In this case, the Petitioner
offered an income approach calculation to demonstrate that its property
suffered from economic obsolescence in 2011.4 More specifically, the Petitioner
asserts that, due to vacancy, its property did not generate rental income in
line with the market rental rates and, therefore, suffers from 95% economic
obsolescence.
In valuing a property under the income approach, it is appropriate to consider the historic and projected income and expense data of the property in question. It is also necessary to consider that same kind of data from other comparable properties in order to make accurate, realistic projections about the income stream a property should be expected to produce. Where the income and expense data for the subject property is out of step with what the market data shows, generally accepted appraisal principles require further examination and analysis. For example, considering both types of income and expense data helps to protect against distortions and inaccurate value estimates that might be caused by extraneous factors (such as bad management or poor business decisions) that have nothing to do with the inherent value of a property. See Indiana MHC, LLC v. Scott County Assessor, 987 N.E.2d 1182, 1186 (Ind. Tax Ct. 2013).
In this case, the Petitioner
used vacancy rate information and expense ratios based on the Indianapolis
warehouse district to calculate the income approach. Similarly, the Petitioner
used an income capitalization rate based on national data. The Petitioner, however,
failed to demonstrate that the national and regional rates were based on properties
that are similar or comparable to the subject property. The Petitioner also failed
to explain reasons why its property experienced a 40% vacancy as opposed to the
alleged 10% market vacancy rate. 5 See id. (footnote added).
While the Petitioner provided
evidence of the actual income and expenses of the property for 2008, 2009, and
2010, the Petitioner failed to demonstrate how these amounts relate to the
relevant valuation date of March 1, 2011. The Petitioner acknowledged that the 2011
actual rental income data was unavailable, but failed to provide further
explanation. Pet’r Ex. 3 at 2.
The record is devoid of
evidence that the Petitioner’s methods comply with generally accepted appraisal
principles. Accordingly, the Board concludes that the Petitioner failed provide
probative evidence to establish a prima facie case that the 2011 assessment was
incorrect.
When a taxpayer fails to
provide probative evidence supporting the position that an assessment should be
changed, the Respondent’s duty to support the assessment with substantial
evidence is not triggered. See Lacy Diversified Indus. v. Dep’t of Local Gov’t
Fin., 799 N.E.2d 1215, 1221-1222 (Ind. Tax Ct. 2003).
http://www.in.gov/ibtr/files/Haddad_Properties_Ltd_Ptrnshp_19-002-11-1-4-00027.pdf
