Tax Court finds assessment properly included land

A tenant leasing 31,000 square feet for the operation of five restaurants on the ground level of a parking garage owned by the city of Indianapolis found the Indiana Tax Court had no appetite for the argument that the lease included only the building and not the land underneath.

Square 74 Associates LLC filed Form 133 petitions in November 2012, challenging the Marion County Assessor’s 2008 through 2011 assessments of the storefront space in the parking garage. After the Marion County Tax Assessment Board of Appeals adjusted the assessments, Square 74 again protested the assessed values, claiming all the assessments contained mathematical errors.

Specifically, the tenant alleged that not only were numerous building components double-assessed, but also that the assessment included the land that was allegedly the responsibility of the city.

In May 2018, Square 74 filed a motion for summary judgment with the Indiana Board of Tax Review. It asserted the land assessments were made against the wrong person and illegal as a matter of law because the terms of its lease stated that it “has no right, interest, or responsibility as to the land” beneath the tenant spaces.

The assessor responded by filing a cross-motion to dismiss. In arguing Square 74’s appeals should be dismissed, the assessor contended the tenant complained of errors that were not objective errors and, therefore, could not be corrected under the Form 133 appeals process.

Once the Indiana board granted the assessor’s cross-motion and dismissed the tenant’s petitions for correction of error, Square 74 appealed to the Tax Court. However, finding no basis for reversal, the Tax Court affirmed the dismissal in Square 74 Associates LLC v. Marion County Assessor, 19T-TA-00020.

First, the Tax Court found that none of the master lease provisions that Square 74 presented expressly stated that the tenant spaces excluded the land.

“Here, the issue before the Court, whether Square 74’s lease documentation defines its leasehold interest to exclude the land under the tenant spaces, requires subjective judgment for its resolution because neither document expressly states that the land is excluded,” Judge Martha Wentworth wrote. “Accordingly, the Court finds no basis for reversing the Indiana Board’s final determination with respect to its claim.”

Next, the Tax Court was also unpersuaded by Square 74’s argument that, when read together, Indiana Code §§ 6-1.1-1-15 and -10-37(b) and 50 IAC 1-3-3 exclude land from the leasehold interest

“Contrary to Square 74’s claims, therefore, Indiana Code § 6-1.1-1-15, Indiana Code § 6-1.1-10-37(b), and 50 IAC 1-3-3 do not establish that its leasehold interest in the tenant spaces excluded the underlying land during the years at issue as a matter of law,” Wentworth wrote. “Accordingly, Square 74 has not shown that the Indiana Board erred in dismissing its case for failure to state a claim upon which relief may be granted.”