In this appeal, both parties agreed that the Respondent has the burden to prove the assessment is correct.
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The Respondent correctly pointed out that many cases have recognized an arm’s-length sale of the subject property as the best evidence of its market value-in-use. Hubler Realty Co. v. Hendricks Co. Assessor, 938 N.E.3d 311, 315 (Ind. Tax Ct. 2010). Most of those cases have been situations where nothing but the real estate itself was involved in the transaction. In situations where more than the value of the real property is represented in the selling price, it is necessary to determine the part of the selling price that actually is for the real property. See Grant Co. Assessor v. Kerasotes Showplace Theatres, 955 N.E.2d 876, 881-2 (Ind. Tax Ct. 2011) (recognizing that Indiana’s assessment system “does not ‘allow [] assessors to assess things other than real property rights for ad valorem taxation.’”) This case analysis requires recognition and application of that same limitation. Therefore, relying on the sale price of the subject property to prove an accurate assessed value is not always as simple as it might first appear.
In this case, there is no dispute that that in December 2008 the Petitioner paid $3,575,000 in a transaction where it acquired the subject property. But there is also no dispute about the fact that that total included some amount for value other than the real property itself. The sales disclosure form says that amount was $655,000. If that amount were deducted, the purchase price of the real estate would be $2,920,000.
According to the Respondent, however, the amount of that deduction should be much less than the figure reported on the sales disclosure form. The Respondent relied on Mr. Mills’ testimony and the data he gathered about other nursing home sales in attempting to prove that an appropriate deduction would only be 10% ($357,500) of the total transaction. Although Mr. Mills testified about his credentials as an appraiser, he explained that he had not done an appraisal of the subject property and was not testifying as an appraiser. “All I am doing is presenting data. I did not do an appraisal on the property and it would be wrong for me to indicate that I am testifying here… as an appraiser.” Mr. Mills compared data from the sales of eleven other nursing homes with data from the purchase of the subject property. Respondent Exhibit D contains a summary of his comparison data as well as several pages of supporting data. For the Respondent’s position, the most important part of the evidence is Mr. Mills’ conclusion that the eleven other sales indicate the deduction from the total purchase price should be only 10% for furniture, fixtures and equipment (FF&E). Even though Mr. Mills testified that things such as age and type of equipment are a “very major factor” in determining FF&E value, there is no evidence that his 10% conclusion is based on a substantial, meaningful, detailed comparative analysis of the FF&E in those comparables and the subject property. In fact, it appears that Mr. Mills simply accepted the FF&E amounts most of those other buyers estimated. Furthermore, his supporting data shows a tremendous range on the percentage of FF&E. For example, in one sale the total price was $4,160,000 while the FF&E was $108,435. It might be true that the average reported FF&E figure for those sales is somewhere around 10%, but the Respondent failed to establish that such methodology conforms to generally accepted appraisal principles for valuing the real property. Ultimately, determining a proposed valuation by simply deducting 10% for FF&E from the Petitioner’s purchase price is not credible or probative evidence. It does not help to prove what an accurate valuation of the subject property is.
Furthermore, the attempt to compare the per bed value derived from that calculation to per bed values derived from similar calculations for other facilities without providing a meaningful comparison of the similarities and difference of the facilities does not provide probative information. Long, 821 N.E.2d at 471. Even if it is true that other facilities have sales prices that range from $13,227 to $56,634 per bed and the purported mean and median values claimed by Mr. Mills are accurate and the Respondent’s proposed valuation falls slightly below both the mean and median values, that point does not help to prove that a value of $32,175 per bed for the subject property is actually accurate.
The Respondent failed to make a prima facie case to support the current assessed value. The Respondent failed to make a prima facie case to support a value of $3,217,500.
In other cases where the Respondent had the burden to prove the assessment is correct and the Respondent failed to carry that burden, the Board has ordered that the assessment be returned to the assessed value of the year before. In this case, doing so would reduce the assessment to $1,746,800. But that amount is less than the Petitioner claimed on its Form 131, which claimed the total assessment should be $2,063,100, or at hearing, where the Petitioner claimed the total assessment should be in the $20,000 per bed range. In other cases, the Board has determined that it will not reduce the assessment to less than a petitioner request. See Castleman v. Steuben Co. Assessor, Petition No. 76-006-08-1-5-00001 (IBTR decision issued Feb. 6, 2012). A similar conclusion is appropriate for the case now before us.
