State Bd. of Tax Com'rs v. Two Market Square Associates Ltd. Partnership, 49S10-9603-TA-227
| Decision Date | 12 May 1997 |
| Docket Number | No. 49S10-9603-TA-227,49S10-9603-TA-227 |
| Citation | 679 N.E.2d 882 |
| Parties | STATE BOARD OF TAX COMMISSIONERS, Appellant (Respondent below), v. TWO MARKET SQUARE ASSOCIATES LIMITED PARTNERSHIP; Duke Realty Investments, Inc.; The Equitable Life Assurance Society of the United States; and W.R.C. Properties, Inc., Appellees (Petitioners below). |
| Court | Indiana Supreme Court |
We hold that under the regulatory scheme for assessing property values promulgated by the State Board of Tax Commissioners during 1989 and 1990, paved parking areas may be assessed either as "primary" or "secondary" industrial/commercial land.
Two Market Square Associates Limited Partnership, Duke Realty Investments, Inc., The Equitable Life Assurance Society of the United States, and W.R.C. Properties, Inc. (the "Taxpayers"), owned parcels of land and improvements on that land in the Park 100 Industrial Complex located in Pike Township, Marion County, Indiana. Each Taxpayer's parcel contained one or more paved parking lots. For both the 1989 and 1990 assessments, the Pike Township Assessor classified each Taxpayer's entire parcel of land as primary commercial/industrial land. Taxpayers challenged the assessments, alleging that portions of the parcels should have been classified as undeveloped commercial/industrial land. The Marion County Board of Review 1 refused to reclassify the portions of property from primary to undeveloped.
Each Taxpayer sought administrative review of the assessments before the State Board of Tax Commissioners. Following the State Board's administrative hearings, each Taxpayer amended the administrative pleadings to assert that not only should portions of its property be reclassified as undeveloped, but the paved parking areas should be reclassified from primary to secondary land as well. On February 28, 1994, the State Board decided to reclassify the portions of the primary land as undeveloped, but determined that the Taxpayers' paved parking areas were properly assessed as primary commercial/industrial land.
On April 6, 1994, each Taxpayer initiated an original tax appeal challenging the valuation of their respective properties for the 1989 and 1990 assessment dates. On November 10, 1994, the Indiana Tax Court consolidated the four appeals under one cause number. Taxpayers and the State Board filed cross motions for summary judgment. The Tax Court granted summary judgment in favor of Taxpayers. Ruling on the cross motions for summary judgment, the Tax Court identified the issue before it as "Whether the State Board erred in classifying the Taxpayers' paved parking areas as primary commercial/industrial land under 50 I.A.C. 2.1-4-2(f)." Two Market Square v. State Bd. of Tax Comm'rs, 656 N.E.2d 308, 309 (Ind.Tax 1995). Attempting to ascertain the intent of the State Board in drafting 50 I.A.C. 2.1-4-2(f) and giving great weight to the fact that 50 I.A.C. 2.1-4-2(f) lists parking as one of three examples of a secondary use, the Tax Court determined that "under the plain and ordinary meaning of the words in 50 I.A.C. 2.1-4-2(f), the use of property for any parking purpose is a secondary use." Two Market Square, 656 N.E.2d at 311. In granting summary judgment in favor of the Taxpayers, the Tax Court held that the plain and ordinary meaning of 50 I.A.C. 2.1-4-2(f) requires land used for parking to be classified as secondary only and the instructional bulletin RO-33 conflicts with 50 I.A.C. 2.1-4-2(f) by permitting land used for parking to be classified as primary. Id.
The State Board petitioned this court for review. The State Board contends that the Tax Court erroneously decided that 50 I.A.C. 2.1-4-2(f) requires all commercial/industrial land used for parking to be classified as secondary because the Tax Court (1) improperly construed the meaning of 50 I.A.C. 2.1-4-2(f); (2) improperly held that RO-33 was inconsistent with 50 I.A.C. 2.1-4-2; (3) improperly ignored uncontradicted evidence showing that the ambiguity in 50 I.A.C. 2.1-4-2 arose from an inadvertent omission; and (4) improperly failed to give deference to administrative agencies' interpretations of their own rules and regulations. 2 We granted the petition for review on March 14, 1996, and now reverse the decision of the Tax Court.
