ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN STEVE CARTER
ATTORNEY AT LAW ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
TED J. HOLADAY
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
BRYDON CORPORATION, )
v. ) Cause No. 49T10-0012-TA-131
DEPARTMENT OF LOCAL )
ON APPEAL FROM A FINAL DETERMINATION
OF THE STATE BOARD OF TAX COMMISSIONERS
NOT FOR PUBLICATION
September 8, 2003
The Petitioner, Brydon Corporation (Brydon), appeals the final determination of the State Board
of Tax Commissioners (State Board) valuing its commercial improvement for the 1996 tax
The issue for the Court to decide is whether the
State Board erred when it refused to award Brydon additional obsolescence depreciation.
For the reasons stated below, the Court AFFIRMS the final determination of the
FACTS AND PROCEDURAL HISTORY
Brydon owns an industrial improvement in Elkhart County, Indiana. For the 1994
assessment, Brydons improvement was awarded a 20% economic obsolescence depreciation adjustment. That
adjustment was reduced to 10% for the 1996 assessment. Brydon subsequently filed
a Form 131 Petition for Review (Form 131) with the State Board, claiming
that the 10% adjustment applied was incorrect and that the 20% adjustment for
the 1994 assessment year should have carried over to the 1996 assessment.
The State Board held hearings on the matter on July 2, 1999 and
May 23, 2000. On November 15, 2000, the State Board issued its
final determination denying Brydons request.
On December 27, 2000, Brydon initiated an original tax appeal. The parties
stipulated to the record and, on February 21, 2002, presented oral arguments to
this Court. Additional facts will be supplied as needed.
ANALYSIS AND OPINION
Standard of Review
This Court gives great deference to the final determinations of the State Board
when it acts within its authority. Wetzel Enters., Inc. v. State Bd.
of Tax Commrs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct. 1998). This
Court will reverse a final determination by the State Board only when its
findings are unsupported by substantial evidence, are arbitrary, or capricious, constitute an abuse
of discretion, or exceed statutory authority. Id.
Further, a taxpayer who appeals to this Court from a State Board final
determination must demonstrate that the final determination was incorrect. Thousand Trails, Inc.
v. State Bd. of Tax Commrs, 757 N.E.2d 1072, 1075 (Ind. Tax Ct.
2001). The taxpayer must present a prima facie case by submitting probative
evidence. Id. Probative evidence is evidence sufficient to establish a given
fact that, if not contradicted, will remain sufficient. Id.
The issue in this case is whether the State Board erred when
it refused to award additional obsolescence depreciation to Brydons improvement for the 1996
assessment. Obsolescence is the functional or economic loss of property value; it
is expressed as a percentage reduction in the remaining value of the subject
improvement. Clark v. Dept of Local Govt Fin., 779 N.E.2d 1277, 1283
(Ind. Tax Ct. 2002) (Clark II); Clark v. State Board of Tax Commrs,
742 N.E.2d 46, 51 (Ind. Tax Ct. 2001) (Clark I) (internal citation omitted),
review denied, 753 N.E.2d 15. Functional obsolescence is caused by factors internal
to the property and is evidenced by conditions within the property. Clark
II, 779 N.E.2d at 1283 (internal quotations marks omitted). Economic obsolescence is
caused by factors external to the property. Id. (internal quotation marks
omitted). Determination of obsolescence involves (1) identification of causes of obsolescence and
(2) quantification of the amount of obsolescence to be applied. Clark I,
742 N.E.2d at 51 (footnote omitted).
The question in this case is whether Brydon submitted probative evidence quantifying
its request for additional obsolescence.
See footnote At the administrative hearings, Brydon produced
two separate calculations to support its claim for additional obsolescence based on the
Economic Life Method; copies of the Marshall Swift Valuation Services Tables (MSV Tables);
a page of text explaining the Economic Life Method; and, photocopies of the
property record cards for the subject property. (Cert. Admin. R. at 41-56.)
On the calculation page, Brydon merely states [a]fter deducting the physical
depreciation that is already applied by the County from the total accrued depreciation
that is calculated using the Economic Life Method, 27% is the amount attributable
to obsolescence depreciation. (Cert. Admin. R. at 41.) No additional information
or narrative is provided to explain the quoted language, the Economic Life Method
calculation, the MSV Tables, or the Economic Life method generally.
To quantify obsolescence, Brydon is required to carefully, methodically, and in detail explain
the logical relationship between the existence of obsolescence and the quantification of the
effects of obsolescence.
See Clark II, 779 N.E.2d at 1282 n.4.
By contrast, Brydons presentation consisted of two conclusory calculations for additional obsolescence depreciation
using the Economic Life method with no showing of how the statements relate
to the MSV Tables, nor how they relate to the 1994 adjustment of
20%. Indeed, Brydons evidence is presented as though it speaks for itself
in regard to the obsolescence depreciation. However, the evidence tells the Court
nothing about why the 1994 obsolescence depreciation is correct while the 1996 calculation
is incorrect. Because Brydon has failed to explain the relationship between the
existence of obsolescence and the quantifiable effects of that obsolescence, Brydon has failed
to make a prima facie case. As a result, this Court affirms
the State Boards final determination.
Brydon has not presented probative evidence quantifying its request for additional obsolescence.
Thus, for the foregoing reasons, the State Boards final determination is AFFIRMED.
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), and
the Indiana Board of Tax Review (Indiana Board).
Ind. Code §§ 6-1.1-30-1.1;
6-1.5-1-3 (West Supp. 2001); 2001 Ind. Acts 198 §§ 66, 95. Pursuant
to Indiana Code § 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. 2002);
2001 Ind. Acts 198 § 95. Nevertheless, the law in effect prior
to January 1, 2002 applies to these appeals. 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.
In addition, Brydons counsel raises various state and federal constitutional claims
that this Court has declined to reach in previous cases.
Barth, Inc. v. State Bd. of Tax Commrs, 756 N.E.2d 1124, 1127 n.1
(Ind. Tax Ct. 2001). Because Brydons claims and supporting arguments are identical
to those previously rejected, this Court will not address them.
The State Boards allowance of the 10% adjustment indicates that obsolescence does
exist. Therefore, the first prong of
Clark I, identification of causes of
obsolescence, is not at issue here.