Vinyard Ministries, L.L.C. v. Levin , 2014 Ohio 1911 ( 2014 )

[Cite as Vinyard Ministries, L.L.C. v. Levin, 2014-Ohio-1911.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
VINEYARD MINISTRIES, LLC, : APPEAL NO. C-130381
BTA NO. 2010-Q-2959
Plaintiff-Appellant, :
: O P I N I O N.
vs.
:
RICHARD A. LEVIN, TAX
COMMISSIONER OF OHIO, :
Defendant-Appellee. :
Appeal From: Board of Tax Appeals
Judgment Appealed from is: Affirmed
Date of Judgment Entry on Appeal: May 7, 2014
Kohnen & Patton, LLP, and Kimberly A. Pramaggiore, for Plaintiff-Appellant,
Michael DeWine, Attorney General of Ohio, and Thomas N. Anger, Assistant
Attorney General, for Defendant-Appellee.
Please note: this case has been removed from the accelerated calendar.
OHIO FIRST DISTRICT COURT OF APPEALS
C UNNINGHAM , Presiding Judge.
{¶1} Appellant, Vineyard Ministries, LLC (“Vineyard”), a subsidiary of the
Vineyard Community Church, appeals from a Board of Tax Appeals (“BTA”) decision
affirming the appellee tax commissioner’s denial of a tax exemption for a 5,612-
square-foot area located in the church’s student ministries center. The BTA
determined that the area was primarily used for recreation and not for public
worship. Therefore, it did not qualify for the house of public worship exemption set
forth in R.C. 5709.07(A)(2). Because the BTA’s decision upholding the tax
commissioner’s denial of the exemption is both reasonable and lawful, we affirm.
Background Facts and Procedure
{¶2} In 2007, Vineyard acquired an 8.352-acre parcel in Springdale that
was adjacent to exempt property owned and used by the church. Thereafter,
Vineyard sought a tax exemption for the entire parcel, including an almost 100,000-
square-foot building containing the church’s student ministries center that had been
constructed on the parcel.
{¶3} The student ministries center includes a lobby and separate
auditoriums and classroom areas for high school and middle school students. The
auditoriums, or sanctuaries as they are sometimes referred to, are used for the
worship services, and the classrooms are used for Bible study, group prayer, and
ministry training.
{¶4} The student ministries center also houses the 5,612-square-foot area
that is the subject of this appeal. Located in that space are half-court basketball
courts, surrounded by an area of recessed seats, and an open recreational area with
concrete floors, video gaming stations, foosball tables, and moveable casual
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OHIO FIRST DISTRICT COURT OF APPEALS
furniture. The high-school side is separated from the middle-school side by a floor-
to-ceiling “playground style chain link fence.” A kitchen/snack shop with a soda
fountain and vending machines is additionally found within the disputed area.
{¶5} The tax commissioner found that the majority of Vineyard’s parcel was
used “exclusively for public worship” and, therefore, was exempt from taxation under
R.C. 5709.07(A)(2). The tax commissioner, however, denied the exemption with
respect to the subject 5,612-square-foot area within the student ministries center,
after finding that the area was used primarily for recreation and concluding that this
use was merely supportive of public worship. Consistent with R.C. 5713.04, the tax
commissioner split the property, exempting from taxation all but the 5,612-square-
foot area.
{¶6} Vineyard appealed the tax commissioner’s decision partially denying
its application for the real-property exemption to the BTA. Upon review of the notice
of appeal, the statutory transcript, and the testimony and evidence submitted at a
hearing, the BTA affirmed the tax commissioner’s decision. Vineyard now appeals to
this court as provided by R.C. 5717.04.
Assignment of Error
{¶7} In its sole assignment of error, Vineyard argues that the BTA erred in
affirming the denial of the exemption because the record demonstrated that the
contested area was primarily used for public worship as contemplated by R.C.
5709.07(A)(2).
{¶8} Standard of Review. Our standard of review of the BTA’s decision is
set forth in R.C. 5717.04. We must determine whether the BTA’s decision was
“reasonable and lawful.” Under this standard, we will reverse a BTA decision that is
based on an incorrect legal conclusion. Cincinnati Community Kollel v. Testa, 135
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OHIO FIRST DISTRICT COURT OF APPEALS
Ohio St.3d 219, 2013-Ohio-396, 985 N.E.2d 1236, ¶ 16. But we will uphold the BTA’s
factual determinations if the record contains reliable and probative evidence to
support them. Id.{¶9} In applying this standard of review, we must be mindful that Vineyard
had the burden of demonstrating that the property qualified for exemption and that
statutes governing tax exemptions should be strictly construed against the claim of
exemption. Id. at ¶ 17; Faith Fellowship Ministries, Inc. v. Limbach, 32 Ohio St.3d
432, 434, 513 N.E.2d 1340 (1987).
