A.
March 1, 2009 assessments
Mr.
Grabbe used the price he paid for Tracts 5 and 16 at auction as the starting
point for analyzing the Finishing and Farrowing Parcels’ values. A property’s
sale price can be compelling evidence of its market value-in-use. Although a
sale at auction, as opposed to one where a property has been listed with a
realtor, may raise concerns as to whether the seller was typically motivated and
marketed the property in a commercially reasonable manner, Mr. Grabbe allayed
those concerns in this case. The auction was well advertised and attended, and
Mr. Grabbe bought Tracts 5 and 16 and accompanying personal property after a
competitive bidding process. Thus, the $385,000 sale price is probative of the
combined market value of those items. And the auction occurred less than a year
after the relevant valuation date for the March 1, 2009, assessment, so the
sale price bears at least some relationship to the value of the items as of
that valuation date.
Of
course, this appeal concerns the value of real property only. To determine that
value, one must deduct the portion of the sale price that was attributable to
personal property. Mr. Grabbe testified that $53,705 of the sale price was
attributable to personal property. While Mr. Grabbe said little about how he
arrived at that allocation, the Assessor did not dispute it. Thus, Mr. Grabbe
made a prima facie case that the real property in Tracts 5 and 16 was worth
$331,300 (rounded).
But
Mr. Grabbe did not appeal all three tax parcels that make up what previously
were Tracts 5 and 16. Instead, Mr. Grabbe appealed only the Finishing and
Farrowing Parcels and left the House Parcel alone. Nonetheless, the record
shows what the House Parcel was assessed for in 2009 ($70,100). Because the
three parcels together were worth $331,300, Mr. Grabbe made a prima facie case
for reducing the combined assessment for the Finishing and Farrowing Parcels to
a total of $261,200 (rounded). And the Assessor did nothing to rebut or impeach
Mr. Grabbe’s evidence
Mr.
Grabbe, however, sought a combined assessment of only $197,653 for the
Finishing and Farrowing Parcels. According to Mr. Grabbe, that is the value
yielded by isolating the improvements’ market value and then adding back the
statutorily mandated base rates for assessing agricultural land.
Using
market-based evidence to show the market value-in-use of improvements
separately from the land on which they sit is not necessarily an easy task. And
one must apply generally accepted appraisal principles in doing so. Mr. Grabbe,
however, did little to show that he complied with those principles. For
example, he allocated Tract 5’s sale price between the House Parcel and the
rest of the land and improvements by subtracting the House Parcel’s assessment
from Tract 5’s total allocated sale price. Granted, the Real Property
Assessment Guidelines for 2002 – Version A recognize that land value may be
abstracted from a sale price by subtracting the value of improvements. See REAL
PROPERTY ASSESSMENT GUIDELINE FOR 2002 – VERSION A, ch. 2 at 14-15
(incorporated by reference at 50 IAC 2.3-1-2 (2009)) (explaining that land
value can be determined by subtracting the improvements’ depreciated value from
a property’s sale price while cautioning that the abstraction method is most
reliable where the improvements have minimal depreciation). But Mr. Grabbe did
more than that here. He took the component assessments (land and improvements)
for a carved-out portion of a larger tract and subtracted those assessments
from the tract’s total sale price. Yet he did not even try to show how those
component assessments related to the carved-out portion’s market value, either
as a freestanding tract or as part of a larger property.
On
the other hand, the Assessor did not even allege that the House Parcel’s assessment
reflected something other than its market value-in-use. So while the Board has
reservations about Mr. Grabbe’s allocation methodology, it arguably carries at
least some probative weight.
The
shortcomings of Mr. Grabbe’s allocation methodology are compounded by problems
with another key component of his analysis—his determination of the market
value of Tract 5 and 16’s agricultural land. For sales data to be probative, the
sold properties must 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, 821 N.E.2d at 470. 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. Similarly,
one must explain how any differences between the sold properties and the property
under appeal affect the properties’ relative market values-in-use. Id.
Mr.
Grabbe did offer the type of comparison contemplated by the Tax Court. Mr. Grabbe
based the value that he allocated to Tract 5’s agricultural land exclusively on
a single sale in which Campbell Limited Partnership bought 381.2 acres of land
for $2,100,000. Similarly, he based his allocation for Tract 16’s agricultural land
on the average per-acre price from two different sales—232 acres that Scott Schular
bought for $1,100,000 and 108.2 acres that Phyllis Shuck bought for $535,000.
But Mr. Grabbe did little to compare the sold properties to Tracts 5 and 16. He
explained that they were close to each other; in fact, Tract 5 had previously
been part of the same larger property that included the tracts that Campbell
bought at the same auction. Beyond that, the auction brochure offers the only
description of the respective properties. That brochure describes the purportedly
comparable properties as tillable cropland, while it says little or nothing
about the land contained in Tracts 5 and 16. If anything, the brochure highlights
the fact that Tracts 5 and 16 were not used as tillable cropland.
Mr.
Grabbe, however, did little to explain how that difference or any other difference
affected the properties’ relative market values. Instead, he simply asserted
that if Tracts 5 and 16 were not used for hog finishing and farrowing, they
would be farmed like the other properties. Without a more detailed and reasoned
comparison, Mr. Grabbe’s comparative sales data has little or no probative
weight.
Because
of the cumulative problems with his allocation analysis, Mr. Grabbe failed to
make a prima facie case for reducing the Finishing and Farrowing parcels’
combined assessment below $261,200.
B.
March 1, 2008 assessments
Mr.
Grabbe’s appeals for the March 1, 2008, assessment date present an added
complication. Those appeals address land and improvements contained in larger
tax parcels that Mr. Grabbe did not own either on March 1, 2008, or at any time
thereafter. And the owners of the rest of the property contained in those
larger parcels are not parties to Mr. Grabbe’s appeals. Under those
circumstances, Mr. Grabbe failed to make a prima facie case for relief.
