The Indiana Tax Court has ruled a Columbus rental program administered by Housing Partnerships Inc. (HPI) qualifies for property tax exemptions.
In concurrence with a decision made by the Indiana Board of Tax Review in June, 2018, the Indiana Tax Court ruled Tuesday that Bartholomew County government should repay HPI about $750,000 for property taxes paid from 2009-17, which includes all back taxes the county had charged during the appeals process.
Over the past two years, HPI has continued to pay property taxes and interest, but the amount has not yet been fully calculated, HPI Executive Director Mark Lindenlaub said.
“We have (also) incurred over $200,000 in legal fees, plus interest on the money we’ve had to borrow, to prove we qualify for property tax exemption,” Lindenlaub said.
When all expenses are considered, the state will essentially be ordering Bartholomew County government to surrender more than $1 million to HPI, based on earlier calculations.
But Lindenlaub said affordable housing advocates didn’t feel like celebrating the 2018 victory because they understood the decision would likely be disputed in court — and it was.
Two months after the Indiana Board of Tax Review ruled in favor of HPI, the Bartholomew County Assessor’s office filed a petition asking the Indiana Tax Court to review the matter.
In an Aug. 11, 2018 petition, the assessor’s office described the board of tax review’s decision as “arbitrary, capricious and an abuse of discretion.” The petition accused the board of accepting too much opinion as evidence, and failing to give fact-based guidance that the assessor’s office could use in making future property tax decisions.
The dispute regarding whether HPI is a charitable organization goes back to 2006, when Tom Owens was serving as county assessor.
After HPI was granted property tax exemptions in 2002 and 2004, the Bartholomew County Property Tax Board of Appeals broke years of precedent by denying property tax exemptions for HPI-managed properties in 2006.
Under Owens’ guidance, the tax board of appeals determined that HPI housing did not meet the definition of a charitable purpose because it did not relieve government of a burden.
Although HPI won a brief reprieve in 2008, two different state-level appeals ended with rulings in the assessor’s favor, and the Indiana Supreme Court declined to hear the matter in 2015.
From the assessor’s perspective, the granting of exemptions to HPI could drive some of the lower-priced landlords out of business, former assessor Lew Wilson said in 2018. It is those landlords who pay about 15 percent of their rental income out in taxes that help fund local government services, he said.
But from Lindenlaub’s perspective, the decisions between 2009 and 2017 temporarily destroyed the business model that HPI was locked into. As a result, his agency was denied credit by two local banks, faced delays in receiving state grants, and struggled with tax liens that restricted its ability to sell property to pay off those liens, he said. Unable to raise rents because of its long-term funding commitments, HPI was forced to borrow money and sell several properties to keep the agency afloat.
This week, the Indiana Tax Court essentially determined there is sufficient evidence proving that HPI is a charitable nonprofit. For example, the organization finances its housing projects from several different sources, including sale and rental income, volunteer labor, donations from individuals and businesses, and grants from private sources, as well as public.
Other efforts proving HPI is charitable include paying the cost of tenants to attend credit counseling sessions, offering classes on how to buy homes and make repairs, writing recommendation letters, and taking tenants to Alcoholics Anonymous meetings, according to the board’s 2018 written determination.
That ruling also determined that by providing quality housing at rents lower than what other landlords charged, HPI helps make its tenants more self-sufficient and less reliant on government programs such as Section 8 vouchers, food stamps and subsidized health care.
In addition, HPI “appreciably relieves a governmental burden and that its activities therefore provide a public benefit sufficient to justify the loss of tax revenue,” the Indiana Board of Tax Review earlier determined.
In this week’s decision, the Indiana Tax Court stated that HPI must be granted a property tax exemption for about 60 properties during assessments that have been conducted every other year since 2008.
While current Bartholomew County Assessor Ginny Whipple said she’s disappointed in the decision, “I think that HPI is just a very worthwhile endeavor, and it does a lot of good for a lot of taxpayers,” she said.
It’s going to take some time for her office to work with HPI to determine the financial impact of Tuesday’s decision on county government, Whipple said.
Lindenlaub says the cost of the 14-year challenge against his nonprofit “has been enormous,” adding that the shortage of safe, affordable housing in Bartholomew County has been well documented for decades.
“This chronic housing shortage affects vulnerable families in our community each day,” he said. “Families are unable to pay for basic needs due to high housing costs, move out of domestic violence situations, successfully overcome addictions, or transition to the community from institutional facilities.”
Since 1989, HPI — now part of Thrive Alliance — has attracted more than $14 million in grants and an estimated $35 million in private investments to create more than 500 safe, affordable homes, according to the agency.
These homes have served lower-income families and residents with specific needs including seniors, people with disabilities, survivors of domestic violence, single-parent families, and families affected by addiction, according to HPI.
