PETITIONER PRO SE:
JOSEPH G. HAMM
ATTORNEYS FOR THE RESPONDENT:
ATTORNEY GENERAL OF INDIANA
TED J. HOLADAY
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
JOSEPH G. HAMM, )
v. ) Cause No. 49T10-9906-TA-131
DEPARTMENT OF LOCAL )
ON APPEAL FROM A FINAL DETERMINATION
OF THE STATE BOARD OF TAX COMMISSIONERS
April 29, 2003
Joseph G. Hamm appeals the final determination of the State Board of Tax
Commissioners (State Board) valuing his real property for the March 1, 1995 assessment.
While Hamm raises multiple issues, the Court finds that it need only
address one: whether the State Board erred in applying a neighborhood desirability
rating of excellent to Hamms property.
See footnote For the reasons stated below, the
Court REVERSES the State Boards final determination.
FACTS AND PROCEDURAL HISTORY
Hamm owns land and a residential improvement in the Eagle Ridge subdivision in
Marion County, Indiana. For the 1995 assessment, Hamms property was assessed with
a neighborhood desirability rating of excellent. On December 13, 1995, Hamm appealed
his assessment to the Marion County Board of Review (BOR). The BOR
denied Hamm any relief.
Hamm subsequently filed a Form 131 Petition for Review of Assessment (131 Petition)
with the State Board, again challenging his neighborhood desirability rating. The
State Board held a hearing and on April 19, 1999, issued a final
determination, making no change to Hamms neighborhood desirability rating.
On June 1, 1999, Hamm initiated an original tax appeal. The Tax
Court conducted a trial on February 18, 2000. The parties presented oral
arguments on October 31, 2000. Additional facts will be supplied as needed.
ANALYSIS AND OPINION
Standard of Review
This Court gives great deference to the final determinations of the State Board
when it acts within the scope of its authority. Thousand Trails, Inc.
v. State Bd. of Tax Commrs, 757 N.E.2d 1072, 1075 (Ind. Tax Ct.
2001). This Court will reverse a final determination of the State Board
only when its findings are unsupported by substantial evidence, arbitrary, capricious, constitute an
abuse of discretion, or exceed statutory authority. Id.
Furthermore, a taxpayer who appeals to this Court from a State Board final
determination bears the burden of showing that the final determination was invalid.
Id. The taxpayer must present a prima facie case by submitting probative evidence,
i.e., evidence sufficient to establish a given fact that, if not contradicted, will
remain sufficient. Id. Once the taxpayer presents a prima facie case,
the burden shifts to the State Board to rebut the taxpayers evidence and
support its findings with substantial evidence. Id.
The issue in this case is whether the State Board erred in applying
a neighborhood desirability rating of excellent to Hamms property. Hamm argues that
noise, a lack of adequate infrastructure, a difficult-to-access location, and destructive wildlife all
militate against a rating of excellent for his neighborhood. The State Board,
on the other hand, while acknowledging that Hamms neighborhood lacks some amenities, insists
that many features make the area exceptional and therefore the rating of excellent
is proper. (Cert. Admin. R. at 266.) The State Board is
Under the State Boards rules, neighborhood desirability is a factor used in calculating
physical depreciation for residential improvements. Ind. Admin. Code tit. 50, r. 2.2-7-9(c)
(1996). It constitutes a composite judgment of the overall desirability based on
. . . the extent of residential benefits arising from the location of
the dwelling. Ind. Admin. Code tit. 50, r. 2.2-7-7.1(f)(7) (1996). Accordingly,
an evaluation of neighborhood desirability looks beyond the improvement itself to external features
of the propertys location that may affect its value. Corey v. State
Bd. of Tax Commrs, 674 N.E.2d 1062, 1065 (Ind. Tax Ct. 1997).
The rating level describes the balance between desirable and undesirable factors in the
improvements location. Id. (emphasis added). In striking this balance, location of
a parcel is simply the beginning of the analysis, as land values may
deviate substantially throughout a geographic area. See Ind. Admin. Code tit. 50,
r. 2.2-4-13(c) (1996). The boundaries of the geographic area and the characteristics
of the area determine the amount of variation in value. Id.
The State Boards rules note that [i]t is impossible to create a precise
formula that measures every variable of location and converts those variables into a
precise value. Id. Nevertheless, the State Board established a range of
neighborhood desirability ratings with guidelines as to their application to agricultural homesites and
rural residential parcels. See id. Hamms neighborhood desirability rating was excellent,
which the State Board defines as a prestigious, high value area. 50
IAC 2.2-7-7.1(f)(7)(A). More specifically, an excellent rating
indicates that the location is exceptional. The desirable location is a factor
of the proximity to high quality scenic views or natural or manmade recreational
facilities. These features may be a lake, golf course, swimming area, country
club, or tennis area. Other factors may include easy access to major
urban areas, major roads, estate settings of manicured lawns, or wooded areas.
This type of location may include building restrictions which dictate the size and
cost of structures being built.
50 IAC 2.2-4-13(c)(1).
Hamm bears the burden of proving that his neighborhood desirability rating is incorrect.
