Opinion
No. 40328
Decided April 5, 1967.
Taxation — Exemptions — Unimproved parcels of real estate purchased by hospital — Building sites for hospital and nursing home — Not in actual use during year in question — Character of hospital.
APPEAL from the Board of Tax Appeals.
This appeal originated in the Board of Tax Appeals with an application filed by the appellant, the taxpayer, on December 22, 1965, requesting that the appellee, the county auditor of Cuyahoga County, Ohio, remove from his tax list and duplicate, and place on the tax exempt list of real estate for the tax year 1965, two adjacent unimproved parcels located in Mayfield Heights and owned by the appellant, for the reason that such land was used exclusively for charitable purposes during the year 1965.
The county auditor made no recommendation as to the requested exemption.
One parcel (known as Parcel "A") was purchased by the taxpayer in April 1964 as the site for the relocation of Doctors Hospital, a general hospital which it now operates in Cleveland Heights. That project involves the construction of a new hospital building at a contemplated cost of $6,250,000. Prior to the purchase of the land, the taxpayer had hired consultants for the contemplated construction, made application for a federal assistance grant under the Hill-Burton Act, and engaged architects to prepare plans. Immediately after the purchase of the property in question, the taxpayer employed a professional fund-raising agency to conduct a solicitation campaign for the balance of funds needed for construction. That campaign began in 1965.
Thereafter, in regular sequence leading up to the date of the hearing before the board, commitments from Hill-Burton funds and from a long-term mortgage loan in the total amount of $3,666,000 were secured; public subscriptions in the sum of $813,000 out of goal of $850,000 had been received; construction plans had been completed, approved and bids let thereon and received; and the balance of the construction money needed was apparently assured by the contemplated sale of the Doctors Hospital properties and other capital assets.
The remaining parcel (known as Parcel "B") was purchased in November 1964 for the future construction of a nursing home and extended care facilities to be operated in conjunction with the new hospital. The record is clear that during 1965 no action whatsoever had been taken by the taxpayer in preparation for the use of that parcel.
Neither parcel was in actual use during the year in question. The Board of Tax Appeals refused the application for exemption for the reason that there was no evidence to show that either property was "devoted to an actual physical use for the public benefit, effective January 1, 1965 * * *."
Mr. Reuel A. Lang, Messrs. Ziegler, Graham Metzger, Mr. Perry L. Graham and Mr. Herbert J. Hoppe, Jr., for appellant.
Mr. John T. Corrigan, prosecuting attorney, Mr. Richard A. Goulder and Mr. Adam P. Angelas, for appellee.
MATTHIAS, O'NEILL and HERBERT, JJ., are of the opinion that the appeal is governed by Holy Trinity Protestant Episcopal Church of Kenwood v. Bowers, Tax Commr., 172 Ohio St. 103, and, therefore, the decision of the Board of Tax Appeals should be reversed as to Parcel A and tax exemption granted therefor.
ZIMMERMAN and BROWN, JJ., are of the opinion that the decision of the Board of Tax Appeals is not unreasonable or unlawful and should be affirmed.
SCHNEIDER, J., is of the opinion that if the taxpayer is, in fact, an institution "used exclusively for charitable purposes" (Section 5709.12, Revised Code), both parcels should be exempt from taxation as belonging to such institution (see dissenting opinion, Philada Home Fund v. Board of Tax Appeals, 5 Ohio St.2d 135) ; that it was unreasonable and unlawful for the Board of Tax Appeals, which has primary responsibility to determine exemptions from taxation, to accept a stipulation entered into by the attorney for the county auditor as to the taxpayer's status, which stipulation was predicated upon a determination of this court on a citizen's complaint as to the tax year 1963 (see Vick v. Cleveland Memorial Medical Foundation, 2 Ohio St.2d 30); and that the cause should be remanded to the Board of Tax Appeals for its determination of the character of the taxpayer.
Decision reversed in part.