ATTORNEY FOR PETITIONER:    ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN    STEVE CARTER    
ATTORNEY AT LAW     ATTORNEY GENERAL OF INDIANA
Indianapolis, IN    Indianapolis, IN
    
     LAUREANNE NORDSTROM
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN
    

_____________________________________________________________________

    IN THE INDIANA TAX COURT _____________________________________________________________________ 

EAGLE BOWL, INC.,                                                         )
                                                                               )
    Petitioner,                                                                )
                                                                               )
    v.                                                                         )   Cause No. 49T10-9701-TA-31
                                                                               )
DEPARTMENT OF LOCAL                                                            )
GOVERNMENT FINANCE,
                                                           
                                                 
                                                                      
                                      See footnote
        )
                )
    Respondent.            )    
_____________________________________________________________________

ON APPEAL FROM A FINAL DETERMINATION OF
THE STATE BOARD OF TAX COMMISSIONERS

NOT FOR PUBLICATION
April 11, 2003

FISHER, J.

    Eagle Bowl, Inc. (Eagle Bowl) appeals the final determination of the State Board of Tax Commissioners (State Board) valuing its real property for the March 1, 1992 assessment date.
ISSUES

I.     Whether the State Board erred in denying an economic obsolescence adjustment to Eagle Bowl’s improvement; and

III.    Whether Eagle Bowl’s property assessment violates the U.S. Constitution?

FACTS AND PROCEDURAL HISTORY

    Eagle Bowl is a bowling alley located on the west side of Indianapolis, Indiana. For the 1992 tax year, local assessing officials valued Eagle Bowl’s improvement at $113,330. No economic obsolescence adjustment was granted to the improvement.
    In November 1993, Eagle Bowl challenged the assessment by filing a Petition for Review of Assessment (Form 131) with the State Board. In its Form 131, Eagle Bowl asserted that its improvement was entitled to a 50% economic obsolescence adjustment.
    Following an administrative hearing, the State Board issued a final determination on Eagle Bowl’s Form 131, lowering the assessed value of Eagle Bowl’s improvement to $92,030. The lowered valuation resulted in part from the State Board’s assignment of a 20% economic obsolescence adjustment to the improvement.
    Eagle Bowl appealed the State Board’s final determination to this Court on January 3, 1997. On March 3, 1999, however, both Eagle Bowl and the State Board moved to have the case remanded to the State Board for further proceedings. On March 4, 1999, the Court issued an order remanding the matter:
It is hereby ORDERED that the issue of obsolescence is REMANDED to the State Tax Board for further proceedings consistent with the provisions of Ind. Code § 6-1.1-15-8. The State Board shall have 180 days to issue its revised Final Assessment Determination. The State Board shall issue a Final Assessment Determination consistent with Clark v. State Board of Tax Commissioners, 694 N.E.2d 1230, 1238 (Ind. Tax [Ct.] 1998).

(See Ex. B at 1.)

    The State Board conducted a remand hearing and, on May 28, 1999, issued its final determination in which it removed Eagle Bowl’s 20% economic obsolescence adjustment. The State Board concluded that because Eagle Bowl did not submit “probative evidence to either support the existence or quantification of obsolescence, the State Board’s initial granting of obsolescence can not [sic] stand[.]” (Ex. B. at 25.) Accordingly, the assessed value of Eagle Bowl’s improvement was returned to $113,330.
    Eagle Bowl now appeals the State Board’s removal of its economic obsolescence adjustment. In lieu of a trial, the parties agreed to argue this case based on the administrative record presented to the State Board as well as on their briefs. Accordingly, the Court heard oral argument on December 4, 2000. Additional facts will be supplied as necessary.

STANDARD OF REVIEW

    This Court accords great deference to the State Board when it acts within the scope of its authority. Wetzel Enters., Inc. v. State Bd. of Tax Comm’rs, 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.
    Furthermore, the taxpayer bears the burden of demonstrating the invalidity of the State Board’s final determination. Clark v. State Bd. of Tax Comm’rs, 694 N.E.2d 1230, 1233 (Ind. Tax Ct. 1998). In bearing this burden, the taxpayer must present a prima facie case, i.e., a case in which the evidence is “sufficient to establish a given fact and which if not contradicted will remain sufficient.” GTE North Inc. v. State Bd. of Tax Comm’rs, 634 N.E.2d 882, 887 (Ind. Tax Ct. 1994) (citations and internal quotation marks omitted). To establish a prima facie case, the taxpayer must offer probative evidence concerning the alleged assessment error. Miller Structures, Inc. v. State Bd. of Tax Comm’rs, 748 N.E.2d 943, 947 (Ind. Tax Ct. 2001). Where the taxpayer has failed to provide the State Board with probative evidence supporting its position on the alleged assessment error, the State Board’s duty to support its final determination with substantial evidence is not triggered. Whitley Prods., Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1119-20 (Ind. Tax Ct. 1998), review denied.
DISCUSSION
I. Economic Obsolescence

