ATTORNEY FOR PETITIONER:
DAVID L. PIPPEN
ATTORNEY AT LAW
ATTORNEYS FOR RESPONDENT:
ATTORNEY GENERAL OF INDIANA
LINDA I. VILLEGAS
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
HAMSTRA BUILDERS, INC., )
v. ) Cause No. 49T10-9701-TA-57
DEPARTMENT OF LOCAL )
ON APPEAL FROM A FINAL DETERMINATION
OF THE STATE BOARD OF TAX COMMISSIONERS
February 10, 2003
Hamstra Builders, Inc. (Hamstra) appeals the final determination of the State Board of
Tax Commissioners (State Board) denying Hamstras 133 Petitions for Correction of Error (133
Petitions) for the 19911994 tax years (years at issue). The issue is
whether, on remand, the State Board arbitrarily denied Hamstras request for a kit
building adjustment. For the following reasons, the Court REVERSES the State Boards
FACTS AND PROCEDURAL HISTORY
Hamstra owns a building located in Franklin County, Indiana. For the 19911994
tax years, the Brookville Township Assessor assessed Hamstras improvement at $130,400. On
November 8, 1994, Hamstra filed four Form 133 Petitions for Correction of Error
(133 Petitions) for each year at issue, alleging that its improvement was entitled
to a fifty percent assessment reduction because it was a kit building.
The Franklin County Board of Review (BOR) denied the petitions on June 27,
1995. On July 13, 1995, Hamstra appealed the BORs denial to the
State Board. The State Board held a hearing and on November 22,
1996, issued a final determination on the four 133 Petitions denying Hamstra any
On January 6, 1997, Hamstra initiated an original tax appeal. On March
2, 1999, pursuant to the State Boards request, the Court remanded the case
to the State Board for further proceedings. The State Board held a
remand hearing and, on May 26, 1999, issued a final determination again denying
Hamstra any relief. On July 26, 1999, Hamstra again appealed to this
Court. On November 18, 1999, the parties stipulated to the record.
On March 9, 2001, oral arguments were presented. Additional facts will be
supplied as needed.
ANALYSIS AND OPINION
Standard of Review
This Court gives great deference to final determinations of the State Board when
it acts within the scope of its authority. Thousand Trails, Inc. v.
State Bd. of Tax Commrs, 757 N.E.2d 1072, 1075 (Ind. Tax Ct. 2001).
This Court will reverse a final determination of the State Board only
when its findings are unsupported by substantial evidence, arbitrary, capricious, constitute an abuse
of discretion, or exceed statutory authority. Id.
Furthermore, a taxpayer who appeals to this Court from a State Board final
determination bears the burden of showing that the final determination was invalid.
Id. To do so, the taxpayer must present a prima facie case by
submitting probative evidence, i.e., evidence sufficient to establish a given fact that, if
not contradicted, will remain sufficient. Id. Once the taxpayer presents a
prima facie case, the burden shifts to the State Board to rebut the
taxpayers evidence and support its findings with substantial evidence. Id.
The sole issue is whether the State Board arbitrarily denied Hamstras request for
a kit building adjustment. Hamstra argues that it submitted probative evidence showing
that its improvement has features consistent with a kit building and therefore, it
should have received an adjustment. The State Board, on the other hand, contends
that Hamstra submitted no probative evidence and therefore did not make a prima
facie case. The State Board is incorrect.
Starting in 1991, the State Boards rules included a fifty percent reduction in
the base rate for certain light, pre-engineered buildings (i.e., kit buildings) because of
their economical quality and their use of low cost materials.
Inc. v. State Bd. of Tax Commrs, 748 N.E.2d 943, 949 (Ind. Tax
Ct. 2001) (citation omitted); Williams Indus. v. State Bd. of Tax Commrs, 648
N.E.2d 713, 717 n.4 (Ind. Tax Ct. 1995). Generally, kit buildings are
made of light weight and inexpensive materials and are fabricated at central manufacturing
facilities and shipped to the construction site ready for fast and efficient assembly.
Miller Structures, 748 N.E.2d at 949. To provide guidance to assessors
in determining which improvements qualify for the fifty percent kit building adjustment, the
State Board issued Instructional Bulletin 91-8. Id.
According to Instructional Bulletin 91-8, the key elements used to identify kit buildings
are simply a buildings type of interior column and roof beam support. Instructional
Bulletin 91-8 at 4; Componx, Inc. v. State Bd. of Tax Commrs, 683
N.E.2d 1372, 1374 (Ind. Tax 1997). Kit building interior columns and roof
beam supports may include cold form cee channel supports, tapered columns, H-columns, and
steel pole (or post) columns. Miller Structures, 748 N.E.2d at 950.
Consequently, it should not be difficult for taxpayers to identify those characteristics in
an improvement alleged to qualify for the kit adjustment. Whitley Prods., Inc.
v. State Bd. of Tax Commrs, 704 N.E.2d 1113, 1121 (Ind. Tax Ct.
1998), rev. denied. Indeed, a taxpayer satisfies its burden with regard to
a kit building adjustment where the taxpayer shows that its improvements type of
column and roof beam support meet the criteria for a kit building.
See Componx, 683 N.E.2d at 1374.
