Goodhost LLC v. Department of Local Government Finance

_____________________________________________________________________

    IN THE INDIANA TAX COURT _____________________________________________________________________

GOODHOST, LLC, ) ) Petitioner, ) ) v. ) Cause No. 49T10-9810-TA-131 ) DEPARTMENT OF LOCAL ) GOVERNMENT FINANCE, )     )
    Respondent.            )    
_____________________________________________________________________
 
ORDER ON MOTION TO CORRECT ERRORS
 
 
NOT FOR PUBLICATION
September 2, 2003
FISHER, J.
 
    Comes now Goodhost, LLC (Goodhost) and files a Motion to Correct Errors (Motion) pursuant to Indiana Trial Rule 59. In its Motion, Goodhost challenges this Court's holding in Goodhost, LLC v. Department of Local Government Finance, 786 N.E.2d 813 (Ind. Tax Ct. 2003). Having reviewed Goodhost's Motion and having held a hearing thereon, the Court now DENIES Goodhost's Motion for the reasons set forth below.
FACTS AND PROCEDURAL HISTORY
    Goodhost owns approximately ten acres of land and the American Inn located near the intersection of 82nd Street and I-69 in Lawrence Township, Marion County, Indiana. Goodhost rents a portion of its motel units as low-income apartment housing.
     For the 1995 general reassessment, the State Board of Tax Commissioners (State Board) classified Goodhost's land as "hotel/motel land." As a result, the land was valued at $2.50 per square foot pursuant to the relevant portion of the Marion County Land Order (Land Order).     
    Goodhost filed an original tax appeal with this Court on October 23, 1998, arguing that its land should have been valued as "apartment land" with a value of "approximately $40,000 per acre." (Pet'r Compl. at 3.) After conducting trial and oral argument, this Court issued an opinion in which it affirmed the State Board. Goodhost, 786 N.E.2d at 816.
    On May 16, 2003, Goodhost timely filed a Motion to Correct Errors. The Court held a hearing on Goodhost's Motion on August 1, 2003. Additional facts will be provided as necessary.
ANALYSIS & ORDER
    In its Motion, Goodhost argues that the Court's decision was erroneous because it misconstrued the substantive issue, it ignored the extensive evidence presented by Goodhost, and it failed to address the due process issue originally raised by Goodhost. (Pet'r Mot. to Correct Error at 1, 2.) Each of these alleged errors are addressed in turn.
I. Goodhost's Substantive Issue
    In Goodhost, this Court determined that the sole issue presented for review was whether the State Board correctly assessed Goodhost's land under the Land Order. Because Goodhost did not submit a copy of the Land Order into evidence, the Court determined that it was unable to reach the merits of Goodhost's claim (i.e., Goodhost failed to make a prima facie case). Goodhost, 786 N.E.2d at 815.
    Goodhost now argues in its Motion that "[t]he issue before the Court was not interpretation of the language of the Land Order, but rather [] the grossly disparate treatment of [Goodhost's] property when compared to other similar properties." (Pet'r Mot. to Correct Error at 2 (emphasis in original).) Consequently, Goodhost asserts that the introduction of the Land Order into evidence was not necessary for the Court in its disposition of the case. The Court disagrees.
    Goodhost contests the valuation of its land. The value of its land resulted from a "hotel/motel land" classification rather than an "apartment land" classification. Such a classification, however, is not inherent to the assessment of land throughout the State. Rather, it arises from the application of the relevant land order. See footnote During oral argument, this Court sought numerous clarifications from Goodhost regarding the issue on review:
Mr. Terrell: A couple of points that I want to clarify, if I may.
First of all, so there is no confusion, the issue here is land value. . . .

The Court: Is this the application of the land order that we're talking about?

Mr. Terrell: Yes, your Honor.

(Oral Argument Tr. at 29 (emphasis added).) Again, later in the proceeding:
Mr. Terrell: We understand that there's been repeated statements that this doesn't look like an apartment . . .

The Court: Well, I am confused.

Mr. Terrell: Yes.

The Court: We're not talking about the assessment of the improvements; we're talking about the assessment of the land; is that correct?

Mr. Terrell: Yes, your Honor.

The Court: So we are not concerned --- Is the land value order, is that in evidence?

Mr. Terrell: The actual order?

The Court: Uh-huh.

Mr. Terrell: I don't believe that the order is in evidence, is it, Jim?

Mr. Beatty: No, I don't recall.

Mr. Terrell: I don't believe so. . . .

The Court: But we're not worried in this case about the application of the GCM base [improvement] prices on this property. All we're concerned about is the application of . . . the land order ---

Mr. Terrell: Yes, your Honor.

