ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
TAMATHA A. STEVENS STEVE CARTER
McMAINS, GOODIN & ORZESKE, P.C. ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
KATHRYN SYMMES KIRK
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
AURORA LTD. C/O LOVELESS )
CONSTRUCTION, RIVER PARK )
v. ) Cause No. 49T10-9701-TA-103
DEPARTMENT OF LOCAL )
ON APPEAL FROM A FINAL DETERMINATION
OF THE STATE BOARD OF TAX COMMISSIONERS
NOT FOR PUBLICATION
July 19, 2002
The Petitioner, Aurora Ltd. c/o Loveless Construction, River Park Apartments (Aurora), appeals the
final determination of the State Board of Tax Commissioners (State Board) establishing the
assessed value of Auroras property as of March 1, 1991-1994. Aurora raises
various issues, which the Court restates as:
Whether the State Board should have reduced Auroras unit finish adjustment for the
1991-1993 tax years because it assessed Aurora for central air conditioning that it
does not have;
Whether Aurora is entitled to a reclassification of its land for the 1991-1993
tax years; and
Whether the State Board should have applied obsolescence depreciation to Auroras paving for
the 1994 tax year.
For the reasons stated below, the Court REMANDS Issue I to the Indiana
for further proceedings and AFFIRMS the State Boards final determination on Issues
II and III. FACTS AND PROCEDURAL HISTORY
Aurora owns the land and improvements at River Park Apartments in Dearborn County,
Indiana. River Park Apartments consists of five apartment buildings and one building
used for office, clubhouse, and laundry purposes. On September 9, 1994, Aurora
filed three Form 133 Petitions for Correction of an Error (133 Petition), one
each for the 1991-1993 tax years.
In each 133 Petition, Aurora raised
one issue: that the unit finish adjustment price should be reduced to
account for the fact that each apartment had a single unit air conditioner
as opposed to central air conditioning. On November 10, 1995, the Dearborn
County Board of Review (BOR) denied all of Auroras 133 Petitions. On
November 13, 1995, Aurora requested that the BOR transmit its Petitions to the
State Board for review.
On April 17, 1995, Aurora filed a Form 131 Petition for Review of
Assessment (131 Petition) for the 1994 tax year. Aurora raised the following
issues: (1) an excessive amount of its land had been classified as
primary; (2) the unit finish adjustment price should be reduced to account for
the fact that each apartment had a single unit air conditioner as opposed
to central air conditioning; (3) its grade should be reduced to D+1; and
(4) functional obsolescence should be applied to its office and apartment buildings.
On November 22, 1996, the State Board issued its final determination on Auroras
131 Petition. The State Board reclassified Auroras land, lowered the unit finish
adjustment price to reflect the absence of central air conditioning, changed Auroras grade
to D+1, and applied 20% obsolescence to the office building and 10% obsolescence
to apartment buildings 1, 3, 4, and 5 to account for building damage
due to abnormal settling. The State Board also made some changes to
Auroras assessment on issues not raised by Aurora. Among those changes, the
State Board lowered the physical depreciation of Auroras paving from 50% to 5%.
On January 6, 1997, Aurora appealed both its 131 and 133 Petitions to
This Court conducted a trial and heard oral arguments.
Additional facts will be supplied as needed.
ANALYSIS AND OPINION
Standard of Review
The Court gives great deference to the State Boards final determinations when the
State Board acted within the scope of its authority. Wetzel Enters., Inc.
v. State Bd. of Tax Commrs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct.
1998). Accordingly, this Court reverses final determinations of the State Board only
when those decisions are unsupported by substantial evidence, are arbitrary or capricious, constitute
an abuse of discretion, or exceed statutory authority. Id.
The taxpayer bears the burden of demonstrating the invalidity of the State Boards
final determination. Clark v. State Bd. of Tax Commrs, 694 N.E.2d 1230,
1233 (Ind. Tax Ct. 1998). The taxpayer must present a prima facie
case, i.e., a case in which the evidence is sufficient to establish a
given fact and which if not contradicted will remain sufficient. GTE
North Inc. v. State Bd. of Tax Commrs, 634 N.E.2d 882, 887 (Ind.
