ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
CURTIS J. DICKINSON KAREN M. FREEMAN-WILSON
DICKINSON & ABEL ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
DAVID L. PIPPEN TED J. HOLADAY
Attorney at Law DEPUTY ATTORNEY GENERAL
Indianapolis, IN Indianapolis, IN
INDIANA TAX COURT
STERLING MANAGEMENT-ORCHARD )
RIDGE APARTMENTS, )
v. ) Cause No. 49T10-9701-TA-41
STATE BOARD OF TAX )
ON APPEAL FROM A FINAL DETERMINATION OF THE
STATE BOARD OF TAX COMMISSIONERS
June 26, 2000
Petitioner Sterling Management-Orchard Ridge Apartments (Sterling) appeals the final determination of the State
Board of Tax Commissioners (State Board) denying Sterlings request to lower the assessed
value of its property as of the March 1, 1993 assessment date.
In this original tax appeal, Sterling presents the following issues for the Courts
I. Whether the State Board improperly assessed a retaining wall on the subject property;
II. Whether the State Board erroneously valued iron fencing on the subject property, where
the State Boards regulations do not assign values to such fencing; and
III. Whether the State Board incorrectly assigned a grade of C plus one to
Sterlings apartment complex.
FACTS AND PROCEDURAL HISTORY
Sterling is a corporation with its principal place of business in Kosciusko County,
Indiana. Sterling owns parcel number 003-15001-93, upon which is located an apartment
complex known as the Orchard Ridge Apartments. Local assessing officials valued the
subject propertys land and improvements at a total value of $897,670 for the
March 1, 1993 assessment date. Sterling filed a Form 130 petition for
review with the Kosciusko County Board of Review (BOR) on September 8, 1993,
claiming that an incorrect grade of C plus one was assigned to the
subject improvement. On June 17, 1994, the BOR affirmed the subject
improvements assigned grade.
Thereafter, on July 28, 1994, Sterling filed a Form 131 petition for review
with the State Board. In the petition, Sterling stated that the subject
improvements grade was excessive based on materials used for construction [and] should be
C2 [instead of] C+1. (Defs Ex. A at 3.) The State
Board held a hearing on the petition on November 28, 1995. In
its final determination, dated November 22, 1996, the State Board lowered the subject
propertys total assessed value to $885,870. It did not alter the subject
improvements grade. Instead, the lowered assessment resulted from a change in the
subject propertys land classification and from a downward adjustment of iron fencing on
Sterling filed an original tax appeal with this Court on January 3, 1996.
Sterling filed a motion for summary judgment on January 30,
1998; the motion was denied on May 11, 1998. The Court conducted
a trial in this matter on September 30, 1998.
Additional facts will be supplied as necessary.
ANALYSIS AND OPINION
Standard of Review
This Court gives the final determinations of the State Board great deference when
the State Board acts within the scope of its authority. See 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. See id.
The taxpayer bears the burden of demonstrating the invalidity of the State
Boards final determination. See Clark v. State Bd. of Tax Commrs, 694
N.E.2d 1230, 1233 (Ind. Tax Ct. 1998).
The Court will consider each of Sterlings issues in turn.
I. Retaining Wall
Sterling contends that the State Board improperly assessed a retaining wall on the
subject property. According to Sterling, Mr. Gary Utt (Utt), the State Boards
Hearing Officer in this matter, admitted that he could not identify a retaining
wall on the property and would not have assigned a value to any
retaining wall that may have been present. Sterling argues that, because Utt
admitted that no value should be assigned to any retaining wall, the issue
should be remanded to the State Board for a correction of error.
Sterling essentially complains that the State Boards final determination on this issue was
not supported by substantial evidence or, in the alternative, was arbitrary and capricious.
