ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN STEVE CARTER
Attorney at Law ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
FLEET SUPPLY, INC., )
v. ) Cause No. 49T10-9806-TA-58
STATE BOARD OF TAX COMMISSIONERS, )
ON APPEAL FROM A FINAL DETERMINATION OF THE
STATE BOARD OF TAX COMMISSIONERS
March 13, 2001
The Petitioner, Fleet Supply, Inc. (Fleet Supply), appeals the Final Determination of
the State Board of Tax Commissioners (State Board) establishing the assessed value of
its property as of March 1, 1995. Fleet Supply presents the following
issues for the Courts consideration:
I. Whether the State Board erroneously determined the Main Buildings physical depreciation based upon
a forty-year, instead of a thirty-year, life expectancy table;
II. Whether the State Board improperly deemed the subject improvements conditions to be average;
III. Whether the State Board incorrectly applied a D grade to the Main Building;
IV. Whether the State Boards refusal to apply a negative influence factor to the
subject land was erroneous.
See footnote FACTS AND PROCEDURAL HISTORY
Fleet Supply owns the subject property, a discount retail facility, in Cass County,
Indiana. (Oral Argument Tr. at 3.) Improvements on the parcel include
a Main Building and two smaller, pole barns. Fleet Supply filed a
Form 131 Petition for Review of Assessment with the Cass County Auditor on
July 2, 1996. The petition challenged the Cass County Board of Reviews
(BOR) assessment of Fleet Supplys land at $48,330 and its improvements at $333,400.
The State Board conducted an administrative hearing on Fleet Supplys petition on
January 8, 1998. On April 28, 1998, the State Board issued its
Final Determination. In the Final Determination, the State Board did not alter
the assessed value of Fleet Supplys land but did lower the assessed value
of its improvements to $291,100.
Fleet Supply filed an original tax appeal on June 4, 1998. The
Court conducted a trial in this matter on March 19, 1999. On
April 12, 2000, the Court heard oral arguments from the parties and thereafter
took the case under advisement. Additional facts will be supplied where necessary.
ANALYSIS AND OPINION
Standard of Review
The Court gives great deference to the State Boards final determinations when the
State Board acts 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, this Court reverses final determinations of the State Board only
when those decisions are unsupported by substantial evidence, are arbitrary or capricious, constitute
an abuse of discretion, or exceed statutory authority. Id. The taxpayer
bears the burden of demonstrating the invalidity of the State Boards final determination.
Clark v. State Bd. of Tax Commrs, 694 N.E.2d 1230, 1233 (Ind.
Tax Ct. 1998).
I. Life Expectancy Table
Fleet Supply contends that the State Board applied the wrong life expectancy table
in determining the physical depreciation of its Main Building. According to Fleet
Supply, the State Board should have applied the thirty-year life expectancy table, not
the forty-year life expectancy table. The regulations provide: Physical depreciation is
determined by the combination of age and condition. Each type of building
has a life expectancy that is determined by the building components and the
use of the building. Ind. Admin. Code tit. 50, r. 2.2-10-7(c) (1996).
To apply physical depreciation, the assessor must select the correct life expectancy
table and identify the condition and age of the building. Id., r.
2.2-10-7(d). The regulations provide four different life expectancy tables for use in
determining the physical depreciation of commercial and industrial buildings. Id., 2.2-10-7(c).
These tables are located in the regulations at Ind. Admin. Code tit. 50,
r. 2.2-11-7 (1996). Among other things, the thirty-year life expectancy table is
used to assess light pre-engineered buildings and the forty-year life expectancy table is
used to assess all fire-resistant buildings not listed elsewhere. Ind. Admin. Code
tit. 50, r. 2.2-11-7 (1996).
A fifteen percent physical depreciation adjustment was assigned to the Main Building.
(Joint Ex. 1 at 10, 12.) The State Boards Final Determination states
that After inspecting the structure, considering the assessors statement and evidence, and reviewing
50 IAC 2.2-10 and 50 IAC 2.2-11, it is determined [that] the 40
year life table is proper. No change [of assessment] is made.
