Harrington v. State Bd. of Tax Com'rs, 64T05-8705-SC-00021

• Decision Date: 28 June 1988
• Docket Number: No. 64T05-8705-SC-00021,64T05-8705-SC-00021
• Citation: 525 N.E.2d 360
• Parties: James R. HARRINGTON and Suzanne Harrington, Petitioners, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.
• Court: Indiana Tax Court

Page 360

525 N.E.2d 360

James R. HARRINGTON and Suzanne Harrington, Petitioners, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.

No. 64T05-8705-SC-00021.

Tax Court of Indiana.

June 28, 1988.

Barbara A. Young, Hoeppner, Wagner and Evans, Valparaiso, for petitioners.

Linley E. Pearson, Atty. Gen., by Marilyn S. Meighen, Deputy Atty. Gen., Indianapolis, for respondent.

FISHER, Judge.

The petitioners, James and Susan Harrington, appeal the final determination of the respondent State Board of Tax Commissioners. The Harringtons challenged the Porter County Board of Review determination of the value of land and improvements for 1983. The State Board partially sustained the challenge; this appeal followed.

The Harringtons purchased .114 acres abutting the Little Calumet River (Burns Ditch) in Portage Township, Porter County, Indiana, in 1978. The property consisted of ten boat slips with electrical and water hook-ups, a concrete dock, retaining wall, and sidewalks. The Harringtons operated a docking facility for recreational boats. The property had an assessed value of $280 for land and zero for improvements. Shortly after the Harringtons acquired the property, they installed a utility shed.

In 1981, the facility suffered extreme damage from flooding. The Harringtons restored the facility to its prior condition and added two boat slips. In 1983, the property was reassessed. On appeal, the State Board determined that the land had an assessed value of $570 and that the improvements, namely the shed and the concrete dock, had an assessed value of $5,200.

The Harringtons raise several issues which the court restates as follows: 1) did the State Board act arbitrarily and capriciously in determining the assessed value of the Harrington's improvements; 2) was the State Board's assessment of the land supported by substantial evidence.

The Harringtons contend that their property has not been assessed in a manner consistent with similar property in the taxing district. The State Board contends that the assessment was made in accordance with Regulation 17, Real Property Appraisal Manual, 50 IAC 2-1-1 et seq., and is therefore proper.

The State Board is charged with the duty of seeing that property is assessed for tax purposes and that taxes are assessed and collected. IC 6-1.1-30-14. To implement this duty, the State Board is authorized to promulgate rules and regulations concerning the assessment of property. IC 6-1.1-31-1.

50 IAC 2-5 governs the valuation of commercial and industrial properties. 50 IAC 2-5-2 lists various commercial and industrial improvements and the proper sub-schedules to be used. Under "marinas," three categories of improvements are listed: boat sales and service, boat garages or storage, and dock facilities. Improvements which come under the category of dock facilities are to be valued in accordance with Schedule G, 50 IAC 2-5-4, at 176. The only part of Schedule G applicable to the Harrington's property is the first section, which provides:

                Small Boat Marina, per sf.............. 8
                 Typical installation, per slip .... 1600
                 High Cost installation, per ....... 2400
                 slip
                

Id.

The hearing officer testified that the true cash value of the dock was $15,100. He arrived at this figure by multiplying the "small boat marina" rate of $8 by the size of the concrete dock, which measured 1890 square feet. The true cash value of the dock was added to the value of the shed, which is not in dispute here, for a total cash value of improvements of $15,600, and an assessed value of $5,200. The twelve boat slips were not separately valued or assessed.

The Harringtons introduced evidence of the assessments of six other docking facilities in Portage Township. With respect to the valuation and assessment of boat slips, two of the other marinas were not assessed at all for any boat slips, two were assessed at $100 per slip, one was assessed at $50 per slip, and one was assessed at $8 per square foot. ¹

Nothing in the regulation indicates whether the $8 cost for a "small boat marina" is to be applied to the square footage of a dock or to the square footage of the slips. Nothing in the regulation indicates whether the $8 cost is in addition to, or an alternative to, the value of the slips at $1600 per typical installation and $2400 per high cost installation. The regulation does not indicate how to determine what is typical and what is high cost installation. Moreover, the court is at a loss to find any authority for the properties assessed at a $50 or $100 value per slip.

The assessment of the improvements here is flawed in two respects. First, the assessment of the Harrington's boat slips is not consistent with similar property of the same classification. The State Board cannot dismiss the evidentiary value of the other inconsistent assessments by explaining that they were not made by the State Board. The constitutional requirement of uniform and equal taxation requires that the assessments be consistent with similar property of the same classification. IND. CONST. art. X, Sec. 1. See Indiana State Bd. of Tax Comm'rs v. Lyon & Greenleaf Co. (1977), 172 Ind.App. 272, 359 N.E.2d 931.

Second, the assessment of docking facilities has not been based on ascertainable standards.

In order to satisfy due process, an administrative decision must be in accord with previously stated, ascertainable standards. This requirement is to make certain that administrative decisions are fair, orderly and consistent rather than irrational and arbitrary. The standards should be written with sufficient precision to give fair warning as to what the agency will consider in making its decision. And finally, the standards should be readily available to those...