American Chemical Society v. Kinney

Krupansky, J. The primary issue is whether the decision of the BTA is reasonable and lawful. In deciding this issue we must determine, are the parcels in question (approximately 30 acres of land) owned by appellant being used “in furtherance of or incidental to” the charter provisions, viz., its charitable purposes within the purview of R. C. 5709.12 and 5709.121. R. C. 5709.12 provides, in pertinent part: “ * * * Real and tangible personal property belonging to institutions that is used exclusively for charitable purposes shall be exempt from taxation. * * * ” In 1969 the General Assembly adopted R. C. 5709.121 to clarify the phrase “used exclusively for charitable purposes” found in R. C. 5709.12. R. C. 5709.121 provides in relevant part: “Real property and tangible personal property belonging to a charitable or educational institution * * * shall be con [170] sidered as used exclusively for charitable or public purposes by such institution * * * if it is either: «(A) * * * “(B) Otherwise made available under the direction or control of such institution * * * for use in furtherance of or incidental to its charitable, educational or public purposes and not with a view to profit.” In 1976 this court, in Cincinnati Nature Center v. Bd. of Tax Appeals, 48 Ohio St. 2d 122, established a three-pronged test to determine when a taxpayer could be said to come within the purview of R. C. 5709.121. In that case, at page 125, we stated: “To fall within the terms of R. C. 5709.121, property must (1) be under the direction or control of a charitable institution or * * * political subdivision, (2) be otherwise made available ‘for use in furtherance of or incidental to’ the institution’s ‘charitable * * * or public proposes,’ and (3) not be made available with a view to profit.” A review of Section 2 of ACS’s national charter reveals that ACS is clearly a charitable or public institution for R. C. 5709.121 purposes. It is also unquestioned the land at issue is “under the direction or control” of ACS. Thus, the first prong of the Cincinnati Nature Center inquiry has been satisfied. A survey of the evidence submitted in the present action indicates the third prong of this test can be also quickly resolved since no evidence was presented to indicate this property is “made available with a view to profit.” To the contrary, these parcels of land are maintained primarily for the use of the employees of Chemical Abstracts and occasionally for other public groups who are granted access to the Chemical Abstracts’ grounds. According to the BTA’s decision, the real problem arises concerning the second requirement of the Cincinnati Nature Center test, which demands the property be made available “for use in furtherance of or incidental to the institution’s charitable or public purposes.” Appellee commissioner contends the land in question is used solely to create a “pleasant environmental setting” for Chemical Abstracts’ employees, a use which in no way furthers its stated purpose of publishing chemical abstracts and indexes. The appellee has failed, [171] however, to take into account the integral part the entire Chemical Abstracts complex plays in the operation’s success. As previously stated, Chemical Abstracts’ function is to collect, abstract and disseminate highly complicated and technical chemical information. In order to fulfill this goal the institution must employ highly qualified individuals who are much sought after by other educational institutions and businesses. Consequently, the inducement must be great to entice these people into employment at Chemical Abstracts. Appellant contends the attractive campus-like setting of its institution is of considerable importance in attracting and retaining these individuals, and thus, has an important effect on the success of its operations. As the Director of Business Operations for Chemical Abstracts stated in his testimony before the board: “In general, we have felt that an attractive campus-like site has helped us to recruit good people, and also retain good people. In general, we have felt that attractive surroundings are a positive effect with employees.” In order to substantiate these assertions, appellant submitted into evidence the results of a study undertaken to determine the effect of Chemical Abstracts’ campus-like setting on its employees. The study concluded the beautified and preserved property in question had a significant impact upon the recruitment, retention and productivity of Chemical Abstracts’ staff. The board acknowledged its acceptance of this determination stating, “ * * * despite the conflicting interpretations given the study the board finds that the survey does bear out a significant impact upon the Chemical Abstracts Society [sic] staff.” Notwithstanding its recognition of the importance of the property surrounding Chemical Abstracts to the institution’s employee relations, the board denied appellant’s request for a tax exemption. In reaching this decision we feel the board ignored the integral connection which has been shown to exist between appellant’s use of the land in question and appellant’s purpose for existence. As stated earlier, the appellant must be able to attract and retain quality personnel to maintain its enterprise. In essence the “equipment” required for Chemical Abstracts to fulfill its charitable purpose is highly qualified [172] university trained personnel. Since the landscaped property surrounding Chemical Abstracts’ facilities has been shown to be instrumental in attracting and retaining such individuals, this land is clearly held “ ‘in furtherance of or incidental to’ the institution’s ‘charitable * * * purposes.’ ” This court has had five previous opportunities to examine R. C. 5709.121(B), and the case law in this area further reinforces our conclusion that this property is being used in a manner which is “in furtherance of or incidental to” Chemical Abstracts’ charitable purposes. See Cincinnati Nature Center v. Bd. of Tax Appeals, supra; Galvin v. Masonic Toledo Trust (1973), 34 Ohio St. 2d 157; White Cross Hospital Assn. v. Bd. of Tax Appeals (1974), 38 Ohio St. 2d 199; Ohio Masonic Home v. Bd. of Tax Appeals (1977), 52 Ohio St. 2d 127; and Wellsville v. Kinney (1981), 66 Ohio St. 2d 136. An analysis of these five cases reveals the approach used by this court when determining tax exempt status pursuant to R. C. 5709.121: e.g., first, the purpose of the organization must be defined; and second, the property must be used in furtherance of or incidental to that purpose. Applying these criteria to the instant case it is clear Chemical Abstracts’ defined purpose is to collect, abstract and disseminate chemical research; the campus-like use of the land is required to compete with analogous type institutions in the recruitment, retention and productivity of its employees. In'light of this analysis, the BTA should have granted the land in question a tax exempt status. From our examination of the record before us and the applicable case law, we conclude the decision of the Board of Tax Appeals is unreasonable and unlawful, and it is, therefore, reversed. Decision reversed. Sweeney, Locher and Holmes, JJ., concur. Celebrezze, C. J., W. Brown and C. Brown, JJ., dissent.