    “Obsolescence, which is a form of depreciation, is defined as a loss of value and classified as either functional or economic.” Freudenberg-NOK Gen. P’ship v. State Bd. of Tax Comm’rs, 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). Economic obsolescence is caused by factors external to the property. 50 IAC 2.1-5-1. The State Board’s regulations cite a number of factors that may cause economic obsolescence:    
Location of structure unappropriate [sic] for its neighborhood[;]

A neighborhood that is in transition of use[;]

Inoperative of inadequate zoning ordinances or deed restrictions[;]

Building code requirements which set current acceptable construction standards[;]

Market acceptability of the product or devices for which the property was constructed or is currently used[;]

Termination of the need of the property due to actual or probable changes in economic or social conditions[;]

Insufficiency of utilities – unpaved streets, inadequate fire protection, unreliable water, gas or electric systems[;]

Hazards – danger from floods or other special hazards[.]

50 IAC 2.1-5-1.
    As this Court has previously noted, when a taxpayer seeks an economic obsolescence adjustment, it must make a two-pronged showing: it must identify the causes of the economic obsolescence and it must quantify the amount of economic obsolescence to be applied. See Clark, 694 N.E.2d at 1238. It is important to recognize, however, that each of these prongs requires a connection to an actual loss in property value.
    For example, when identifying causes of obsolescence, a taxpayer must provide probative evidence that identifies the existence of specific factors that are causing economic obsolescence in its improvement. Id. In other words, the taxpayer must show that these external factors cause an actual loss of value to its property. See Miller Structures, 748 N.E.2d at 954. In the commercial context, this loss of value usually means a decrease in the property’s income generating ability. See id. at 953.
    Once this showing has been made, See footnote the taxpayer proceeds to the second-prong: quantification of obsolescence. This prong requires a taxpayer, through the use of professional appraisal techniques, to convert the actual loss of value (shown in the first prong) into a percentage reduction and apply it against the improvement’s overall value. See Clark, 694 N.E.2d at 1238.
    In this case, Eagle Bowl contends it “presented both [the] causes and quantification” of its economic obsolescence. (Pet’r Post-Hearing Br., Findings of Fact and Conclusions of Law at 4 (citing to Exs. A and C).) (See also Oral Argument Tr. at 16.) The Court, however, disagrees.
    Exhibit A is the audio recording of the remand hearing. During the hearing, Eagle Bowl’s tax representative, M. Drew Miller (Miller) of Landmark Appraisals, Inc. provided the following testimony:
[I]n explaining some of the situations here, this bowling alley was built back in 1960 and it’s kind of off, off the main thoroughfare in a declining neighborhood, lacks high visibility and due to increased competition and people getting away from the inner city the demand for bowling in the area has fallen off tremendously. . . . There’s [sic] been several [] tenants in there since [December 1993] and again none of them have [sic] been able to make it. At the time of this hearing, due to a lot of deferred maintenance the roof was in need of substantial repair. About 30% of the lanes were unusable due to water damage from the roof leaking.

(Ex. A.) See footnote In conjunction with his testimony, Miller prepared and presented an “Assessment Review and Analysis” (review). (Ex. C.) The review contains a map indicating Eagle Bowl’s general location to the west of Lafayette Road, as well as several uncaptioned, photocopied photographs of the subject improvement. The fifth page of the review states:
Obsolescence depreciation of 68.2% to the improvements due to the highlighted causes of obsolescence listed in the manual. The following income statements clearly show the poor economic performance of the property.

The subject is in a declining area of the city. The hearing officer on the first hearing would not even go there after mid-afternoon. The structure has received minimal maintenance over the years due to lack of business and shortage of funds. Approximately 30% of the lanes were unusable, due to water problems from a poorly maintained roof. After several attempts with various tenants to operate the facility as a bowling alley, the lanes were eventually removed from the building.

