INDIANA TAX COURT
JAMES L. & BARBARA A. PUCKETT, )
v. ) Cause No. 49T10-9910-TA-206
DEPARTMENT OF LOCAL )
GOVERNMENT FINANCE, )
ORDER ON PETITIONERS PETITION FOR REHEARING
NOT FOR PUBLICATION
October 17, 2003
Come now the Petitioners, James L. and Barbara A. Puckett (the Pucketts), and
file a Petition for Rehearing pursuant to Indiana Appellate Rules 54 and 63.
In their Petition, the Pucketts challenge this Courts holding in James L.
& Barbara A. Puckett v. Department of Local Government Finance, No. 49T10-9910-TA-206, slip
op. (Ind. Tax Ct. July 22, 2003). Having reviewed the Pucketts Petition
and having held a hearing thereon, the Court now GRANTS the Pucketts Petition
FACTS AND PROCEDURAL HISTORY
The Pucketts own several warehouses in Columbus Township, Bartholomew County, Indiana. For
the 1997 tax year, the Pucketts warehouses were assessed as mini-warehouses under the
General Commercial Industrial (GCI) cost schedule.
The Pucketts challenged the assessment, first with the local assessing authorities and then
with the State Board of Tax Commissioners (State Board). Throughout the appeal
process, the Pucketts argued that because their warehouses were pole buildings, they should
have been valued under the General Commercial Kit (GCK) cost schedule. In
the alternative, the Pucketts argued that under the current pricing (i.e., GCI pricing),
the warehouses grade factor should be reduced from a D to an E.
Neither the local assessing officials, nor the State Board, awarded the
Pucketts any relief on their appeal. Consequently, the Pucketts filed an original
tax appeal with this Court on October 20, 1999. After conducting trial
and oral argument, this Court issued an opinion in which it affirmed the
State Boards final determination. Puckett, slip. op. at 5. More specifically,
the Court determined that the Pucketts did not submit any evidence to show
that their warehouses qualified for GCK pricing. Id. at 4. Furthermore,
the Court did not address the Pucketts grade issue, as it determined that
the Pucketts waived the issue at the administrative hearing. Id. at n.5.
On August 21, 2003, the Pucketts filed a Petition for Rehearing. The
Court held a hearing on the Pucketts Petition on October 7, 2003.
Additional facts will be provided as necessary.
ANALYSIS & ORDER
In their Petition, the Pucketts argue that the Courts decision was erroneous because
it incorrectly determined that the Pucketts waived the grade issue at the administrative
hearing. (Petrs Pet. for Rehg at 1.) The Pucketts are correct.
After reviewing the administrative record in this case again, the Court finds the
following discussion, between the Pucketts property tax consultant Milo Smith and State Board
hearing officer Kay Schwade, persuasive that the Pucketts did not waive their grade
issue at the hearing:
[Milo] Smith: Okay. Items number 3
and 5 are addressed in
issue number 2 above, and I can either withdraw those or just make
that statement. Probably be easier . . . but issue number 4,
I dont have any evidence to submit about negative partitioning adjustment. Therefore,
I can either withdraw it or just say I dont have any evidence.
What would you prefer? If I --
[Kay] Schwade: Would you just withdraw it?
Smith: Ill just withdraw it then. And I can withdraw issues
3 and 5 as well, but what Im saying is theyre addressed in
issue number 2 above, so theres no reason for me to address them
(Cert. Admin. R. at 149 (footnote inserted).) Later, during the hearing, grade
was discussed numerous times. (See Cert. Admin. R. at 150-153, 156-57.)
It is clear from the record that the Pucketts did not waive the
issue of grade. Rather, the Pucketts representative, Milo Smith, having presented testimony
and evidence regarding grade in conjunction with his presentation on issue two (square
foot pricing), merely intended that he not present the evidence twice. Accordingly,
because the Court erred in not addressing the Pucketts grade issue on appeal,
it does so now.
The Pucketts allege that the State Board erred in grading their warehouses.
