ATTORNEY FOR PETITIONER:    ATTORNEYS FOR RESPONDENT:
TIMOTHY J. VRANA    G. JOHN CENTO
SHARPNACK BIGLEY LLP     ROBERT J. SCHUCKIT
Columbus, IN     KATZ & KORIN, P.C.
    Indianapolis, IN        

______________________________________________________________________
     IN THE INDIANA TAX COURT

STEAKS R US,                )
                                 )
    Petitioner,                  )
    v.                           )

            ) Cause No. 49T10-0205-TA-54
MT. PLEASANT TOWNSHIP ASSESSOR,     )
                )
    Respondent.            )    
______________________________________________________________________


ON APPEAL FROM A FINAL DETERMINATION OF
THE INDIANA BOARD OF TAX REVIEW


NOT FOR PUBLICATION
August 6, 2004


FISHER, J.
Steaks R Us (SRU) appeals from a final determination of the Indiana Board of Tax Review (Indiana Board) valuing its real property for the 1996 tax year. The issues before the Court are whether the Indiana Board erred in assigning SRU’s building a “B” grade and valuing it from the Special Use Commercial Property (Special Use) cost schedules.
FACTS AND PROCEDURAL HISTORY

SRU owns and operates a buffet-style restaurant in Mt. Pleasant Township, Delaware County, Indiana. For the 1996 tax year, local assessing officials valued SRU’s building as a fast food restaurant under the Special Use cost schedules and assigned it a “B” grade. SRU filed a Petition for Review of Assessment (Form 130) with the Delaware County Board of Review (BOR), claiming that its building should be assigned a “C” grade. The BOR denied SRU’s claim.
SRU appealed the BOR’s denial to the State Board of Tax Commissioners (State Board). In addition to the grade issue, SRU also claimed that its building should be valued from the General Commercial Mercantile (GCM) – general retail cost schedule. See footnote On October 30, 2001, the State Board conducted an administrative hearing on the matter. On May 9, 2002, the Indiana Board issued a final determination denying SRU’s requested relief.See footnote SRU initiated an original tax appeal on May 24, 2002. This Court heard the parties’ oral arguments on January 14, 2003. Additional facts will be supplied as necessary.


ANALYSIS AND OPINION
Standard of Review

This Court gives great deference to final determinations of the Indiana Board when it acts within the scope of its authority. Wittenberg Lutheran Vill. Endowment Corp. v. Lake County Prop. Tax Assessment Bd. of Appeals, 782 N.E.2d 483, 486 (Ind. Tax Ct. 2003), review denied. Consequently, the Court may reverse a final determination of the Indiana Board when it is:
arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law;

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 Board’s 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).

Discussion

SRU first asserts that the Indiana Board erred when it failed to reduce the grade of its building from “C” to “B.” SRU is incorrect.
In Indiana, an assessor uses his subjective judgment to assign a grade to a building. See Mahan v. State Bd. of Tax Comm’rs, 622 N.E.2d 1058, 1064 (Ind. Tax Ct. 1993). The grading system allows the assessor to recognize variations in the quality of a building’s materials, design, and workmanship. See footnote Id. See also Ind. Admin. Code tit. 50, r. 2.2-13-1(b) (1996). For instance, the Indiana assessment manual provides that a “B” grade fast food restaurant building may have:
Customized architectural styling with conventional and attractive design, possibly false roof façade, and parapets.
Good quality materials and workmanship.
Gambrel, gabled, mansard, or flat roof design with generous overhangs.
Roof materials of asphalt shingles, stone chip, or composition tar and gravel.
Insulated wood or steel decking and framing or prestressed concrete barrel shell roof construction.
Exterior walls of face brick, ceramic tile, plate glass, insulated enameled steel, or a combination of these materials.
Interior finish of good quality.
Ceramic or quarry tile flooring.
Wall finish of exposed brick, wood or porcelain enamel paneling, or ceramic tile.
Ceiling material of acoustical tile, porcelain enamel, or plaster.
Lighting fixtures in the dining and serving area are ornamental.
Combined heating and air conditioning system.
Good quality fixtures and finish in the restrooms.

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. Dep’t of Local Gov’t Fin., 790 N.E.2d 185, 191 (Ind. Tax Ct. 2003). See footnote In presenting its case, SRU submitted photographs of its building’s 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, SRU’s 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 feet.”

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. Smith’s testimony, when considered in light of Indiana’s 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 Pet’r Br. at 5-6.)
    The Assessor agreed that SRU’s 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 SRU’s 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 SRU’s 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 building’s grade should be reduced to a “C.” (See Cert. Admin. R. at 58.) The Court disagrees with the Indiana Board’s 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 SRU’s 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 SRU’s building has construction characteristics of “B” grade restaurants. See Clark v. State Bd. of Tax Comm’rs, 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 SRU’s 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 SRU’s 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 building’s 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 SRU’s building features compared to the features of the GCM – general retail model, SRU’s evidence is conclusory and of no probative value. See LDI Mfg. Co. v. State Bd. of Tax Comm’rs, 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 Comm’rs, 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 SRU’s position, and the Indiana Board did not err when it denied SRU’s request to value its building from the GCM cost schedule.

CONCLUSION

For the foregoing reasons, the Court AFFIRMS the determination of the Indiana Board.


Footnote: SRU also raised other issues in its Form 131; however, those issues were later withdrawn at the administrative level. ( See Cert. Admin. R. at 5, 136-37.)

Footnote: On December 31, 2001, the legislature abolished the State Board of Tax Commissioners (State Board). 2001 Ind. Acts 198 § 119(b)(2). Effective January 1, 2002, the legislature created the Indiana Board of Tax Review (Indiana Board) as "successor" to the State Board. ind. code ann. §§ 6-1.5-1-3; 6-1.5-4-1 (West Supp. 2003); 2001 Ind. Acts 198 § 95. Thus, when a final determination was issued on SRU’s appeal in May 2002, it was issued by the Indiana Board.

Footnote: A grade is applied as a multiplier to a building’s base replacement cost. Miller Structures, Inc. v. State Bd. of Tax Comm’rs, 748 N.E.2d 943, 952 (Ind. Tax Ct. 2001). Accordingly, a “C” grade indicates a multiplier of one hundred percent (100%); a “B” grade represents a multiplier of one hundred and twenty percent (120%). Ind. Admin. Code tit. 50, r. 2.2-13-1(b)(2), (3) (1996).

Footnote: Note, however, that a taxpayer who presents a grade issue to the Indiana Board after December 17, 2002, will be required to submit probative evidence of “what his grade should have been” in order to meet his prima facie burden. See Clark v. Dep’t of Local Gov’t Fin., 779 N.E.2d 1277, 1282 (Ind. Tax Ct. 2002).

Footnote: “[T]he Court can only review the administrative record to determine whether there is substantial evidence to support the [Indiana] Board's final determination.” Grider v. Dep’t of Local Gov’t Fin., 799 N.E.2d 1239, 1243 (Ind. Tax Ct. 2003). A final determination of the Indiana Board is supported with substantial evidence “if a reasonable person could view the record in its entirety and find enough relevant evidence to support the [Indiana] Board's determination.” Id. at 1243-44.

Footnote: Under Indiana’s property assessment system, assessors use building models and cost schedules to determine the base reproduction cost of a particular structure. See Whitley Prods., Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1116 (Ind. Tax Ct. 1998), review denied. See also Ind. Admin. Code tit. 50, r. 2.2-13-1(a) (1996). These models and schedules reflect the reproduction costs of a structure using typical construction materials. Id.