LANDMAN & BEATTY     Indianapolis, IN
Indianapolis, IN        
    Indianapolis, IN

    Petitioner,                  )
    v.                           )

            ) Cause No. 49T10-0005-TA-60
GOVERNMENT FINANCE, See footnote         )
    Respondent.            )    


August 30, 2004

Piston Service Company (Piston) appeals the final determination of the State Board of Tax Commissioners (State Board) valuing its real property for the 1995 tax year. The sole issue for the Court to decide is whether the State Board erred in applying a grade of “C+1” to Piston’s improvement.

    Piston owns a one-story building on Madison Avenue in Indianapolis, Indiana. For the 1995 assessment year, the Perry Township Assessor (Assessor) assigned Piston’s improvement a grade factor of “C+1.”
Believing the grade factor to be too high, Piston petitioned the Marion County Board of Review (BOR) for a lower assessment. More specifically, Piston argued that the grade factor assigned to its improvement should be reduced to a “C-2.” After conducting a hearing on the matter, the BOR upheld the assessment.
Piston subsequently appealed to the State Board. The State Board held a hearing on October 28, 1998. On March 29, 2000, the State Board issued its final determination affirming the assessment.
Piston filed an original tax appeal on May 4, 2000. The Court heard the parties’ oral arguments on January 30, 2002. Additional facts will be supplied as needed.
Standard of Review

This Court gives great deference to final determinations of the State Board when it acts within the scope of its authority. Hamstra Builders, Inc. v. Dep’t of Local Gov’t Fin., 783 N.E.2d 387, 390 (Ind. Tax Ct. 2003). Thus, the Court will reverse a final determination of the State Board when it is:
arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
contrary to constitutional right, power, privilege, or immunity;
in excess of or short of statutory jurisdiction, authority, or limitations;
without observance of procedure required by law; or
unsupported by substantial or reliable evidence.
Ind. Code Ann. § 33-26-6-4 (West Supp. 2004).
    When appealing to this Court from a State Board final determination, the taxpayer bears the burden of showing that the final determination is invalid. Hamstra Builders, Inc., 783 N.E.2d at 390. To do so, the taxpayer must present a prima facie case, i.e., a case in which the evidence is “sufficient to establish a given fact and which if not contradicted will remain sufficient.” Miller Structures, Inc. v. State Bd. of Tax Comm’rs, 748 N.E.2d 943, 947 (Ind. Tax Ct. 2001) (citation omitted). To establish a prima facie case, the taxpayer must offer probative evidence concerning the alleged assessment error. Id. Only after the taxpayer has met its burden is the State Board’s duty to support its final determination with substantial evidence triggered. Whitley Prods., Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1119-20 (Ind. Tax Ct. 1998), review denied.

Piston claims that the State Board erroneously graded its property. Specifically, it argues that because its improvement deviates from the model used to assess it, the current grade of “C+1” is excessive and therefore the grade should be reduced to “C-2.”
Under Indiana’s true tax value system, assessors use cost schedules to determine the base reproduction cost of a particular improvement. See id. at 1116. See also Ind. Admin. Code tit. 50, r. 2.2-11-6 (1996). To help identify and define various classes of improvements, the State Board has categorized them into several models. Ind. Admin. Code tit. 50, r. 2.2-11-1 to -3 (1996). A model is a “conceptual tool used to replicate reproduction cost of a given structure using typical construction materials. The model assumes that there are certain elements of construction for a given use type.” Ind. Admin. Code tit. 50, r. 2.2-10-6.1(a)(1) (1996).
In turn, improvements are assigned a grade factor based on their design and the quality of their materials and workmanship. See Ind. Admin. Code tit. 50, r 2.2-10-3 (1996). The grades, which range from “A” to “E,” represent multipliers that are applied to the base rate of an improvement. See footnote See id.; Miller Structures Inc., 748 N.E.2d at 952. The “C” grade, which is the norm, is assigned when a building is “moderately attractive and constructed with average quality materials and workmanship.” 50 IAC 2.2-10-3(a)(3); see also 50 IAC 2.2-10-3(b). An improvement with a “C” grade has “an average quality interior finish with adequate built-ins, standard quality fixtures, and mechanical features.” 50 IAC 2.2-10-3(a)(3). An improvement with a “D” grade, on the other hand, is “constructed with economy materials and fair workmanship. [It is] devoid of architectural treatment and ha[s] a substandard quality interior finish with minimal built-in features, substandard quality electrical and plumbing fixtures, and a substandard quality heating system.” 50 IAC 2.2-10-3(a)(4).
When an improvement deviates from the cost schedules/models used to assess it, the State Board’s regulations provide for adjustments to be made to the base price to account for the deviations. See 50 IAC 2.2-10-6.1(c). The preferred method to account for the deviations is to use separate schedules that show the cost of certain components and features present in the model, as it allows the base reproduction cost of an improvement to be adjusted objectively. See Ind. Admin. Code tit. 50, r. 2.2-10-6.1(b)-(e) (1996). See also Whitley Prods., Inc., 704 N.E.2d at 1117. The other method to account for such deviations is the application of grade adjustment. In other words, a grade factor can either be lowered or raised to reflect an improvement’s deviations from the model used to assess it. Nevertheless, this method should be avoided, if at all possible, as it requires the application of subjective judgment. See Whitley Prods., Inc., 704 N.E.2d at 1117.
At the administrative hearing, Piston presented the testimony of its property tax consultant, Ms. Sheila Murray (Murray). Murray testified that while the cost schedules/models used to assess the improvement list exterior wall construction of reinforced concrete block or face brick with concrete block backing (i.e., presumably the “C” grade norm), Piston’s improvement has a substantial amount of metal siding. (See Stip. R. at 58.) To account for this deviation, Piston seeks a grade adjustment. Indeed, as Murray stated at the hearing, “[w]e have a substantial amount of metal siding, so therefore we’re below a C grade in that model.” (Stip. R. at 58.) “[T]hat’s why we’re asking for a C-2, somewhere between a C and [a] D[.]” (Stip. R. at 59.) (See also Pet’r Br. at 3.) Murray’s testimony, however, amounts to nothing more than conclusory statements that the grade on Piston’s improvement should be a “C-2.”
In order for a taxpayer to meet its burden of establishing a prima facie case on grade, it needs to do more than merely offer conclusory statements. See Whitley Prods., Inc., 704 N.E.2d at 1119. Instead, a taxpayer should offer “specific evidence tied to the descriptions of the various grade classifications.” Id. at 1119 n.12. Consequently, Piston needed to provide specific evidence linking the presence of metal walls to a grade of “C-2.” No such link was made. In fact, all Piston relies on is its assertion that “metal walls are not the equivalent of the concrete block.” (Oral Argument Tr. at 9). Piston has simply not met its burden in this case. See footnote

