Tax Court Upholds DLGF's Denial of Clark County's Excess Tax Levy Request

Excerpts of the Tax Court's Decision follow:

On appeal, Clark County provides the Court with three reasons why the DLGF’s final determination is invalid and should be reversed. First, Clark County argues that the DLGF abused its discretion by arbitrarily and capriciously determining that the Council did not make a data error, correctable under Indiana Code § 6-1.1-18.5-14, when it approved its 2008 property tax levy for $2.7 million less than what was statutorily permitted. Second, Clark County argues that the DLGF contravened the law when it failed to apply retroactively the 2011 statutory amendment that eliminated the “use it or lose it” provision from the formula contained in Indiana Code § 6-1.1-18.5-3. Third, Clark County argues that the DLGF violated its due process rights.

I. 

Clark County claims that the DLGF abused its discretion by arbitrarily and capriciously determining that the Council did not make a data error, correctable under Indiana Code § 6-1.1-18.5-14, when it approved its 2008 property tax levy for $2.7 million less than what was statutorily permitted. (See Pet’r Br. at 13-16.) Clark County acknowledges that the Council intentionally decided not to ask for the maximum levy allowable under Indiana Code § 6-1.1-18.5-3. (See Pet’r Br. at 14-15.) Nonetheless, it argues that that decision constituted a data error correctable under Indiana Code § 6-1.1-18.5-14 because

[n]o responsible member of the [] Council would have knowingly and intentionally breached their primary statutory duty to budget and appropriate sufficient funds to provide for the essential functions of Clark County government, thereby jeopardizing the public health, safety, and welfare of its citizens by the consequences of the dire financial condition which has inevitably now resulted. To the contrary, while the vote of the [] Council to reduce the 2008 department budgets . . . may have been an intentional act, it is clear… that the [] Council had no clue of the long-term financial damage that [this decision would] inflict[] on Clark County and its citizens by the resultant maximum levy reduction.

(Pet’r Br. at 14-15.) In other words, Clark County argues that the Council made a data error when it decided to forego the additional revenue that could be generated through the levy because it could not have foreseen any of the unexpected financial expenses and setbacks that would occur in 2009 and beyond. (See, e.g., Oral Arg. Tr. at 27-28 (asserting that the Council could not have possibly known in 2008 “what issues would crawl out of the woodwork” in subsequent years).)

Unambiguous statutes must be read to mean what they plainly express and that plain meaning may not be enlarged or restricted. Indiana Dep’t of State Revenue v. Horizon Bancorp, 644 N.E.2d 870, 872 (Ind. 1994). Indiana Code § 6-1.1-18.5-14(a) unambiguously allows for the correction of an “error in data,” not an error in interpreting that data. See I.C. § 6-1.1-18.5-14(a). Thus, the statute allows for the correction of an objective error only, not a subjective error. This conclusion is supported by the fact that Indiana Code § 6-1.1-18.5-14 allows the DLGF to correct an error in data on its own initiative (indicating that the error is not only readily fixable, but that it is easily observable to someone who did not make it). See id.

Here, there is no record evidence to indicate that there was an objective error in the Council’s data when it made its decision to forego the maximum levy allowable for 2008. Indeed, the evidence indicates that when it made its decision, the Council had accurate numbers as well as a warning from the DLGF that the consequence of reducing its 2008 levy would be to significantly reduce the county’s maximum levy in 2009, regardless of what the future held. Despite the DLGF’s warning, the Council proceeded to approve a property tax levy for $2.7 million less than what was statutorily allowed in 2008. This was not an “error in data,” nor was it even an error in interpreting data. Instead, it was simply a failure on the part of the Council to plan for budgetary contingencies. Consequently, the Court will not reverse the DLGF’s final determination on this basis.

II.

Clark County also claims that the final determination should be reversed because the DLGF should have retroactively applied the 2011 statutory amendment that eliminated the “use it or lose it provision” incorporated within Indiana Code § 6-1.1-18.5-3’s calculation of “maximum permissible ad valorem property tax levy.” (Pet’r Br. at 16-19.) Clark County argues that the Legislature intended this amendment to be applied retroactively because it is remedial. (See Pet’r Br. at 18-19.)

Without strong and compelling reasons, statutes and statutory amendments will not be applied retroactively. See Indiana Dep’t of State Revenue v. Estate of Riggs, 735 N.E.2d 340, 344 (Ind. Tax Ct. 2000). An exception to this general rule exists for remedial statutes and amendments, i.e., those statutes and amendments that are intended to cure a defect or a mischief that existed in a prior statute. State v. Pelley, 828 N.E.2d 915, 919 (Ind. 2005). “Ultimately however, whether or not a statute [or amendment] applies retroactively depends on the legislature’s intent.”  Bourbon Mini-Mart, Inc. v. Gast Fuel and Servs., Inc., 783 N.E.2d 253, 260 (Ind. 2003).  Thus, “when a remedial statute is involved, a court must construe it to ‘effect the evident purpose for which it was enacted[.]’” Id. (citation omitted).

Prior to July 1, 2011, the Legislature included the “use it or lose it provision” in the formula for calculating and adjusting a “maximum permissible ad valorem property tax levy for the preceding calendar year[.]” See I.C. §§ 6-1.1-18.5-1, -3. Effective thereafter, however, the Legislature completely removed that provision from the calculation. See Pub.L.No. 124-2011 § 1 (eff. July 1, 2011). Clark County asserts that this amendment was remedial because the original statute’s defect of being too complex. (See Pet’r Br. at 18 (asserting that “the Indiana Legislature recognized that the procedures for calculating and adjusting maximum levies needed to be simplified” when it eliminated the “use it or lose it” provision).)

The best evidence of the Legislature's intent is found in the actual language used within a statute or an amendment. DeKalb Cnty. E. Cmty. Sch. Dist. v. Dep’t of Local Gov’t Fin., 930 N.E.2d 1257, 1260 (Ind. Tax Ct. 2010). Here, the words of the amendment unambiguously provided that it was not entitled to retroactive effect. See Pub.L.No. 124-2011 § 1 (stating that the “use it or lose it” provision was eliminated “[f]or purposes of determining a maximum permissible ad valorem property tax levy under [Indiana Code § 6-1.1-18.5-3] for property taxes imposed for an assessment date after January 15, 2011” (emphasis added)). Accordingly, the statutory amendment eliminating the “use it or lose it” provision was not remedial.

III.

 Finally, Clark County claims that Indiana Code § 6-1.1-18.5-12 required the DLGF to conduct a hearing on its levy appeal, and by not doing so, the DLGF deprived it of its right to due process. (See Pet’r Br. at 11-12.) Indiana Code § 6-1.1-18.5-12, however, did not require the DLGF to conduct an administrative hearing on Clark County’s levy appeal.

The relevant portions of Indiana Code § 6-1.1-18.5-12 state that

(a) Any civil taxing unit that determines that it cannot carry out its governmental functions for an ensuing calendar year under the levy limitations imposed by [Indiana Code § 6-1.1-18.5-3] may . . . appeal to the [DLGF] for relief from those levy limitations. In the appeal the civil taxing unit must state that it will be unable to carry out the governmental functions committed to it by law unless it is given the authority that it is petitioning for. The civil taxing unit must support these allegations by reasonably detailed statements of fact.

(b) The [DLGF] shall immediately proceed to the examination and consideration of the merits of the civil taxing unit’s appeal.

(c) In considering an appeal, the [DLGF] has the power to conduct hearings, require any officer or member of the appealing civil taxing unit to appear before it, or require any officer or member of the appealing civil taxing unit to provide [it] with any relevant records or books.

IND. CODE § 6-1.1-18.5-12(a)-(c) (2010) (emphasis added). This statutory language merely provided the DLGF with the discretionary power to conduct a hearing on Clark County’s levy appeal. See, e.g., Horizon Bancorp, 644 N.E.2d at 872 (explaining that the plain and obvious meaning of an unambiguous statute may not be enlarged or restricted). Because Indiana Code § 6-1.1-18.5-12 did not require the DLGF to hold a hearing on Clark County’s levy appeal and Clark County has not provided the Court with any other legal analysis to support its claim that it has been deprived of due process, the DLGF’s final determination will not be reversed on this basis.

http://www.in.gov/judiciary/opinions/pdf/06250101mbw.pdf

Tax Court Upholds DLGF's Rejection of Library's Budget

Excerpts of the Tax Court Decision follow:

The Library admits that no notice was provided to the public pursuant to Indiana Code § 6-1.1-17-3 with respect to the Town Council’s September 13th meeting. (See Pet’r Br. at 4.) On appeal, however, the Library presents the Court with two arguments to support its claim that the DLGF erroneously determined that such notice was required.

I.