Tax Ct. 1994) (citations and internal quotation marks omitted). To establish a
prima facie case, the taxpayer must offer probative evidence concerning the alleged error.
Miller Structures, Inc. v. Indiana State Bd. of Tax Commrs, 748 N.E.2d
943, 947 (Ind. Tax Ct. 2001). Once the taxpayer carries the burden
of establishing a prima facie case, the burden shifts to the State Board
to rebut the taxpayers evidence and justify its decision with substantial evidence.
Clark, 694 N.E.2d at 1233. To carry its burden, the State Board
must do more than merely assert that it assessed the property correctly.
Loveless Const. Co. v. State Bd. of Tax Commrs, 695 N.E.2d 1045, 1049
(Ind. Tax Ct. 1998), review denied. Instead, the State Board must offer
an authoritative explanation of its decision to rebut the taxpayers prima facie showing.
I. Unit Finish Adjustment
The first issue is whether the State Board should have reduced Auroras unit
finish adjustment for 1991-1993 tax years because it assessed Aurora for central air
conditioning that it does not have. Specifically, Aurora argues that the State
Board applied the incorrect unit finish adjustment cost because it only had single
unit air conditioning units and not central air conditioning. As further evidence
that the reduction should be made, Aurora relies on the fact that the
State Board corrected the unit finish adjustment for 1994 as a result of
Auroras 131 Petition.
Improvements in Indiana are assessed using generally descriptive models. See Ind. Admin.
Code tit. 50, r. 2.1-4-7 (1992) (providing model descriptions). An assessor locates
the model that best describes an improvement then finds the appropriate cost schedule,
which shows the costs of various components and features associated with that model.
Ind. Admin. Code tit. 50, rr. 2.1-4-3(a); 2.1-4-4; 2.1-4-5 (1992). In
so doing, if an assessor makes an error that can be corrected without
resort to subjective judgment and according to objective standards, then a taxpayer may
file a 133 Petition to correct the error. Hatcher v. State Bd.
of Tax Commrs, 561 N.E.2d 852, 857 (Ind. Tax Ct. 1990). Therefore,
a taxpayer who files a 133 Petition must: (1) show that the
alleged error is objective and (2) quantify the error by using the State
Boards schedules. Barth, Inc. v. State Bd. of Tax Commrs, 756 N.E.2d
1124, 112829 (Ind. Tax Ct. 2001); Rinker Boat Co. v. State Bd. of
Tax Commrs, 722 N.E.2d 919, 922 (Ind. Tax Ct. 1999). Accordingly, the
burden was on Aurora to: (1) show that the assessment of its
improvements for central air conditioning was an objective error and (2) use the
State Boards cost schedules to quantify the cost for the lack of central
To show that the assessment of its improvements for central air conditioning was
an objective error, Aurora introduced a photograph and testimony. The evidence showed
that Auroras apartment buildings had single unit air conditioners for each of the
apartments. (Joint Ex. L; Trial Tr. at 22, 26-27.) Because an
assessor need only look at Auroras single unit air conditioners to determine that
there is no central air conditioning system, Aurora has met its burden of
showing that the assessment of its improvements for central air conditioning was an
objective error. See Rinker Boat, 722 N.E.2d at 922 (stating that the
determination of an objective error involves a simple observation of fact without resort
to subjective judgment).
Further, Aurora used the State Boards cost schedules to quantify the cost for
lack of central air conditioning. On its 133 Petitions, Aurora stated that,
pursuant to the State Boards regulations,
See footnote the unit finish adjustment cost for apartment
buildings 1, 2, and 3 should be $5.65 and that buildings 4 and
5 should be $4.25. (Joint Exs. B-D.)
Aurora did not have central air conditioning; therefore, the State Board should not
have included the cost of air conditioning when determining the unit finish adjustment
of Auroras apartments. Because Aurora showed that the assessment of its improvements
for central air conditioning was an objective error and quantified the error by
using the State Boards cost schedules, it met its burden of making a
prima facie case. Accordingly, the burden shifted to the State Board to
rebut the Auroras evidence and justify its decision with substantial evidence. Clark,
694 N.E.2d at 1233. The State Board, however, did not present any
evidence to support its decision. Therefore, this Court REMANDS this issue to
the Indiana Board with instructions to reduce Auroras unit price adjustment cost to
reflect the lack of central air conditioning.