(Joint Ex. 1 at 19.) To prove this decision incorrect, Fleet Supply
was required to submit to the State Board probative evidence sufficient to establish
a prima facie case as to the invalidity of the application of the
forty-year life expectancy table. CDI, Inc. v. State Bd. of Tax Commrs,
725 N.E.2d 1015, 1022 (Ind. Tax Ct. 2000).
Fleet Supply argues that its main structure was a light pre-engineered building, so
its physical depreciation should have been determined via application of the thirty-year life
expectancy table. Thus, Fleet Supply must have offered evidence showing that its
building had construction characteristics typical of a light pre-engineered building. Damon Corp.
v. State Bd. of Tax Commrs, 738 N.E.2d 1102, 1111 (Ind. Tax Ct.
2000) (involving kit building adjustment under prior regulations).
At the administrative hearing, Fleet Supply submitted an Assessment Review and Analysis (Review)
addressing all of its challenges to the BORs assessment. M. Drew Miller
of Landmark Appraisals, Inc., Fleet Supplys taxpayer representative, prepared the Review. The
Review stated that the County Board failed to accurately apply the correct amount
of physical depreciation based upon a 30 year life expectancy. (Joint Ex.
2 at 3.) The Review also contained blurred, black-and-white copies of two photographs
of the Main Building. (Joint Ex. 2 at 2.) In addition,
Miller submitted a copy of the State Boards Final Determination of an appeal
challenging the subject propertys assessment as of March 1, 1992. (Joint Ex.
4.) This Final Determination for 1992 concluded that the thirty-year life expectancy
table should be used to calculate the Main Buildings physical depreciation. (Joint
Ex. 4 at 2.) At trial, Miller made the following statement:
This building is . . . a light pre-engineered structure. . . .
It has a general retail use. There is no need
for heavy flooring or heavy framing. (Trial Tr. at 16.) The
State Boards hearing officer, Mark A. Bisch, also testified at trial, saying that
the subject improvement had metal construction and concrete floors with some tile.
(Trial Tr. at 37.)
Fleet Supply has not submitted probative evidence sufficient to establish a prima facie
case regarding which economic life table should be applied in determining the Main
Buildings physical depreciation. The Reviews statement and Millers remarks at trial are
conclusory in nature and therefore non-probative. CDI, Inc., 725 N.E.2d at 1020-21.
Millers statement that neither heavy flooring nor framing is needed does not
help the Court make a determination. That these features are not needed
does not mean that they are not present. Further, Miller makes no
effort to explain why, if these features are not present, the Main Building
must then be viewed as a light, pre-engineered structure. Id. at 1020.
The unclear photographs lack captions and Miller made no effort to explain
what is depicted in them. Therefore, the pictures lack any probative value.
Heart City Chrysler v. State Bd. of Tax Commrs, 714 N.E.2d 329,
333 (Ind. Tax Ct. 1999). The fact that the Main Building has
metal construction and concrete floors may be probative as to whether it must
be considered a light, pre-engineered building. However, Fleet Supply provides no analysis
as to how these features are probative. The Court will not make
the taxpayers argument and analysis for it. CDI, Inc., 725 N.E.2d at
1020. Moreover, as this Court has said before, unsupported allegations remain just
thatmere allegations that lack any probative value. CGC Enters. v. State Bd.
of Tax Commrs, 714 N.E.2d 801, 804 (Ind. Tax Ct. 1999) (citing Herb
v. State Bd. of Tax Commrs, 656 N.E.2d 890, 893 (Ind. Tax Ct.
1995)). Finally, the Court reminds Fleet Supply that each assessment and each
tax year stands alone. Glass Wholesalers, Inc. v. State Bd. of Tax
Commrs, 568 N.E.2d 1116, 1124 (Ind. Tax Ct. 1991) (citation omitted).
Thus, evidence as to the Main Buildings assessment in 1992 is not probative
as to its assessed value three years later. Fleet Supply has made
no prima facie case as to its position that the thirty-year life expectancy
table should have been applied to determine the Main Buildings physical depreciation adjustment.
Fleet Supply argues that the average condition assigned to the Main Building and
two pole barns was erroneous. As noted supra, section I, determining a
buildings condition is necessary for calculating its physical depreciation. Condition is the
degree of wear and tear displayed by a building and is determined relative
to the age of the building. Ind. Admin. Code tit. 50, r.