(Oral Argument Tr. at 31-32 (emphasis added).)
    As this Court has held numerous times, when a taxpayer seeks to challenge the value assigned to its land, it must present probative evidence showing that either (1) its land was improperly assessed under the wrong section of the land order or (2) comparable properties were assessed and taxed differently than its own under the land order. Goodhost, 786 N.E.2d at 815 (citing Park Steckley I v. Dep't of Local Gov't Fin., 779 N.E.2d 1270, 1273 (Ind. Tax Ct. 2002); Blackbird Farms Apartments, LP v. Dep't of Local Gov't Fin., 765 N.E.2d 711, 714 (Ind. Tax Ct. 2002)) (emphases added). Thus, in appeals involving land valuation, land orders are necessarily implicated. Consequently,
it is essential for the Court to have an opportunity to read and analyze the relevant portions of the applicable land order. In particular, the Court must be able to evaluate the application of the land order to the taxpayer's property or comparable properties or both so that it may determine if a remedy is warranted and, if so, its nature and extent.

Id.
    In this case, Goodhost claims that introducing the Land Order into evidence "elevates form over substance" and "clutter[s] the Record . . . with useless information[] at a great waste of time and expense." Indeed, it argues that "the Land Order itself provided absolutely no useful information with regard to the issues on this appeal. The issue is not the content of the Land Order, but rather the disparate treatment of similar properties." (Pet'r Mot. to Correct Error at 3.)
    What Goodhost does not understand is that when it claims that similar properties are being treated dissimilarly, it must show that within the context of the Land Order. Goodhost, 786 N.E.2d at 815 (citing Park Steckley, 779 N.E.2d at 1273; Blackbird, 765 N.E.2d at 714) (emphasis added). Thus, in order to make a prima facie case, See footnote Goodhost needed to show that similar properties (i.e., properties subject to the same portion of the Land Order) were being treated dissimilarly (i.e., the Land Order was not applied uniformly to those similar properties). This simply cannot be achieved without the Land Order.
 
Goodhost's Evidence
    During the administrative hearing, Goodhost submitted evidence showing that the land at three nearby properties (one nursing home and two apartment complexes) were assessed as "apartment land" and assigned values between $19,000 and $22,000 per acre. Goodhost also submitted evidence that another apartment complex, located in a different township, was classified as "apartment land" despite the fact that it rented some of its units on a nightly or weekly basis. See footnote Goodhost claims that this evidence clearly supports its claim that its land was improperly valued and that this Court "committed an uncorrected error of law by erroneously ignoring [that] extensive evidence[.]" (Pet'r Mot. to Correct Error at 2.) Again, this Court must disagree.
    This Court's standard of review has been stated many times: it gives great deference to the State Board and its final determinations. Wetzel Enters., v. State Bd. of Tax Comm'rs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct. 1998). Thus, when it reviews the claim of a taxpayer (like Goodhost) that the State Board's final determination is invalid, it will not reweigh the evidence presented at the administrative level. See State Bd. of Tax Comm'rs v. Gatling Gun Club, 420 N.E.2d 1324, 1328 (Ind. Ct. App. 1981). Rather, the Court determines whether the taxpayer has presented probative evidence (i.e., met its burden of proof) and, if so, whether the State Board has supported its final determination with substantial evidence. See id.
    Assuming only for argument's sake that the Land Order was not required in order to make its prima facie case, Goodhost overlooks the fact that its evidence was not uncontroverted. Indeed, the State Board found the evidence presented by the assessor's office more persuasive. See footnote This was not improper of the State Board, but merely a proper exercise of its statutory responsibility. See footnote Accordingly, the Court did not err in affirming the State Board's final determination.
III. Goodhost's Due Process Claim
    After conducting an administrative hearing on Goodhost's appeal, the State Board's hearing officer inspected Goodhost's property. The hearing officer also conducted exterior inspections of two of the four properties that Goodhost claimed were comparable, as well as all three of the properties that the assessor's office claimed were comparable. Goodhost subsequently alleged the inspections violated its right to due process because it did not have an opportunity to respond to the hearing officer's inspection before the State Board issued its final determination, nor did the hearing officer inspect all the properties Goodhost offered as comparables. Having determined that Goodhost did not meet its initial burden of proof, however, the Court did not address Goodhost's due process claim. Now, in its Motion, Goodhost argues that this Court "committed an uncorrected error of law in that it failed to reach a decision on [Goodhost's due process] issue[.]"
    Indiana follows the rule that a final administrative decision is a denial of due process when the administrative authority considers evidence received outside the presence of a party who is without notice of its consideration and who is not afforded an opportunity to rebut the evidence. State Bd. of Tax Comm'rs v. Oliverius, 294 N.E.2d 646, 651 (Ind. Ct. App. 1973). Such is not the case in this matter.
    In the first instance, no "new errors" were corrected as a result of the hearing officer's inspections, nor was any "new evidence" received. Cf. Castello v. State Bd. of Tax Comm'rs, 638 N.E.2d 1362, 1364-65 (Ind. Tax Ct. 1994) (holding that if the State Board addresses issues in its final determination not initially raised by the taxpayer, the taxpayer must be provided an "opportunity to rebut the evidence on the newly raised issues.") In this case, the State Board's final determination only addressed the issue initially raised by Goodhost: if the land was properly valued.
    Furthermore, it is inconceivable to think that Goodhost was not put on notice that the hearing officer would inspect and consider the alleged comparables, let alone the subject property, the very subject of the appeal. Indeed, but for Goodhost's appeal and its presentation of evidence regarding allegedly comparable properties evidence Goodhost based its case on and wanted the hearing officer to consider the hearing officer would not have inspected the properties in the first place. Likewise, Goodhost received notice at the administrative hearing that the assessor's office wanted the hearing officer to consider three other allegedly comparable properties. Goodhost had an opportunity at the hearing to rebut the assessor's comparables.
    Next, Goodhost asserts that its right to due process was violated in that the State Board ignored evidence when it made its final determination. This assertion centers on the failure of the hearing officer to inspect one of the properties Goodhost alleged as comparable. See footnote The Court must disagree.
    It is the responsibility of the State Board to weigh the evidence presented to it and to make a determination based thereon. In this case, the State Board found that after inspecting two of Goodhost's comparables and three of the assessor's comparables, Goodhost did nothing more than present evidence that apartment land was valued as "apartment land" (as opposed to presenting evidence that hotel/motel land was valued as "apartment land"). There being substantial evidence in the record to support that finding, the hearing officer's failure to inspect the other two alleged comparables, both apartment complexes, did not constitute reversible error.
Conclusion
    Upon review and for the foregoing reasons, this Court DENIES Goodhost's Motion to Correct Errors.

