IN THE INDIANA TAX COURT _____________________________________________________________________

WARREN W. SPURLING and                                                    )
SSS DEVELOPMENT, LLC,                                                          )
    Petitioners,                                                               )
    v.                                                                         )   Cause No. 82T10-0205-TA-44
VANDERBURGH COUNTY PROPERTY                                                    )
TAX ASSESSMENT BOARD OF APPEALS,                                               )
    Respondent.            )    


April 30, 2004


    Come now the Petitioners, Warren W. Spurling and SSS Development, LLC, and file a Petition for Rehearing pursuant to Indiana Appellate Rules 54 and 63. In their Petition, the Petitioners challenge this Court’s holding in Spurling v. Vanderburgh County Property Tax Assessment Board of Appeals, No. 82T10-0205-TA-44, slip opinion (Ind. Tax Ct. November 13, 2003). Having reviewed the Petition, the Court now GRANTS the Petition and, in lieu of scheduling a rehearing, addresses the merits of Petitioners’ Petition in this order.

    The Petitioners own and operate more than 10 commercial properties in Vanderburgh County, Indiana. Each of these properties contains numerous improvements that are used as offices and retail centers. For the 1999 tax year, the Petitioners’ improvements were assessed pursuant to the General Commercial Mercantile (GCM) office model and were each assigned a grade of “C.”     
    The Petitioners challenged the assessment of the improvements, first with the local assessing authorities and then with the State Board of Tax Commissioners (State Board). Throughout the appeal process, the Petitioners argued, among other things, that the improvements were erroneously assessed because they were assigned a base price of approximately $36.00 per square foot, despite evidence indicating that they were constructed at a cost of approximately $24.00 per square foot. See Spurling, slip op. at 6. Consequently, the Petitioners requested that the GCM retail model, which carried a base price of approximately $23.00 per square foot, be used to assess its improvements. See id.
    Neither the local assessing officials, nor the Indiana Board of Tax Review (Indiana Board) See footnote , awarded the Petitioners any relief. Consequently, the Petitioners filed an original tax appeal with this Court on May 1, 2002. After hearing the parties’ oral arguments, this Court issued an opinion in which it affirmed the Indiana Board’s final determination. Spurling, slip. op. at 9.
    On December 11, 2003, the Petitioners filed a Petition for Rehearing. The Respondent, the Vanderburgh County Property Tax Assessment Board of Appeals (PTABOA), did not file any response thereto. But see Ind. Appellate Rule 54(C). Additional facts will be supplied as necessary.

    In their Petition, the Petitioners argue that the Court’s decision in Spurling was erroneous because it did not address the argument that the Indiana Board, in making its final determination, failed to follow Indiana Administrative Code title 50, rule 17-7-3. That regulation provides, in relevant part:
Evidence submitted to demonstrate that an individual assessment is not consistent with the market value of the particular assessed property [is] deemed immaterial.


[However, e]vidence of actual construction costs or replacement costs may be submitted to demonstrate that the tax system was not properly applied to the individual assessment under appeal.

Ind. Admin. Code tit. 50, r. 17-7-3(b) & (d) (2001) (eff. 3-1-00). More specifically, the Petitioners explain that at the hearing held before the Indiana Board on September 5, 2000, they submitted evidence as to the actual construction costs of their improvements pursuant to 50 IAC 17-7-3(d). The Petitioners assert that, in turn, the Indiana Board failed to meaningfully deal with that evidence. The Petitioners are correct.
    Upon reviewing the administrative record again, the Court notes that, in its final determination, the Indiana Board essentially made one finding with respect to the Petitioners’ actual cost evidence. Indeed:
The Petitioner[s] also presented cost information. The Petitioner[s] state[] the cost to construct the subject buildings was $24.00 per square foot. With regard to the cost of constructing, the Tax Court stated: “Relative costs of construction materials are irrelevant in deciding whether the Major Buildings better resemble the characteristics attributed to the Mill Manufacturing or Heavy Manufacturing models.” Inland Steel, 739 N.E.2d at 226. Accordingly, the cost of constructing the subject buildings in this appeal are deemed irrelevant in deciding whether the General Office or General Retail model is more appropriate.

(Cert. Admin. R. at 372.) Thus, the Indiana Board determined that the Petitioners’ construction cost evidence was irrelevant solely in light of this Court’s decision in Inland Steel Company v. State Board of Tax Commissioners, 739 N.E.2d 201 (Ind. Tax Ct. 2000), review denied.
    Inland Steel presented its case at the administrative level in a series of hearings, the earliest in October, 1995, and the latest in November, 1998. See Inland Steel Co., 739 N.E.2d at 209. The State Board issued its final determination on the matter on February 16, 1998. Id. Thus, Inland presented its case, and the State Board decided it, before 50 IAC 17-7-3 was even promulgated. At the time of the Petitioners’ administrative hearing before the Indiana Board (September 5, 2000), however, 50 IAC17-7-3(d) was in effect. Consequently, the Indiana Board erred in its failure to address the Petitioners’ cost data in light of that regulation.


    Upon review and for the foregoing reasons, this Court GRANTS the Petitioners’ Petition. See footnote The Court REMANDS the case to the Indiana Board with instructions to consider the Petitioners’ cost evidence in light of 50 IAC 17-7-3.

SO ORDERED this 30 th day of April, 2004.
     Thomas G. Fisher, Judge
Indiana Tax Court

Andrew R. Rutz
Mark S. Samila
G. Michael Schopmeyer
Fifth – Main Financial Plaza
P.O. Box 3646
Evansville, IN 47735-3646

Steve Carter
Attorney General of Indiana
By: Linda I. Villegas
Deputy Attorney General
Indiana Government Center South, Fifth Floor
402 West Washington Street
Indianapolis, IN 46204-2770
Indiana Board of Tax Review
100 N. Senate Avenue
Room N-1058(A)
Indianapolis, IN 46204

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 Ann. §§ 6-1.5-1-3; 6-1.5-4-1 (West Supp. 2003)(eff. 1-1-02); 2001 Ind. Acts 198 § 95. Consequently, when the final determination was issued on Spurling’s appeal in March of 2002, the Indiana Board issued it.

Footnote: In Spurling, this Court addressed three issues: 1) burden of proof; 2) proper application of the use models; and 3) proper grade assignment. Spurling v. Vanderburgh County Property Tax Assessment Board of Appeals, No. 82T10-0205-TA-44, slip op. at 4-9 (Ind. Tax Ct. November 13, 2003). The Petitioners’ Petition for Rehearing is granted, however, with respect to the disposition of issue two only. The Indiana Board’s final determination with respect to issues one and three remain AFFIRMED.