2.2-10-7(b) (1996). Condition measures the remaining usefulness of the building based on
its age. Id. See also White Swan Realty v. State Bd.
of Tax Commrs, 712 N.E.2d 555, 560 (Ind. Tax Ct. 1999), review denied.
A taxpayer challenging the condition of its building must offer probative evidence
concerning the condition of that improvement. White Swan Realty, 712 N.E.2d at
560. Probative evidence might consist of evidence of decay, dry rot, cracks,
or structural defects. Ind. Admin. Code tit. 50, r. 2.2-10-7(a) (1996).
See also Phelps Dodge v. State Bd. of Tax Commrs, 705 N.E.2d 1099,
1104 (Ind. Tax Ct. 1999), review denied.
As regards condition, the Review stated that the buildings have received minimal maintenance
over the years, causing the condition to be less than average. (Joint
Ex. 2 at 3.) Miller also testified that the Main Building had
some dents in the metal, stains in the ceiling tile, some areas of
discoloration and scraping on the floor tile. (Trial Tr. at 17.) This,
Fleet Supply asserts, demonstrates that the condition of the Main Building is less
The Review offers only a conclusory observation and is therefore not probative as
to condition. CDI, Inc., 725 N.E.2d at 1020-21. Millers testimony was
perhaps probative as to as to the level of deterioration suffered by the
Main Building. However, it fails to inform the Court how these items,
if present, actually affected the Main Buildings remaining usefulness. Fleet Supply provided
no explanation of its evidence sufficient to establish a prima facie case that
the assignment of an average condition to the Main Building and two pole
barns was invalid.
Fleet Supply challenges the D grade assigned to the Main Building by the
State Board. In assigning the Main Building a D grade, the State
Board actually lowered the buildings grade from a C-1. See Ind. Admin.
Code tit. 50, r. 2.2-10-3 & -11-6 (Schedule F) (1996) (assigning D grade
a multiplier of 80% and C-1 grade a multiplier of 95%). Fleet
Supply argues that a D-1 grade should be applied to the Main Building,
which would result in an additional ten percent downward adjustment of its base
value. Id., r. 2.2-11-6.
To make its case, Fleet Supply was required to submit probative evidence sufficient
to establish a prima facie case as to grade. CDI, Inc., 725
N.E.2d at 1019. The Review offers only a conclusory observation that the
subject building is inferior to the model used to price it and therefore
should be assigned a grade lower than a C. (Joint Ex. 2
at 3.) Thus, the Review is non-probative as to grade and cannot
help establish a prima facie case on this issue.
CDI, Inc., 725
N.E.2d at 1020-21.
Miller made similar, conclusory remarks at trial that are non-probative as to grade.
(Trial Tr. at 12-13.) Miller stated that at the inspection following
the administrative hearing, he presented the building, walked the hearing officer through the
building. And the regulations or the descriptions of the models are
part of the regulations. (Trial Tr. at 13.) According to Miller,
the D grade was incorrect [b]ased on other decisions that [he has] seen
from the State Tax Board on similar buildings. (Trial Tr. at 14.)
Millers opinion was also based upon his experience in seeing . .
. what [he] would consider an average quality building. (Trial Tr. at
15.) With respect to specific deviations, Miller stated that the building lacked:
(1) architectural attractiveness; (2) partitioning; and (3) a display area. (Trial
Tr. at 14.) He added that the Main Building had an almost
kit-type structure. (Trial Tr. at 14.)
These remarks fail to inform the Court as to how the Main Building
differs from the model used to assess it and why a grade adjustment
See footnote Moreover, Miller failed to identify or describe any specific instance
where the State Board has priced a similarly structured building below a D
CDI, Inc., 725 N.E.2d at 1021. The models descriptions are
indeed part of the regulations, but the taxpayernot the Tax Court or the
State Boardis responsible for comparing the regulations models with the subject buildings features
and making a logical, well-reasoned argument supporting its position based upon the evidence
submitted. Id. at 1020. Millers observations, even if true and probative
as to grade, do not explain what the model requires and how the
subject building differs from the model in a way that requires an additional
downward adjustment in its base value. A taxpayer (or counsel or witness
for the taxpayer) cannot simply point to alleged deficiencies in a building and
expect to make prima facie case as to grade or any other issue.