See Corey, 674 N.E.2d at 106566. He argues that his neighborhood
desirability rating should be good. The State Boards rules define good as
an attractive and desirable area. 50 IAC 2.2-7-7.1(f)(7)(C). More specifically, a
good rating indicates that the location is pleasant. Generally, this location is
an improving area with good access to shopping, schools, and major roads.
This location may be in proximity to recreational facilities. 50 IAC 2.2-4-13(c)(3).
In an effort to meet his burden, Hamm submitted evidence showing that his
neighborhood is subject to significant noise pollution. Indeed, his neighborhood is directly
beneath the flight path of jets flying in and out of the Indianapolis
International Airport. Air traffic passes over Hamms neighborhood and literally rattles his
house from 1 a.m. to 6 a.m. Moreover, small planes from the
Eagle Creek Airport at times fly approximately 200 feet over his house, creating
significant noise. Additionally, noise from the automobile races at Raceway Park carries
into Hamms neighborhood on Fridays. (Joint Exs. 16O, 16P, 17, & 64
Hamm also submitted evidence that access to public transportation that can take residents
into major urban areas is ten miles away. Furthermore, his neighborhood can
be reached only by a county road and West 46th Street. The
latter is approximately sixteen feet wide and in need of shoulder repair.
It cannot accommodate two lanes of traffic, has drainage problems, and is frequently
impassable in the winter. Because there is no city snow removal in
Hamms neighborhood, school buses will not negotiate West 46th Street on very snowy
days, leaving neighborhood children stranded at home if their parents are unable to
take them to school. If snow falls while the children are in
school, the school buses will not drop them off at their homes.
Instead, the buses drop the children off miles from the neighborhood where they
have to be retrieved by their parents. (Joint Exs. 12C, 12D, 17,
& 64 at 3.)
Hamm also submitted evidence showing that his neighborhood lacks city water,
sewer, and electricity. It also lacks good phone lines and fire hydrants.
Hamm draws water from a well, except during power surges and power
outages, at which time he has no electricity to pump water. During
some outages, people in Hamms neighborhood go up to three days without running
water. Moreover, voice traffic on the phone lines often bleeds into other
voice traffic, a situation the phone company states is caused by standing water
on underground phone cables; the phone lines, however, are not repaired unless they
cease working altogether. Also, the lack of fire hydrants in the neighborhood
drives up the cost of homeowners insurance, and in some cases, homes cannot
be insured at all. (Joint Exs. 17 & 64 at 3).
Finally, Hamm submitted evidence indicating that wildlife destroys property in his neighborhood.
Deer invade gardens, which has necessitated the erection of electric fences. Furthermore,
beaver destroy trees, raccoons break into houses and garages, and coyotes threaten pets.
(Joint Exs. 17 & 64 at 4.)
Given Hamms evidence showing the less than desirable aspects of his neighborhood, the
Court concludes that Hamms evidence establishes a prima facie case that his neighborhood,
on balance, is not exceptional and therefore does not deserve an excellent rating.
Consequently, the burden shifted to the State Board to show that the
neighborhood desirability rating of excellent was correct. See Corey, 674 N.E.2d at
1066. While the determination of neighborhood desirability is largely a qualitative one,
such a judgment still must be supported by substantial evidence. Id.
The State Board claims that Hamms neighborhood desirability rating of excellent is justified
by Eagle Creek Reservoir, wooded areas and some manicured lawns. (R. at
266.) Furthermore, the State Board concluded that [t]he location of this development
offers serenity while still in [a] somewhat . . . close proximity to
major metropolitan areas. Id. As for the noise, the State Board
said that [m]ajor airports . . . in large metropolitan areas are usually
common. If a parcel were situated directly beside such an area, reducing
the rating would be justifiable. Id.
The State Boards mere reference to various features of Hamms neighborhood does not
tip the balance away from Hamms evidence and toward an excellent rating; rather,
the State Board must offer evidence showing why these features outweigh the undesirable
features. See Corey, 674 N.E.2d at 1065 (indicating that the neighborhood desirability
rating requires a balancing of factors). More specifically, Eagle Creek Reservoir, wooded
areas, and the somewhat close proximity of Hamms neighborhood to major metropolitan areas
are not elements of a neighborhood desirability rating of excellenta rating of excellent
requires proximity to high quality scenic views or natural or manmade recreational facilities
and may include easy access to major urban areas[.] 50
IAC 2.2-4-13(c)(1) (emphasis added). The State Boards final determination does not address
the quality of the view from Hamms neighborhood, nor does it address the
proximity of Hamms neighborhood to the reservoir or whether the reservoir is used
for recreation. Furthermore, Hamms evidence shows that he is ten miles from
public transportation and at times cannot enter or exit his neighborhood because of
weather. The State Board never rebutted these showings.
Also, the State Boards rules do not simply refer to manicured lawns.
Rather, the State Boards rules refer to estate settings of manicured lawns[.]
