ATTORNEY FOR PETITIONERS: ATTORNEYS FOR RESPONDENT:
NELSON G. GRILLS KAREN M. FREEMAN-WILSON
WALKER & GRILLS ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
DAVID G. SADLER
DEPUTY ATTORNEY GENERALS
ATTORNEYS FOR INTERVENOR:
GARY J. DANKERT
MICHAEL A. WILKINS
ICE MILLER DONADIO & RYAN
IN THE INDIANA TAX COURT _____________________________________________________________________
GLEN S. GRABER et al., ) ) Petitioners, ) ) v. ) ) STATE BOARD OF TAX ) COMMISSIONERS, ) Cause No. 49T10-0001-TA-1 ) Respondent, ) ) and ) ) North Daviess School Corporation, ) ) Intervenor. )
(b) A hearing shall be held on a petition described in subsection
(a) in the same manner as the hearing on temporary injunctions under IC
34-26-1. If, at the hearing, the court determines that the plaintiff cannot
establish facts that would entitle the plaintiff to a temporary injunction, the court
shall set the amount of bond to be filed by the plaintiff in
an amount found by the judge to cover all damage and costs that
may accrue to the defendants by reason of the pendency of the public
lawsuit in the event the defendant prevails.
In a public lawsuit, the plaintiff is not actually seeking a temporary injunction;
rather, he is seeking to avoid posting a bond.
See Bell v.
State Bd. of Tax Commrs, 651 N.E.2d 816, 821 (Ind. Tax Ct. 1995).
To avoid posting a bond, Petitioners must introduce evidence sufficient to show
that there is a substantial question to be tried. See id.
(citing Johnson v. Tipton Community Sch. Corp., 253 Ind. 460, 255 N.E.2d 92,
94 (1970)). Therefore, Petitioners must present sufficient evidence showing that the State
Boards approval was arbitrary and capricious, an abuse of discretion, unsupported by substantial
evidence or in excess of statutory authority. See Hall v. State Bd.
of Tax Commrs, 512 N.E.2d 891, 893 (Ind. Tax Ct. 1987) (finding no
substantial question to be presented as to State Boards final determination in public
lawsuit). Petitioners do not have to make out such a case
that would entitle them to relief on the final hearing. See
Bell, 651 N.E.2d at 820 (quoting Johnson, 253 Ind. at 464, 255 N.E.2d
at 94). In reviewing Petitioners claims, the Court will not reweigh the
evidence presented to the State Board at the administrative level. See State
Bd. of Tax Commrs v. Gatling Gun Club, 420 N.E.2d 1324, 1328 (Ind.
Ct. App. 1981).
The State Board is Indianas property tax specialist and is vested with broad discretion to exercise its powers in the performance of its duties. See Bell, 651 N.E.2d at 819-20. The legislature has directed the State Board to consider the following factors when determining whether to approve or disapprove a school building construction project (and by implication the approval of a lease for a newly constructed school building):
(1) The current and proposed square footage of school building space per student.
(2) Enrollment patterns within the school corporation.
(3) The age and condition of the current school facilities.
(4) The cost per square foot of the school building construction project.
(5) The effect that completion of the school building construction project would have on the school corporations tax rate.
(6) Any other pertinent matter.
Ind. Code Ann. § 6-1.1-19-4.2 (West 2000).
See footnote This statute does not require
the State Board to assign greater weight to any one of the listed
factors; also, the State Board does not have to consider any single factor
dispositive in reaching its decision. Moreover, the State Board only has to
consider each of the listed factors. It does not have to base
its ultimate decision on them. The sixth factor, of course, gives the
State Board leeway to consider any non-listed factor that it considers pertinent to
the matter.See footnote For purposes of considering whether a substantial issue for trial
has been raised by Petitioners, the Court will first determine whether Petitioners in
this public lawsuit have presented evidence demonstrating that the State Board failed to
consider any of the listed factors, including any pertinent factor not specifically listed.
Cf. Ackelmire v. North Vermillion Community Sch. Corp., 558 N.E.2d 916, 921
(Ind. Tax Ct. 1990) (observing that, where substantial question would be whether notice
was properly issued, the Court need only examine whether Plaintiffs can reasonably prove
the School Board failed to publish the notice required). Failure to consider
the listed factors would constitute an abuse of discretion by the State Board.
In its final determination approving the lease agreement, the State Board expressly states that it considered the factors listed in section 6-1.1-19-4.2. (Original Tax Appeal Pet., Ex. C.) The final determination does not itself list facts relating to factors one through five. It does, though, reference concerns over enrollment trends regarding Amish students and identifies the tax impact at $1.80 per $100.00 of assessed value. (Original Tax Appeal Pet., Ex. C. ¶¶ 10 & 11.) Further, the final determination addressed the age and condition of the existing elementary schools, stating: The continued maintenance of outdated facilities like Raglesville, Odon and Elnora will burden taxpayers and result in increased operating expenses for school officials. The physical qualities of the buildings do not appear to warrant extensive renovation or repair. (Original Tax Appeal Pet., Ex. C ¶ 12.) Moreover, Counsel for the School Board at the March 20, 2000 hearing on this matter indicated that the State Board had considered each factor. (Hrg Tr. at 63-64.) Petitioners point to no evidence of record showing that the State Board failed or refused to consider factors one through five.