Cf. Phelps Dodge, 705 N.E.2d at 1104 (where taxpayer challenged regulations governing
condition based upon lack of ascertainable standards, Court stated that a taxpayer will
not be able to come into court, point out the inadequacies of the
present system and obtain a reversal of assessment) (citation omitted).
Hearing Officer Bisch testified that, at the subject propertys inspection, Fleet Supply pointed
to no specific evidence that justified assignment of a lower grade. (Trial
Tr. at 33.) Bisch was not obligated to make the taxpayers case
for it. Whitley Prods., Inc. v. State Bd. of Tax Commrs, 704
N.E.2d 1113, 1118 (Ind. Tax Ct. 1998), review denied. Rather, Bisch had
the right to expect that Fleet Supply would identify and present probative evidence
concerning any alleged errors, including grade, to him. Id. at 1118-19.
See also North Park Cinemas, Inc. v. State Bd. of Tax Commrs, 689
N.E.2d 765, 769 (Ind. Tax Ct. 1997) (noting that taxpayer has an obvious
responsibility to appear before the State Board and present evidence and argument in
support of its position). Fleet Supply did not present a prima facie
case as to grade.
IV. Negative Influence Factor.
The final issue raised by Fleet Supply is whether the State Board should
have applied a negative influence factor to its valuation of the subject parcel.
Specifically, Fleet Supply contends that its parcel is misimproved. An influence
factor refers to a condition peculiar to the acreage tract that dictates an
adjustment to the extended value to account for variations from the norm.
Ind. Admin. Code tit. 50, r. 2.2-4-17(c)(8) (1996). See also id., r.
2.2-4-12 (1996); 2.2-4-1 (Supp. 2000). An influence factor is expressed as a
percentage increase or decrease in the subject lands assessed value, with the percentage
representing the composite effect of the factors that influence the value. Id.,
2.2-4-17(c)(8). The decision whether to apply an influence factor calls for subjective
judgment. Wirth v. State Bd. of Tax Commrs, 613 N.E.2d 874, 878
(Ind. Tax Ct. 1993). In applying an influence factor, an assessing official
must first identify the deviations from the norm and then quantify the variations
as a percentage. White Swan Realty, 712 N.E.2d at 562. According
to the regulations, a misimprovement indicates that a negative adjustment in the lands
value is warranted. Ind. Admin. Code tit. 50, r. 2.2-4-10(a)(9)(E) (1996).
This factor is used when the parcel does not have the same
use as surrounding parcels. The base rate is computed based on the
predominant use of the surrounding parcels. Id.
The State Board determined that the land is not misimproved and a negative
influence factor is not warranted. (Joint Ex. 1 at 18.) In
its brief, Fleet Supply contends that the predominate use of the parcels surrounding
the subject parcel is not retail (as is the subject parcel) and therefore
the misimprovement factor should have been applied. (Petr Br. at 9.)
To support this claim, Fleet Supply refers to Millers trial testimony, where he
indicated that two parcels (to the north and south of the subject parcel)
have residential uses, one parcel is not used (the west parcel has a
vacant grocery store) and one parcel has a special use (the east parcel
has a restaurant). (Petr Br. at 9) (citing Trial Tr. at 11.)
Miller further stated that, in his opinion, the regulations require application of
a negative influence factor if the surrounding properties are of a different use.
(Trial Tr. at 11.) The Review makes the statement that The
[BOR] failed to properly decrease the land value due to a misimprovement, i.e.,
the subject parcel does not have the same use as the surrounding parcels.
(Joint Ex. 2 at 3.) Also, Fleet Supply submitted Joint Exhibit
3, which is an unsigned letter from Miller to Hearing Officer Bisch.
The letter is a response to a request by Bisch for additional information
to be submitted after the administrative hearing. (Joint Ex. 3.) The
letter states in part:
The assessors land value is wrong because she failed to make a deduction
due to the misimprovement as required in the assessment regulations. . . .
