Opinion
No. 88-1015
Submitted February 20, 1990 —
Decided May 2, 1990.
Taxation — Tax exemption for real property owned by state university and leased to two separate business entities allowed, when — R.C. 3345.17 — Factors to be considered — "Used for the support of" state university, construed.
APPEAL from the Board of Tax Appeals, No. 86-F-67.
In 1966, a 1.13-acre parcel of real estate was donated to the University of Cincinnati. Title to the real estate was later transferred to the state of Ohio, but it was held for the benefit of the university. Two buildings on the premises were under lease to separate business entities: one for use as a laundromat and the other, involving only a portion of the building, for use as a convenience store. The leased premises constituted twelve percent of the subject real estate. The Tax Commissioner granted tax exemption to the major portion of the property since it was used by the College of Design, Art, Architecture and Planning, but split-listed the property and held the leased premises subject to real estate tax. The premises are located within two blocks of the university's main campus and the Nursing College, and several blocks of University Hospital. The university has plans for development of the site as a maintenance service garage for the main campus or as a residence facility for the medical center. It is to the university's advantage not to demolish buildings or allow them to remain vacant. Rental payments have been deposited to the general fund of the university and the leases continue in effect.
The Board of Tax Appeals ("BTA"), in granting exemption for the leased premises, found from the testimony and evidence presented to it that: (1) the rent from the leased premises goes into the general operating fund for the support of the university and the university is not making a profit from the rental of the property, (2) the university plans to develop the property either as a maintenance garage for the main campus or as a residence facility for the university's medical center, and (3) eighty-eight percent of the property is being used for the benefit of the university.
The cause is now before this court upon an appeal as of right.
Beckman, Weil, Shephardson Faller and Joseph H. Feldhaus, special counsel, for appellee.
Anthony J. Celebrezze, Jr., attorney general, Martha Jane Cooper and Richard C. Farrin, for appellant.
Anthony J. Celebrezze, Jr., attorney general, Edward J. Elum, Brown, Baker, Schlageter Craig and David J. Simko, special counsel, urging affirmance for amicus curiae State Universities of Ohio.
The issue before us is whether real property which is titled in the state of Ohio and held for the benefit of the University of Cincinnati, part of which is leased to private parties, is entitled to tax exemption under R.C. 3345.17. We hold that the subject property is entitled to exemption and affirm the decision of the BTA.
R.C. 3345.17 reads in pertinent part:
"All property, personal, real or mixed of the boards of trustees * * * and of the state held for the use and benefit of any such institution, which is used for the support of such institution, is exempt from taxation so long as such property is used for the support of such university or college." (Emphasis added.)
The exemption is available in cases where the property supports a university. Here, the BTA found that the rent from the property goes into the university's general operating fund which is used for the support of the university and that there were plans to develop the property in a manner to serve the university's medical center or its main campus.
Webster's Third New International Dictionary (1986) 2297, defines "support" as:
"2a(1): * * * actively promote the interest or cause of * * *
"[2][b](2): to give assistance to * * *
"3(a): to pay the costs of: maintain * * *."
In Bd. of Trustees v. Kinney (1983), 5 Ohio St.3d 173, 174, 5 OBR 392, 449 N.E.2d 1282, we held a half-acre parcel of a two-acre tract owned by the Ohio State University ("OSU") exempt under R.C. 3345.17, even though leased for use as a private residence, because the property was "used for the support of" the university. The same can be said of the real estate used by the University of Cincinnati. It is utilized to support the university.
There is a cogent parallel between the facts of Bd. of Trustees, supra, and this appeal. The OSU property was described as a "control zone" around the OSU airport. Here, the property enjoys a strategic location near the main campus and the university medical center. The OSU property served as expanded facilities for the College of Agriculture. Here it serves as expanded facilities for the College of Design, Art, Architecture and Planning. In both cases, university policy or interests opposed allowing a building to remain vacant or to be demolished, and, in both, the proceeds of the rental(s) were deposited to the university's general fund and were used for daily operational expenses. All these factors constitute support of the university in a manner consistent with R.C. 3345.17. In each case the BTA granted exemption based upon evidence in the record before it.
It is not our function to substitute our judgment for that of the BTA on factual issues, but only to determine from the record whether the decision of the BTA is unreasonable or unlawful. Buckeye Power v. Kosydar (1973), 35 Ohio St.2d 137, 64 O.O. 2d 82, 298 N.E.2d 610, paragraph one of the syllabus. The decision of the BTA is neither unreasonable nor unlawful and is hereby affirmed.
Decision affirmed.
MOYER, C.J., SWEENEY, HOLMES, DOUGLAS, WRIGHT, H. BROWN and RESNICK, JJ., concur.