specifically, the record reveals that during the

Indiana Board hearing, the Appraiser reviewed a few pages from the Tikijian Survey and

then explained that the extent of the rental rate increases in Portage, Crown Point, and

Merrillville for 2013 through 2015 indicated that Misty Glen’s rental rates remained below

market during those years. (See Cert. Admin. R. at 2821-26.) Therefore, the Appraiser’s

testimony contains her rationale and is not conclusory.         See, e.g., BLACK’S LAW

DICTIONARY 362 (11th ed. 2019) (defining “conclusory” as “[e]xpressing a factual inference

without stating the underlying facts on which the inference is based”). Consequently, the

Indiana Board erred in concluding that the evidence failed to establish that Misty Glen’s

rental rates were below market.




                                           21
                C. Residents’ Income Levels and Screening Process

       In concluding that Hebron-Vision failed to show it used Misty Glen for charitable

purposes, the Indiana Board also found that

          the predominate and primary use of the subject property is providing
          apartment living to its tenants. [Hebron-Vision] characterized its
          tenants as “disadvantaged” because their income levels fall within
          certain income limits established by IHCDA. However, [Hebron-
          Vision] failed to show the income levels of its tenants differ from the
          income levels of residents at other conventional apartments.

          Similar to the [p]etitioner in Jamestown Homes, [Hebron-Vision]
          retains several “typical” landlord rights: tenants can be evicted if they
          failed to pay their rent, charges can be applied for late rent payments,
          an initial “application screening” is conducted to determine if tenants
          had adequate credit, and tenants must prove they have had no prior
          evictions. . . . Admittedly, [Hebron-Vision] has “often” denied
          potential tenants during the initial screening.           Consequently,
          [Hebron-Vision] evicted four tenants during the years in question for
          nonpayment of rent. Clearly[, Hebron-Vision] is using shrewd
          business skills in selecting tenants. But this also indicates that
          [Hebron-Vision] is not selecting tenants who are in most need of
          charitable housing or who have difficulties finding housing due to
          prior evictions or bad credit.

(Cert. Admin. R. at 2087 ¶¶ 86-87 (citation omitted and emphasis added).) The Assessor

contends that these Indiana Board findings are supported by substantial evidence

because they are based entirely on Hebron-Vision’s Resident Selection Criteria Policy

and the related testimony. (See Resp’t Br. at 34-36.) Indeed, the Assessor claims this

finding is proper because the evidence “indicates that [Hebron-Vision] did not rent to

tenants avoided by landlords in general and tenants who are in need of true charity.”

(Resp’t Br. at 39.)

       Although the Indiana Board’s finding is based on Hebron-Vision’s evidence, it

cannot stand because it: 1) is derived from the faulty legal premise that the subjects of

charity must be the neediest; and 2) fails to take into account the statutes and evidence

                                             22
that show that Misty Glen’s residents are in need. With respect to the first point, there is

no legal requirement that a taxpayer’s disposition of charity be confined to a particular

subset of individuals. See, e.g., Raintree Friends Hous., Inc. v. Indiana Dep’t of State

Revenue, 667 N.E.2d 810, 814 (Ind. Tax Ct. 1996) (providing that an organization that

“limits the dispensation of its blessings to one sex, or to the inhabitants of a particular city

or district, or to the membership of a particular religious or secular organization, does not

. . . deprive it either in legal or popular apprehension of the character of a charitable

institution” (quoting City of Indianapolis v. Grand Master, etc., of Grand Lodge of Indiana,

25 Ind. 518, 522 (1865))).

       With respect to the second point, the Legislature has determined that individuals

and families whose income does not exceed 80% of the area median income (“AMI”) are

in need of safe, sanitary, and affordable housing. See I.C. §§ 5-20-1-1(1), (3), -4-5. Thus,

those individuals and families are proper subjects of charity. The evidence in this case

shows that the policies and procedures implemented by Hebron-Vision during the years

at issue ensured that the annual incomes of nearly all of Misty Glen’s actual residents

were at or below 60% of the AMI. (See, e.g., Cert. Admin. R. at 2997-3001.) In addition,

the evidence indicates that during the 2014 tax year, 21% of Porter County households

were ALICE13 Households (i.e., households with incomes above the federal poverty level,

but below the basic cost of living), 10% of Porter County households were Poverty

Households, and 36% of Hebron’s households were ALICE and Poverty Households.

