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10/22/87 LANTERN HILLS CONSERVANCY DISTRICT v.

October 22, 1987.

LANTERN HILLS CONSERVANCY DISTRICT, PETITIONER,
v.
INDIANA STATE BOARD OF TAX COMMISSIONERS, RESPONDENT.



APPEAL FROM FINAL DETERMINATION OF STATE BOARD OF TAX COMMISSIONERS

Author: Fisher

FISHER, J.

The Petitioner, Lantern Hills Conservancy District, petitioned the Respondent, State Board of Tax Commissioners, for the authority to issue bonds for the construction of sewers. The remonstrators filed objections on the grounds that the bond issuance was unnecessary or excessive. The State Board denied the petition and this appeal followed.

The residents of Lantern Hills were in need of a sewer system. The City of Indianapolis Department of Public Works (DPW) sought federal funds for construction of sewers, but failed to meet appropriate deadlines. In 1984, the DPW hired an engineering firm to design a sewer installation plan to be constructed at the expense of the residents through the issuance of Barrett Law bonds. Despite the objections of many residents regarding the accuracy and cost of the proposed sewer project, the DPW approved the plan. Sixty-three percent of the residents then petitioned the Circuit Court of Marion County to establish a conservancy district under the Indiana Conservancy Act, IND. CODE 13-3-3-1 et seq.

On January 24, 1986, the circuit court ordered the Conservancy District established. On July 14, 1986, the Conservancy District filed a petition under IC 6-1.1-20-3, seeking authority to issue bonds for the construction of the sewers. Ninety-five signatures were certified for the bond issue. In August 1986, a petition against the bond issue, certified to have 83 signatures, failed to defeat the bond issue under IC 6-1.1-20-4(b). In August 1986, ten or more taxpayers filed a petition objecting to the bond issue because it was unnecessary or excessive under IC 6-1.1-20-5 alleging:

1. That the issuance of bonds by the Lantern Hills Conservancy District is unnecessary because the City of Indianapolis is willing to install the sewers in the proposed district.

2. That said issuance of bonds is excessive in that the organizers and directors of the Lantern Hills Conservatory District informed the residence [sic] of said district that the sewer would be put in at a cost not to exceed $850,000.

3. That the interest rate of nine per cent (9%) is not fully determined and is in excess of the amount of interest the taxpayers of Marion County would have to pay under the Barrett Law.

The State Board, by its hearing officer Bill Carter, held a hearing on September 24, 1986. Carter recommended disapproval of the bond issue. He concluded that "the need for a conservancy district and the need for a bond issue do not exist, since the [City] has existing plans for sewer installation in Lantern Hills." On February 25, 1987, the State Board found for "the petitioners in opposition and [disapproved] the incurring of an indebtedness by the issuance of general obligation bonds."[Footnote 1]

The issues before this Court are:

1) Whether the State Board may gather additional evidence under IC 6-1.1-30-12 without allowing the parties an opportunity to explain and rebut such evidence;

2) Whether the State Board's scope of inquiry under IC 6-1.1-20-5 is limited by the provisions of the Indiana Conservancy Act; and

3) Whether the State Board's decision to disapprove the bond issue is supported by substantial evidence and is according to law.

The Conservancy District contends that the State Board's decision was not supported by substantial evidence because most of the evidence considered by State Board was outside the proper scope of inquiry and was obtained in violation of the ...


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