29. In this case, the Respondent had the burden of proof.
The Respondent presented a USPAP compliant appraisal prepared by John Leader
that was dated December 19, 2013. It had an effective date of “2008–2010.”
Resp’t Ex. 1. Mr. Leader valued the subject property using all three approaches
to value: the cost approach, the income approach, and the sales comparison
approach. He placed the most weight on the cost approach and valued the subject
property at $12,900,000. In his cost approach Mr. Leader used the square foot
methodology with increased adjustments for building heights of twenty feet. He
estimated the value for 2009, but not for 2008, because of some “land errors.”
Mr. Leader stated that this value could also suffice for 2008 because there was
not much change in the market.
30. In his sales comparison approach to value, Mr. Leader
did not view the local lease agreements for the subject property, but did look
at the income and expense data acquired from the owner. In the regression
analysis he used Loop Net sales that represented regional and national retail
sales from 2008 through 2010. The building areas ranged from 6,400 square feet
to 125,238 square feet. Mr. Leader adjusted these sales to the local market,
and came up with a value of $13,044,455 for the subject property under the
sales comparison approach. Once again, the sales used in Mr. Leader’s analysis
were much smaller and the majority of the sales were from 2009 and 2010, with
the exception of three from 2008.
31. Further, the income approach in the Respondent’s
appraisal was flawed. Mr. Leader relied on market rents of “similar”
properties; however, the properties he relied on differed in size and in use
when compared to the subject property. Mr. Leader did not go into detail about
any adjustments made in his income approach to account for the differences that
existed. Again, the major problem with Mr. Leader’s income approach is that he
did not relate his income approach to the valuation date of January 1, 2007.
32. Mr. Leader presented his appraisal information for the
years of 2008 through 2010. He did not calculate specific values for 2008 but
instead stated that the market was steady for all of the years included in his
appraisal. He provided no support for his assumption. To elaborate on Mr.
Leader’s appraisal, there were multiple flaws. There was not enough information
in the appraisal from 2008 to form a value of opinion for the March 1, 2008, assessment
date. For instance, Mr. Leader stated that there was a problem with the land valuation
through the assessor for the 2008 assessment and therefore used his 2009 calculation
as his cost approach to value. However, he failed to explain how this information
related to the relevant valuation date of January 1, 2007. Further, the sales used
in the income and sales comparison approaches were mostly from 2009 and 2010. The
local assessing officials were instructed to use sales of properties occurring
between January 1, 2007, and December 31, 2008, in performing ratio studies for
a March 1, 2008, assessment date. Mr. Leader’s comparable sales information was
more in line with 2009 and moving forward. The Respondent did not present a
prima facie case that the 2008 assessment value should be $12,900,000, or that
the current assessment of $12,870,800 is correct.
33. Because the Respondent failed to meet her burden of
proof, the 2008 assessment must be reduced to the previous year’s level of
$12,253,100. That, however, does not end the Board’s inquiry. The Petitioner
requested that the 2008 assessment be lowered to $7,000,000. Thus, the
Petitioner has the burden of proving that it is entitled to any additional
reduction. The Board therefore turns to the Petitioner’s evidence.
34. The Petitioner offered an appraisal performed by Mr.
Edison and Mr. Dillman, both certified appraisers. Mr. Edison and Mr. Dillman
performed the appraisal according to USPAP guidelines. The effective date of
the appraisal is January 1, 2011. Both Mr. Edison and Mr. Dillman contend the
appraisal applies to 2008 through 2011. Mr. Edison and Mr. Dillman utilized the
cost, income and sales comparison approaches to value. The cost approach and
the sales comparison approach both valued the subject property at $7,100,000.
The income approach valued the subject property at $6,900,000.
35. The Petitioner’s appraisal is flawed in various ways,
but most importantly, the appraisal does not appear to reflect the market for
the assessment date in question, March 1, 2008. The information used in the
Petitioner’s appraisal is from 2010 and 2011 and is too far removed from the
valuation date of January 1, 2007. Further, the valuation date was never even
mentioned in the appraisal. Although, Mr. Edison and Mr. Dillman claim that the
appraisal incorporates 2008, the appraisal itself contains no such statement.
Using income and expense data from 2010 and 2011 and sales from 2009 through
2011 without relating it back to 2008 falls short of what is required. Thus,
the Petitioner did not meet its burden to reduce the property to $7,000,000.
36. In a sense, the parties have agreed through their
evidence that, whatever the value of the subject property was, it was the same
in 2008, 2009, and 2010. Both parties seem to agree that the market was static
for this time period. However, for this appeal the valuation date was January
1, 2007. Neither party’s appraisal even mentions this date. And at the hearing,
neither appraiser made any attempt to relate his respective value estimate to
January 1, 2007. The appraisers only asserted through testimony that their retrospective
value estimates applied to 2008 and forward. Because the valuation date in question
here is January 1, 2007, neither appraiser offered probative evidence of the subject
property’s correct 2008 assessment.
37. In this appeal, neither party offered probative evidence
of the value for March 1, 2008, or January 1, 2007. Consequently, because
neither the Respondent nor the Petitioner met the burden of proof, the
assessment reverts back to the prior year, or March 1, 2007, assessment of
$12,253,100. See Ind. Code § 6-1.1-15-17.2(b) (2014).
