Convention Headquarters Hotels v. Marion Cty. Assessor

236 N.E.3d 747

CONVENTION HEADQUARTERS HOTELS, LLC, Petitioner,

v.MARION COUNTY ASSESSOR, Respondent.

Cause No. 19T-TA-00021

Tax Court of Indiana.

May 24, 2024

ON DIRECT APPEAL FROM THE INDIANA BOARD OF TAX REVIEW

ATTORNEYS FOR PETITIONER: BENJAMIN A. BLAIR, DAVID A. SUESS, DANIEL R. ROY, FAEGRE DRINKER BIDDLE & REATH LLP, Indianapolis, IN

ATTORNEYS FOR RESPONDENT: JESSICA R. GASTINEAU, JOHN P. LOWREY, OFFICE OF CORPORATION COUNSEL, Indianapolis, IN, RAYMOND J. BIEDERMAN, SEAN P. BURKE, HAMISH S. COHEN, JEFFREY N. FURMINGER, MATTINGLY BURKE COHEN & BIEDERMAN, LLP, Indianapolis, IN

WENTWORTH, Senior J.

Convention Headquarters Hotels, LLC ("Convention HQ") claims the Marion County Assessor’s 2010 assessment of its hotel, which was then under construction, violated its constitutionally guaranteed rights to equal protection, due process, uniformity and equality in assessment and taxation, and equal privileges and immunities. The essence of Convention HQ’s argument is that the Assessor had a general practice of assessing some, but not all, commercial properties under construction in Marion County on the assessment dates between 2006 and 2019. Upon review, the Court finds that the Assessor did assess all of these commercial properties under construction, and therefore, the 2010 assessment of Convention HQ’s property did not violate its constitutionally guaranteed rights.

FACTS

Convention HQ owns a 4.382-acre parcel of land in downtown Indianapolis, Center Township, Marion County, Indiana. (See Trial Tr. Vol. 1 at 88-89;¹ Joint Stipulation of Facts ("Stip.") ¶¶ 1-2, Sept. 17, 2021;² Ex. P-1 at 2.) The parcel is located in Marion County Tax District 101³ and has been assigned the State Parcel Number 49-11-02-185-001.000-101 and the County Parcel Number 1055259 for identification and record-keeping purposes. (See Stip. ¶¶ 1, 34; Ex. P-1 at 2.) See also 50 Ind. Admin. Code 26-2-31 (2024) (defining the term "parcel number"); 50 Ind. Admin. Code 26-8-1 (2024) (regarding the parcel index numbering system for real property).

In early 2008, the demolition of a Courtyard hotel on the parcel began, paving the way for the construction of several new facilities. (See Ex. R-4 at 154; Ex. R-7 at 172; Ex. R-91 at 2753-55.) Construction of the JW Marriott Indianapolis hotel began on May 27, 2008. (See Stip. ¶¶ 2, 25; Ex. R- 23 at 254.) Anticipated to open in the first quarter of 2011, the JW Marriott included a 34-story glass tower, over 105,000 square feet of meeting space, an enclosed skyway leading to the Indiana Convention Center, and a multilevel underground parking garage. (See Ex. R-23 at 254-57; Ex. R-91 at 2679-80, 2776; Ex. R-96.)

For the 2009 tax year, the Assessor assigned Convention HQ’s property an assessed value of $18,479,100.⁴ (See, e.g., Ex. R-5.) He valued the land at $15,270,400, the pre-existing improvements⁵ at $3,208,700, and the under-construction hotel at zero dollars ($0). (See Ex. R-29 at 1740; Trial Tr. Vol. 2 at 60-62; Trial Tr. Vol. 3 at 6-8.)

After conducting a site visit and reviewing certain valuation data, including the hotel’s income and expense projections, the Assessor valued the land for the 2010 assessment date at $15,270,400. (See Exs. R-8 to R-11; Stip. ¶ 27.) He assigned percentage completion factors⁶ of 40% and 70% to the incomplete buildings and skywalk, valuing them at $71,716,700. (See Ex. R-29 at 1740-44; Stip. ¶¶ 27-28.) Consequently, Convention HQ’s assessment increased from $18,479,100 in 2009 to $86,987,100 for the 2010 tax year. (See Ex. R-29 at 1740-43; Stip. ¶ 27.)

PROCEDURAL HISTORY

On November 24, 2010, Convention HQ sought review of its 2010 assessment with the Marion County Property Tax Assessment Board of Appeals (the "PTABOA"), but the appeal languished with no discernable activity from the PTABOA for over six years. (See Stip. ¶ 14; Ex. R-21.) See also Convention Headquarters Hotels, LLC v. Marion Cnty, Assessor (CHH III), 132 N.E.3d 77, 79 (Ind. Tax Ct. 2019). On June 6, 2017, Convention HQ transitioned its appeal to the Indiana Board of Tax Review. Id.

Approximately a year later, Convention HQ filed direct appeals on two separate occasions with this Court under Indiana Code Section 6-1.1-15-5(g). Convention Headquarters Hotels, LLC v. Marion Cnty. Assessor (CHH I), 119 N.E.3d 245 (Ind. Tax Ct. 2019); Convention Headquarters Hotels, LLC v. Marion Cnty. Assessor (CHH ID, 126 N.E.3d 80 (Ind. Tax Ct. 2019). Convention HQ filed these appeals, arguing in each that the maximum tune for the Indiana Board to give notice of its final determination had elapsed. CHH I, 119 N.E.3d at 246-48; CHH II, 126 N.E.3d at 81-82. In each instance, however, the Court held that the appeal was commenced before the maximum time had elapsed and remanded them to the Indiana Board to make its final determination. CHH I, 119 N.E.3d at 248-50; CHH II, 126 N.E.3d at 82-84.