Hamstras tax representative, M. Drew Miller of Landmark Appraisals, Inc., inspected Hamstras improvement
and submitted the following written testimony at the remand hearing:
The subject building meets the following qualifications and factors for the kit-type adjustment
as stated in STB Instructional Bulletin 91-8[:]
- The subjects structure has zee channel used in its framing, which is
the same as the cee channel with a different bend.
- The subjects framing has a mix of column types consisting of light
tapered and H columns with steel pole columns supporting the roof on the
interior of the building.
(Stip. Ex. E.) Millers testimony shows that that the columns and roof
supports of Hamstras building satisfy the key criteria for a kit building.
See Instructional Bulletin 91-8 at 4; Componx, 683 N.E.2d at 1374. Because
it does, Hamstra presented a prima facie case that its building is a
See Componx, 683 N.E.2d at 1374.
By meeting its burden of proof, Hamstra shifted the burden to the State
Board to rebut Hamstras case by submitting substantial evidence showing that Hamstras improvement
is not a kit building. See id. at 1375. Specifically, the
State Board had to articulate why the improvements deviations from the basic kit
model, if any, increased the cost of the improvement so as to make
it uneconomical. See Miller Structures, 748 N.E.2d at 950.
The State Boards evidence consists of a photograph of the exterior of Hamstras
improvement that shows what appear to be four air-conditioning units on the roof.
(See Stip. Ex. F1.) The State Board argues that the air
conditioning units implicate a load tolerance for the improvement inconsistent with the load
tolerance for kit buildings.
See footnote Thus, the State Board argues that Hamstras improvement is
not a kit building. The State Boards argument, however, is without merit.
A photograph alone is not substantial evidence of whether an improvement is or
is not a kit building.
See Quality Farm and Fleet, Inc. v.
State Bd. of Tax Commrs, 747 N.E.2d 88, 93 (Ind. Tax Ct. 2001)
(rejecting photographic evidence alone as sufficient proof of whether an improvement qualified for
a kit adjustment). Moreover, Instructional Bulletin 91-8 itself provides that an [i]nterior
inspection of the type of column and roof beam supports is the only
possible way to identify [whether an improvement is a kit building]. Instructional
Bulletin 91-8 at 4 (emphasis added). The State Board did not inspect
Hamstras building. Because the State Board offers no more than a photograph,
it has not rebutted Hamstras prima facie case. See Quality Farm and
Fleet, 747 N.E.2d at 93. The Court therefore REVERSES the State Boards
For the foregoing reasons, the Court REVERSES the State Boards final determination and
REMANDS this case to the Indiana Board of Tax Review (Indiana Board).
On remand, the Indiana Board is ORDERED to apply the fifty percent kit
building adjustment to Hamstras improvement for the years at issue.
Footnote: 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. 2001 Ind. Acts 198 § 119(b)(2). Effective January 1,
2002, the Legislature created the Department of Local Government Finance (DLGF) and the
Indiana Board of Tax Review (Indiana Board).
Ind. Code §§ 6-1.1-30-1.1; 6-1.5-1-3
(West Supp. 2001); 2001 Ind. Acts 198 §§ 66, 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. 2002); 2001
Ind. Acts 198 § 95. Nevertheless, the law in effect prior to
January 1, 2002 applies to these appeals. I.C. § 6-1.5-5-8. See
also 2001 Ind. Acts 198 § 117. Although the DLGF has been
substituted as the Respondent, this Court will still reference the State Board throughout
In 1995, the State Board included a separate cost schedule for kit
buildings in its rules.
See Ind. Admin. Code tit. 50, r. 2.2-11-6
Instructional Bulletin 91-8 provides:
The key element in identifying this low cost economical kit-type structure is the
type of interior column and roof beam support. Understanding the correlation between
cost and strength in the type of column or beam being used in
the structure is essential in identifying a qualifying structure: the higher the
load tolerance commands, the higher the dollar cost for the supports.
Instructional Bulletin 91-8 at 4.
Footnote: The State Board argues that Millers testimony was unreliable because he was
a contingently paid witness. The State Board and this Court may evaluate
statements by a witness in light of any contingency fee arrangements the witness
Clark v. State Bd. of Tax Commrs, 694 N.E.2d 1230,
1241 n.17 (Ind. Tax Ct. 1998). Thus, the State Board and the
Court are entitled to discount the unsubstantiated opinion of a contingently paid witness.
See id. Here, however, Millers testimony was based on objectively observable
facts that did not require the State Board simply to trust Millers opinion.
If the State Board doubted the facts of Millers testimony, it could
have inspected Hamstras building and assembled its own factsas its own rules make
clear should be done in the case of kit buildings. See Instructional
Bulletin 91-8 at 4. Thus, in this instance, it was an abuse
of the State Boards discretion to dismiss Millers testimony out of hand.
Columns and beams with heavy load tolerances do not qualify for the
50% reduction. Instructional Bulletin 91-8 at 4.
Footnote: All cases that would have previously been remanded to the State Board
are now remanded to the Indiana Board of Tax Review (Indiana Board).
Ind. Code § 6-1.1-15-8. Final determinations made by the Indiana Board are
subject to review by this Court pursuant to Indiana Code § 6-1.1-15.
Ind. Code §§ 6-1.5-5-7; 33-3-5-2.