Before
turning to the fundamental issue, which is the accurate valuation of the
subject property, we must address the Petitioner’s claim that the greenhouses
should have been assessed as personal property and not as real property. Both
parties relied on the Real and Personal Property Guidelines, Table 1-1, listing
that identifies a greenhouse building as real property and also identifies a
greenhouse building with plastic cover as personal property. The weight of the
evidence establishes that these particular greenhouses are more substantial and
permanent than ones that would properly be classified as personal property. An
even more important factor in this case, however, is the Petitioner’s admission
that the greenhouses were not reported as personal property. Under these
circumstances, the Board will not change the classification from real to
personal.
Another
preliminary issue is the claim that the subject property should have been
assessed as agricultural land. The Indiana General Assembly has directed the
DLGF to establish rules for determining the true tax value of each parcel of
agricultural land. Ind. Code § 6-1.1-4-13(c). The Guidelines also require
assessors to further classify agricultural land into various types, some of
which call for applying negative influence factors in predetermined amounts.
Guidelines, ch. 2 at 102-05. Only land actually "devoted to agricultural use,"
however, may be assessed as agricultural land. Ind. Code § 6-1.1-4-13(b). The
word ―devote‖ means "to give or apply (one’s time, attention, or self)
completely." WEBSTER’S II NEW RIVERSIDE DICTIONARY 192 (revised edition). Thus,
a taxpayer seeking to have its land assessed as agricultural cannot prevail
merely by showing that agriculture is one of several activities for which it
uses the land. Here, substantial evidence shows that the property is zoned for
general business and the biggest part of it is the home, garage, retail
building and a large parking lot. The entire parcel is slightly less than 2
acres—and the evidence about agricultural use goes to only a small portion of
that total. Although the Petitioner presented evidence of some agricultural activity,
the agricultural use proved for a small part of the land is not enough to demonstrate
this parcel is devoted to agricultural use.
Real
property is assessed based on its "true tax value," which means
"the market value-in-use of a property for its current use, as reflected
by the utility received by the owner or a similar user, from the
property." Ind. Code § 6-1.1-31-6(c); 2002 REAL PROPERTY ASSESSMENT MANUAL
at 2 (incorporated by reference at 50 IAC 2.3-1-2). There are three generally
accepted techniques to calculate market value-in-use: the cost approach, the
sales comparison approach, and the income approach. Indiana assessing officials
primarily use the cost approach. Id. at 3. Indiana promulgated
Guidelines that explain the application of the cost approach. REAL PROPERTY
ASSESSMENT GUIDELINES FOR 2002 – VERSION A (incorporated by reference at 50 IAC
2.3-1-2. The value established by use of the Guidelines is presumed to be
accurate, but it is merely a starting point. Other evidence relevant to market
value-in-use can rebut that presumption. That evidence may include actual
construction costs, sales information regarding the subject or comparable properties,
appraisals, and any other information compiled in accordance with generally accepted
appraisal principles. MANUAL at 5.
The
most effective method to establish value can be through the presentation of a
market value-in-use appraisal, completed in conformance with the Uniform
Standards of Professional Appraisal Practice. Kooshtard Property VI, LLC v.
White River Twp. Assessor, 836 N.E.2d 501, 506 n. 6 (Ind. Tax Ct. 2005).
Regardless
of the valuation method used, a party must explain how its evidence relates to market
value-in-use as of the relevant valuation date. See O’Donnell v. Dep’t of
Local Gov’t Finance, 854 N.E.2d 90, 95 (Ind. Tax Ct. 2006); Long v.
Wayne Township Assessor, 821 N.E.2d 466, 471 (Ind. Tax Ct. 2005). The
valuation date for a 2010 assessment was March 1, 2010. For a 2011 assessment,
the valuation date was March 1, 2011. IC 6-1.1-4-4.5(f). Any evidence of value
relating to a different date must also have an explanation about how it
demonstrates, or is relevant to, that required valuation date. Long, 821
N.E.2d at 471.
Although
its conclusion about value exceeds the 2010 assessment of $288,100, the 2010 appraisal
is substantial evidence and is sufficient to satisfy the Respondent’s initial burden
to support that assessment. (Significantly, the Respondent did not ask for any increase
in the assessment to match the appraised value.) The other appraisal is substantial
evidence that the value of the subject property was only $311,000 as of March 1,
2011. This value is less than the current assessment of $339,300 for 2011. Accordingly,
based on the statute defining the Respondent’s initial burden, the final determination
for the 2011 assessed value can be no more than $311,000. Beyond this initial
analysis and conclusion, however, the final outcome and our final determination
depend on determining credibility.
The
Petitioner attempted to prove a more credible value that would be much lower
than the appraisals in several ways. But ultimately, none of those other
attempts are as credible as the two Sceifers appraisals.
The
Petitioner focused part of its case on the amount it paid for the subject
property in July 2009.