More specifically, the Pucketts argue that even if the warehouses do not qualify
for the kit building pricing under the GCK schedule, they are, nonetheless, low-cost,
pre-engineered buildings. As a result, the Pucketts contend that the State Board
should have graded the warehouses with an E grade instead of a D
grade. See King Indus. Corp. v. State Bd. of Tax Commrs, 699
N.E.2d 338, 340-41 (Ind. Tax Ct. 1998) (stating that if a pre-engineered building
does not qualify for a kit adjustment, i.e., GCK pricing, the assessor may
apply a lower grade and design factor to account for the lower cost
Pursuant to the State Boards regulations, improvements are assigned various grades based on
their materials, design, and workmanship. Ind. Admin. Code tit. 50, r. 2.2-10-3;
Whitley Prods., Inc. v. State Bd. of Tax Commrs, 704 N.E.2d 1113, 1116
(Ind. Tax Ct. 1998), review denied. In determining grade, the assessor must
distinguish significant variations [in an improvements] quality and design. Ind. Admin. Code
tit. 50, r. 2.2-10-3(a). The State Boards regulations define the different characteristics
that help assessors differentiate between grades. For instance, D grade buildings are
constructed with economy materials and fair workmanship. These buildings are devoid of
architectural treatment and have a substandard quality interior finish . . . electrical
and plumbing fixtures, and . . . heating system. Ind. Admin. Code
tit. 50, r. 2.2-10-3(a)(4). On the other hand, E grade buildings are
constructed with sub-standard grade materials . . . and very poor quality workmanship
resulting from unskilled, inexperienced, do-it-yourself labor. They have low grade mechanical features
and fixtures. Ind. Admin. Code tit. 50, r. 2.2-10-3(a)(5).
The Pucketts bear the burden of proof on the
grade issue and must offer probative evidence concerning the alleged grading error.
See Clark v. State Bd. of Tax Commrs, 694 N.E.2d 1230, 1233 (Ind.
Tax Ct. 1998); Miller Structures, Inc. v. State Bd. of Tax Commrs, 748
N.E.2d 943, 947 (Ind. Tax Ct. 2001). During the administrative hearing, the
Pucketts presented their federal tax depreciation report indicating that their warehouses had an
actual cost basis totaling $380,462. The Pucketts explained (by way of Milo
Smith) that because the base prices contained within the State Boards regulations were
15% lower than the base prices used by Indiana businesses, the actual cost
basis needed to be adjusted by 85%. In turn, the resulting figure
of $323,546, was approximately 40% of the total reproduction cost ($806,357) assigned by
the State Board. The Pucketts contend that by reducing the grade on
the warehouses from a D to an E, the State Board could reduce
the total reproduction cost to be more in line with the actual cost
basis. (See Cert. Admin. R. at 72, 132, 134, 136-37.)
The Pucketts evidence is nothing more than a calculation supporting their conclusion that
the grade is this and it should be that. A taxpayers conclusory
statements do not constitute probative evidence concerning the grading of the subject improvement.
Sterling Mgmt.-Orchard Ridge Apartments v. State Bd. of Tax Commrs, 730 N.E.2d
828, 838 (Ind. Tax Ct. 2000). Instead, the Pucketts should have compared
the features of D and E grade improvements as provided the State
Board regulations with the features (or lack thereof) in their own improvements.
The Pucketts should have then attempted to calculate the value of the
features in the applicable models and translate that lack of value into a
grade adjustment. Because the Pucketts did not make the necessary comparisons, they
did not make a prima facie case that their warehouses were entitled to
an E grade.
Upon review and for the foregoing reasons, this Court GRANTS the Pucketts Petition
to the extent that the Court incorrectly determined that the Pucketts waived the
issue of grade at the administrative hearing. Nevertheless, upon reviewing the evidence
presented by the Pucketts at the administrative hearing regarding the issue of grade,
the Court finds that the Pucketts did not make a prima facie case
that they were entitled to their requested grade change. Accordingly, the Court
AFFIRMS the State Boards final determination.
SO ORDERED this 17th day of October, 2003.
Thomas G. Fisher, Judge
Timothy J. Vrana
SHARPNACK BIGLEY LLP
321 Washington Street
P.O. Box 310
Columbus, IN 47202-0310
Attorney General of Indiana
By: Ted J. Holaday
Deputy Attorney General
Indiana Government Center South, Fifth Floor
402 West Washington Street
Indianapolis, IN 46204-2770
At the administrative hearing, Milo Smith presented an exhibit listing the
Pucketts issues on appeal. (
See Cert. Admin. R. at 132.) Item
number three on the list is the issue of grade.