ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN STEVE CARTER
ATTORNEY AT LAW ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
SSK CO., )
v. ) Cause No. 49T10-9907-TA-174
DEPARTMENT OF LOCAL )
ON APPEAL FROM A FINAL DETERMINATION OF
THE STATE BOARD OF TAX COMMISSIONERS
NOT FOR PUBLICATION
November 13, 2002
SSK Co. (SSK) appeals the final determination of the State Board of Tax
Commissioners (State Board) valuing its property for the March 1, 1995 assessment.
I. Whether SSKs improvements are entitled to additional
II. Whether SSKs land is entitled to a negative influence
factor adjustment; and
III. Whether SSKs improvements were improperly graded?
FACTS AND PROCEDURAL HISTORY
SSK timely filed a Form 131 Petition for Review of Assessment (Form 131)
with the State Board challenging the 1995 assessment of its Indianapolis, Indiana property.
In its Form 131, SSK claimed that its improvements were entitled to
an additional obsolescence adjustment, that its land was improperly valued, and that its
improvements were graded improperly. On May 24, 1999, the State Board issued
its final determination on SSKs Form 131, denying relief on SSKs claims.
SSK filed an original tax appeal with this Court on July 7, 1999.
The Court did not conduct a trial, as both parties requested to
have the matter resolved based on the evidence stipulated into the record as
well as on their briefs. Additional facts will be supplied as necessary.
STANDARD OF REVIEW
This Court accords great deference to the State Board when it acted within
the scope of its authority. Wetzel Enters., Inc. v. State Bd. of
Tax Commrs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct. 1998). Accordingly, the
Court will reverse a State Board final determination only if it is unsupported
by substantial evidence, constitutes an abuse of discretion, exceeds statutory authority, or is
arbitrary and capricious. Id.
The party challenging the propriety of a State Board final determination bears the
burden of demonstrating its invalidity. Clark v. State Bd. of Tax Commrs,
694 N.E.2d 1230, 1233 (Ind. Tax Ct. 1998). To do so, the
taxpayer must present a prima facie case, or one in which the evidence
is sufficient to establish a given fact and which if not contradicted will
remain sufficient. Id. (internal quotation and citation omitted).
Although the burden
of proof never shifts, once the taxpayer presents a prima facie case, the
duty to go forward with the evidence shifts, and it is incumbent on
the State Board to rebut the taxpayers evidence and support its decision with
substantial evidence. Id.
For the 1995 reassessment, the Marion County Board of Review (BOR) awarded SSK
a 15% obsolescence depreciation adjustment on one of the improvements to the property
and a 5% obsolescence depreciation adjustment to the other building. (See R.
of Admin. Proceeding at 5). SSK, however, seeks at least a 66%
To receive an adjustment for obsolescence, SSK must (1) identify the causes of
obsolescence and (2) quantify the amount of obsolescence to be applied. See
Clark, 694 N.E.2d at 1241. While it appears that the parties agree
that obsolescence is present in the subject property,
See footnote they disagree as to the
See R. of Admin. Proceeding at 46-48.) In effort to
quantify its obsolescence entitlement, SSK offered a comparison sales method.See footnote Nevertheless, SSK
did nothing more than supply some sales data from four supposedly comparable properties,
as well some pages from an appraisal textbook. At the State Board
hearing, SSKs tax representative, M. Drew Miller of Landmark Appraisals (Miller), failed to
explain and link the quantification method to the instant case, and the Court
will not now craft SSKs argument. Consequently, because SSK has not presented
a prima facie case that it is entitled to an obsolescence depreciation adjustment,
the State Boards duty to rebut SSKs evidence is not triggered. See
Clark, 694 N.E.2d at 1233. Accordingly, this Court AFFIRMS the State Boards
determination on this issue.
NEGATIVE INFLUENCE FACTOR FOR LAND
SSK argues that its land is entitled to a negative influence factor to
account for the fact that while the property is commercial/industrial in nature, it
is located in a residential neighborhood. (R. of Admin. Proceeding at 46.)
