ATTORNEY FOR PETITIONER:    ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN    STEVE CARTER
ATTORNEY AT LAW     ATTORNEY GENERAL OF INDIANA
Indianapolis, IN    Indianapolis, IN

     JOEL SCHIFF
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN
    
_____________________________________________________________________

    IN THE INDIANA TAX COURT _____________________________________________________________________

HARVEST LEASING CORP.,                                                    )
                                                                               )
    Petitioner,                                                                )
                                                                               )
    v.                                                                         )   Cause No. 49T10-0002-TA-26
                                                                               )
INDIANA STATE BOARD OF                                                         )
TAX COMMISSIONERS,                                                             )
                                                                               )
    Respondent.                                                                )    
 _____________________________________________________________________
     
                                                 

ON APPEAL FROM A FINAL DETERMINATION
OF THE STATE BOARD OF TAX COMMISSIONERS
_____________________________________________________________________

NOT FOR PUBLICATION
December 18, 2001


FISHER, J.

Harvest Leasing Corp. (Harvest) appeals the State Board of Tax Commissioners’ (State Board) final determination that assessed its property as of the March 1, 1996 assessment date. Harvest presents the following issues for this Court’s review on appeal, which the Court restates as:
whether the State Board properly affirmed the pricing of Harvest’s building utilizing the General Commercial Industrial (GCI) Schedule;

whether the State Board properly affirmed the assessment of Harvest’s building as a D grade; and

whether the State Board properly affirmed the use of the forty-year life expectancy table for the physical depreciation of Harvest’s building. See footnote

For the reasons stated below, the Court AFFIRMS this case.

FACTS AND PROCEDURAL HISTORY

Harvest owns property located in Kosciusko County, Indiana.See footnote For the 1996 tax year, the improvement located on Harvest’s land was priced using the GCI schedule, was assigned a D grade, and was depreciated using a 40-year life table. On January 20, 1997, Harvest filed a form 131 Petition for Review of Assessment (131 Petition) with the State Board seeking review of the March 1, 1996, assessment of its improvement claiming among other things that its building should have been priced using the General Commercial Kit (GCK) schedule, assigned a D-2 grade, and depreciated using a 30-year life table. Thereafter, the State Board held a hearing on the 131 Petition. However, the improvement was not inspected. On December 21, 1999, the State Board issued its final determination wherein no changes were made to Harvest’s assessment. On February 4, 2000, Harvest filed its original tax appeal in this Court. The parties stipulated to the record from the administrative proceedings. Additional facts will be provided as necessary.
ANALYSIS AND OPINION


Standard of Review


This Court gives final determinations of the State Board great deference when the State Board acts within the scope of its authority. Freudenberg-NOK General Partnership v. State Bd. of Tax Comm’rs, 715 N.E.2d 1026, 1028-29 (Ind. Tax Ct. 1999). Accordingly, this Court reverses final determinations of the State Board only when they are unsupported by substantial evidence, are arbitrary or capricious, constitute an abuse of discretion, or exceed statutory authority. Id. at 1029.
In addition, a taxpayer challenging the validity of the State Board’s final determination bears the burden of demonstrating the invalidity of the final determination. Clark v. State Bd. of Tax Comm’rs, 694 N.E.2d 1230, 1233 (Ind. Tax Ct. 1998). The taxpayer must present a prima facie case. Damon Corp. v. Indiana State Bd. of Tax Comm’rs, 738 N.E.2d 1102, 1106 (Ind. Tax Ct. 2000). A prima facie case is one in which the evidence is sufficient to establish a given fact and which if not contradicted will remain sufficient. Id. To establish a prima facie case, the taxpayer must offer probative evidence concerning the alleged error. King Indus. v. State Bd. of Tax Comm’rs, 699 N.E.2d 338, 343 (Ind. Tax Ct. 1998); Whitley Prods., Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1119 (Ind. Tax Ct. 1998), review denied. Once the taxpayer establishes a prima facie case, the burden shifts to the State Board to rebut the taxpayer’s evidence and justify its decision with substantial evidence. Clark, 694 N.E.2d at 1233.
Discussion
I. Pricing Schedule

