30. The Petitioner’s claim depends on
a value calculation purportedly using the income approach to determine the
actual market value-in-use of the subject property. An income capitalization
approach that conforms to generally accepted appraisal principles would be an
acceptable way to prove the market value-in-use of a property and overcome the presumption
in favor of the existing assessment. MANUAL at 3. The income capitalization
approach values property based on its earning power, and in part relies on income,
expenses and occupancy rates of comparable properties in the market. Indiana
MHC, LLC v. Scott County Assessor, 987 N.E.2d 1182, 1185-86 (Ind. Tax Ct.
2013).
31. The Petitioner contends the
income approach for the property should be based on actual rents and vacancy.
The Petitioner based his income approach on the pro forma prepared by the Assessor.
Petitioner Exs. 2, 3. The Petitioner, however, decreased the rents received
for the liquor store and the small retail space to reflect the actual rents.
The Petitioner increased the vacancy rate to 25%, which it claims is the actual
rate. The Petitioner then deducted the market expenses used by the Assessor and
applied the Assessor’s capitalization rate even though Mr. Vaughn stated he did
not agree with it.
32. The Petitioner’s income
capitalization approach failed to comply with generally accepted appraisal
principles because it did not consider rents and vacancy rates in the market. Further,
the Petitioner also failed to show that combining the actual rents and the
actual vacancy rate with market expenses satisfies generally accepted appraisal
principles. There is no indication of how the actual expenses compare to the
market expenses. The Petitioner invites the Board to find that his method of
relying on actual rents and actual vacancies represents the market value-in-use
of the property. The Board declines the Petitioner’s invitation. See Indiana
MHC, 987 N.E.2d 1182, 1185-86. (stating that the petitioner’s income
capitalization approach, which failed to consider any market data, lacked
probative value).
33. To the extent that the
Petitioner contends the property suffers from high vacancy or low rental rates
can be seen as a claim for obsolescence, this argument also fails. It is not sufficient
for the Petitioner to merely identify random factors that may cause the
property to be entitled to an obsolescence adjustment. The Petitioner must
explain how the purported causes of obsolescence cause the property to suffer
an actual loss in value. See
34. [sic] Indian Industries, Inc. v. Department of Local
Government Finance, 791 N.E.2d 286, 290 (Ind. Tax Ct. 2003) (“All Indian
has done in this case is provide the State Board with a laundry list of factors
that may cause obsolescence to its improvements and then say ‘as a result, we’re
entitled to a 70% obsolescence adjustment.’ However, Indian needed to link one
with the other by showing an actual loss in value”). The Petitioner failed to sufficiently
show the property’s market value-in-use. Therefore, the Petitioner failed to make
a prima facie case that the subject property’s 2010 and 2011 assessments are incorrect.
35. Finally, the Petitioner also
focused on two purportedly comparable sales. Petitioner Ex. 5. But, in
order to use the sales comparison approach as evidence in a property assessment
appeal, the proponent must establish the comparability of the properties being examined.
Conclusory statements that a property is “similar” or “comparable” to another property
do not constitute probative evidence of the comparability of the two properties.
Long, 821 N.E.2d at 470. Instead, the proponent must identify the
characteristics of the subject property and explain how those characteristics
compare to the characteristics of the purportedly comparable properties. Id.
at 471. The proponent also must deal with how any differences between the
properties affect their relative values. Id. When seeking to establish
comparability of land, the relevant characteristics to compare include things
such as location, accessibility, and topography. See Blackbird Farms Apts.,
LP v. Dep’t of Local Gov’t Fin., 765 N.E.2d 711, 715 (Ind. Tax Ct. 2002)
(holding that taxpayer failed to establish comparability of parcels of land
where, among other things, taxpayer did not compare the topography and
accessibility of parcels). The proponent also must explain how any differences
between the properties affect their relative market values-in-use. Long at
471. The Petitioner failed to offer any such meaningful analysis in this
appeal. In fact, the two purportedly comparable properties have, according to
the Petitioner’s witness, much lower rents per square foot than the subject
property: $6.00 or less compared to $9.00 and $10.00 per square foot for the
subject property. This difference in rental price does not support the
Petitioner’s conclusion that these properties are comparable. The Petitioner’s
conclusory evidence is insufficient to establish the comparability of these
parcels and has no probative value. Id.
http://www.in.gov/ibtr/files/Twyckenham_Village_79-032-10-1-4-00001_etc.pdf
