Tax Court orders reassessment of Westfield apartment property

The Indiana Tax Court decided Wednesday that the Hamilton County assessor misconstrued a portion of the Residential Property Statute in 2012, forcing the assessor to reclassify a Westfield apartment complex and its surrounding property.

During the 2012 tax year, the Hamilton County assessor assigned a 200-unit apartment complex in Westfield owned by Hamilton Square Investment LLC an overall gross assessed value of $5,030,900, with 70 percent of the property classified as residential and 30 percent classified as nonresidential.

Hamilton Square filed a notice of review with the Hamilton County Property Tax Assessment Board of Appeals, saying it believed the property had been incorrectly classified. However, the board took no action on the issue, so Hamilton Square filed a petition for review with the Indiana Board of Tax Review in April 2014.

In its argument before the review board, Hamilton Square said some of the residential property had been misclassified by “limit(ing) the term ‘common areas’ to those areas shared only by the actual dwelling units, such as common hallways, and not those areas shared by residents.”

The Indiana Board of Tax Review upheld the assessor’s classification of the property in April 2015 and rejected Hamilton Square’s subsequent petition for a rehearing. The property owner then filed an appeal to the Tax Court in Hamilton Square Investment, LLC v. Hamilton County Assessor, 49T10-1505-TA-00018, arguing once again that the assessor had incorrectly limited the term “common areas” to “solely the land and improvements within the footprint of a multi-unit apartment building.”

In its Wednesday opinion, the Indiana Tax Court wrote that the statute regarding common areas is susceptible to more than one interpretation and, therefore, is subject to judicial construction.

In its interpretation of the statute, the Tax Court wrote that “common area” was meant to be understood as both the land and the improvements that are attached to and separated from a multi-unit apartment building, as long as the area is available for shared tenant use.

“Moreover, when the sections of the Residential Property Statute are read in conjunction with one another rather than piecemeal, it is apparent that the Assessor has misconstrued the import of the restrictive phrase, ‘not exceeding the area of the building footprint’ in…the Residential Property Statue,” the court wrote.

The Tax Court reversed the board’s determination in the case and remanded it to the board to instruct the assessor to take actions consistent with the Wednesday opinion.