    The first issue is whether the State Board properly affirmed the pricing of Harvest’s building by utilizing the GCI schedule. Harvest argues that its building should have been assessed using the GCK schedule. The State Board argues that Harvest did not present probative evidence that its building should be priced using the GCK Schedule.
    The GCK pricing schedule is used for “valuing preengineered and predesigned pole buildings which are used for commercial and industrial purposes.” Quality Farm and Fleet, Inc. v. State Bd. of Tax Comm’rs, 747 N.E.2d 88, 92-93, (Ind. Tax Ct. 2001) (quoting Ind. Admin. Code tit. 50, r. 2.2-10-6.1(a)(1)(D) (1996)). Moreover, the GCK schedule “value[s] the base building on a perimeter area ratio basis and adjust[s] the value based on the various individual components of the building.” Id. (quoting 50 IAC 2.2-10-6.1(a)(1)(D)). The GCK base rates are located on Schedule A.4 of Ind. Admin. Code tit. 50, r. 2.2-11-6 (1996).
    The Court first looks to whether Harvest presented a prima facie case that its building should be priced using the GCK schedule. The only evidence presented by Harvest is the testimony of its tax representative, Drew Miller, and black-and-white copies of three photographs of the building at issue. (Record of Administrative Proceedings at 21, 49, 51.)
At the hearing Miller testified:
I don’t have a whole lot. Um, basically first of all we believe that the subject should be priced up at the GCK schedule you look at the components out of the GCK pricing, all the components in there can be found right out of the GCK pricing with the columns and the insulation, metal walls. . . . This building clearly is better described by the GCK model. It’s a building that was manufactured by strand [sic]. 26 gauge metal. It meets all the components that are found in the GCK schedule.

(Record of Administrative Proceedings at 51.) The only specific evidence in Miller’s testimony is that the building is made of 26 gauge metal See footnote and was manufactured by Stran. The regulations seem to indicate that 20 to 24 gauge steel is considered heavy gauge and, where present, must be accounted for by adding to the base rate. See Ind. Admin. Code tit. 50, r. 2.2-11-6 (Schedule A.4) n.2 (1996). Therefore, it appears that Harvest is arguing that 26 gauge steel is standard for the GCK model, and thus, a characteristic of a building eligible for GCK pricing. With regard to the manufacturer, in Harvest’s brief, it cites to Morris v. State Bd. of Tax Comm’rs, 712 N.E. 2d 1120, 1122 (Ind. Tax Ct. 1999) to support its assertion that its building was manufactured by Stran, and therefore, it should be priced as a GCK because “Stran is one of the leading manufacturers of pre-engineered buildings.” (Pet’r Reply Br. at 2.) In Morris, the taxpayer submitted, among other evidence, an affidavit from a builder stating that the taxpayer’s building was in fact a “STRAN pre-engineered steel framed building.” Morris, 712 N.E.2d at 1122. Harvest presented no such affidavit in this case.
Miller did not testify as to any other specific components or characteristics of the building. The remainder of Miller’s testimony consists of nothing more than generalized conclusory statements that the building should be priced using the GCK schedule because whatever the building’s components are, they can be found in the GCK schedule. Conclusory statements are not probative evidence. Quality Farm and Fleet, 747 N.E.2d at 93. In addition, the black-and-white copies of photographs that were submitted by Harvest are not labeled and no reference is made to specific photographs or portions thereof in Miller’s testimony that would identify characteristics of the building that would qualify it for pricing according to the GCK schedule. However, when discussing what he believed to be the proper depreciation schedule, Miller generally stated that “[y]ou can see from the photographs that it is [a] metal-skinned, pre-engineered, steel framed building.” (Record of Administrative Proceedings at 51.) This Court has rejected past attempts by taxpayers to put forth evidence such as photographs without specific explanations and does so again in this case. Miller Structures, Inc. v. Indiana State Bd. of Tax Comm’rs, 748 N.E.2d 943, 954 n.7 (Ind. Tax Ct. 2001); Fleet Supply, Inc. v. State Bd. of Tax Comm’rs, 747 N.E.2d 645, 650 (Ind. Tax Ct. 2001), review denied; Heart City Chrysler v. State Bd. of Tax Comm’rs, 714 N.E.2d 329, 333 (Ind. Tax Ct. 1999).
The above evidence is not sufficient to establish a prima facie case that the building should have been priced using the GCK Schedule rather than the GCI Schedule. Consequently, this Court AFFIRMS the State Board’s final determination that assessed the subject building using the GCI Schedule.

