ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
TIMOTHY J. VRANA STEVE CARTER
SHARPNACK BIGLEY LLP ATTORNEY GENERAL OF INDIANA
Columbus, IN Indianapolis, IN
LINDA I. VILLEGAS
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
ROYAL REALTY OF SEYMOUR, )
v. ) Cause No. 49T10-0109-TA-78
DEPARTMENT OF LOCAL )
ON APPEAL FROM A FINAL
DETERMINATION OF THE STATE BOARD OF TAX COMMISSIONERS
NOT FOR PUBLICATION
January 10, 2003
Royal Realty of Seymour (Royal Realty) appeals the final determination of the State
Board of Tax Commissioners (State Board) that valued its commercial property improvement for
the 1995 assessment. The Court finds the following issues dispositive:
Whether the State Board erred in valuing Royal Realtys steel siding and roofing;
Whether the State Board erred in valuing Royal Realtys epoxy-painted floor. FACTS AND PROCEDURAL HISTORY
Royal Realty owns an automobile dealership in Jackson Township, Jackson County, Indiana.
For the 1995 assessment, the Jackson County Board of Review (BOR) assessed Royal
Realtys property at $139,830 ($52,130 for land and $87,700 for improvements). In
arriving at that value, Royal Realtys building was priced using the General Commercial
Mercantile (GCM) Schedule and assigned a grade of C-1.
On August 5, 1998, Royal Realty filed a Form 131 Petition for Review
of Assessment with the State Board, alleging that the assessment was erroneous.
Specifically, Royal Realty claimed that the State Board should have used the General
Commercial Kit (GCK) Schedule to value its improvement.
The State Board held a hearing on March 2, 2000. At that
hearing, the Jackson Township Assessor (Assessor) maintained that if the State Board determined
that the GCK Schedule was the appropriate schedule to use, then several special
adjustments would have to be made to account for features in Royal Realtys
improvement that were not accounted for under the GCK Schedule. These adjustments
were necessary, the Assessor explained, to account for the presence of heavy gauge
siding and roofing, overhead doors in the auto service and light utility storage
areas, the plate glass window in the showroom, the canopy, and an epoxy-painted
floor. The Assessor also presented the mathematical calculations indicating the value of
these features and how they would affect Royal Realtys overall assessment.
Because the special adjustments were first discussed at the State Board hearing, the
State Board gave Royal Realty until March 8, 2000 to provide a written
response to the Assessors recommendations and to provide any other evidence it deemed
necessary to counter those adjustments. On March 9, 2000, the State Board
received Royal Realtys response. While it addressed the heavy gauge siding and
roofing and the epoxy-painted floor, it did not address the other adjustments first
raised by the Assessor.
In its final determination of August 15, 2001, the State Board determined that
Royal Realtys improvement should have been valued pursuant to the GCK Schedule.
The State Board also adopted the Assessors recommendation that adjustments were necessary to
account for the features not listed in the GCK Schedule.
Royal Realty filed an original tax appeal on September 7, 2001, challenging the
State Boards adjustments.
Because both parties agreed that the matter should be
resolved on the basis of the stipulated record and briefs, no trial was
held. The Court heard oral arguments on October 7, 2002. Additional
facts will be supplied as necessary.
STANDARD OF REVIEW
This Court accords great deference to the State Board when it acted within
the scope of its authority. Wetzel Enters., Inc. v. State Bd. of
Tax Commrs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct. 1998). Accordingly, the
Court will reverse a State Board final determination only if it is unsupported
by substantial evidence, constitutes an abuse of discretion, exceeds statutory authority, or is
arbitrary and capricious. Id.
DISCUSSION AND ANALYSIS
I. Siding and Roofing
When the State Board changed the improvements pricing to the GCK schedule, it
made an adjustment to account for heavy gauge siding and roofing.
the State Board claimed that because 24 gauge siding and roofing was used
on the improvement, a $1.00 per square foot adjustment was necessary. See
Ind. Admin. Code tit. 50, r. 2.1-4-5 (Schedules A.1 and A.2) (1992) (codified
in present form at id., r. 2.2-11-6 (Schedule A.4)(1996)).
Royal Realty contests the adjustment, alleging that although the Assessor measured the siding
as 24 gauge, she did not account for the fact that the siding
had paint on it. Although the exact thickness of the paint is
not known, it has to have some thickness. Once the thickness of
the paint is accounted for, the thickness of the siding itself must be
less than 24 gauge. Because the siding is thinner than 24 gauge,
the heavy gauge adjustment cannot be allowed to stand. (Petr Br. at
2 (emphases in original).)
Royal Realty bears the burden of demonstrating the invalidity of the State Boards
final determination. See Clark v. State Bd. of Tax Commrs, 694 N.E.2d
1230, 1233 (Ind. Tax Ct. 1998). To do so, it must present
a prima facie case, or one in which the evidence is sufficient to
establish a given fact and which if not contradicted will remain sufficient.
See id. (internal quotation and citation omitted). While Royal Realty may be
correct in its assertion that paint will lend a thickness to the aluminum
on which it is applied, it has not made its prima facie case.
See Whitley Prods., Inc. v. State Bd. of Tax Commrs, 704 N.E.2d
1113, 1119 (Ind. Tax Ct. 1998), review denied (stating that in order to
make a prima facie case, the taxpayer must offer probative evidence concerning the
alleged assessment error). Royal Realty bore the burden to show what the
thickness of the paint was. Instead, it merely made a conclusory statement
that there was paint and it added a thickness.
This does not
constitute probative evidence. See id. Accordingly, the Court AFFIRMS the State
Boards final determination on this issue.
