ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN STEVE CARTER
Attorney at Law ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
VINCENT S. MIRKOV
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
CHAMPLIN REALTY COMPANY, )
v. ) Cause No. 49T10-9701-TA-47
STATE BOARD OF TAX COMMISSIONERS, )
ON APPEAL FROM FINAL DETERMINATIONS OF THE
STATE BOARD OF TAX COMMISSIONERS
March 27, 2001
The Petitioner, Champlin Realty Company (CRC), appeals the Final Determinations of the
State Board of Tax Commissioners (State Board) establishing the assessed values for two
of its parcels as of March 1, 1993. CRC contests the State
Boards denial of obsolescence adjustments for improvements located on these two parcels.
The Court finds the following issue dispositive in this matter: whether CRC
sufficiently identified causes of functional obsolescence affecting the subject improvements.
FACTS AND PROCEDURAL HISTORY
CRC owns the two subject parcels, which are located in Elkhart County, Indiana.
The two parcels are numbered 01-05-13-251-002 (Parcel #2) and 01-05-13-277-013 (Parcel #13).
For the 1993 tax year, local assessing officials valued the improvements on
Parcel #2 (a primary building and a 10,860 square foot building) at $564,970
and the improvement on Parcel #13 at $48,770. No obsolescence adjustments were
granted to the improvements. CRC challenged the assessments. The Elkhart County
Board of Review (BOR) declined to change the improvements assessed values. CRC
filed a Form 131 Petition for Review of Assessment for each parcel, which
the State Board received on January 12, 1994. Following an administrative hearing,
the State Board issued two separate Final Determinations. The Final Determination for
Parcel #2 lowered the assessed value of the improvements to $464,630. The
lowered valuation resulted in part from the State Boards assignment of a fifteen
percent obsolescence adjustment for the primary building and an eighty percent obsolescence adjustment
for the 10,860 square foot building. The Final Determination for Parcel #13
lowered the assessed value of its improvement to $36,870. The lowered valuation
resulted in part from the State Boards assignment of a twenty-five percent obsolescence
adjustment to the subject improvement.
CRC appealed both Final Determinations to this Court, filing an original tax appeal
on January 3, 1996. The Court held a trial on May 18,
1998. After both parties had filed briefs, the State Board, on January
28, 1999, moved to have the case remanded for further proceedings on the
obsolescence issue. The Court ordered the matter remanded to the State Board
on February 10, 1999. In its Remand Order, the Court stated:
The Court finds that the record is bereft of any probative evidence which
supports either the causes or quantification of functional obsolescence, either that claimed by
[CRC] or that granted by the [State Board] in its final determination here
under appeal. At best the record contains the conclusions of the parties
witnesses as to causes and quantification but there is nothing in the record
that applies the causes to the subject property nor attempts to explain the
amount of functional obsolescence that should be granted to the subject property.
For these reasons, the Court finds that the entire issue of functional obsolescence
should be remanded. Procedures and guidelines set out in Clark v. State
Bd. of Tax Commrs, 694 N.E.2d 1230 (Ind. Tax Ct. 1998) shall apply.
The only restriction is that only the issue of functional obsolescence is
to be considered.
(Remand Order at 1-2.) ANALYSIS AND OPINION
The State Board conducted a remand hearing on March 31, 1999. On
May 11, 1999, the State Board issued a Final Determination for each parcel.
In the Final Determinations, the State Board denied functional obsolescence adjustments for
the improvements. (Ex. B at 32, 58.) The State Board concluded that
in both cases CRC failed to submit probative evidence to support either the
existence or quantification of functional obsolescence. (Ex. B at 32, 58.)
The State Board further reasoned that because the record was devoid of probative
evidence to either support the existence or quantification of functional obsolescence, the State
Boards initial grants of obsolescence could not stand. (Ex. B at 32,
58.) Accordingly, the value of the improvements on Parcel #2 was increased
to $561,130 and the value of the improvement on Parcel #13 was increased
On July 6, 1999, the Court granted CRC leave to file its amended
petition to set aside the Final Determinations. The Court heard oral arguments
from the parties on January 5, 2001. Thereafter, the Court took this
case under advisement. Additional facts will be supplied where necessary.
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).
