ATTORNEY FOR PETITIONERS:    ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN    STEVE CARTER    
ATTORNEY AT LAW     ATTORNEY GENERAL OF INDIANA
Indianapolis, IN    Indianapolis, IN

     LINDA I. VILLEGAS
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN
_____________________________________________________________________

    IN THE INDIANA TAX COURT _____________________________________________________________________

THOMAS AND PATRICIA E. GENUNG,                                        )
                                                                           )
    Petitioners,                                                           )
                                                                           )
    v.                                                                     )   Cause No. 49T10-9712-TA-199
                                                                           )                
DEPARTMENT OF LOCAL                                                        )                
GOVERNMENT FINANCE See footnote ,            )
    )
    Respondent.            )    
_____________________________________________________________________


_____________________________________________________________________

ORDER ON PETITIONERS’ MOTION FOR SUMMARY JUDGMENT


NOT FOR PUBLICATION
August 23, 2002

FISHER, J.     

    Thomas and Patricia E. Genung (the Genungs) appeal the State Board of Tax Commissioners’ (State Board) final determination that assessed their property as of March 1, 1995. The matter is currently before the Court on Genungs’ motion for summary judgment, in which they present the following issues for this Court’s review:
ISSUES

Whether the State Board erred in assigning a grade of A+2 to the Genungs’ house; and

Whether the State Board’s failure to instruct the hearing officer of his duties, in writing, constituted an error as a matter of law. See footnote

FACTS AND PROCEDURAL HISTORY

    The Genungs’ house in Marion County was assessed at $174,940 as of March 1, 1995. The Pike Township Assessor assigned the house a grade of A+2.
After challenging the assessment at the local level, the Genungs filed a Form 131 Petition for Review of Assessment with the State Board on December 13, 1996. In its petition, the Genungs raised two issues:
The valuation method used to determine the assessed value of the subject property is not uniform or at an equal rate and is not based upon a just valuation. The Indiana Tax Court has ruled that the methodology used by the State Tax Board is in violation of Article X, Section I of the Indiana Constitution. We, therefore, request an assessment be made in compliance with the Indiana Constitution.

Obsolescence factor needs to be applied to correct assessment inequities when compared to older homes.

(Pet’rs Complaint, at Ex. A.)
On April 28, 1997, the State Board held a hearing. On October 17, 1997, the State Board issued its final determination, upholding the Pike Township Assessor’s assignment of a grade factor of A+2. The State Board also determined that the Genungs did not present sufficient evidence to establish their entitlement to an obsolescence adjustment.
    On December 2, 1997, the Genungs initiated an original tax appeal. On September 15, 1998, the Genungs filed a motion for summary judgment. The Court heard oral arguments on the Genungs’ motion on December 3, 1998. Additional facts will be supplied as needed.

ANALYSIS AND OPINION
Standard of Review

    The Court gives great deference to the State Board’s final determination when it acted within the scope of its authority. Wetzel Enters., Inc. v. State Bd. of Tax Comm’rs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct. 1998). Accordingly, this Court reverses final determinations of the State Board only when they 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 Board’s final determination and must do so by establishing a prima facie case that the assessment is incorrect. Miller Structures, Inc. v. State Bd. of Tax Commr’s, 748 N.E.2d 943, 952 (Ind. Tax Ct. 2001) (stating that “a taxpayer must offer probative evidence concerning the alleged assessment error [in order to establish a prima facie case]”); Clark v. State Bd. of Tax Comm’rs, 694 N.E.2d 1230,1233 (Ind. Tax Ct. 1998). Once the taxpayer has established a prima facie case, the burden shifts to the State Board to support its final determination with substantial evidence. Miller Structures, 748 N.E.2d at 952. If, however, the taxpayer fails to provide the State Board with probative evidence supporting his position on the alleged assessment error, the State Board’s duty to support its final determination with substantial evidence is not triggered. Kemp v. State Bd. of Tax Comm’rs, 726 N.E.2d 395, 400 (Ind. Tax Ct. 2000). A taxpayer’s conclusory assertions that the State Board’s assessment is erroneous do not constitute probative evidence. Id.     
    Summary judgment is appropriate only where no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C); Bulkmatic Transp. Co. v. Ind. Dep’t of State Revenue, 691 N.E.2d 1371,1373 (Ind. Tax Ct. 1998). Nevertheless, “[w]hen any party has moved for summary judgment, the court may grant summary judgment for any other party upon the issues raised by the motion although no motion for summary judgment is filed by such party.” Ind. Trial Rule 56(B).
Discussion
I. Grade

    The first issue is whether the State Board erred in assigning an A+2 grade See footnote to the Genungs’ house. The Genungs argue that the State Board regulations governing grade lack ascertainable standards that would provide a basis for any grade higher than an A, and to support their argument rely on this Court’s ruling in Garcia v. State Bd. of Tax Comm’rs, 694 N.E.2d 794, 798 (Ind. Tax Ct. 1998), rev’d by 766 N.E.2d 341 (Ind. 2002). In Garcia, this Court held that because there was no “ability to differentiate between an ‘A+10’ or an ‘A’ grade dwelling” under the State Board’s regulations, it was “‘compelled to find that the Sate Board’s assessment . . . [wa]s arbitrary and capricious.’” Garcia v. State Bd. of Tax Comm’rs, 694 N.E.2d 794, 798 (Ind. Tax Ct. 1998), rev’d by 766 N.E.2d 341 (Ind. 2002).
The Genungs’ argument, however, is without merit. Indeed, Indiana’s Supreme Court, in reviewing this Court’s opinion in Garcia, has held that the State Board’s regulations with respect to grades above an A are not arbitrary and capricious. State Bd. of Tax Comm’rs v. Garcia, 766 N.E.2d 341, 349 (Ind. 2002). Accordingly, the Genung’s argument cannot succeed.
II. Written Instructions

