ATTORNEYS FOR PETITIONER: ATTORNEYS FOR RESPONDENT:
CURTIS J. DICKINSON JEFFERY A. MODISETT
DAVID L. PIPPEN Attorney General of Indiana
DICKINSON & ABEL
Indianapolis, Indiana VINCENT S. MIRKOV
Deputy Attorney General
) WARECO ENTERPRISES, INC., ) ) Petitioner, ) ) v. ) Case No. 49T10-9606-TA-00066 ) INDIANA STATE BOARD OF ) TAX COMMISSIONERS, ) ) Respondent. ) _____________________________________________________________________________
Wareco Enterprises, Inc. (Wareco) appeals the State Board of Tax Commissioners' (State Board) final determination of its real property assessment for 1989, 1990 and 1991. Wareco filed
three Form 133 Petitions for Correction of Errors, alleging that mathematical errors occurred
when the assessor calculated the Perimeter to Area Ratio (PAR), calculated the Base Rate, and
failed to apply the appropriate Physical Depreciation Table to its real property. The issue before
this Court is whether Form 133 is the appropriate petition for challenging these types of alleged
arbitrary or capricious, constitutes an abuse of discretion, or exceeds statutory authority. Bock
Prods., Inc. v. State Bd. of Tax Comm'rs, 683 N.E.2d 1368, 1369 (Ind. Tax Ct. 1997).
properly be depreciated from the 30-year life table. (Tr. at 20); Ind. Admin Code tit. 50, r. 2.1-
5-1 (1992) (repealed and codified at Ind. Admin Code tit. 50, r. 2.2-10-7 (1996)).
An agent of the State Board itself, Hearing Officer Edwards determined the facts and law establish errors in the assessment of Wareco's property for the tax years 1989, 1990 and 1991. Wareco, of course, agrees with the Hearing Officer's determination of error and has provided this Court with substantial evidence documenting each of those errors. What remains for the Court to determine, then, is whether each of those errors is correctable via a Form 133 Petition to Correct Error.See footnote 2
Ind. Admin. Code tit. 50, r. 2.1-4-1 (1992) (emphasis added) (repealed and codified at Ind.
Admin Code tit. 50, r. 2.2-10-2 (1996)).
The regulation further states that when pricing a building with mixed use, mixed framing, or mixed wall heights, the computation of PAR for the entire building should be performed, then,
adjustments to the pricing schedule should be made to reflect these variations in use, framing or
wall height. Id. Thus, although the use framing costs, type costs, or wall height costs differ, the
PAR is the same. The only elements necessary for a calculation of PAR, by the clear language of
the regulations, is measurement of the exterior walls and calculation of the total square foot area
of the building. These are objective measurements. While separate sections may be treated
differently for pricing, the regulations provide that the PAR for the entire building does not
change. This conclusion is only logical when the regulation's clearly stated purpose is analyzed:
The PAR is simply a means of converting a per lineal foot price into easily measured square foot units.
Id. (emphasis added). PAR, then, measures how efficiently the building space is used. "A
rectangular building requires a larger amount of perimeter walls than a square building to
encompass the same amount of floor area." Id. The PAR calculation translates this reality to a
measurable, and taxable, ratio.
The Hearing Officer found the PAR incorrect as calculated for the subject building. (Tr. at 9-10). The State Board's only response to the taxpayer's allegation (and the Hearing Officer's verification) of an error in the calculation of the PAR was the State Board's Final Assessment Determination stating "the perimeter to area ratio is a subjective determination and therefore not correctable" using a Form 133. The State Board bases this assertion on the fact that PAR can be calculated using the entire building or can be done in sections. Because the Hearing Officer calculated PAR differently from the County Board, and because he determined the PAR by an alternate method, the County Board calculation of PAR was never tested for accuracy. (Tr. at 56,
59). The Court has previously rejected such a cursory response by the State Board as failing in its
duty to investigate the claim. Bock, 683 N.E.2d at 1370.
The "section method" by which some assessors calculate the PAR is an alternative method aimed at simplifying the calculations for the entire building. Use of the "section method" requires an assessor to use percentages to avoid double taxation of interior or partition walls. (Tr. at 49- 50). While choice of methodology is subjective, the calculation of PAR under either method is objective. Once a methodology is chosen, the calculation should be the same_total lineal feet of exterior walls divided by total square foot area of the building, multiplied by one hundred. Ind. Admin. Code tit. 50, r. 2.1-4-1. The Hearing Officer determined that there was an error in the PAR and recommended it be changed. (Pet. Ex. 1; Tr. at 49). In this case, the State Board should recalculate the PAR using the County Board's methodology in order to determine whether it was done correctly.See footnote 3 This issue is remanded to the State Board.
model, the State Board's regulations provide schedules showing the costs of components. Id.
For any item to which value is assigned, but does not exist in the subject building, the value
assigned should be subtracted. See Hatcher, 561 N.E.2d at 852.
Wareco's building was assessed from the light manufacturing model as defined by the regulations. (Tr. at 20; Pet. Ex. 1, 3). However, the building does not contain each of the components presumed to exist by the model. The Hearing Officer testified that there is no heat in sections of the building. He further testified that the building does not have the amount of partition wall presumed to exist in the light manufacturing model. (Tr. at 12, 13, 20, 49, 51). Furthermore, the Hearing Officer testified that an error in the calculation of the PAR would result in an error in the calculation of the base rate. (Tr. at 45). If the calculation of the PAR for Wareco's building was in error, then the base rate would also be in error.
The property record card and assessment assigned to Wareco's building the value of certain items that it does not have. A determination of whether components contained in the base model are present in the actual property "is precisely the type of uncomplicated 'true or false finding of fact' that is correctable via a Form 133." Bock, 683 N.E.2d at 1371 (citing Bender v. State Bd. of Tax Comm'rs, 676 N.E.2d 1113, 1115 (Ind. Tax Ct. 1997)). "For the state board to refuse to correct errors alleged and shown to exist which are similar to the examples . . . is arbitrary and capricious." Hatcher, 561 N.E.2d at 858.
Ind. Admin. Code tit. 50, r. 2.1-5-1 (1992) (repealed). The State Board's regulations provide:
To apply physical depreciation the assessor must identify the correct economic life table.
30 year: . . . light pre-engineered buildings, . . .
40 year: . . . all fire resistant buildings not listed elsewhere. . . .
Id. (emphasis added).
As the Court has recently discussed, the State Board must investigate the claim of error to determine whether the taxpayer is challenging objective determinations or subjective determinations. In Bock, the Court refused to allow the State Board to deny review of an alleged error merely because some subjective determination may be required. 683 N.E.2d at 1370-71. The Court held that where errors in objective determinations have been made, those errors are reviewable via a Form 133 petition. Id. at 1372.
The testimony and evidence from the State Board's own Hearing Officer demonstrate that the Wareco's building is a low cost, pre-engineered, light manufacturing building. (Tr. at 20, 47). Following that determination, an uncomplicated application of the State Board's regulations required an application of the 30-year life depreciation table. (Tr. at 14-15). The regulations specifically provide that "light pre-engineered buildings" are depreciated according to the 30-year life table. See Ind. Admin. Code tit. 50, r. 2.1-5-1 (repealed). For the building to fall under the 40-year life table, which has been applied by the State Board, the subject building would have to be classified as a fire resistant building "not listed elsewhere." Id. No subjective determination is required to see that the building is listed under the 30-year life table and by the requirements of the regulations, the building must be depreciated using the 30-year life table. Ind. Admin. Code tit. 50, r. 2.1-5-1 (repealed). The failure to review this error is arbitrary, capricious, and a violation of law.
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