Tax Court rules against steelworkers hall exemptions

A Porter County union cannot receive property tax exemptions on its meeting hall for the 2008 and 2010 tax years after the Indiana Tax Court held Friday that the property’s functions were largely used for the benefit of union members.

United Steelworkers of America Local 6787 in Porter County filed for charitable and educational property tax exemptions in the 2008 and 2010 tax years. Among Local 6787’s bylaws is a provision that calls for the union “to engage in educational, legislative, political, civic, social, welfare, community and other activities … .”

However, the Porter County Property Tax Assessment Board of Appeals denied both applications, so the union appealed to the Indiana Board of Tax Review. During a two-day hearing, Local 6787 presented evidence such as a Civic Engagement and Community Support Report stating that its provision of union activities benefitted the Burns Harbor community, where its steel mill is located. Further, the union testified that its members regularly donated to charities.

Based on that evidence, Local 6787 argued that it was entitled to a 100 percent exemption on its meeting hall, as well as a predominate use exemption because it was used for 74.4 percent of the time in 2008 and 67.2 percent of the time in 2010 for exempt purposes.

However, the Indiana Board of Tax Review denied both exemption applications, holding that the union’s charitable uses of its property were confined to allowing charitable organizations to use the meeting hall for free, holding public wellness events and donating to charities or encouraging members to do so. Other union-related activities were ineligible “fringe compensation benefits” intended to benefit the union’s members, the Board held.

On appeal, Local 6787 argued that the Board’s “fringe benefits” finding was contrary to law “because it was based on the faulty legal premise that its services are targeted toward its membership and confer no public benefit.” The union relied on the 1865 case of City of Indianapolis v. Grand Master, etc., of Grand Lodge of Indiana, 25 Ind. 518, 522, in which it argued the Court held that “real property of ‘member-centric’ organizations is eligible for exemptions.”

However, in a Friday affirmation of the Indiana Board’s decision, Indiana Tax Court Judge Martha Blood Wentworth noted that the Grand Master case considered an entirely different statute that was more broad than the one at issue in Local 6787’s case. Under Indiana Code section 6-1.1-10-16, the statute at issue in the current case, properties are exempted under an exemption “provided to buildings that are owned, occupied, and used for charitable purposes under the statute effective for the periods at issue.”

Further, Wentworth wrote that the certified administrative record shows that the union’s activities primarily benefited its members and that its property was not used like a benevolent corporation during the 2008 and 2010 tax years. Thus, the Tax Court judge rejected the union’s argument that the Indiana Board’s decision was not supported by sufficient evidence.

The case is 6787 Steelworkers Hall, Inc. v. Jon M. Snyder, Assessor of Porter County, 49T10-1503-TA-00007.