The Indiana Board’s final determination, as a preliminary
matter, found that the Assessor bore the burden of showing that the 2010
assessment of the subject property was correct under the 5% burden-shifting
rule contained in Indiana Code § 6-1.1-15-17.2. Neither party presents any real
dispute as to this determination on appeal. Grabbe, however, appeals two issues
that the Court restates as: (1) whether the Indiana Board’s determination that
Grabbe’s evidence failed to make a prima facie case that his assessment should
be reduced to $218,862 for the 2010 tax year is supported by substantial and
reliable evidence or is contrary to law, and (2) whether the Indiana Board’s
determination that Grabbe’s 2010 assessment must be reduced to its 2009
assessed value is contrary to law.
(1)
Grabbe first contends that the Indiana Board’s determination
that he failed to make a prima facie case because his evidence consisting of
four analyses - an allocation approach, a cost approach, an income approach,
and a market data approach - lacked probative value is incorrect. (See Pet’r
Br. at 4-6.) As a result, Grabbe requests that the Court reduce his assessment
to $218,862 for the 2010 tax year.
This Court has previously explained that when a taxpayer
challenges the validity of his assessment he must make a prima facie case by
presenting probative evidence regarding the alleged assessment error. See Long
v. Wayne Twp. Assessor, 821 N.E.2d 466, 468 (Ind. Tax Ct. 2005), review denied.
Moreover, the Court has explained that evidence is probative if it is
“sufficient to establish a given fact that, if not contradicted, will remain
sufficient.” Meadowbrook N. Apts. v. Conner, 854 N.E.2d 950, 953 (Ind. Tax Ct.
2005) (citation omitted). Slightly over two years ago, Grabbe initiated an
original tax appeal challenging the subject property’s 2009 assessment. See
Grabbe v. Carroll Cnty. Assessor (Grabbe I), No. 49T10-1108-TA-51, slip op. at
2 (Ind. Tax Ct. Dec. 31, 2013). In that case, Grabbe presented the same four
analyses as here – an allocation approach, a cost approach, an income approach,
and a market data approach - to show that his 2009 assessment was incorrect.
See id. at 4-11. The Court affirmed the Indiana Board’s finding in the prior
appeal that each of Grabbe’s analyses lacked probative value because he failed
to show that his analyses comported with generally accepted appraisal
principles. See id. at 3-12.
The certified administrative record in this case reveals that
Grabbe used the same four analyses to estimate the value of the subject
property for the 2010 tax year. (Compare Cert. Admin. R. at 109-12, 117-18,
126, 148-55, 158-67, 212-38, 260-76 and Revised Cert. Admin. R. at 310-13,
317-22 (all regarding Grabbe’s 2010 analyses)) with Grabbe I, No.
49T10-1108-TA-51, slip op., at 4-12 (describing Grabbe’s 2009 analyses). In
addition, the administrative record in this case reveals that once again Grabbe
did not present evidence to demonstrate that his use of these analyses
comported with generally accepted appraisal principles. Consequently, the Court
finds that the Indiana Board’s determination that Grabbe failed to make a prima
facie case because his evidence lacked probative value is supported by
substantial and reliable evidence and is not contrary to law.
(2)
Grabbe also maintains that the Indiana Board’s determination
that the 2010 assessment of his property should be the same as the 2009
assessment of his property is contrary to law. Grabbe claims that once the
Assessor failed to meet its burden to show that his 2010 assessment was correct
under the 5% burden-shifting rule, the Indiana Board should have adopted his
uncontradicted valuation of the subject property rather than use the prior
year’s assessed value. (See Oral Arg. Tr. at 10; Pet’r Reply Br. at 2, 6-8;
Pet’r Br. at 2.) Grabbe reasons that the General Assembly enacted the 5%
burden-shifting rule in order to put taxpayers and assessors “on a bit more
level playing field.” (Pet’r Reply Br. at 6.) Moreover, Grabbe maintains that
the 5% burden-shifting rule does not require that a prior assessment be the
default value when an assessing official fails to meet his burden. (See Pet’r
Reply Br. at 2, 6-8.)
