Evansville, IN        
    Indianapolis, IN

    IN THE INDIANA TAX COURT _____________________________________________________________________

WARREN W. SPURLING, as owner of                                           )        

    Petitioner,                )
    v.        ) Cause No. 82T10-0205-TA-44
    Respondent.                )



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 appeal;

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 Board’s final determination.


    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 Pet’r 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 Spurling’s properties were underassessed. Shortly thereafter, the PTABOA reassessed Spurling’s 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.” See footnote Consequently, Spurling’s assessment on all ten properties increased from $2,607,440.00 to $3,611,180.00. (See Pet’r Br. at 5.)
    Spurling challenged the PTABOA’s 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 See footnote issued one final determination sustaining the PTABOA’s 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.
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 it is:
(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 Board’s 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 Ct. 2003).

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 Comm’rs, 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 taxpayer’s 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 footnote See Elkhart Maple Lane Assocs., 789 N.E.2d at 111.
    When Spurling initially challenged the PTABOA’s reassessment, he bore the burden of showing the PTABOA was incorrect. When Spurling challenged the PTABOA’s determination to the Indiana Board, he again bore the burden of proof. Spurling’s 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. See footnote Rather, only after he has made a prima facie case does the burden of going forward shift to the PTABOA to support its findings. See footnote
II. Use Model

    The second issue before the Court is whether Spurling’s 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 Indiana’s 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 Comm’rs, 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 Comm’rs, 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 Comm’rs, 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 improvement’s 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 foot, See footnote 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 PTABOA’s evidence, Spurling’s 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 PTABOA’s comparisons between Spurling’s improvements and photos listed in the Indiana Assessment Manual for the GCM office model, as well as the fact that Spurling’s 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 Comm’rs, 722 N.E.2d 926, 938-40 (Ind. Tax Ct. 2000), rev’d 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 that.”
III. Grade

    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[.]” See footnote 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 Comm’rs, 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 Pet’r 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 taxpayer’s 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). Spurling’s 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 Court’s ruling in Clark, or any other case.
    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 Board’s final determination on this issue is affirmed.

    For the aforementioned reasons, the Court AFFIRMS the Indiana Board’s final determination.

Footnote: Previously, the grades on the improvements were either “D”, “C-2”, or “C-1”.

Footnote: 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 Spurling’s appeal in March 2002, the Indiana Board issued it.

Footnote: This Court has been clear in stating the policy underpinnings for burden shifting in tax appeals. See Hoogenboom-Nofziger v. State Bd. of Tax Comm’rs, 715 N.E.2d 1018, 1024 (Ind. Tax Ct. 1999).

Footnote:      To support his argument, Spurling cites to decisions of the Indiana Court of Appeals and the Indiana Administrative Orders and Procedures Act (AOPA). (See Pet’r 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 Court’s standard will be applied.
    Spurling also argues that AOPA applies to local proceedings. (Pet’r 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.

Petitioner’s 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.

Footnote: 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 square foot. See Ind. Admin. Code tit. 50, r. 2.2-11-6 (Schedule A.1).

Footnote: 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).