PETITIONERS PRO SE:    ATTORNEYS FOR RESPONDENT:
BARRY J. STERN    STEVE CARTER    
JUDY C. STERN    ATTORNEY GENERAL OF INDIANA
Indianapolis, IN    Indianapolis, IN
    
     KATHRYN SYMMES KIRK
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN
    

_____________________________________________________________________

    IN THE INDIANA TAX COURT _____________________________________________________________________

BARRY J. STERN and JUDY C. STERN,                                         )
                                                                               )
    Petitioners,                                                               )
                                                                               )
    v.                                                                         )   Cause No. 49T10-0007-TA-82
                                                                               )
DEPARTMENT OF LOCAL                                                            )
GOVERNMENT FINANCE,
                                                           
                                                 
                                                                      
                                      See footnote 
                          
        )
                )
    Respondent.            )    
_____________________________________________________________________

ON APPEAL FROM SEVEN FINAL DETERMINATIONS OF
THE STATE BOARD OF TAX COMMISSIONERS

NOT FOR PUBLICATION
July 8, 2003


FISHER, J.

    Barry J. Stern and Judy C. Stern (the Sterns) appeal seven final determinations of the State Board of Tax Commissioners (State Board) which valued, for the March 1, 1995 assessment date, the land at Gateway West (Gateway), a planned-unit development on Indianapolis’ northwest side. While the Sterns raise several complaints about Gateway’s assessment, the Court need only decide one: whether the State Board erred in applying a “fair” rating to the land at Gateway. See footnote


FACTS AND PROCEDURAL HISTORY

     Gateway is a 155-unit townhome community on approximately 11.7 acres of land. The townhomes themselves are located on 3.6 acres and are owned by the individual townhome owners. Gateway West Homeowners’ Association (the Association) owns the remaining acreage as common land. The Sterns own several townhome units within Gateway and also serve as the development’s property managers.
    In accordance with Indiana Code § 6-1.1-4-13.6 (1993), the Marion County Land Valuation Commission and the State Board promulgated a land order for use by Marion County assessing officials for the 1995 general reassessment and subsequent years. Under the relevant portion of the land order, the land contained within Pike Township planned-unit developments was first rated and then valued based on the whether the land was titled/deeded land, See footnote excess land, See footnote or homeowners’ association land (common land). See footnote More specifically, the land order provided:

IX. Pike Township Planned Unit Development (PUD) Rates

Per Square Foot
Titled/Deed Land
Under the Unit


Low      High
Excess Land


Low      High
Excellent/Very Good
Very Good
Very Good/Good
Good
Good/Average
Average
Average/Fair
Fair
Fair/Poor
Poor
------ ------
6.35 7.20
5.50 6.30
4.70 5.45
4.30 4.65
3.95 4.25
3.55 3.90
3.20 3.50
------ ------
------ ------
------ ------
1.27 1.44
1.10 1.26
.96 1.09
.86 .93
.79 .85
.71 .78
.64 .70
------ ------
------ ------

(Cert. Admin. R. at 227.) For the March 1, 1995 assessment date, the Pike Township Assessor rated the land within Gateway “fair.” Accordingly, the land directly under Gateway’s residential units was valued at $3.20 per square foot, and its excess and common land was valued at $0.64 per square foot. See footnote
The Sterns believed these values to be too high and filed seven petitions for review of assessment,See footnote first with the Marion County Board of Review (BOR) and then with State Board. Neither the BOR, nor the State Board, however, provided the Sterns with any relief. Consequently, the Sterns filed an appeal with this Court on December 16, 1998.
On November 18, 1999, the Court remanded the action to the State Board for a reconstruction of the administrative record. (Cert. Admin. R. at 3.) As a result, the State Board conducted a remand hearing on March 16, 2000. On June 15, 2000, the State Board issued its final determination, again denying any relief to the Sterns.
    The Sterns again appealed the State Board’s final determination to this Court on July 18, 2000. Trial was held on May 21, 2001. Oral arguments were heard on January 11, 2002. Additional facts will be supplied as necessary.

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 Comm’rs, 757 N.E.2d 1072, 1075 (Ind. Tax Ct. 2001). Thus, 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 taxpayer’s evidence and support its findings with substantial evidence. Id.
DISCUSSION

    The sole issue for the Court to decide is whether the State Board erred in applying a “fair” rating to the land at Gateway. The Sterns contend the land in Gateway should have been rated “poor.” The State Board, on the other hand, contends that the rating of “fair” is proper. The State Board is incorrect.
    Residential properties are typically assigned a neighborhood desirability rating that takes into account the effect of location on property value. See Ind. Admin. Code tit. 50, r. 2.2-7-9(c) (1996). These neighborhood desirability ratings constitute “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). The rating level attempts to strike a balance between the desirable and undesirable factors in the improvement’s location. See Corey v. State Bd. of Tax Comm’rs, 674 N.E.2d 1062, 1065 (Ind. Tax Ct. 1997). A similar rating system is applied to planned-unit developments within Marion County. (See Cert. Admin. R. at 226.)
    Indeed, the Land Order establishes a range of ratings with guidelines as to their application to “apartment land and planned-unit development land.” (Cert. Admin. R. at 225.) In this case, the State Board rated the land at Gateway as “fair.” A “fair” rating, as defined in the land order, means: “[a]dequate. Declining in desirability with limited access to main roads, shopping and schools. Features include: minimal parking, and sidewalks with scant lighting throughout the area, may have small clubhouse and has few recreational facilities.” (Cert. Admin. R. at 226.)
    The Sterns argue that the land at Gateway should be rated “poor.” A “poor” rating means “[e]xtremely undesirable. Features include: parking areas and streets with minimal paving or gravel base. No sidewalks, clubhouse or recreational facilities. Could be in a blighted area.” (Cert. Admin. R. at 226 (emphasis added).)
    The Sterns bear the burden of showing that the State Board’s rating of “fair” is invalid. See Thousand Trails, 757 N.E.2d at 1075. To meet that burden, the Sterns testified at the administrative hearing that Gateway had minimal paving/parking; crumbling, unusable sidewalks; drainage problems; and no recreational facilities. (Cert. Admin. R. at 250.) In response, the Pike Township Assessor (Assessor) testified:
When you get down to [the] poor [rating], it’s extremely undesirable. Features include parking areas in streets with minimal paving or gravel base, no sidewalks or clubhouse, or recreation facilities. They do fit that, but . . . could be in a blighted area [--w]ell, even though we felt that this area was declining, we did not feel this area was blighted.

