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
WATERFURNACE INTL., INC., )
) Cause No. 49T10-0005-TA-71
DEPARTMENT OF LOCAL )
See footnote )
ON APPEAL FROM A FINAL DETERMINATION OF
THE STATE BOARD OF TAX COMMISSIONERS
April 23, 2004
Waterfurnace International, Inc. (Waterfurnace) appeals the State Board of Tax Commissioners (State Board)
final determination valuing its real property for the 1998 tax year. The
issue for the Court to decide is whether the State Board erred when
it assessed Waterfurnaces improvement using the General Commercial Industrial (GCI) schedule as opposed
to the General Commercial Kit (GCK) schedule.
FACTS AND PROCEDURAL HISTORY
Waterfurnace owns land and improvements in Fort Wayne, Indiana. The improvement at
issue has a 100,378 square foot section of area used for warehousing.
The local assessing officials assessed that section using the GCI schedule.
Waterfurnace challenged its assessment by filing a Form 130 Petition for Review of
Assessment with the Allen County Board of Review (BOR). In its appeal,
Waterfurnace argued that its improvement should have been assessed using the GCK schedule.
The BOR, however, denied its claim. Waterfurnace appealed the BORs determination
to the State Board. After conducting an administrative hearing, the State Board
also denied Waterfurnaces claim.
On May 15, 2000, Waterfurnace initiated an original tax appeal. The parties
stipulated to the record and, on April 10, 2001, this Court heard their
oral arguments. Additional facts will be supplied as 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. Hamstra Builders, Inc.
v. Dept of Local Govt Fin., 783 N.E.2d 387, 390 (Ind. Tax Ct.
2003). 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. When appealing
to this Court from a State Board final determination, the taxpayer bears the
burden of showing that the final determination is invalid. Id.
Waterfurnace argues that the State Board erred in using the GCI as opposed
to the GCK schedule when it assessed its improvement. The State Board
claims that Waterfurnace failed to demonstrate that its improvement qualified for GCK pricing.
The State Board, however, is incorrect.
The GCK schedule is used for valuing preengineered and predesigned pole buildings which
are used for commercial and industrial purposes. Ind. Admin. Code tit. 50,
r. 2.2-10-6.1(a)(1)(D) (1996). Specifically, it value[s] the base building on a
perimeter area ratio basis and adjust[s] the value based on the various individual
components of the building. Id. The GCK schedule provides pricing for
components such as: insulation; interior liner; 24 to 20 gauge steel siding and
roofing; and finished, semi-finished, and unfinished interior occupancies. See Ind. Admin. Code
tit. 50, r. 2.2-11-6 (Schedule A.4) (1996).
At the administrative hearing, Waterfurnaces property tax consultant, Timothy Boyce (Boyce), presented interior
and exterior photographs of the improvement and explained how those photographs showed components
that qualified the building for GCK pricing. (See Petr Exs. 1, 2;
Respt Br. at 14-16.) Specifically, Waterfurnaces evidence indicated that its improvement has:
(1) 26-gauge exterior metal walls; (2) interior metal walls with 4-inch vinyl insulation;
and (3) unfinished interior flooring, ceilings, and sidewalls.
By comparing the features of its improvement with those listed in the regulations,
Waterfurnace established that its improvement should have been assessed under the GCK schedule.
See LDI Mfg. Co. v. State Bd. of Tax Commrs, 759 N.E.2d
685, 688 (Ind. Tax Ct. 2001). Thus, the burden shifted to the
State Board to come forward with probative evidence to rebut Waterfurnaces showing.
At the administrative hearing, the local assessing official testified that [t]he only
thing that is actually economical [in the improvements construction is its] siding and,
based on his comparison with components listed in the kit building bulletin, the
improvement simply d[id] not qualify as a kit building.
See footnote (Respt Br.
at 19 (footnote
added).) The official further testified that, in any event, any variations from
the GCI schedule were accounted for in the buildings grade factor of D+1.
See Respt Br. at 20.)
In its final determination, the State Board held that the improvement did not
qualify for GCK pricing. More specifically, it found that the improvement had
a 3-foot high wall on its northwest corner (to retain grade) and a
rubber roof system that were not listed in the GCK schedule.
See Stip. R. at 28.)