 The Library first argues that the DLGF erroneously determined that notice of the Town Council’s September 13th meeting was required because under Indiana Code § 6-1.1-17-20(e), the Town Council did not adopt the Library’s budget, it merely reviewed it. (See Pet’r Br. at 14 (asserting that the Library adopted its own budget on August 17th), 15 (implying that the Town Council is not an adopting entity because it does not have the authority to increase the Library’s budget); Pet’r Reply Br. at 2 (asserting that the Town Council becomes an adopting entity only if it modifies the Library’s originally adopted budget).) To support its argument, the Library points to the fact that before it submitted its budget to the Town Council, it filed its budget with the Speedway Town Clerk pursuant to Indiana Code § 36-3-6-9(b). (See Pet’r Br. at 3, 14-15; Pet’r Reply Br. at 1-2.) That statutory provision states that “[t]he board of each entity listed in subsection (a) shall, after adoption of its proposed budget and tax levies, submit along with detailed accounts, to the city clerk before the first day of September of each year.” I.C. § 36-3-6-9(b) (emphasis added). The Library maintains that if some other entity actually adopted its budget, there would have been no reason for the legislature to use the words “after adoption”’ in Indiana Code § 36-3-6-9(b). (See Pet’r Br. at 15; Pet’r Reply Br. at 2.) The Library’s argument fails for three interrelated reasons.

 First, to the extent the Library filed its budget with the Speedway Town Clerk pursuant to Indiana Code § 36-3-6-9(b), that statutory provision did not apply. As previously stated, Indiana Code § 36-3-6-9(b) provided that “[t]he board of each entity listed in subsection (a) shall, after adoption of its proposed budget and tax levies, submit them, along with detailed accounts, to the city clerk before the first day of September of each year.” I.C. 36-3-6-9(b) (emphasis added). Subsection (b) must therefore be read in relation to subsection (a). See State v. Adams, 583 N.E.2d 799, 800 (Ind. Ct. App. 1992) (explaining that a statute must be read as a whole, and not sections or parts of it piecemeal), trans. denied. Indiana Code § 36-3-6-9(a), in relevant part, states:

Except as provided in subsection (d), the city-county legislative body shall review the proposed operating and maintenance budgets and tax levies and adopt final operating and maintenance budgets and tax levies for each of the following entities in the county:

(1) An airport authority operating under IC 8-22-3.

(2) A public library operating under IC 36-12.

(3) A capital improvement board of managers operating under 36-10.

(4) A public transportation corporation operating under IC 36-9-4.

(5) A health and hospital corporation established under IC 16-22-8.

(6) Any other taxing unit (as defined in IC 6-1.1-1-21) that is located in the county and has a governing body that is not comprised of a majority of officials who are elected to serve on the governing body.

I.C. § 36-3-6-9(a) (emphasis added). See also I.C. § 36-3-6-9(d) (explaining that because the Library is outside Unigov’s jurisdiction, it would not submit its proposed budget to the city-county legislative body referenced in subsection (a).) Given this language, it is clear that Indiana Code § 36-3-6-9(b) did not apply to the Library; instead, it applied to the public library that has its budget and tax rates approved by the City-County Council of Indianapolis and Marion County (i.e., the Indianapolis-Marion County Public Library). See supra at p. 3. 

Second, Indiana Code § 6-1.1-17-20(e) unambiguously instructed the Town Council to review the Library’s proposed budget and adopt a final budget, not review or adopt. See I.C. § 6-1.1-17-20(e). Thus, while the Town Council may have simply approved or accepted the Library’s budget and tax levy “as submitted,” that act constituted more than just a “review” of the Library’s budget. It constituted the Town Council’s adoption of a final budget for the Library. See, e.g., Indiana Dep’t of State Revenue v. Horizon Bancorp, 644 N.E.2d 870, 872 (Ind. 1994) (explaining that the plain and obvious meaning of an unambiguous statute may not be enlarged or restricted). See also WEBSTER’S THIRD NEW INT’L DICTIONARY 29 (2002 ed.) (defining “adopt” as “to accept formally”; “to take over . . . esp. with little or no change in form”; “to endorse and assume official responsibility for”). 

The final reason the Library’s argument fails is because when the Town Council received the Library’s proposed budget and tax rates, it was required to conduct a hearing thereon. See I.C. § 6-1.1-17-20(c) (indicating that the Library was required to submit its proposed budget and tax levies to the Town Council at least 30 days before it held a budget approval hearing thereon). In turn, notice of that hearing was statutorily required. See IND. CODE § 6-1.1-17-3(a) (2010).

II.

Alternatively, the Library argues that no notice of the Town Council’s September 13th meeting should be required because the Library had already complied with and satisfied the notice requirements. More specifically, the Library explains that:

The whole purpose of the publication process is to give citizens notice of what is going on in their communities, let them know when and where they can then go an[d] be heard in their opinions. These goals were met by the publications [on] July 14 and 21, 2010. The citizens of the taxing unit were advised of the date, time, place and purpose of the public budget hearing being held on August 4, and August 17, 2010 to consider the [Library’s] budget. . . . So if the concern is that the public did not have an opportunity to comment on and/or object to the budget, tax rates and levies[,] that concern is alleviated.

(Pet’r Br. at 15-16.) Moreover, the Library explains that the Town Council’s September 13th meeting was a regularly scheduled meeting with a posted agenda. (Pet’r Br. at 15.) This argument, however, is no more availing than the Library’s first one. As just explained, the Town Council was required to provide the public with notice of its September 13th meeting. Thus, the fact that the Library provided notice of its August 4th hearing and its August 17th meeting misses the point. See Town of Beverly Shores Plan Comm’n v. Enright, 463 N.E.2d 246, 248 (Ind. 1984) (explaining that notice statutes “are generally strictly construed and notice in accordance with their provisions held to be mandatory”). See also generally IND. CODE § 6-1.1-17 (demonstrating that because taxpayers have multiple opportunities to object and be heard on a political subdivision’s proposed budget, notice will also occur on multiple occasions). Furthermore, the record evidence does not show that notice was provided for the Town Council’s September 13th adoption meeting nor does it show that the agenda for that meeting was posted. (See generally Cert. Admin. R.)

http://www.in.gov/judiciary/opinions/pdf/06241401tgf.pdf

Tax Court Upholds Board's Finding Low Income Housing Not Exempt

Excerpts of the Tax Court's Determination follow:

I.

Housing Partnerships first claims that in reaching its determination, the Indiana Board abused its discretion by simply ignoring “the overwhelming amount of uncontroverted testimony” by its employees, its tenants, and the executive director of the Columbus Housing Authority.  (Pet’r Br. At 16.)  Housing Partnerships asserts that this testimony demonstrated that the subject properties were used to provide low-income individuals in the distressed areas of Bartholomew County with “clean, safe and secure housing… at affordable and below-market rents” and with services and support designed “to assist them in becoming self-sufficient and productive members of the community.” (Pet’r Br. at 14.)

During the Indiana Board hearing, Housing Partnerships presented the testimony of Mark Lindenlaub, its president, and Connie Munn, its vice president. Their testimony established that Housing Partnerships had been recognized by the Internal Revenue Service as a 501(c)(3) organization, having met the federal statutory criteria to be exempted from federal income taxation as a charitable organization. (See Cert. Admin. R. at 1211-12.) (See also Cert. Admin. R. at 551-56.) In addition, their testimony established that because Housing Partnerships received federal grant monies, it was able to charge below-market rental rates for the subject properties. (See Cert. Admin. R. at 1252-53, 1262, 1268, 1287-97, 1303-04.) (See also Cert. Admin. R. at 583-84, 609-26.) Their testimony also established that Housing Partnerships not only pays for its tenants to attend at least one credit counseling session, but it also has offered classes to them on how to purchase a home and make home repairs. (See Cert. Admin. R. at 1218-19, 1225-27, 1240-44.) Moreover, Housing Partnerships has written letters of recommendation for its tenants, it has taken them to Alcoholics Anonymous meetings, and it has provided them with referrals to various service organizations. (See Cert. Admin. R. at 1272-80, 1300-01, 1317-20.) Finally, through their testimony they explained that Housing Partnerships’ building and rehabilitation efforts are directed to the oldest, poorest, and most dilapidated areas in Bartholomew County. (See Cert. Admin. R. at 1219, 1227-29.)

Housing Partnerships also presented the affidavits of three of its tenants (two former, one current). (See Cert. Admin. R. at 567-82.) All of these affiants described how Housing Partnerships and its employees have made a difference in their lives, whether it was by assisting them in repairing their credit, by giving them confidence to make home repairs, or simply by providing them with encouragement. (See Cert. Admin. R. at 567-82.) Finally, Housing Partnerships presented the testimony of Deborah Holt, the Executive Director of the Columbus Housing Authority (CHA) and a member of Housing Partnerships’ Board of Directors. (See Cert. Admin. R. at 1323, 1327.) Holt testified that in her position with the CHA, she referred many of her Section 8 clients to Housing Partnerships because she believed it was the “best” landlord in Columbus. (See Cert. Admin. R. at 1327-31.) She further testified that she believed that if Housing Partnerships did not exist, there would be a “huge” number of homeless people in the area because they would not be able to find good, clean, affordable housing. (See Cert. Admin. R. at 1327-31, 1335-41.)