(Cert. Admin. R. at 255-56.) As a result, the State Board determined that because the Sterns did not prove that Gateway was in a blighted area, it was not entitled to a “poor” rating.
    Land orders are administrative rules and therefore subject to the same rules of construction as statutes. See Park Steckley I v. Dep’t of Local Gov’t Fin., 779 N.E.2d 1270, 1273 (Ind. Tax Ct. 2002). Consequently, words contained within the Land Order will be given their plain, ordinary, and usual meaning. Id. “Could” is “an alternative to can suggesting less force or certainty[.]” Webster’s Third New International Dictionary 517 (1981). In turn, “can” means “may perhaps: may possibly[.]” Id. at 323. Thus, under the Land Order, “Could be in a blighted area” means the land might be in a blighted area, but need not be. Thus, a showing of “blightedness” is not required in order to receive a “poor” rating.
    In this case, the Sterns have shown, and the Assessor admits, all elements of the “poor” rating but for “blight.” Accordingly, it was arbitrary for the State Board to require the Sterns to show that Gateway was in a blighted area in order to receive a “poor” rating.

CONCLUSION

    For the aforementioned reasons, the Court REVERSES the State Board’s determination. The Court hereby REMANDS the matter to the Indiana Board of Tax Review (Indiana Board) See footnote with orders to instruct the Assessor to reclassify the land at Gateway as “poor.”See footnote


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), see Indiana Code § 6-1.1-30-1.1 (West Supp. 2001)(eff. 1-1-02); 2001 Ind. Acts 198 § 66, and the Indiana Board of Tax Review (Indiana Board). Ind. Code § 6-1.5-1-3 (West Supp. 2001)(eff. 1-1-02); 2001 Ind. Acts 198 § 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. 1-1-02); 2001 Ind. Acts 198 § 95. Nevertheless, the law in effect prior to January 1, 2002 applies to these appeals. Id. 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 this opinion.

Footnote:      The Sterns contend that the increase in assessed value of Gateway’s land over prior years’ assessments is “obscene,” “unsupported by any real-world data whatsoever,” and merely “a disguise to gain more revenue.” (See Oral Argument Tr. at 12, 16, 18.) The Sterns’ argument, however, is general in nature and unsupported by any specific legal authority. Consequently, the claim presents no issue for the Court to decide. See Bulkmatic Transport Co. v. Dep’t of State Revenue, 691 N.E.2d 1371, 1375 (Ind. Tax Ct. 1998).
    The Sterns also argue that the 1995 land assessment at Gateway is arbitrary and capricious because the assessed value of the land exceeded its fair market value. Under the applicable assessment regulations, the “true tax value” of non-agricultural land was determined by a county land valuation commission, subsequently approved by the State Board of Tax Commissioners (State Board), and compiled in a county land order. Ind. Admin. Code tit. 50, rr. 2.2-4-2; 2.2-4-3 (1996). See also Ind. Code § 6-1.1-4-13.6 (1993). Each county had its own land valuation commission to collect and analyze sales data for the county and, on the basis of that information, it determined the value of all land contained therein. Ind. Admin. Code tit. 50, rr. 2.2-4-4; 2.2-4-5 (1996). Given this framework, however, the Indiana Supreme Court ruled that taxpayers did not have “the substantive right to individual assessments evaluating property wealth, nor [were they entitled to a] consideration of independent property wealth evidence in [their] individual tax appeals.” See State Bd. of Tax Comm’rs v. Town of St. John et. al, 702 N.E.2d 1034, 1043 (Ind. 1998). Consequently, because the Sterns are challenging the 1995 assessed value of Gateway’s land, they are not entitled to a reduction merely because an independent appraisal indicates the property’s market value is less than its assessed value. See id.


Footnote: “Titled/deeded” land refers to that land located directly underneath the residential unit.


Footnote: “Excess” land refers to that land belonging to an individual residential unit, but not located directly underneath it. Examples include patios, grassy areas, storage units, etc.

Footnote:
“Homeowners’ Association Land” (common land) refers to that land within the development reserved for common use (i.e., clubhouse, swimming pools, roads, sidewalks, etc.).


Footnote: Under the land order, common land values are 20% of the base rate applied to titled/deed land. (Cert. Admin. R. at 226.)


Footnote: Six of the petitions covered the property owned by the Sterns themselves, while one petition was filed on behalf of the Gateway West Homeowners’ Association (Association) and covered the common land. Consequently, the Association also has an interest in the outcome of this matter, and was represented by counsel (who assisted the Sterns in presenting their case) at both the administrative hearing and the trial.

Footnote: All cases that would have 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.

Footnote:
The Court notes that the relevant portion of the Land Order is silent with respect to values to be applied to Pike Township planned-unit developments with a rating of “poor.” ( See Cert. Admin. R. at 227.) Nevertheless, the Assessor should find “an objective, logical method to assess [the property] within the existing guidance.” See State Bd. of Tax Comm’rs v. Garcia, 766 N.E.2d 341, 349 (Ind. 2002).