ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
ANDREW R. RUTZ STEVE CARTER
MARK S. SAMILA ATTORNEY GENERAL OF INDIANA
G. MICHAEL SCHOPMEYER Indianapolis, IN
KAHN, DEES, DONOVAN & KAHN, LLP
LINDA I. VILLEGAS
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
WARREN W. SPURLING, as owner of )
SSS DEVELOPMENT, LLC, )
v. ) Cause No. 82T10-0205-TA-44
VANDERBURGH COUNTY PROPERTY )
TAX ASSESSMENT BOARD OF APPEALS, )
ON APPEAL FROM A FINAL DETERMINATION
OF THE INDIANA BOARD OF TAX REVIEW
NOT FOR PUBLICATION
November 13, 2003
Warren W. Spurling (Spurling), as owner of SSS Development, LLC, appeals the final
determination of the Indiana Board of Tax Review (Indiana Board) establishing the assessed
value of his real
property for the 1999 assessment year. Spurling raises
a number of issues that the Court restates as:
Whether the Indiana Board incorrectly applied the burden of proof in his tax
Whether the Indiana Board used the incorrect model to assess his properties; and
Whether the Indiana Board assigned improper grade factors to his properties.
For the reasons stated below, this Court AFFIRMS the Indiana Boards final determination. FACTS AND PROCEDURAL HISTORY
Spurling owns and operates more than 10 commercial properties in Vanderburgh County, Indiana.
Each of these properties contains numerous buildings that are used as offices
and retail centers. (See Petr Br. at 2.)
Spurling alleges that, in the spring of 1999, an anonymous third-party approached the
Vanderburgh County Property Tax Assessment Board of Appeals (PTABOA) and complained that Spurlings
properties were underassessed. Shortly thereafter, the PTABOA reassessed Spurlings properties. As
part of the reassessment, the PTABOA changed the use classification of the buildings
from general retail to general office and raised the grade on each of
the improvements to C.
Consequently, Spurlings assessment on all ten properties increased
from $2,607,440.00 to $3,611,180.00. (See Petr Br. at 5.)
Spurling challenged the PTABOAs assessments by filing 10 Form 131 Petitions for
Review of Assessment with the State Board of Tax Commissioners (State Board).
The State Board held an administrative hearing on September 5, 2000. On
March 20, 2002, the Indiana Board
issued one final determination sustaining the PTABOAs
assessments. (See Cert. Admin. R. at 317.)
On May 1, 2002, Spurling filed an original tax appeal in which he
consolidated his 10 Form 131 petitions. This Court heard the parties oral
arguments on May 2, 2003. Additional facts will be supplied as needed.
ANALYSIS AND OPINION
Standard of Review
This Court gives great deference to final determinations of the Indiana Board.
Wittenberg Lutheran Vill. Endowment Corp. v. Lake County Prop. Tax Assessment Bd. of
Appeals, 782 N.E.2d 483, 486 (Ind. Tax Ct. 2003), review denied. Consequently,
this Court will reverse a final determination of the Indiana Board only if
(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(2) contrary to constitutional right, power, privilege, or immunity;
(3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory jurisdiction,
authority, or limitations;
(4) without observance of procedure required by law; or
(5) unsupported by substantial or reliable evidence.
Ind. Code § 33-3-5-14.8(e)(1)-(5). The party seeking to overturn the Indiana Boards
final determination bears the burden of proving its invalidity. See Osolo Twp.
Assessor v. Elkhart Maple Lane Assocs., L.P., 789 N.E.2d 109, 111 (Ind. Tax
I. Burden of Proof
The first issue in this case is whether the Indiana Board incorrectly applied
the burden of proof. Spurling contends that the burden of proof in
this case lies with the PTABOA because it made the first move by
reassessing his property. In other words, Spurling argues that because the PTABOA
on its own accord reassessed his property, it bears the initial burden at
the Indiana Board hearing to show that its reassessment is correct. Spurling
asserts that because the PTABOA never met its burden of proof, the Indiana
Board decision upholding the PTABOA must be reversed. Spurling is incorrect.
The PTABOA has the authority to correct the assessed value of real property
that has been undervalued. Ind. Code § 6-1.1-13-4. When it does
so, the PTABOA must provide notice to the taxpayer. Ind. Code §
6-1.1-13-1. If the taxpayer chooses to challenge the reassessment, the taxpayer bears
the burden to present a prima facie case showing that the reassessment is
in error. See Clark v. State Board of Tax Commrs, 694 N.E.2d
1230, 1233 (Ind. Tax Ct. 1998). Once a prima facie case is
established, the burden shifts. See id. At that point, the PTABOA
must rebut the taxpayers prima facie case with substantial evidence supporting the reassessment.
