Zakutansky v. State Bd. of Tax Com'rs

• Citation: 691 N.E.2d 1365
• Decision Date: 13 February 1998
• Docket Number: No. 64T10-9410-TA-00227,64T10-9410-TA-00227
• Parties: Peter ZAKUTANSKY et ux., Petitioners, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.
• Court: Tax Court of Indiana

Page 1365

691 N.E.2d 1365

Peter ZAKUTANSKY et ux., Petitioners, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.

No. 64T10-9410-TA-00227.

Tax Court of Indiana.

Feb. 13, 1998.

Philip D. Norman, Costas & Norman, Valparaiso, for Petitioners.

Jeffrey A. Modisett, Attorney General, Joel Schiff, Deputy Attorney General, Indianapolis, for Respondent.

FISHER, Judge.

Peter and Mary Jane Zakutansky (Zakutansky) appeal the final determination of the State Board of Tax Commissioners assessing their residential land as of the March 1, 1989 assessment date.

ISSUE

Whether Zakutansky's land assessment, pursuant to a valid land order, complies with Indiana law.

FACTS AND PROCEDURAL HISTORY

Zakutansky owns residential land and improvements in Porter County, Indiana. Zakutansky's property is located at 14 Cedar Trail, Portage, Indiana. This places his property in Ogden Dunes, a residential area located on the shore of Lake Michigan. In accordance with IND.CODE ANN. § 6-1.1-4-13.6 (West 1989), the Porter County Land Valuation Commission and the State Board promulgated a Land Order for use by assessing officials in Porter County for the 1989 general reassessment and subsequent years. Under that order, the land values in Ogden Dunes vary between $100 to $900 per front foot.

Consistent with the Land Order, Zakutansky's land was assessed at $350 per front foot. Believing this value to be too high, Zakutansky filed a Petition for Review of Assessment (Form 130) with the Porter County Board of Review (BOR). After a hearing, the BOR allowed for a 20% reduction of his total land assessment due to a negative influence factor (excess frontage). However, the BOR did not afford Zakutansky all the relief he sought. Zakutansky subsequently filed a Petition for Review of Assessment (Form 131) with the State Board. See IND.CODE ANN. § 6-1.1-15-3 (West 1989) (amended 1993, 1997). After a hearing, the State Board denied Zakutansky's protest. Zakutansky now appeals to this court. Additional facts will be supplied as necessary.

STANDARD OF REVIEW

The State Board is charged with the responsibility of interpreting the property tax laws and ensuring that property assessments are made in the manner prescribed by law. See Poracky v. State Bd. of Tax Comm'rs, 635 N.E.2d 235, 236 (Ind.Tax Ct.1994). This Court has recognized that the State Board must be given a great deal of discretion in carrying out these responsibilities. Consequently, the party challenging an assessment based on a valid land order issued by the State Board bears the burden of proving that the assessment is unsupported by substantial evidence, constitutes an abuse of discretion, exceeds the State Board's statutory authority, or is arbitrary or capricious. Vonnegut v. State Bd. of Tax Comm'rs, 672 N.E.2d 87, 89 (Ind.Tax Ct.1996), review denied.

DISCUSSION AND ANALYSIS

The State Board's Duty to Review Land Orders

Zakutansky contends that the State Board's determination of the value of his land violates Article X, section 1 of the Indiana Constitution. Specifically, Zakutansky maintains that the Land Order does not result in a uniform and equal assessment of his property since the base rates of nearly identical properties in his neighborhood are $200 to $250 less per front foot. Additionally, Zakutansky contends that the wrong Depth Table was used in calculating his property's base rate. Zakutansky submitted evidence of the valuation of similar properties that are nearby in Ogden Dunes. Although in a different subdivision within Ogden Dunes, these properties are located in a similar manner to Zakutansky's property (i.e., third row of houses from Lake Michigan, no view of the lake or the Chicago skyline).

The State Board found no error in the assignment of a $350 per front foot value to Zakutansky's land. At trial, the State Board presented testimony from Mr. Airhart, the State Board hearing officer, who explained that the values were correctly determined according to the Land Order for Ogden Dunes. (Tr. at 40). The State Board's position is that because the Land Order is valid, as this Court previously found in Poracky, 635 N.E.2d at 239, any assessment done pursuant to such an order must also be valid. Airhart testified that Zakutansky's property was valued consistently and fairly with other properties within his Ogden Dunes subdivision.