    The Genungs also assert that the State Board’s failure to instruct the hearing officer of his duties, in writing, constituted an error as a matter of law. The Genungs contend that during discovery, they requested that the State Board explain and produce “‘any and all statutes, regulation sections, and formal and informal rules controlling the conduct of the administrative hearings before the State Board.’” (Pet’rs Mem. In Support of its Motion for Summary Judgment, at 6.) The Genungs contend that the State Board did not produce anything.
If there were any irregularities in the hearing officer’s instructions, or in carrying out his duties, they should have been challenged during the State Board hearing. See Hoogenboom-Nofziger v. State Bd. of Tax Comm’rs, 715 N.E.2d 1018, 1022 (Ind. Tax Ct. 1999). Nevertheless, there is nothing in the record to indicate that the Genungs challenged those irregularities at the administrative hearing. The Genungs remained silent during the hearing and, by their silence, consented to the hearing despite any possible irregularities. See id.
    The Tax Court is bound by the evidence and issues raised at the administrative level. State Bd. of Tax Comm’rs v. Gatling Gun Club, Inc., 420 N.E.2d 1324, 1328 (Ind. Ct. App. 1981). When the Genungs failed to raise an issue at the administrative level, the issue is waived and may not be considered by the court. See id.
Conclusion

    For the foregoing reasons, the Court DENIES the Genungs’ motion for summary judgment. The Court now DIRECTS the parties to file status reports regarding trial readiness on or before September 16, 2002.

So ORDERED this 23rd day of August, 2002.

                            _____________________________    
                            Honorable Thomas G. Fisher
                            Judge, Indiana Tax Court        
                            
Distribution:
David L. Pippen
Attorney at Law
7164 Graham Road
Indianapolis, IN 46250

Steve Carter
Attorney General of Indiana
By: Linda I. Villegas
Deputy Attorney General
Indiana Government Center South, Fifth Floor
402 West Washington Street
Indianapolis, IN 46204-2770


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. P.L. 198-2001, § 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); 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. Nevertheless, the law in effect prior to January 1, 2002 applies to these appeals. Id. See also P.L. 198-2001, § 117. Although the DLGF has been substituted as the Respondent, this Court will still reference the State Board throughout this opinion.



Footnote: The Genungs also argue that the State Board regulations in effect at the time of its assessment were arbitrary because they lacked ascertainable standards. The Genungs also assert that the State Board regulations do not provide for a uniform or equal assessment as required by the Indiana Constitution. ( See Pet’rs Mem. In Support of Summary Judgment at 7-9). Instead, the Genungs contend that the only way to measure uniformity and equality in assessment is through market value and, as a result, they submitted a portion of the “Report of the Indiana Fair Market Value Study” at the administrative hearing to show how inequitably their property was assessed. (See Pet’rs Mem. In Support of Summary Judgment, at Ex. 5).
In 1998, Indiana’s Supreme Court declared the State Board’s regulations governing the 1995 state-wide general reassessment unconstitutional. See State Bd. of Tax Comm’rs v. Town of St. John, 702 N.E.2d 1034, 1043 (Ind. 1998) (stating “the existing cost schedules . . . violate the Property Taxation Clause of the Indiana Constitution”). Nevertheless, the fact that the subject property was assessed under unconstitutional regulations does not mean that the assessment will be invalidated on that basis. Whitley Prods., Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1121 (Ind. Tax Ct. 1998) (citations omitted), review denied. “Real property must still be assessed, and, until the new regulations are in place, must be assessed under the present system.” Id. See also Town of St. John v. State Bd. of Tax Comm’rs, 729 N.E.2d 242, 246 & 250-51 (Ind. Tax Ct. 2000) (ordering that all real property in Indiana shall be reassessed under new, constitutional regulations as of March 1, 2002 and providing that until then, real property tax assessments shall be made in accordance with the current system). With respect to the Indiana Fair Market Value Study, Public Law 63-1993 § 3(f) prohibits its use in the review of an assessment.

Footnote: The grade system is a key aspect of Indiana’s true tax value system. White Swan Realty v. State Bd. of Tax Comm’rs, 712 N.E.2d 555, 559 (Ind. Tax Ct. 1999). In general, every home’s materials, design, and workmanship are collectively assigned a grade from A (high) to E (low), which represents a numeric multiplier that raises or lowers an improvement’s assessed value. See Miller Structures, Inc. v. State Bd. of Tax Comm’rs, 748 N.E. 2d 943, 952 (Ind. Tax Ct. 2001). Grades above an A are indicated by an “A+1” through “A+10.” Ind. Admin. Code tit. 50, r. 2.1-4-3(f) (1992).