Katie Stancombe for www.theindianalawyer.com

The Clark County assessor has lost her appeal of a determination that lowered the assessed value of a Jeffersonville Meijer store when the Indiana Tax Court found she failed to prove the decision was contrary to law, unsupported by substantial evidence, or was an abuse of discretion.

Meijer argued its Jeffersonville Meijer store’s valuations for 2008-2016 were too high. Meijer filed an appeal with the Clark County Property Tax Assessment Board of Appeals and with the Indiana Board of Tax Review.

In November 2017, the Indiana Board conducted one administrative hearing on all of Meijer’s appeals, but focused primarily on its 2012 assessment of just over $10 million. Meijer presented an appraisal report and testimony from its author, Laurence Allen.

Allen presented a sales comparison and income approach that, combined, assessed the value for tax purposes at $7.6 million for the 2012 tax year. The Clark County assessor then presented her own USPAP certified appraisal authored by David Hall, that valued Meijer’s property at $11.2 million.

In finding that the Meijer appraisal was more persuasive than the assessor’s appraisal, the Indiana Board reduced the subject property’s 2012 assessment consistent with the Meijer appraisal’s reconciled value of $7,6 million. The other years’ assessments would subsequently be determined by applying an agreed-upon trending formula to the finally determined 2012 assessed value.

On appeal, the assessor argued the Indiana Board of Tax Review’s final determination should be reversed because it was contrary to law, not supported by substantial evidence, and constituted an abuse of discretion.

First, the assessor contended that pursuant to The Appraisal of Real Estate, 14th Edition, Allen was required to adjust the sales prices of the comparable properties to account for the expenditures. Since he did not, she argued the final determination was contrary to law and should be reversed.

The Tax Court noted that a final determination of the Indiana Board could only be contrary to law if it violated a statute, constitutional provision, legal principle, or rule of substantive or procedural law, and that The Appraisal of Real Estate was none of those things.

“… [I]t is a textbook, used by the appraisal profession, to instruct its members on the ‘principles of appraisal and the sound application of recognized valuation methodology,’” Judge Martha Wentworth wrote. “To the extent an appraiser relies on the guidance provided in The Appraisal of Real Estate to complete an appraisal assignment, the result, his appraisal, is still merely his opinion.”

Next, the tax court denied the assessor’s contention that the final decision lacked evidence to support the leased-fee sales comparables she used in her first sales comparison approach were not credible and reliable.

The Tax Court found that had the assessor wanted the Indiana Board to follow a specific path to conclude that the leased-fee rental rates were at market levels, she should have walked the Indiana Board down that path during the administrative process.

“Because the assessor failed to do so, she cannot now rectify her misstep,” Wentworth wrote. The court further found there to be a reasonably sound basis of support in administrative record for the Indiana Board’s conclusion that the subject property, containing a grocery and convenience store/gas station completed in 1999, suffered from obsolescence.

“Allen testified at length about what he believed had a diminishing effect on the value of Meijer’s property. Indeed, he explained numerous times that big-box properties generally, and the subject property specifically, suffer from obsolescence immediately upon construction because they are built for first-generation users to their exact specifications, and in turn, subsequent users will never pay ‘cost’ for these properties because they must incur extensive expenditures to adapt the properties to their own use,” Wentworth continued. “Allen’s testimony adequately identifies the cause of the obsolescence and is consistent with a paradigm this Court has long accepted as valid.”

It additionally denied the assessor’s claims that there was an abuse of discretion because the final determination failed to apply a consistent burden of proof in Clark County Assessor v. Meijer Stores LP, 18T-TA-3.