ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
CURTIS J. DICKINSON STEVE CARTER
DICKINSON & ABEL ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
DAVID L. PIPPEN VINCENT S. MIRKOV
ATTORNEY AT LAW DEPUTY ATTORNEY GENERAL
Indianapolis, IN Indianapolis, IN
INDIANA TAX COURT
SUPERIOR WALLBROOK, INC., )
v. ) Cause No. 49T10-9701-TA-33
DEPARTMENT OF LOCAL )
See footnote )
ON APPEAL FROM A FINAL DETERMINATION
OF THE STATE BOARD OF TAX COMMISSIONERS
NOT FOR PUBLICATION
July 3, 2002
Superior Wallbrook, Inc. (Superior) appeals the State Board of Tax Commissioners (State Board)
final determination that assessed its property as of the March 1, 1991, assessment
date. Superior presents the following issues for this Courts review on appeal,
which the Court restates as:
whether the State Board improperly applied a C grade to Superiors improvement; and
whether the State Board improperly denied Superiors improvement any obsolescence depreciation.
For the reasons stated below, the Court AFFIRMS the State Boards final determination
on both issues.
FACTS AND PROCEDURAL HISTORY
In 1991, Superior owned improved property located in Noble County, Indiana.See footnote After
receiving its property assessment for 1991, Superior appealed to the Noble County Board
of Review (BOR). On November 6, 1991, the Noble County BOR issued
a final determination affirming the assessment. Thereafter, Superior appealed via a 131
Petition for Review of Assessment (131 Petition) to the State Board asserting that
its improvements grade and obsolescence were incorrect and that its assessment was unconstitutional.
On November 22, 1996, the State Board issued its final determination denying
any change to grade or obsolescence and stating that the property was properly
assessed under the True Tax Value system. On January 3, 1997, Superior
filed its original tax appeal in this Court. The Court held a
trial on September 2, 1998, and oral argument on February 25, 1999.
Additional facts will be provided as necessary.
ANALYSIS AND OPINION
Standard of Review
This Court gives final determinations of the State Board great deference when the
State Board acts within the scope of its authority. Freudenberg-NOK General Partnership
v. State Bd. of Tax Commrs, 715 N.E.2d 1026, 1028-29 (Ind. Tax Ct.
1999), review denied. Accordingly, this Court reverses final determinations of the State
Board only when they are unsupported by substantial evidence, are arbitrary or capricious,
constitute an abuse of discretion, or exceed statutory authority. Id. at 1029.
A taxpayer challenging the validity of the State Boards final determination bears the
burden of demonstrating the invalidity of the final determination. Clark v. State
Bd. of Tax Commrs, 694 N.E.2d 1230, 1233 (Ind. Tax Ct. 1998).
The taxpayer must present a prima facie case, which is a case
wherein the evidence is sufficient to establish a given fact that if not
contradicted will remain sufficient. Damon Corp. v. Indiana State Bd. of Tax
Commrs, 738 N.E.2d 1102, 1106 (Ind. Tax Ct. 2000). To establish a prima
facie case, the taxpayer must offer probative evidence concerning the alleged error.
Id. Once the taxpayer carries the burden of establishing a prima facie
case, the burden shifts to the State Board to rebut the taxpayers evidence
and justify its decision with substantial evidence. Clark, 694 N.E.2d at 1233.
The first issue is whether the State Board improperly applied a C grade
to Superiors improvement. Superior asserts that the State Board did not support
its C grade of Superiors improvement with substantial evidence. The State Board
argues that Superior did not present any evidence demonstrating that the grade that
it assigned to the improvement was improper. Superior misunderstands the placement of
the burden here. As mentioned above, the burden is on Superior
to present a prima facie case that the State Boards grade is improper
or that it is entitled to a different grade. See Miller Structures,
Inc. v. Indiana State Bd. of Tax Commrs, 748 N.E.2d 943, 953 (Ind.
Tax Ct. 2001). Only then does the burden shift to the State
Board to support its final determination with substantial evidence. See Clark, 694
N.E.2d at 1233.
Grading of improvements is a key aspect of the True Tax Value system.
White Swan Realty v. State Bd. of Tax Commrs, 712 N.E.2d 555,
559 (Ind. Tax Ct. 1999), review denied. Assessors use cost schedules to
determine the base reproduction cost of a particular improvement. Id. Various
grades are then assigned to an improvement based on the quality of the
improvements materials, design, and workmanship. Id. See also Ind. Admin. Code
tit. 50, r. 2.1-4-3(f) (1992). The grades represent multipliers that are applied
to the base reproduction cost of an improvement as calculated by using the
cost schedules provided in the regulations. White Swan Realty, 712 N.E.2d at
At trial, three joint exhibits were admitted into evidence and two witnesses testified.
