Tax Court: Mass Ave building can keep charitable purposes exemption for 2010 tax year

A seven-story, mixed-use development that makes up a large chunk of Indianapolis’ Massachusetts Avenue can keep its charitable exemption for the 2010 tax year despite opposition from the Marion County assessor, the Indiana Tax Court has ruled.

In 1999, Riley-Roberts Park LP purchased a building that is now known as The Davlan on for $10. The boarded up and dilapidated mixed-use building was restored by Riley-Roberts using private and public sources, which had an “immediate trickle-down effect” that led to the revitalization of other commercial establishments in the area.

Fully renovated, the first floor has 13,000 square feet for retail space and a mix of 50 one- and two-bedroom apartments on the remaining floors. Riley-Roberts charged market rent for 14 of the units and below-market rent for the remaining 36 units.

That’s where the trouble began for Riley-Roberts, who during the 2010 to 2016 tax years leased the retail space to various for-profit businesses and the below-market apartments to individuals with annual incomes at or below 60% of the area median income for Marion County.

The Marion County Property Tax Assessment Board of Appeals rejected Riley-Roberts’ requests for a 100% charitable purposes exemption on The Davlan for the 2006 and 2008 tax years, finding it only qualified for a 54% exemption.

Believing that its partial exemption continued to be valid for the 2010 tax year, as well, Riley-Roberts did not file an exemption application for that year. But the PTABOA issued a “Notice of Action on Exemption Application” that revoked Riley-Roberts’s 2010 charitable purposes exemption for failing to provide information showing that the property “provides a benefit to the public sufficient to justify the loss of tax revenue.”

The parties then fought for the next decade about the issue until the Indiana Board of Tax Review issued a final determination finding that various parts of Indiana Code § 6-1.1-11-1 and 6-1.1-13-1 authorized the PTABOA to revoke Riley-Roberts’ 2010 charitable purposes exemption. The board also found that Riley-Roberts waived its constitutional claims because it failed to support them with sufficient evidence and “cogent” argument, and that none of the evidence showed The Davlan was owned, occupied and predominantly used for charitable purposes during the years at issue.

But the Indiana Tax Court found the PTABOA’s actions were ultra vires and void, reversing and remanding in Riley-Roberts Park, LP v. Joseph O’Connor, in his official capacity as Marion County Assessor, 21T-TA-24.

Up for debate before the Tax Court was the question of whether the PTABOA had the statutory authority to revoke Riley-Roberts’ 2010 charitable purposes exemption. It did not, Judge Martha Blood Wentworth concluded.

The Tax Court found that none of the cited provisions — sections 6-1.1-11-3.5, 6-1.1-11-4, and 6-1.1-11-7 — of Chapter 11 authorized the PTABOA’s revocation of Riley-Roberts’ 2010 charitable purposes exemption.It found similarly for the Chapter 13 sections — 6-1.1-13-2, 6-1.1-13-3 and 6-1.1-13-4 —cited by the Indiana board.

“Here, the evidence and arguments presented during the administrative proceedings fail to show that the assessment roll needed to be corrected because there were errors in the names of persons, the description of The Davlan, or the assessed value of The Davlan,” Wentworth wrote.

Finally, the court concluded that none of the equitable principles advanced by either the Indiana board or the assessor provided the PTABOA with authority to revoke Riley-Roberts’ 2010 charitable purposes exemption. It therefore remanded the case to the Indiana board for actions consistent with the Tax Court’s opinion.

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