ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
TIMOTHY J. VRANA STEVE CARTER
SHARPNACK, BIGLEY, DAVID & RUMPLE ATTORNEY GENERAL OF INDIANA
Columbus, IN Indianapolis, IN
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
MCDONALDS CORPORATION, )
v. ) Cause No. 49T10-9901-TA-3
INDIANA STATE BOARD OF )
TAX COMMISSIONERS, )
ON APPEAL FROM A FINAL DETERMINATION
OF THE STATE BOARD OF TAX COMMISSIONERS
May 4, 2001
McDonalds Corporation (McDonalds) appeals the State Board of Tax Commissioners (State Board) final
determination that assessed its property as of the March 1, 1995 assessment date.
McDonalds presents the following issue for this Courts review on appeal, which
the Court restates as whether the State Board must value McDonalds land pursuant
to the Commercial/Industrial Platted section of the Kosciusko County Land Valuation Order, which
specifically lists the subdivision where McDonalds land is located as being valued on
a front foot basis.
For the reasons stated below, the Court REVERSES this case and REMANDS it
to the State Board.
FACTS AND PROCEDURAL HISTORY
McDonalds owns a 2.02 acre platted lot located in Warsaw, Indiana. It
is more specifically identified as Out Lot B of the Horne Subdivision in
Wayne Township, Kosciusko County. The Wayne Township assessor assessed the land for
the tax year 1995 on an acreage basis pursuant to the Commercial/Industrial Acreage
section of the Kosciusko County Land Valuation Order (Land Order).
McDonalds appealed the assessment to the Kosciusko County Board of Review (BOR) via
a 130 Petition for Review of Assessment asserting among other things that its
land should have been assessed on a front foot basis pursuant to the
Commercial/Industrial Platted section of the Land Order rather than on the acreage basis.
The BOR affirmed the assessment of McDonalds land.
McDonalds appealed to the State Board via a 131 Petition for Review of
Assessment (131 Petition) asserting among other things that its property should be assessed
on the front foot basis. The State Board held a hearing on
McDonalds 131 Petition. On December 7, 1988, the State Board issued its
final determination concluding that the land was properly assessed by the BOR.
On January 15, 1999, McDonalds filed an original tax appeal in this Court.
A trial was held on July 29, 1999. Additional facts will
be provided as necessary.
ANALYSIS AND OPINION
Standard of Review
The State Board is charged with the responsibility of interpreting the property tax
laws and ensuring that property assessments are made in the manner prescribed by
Canal Square Ltd. Partnership v. State Bd. of Tax Comm'rs, 694
N.E.2d 801, 804 (Ind. Tax Ct. 1998); See also Ind. Code Ann. §
6-1.1-35-1 (West 2000). The Court gives the final determinations of the State
Board great deference when the State Board acts within the scope of its
authority. Freudenberg-NOK General Partnership v. State Bd. of Tax Commrs, 715 N.E.2d
1026, 1028-29 (Ind. Tax Ct. 1999). The taxpayer bears the burden of
demonstrating that the State Board's final determination is improper. Indianapolis Historic Partners
v. State Bd. of Tax Comm'rs, 694 N.E.2d 1224, 1226 (Ind. Tax Ct.
1998). Accordingly, a final determination will be reversed where it is unsupported
by substantial evidence, constitutes an abuse of discretion, exceeds the State Board's statutory
authority, or is arbitrary or capricious. Freudenberg-NOK General Partnership, 715 N.E.2d at
The issue here is whether the State Board was required to value McDonalds
property pursuant to the Commercial/Industrial Platted section of the Land Order (on a
front foot basis). McDonalds argues that its land should be assessed pursuant
to the Commercial/Industrial Platted section of the Land Order (on a front foot
basis) instead of by the Commercial/Industrial Acreage section of the Land Order.
The State Board argues that both the acreage and platted sections of the
valuation order were in effect when it assessed the land and therefore it
could elect to assess the land on an acreage basis or a front
foot basis. The State Board asserts that it chose to use the
acreage basis to assess the land because the properties in the Horne Subdivision
were irregular and odd-shaped in comparison to the standard sized lot upon which
the Land Order provided for the use of the front foot method.
(Respt Br. at 2.) In addition, the State Board contends that it
used the acreage basis because there was a dispute over which side of
the property should be considered the front side. The State Board computed
the acreage value of the property by converting the high front foot value
assigned to the property to an acreage amount for primary and secondary land.
McDonalds asserts that the State Board was required to follow the Platted section
of the Land Order. In support of its contention, McDonalds quotes
Code Ann. § 6-1.1-4-13.6(c) which provides that [t]ownship assessors shall use the values
determined under this section. This statute does not tell the Court which
section of the Land Order must be used. It only tells the
Court that the land must be valued under the Land Order. The
State Board argues that the land could be properly valued under the either
the acreage or front foot method because both sections are classified as commercial/industrial,
which is the critical classification. (Respt Br. at 6.)
