Christian Benevolent Ass'n of Greater Cincinnati, Inc. v. Limbach , 69 Ohio St. 3d 296 ( 1994 )

Wright, J.

The Tax Commissioner may not exempt property from taxation unless the exempt use began by the tax lien date of the year for which exemption is sought. R.C. 5713.08(B); Ursuline Academy of Cleveland v. Bd. of Tax Appeals (1943), 141 Ohio St. 563, 567, 26 O.O. 152, 154, 49 N.E.2d 674, 676.

CBA and Brentwood contest the BTA’s interpretation of the exemption of property found in R.C. 5709.12 and 5701.13. R.C. 5709.12(B) provides:

“ * * * All property owned and used by a nonprofit organization exclusively for a home for the aged, as defined in section 5701.13 of the Revised Code, also shall be exempt from taxation.”

At the time in question, R.C. 5701.13 provided in part:

“(A) As used in this section:

“(1) ‘Nursing home’ means a nursing home or a home for the aging, as those terms are defined in section 3721.01 of the Revised Code, that is issued a license pursuant to section 3721.02 of the Revised Code.

“(2) ‘Rest home’ means a rest home, as defined in section 3721.01 of the Revised Code, that is issued a license pursuant to section 3721.02 of the Revised Code.

K * $ $

“(B) As used in Title LVII of the Revised Code * * * a ‘home for the aged’ means a place of residence for aged and infirm persons that is either a nursing home [or] rest home * * *.” (Emphasis added.) 142 Ohio Laws, Part I, 72.

According to Ohio Adm.Code 3701-17-03, which sets forth licensing procedures for nursing and rest homes, an applicant for a license must complete an application for a license and submit it to the Ohio Director of Health not less than sixty days before the proposed opening of the home. According to R.C. 3721.07, the director must inspect the home before he issues a license. Consequently, construction must be at or near completion before an applicant can receive a license.

CBA argues that, by purchasing the land and obtaining a certificate of need, it has demonstrated its intention to use the property as a home for the aged and, hence, is exempt under the prospective use rule. Brentwood contends that it has manifested its intention to occupy the facility as a home for the aged by virtually completing the home by the tax lien date and, within three months of such date, actually occupying the facility for the intended exempt use. The commissioner responds that a certificate of need is not tantamount to a license to operate and that the prospective use rule does not apply in these situations.

In several cases, we have held that an applicant could obtain a tax exemption for its property if the applicant intended to use the property in an exempt manner within a reasonable time and provided tangible evidence that the property would be so used. Ohio Operating Engrs. Apprenticeship Fund v. Kinney (1980), 61 Ohio St.2d 359, 362-363, 15 O.O.3d 440, 442-443, 402 N.E.2d 511, 514 (vacant land to be used for public education); Holy Trinity Protestant Episcopal Church of Kenwood v. Bowers (1961), 172 Ohio St. 103, 15 O.O.2d 173, 173 N.E.2d 682 (intent to erect church on vacant land); Lake Cty. Bd. of Commrs. v. Supanick (1972), 32 Ohio St.2d 45, 61 O.O.2d 279, 289 N.E.2d 902 (intent to construct hospital on undeveloped land). The exemptions in these cases, however, did not involve the application of a statute requiring that a license to operate be issued before a tax exemption can be granted. At issue today is a statute that contains specific criteria, including the issuance of a license to operate, with which an applicant must comply in order to obtain a tax exemption. As pointed out by counsel for the Tax Commissioner, the license requirement of R.C. 5701.13, by its very nature, precludes an application of the prospective use test.

Statutes granting tax exemptions must be strictly applied. Ohio Operating Engrs., supra, 61 Ohio St.2d at 360, 15 O.O.3d at 441, 402 N.E.2d at 512. We applied the home-for-aged exemption in Toledo Business & Professional Women’s Retirement Living, Inc. v. Bd. of Tax Appeals (1971), 27 Ohio St.2d 255, 56 O.O.2d 153, 272 N.E.2d 359. In that case we stated:

“ * * * By [the] adoption [of former analogous R.C. 5701.12 and 5701.13], the General Assembly has marked for exemption from taxation ‘all property owned and used by a nonprofit organization exclusively for a home for the aged, as defined in’ R.C. 5701.13, which established the criteria for a ‘home for the aged.’

“Necessarily, that power is lodged exclusively in the General Assembly, and once it has chosen a specific subject for tax exemption, and defined the criteria, the function of the executive and judicial branches is limited to applying those criteria to a particular case, or to interpreting them if necessary. Any other interpretation of Section 2 of Article X of our Constitution would constitute [a] usurpation of the power thereby granted in favor of, and a co-sharing of that power by, those other branches.” Id at 258, 56 0.0.2d at 154, 272 N.E.2d at 361-362.

Thus, the prospective use rule cannot apply to the exemption of real property from taxation under R.C. 5709.12(B) and 5701.13 because these statutes specifically identify the criteria necessary for exemption, one criterion being the issuance of a license to the applicant for exemption. Consequently, in order to be entitled to a real property tax exemption for a nursing home or rest home under R.C. 5709.12(B) and 5701.13, an applicant for the exemption must have received a license to operate the facility by the tax lien date of the year for which exemption is sought. Here, neither appellant had received a license on the tax lien date of the year for which each appellant applied for exemption. Accordingly, neither CBA’s property nor Brentwood’s property is exempt for the respective years at issue.

As for Brentwood’s equal protection argument, it failed to mention this claim in its notice of appeal to the BTA or this court. Consequently, we have no jurisdiction to decide it. Cleveland Gear Co. v. Limbach (1988), 35 Ohio St.3d 229, 520 N.E.2d 188.

Accordingly, we affirm the decision of the BTA.

Decision affirmed.

Moyer, C.J., A.W. Sweeney, Douglas and Resnick, JJ., concur. F.E. Sweeney and Pfeifer, JJ., dissent.