The property south of the subject is of a different use as
is the property to the north of the subject parcel. As more
than 50% of the surrounding properties are of a different use, a 50%
negative influence factor should be applied to the land. The influence factor
is needed because it is required by the regulations.
(Joint Ex. 3.) In the letter, Miller requested that Bisch send him
any specific guidelines provided or used by the State Board to determine the
influence factor. (Joint Ex. 3.) CONCLUSION
To properly identify a misimprovement, Fleet Supply needed to submit probative evidence sufficient
to show that (1) its parcel did not have the same use as
surrounding parcels and (2) the inconsistent usage negatively impacted the subject parcels value.
Ind. Admin. Code tit. 50, r. 2.2-4-10(a)(9)(E). Cf. Talesnick v. State
Bd. of Tax Commrs, 693 N.E.2d 657, 661 (Ind. Tax Ct. 1998) (observing
that where taxpayers presented evidence that water flowage easement encroached upon their land
to a greater extent than it did to other land surrounding reservoir, State
Board should have considered whether taxpayers land was encumbered by the easement to
an extent that application of a negative influence factor is warranted). Millers
testimony tends to show that the immediately surrounding parcels had uses that were
different than that of the subject parcel. The letter is of less
help, because its observations are conclusory. The letter is not probative as
to the lands value. CDI, 725 N.E.2d at 1020-21.
Millers interpretation of the regulations is mistaken. The regulations require an assessor
to indicate on the property record card a decrease [in the subject parcels
value] based on a misimprovement to the land. Ind. Admin. Code tit.
50, r. 2.2-4-10(a)(9)(E). See also id., r. 2.2-4-17(c)(8). Thus, contrary to
Millers understanding, a different usage does not automatically warrant application of a negative
influence factor. Fleet Supply failed to provide evidence that the inconsistent usage
lowered the value of its land. Therefore, Fleet Supply did not make
a prima facie case that a negative influence factor should have been applied
to its property.
Fleet Supply failed to make a prima facie case as to any of
the issues it raised. Thus, the State Board was not required to
support its Final Determination as to these issues with substantial evidence. CDI,
Inc., 725 N.E.2d at 1019. Therefore, the Court AFFIRMS the State Boards
Final Determination in all respects.
Fleet Supply also claims that the State Boards assessment regulations in general
violate the Indiana Constitution. However, the fact that the subject property was
assessed under an unconstitutional regulation does not mean that the assessment will be
invalidated on that basis.
Whitley Prods., Inc. v. State Bd. of Tax
Commrs, 704 N.E.2d 1113, 1121 (Ind. Tax Ct. 1998) (citations omitted), review denied.
Real property must still be assessed, and, until the new regulations are
in place, must be assessed under the present system. Id. Therefore,
the Court will not address Fleet Supplys facial constitutional challenge.
infra, section IV, Fleet Supply also submitted a letter from
Miller to Bisch as evidence. (Joint Ex. 3.) Along with the
letter, Miller submitted another photograph of the subject property. A copy of
this photograph was submitted as part of Joint Exhibit 3. The black-and-white
copy is also blurry. It is uncaptioned, and neither the letter nor
any testimony by Miller explains what it shows. Thus, this letter is
also non-probative and does not help Fleet Supply establish a prima facie case
on this issue. Heart City Chrysler v. State Bd. of Tax Commrs,
714 N.E.2d 329, 333 (Ind. Tax Ct. 1999). In addition, the Court
notes that none of the submitted photographs are probative as to the condition
and grade issues raised by Fleet in sections II and III, infra.
supra, the Main Building was assessed as a C-1 by
the BOR. The two pole barns were given C grades. Thus,
the Court is unsure whether the Review addresses the grade of the Main
Building (the only building for which the State Board considered the grade issue),
the two pole barns or all three structures. The ambiguity is not
important, however, because the Reviews observation is not probative as to any of
the three buildings grades.
The Court reminds the taxpayer that it should advocate for objective adjustments,
when possible, to account for a subject improvements deviations from the model used
to assess it; the subjective grade adjustment must be avoided where an adjustment
using the base rate adjustment and/or unit-in-place tables is feasible.
State Bd. of Tax Commrs, 742 N.E.2d 46 (Ind. Tax Ct. 2001).