Without stating so, Petitioners essentially attack factor six, which requires the State Board to consider other any other pertinent matter. They contend that the State Board: (1) failed to recognize soil and wastewater problems with the proposed construction cite; and (2) failed to consider the educational needs of Amish students within the school district. (Petr Br. Supp. Denial for Bond Req. at 10-20.) The State Board considered both of these concerns. (Original Tax Appeal Pet., Ex. C ¶¶ 12 & 13.) Therefore, Petitioners have presented no evidence that the State Board failed to consider the statutory factors listed in section 6-1.1-19-4.2, including any pertinent matters raised by Petitioners.
Petitioners could also show that a substantial issue for trial exists by presenting evidence that, despite having considered the proper factors, the State Boards approval was still arbitrary and capricious, constituted an abuse of discretion, was not supported by substantial evidence or exceeded statutory authority. They have not done so. Petitioners did show that the Amish community had legitimate concerns regarding transportation, curriculum and parental involvement as regards the proposed elementary school; further, at the time of the Control Board hearings, certain soil and wastewater issues were not resolved. The State Board basically acknowledged this in its findings. (Original Tax Appeal Pet., Ex. C ¶¶ 12 & 13.) See footnote
Evidence does show that Amish taxpayers may not receive the educational program they desire for their children. The record clearly demonstrates, though, that a majority of real property taxpayers in the North Daviess area favored the new school building and that the elected School Board members have steadfastly supported the project. Petitioners ask this Court to trump the State Boards decision differing to the School Boards and communitys support for a single new elementary school. The issue presented by Petitioners is one of educational policy, not tax policy. Though certainly not without reasonable limits, it is within the State Boards discretion to defer to the School Boards determination that a one-school option will provide an improved education environment for all students. (Original Tax Appeal Pet., Ex. C ¶¶ 7, 8 & 12.) Cf. Bell, 651 N.E.2d at 820 (noting that purpose of section 21-5-12-7 is to require the State Board to determine whether a lease agreement is necessary and rental payments are fair and reasonable from a tax standpoint, not an educational standpoint). As this Court stated in Boaz, 654 N.E.2d at 325-26:
The decision to implement [educational programs] is one properly delegated to the local school corporation, the Indiana Department of Education, and the State Board of Education. Indeed, those agencies have expertise in educational matters. . . . It is not the function of the State Board to pass judgment on the implementation of educational programs. Rather, the State Board is to analyze the School Corporations need for capital construction in light of the Schools educational programs.
The School Board and North Daviess taxpayers have chosen the one-school concept as
a means of implementing the School Corporations educational program. Through the petition
and remonstrance process, Petitioners had their chance to stop the project but failed
to convince a sufficient number of their neighbors of the wisdom of their
position. Boshart, 672 N.E.2d at 501. The State Board acknowledged that
the merits of the one-school option may be debatable. (Original Tax Appeal
Pet., Ex. C ¶ 16.) But, the State Board concluded that
the proposed school suffers from no significant limitations. (Original Tax Appeal Pet.,
Ex. C ¶ 16.) Petitioners have not produced evidence demonstrating that the
State Board abused its discretion or acted arbitrarily or capriciously in approving the
lease agreement. Thus, they have not shown that a substantial issue for
trial exists, as regards the School Corporations choice to build a single elementary
Likewise, Petitioners have not shown that a substantial issue for trial exists in connection with the soil and wastewater at the proposed construction site. The State Board, in its final determination, acknowledged that the soil type at the construction site requires a deep support and stated that contingency dollars may be necessary to resolve drainage problems. (Original Tax Appeal Pet., Ex. C ¶ 13.) The State Board further noted that officials were reviewing options to address wastewater needs. (Original Tax Appeal Pet., Ex. C ¶ 13.) The State Board stated that it lacked expertise in architectural design, drainage or other engineering disciplines. (Original Tax Appeal Pet., Ex. C ¶ 14.) Accordingly, the State Board reasoned, Absent clear evidence to the contrary, the Board must assume that the licensed professionals employed by the School can be relied upon to provide sound counsel to such engineering matters. (Original Tax Appeal Pet., Ex. C ¶ 14.) Again, the State Board is recognized as Indianas tax specialist, not Indianas educational or engineering specialist. See Bell, 651 N.E.2d at 819-20. The State Board thus could at its discretion trust the School Board to employ competent professionals to address the soil and wastewater concerns. Petitioners evidence did not show that problems existed to the extent that even non-experts would be able to deem the proposed construction project improper. See footnote
Opinions may differ as to whether a single, new elementary school best serves the educational needs of children in the North Daviess community and whether the chosen site is the best location for that school. However debatable those issues may be, the evidence presented does not raise substantial issues for trial. Therefore, Petitioners will be required to post a sufficient bond pursuant to section 34-13-5-7. The School Board called two witnesses to elaborate upon the financial impact of delaying construction. The School Boards education consultant estimated that a five-month delay in the project could set back the entire construction schedule for one year. (Hrg Tr. at 138.) He estimated the monthly increase in construction cost to be roughly $72,500. (Hrg Tr. at 136.) Given these numbers, a one year delay in construction could cost the School Corporation $870,000. The School Corporations financial advisor estimated that delay could increase financing costs for the project as much as $1,160,000. (Hrg Tr. at 148; Intervenors Ex. 9 at 3.) Thus, according to the School Corporation, a one-year delay in completing the new elementary school building could cost it approximately $2,030,000. However, the School Board has only requested that Petitioners post a bond for $1,800,000. (Hrg Tr. at 151.) Petitioners have presented no evidence contesting the School Boards estimates or otherwise arguing why the requested amount is unreasonable. Given the speculation involved in making a calculation of this nature, the Court finds that the bond amount requested by the School Corporation is reasonable. Accordingly, the Court finds that should the School Corporation prevail in this original tax appeal, damages and costs may accrue to it in the total amount of $1,800,000.