An unresolved decade-long dispute about property taxes might eventually force some low-income families out of their homes.
For the fifth time, a large group of properties owned by Housing Partnerships Inc., a nonprofit organization that creates affordable housing, have been given a temporary reprieve.
While two-dozen parcels and residences had been advertised on Bartholomew County’s tax-sale list, they were pulled at the last minute when it became apparent a state-level property tax appeal would not be resolved by the time of the sale, Bartholomew County treasurer Pia O’Connor said.
“They’ve paid the tax,” O’Connor said. “It’s the outstanding penalties on past delinquencies that are in question.”
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When Housing Partnerships filed its latest appeal last December with the Indiana Board of Tax Review, those penalties totaled about $234,000, said Mark Lindenlaub, executive director of Thrive Alliance, which operates Housing Partnerships.
No hearing date has been set on the appeal, which is based on statutes that suggest the penalties should not have been enacted in the first place, Lindenlaub said.
If the appeal is not successful, the 27-year-old nonprofit will have no choice but to sell rental properties on the open market.
“It’s anybody’s guess who will buy them — and how well they will work with the current tenants,” Lindenlaub said.
In a community with an $807 a month median rent — ranked second-highest among all Indiana cities in 2014 — some low-income renters might have reason for concern.
A decade ago, property taxes were not a problem for Housing Partnerships, which owned numerous single-family homes, duplexes and small apartment buildings to provide homes to those with earnings at or below 60 percent of the area’s median income.
The 501(c)(3) charitable organization was granted charitable purpose property tax exemptions in both 2002 and 2004 by then-Bartholomew County Assessor Tom Owens.
But 10 years ago, Owens cited Indiana’s legal definition of “charitable purpose,” which includes relieving government of a burden, as the basis for changing his mind.
Since the nonprofit was receiving financial assistance in the form of federal grants and subsidies, Owens concluded Housing Partnerships was not relieving that burden — and therefore was not a charitable purpose, court documents state.
His decision was upheld by the Bartholomew County Property Tax Board of Appeals in February 2007.
In 2011, the Indiana Board of Tax Review refused to overturn Owens’ determination. A second appeal to the Indiana Tax Court concluded with another denial in June 2014.
By the end of that year, the nonprofit owed $617,751 in current and back property taxes.
Five months after the state’s highest court was asked to consider the matter, the Indiana Supreme Court announced its 3-2 decision not to look into the matter in April 2015.
Although the nonprofit paid back taxes within 10 days of calculating the amount, penalties continued to show up as liens on Housing Partnership properties, causing extensive problems in securing financing for new projects, Lindenlaub said.
A key point of contention is that there is no uniform definition of a charitable purpose being followed by all of Indiana’s 92 counties, according to Lindenlaub and current Bartholomew County Assessor Lew Wilson.
“I understand from talking to other assessors that there are counties that have chosen to make organizations like HPI fully or partially-exempt,” said Wilson, who took office in 2011.
“We elect an assessor to follow the law as he sees it,” Lindenlaub said. “I’ve talked to our attorney, and he said at any time, (Wilson) could decide we are a charitable purposes and re-grant our exemption.”
But if organizations such as HPI receive all the advantages they feel they are entitled to, it would put some landlords out of business, Wilson said.
“Being tax-exempt is possibly the biggest advantage you can have,” the county assessor said. “Is that fair to the people who are trying to make a living? It doesn’t sound fair to me.”
There is also the matter of the ongoing financial crisis within Bartholomew County government.
According to Wilson, the county has averaged 673 property tax appeals annually since 2012, which has resulted in millions of dollars of lost revenue.
A substantial amount of that loss can be traced to corporations with more resources to wage legal battles than the county, the assessor said.
Wilson said he appreciates what Lindenlaub and his organization do for the community.
“In his heart, Mark is probably a better man than me because he lives to help people,” Wilson said. “But unless they change the law, I have to apply it as far as I understand it.”
Lindenlaub responded that he appreciates the kind words, “but again, I say it’s Lew’s interpretation of the law,” Lindenlaub said. “And interpretations are inconsistent from county to county.”
While a bill to provide consistency did pass one chamber of the Indiana General Assembly early this year, the measure died in the other, Lindenlaub said.
State Rep. Milo Smith, R-Columbus, has offered to sponsor a similar measure when lawmakers convene in Indianapolis early next year, Lindenlaub said.
“This honestly needs to be settled,” Wilson said. “HPI can’t have this thing sitting out there. And the county needs to know whether we get money or we don’t.”