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ATTORNEY FOR PETITIONER: JAMES K. GILDAY GILDAY & ASSOCIATES, LLC Indianapolis, IN

ATTORNEYS FOR RESPONDENT: GREGORY F. ZOELLER ATTORNEY GENERAL OF INDIANA JESSICA E. REAGAN ANDREW J. ASMA DEPUTY ATTORNEYS GENERAL Indianapolis, IN _____________________________________________________________________

IN THE INDIANA TAX COURT
6787 STEELWORKERS HALL, INC.,

FILED
Sep 02 2010, 12:20 pm
of the supreme court, court of appeals and tax court

_____________________________________________________________________ CLERK ) ) ) Petitioner, ) ) v. ) Cause No. 49T10-0906-TA-27 ) JOHN R. SCOTT, ASSESSOR OF ) PORTER COUNTY, ) ) Respondent. ) _____________________________________________________________________ ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX REVIEW FOR PUBLICATION September 2, 2010 FISHER, J. 6787 Steelworkers Hall, Inc. (hereinafter, "Local 6787") appeals the final determination of the Indiana Board of Tax Review (Indiana Board) denying its application for an educational/charitable purposes property tax exemption for the 2006 tax year (the year at issue). Local 6787's appeal presents a single issue for this Court's review: whether the Indiana Board's denial of Local 6787's exemption application is

supported by substantial evidence.

FACTS AND PROCEDURAL HISTORY Local 6787, an affiliate of the United Steelworkers of America, was incorporated as a domestic not-for-profit corporation in 1967.1 (Cert. Admin. R. at 82-90, 247

(footnote added).) It is recognized by the Internal Revenue Service as a 501(c)(5) organization.2 Pursuant to its articles of incorporation, its purposes are "[t]o acquire title to real property, together with furnishings and fixtures thereon; and to maintain said property for offices, meeting halls, and social rooms to house and serve the needs, pleasure and conveniences of organized union labor." (Cert. Admin. R. at 83.) In

addition, Local 6787's "incidental" purposes are "[t]o rent such property, lease such property, collect income therefrom and turn over the entire amount thereof, less expenses, to the labor organization specified in [its] by-laws, to borrow money for the acquisition or improvement of the property, and to transfer property as security for such indebtedness." (Cert Admin. R. at 83.) During the year at issue, Local 6787 owned and operated a banquet facility and a union hall in Portage, Indiana (Portage Township). The construction of the banquet facility was completed in early December 2005; the construction of the adjoining union hall was completed several years prior. (See Cert. Admin. R. at 247, 279-81.) The Porter County Assessor (the Assessor) assigned the property an assessed value of $3,554,800 for the year at issue: improvements. Local 6787 is owned by its members. During the year at issue, Local 6787 had between 3,400 and 33,000 members. (See Cert. Admin. R. at 264, 266; Pet'r Br. at 13.) Section 501(c)(5) of the Internal Revenue Code exempts from federal income taxation those labor organizations that meet specified criteria. (See Cert. Admin. R. at 278.) 2
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$344,300 for the land and $3,210,500 for the

On June 5, 2006, Local 6787 filed an exemption application with the Assessor seeking an educational purposes exemption on both of its buildings, the land thereunder, and the personal property contained therein. On December 28, 2006, the Porter County Property Tax Assessment Board of Appeals (PTABOA) issued its final determination concluding that Local 6787's union hall, the personal property therein, and the land thereunder was exempt from property taxation. The PTABOA determined that the banquet facility, however, was 100 percent taxable. Local 6787 subsequently filed a Petition for Review of Exemption with the Indiana Board. During the Indiana Board hearing, Local 6787 claimed that the banquet facility's eligibility for an educational/charitable purposes exemption was "obvious" because the Assessor admitted that the union hall was exempt and, therefore, "any typical or customary union usage of [the banquet facility] should not be questioned as having an exempt purpose." (Cert. Admin. R. at 250.) ( See also Cert. Admin. R. at 251 (where Local 6787 asserts that unions are, by definition, formed and operated for charitable purposes).) Nonetheless, Local 6787 also presented, inter alia, the testimony of Mr. Allen Long (Local 6787's financial secretary), a schedule of events, and a summary of the facility's overall usage to demonstrate that its banquet facility qualified for an 86.11 percent exemption. During the hearing, Mr. Long explained that Local 6787's "essential" purposes were "best" expressed in two paragraphs of its by-laws. (See Cert. Admin. R. at 271, 276.) Those paragraphs provided that Local 6787's "objectives" were: [1.] To establish through collective bargaining, adequate wage standards, shorter hours of work, and improvements in the conditions of employment for workers in industry.

