ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN STEVE CARTER
ATTORNEY AT LAW ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
JANET L. PARSANKO
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
ABOITE CORPORATION, )
v. ) Cause No. 49T10-9701-TA-102
STATE BOARD OF TAX COMMISSIONERS, )
ON APPEAL FROM A FINAL DETERMINATION OF
THE STATE BOARD OF TAX COMMISSIONERS
December 7, 2001
Aboite Corporation (Aboite) appeals the final determination of the State Board of Tax
Commissioners (State Board) valuing its property for the March 1, 1992 assessment date.
Whether the State Board exceeded its statutory authority in reassessing Aboites land from
agricultural to commercial?
Whether the State Board erroneously calculated the amount of obsolescence depreciation to which
Aboites shopping center is entitled?
Whether the State Boards assessment of the shopping centers atrium is arbitrary and
See footnote FACTS AND PROCEDURAL HISTORY
Aboite owns land and a shopping center in Allen County, Indiana. For
the March 1, 1992 assessment date, Aboites property was assigned an assessed value
of $2,317,300. Believing the assessment to be incorrect, Aboite filed an appeal
with the Allen County Board of Review (BOR). On November 4, 1992,
the BOR issued a final determination in which it found Aboites assessment to
be without error. (Joint Ex. 1, p.6.)
Consequently, Aboite appealed the BORs final determination by filing a Form 131 Petition
for Review of Assessment with the State Board. After a
hearing, the State Board issued a final determination on January 7, 1997, in
which it reduced Aboites overall assessment to $1,895,440 (by adjusting the improvements wall
heights, grade factors, and allowing a twenty percent obsolescence depreciation adjustment). The
State Board denied Aboite relief, however, on the issues of land reclassification, additional
obsolescence depreciation, and atrium pricing.
Aboite filed an original tax appeal with this Court on January 6, 1997.
Trial was held on July 2, 1998. Additional facts will be
supplied as necessary.
STANDARD OF REVIEW
This Court gives great deference to final determinations of the State Board.
Wetzel Enters. Inc. v. State Bd. of Tax Commrs, 694 N.E.2d 1259, 1261
(Ind. Tax Ct. 1998). Accordingly, this Court will reverse a State Board
final determination only if it is unsupported by substantial evidence, is arbitrary or
capricious, constitutes and abuse of discretion, or exceeds statutory authority. Id.
The taxpayer bears the burden of showing the invalidity of the State Boards
final determination. See Clark v. State Bd. of Tax Commrs, 694 N.E.2d
1230, 1233 (Ind. Tax Ct. 1998). To meet this burden, the taxpayer
must present a prima facie case (a case supported by probative evidence, i.e.,
evidence that is sufficient to establish a given fact and which if not
contradicted will remain sufficient). Damon Corp. v. State Bd. of Tax Commrs,
738 N.E.2d 1102, 1106 (Ind. Tax Ct. 2000). Once the taxpayer presents
a prima facie case, the burden shifts to the State Board to rebut
the taxpayers evidence and support its final determination with substantial evidence. Clark,
694 N.E.2d at 1233.
I. Land Reassessment
In the 1980s, Aboite purchased approximately 1,500 acres of farmland in Allen County,
Indiana. At the time of purchase, the land was classified as agricultural
and was valued on an acreage basis. Aboite subsequently developed the land,
subdivided it into residential lots, and sold them.
Aboite retained ownership to one of the lots, however, which is at issue
in this case. In 1988, Aboite built a shopping center on that
lot. In 1992, the State Board reassessed the lot to reflect the
lands change in use. Specifically, the State Board changed the lots classification
from agricultural to commercial.
The parties disagree as to whether or not the State Board had the
authority to reassess the lot. They do agree, however, that Indiana Code
§ 6-1.1-4-12 is controlling. That statute provides:
If land assessed on an acreage basis is subdivided into lots, the land
shall be reassessed on the basis of lots. If land is rezoned
for, or put to, a different use, the land shall be reassessed on
the basis of its new classification. If improvements are added to real
property, the improvements shall be assessed. An assessment or reassessment made under
this section is effective on the next assessment date. However, if land
assessed on an acreage basis is subdivided into lots, the lots may not
be reassessed until the next assessment date following a transaction which results in
a change in legal or equitable title to that lot.
