ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
JAMES W. BEATTY STEVE CARTER
STEPHEN M. TERRELL ATTORNEY GENERAL OF INDIANA
LANDMAN & BEATTY Indianapolis, IN
TED J. HOLADAY
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
PISTON SERVICE COMPANY, )
) Cause No. 49T10-0005-TA-60
DEPARTMENT OF LOCAL )
ON APPEAL FROM A FINAL DETERMINATION OF
THE STATE BOARD OF TAX COMMISSIONERS
NOT FOR PUBLICATION
August 30, 2004
Piston Service Company (Piston) appeals the final determination of the State Board of
Tax Commissioners (State Board) valuing its real property for the 1995 tax year.
The sole issue for the Court to decide is whether the State
Board erred in applying a grade of C+1 to Pistons improvement.
FACTS AND PROCEDURAL HISTORY
Piston owns a one-story building on Madison Avenue in Indianapolis, Indiana. For
the 1995 assessment year, the Perry Township Assessor (Assessor) assigned Pistons improvement a
grade factor of C+1.
Believing the grade factor to be too high, Piston petitioned the Marion County
Board of Review (BOR) for a lower assessment. More specifically, Piston argued
that the grade factor assigned to its improvement should be reduced to a
C-2. After conducting a hearing on the matter, the BOR upheld the
Piston subsequently appealed to the State Board. The State Board held a
hearing on October 28, 1998. On March 29, 2000, the State Board
issued its final determination affirming the assessment.
Piston filed an original tax appeal on May 4, 2000. The Court
heard the parties oral arguments on January 30, 2002. Additional facts will
be supplied as needed.
ANALYSIS AND OPINION
Standard of Review
This Court gives great deference to final determinations of the State Board when
it acts within the scope of its authority. Hamstra Builders, Inc. v.
Dept of Local Govt Fin., 783 N.E.2d 387, 390 (Ind. Tax Ct. 2003).
Thus, the Court will reverse a final determination of the State Board
when it is:
arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
contrary to constitutional right, power, privilege, or immunity;
in excess of 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. § 33-26-6-4 (West Supp. 2004).
When appealing to this Court from a State Board final determination, the taxpayer
bears the burden of showing that the final determination is invalid. Hamstra
Builders, Inc., 783 N.E.2d at 390. To do so, the taxpayer must
present a prima facie case, i.e., a case in which the evidence is
sufficient to establish a given fact and which if not contradicted will remain
sufficient. Miller Structures, Inc. v. State Bd. of Tax Commrs, 748 N.E.2d
943, 947 (Ind. Tax Ct. 2001) (citation omitted). To establish a prima
facie case, the taxpayer must offer probative evidence concerning the alleged assessment error.
Id. Only after the taxpayer has met its burden is the
State Boards duty to support its final determination with substantial evidence triggered.
Whitley Prods., Inc. v. State Bd. of Tax Commrs, 704 N.E.2d 1113, 1119-20
(Ind. Tax Ct. 1998), review denied.
Piston claims that the State Board erroneously graded its property. Specifically, it
argues that because its improvement deviates from the model used to assess it,
the current grade of C+1 is excessive and therefore the grade should be
reduced to C-2.
Under Indianas true tax value system, assessors use cost schedules to determine the
base reproduction cost of a particular improvement. See id. at 1116.
See also Ind. Admin. Code tit. 50, r. 2.2-11-6 (1996). To help
identify and define various classes of improvements, the State Board has categorized them
into several models. Ind. Admin. Code tit. 50, r. 2.2-11-1 to -3
(1996). A model is a conceptual tool used to replicate reproduction cost
of a given structure using typical construction materials. The model assumes that
there are certain elements of construction for a given use type. Ind.
Admin. Code tit. 50, r. 2.2-10-6.1(a)(1) (1996).
In turn, improvements are assigned a grade factor based on their design and
the quality of their materials and workmanship. See Ind. Admin. Code tit.
50, r 2.2-10-3 (1996). The grades, which range from A to E,
represent multipliers that are applied to the base rate of an improvement.
See id.; Miller Structures Inc., 748 N.E.2d at 952. The C
grade, which is the norm, is assigned when a building is moderately attractive
and constructed with average quality materials and workmanship. 50 IAC 2.2-10-3(a)(3); see
also 50 IAC 2.2-10-3(b). An improvement with a C grade has an
average quality interior finish with adequate built-ins, standard quality fixtures, and mechanical features.
50 IAC 2.2-10-3(a)(3). An improvement with a D grade, on the
other hand, is constructed with economy materials and fair workmanship. [It is]
devoid of architectural treatment and ha[s] a substandard quality interior finish with minimal
built-in features, substandard quality electrical and plumbing fixtures, and a substandard quality heating
system. 50 IAC 2.2-10-3(a)(4).
When an improvement deviates from the cost schedules/models used to assess it, the
State Boards regulations provide for adjustments to be made to the base price
to account for the deviations. See 50 IAC 2.2-10-6.1(c). The preferred
method to account for the deviations is to use separate schedules that show
the cost of certain components and features present in the model, as it
allows the base reproduction cost of an improvement to be adjusted objectively.