 In evaluating all of this testimonial evidence, the Indiana Board explained that it demonstrated that Housing Partnerships was “a good landlord and d[id] some nice things for its tenants,” but it did not demonstrate that the subject properties were owned, occupied, and predominately used for a charitable purpose as that term is used in Indiana Code § 6-1.1-10-16. (Cert. Admin. R. at 478 ¶¶ 40-42, 479 ¶ 44.) The Indiana Board’s conclusion that a taxpayer must show more than just good deeds and a nonprofit status is supported by this Court’s case law. See generally Methodist Hosps., Inc. v. Lake Cnty. Prop. Tax Assessment Bd. of Appeals, 862 N.E.2d 335 (Ind. Tax Ct. 2007), review denied; Indianapolis Osteopathic Hosp., Inc. v. Dep’t of Local Gov’t Fin., 818 N.E.2d 1009 (Ind. Tax Ct. 2004), review denied; Nat’l Ass’n of Miniature Enthusiasts v. State Bd. of Tax Comm’rs, 671 N.E.2d 218 (Ind. Tax Ct. 1996); St. Mary’s Med. Ctr. of Evansville, Inc. v. State Bd. of Tax Comm’rs, 534 N.E.2d 277 (Ind. Tax Ct. 1989) (all denying an exemption to a corporation despite its recognized federal or state nonprofit status).  Moreover, evidence that a nonprofit corporation charges low-income individuals below-market rents for its apartments is not enough to show that the property is used for a charitable purpose, even when the nonprofit corporation provides free services to its tenants.  See Jamestown Homes, 909 N.E.2d at 1144.  Indeed, a taxpayer still must provide evidence that it has relieved the government of an expense that it would have otherwise borne.  See id.

Throughout the administrative process and in its presentation to this Court, Housing Partnerships stated that it lessened the government’s financial burden because:

1) its building and rehabilitation efforts were directed to the distressed areas in Bartholomew County, relieving the government of its burden to revitalize those areas;

2) it helped people “from falling through the cracks,” relieving human want and therefore doing something the government otherwise would have had to do;

3) its rental rates were lower than other housing units, relieving the government (i.e., HUD) of its obligation to subsidize a greater portion of the rents paid by Housing Partnerships’ Section 8 tenants;

4) it helped its tenants to become more financially self-sufficient, relieving the government of its burden to support them.

(See, e.g., Cert. Admin. R. at 528-29, 1219, 1227-29, 1337-41; Pet’r Br. at 11; Pet’r Reply Br. at 7 n.10; Oral Arg. Tr. at 22-23.) These statements, however, are nothing more than mere conclusions. They are not supported by any evidence in the administrative record that, for example, the government actually bore the burden of revitalizing Bartholomew County’s distressed areas, or that it bore the burden of “preventing people from falling through the cracks.” See College Corner, 840 N.E.2d at 910 (referring to a statutory provision that indicated the government bore the burden to provide for neighborhood sidewalks and alleys). Without laying such a foundation, Housing Partnerships’ conclusory statements do not constitute probative evidence. See, e.g., Whitley Prods., Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1119 (Ind. Tax Ct. 1998) (explaining that allegations, unsupported by factual evidence, remain allegations), review denied.

The final determination shows that the Indiana Board did not ignore Housing Partnerships’ testimonial evidence. Instead, it shows that the Indiana Board weighed that evidence and concluded that it was not probative because it failed to demonstrate that the subject properties were owned, occupied, and used for a charitable purpose.

II.

Housing Partnerships also argues that the Indiana Board’s final determination is contrary to law. Specifically, Housing Partnerships claims that

[t]he Indiana Board misinterpreted [the Court’s holding in] Jamestown[ Homes] when it determine[d] that an owner of property, whose actions provide numerous benefits to it[s] tenants and the community in addition to providing safe, secure, clean and affordable housing . . . is not eligible for [a] property tax exemption under Ind[iana] Code § 6-1.1-10-16, merely because it receives government grants, even if the grant has nothing to do with the [subject properties.]

(Pet’r Br. at 18.)

In Jamesown Homes, a nonprofit corporation, through its participation in the federal government’s Section 221(d)(3) program, constructed an apartment complex. See Jamestown Homes, 909 N.E.2d at 1139.  Under that program, the federal government covered the corporation’s mortgage insurance and subsidized a low-interest loan in an effort “to promote the construction of affordable housing for low to moderate-income families.”  Id.  In exchange for the governmental assistance, corporation agreed both to rent its apartments to certain income-qualifying tenants and to charge budget-based rents. Id.

In its hearing before the Indiana Board, the nonprofit corporation argued that its property was entitled to an exemption because “the provision of ‘safe, decent and affordable housing for persons of lower income who could not otherwise afford such housing’ [was] a charitable purpose.” Id. at 1140. The Indiana Board denied the exemption, and on appeal, this Court affirmed the Indiana Board’s exemption denial. Id. at 1145. In affirming the Indiana Board, the Court explained that the nonprofit corporation failed to provide probative evidence to demonstrate, among other things, that it had lessened the burden of government in meeting the need for affordable housing “because that need [was] ultimately being met by the government through its mortgage insurance and interest subsidy.” Id. at 1144. Moreover, the Court noted in its analysis that numerous jurisdictions had rejected charitable exemptions on similar properties because, ultimately, any “charitable use” was achieved solely as a condition of the agreements with the federal government (i.e., through their use, the properties were not relieving a government burden because the government was providing subsidies and financial assistance to them). See id. at 1143 n.10. 

Here, the Indiana Board explained in its final determination that Housing Partnerships needed to explain whether the federal government imposed any conditions on its receipt of the federal monies. (See Cert. Admin. R. at 477 ¶ 38.) The Indiana Board found Housing Partnerships’ lack of evidence or explanation on this point significant because “[an] exemption for low income rental properties ha[d] been denied [in Jamestown Homes] based on [the] incentives the property owner[ ] received to construct and operate such housing.” (Cert. Admin. R. at 477 ¶ 38.) In other words, no probative evidence was offered for the Indiana Board to determine whether Housing Partnerships relieved the government of an expense it would otherwise have borne, or whether the government, through its federal grants, was still bearing the expense itself.

The Indiana Board concluded that Housing Partnerships did not provide facts showing that its provision of low-income housing met the legal requirements of a charitable purpose that would entitle it to an exemption from the general duty to pay property tax. This conclusion did not misinterpret Jamestown Homes, and it was reasonable. See, e.g., Amax Inc. v. State Bd. of Tax Comm’rs, 552 N.E.2d 850, 852 (Ind. Tax Ct. 1990) (explaining that this Court will not affirm a final determination if it finds that a reasonable person, upon reviewing the administrative record in its entirety, would not be able to find enough relevant evidence to support the decision).

http://www.in.gov/judiciary/opinions/pdf/06061401mbw.pdf

The Board's Determination can be found here:

http://www.in.gov/ibtr/files/Housing_Partnerships_Inc_03-003-06-2-8-00001_et_seq.pdf

Tax Court Affirms Board Finding that Taxpayer Failed to Support Reduction in Property Value

Excerpts of the Tax Court's Decision follow:

On appeal, Idris contends that the Indiana Board’s final determination must be reversed for three reasons. First, Idris claims that the Indiana Board abused its discretion in finding that Kamenova failed to establish that their property was entitled to an obsolescence adjustment. Second, Idris claims that the Indiana Board abused its discretion in determining that the assessments of the three other units in their building failed to show that their property was over-assessed. Third, Idris claims that the Indiana Board erred in upholding their assessment given the Assessor’s improper use of the “one unit multiple units” classification.

Obsolescence

 Obsolescence, a form of depreciation, is either the functional or economic loss of value to property, which is expressed as a percentage reduction to an improvement’s replacement cost. See REAL PROPERTY ASSESSMENT GUIDELINES FOR 2002--VERSION A (incorporated by reference at 50 IND. ADMIN. CODE 2.3-1-2 (2002 Supp.)), Bk. 2, App. F at 4. For instance, external obsolescence (a loss of value caused by external factors) may be caused by environmental factors, such as noise pollution, crime, or
inharmonious land use. Id. at 4, 13. To establish a prima facie case for an obsolescence adjustment, a taxpayer must present probative evidence during the Indiana Board hearing that: (1) identifies the factors that are causing the obsolescence, and (2) quantifies the amount of obsolescence to which the taxpayer believes she is entitled. Meadowbrook N. Apartments v. Conner, 854 N.E.2d 950, 954 (Ind. Tax Ct. 2005). “The taxpayer must relate the factors (and therefore the quantification) of obsolescence to an actual loss in property value.” Id. (citation omitted).

In its final determination, the Indiana Board held that Idris and Kamenova were not entitled to an obsolescence adjustment because even assuming that Kamenova established that the undesirable view, odor problems, excessive noise, and crime issues had diminished the value of their property, she did not present evidence that showed what a more accurate assessment would be. (See Cert. Admin. R. at 19.) On appeal, Idris maintains that the Indiana Board abused its discretion in reaching this conclusion because Kamenova presented an overwhelming amount of reliable evidence that showed that obsolescence had indeed diminished the value of their condominium unit. (See Pet’rs’ Br. at 9-10.)

