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X/&24Technical Document Style.. 23  Ԁ.   CRight ParRight-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a)3|x<6X9`(*Courier 12pt10cpiXXx6X@JQX@( T$   d^!$(G.2$ FT!   XX     0  MARVINBERKELESLIEMcWILLIAMS($   0  LANTRIPBERNSTEINBarretBraceyFentress Holt2 0Indent123  2" 0Indent20 23  }ӀD,eӀ2, 0Indent30 0 23  26 0Indent40 0 0 23  2@ 0Indent50 0 0 0 23  2J 0Indent60 0 0 0 0 23  2T 0Indent70 0 0 0 0 0 23  2^ 0Indent80 0 0 0 0 0 0 23  QSVWXYZ[ ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P 8Mac DefaultMac Default ` X("$    GGGG'dxd<  9p`(Courier New% Line 7 diiii7Border 1ddcjC << G<  9p`(Arial  F!  #d#h  ll   YYY FILEDlX December17,1996CecilCrowson,Jr.lAppellateCourtClerk  F!#d#h  I$h         T.C.A.6627101etseq.  F!#d#h  I$h         TheAppellee'scomplaintallegesthat"inordertoreducethecostsofcarryingtheUnitsandtoprovidefortheoccupancyoftheUnitswhiletheyareawaitingsale,thoseUnitsthathavenotbeensoldaremadeavailableforoccupancybyothersonanightly,weektoweek,monthtomonthorothershorttermbasis."  F F!#d#h  I$h        ݀"Thestateboardofequalizationhasjurisdictionoverthevaluation,classificationandassessmentofallpropertiesinthestate."T.C.A.6751501.  F!#d#h  I$h         SeealsoT.C.A.675501whichprovidesthat"[all]realpropertywhichisused,orheldforuse,fordwellingpurposeswhichcontainstwo(2)ormorerentalunitsisherebydefinedandshallbeclassifiedas'industrialandcommercialproperty.'"  F!#d#h  I$h         TheHorizontalPropertyActprovidesinpartasfollows:      Taxes,assessmentsandotherchargesofany taxingunitofthisstate,orofanypolitical subdivision,oranyothertaxingorassessing authorityshallbeassessedagainstandcollected oneachindividualapartment,eachofwhichshall becarriedonthetaxbooksasaseparateand distinctentityforthatpurpose,andnoton thebuildingorpropertyasawhole. T.C.A.6627120(a).PtPtHH(FG(HH(d'hStyl{WP}01  HH  2$HH  Geneva  <Px443!#4$*$$*$ KK  Geneva  Geneva .,6 Geneva   h HD: Geneva  h HD: Geneva cC<< CLevel 1Level 2Level 3Level 4Level 5($$   1  ' dxdP Pd F! . h  ݛ  7߮XXdd7\RA'\ `    , 5  i u` ќRkmjA1-j|`  `@Rߛ @ INTHECOURTOFAPPEALSOFTENNESSEE@ EASTERNSECTIONCASTLEWOOD,INC.@ ) ANDERSONCOUNTY@ ) 03A019606CH00185 PlaintiffAppellee @ )@ )@ ) v. @ ) HON.WILLIAME.LANTRIP,̀@ ) CHANCELLOR @ )ANDERSONCOUNTY,TENNESSEE;@ )PATSYSTAIR,Trustee;OWEN@ ) K.RICHARDSON,TaxAssessor;  @ ) CITYOFOAKRIDGE,TENNESSEE;@ )andtheTENNESSEESTATEBOARD@ )OFEQUALIZATION@ )@ ) DefendantsAppellants@ ) VACATEDANDREMANDEDDAVIDA.STUARTOFCLINTONFORAPPELLANTSANDERSONCOUNTY,PATSYSTAIRandOWENK.RICHARDSONCHARLESW.BURSON,AttorneyGeneralofTennessee,andCHRISTINELAPPS,AssistantAttorneyGeneral,OFNASHVILLEFORAPPELLANTTENNESSEESTATEBOARDOFEQUALIZATIONBERNARDE.BERNSTEINandDORISC.ALLENOFKNOXVILLEFORAPPELLEE    OPINION         Goddard,P.J.  ThisisanappealfromajudgmententeredbytheAndersonCountyChanceryCourtholdingthattheAppellee'scondominiumunitsshouldbeclassifiedasresidentialpropertyandassessedat25percentoftheirvalueforpropertytaxpurposesratherthanbeingclassifiedasindustrialandcommercialpropertyandassessedat40percentoftheirvalue.   AndersonCounty,theCityofOakRidge,andtheTennesseeStateBoardofEqualization(collectivelyreferredtoas"Appellant")raisetwoissuesonappeal.Werestatethemasfollows:        I.TheTrialCourterredindenyingtheAppellantsmotiontodismissforlackofjurisdictionbecausetheAppelleefailedtoexhaustitsadministrativeremediesbeforetheStateBoardofEqualization. II.TheTrialerredindeterminingthattheAppelleescondominiumsshouldbeclassifiedasresidentialpropertyratherthanindustrialandcommercialproperty.         