The exhibits included an Assessment Review and Analysis (Review), the official transcript
of proceedings before the State Board, and a property record card prepared by
the State Board. In the Review, Superior argues that its improvement should
receive a grade no higher than D-1. In support of this contention
the Review simply states the following:
The 51,000 SF subject property varies substantially from the base models in type
and quality of materials and workmanship. To adjust for these differences a
grade no higher than D-1 or a 70% factor should be applied.
(Joint Ex. 1 at 2.) At the trial before this Court, Mark
Drew Miller, the author of the Review, testified that the assessment was excessive
because things that were not present in the subject building were included in
the models price. (Trial Tr. at 21.) More specifically, he stated
that [t]he subject is a preengineered steel building. The model that was
being priced from is for concrete block/mortar type building. (Trial Tr. at
21.) Miller also testified that at the State Board hearing he went
into the interior components that were not present in the subject property, but
were assumed present in the model, [and] the type of exterior walls that
were used to construct the subject. (Trial Tr. at 21-22.) Additionally,
he mentioned that [w]e discussed the interior, heat, lack of partitioning and the
metal walls versus concrete block walls. (Trial Tr. at 25.)
Superiors assertions in its exhibits and through Millers testimony are conclusory because they
do not specifically describe why the improvement was improperly assigned a C grade
or why it better resembles the description of a D-1 grade improvement as
set forth in the State Board Regulations.
See Ind. Admin. Code tit.
50, r. 2.1.4-3(f)(1992). A taxpayers conclusory statements do not constitute probative evidence
concerning the grading of the subject improvement. Sterling Management-Orchard Ridge Apartments v.
State Bd. of Tax Commrs, 730 N.E.2d 828, 838 (Ind. Tax Ct. 2000).
See also Herb v. State Bd. of Tax Commrs, 656 N.E.2d 890,
893 (Ind. Tax Ct. 1995) (stating that allegations, unsupported by factual evidence, remain
mere allegations). Because Superior has not submitted probative evidence of grade, it
has not made a prima facie case that the grade of the improvement
should be lowered to a D-1. Thus, the State Boards duty to
support its final determination with substantial evidence is not triggered. See Miller
Structures, Inc., 748 N.E.2d at 953. Consequently, the Court AFFIRMS the State
Boards final determination that the improvement in question is entitled to a C
The second issue is whether the State Board improperly denied Superiors improvement any
obsolescence depreciation. Superior argues that the State Board did not support its
denial of obsolescence with substantial evidence. The State Board contends that Superior
did not present evidence to show that the improvement was entitled to obsolescence
depreciation. As mentioned with regard to grade, the burden is on Superior
to present a prima facie case as to obsolescence. See Miller Structures,
748 N.E.2d 943 at 954.
The True Tax Value of a commercial improvement is determined by calculating the
reproduction cost of the improvement (as determined by an application of the State
Board regulations) and subtracting any physical and obsolescence depreciation. Loveless Const. Co.
v. State Bd. of Tax Commrs, 695 N.E.2d 1045, 1047 (Ind. Tax Ct.
1998), review denied. The regulations define obsolescence as a functional or economic
loss of value. Ind. Admin. Code tit. 50, r. 2.1-5-1 (1992).
Functional obsolescence is caused by factors internal to the property and is evidenced
by conditions within the property. Id. Economic obsolescence is caused by
factors that are external to the property. Id.
In Clark v. State Board of Tax Commissioners, this Court concluded that as
a prerequisite for this Court to review a taxpayers case, the taxpayer must
follow a two step process during its hearing before the State Board.
Clark, 694 N.E.2d at 1241. First, a taxpayer must identify causes of
obsolescence and then must quantify the amount of obsolescence to be applied.
Id. However, because this case arose before Clark, Superior was not required
to quantify its evidence but simply to identify it. See id.
Superior is required to present probative evidence to establish a prima facie case
regarding its asserted causes of obsolescence. White Swan Realty, 712 N.E.2d at
Here, however, Superior has not even identified what type of obsolescence that it
claims affects its improvement. The Review states that [t]he subject property suffers
from the following highlighted causes of obsolescence depreciation. To account for this
loss in value, 25% obsolescence depreciation should be applied. (Joint Ex. 1
at 2.) Within the Review, definitions and information on both functional and
economic obsolescence are highlighted with a yellow marker. The origin of this
information is not identified in the Review other than the statements RULE 6:
DEPRECIATION and RULE 6: APPENDIX at the bottom of the pages. (Joint
Ex. 1 at 3, 4.) The Review also contains a State Board
final determination regarding an alleged comparable improvement. Highlighted in the final determination
is one sentence: Obsolescence depreciation of 20% is applied. (Joint Ex.