This Court will find that the Indiana Board abused its discretion if its final determination is clearly against the logic and effect of the facts and circumstances before it or if the Indiana Board misinterprets the law. See Hubler, 938 N.E.2d at 315 n.5. The certified administrative record in the case reveals that Kamenova did not offer any quantification or any other evidence to substantiate her claim that certain factors had diminished the value of her property by $125,900 (i.e., $395,900 - $270,000). (See Cert. Admin. R. at 290-92.) Accordingly, the Court must find that Idris has not established that the Indiana Board abused its discretion with respect to this issue.

The other units

 In Indiana, real property is assessed on the basis of its market value-in-use: the value “of a property for its current use, as reflected by the utility received by the owner or a similar user, from the property.” 2002 REAL PROPERTY ASSESSMENT MANUAL (2004 Reprint) (incorporated by reference at 50 I.A.C. 2.3-1-2) at 2. A taxpayer may establish that her assessment does not accurately reflect her property’s market value-in-use by presenting probative, market-based evidence such as sales information regarding
comparable properties. Id. at 5. To establish comparability, however, the taxpayer must explain to the Indiana Board the characteristics of her own property, how those characteristics relate to those of the purportedly comparable properties, and how any differences between the properties affect the relevant market value-in-use of the properties. Long v. Wayne Twp. Assessor, 821 N.E.2d 466, 471 (Ind. Tax Ct. 2005), review denied.

In its final determination, the Indiana Board concluded that Kamenova’s evidence regarding the three other units in the building did not establish that her assessment should be reduced because she did not provide any meaningful analysis as to the comparability of those properties. (See Cert. Admin. R. at 19-20.) Idris contends that the Indiana Board abused its discretion in reaching this conclusion because it was evident that those units were larger than her unit and their assessments were significantly less than hers. (See Pet’rs’ Br. at 7-8; Oral Arg. Tr. at 11.) (See also Cert. Admin. R. at 227, 235, 240-41, 249.)

As the Indiana Board properly explained, such a comparison falls short of establishing comparability for purposes of an assessment reduction. (See Cert. Admin. R. at 19-20.) See also Long, 821 N.E.2d at 470-71 (merely stating that a property is larger or smaller than another is insufficient to establish comparability). Moreover, at no point did Kamenova actually describe her own unit’s characteristics nor did she attempt
to explain how any similarities or differences between her unit and the purportedly comparable units affected the market value-in-use of the subject property. (See Cert. Admin. R. at 227, 235, 240-41, 249.) Finally, the Marion County Tax Reports and real estate listings upon which Kamenova relied not only overtly qualified their own accuracy but also indicated that only one of the three units was larger than Kamenova’s property. (Compare Cert. Admin. R. at 179-88 with 199.) Consequently, the Court finds that Idris has not demonstrated that the Indiana Board abused its discretion with respect to this issue.

The one unit multiple units classification

 Lastly, Idris contends that the Indiana Board’s final determination must be reversed because it sanctions the Assessor’s purported erroneous use of the “one unit multiple units” classification. (See Pet’rs’ Br. at 8.) Idris explains that this classification is inapplicable because it implies that her building contains a single family who merely live in separate apartments, when it clearly does not. (See Oral Arg. Tr. at 4, 7.)

 As an initial matter, other than Idris’s assertion that the value of the subject property was based on the “one unit multiple units” classification, there is no evidence in the record to show that the Assessor used such a classification.  (See generally Cert. Admin. R.) Moreover, the record in this case establishes that Idris’s one unit multiple units argument was not presented to the Indiana Board. (See Cert. Admin. R. at 2-5, 175-293.) It is well-settled that this Court generally cannot review an issue or argument raised for the first time on appeal because there would be no written findings in the record for the Court to review. See, e.g., Scheid v. State Bd. of Tax Comm’rs, 560 N.E.2d 1283, 1284-86 (Ind. Tax Ct. 1990); IND. CODE § 33-26-6-3(b) (2014). Consequently, the Court finds that Idris has waived this argument because Kamenova could have, but failed to, present it to the Indiana Board.

http://www.in.gov/judiciary/opinions/pdf/06041401tgf.pdf

Tax Court Denies Motion to Reconsider on Discovery Ruling

Excerpts of the Tax Court's Decision follow:

Popovich asks the Court to reconsider its denial of his second motion to compel for two reasons. First, Popovich claims that the Court erred in concluding that he needed to comply with Trial Rule 26(F). (See Pet’r Mot. Reconsider Denial Pet’r Sec. Mot. Compel (“Pet’r Mot. Reconsider”) at 4-8.) In the alternative, Popovich claims that even if he was required to do so, the Court should excuse his failure to comply. (See
Pet’r Mot. Reconsider at 8-9.)

Popovich initially explains that he issued a subpoena pursuant to Indiana Trial Rule 45 that required the Indiana Department of State Revenue’s designated 30(B)(6) witness to appear for the deposition with certain original documentation. (See Pet’r Mot. Reconsider at 4-5.) Popovich therefore maintains that because his second motion to compel concerned the witness’s compliance with Trial Rule 45, he had no obligation to comply with Trial Rule 26(F). (See Pet’r Mot. Reconsider at 8.)

 Popovich’s own language in his second motion to compel, however, brings him within the ambit of Trial Rule 37:

COMES NOW, Petitioner, Nick Popovich, by counsel, and moves the Court for an order under Indiana Rules of Trial Procedure (“TR”) 37 compelling Respondent, Indiana Department of State Revenue
(“the Department”), to fully comply with Petitioner’s request for production of original documents in his Subpoena and Notice of Deposition[.]

(Pet’r Sec. Mot. Compel at 1 (emphasis added).) In addition, the sentence before his prayer for relief states
This Motion is brought because the Department failed to produce documents as duly requested at a deposition and refused to allow inspection as requested under TR 9.3(E) [sic] at a deposition, all in violation of TR 37(A)(2).

 (Pet’r Sec. Mot. Compel at 5 (emphasis added).) Accordingly, Popovich cannot now walk away from the requirements of the remedy he sought in his second motion to compel.  Moreover, Popovich could have filed a motion for contempt, the remedy for a violation of Trial Rule 45, thereby making compliance with Trial Rule 26(F) unnecessary, but he did not. See Ind. Trial Rule 45(F). Thus, after a second look, the Court reaffirms its finding that Popovich was required to comply with Trial Rule 26(F). See Popovich II, 7 N.E.3d at 422 (stating that “Trial Rule 26(F) requires a party seeking to compel discovery to attempt to resolve the discovery dispute before seeking Court intervention and to document its attempts in the motion”). See also Ind. Trial Rule 26(F).

 Alternatively, Popovich claims that the Court should have excused his failure to comply with Trial Rule 26(F) because any effort to comply would have been futile. (See Pet’r Mot. Reconsider at 8-9.) Popovich points out that the Department acted repeatedly in a non-cooperative manner. (See Pet’r Mot. Reconsider at 5-9.) For example, Popovich explains that the Department waited until the eleventh hour to convey for the first time that its designated witness would not bring the original documentation to the deposition. (See Pet’r Mot. Reconsider at 5-6.) Popovich further explains that the Department did not respond to his prompt offer to accommodate its last minute communication, but instead sent its witness to the deposition without the
requested original documentation. (See Pet’r Mot. Reconsider at 6.) Moreover, Popovich states that the Department could have filed a defensive motion under Trial Rules 26 or 45 to protect itself from violating the terms of the subpoena, but instead it blatantly ignored and violated the trial rules altogether. (See Pet’r Mot. Reconsider at 5.) Popovich therefore maintains that any failure to comply with Trial Rule 26(F) on his part was “completely appropriate[] in the face of the Department’s antics[.]” (Pet’r Mot. Reconsider at 7.) This argument, however, misses the point of the Court’s holding in Popovich II.

 The purpose of Trial Rule 26(F) is to limit the amount of time that courts must devote to resolving discovery disputes by encouraging the parties to make reasonable attempts to resolve the disputes themselves. See Howard v. Dravet, 813 N.E.2d 1217, 1223 (Ind. Ct. App. 2004) (stating that “[t]he vital resource of the trial court’s time should be spent on discovery issues rarely and sparingly”). The requirements of Trial Rule
26(F) are neither discretionary nor onerous; indeed, in cases where one party improperly impedes an attempt at informal resolution, its opponent need only to advise the court of that fact when it files its discovery enforcement motion. See T.R. 26(F)(2); Whitaker v. Becker, 960 N.E.2d 111, 113 n.2 (Ind. 2012) (indicating that compliance with Trial Rule 26(F) is mandatory). Consequently, litigants are expected to comply with each of the specific requirements of Trial Rule 26(F) before moving to enforce, modify, or limit discovery, “even in instances where, like here, the entire discovery process has been imbued with acrimony.” Popovich II, 7 N.E.3d at 423 (emphasis added). Popovich’s failure to comply with Trial Rule 26(F) is not cancelled out by the purported bad behavior of its opponent and is not excusable.