Id. (emphasis added). The State Boards final determination says nothing about whether Hamms
neighborhood is an estate setting. Finally, the State Boards assertion that Hamms
neighborhood offers serenity is nothing more than a conclusory statement, not substantial evidence
rebutting Hamms showing of significant air traffic and race car noise, as well
wildlife nuisances. See Park Steckley I v. Dept of Local Govt Fin.,
779 N.E.2d 1270, 1274 (Ind. Tax Ct. 2002) (holding that a conclusory statement
is not substantial evidence).
Without an evidentiary basis for a State Board final determination, the Court cannot
properly review it. Corey, 674 N.E.2d at 1066. In this case,
because the State Board provided no evidence to support its neighborhood desirability rating,
the Court holds that the State Boards assessment is not supported by substantial
evidence. See id. Accordingly, the Court REVERSES the State Boards final
determination on this issue and REMANDS it to the Indiana Board of Tax
Review (Indiana Board)
See footnote for further consideration consistent with this opinion.
For the aforementioned reasons, the Court REVERSES the State Boards final determination on
Hamms neighborhood desirability rating and REMANDS this issue to the Indiana Board with
instructions to refer the matter to the Marion County Property Tax Board of
AppealsSee footnote to assess Hamms property with a neighborhood desirability rating of good pursuant
to Indiana Code Section 6-1.1-15-8(a) (Supp. 2002).
Footnote: The State Board of Tax Commissioners (State Board) was originally the Respondent
in this appeal. However, the Legislature abolished the State Board as of December
31, 2001. 2001 Ind. Acts 198 § 119(b)(2). Effective January 1,
2002, the Legislature created the Department of Local Government Finance (DLGF) and the
Indiana Board of Tax Review (Indiana Board).
Ind. Code §§ 6-1.1-30-1.1; 6-1.5-1-3
(West Supp. 2001); 2001 Ind. Acts 198 §§ 66, 95. Pursuant to
Indiana Code § 6-1.5-5-8, the DLGF is substituted for the State Board in
appeals from final determinations of the State Board that were issued before January
1, 2002. Ind. Code § 6-1.5-5-8 (West Supp. 2001) (eff. 2002); 2001
Ind. Acts 198 § 95. Nevertheless, the law in effect prior to
January 1, 2002 applies to these appeals. I.C. § 6-1.5-5-8. See
also 2001 Ind. Acts 198 § 117. Although the DLGF has been
substituted as the Respondent, this Court will still reference the State Board throughout
Hamm claims that his assessment is invalid because the State Board used
mass appraisal techniques to arrive at his assessed value. Hamm argues that
all property in Indiana is entitled to individual assessment. However, Hamms claim
raises no issue for this Court to decide, as the Legislature has provided
that the State Board may prepare its property assessment rules in consideration of
mass appraisal principles and practices,
Ind. Code § 6-1.1-31-3(4) (1998), which are defined
as [the] appraisal of property on a wholesale scale[.] Ind. Admin. Code tit.
50, r. 2.2-1-35 (1996). Hamm also claims that his assessment is invalid
because the Marion County Land Valuation Commission did not give him copies of
its summary reports in violation of Indiana Administrative Code title 50, rule 2.2-2-8(c),
which provides that [f]ailure of an official to provide . . . a
representative of the state board of tax commissioners with access to official records
is evidence of misconduct in office. Ind. Admin. Code tit. 50, r.
2.2-2-8(c) (1996) (emphasis added). Hamm is not a representative of the State
Board; therefore, this claim raises no issue for the Court. Hamm then
complains that the notice provided for the public hearing prior to his assessment
was clandestine, (see Petr Br. at 5), yet admits that the notice complied
with all legal requirements. Because Hamm alleges no violation of the law, the
Court will not address this issue either. Finally, Hamm raises numerous general
issues that he either did not raise in his 131 Petition or did
not support with specific argument or authority. Consequently, the Court will not
address them. See Deer Creek Developers, Ltd. v. Dept of Local Govt
Fin., 769 N.E.2d 259, 261 n.2 (Ind. Tax Ct. 2002); Whitley Prods., Inc.
v. State Bd. of Tax Commrs, 704 N.E.2d 1113, 1119 (Ind. Tax Ct.
1998), review denied, 714 N.E.2d 174 (Ind. 1999).
All cases that would have previously been remanded to the State Board
are now remanded to the Indiana Board of Tax Review (Indiana Board).
Ind. Code § 6-1.1-15-8. Final determinations made by the Indiana Board are subject
to review by this Court pursuant to Indiana Code § 6-1.1-15. Ind.
Code §§ 6-1.5-5-7; 33-3-5-2.
The Marion County Board of Review (BOR) initially heard Hamms appeal on
December 13, 1995 pursuant to Indiana Code Section 6-1.1-15-1.
See Ind. Code
§ 6-1.1-15-1 (1993). However, the Legislature reconstituted all county boards of review
as of January 1, 1999, replacing them with property tax assessment boards of
appeal. See, e.g., 1997 Ind. Acts 6 § 71 (codified as amended
at Ind. Code § 6-1.1-15-1 (Supp. 2002)).