Bell v. State Bd. of Tax Com'rs, 49T10-9504-TA-00036

• Decision Date: 14 June 1995
• Docket Number: No. 49T10-9504-TA-00036,49T10-9504-TA-00036
• Parties: 101 Ed. Law Rep. 413 Chester BELL, John Bradshaw, Della Bicking, Petitioners, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.
• Court: Indiana Tax Court

Page 816

651 N.E.2d 816

101 Ed. Law Rep. 413

Chester BELL, John Bradshaw, Della Bicking, Petitioners, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.

No. 49T10-9504-TA-00036.

Tax Court of Indiana.

June 14, 1995.

Nelson G. Grills, Indianapolis, for petitioner.

Pamela Carter, Indiana Atty. Gen. and Joel Schiff, Deputy Atty. Gen., Indianapolis, for respondent State Bd. of Tax Com'rs.

Jeffrey A. Boyll, Wilkinson, Goeller, Modesitt, Wilkinson & Drummy, Terre Haute, for respondent Clay Community Schools.

ORDER ON MOTION FOR JUDGMENT ON THE PLEADINGS AND MOTION TO POST BOND

FISHER, Judge.

On April 13, 1995, the State Board of Tax Commissioners (State Board) approved a lease rental agreement between Clay Community Schools and the North Clay Middle School Building Corporation for the construction of a new middle school. Chester Bell, John Bradshaw, and Della Bicking (the Remonstrators) now appeal the State Board's action.

ISSUES

I. Whether the State Board must inquire into the propriety of actions taken by school corporations, the Indiana Department of Education, and the State Board of Education and find that those agencies complied with Indiana law governing school construction projects before it may approve a lease rental agreement under IND.CODE 21-5-12-7.

II. Whether the Remonstrators must post bond in an amount to cover all damages and costs which may accrue

to Clay Community Schools in the event that Clay Community Schools should prevail in this lawsuit.

FACTS AND PROCEDURAL HISTORY

On November 2, 1994, Clay Community Schools and the North Clay Middle School Building Corporation entered into a lease rental agreement for the construction of a new middle school. ¹ A number of taxpayers, including the Remonstrators, filed a remonstrance challenging the lease rental agreement because: 1) it was not necessary, and 2) the rental payments were neither fair nor reasonable. On January 13, 1995, the State Board conducted a hearing to consider the remonstrance and then referred the lease rental agreement to the School Property Tax Control Board for its review and recommendation. On March 16, 1995, the School Property Tax Control Board recommended that the State Board approve the lease rental agreement. Thereafter, the State Board toured the North Clay Junior High School, the Clay City Junior/Senior High School, and the Jackson Elementary School. Then, on April 13, 1995, the State Board approved the lease rental agreement.

The Remonstrators filed this appeal on April 21, 1995. In response, Clay Community Schools filed: 1) a motion to intervene as a party defendant, 2) a motion to declare the case a public lawsuit, and 3) a motion to require the Remonstrators to post bond. In an order dated May 3, 1995, the court granted Clay Community Schools' motion to intervene as a party defendant. On May 9, 1995, the Remonstrators filed a motion for judgment on the pleadings. The court held a hearing to consider the parties' motions on May 22, 1995.

The Remonstrators do not contest that this case is a public lawsuit under IND.CODE 34-4-17-1(b), and the court has previously found that the case is a public lawsuit. Therefore, this order will address Clay Community Schools' motion to require the Remonstrators to post bond and the Remonstrators' motion for judgment on the pleadings only. If the Remonstrators are successful on their motion for judgment on the pleadings, the Clay Community Schools' motion to require the Remonstrators to post bond becomes moot. See Ackelmire v. North Vermillion Community School Corp. (1990), Ind.Tax, 558 N.E.2d 916, 922. Accordingly, the court will address the Remonstrators' motion for judgment on the pleadings first.

I

A motion for judgment on the pleadings is appropriate when the pleadings present no material issues of fact and the facts shown by the pleadings clearly entitle a party to judgment. Riley at Jackson Remonstrance Group v. State Bd. of Tax Comm'rs (1994), Ind.Tax, 642 N.E.2d 562, 565.

The Remonstrators' motion for judgment on the pleadings is based on I.C. 21-5-12-7. It provides that after the execution of a lease rental agreement is authorized:

Ten (10) or more taxpayers in [a] school corporation or corporations, who will be affected by the proposed lease and who may be of the opinion that no necessity exists for the execution of such lease, or that the proposed rental provided for therein is not a fair and reasonable rental, may file a petition in the office of the county auditor of the county in which such school corporation or corporations is located, ... setting forth their objections thereto and facts showing that the execution of the lease is unnecessary or unwise, or that the lease rental is not fair and reasonable as the case may be. Upon the filing of any such petition, the county auditor shall immediately certify a copy thereof ... to the state board of tax commissioners.... The decision of the state board of tax commissioners on such appeal, upon the necessity for the execution of said lease and as to whether the rental is fair and reasonable, shall be final.