CRC claims that it presented evidence sufficient to establish a prima facie case
as to the causes of functional obsolescence present in its improvements. Obsolescence,
which is a form of depreciation, is defined as a loss of value
and classified as either functional or economic. Freudenberg-NOK General Partnership v. State
Bd. of Tax Commrs, 715 N.E.2d 1026, 1029 (Ind. Tax Ct. 1999), review
denied. See also Ind. Admin. Code tit. 50, r. 2.1-5-1 (1992) (codified
in present form at id., r. 2.2-10-7(e) (1996)); Michael D. Larson, Identifying, Measuring,
and Treating Functional Obsolescence in an Appraisal, 10 J. Prop. Tax Mgmt. 42,
44 (1999) (defining functional obsolescence). Functional obsolescence is caused by factors inherent
to the property. Ind. Admin. Code tit. 50, r. 2.1-6-1 (codified in
present form at id., 2.2-1-29). It represents either a physical element that
buyers are unwilling to pay for or a deficiency that impairs the utility
of a property when compared to a more modern replacement. Freudenberg-NOK, 715
N.E.2d at 1029 (citing Larson, supra at 44). Functional obsolescence may be
due to a poor floor plan, mechanical inadequacy or superadequacy, functional inadequacy or
superadequacy due to size, style, age or other losses. Ind. Admin. Code
tit. 50, r. 2.1-5-1. Simply put, functional obsolescence works as a penalty
against the propertys value. Freudenberg-NOK, 715 N.E.2d at 1029. The regulations
provide some examples of causes of functional obsolescence. Ind. Admin.Code tit. 50,
r. 2.1-5-1 (codified in present form at id., 2.2-10-7(e)). Obsolescence is expressed
in terms of a percentage reduction from the subject improvements value; the obsolescence
deduction can range from 0% to 95%. Ind. Admin. Code tit.
50, r. 2.1-5-1 (1992) (codified in present form at id., 2.2-10-7(f) (1996)).
As noted in Clark v. State Board of Tax Commissioners, the determination of
obsolescence is a two-step inquiry. 694 N.E.2d at 1238. Causes of
obsolescence must first be identified and then the amount of obsolescence must be
quantified. Id. In Clark, the Court announced that, henceforth, the Court
would not consider taxpayer complaints concerning obsolescence in cases where the State Board
holds a hearing concerning an assessment . . . unless the taxpayer has
identified the causes of the alleged obsolescence and presented probative evidence that would
support a quantification of obsolescence at the administrative level. 694 N.E.2d at
1241. Therefore, in advocating for an obsolescence adjustment, a taxpayer must
first provide the State Board with probative evidence sufficient to establish a prima
facie case as to the causes of obsolescence.
See White Swan Realty
v. State Bd. of Tax Commrs, 712 N.E.2d 555, 560 (Ind. Tax Ct.
1999), review denied. Where there is no cause of obsolescence, there is
no obsolescence to quantify. Lake County Trust v. State Bd. of Tax
Commrs, 694 N.E.2d 1253, 1257 (Ind. Tax Ct. 1998), review denied.
According to CRC, it presented exhibits specifically pointing to the causes of obsolescence.
(Petr Reply Br. at 1) (citing Exs. D & E). Exhibit
D is an Assessment Review and Analysis for Parcel #2 that was prepared
by M. Drew Miller of Landmark Appraisals, Inc. (Landmark), CRCs taxpayer representative during
the administrative proceedings. This Parcel #2 Review contains four uncaptioned, color photographs
of the subject improvements; three photographs represent exterior views and the fourth represents
an interior view. It also contains a map showing the subject improvements
locations and the area near the subject improvements, with the subject improvements highlighted
in yellow marker. On its seventh page, the Parcel #2 Review states
1) The subject property suffers from the following highlighted causes of obsolescence:
a) The facility has an inefficient floor plan, varying ceiling heights and a cut-up
interior with a flat roof design on most of the building. All
of these are a detriment to the structure and detract from the value
of the property as the ideal facility would be square to rectangular in
shape with wide open bays and one ceiling height at least 18.
b) Due to the inefficiency of the building and lack of insulation, the heat
distribution of the structure is substandard.
c) The majority of this structure was constructed over 40 years ago. Building
code has changed substantially since the original construction, which leaves this structure not
conforming to current electrical, plumbing and handicap accessibility codes.
d) The structure was originally constructed for manufacturing and warehouse purposes 40 years ago.
Since that time, there have been several different occupants in the building
with each making some modifications to the structure in order for the utility
of the building to better serve the occupants
needs. Currently there is
an excess amount of office space as only 1/3 of the office is
The ninth page of the Parcel #2 Review is a copy of the
State Boards obsolescence depreciation rules, with various causes of functional and economic obsolescence
highlighted in yellow marker.
