Portland, Indiana      Attorney General Of Indiana

    Deputy Attorney General
     Indianapolis, IN

INDIANA TAX COURT ______________________________________________________________________________


                                                                           v.                                                                                  )    

Cause No. 49T10-9808-SC-00095
    Respondent.     )    


September 17, 1999
Not for Publication

Michael Schwieterman (Schwieterman) appeals from the final determination of the State Board of Tax Commissioners (State Board), fixing the assessed value of his real property as of the March 1, 1995 assessment date. See footnote Schwieterman raises one issue for the Court's discussion: Did the State Board err when it classified his building as a nonconfinement facility, rather than a poultry confinement facility for depreciation purposes? This Court finds that the State Board did not, and, for the reasons explained below, affirms the State Board's final determination.
The issue here stems from the State Board's assessment of Schwieterman's property, consisting of a turkey barn located in Jay County, Indiana, as of the March 1, 1995 assessment date. The building's main function is the preparation of live turkeys for eventual human consumption. Dissatisfied with the Jay County assessment, Schwieterman filed two Form 130 Petitions for Reassessment with the Jay County Board of Review (BOR), claiming that his turkey barn experienced a more rapid rate of depreciation, which would allow him to depreciate his turkey barn based on a 20-year life expectancy table for poultry confinement facilities, rather than a 30-year table used for nonconfinement facilities. After the BOR returned an unfavorable decision, Schwieterman filed two Form 131 Petitions with the State Board, requesting review of the BOR's findings. On April 22, 1998, the State Board issued its initial determination, in which it stated that Schwieterman's turkey barn qualified for depreciation based on the 20-year life expectancy table.
On May 6, 1998, the State Board received written correspondence from the Jay County Commissioners, in accordance with Ind. Code Ann. § 6.1.1-15-5 (West 1989), requesting rehearing on the ground that Schwieterman's turkey barn was erroneously depreciated based on the 20-year life expectancy table. See footnote After further review, the State Board reversed itself, holding that the barn in question more closely resembled a nonconfinement facility and should be depreciated using the 30-year life expectancy table. This decision resulted in a higher tax assessment for Schwieterman.
On August 1, 1998, Schwieterman filed this original tax appeal seeking judicial review of the State Board's decision to use the 30-year life expectancy table for his turkey barn. A trial was held on this issue on November 25, 1998, and both parties presented oral argument on April 23, 1999. Additional facts will be supplied as necessary.
Standard of Review