(Tr. at 41-42; Joint Ex. 1 at 14 (Ogden Dunes Land Order); Resp. Ex. 1 (plat map from Portage Township Assessor's Office)). Airhart explained that the properties that Zakutansky was using as a comparison were actually from a separate subdivision within Ogden Dunes. (Tr. at 40-41). The State Board concluded that although the properties were in the same neighborhood, they were not in the same subdivision and therefore irrelevant to the determination of Zakutansky's assessment.

Section 6-1.1-4-13.6 requires the State Board to make modifications it considers necessary to ensure uniformity and equality in assessments. The State Board argues that Zakutansky's assessment is valid because the applicable Land Order is valid. It contends that section 6-1.1-4-13.6 limits Zakutansky's right to challenge the assessment of his land to alleging an improper application of the Land Order itself. By this reasoning, in the event that the State Board initially fails to make the necessary modifications to provide for uniformity and equality (and in the event the county and township assessors fail to appeal the values to the State Board) individual taxpayers have no remedy to seek review of an assessment that is not uniform and equal. To accept this proposition would force this Court to find that taxpayers only have the right to have their land assessments reviewed for compliance with the Land Order. The Court refuses to do so.

First, to accept the State Board's position (i.e., that its failure to act forecloses a taxpayer from asserting a constitutional right) would put the constitutional rights of taxpayers at the mercy of State Board inaction. Such a result is absurd. The purpose behind Article X, section 1 is to protect from the whim of some governmental officer a right considered fundamental. ¹

Second, the State Board's position belittles taxpayers' statutory rights to challenge their assessments. IND.CODE ANN. §§ 6-1.1-15 (West 1989 & Supp.1997); Williams Indus. v. State Bd. of Tax Comm'rs, 648 N.E.2d 713, 718 (Ind. Tax Ct.1995). Zakutansky has the right to seek judicial review when the underlying basis for the State Board's assessment does not comply with his constitutional and statutory rights to a uniform and equal assessment. Section 6-1.1-4-13.6 does not address the scope of an individual taxpayer's right to challenge the assessment of his land. Yet the State Board asks this Court to read a limitation of that right into that section. This Court will do no such thing. An intent on the part of the legislature to deprive taxpayers of the right to allege a violation of Article X, section 1 in their assessments will not be presumed from silence. The ardent wish of the State Board is no substitute for the voice of legislature.

Furthermore, when a taxpayer challenges a Land Order alleging that his assessment violates Article X, section 1 of the Indiana Constitution, it is no defense to answer that the assessment comports with the Land Order. A taxpayer's constitutional right to uniformity and equality of assessment (and the State Board's statutory duty to ensure uniformity and equality) in property tax assessments refutes the State Board's position. The State Board's position elevates an administrative order to a position of greater importance than a taxpayers constitutional right. This Court will not countenance such a preposterous result. Administrative orders yield to constitutional provisions, not the other way around. If an otherwise valid Land Order results in an individual assessment that is not uniform and equal, the Land Order as applied to the assessment yields to the constitution. See IND. CODE ANN. § 1-1-2-1 (West 1981); Cf. Universal Group Ltd. v. Department of State Revenue, 642 N.E.2d 553, 557 (Ind. Tax Ct 1994) (regulation invalid if it is in conflict with state's organic law).

The State Board's constitutional and statutory duty to review assessments requires it to review individual assessments to ensure equality and uniformity. It therefore follows that the State Board must review the Porter County Land Order to ensure that Zakutansky's real property was assessed in an equal and uniform manner. As the State In this matter, the State Board simply relied on the Porter County Land Valuation Order, stating that Zakutansky's land was priced according to the Order, which resulted in no change in the assessment. In effect, the State Board's position is that it had no obligation, upon request by an individual taxpayer, to review the Porter County Land Valuation Order to ensure that the Order provided for a uniform and equal assessment for the real estate in question. This position seeks to foreclose any judicial review of its actions and discharge the duties that Article X, section 1 imposes upon the State Board. As this Court stated in Bielski, there is a constitutional right to review administrative action. 627 N.E.2d at 885-86. This Court also held that the State Board cannot refuse to review allegations of errors explicitly within its mandate and then claim its refusal is immune from judicial scrutiny because it refused to take action. Id. Instead, the State Board has a concrete obligation to ensure uniformity and equality in the assessment of Zakutansky's real estate. See North Park Cinemas, Inc v. State Bd. of Tax Comm'rs, 689 N.E.2d 765, 768 (Ind. Tax Ct.1997). Zakutansky's petition triggered the State Board's duty to review the Porter County Land Order to determine if Zakutansky's real property was assessed in a equal and uniform manner; the State Board cannot simply state that the assessment complies with a Land Order and refuse...