Exhibit E is an Assessment Review and Analysis of Parcel #13, which was
also prepared by Miller. Page four of the Parcel #13 Review is
titled ERRORS IN THE ELKHART COUNTY BORS DETERMINATION. It states in relevant
The Countys determination failed to adequately consider the loss in value due to
obsolescence. The subject property suffers a loss in value due to functional
and economic causes which requires the application of obsolescence depreciation. The subject
building was constructed in 1950, a time when the concern for heating
and cooling efficiencies were of minimal importance. This is best observed by
the buildings lack of thermal pane windows and minimal insulation. All windows
are of single pane glass. The add-on type of construction has created
an excessive amount of interior walls with low and varying ceiling heights as
well as a varying high maintenance roofline. Modern buildings are more square
in shape, have uniform ceiling heights with fewer interior columns and partitions.
The finished areas of modern office buildings are designed to facilitate a network
of computers and phone lines. Because the subject building was built with
little or no concern for these features and was built over a period
of time with various materials and add-on construction, it is at an economic
disadvantage in the marketplace, incurring higher utility, maintenance, material handling costs and labor
The fifth page of the Parcel #13 Review is a copy of the
State Boards obsolescence depreciation rules, with various causes of functional and economic obsolescence
highlighted in yellow marker. A map of the subject building, also highlighted
in yellow marker, and its surrounding area is provided on page six of
the Parcel #13 Review. A. Reviews
CRC also argues that county officials agreed with the State Boards original Final
Determination, with respect to the obsolescence adjustment granted to the subject improvements.
According to CRC, This agreement as to obsolescence amounts to agreement that the
property suffers from causes of obsolescence. (Petr Reply Br. at 2) (citing
Heart City Chrysler v. State Bd. of Tax Commrs, 714 N.E.2d 329 (Ind.
Tax Ct. 1999)). This agreement, CRC maintains, is further supported by the
fact that the State Board applied obsolescence for the tax year at issue
previously. (Petr Reply Br. at 2). CRC adds that, One cannot
imagine evidence more probative in the adversary administrative proceeding than agreement of the
parties. (Reply Br. at 2.)
Neither the Parcel #2 Review nor the Parcel #13 Review is probative as
to the identification of causes of obsolescence. Probative evidence is evidence that
tends to prove or disprove a point in issue. Sterling Mgmt.-Orchard Ridge
Apartments, 730 N.E.2d 828, 833 (Ind. Tax Ct. 2000). The photographs in
the Parcel #2 Review lack descriptive captions, and CRC does not explain how
the photographs identify causes of obsolescence in the buildings shown. Thus, they
lack probative value. See Heart City Chrysler v. State Bd. of Tax
Commrs, 714 N.E.2d 329, 333 (Ind. Tax Ct. 1999). The highlighted maps
in both reviews illustrate the general outlines of the subject improvements, but they
also lack any explanations. The maps are non-probative, because they provide the
Court with no insights with respect to any causes of obsolescence allegedly suffered
by the subject improvements. Cf. Sterling-Mgmt., 730 N.E.2d at 839 (concluding that
highlighted marks on grade specification table were no more than unsupported conclusory statements
that were not probative as to grade). Similarly, the highlighted pages from
the State Boards depreciation rules, standing alone, are nothing more than unsupported allegations
that do not qualify as probative evidence. Cf. id. See also
Herb v. State Bd. of Tax Commrs, 656 N.E.2d 890, 893 (Ind. Tax
Ct. 1995) (Allegations, unsupported by factual evidence, remain mere allegations.).
Page seven of the Parcel #2 Review states that the subject improvements suffer
from the highlighted causes of obsolescence. Essentially, page seven is a list
of conclusory statements. Sub-section a claims that the floor plans are inefficient,
have varying ceiling heights, a cut-up interior and a flat roof design; according
to CRC, these alleged deficiencies detract from the value of the improvements when
considering the features of an ideal facility.
(Joint Ex. D at 7.)
CRC provides no explanation as to how the existing features of the
improvements on Parcel #2 actually detract from the buildings values. Similarly, subsection
b states that the subject buildings are
inefficient and lack insulation; thus, their
heat distributions are substandard. (Joint Ex. D at 7.) No explanation
as to how the buildings insulation or heat distribution systems impact their operating
costs is given. Further, stating (as subsection c does) that the improvements
do not meet current building codes does not inform the State Board or
the Court as to the current code requirements, how the subject improvements fail
to meet those requirements or how the deviations cause the subject improvements lose
value. Finally, subsection d asserts that the improvements have been modified over
the years and that only one-third of the office space was being used.