II. Land Classification
The next issue is whether Aurora is entitled to an adjustment of its
land classification for the 1991-1993 tax years. The State Board argues that
Aurora has improperly raised this argument because it did not raise land classification
as an issue in its 133 Petitions. While Aurora admits that it
did not raise land classification in its 133 Petitions, it argues that land
classification does not require an assessors subjective judgment and thus should be correctable
on a 133 Petition. Furthermore, Aurora argues that its land should be
reclassified for the 1991-1993 tax years because the State Board reclassified its land
for the 1994 tax year via its 131 Petition. The Court disagrees.
The State Board acts in an arbitrary and capricious manner when it refuses
to correct errors alleged and shown to exist. Wareco Enters., Inc. v.
State Bd. of Tax Commrs, 689 N.E.2d 1299, 1302 (Ind. Tax Ct. 1997)
(citing Hatcher, 561 N.E.2d at 858). While Aurora is correct in that
objective errors are correctable via a 133 Petition, it seems to be confused
about its burden to raise those types of errors to the State Board.
Aurora was required to allege and show in its 133 Petitions that
an objective error existed. See Thousand Trails, Inc. v. State Bd. of
Tax Commrs, 757 N.E.2d 1072, 1077 (Ind. Tax Ct. 2001). However, Aurora
only raised the issue of unit finish adjustment. Aurora made no allegation
nor showed that its land classification was in error. Moreover, because each
assessment and each tax year stands alone, evidence as to the assessment of
Auroras land classification in 1994 is not probative as to its assessed value
for 1991-1993. See id. at 1077; Quality Farm and Fleet, 747 N.E.2d
at 93. Thus, the State Board did not act arbitrarily and capriciously
in refusing to change Auroras land classification for the 1991-1993 tax years.
Accordingly, this Court AFFIRMS the State Boards final determination on this issue.
The final issue is whether the State Board should have applied obsolescence depreciation
to Auroras paving for the 1994 tax year. The State Board argues
that this issue is not proper because in its 131 Petition, Aurora raised
the issue of obsolescence in regard to its buildings only and not to
its paving. Aurora admits that it did not specifically include a paving
obsolescence issue in its 131 Petition (Oral Argument Tr. at 8) but contends
that the State Boards sua sponte decrease of the physical depreciation from 50%
to 5% on of its paving gave rise to its current paving obsolescence
The State Board, upon hearing an appeal initiated by a taxpayer under the
Form 131 Petition process, may assess the property in question, correcting any errors
which may have been made. Ind. Code § 6-1.1-15-4(a). Thus, the
State Board may address and correct all errors in an assessment, even those
errors not raised in the taxpayers petition for review. Castello v. State
Bd. of Tax Commrs, 638 N.E.2d 1362, 1364 (Ind. Tax Ct. 1994) (citations
omitted). However, if the State Board chooses to address issues not raised
by the taxpayer, the taxpayer is constitutionally empowered to respond to the State
Boards disposition of those issues. Id.
Because the State Board made a sua sponte change to Auroras physical depreciation
of its paving, Aurora would have been afforded an opportunity to respond to
the decrease of 50% to 5% in physical depreciation. See id.
The Court might have even afforded Aurora an opportunity to respond to the
State Boards sua sponte paving change because the decrease in the physical depreciation
ultimately increased the assessed value of Auroras paving. However, in Auroras Assessment
Review and Analysis submitted as evidence at the State Board hearing, Aurora stated
that its paving should receive 5% physical depreciation and 0% obsolescence depreciation.
(Joint Ex. G at 10.) That is exactly what Aurora received.
Therefore, Auroras argument that it is now entitled to a hearing on the
obsolescence of its paving is without merit. Accordingly, this Court AFFIRMS the
State Boards final determination on this issue.
For the aforementioned reasons, the Court REMANDS Issue I to the Indiana Board
for further proceedings consistent with this opinion and AFFIRMS the State Boards final
determination on Issues II and III.