For all of the reasons discussed above, Popovich’s Motion to Reconsider Denial of Petitioner’s Second Motion to Compel is DENIED. The Court EXPECTS the parties to obey its order to work cooperatively to resolve their discovery disputes without further Court intervention. See Popovich v. Indiana Dep’t of State Revenue (Popovich I), 7 N.E.3d 406, 419 (Ind. Tax Ct. 2014).

http://www.in.gov/judiciary/opinions/pdf/06041401mbw.pdf

The earlier decision can be found here:

http://www.in.gov/judiciary/opinions/pdf/04241402mbw.pdf

Tax Court Finds Board Did Not Err in Finding Petitioner's Evidence Lacked Probative Value

Excerpts of the Tax Court's Decision follow:

The McKeemans have asked this Court to reverse the final determination of the Indiana Board for three main reasons. The McKeemans first contend that the Indiana Board erred in disregarding their claim concerning the establishment of their neighborhood. The McKeemans also contend that the Indiana Board erred in rejecting their base rate claim. Lastly, the McKeemans contend that the Indiana Board erred in concluding that their sales comparison analysis lacked probative value.

1. The Neighborhood

Indiana’s assessment guidelines provide that assessing officials must establish specific “neighborhoods” within each township for purposes of assessment.3 See Guidelines, Bk. 1, Ch. 2 at 8. In establishing these neighborhoods, assessing officials must consider:

(1) common development characteristics; (2) the average age of the majority of improvements; (3) the size of lots or tracts; (4) subdivision plats and zoning maps; (5) school and other taxing district boundaries; (6) distinctive geographic boundaries; (7) any manmade improvements that significantly disrupt the cohesion of adjacent properties; (8) sales statistics; and (9) other characteristics deemed appropriate to assure equitable determinations.

Id.

On appeal, the McKeemans maintain that the Indiana Board’s final determination is erroneous because the properties within their neighborhood demonstrate that the Assessor must have ignored Indiana’s assessment guidelines in establishing their neighborhood. (See Oral Arg. Tr. at 102-03; Pet’rs’ Reply Br. at 4-9; Pet’rs’ Br. at 3, 10-11, 13-16.) (See also Cert. Admin. R. at 116-21, 203-08.) For example, the McKeemans explain that certain properties in their neighborhood had access to paved roads while others did not, that significant size (i.e., depth) differences existed between some of the properties, and that a large, commercial, youth camp/retreat center bisected the entire neighborhood thereby destroying any real sense of cohesiveness.4 (See, e.g., Cert. Admin. R. at 55, 76-88, 91-95.)

The assessment guidelines, however, clearly indicate that a neighborhood may contain properties that vary with respect to road access, size, and use type. See Guidelines, Bk. 1, Ch. 2 at 8. Thus, those types of differences simply are not per se indicators of an improperly constituted neighborhood. Consequently, the Court cannot say the Indiana Board erred in rejecting the McKeemans’ claim regarding the establishment of their neighborhood.

2. The Base Rate

The McKeemans also maintain that the Indiana Board’s final determination is erroneous because the Assessor’s evidence, in and of itself, demonstrated that several properties that are not comparable to their own were used to establish their land’s base rate. (See Pet’rs’ Reply Br. at 7-8; Pet’rs’ Br. at 3, 6-29.) This, however, is incorrect.

Indiana’s assessment guidelines call for the development of neighborhood valuation forms that establish “base rates” for commercial, industrial, and residential land in each of the townships throughout the county. See generally Guidelines, Bk. 1, Ch. 2; IND. CODE § 6-1.1-4-13.6 (2006) (explaining the base rate establishment process). In this case, the administrative record reveals that the Assessor introduced the McKeemans’ neighborhood valuation form and their property record cards, which demonstrated that the McKeemans’ land was assessed consistent with the established base rate of $5,900 per front foot. (See Cert. Admin. R. at 157-59, 164.) The administrative record, however, does not disclose what properties were actually used in developing that base rate. (See generally Cert. Admin. R.) Consequently, the McKeemans have not shown that the Indiana Board erred in upholding the $5,900 base rate applied to their land.5

3. The Sales Comparison Analysis

During the Indiana Board hearing, the McKeemans presented a sales comparison analysis that valued their two parcels of residential land at $62,3416 using data from seven sales transactions in which ten properties were conveyed (“the Comps”).7 (See Cert. Admin. R. at 53.) In arriving at this value, the McKeemans:

(1) Determined the land value of each of the Comps by deducting from their total sales prices the assessed value of their improvements;

(2) Calculated the front foot values of each of the Comps by dividing their land values in Step 1 by their actual frontage/width;

(3) Computed the Comps’ average front foot value to be $2,969;

(4) Determined the front foot value of their own land to be $92,047 (by multiplying the Comps’ average front foot value of $2,969 by the actual frontage/width (31) of their land);

(5) Adjusted their land’s front foot value to account for differences between their land and the Comps ($92,047 - $29,706).

(See Cert. Admin. R. at 53-56, 97-115, 132-40, 198-212.) The Indiana Board determined the analysis lacked probative value because six of the Comps’ sales prices were not reliable indicators of those properties’ market value-in-use. (See Cert. Admin. R. at 35-36.) The Indiana Board also explained that in the two instances where the Comps’ sales prices were indicative of those properties’ market value-in-use, the McKeemans quantification of the differences between those properties and their own land simply did not indicate that their assessment was too high.12 (See Cert. Admin. R. at 36-37.)

On appeal, the McKeemans contend that the Indiana Board erred in concluding that their sales comparison analysis lacked probative value because the Indiana Board relied on the Assessor’s mistaken claim that Comp 10 was not in their neighborhood.13 (See Oral Arg. Tr. at 38-39; Pet’rs’ Br. at 3-5.) Although the Indiana Board’s final determination indicates that the Assessor claimed Comp 10 was not in the McKeemans’ neighborhood, it does not indicate whether the Indiana Board relied on the Assessor’s erroneous claim. (Compare Cert. Admin. R. at 29 with 31-38.) Nonetheless, even if the Indiana Board had relied on the Assessor’s mistaken claim, that alone would not warrant a reversal of the Indiana Board’s final determination. Indeed, the Indiana Board’s final determination explained that Comps 2 through 6, and Comps 8 through 9, lacked probative value for reasons unrelated to the Assessor’s erroneous claim. See supra notes 8, 11. Moreover, the Indiana Board explained that the McKeemans valuation of the remaining Comps, Comps 1 and 7, also failed to demonstrate that their assessment was too high. See supra note 12. Consequently, the McKeemans have not shown that the Indiana Board erred in concluding that their sales comparison analysis lacked probative value.

...

http://www.in.gov/judiciary/opinions/pdf/05281401tgf.pdf

Tax Court Finds Tissue Bank Property Exempt Despite Ownership by For Profit Entity

Excerpts of the Tax Court's Decision follow:

In its final determination, the Indiana Board explained that it found that New Life occupied and used the property for a charitable purpose because the parties did not appear to dispute the issue. (See Cert. Admin. R. at 64.) Now, on appeal, the Assessor contends that this finding is erroneous because she indeed disputed the issue, and SPD’s evidence showed that New Life merely operated a business that provided health services for a fee. (See Pet’r Br. 8-10; Oral Arg. Tr. at 7-12.) (See also Pet’r Reply Br. at 2-5 (arguing that SPD therefore failed to make a prima facie case that New Life occupied and used the property for a charitable purpose as required under Indiana Code § 6-1.1-10-16).)

It is well-established that exemption statutes are to be strictly construed against the taxpayer, and thus, the taxpayer bears the burden of proving that it is entitled to the exemption that it seeks. Fraternal Order of Eagles #3988, Inc. v. Morgan Cnty. Prop. Tax Assessment Bd. of Appeals, 5 N.E.3d 1195, 1200 (Ind. Tax Ct. 2014). Accordingly, a taxpayer must show that all the elements of the charitable purposes exemption have been met for the property to be exempt. See id. Nonetheless, when the parties agree that property is owned, occupied, and used for charitable purposes, the taxpayer’s burden to offer probative evidence as to each agreed upon element is obviated. See Sangralea Boys Fund, 686 N.E.2d at 955-60 (determining only whether a unity of ownership, occupancy, and use was required for exemption because the parties did not dispute that both the owner and occupant of the property had a charitable purpose). See also, e.g., Freudenberg-NOK Gen. P’ship v. State Bd. of Tax Comm’rs, 715 N.E.2d 1026, 1031 (Ind. Tax Ct. 1999) (explaining that the parties’ agreement on an obsolescence issue negated the taxpayer’s burden to offer probative evidence on that issue), review denied. Consequently, the critical question here is whether the record supports the Indiana Board’s finding that New Life occupied and used the property for a charitable purpose.

At the Indiana Board hearing, SPD argued that New Life had a charitable purpose and presented evidence that New Life recovers and distributes human tissue for medical purposes; that tissue donation relieves the human suffering and want of medical patients who need skin grafts, orthopedic, reconstructive, neurological, cardiovascular, and oral surgeries; and that in providing these services, New Life receives reimbursements that cover only its skin acquisition costs. (See, e.g., Cert. Admin. R. at 104, 158-62, 326, 333-37.) SPD also presented evidence showing that prior to New Life’s creation, the supply of transplantable human tissue and the number of tissue banks in Indiana was inadequate to meet demand. (See Cert. Admin. R. at 335-37.)