II. Grade

The next issue is whether the State Board properly affirmed the assessment of Harvest’s building as a D grade. Harvest argues that if its building is not priced using the GCK pricing model, the D grade assigned to the building should be lowered to a D-2 because its structure is a “light pre-engineered” building. (Pet’r Br. at 5, Pet’r Reply Br. at 3.) The State Board argues that Harvest did not present probative evidence that its grade should be lowered.
“[G]rades represent multipliers that are applied to the base reproduction cost of an improvement.” Kemp v. State Bd. of Tax Comm’rs, 726 N.E.2d 395, 400 (Ind. Tax Ct. 2000); see also Ind. Admin. Code tit. 50, r. 2.2-10-3 (1996). Under Indiana’s true tax value system, grade may be utilized to account for deviations from the C grade, which is the norm. See footnote 50 IAC 2.2-10-3. The most significant variables in establishing grade are the quality and design of the building. Id. Lowering Harvest’s building to a D-2 grade would lower the building’s base value by twenty percent. See Ind. Admin. Code tit. 50, r. 2.2-11-6 (1996) (Schedule F). When contesting the grade assigned to an improvement, a taxpayer must offer probative evidence concerning the alleged assessment error. Kemp, 726 N.E.2d at 400; Quality Farm and Fleet, 747 N.E.2d at 94.
The Court first looks to whether Harvest presented a prima facie case that the grade assigned to its building should be lowered to a D-2. The evidence presented by Harvest included a copy of a page from the Marshall Valuation Service and the testimony of Miller. At the hearing Miller testified:
we do feel that the grade is excessive, because it does have substantially, inferior components than compared to the concrete block model that it’s priced from. The, what I did to estimate that difference or estimate the grade is to look at those design and cost differences using Marshall Valuation Services comparing a concrete block structure to a steel structure. And making that comparison, we’ve got $28.71 for the concrete per square foot for the concrete block structure versus $17.86 for the steel structure. In other words the steel structure cost[s] about 62% of the concrete block structure. So we would estimate a D-2 grade would be appropriate.

(Record of Administrative Proceedings at 51.) Miller’s calculation utilizing the Marshall Valuation Service presumes that Harvest’s building is a “[l]ight, pre-engineered, utility-type building.” See footnote (Record of Administrative Proceedings at 48.) However, as previously decided in section one of this opinion, Harvest has not demonstrated that its building is a “light pre-engineered” structure. The fact that the building has some steel construction does not mean that it is “light pre-engineered.” Therefore, the Court does not reach an evaluation of whether Harvest’s calculation using the Marshal Valuation Service table would show that a D-2 grade would be more appropriate. Harvest’s contentions are conclusory because they do not specifically describe why the improvements better resemble the description of D-2 grade improvements as set forth in Ind. Admin. Code tit. 50, r. 2.2-10-3. “A taxpayer’s conclusory statements do not constitute probative evidence concerning the grading of the subject improvement.” Sterling Management-Orchard Ridge Apartments v. State Bd. of Tax Comm’rs, 730 N.E.2d 828, 838 (Ind. Tax Ct. 2000). Harvest has not made a prima facie case that the grade of the improvements should be lowered to a D-2. Consequently, the Court AFFIRMS the State Board’s final determination that the improvement in question is entitled to a D grade.
III. Depreciation

    The final issue is whether the State Board properly affirmed the use of the forty-year life expectancy table for the physical depreciation of Harvest’s building. According to Harvest, the State Board should have applied the thirty-year life expectancy table instead of the forty-year life expectancy table. The State Board contends that Harvest did not submit probative evidence that its building should be depreciated using the thirty-year life expectancy table.
The regulations provide that “[p]hysical depreciation is determined by the combination of age and condition. Each type of building has a life expectancy that is determined by the building components and the use of the building.” Ind. Admin. Code tit. 50, r. 2.2-10-7(c) (1996). “To apply physical depreciation, the assessor must select the correct life expectancy table and identify the condition and age of the building.” 50 IAC 2.2-10-7(d). The regulations provide four different life expectancy tables for use in determining the physical depreciation of commercial and industrial buildings. 50 IAC 2.2-10-7(c). These tables are located in the regulations at Ind. Admin. Code tit. 50, r. 2.2-11-7 (1996). Among other things, the thirty-year life expectancy table is used to assess “light pre-engineered buildings” and the forty-year life expectancy table is used to assess “all fire-resistant buildings not listed elsewhere.” Ind. Admin. Code tit. 50, r. 2.2-11-7 (1996).
The Court now looks to whether Harvest presented probative evidence that its building was a “light pre-engineered building.” Again, the only evidence submitted by Harvest is Miller’s testimony and the copies of the black-and-white photographs of the building. At the hearing Miller testified:
You can see from the photographs that it is [a] metal-skinned, pre-engineered, steel framed building. Therefore it would [be] required also to be depreciated using the 30 year life-table.

