ATTORNEYS FOR PETITIONER:            ATTORNEYS FOR RESPONDENT:
CURTIS J. DICKINSON                JEFFREY A. MODISETT
DAVID L. PIPPEN                    Attorney General of Indiana
Dickinson & Abel
Indianapolis, Indiana         TED J. HOLADAY     Deputy Attorney General
                                Indianapolis, Indiana
__________________________________________

WHITE SWAN REALTY,                                                    )
                                                                           )
            Petitioner,                                                    )
        v.                                                                 ) Cause No. 49T10-9701-TA-00019
                                                                           )                                      
STATE BOARD OF TAX COMMISSIONERS,                                          )
                                                                           )
            Respondent.                                                    )
                                                                           )                 
_____________________________________________________________________
 

                                                                       
ON APPEAL FROM FINAL DETERMINATIONS 
                              OF THE STATE BOARD OF TAX COMMISSIONERS
                                   
                                                                 _____________________________________________________________________
     

                                                                       

    White Swan Realty (White Swan) appeals the final determinationsSee footnote 1 of the State

Board of Tax Commissioners (State Board) fixing the assessed value of two real estate parcels it owned located in Allen County, Indiana as of March 1, 1992.

II.    Whether the State Board's final determination with respect to the grade assigned to the subject properties lacked substantial evidentiary support.
    
III. Whether the State Board's final determination with respect to obsolescence depreciation lacked substantial evidentiary support.

IV. Whether the State Board's final determination with respect to condition lacked substantial evidentiary support.

V.    Whether the State Board's final determination with respect to land classification and negative influence factor lacked substantial evidentiary support.

assessment made by the BOR. Deeming the adjustments made by the State Board to be insufficient, White Swan filed this original tax appeal on January 3, 1997. On June 15, 1998, the parties tried this case before this Court. Additional facts will be supplied as necessary.

Originally, the wall in question was the exterior wall of building A. Subsequently, White Swan added building B to building A. As a result, what was originally an exterior wall of building A became a division wall separating the two buildings. For assessment purposes, the buildings were assessed separately. (Resp't Br. at 12). The buildings in question were priced from the General Commercial Mercantile (GCM) schedules with building A priced as a supermarket and building B priced as a neighborhood shopping center.
White Swan contends that the division wall adjustment was improper and that even if proper, the division wall adjustment was erroneously calculated. The State Board contends that the division wall adjustment was warranted because neither of the models used to assess buildings A and B contain division walls.See footnote 4 See Barth, Inc. v. State Bd. of Tax Comm'rs, 699 N.E.2d 800, 802-03 (Ind. Tax Ct. 1998) (discussing various ways in which buildings being assessed deviate from models used to assess those buildings are accounted for in the regulations), reh'g denied, 705 N.E.2d 1084. Therefore, according to the State Board, the division wall adjustment is necessary to arrive at an accurate assessment in this case. See Ind. Admin. Code tit. 50, r. 2.1-4- 3(c) (1992) (codified in present form at id. r. 2.2-10-6.1(c)(2) (1996)).
    In calculating a division wall adjustment, the assessor must first determine the

reproduction cost of the division wall.See footnote 5 Then the assessor must divide that cost by the square footage of the entire building in order to determine the amount to be added to the base rate of that building.See footnote 6
    In its final determination, the State Board concluded that the presence of a division wall added $3.65 to the base rate of building B. However, there is no evidence in the record to support this figure. Accordingly, the Court is unable to determine how this figure was calculated. This alone mandates reversal. See Clark v. State Bd. of Tax Comm'rs, 694 N.E.2d 1230, 1240 (Ind. Tax Ct. 1998) (court must be apprised of the basis of a State Board final determination). In addition, assuming arguendo that this figure represents the proper reproduction cost (expressed in terms of cost per square foot or cost per lineal foot, the record is silent as to which) of the division wall, there is no evidence in the record to suggest that the assessor determined the proper adjustment to the base rate of building B once the reproduction cost of the division wall was determined. (There is a difference between the per square foot reproduction cost of the division wall and how much that division wall adds to the per square foot reproduction cost (i.e., base rate) of the building being assessed). In fact, the testimony of the hearing officer indicates that the $3.65 figure was added directly into the base rate of building B. (Trial Tr. at 23-24). This was improper.

     adjustment is warranted. Without other evidence[,] obsolescence depreciation is      not supported.

     No change was made.

(Joint Ex. C-1).

    White Swan's failure to present or identify any evidence concerning obsolescence at the administrative hearing is fatal to its contention that the State Board erred in finding no causes of obsolescence. In Lake County Trust Co. v. State Board of Tax Commissioners, 694 N.E.2d 1253, 1258 (Ind. Tax Ct. 1998), review denied, this Court held that when challenging the State Board's determination denying an obsolescence adjustment, the taxpayer has to offer evidence tending to prove causes of obsolescence. In this case, White Swan failed to do so. There is no evidence in the record showing that the property suffers from any cause of obsolescence. “Where there is no cause of obsolescence, there is no obsolescence to quantify.” Id. at 1257. As a result, the State Board's final determinations must be affirmed.