Thefactswerestipulatedtobythepartiesandarenotindispute.TheAppelleeisaTennesseeCorporationwithitsofficeandprincipalplaceofbusinessinOakRidge,inwhichitdevelopedacondominiumprojectconsistingof86condominiumunits.Inconnectionwithitsdevelopmentofthecondominiumunits,theAppelleefiledthenecessaryinstrumentstoeffectahorizontalpropertyregime.Thecondominiumprojectconsistedof19buildings,eachcontainingfourtosixindividualcondominiumunits.  TheentiredevelopmentwasstructuredpursuanttotheHorizontalPropertyAct. n   ׀Eachunitwasofferedforsaleseparatelyasasingleunitresidence.Sixcondominiumunitshavebeensold.Theremaining80units,whichcontinuetobeofferedforsaleasseparateresidentialunits,arebeingrented. o   כ   TheAndersonCountyTaxAssessordeterminedthattheunitsownedbytheAppelleeshouldbeclassifiedasindustrialandcommercialpropertyandimposedanassessmentof40percentofthevalueofthepropertyfordeterminingthepropertytaxes.TheTaxAssessoralsodeterminedthatthesixcondominiumunitsthatwereindividuallyownedshouldbeclassifiedasresidentialpropertyandimposedanassessmentof25percentofthevalueofthepropertyfordeterminingtheirpropertytaxes.  All86condominiumunitswereconstructedinthesamemannerintermsofappearance,size,location,constructionorbyanyotherobjectivestandard.Theywerealltwobedroomcondominiumunits.Theonlydifferencewastheownershipoftheunit.  OnSeptember28,1992,theAppelleefiledanappealofitspropertytaxassessmenttotheTennesseeStateBoardofEqualization.AnAdministrativeLawJudgefortheStateBoardofEqualizationnotifiedthepartiesthattheappealwouldbeheardonFebruary17,1993.TheAppelleewithdrewitsappealbeforethematterwasheardandfiledsuitinAndersonCountyChanceryCourtseekingrelief.  TheAppellantcontendsthattheTrialCourterredindenyingthemotiontodismissforlackofjurisdictionbecauseT.C.A.6751501grantstheStateBoardofEqualizationjurisdictionoverthevaluation,classificationandassessmentofproperty, p   ׀andtheAppelleefailedtoexhaustthisadministrativeremedy."ItisasettledruleinthisStateandisthegeneralruleinotherjurisdictionsthat'whereanadministrativeremedyisprovidedbystatute,reliefmustbesoughtbyexhaustingthisremedybeforethecourtswillact.'"Braceyv.Woods,571S.W.2d828(Tenn.1978).  However,thereisawellestablishedexceptiontotheabovestatedrulethatallowsapartytobringsuitinastatecourtandbypasstheadministrativeprocesswhenonlylegalissuesareindispute."[A]taxpayeroughtnottoberequiredinallcasestogothroughboardsofequalizationorotheradministrativeproceduresinordertoraisestrictlylegalissues."FentressCountyBankv.Holt,535S.W.2d854(Tenn.1976).Itisundisputedthatonlylegalissuesareatissue.Thus,theAppelleewasnotrequiredtoexhaustitsadministrativeremedies.TheAndersonCountyChanceryCourthadjurisdictiontoresolvethecase.  TheAppellantnextclaimsthattheTrialCourterredinfindingthatthecondominiumsshouldbetaxedasresidentialpropertyratherthanindustrialandcommercialproperty.UndertheTennesseeConstitution,realpropertyissubclassifiedintofourcategories:publicutility,industrialandcommercial,residentialandfarm.TennesseeConstitution,ArticleII,Section28.TheConstitutionfurtherrequiresthatcommercialrealpropertybeassessedat40percentofitsappraisedvalue,whileresidentialpropertyisassessedat25percentofitsappraisedvalue.TheConstitutiondoesnotdefinethepropertysubclassificationsotherthantonotethat"residentialpropertycontainingtwo(2)ormorerentalunitsisherebydefinedasindustrialandcommercialproperty." q     