The State Board is afforded great deference when it acts within the scope of its authority. See King Indus. Corp. v. State Bd. of Tax Comm'rs, 699 N.E.2d 338, 339 (Ind.Tax Ct. 1998). Accordingly, the Court will reverse a final determination made by the State Board only when that determination is unsupported by substantial evidence, is arbitrary or capricious, constitutes an abuse of discretion, or exceeds statutory authority. See id. In addition, the party challenging the propriety of a State Board final determination bears the burden of demonstrating the invalidity of that determination. See Clark v. State Bd. of Tax Comm'rs, 694 N.E.2d 1230, 1236. (Ind. Tax Ct. 1998); see also Zakutansky v. State Bd. of Tax Comm'rs, 691 N.E.2d 1365, 1367. (Ind. Tax Ct. 1998); accord Vonnegut v. State Bd. of Tax Comm'rs, 672 N.E.2d 87, 89 (Ind. Tax Ct. 1996), review denied. An important inquiry in this case is not whether the taxpayer demonstrated what the assessment should be but whether the State Board acted properly in arriving at its final determination. See Clark, 694 N.E.2d at 1236; see also Scheid v. State Bd. of Tax Comm'rs, 560 N.E.2d 1283, 1285 (Ind. Tax Ct. 1990). In order to successfully challenge a final determination, the taxpayer will necessarily have to offer a competing view (along with evidence to support that view) of what the assessment should be. See Clark, 694 N.E.2d at 1236.
In order to prevail, Schwieterman must present a prima facie case to support his arguments. See Loveless Const. Co. v. State Bd. of Tax Comm'rs, 695 N.E.2d 1045, 1051. (Ind. Tax Ct. 1998) review denied. If this is done, the burden of production shifts to the State Board to rebut Schwieterman's evidence. See Clark, 694 N.E.2d at 1236; see also Western Select Properties L.P. v. State Bd. of Tax Comm'rs, 639 N.E.2d 1068, 1072. (Ind. Tax Ct. 1994). The term prima facie case is a convenient shorthand for describing situations where the taxpayer has chosen or is required to offer evidence of a competing view of an assessment to demonstrate the invalidity of a State Board final determination. See Clark, 694 N.E.2d at 1236. Once the taxpayer has made the proper evidentiary showing, it is incumbent upon the State Board to offer some explanation in order to rebut the taxpayer's evidence. See Clark, 694 N.E.2d at 1236; see also Western Select Properties, 639 N.E.2d at 1075. When a taxpayer offers probative evidence, that evidence must be dealt with in some meaningful manner. See Lovelsss, 695 N.E.2d at 1051. The prima facie case formulation allows this Court to determine whether the State Board dealt with the taxpayer's evidence. See Clark, 694 N.E.2d at 1236.
I. The State Board's classification of the subject property.
The issue in this case is whether Schwieterman's barn is a confinement or nonconfinement facility, for depreciation purposes. However, before completing a full analysis of this case, it is necessary to give a short description about the concepts of physical depreciation and models. Physical depreciation is determined by the combination of age, condition, and neighborhood desirability. See Ind. Admin. Code tit. 50, r. 2.2-7-9 (1996); see also Phelps Dodge v. State Bd. of Tax Comm'rs, 705 N.E.2d 1099, 1103 (Ind. Tax Ct. 1999), review denied. Depreciation is applied to adjust the reproduction cost of a structure. See Ind. Admin. Code tit. 50, r. 2.2-7-9 (1996). It is evidenced by wear and tear, decay or structural defects. See Ind. Admin. Code tit. 50, r. 2.2-9-4. For agricultural improvements, physical depreciation is a combination of age and condition. See id. Based on these factors, either a 20, 30 or 40-year life expectancy table is used. Poultry confinement facilities are listed under a 20-year life expectancy table, while barns and nonconfinement facilities are classified under a 30-year table. See id. at tit. 50, r. 2.2-9-6, Schedule G.2. The State Board has the discretion of selecting a depreciation table that most closely fits the physical characteristics of the subject improvement. See CGC Enters. v. State Bd. of Tax Comm'rs, No. 49T10-9610-TA-137, slip op. at 7 (Ind. Tax Ct. 1999) (quoting Bender v. State Bd. of Tax Comm'rs, 676 N.E.2d 1113, 1116 (Ind. Tax Ct. 1997)) (observing that State Board has the discretion of choosing a model that most closely resembles the subject improvement).
A model is a conceptual tool used to replicate the reproduction cost of a given structure using typical construction materials. See Ind. Admin. Code, tit. 50, r. 2.2-9-1 (1996); see also Herb v. State Bd. of Tax Comm'rs, 656 N.E.2d 890, 893 (Ind. Tax Ct. 1995). The model assumes that there are certain elements of construction, which can be defined as specifications. See Herb, 656 N.E.2d at 893. The regulations contain photographs, which assist in determining which model to use. See footnote Here, the State Board ultimately decided that, based on the model, Schwieterman's barn more closely resembled a pole barn, which is a nonconfinement facility, than a poultry confinement facility.
