ATTORNEY FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN STEVE CARTER
ATTORNEY AT LAW ATTORNEY GENERAL OF INDIANA
Indianapolis, IN Indianapolis, IN
LINDA I. VILLEGAS
DEPUTY ATTORNEY GENERAL
INDIANA TAX COURT
MARLETTE HOMES, INC., )
v. ) Cause No. 49T10-0101-TA-5
DEPARTMENT OF LOCAL )
ON APPEAL FROM A FINAL DETERMINATION OF
THE STATE BOARD OF TAX COMMISSIONERS
NOT FOR PUBLICATION
November 19, 2003
Marlette Homes, Inc. (Marlette) appeals the State Board of Tax Commissioners (State Board)
final determination valuing its real property for the 1995 tax year. The
issue for the Court to decide is whether the State Board erred in
grading Marlettes light manufacturing improvement (improvement) a D.
For the following reasons,
the Court REVERSES the State Boards final determination.
FACTS AND PROCEDURAL HISTORY
Marlette owns land and improvements (used for warehousing, manufacturing, and office purposes associated
with its business) in Elkhart County, Indiana. The subject improvement is a
low-cost, pre-engineered building. For the 1995 tax year, the local assessing officials
valued Marlettes improvement using the General Commercial Industrial (GCI) Schedule and assigned it
a D grade.
Marlette appealed the assessment to the Elkhart County Board of Review (BOR), claiming
that the improvements grade should be an E. The BOR denied Marlettes
claim. Marlette then appealed the BORs determination to the State Board.
After a hearing on October 12, 2000, the State Board also denied Marlettes
On January 4, 2001, Marlette initiated an original tax appeal. The parties
stipulated to the record and, on March 18, 2002, this Court heard their
oral arguments. Additional facts will be supplied as necessary.
ANALYSIS AND OPINION
Standard of Review
This Court gives great deference to the final determinations of the State Board
when it acts within the scope of its authority. Hamstra Builders, Inc.
v. Dept of Local Govt Fin., 783 N.E.2d 387, 390 (Ind. Tax. Ct.
2003). Thus, this Court will reverse a final determination of the State
Board only when its findings are unsupported by substantial evidence, arbitrary, capricious, constitute
an abuse of discretion, or exceed statutory authority. Id. When appealing
to this Court from a State Board final determination, the taxpayer bears the
burden of showing that the final determination is invalid. Id.
The grading of improvements is an important part of Indianas property assessment system.
Under that system, assessors use improvement models and cost schedules to determine
the base reproduction cost of a particular improvement. Whitley Prods., Inc. v.
State Bd. of Tax Commrs, 704 N.E.2d 1113, 1116 (Ind. Tax. Ct.
1998), review denied. Improvements are then assigned various grades based on their
materials, design, and workmanship. Id. See also Ind. Admin. Code tit.
50, r. 2.2-10-6.1(f) (1996) (providing that grade is used to adjust the total
base reproduction cost in order to account for variations in standards of quality
and design). The grades represent multipliers that are applied to the subject
improvements base reproduction cost. Whitley Prods., 704 N.E.2d at 1116.
There are times, however, when an improvement deviates from the applicable improvement model
or cost schedule. Such a deviation impacts the improvements base reproduction cost.
Id. at 1117. As this Court has previously explained, there
are two methods by which to account for such deviations:
The preferred method . . . is to use separate schedules that show
the costs of certain components and features present in the model. This
allows an assessor to adjust the base reproduction cost of the improvement objectively.
The other means of accounting for an improvements deviation from the model used
to develop the cost schedule is via an adjustment to the grade of
the improvement. This type of adjustment requires the assessors subjective judgment.
Where possible, this type of an adjustment should be avoided. However, because
the component (base rate adjustment) schedules are not comprehensive, this type of adjustment
may be necessary.
Id. (internal citations, quotations, and footnotes omitted).
Marlette claims that the State Board erred in assigning a D grade to
its improvement. Specifically, Marlette alleges that because its building lacks certain features
present in the GCI model, its grade should be reduced to an E.
To support its claim, Marlette presented an Assessment Review and Analysis (Analysis).
In the Analysis, Marlette described the improvement as a light pre-engineered structure, constructed
of rigid steel framing, with purlins and girders with a 14 gauge, along
with the standard X bracing. Walls are made up of 28 gauge
metal siding with exposed insulation on the interior. (Stip. R. at 135.)
