Chopping Block – Roundup of Indiana Board of Tax Review property tax rulings (October 2013)

Chopping Block – Roundup of Indiana Board of Tax Review property tax rulings (October 2013)

Values of office buildings reduced based on sale price; Assessor failed to show buyer was “atypically motivated.”  Fort Wayne Portfolio Corporation (“Fort Wayne”) purchased two office buildings on four parcels for $5.1 Million on June 10, 2011; it challenged the properties’ nearly $8.7 Million valuation by the County Board for the March 1, 2011 assessment.  The Assessor argued that the sale price was not indicative value because it was a “portfolio sale” and a “distressed sale with an atypically motivated seller.”  Nevertheless, the Board concluded:  “Fort Wayne Portfolio bought [the office buildings] for $5,100,000 as part of a single transaction after [real estate company] had actively marketed the properties for a year. And the sale occurred less than four months after the relevant March 1, 2011 valuation date.  Fort Wayne Portfolio therefore made [a] prima facie case that the two properties were worth a combined total of no more than $5,100,000.”  (Page 13, ¶ 38.)  The Assessor provided no probative evidence to counter the sale price.  While the Board agreed that there was no “competent, probative evidence to support” an allocation of the sale price between the office buildings, the evidence showed the combined value of the properties to be $5.1 Million.  (Page 15, ¶ 44.)  The assessments were reduced to the purchase price, though the Board did not direct the Assessor as to how to allocate the lower value.  Fort Wayne Portfolio Corporation v. Allen County Assessor, Pet. Nos. 02-072-11-1-4-00019 et al.  (Oct. 24, 2013) (March 1, 2011 assessment).

Bank shot:  Taxpayer makes one, misses one – assessment holds for 2011, reduced for 20122011 a miss.  A bank challenged its 2011 and 2012 assessments.  Under Indiana’s burden-shifting statute, Ind. Code § 6-1.1-15-17.2, the bank had the burden of proof in 2011.  The statute assigns the burden of proof to the assessor on appeal, where the contested value of the same property has increased by more than 5% over the assessment determined by the assessor in the prior year.  Here, the bank was constructed after the March 1, 2010 assessment date, so the parcel was not the same property as of the March 1, 2011 assessment date. (Pages 4-5, ¶ 13.)  The Bank offered no evidence of the property’s market value-in-use and therefore failed to prove it was overvalued in 2011.  (Page 6, ¶ 21.)

2012 a hit.  For 2012, however, the Assessor carried the burden of proof because the property remained the same while its value increased by more than 5% – from $932,000 to $1,008,600.  The Assessor defended the increase with the property’s building permit application showing an estimated cost from 2009 and 2010 of $1,000,200.  But the Assessor failed to relate this cost to the March 1, 2012 assessment/valuation date.  And the Assessor testified that the only difference in the 2011 and 2012 values was the cost tables applied; because 2012 was a reassessment year, the tables changed.  This was insufficient proof to carry the day:  “Even if the assessment correctly applied the new cost tables, this evidence does not establish the actual market value-in-use of the property.”  (Page 7, ¶ 27.)  Because the Assessor failed to support her increased value, the Board reduced the assessment to its 2011 level, $932,000.  (Page 7, ¶ 28.)  Home Federal Bank v. Jennings County Assessor, Pet. Nos. 40-004-11-1-4-00001 and 40-004-12-1-4-00001 (Oct. 7, 2013).

Pick Six:  Board reduces home’s assessment based on one of six opinions of value.  In this 2010 assessment appeal, Owners argued that their home’s March 1, 2010 assessment should be reduced from $513,100 to $315,504.  Owners and the Assessor submitted appraisals and opinions of value to support competing positions – six in all.  Both parties met their burdens of production by offering USPAP certified appraisals.  (Page 7, ¶ 13.)  In this “battle of the appraisers,” the Assessor prevailed.  Owners’ evidence had “little or no probative value.”  (Page 7, ¶ 13(a).)  They submitted two market analyses which the author, a licensed broker and realtor, did not certify complied with USPAP.  And their appraisal contained “various inaccuracies and contradictions” that made the appraiser’s “ultimate valuation opinion unreliable.”  (Page 8, ¶ 13(b).)  That left three appraisals by two appraisers, one submitted by Owners and two submitted by the Assessor.  All three were “generally credible.”  (Page 8, ¶ 13(c).)   That neither appraiser testified made “it more difficult for the Board to weigh their respective opinions.”  Id.  The Board assigned greatest weight to the appraisal which made adjustments to account for age differences between the subject and comparable properties and which valued the property as of the relevant assessment/valuation date using sales closer to that date.  (Page 8, ¶¶  13(d) & (e).)  The property’s value was reduced to $480,000.  (Page 9, ¶ 14.)  Wilson v. Lawrence County Assessor, Pet. No. 47-004-10-1-5-00006 (Oct. 15, 2013) (March 1, 2010 assessment).

Board rejects income and sales comparison analyses by non-appraisers that don’t apply generally accepted appraisal principles.  In an appeal of a vacant commercial retail building, the Owner’s tax representative presented two analyses:  a comparative market (sales) analysis prepared by a third party and an income approach valuation analysis prepared by the representative.  Neither the third party nor the representative was an appraiser.  The third party didn’t attend the hearing, and neither the Owner nor the tax representative provided a meaningful comparison of the subject and comparable properties; the comparative market analysis didn’t comply with generally accepted appraisal principles and therefore carried “little or no weight.”  (Page 6, ¶ 15(d).)

The tax representative’s income analysis fared no better.  The Board found that it lacked credibility because: (a) the tax representative was compensated on a contingency fee basis and thus had an interest in the appeal’s outcome; (b) the representative was not an “independent, professional, certified appraiser” and her analysis didn’t “purport to be a certified appraisal”; and (c) the representative presented only conclusory evidence of the property’s alleged non-leasable, raccoon-damaged second floor.  (Page 6, ¶ 15(f).)  The analysis was “not probative evidence” of value. Id.  The appeal was denied.  (Page 6, ¶ 16.) .)  JY Properties, LLC v. Porter County Assessor, Pet. No. 64-016-11-1-4-00017 (Oct. 22, 2013) (March 1, 2011 assessment date).

Property manager fails to identify when home demolished, so assessment of improvement value upheldThe property manager for a land trust testified that the City of South Bend demolished the house on the contested parcel.  The manager testified as to the vacant lot’s current status but offered no evidence as to its condition and value as of the March 1, 2008 and 2009 assessment dates under appeal.  Without evidence of value as of the relevant assessment/valuation dates, the appeals failed and the lot’s value remained unchanged for both tax years. 313 Studebaker Land Trust v. St. Joseph County Assessor, Pet. Nos. 71-026-08-1-5-01246 and 71-026-09-1-5-01858 (Oct. 8, 2013) (March 1, 2008 and 2009 assessment dates).

No showing that sales of HUD properties supported lower assessmentOwners appealed the value of their single-family home in Valparaiso, pointing out in part that neighboring HUD properties sold for $1 and $100,000.  These sales failed to support a reduced assessment, however, because the Owners “failed to establish a meaningful basis for comparing these properties with their own or to account for any ways the properties may differ.”  (Page 7, ¶ 17(e).)  The Board observed that Owners’ arguments regarding misapplication of the Indiana Guidelines to their home were equally unhelpful, as “claims based on strict application of the Guidelines are insufficient to rebut the presumption that the assessment is correct.”  (Page 6, ¶ 17(d).)  Harmon v. Porter County Assessor, Pet. No. 64-004-08-1-5-00003 (Oct. 28, 2013) (March 1, 2008 assessment).


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