I.C. 21-5-12-7(b). The Remonstrators maintain that I.C. 21-5-12-7 requires the State Board to inquire into the propriety of actions a) The feasibility study upon which the middle school construction project is based, Remonstrators' Exhibit 2, Part I (attached to complaint), does not include a discussion of "future education program needs" as required by State Board of Education regulation 511 I.A.C. 2-2-1(B)(1)(e).

taken by school corporations, the Indiana Department of Education, and the State Board of Education. They further maintain that if, upon such inquiry, the State Board finds that a school corporation, the Indiana Department of Education, or the State Board of Education did not comply with Indiana law governing school construction projects, the State Board may not approve a lease rental agreement. Accordingly, the Remonstrators argue that they are entitled to judgment on the pleadings because: 1) the State Board failed to conduct an inquiry into whether Clay Community Schools, the Indiana Department of Education, and the State Board of Education complied with Indiana law governing school construction projects; and 2) if the State Board had conducted such an inquiry, it would have found that:

b) The feasibility study, Remonstrators' Exhibit 2, Part I (attached to complaint), and the Steering Committee Report, Remonstrators' Exhibit 3 (attached to complaint), do not provide "educational specifications to determine the quality of the educational program" as required by State Board of Education regulation 511 I.A.C. 2-21(B)(2).

c) The Clay Community Schools did not give the local community an opportunity to study the need for a new middle school as required by State Board of Education regulation 511 I.A.C. 2-2-1(A)(1).

d) The State Board of Education never adopted any regulations to implement the requirements of IND.CODE 20-1.1-6.1.

e) The Indiana Department of Education's approval of the final plans for the construction of the new middle school was ineffective because it was signed in the name of the Superintendent of Instruction by one of her employees and not by the Superintendent of Public Instruction herself in violation of State Board of Education regulation 511 I.A.C. 2-2-1(C)(2)(a).

f) The State Board of Education never approved the final plans for the construction of the new middle school as required by State Board of Education regulation 511 I.A.C. 2-2-1(C)(2)(e) [sic ].

g) Clay Community Schools did not obtain the permit required by State Board of Education regulation 511 I.A.C. 2-3-2.

See Remonstrators' Motion for Judgment on the Pleadings at 3-5.

In determining whether I.C. 21-5-12-7 requires the State Board to inquire into the propriety of actions taken by school corporations, the Indiana Department of Education, and the State Board of Education, the court notes that "an administrative agency has only those powers conferred on it by the General Assembly; powers not in its legislative grant cannot be assumed by the agency nor implied to exist in its powers." Fort Wayne Education Association, Inc. v. Aldrich (1988), Ind.App. 527 N.E.2d 201, 216. The court also notes that "no administrative agency has the prerogative to make decisions properly committed to any other agency." Auburn Foundry, Inc. v. State Bd. of Tax Comm'rs (1994), Ind.Tax, 628 N.E.2d 1260, 1263 (citations omitted); Miller v. Gibson County Solid Waste Management District (1993), Ind.Tax, 622 N.E.2d 248, 259-260.

"The State Board is Indiana's property tax specialist." Miller, 622 N.E.2d at 260. It has no expertise in educational matters. While I.C. 21-5-12-7 does authorize the State Board to determine whether a lease rental agreement between a lessor corporation and a school corporation is necessary and whether the rental payments are fair and reasonable, the purpose of I.C. 21-5-12-7 is not to require the State Board to determine whether a school construction project is necessary from an educational standpoint. That determination has been specifically delegated to the Indiana Department of Education and the State Board of Education under Title 20 of the Indiana Code. The purpose of I.C. 21-5-12-7 is to require the The State Board is vested with broad discretion in the exercise of its powers and the performance of its duties. Id. In performing its duties under I.C. 21-5-12-7, the State Board may thus consider any evidence that it finds helpful, including documentation of relevant decisions made by the Indiana Department of Education, the State Board of Education, and other administrative agencies. Moreover, when an official document prepared by an administrative agency is offered as evidence to the State Board, the State Board may presume that the official document was promulgated in accord with Indiana law, for "[a]gency action is entitled to a presumption of regularity." 1 Charles H. Koch, Jr., Administrative...