{¶10} Public-Worship Exemption under R.C. 5709.07(A)(2). Vineyard
sought an exemption under R.C. 5709.07(A)(2), which exempts from taxation
“[h]ouses used exclusively for public worship, the books and furniture in them, and
the ground attached to them that is not leased or otherwise used with a view to profit
and that is necessary for their proper occupancy, use and enjoyment.” As
contemplated by this statute, “ ‘public worship’ means the open and free celebration
or observance of the rites and ordinances of a religious organization.” Faith
Fellowship Ministries at paragraph one of the syllabus.
{¶11} Primary-Use Test. To qualify for the exemption set forth in R.C.
5709.07(A)(2), an applicant must demonstrate that property is used “to facilitate the
public worship” in a “principal, primary, and essential way.” Id. at paragraph two of
the syllabus. This “primary-use test” is not an “exclusive-use test.” Bishop of Roman
Catholic Diocese v. Kinney, 2 Ohio St.3d 52, 442 N.E.2d 764 (1982); Moraine Hts.
Baptist Church v. Kinney, 12 Ohio St.3d 134, 465 N.E.2d 1281 (1984). It requires an
examination of the quantity and quality of the use. Faith Fellowship Ministries at
437-438. Although incidental uses are not controlling, the exemption will be denied
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OHIO FIRST DISTRICT COURT OF APPEALS
for a building or a room that is primarily used for a nonexempt purpose. Bishop of
Roman Catholic Diocese at 53-54.
{¶12} Evidence of Primary Use. At the hearing before the BTA, Vineyard
presented testimony from Jim Cochran, the Senior Associate Pastor of the church,
and Matthew Milthaler, the Senior Director of Student Ministries at the church.
According to these witnesses, the recreational area is not open for people to come in
off the street to shoot free throws or to play video games. Youths who belong to the
church or who are guests are invited to use the recreational and athletic equipment
before and after the worship services and bible-study sessions that take place in the
auditorium and the classrooms on Saturdays and Sundays. The recreational area is
also the location of regular Friday night events, including dance parties with “DJs”
and basketball-related competitions, which youths can attend for a small fee.
Trained volunteers and staff serving out the ministry of the church are present
during the recreational and sporting activities to interact with the youths.
{¶13} The recreational area is used for a week each summer during a large
student conference involving worship, biblical teaching, and community service, and
periodically throughout the year for student retreats on issues such as sexuality.
Additionally, after the weekly worship service in the auditorium, youths in the junior
high program meet in small groups with an adult leader for 20 minutes in the open
recreational area. A photograph introduced into evidence depicting junior high
youths meeting in a small group, however, showed other youths playing basketball in
the recreational area at the same time.
{¶14} BTA’s Decision. The BTA found that the import of this testimony
demonstrated, as summarized by Vineyard, that the church uses this area and its
recreation activities “ ‘to invite [youth] to a cool and fun setting where the youth
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OHIO FIRST DISTRICT COURT OF APPEALS
pastors and the students who are already church members can meet them, relate to
them, have fun with them, and invite them into communal worship.’ ” The BTA did
not reject the claimed value of the facilities in accomplishing this purpose, but it
determined that the use was merely supportive of public worship.
Analysis
{¶15} Vineyard argues that the primary use of the area is public worship
because the recreational area brings the youths to the property for public worship
and it is therefore necessary for the use of the property for public worship. Vineyard
also contends that the recreational area, which is in the same building as exempt
areas and is used for weekly small group meetings, ministry work, and summer
retreats, is not like a separate recreational facility where the public can watch a
church sponsored team perform.
{¶16} Recreational activity for the purpose of church recruitment or to
promote religious values is not primarily for public worship. We first address
Vineyard’s contention that recreational areas qualify for the tax exemption under
R.C. 5709.07(A)(2) because the recreational opportunities are necessary to the
creation of an atmosphere where students can be effectively encouraged to
participate in the public worship that takes place elsewhere on the property. This is
not a novel argument.
{¶17} The BTA rejected this argument applying the analysis of the Supreme
Court in Moraine Hts. Baptist Church, 12 Ohio St.3d 134, 465 N.E.2d 1281, and the
numerous cases following Moraine Hts., including the BTA’s own decision, Grace
Chapel v. Levin, BTA No. 2007-K-835, 2010 Ohio Tax LEXIS 616 (May 4, 2010).