The modifications are not explained. Assuming the building has been modified
over the years, CRC does not indicate how the modifications resulted in a
loss in value to the improvements. Likewise, that only one-third of the
office space is being used does not necessarily mean that the subject improvement
has suffered a loss in value.
The Parcel #13 Review contains similar, conclusory statements. According to the Parcel
#13 Review, the subject improvement suffered a loss in value due to, among
other things, minimal insulation and inefficient add-on construction. These features, CRC maintains,
put the subject improvement at an economic disadvantage in the marketplace, incurring higher
utility, maintenance, material handling costs and labor costs. (Joint Ex. E at
4.) These alleged deficiencies may in fact cause a loss in value
of the subject improvement. However, CRC cannot merely state that these features
are present and cause a loss in value without explaining how or why
the subject buildings values are negatively impacted by the alleged deficiencies.
The Court addressed the need for identification of obsolescence in Clark v. State
Board of Tax Commissioners, 742 N.E.2d 46 (Ind. Tax Ct. 2001) (Clark II),
pet. for review filed Feb. 7, 2001. The issue in Clark II
was whether the taxpayer identified causes of economic obsolescence.
In Clark II,
the taxpayer alleged in part that a high tenant turnover rate and excessive
maintenance costs caused his apartment units, which were rented primarily to college students,
to suffer a loss in value. 742 N.E.2d at 50-51. The
taxpayers evidence consisted of one witnesss trial testimony and his written review.
The review stated that students tend to sign shorter leases than non-student tenants
and subject apartments to a degree of wear and tear higher than that
typical of non-student tenants. This, the witness claimed, led to higher than
normal administrative costs and maintenance costs for the taxpayers apartment units. The
review cited no authority to support these contentions but did include an income
statement for the units. At trial, the witness opined that the units
high turnover rate for renters detracted from cash flow but that the taxpayer
was not necessarily losing money. The Court concluded that the taxpayer had
failed to submit probative evidence identifying causes of economic obsolescence. Id. at
51. The Court observed that the witnesss review and trial testimony were
nothing but conclusory observations. Id. Moreover, the Court concluded that, assuming
the units had a seventy percent annual turnover rate (as claimed by the
witness), the taxpayer did not submit evidence showing that this alleged fact causes
overly burdensome administrative costs. Id. In addition, the Court found the
taxpayers income statement to be non-probative as to obsolescence because it did not
compare the subject units rental income, security deposit income and maintenance expenses with
those of other properties with non-student populations. Id. at 51-52. Essentially,
the Court held that the taxpayers presentation of evidence without showing how that
evidence demonstrates that the units suffered a loss in value was not probative
Damon Corp. v. State Board of Tax Commissioners, 738 N.E.2d 1102 (Ind. Tax
Ct. 2000) also concerned the identification economic obsolescence. In Damon Corp., the
taxpayer argued that its property suffered from low market acceptability and low desirability
as evidenced by the following: (1) its payment of less than the
true tax value for the property; (2) the vacancy of the property for
over a year prior to the taxpayers purchase of it; and (3) the
fact that the taxpayers building was under construction at the time of purchase.
Damon Corp., 738 N.E.2d at 1108. The Court first noted that
the taxpayer cited no authority showing that low market acceptability and low desirability
indicate the presence of economic obsolescence. Id. Thus, the taxpayers claim
was a mere allegation that did not qualify as probative evidence identifying causes
of obsolescence. Id. The Court did analyze each of the taxpayers
three claims, in order to determine if they show a loss in value
that would indicate that obsolescence should be applied. Id. None of
the taxpayers assertions, however, were found to be probative evidence as to causes
of obsolescence, because the taxpayers evidence failed to show that the property suffered
a loss in value. Id. at 1109-10. See also Pedcor Invs.-1990-XIII,
L.P. v. State Bd. of Tax Commrs, 715 N.E.2d 432, 438 (Ind. Tax
Ct. 1999) (Without a loss of value, there can be no economic obsolescence.).