See also Ind. Admin. Code tit. 50, r. 2.2-4-10(a)(9)(E) (stating that a
decrease in the value of land may be made to account for the
fact that a parcel does not have the same use as its surrounding
parcels). To support its claim, the only evidence
presented by the taxpayer
was Millers testimony at the administrative hearing:
[A]s far as the land goes, the subject property is industrial property.
Its in an older section of town and in a mixed, mostly residential,
neighborhood. The influence factor that were asking for is for misimprovement, which
the manual describes it as the surrounding properties being of a different use.
The surrounding properties of the subject property are definitely of a different
use, and we feel a negative influence factor should be applied.
Q: How much?
A: Fifty percent.
Q: Minus fifty percent?
A: Correct. * * * * *
Q: I just wanted to ask what type of documentation youre basing
your fifty percent influence factor on the land on. I dont see
any documentation . . . Im just wondering where that figure is coming
A: Thats basically coming from the fact that there is no guidelines
to say what influence factor. The regulations simply say that a deduction
should be made. Thats based off the fact that 50% of the
property is bordered by a use other than what the first subject is.
(R. of Admin. Proceeding at 46-48.)
When contesting an assessment, a taxpayer must offer probative evidence concerning the alleged
assessment error. See Whitley Prods., Inc. v. State Bd. of Tax Commrs,
704 N.E.2d 1113, 1119 (Ind. Tax Ct. 1998), review denied. Mere
conclusory statements, however, do not constitute probative evidence. Id. Here, other
than Mr. Millers conclusion that SSKs land is entitled to a fifty percent
negative influence factor, the record is devoid of any evidence calculating the appropriate
adjustment to be applied. SSK, therefore, is not entitled to any relief
on this issue. Thus, the Court AFFIRMS the State Boards final determination
on this issue.GRADE
For the 1995 assessment, one of SSKs improvements had been assigned a D
grade. SSK maintains that the grade should be reduced to an E.
Under Indianas true tax value system, improvements are assigned various grades based on
their materials, design, and workmanship; the grades represent multipliers that are applied to
the base reproduction cost of an improvement. Ind. Admin. Code tit. 50,
r. 2.2-10-3; Whitley Prods., 704 N.E.2d at 1116. The selection of which
grade should be applied to an improvement calls for a subjective judgment and
is committed to the discretion of the assessor. Mahan v. State Bd.
of Tax Commrs, 622 N.E.2d 1058, 1064 (Ind. Tax Ct. 1993). Thus,
in determining grade, the assessor is to 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[.] Ind. Admin. Code tit. 50, r. 2.2-10-3(a)(4). On
the other hand, E grade buildings are constructed with substandard grade materials, usually
culls and seconds, and very poor quality workmanship resulting from unskilled, inexperienced, do-it-yourself
labor. Ind. Admin. Code tit. 50, r. 2.2-10-3(a)(5).
When contesting a grade assigned to an improvement, a taxpayer must offer probative
evidence concerning the alleged assessment error. Whitley Prods., 704 N.E.2d at 1119.
A taxpayers conclusory statements concerning the grading of a subject improvement, however,
do not constitute probative evidence. Id. Likewise, mere references to photographs
or State Board regulations, without explanation, do not qualify as probative evidence for
purposes of grading issues. Heart City Chrysler v. State Board of Tax
Commrs, 714 N.E.2d 329, 333 (Ind. Tax Ct. 1999). In the event
that a taxpayer fails to provide the State Board with probative evidence supporting
its position on a grade issue, the State Boards duty to support its
final determination with substantial evidence is not triggered. Whitley Prods., 704 N.E.2d
In examining the evidence it presented to the State Board at its administrative
hearing, the Court determines that SSK has not met its burden of proof.
For instance, at the administrative hearing, SSK presented several photocopied pictures of
the subject improvement. No supporting explanation, however, was provided to show what
features of the improvement warranted an E grade. As stated earlier, photographs,
without explanation, do not qualify as probative evidence for purposes of grading issues.
