ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
JOHN R. RUMPLE JEFFREY A. MODISETT
SHARPNACK, BIGLEY, DAVID & RUMPLE Attorney General of Indiana
TED J. HOLADAY
Deputy Attorney General
I. Whether the State Board properly denied the application of Instruction Bulletin 91-8 to Componx's building.
II. Whether the State Board properly calculated the square footage of Componx's
The Court holds that the State Board's denial of the Instructional Bulletin "kit" adjustment
was arbitrary, capricious, and unsupported by substantial evidence, and that the square footage of
the mezzanine is unsupported by the evidence. This Court remands the matter to the State Board.
economical version" that would qualify it for the 50% reduction in base rate.
In addition to denying Componx's petition for a "kit" adjustment, the State Board also found that the second floor of Componx's building was a mezzanine, and the building was of mixed use_29% office space and 71% light warehouse. Componx contends that the calculations of the square footage made by the State Board pertaining to these new findings were in error. Additional facts will be provided as needed.
State Board of Tax Comm'rs, 656 N.E.2d 890, 893 (Ind. Tax Ct. 1995). By comparing the
features of the Componx building with those that are listed in the Bulletin, Componx has shown
that the State Board's decision to deny the adjustment was unsupported by substantial evidence.
The State Board's main justification for disallowing the "kit" adjustment for Componx's building rested on the fact that the thickness of the hard steel used in the support system was 3/16 of an inch. They argued that such a thickness in hard steel was substantial enough to disqualify the building from receiving the reduction in base rate. However, undisputed testimony at trial by the taxpayer's witness revealed that 3/16 is actually very lightweight. Tr. at 18. The witness pointed out that the presence of the supporting round posts in the center of the building would not be necessary if the hard steel was of adequate thickness. Therefore, the hard steel support system was actually quite thin and only able to withstand minimal load tolerances. Tr. at 18.
Not only is the support system the Componx building only 3/16-inch thick, it is also the type of system that Bulletin 91-8 describes as used most prominently in buildings that qualify for the "kit" adjustment. The Bulletin issued by the State Board explains that "[t]he key element in identifying this low cost economical 'kit-type' structure is the type of interior column and roof beam support. Understanding the correlation between cost and strength in the type of column or beam being used in the structure is essential in identifying a qualifying structure." Instructional Bulletin 91-8 at 4.
Componx's support system, the "cold form open cee channel system," is made from light weight steel. The system derives its support from the "C" shape of the beams. In addition to having an "open cee channel support system," Componx's building also has steel pole columns that are placed 25 feet apart. These type of columns are described in Bulletin 91-8 as a low cost
way of supporting the roof beam system when used in conjunction with cee columns. Id. at 5.
Based on the support system that the Componx building uses, it clearly fits within the parameters of the "kit" building adjustment. However, the building possesses even more characteristics that are indicative of the type of building that qualifies for the 50% adjustment. Id. at 6. Trial testimony revealed that Componx's building included: standard "x" bracing, 18 feet eave height, 25 feet equally spaced bay spacing, and a low pitched roof. Tr. at 19. All of this evidence was presented at trial by Componx with no evidence to the contrary offered by the State Board.
By meeting its burden of proof, Componx placed the burden of going forward to show that the determination was correct on the State Board. See Corey v. State Board of Tax Comm'rs, 674 N.E.2d 1062, 1066 (Ind. Tax Ct. 1997). The State Board argued that because Componx's building displayed a few additional features, it could completely disallow the exemption. This reasoning may be sound if the building in question displayed such extant characteristics that the structure could no longer be considered economical, but Componx's building was only enhanced to a minimum degree. Bulletin 91-8 states that:
"[g]rade may also be increased to recognize minimal building feature options. Should a structure include a stone or masonry front, a plate glass front, ornate exterior, decorative trim, high quality interior trim, and/or variations in number of openings, a determination of the impact of these features options to the overall cost should be made. If the feature option only slightly impacts overall cost, an increase in grade factor could be made to compensate."
Instructional Bulletin 91-8 at 7. While the Componx building does in fact have a stone veneer front, several windows and doors in the front, and 3 large electric roll up doors in the rear, these variations in design do not completely disqualify the building for the adjustment. In fact,
Componx's building has the support system that is most indicative of a qualifying "kit" structure.
The slight additions to the basic "kit" model can be accounted for by simply raising the grade
factor. This can be done because none of the variations effect the actual structure of the building
itself. They are simply cosmetic features that enhance the buildings aesthetic value, not its
structural integrity. Without evidence refuting Componx's claim, this Court finds that the State
Board's failure to apply Bulletin 91-8 arbitrary and unsupported by substantial evidence.
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