Ind. Code § 6-1.1-4-12. Aboite argues that, pursuant to the statute, Indiana
law does not allow for the re-classification of the [lot] until title changes.
(Petr Post-Hrg. Br. at 6.) Thus, Aboite argues, the State Board
is precluded from reassessing the lot until its title is transferred to a
third party. The State Board, on the other hand, argues that regardless
of the fact that the lot had been subdivided, because it has changed
from an agricultural to a commercial use, the statute requires that it shall
be reassessed on the basis of its new classification. See Ind. Code
are not at liberty to construe a statute that is unambiguous.
City of Evansville v. Zirkelbach, 662 N.E.2d 651, 653 (Ind. Ct. App. 1996),
trans. denied. However, where a statute is susceptible to more than one interpretation,
it is ambiguous and the reviewing court must ascertain the intent of the
legislature and interpret the statute to effectuate that intent. Id. Thus,
in construing Indiana Code § 6-1.1-4-12, this Court will interpret the statute as
a whole, and not overemphasize a strict literal or selective reading of its
individual words. See Gen. Motors Corp. v. Indiana Dept of Workforce Dev.,
671 N.E.2d 493, 497 (Ind. Ct. App. 1996).
§ 6-1.1-4-12 requires that land be reassessed upon the occurrence of two events:
when acreage is subdivided into lots, and when land is put to
a different use. Ind. Code § 6-1.1-4-12. Aboite relies on
the exception stated in Indiana Code § 6-1.1-4-12: if land assessed on
an acreage basis is subdivided into lots, the lots may not be reassessed
until the next assessment date following a transaction which results in a change
in legal or equitable title to that lot. Ind. Code § 6-1.1-4-12.
The plain, ordinary meaning of this exception, however, presumes that acreage is
subdivided into lots so that they may be sold, and until the lots
are sold, its owner reaps the benefit of a lower assessment (footnote 2,
supra). In other words, the exception is designed to encourage developers to
buy farmland, subdivide it into lots, and resell the lots.
In this case, not
only did Aboite not sell its vacant lot, but it built a shopping
center on it instead. Assuming arguendo that Aboite merely decided to hold
off in selling its vacant lot until a later date, the intent of
the exception would prevail, and the land would continue to be assessed on
its original agricultural acreage basis. Because Aboite converted the vacant lot into
an income-producing property, however, the intent of the exception is frustrated. Indeed,
the exception applies when land is subdivided into lots only, not when a
change of use occurs. As a result, the State Board properly reassessed
the lot from agricultural to commercial.
Another fundamental rule
of statutory construction is that if a statute is susceptible to more than
one interpretation, then the court may consider the consequences of a particular construction.
Herff Jones v. State Bd. of Tax Commrs, 512 N.E.2d 485, 490-91
(Ind. Tax Ct. 1987) (citation omitted). In Indiana, land is assessed as
either agricultural or non-agricultural. See 50 IAC 2.1-2-1 (non-agricultural land valuation); 50
IAC 2.1-2-2 (agricultural land valuation). If Aboites position were advanced, however, commercial
developers could always escape a non-agricultural assessment by merely purchasing farmland, subdividing the
acreage into lots, keeping some of the lots, changing the use, and not
reselling the retained lots (which is what occurred here). It is difficult
to believe that the legislature intended such an absurd result. Accordingly, the
State Boards final determination on the issue of land reassessment is AFFIRMED.
II. Obsolescence Depreciation
In its appeal to this Court, Aboite challenged the amount of obsolescence depreciation
to which its shopping center is entitled. That issue, however, was remanded
to the State Board prior to trial. Consequently, the Court need not
address the issue in this opinion.
III. Atrium Pricing
The entrance to Aboites shopping center is marked by a large atrium.