SO ORDERED this 2nd day of September, 2003.

     _________________________
     Thomas G. Fisher, Judge
Indiana Tax Court

DISTRIBUTION:

James W. Beatty
Stephen M. Terrell
LANDMAN & BEATTY
1150 Market Square Center
151 North Delaware Street
P.O. Box 44953
Indianapolis, IN 46244-0953

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

Footnote: In other words, each county has its own land order containing land values that are expressed in ranges of "base rates." See Ind. Admin. Code tit. 50, r. 2.2-4-4(c) (1996). The base rates, in turn, are applied to various geographic areas, subdivisions, or neighborhoods based on their distinguishing characteristics or boundaries. See id. As a result, some counties, for purposes of assessment, may classify land as either "apartment land" or "hotel/motel land" under their land order; other county land orders, however, may not.
Footnote: Because Goodhost challenged the State Board's final determination, it bore the burden of demonstrating its invalidity. See Clark v. State Bd. of Tax Comm'rs, 694 N.E.2d 1230, 1233 (Ind. Tax Ct. 1998). To meet that burden, Goodhost was required to present a prima facie case, or one in which the evidence is "‘sufficient to establish a given fact and which if not contradicted will remain sufficient.'" See id. (quoting GTE N., Inc. v. State Bd. of Tax Comm'rs, 634 N.E.2d 882, 887 (Ind. Tax Ct. 1994)).
Footnote: The record is silent as to whether this alleged comparable, by reason of its location in a different township, is subject to the same portion of the Land Order as the subject property.
Footnote: The assessor's office provided evidence that other motels in the area were classified as "hotel/motel land" and therefore valued on a per square foot basis. As the State Board explained in its final determination, while Goodhost presented evidence that apartment land was valued as "apartment land," it did not present evidence that hotel/motel land was valued as "apartment land." ( See Ex. A at 6, attached to Pet'r Compl.)
Footnote:
The State Board derives its authority from the General Assembly and only has those powers granted by statute. See Matonovich v. State Bd. of Tax Comm'rs, 705 N.E.2d 1093, 1096 (Ind. Tax Ct.1999), review denied.
Footnote: Goodhost asserts that this failure "is akin to a judge only reviewing evidence offered by one side." (Pet'r Mot. to Correct Error at 8.)