It is the taxpayers responsibility to provide the State Board with probative evidence
demonstrating a claimed error in assessment. See Herb v. State Bd. of
Tax Commrs, 656 N.E.2d 890, 894 (Ind. Tax Ct. 1995) (observing that taxpayer
failed to offer any evidence that State Board acted arbitrarily in classifying his
property); see also Whitley Prods., Inc. v. State Bd. of Tax Commrs, 704
N.E.2d 1113, 1119 (Ind. Tax Ct. 1998) ([T]he taxpayer must offer probative evidence
concerning the alleged error.) (citations omitted), review denied; Kemp v. State Bd. of
Tax Commrs, 726 N.E.2d 395, 400 (Ind. Tax Ct. 2000) (stating that when
propertys grade challenged, taxpayer must offer probative evidence concerning the alleged assessment error).
Probative evidence is evidence that tends to prove or disprove a point
in issue. Blacks Law Dictionary 579 (7th ed. 1999). Where the taxpayer
fails to provide the State Board with probative evidence supporting its position regarding
an alleged error, the State Boards duty to support its final determination on
that issue with substantial evidence is not triggered. See Whitley Prods., 704
N.E.2d at 1119-20. A taxpayers conclusory statements are not probative evidence.
See id. at 1119.
Yard improvements are improvements to the property that generally are detached from the
principal building, and are recorded and priced separately. Ind. Admin. Code tit.
50, r. 2.1-4-3(g) (1992) (codified in present form at id., 2.2-12-2(a) (1996)).
Only those yard improvements that add value to the property and that are
not included in land improvements are included in the replacement cost schedule.
Id., r. 2.1-4-3(g)(2) (codified in present form at id., 2.2-12-2(a) (1996)). The
State Boards regulations include values to calculate the replacement costs of yard improvements,
including values for retaining walls. See id., r. 2.1-4-5 (1992) (Schedule G)
(codified in present form at id., r. 2.2-12-5 (1996)). A retaining wall
is a wall designed primarily to withstand lateral pressures of earth or other
filling or backing deposited behind it after construction. Id., r. 2.1-6-1 (codified
in present form at id., r. 2.2-16-2(77) (1996)). Retaining walls are to be
considered only if they add value as an improvement over and above the
curing contribution considered in the site valuation. Id., r. 2.1-4-5. To
prove that the State Boards assessment of the retaining wall was improper, Sterling
was obligated to submit evidence of probative value to the State Board showing
that the retaining wall in question was not present, was present but added
no value as an improvement over and above the curing contribution considered in
the site valuation
See footnote or was present and had a value different from its
The evidence presented at trial by Sterling was scant. The State Boards
final determination, a copy of which was admitted into evidence as part of
the State Boards transcript of proceedings, simply stated, the retaining wall has been
correctly identified and priced. (Def.s Ex. A at 15.) Also admitted
into evidence was a document titled Assessment Review and Analysis, prepared by Mr.
M. Drew Miller (Miller) of Landmark Appraisals, Inc. Under its List of
Contentions, this document asserted, The cost for the retaining wall should be removed
as it does not add value as an improvement over and above the
curing contribution considered in the site valuation, per Schedule G, Page 17.
(Def.s Ex. B at 4.) During trial, the following exchange took place
between Sterlings counsel and Utt:
Q: Did you price a retaining wall on the subject property?
A: A retaining wall was priced on the property record card, yes.
Q: And how did you make a determination that this retaining wall added value
to the property?
A: Im not so sure that it did, that it added value. I
didnt disagree with the value shown on the property record card. However,
I must say, if I remember correctly, the value assigned some $1400.
Sitting here today I do not remember a retaining wall. There might
have been a cur[b] or something. If I [were] doing it today,
I would not have assigned a value to that retaining wall.
(Trial Tr. at 13-14.)
II. Iron Fencing
The evidence presented does not prove that no retaining wall existed. Utt
admitted that, at the time, he did not disagree with the value assigned
to the retaining wall on the property record card. Moreover, he could
not recall whether a retaining wall was present. These statements fall short
of demonstrating that no retaining wall existed.
Furthermore, assuming the retaining wall was present, the testimony does not constitute probative
evidence as to what value, if any, should have been assigned to it.
The final statement by Utt is speculative at best. It is a
conclusory observation that does not represent proof that the retaining wall had no
value. Likewise, Millers contention that the retaining wall adds no value to
the subject improvement is conclusory.
