How are landlords that operate under nonprofit or charitable status' held accountable?
Who determines nonprofit status for companies in the state, particularly for apartment complexes? And how are these landlords held accountable? That’s a question our audience wanted to know.
According to several government officials, various state and federal entities make these determinations and work to oversee these companies.
Chase Haller is the section chief of the Homeowner Protection Unit of the Indiana Attorney General’s office.
He said the Indiana Secretary of State approves or denies nonprofit status for Indiana apartments or other companies. For nonprofit tax-exempt companies, or companies with a 501(c)(3) status, the federal Internal Revenue Service must make this designation.
Haller said, while the attorney general’s office does not control nonprofit status, it does – along with state entities like health departments – work to oversee various issues coming from apartment complexes.
“You might drive by an apartment complex and think that it looks pretty decent from the outside,” he said. “And we've been to several complexes like that and you take a step inside and it's like you've just stepped into a war zone in some respects.”
One apartment complex in particular that garnered media attention was the Lakeside Pointe apartment complex in Indianapolis.
Haller said the Attorney General’s office received several consumer complaints about this apartment complex that caused the office to investigate it further.
“It was things like standing water in people's apartments and buildings burning down,” he said. “In fact, right before we filed our lawsuit, the main clubhouse experienced a fire and completely burned to the ground. And so at that point, we had just really sort of started our investigation but received this information of another fire. And we were concerned about the health and the safety of the tenants, so we filed suit to hold the ownership accountable.”
Lakeside Pointe Apartments was owned by JPC Charities, a nonprofit company that owned several multifamily complexes in Indiana. The Indiana Attorney General’s office, the city of Indianapolis and Citizens Energy Group filed a joint lawsuitagainst the apartment owner last year to combat “negligence” on the properties it owned throughout Indianapolis.
“It did raise questions about, well, how was this entity allowed to continue operating as a nonprofit for so many years without any kind of intervention by a government agency or other entity responsible?” he said.
He said his office often pays attention to news reports and consumer complaints to hold apartment complexes, nonprofits or not, accountable.
Joseph O’Connor is the Marion County Assessor. He said county assessor boards throughout the state vary, but for Marion County, the local board and the Indiana General Assembly are the only entities that have the power to approve or deny property tax exemptions for nonprofits.
“The only entities that have the authority to deny or grant exemptions – whether they be charitable, religious, scientific – are the Indiana General Assembly and the Local Property Tax Assessment Board of Appeals, which we call PTABOA,” O’Connor said.
The PTABOA boards also have the power to suspend these exemptions, which can cause landlords to owe money if they are not properly using their nonprofit exemption status.
For Lakeside Pointe Apartments, the Marion County PTABOA board reopened the case of the apartment’s charitable exemption status and removed the exemption. He said this created an opportunity for the Indiana General Assembly to codify the permissions of this board to remove or deny exemptions after reassessments of these organizations moving forward.
“The General Assembly codified that and said that the PTABOA vote does have the decision to look back and open a case that, you know, was granted and then kind of followed through the years and able to pull back or deny that exemption,” O’Connor said.
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He said this set a new precedent in how his assessor’s office will examine various charitable exemptions moving forward.
“We have a plan to kind of look at all of the charitable exemptions and why we have such a large amount that we've broken it up into how we are doing cyclical reassessment under the statute,” O’Connor said. “So basically what that means is every four years we will physically inspect all properties in Marion County.”
Haller said this can be an effective tool to hold nonprofits accountable. However, he said that not all apartment complexes being dealt with are nonprofits or have charitable exemptions, which can make the problem more difficult.
In addition to this, the state’s nonprofit laws haven’t been updated in decades. Haller said this can make it extremely difficult for the attorney general’s office to hold these complexes accountable.
“We have to come to the court with evidence that the owner of the property intended to deceive the tenants, not just that they were negligent or that they weren't fixing things properly or letting the place fall apart, but they actually intended to defraud or receive those tenants,” he said. “And if we don't have access to those records and communications of the underlying nonprofit entity to allow us to investigate properly, it makes our job all that more difficult to make someone accountable for what has happened.”
Haller said holding these organizations accountable can be a complex issue. He said the attorney general’s office can help Hoosiers in some cases, but that Hoosiers should also look into other avenues to ensure their complaints are being heard.
“Certainly, if they have a local health inspector, health and housing inspector, that is a very good place to start. We often use those types of records in our investigations,” he said.
He said legal aid organizations are another path Hoosiers can use to find out more information about their rights and determine appropriate action with complaints about their housing complexes.
Haller said the attorney general’s office does the best they can to protect Hoosiers and provide adequate housing for Indiana residents. However, he said there is still much more work to be done to ensure healthy and safe housing for tenants.
“If we want to be a state that is a leader in housing policy, that is going to put us in a position where we can attract investment and attract workers and people who want to live here and build a life here,” he said.
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