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
INDIANA TAX COURT
BARRY J. STERN and JUDY C. STERN, )
v. ) Cause No. 49T10-0007-TA-82
DEPARTMENT OF LOCAL )
ON APPEAL FROM SEVEN FINAL DETERMINATIONS OF
THE STATE BOARD OF TAX COMMISSIONERS
NOT FOR PUBLICATION
July 8, 2003
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
Gateways assessment, the Court need only decide one: whether the State Board
erred in applying a fair rating to the land at Gateway.
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 developments 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,
or homeowners association land (common land).
More specifically, the land order provided:
IX. Pike Township Planned Unit Development (PUD) Rates
Per Square Foot
Under the Unit
(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 Gateways residential units was valued at $3.20 per square foot,
and its excess and common land was valued at $0.64 per square foot.
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 Boards 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
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). 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 taxpayers evidence
and support its findings with substantial evidence. Id.
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 improvements location. See Corey
v. State Bd. of Tax Commrs, 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 Boards 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], its 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. Dept of Local Govt
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[.] Websters 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.
For the aforementioned reasons, the Court REVERSES the State Boards determination.
The Court hereby REMANDS the matter to the Indiana Board of Tax Review
See footnote with orders to instruct the Assessor to reclassify the land at
Gateway as poor.See 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),
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
The Sterns contend that the increase in assessed value of Gateways
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. Dept
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 Commrs 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 Gateways land, they are not entitled to
a reduction merely because an independent appraisal indicates the propertys market value is
less than its assessed value. See id.
Titled/deeded land refers to that land located directly underneath the residential
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.
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.
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 Commrs v.
Garcia, 766 N.E.2d 341, 349 (Ind. 2002).