See footnote Millers assertion lacks any factual basis whatsoever.
The statements offered by Sterling do not constitute probative evidence regarding either the
existence or value of the retaining wall. Therefore, the State Boards duty
to support its final determination with substantial evidence was never triggered. Moreover,
Sterlings argument does not demonstrate that the State Boards final determination was arbitrary
and capricious. The State Boards final determination as regards assessment of the
retaining wall is AFFIRMED.
Sterling argues that the State Boards assessment of its iron fencing at thirty-two
dollars per linear foot was erroneous, because the assessment regulations contain no values
for iron fencing. According to Sterling, One cannot image a more blatant
failure to support an assessment with reason or evidence than the State Boards
admission that it basically made up a figure it wished to apply.
(Petr Post-Hrg Br. at 5.) Thus, Sterling maintains that the State Boards
final determination, with respect to the value assigned to the iron fencing on
the subject property, was arbitrary and capricious.
Values for iron fencing are nowhere to be found in the State Boards
assessment regulations. Ind. Admin. Code tit. 50, r. 2.1-4-5 (1992) (Schedule G)
(codified in present form at id., r. 2.2-12-5 (1996)) provides values for chain
link (galvanized and aluminum) and wood fencing but not iron fencing. The
State Board lowered the assigned value for the fencing from forty to thirty-two
dollars per linear foot, which resulted in a reduction of Sterlings assessment.
At trial, Counsel for Sterling and Hearing Officer Utt had the following exchange:
Q. Using the real property assessment Manual you got there, could you open to
the section that discussed the pricing for iron fencing?
A. No, I dont believe I could. I dont believe it was in
the Manual. I tried to use something that . . . was
representative of what I saw in the field.
Q. What is the basis for the $32 a lineal foot?
A. I dont know. When it became $32 per lineal foot it was
my opinion that was dictated to me, that I shall use $32, based
on what the State said.
Q. And that is not to be found in [the Manual]?
A. I dont believe it is. I believe that is something that [the
State Board] felt was fair and reasonable.
(Trial Tr. at 12-13.) Although the State Boards valuation lowered the assessed
value for the fencing, the State Board provided no explanation for the change.
In its final determination, the State Board simply states that, It is
determined that the fence price should be changed to $32 per linear foot.
(Def.s Ex. A at 15.)
Noting that Indiana does not value property based on its market value and
that the State Board is generally not obligated to consider a taxpayers cost
data when reviewing an assessment,
the Court on Feb. 21, 2000 invited the
State Board to submit a supplemental brief identifying what regulations or other authority
governs the valuation of iron fencing and explaining precisely how the iron fencings
value was calculated in the present case.
On March 16, 2000, the State Board submitted its supplemental authority. It
relied upon the Affidavit of Gordon E. McIntyre, the State Board Commissioner who
reviewed and approved Sterlings final assessment determination. McIntyres affidavit, in turn, cited
and attached copies of: (1) a question and answer memorandum (Memo); (2)
one page of Marshall and Swift Companys Residential Cost Handbook (1983) (Handbook); and
(3) one side of Sterlings property record card. The State Board offered
the following narrative in support of its position that the fencing should be
valued at thirty-two dollars per linear foot:
It is acknowledged that the applicable regulations of the State Board for assessment
of real property from 1989 through 1993 contained no specific values for iron
fences. In order to meet its obligation to assess all property that
should be assessed, the State Board relied upon a question and answer memorandum
it had sent out to all local assessors. The memorandum states that
four foot high iron fence should be valued at $32 per linear foot.
This value is consistent with the lowest value stated by Marshall &
Swift Valuation Service, which is $8 per square foot. The State Board
simply multiplied the $32 times 226 feet and rounded the result to $7200
to calculate the true tax value of this fence. Sterling presented no
evidence upon which to base a value. Because the State Boards calculation
is favorable to Sterling and based upon the lowest value figure, it should
be sustained by the Tax Court.
(Respt Supp. Authority at 2.)