TheAppelleecontendsthatsincetheHorizontalPropertyActassessescondominiumsindividually, r   ׀eachcondominiumshouldbetreatedasaseparatepieceofproperty,justasasinglefamilyresidenceistreatedasaseparatepieceofproperty.AccordingtotheAppellee,oncethedeterminationismadethatacondominiumisaseparatepieceofproperty,thenapplicationofthatdeterminationwouldprecludeafindingthatoneunit,evenifrented,containstwoormorerentalunits.TheTrialCourtagreedwiththeAppelleespositionandheldasfollows:       TheCourtbelievesthatthesecondominiumunitsshouldnotbetreateddifferentlyfromsinglefamilyresidenϜtialunits,whichareassessedat25%ofvaluewithoutregardtotheirownership.Theseareindividualcondominiumunitsanddonotconstitutetwoormorerentalunitsasataxentityorataxparcel,andtheyshouldnotbetreateddifferentlyfromthosecondominϜiumunitsthathavebeensold,allbeingthesameresidentialunitsfortaxpurposesandtheassessmentshouldbeat25%ofvalue.         TheAppellantassertsthattheConstitutionandtheHorizontalPropertyActshouldnotbereadsonarrowly.TheAppellantreliesuponadecisionbytheStateBoardofEqualizationinsupportofitsposition.TheBoardinthatcaseheldthatownerswhorentmultiplecondominiumunits,builtpursuanttotheHorizontalPropertyAct,shouldhavetheirpropertyclassifiedascommercial.TheBoardreasonedasfollows:       [T]he[HorizontalProperty]Actrequiresseparateassessmentofcondominiumunitsbutdoesnotexplicitlyaddresstheissueofclassification.ThestateConstitution,ontheotherhand,clearlyintendsthatincomeproducingpropertybeclassifiedascommercialevenwhenitisusedfordwellingpurposes,ifthepropertycontainsmorethanasinglerentalunit.WeshouldavoidaconstructionoftheHorizontalPropertyActwhichplacesitatoddswiththestateConstituϜtion.Tenn.CodeAnn.6627120requiresseparateassessmentofcondominiumunitsprimarilytorelieveindividualcondominiumownerswhopaytheirtaxesofthepossibilityofforfeitingtheirinterestswhenthebuildingorpropertyasawholeissoldfordelinquenttaxes.ThispurposecanbeachievedwithoutretreatingfromthehigherclassificationmandatedformultiunitrentalpropertyundertheConstitution.Anownerofasinglefamilydwellingmayrentthepropertytoanotherwithoutlosingthe residentialclassification.Theownerofasinglecondominiumshouldbetreatedsimilarly,butspecialcircumstancesarepresentedhere.Multiplecondominiumunits,inthiscaseinthesamebuildingundercommonownership,areherebeingrentedtoothersas"apartments."Suchcircumstancesfallclearlywithintheconstitutionalintenttoclassifyincomeproducingpropertyascommercial.       InRePowersandAssociates,adecisionbytheTennesseeStateBoardofEqualization(October6,1988).  Weacknowledgethatbothpartiespositionsarewellreasoned;however,fundamentalfairnessleadsustotheconclusionthattheAppelleescondominiumunitsshouldbeclassifiedasindustrialandcommercialproperty.TheHorizontalPropertyActshouldnotbereadtoprovidecondominiumrentersasafehavenfromthehighertaxrate.Aslongastwoormorecondominiumunitsarebeingusedasrentalunits,thepropertywillbeclassifiedascommercial.Ourdecisionfallsclearlywithintheconstitutionalintenttoclassifyincomeproducingpropertyascommercial.  FortheforegoingreasonsthejudgmentoftheTrialCourtisvacatedandthecauseremandedforproceedingsnotinconsistentwiththisopinion.CostsofappealareadjudgedonehalfagainsttheAppellantandonehalfagainsttheAppellee.      _______________________________      HoustonM.Goddard,P.J.CONCUR:________________________________DonT.McMurray,J.________________________________CharlesD.Susano,Jr.,J.