Marlette then explained that, while the improvement would normally be priced under the
General Commercial Kit (GCK) ScheduleSee footnote , it was the policy of the [BOR] at
that time . . . that very few if any buildings were priced
from the GCK schedule. (Stip. R. at 188.) Rather, the BOR
just appl[ied] a lower grade . . . as opposed to using the
GCK Schedule. See footnote (Stip. R. at 188 (footnote added).) Consequently, Marlette
presented a calculation to justify its request for an E grade: first, it
calculated the value of the improvement utilizing the General Commercial Kit (GCK) Schedule,
establishing an alternate reproduction cost for the improvement. (Stip. R. at 135.)
In comparing that alternate reproduction cost with that of the base reproduction
cost under the GCI pricing schedule, Marlette calculated a 60% difference. (Stip.
R. at 135.) Marlette then asserted that if the current grade were
reduced to an E, the values would be equalized with those as calculated
under the GCK Schedule.
The State Board denied Marlettes claim, finding that the difference between pricing schedules
does not constitute probative evidence that the grade of the subject building is
incorrect. (Stip. R. at 68.) In doing so, the State Board
erred. Indeed, Marlettes evidence demonstrated that it was entitled to GCK pricingSee footnote ;
thus, because the BOR admitted that it was its practice to reduce grades
rather than utilize GCK pricing (
see Stip. R. at 189), Marlette has shown
it was entitled to a grade reduction to E on its improvement.
In light of the BORs own admission, the State Board improperly ignored Marlettes
calculation demonstrating that an E grade would be an equivalent value to the
GCK value for its improvement.
Marlette established a prima facie case that it was entitled to GCK pricing
and, thus, a grade of E. The State Board, however, failed to
rebut Marlettes evidence and support its findings with substantial evidence. See Hamstra
Builders, 783 N.E.2d at 390 (stating that once the taxpayer presents a prima
facie case, the burden shifts to the State Board to rebut the taxpayers
evidence and support its findings with substantial evidence). Accordingly, the State Boards
final determination cannot stand.
For the reasons stated above, the Court REVERSES the final determination of the
State Board and REMANDS the issue to the Indiana Board of Tax Review
See footnote to instruct the local assessing officials to lower the grade of
Marlettes improvement to E, consistent with this opinion.
Footnote: 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),
Indiana Code § 6-1.1-30-1.1 (West Supp. 2001)(eff. 1-1-02); 2001 Ind. Acts 198 §
66, and the Indiana Board of Tax Review (Indiana Board). Ind. Code
§ 6-1.5-1-3 (West Supp. 2001)(eff. 1-1-02); 2001 Ind. Acts 198 § 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);
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
In addition, Marlette raises various state and federal constitutional claims that this
Court has declined to reach in previous cases.
See, e.g., Barth, Inc.
v. State Bd. of Tax Commrs, 756 N.E.2d 1124, 1127 n.1 (Ind. Tax.
Ct. 2001). Because Marlettes claims and supporting arguments are identical to those
previously rejected by the Court, the Court will not address them.
Marlettes Assessment Review and Analysis was prepared by its property assessment consultant,
Mr. M. Drew Miller of Landmark Appraisals, Inc.
Footnote: The General Commercial Kit (GCK) Schedule provides base rates for pre-engineered and
pole framed buildings (kit buildings) and is used for valuing kit buildings which
are used for commercial and industrial purposes.
See Ind. Admin. Code tit.
50, r. 2.2-11-6 (Schedule A.4) (1996). See also Ind. Admin. Code tit.
50, r. 2.2-10-6.1(a)(1)(D) (1996).
While the Court disfavors such a practice, it recognizes that such was
See King Indus. Corp. v. State Bd. of Tax Commrs,
699 N.E.2d 338, 340-41 (Ind. Tax. Ct. 1998).
In fact, the stipulated record provides evidence that for the 1998 and
1999 assessments, the State Board valued Marlettes improvement using the GCK Schedule.
See Stip. R. at 74, 84, 90, 100.)
All cases that would have been remanded to the State Board are
now remanded to the Indiana Board of Tax Review (Indiana Board).
Code § 6-1.1-15-8 (West Supp. 2003). Final determinations made by the Indiana
Board are subject to review by this Court pursuant to Ind. Code §
6-1.1-15. Ind. Code §§ 6-1.5-5-7 (West Supp. 2003); 3-33-5-2.