Here, the Indiana Board first determined that the Assessor
failed to establish that the 11% increase to Grabbe’s 2009 assessment for the
2010 tax year was correct. (See Cert. Admin. R. at 63-64.) The Indiana Board
also determined that Grabbe’s evidence that his property should be assessed for
less than its 2009 assessed value lacked probative value, and therefore, the
Indiana Board had no reason to conclude that Grabbe’s valuation of the subject
property was indicative of its 2010 market value-in-use. (See Cert. Admin. R.
at 64-70.) Accordingly, the Indiana Board applied the subject property’s 2009
assessment, which the Court finds was reasonable …
While Grabbe raises several issues on appeal,the Court
restates the dispositive issue as whether the Indiana Board’s final
determination must be reversed because it is unsupported by substantial and
reliable evidence and is contrary to law. In support of his claim, Grabbe
asserts that because he presented probative evidence consisting of his analyses
using an allocation approach, a cost approach, an income approach, and a market
data approach, the Indiana Board erred in upholding his property’s $274,500
assessment.
The Allocation Approach
Grabbe first provided an alternate value calculation based on
the allocated April 17, 2008, sales price of his property. This allocation
approach valued the subject property at $218,262 ($30,900 for the land and
$187,362 for the hog buildings). (See Cert. Admin. R. at 123-28.) To determine
the value of the hog buildings, Grabbe allocated the subject property’s April
17, 2008, sales price of $350,000 between each parcel, valuing the 020 parcel
at $146,611 and the 015 parcel at $203,389. (See Cert. Admin. R. at 123-28.)
From these figures, Grabbe deducted: (1) the value of the one-acre homesites on
each parcel as recorded on the property record cards ($11,240 for the 020
parcel and $3,890 for the 015 parcel); (2) the value of the remaining land,
which was based on Grabbe’s “recollection” of the per acre sales price of
nearby land ($14,098 for the 020 parcel and $96,831 for the 015 parcel); and
(3) the value of the personal property located on the parcels at the time of
sale ($9,021 for the 020 parcel and $27,558 for the 015 parcel) based on his
2009 personal property tax returns. (See Cert. Admin. R. at 123-28, 175-80,
313-14, 320-22.)
...
Grabbe did not present any evidence to show that his
assumptions about how much of the purchase price to allocate were reliable by
relating them, for example, to the market values-in-use of similar properties.
See APPRAISAL INST., supra, at 340 (explaining that the allocation approach
requires the use of market data). Consequently, the Court finds that the
Indiana Board’s determination that Grabbe’s allocation approach lacked
probative value was based on substantial evidence and consistent with the law.
The Cost Approach
Grabbe also presented an estimated value of his property using
a cost approach analysis, which valued the property at $188,320 ($30,900 for
the land and $157,420 for the hog buildings).4 (See Cert. Admin. R. at 208.)
Grabbe estimated the value of the property under the cost approach by taking an
obsolescence depreciation adjustment for the hog buildings’ antiquated designs
and use of lagoon manure storage systems. See note 4. (See also Cert. Admin. R.
at 163-72, 322-27.)
The Indiana Board determined that Grabbe’s cost approach
lacked probative value because it failed to link the identified causes of
obsolescence to an actual loss in property value. (See Cert. Admin. R. at 49-50
(explaining, for example, that Grabbe did not show that a hog facility with a
lagoon manure storage system was worth 15% less than a facility with a deep pit
manure storage system).) Grabbe, however, claims that the Indiana Board’s
rejection of his cost approach seeks the “impossible” with respect to the
quantification of obsolescence.
…
According to Grabbe, that level of evaluation conflicts with
current Indiana law that plainly provides that a taxpayer need not submit an
appraisal to appeal an assessment. (See Pet’r Br. at 8-9.) See also IND. CODE §
6-1.1-15-3(f) (2010).