II. Epoxy-Painted Floor
The State Board also made an additional adjustment to account for the floor
finish in the auto service area of Royal Realtys improvement. Specifically, the
State Board adopted the Assessors findings that [t]he floor is sealed with high
quality or epoxy paint, with a portion having colored paint chips and a
decorative painting design[,] (Cert. Admin. R. at 123), and implemented an additional
value of $5.20 per square foot pursuant to the State Boards unit-in-place cost
schedules. See Ind. Admin. Code tit. 50, r. 2.2-15-1, § 12.18.
Royal Realty contends this was in error for two reasons. First, it
states that during the hearing, there was discussion and disagreement between the Assessor
and [our consultant] about the presence (or absence) of the floor finish at
the relevant time. (Petr Br. at 6). Second, Royal Realty argues
that while the [State Board] was free to believe whichever witness it wanted
;  it needed to explain its reasoning. Once it decided to
apply an adjustment for an epoxy floor finish, it needed to choose between
a Rule 11 adjustment or a Rule 15 adjustment, and it needed to
explain the reasoning for that choice as well.
(Petr Br. at 6.)
As stated earlier, Royal Realty bears the burden of proof in showing that
the State Boards assessment of the epoxy floors was in error. The
extent of Royal Realtys discussion with the Assessor at the State Board hearing
is as follows:
[Royal Realty]: Yeah, they have just recently done that to the floor.
[Assessor]: Yeah, but now Ive talked to them and he said they
first did that 15 years ago. They just redo it every so
[Royal Realty]: No, they dont.
[Assessor]: Ive talked to a gentleman whos been out there for 15
[Royal Realty]: But I know the floor wasnt like that when we
did the assessment.
[Assessor]: Well, it had worn down.
[Royal Realty]: Yeah, ok. CONCLUSION
(Cert. Admin. R. at 167.) This testimony simply does not constitute a
prima facie case. See Herb v. State Bd. of Tax Comm'rs, 656
N.E.2d 890, 893 (Ind. Tax Ct. 1995) (stating that to make a prima
facie case, a taxpayer must show probative evidence that an error existed in
its assessment). Rather, the testimony merely indicates that Royal Realtys property tax
consultant was unaware as to what type of floor finish Royal Realty actually
had for the period in question.
As to Royal Realtys argument that the State Board was required to explain
why it chose a unit-in-place cost adjustment of $5.20 per square foot over
a lesser adjustment, it is correct. However, this issue was not raised
until oral argument. Indeed, the only written evidence Royal Realty presented in
its March 9, 2000, post-administrative hearing response was the statement [t]he GCM Auto
Service has $.50 included in its base rate for floor finish, therefore $.50
is correct[.] (Cert. Admin. R. at 73.) Again, this does not
constitute a prima facie case it is merely a conclusory statement that
Royal Realty disagrees with its assessment. Mere references to State Board regulations,
without explanation, do not qualify as probative evidence for purposes of assessment errors.
See Heart City Chrysler v. State Bd. of Tax Commrs, 714 N.E.2d
329, 333 (Ind. Tax Ct. 1999). Because Royal Realty has not provided
the State Board with probative evidence supporting its position, the State Boards duty
to support its final determination with substantial evidence is not triggered. Whitley
Prods., 704 N.E.2d at 1119-20.
Royal Realty has
not made prima facie case with respect to the issues raised in its
case. Thus, the State Boards final determination is AFFIRMED.
The State Board of Tax Commissioners (State Board) was originally the Respondent
in this appeal. However, the legislature abolished the State Board as of
December 31, 2001. P.L. 198-2001, § 119(b)(2). Effective January 1, 2002,
the legislature created the Department of Local Government Finance (DLGF),
see Indiana Code
§ 6-1.1-30-1.1 (West Supp. 2001)(eff. 1-1-02); P.L. 198-2001, § 66, and the Indiana
Board of Tax Review (Indiana Board). Ind. Code § 6-1.5-1-3 (West Supp.
2001)(eff. 1-1-02); P.L. 198-2001, § 95. Pursuant to Indiana Code § 6-1.5-5-8,
the DLGF is substituted for the State Board in appeals from final determinations
of the State Board that were issued before January 1, 2002. Ind.
Code § 6-1.5-5-8 (West Supp. 2001)(eff. 1-1-02); P.L. 198-2001, § 95. Nevertheless,
the law in effect prior to January 1, 2002 applies to these appeals.
Id. See also P.L. 198-2001, § 117. Although the DLGF
has been substituted as the Respondent, this Court will still reference the State
Board throughout this opinion.
Royal Realty also alleged that its land was improperly valued, but
withdrew the issue at the State Board hearing.
Footnote: In its original tax appeal, Royal Realty also challenged the State
Boards adjustments to account for overhead doors, a plate glass window in its
showroom, and a canopy. As discussed earlier, however, Royal Realty had an
opportunity to provide argument and evidence to counter the application of these adjustments
after its administrative hearing but did not do so. It now attempts
to assert its argument and supporting evidence for the first time with this
Court. The Court, however, is limited to reviewing the record before the
See State Bd. of Tax Commrs v. Gatling Gun Club,
Inc., 420 N.E.2d 1324, 1328 (Ind. Ct. App. 1981). Because there is
nothing in the record on these issues, the Court will not now decide
them. See id.
Heavy gauge is defined as 24 to 20 guage [sic] steel;
.032 to .050 thick aluminum.
See Ind. Admin. Code tit. 50, r.
2.1-4-5 (Schedules A.1 and A.2) (1992) (codified in present form at id., r.
2.2-11-6 (Schedule A.4, n. 2)(1996)).
Royal Realty presented no evidence indicating that a coat of paint
increased the thickness of the steel by a certain amount.
Footnote: Royal Realty refers to Indiana Administrative Code title 50, rule 2.2-11-6,
which provides that an adjustment for epoxy floors may be between $2.45 per
square foot and $3.10 per square foot.