SOUTH BEND — More than 30 percent of the properties in St. Joseph County were labeled "tax exempt" last year. But Thursday, an Indiana Tax Court Judge said one major local property is not. That means Holy Cross may now have to pay up.

Every year, the St. Joseph County assessor's office watches the stack of tax exemption requests grow. Last year, it passed 1,500 applications. This year, it's expected to be even higher.

All those exemptions mean more than $900 million in lost taxes for the county every year. That's one of a number of reasons St. Joseph County's Property Tax Assessment Board of Appeals -- or PTABOA -- denied Holy Cross Village's request to be added to the list in 2002.

"The burden of proof simply was not met to the St. Joseph County PTABOA. So we did not grant it," said Kevin Klaybor, PTABOA president, and St. Joseph County Chief Deputy Assessor.

The problem, says the local board of appeals, is that Holy Cross Village also includes dozens of luxury homes, worth hundreds of thousands of dollars in property taxes, and a total assessed value of nearly $5 million.

But Holy Cross Attorney Dick Nussbaum says the vast majority of the residents there are senior citizens. And while some do have a more independent lifestyle and may not live there full time, that doesn't matter.

"There are private residences there, but from our viewpoint, and from the law's viewpoint, that really isn't relevant," said Nussbaum.

Still, that didn't stop Indiana Tax Court Judge Thomas Fisher from agreeing with the county's decision not to grant the exemption for 2002. And Klaybor says, that should be the end of the argument.

"We would assume that it would stay the same for all subsequent years," he said.

But Nussbaum says the ruling could mean just the opposite.

"The services that were rendered from 2003 forward were not there in 2002, and for that reason, the use of the property did not qualify for a tax exemption," he said.

But he's convinced now it does.

"We feel quite confident we'll ultimately be found to be tax exempt."

There are lots of hurdles for Holy Cross to overcome before that might happen. The local board of appeals has already rejected tax exempt status for 2003 through 2006, and Holy Cross has not appealed those decisions.

It does still have 30 days to appeal the tax court decision on 2002. That appeal must be filed to the Indiana Supreme Court.