For the reasons stated above, the Court AFFIRMS the final determination of the State Board.

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), see Indiana Code Annotated § 6-1.1-30-1.1 (West Supp. 2003)(eff. 1-1-02)(amended 2004); 2001 Ind. Acts 198 § 66, and the Indiana Board of Tax Review (Indiana Board). Ind. Code Ann. § 6-1.5-1-3 (West Supp. 2003)(eff. 1-1-02)(amended 2004); 2001 Ind. Acts 198 § 95. Pursuant to Indiana Code Annotated § 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 Ann. § 6-1.5-5-8 (West Supp. 2003)(eff. 1-1-02)(amended 2004); 2001 Ind. Acts 198 § 95. Nevertheless, the law in effect prior to January 1, 2002 applies to these appeals. A.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 this opinion.

Footnote: The “C” grade is assigned a multiplier of 100% (i.e., 100% of the reproduction cost as determined under the State Board’s regulations). See Ind. Admin. Code tit. 50, r. 2.2-10-3(b)(3) (1996); King Indus. Corp. v. State Bd. of Tax Comm’rs, 699 N.E.2d 338, 340 n.7 (Ind. Tax Ct. 1998). The remaining multipliers are 160% for an “A” grade, 120% for a “B” grade, 80% for a “D” grade, and 40% for an “E” grade. 50 IAC 2.2-10-3(b). In turn, intermediate grade levels may be assigned to a building to indicate that its grade falls between the major grade classifications. 50 IAC 2.2-10-3(c). A plus or minus two (+/- 2) indicates that the grade falls halfway between the assigned grade classification and the grade immediately above or below it. 50 IAC 2.2-10-3(c)(1). A plus or minus one classification (+/- 1) indicates that the grade falls “slightly above or below the assigned grade classification, or at a point approximately twenty-five percent (25%) of the interval between the assigned grade classification and the grade immediately above or below it.” 50 IAC 2.2-10-3(c)(2).

Footnote: The Court notes that Piston also entered into evidence at the administrative hearing the following items: (a) color photographs of the subject improvement; (b) the improvement’s property record card; (c) photocopies from the State Board’s assessment manual of the descriptions of the models used to assess the improvement; and (d) the property record for an allegedly comparable improvement that was assigned a grade factor of “C.” (See Stip. R. at 35-48.) Because the administrative record reflects that Murray merely referenced these items in her presentation, however, they do not qualify as probative evidence for purposes of Piston’s grade issue. See Heart City Chrysler v. State Bd. of Tax Comm’rs, 714 N.E.2d 329, 333 (Ind. Tax Ct. 1999) (stating that references to photographs or State Board regulations, without further explanation, do not qualify as probative evidence for purposes of grading issues); Blackbird Farms Apartments, LP v. Dep’t of Local Gov’t Fin., 765 N.E.2d 711, 715 (Ind. Tax Ct. 2002) (stating that when a taxpayer alleges that an allegedly comparable property has been assessed differently, the taxpayer must provide specific reasons why the properties are comparable in order to qualify as probative evidence).