Excerpts of the Board's Determination follow:
Here, the assessment under review—the
PTABOA’s determination of $240,600—represents an 18.4% increase over what the
Assessor had determined for the immediately preceding assessment date. Part of
that increase stemmed from the PTABOA determining that the Assessor’s valuation
did not properly account for the subject basement’s actual finish and therefore
arguably was not an increase in the assessment for the “same property” that was
assessed in 2010. See Mac’s Convenience Stores, LLC v. Johnson County
Assessor, pet. nos. 41-025-08-1-4-00960 and 41-025-09-1-4-01106 (Ind. Bd.
of Tax Rev. July 25, 2012) (explaining that the increase in a parcel’s
assessment between 2008 and 2009 was based partly on the PTABOA’s decision to
include two previously omitted utility sheds, and therefore the 2009 assessment
was not “for the same property” that had been assessed in 2008).
But adding the extra basement
finish only increased the March 1, 2011 assessment from $221,200 to $240,600.
The parcel’s assessment had already changed from $203,200 for March 1, 2010, to
$221,200 for March 1, 2011—an increase of 8.85%. And there is nothing to
suggest that the 8.85% increase stemmed from any intervening changes to the property
or from adding items that previously had not been assessed. Based on those facts,
the Board finds that the Assessor had the burden of proving that the subject property’s
March 1, 2011, assessment was correct.
…
The Assessor spent significant
time trying to show that each entry on the subject property’s record card was
accurate. But that does little to prove that the subject property’s market
value-in-use was $240,600. As the Tax Court and Board have repeatedly held, the
DLGF’s guidelines are only a starting point. See Eckerling, 841 N.E.2d
at 646. Thus, to prove a property’s market value-in-use on appeal, parties normally
must do more than strictly apply those guidelines; they must instead offer the
types of evidence described above.
The Assessor also pointed to
his own ratio study to support the subject property’s assessment. More
specifically, he argued that because the median ratio for each area met the
DLGF’s standards for an acceptable mass appraisal, the subject property’s assessment
must be correct. The Assessor, however, offered no support for the notion that
a ratio study may be used to prove that an individual property’s assessment reflects
its market value-in-use. Indeed, the International Association of Assessing Officers
Standard on Ratio Studies, which 50 IAC 27-1-4 incorporates by reference, says
otherwise:
Assessors, appeal boards,
taxpayers, and taxing authorities can use ratio studies to evaluate the
fairness of funding distributions, the merits of class action claims, or the
degree of discrimination. . . . . However, ratio study statistics cannot be
used to judge the level of appraisal of an individual parcel. Such
statistics can be used to adjust assessed values on appealed properties to the
common level.
INTERNATIONAL ASSOCIATION OF ASSESSING
OFFICERS STANDARD ON RATIO STUDIES VERSION 17.03 Part 2.3 (Approved by IAAO
Executive Board 07/21/2007) (bold added, italics in original).
Because the Assessor did not
offer probative evidence to show the subject property’s market value-in-use, he
failed to make a prima facie case that the property’s March 1, 2011 assessment
was correct. The Reeds are therefore entitled to have the property’s assessment
returned to its March 1, 2010, level of $203,200.
But the Reeds sought an
assessment of only $191,000. Consequently, they had the burden of proving the
lower amount. It is to that issue that the Board now turns.
…
The Reeds hired Robert Green,
a licensed residential appraiser, to appraise the subject property. Mr. Green
estimated the property’s market value at $191,000 as of March 1, 2011. In
reaching that conclusion, Mr. Green used both the sales comparison and the cost
approaches to value, but gave the most weight to his conclusions under the
sales-comparison approach.
The Assessor, however,
seriously impeached the credibility of Mr. Green’s valuation opinion. The
Assessor persuasively showed that Mr. Green used the assessments for comparables
1 and 2 instead of their sale prices. The transfer history on each comparable
property’s record card shows no transfers for the prices or dates that Mr. Green
listed in his appraisal. But the property record card for comparable 1 lists a $0
transfer just one day before the date that Mr. Green listed as the sale date in
his appraisal, and comparable 2’s card lists a $0 transfer on the same date
that Mr. Green used as the property’s sale
date. Plus, Mr. Green used prices that are identical to each property’s March
1, 2010, assessment.
Mr. Green’s error
fundamentally affected his valuation opinion. Mr. Green admitted that “you don’t
use an assessed value, you need a bona fide sale with a sale date and a willing
buyer.” Green testimony. Yet he relied most heavily on comparables 1 and
2 in reaching his valuation opinion. Indeed, Mr. Weterick, the other appraiser who
testified, acknowledged that Mr. Green’s remaining sales were from rural areas and
therefore were not particularly comparable to the subject property. Under those
circumstances, Mr. Green’s valuation opinion carries little or no probative
weight.
Mr. Weterick’s opinion fares
no better. Mr. Weterick based his opinion partly on Mr. Green’s appraisal and
acknowledged that he simply assumed that Mr. Green used accurate data. As
already explained, however, Mr. Green’s data was inaccurate for the two “sales”
that Mr. Weterick felt were most comparable to the subject property.
Mr. Weterick did point to some
more recent sales, but he acknowledged that he did not independently appraise
the subject property’s market value-in-use as of March 1, 2011. Thus, for
example, he did little to explain how the more recently sold properties compared
to the subject property or how any relevant differences affected the properties’
relative values. See Long, 821 N.E.2d at 471 (rejecting taxpayers’ sales-comparison
data where taxpayers failed to explain how their property’s characteristics
compared to the purportedly comparable properties and how any differences
affected the properties’ relative market values-in-use). At most, Mr. Weterick
vaguely testified that the market had decreased somewhere from 10% to 15%
between the date that he appraised the subject property and Mr. Green’s more recent
appraisal. Mr. Weterick, however, based that opinion largely on literature that
he did not specifically identify. Mr. Weterick therefore did not support his
opinion sufficiently for the Board to find that the subject property was worth
any specific amount as of March 1, 2011, much less that it was worth only
$191,000 as opposed to $203,200.
Finally, Mr. Reed offered
assessment data for various other properties on the subject property’s street.
Indiana Code § 6-1.1-15-18 allows parties to offer evidence about comparable
properties’ assessments to prove the value for a property under appeal. But
that statute does not automatically make evidence of other properties’ assessments
probative. Instead, the party relying on those assessments must apply generally
accepted appraisal and assessment practices to show that the properties are comparable
to the property under appeal. See I.C. § 6-1.1-15-18 (“The determination
of whether properties are comparable shall be made using generally accepted appraisal
and assessment practices.”).
Beyond the fact that the
properties are located on the same street, Mr. Reed did not meaningfully
compare the other properties to the subject property, much less account for any
relevant ways in which the properties differed from each other. Instead, he seized
on the fact that the Assessor assigned the subject property a condition rating
of “average” and extrapolated that the subject property should therefore be
assessed using the average price per square foot for the other properties. That
does not comply with generally accepted appraisal or assessment practices.
http://www.in.gov/ibtr/files/Reed_90-009-11-1-5-00015.pdf