It appears that both sections of the land valuation order were in effect
at the time of the assessment.
See footnote (Trial Tr. at 50-51.) Section
Five of the Land Order provides for the valuation of commercial/industrial property on
the basis of acreage. (Respt Ex. 7). In that Section there
is a listing for Warsaw: NW ¼ S14 T32N R6E, which the State
Board apparently contends describes the subject property.See footnote (Respt Ex. 7); (Trial Tr.
at 50.) Section Four of the Land Order provides for the valuation
of commercial/industrial platted land and lists the Warsaw: Hornes Sub. as being priced
on a front footage basis. (Petr Ex. 1.) Both parties agree
that the land in question is located in Horne Subdivision and is platted.
Land Orders, like administrative rules, are subject to the same rules of construction
as are statutes.
Indianapolis Historic Partners, 694 N.E.2d at 1227. In
construing a statute, the Court's foremost goal is to determine and effect legislative
intent. Id. Furthermore, Indiana law is clear that a court may
construe and interpret a statute only if it is ambiguous. Id.
A statute that is clear and unambiguous must be read to "mean what
it plainly expresses, and its plain and obvious meaning may not be enlarged
or restricted." Id. (quoting Department of State Revenue v. Horizon Bancorp,
644 N.E.2d 870, 872 (Ind. 1994)). The "words and phrases" of such
a statute "shall be taken in their plain, ordinary, and usual sense."
Id. (quoting State Bd. of Tax Comm'rs v. Jewell Grain Co., 556 N.E.2d
920, 921 (Ind.1990)); Ind. Code Ann. § 1-1-4-1(1) (West 2000). The plain
language of the Land Order for Commercial/Industrial Platted land requires that McDonalds land
be assessed on a front foot basis. This valuation is required because
McDonalds land is platted and the subdivision where McDonalds land is located is
specifically provided for in the Commercial/Industrial Platted land section of the Land Order.
See Indianapolis Historic Partners, 694 N.E.2d at 1227 (holding that apartment land
must be valued under apartment land values and not under commercial values in
a land valuation order, where land valuation order specifically provided an apartment land
category). Otherwise the Commercial/Industrial Platted section of the Land Order would be
rendered meaningless. See id.
Therefore, the Court REVERSES the State Boards valuation of McDonalds land on the
basis of acreage and REMANDS this issue to the State Board for re-determination
on the basis of front footage pursuant to the Commercial/Industrial Platted section of
the Land Order. On remand, the burden will be on McDonalds to
prove which side of the land constitutes the front footage in accordance with
the State Boards regulations.
At trial, McDonalds also argued that the twenty foot Northern Indiana
Public Service Company (NIPSCO) easement on the frontage of its land should be
valued at zero because it is a public service easement which makes it
property that cannot be used by McDonalds. (Trial Tr. at 17.)
At McDonalds State Board hearing and on its 131 Petition it requested that
a ten percent influence factor be applied to account for the easement.
(Respt Ex. 9 at 3.) According to Milo Smith, McDonalds Taxpayer Representative,
the easement was given a thirty percent influence factor, which was affirmed by
the State Board. (Trial Tr. at 16-17.) It appears from the
property record card that the easement was priced as commercial/industrial secondary land.
(Respt Ex. 9 at 36.) The State Boards final determination simply stated
that [t]he assessor has taken [the] NIPSCO easement into consideration when classifying the
land. (Respt Ex. 9 at 35.) McDonalds did not address this
issue in its briefs and does not provide legal authority to support its
assertion that the easement should be valued at zero. This Court will
not make McDonalds case for it.
See CGC Enters. v. State Bd.
of Tax Commrs, 714 N.E.2d 801, 803 (Ind. Tax Ct. 1999). Consequently,
the Court AFFIRMS the State Boards valuation of the easement.
The average size of a lot in the Horne Subdivision is
300 feet wide and 200 feet deep. (Respt Ex. 8 at 4.)
According to McDonalds calculations, its lots width (effective frontage) is 170 feet
and its depth (effective depth) is 512 feet. (Petr Ex. 2 at
Footnote: The Commercial/Industrial Acreage section of the Land Order states that it
was amended on March 25, 1994, while the Commercial/Industrial Platted section does not
have any date on it. (Respt Ex. 7.) (Petr Ex. 1.)
Footnote: The line containing this language is highlighted on Respt Exhibit 7.
Footnote: The Horne Subdivision (6.515 acres, more or less) is located in
the NW ¼ Section 14, Township 32 N., Range 6 E (160 acres,
more or less). Thus, NW ¼ Section 14, Township 32 N., Range
6 E encompasses an area that includes more land than just the Horne