In the present case, it appears, as the State Board noted, that CRCs
taxpayer representative attempted to use a replacement facility comparison to prove obsolescence by
referring to [and referencing of] items such as plant design, proportion of space,
and product-handling cost caused by the floor plan. (Joint Ex. B at
27, 53-54.) In Inland Steel Co. v. State Bd. of Tax Commrs,
739 N.E.2d 201, 212-13 (Ind. Tax Ct. 2000), pet. for review filed Dec.
22, 2000, the Court did note that the cost approach is usually used
in measuring functional obsolescence and that the cost approach is concerned with the
subject improvements cost of replacement and its cost of reproduction. However, in
reality CRC did little more than list factors that cause improvements to possibly
suffer losses in value. In its brief, the State Board correctly asserts
that the identification of causes of functional obsolescence requires more than randomly naming
factors. (Respt Br. at 5.) Rather, as the Courts decisions in
Clark II and Damon Corp. illustrate, the taxpayer must explain how the purported
causes of obsolescence cause the subject improvements to suffer losses in value. Neither
the Parcel #2 Review nor the Parcel #13 Review meets this standard.
They merely identify possible causes of obsolescence; they fail to explain, other then
in conclusory fashion, how the alleged causes result in losses in value to
the subject improvements. Therefore, the reviews lack probative value.
CRC believes that because the State Boards original Final Determinations assigned obsolescence adjustments
to the subject improvements and because at the remand hearing local assessing officials
thought those adjustments were adequate, there is agreement as to causes of obsolescence.
Therefore, CRC posits that identification of functional obsolescence is not an issue
in this case and that only the quantification of the agreed upon causes
serves as a bone of contention between the parties. CRC is incorrect.
At the remand hearing, Miller pronounced his agreement with the prior Final Determinations
as to the existence of obsolescence in the subject improvements. (Joint Exs.
A, B at 12, 38.) Moreover, local assessing officials at the remand
hearing opined that the obsolescence adjustments granted by the State Board in its
original Final Determinations were adequate. (Joint Exs. A, B at 13, 39.)
However, neither the prior Final Determinations nor the agreement between Miller and
the local assessing officials were probative as to whether the subject improvements suffered
from causes of functional obsolescence.
The Courts Remand Order controlled the conduct of the remand proceedings. See
Ind. Code Ann. § 6-1.1-15-8(a) (West 2000); Foursquare Tabernacle Church of God in
Christ v. State Bd. of Tax Commrs, 550 N.E.2d 850, 852 (Ind. Tax
Ct. 1990). In the Remand Order, the Court expressly determined that the
record was bereft of any probative evidence which supports either the causes or
quantification of functional obsolescence, either that claimed by [CRC] or that granted
by the [State Board] in its final determination. (Remand Order at 1.)
According to the Court, nothing in the record applied the alleged causes
of functional obsolescence to the subject improvements. (Remand Order at 1.)
Therefore, the Court remanded the entire issue of functional obsolescence to the State
Board, with the State Boards proceedings on remand to comport with the Courts
guidelines set out in the Clark case. (Remand Order at 2.)
Further, the State Board was to consider only the issue of functional obsolescence.
(Remand Order at 2.)
The Courts Remand Order wiped the slate clean with respect to functional obsolescence,
due to the lack of any probative evidence tending to show that the
subject improvements suffered from causes of functional obsolescence. In other words,
the Court effectively declared the State Boards original Final Determinations, as regards the
application of obsolescence adjustments to the subject improvements, null and void. Millers
agreement with the obsolescence adjustments granted was meaningless, because he agreed with something
that was unsupported by the record and that was no longer in effect.
For this very same reason, the local assessing officials agreement with the
prior obsolescence adjustments was meaningless.
In reviewing assessments as part of the Form 131 review process, the State
Board is permitted to correct any errors which may have been made in
the taxpayers assessment. Ind. Code Ann. § 6-1.1-15-4(a) (West 2000); Castello
v. State Bd. of Tax Commrs, 638 N.E.2d 1362, 1364 (Ind. Tax Ct.
1994). Thus, the State Board is free to correct the assessment errors that
it finds, regardless of the views of local assessing officials with respect to
those errors. CRC cannot reasonably argue that the State Board is bound
by the mistakes of local assessing officials, merely because the taxpayer and the
local officials agree with the mistakes. After all, the Indiana General Assembly
has charged the State Board with seeing that all property assessments are made
in the manner provided by law. Ind. Code Ann. § 6-1.1-35-1(3) (2000).