See id. Upon appeal to the Indiana Board, the process
begins again with the burden of proof resting with the challenging party (in
this case, the taxpayer).
See Elkhart Maple Lane Assocs., 789 N.E.2d at
When Spurling initially challenged the PTABOAs reassessment, he bore the burden of showing
the PTABOA was incorrect. When Spurling challenged the PTABOAs determination to the
Indiana Board, he again bore the burden of proof. Spurlings belief that
he must merely raise a flag of protest at the local level to
shift the burden of proof to the PTABOA is incorrect.
after he has made a prima facie case does the burden of going
forward shift to the PTABOA to support its findings.
II. Use Model
The second issue before the Court is whether Spurlings improvements were incorrectly assessed
using the General Commercial Mercantile (GCM) office model. Spurling contends that the
base reproduction costs for his buildings should have been determined under the GCM
retail model. The PTABOA counters that Spurling failed to present a prima
facie case that his improvements should have been assessed using the retail model.
The PTABOA is correct.
Under Indianas property tax assessment system, cost schedules are used to determine the
base reproduction cost of a particular improvement. See Whitley Prods., Inc. v.
State Bd. of Tax Commrs, 704 N.E.2d 1113, 1116 (Ind. Tax Ct. 1998),
review denied. These cost schedules are contained within the Indiana assessment manual.
See Ind. Admin. Code tit. 50, r. 2.2-11-6 (1996). The cost
schedules are divided into models based on various physical characteristics of an improvement.
Assessing officials are to apply a pricing schedule associated with the model
that most resembles the subject improvement. See Herb v. State Bd. of
Tax Commrs, 656 N.E.2d 890, 893 (Ind. Tax Ct. 1995). Nevertheless, not
all improvements will conform exactly to the features of the model used to
assess an improvement. Barth, Inc. v. State Bd. of Tax Commrs, 756
N.E.2d 1124, 1129-1131 (Ind. Tax Ct. 2001). As a result, separate schedules
contain cost deviations for certain components and features that can be applied to
adjust an improvements base rate. Id.
Spurling contends that based on actual reproduction costs, the GCM retail model,
rather than GCM office model, is the appropriate model to apply to his
improvements. To support his claim, Spurling testified before the Indiana Board that
the actual reproduction cost of one of his buildings was $24.00 per square
based upon his own recollection and a single sheet of handwritten notes.
(Cert. Admin. R. at 576-77.)
However, the Indiana Board found that in light of the PTABOAs evidence, Spurlings
buildings conformed more to the GCM office model in regard to ceiling heights,
service doors and windows, partitioning, HVAC, roof style, and lighting. (Cert. Admin.
R. at 346-47.) The Indiana Board also found relevant the PTABOAs comparisons
between Spurlings improvements and photos listed in the Indiana Assessment Manual for the
GCM office model, as well as the fact that Spurlings buildings were comparable
to other buildings assessed under the GCM office use model in the area.
(Cert. Admin. R. at 348.)
In a recent case, this Court found that a taxpayer established a prima
facie case that its improvement was assessed with the wrong model by pointing
to several identifiable, objective differences between the model and subject improvement. See
Indianapolis Racquet Club, Inc. v. State Bd. of Tax Commrs, 722 N.E.2d 926,
938-40 (Ind. Tax Ct. 2000), revd on other grounds by 743 N.E.2d 247
(Ind. 2001). For instance, the taxpayer presented evidence showing that, in contrast
to the health club model, its tennis facility had higher ceiling heights, unfinished
interior walls, no finished floors, and different lighting and heating systems. See
id. at 938. Consequently, the taxpayer made a prima facie case that
its improvements should have been assessed using the light industrial warehouse model.
Id. at 940.
Like the taxpayer in Indianapolis Racquet Club, Spurling must present clear and detailed
evidence establishing the differences between his improvements and the GCM office model and
the similarities with the GCM retail model. Instead, Spurling presents nothing more
than conclusory statements that the model used was this and it should be
Finally, Spurling contends that the grade classifications on his commercial properties were improperly
increased by the PTABOA to C grades. The grading of improvements is
an important aspect of the True Tax Value System. Whitley Prods., 704
N.E.2d at 1116. Grades are assigned to improvements based on the quality
of the materials used, the design, and workmanship. Ind. Admin. Code tit.