See Ind. Admin. Code tit. 50, r. 2.2-10-6.1(b)-(e) (1996). See also Whitley
Prods., Inc., 704 N.E.2d at 1117. The other method to account for
such deviations is the application of grade adjustment. In other words, a
grade factor can either be lowered or raised to reflect an improvements deviations
from the model used to assess it. Nevertheless, this method should be
avoided, if at all possible, as it requires the application of subjective judgment.
See Whitley Prods., Inc., 704 N.E.2d at 1117.
At the administrative hearing, Piston presented the testimony of its property tax consultant,
Ms. Sheila Murray (Murray). Murray testified that while the cost schedules/models used
to assess the improvement list exterior wall construction of reinforced concrete block or
face brick with concrete block backing (i.e., presumably the C grade norm), Pistons
improvement has a substantial amount of metal siding. (See Stip. R. at
58.) To account for this deviation, Piston seeks a grade adjustment.
Indeed, as Murray stated at the hearing, [w]e have a substantial amount of
metal siding, so therefore were below a C grade in that model.
(Stip. R. at 58.) [T]hats why were asking for a C-2, somewhere
between a C and [a] D[.] (Stip. R. at 59.) (See
also Petr Br. at 3.) Murrays testimony, however, amounts to nothing more
than conclusory statements that the grade on Pistons improvement should be a C-2.
In order for a taxpayer to meet its burden of establishing a prima
facie case on grade, it needs to do more than merely offer conclusory
statements. See Whitley Prods., Inc., 704 N.E.2d at 1119. Instead, a
taxpayer should offer specific evidence tied to the descriptions of the various grade
classifications. Id. at 1119 n.12. Consequently, Piston needed to provide specific
evidence linking the presence of metal walls to a grade of C-2.
No such link was made. In fact, all Piston relies on
is its assertion that metal walls are not the equivalent of the concrete
block. (Oral Argument Tr. at 9). Piston has simply not met
its burden in this case.
For the reasons stated above, the Court AFFIRMS the final determination of the
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. 2001 Ind. Acts 198 § 119(b)(2). Effective January
1, 2002, the legislature created the Department of Local Government Finance (DLGF),
Indiana Code Annotated § 6-1.1-30-1.1 (West Supp. 2003)(eff. 1-1-02)(amended 2004); 2001 Ind. Acts
198 § 66, and the Indiana Board of Tax Review (Indiana Board).
Ind. Code Ann. § 6-1.5-1-3 (West Supp. 2003)(eff. 1-1-02)(amended 2004); 2001 Ind. Acts
198 § 95. Pursuant to Indiana Code Annotated § 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 Ann.
§ 6-1.5-5-8 (West Supp. 2003)(eff. 1-1-02)(amended 2004); 2001 Ind. Acts 198 § 95.
Nevertheless, the law in effect prior to January 1, 2002 applies to
these appeals. A.I.C. § 6-1.5-5-8. See also 2001 Ind. Acts 198
§ 117. Although the DLGF has been substituted as the Respondent, this
Court will still reference the State Board throughout this opinion.
The C grade is assigned a multiplier of 100% (i.e., 100% of
the reproduction cost as determined under the State Boards regulations).
Admin. Code tit. 50, r. 2.2-10-3(b)(3) (1996); King Indus. Corp. v. State Bd.
of Tax Commrs, 699 N.E.2d 338, 340 n.7 (Ind. Tax Ct. 1998).
The remaining multipliers are 160% for an A grade, 120% for a B
grade, 80% for a D grade, and 40% for an E grade.
50 IAC 2.2-10-3(b). In turn, intermediate grade levels may be assigned to
a building to indicate that its grade falls between the major grade classifications.
50 IAC 2.2-10-3(c). A plus or minus two (+/- 2) indicates
that the grade falls halfway between the assigned grade classification and the grade
immediately above or below it. 50 IAC 2.2-10-3(c)(1). A plus or
minus one classification (+/- 1) indicates that the grade falls slightly above or
below the assigned grade classification, or at a point approximately twenty-five percent (25%)
of the interval between the assigned grade classification and the grade immediately above
or below it. 50 IAC 2.2-10-3(c)(2).
The Court notes that Piston also entered into evidence at the
administrative hearing the following items: (a) color photographs of the subject improvement;
(b) the improvements property record card; (c) photocopies from the State Boards assessment
manual of the descriptions of the models used to assess the improvement; and
(d) the property record for an allegedly comparable improvement that was assigned a
grade factor of C. (See Stip. R. at 35-48.) Because the
administrative record reflects that Murray merely referenced these items in her presentation, however,
they do not qualify as probative evidence for purposes of Pistons grade issue.
See Heart City Chrysler v. State Bd. of Tax Commrs, 714 N.E.2d
329, 333 (Ind. Tax Ct. 1999) (stating that references to photographs or State
Board regulations, without further explanation, do not qualify as probative evidence for purposes
of grading issues); Blackbird Farms Apartments, LP v. Dept of Local Govt Fin.,
765 N.E.2d 711, 715 (Ind. Tax Ct. 2002) (stating that when a taxpayer
alleges that an allegedly comparable property has been assessed differently, the taxpayer must
provide specific reasons why the properties are comparable in order to qualify as