The Assessor’s presentation, however, did not challenge SPD’s claims regarding New Life’s charitable purpose or present evidence to the contrary, but instead, focused primarily on whether SPD had a charitable purpose. (See, e.g., Cert. Admin. R. at 181-229, 293-309, 353-70, 385-406.) Moreover, the Assessor’s opening statement that “[w]e are not in any way, shape, or form conceding that New Life uses or occupies th[e] property for an exempt purpose” did not put the issue in dispute. (See Cert. Admin. R. at 322-23.) Indeed, this statement alone, without supporting evidence and argument, is insufficient to create an actual dispute as to whether New Life had a charitable purpose because an opening statement generally is not substantive evidence; rather, it is designed to acquaint the fact-finder with the facts that a party intends to prove. See Luphahla v. Marion Cnty. Sheriff’s Dep’t, 868 N.E.2d 1155, 1158-59 (Ind. Ct. App. 2007). Accordingly, there is substantial evidence to support the Indiana Board’s finding that New Life occupied and used the property for a charitable purpose.

2.

The Indiana Board also determined that the totality of the evidence demonstrated that SPD owned the property for a charitable purpose. (See Cert. Admin. R. at 64-66.) The Assessor asserts, however, that the evidence regarding SPD’s close relationship with New Life and its status as New Life’s landlord contradicts this finding. (See Pet’r Br. at 10-11; Oral Arg. Tr. at 14-15.)

The evaluation of whether property is owned, occupied, and predominately used for a charitable purpose is a fact sensitive inquiry; there are no bright-line tests because every exemption case stands on its own facts. Jamestown Homes of Mishawaka, Inc. v. St. Joseph’s Cnty. Assessor, 914 N.E.2d 13, 15 (Ind. Tax Ct. 2009), review denied. In this case, the administrative record reveals that the same individuals that created and own New Life created and own SPD. (See Cert. Admin. R. at 106, 152-53, 329-30, 338-40.) In fact, SPD exists as an outgrowth of New Life because SPD was formed for the sole purpose of acquiring and renting the subject property to New Life in furtherance of its charitable tissue bank operations.4 (See Cert. Admin. R. at 338-40.) In this instance, therefore, the evidence of the close relationship between these two entities does support the Indiana Board’s finding that each has a similar charitable purpose. See Amax Inc. v. State Bd. of Tax Comm’rs, 552 N.E.2d 850, 852 (Ind. Tax Ct. 1990) (stating that a final determination of the Indiana Board determination is supported by substantial evidence (i.e., more than a scintilla of evidence) when a reasonable person could view the record in its entirety and find enough relevant evidence to support the Indiana Board’s determination).

Nonetheless, the Assessor further contends that because SPD charges New Life above-market rent, SPD has a profit motive similar to that of commercial landlords, not a charitable purpose. (See Pet’r Br. at 10-11.) The record evidence reveals that SPD, unlike some commercial landlords, owns and rents just one property, the property it rents to New Life. (See Cert. Admin. R. at 340-41.) The evidence also shows that SPD has never enforced a provision in its lease with New Life that calls for annual rental increases. (Compare Cert. Admin. R. at 163 with 371.) Moreover, SPD’s evidence reveals that the amount of rent it charged New Life was designed to cover just the mortgage costs and operational expenses, not to generate profits for SPD. (See Cert. Admin. R. at 341, 348-49, 371-72.) Finally, SPD explained that unlike a typical commercial landlord its owners paid the immediately prior installment of property taxes from their own personal accounts because neither SPD nor New Life had sufficient funds to cover the liability. (See Cert. Admin. R. at 371-73.)

The totality of the evidence indicates that the arrangement between SPD and New Life was not a typical landlord-tenant relationship and that SPD did not have a profit motive. Thus, to the extent that the Assessor has invited the Court to reweigh the evidence in her favor, the Court must decline to do so. See Grant Cnty. Assessor v. Kerasotes Showplace Theatres, LLC, 955 N.E.2d 876, 883 (Ind. Tax Ct. 2011) (providing that the Court may not reweigh the evidence nor judge the credibility of witnesses when reviewing the Indiana Board’s final determinations). Therefore, the Court has no basis for reversing the Indiana Board’s finding that SPD owns the property for a charitable purpose.

3.

Lastly, the Assessor claims that the Indiana Board’s finding that SPD’s property was predominately used for charitable purposes is contrary to law. More specifically, the Assessor argues that while New Life used the property for four months of the 2009 tax year, Indiana Code § 6-1.1-10-36.3 requires that the property be used for charitable purposes for more than half of that year. (See Oral Arg. Tr. at 15-18.) Accordingly, the Assessor argues that even assuming that SPD and New Life have a charitable purpose, the Indiana Board’s final determination is contrary to law.

When the interpretation of a statute is at issue, the Court first looks to the plain language of the statute. Charwood LLC v. Bartholomew Cnty. Assessor, 906 N.E.2d 946, 949 (Ind. Tax Ct. 2009) (citation omitted). “When a statute is susceptible to more than one interpretation, it is ambiguous and the [C]ourt must interpret the statute to effectuate the intent of the legislature.” Howser Dev. LLC v. Vienna Twp. Assessor, 833 N.E.2d 1108, 1110 (Ind. Tax Ct. 2005) (citation omitted). In other words, the Court is not at liberty to construe an unambiguous statute. Id.

Indiana Code § 6-1.1-10-36.3(a) states that “property is predominantly used or occupied for [charitable] purposes if it is used or occupied for . . . [those] purposes during more than fifty percent (50%) of the time that it is used or occupied in the year that ends on the assessment date of the property.” I.C. § 6-1.1-10-36.3(a). This language clearly requires that a property be used or occupied for charitable purposes for more than 50% of the time that it is actually used or occupied during the tax year at issue. See id. Here, the evidence shows that in the four months the property was used and occupied, it was used 100% of the time for the charitable purpose of operating a tissue bank. Therefore, the Indiana Board’s final determination that SPD’s property was predominately used for charitable purposes is not contrary to law.

http://www.in.gov/judiciary/opinions/pdf/05271401mbw.pdf

Tax Court Finds Township's Lack of Evidence regarding Notice Prevented Finding DLGF Determination was Improper

Excerpts of the Tax Court's Decision follow:

Fire protection territories are a means by which two or more contiguous jurisdictions may pool resources for the purpose of providing fire protection and prevention services. See IND. CODE § 36-8-19-5 (2010). The basic requirements for establishing a fire protection territory are set forth in the following relevant portions of Indiana Code § 36-8-19-6:

(a) To establish a fire protection territory, the legislative bodies of each unit desiring to become a part of the proposed territory must adopt an ordinance (if the unit is a county or municipality) or a resolution (if the unit is a township) that meets the following requirements:

(1) The ordinance or resolution is identical to the ordinances and resolutions adopted by the other units desiring to become a part of the proposed territory.

(2) The ordinance or resolution is adopted after January 1 but before April 1.

(3) The ordinance or resolution authorizes the unit to become a party to an agreement for the establishment of a fire protection territory.

(4) The ordinance or resolution is adopted after the legislative body holds a public hearing to receive public comment on the proposed ordinance or resolution. The legislative body must give notice of the hearing under IC 5-3-1.

(b) The notice required under this section shall include the following:

(1) A list of the provider unit and all participating units in the proposed territory.

(2) The date, time, and location of the hearing.

(3) The location where the public can inspect the proposed ordinance or resolution.

(4) A statement as to whether the proposed ordinance or resolution requires uniform tax rates or different tax rates within the territory.

(5) The name and telephone number of a representative of the unit who may be contacted for further information.

IND. CODE § 36-8-19-6(a),(b) (2010).

The Townships admit that Van Buren Township’s notice did not comply with Indiana Code § 36-8-19-6(b). Specifically, they admit that the Van Buren Township notice failed to designate: 1) which Township was the fire territory’s provider unit and which Township was the participating unit; 2) the location where the public could inspect the proposed resolution creating the fire territory; and 3) who could be contacted for further information and how. (Compare Oral Arg. Tr. at 11-13 with I.C. § 36-8-19-6(b)(1), (3), (5).) Moreover, they admit that the Van Buren Township notice erroneously included Duck Township and erroneously listed Harvey Stitt’s title as “Lafayette Township Trustee” instead of “Van Buren Township Trustee.” (See Oral Arg. Tr. at 10-11.) Even so, the Townships argue on appeal that the DLGF’s final determination denying their levy request was improper because a reasonable person would not have been misled by the Van Buren Township notice’s defects. The Townships assert that because “[t]he pair of notices were published on the same days in the same newspaper” and thus “when read together[, they] contain[ed] all the information that [was] necessary” under Indiana Code § 36-8-19-6(b).