This Court has repeatedly stated that the valuation of
property is the formulation of an opinion, not an exact science. See, e.g.,
Millennium Real Estate Inv., LLC v. Assessor, Benton Cnty., 979 N.E.2d 192, 197
(Ind. Tax Ct. 2012), review denied; Stinson v. Trimas Fasteners, Inc., 923
N.E.2d 496, 502 (Ind. Tax Ct. 2010). Nonetheless, Indiana law makes clear that
the probative value of an opinion depends on whether the proponent of that
opinion has shown that he adhered to generally recognized appraisal principles
in formulating the opinion. See Manual at 3, 5. This requirement remains the
same whether an assessing official, an appraiser, or a taxpayer is the
proponent of the opinion. See, e.g., Inland Steel Co. v. State Bd. of Tax
Comm’rs, 739 N.E.2d 201, 220 (Ind. Tax Ct. 2000) (explaining that an
appraiser’s use of a producer price index does not, in and of itself, establish
that he complied with generally accepted appraisal standards), review denied.
The Indiana Board, therefore, did not adopt an unreasonable requirement or
apply some artificially high standard in determining the probative value of
Grabbe’s income approach.
Grabbe did not demonstrate that his deduction of property
taxes as an expense was proper under generally accepted appraisal standards.
See Millennium, 979 N.E.2d at 196-97 (discussing the propriety of deducting
property taxes as an expense for ad valorem tax purposes). Moreover, while
Grabbe’s evidence provided that the capitalization rates of certain hog
facilities ranged from 8% to 20%, he did not provide any evidence demonstrating
why a rate of 20% is proper in this case or why the property from which he
derived his 20% capitalization rate was comparable to his own property. (See
Cert. Admin. R. at 204-07, 301-03.) Consequently, the Court finds that the
Indiana Board’s determination that Grabbe’s income approach lacked probative
value is supported by substantial and reliable evidence and is not contrary to
law.
The Market Data Approach
Finally, Grabbe calculated the value of his property using a
market data approach, which valued the subject property at $184,311 based on
the sales data from three other hog farms (hereinafter, “the comparison
farms”). (See Cert. Admin. R. at 210.) Thus, Grabbe’s market data approach is
comparable to the sales comparison approach to value, which “estimates the
total value of the property directly by comparing it to similar, or comparable,
properties that have sold in the market.” Manual at 3. Grabbe’s market data
approach involved four steps:
Step 1) Determined the value of the hog buildings on the
comparison farms by deducting from their total sales prices the value of the
homes, certain land, and tool sheds on these properties;
Step 2) Calculated the “price per pig space” of the hog
buildings on the comparison farms by dividing the number of pig spaces in each
building by the value of the building as determined in Step 1;
Step 3) Determined the value of his hog buildings (which
included the value of the personal property) by multiplying their price per pig
space8 by their number of pig spaces;
Step 4) Arrived at a final estimate of value for his property
by adding the value of the land and the value of the hog buildings, and then
subtracting the value of the personal property.
(See Cert. Admin. R. at 210-17, 304-08.)
The
Indiana Board determined that Grabbe’s market data approach lacked probative
value because he neither explained nor submitted any documentary evidence to
indicate how he determined the value of the homes, the other land, and the tool
sheds on the comparison farms. (See Cert. Admin. R. at 50-51.) Grabbe claims,
however, that the Indiana Board erred in finding that his market data approach
lacked probative value because the certified administrative record contains
evidence of the values of those items. (See Pet’r Br. at 10.) To support this
claim, Grabbe directs the Court to three photocopied pages of an Indiana Board
final determination in another case. (See Pet’r Br. at 10 (citing Ex. 2).) That
evidence, however, was not presented to the Indiana Board during the course of
the administrative proceedings in this case and, therefore, the Court may not
consider it now. See State Bd. of Tax Comm’rs v. Gatling Gun Club, Inc., 420
N.E.2d 1324, 1326-28 (Ind. Ct. App. 1981) (explaining that the Court generally
may not consider evidence that a taxpayer fails to submit to the Indiana
Board); see also IND. CODE § 33-26-6-3 (2010). Accordingly, Grabbe failed to
demonstrate that the Indiana Board’s determination that his market data
approach lacked probative value is unsupported by substantial and reliable
evidence or is contrary to law.