(Ind. 1998). An assessor can determine from the regulation's life expectancy (depreciation) tables the effect of the improvement's condition and age on its true tax value. See Barth, Inc., 699 N.E.2d at 808 (citing Ind. Admin. Code tit. 50, r. 2.1-5-1). Using these tables, the assessor will then convert his findings into a percentage factor for physical depreciation. See Ind. Admin. Code tit. 50, r. 2.1-5-1 . Once the percentage factor is applied, the true tax value can be determined. See id.
    White Swan contends that reversal of the State Board's final determinations with respect to the condition of the subject improvements is warranted because the regulations governing condition lack ascertainable standards. Recently, this Court addressed the same issue. In Phelps Dodge, this Court held that a taxpayer may not secure a reversal of a State Board final determination of the condition of a given improvement simply by pointing out the inadequacy of the regulations governing condition. See Phelps Dodge, 705 N.E.2d at 1104. Rather, the taxpayer must offer probative evidence concerning the condition of that improvement.See footnote 12 See Id. In this case, White Swan has offered no evidence relating to the condition of the subject improvement. Therefore, the Court will not reverse the State Board's final

determination on this issue.

undeveloped. See Ind. Admin. Code tit. 50, r. 2.1-4-2(f) (1992) (codified in present form at id. r. 2.2-4-17 (1996)). A land parcel's base value depends on the classification it receives. Land parcels are not restricted to one classification, i.e., the particular parcel may have parts that are primary, secondary, or undeveloped. To illustrate, the BOR originally classified all land as primary, assigning a base value of $2.75 per square foot. In its final determination, the State Board reclassified parts of the parcel as secondary and undeveloped. Thus part of the parcel was assigned a base value of $1.23 per square foot as secondary, and another assigned a value of $.53 as undeveloped. A separate part of the land remained classified as primarySee footnote 14 (Resp't Br. at 9).
    White Swan failed to sufficiently place land classification at issue by failing to provide probative evidence relating to this issue. See Whitley Prods., 704 N.E.2d at 1119-20 (where taxpayer fails to present probative evidence regarding an issue, the substantial evidence standard is not triggered). White Swan raises the issue of land classification, but does not provide the Court with a cogent argument regarding the actual reclassification of the land.See footnote 15 Instead, White Swan's argument is directed at the State Board's decision to lower the negative influence factor as a result of the reclassification. As a result, the Court will affirm the State Board's reclassification of

Parcel 49.

assessor must first identify deviations from the norm and then quantify the variation. See Ind. Admin. Code tit. 50, r. 2.1-4-2. The variation is then expressed as a percentage. The percentage represents the composite effect of the factors that influence the value. Id.
    In the case at bar, the land in question initially had a forty-percent influence factor applied to it because the parcel was considered oversized. After reclassification of the land, however, the State Board contends that a reduction of the influence factor from forty-percent to fifteen-percent was required. (Joint Ex. C-2). Thus, it appears that the State Board treated land classification and negative influence factor as interdependent. The State Board was incorrect. In fact, land classification and influence factors are independent of each other. The regulations do not require a change in one factor because there was a change in the other. As a result, the State Board, if it decides to lower a negative influence factor because of land reclassificationSee footnote 16 , must demonstrate in its final determination how a change in one affects the other.See footnote 17
     The State Board's errors are highlighted further by the testimony of the hearing officer. At trial, the hearing officer admitted that he did not know the basis behind the fifteen-percent negative influence factor application, or, for that matter, the basis of the

initial forty-percent application. (Trial Tr. at 14). The hearing officer also admitted that it is possible that the fifteen-percent negative influence factor applied does not accurately account for the effect of the size of the property on its per square foot or per acre value. (Trial Tr. at 14). Thus, because the State Board altered the negative influence factor without articulating reasons for the reduction in its final determination, this Court finds that the State Board's final determinations lacked substantial evidentiary support. See Phelps Dodge, 705 N.E.2d at 1106 (citing Talesnick, 693 N.E.2d at 661; Western Select Properties, 639 N.E.2d at 1073; Canal Square Ltd. Partnership v. State Bd. of Tax Comm'rs, 694 N.E.2d 801, 810 (Ind. Tax Ct. 1998) (State Board's reasoning for its decision must be contained in its written findings.). Accordingly, the Court reverses and remands the final determination of the State Board.
    On remand, White Swan will be required to present probative evidence that supports what it believes to be the proper amount of negative influence factor to be applied. See Phelps Dodge, 705 N.E.2d at 1106. The State Board, of course, must then deal with the evidence in a meaningful manner. See Loveless Const. Co., 695 N.E.2d at 1049.

with this opinion.
    

determination.

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