Unfortunately for the Townships, the Court cannot determine whether there is any merit to their argument because the administrative record in this case is completely devoid of any evidence demonstrating that the two notices were in fact published on the same days in the same newspaper. (See Cert. Admin. R.; Oral Arg. Tr. at 13-14.) Accordingly, the Court cannot find the DLGF’s final determination was improper. The Townships’ request for relief is therefore denied.

http://www.in.gov/judiciary/opinions/pdf/05161401mbw.pdf

Tax Court Finds that, in Grinding Customer's Work Rolls, Taxpayer Produces Other Tangible Property

Excerpts of the Tax Court's Decision follow: 


The parties’ motions for summary judgment present just one issue for the Court to decide: whether Hoosier Roll produces a new good, thereby entitling it to the exemptions previously mentioned, when it grinds and calibrates work rolls. Hoosier Roll claims that it does: it takes a work roll, a tool ground and calibrated for a certain use and, through its grinding and calibration process, creates an entirely new tool for a different use (i.e., a remanufactured work roll). (See, e.g., Pet’r Mem. Supp. Mot. Summ. J. ("Pet’r Br.") at 16-18.) The Department argues, however, that Hoosier Roll does not produce a new good; rather, it provides a repair service that is designed merely to perpetuate the usuable life of the work roll. (See, e.g., Resp’t Br. Supp. Mot. Summ. J. ("Resp’t Br.") at 7, 11.)

In Rotation Products Corporation v. Department of State Revenue, 690 N.E.2d 795 (Ind. Tax Ct. 1998), this Court explained that merely characterizing a process as "remanufacturing" or "repair" is not helpful in determining whether the process actually produces a new product and is thus an exempt activity. See Rotation Prods. Corp. v. Dep’t of State Revenue, 690 N.E.2d 795, 800-02 (Ind. Tax Ct. 1998) (explaining that some repair activities might constitute production while some remanufacturing activities might not). Consequently, in that case, the Court developed four questions, based on its analysis of case law from both Indiana and other jurisdictions, to assist it in determining whether a "remanufacturing" or "repairing" process produces a new product. See id. at 800-03. Here, both Hoosier Roll and the Department agree that the Court can determine whether Hoosier Roll produces a new good when it grinds and calibrates work rolls by using the facts they have presented to answer the questions set forth in Rotation Products. (See, e.g., Pet’r Br. at 16-19; Resp’t Br. at 7-9.)

QUESTION 1: What is the substantiality and complexity of the work done on the existing article and what are the physical changes to the existing article, including the addition of new parts?

In answering this first question, the Court finds that Hoosier Roll makes substantial physical changes to the work rolls it receives from its customers through its complex process of grinding and calibration. Indeed, the surfaces of the work rolls – whether the rolls are new and blank or have been previously ground and calibrated to certain specifications – must be physically altered before the work rolls can be used to produce a specified sheet product. As a result of this physical alteration, the work roll Hoosier Roll returns to its customer is not the same work roll that the customer originally delivered to Hoosier Roll. As Hoosier Roll very convincingly explained, it takes a work roll, a tool ground and calibrated for a certain use and, through its grinding and calibration process, creates an entirely new tool for a different use. (See Pet’r Br. at 16-18.)

The Department acknowledges that while Hoosier Roll’s grinding and calibration process is complex, it "does not substantially change the underlying good" as the process "begins and ends with a giant rolling pin that is used to flatten things." (Resp’t Br. at 7; Hr’g Tr. at 33 (emphasis added).) While it is true that when Hoosier Roll’s process is completed its customer still has a work roll, the Department’s argument fails to recognize that the intended use of that work roll – and thus the form of its physical surface – is very different from the use and form of the work roll when the customer first delivered it to Hoosier Roll. See, e.g., Rotation Prods. Corp., 690 N.E.2d at 804 (explaining that with respect to a remanufactured roller bearing, the new working surface has a very different "geometry" from the original and is therefore a new and different product from the original).

QUESTION 2: How does the article’s value before and after the work compare?

With respect to this second question, the Court finds that Hoosier Roll’s grinding and calibration process adds value to a work roll that was not there when the work roll was first delivered to it. This is evidenced by the fact that at the time a customer brings its work rolls to Hoosier Roll, it can no longer use them for their specified purpose. See, e.g., supra at note 6. Once ground and calibrated to new specifications, however, the customer can use the work roll again, as it has been transformed into a new tool.

Nonetheless, the Department asserts that because work rolls are initially manufactured and sold blank, they must have "an intrinsic value of themselves." (See Hr’g Tr. at 33.) Accordingly, if any value results from Hoosier Roll’s grinding and calibration process, it is "only" use value to Hoosier Roll’s customer which "does not increase the value or marketability of the work roll itself." (Resp’t Br. at 8.) This Court, however, has previously rejected the notion that the term "value" does not encompass use value. See Rotation Prods. Corp., 690 N.E.2d at 802 (recognizing that a manufacturing process converts material "‘having no commercial value for its intended use . . . [to material that] has appreciable commercial value for its intended use’" (emphases added) (citation omitted)).

QUESTION 3: How favorably does the performance of the "remanufactured" article compare with the performance of newly manufactured articles of its kind?

There is no dispute that each time a work roll is ground and calibrated to certain specifications, its performance as a work roll is no less favorable than its performance as a work roll with the previously ground and calibrated specifications. Consequently, the Department has conceded that the answer to this third inquiry weighs in Hoosier Roll’s favor. (See Resp’t Br. at 7; Hr’g Tr. at 28, 35.) (See also Department’s LOF at 7 (acknowledging that "the refurbished rolls perform as well as brand new work rolls").)

QUESTION 4: Was the work performed contemplated as a normal part of the life cycle of the existing article?

In answering the fourth and final question advanced by Rotation Products, the Court finds that Hoosier Roll’s grinding and calibration process is not work that is contemplated as a normal part of a work roll’s life cycle. Indeed, grinding and calibrating work rolls is not "routine maintenance." See Rotation Prods. Corp., 690 N.E.2d at 803 (explaining that the process of cleaning and polishing an item so that it functions more efficiently may be "routine maintenance" or a normal part of its life cycle). Rather, as previously explained, when Hoosier Roll grinds and calibrates work rolls, it physically transforms them into entirely new and different tools that are used by its customers to create entirely new and different sheet products. This finding is further buttressed by the fact that when Hoosier Roll’s customers send their work rolls to Hoosier Roll, they are aware that the work rolls may not even be salvageable in the first instance. (See, e.g., Department’s LOF at 7.)

http://www.in.gov/judiciary/opinions/pdf/05141401tgf.pdf

In Identical Cases, Tax Court Finds it has No Jurisdiction Over Case Prior to Board Determination

Excerpts of the Tax Court's Decisions follow:

In its Petition, Washington Park acknowledges that it has not yet received a final determination from the Indiana Board. (See Pet’r Pet. ¶ 4; Pet’r Br. Supp. Pet. Enjoin Collection Tax at 3.) Accordingly, Washington Park admits that its case is not yet ripe to file a petition for an original tax appeal. (See Pet’r Br. Supp. Pet. Enjoin Collection Tax at 3.) Nonetheless, Washington Park maintains that this Court has subject matter jurisdiction to rule on its Petition for three reasons. 

I.

Washington Park first argues that

[b]y requiring a summary of the issues that Petitioner “will raise” in the original tax appeal, [Indiana Code § 33-26-6-2(b)] contemplate[s] the filing of an injunction request prior to the filing of an original tax appeal because if an original tax appeal had been filed, that filing would suffice to have “raised” the issues. There would be no need to recite issues that “will be” raised because those issues would have already been raised upon the filing of an original tax appeal.

(Pet’r Br. Resp. Mot. Dismiss (“Pet’r Br.”) at 2.) In addition, Washington Park argues that

the legislature has organized Indiana Code § 33-26-6-2 into separate and distinct sections to deal with the separate and distinct petitions that may be brought before this Court – a petition to set aside a final determination, on the one hand (Indiana Code § 33-26-6-2(a)); and a petition to enjoin the collection of tax, on the other hand (Indiana Code § 33-26-6-2(b)). The [injunction] petition . . . is not the same as the petition required to initiate an original tax appeal under Indiana Code § 33-26-6-2(a). If it were, there would be no need to refer separately to the injunction petition described in in subsections (b) and (c). (Pet’r Br. at 2.) Washington Park, however, has read Indiana Code § 33-26-6-2(b) in a vacuum.

When confronted with a question of statutory construction, the Court’s function is to determine and implement the intent of the legislature in enacting that statutory provision. See Johnson Cnty. Farm Bureau Coop. Ass’n v. Indiana Dep’t of State Revenue, 568 N.E.2d 578, 580 (Ind. Tax Ct. 1991), aff’d by 585 N.E.2d 1336 (Ind. 1992). In general, the best evidence of this intent is found in the actual language of the statute itself, as chosen by legislature. See id. at 581. To this end, the Court will endeavor to give meaning to each and every word used in a statute, as it will not be presumed that the legislature intended to enact a statutory provision that is superfluous, meaningless, or a nullity. See Chrysler Fin. Co. v. Indiana Dep’t of State Revenue, 761 N.E.2d 909, 916 (Ind. Tax Ct. 2002), review denied. Additionally, the Court will give those statutory words and phrases their plain, ordinary, and usual meaning. See Johnson Cnty. Farm Bureau, 568 N.E.2d at 581. Finally, the Court must read the statute as a whole, and not sections or parts of it piecemeal. See State v. Adams, 583 N.E.2d 799, 800 (Ind. Ct. App. 1992), trans. denied. Indeed, “[e]ach part [of a statute] must be considered with reference to all other parts [of the statute].” Id. (citation omitted).