The Memo is the basis for the State Boards valuation of the iron
fencing. The Memo, dated April 10, 1989, was sent from the State
Board to all local assessors. Its introductory paragraph reads, At the conference
held in late January, 1989, question and answer sessions were held. This
memorandum catalogues the questions and answers. Unless otherwise indicated, the answers are
responsive to specific circumstances and should not be applied beyond those circumstances.
Question and answer number forty-three states as follows:
Q: How are the following valued: (a) commercial wrought iron fencing[?]
A: (a) Iron fencing 4 high $32 P.L.F.; 6 high $48 P.L.F.; 8
high $64 P.L.F.; 10 high $80 P.L.F.; 12 high $96 P.L.F.
(Memo at 7.) III.
Along with the Memo, the State Board submitted a copy of page C-1
of the Handbook. This page is in the Yard Improvements section of
the Handbook and shows the Unit-in-Place Costs for fencing and patio roofs and
enclosures. It lists the cost range for Hand forged wrought iron metal
fences as eight dollars to sixteen dollars twenty-five cents per square foot.
Sterling submitted its Reply to the State Boards supplemental authority on April 24,
2000. Sterling reasons that, because the State Boards regulations determine a propertys
true tax value yet assign no value to iron fencing, the iron fencing
has no true tax value. (Petr Reply to Supp. Authority at 2.)
Sterling points out that the State Board knew of the regulations deficiency
as regards iron fencing but failed to properly revise its regulations or even
to issue an instructional bulletin for taxing officials. The State Board, according
to Sterling, violated due process principles by providing no notice to the public
of its decision to use market value in assessing iron fencing. Therefore,
Sterling maintains that the issue must be remanded with instructions to remove any
assigned value to the fencing.
Under Indianas ascertainable standards rule, all administrative decisions must be in accord with
previously stated, ascertainable standards. Boaz v. Bartholomew Consol. Sch. Corp., 654 N.E.2d
320, 323 (Ind. Tax Ct. 1995). The ascertainable standards requirement ensures that
administrative decisions are fair, orderly and consistent rather than irrational and arbitrary.
Garcia v. State Bd. of Tax Commrs, 694 N.E.2d 794, 796 (Ind. Tax
Ct. 1998) (quoting Podgor v. Indiana Univ., 178 Ind. App. 245, 258, 381
N.E.2d 1274, 1283 (1978)). To satisfy the ascertainable standards rule, standards must
be written with sufficient precision to give fair warning as to what factors
an agency will consider in making an administrative decision. See Mechanics Laundry
& Supply, Inc. v. Indiana Dept of State Revenue, 650 N.E.2d 1223, 1233
(Ind. Tax Ct. 1995) (citing Podgor, 178 Ind. App. at 258, 381 N.E.2d
at 1283). Moreover, standards should also be readily available to those who
have potential contact with the administrative body.
The State Boards actions violate the ascertainable standards requirement. The State Boards
assessment regulations provide no standards whatsoever with respect to valuing iron fencing.
Cf. Garcia, 694 N.E.2d at 797-98 (finding State Boards assessment arbitrary and capricious,
where regulations provided no definitions or guidelines for differentiating between A and A+10
grade dwellings). Thus, there is no previously announced standard for the State
Board to apply in assessing the iron fencing. Moreover, Sterling certainly had
no fair warning that the State Board would rely upon market information from
the Handbook to assess the fencing. As noted supra note four, in
Indiana a propertys reproduction cost is determined by referring to the State Boards
regulations, not market information. Sterling could not have reasonably known that the
State Board would use market information, i.e., the Handbook, in assessing its iron
fencing. In this case, the State Board provided no warning that it
would consider market information. No warning falls far short of being fair
warning. Finally, the State Boards standards were not readily available to Sterling.
The Memo is neither a regulation
See footnote nor an informational bulletin;See footnote by its
own terms, the document was responsive (unless otherwise stated)
only to specific circumstances
and should not be applied beyond those circumstances.
See footnote (Memo at 1.)
The State Board could not have expected Sterling to have access to or
possess knowledge of the Memo. Moreover, even if Sterling did know about
this Memo from April of 1989, it would not have been expected to
know that it applied to the 1993 assessment of the iron fencing.
