ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
TIMOTHY J. VRANA G. JOHN CENTO
SHARPNACK BIGLEY LLP ROBERT J. SCHUCKIT
Columbus, IN KATZ & KORIN, P.C.
IN THE INDIANA TAX COURT
STEAKS R US, ) ) Petitioner, ) v. )
contrary to constitutional right, power, privilege, or immunity;
in excess of statutory jurisdiction, authority, or limitations, or short of statutory jurisdiction,
authority, or limitations;
without observance of procedure required by law; or
unsupported by substantial or reliable evidence.
Ind. Code Ann. § 33-3-5-14.8(e)(1)-(5) (West Supp. 2003). The party seeking to
overturn the Indiana Boards final determination bears the burden of proving its invalidity.
Osolo Township Assessor v. Elkhart Maple Lane Assocs., L.P., 789 N.E.2d 109,
111 (Ind. Tax Ct. 2003).
Ind. Admin. Code tit. 50, r. 2.2-13-4(2) (1996). In contrast, a C
grade fast food restaurant building may have:
Moderate architectural styling with conventional design.
Good quality materials and workmanship.
Flat, shed, or gable roof design with normal overhangs.
Roof materials of asphalt shingle, or composition tar and gravel.
Insulated wood or steel decking and framing roof construction.
Exterior walls of wood siding, baked acrylic paneling, face brick, plate glass, or painted concrete blocks, or a combination of these materials.
The interior finish of good quality.
Quarry tile or vinyl asbestos tile flooring.
Wall finish of wood or baked acrylic paneling, plaster, drywall, partial ceramic tile, or a combination of these materials.
Ceiling material of acoustical tile, plaster, or drywall.
Lighting fixtures in the dining and serving area are functional, such as recessed fluorescent.
Combined heating and air conditioning system.
Good quality fixtures and finish in the restrooms.
50 IAC 2.2-13-4(3).
As the party challenging the final determination of the Indiana Board, SRU was required to submit probative evidence demonstrating that its building was either improperly given a B grade or improperly denied a C grade. See Sollers Pointe Co. v. Dept of Local Govt Fin., 790 N.E.2d 185, 191 (Ind. Tax Ct. 2003). See footnote In presenting its case, SRU submitted photographs of its buildings interior and exterior features, along with photocopies of several sections of the regulations outlining fast food restaurant grade specifications. (See Cert. Admin. R. at 64-74.) Additionally, SRUs property tax consultant, Mr. Milo Smith, testified at the administrative hearing that the building had the following features:
Roof: [i]t has [a] flat plywood roof covering with tar[.]
Exterior Walls: [t]here is stucco over plywood siding for the exterior walls
. . . [with] some brick that goes up 2 ½ to 3
Floor: quarry tile . . . with carpet over concrete[.]
Interior Finish: drywall with ½[inch] Marlite[.]
Ceilings: [t]he drywall ceilings are acoustical tile[.]
Lighting: [is] functional . . . [mostly] recessed florescent [with some] small
lights that hang over each eating area[.]
(Cert. Admin. R. at 144-45.) SRU asserts that Mr. Smiths testimony, when
considered in light of Indianas assessment manual grade specification chart, (see 50 IAC
2.2-13-4), indicates that while many features of its building fell into A, B,
and C grade categories, [t]he overwhelming majority of characteristics fit into the description
of C grade specifications. (See Petr Br. at 5-6.)
The Assessor agreed that SRUs building contained features characteristic of A grade, B grade, and C grade restaurant specifications. (See Cert. Admin. R. at 174.) However, the Assessor submitted photographs of SRUs building, emphasizing its A grade features:
a steel frame building on steel columns and insulated steel deck[;] . . . composition roof[;] . . . ceramic and quarry tile flooring[;] . . . [c]ombined heating and air conditioning systems[;] . . . [h]igh quality fixtures and finish in the restrooms[;] [and c]eramic and quarry tile wall finish[.]
(Cert. Admin. R. at 174-75.) Additionally, the Assessor submitted photographs and property record cards of four other comparable restaurants graded as B or B+2, as well as graded photographs in the assessment manual of other B or B+1 fast food restaurants to support the assigned grade of B to SRUs building. (See Cert. Admin. R. at 177-79.)
In its final determination, the Indiana Board determined that simply submitting [the grade specification] chart and attempting to place certain characteristics into certain grade classifications does not constitute probative evidence of error in the assessment. (Cert. Admin. R. at 57.) Accordingly, the Indiana Board concluded that SRU failed to establish that its buildings grade should be reduced to a C. (See Cert. Admin. R. at 58.) The Court disagrees with the Indiana Boards reasoning, but not with the result.
This Court has previously stated that a taxpayer can submit specific evidence tied to the descriptions of the various grade classifications to establish its prima facie case on grade. Sollers Pointe Co., 790 N.E.2d at 191. Here, SRU submitted detailed photographic and testimonial evidence demonstrating that SRUs building has construction characteristics found in C grade restaurants. See id. (stating that specific evidence . . . must be probative evidence.) Thus, SRU established its prima facie case on grade. The Assessor, however, likewise submitted substantial evidence to support its conclusion that SRUs building has construction characteristics of B grade restaurants. See Clark v. State Bd. of Tax Commrs, 694 N.E.2d 1230, 1233 (Ind. Tax Ct. 1998) (stating that once a taxpayer presents a prima facie case, it must be rebutted with substantial evidence).
Accordingly, this case ultimately involves a difference in opinions on whether the balance of grade variations present in SRUs building amounts to a C grade as SRU contends, or a B grade, as the Assessor contends. SRU is essentially asking this Court to substitute its subjective determination of grade for that of the Assessor. The Court declines to do so. See footnote Consequently, based on the evidence contained in the record, the Court finds that the Indiana Board did not err when it did not reduce the grade of SRUs building from a B to a C.
SRU next claims that its building should have been valued from the GCM cost schedule rather than the Special Use cost schedules. See footnote SRU, however, presented no evidence demonstrating how its buildings features fit the GCM general retail model. Instead, SRU submitted the property record cards of two other allegedly similar restaurants valued from the GCM schedule and concluded that its building was not a fast food restaurant because [the] building does not have a drive-up window, and . . . less than 1% of th[e] total sales [are] pickup order[.] (Cert. Admin. R. at 148.)
Without demonstrating how the features of its building compared with the restaurants priced under the GCM cost schedule, or showing how SRUs building features compared to the features of the GCM general retail model, SRUs evidence is conclusory and of no probative value. See LDI Mfg. Co. v. State Bd. of Tax Commrs, 759 N.E.2d 685, 688 (Ind. Tax Ct. 2001) (finding that taxpayer made its prima facie case that its improvement should have been assessed under a different model by comparing the features of its improvement with those listed in the regulations); see also Whitley Prods., Inc. v. State Bd. of Tax Commrs, 704 N.E.2d 1113, 1119 (Ind. Tax Ct. 1998) (finding that conclusory statements without support do not constitute probative evidence), review denied. Hence, SRU failed to establish a prima facie case that its building was incorrectly valued under the Special Use cost schedules. As a result, the burden never shifted to the Assessor to rebut SRUs position, and the Indiana Board did not err when it denied SRUs request to value its building from the GCM cost schedule.