On June 28, 2019, after the maximum time actually had elapsed, Convention HQ initiated this direct appeal. CHH HI, 132 N.E.3d at 80. Convention HQ asserted five claims, alleging that the 2010 assessment of its partially constructed hotel violated the Equal Protection and Due Process Clauses of the Fourteenth Amendment to the United States Constitution, its civil rights pursuant to 42 U.S.C. § 1983 (the "1983 Claim"), and the Property Taxation and Equal Privileges and Immunities Clauses of the Indiana Constitution.⁷ Id. Twice thereafter, the Assessor unsuccessfully moved to dismiss Convention HQ’s direct appeal. Id. at 80-84; Convention Headquarters Hotels, LLC v. Marion Cnty. Assessor, Case No. 19T-TA-00021 (Ind. Tax Ct. Sept. 23, 2019) (order denying the Assessor’s second motion to dismiss).

In June of 2020, Convention HQ moved for partial summary judgment, claiming the Assessor had assessed only a few of the commercial buildings that were under construction between 2006 and 2019, including its own, which violated its federal and state constitutional rights.⁸ Convention Headquarters Hotels, LLC v. Marion Cnty. Assessor (CHH V), 175 N.E.3d 1212, 1217-18 (Ind. Tax Ct. 2021). On August 5, 2021, the Court denied Convention HQ’s motion, concluding that the case must proceed to trial because there was a genuine issue of material fact: whether all commercial properties under construction in Marion County between 2006 and 2019 had been assessed. Id. at 1221, 1229. The three-day trial was held and concluded on February 4, 2022.

In presenting its case-in-chief, Convention HQ offered the testimony of Jeffrey A. Hill as an adverse witness. (Trial Tr. Vol. 1 at 13, 22-23, 42.) Mr. Hill served as the elected township assessor of Lawrence Township, Marion County, Indiana from 2007 through 2011. (See Trial Tr. Vol. 1 at 43-44.) From January 2009 through January 2021, he worked as a Commercial and Industrial Valuation Analyst ("Analyst") for the Assessor. (Trial Tr. Vol. 1 at 43-44.) Mr. Hill’s Analyst duties required him to work primarily on property tax appeals and assessments of hotels, nursing homes, and apartments. (See Trial Tr. Vol. 1 at 4348.) Mr. Hill was certified by the Department of Local Government Finance (the "DLGF") as a Level III Assessor-Appraiser, but he did not have any certifications or designations from the Appraisal Insti- tute or the International Association of Assessing Officers. (Trial Tr. Vol. 1 at 45.)

In response, the Assessor offered testimony from both Hill and a current employee, Gabe Deaton. (See Trial Tr. Vol. 1 at 13-15; Trial Tr. Vol. 2 at 5-6, 198-200.) Mr. Deaton, a DLGF certified Level III Assessor-Appraiser, began his employment with the Marion County Assessor’s Office in January 2009 as the Deputy Director of Residential Assessment, becoming the Director of Assessment in 2012. (See Trial Tr. Vol. 2 at 199-202, 206; Trial Tr. Vol. 3 at 52.) As the Director of Assessment, Mr. Deaton oversaw the assessment of all real property and business personal property in Marion County. (Trial Tr. Vol. 2 at 202.)

The Court conducted oral argument on July 14, 2022. Additional facts will be supplied as necessary.

STANDARD OF REVIEW

[1] When the Indiana Board fails to enter a final determination within the maximum time allowed by statute, the Tax Court hears the resulting direct appeal, authorized under Indiana Code Section 6-1.1-15-5(g), standing in the shoes of the Indiana Board and determines the matter de novo. See Rolls-Royce Corp. v. Marion Cnty. Assessor, 132 N.E.3d 522, 525 (Ind. Tax Ct. 2019); Ind. Code § 6-1.1-15-5(g) (2024).

LAW

[2] Indiana’s Constitution states that "the General Assembly shall provide, by law, for a uniform and equal rate of property assessment and taxation and shall prescribe regulations to secure a just valuation for taxation of all property, both real and personal." Ind. Const. art. 10, § 1(a). The General Assembly mandated that "all tangible property … [in Indiana] on the assessment date of a year is subject to assessment and taxation for that year." Ind. Code § 6-1.1-2-1 (2024). "[T]he annual assessment date for tangible property is: (1) March 1 in a year ending before January 1, 2016; and (2) January 1 in a year beginning after December 31, 2015." Ind. Code § 6-1.1-2-1.5(a) (2024). Consequently, all real property must be annually assessed and taxed, including all improvements to real property that may be under construction on the assessment date. See, e.g., Jones v. Jefferson Cnty. Assessor, 51 N.E.3d 461, 463-64 (Ind. Tax Ct. 2016) (upholding the assessment of a residence that was under construction on two different assessment dates).

During the 2006 through 2019 tax years, Indiana used a mass appraisal system that valued real property using a cost approach appraisal methodology. See, e.g., Piotrowski BK #5643, LLC v. Shelby Cnty. Assessor, 177 N.E.3d 127, 131 (Ind. Tax Ct. 2021); Gillette v. Brown Cnty. Assessor, 54 N.E.3d 454, 456 (Ind. Tax Ct. 2016). The resulting valuation represented the property’s "market value-in-use," which is defined as the value "of a property for its current...