Indianapolis, IN    Indianapolis, IN
    Indianapolis, IN

    IN THE INDIANA TAX COURT _____________________________________________________________________

B.L. CURRY & SONS, INC.,                                              )
    Petitioner,                                                                )
    v.                                                                         )   Cause No. 49T10-0004-TA-38
DEPARTMENT OF LOCAL                                                            )
                                      See footnote 
    Respondent.            )    


NOVEMBER 5, 2003


B.L. Curry & Sons, Inc. (Curry) appeals the State Board of Tax Commissioners’ (State Board) final determination valuing its real property for the 1992 tax year. The issue for the Court to decide is whether the State Board erred when it refused to assign obsolescence depreciation to Curry’s improvement. See footnote For the following reasons, the Court AFFIRMS the State Board’s final determination.

    Curry, a veneer manufacturing company, owns land and an improvement in New Albany, Indiana. For the 1992 assessment year, local assessing officials valued Curry’s land and improvement at $224,000 with no obsolescence depreciation assigned to the improvement. Curry appealed the assessment to the Floyd County Board of Review (BOR); the BOR denied Curry’s appeal. Curry then appealed the BOR’s decision to the State Board, arguing that its improvement should have been assigned obsolescence depreciation. On December 15, 1995, following an administrative hearing, the State Board issued a final determination affirming the BOR’s decision.
Curry subsequently filed an original tax appeal. On December 2, 2000, this Court reversed the State Board’s determination and remanded the action to the State Board for further proceedings. See footnote
    On February 10, 2000, the State Board conducted a remand hearing and on February 22, 2000, issued its final determination again affirming the BOR’s decision. Curry filed another original tax appeal with this Court. On September 6, 2001, this Court heard the parties’ oral arguments. Additional facts will be supplied as necessary.
Standard of Review

This Court gives great deference to the 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, this Court will reverse a final determination of the State Board only when its findings are unsupported by substantial evidence, arbitrary, capricious, constitute an abuse of discretion, or exceed statutory authority. Id. When appealing to this Court from a State Board final determination, the taxpayer bears the burden of showing that the final determination is invalid. Id.


    Curry contends that the State Board erred when it refused to assign obsolescence depreciation See footnote to its improvement. Both Curry and the Floyd County assessing official agreed that causes of obsolescence existed within Curry’s improvement. Accordingly, Curry bore the burden of presenting evidence at the remand hearing quantifying the amount of obsolescence depreciation to be applied to its improvement. See Clark v. State Bd. of Tax Comm’rs, 742 N.E.2d 46, 51 (Ind. Tax. Ct. 2001), review denied (a taxpayer who believes it is entitled to obsolescence must first identify causes of obsolescence and then quantify the amount of obsolescence to be applied); see also Heart City Chrysler v. State Bd. of Tax Comm’rs, 714 N.E.2d 329, 333-34 (Ind. Tax. Ct. 1999) (stating that when parties agree as to the existence of certain causes of obsolescence, the only issue to consider is the quantification of obsolescence).    
To support its claim, Curry presented an “Assessment Review and Analysis” (Analysis) prepared by its property tax consultant, Mr. M. Drew Miller (Miller) of Landmark Appraisals. In the Analysis, Curry asserts that its property suffers from obsolescence because its add-on construction creates certain inefficiencies: it has inadequate warehouse space and floor load capacity, it has no heat source or distribution system in the building except for the office, it has inadequate vehicle access, and it has outdated brick and block construction. (See Stip. R. at 63.) The Analysis then quantifies the obsolescence at either 26% or 58%, based on Miller’s mathematical calculations. (See Stip. R. at 66.) Miller then concludes that, based upon the inherent flaws in each calculation, “[an] estimated . . . amount of obsolescence to be applied to the subject property is 50%.” Id. Additionally, the Analysis contains photographs of and the property record card on Curry’s improvement; a property record card on and photographs of a veneer company located in Dubois County; and an article discussing the process of identifying functional obsolescence, as well as a generalized description of each of the methods behind his calculations.
    Obsolescence must be tied to an actual loss in property value; in the commercial context, that usually means the loss of income generated by the property. Clark v. State Bd. of Tax Comm’rs, 694 N.E.2d 1230, 1238 (Ind. Tax. Ct. 1998). Here, Curry presented a list of factors that may be causing obsolescence to its improvements but failed to show how those factors are causing an actual loss of value to its property (i.e., how they are causing Curry to lose money). See id. See also Miller Structures, Inc. v. State Bd. of Tax Comm’rs, 748 N.E.2d 943, 954 (Ind. Tax. Ct. 2001). For example, Curry needed to support its allegation that “add-on construction has created . . . added production and material handling costs[,]” (see Stip. R. at 63), with calculations indicating the amount of the additional handling costs incurred. These additional costs could then be translated into an obsolescence deduction.
Furthermore, Curry’s submission of photographs, record cards, and articles, without an explanation as to how they illustrate a loss of value to its improvement, is not evidence as to the quantification of obsolescence. For instance, Miller’s submission of a property card and photographs of another veneer plant fails to illustrate the actual losses in Curry’s property value. See footnote In essence, Curry merely submitted information at its hearing and expected the State Board to make its case for it. The State Board is not required to make a taxpayer’s case for it. See Whitley Prods., Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1120 (Ind. Tax. Ct. 1998), review denied. Consequently, the State Board did not err when it declined to award obsolescence depreciation to Curry’s improvement.

    Curry, having failed to link the factors causing obsolescence with an actual loss in value, failed to make a prima facie case quantifying the amount of obsolescence to which it believed it was entitled. For the aforementioned reasons, the Court AFFIRMS the State Board’s final determination.

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 § 6-1.1-30-1.1 (West Supp. 2001)(eff. 1-1-02); 2001 Ind. Acts 198 § 66, and the Indiana Board of Tax Review (Indiana Board). Ind. Code § 6-1.5-1-3 (West Supp. 2001)(eff. 1-1-02); 2001 Ind. Acts 198 § 95. Pursuant to Indiana Code § 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 § 6-1.5-5-8 (West Supp. 2001)(eff. 1-1-02); 2001 Ind. Acts 198 § 95. Nevertheless, the law in effect prior to January 1, 2002 applies to these appeals. 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: In addition, Curry raises various state and federal constitutional claims that this Court has declined to reach in previous cases. See, e.g., Barth, Inc. v. State Bd. of Tax Comm’rs, 756 N.E.2d 1124, 1127 n.1 (Ind. Tax. Ct. 2001). Because Curry’s claims and supporting arguments are identical to those previously rejected by the Court, the Court will not address them.

Footnote: On April 24, 1998, this Court issued an opinion in Clark v. State Board of Tax Commissioners, 694 N.E.2d 1230 (Ind. Tax. Ct. 1998). In essence, Clark set forth what this Court expects from taxpayers and the State Board in appeals involving issues of obsolescence. See Clark, 694 N.E.2d at 1241. As a result of that directive, this case was remanded to the State Board for further consideration in light of Clark; additionally, the Court ordered that the State Board exclude certain evidence from consideration.

Footnote: Obsolescence is defined as either a functional or an economic loss of value. Ind. Admin. Code tit. 50, r. 2.1-5-1 (1992). Functional obsolescence is caused by internal factors within a property; economic obsolescence is caused by factors external to the property. See id.

Footnote: Perhaps Curry submitted this information in an attempt to show the differences in construction between a modern plant and Curry’s plant. Nevertheless, there is no attempt by Curry to translate those differences into an actual loss of value.