SBYC
did not offer any of the types of evidence the Manual contemplates. Instead,
SBYC argued that its taxes increased while its neighbors’ taxes decreased and
that subject parcels were assessed for far more than two neighboring parcels.
SBYC’s
first claim is beside the point. The question is not whether SBYC’s taxes
increased at a greater rate than its neighbors' taxes did, but instead whether
the subject parcels were assessed for more than their true tax value. In fact,
to the extent that SBYC seeks to contest its taxes—opposed to the subject
parcels’ assessments—the Board lacks authority to hear SBYC’s claim. The Board
is a creation of the legislature and has only the powers conferred by statute. See
Whetzel v. Dep’t of Local Gov’t Fin., 761 N.E.2d 904, 908 (Ind. Tax Ct.
2001) (citing Matonovich v. State Bd. of Tax Comm’rs, 705 N.E.2d 1093,
1096 (Ind. Tax Ct.1999)). The Board therefore must address appeals from
determinations made by local assessing officials or county PTABOAs that concern
property valuations, property tax deductions, property tax exemptions, or
property tax credits. Ind. Code § 6-1.5-4-1(a). By contrast, the Board lacks
statutory authority to address general challenges to property taxes.
The
Board, however, must address SBYC’s second claim, which focuses on the
disparity between the subject parcels’ assessments and the assessments for the
Van and Blair parcels. The Manual does not necessarily contemplate using the
assessments—as opposed to sale prices—of comparable properties to estimate an
appealed property’s value. But the Indiana General Assembly recently enacted a
statute allowing parties to an appeal to do just that:
(a)
This section applies to an appeal to which this chapter applies, including any
review by the board of tax review or the tax court.
(b)
This section applies to any proceeding pending or commenced after June 30,
2012.
(c)
To accurately determine market-value-in-use, a taxpayer or an assessing
official may:
(1)
in a proceeding concerning residential property, introduce evidence of the
assessments of comparable properties located in the same taxing district or
within two (2) miles of a boundary of the taxing district; and
(2)
in a proceeding concerning property that is not residential property, introduce
evidence of the assessments of any relevant, comparable property.
However,
in a proceeding described in subdivision (2), preference shall be given to
comparable properties that are located in the same taxing district or within
two (2) miles of a boundary of the taxing district. The determination of
whether properties are comparable shall be made using generally
accepted appraisal and assessment practices.
Ind.
Code § 6-1.1-15-18 (emphasis added).
In
any case, whether using sale prices or assessments as proxy for market
value-in-use, raw data about other properties, by itself, does little to prove
an appealed property’s market value-in-use. The other properties must be shown
to be sufficiently comparable to the property under appeal. Conclusory
statements that a property is "similar" or "comparable" to another property do
not suffice. See Long v. Wayne Twp. Assessor, 821 N.E.2d 466, 470 (Ind.
Tax Ct. 2005). Instead, one must identify the characteristics of the property
under appeal and explain how those characteristics compare to the
characteristics of the sold properties. Id. at 471. One must similarly
explain how any differences between the sold properties and the property under
appeal affect the properties’ relative market values-in-use. Id.
SBYC
did little to meaningfully compare the Van and Blair parcels to the subject
parcels. At most, SBYC showed that the parcels are all very close to each
other—the Van parcel sits beside the subject parcels along the same road and
the Blair parcel sits immediately behind them. But various factors other than
location go into analyzing a piece of land’s market value-in-use, such as size,
shape, topography, accessibility, and use. See Blackbird Farms Apartments v.
Dep’t of Local Gov’t Fin., 765 N.E.2d 711, 714 (Ind. Tax Ct. 2002)(quoting Beyer
v. State, 280 N.E.2d 604, 607 (Ind. 1972). SBYC did not explicitly compare
the parcels along any of those lines, although a cursory examination of the
record shows that the subject parcels and the Van parcel are similarly shaped
and have similar accessibility.
SBYC
also ignored significant differences between the parcels. For example, Ms.
Conley admitted that, unlike the subject parcels, the Van parcel is wooded. Yet
she did not explain how that difference affected the parcels’ relative market
values-in-use. More importantly, the subject parcels are platted while the Van
and Blair parcels are not. As the Assessor explained, the Real Property
Assessment Guidelines for 2002 – Version A give weight to whether a parcel is
platted or not in determining the most likely influence on the parcel’s value.