Indiana Code § 33-26-6-2(a) states that 

[a] taxpayer who wishes to initiate an original tax appeal must file a petition in the tax court to set aside the final determination of the department of state revenue or the Indiana board of tax review. If a taxpayer fails to comply with any statutory requirement for the initiation of an original tax appeal, the tax court does not jurisdiction to hear the appeal. 

I.C. § 33-26-6-2(a). Thus, when section (b) indicates that a taxpayer may file an injunction petition, it is assumed that an original tax appeal has been initiated under section (a). Indeed, the words in section (b) state that “[a] taxpayer who wishes to enjoin the collection of a tax pending the original tax appeal . . ..” Id. at (b) (emphases added). The use of the word “pending” together with the definite article “the” strongly suggests that injunctive relief is proper only when an original tax appeal has been commenced. See, e.g., BLACK’S LAW DICTIONARY 1248 (9th ed. 2009) (defining “pending” as “[t]hroughout the continuance of; during . . . [w]hile awaiting; until”); WEBSTER’S THIRD NEW INT’L DICTIONARY 2368 (2002) (stating that the word “the” is “used as a function word to indicate that a following noun or noun equivalent refers to someone or something previously mentioned or clearly understood from the context or the situation”). This interpretation is further supported by the fact that Tax Court Rule 3(F) states that “[i]f the petitioner wishes to enjoin the collection of a tax pending the original tax appeal, there must be included with the original tax appeal a petition to enjoin the collection of the tax[.]” Ind. Tax Court Rule 3(F) (emphasis added). For these reasons, the Court finds that the language “will raise” in Indiana Code § 33-26-6-2(b)(1) does not mean that injunctive relief can be granted before an original tax appeal has been initiated.

II. 

Next, Washington Park asserts that

the nature of preliminary injunctive relief typically seeks an order from the Court BEFORE the full presentation of evidence on the merits, not AFTER. By authorizing this Court to grant injunctive relief and by authorizing this Court to hold an evidentiary hearing for the purpose of determining whether to grant equitable relief, the legislature has authorized this Court to hear evidence BEFORE a dispute has been fully litigated at the [Indiana Board.] (Pet’r Br. at 4.) Washington Park, however, asks the Court to exert power where it has none. As just explained, the Tax Court may grant injunctive relief only if an original tax appeal is pending.

III.

Finally, Washington Park argues that the principle of stare decisis requires the Court to follow its rationale and holding in American Trucking Associations, Inc. v. Indiana, 512 N.E.2d 920 (Ind. Tax Ct. 1987). (See Pet’r Br. at 5-7.) While the rationale and holding in American Trucking does indeed support Washington Park’s position, this Court declines to follow it.

http://www.in.gov/judiciary/opinions/pdf/05091402mbw.pdf

In its Petition, West Ohio acknowledges that it has not yet received a final determination from the Indiana Board. (See Pet’r Am. Pet. ¶ 5; Pet’r Br. Supp. Am. Pet. Enjoin Collection Tax at 1.) Accordingly, West Ohio admits that its case is not yet ripe to file a petition for an original tax appeal. (See Pet’r Br. Supp. Am. Pet. Enjoin Collection Tax at 1-2.) Nonetheless, West Ohio maintains that this Court has subject matter jurisdiction to rule on its Petition for three reasons.

I. 

West Ohio first argues that

[b]y requiring a summary of the issues that Petitioner “will raise” in the original tax appeal, [Indiana Code § 33-26-6-2(b)] contemplate[s] the filing of an injunction request prior to the filing of an original tax appeal because if an original tax appeal had been filed, that filing would suffice to have “raised” the issues. There would be no need to recite issues that “will be” raised because those issues would have already been raised upon the filing of an original tax appeal. 

(Pet’r Br. Resp. Mot. Dismiss (“Pet’r Br.”) at 2.) In addition, West Ohio argues that the legislature has organized Indiana Code § 33-26-6-2 into separate and distinct sections to deal with the separate and distinct petitions that may be brought before this Court – a petition to set aside a final determination, on the one hand (Indiana Code § 33-26-6-2(a)); and a petition to enjoin the collection of tax, on the other hand (Indiana Code § 33-26-6-2(b)). The [injunction] petition . . . is not the same as the petition required to initiate an original tax appeal under Indiana Code § 33-26-6-2(a). If it were, there would be no need to refer separately to the injunction petition described in in subsections (b) and (c).  (Pet’r Br. at 2.) West Ohio, however, has read Indiana Code § 33-26-6-2(b) in a vacuum.

When confronted with a question of statutory construction, the Court’s function is to determine and implement the intent of the legislature in enacting that statutory provision. See Johnson Cnty. Farm Bureau Coop. Ass’n v. Indiana Dep't of State Revenue, 568 N.E.2d 578, 580 (Ind. Tax Ct. 1991), aff’d by 585 N.E.2d 1336 (Ind. 1992). In general, the best evidence of this intent is found in the actual language of the statute itself, as chosen by legislature. See id. at 581. To this end, the Court will endeavor to give meaning to each and every word used in a statute, as it will not be presumed that the legislature intended to enact a statutory provision that is superfluous, meaningless, or a nullity. See Chrysler Fin. Co. v. Indiana Dep’t of State Revenue, 761 N.E.2d 909, 916 (Ind. Tax Ct. 2002), review denied. Additionally, the Court will give those statutory words and phrases their plain, ordinary, and usual meaning. See Johnson Cnty. Farm Bureau, 568 N.E.2d at 581. Finally, the Court must read the statute as a whole, and not sections or parts of it piecemeal. See State v. Adams, 583 N.E.2d 799, 800 (Ind. Ct. App. 1992), trans. denied. Indeed, “[e]ach part [of a statute] must be considered with reference to all other parts [of the statute].” Id. (citation omitted).

Indiana Code § 33-26-6-2(a) states that

[a] taxpayer who wishes to initiate an original tax appeal must file a petition in the tax court to set aside the final determination of the department of state revenue or the Indiana board of tax review. If a taxpayer fails to comply with any statutory requirement for the initiation of an original tax appeal, the tax court does not jurisdiction to hear the appeal. 

I.C. § 33-26-6-2(a). Thus, when section (b) indicates that a taxpayer may file an injunction petition, it is assumed that an original tax appeal has been initiated under section (a). Indeed, the words in section (b) state that “[a] taxpayer who wishes to enjoin the collection of a tax pending the original tax appeal . . ..” I.C. § 33-26-6-2(b) (emphases added). The use of the word “pending” together with the definite article “the” strongly suggests that injunctive relief is proper only when an original tax appeal has been commenced. See, e.g., BLACK’S LAW DICTIONARY 1248 (9th ed. 2009) (defining “pending” as “[t]hroughout the continuance of; during . . . [w]hile awaiting; until”); WEBSTER’S THIRD NEW INT’L DICTIONARY 2368 (2002) (stating that the word “the” is “used as a function word to indicate that a following noun or noun equivalent refers to someone or something previously mentioned or clearly understood from the context or the situation”). This interpretation is further supported by the fact that Tax Court Rule 3(F) states that “[i]f the petitioner wishes to enjoin the collection of a tax pending the original tax appeal, there must be included with the original tax appeal a petition to enjoin the collection of the tax[.]” Ind. Tax Court Rule 3(F). For these reasons, the Court finds that the language “will raise” in Indiana Code § 33-26-6-2(b)(1) does not mean that injunctive relief can be granted before an original tax appeal has been initiated.

II.

Next, West Ohio asserts that 

the nature of preliminary injunctive relief typically seeks an order from the Court BEFORE the full presentation of evidence on the merits, not AFTER. By authorizing this Court to grant injunctive relief and by authorizing this Court to hold an evidentiary hearing for the purpose of determining whether to grant equitable relief, the legislature has authorized this Court to hear evidence BEFORE a dispute has been fully litigated at the [Indiana Board.]

(Pet’r Br. at 4.) West Ohio, however, asks the Court to exert power where it has none. As just explained, the Tax Court may grant injunctive relief only if an original tax appeal is pending.

III.

Finally, West Ohio argues that the principle of stare decisis requires the Court to follow its rationale and holding in American Trucking Associations, Inc. v. Indiana, 512 N.E.2d 920 (Ind. Tax Ct. 1987). (See Pet’r Br. at 5-7.) While the rationale and holding in American Trucking does indeed support West Ohio’s position, this Court declines to follow it.

http://www.in.gov/judiciary/opinions/pdf/05091401mbw.pdf