{¶18} In Moraine Heights, the Supreme Court upheld the division of
property operated as a church camp into exempt and nonexempt sections. The
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OHIO FIRST DISTRICT COURT OF APPEALS
section containing the church’s chapel was exempted. Moraine Hts., 12 Ohio St.3d.
at 134, 465 N.E.2d 1281. The nonexempt section contained a dormitory, cabins, a
cafeteria with kitchen and dining facilities, a shower and restroom facility, a
swimming pool, a basketball court, a shuffleboard court, a shelter house, and open
recreation fields. Id. The property was used for camping programs during the week
and for retreats, picnics, and other social functions during the weekend. Id.{¶19} The church, much like Vineyard in this case, argued that the primary
use of the camp and its facilities was for public worship because the camp “create[d]
an atmosphere conducive to the worship of God.” Id. at 136. Despite the church’s
claim that the areas were “vital to the camp for the purpose of entertaining youth in
an atmosphere in which worship is the primary goal,” id. at 137, the Supreme Court
ultimately concluded that the BTA’s denial of the exemption was both reasonable
and lawful “[i]n view of the fact that the swimming pool, basketball and shuffleboard
courts, as well as the remainder of the appellant’s unimproved property constituting
the vast majority of the forty-nine acre church camp, are neither buildings used
exclusively for public worship, nor necessary for the proper occupancy, use and
enjoyment of the tax-exempt chapel.” Id.
{¶20} The BTA followed Moraine Hts. in Grace Chapel to affirm the
commissioner’s denial of an exemption for facilities used for social and recreation
purposes even though the board accepted that those purposes provided the church
with “an alternative means by which to reach out to the individuals and draw them
into its ministry.” Grace Chapel, BTA No. 2007-K-835, 2010 Ohio Tax LEXIS 616 at
*17.
{¶21} In Grace Chapel, the church’s facilities were to include areas for
recreation and athletics such as a volleyball court, a rock climbing wall, batting cages,
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OHIO FIRST DISTRICT COURT OF APPEALS
and a basketball court, as well as a game room, lounge, and computer lab. The BTA
recognized that the facilities were capable of a variety of types of uses and that the
facilities “may, at times, be used by [the church] to engage in worship.” Id. at *24.
But the board concluded that that “the design, function, and primary purpose of
these facilities” would “remain recreational/athletic” and not for public worship. Id.
at *24-25.
{¶22} In sum, a recreational facility or area that is used for purposes of
church recruitment or to promote religious values is merely supportive of or
incidental to a church’s goal to promote worship. And an area used primarily for
recreational purposes does not meet the primary-use test for exemption under R.C.
5709.07(A)(2), even when that recreational use is supportive of religious purposes.
See Moraine Hts., supra; Grace Chapel, supra; Columbus Christian Ctr. v. Zaino,
10th Dist. Franklin No. 02AP-563, 2002-Ohio-7033, ¶ 15.
{¶23} Evidence Supports BTA’s Primary-Use Determination. The record in
this case supports the BTA’s determination that the nonexempt area in the student
ministries building is used primarily for recreation and not for public worship. Part
of the area is designed exclusively for recreation, as the basketball posts and the
fencing around the basketball courts are not removable. Moreover, the area is
regularly used for recreational purposes. The fact that this recreational area is
located within the same building as exempt property and that the area is at times
used for small group sessions, youth retreats, and the like, does not, as Vineyard
suggests, alter the application of the primary-use test. See, e.g., Faith Fellowship
Ministries, 32 Ohio St.3d at 437, 513 N.E.2d 1340 (a cafeteria, sleeping rooms for
retreats, and a gymnasium were not exempt even though those areas were supportive
of public worship conducted in exempt portions of the same building).
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OHIO FIRST DISTRICT COURT OF APPEALS
Conclusion
{¶24} The BTA applied the correct legal analysis and, after weighing the
relevant evidence, determined that the nonexempt area was primarily used for
recreation and was merely supportive of public worship. In urging this court to
reverse, Vineyard is essentially asking this court to impermissibly reweigh the
evidence in the record. See Moraine Hts., 12 Ohio St.3d at 136, 465 N.E.2d 1281.
Because the BTA’s decision upholding the tax commissioner’s decision is both
reasonable and lawful, we overrule the assignment of error, and we affirm the BTA’s
decision.
Judgment affirmed.
HILDEBRANDT and HENDON, JJ., concur.
Please note:
The court has recorded its own entry on the date of the release of this opinion.
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