(Ex. C at 5.) The sixth page of the review states that Eagle Bowl is entitled to an economic obsolescence adjustment of 68.2% and provides a cursory mathematical calculation to arrive at that figure. The remaining pages of the review contain what appears to be a photocopy of the State Board’s obsolescence depreciation rules, Eagle Bowl’s 1990, 1991, and 1992 income and expense statements, See footnote a copy of Eagle Bowl’s property record card, and a photocopy of the “Life Expectancy Guidelines” and a depreciation schedule from the Marshall & Swift Valuation Service.
    Miller’s hearing testimony is not probative as to the causes of economic obsolescence. Indeed, statements that economic obsolescence is caused by factors such as “off the main thoroughfare,” “in a declining neighborhood,” “lacks high visibility” and “the demand for bowling in the area has fallen off tremendously” are nothing more than unsupported, conclusory allegations. Eagle Bowl needed to submit factual evidence showing that these external factors had caused an actual loss in its property value. See Miller Structures, 748 N.E.2d at 954. Eagle Bowl needed to explain what “off the main thoroughfare” meant and then link it, through factual evidence, to how it caused Eagle Bowl to lose money. See footnote It needed to explain what “a declining neighborhood” meant, and then link it, through factual evidence, to how it caused Eagle Bowl to lose money. See footnote It needed to explain what “lacks high visibility” meant and then link it, through factual evidence, to how it has caused Eagle Bowl to lose money. See footnote And finally, it needed to explain what “the demand for bowling in the area has fallen off tremendously” meant and then link it, through factual evidence, to how it has caused Eagle Bowl to lose money. See footnote Instead, Eagle Bowl merely said “here are the causes of obsolescence” and “here are our income and expense statements.” No explanation, no supporting factual evidence, no link. Eagle Bowl hoped the State Board would make its case for it (the metaphorical strike). Instead, Eagle Bowl bowled a gutter ball.
    Likewise, Miller’s review does nothing to support Eagle Bowl’s claim that economic obsolescence exists. The photocopied photographs lack any descriptive captions and were not accompanied by an explanation as to how they identify causes of obsolescence. The map, also lacking any description, caption or explanation, provides no insight as to how location might affect Eagle Bowl’s revenue generating ability. The State Board’s depreciation rules, standing alone, constitute unsupported allegations and do not qualify as probative evidence. See Herb v. State Bd. of Tax Comm’rs, 656 N.E.2d 890, 893 (Ind. Tax Ct. 1995) (stating that “[a]llegations, unsupported by factual evidence, remain mere allegations.”).
All Eagle Bowl has done in this case is provide the State Board with two things: 1) a laundry list of factors that may cause economic obsolescence to its improvement; and 2) an income and expense statement that reflects a loss in net operating income from 1990 to 1991 and 1992. It was necessary for Eagle Bowl to link one with the other. Because Eagle Bowl has not shown how or why its improvement’s value is negatively impacted by the factors that generally cause economic obsolescence, it has not satisfied the first-prong of the “economic obsolescence test.” Consequently, there is no

economic obsolescence to quantify. See footnote See Lake County Trust v. State Bd. of Tax Comm’rs, 694 N.E.2d 1253, 1257 (Ind. Tax Ct. 1998), review denied. Thus, the State Board’s final determination on this issue is AFFIRMED.

II. Federal Constitutional Claims

In 1997, this Court determined that Indiana’s property tax system violated Article X, section 1 of the Indiana Constitution (the Property Taxation Clause) See footnote because it did not accurately measure property wealth nor was it based on objectively verifiable data. Town of St. John v. State Bd. of Tax Comm’rs, 690 N.E.2d 370, 382-83 (Ind. Tax Ct. 1997), rev’d in part on other grounds by 702 N.E.2d 1034 (Ind. 1998). The Court rejected the notion, however, that the system violated a taxpayer’s rights to due process and equal protection as guaranteed by the Fourteenth Amendment to the U.S. Constitution. See id. at 388–97.
Despite the system’s state constitutional infirmities, this Court declared that “[r]eal property must still be assessed, and, until [] new regulations are in place, must be assessed under the present system.” Whitley Prods., 704 N.E.2d at 1121. See also Town of St. John v. State Bd. of Tax Comm’rs, 729 N.E.2d 242, 246 & 251 (Ind. Tax Ct. 2000) (ordering real property in Indiana to be reassessed under constitutional regulations as of March 1, 2002 and providing that until then, “real property tax assessments shall be made in accordance with the current system”). As a result, this Court has refused to analyze the subsequent claims of taxpayers alleging that, on their face, their property assessments violate either the state or federal constitutions, or both. See, e.g., Barth, Inc. v. State Bd. of Tax Comm’rs, 756 N.E.2d 1124, 1127 n.1 (Ind. Tax. Ct. 2001).
In this case, Eagle Bowl contends that because Indiana’s system of taxing tangible property is not “based upon objectively verifiable data, [it] condemns any determination [thereunder] to federally impermissible vagueness,” (Pet’r Post-Hearing Br. and Findings of Fact and Conclusions of Law at 7), and thus its due process rights under the Fifth and Fourteenth Amendments to the U.S. Constitution are violated. As just mentioned, this Court has previously rejected legal arguments analogous to Eagle Bowl’s. See Town of St. John, 690 N.E.2d at 388–97. Eagle Bowl attempts to convince the Court, however, that its argument is somehow different than that which was decided in the Town of St. John case. (Oral Argument Tr. at 32, 34-35.) Cf. Town of St. John, 690 N.E.2d at 388-97. Eagle Bowl’s attempt is unsuccessful.
In briefing the issue, Eagle Bowl does little more than quote the Fifth and Fourteenth Amendments and then make the sweeping statement that the State Board’s failure “to draft regulations that afford taxpayers fair warning of what is required of them under the tax regulations” violates the Federal Constitution. (Pet’r Post-Hearing Br. and Findings of Fact and Conclusions of Law at 8.) Briefs supplied to this Court in property tax appeals, however, should be prepared like those in appellate cases -- “so that [a] judge, considering the brief alone and independent of the transcript, can intelligently consider each question presented.” See Pluard v. Patients Compensation Fund, 705 N.E.2d 1035, 1038 (Ind. Ct. App. 1999), trans. denied.
Here, Eagle Bowl has failed to show how its claim is different from those decided in Town of St. John. Indeed, Eagle Bowl provides the Court with no clear statement of the issue, no analysis or cogent reasoning, and specifies no particular relief. Accord Ind. Appellate Rule 46(A)(8)(a) (stating that a brief submitted to an appellate court must provide an argument supported by “cogent reasoning”). This Court is not in the business of making taxpayers’ cases for them. See Davidson Indus. v. State Bd. of Tax Comm’rs, 744 N.E.2d 1067, 1071 (Ind. Tax Ct. 2001). Accordingly, it rejects Eagle Bowl’s federal constitutional claim.
CONCLUSION

