Hamilton Square Investment, LLC. v. Hamilton County Assessor
2016 Ind. Tax LEXIS 41, 60 N.E.3d 313 (2016)
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Rule of Law:
For the purpose of property tax classification, the term 'common areas' associated with a multi-unit residential building includes not only interior spaces like hallways but also external amenities, such as pools and clubhouses, that are intended for the shared use of tenants.
Facts:
- Hamilton Square Investment, LLC owns a 200-unit apartment complex situated on approximately 20 acres of land in Westfield, Indiana.
- For the 2012 tax year, the Hamilton County Assessor classified the property for tax purposes.
- The Assessor classified the apartment buildings and the land directly under them as 'residential property,' subject to a 2% tax cap credit.
- The Assessor classified other amenities, including paving, storage sheds, a pool, and a clubhouse, as 'nonresidential property,' subject to a higher 3% tax cap credit.
- These nonresidential-classified amenities were available for the shared use of the complex's tenants.
Procedural Posture:
- In May 2013, Hamilton Square filed a Notice of Review with the Hamilton County Property Tax Assessment Board of Appeals (PTABOA) to challenge the Assessor's classification.
- The PTABOA took no action on the appeal.
- On April 7, 2014, Hamilton Square filed a Petition for Review with the Indiana Board of Tax Review.
- The parties filed cross-motions for summary judgment with the Indiana Board.
- On April 1, 2015, the Indiana Board issued a final determination upholding the Assessor's classification.
- Hamilton Square's subsequent petition for rehearing was denied by the Indiana Board.
- On May 15, 2015, Hamilton Square initiated an original tax appeal in the Indiana Tax Court.
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Issue:
Does the term 'common areas' in Indiana's Residential Property Statute (Ind. Code § 6-1.1-20.6-4) include amenities located outside the physical footprint of an apartment building, such as clubhouses and pools, for the purpose of property tax classification?
Opinions:
Majority - Fisher, Senior Judge
Yes, the term 'common areas' includes amenities outside the physical footprint of the main building. Limiting 'common areas' to only interior spaces like hallways and stairways would render that portion of the statute superfluous, as those areas are already inherently part of the 'building' mentioned in the statute. To give effect to the entire statutory text, 'common areas' must be interpreted to include land and improvements, whether attached or separated from the main building, so long as they are available for the shared use of tenants. The statute's language restricting land to 'the area of the building footprint' applies to the land on which the dwelling itself is located, not to the common areas.
Analysis:
This decision clarifies the scope of 'residential property' for tax cap purposes in Indiana, benefiting owners of multi-unit properties with amenities. By rejecting a narrow interpretation limited to a building's footprint, the court ensures that shared facilities integral to the residential experience receive the same favorable tax treatment as the dwelling units themselves. The case serves as a key example of statutory interpretation, specifically the canon against surplusage, where courts strive to give independent meaning to every word in a statute. This ruling provides clear guidance to tax assessors and prevents them from artificially separating a unified residential complex into differently taxed components.