Schwieterman contends that the State Board failed to offer sufficient evidentiary support for its findings. According to Schwieterman, a poultry confinement facility contains heating, cooling and feeding facilities, as well as small entryways, which cannot accommodate large machinery. (Trial Tr. at 79). Nonconfinement facilities and pole barns, on the other hand, are general-purpose buildings. (Trial Tr. at 79). Since they are used mostly for storage, their construction is not as solid as poultry confinement facilities. (Trial Tr. at 79). They have large openings and high ceilings, both of which are more accommodating of large machinery. (Trial Tr. at 79).
In support of its arguments, the State Board offered the testimony of one of its hearing officers, Virginia Whipple. An employee of Appraisal Research Corporation, which was contracted to perform the assessments for Jay County, she presented compelling evidence. Whipple testified that poultry confinement facilities normally contained cages hung from the ceiling. In addition, she testified that these structures are constructed of heavier materials, making them more solid. In comparison, Whipple described turkey barns as generally being of weaker construction. They often have dirt floors, are absent of any cages and look more like pole buildings than anything else. Schwieterman's building contained no cages and consisted of a dirt floor. Based on this evidence, Whipple concluded that Schwieterman's barn was a nonconfinement facility. Since there is no mention in either the case law, regulations, or any other source defining a confinement facility differently, for purposes of this case, the Court will adopt Ms. Whipple's determination.
In further support of its arguments, the State Board offered exhibit 15, which is a pricing example for various agricultural improvements See footnote . In the example, a turkey barn is listed as having a depreciation of 30, rather than 20 years. Since the State Board has the authority to interpret its own regulations, its interpretation should be given great weight unless it would be inconsistent with the regulation itself. See Indiana Dep't. of State Revenue v. Bulkmatic Transp. Co., 648 N.E.2d 1156, 1160 (Ind. 1995); see also State Bd. of Tax Comm'rs v. Two Market Square Associates. Ltd. Partnership, 679 N.E.2d 882, 886 (Ind. 1997).
Another regulation at issue here is Ind. Admin. Code tit. 50, r.2.2-9-7, which lists the 20, 30 and 40-year depreciation charts. Confinement facilities are listed under the 20-year chart, while nonconfinement facilities and barns in general are listed under a 30-year chart. Since the meaning of the regulation is in question here, the Bulkmatic and Two Market Square decisions control. Those cases direct this Court to defer to the judgment of the State Board, unless its judgment would be against the meaning of the regulation. See Bulkmatic, 648 N.E.2d at 1160; see also Two Market Square, 679 N.E.2d at 886. The Court holds that the State Board's determination in this case was not inconsistent with the regulation, and, as a result, its final determination will stand.
Finally, at trial, Schwieterman attempted to introduce evidence that similar barns around his were given lower assessments. However, since he failed to raise this issue before the State Board at his initial hearing, he cannot raise it in this Court for the first time. See State Bd. of Tax Comm'rs v. Gatling Gun Club, 420 N.E.2d 1324, 1328. See footnote (Ind. Ct. App. 1981). Schwieterman does not walk away in total defeat, however. The 1995 regulations were modified to list turkey barns under a separate schedule, which the State Board used in its assessment of Schwieterman's property. See Ind. Admin. Code tit. 50, r.2.2-9-6, Schedule G.2 (1996). Based on this schedule, Schwieterman's turkey barns were given a lower base rate. See footnote
For the foregoing reasons, this Court AFFIRMS the State Board's final determination in this case.


Footnote:     1 These structures are more commonly referred to as either chicken or turkey barns. See Ind. Admin. Code tit., 50 r. 2.2-9-6, Schedule. G.2. (1996).
Footnote: Ind. Code Ann. § 6.1.1-15-5 states that the county executive may petition the State Board to rehear any case, provided notice is given to all parties within 15 days of the State Board's final determination. In this case, the State Board issued its final determination on April 22, 1998, and the Jay County Commissioners petitioned the State Board 14 days later, on May 6, 1998.
Footnote: See Ind. Admin. Code tit. 50, r. 2.2-9-5 (1996).
See Ind Admin. Code tit. 50, r. 2.2-9-3 (1996).

Even so, the Court wishes to applaud Mr. Schwieterman for all his efforts in this case. His agricultural background served him well, for without legal representation, he presented rational arguments to which the Court gave much consideration.

The 1992 regulations did not provide a schedule for turkey barns. Only Poultry Confinement Buildings were provided their own table, and barns were classified together under another table. See Ind. Admin Code tit. 50, r.2.1-3-5, Schedule G.2 (1992).

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