The Petitioners contend that
their property’s value was excessive based on its appraised value. The
Respondent objected because the appraisal is hearsay. “‘Hearsay’ is a statement,
other than one made by the declarant while testifying at [] trial or
hearing, offered in evidence to prove the truth of the matter asserted.” Ind.
Evidence Rule 801(c). Such a “statement” can be either oral or written. Id. Nevertheless,
hearsay evidence is admissible with significant limitations:
Hearsay evidence, as defined by
the Indiana Rules of Evidence (Rule 801) may be admitted. If the hearsay
evidence is not objected to, the evidence may form the basis for a
determination. However, if the evidence is: (1) properly objected to; and (2)
does not fall within a recognized exception to the hearsay rule; the resulting
determination may not be based solely upon the hearsay evidence.
52 IAC 3-1-5(b).
The word “may” is discretionary,
not mandatory. In other words, the Board can permit hearsay evidence to be
entered in the record, but it is not required to allow it.
In this case, the appraisers’
written statements concerning the valuation of the subject property are offered
to prove the truth of the matter asserted. The appraisers, however, were not present
to testify or be cross-examined at the hearing. Accordingly, the appraisals are
hearsay evidence.1 Nonetheless, Petitioners’ Exhibits 1 and 2 are admitted,
subject to the limitations in the Board’s procedural rules.
Here, the Petitioners presented two
market value appraisals both prepared in accordance with USPAP. Both appraisers
used the sales comparison approach, the cost approach, and the income
capitalization approach. One appraiser, Mr. Falcone, estimated the value of the
property was $228,000 as of August 5, 2010. The other appraiser, Mr. Glenn,
estimated the value of the property was $240,000 as of October 15, 2010. See
Pet’rs Exs. 1 and 2.
Assuming, arguendo, that
the appraisals accurately reflect 2010 value, the Petitioners failed to present
evidence relating the 2010 appraised value to the correct valuation dates for
2008 or 2009 assessments. While the Petitioners expressed their desire for the
Assessor to trend the 2010 value back to the March 1, 2008, and March 1, 2009, assessment
dates, it was incumbent on the Petitioners to establish the correct
value for the years being appealed.
Moreover, because of the hearsay
objection, the appraisals alone are not a sufficient basis for lowering the
assessments. And here the Petitioners failed to present other probative
evidence to support the requested $230,000 valuation.
More specifically, the
Petitioners attempted to show that the subject property was assessed for more
than its market value by comparing it to several other multiunit/income properties
that sold between July 1, 2009, and June 30, 2011. While the Petitioners
recognized that one can estimate value based on the values of comparable properties,
as in the sales comparison approach, the Petitioners did not follow that approach’s
basic requirements.
When applying the
sales-comparison approach, one must first identify comparable properties that
have sold. One then considers and compares all possible differences between the
comparable properties and the subject property that could affect value, using
objectively verifiable evidence to determine which items actually affect value in
the marketplace. Typically, those items are then quantified by their
contributory values and used to adjust the comparable properties’ sale prices.
Stated differently, in order to
effectively use a sales comparison approach as evidence in an assessment
appeal, one must first show that the properties being examined are comparable
to the property under appeal. See Long v. Wayne Twp. Assessor, 821 N.E.2d
466, 470-471 (Ind. Tax Ct. 2005) (explaining that conclusory statements
that a property is similar or comparable to another property are not probative
of the properties’ comparability). One must also identify the
characteristics of the property under appeal and explain how those
characteristics compare to the characteristics of the purportedly comparable
properties. Similarly, one must explain how any differences between the
properties affect their relative market values-in-use. Id.
The Petitioners compared the sold
properties to the subject property along certain lines, such as size, updates,
and amenities, but did little to explain how any relevant differences affected
the relative values. Without analysis that complies with generally accepted
appraisal principles, the sales data that the Petitioners provided does little
to show the subject property’s market value-in-use.
Finally, the Petitioner’s
assertion that the 2007 value should not be used as a basis for assessment
because 2007 was the peak of the market is unsupported. Statements that are
unsupported by probative evidence are conclusory and of little value to the
Board in making its determination. Whitley Products, Inc. v. State Board of
Tax Commissioners, 704 N.E. 2d 1113, 1119 (Ind. Tax Ct. 1998). Thus, the Petitioners
failed to establish the value of the property.