The
sale of a property can be the best evidence of its market value or
value-in-use, but sometimes it does not. The distinction can depend on the
conditions surrounding the sale and is reflected in the definition of "market
value," which means:
The
most probable price (in terms of money) which a property should bring in a
competitive and open market under all conditions requisite to a fair sale, the
buyer and seller each acting prudently and knowledgably, and assuming the price
is not affected by undue stimulus. Implicit in this definition is the
consummation of a sale as of a specified date and the passing of title from
seller to buyer under conditions whereby:
The
buyer and seller are typically motivated;
Both
parties are well informed and advised and act in what they consider their best
interests;A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash or in terms of financial arrangements comparable thereto;
The price is unaffected by special financing or concessions.
MANUAL
at 10. This definition recognizes that sometimes the circumstances of a transaction
make it less likely that a particular sale price accurately reflects market
value. One frequent issue is whether "the buyer and seller are typically
motivated." For example, when one family member sells a property to another
family member the price is not reliable evidence of market value. Other sales
fall into the unreliable category because a seller’s motivation is not typical
for other reasons. They include ones where circumstances force a sale, such as
tax sales, sheriff sales, and bankruptcy liquidations. Where a property sells
under such circumstances, the price is likely to be less than it would have
been if all the requirements in the "market value" definition were present. Consequently,
sales with such problematic circumstances normally are not used by appraisers
in forming an opinion about value. Alternatively, if they are considered, an adjustment
for the special circumstances is normally required.
The
evidence indicates the auction of the subject property was a "COURT ORDERED ABSOLUTE
SHERIFF’S FORECLOSURE AUCTION." Pet’r Ex. A-2. It was incumbent on the
Petitioner to offer specific evidence to allay the concerns discussed above. The
Petitioner merely relied on the fact that 140 bidders were present and claimed that
the auction was well advertised. To convincingly overcome concerns about
the auction, however, requires much more than the Petitioner offered in this
case. Under these circumstances the Board gives very little, if any, weight to
the Petitioner’s purchase price—far less weight than the Sceifers appraisals.
The
Petitioner also focused on several purportedly comparable sales, Petitioner
Exhibits B1 through B9 and C1 through C11. But in order to use the sales
comparison approach as evidence in a property assessment appeal, the proponent
must establish the comparability of the properties being examined. Conclusory
statements that a property is "similar" or "comparable" to another property do
not constitute probative evidence of the comparability of the two properties.
Long, 821 N.E.2d at 470. Instead, the proponent must identify the
characteristics of the subject property and explain how those characteristics
compare to the characteristics of the purportedly comparable properties. Id.
at 471. The proponent also must deal with how any differences between the properties
affect their relative values. Id. When seeking to establish
comparability of land, the relevant characteristics to compare include things
such as location, accessibility, and topography. See Blackbird Farms Apts.,
LP v. Dep’t of Local Gov’t Fin., 765 N.E.2d 711, 715 (Ind. Tax Ct. 2002)
(holding that taxpayer failed to establish comparability of parcels of land
where, among other things, taxpayer did not compare the topography and accessibility
of parcels). The proponent also must explain how any differences between the
properties affect their relative market values-in-use. Long at 471. The
Petitioner failed to offer any such meaningful analysis in this appeal. The
Petitioner’s conclusory evidence is insufficient to establish the comparability
of these parcels and has no probative value. Id.
The
Petitioner also attempted to use cost evidence to reconstruct the greenhouses
and the retail structure, which the Petitioner attempted to characterize as a
barn. Most of these estimates are dated January 2012, well after the respective
valuation dates for 2010 and 2011. No evidence trended these proposed values to
either of the assessment dates. Long, 821 N.E.2d at 471. More
importantly, the Petitioner failed to establish that these proposed costs
include all required cost elements and that they would be sufficient to satisfy
generally accepted appraisal principles for use of the cost method of
valuation. At most, these estimates offer minor support to the contention that
individual features of the property may be incorrectly assessed. But they do
not demonstrate the total assessment is in error. Eckerling v. Wayne Twp.
Assessor, 841 N.E.2d 674, 677 (Ind. Tax Ct. 2006).
Finally,
even if the property record card has errors concerning a finished attic or the
lack of a negative influence factor, the Petitioner failed to make a case by
simply contesting the methodology used to compute the assessment. Eckerling,
841 N.E.2d at 677. To successfully make a case the Petitioner needed to
show the assessment does not accurately reflect the subject property’s market
value-in-use. Id.; see also P/A Builders & Developers, LLC v. Jennings
County Assessor, 842 N.E.2d 899, 900 (Ind. Tax Ct. 2006) (explaining that
proper focus is not on methodology, but rather, on what the correct value
actually is). It failed to do so.
The
appraisals are the most credible, convincing evidence of the value of the subject
property. The Petitioner failed to rebut the value proved by the appraisals and
did not present substantial, probative evidence to support reducing the
assessment to $115,833 or $126,419.