In addition, the State Board contends that the Memos value for iron fencing
is consistent with that found in the Handbook. However, the Memo never
references the Handbook. While Marshall and Swifts Handbook may be a widely
accepted and respected valuation source, Sterling should have had the opportunity to challenge
the accuracy of the Handbooks assigned value or to offer its own competing
evidence of the fencings value. This is especially true considering that the
Handbook is copyrighted a full decade before the assessment year in question.
The State Boards actions in assessing Sterlings iron fencing are troubling, if not
egregious. Basic principles of due process require the State Board to establish
identifiable standards in assessing property and to have those standards published and accessible.
In the present case, the State Board failed to promulgate regulations for
assessing iron fencing. To correct that error, it may not simply refer
to market concepts when it is convenient to do so without giving the
taxpayer an opportunity to respond. Therefore, the Court finds that the State
Boards assessment of Sterlings iron fencing was arbitrary and capricious.
Sterling would have the Court remand and order the State Board to assign
no value to the iron fencing. However, real property must be assessed.
See Whitley Prods., 704 N.E.2d at 1121. The State Board asserts
that the iron fencings assessment should be affirmed because its valuation is favorable
to Sterling and because Sterling offered no evidence regarding the value of the
iron fencing. The Court refuses to rubber-stamp the State Boards improper assessment.
Sterling must be given the opportunity to respond with evidence as to
the fencings value. Cf. Wirth v. State Bd. of Tax Commrs, 613
N.E.2d 874, 879 (Ind. Tax Ct. 1993) (The State Board simply has no
power to take action affecting a taxpayers property without giving the taxpayer notice
and an opportunity to be heard . . . .) Therefore, on
the issue of the iron fencings valuation, the State Boards final determination is
REVERSED and this cause REMANDED to the State Board. The State Board
is instructed to conduct a hearing on this issue, during which it shall
accept and consider any objectively verifiable evidence submitted by Sterling as to the
iron fencings value.
Sterling claims that the State Boards assignment of a C plus one grade
to the subject improvement was not supported by substantial evidence. In its
final determination, the State Board found that the grade of C+1 is correct
based upon the specifications outlined in 50 IAC 2.1-4-3(f). (Def.s Ex. A
at 15.) The Court need not discuss whether the State Boards decision
is supported by substantial evidence, because Sterling points to no probative evidence of
record indicating what the correct grade should be.
When a taxpayer contests the grade assigned to an improvement, it must offer
probative evidence concerning the alleged assessment error. See Herb, 656 N.E.2d at
894; Whitley Prods., 704 N.E.2d at 1119; and Kemp, 726 N.E.2d at 400.
A taxpayers conclusory statements do not constitute probative evidence concerning the grading
of the subject improvement. See Whitley Prods., 704 N.E.2d at 1119.
Furthermore, mere references to photographs or regulations, without explanation, do not qualify as
probative evidence. See Heart City Chrysler v. State Bd. of Tax Commrs,
714 N.E.2d 329, 333 (Ind. Tax Ct. 1999); Kemp, 726 N.E.2d at 400.
Where the taxpayer fails to provide the State Board with probative evidence
supporting its position on the grade issue, the State Boards duty to support
its final determination with substantial evidence is not triggered. See Whitley Prods.,
704 N.E.2d at 1119-20.
Sterling submitted little evidence as to the subject improvements grade. In his
Assessment Review and Analysis, Miller provided four photographs showing different parts of the
subject improvement. (Def.s Ex. B at 2-3.) The photographs were not
captioned. In his self-styled analysis, Miller remarked, The grade of D+1 on
the subject property more accurately reflects the quality of materials and workmanship.
Also note that the model assumes 9 wall height on the 2d floor.
The subject is 8 on the 2nd floor. (Def.s Ex. B
at 4.) In addition, Millers analysis included copies of pages three and
four from Rule 3 of the 1989 Indiana Real Property Assessment Manual (Regulation
17). Page three describes the C and D grades. Page four
is titled grade specification table and lists the basic structural characteristics assigned to
C and D grade residential improvements. (Def.s Ex. B at 6-7.)
