Arneo made several
arguments about its property taxes, including claims about the level of its
taxes as a percentage of the subject parcels’ fixed income. The Board, however,
lacks jurisdiction to hear general claims that a petitioner’s taxes are too
high or that those taxes are higher than the taxes paid by other property
owners. The Board is a creation of the legislature and has only the powers
conferred by statute. Whetzel v. Dep’t of Local Gov’t Fin., 761 N.E.2d
904, 908 (Ind. Tax Ct. 2002) (citing Matonovich v. State Bd. of Tax Comm’rs,
705 N.E.2d 1093, 1096 (Ind. Tax Ct. 1999)). Indiana Code § 6-1.5-4-1 gives the
Board authority to determine appeals concerning assessed valuation, deductions,
exemptions, and credits. The Board therefore has no authority to address
general disputes over taxes or tax rates.
Of course, Arneo’s
taxes are based on the subject parcels’ assessments. And the Board does have
jurisdiction to hear Arneo’s challenge to those assessments. There appears to
be no dispute about how the Assessor classified Arneo’s land. Mr. Nagel testified
that the Assessor made changes to the land after reviewing its geographic information
system (“GIS”) and surveys, and that Mr. Kramer did not dispute those changes
at the PTABOA hearing. The same is true for the Board’s hearing—while Mr.
Kramer referred to a letter from a surveyor estimating that roughly 40 acres of
the farm was in a flood hazard area or flood zone, Mr. Kramer did not claim
that the Assessor failed to
accurately classify that portion of the subject parcels.
Instead, Mr.
Kramer focused on the fact that Arneo had enrolled a significant part of the
farm in the CRP and received a fixed income under that program. Mr. Kramer therefore
proposed using the income capitalization approach to value the parcels. Assuming
without deciding that a taxpayer or assessor can prove the market value-in-use value
of agricultural land other than through using the base rates adopted by the DLGF
and applying the methodology laid out in the DLGF’s guidelines, we find that Mr.
Kramer’s income capitalization analysis lacks probative weight.
Under
the income capitalization approach,
[T]he income
expected to be earned by the subject property is estimated, allowing for
reasonable expenses, vacancy, and/or collection loss, to arrive at net
operating income (NOI). The NOI is subsequently converted to a present value by
dividing it by a capitalization rate. The capitalization rate generally
reflects the annual rate of return necessary to attract investment capital and
is influenced by such factors as “apparent risk, market attitudes toward future
inflation, the prospective rates of return for alternative investments, the
rates of return earned by comparable properties in the past, the supply of and
demand for mortgage funds, and the availability of tax shelters.”
Lacy
Diversified Indust. v. Dep’t of Local Gov’t Fin., 799
N.E.2d 1215, 1224 (Ind. Tax Ct. 2003)(quoting, AM INST. OF REAL ESTATE APPRAISERS,
THE APPRAISAL OF REAL ESTATE, 417 (10th ed. 1992)). Although Mr. Kramer
followed the income capitalization approach’s general formula of dividing
income by a rate of return (capitalization rate), he did not consider any of
the factors required by generally accepted appraisal principles in calculating
net income or choosing a capitalization rate. To the contrary, Mr. Kramer’s
analysis is entirely conclusory and therefore lacks probative weight.
Mr.
Kramer also identified the following additional issues: (1) a highway bisects
the farm, (3) power lines run on and off the farm, (3) there is an interceptor
sewer at the back of the farm, and (4) the house and other buildings are simple
and have not been remodeled. But Mr. Kramer did not claim that the Assessor failed
to properly address those issues in applying the DLGF’s guidelines, nor did he
offer any probative evidence to quantify how they affect the farm’s market
value-in-use.