For the aforementioned reasons, the State Board’s final determination is AFFIRMED.


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. 198 Ind. Acts 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); 198 Ind. Acts 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); 198 Ind. Acts 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); 198 Ind. Acts 2001, § 95. Nevertheless, the law in effect prior to January 1, 2002 applies to these appeals. Id. See also 198 Ind. Acts 2001 § 117. Although the DLGF has been substituted as the Respondent, this Court will still reference the State Board throughout this opinion.
Footnote: Indeed, “[w]here there is no cause of obsolescence, there is no obsolescence to quantify.” Lake County Trust v. State Bd. of Tax Comm’rs, 694 N.E.2d 1253, 1257 (Ind. Tax Ct. 1998), review denied.

Footnote: Eagle Bowl also provided testimony as to both the condition of its improvement as well as its financial operations – post 1992. ( See Ex. A.) This testimony is irrelevant, however, to a determination of obsolescence for the 1992 tax year. See Glass Wholesalers, Inc. v. State Bd. of Tax Comm’rs, 568 N.E.2d 1116, 1124 (Ind. Tax Ct. 1991) (stating that each tax year stands alone and evidence of previous or subsequent assessments are irrelevant).

Footnote: Eagle Bowl’s income and expense statements show that, for the year ending June 30, 1990, Eagle Bowl had a net operating income of $7,780. For the year ending June 30, 1991, Eagle Bowl’s statement shows a loss of $4,121. For the year ending June 30, 1992, Eagle Bowl’s statement still shows a loss (of $2,500), but not as much as the previous year.

Footnote: For example: what main thoroughfare? Was it too hard to drive to Eagle Bowl (because it was off the main thoroughfare) thereby causing customers to go elsewhere?

Footnote: For example: how has the neighborhood declined? Are businesses moving out? Are new businesses not moving in? How many vacant buildings are in the area, and how does that affect potential-customer draw?

Footnote: For example: visibility off the road? Visibility within the bowling community?

Footnote: For example: why has demand fallen off? Has the area undergone a change in demographics? If so, what are those changes?
Footnote: In the alternative, Eagle Bowl asserts that because the State Board originally awarded a 20% economic obsolescence adjustment, it “agreed” as to the causes of economic obsolescence. Therefore, Eagle Bowl posits that identification of economic obsolescence is not an issue in this case and that only the quantification of the agreed upon causes serves as the bone of contention between the parties.
Assuming that Eagle Bowl is correct, what it fails to recognize is the quantification of economic obsolescence is intrinsically tied to the actual loss of value suffered by the improvement from external factors. See Miller Structures, 748 N.E.2d at 954. See also Heart City Chrysler v. State Bd. of Tax Comm’rs, 714 N.E.2d 329, 334 (Ind. Tax Ct. 1999) (stating that attempts to quantify obsolescence must correlate to the causes of obsolescence). The record from the remand hearing is devoid on the subject of Eagle Bowl’s actual loss of value. Consequently, it is impossible for Eagle Bowl to convert that loss of value into an obsolescence quantification.

Footnote: Indiana’s Property Taxation Clause provides:

The General Assembly shall provide, by law, for a uniform and equal rate of property assessment and taxation and shall prescribe regulations to secure a just valuation for taxation of all property, both real and personal.

Ind. Const. Art. X, § 1. See also Ind. Code § 6-1.1-2-2.