That, in turn, helps an assessor select the most appropriate unit value to use
in assessing the property. See REAL PROPERTY ASSESSMENT GUIDELINES FOR
2002 – VERSION A, ch. 2 at 16-19. Thus, for a platted residential parcel in a
subdivision, "front footage along the street is of primary importance," while
the acreage method is appropriate where a particular use requires a large
amount of land, such as a rural residential home-site or rural residential
acreage. Id. at 16-17.
Of
course, "the pricing method for valuing the neighborhood is of less importance
than arriving at the correct value of the land as of the valuation date." Id.
at 16. The Board therefore does not hold that a platted lot can never be
comparable to an unplatted lot. On the other hand, the Board will not simply
assume that the difference is irrelevant to the parcels’ relative market
values-in-use. SBYC needed to show that it was using generally accepted
appraisal or assessment practices in seeking to value subject parcels based on
the assessments of the Van and Blair parcels. Because SBYC failed to (1)
compare the parcels in terms of key characteristics, and (2) explain how
differences in those key characteristics affected the parcels’ relative market
values-in-use, the raw assessment data on which SBYC relied has little or no
probative value regarding the subject parcels’ market value-in-use.
But
a taxpayer is not limited to claiming that its property is assessed for more
than its market value-in-use. Tangible property must also be assessed "in a
uniform and equal manner." I.C. § 6-1.1-2-2; see also, IND. CONST. ART.
10 § 1(requiring the legislature to "provide, by law, for a uniform and equal
rate of property assessment and taxation. . . ."). Thus, for example, the
Indiana Supreme Court has recognized that a taxpayer may seek an adjustment to
his property’s assessment on grounds that his taxes are higher than they would
have been had other properties been properly assessed. Dep’t of Local Gov’t
Fin. v. Commonwealth Edison, Co. 820 N.E.2d 1222, 1226-27 (Ind. 2005).
Unfortunately,
there is little guidance on how a taxpayer can make an actionable lack-of-uniformity-and-equality claim under our current market value-in-use system. The
Tax Court has recognized at least one way—a taxpayer can offer ratio studies,
"which compare the assessed values of properties within an assessing
jurisdiction with objectively verifiable data, such as sales prices or market
value-in-use appraisals." Westfield Golf Practice Center, LLC v. Washington
Twp. Assessor, 859 N.E.2d 396, 399 n. 3 (Ind. Tax. Ct. 2007)(citing MANUAL
at 6, 24-26). SBYC, however, did not offer a ratio study. The Board need not
decide what, if any, other ways a taxpayer might make an actionable claim for
lack of uniformity and equality to find that SBYC’s approach of simply pointing
to two other properties, which differed from the subject parcels in ways that
likely affected their relative values, but which were assessed for less than
the subject parcels, did not suffice.
Nevertheless,
the Assessor’s justification for the disparity in assessments continues to
trouble the Board. The Assessor attributed the difference between the
assessments of the subject parcels and the Van parcel solely to the fact that
the subject parcels are platted while the Van parcel is not. As explained
above, that difference might affect the parcels’ relative values, and SBYC
needed to deal with that and other differences between the parcels in making
its assessment comparison. But the Board has a hard time seeing how the mere
fact that two parcels totaling 0.63 acres (the subject parcels) are platted
justifies assessing those parcels for $132,000 more than an adjacent one-acre
parcel along the same road (the Van parcel). Had SBYC meaningfully dealt with
the differences between the parcels, it might have persuaded the Board that the
subject parcels’ value lies somewhere between their current assessments and the
Van parcel’s assessment.
As things stand, however, SBYC’s failure to make a prima facie case ends the Board’s inquiry. See Lacy Diversified Indus. LTD v. Dep’t of Local Gov’t Fin., 799 N.E.2d 1215, 1221-22 (Ind. Tax Ct. 2003)(finding that, where the taxpayer had failed to offer probative evidence to show that the State Board of Tax Commissioners had assigned an incorrect quality grade, the "Board's duty to support its final determination with substantial evidence [was] therefore not triggered.").
As things stand, however, SBYC’s failure to make a prima facie case ends the Board’s inquiry. See Lacy Diversified Indus. LTD v. Dep’t of Local Gov’t Fin., 799 N.E.2d 1215, 1221-22 (Ind. Tax Ct. 2003)(finding that, where the taxpayer had failed to offer probative evidence to show that the State Board of Tax Commissioners had assigned an incorrect quality grade, the "Board's duty to support its final determination with substantial evidence [was] therefore not triggered.").