Most of the specifications in the D grade column on this table are
highlighted with a pink marker. Utt testified that he understood the highlighted
specifications to represent the deficiencies in the subject improvement. (Trial Tr. at
22.) He assumed that Miller had made the marks but indicated that
Miller had not explained the meaning of the marks. (Trial Tr. at
23.) During trial, counsel for Sterling questioned Utt as to whether the
State Boards regulations defined or provided standards for the terms describing a C
grade. (Trial Tr. at 8-12, 19, 25.) Utt basically responded that
the regulations provided no specific definitions or standards. (Trial Tr. at 9-12,
Sterling failed to meet its burden of production in this case. Its
submissions to the State Board and to this Court do not constitute probative
evidence. The uncaptioned photographs in Millers analysis, without further explanation, do
not show what the subject improvements grade should be. See Heart City
Chrysler, 714 N.E.2d at 333 ([T]his Court has rejected attempts by taxpayers to
put forth evidence such as photographs without explanations.). Miller opined that a
grade of D plus one is appropriate. However, he did not clarify
how the subject improvements features better resemble the D grade characteristics in the
grade specification table. As Utt pointed out, Miller neither explained the highlighted
marks nor attended Utts physical examination of the subject improvement. (Trial Tr.
at 23.) Apparently, Miller expected Utt to ascertain, accept and apply Sterlings
entire argument from the mere presence of the highlighted marks and the remainder
of his analysis. Unfortunately for Sterling, State Board hearing officers are not
obligated to make a case for the taxpayer. See Whitley Prods., 704
N.E.2d at 1118. Millers contentions and the highlighted marks are no more
than unsupported conclusory statements. See Kemp, 726 N.E.2d at 401 (noting that,
without further explanation, checkmarks on grade specification table are conclusory). Accord Bernacchi
v. State Bd. of Tax Commrs, 727 N.E.2d 1133, 1136 (Ind. Tax Ct.
2000). As noted supra, conclusory statements are not probative evidence.
Prods., 704 N.E.2d at 1119; Heart City Chrysler, 714 N.E.2d at 333.
Moreover, questions as to definitions do not constitute probative evidence on the issue
of grade; the taxpayer should offer specific evidence tied to the various descriptions
of grade classifications. See Whitley Prods., 704 N.E.2d at 1119-20 n.12; CDI,
Inc. v. State Bd. of Tax Commrs, 725 N.E.2d 1015, 1022 n.8 (Ind.
Tax Ct. 2000) (noting that questions as to definitions, the hearing officers general
assessment methodology and instructions for applying assessment standards are not probative evidence).
It was imperative that Sterling present probative evidence proving its claim. See
Whitley Prods., 704 N.E.2d at 1120 ([I]t is not too much to ask
that a taxpayer present probative evidence concerning the error the taxpayer alleges.).
Having failed to present probative evidence as to grade, the State Board was
not required to support its final determination on the issue with substantial evidence.
The State Boards final determination on the issue of the subject improvements
grade is AFFIRMED.
For all of the aforementioned reasons, the Court hereby AFFIRMS the State Boards
final determinations as to Issues I and III. In addition, the Court
REVERSES the State Boards final determination as to Issue II and REMANDS the
cause to the State Board for further proceedings consistent with this opinion.
Sterling 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. However, the fact that the subject property was assessed under
an unconstitutional regulation does not mean the assessment will be invalidated on that
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
& 251 (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 regulations do not explain and the parties do not elaborate on
the requirement that a retaining wall add value beyond its curing contribution considered
in the site valuation.
Ind. Code Ann. § 2.1-4-5. In reference
to legal issues, to cure means the act of correcting any defect or
deficiency. Bryan A. Garner, A Dictionary of Modern Legal Usage 163 (1987).
By definition, retaining walls are designed to withstand certain lateral pressures.
The curing contribution of a retaining wall references the walls function in countering
the defects or deficiencies (i.e., lateral pressures from earth, filling or backing) that
it is designed to withstand.