50, r. 2.2-10-3 (1996). Grades range from A through E, with an
A grade building having an outstanding architectural style and design and constructed with
the finest quality materials and workmanship[,] while an E grade building is constructed
with substandard grade materials . . . and very poor quality workmanship[.]
Ind. Admin. Code tit. 50, r. 2.2-10-3(a)(5). The selection of which grade
should be applied to an improvement calls for 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).
Spurling contends there are four reasons why the grade increase on his improvements
is improper: the type of heating system present in his buildings, the quality
of the foundations of his buildings, the quality of the exterior walls, and
the type of air conditioning systems present are all substandard to what is
found in the GCM office model. (See Petr Br. at 47-48.)
Spurling also claims that use of residential-type materials in his improvements should reduce
the grade. Spurling asserts that because this Court has found in the
past that when a feature assumed in a model is absent in the
assessed property, the taxpayers testimony that the feature is absent constitutes evidence that
the assessment is in error. See Clark, 694 N.E.2d at 1235 -
36 (stating that the absence of a concrete back up wall in an
improvement is a significant variation from the assessing model and cannot be overlooked
in an assessment). Spurlings reliance on Clark is misplaced. Spurling merely
provided conclusory affidavits from his experts claiming that the construction materials were residential
in type. (Cert. Admin. R. at 1025-26, 1031-32.) Spurling provides no
explanation of how residential building materials used in a commercial structure relate to
a decreased grade according to this Courts ruling in Clark, or any other
In order to successfully challenge a final determination of grade, a taxpayer will
usually have to offer a competing view of a grade determination (e.g., comparisons
with comparable properties or detailed photographic evidence). See Clark, 694 N.E.2d at
1234. Spurling failed to provide evidence, beyond his own allegation, that his
properties were assigned incorrect grades. As a result, the Indiana Boards final
determination on this issue is affirmed.
For the aforementioned reasons, the Court AFFIRMS the Indiana Boards final determination.
Footnote: Previously, the grades on the improvements were either D, C-2, or C-1.
On December 31, 2001, the legislature abolished the State Board of Tax
Commissioners (State Board). 2001 Ind. Acts 198 § 119(b)(2). Effective January
1, 2002, the legislature created the Indiana Board of Tax Review (Indiana Board)
as successor to the State Board.
Ind. Code §§ 6-1.5-1-3; 6-1.5-4-1 (Supp.
2001); 2001 Ind. Acts 198 § 95. Consequently, when the final determination
was issued on Spurlings appeal in March 2002, the Indiana Board issued it.
This Court has been clear in stating the policy underpinnings for
burden shifting in tax appeals. See Hoogenboom-Nofziger v. State Bd. of Tax
Commrs, 715 N.E.2d 1018, 1024 (Ind. Tax Ct. 1999).
To support his argument,
Spurling cites to decisions of the Indiana Court
of Appeals and the Indiana Administrative Orders and Procedures Act (AOPA). (See
Petr Br. at 10-12.) While Indiana Court of Appeals opinions may be
instructive, those decisions are not binding on this Court. Jurisdiction over all
original tax appeals is vested with this Court. Ind. Code § 33-3-5-2.
Since the burden of proof is well settled in tax appeals, this
Courts standard will be applied.
Spurling also argues that AOPA applies to local proceedings. (Petr Br. at 11-12.)
AOPA creates minimum procedural rights for citizens and imposes minimum procedural duties
on state agencies. Ind. Code § 4-21.5-2-2. Local political subdivisions are
not state agencies. Ind. Code §§ 4-21.5-2-3; 4-21.5-1-3. Therefore, AOPA does
not apply to the administrative hearing before the PTABOA.
Petitioners counsel previously presented this version of the burden of proof in
North Park Cinemas, Inc. v. State Board of Tax Commissioners, 689 N.E.2d
765, 770 (Ind. Tax Ct. 1997). This Court finds the argument no
more inviting than it was in 1997 and rejects it accordingly.
Because Spurling claims he was able to build his buildings for $24.00
per square foot, those buildings should be assessed under the GCM retail model,
which has an approximate $23.00 base price per square foot, as opposed to
the GCM office model which has an approximate base price of $36.00 per
See Ind. Admin. Code tit. 50, r. 2.2-11-6 (Schedule A.1).
A C grade building is moderately attractive and constructed with average quality
workmanship and materials. [It has] minimal to moderate architectural treatment and conform[s]
with the base specifications used to develop the pricing schedules. [It has]
an average quality interior finish[.] Ind. Admin. Code tit. 50, r. 2.2-10-3(3)(a)(3)(1996).