(Record of Administrative Proceedings at 51.) This does not qualify as probative evidence sufficient to establish a prima facie case that Harvest’s building is “light pre-engineered,” and thus, that the thirty-year life expectancy table should be used to depreciate Harvest’s building. Miller’s testimony consists of nothing more than conclusory statements, which are not probative. See Fleet Supply, 747 N.E.2d at 649-50. Moreover the unclear, black-and-white photographs lack probative value because they are not labeled and Miller has not specifically pointed out any of the components that he mentions in any particular photograph. See Id.; Heart City Chrysler, 714 N.E.2d at 333. Harvest has not made a prima facie case as to its position that the thirty-year life expectancy table should have been applied to determine its building’s physical depreciation adjustment. Therefore, Court AFFIRMS the State Board’s final determination that the building should be depreciated using the forty-year life table.
CONCLUSION

    For the foregoing reasons, the Court hereby AFFIRMS the State Board’s final determination in all respects.


Footnote: Harvest also raises the issue of whether the State Board’s assessment regulations violate both the United States Constitution and the Indiana Constitution. The fact that a subject improvement was assessed under an unconstitutional regulation does not mean that the assessment will be invalidated on that basis. Champlin Realty Co. v. State Bd. of Tax Comm’rs, 745 N.E.2d 928, 930 n.1 (Ind. Tax Ct. 2001), review denied; Whitley Prods., Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1121 (Ind. Tax Ct. 1998), review denied; see also White Swan Realty v. State Bd. of Tax Comm’rs, 712 N.E.2d 555, 559 (Ind. Tax Ct. 1999), review denied; Phelps Dodge v. State Bd. of Tax Comm’rs, 705 N.E.2d 1099, 1104 (Ind. Tax Ct. 1999), review denied. “Real property must still be assessed, and, until the new regulations are in place, must be assessed under the present system.” Whitley Prods., 704 N.E.2d at 1121; see also Town of St. John v. State Bd. of Tax Comm’rs, 729 N.E.2d 242, 246, 250-51 (Ind. Tax Ct. 2000) (ordering that all real property in Indiana shall be reassessed under new, constitutional rules as of March 1, 2002, and stating that, until then, real property tax assessments shall be made in accordance with the current system). Therefore, the Court will not address the constitutionality issue.


Footnote: This property is parcel number 004-018-003.E.


Footnote: The Court notes that the regulations refer to “guage” in two different places in Schedule A.4 rather than “gauge.” Ind. Admin. Code tit. 50, 2.2-11-6 (Schedule A.4) (1996). The Court assumes that these are typographical errors.


Footnote: When an improvement deviates from the model and associated cost schedule used to assess the improvement, the deviation frequently affects the reproduction cost of the improvement. Whitley Products, 704 N.E.2d at 1117. The preferred method of accounting for this deviation is by using an objective approach, whereby separate schedules that show the costs of certain components and features present in the model are used to adjust the base reproduction cost of the improvement. Id.; Quality Farm and Fleet, Inc. v. State Bd. of Tax Comm’rs, 747 N.E.2d 88, 94 (Ind. Tax Ct. 2001). The other way to account for the deviation is to adjust the grade of the improvement. Whitley Products, 704 N.E.2d at 1117. The grade adjustment is not preferred because it requires the assessor to exercise his subjective judgment. Id. However, it is sometimes necessary because the component (base rate adjustment) schedules are not comprehensive. Id.

Footnote: The Marshall Valuation Service table submitted by Harvest describes this $17.86 per square foot building as being a “[l]ight, pre-engineered, utility-type building.” (Record of Administrative Proceedings at 48.)