1 at 13.) Superior does not provide any explanation to show how
its property is comparable to the one discussed in the exhibit.
Superior has not shown how the information that it submitted to the State
Board demonstrates a cause of obsolescence nor has it even identified what kind
of obsolescence it seeks to have applied to its improvement. Its statements
are conclusory and do not constitute probative evidence of obsolescence. See Miller
Structures, 748 N.E.2d at 954. In addition, Superior has not presented any
authority to support its claim of obsolescence. This Court will not make
Superiors case for it. See id. Because Superior has not presented
a prima facie case showing that its property suffers from obsolescence, this Court
AFFIRMS the State Boards final determination as it relates to obsolescence.
For the foregoing reasons, the Court hereby AFFIRMS the State Boards final determination
that Superior is not entitled to a change in grade or application of
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. P.L. 198-2001, § 119(b)(2). Effective January 1,
2002, the legislature created the Department of Local Government Finance (DLGF),
§ 6-1.1-30-1.1 (West Supp. 2001)(eff. 1-1-02); P.L. 198-2001, § 66, and the Indiana
Board of Tax Review (Indiana Board). Ind. Code § 6-1.5-1-3 (West Supp.
2001)(eff. 1-1-02); P.L. 198-2001, § 95. Pursuant to Indiana Code Section 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); P.L. 198-2001, § 95. Moreover,
the law in effect prior to January 1, 2002 applies to these appeals.
Ind. Code § 6-1.5-5-8 (West Supp. 2001)(eff. 1-1-02); P.L. 198-2001, §§ 95,
117. Although the DLGF has been substituted as the Respondent, this Court
will still reference the State Board throughout this opinion.
Superior also argues that the State Board Regulations in effect
at the time of its assessment were unconstitutional because they lacked ascertainable standards.
St. John III this Court concluded that the tax system in
place at that time did lack ascertainable standards. Town of St. John
v. State Bd. of Tax Commrs, 690 N.E.2d 370, 384 (Ind. Tax Ct.
1997) (St. John III), revd in part on other grounds by Town of
St. John v. State Bd. of Tax Commrs, 702 N.E.2d 1034 (Ind. 1998)
(St. John V). Notwithstanding the conclusion that this Court made in St.
John III, this Court has also recognized that the fact that the subject
improvement was assessed under an unconstitutional regulation does not mean that the assessment
will be invalidated on that basis. Whitley Prods., Inc. v. State Bd.
of Tax Commrs, 704 N.E.2d 1113, 1121 (Ind. Tax Ct. 1998), review denied.
See also White Swan Realty v. State Bd. of Tax Commrs, 712
N.E.2d 555, 559 (Ind. Tax Ct. 1999), review denied; Phelps Dodge v. State
Bd. of Tax Commrs, 705 N.E.2d 1099, 1104 (Ind. Tax Ct. 1999), review
denied. Real property must still be assessed, and, until the 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 Commrs, 729 N.E.2d 242, 250-251 (Ind. Tax Ct. 2000). This
means that a taxpayer cannot come into court, point out the inadequacies of
the system and obtain a reversal of an assessment. Whitley Prods., 704
N.E.2d at 1121. Instead, the taxpayer must come forward with probative evidence
relating to the issue the taxpayer raises. Id. Therefore, Superiors argument
that the final determinations should be reversed because the regulations did not contain
ascertainable standards cannot prevail.
The property at issue was parcel number 075-080-00004900.
Footnote: The two witnesses were Gary Utt, the hearing officer on the
case and Mark Drew Miller from Landmark Appraisals for Superior.
Footnote: Superior also argues that the State Board impermissibly considered its propertys
location and use when determining obsolescence because in its final determination the State
Board stated: [t]he structure is used for its designed and intended purpose.
(Joint Ex. 2.) Superior asserts that this is improper because the State
Boards regulations do not contain any information on location and use as required
by Indiana Code Section 6-1.1-31-6. The Court acknowledges that the regulations are
not as developed as they could be regarding location and use. Nevertheless,
location and use are described in Indiana Administrative Code title 50, r. 2.1-2-1
(1992). The regulations also provide for the use of property as residential,
agricultural, commercial, and industrial.
Ind. Admin Code tit. 50, rr. 2.1-3-1, 2.1-4-1
(1992). Consequently, Superiors argument regarding location and use cannot prevail.