Richmond Gymnastics Training Ctr., Inc. v. Department of Local Government Finance

ATTORNEY FOR PETITIONER:    ATTORNEYS FOR RESPONDENT:
AMY K. NOE    STEVE CARTER
ARNOLD & NOE, LLP     ATTORNEY GENERAL OF INDIANA
Richmond, IN     Indianapolis, IN
 
     TED J. HOLADAY
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN
____________________________________________________________________
    IN THE INDIANA TAX COURT ____________________________________________________________________ RICHMOND GYMNASTICS TRAINING ) CENTER, INC., ) Petitioner, ) v. ) Cause No. 49T10-0112-TA-100 ) DEPARTMENT OF LOCAL GOVERNMENT ) FINANCE, See footnote                 )
    Respondent.                )    
_____________________________________________________________________

ON APPEAL FROM A FINAL DETERMINATION
OF THE STATE BOARD OF TAX COMMISSIONERS
 
 
NOT FOR PUBLICATION
December 11, 2003
FISHER, J.
 
    The Petitioner, Richmond Gymnastics Training Center, Inc. (RGTC), appeals the final determination of the State Board of Tax Commissioners (State Board) denying its application for a property tax exemption for the 2000 tax year. The issue for the Court to decide is whether RGTC is entitled to the "educational purposes" exemption as provided by Indiana Code § 6-1.1-10-16. See footnote
    For the reasons stated below, the Court finds that RGTC is entitled to the exemption and therefore REVERSES and REMANDS the final determination of the State Board.
FACTS AND PROCEDURAL HISTORY
    RGTC is a gymnastics training facility that offers classes and private lessons to children. (Pet'r Br. at 1-2.) RGTC's facility is a one-story improvement located in Wayne County, Indiana. The improvement contains a gymnasium, office, and locker rooms.
    On March 1, 2000, RGTC filed an application for the educational purposes property tax exemption with the Wayne County Property Tax Assessment Board of Appeals (PTABOA). After an administrative hearing, the PTABOA denied the application. On August 24, 2000, RGTC filed a Form 132 Petition for Review of Exemption with the State Board. On February 26, 2001, the State Board held a hearing on RGTC's exemption petition. On November 1, 2001, the State Board affirmed the PTABOA's determination.
    On December 18, 2001, RGTC filed an original tax appeal. The parties submitted briefs and this Court heard oral arguments. Additional facts will be supplied as needed.
ANALYSIS AND OPINION
Standard of Review
    This Court gives great deference to the final determinations of the State Board when it acts within its authority. Wetzel Enters., Inc. v. State Bd. of Tax Comm'rs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct. 1998). This Court will reverse a final determination by the State Board only when its findings are unsupported by substantial evidence, are arbitrary or capricious, constitute an abuse of discretion, or exceed statutory authority. Id.
Discussion
    To qualify for the educational purposes exemption, a taxpayer must demonstrate that the predominant use See footnote of its property is educational. See State Bd. of Tax Comm'rs v. New Castle Lodge #147, Loyal Order of Moose, Inc., 765 N.E.2d 1257, 1259 (Ind. 2002)(footnote added). RGTC argues that because it teaches courses in gymnastics, the predominant use of its property is educational. (See Pet'r Br. at 1,7.) RGTC is correct.
     This Court has held that the educational use of a property can be found if public benefits accrue from the use. See Trinity Sch. of Natural Health, Inc. v. Kosciusko County Prop. Tax Assessment Bd. of Appeals, No. 49T10-0203-TA-36, slip op. at 5-6 (Ind. Tax Ct. December 11, 2003). In Trinity, this Court rejected the argument that in order to qualify for the educational purposes exemption, a taxpayer must offer classes that are identical to those offered by Indiana's tax-supported schools. See id. The PTABOA advances the same argument in this case. (See Resp't Br. at 9.) Accordingly, the PTABOA's argument fails.
    Though offering a class that is identical to one taught in tax-supported schools would qualify a taxpayer for the exemption, a taxpayer need only relieve the State's burden of providing education "to some limited extent" with courses that are merely "related" to those found in tax-supported schools. See Trinity, slip op. at 5-6 (emphasis added). As this Court held in Trinity:
the present benefits test can be met by providing courses found in tax-supported schools, or by providing courses that are related to those found in tax-supported public schools, but not necessarily provided. Indeed, taxpayers that fill an educational void can relieve the State's burden by adding a new course of study as much as they can by providing a program that is a direct analogue to classes taught in Indiana's tax-supported schools and universities.

Id. (internal footnotes and citation omitted).
    While this Court recognizes that physical education is taught in tax-supported schools, it is not necessary to qualify gymnastics classes as equivalent to a course taught in tax-supported schools. Rather, gymnastics courses are related to physical education classes taught in tax-supported schools. Because RGTC's gymnastics courses accomplish similar objectives to those of physical education classes provided in tax-supported schools, this, "to some limited extent," relieves the State's burden. See id. Therefore, RGTC's application for an education purposes exemption was erroneously denied.
CONCLUSION
    The State Board's denial of RGTC's exemption petition was an abuse of discretion and otherwise not in accordance with law. Thus, for the foregoing reasons, the State Board's final determination is REVERSED and REMANDED to the Indiana Board of Tax Review See footnote to instruct the local assessing officials to grant the exemption.

Footnote: The State Board of Tax Commissioners (State Board) was originally the Respondent in this appeal. However, the Legislature abolished the State Board as of December 31, 2001. 2001 Ind. Acts 198 § 119(b)(2). Effective January 1, 2002, the Legislature created the Department of Local Government Finance (DLGF), and the Indiana Board of Tax Review (Indiana Board). Ind. Code §§ 6-1.1-30-1.1 (West Supp. 2003)(eff. 1-1-02); 6-1.5-1-3 (West Supp. 2003)(eff. 1-1-02); 2001 Ind. Acts 198 §§ 66, 95. Pursuant to Indiana Code § 6-1.5-5-8, the DLGF is substituted for the State Board in appeals from final determinations of the State Board that were issued before January 1, 2002. Ind. Code § 6-1.5-5-8 (West Supp. 2003)(eff. 1-1-02); 2001 Ind. Acts 198 § 95. Nevertheless, the law in effect prior to January 1, 2002 applies to these appeals. I.C. § 6-1.5-5-8. See also 2001 Ind. Acts 198 § 117. Although the DLGF has been substituted as the Respondent, this Court will still reference the State Board throughout this opinion.
Footnote: "All or part of a building is exempt from property taxation if it is owned, occupied, and used by a person for educational, literary, scientific, religious, or charitable purposes." Ind. Code § 6-1.1-10-16(a).

Footnote: T he educational purposes exemption will be denied when "educational training . . . [is] merely incidental to [ ] recreational and hobby activities." Nat'l Ass'n of Miniature Enthusiasts v. State Bd. of Tax Comm'rs, 671 N.E.2d 218, 222 (Ind. Tax Ct. 1996). See also State Bd. of Tax Comm'rs v. Ft. Wayne Sports Club, Inc., 258 N.E.2d 874, 882 (Ind. Ct. App. 1970) (rejecting an educational purposes exemption for a club that taught soccer classes and conducted soccer leagues on the basis that its educational use was incidental to its predominant use as a social club.)
Footnote: All cases that would have been remanded to the State Board are now remanded to the Indiana Board of Tax Review (Indiana Board). Ind. Code § 6-1.1-15-8 (West Supp. 2003). Final determinations made by the Indiana Board are subject to review by this Court pursuant to Ind. Code § 6-1.1-15. Ind. Code §§ 6-1.5-5-7 (West Supp. 2003); 3-33-5-2.