Indiana Tax Court denies petition to enjoin the collection of property tax, where Taxpayer failed to show former school building and athletic facility had zero value

Indiana Tax Court denies petition to enjoin the collection of property tax, where Taxpayer failed to show former school building and athletic facility had zero value

Indiana Tax Court rejects petition to enjoin collection of real property tax, where Taxpayer failed to show there was a reasonable opportunity it could prove its former school building and athletic facility had zero value.

Name:  Wigwam Holdings LLC v. Madison County Assessor

Date Issued: December 14, 2018

Property Type: 220,000 SF building, including a natatorium, auditorium and 8,996 seat basketball facility

Assessment Date: March 1, 2015

Point of Interest: Wigwam Holdings LLC (“Holdings”) claimed that an appraisal and purchase price of $0 supported a zero assessment for its improvements, a former school property with an iconic basketball arena.  Holdings was denied an injunction for the collection of tax, because it failed to show that it has a reasonable opportunity to prevail on the merits.

Synopsis: Holdings acquired four parcels by Quitclaim Deed from the City of Anderson Department of Redevelopment. The only parcel at issue contained, among other things, an 8,996-seat basketball facility. The Madison County Property Tax Assessment Board of Appeals had reduced the assessment from $11,415,000 down to $2,115,200. Holdings filed its appeal to the Indiana Board and claimed its assessment should be reduced to $68,500 ($68,500 for land and $0 for improvements). In support of its appeal, Holdings presented a USPAP-compliant appraisal, testimony of an appraiser, and documents related to the purchase.

The appraisal provided that the Wigwam’s highest and best use was as vacant land, because the building contained asbestos and had other issues.  The appraisal concluded that the property had a negative value.  Holdings further asserted that the building — acquired for $0 in September 2014 — had no value.  The appraiser also testified that the property’s assessment failed to account for abnormal obsolescence.  The Indiana Board concluded that Holdings did not make a prima facie case for reducing the assessment because the “appraisal did not credibly value the Wigwam and the September 2014 sale was not a probative, market transaction.”

On appeal to the Indiana Tax Court, Holdings sought to enjoin the collection of tax.  To do so, Holdings had to show the following three factors exist: “(1) it has a reasonable opportunity to prevail in the appeal; (2) the issues raised by its appeal are substantial; and (3) the equitable considerations favor the enjoining of the collection of the tax outweigh the state’s interest in collecting the tax pending the appeal.” A reasonable opportunity to prevail is a “tolerable, moderate, rational, honest, or equitable chance of success on the merits of the appeal.”

Holdings argued that it was likely to prevail on the merits because of its appraisal and the testimony of its expert witness. The Court noted that there is no per se rule that a USPAP-compliant appraisal automatically establishes a prima facie case for reducing an assessment.  The Assessor’s expert witness testified that the property was a special purpose property.  Therefore, according to the witness, the cost approach was the appropriate valuation method.  The Indiana Board, the Court reasoned, properly exercised its discretion and weighed the competing evidence.

In addition, Holdings claimed that it had a chance of success on the merits based on the September 2014 acquisition price.  Assessor’s witness claimed that the seller was atypically motivated, as shown by the buyer having paid zero dollars and received access to substantial funds for site restoration.  Holdings was unable to point to anything in the administrative record indicating the Indiana Board abused its discretion.

Finally, Holdings asserted that it “presented uncontroverted evidence of the Wigwam’s significant functional and economic obsolescence.” But Holdings failed to provide any evidence to quantify the alleged obsolescence and its impact on the value of the property.

For these reasons, the Court found that Holdings did not have a reasonable opportunity to prevail on the issues raised, so there was no need to address the remaining two factors to enjoin the tax.  Consequently, the Court denied Holdings’ Petition to Enjoin the Collection of Tax.

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