Heart City Chrysler, 714 N.E.2d at 333. Finally, Millers testimony at
the administrative hearing was nothing more than we would ask that a grade
of E be applied to that to account for the major differences in
the subject property in the grade. (R. of Admin. Proceeding at 46.)
Because SSK has failed to provide the State Board with probative evidence to
support its position on grade, the State Boards duty to support its final
determination with substantial evidence is not triggered. See Whitley Prods., 704 N.E.2d
at 1119-20. As a result, the State Boards determination
of a D grade is AFFIRMED.
SSK has not
made a prima facie case with respect to its issues. Consequently, the
State Boards final determination is AFFIRMED on all counts.
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. P.L. 198-2001, § 119(b)(2). Effective January 1, 2002,
the legislature created the Department of Local Government Finance (DLGF),
see Indiana Code
§ 6-1.1-30-1.1 (West Supp. 2001)(eff. 1-1-02); P.L. 198-2001, § 66, and the Indiana
Board of Tax Review (Indiana Board). Ind. Code § 6-1.5-1-3 (West Supp.
2001)(eff. 1-1-02); P.L. 198-2001, § 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. 1-1-02); P.L. 198-2001, § 95. Nevertheless,
the law in effect prior to January 1, 2002 applies to these appeals.
Id. See also P.L. 198-2001, § 117. Although the DLGF
has been substituted as the Respondent, this Court will still reference the State
Board throughout this opinion.
SSK also argues that its assessment should be voided because portions
of Indianas regulations for taxing tangible property have been declared unconstitutional. Indeed,
in 1998, the Indiana Supreme Court affirmed this Courts determination that the existing
cost schedules . . . violate the Property Taxation Clause of the Indiana
State Bd. of Tax Commrs v. Town of St. John, 702
N.E.2d 1034, 1043 (Ind. 1998). That same year, however, this Court declared
that [r]eal property must still be assessed, and, until the new regulations are
in place, must be assessed under the present system. Whitley Prods., Inc.
v. State Bd. of Tax Commrs, 704 N.E.2d 1113, 1121 (Ind. Tax Ct.
1998), review denied; see also Town of St. John v. State Bd. of
Tax Commrs, 729 N.E.2d 242, 246 & 251 (Ind. Tax Ct. 2000) (ordering
real property in Indiana to be reassessed under constitutional regulations as of March
1, 2002 and providing that until then, real property tax assessments shall be
made in accordance with the current system). The Court, therefore, will not
analyze SSKs state constitutional claim in this opinion.
SSK also contends that because Indianas system of taxing tangible property is not
based upon objectively verifiable data, (see Petr Br. and Findings of Fact and
Conclusions of Law at 8-10), its due process rights under the Fifth and
Fourteenth Amendments to the U.S. Constitution are violated. This Court has in
the past rejected legal arguments analogous to SSKs. See Town of St.
John v. State Bd. of Tax Commrs, 690 N.E.2d 370, 38897 (Ind. Tax
Ct. 1997), revd in part on other grounds by 702 N.E.2d 1034 (Ind.
1998). Even if SSKs federal constitutional claims had merit, real property must
still be assessed, and, until the new regulations are in place, must be
assessed under the present system. See Whitley Prods., 704 N.E.2d at 1121.
The Court, therefore, will not analyze SSKs federal constitutional claim in this
In bearing that burden, SSK may only present evidence to this
Court that it presented at the administrative level. See State Bd. of
Tax Commrs v. Gatling Gun Club, Inc., 420 N.E.2d 1324, 1328 (Ind. Ct.
that the improvements suffer from various forms of economic
and functional obsolescence (inefficient floor plans, varying ceiling heights, inadequate docking facilities and
poor access to and from the property). (R. of Admin. Proceeding at
SSK used four comparable sales to arrive at an estimated
accrued depreciation for the subject property. (See R. of Admin. Proceeding at
26, 30-38.) SSK then subtracted the amount of physical depreciation the subject
property received from the estimated accrued depreciation figure to arrive at a 66%
In fact, SSK did not even address the argument in its
brief/reply brief filed with this Court.