The State Board of Tax Commissioners (State Board) was originally the
Respondent in this appeal. However, as of December 31, 2001, the legislature
abolished the State Board. P.L. 198-2001, § 119(b)(2). Effective January 1,
2002, the legislature created the Department of Local Government Finance (DLGF),
§ 6-1.1-30-1.1 (West Supp. 2001)(eff. 1-1-02); P.L. 198-2001, § 66, and the Indiana
Board of Tax Review (Indiana Board). Ind. Code § 6-1.5-1-3 (West Supp.
2001)(eff. 1-1-02); P.L. 198-2001, § 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); P.L. 198-2001, § 95. Moreover,
the law in effect prior to January 1, 2002 applies to these appeals.
Ind. Code § 6-1.5-5-8 (West Supp. 2001)(eff. 1-1-02); P.L. 198-2001, §§ 95,
117. Although the DLGF has been substituted as the Respondent, this Court
will still reference the State Board throughout this opinion.
All cases that would have previously been remanded to the State Board
are now remanded to the 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.
Aurora also filed a 133 Petition for the 1990 tax
n September 9, 1994. (Joint Ex. A.) In its brief
and at trial and oral argument, Aurora did not contend that its arguments
raised in its 133 Petitions should also apply to the 1990 tax year.
In its reply brief, however, it included argument about its 133 Petitions
that included the 1990 tax year. Although a taxpayer can file a
133 Petition at any time, it can only be applied retroactively up to
three years from the date the taxes were first due (or May 1994,
in this case). See Ind. Code § 6-1.1-26-1(2); Town of St. John
v. State Bd. of Tax Commrs, 691 N.E.2d 1387, 1390 (Ind. Tax Ct.
1998), revd on other grounds, 702 N.E.2d 1034 (Ind. 1998). Thus, Aurora
cannot seek a refund for 1990 because it filed its 133 Petition after
the three-year period allowed by statute. See Ind. Code § 6-1.1-26-1(2).
Despite Auroras November 13, 1995 request that
the Dearborn County Board
of Review (BOR) transmit its 133 Petitions to the State Board for review,
the State Board had still not issued a final determination on those Petitions
when Aurora filed its original tax appeal on January 6, 1997. The
State Board moved to dismiss Auroras 133 Petitions for lack of subject matter
jurisdiction, claiming that it did not issue a final determination because it never
received the petitions. At trial, this Court denied the State Boards motion
to dismiss. (Trial Tr. at 18-20.) The evidence shows that the
State Board received a copy of the 133 Petitions from the county on
April 17, 1997 but has never issued a final determination. While Aurora
should have waited until April 1998 one year after the inaction of
the State Board to appeal its 133 Petitions to this Court, see
Ind. Code § 6-1.1-15-4(e) (1995), the Courts dismissal of Auroras appeal on its
133 Petitions would simply result in Aurora re-filing its appeal and reappearing before
this Court. Such action is not an efficient use of the Courts
time and resources. Thus, the Court denies the State Boards motion to
dismiss and will review Auroras claims from its 133 Petitions.
Auroras reliance on the 1994 corrected unit finish adjustment, however, is
improper. As this Court has stated numerous times, each assessment and each
tax year stands alone.
Quality Farm and Fleet, Inc. v. State Bd.
of Tax Commrs, 747 N.E.2d 88, 93 (Ind. Tax Ct. 2001) (citing Glass
Wholesalers, Inc. v. State Bd. of Tax Commrs, 568 N.E.2d 1116, 1124 (Ind.
Tax Ct. 1991)). Thus, evidence as to the assessment of Auroras improvements
in 1994 is not probative as to its assessed value for the tax
years under review. See Quality Farm and Fleet, 747 N.E.2d at
The unit finish adjustment cost for apartments (with and without air
conditioning) is contained in Schedule C of the State Boards regulations.
Admin. Code tit. 50, r. 2.1-4-5 (1992) (Schedule C). The regulations provide
that an apartment is assessed for air conditioning under Schedule C if it
has central air conditioning. See Ind. Admin. Code tit. 50, r. 2.1-4-3(c)