CRC mistakenly argues that this Courts opinion in Heart City Chrysler v. State
Board of Tax Commissioners, 714 N.E.2d 329 (Ind. Tax Ct. 1999) supports its
position. In Heart City Chrysler, the State Board had determined that the
subject improvements suffered obsolescence; consequently, this Court reasoned that the State Board must
have concluded that the subject improvements suffered from causes of obsolescence. 714
N.E.2d at 333 n.13. Accord Phelps Dodge v. State Bd. of Tax
Commrs, 705 N.E.2d 1099, 1102-03 (Ind. Tax Ct. 1999) (concluding that State Board
and taxpayer agreed on the causes of obsolescence, where both parties agree[ed] that
the small bays and limited use caused[ed] obsolescence in the subject improvements), review
denied. The agreement at issue in Heart City Chrysler was that between
the State Board and the taxpayer, not that between the taxpayer and local
assessing officials. Moreover, as explained supra, in the present case the Court
essentially declared the original final determinations, with respect to the obsolescence issue, null
and void. Unlike in Heart City Chrysler, here the new final determinations
granted no obsolescence adjustments. Therefore, the final determinations do not imply the
existence of any agreement as to the causes of obsolescence in the subject
CRC advocates a general rule that when parties in an adversarial proceeding agree
upon items, those items no longer represent issues open for consideration. (Petr
Reply Br. at 2.) However, this Courts prior decisions do not stand
for this proposition. Rather, the agreements recognized by the Court are those
represented by the State Boards grants of obsolescence adjustments in its Final Determinations.
The logic is simple. In these prior cases, the Court found
that because the State Board in fact granted some obsolescence, it must have
first identified causes of obsolescence in the subject improvements.
Here, the State Board found after remand that CRC failed to identify causes
of functional obsolescence in the subject improvements. Therefore, there is no agreement
between the State Board and CRC for the Court to recognize. CRC
incorrectly asserts that its agreement with local officials as to the formally recognized
causes of obsolescence by the State Board shows that the subject improvements suffered
from causes of functional obsolescence. The agreements are not probative as to
whether the subject improvements suffered from causes of obsolescence.
As the State Board observed, It is incumbent on the taxpayer to establish
a link between the evidence and the loss of value due to [functional]
obsolescence. (Joint Ex. B at 23, 49.) In the present case,
CRCs exhibits and the testimony of its taxpayer representative lack probative value.
Thus, CRCs evidence shows no loss in value suffered by the subject improvements
due to factors inherent in the properties. Without having identified a loss
in value, CRC has not made a prima facie case that adjustments for
functional obsolescence should have been applied to its properties. For the aforementioned
reasons, the Court AFFIRMS the State Boards Final Determinations in this matter.
CRC raises one additional issue not considered by the Court: whether
the State Boards assessment regulations violate both the United States Constitution and the
Indiana Constitution. The fact that the subject properties were assessed under unconstitutional
regulations does not mean their assessments will be invalidated on that basis.
See 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. See also Town of St.
John v. State Bd. of Tax Commrs, 729 N.E.2d 242, 246 & 250-51
(Ind. Tax Ct. 2000) (ordering that all real property in Indiana shall be
reassessed under new, constitutional rules as of March 1, 2002, and, until then,
real property tax assessments shall be made in accordance with the current system).
Therefore, the Court will not address the constitutionality issue.
The values for both parcels were also lowered because portions of the
subject improvements consisted of wood joist construction.
Footnote: A prima facie case is a case in which the evidence is
sufficient to establish a given fact and which if not contradicted remains sufficient
to establish that fact.
Damon Corp. v. State Bd. of Tax Commrs,
738 N.E.2d 1102, 1106 (Ind. Tax Ct. 2000) (citation omitted). Clark, 694
N.E.2d at 1241, requires the taxpayer to present a prima facie case as
to both the identification of causes and quantification of obsolescence. Once the
taxpayer carries its burden of production with respect to the identification and quantification
of obsolescence, the burden of production shifts to the State Board to rebut
the taxpayers evidence and justify its decision with substantial evidence. See Damon,
738 N.E.2d at 1106. The Supreme Court of Oregon aptly expressed this
burden shifting process as follows: As in ordinary civil litigation, when the
party bearing the burden of [persuasion] introduces sufficient evidence to make out a
prima facie showing on a particular phase of his case, the burden of
going forward shifts to his opponent. Publishers Paper Co. v. Department of
Revenue, 530 P.2d 88, 92 (Or. 1974).
Although the Parcel #2 Review on page seven discusses the alleged deficiencies
of a single facility, the Court assumes that it is referencing both improvements
located on the parcel and will therefore refer to both improvements in its
Footnote: Economic obsolescence is caused by factors external to the property, such as
inharmonious property uses.
Ind. Admin. Code tit. 50, r. 2.1-5-1 (1992) (codified
in present form at id, r. 2.2-1-24 & -10-7(e) (1996)).