Millers statement that the retaining wall added no value is an implicit
recognition on his part that a retaining wall was in fact present on
the subject property.
Footnote: Rather, the assessed value of property is based on its reproduction cost
as determined by the State Boards regulations.
See Ind. Code Ann. §
6-1.1-31-6(c) (West 2000); Kemp, 726 N.E.2d at 403 (string citation omitted). But
cf. Barker v. State Bd. of Tax Commrs, 712 N.E.2d 563, 572 (Ind.
Tax Ct. 1999) (However, evidence of actual reproduction cost may have relevance in
certain cases.) (citations omitted).
This Court has posited, The ascertainable standards requirement is actually a hybrid
mix of procedural (fair warning) and substantive (consistent rather than irrational) due process,
which has developed in Indiana. This idea implies that government agencies and
the courts themselves must operate according to known rules and procedures.
of St. John v. State Bd. of Tax Commrs, 690 N.E.2d 370, 384
(Ind. Tax Ct. 1997), revd in part on other grounds, 702 N.E.2d 1034
(Ind. 1998). See also Ind. Const. art. 1, § 12 (due course
of law provision).
See Ind. Code Ann. § 4-22-2-3 (West 1999) (defining rule and rulemaking
action). See generally Ind. Code Ann. §§ 4-22-2-23 to -36 (West 1991
& Supp. 1999) (statutes governing rulemaking process).
Ind. Admin. Code tit. 50, r. 4.2-1-5 (1992) (codified in present form
at id. (1996)) provides:
(a) Issuance. The state board may issue instructional bulletins. The instructional
bulletins . . . will be utilized to instruct taxing officials of their
duties and provide administrative forms to be used by taxpayers, local and county
officials as required by various rules of the state board. . . .
(b) Availability. Copies of instructional bulletins issued pursuant to this article (50
IAC 4.2) may be obtained for a fee of twenty-five cents ($.25) per
page plus mailing costs . . . .
The Court notes that a question and answer memorandum is not a
substitute for regulations. Regulations have been promulgated only after having undergone the
scrutiny of the rulemaking process, while answers in a memorandum may not be
subjected to any review or consideration beyond that of the documents drafter.
However, this is not to say that such memorandums are irrelevant to the
assessing process. While not controlling of any particular assessment issue, memorandums from
the State Board assist assessing officials in interpreting the regulations.
Footnote: The Court reminds Sterling that a party who stands to be adversely
affected by a petition for review has an obvious responsibility to appear before
the State Board and
present evidence and argument in support of its position.
North Park Cinemas
v. State Bd. of Tax Commrs, 689 N.E.2d 765, 769 (Ind. Tax Ct.
Miller stated that the model used to determine the subject improvements base
rate assumes nine-foot wall heights on the second floor, but the subject improvement
has only eight-foot wall heights on the second floor. First, Miller does
not identify the model used to assess the subject improvement. Second, he
fails to explain how the height discrepancy, if true, should affect the subject
improvements grade. Without more, Millers statement as to the second floor wall
height cannot be considered probative evidence.
See Heart City Chrysler, 714 N.E.2d
at 333. Cf. CDI, Inc. v. State Bd. of Tax Commrs, 725
N.E.2d 1015, 1020 (Ind. Tax Ct. 2000) (concluding that testimony provided no insight
as to why structure should be classified as a kit building, where witness
gave vague description of building and never referenced instructional bulletin).
Although it is not for the Court to explain to taxpayers how to
make their cases, see Monarch Steel Co. v. State Bd. of Tax Commrs,
699 N.E.2d 809, 812 (Ind. Tax Ct. 1998), the Court nevertheless reminds counsel
for Sterling that the preferred method of accounting for deviations from the model
is to use separate schedules showing the costs of certain components and features
present in the model. See Whitley Prods., 704 N.E.2d at 1117 (citations
omitted). This allows an assessor to adjust the base reproduction cost on
the improvement objectively. Id. Use of grade to account for an
improvements deviation from the model requires the assessors subjective judgment and, thus, should
be avoided. See id.