Thursday, April 25, 2013

Board Finds Taxpayer's Appraisal More Probative of Property's Value than Assessor's Appraisal and More Credible than Evidence of Sale Where Buyer and Seller had Common Investors

Excerpts of the Board's Determination follow:

Here, the Petitioners presented a market value appraisal prepared by Jeffrey R, Vale, an Indiana certified appraiser and MAI, who prepared the appraisal in accordance with USPAP. Using the sales comparison approach, the cost approach, and the income capitalization approach, the appraiser estimated the value of the property to be $1,155,000 as of January 1, 2009. An appraisal performed in conformance with generally recognized appraisal principles is often enough to establish a prima facie case that a property’s assessment is incorrect. See Meridian Towers East & West v. Washington Township Assessor, 805 N.E.2d 475, 479 (Ind. Tax Ct. 2003). Further, the Petitioners’ representative presented some evidence to trend the appraised value to the correct valuation dates. Thus, the Board finds that the Petitioners raised a prima facie case that their property should be assessed at $1,224,700 for March 1, 2008, $1,238,200 for March 1, 2009, and $1,058,000 for March 1, 2010.

The Petitioners also presented the sales disclosure form and the closing statement from the purchase of the subject property for $1,050,000 on January 22, 2009. However, Mr. Hume admitted that the sale was a negotiated deal among real estate investors – some of whom had interests in the both sides of the transaction. The Respondent’s appraiser voiced the same concern in his appraisal. Moreover, the Respondent’s appraiser contends that public records show that the purchase price was $1,315,593. Thus, because the property was not widely marketed, the buyer and seller shared some common investors, and because the actual price of the property is in dispute, the Board finds that the property’s purchase price is less reliable than the property’s appraised value.

Once the Petitioners raised a prima facie case that their property was over-valued, the burden shifts to the assessing official to rebut the Petitioners’ evidence. See American United Life Insurance Co. v. Maley, 803 N.E.2d 276 (Ind. Tax Ct. 2004).  To rebut or impeach the Petitioners’ case, the Respondent has the same burden to present probative evidence that the Petitioners faced to raise a prima facie case. Fidelity Federal Savings & Loan v. Jennings County Assessor, 836 N.E.2d 1075, 1082 (Ind. Tax Ct. 2005).

Here, the Respondent also presented an appraisal of the property’s market value. The Respondent’s appraisal was prepared by William Stronks, an Indiana certified general appraiser who prepared the appraisal in accordance with USPAP. Mr. Stronks used all three approaches to value and estimated the value of the property to be $1,550,000 as of January 1, 2009. While Mr. Stronks did not provide any explanation about how the appraisal of January 1, 2009, might demonstrate or be relevant to the value of the property as of January 1, 2007, January 1, 2008, or March 1, 2010, the Respondent’s appraiser valued the property as of the same date the Petitioners’ appraiser used. Thus, there is some evidence in the record that trends the property’s appraised value to the relevant valuation dates.

Both the Petitioners’ appraisal and the Respondent’s appraisal occurred sufficiently contemporaneously with the statutory valuation dates to be probative of the property’s value for the 2008, 2009 and 2010 assessment dates. The Board must, therefore, weigh the evidence presented by both parties and determine the most persuasive evidence of the property’s value.

First, although both appraisers used the same comparable land sales to develop the land value for the subject property, the Respondent’s appraiser used a sale price of $375,000 for 7101 E. 81st Avenue. The Petitioners’ appraiser, however, presented the sales disclosure information showing the property sold for $300,000. Mr. Vale also contends the 30% adjustment to 9527 Broadway for zoning used by Mr. Stronks is excessive because the property is surrounded by commercial property and there is no justification for believing a zoning change would cost $114,000.

Mr. Vale also contends that the sale price of $875,000 for 218 South East Street used by Mr. Stronks in his sales comparison approach to value is incorrect. Mr. Vale submitted the sales disclosure form which shows that the property sold for $666,000. Mr. Vale further contends that the location adjustments in the Respondent’s appraisal are too low because the subject property is hidden. Mr. Vale argues that the Petitioners’ property is not located on a major thoroughfare like the Respondent’s appraiser’s comparable sales.

Further, Mr. Vale disagreed with Mr. Stronks’ value using the income capitalization approach. Mr. Vale argues that 4340 Lincoln Highway in Matteson, Illinois, and 2744 East 146th Street in Carmel, Indiana, are leased to national health clubs who would not be interested in the subject property because of its location. Further, the properties located at 4340 Lincoln Highway in Matteson, Illinois, 2744 East 146th Street in Carmel, Indiana, and 9159 Wicker Boulevard in St. John, Indiana, are all on commercial thoroughfares unlike the subject property.

The Respondent, on the other hand, did not raise any issues with the Petitioners’ appraisal. In fact, Mr. Metz testified, “I believe both appraisals took into consideration all three approaches to value and both appraisers probably ran into the same problems, separately, the lack of comparable sales and, obviously, the limitations to the three different approaches to value.” And he concluded “[i]t appears like they both came to a somewhat similar conclusion.” Thus, because of the errors identified by the Petitioners’ appraiser in the Respondent’s appraisal and the Respondent’s failure to present any impeachment or rebuttal evidence, the Board finds the Petitioners’ appraisal more probative of the subject property’s market value-in-use for the 2008, 2009 and 2010 assessment years.