(See Cert. Admin. R. at 1410, 1584-85.)



13
    “ALICE is an acronym that stands for Asset Limited, Income Constrained, Employed,
comprising households with income above the Federal Poverty Level but below the basic cost of
living.” (Cert. Admin. R. at 1410.)
                                              23
         Furthermore, the evidence shows that in 2014, the AMI for a Porter County family

of four ranged from $60,903 to $63,800. (See Cert. Admin. R. at 1066, 1584.) Based on

those figures, the AMI of a Porter County family of four surviving on an AMI of 60% would

have ranged from $36,540 to $38,280.14 In turn, the Household Survival Budget (i.e., the

bare minimum needed to survive) for a Porter County family of four was $53,400.15 (Cert.

Admin. R. at 1584.) Thus, a Porter County family of four living on 60% of AMI in 2014

made about $16,000 less than what was considered to be the bare minimum needed to

survive. Moreover, the evidence indisputably shows that an undisclosed number of Misty

Glen’s residents16 still required additional financial assistance to make ends meet despite

the fact that their rental rates were below HUD’s FMRs. (See, e.g., Cert. Admin. R. at

2344-46.) When the evidence is considered in light of the relevant statutory provisions,

it indicates that Misty Glen’s residents were proper subjects of charity. The Indiana

Board’s final determination does not explain the basis for discounting either the statutes

or the evidence on this issue. Accordingly, this finding cannot stand because it is not in

accordance with the law, is not supported by substantial evidence, and is arbitrary and

capricious.

                                    D. Additional Services

         The Indiana Board’s final determination also provides that Hebron-Vision


14
     The calculations are as follows: ($60,903 * 0.6 = $36,541.80) and ($63,800 * 0.6 = $38,280).
15
   The “Household Survival Budget” “calculates the actual costs of basic necessities (housing,
[childcare], food, health care, and transportation) in Indiana, adjusted for different counties and
household types.” (Cert. Admin. R. at 1410.)
16
    The Assessor contends that the evidence shows that 22 of Misty Glen’s residents received
Section 8 rental vouchers. (See Resp’t Br. at 31-32 (citing Cert. Admin. R. at 2344).) (See also,
e.g., Cert. Admin. R. at 2026.) The certified administrative record, however, contains no evidence
to that effect. (See generally Cert. Admin. R.)
                                                24
          introduced evidence in an attempt to prove it provides “an element
          of fraternity and brotherhood.” According to [one of the witnesses],
          Misty Glen offers various services to its tenants that “typically (are)
          not provided at for-profit entities.”         Those services include
          neighborhood watch meetings, self-defense training, fitness and
          nutrition training, scam education, various social events, resumé
          writing and job search assistance, free blood pressure tests, and help
          with tax preparation. Admittedly, several of these services are
          provided to the tenants from several outside government and private
          sector agencies and are not actually provided by [Misty
          Glen/Hebron-Vision]. While these services may be admirable, the
          Board finds these activities fail to prove the predominate use of the
          property is for charitable purposes. Additionally, these services are
          not the type of activities that relieve human want or provide a benefit
          that will inure to the general public sufficient to justify the loss of tax
          revenue.

(Cert. Admin. R. at 2087-88 ¶ 88 (citations omitted).) The Assessor claims that this finding

is proper because Hebron-Vision’s evidence indicates that a “‘substantial amount’ of [the]

social services provided for Misty Glen tenants were provided not by Misty Glen, but were

instead provided by outside agencies, and the social services provided by outside

agencies to Misty Glen tenants were ‘acts of charity’ provided by outside agencies, not

‘acts of charity’ provided by Misty Glen [] or Hebron-Vision[.]” (Resp’t Br. at 29 (citations

omitted).) The Court is not persuaded.