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[2.] To engage in educational, legislative, political, civic, social, welfare, community and other activities; to advance and safeguard the economic security and social welfare of workers in industry, the [United Steelworkers of America], its Local Unions and the free labor movements of the United States, Canada and the world; to protect and extend our democratic institutions and civil rights and liberties; and to perpetuate and extend the cherished traditions of democracy and social and economic justice in the United States, Canada and the world community. (Cert. Admin. R. at 94.) Mr. Long testified that Local 6787 met the first objective by engaging in collective bargaining negotiations with Arcelor Mittal Steel. (Cert. Admin. R. at 265-66, 272.) According to Mr. Long, Local 6787's collective bargaining activities were "designed to provide relief from human want" for its members. (Cert. Admin. R. at 272.) Mr. Long testified that the activities planned and carried-out by Local 6787's educational, legislative, and community-involvement committees fulfilled the second objective and also provided its members with relief from human want. 3 (See Cert. Admin. R. at 273-76 (footnote added).) With respect to Local 6787's use of its union hall and banq uet facility, Mr. Long explained that Local 6787 used the union hall for the sole purpose of conducting "day to-day" union business. (Cert. Admin. R. at 281-82.) Local 6787's use of its 22,000 square foot banquet facility, however, varied: weddings/banquets were held in the

facility, Ivy Tech taught culinary courses (primarily for Local 6787 members) in the facility, other charitable organizations such as the American Heart Association and the United Way used the facility free-of-charge, and union meetings/activities were For example, Mr. Long explained that Local 6787 assisted its laid-off members by operating a food bank, providing counseling services, and offering an "educational benefit program." (Cert. Admin. R. at 275-76.) (See also Cert. Admin. R. at 306, 328 (describing the "educational benefit program").) While 490 of Local 6787's members were laid off as of the Indiana Board hearing in 2009, none of its members were laid off during the year at issue. (Cert. Admin. R. at 267.) 4
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conducted throughout the facility. (See Cert. Admin. R. at 148-52, 285, 306-07, 323-24, 330.) Mr. Long explained that during the year at issue, the banquet facility was used 41.67 percent of the time for union related activities, 44.44 percent of the time for culinary classes, and 13.89 percent of the time for weddings/banquets.4 (See Cert. Admin. R. at 151-52, 292 (footnote added).) Accordingly, Local 6787 claimed that it was entitled to an 86.11 percent exemption as that reflected the amount of time that the banquet facility was used for educational/charitable purposes (i.e., union related activities and culinary classes). (Cert. Admin. R. at 313-14.)5 On May 8, 2009, the Indiana Board issued its final determination concluding that Local 6787 had not demonstrated that the banquet facility was predominately used for educational/charitable purposes.6 More specifically, the Indiana Board found that Local 6787's evidence established that its "main function . . . [was] to promote [its] member's

The union related activities occurring on a monthly basis were: Steelworkers Organization of Active Retirees (SOAR) meetings, Northwest Indiana Federation of Labor (NIFL) meetings, Local 6787 executive board meetings, and Local 6787 union meetings. (See Cert. Admin. R. at 148-52, 294-95, 297-98, 302-03.) On a weekly basis, Local 6787 used the facility to conduct meetings for its safety committee and its griever's committee. (See Cert. Admin. R. at 148-50.) The Assessor's presentation of evidence was precluded during the Indiana Board hearing. More specifically, the Indiana Board did not admit the Assessor's evidence because he had not complied with the Indiana Board's "Order Regarding Conduct of Exemption Hearing" and 52 IAC 2-7-1. (See Cert. Admin. R. at 16-17, 24146.) See also 52 IND. ADMIN. CODE 2-7-1(b)(1) (2006) (see http://www.in.gov/legislative/iac/) (instructing the Assessor to provide Local 6787 with "[c]opies of [its] documentary evidence and summaries of [any] statements of testimonial evidence at least five (5) business days before the hearing"). Property is predominately used for educational/charitable purposes when it is used "for one (1) or more of those purposes during more than fifty percent (50%) of the time that it is used . . . in the year that ends on the assessment date of the property" (i.e., March 1, 2006). IND. CODE ANN.

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