Petitioners failed to make their
case based on the evidence and arguments related to methodology. Petitioner
Naik argued that Respondent should have assigned a dwelling grade of B and
should not have added a 10% influence factor to the property. One cannot make a
case based on whether the Guidelines were applied properly. Eckerling v.
Wayne Twp. Assessor, 841 N.E.2d 674,677 (Ind. Tax Ct. 2006). Even if the
grade of the subject property really was B on March 1, 2010, that point does
not prove what a more accurate value is. To successfully make their case,
Petitioners needed to show the assessment does not accurately reflect 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). They did not do so.
The Petitioner sought to use
construction costs to show that the assessed value of the subject property is
incorrect. Petitioner Naik testified that the original construction cost of the
home he had built on the subject property was $424,198.34, which when added to the
purchase price of the land comes to an assessed value of $570,198.34.
Petitioner provided no direct evidence of the actual construction cost besides
his own testimony.
According to the 2002 REAL
PROPERTY ASSESSMENT GUIDELINES (GUIDELINES), “[t]he cost to be estimated by the
assessor is made up of all the direct labor and material costs plus the
indirect expenses required to construct an improvement. Examples of direct
costs include labor, materials, supervision, utilities used during
construction, and equipment rental. Indirect cost examples are building
permits, fees, insurance, taxes, and construction interest, overhead, profit,
and professional fees such as those charged by architects, engineers,
consultants, and attorneys. The cost tables contain both direct and indirect
costs.” GUIDELINES, intro. at 1. It is critical that the actual construction
costs represent all costs (direct and indirect) regardless of whether or not they
were realized, as in the case of do-it-yourself construction. Id. Thus,
while a taxpayer may establish a prima facie case based upon construction cost
information, that information must include all costs. For example, the cost of
purchasing the property and utilities used during construction are part of the
costs of constructing the subject property. Further, if the Petitioner acted as
his own contractor, a “contractor fee” would need to be added to the construction
costs to accurately reflect market value-in-use.
The Board finds that the
Petitioner’s testimony regarding construction costs was insufficiently detailed
to be probative of the structure’s value. The Petitioner’s testimony did not
include information regarding administrative and permit costs for the construction.
Further, no evidence was offered as to contractor costs, labor, mark-up or other
costs that would reflect the market value of the property. Finally, there was
no complete accounting of the Petitioner’s costs. Petitioner merely stated the
amount of the final construction cost. Such conclusory statements without
substantially more supportive detail are not probative evidence. Whitley
Products, Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113, 1119 (Ind. Tax
Ct. 1998) (stating that conclusory statements do not qualify as probative
evidence). This falls short of the type of detailed facts and analysis that
might support a legitimate conclusion about building costs for the subject property.
See Long v. Wayne Township Assessor, 821 N.E.2d 466, 471 (Ind. Tax Ct. 2005).
Finally, assuming arguendo that the Petitioner had provided an
acceptable cost approach analysis, he failed to explain how the purported
construction costs from March 2008 are relevant to the March 1, 2010, valuation
date pursuant to Long.
Comparing assessments without
relating those amounts to actual market value-in-use is not probative.
Petitioner argued that the subject property’s land was assessed in excess of the
assessed values of neighboring properties, because unlike the subject, the land
values of the neighboring properties were not increased with a 10% influence
factor. This argument, however, is insufficient to show an error in an
assessment. Westfield Golf Practice Center, LLC v. Washington Township
Assessor, 859 N.E.2d 396 (Ind. Tax Ct. 2007). In Westfield Golf, the
Tax Court held that it is not enough for a taxpayer to show that its property
is assessed higher than other comparable properties. Id. Instead, the taxpayer
must present probative evidence to show that the property’s assessed value does
not accurately reflect the property’s market value-in-use. Id. Petitioner
failed to do so.
Furthermore, Petitioner did
not explain how the land at each of the other properties was comparable other
than being located in the same neighborhood. He presented no comparison of lot
sizes or shapes, no comparison of topography or geographical features, and no
comparison of lot accessibility and uses. Rather, the Petitioner merely
asserted that the land was comparable. Conclusory statements regarding the
comparability of properties do not constitute probative evidence. Blackbird
Farms Apts., LP v. Dep’t of Local Gov’t Fin., 765 N.E.2d 711 (Ind. Tax Ct.
2002).
Petitioner’s opinion that
market values have declined since 2007 is an unsupported conclusion that does
not constitute probative evidence. See Heart City Chrysler v. State Bd. of
Tax Comm’rs, 714 N.E.2d 239 (Ind. Tax Ct. 1999); Whitley Products, 704
N.E.2d at 1119 (Ind. Tax Ct. 1998). Furthermore, because each tax year and each
assessment year stands alone, evidence of a property’s assessed value for one
year does not necessarily show its true tax value for a different assessment
year. Fleet Supply, Inc. v. State Bd. of Tax Comm’rs, 747 N.E.2d 645,
650 (Ind. Tax Ct. 2001) (citing Glass Wholesalers, Inc. v. State Bd. of Tax
Comm’rs, 568 N.E.2d 1116, 1124 (Ind. Tax Ct. 1991).
http://www.in.gov/ibtr/files/Naik_53-008-10-1-5-00021.pdf