       It is well-established that the qualification for an exemption under Indiana Code §

6-1.1-10-16 does not require a unity of ownership, occupancy, and use. See, e.g.,

Grandview Care, 826 N.E.2d at 183. Indeed, “‘[if] one seeks to reward charities for their

activities and to encourage beneficial public service, drafting a statute that severely limits

the ability of a charity to organize and operate in an efficient and cost-effective manner

would be illogical.’” Id. (quoting Sangralea Boys Fund, Inc. v. State Bd. of Tax Comm’rs,

686 N.E.2d 954, 958 (Ind. Tax Ct. 1997), review denied).             Thus, when a unity of

ownership, occupancy, or use is lacking, as here, the Court must “‘ensure that the

                                              25
particular arrangement is not driven by a profit motive.’” Id. (citation omitted). Moreover,

this Court has observed that a landlord’s attempt to provide an “‘element of fraternity,

brotherhood, or good fellowship intended to improve the spirits or impel to renewed effort,’

whether it be through, for example, free services for, or counseling of, its tenants” could

indicate that the landlord’s property is being used for charitable purposes.             See

Jamestown Homes of Mishawaka, Inc. v. St. Joseph Cty. Assessor, 909 N.E.2d 1138,

1144 (Ind. Tax Ct. 2009).

       As previously mentioned, there is no evidence that Hebron-Vision, Vision

Communities, Flaherty & Collins, or the owners of Flaherty & Collins improperly profited

from Misty Glen’s operations. Rather, the evidence indicates that when Misty Glen’s

revenues exceeded its expenses, the revenues belonged to Vision Communities and

were either reinvested into Misty Glen or used to further other charitable purposes. (See

Cert. Admin. R. at 2404-05, 2440-43.) The evidence also shows that even though Misty

Glen’s revenues exceeded its expenses in 2012 and 2015 only, Hebron-Vision has not

been able to repay Vision Communities the balance of a $70,000 loan for Misty Glen’s

operations. (See Cert. Admin. R. at 791-98, 832-39, 877-84, 925-32, 2441-43, 2629-33.)

       Furthermore, the evidence shows that Hebron-Vision provided Misty Glen’s

residents with access to free tax preparation services and blood pressure screenings;

monthly meetings on topics that included self-defense, senior scams, and nutrition; on-

site community book and video libraries; holiday/special event parties and contests; and

referral information for rent, food, utility, and transportation assistance. (See Cert. Admin.

R. at 512-17, 2984-86, 2993-3002, 3052-68, 3081-82.) Additionally, the residents had

access to a business center where they received help with their resumés, completing



                                             26
online applications, and performing online research for jobs. (See Cert. Admin. R. at

2986-99.) The evidence also shows that Hebron-Vision worked with its tenants to keep

evictions at a minimum, as evidenced by the fact that only six tenants were evicted over

the four year period at issue.17 (See Cert. Admin. R. at 3007-13.) Accordingly, based on

the totality of the evidence, the Indiana Board erred in concluding that Hebron-Vision’s

provision of additional services, whether directly or indirectly, “are not the type of activities

that relieve human want or provide a benefit that will inure to the general public sufficient

to justify the loss of tax revenue.” (See Cert. Admin. R. at 2087-88 ¶ 88.)

               III. Whether Hebron-Vision lessened a governmental burden

       Hebron-Vision has also claimed that the Indiana Board’s final determination must

be reversed because the unrebutted, probative evidence established that it qualified for

a charitable purposes exemption by showing that its ownership, occupancy, and use of

Misty Glen lessened a governmental burden.               (See, e.g., Pet’r Br. at 45-46.)       The

Assessor, on the other hand, claims that because the evidence failed to show Hebron-

Vision “‘relieved the government of its obligations,’” Hebron-Vision did not show it

qualified for an exemption. (See Resp’t Br. at 31 (citing Jamestown Homes, 909 N.E.2d

at 1142).)

       The Assessor explains that Hebron-Vision did not relieve the government of its

financial obligations because Hebron-Vision, either directly or indirectly via Vision

Communities and Misty Glen’s tenants, received grants, cash contributions, and

rent/utility subsidies from government sources. (See Resp’t Br. at 31-34 (citing, e.g., Cert.

Admin. R. at 805, 823, 854, 899, 956); Oral Arg. Tr. at 28-29.) The Assessor therefore


17
  Two of the tenants were evicted for failing to comply with recertification, drug, or crime policies
and the other four tenants were evicted for failing to pay rent. (See Cert. Admin. R. at 3007-13.)
                                                 27
concludes that the evidence “show[s] that the government is carrying the financial burden

of Misty Glen[’s] tenants, and in some cases ‘relieving the rent burden’ of the tenants, not

that [Hebron-Vision] or Vision Communities relieved the government of its obligations.”