The State Board failed to rebut Waterfurnaces evidence. Indeed, the State Board
made no attempt to provide substantive evidence as to how the roofing system
or 3-foot grade wall disqualified the improvement from being priced using the GCK
schedule. See Barker v. State Bd. of Tax Commrs, 712 N.E.2d 563,
570 (Ind. Tax Ct. 1999) (finding that the State Boards denial of the
kit adjustment could not be upheld merely on the basis that the subject
improvement contained deviations from the basic kit model). The State Board, in
the alternative, failed to provide evidence demonstrating how those features could not be
accounted for through a grade adjustment
See footnote under the GCK schedule or that they
were accounted for in the D+1 grade assigned to the
improvement under the GCI schedule.See footnote
See King Indus. Corp. v. State Bd.
of Tax Commrs, 699 N.E.2d 338, 342 (Ind. Tax Ct. 1998) (stating that
the State Board must quantify the effects of a buildings deviations from the
C grade on the reproduction cost of that building to support its grade
Because the State Board failed to support its final determination with substantial evidence,
it did not rebut Waterfurnaces evidence indicating that its improvement qualified for assessment
under the GCK schedule. See Hamstra Builders, Inc., 783 N.E.2d at 390.
Accordingly, the State Boards final determination must be reversed.
For the reasons stated above, the Court REVERSES the final determination of the
State Board and REMANDS it to the Indiana Board of Tax Review (Indiana
See footnote to instruct the local assessing officials to assess Waterfurnaces improvement under the
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),
Indiana Code Annotated § 6-1.1-30-1.1 (West Supp. 2003)(eff. 1-1-02); 2001 Ind. Acts 198
§ 66, and the Indiana Board of Tax Review (Indiana Board). Ind.
Code Ann. § 6-1.5-1-3 (West Supp. 2003)(eff. 1-1-02); 2001 Ind. Acts 198 §
95. Pursuant to Indiana Code Annotated § 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 Ann. § 6-1.5-5-8
(West Supp. 2003)(eff. 1-1-02); 2001 Ind. Acts 198 § 95. Nevertheless, the
law in effect prior to January 1, 2002 applies to those appeals.
A.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 this opinion.
In addition, Waterfurnace raises various state and federal constitutional claims that this
Court has declined to reach in previous cases.
See, e.g., Barth, Inc.
v. State Bd. of Tax Commrs, 756 N.E.2d 1124, 1127 n.1 (Ind. Tax
Ct. 2001). Because Waterfurnaces claims and supporting arguments are identical to those
previously rejected by the Court, the Court will not address them.
Prior to the promulgation of the 1995 GCK schedule, light pre-engineered buildings
(i.e., kit buildings) were assessed under the GCI schedule, and received a 50%
base rate reduction.
See Ind. Admin. Code tit. 50, r. 2.1-4-5 (Schedule
A.2) (1992). To assist assessors in determining which pre-engineered buildings qualified for
the reduction, the State Board issued Instructional Bulletins 91-8 and 92-1 which included
construction characteristics common to kit buildings.
The Court notes that the State Board essentially rejected the evidence presented
by the County in finding that [a]ll testimony and evidence submitted in relation
to State Board Bulletin 91-8 and 92[-1] is irrelevant to th[e] hearing as
. . . [the] bulletins were repealed with the enactment of 50 IAC
2.2 for the 1995 assessment [i.e., the GCK regulation,
see footnote 3].
(Stip. R. at 26.) The State Board also determined that this Courts
cases related to those bulletins [we]re obsolete cases[.] (Stip. R. at 27.)
The GCK cost schedule, however, provides minimal detail in describing the essential
characteristics of a building that qualifies to be assessed under it. Therefore,
although the State Boards bulletins have been superseded by the GCK cost schedule,
they still offer guidance as do this Courts cases construing those bulletins
in determining whether a building may qualify to be assessed under the
The Court has previously held that when an improvement deviates from the
model used to assess it, the grade can be adjusted to account for
Whitley Prods., Inc. v. State Bd. of Tax Commrs, 704
N.E.2d 1113, 1117 (Ind. Tax Ct. 1998), review denied. See also
Ind. Admin. Code tit. 50, r. 2.2-10-6.1(f) (1996) (providing that grade is used
to adjust the total base reproduction cost in order to account for variations
in standards of quality and design).
The State Board also stated in its final determination that [Waterfurnace] is
correct in stating [that] the subject should not be assessed as a concrete
building using the cost schedule found in 50 IAC 2.2-11-6. (Stip. R.
at 29.) The State Board then states that [t]he subject is assessed
with Wall Type 1 which denotes [among other things] concrete block and there
is no change in the assessment[.] (Stip. R. at 29.) In
light of these statements, the Court is puzzled as to how the State
Board affirmed the use of the GCI schedule when its own findings seem
to indicate its position was to the contrary.
Footnote: All cases that would have been remanded to the State Board are
now remanded to the Indiana Board of Tax Review (Indiana Board).
Code Ann. § 6-1.1-15-8 (West Supp. 2003). Final determinations made by the
Indiana Board are subject to review by this Court pursuant to Indiana Code
§ 6-1.1-15. Ind. Code Ann. §§ 6-1.5-5-7, 3-33-5-2 (West Supp. 2003).