(Petr Exs. 1-3). Aboite claims that the State Boards assignment of value
to the atrium is [nothing] but arbitrary and capricious as a matter of
law. (Petr Reply Br. at 4.) Specifically, Aboite argues that because
the State Boards regulations fail to define atrium, fail to provide instructions as
to how an atriums dimensions are measured, and fail to sufficiently explain what
constitutes an A quality
atrium, the State Board has not shown it has
any basis for assessing an atrium, let alone a basis on which reasonable
and honest people could be led to uniform or even similar conclusions.
Id. In other words, Aboite argues that because the regulations providing for
the assessment of atriums lack ascertainable standards, they are unconstitutional.
As this Court has already explained, until the new [constitutional] regulations are
in place, [real property] must be assessed under the present system. See
Whitley Prods., 704 N.E.2d at 1121. Accordingly, Aboite cannot come into court,
merely point out the inadequacies of the present system and obtain a reversal
of its assessment. See id. Instead, Aboite bears the burden of
establishing, by a prima facie case, that its atrium was erroneously assessed.
See Damon Corp., 738 N.E.2d at 1106.
Aboite submitted little evidence as to the atriums pricing. In fact, in
the Assessment Review and Analysis
that was presented at the State Board hearing,
Aboite merely presented an alternate calculation for the atriums pricing, based on a
C grade, rather than the A grade as used by the State Board.
(See Joint Ex. 3 at 2.) This alternate calculation, however, is
nothing more than a conclusory statement. See Whitley Prods., 704 N.E.2d at
1119. Conclusory statements do not constitute probative evidence. Id. Thus,
without any further explanation or evidence that would indicate other similar atriums are
assessed at a C grade, Aboites Analysis does not show what the atriums
grade should be and therefore does not constitute probative evidence that the State
Boards pricing of the atrium is improper. See id.
Aboite has failed to meet its burden of proof on this issue, and
therefore the State Boards duty to support its final determination with substantial evidence
is not triggered. See id. at 1119-20. Thus, the State Boards final
determination on the issue of atrium pricing is AFFIRMED.
For all the foregoing reasons, this Court AFFIRMS the State Boards final
determination with respect to Issues I and III. As stated earlier, Issue
II was remanded, prior to trial, to the State Board for further consideration.
Aboite raises one additional issue not considered by the Court:
whether the State Boards assessment regulations violate both the Indiana Constitution and
the United States Constitution.
In 1998, Indianas Supreme Court declared the State Boards regulations governing the 1995
state-wide general reassessment unconstitutional.
See State Bd. of Tax Commrs v. Town
of St. John, 702 N.E.2d 1034, 1043 (Ind. 1998) (stating that the existing
cost schedules . . . violate the Property Taxation Clause of the Indiana
Constitution). Those regulations were almost identical to the regulations at issue in
this case, which govern the 1989 state-wide general reassessment. Phelps Dodge v.
State Bd. of Tax Commrs, 705 N.E.2d 1099, 1104 & fn. 6 (Ind.
Tax Ct. 1999) (citation omitted), review denied. Nevertheless, the fact that the
subject property was assessed under unconstitutional regulations does not mean the assessment will
be invalidated. Whitley Prods., Inc. v. State Bd. of Tax Commrs, 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 Commrs, 729 N.E.2d 242, 246
& 251 (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).
In Indiana, agricultural land is assigned a true tax value of $495
per acre. Adjustments are then made, either upward or downward, to account
for the soils capacity to produce crops.
See 50 IAC 2.1-2-2.
With a commercial classification, however, Aboites lot appears to average a true tax
value of $38,000 per acre. (See Joint Ex. 1 at 16.)
50 I.A.C. 2.1-4-5, Schedule E, provides that atrium cost [is] computed grade
A quality, fireproof steel frame, steel and glass walls, glass and steel roof.
50 IAC 2.1-4-5.
Footnote: At oral argument, counsel for Aboite admits that the atrium pricing issue
and the constitutional issue it raises (see footnote 1,
supra) dovetail. (Oral
Argument Tr. at 19.) This Court construes the two issues as one
in the same.
Aboite was represented at the State Board hearing by its consultant, M.
Drew Miller, of Landmark Appraisals. Mr. Miller prepared the Assessment Review and