(Resp’t Br. at 33-34.) The Court is not persuaded, however, for two reasons.

       First, contrary to the Assessor’s claim, the record evidence does not show that

Hebron-Vision, by virtue of its relationship to Vision Communities, received state/local

government grants and cash contributions. To support his claim, the Assessor cites

portions of Vision Communities’ federal tax returns for the years at issue. (See Cert.

Admin. R. at 805-31, 846-76, 891-924, 940-87.) The returns report the aggregated

incomes, expenses, and assets of Misty Glen along with at least three other Indiana

affordable housing complexes. (See Cert. Admin. R. at 826-27, 870-71, 920, 924, 973-

75.) (See also Cert. Admin. R. at 2568-69, 2697-98, 2746-47.) The returns do not,

however, “state what money or profit Vision Communities [] put back into [] Misty Glen[.]”

(See Cert. Admin. R. at 2707-08.) The returns also do not indicate the purposes for which

Vision Communities received the purported government grants and cash contributions.

(See, e.g., Cert. Admin. R. at 2704-09.) Consequently, Vision Communities’ tax returns

do not show that Hebron-Vision actually received grants and cash contributions from

government sources during the years at issue.

       Second, and just as importantly, this Court has explained that

          when a private organization uses its property to perform charitable
          acts that relieve the government of its obligations, an exemption is
          proper: “when a private organization takes on a task that would
          otherwise fall to the government, this provides a benefit to the
          community as whole because it allows the government to direct its
          funds and attention to other community needs.”

Jamestown Homes, 909 N.E.2d at 1141 (quoting College Corner, L.P. v. Dep’t of Local

                                            28
Gov’t Fin., 840 N.E.2d 905, 910 (Ind. Tax Ct. 2006)). A taxpayer does not, however,

need to demonstrate that it relieves a governmental obligation completely to qualify for a

charitable purposes exemption. See, e.g., Grandview Care, 826 N.E.2d at 184 (providing

that “Indiana courts have recognized that ‘charitable’ is not necessarily the equivalent of

‘free’”).   Indeed, “[e]ven when a taxpayer receives government funds, it ‘fulfill[s] a

charitable purpose to the extent that it lessened some part of the government’s burden.’”

Porter-Starke Servs., 88 N.E.3d at 819 (citations omitted). Consequently, to qualify for a

charitable purposes exemption “a taxpayer must provide actual evidence that a

government burden exists and that this burden is relieved beyond the extent of the

grants.” Id. at 820 (citation omitted).

        The evidence in this case shows that the federal government and the State of

Indiana have taken on the burden of providing affordable housing to individuals and

families whose annual incomes do not exceed 80% of the AMI. Although federal tax

credits were allocated to a private organization to facilitate the development of Misty Glen,

the evidence indisputably shows that Hebron-Vision, Vision Communities, and Flaherty

& Collins did not receive any of those tax credits. The evidence also shows that Hebron-

Vision voluntarily charges its tenants, (i.e., individuals/families with annual incomes at or

below 60% of the AMI), below market rental rates and keeps evictions to a minimum.

(See, e.g., Cert. Admin. R. at 2531-34.) Hebron-Vision also provides its tenants with

access to, and facilitates the provision of, a variety of social services and activities. In

addition, there is absolutely no evidence that Hebron-Vision uses Misty Glen to generate




                                             29
profits for Flaherty & Collins or any other private organization/individual.18 Given the

totality of the record evidence, therefore, the Indiana Board erred when it concluded that

Hebron-Vision failed to establish that it owned, occupied, and used its property for

charitable purposes, and thus, qualified for a charitable purposes exemption during the

years at issue.

                                        CONCLUSION

       For the above-stated reasons, the Court REVERSES the final determination of the

Indiana Board.




18
  The Assessor has claimed that Hebron-Vision is not entitled to a charitable purposes exemption
because the evidence indicates that Vision Communities and Hebron-Vision “donated only
meager amounts to charities and zero to Hebron community charities.” (See Resp’t Br. at 37-38.)
This claim is unavailing because Hebron-Vision has not claimed that it qualified for a charitable
purposes exemption because it makes charitable contributions to other organizations. (See
generally Pet’r Br.)
                                               30
