Board Finds an Appraisal Valuing the Leased-Fee Fails to Support the Assessed Value of a Property

Here, the Respondent argues that the Petitioner’s property was not over-valued for the 2009 assessment year based on other CVS properties that were sold or leased in the Midwest. The Respondent’s witness, Mr. Parker, testified that CVS properties are built to lease and purchasers acquire them for the income stream that the properties generate. Mr. Parker contends that the sale price for a CVS property is based on the length of its lease term. According to Mr. Parker, the value of the subject property for 2009 was $2,292,000 based on his income analysis and the value of the property based on his sales comparable analysis was $3,225,000. …

The Board notes that the Petitioner presented no evidence to show that the Respondent’s comparable properties’ rental rates or sales prices did not reflect the properties’ market values. However, the Respondent’s witness testified that he determined the market rent based on a leased fee basis. According to Mr. Parker, investors were purchasing the CVS properties “for the income stream.” Because both the Respondent’s sales comparison valuation and income valuation were based on sales and rent data that, by Mr. Parker’s own admission, valued the lease rather than the property, the Respondent’s valuation evidence fails to sufficiently support a finding that the Petitioner’s property’s 2009 assessment was correct. More importantly, although Mr. Parker is an appraiser, he specifically testified that he did not prepare an appraisal; rather, he merely concluded that the cost approach value determined by the assessor was “the most correct value for tax assessment.” Parker testimony. Thus, the Board can give little weight to either his sales comparable valuation or his income approach valuation of the subject property.

http://www.in.gov/ibtr/files/CVS_Corp_No_6252-02_82-020-09-1-4-07415.pdf