The context in which this dispute arises is important to understanding this case. The State Board of Tax Commissioners promulgates rules governing real property assessments in the State of Indiana. See Ind.Code §§ 6-1.1-31-1 to -9 (1993). These rules explain to assessors and other interested persons how different types of property should be assessed. A general reassessment, effective in 1979, required the reassessment of all real property in Indiana. A comprehensive set of State Board regulations contained in 50 I.A.C. 2-1-1 to 2-13-5 (1979 ed., repealed 1989) governed all real property assessments between the 1979 general reassessment and the 1989 general reassessment. 3 In particular, 50 I.A.C. 2-2-6 ("1979 version") guided assessors in assigning a land "type" code to a particular parcel of land between the 1979 and 1989 reassessments. It was promulgated as follows:
TYPE refers to a one digit code denoting the classification of the parcel, or portion thereof, according to its use.
In entering acreage or square footage, the following type codes apply:
Enter 1 PRIMARY IND/COMM SITE to indicate that portion of the land utilized as the primary building site or plant site, including primary parking and yard storage.
Enter 2 SECONDARY IND/COMM SITE to indicate that portion of the land utilized for uses which are "secondary" to the primary use and, therefore, require individual treatment. Use Subcodes ...
(21) to indicate that the secondary use is parking; generally applicable to industrial operations.
(22) to indicate that the secondary use is yard storage, referring to that portion of the land predominantly utilized for material and/or product storage; generally applicable to industrial operations.
(23) to indicate the secondary use as a dump area, referring to that portion of the land predominantly utilized for refuse; generally applicable to industrial operations.
Enter 3 UNDEVELOPED to indicate that portion of land which is unused but which is capable of being used.
50 I.A.C. 2-2-6 (1979 ed.) (emphasis added).
The 1989 and 1990 assessments were governed by a revised set of rules published at 50 I.A.C. 2.1-1-1 to 2.1-6-1 (1988 ed., repealed 1992). 4 The regulation contained in 50 I.A.C. 2-2-6 ("1989 version") was updated and promulgated as follows:
"LAND TYPE" refers to a code that denotes the classification of all or part of the parcel according to its use.
The following codes apply to the entry of acreage or square footage:
Enter "1" to indicate "PRIMARY IND/COMM SITE" which is the portion of the land utilized as the primary building site or plant site.
Enter "2" to indicate "SECONDARY IND/COMM SITE," which is the portion of the land utilized for uses which are secondary to the primary use and, therefore, require individual treatment. Use the following subcodes, which generally apply to industrial operations:
"21" to indicate that the secondary use is parking
"22" to indicate that the secondary use is yard storage, referring to that portion of the land predominantly utilized for material or product storage
"23" to indicate the secondary use as a dump area, referring to that portion of the land predominantly utilized for refuse
Enter "3" to indicate "UNDEVELOPED", which is the portion of land that is usable but is unused.
50 I.A.C. 2.1-4-2(f) (1988 ed.) (emphasis added).
In April of 1989 the State Board issued Reassessment Bulletin RO-33 (RO-33) which provides in part:
The State Board of Tax Commissioners has defined that the primary building or plant site would be land utilized as follows:
1) The portion of land located under the buildings.
2) The portion of the land used for primary parking areas.
3) The portion of land used as roadways.
4) The portion of land used as primary yard storage.
Stipulated Exhibit 1 (emphasis added). A comparison of the 1979 version with the 1989 version reveals that the 1989 version does not include the specific language indicating that primary site "includ[es] primary parking and yard storage." However, RO-33 clarified that ambiguity. The question before this court is whether, under 50 I.A.C. 2.1-4-2, paved parking areas could be assessed in 1989 and 1990 as secondary only (as the Tax Court concluded) or as either primary or secondary (as the State Board contends). 5
The State Board argues that the Tax Court erred in its construction of 50 I.A.C. 2.1-4-2. The rules of statutory construction apply to the construction of administrative regulations, Indiana Dep't of Public Welfare v. Payne, 622 N.E.2d 461, 465 (Ind.1993), including State Board regulations. Western Select Properties, L.P. v. State Bd. of Tax Comm'rs, 639 N.E.2d 1068, 1073 (Ind.Tax 1994). Regarding the interpretation of the regulations of the State Board, the Tax Court states, "[T]he foremost goal of regulatory construction ... is to determine the intent of the State Board" by giving the words and phrases "their plain, ordinary, and...
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