In order to show the marketvalue of the improvements, Mr. Grabbe purports to have “abstracted” the fairmarket value of the land from his purchase price. The Petitioner first removedthe $11,240 assessed value of the one-acre building site from the amount of thepurchase allocated to the 3.664 acre parcel. Petitioner Exhibit 4SN. Similarly,he subtracted the $3,890 assessed value for the one-acre building site from theamount of the purchase price allocated to the 19.266 acre parcel. PetitionerExhibit 4SF. Then, to calculate the value of the remaining 2.664 acres ofthe 3.664 acre parcel and the value of the remaining 18.266 acres of the 19.266acre parcel, Mr. Grabbe relied on the purchase of a contiguous property.According to Mr. Grabbe, Ceres Farms, LLC, purchased approximately 200 acres inCarroll County for $1,647,513, or $8,216 an acre, in February 2009. PetitionerExhibit 17S. However, the sales disclosure forms that Mr. Grabbe submittedindicate Ceres Farms purchased six parcels of land for $2.8 million. Id. Accordingto a hand-written notation, two of the six parcels are located in ClintonCounty. Id. In addition, the sales disclosure form shows the typed $2.8million sale price struck out by pen and “1,647,513” (no dollar sign) writtenbeside the figure by hand. While it is possible the handwritten notation of“1,647,513” was an allocation of that sale price to the four parcels in CarrollCounty, it is not clear on the record. Even if the Board assumed that thehandwritten “1,647,513” was intended to be an allocation of the sale price tothe four Carroll County parcels, there is no evidence showing the basis forthat allocation. In fact, there is no evidence of who made the handwrittennotation or when the “allocation” was made. More importantly, the Petitionersupplied the sales disclosure forms for only two of the four parcels inCarroll County. Id. There is no information as to the size of the otherparcels included in the purchase. Thus, Mr. Grabbe’s contention thatagricultural land is worth $8,216 based on Ceres Farms’ purchase of farmland isunsupported by the evidence. And Mr. Grabbe’s use of $5,300 an acre iscompletely without support in the record. While Mr. Grabbe provided someevidence that agricultural land is assessed below its market value-in-use, Mr.Grabbe’s evidence fails to sufficiently show the land’s actual value. Withoutprobative evidence of the value of his land, Mr. Grabbe’s attempt to “abstract”the value of the properties’ improvements from his purchase price fails toraise a prima facie case that his hog barns are over-valued.
The Petitioner also contendshis properties are over-assessed based on an income approach to value.According to Mr. Grabbe, he used the properties’ actual rent of $90,000 anddeducted depreciation, an estimated amount for repairs, and the actual cost ofinsurance and real estate taxes, resulting in a net operating income of$42,442. The Petitioner then applied a 20% capitalization rate to theproperties’ net income, added in $15,000 for the extra farm land and deducted$36,579 for personal property from the calculation, resulting in an estimatedvalue of $191,401… Here Mr. Grabbe used site-specific income and expenseinformation, but he provided no evidence to demonstrate that the properties’ incomeor expenses were typical for comparable properties in the market. Thus, any lowrent or high expense levels may be attributed to the Petitioner’s management ofthe property as opposed to the property’s market value. See Lake CountyTrust Co. No. 1163 v. State Board of Tax Commissioners, 694 N.E.2d 1253,1257-58 (Ind. Tax Ct. 1998) (economic obsolescence was not warranted wheretaxpayer executed unfavorable leases resulting in a failure to realize as muchnet income from the subject property).
Additionally, the Petitionerfailed to adequately support his capitalization rate. A capitalization rate“reflects the annual rate of return necessary to attract investment capital andis influenced by such factors as apparent risk, market attitudes toward futureinflation, the prospective rates of return for alternative investments, therates of return earned by comparable properties in the past, the supply of anddemand for mortgage funds, and the availability of tax shelters.” SeeHometowne Associates, L.P. v. Maley, 839 N.E.2d 269, 275 (Ind. Tax Ct.2005). Here the Petitioner based his capitalization rate on the rate used in anappraisal of a different – and more importantly an unidentified –property by an appraiser without even submitting the entire appraisal for theBoard’s review. While the rules of evidence generally do not apply inthe Board’s hearings, the Board requires some evidence of the accuracy andcredibility of the evidence. Whitley Products, Inc. v. State Board of TaxCommissioners, 704 N.E.2d 1113, 1119 (Ind. Tax Ct. 1998); and Herb v.State Board of Tax Commissioners, 656 N.E.2d 890, 893 (Ind. Tax Ct. 1995).Mr. Grabbe’s assurance that the unidentified appraised property was“comparable” to the properties under appeal falls well below the standard ofproof required in a property tax appeal. See Long v. Wayne Twp. Assessor, 821N.E.2d 466, 469 (Ind. Tax Ct. 2005) (conclusory statements that a property is“similar” or “comparable” to another property do not constitute probativeevidence of the comparability of the two properties). Thus, the Boardconcludes that the Petitioner’s income analysis fails to raise a prima faciecase that the subject properties’ assessed values should be reduced.
The Petitioner also argues thathis properties are over-valued based on a cost approach analysis. Grabbetestimony. In his analysis, Mr. Grabbe testified that he used the county’sreproduction cost. Id.; Petitioner Exhibit 13S. The Petitioner then“corrected” the building area in the hog building on the 3.664 acre parcel andadded an obsolescence adjustment to the buildings on both parcels. Id. According to Mr. Grabbe, his cost approach analysisshows the properties under appeal should be valued at no more than $188,320together. Id.
Here, Mr. Grabbe argues that heis entitled to an obsolescence adjustment of 35% to the buildings on the 3.664acre parcel and an obsolescence adjustment of 45% to the buildings on the19.266 acre parcel because of the out-dated design of the buildings and theobsolete manure lagoon system. For a Petitioner to show it is entitled toreceive an adjustment for obsolescence, however, the Petitioner must bothidentify the causes of obsolescence it believes is present in its improvementsand also quantify the amount of obsolescence it believes should be applied toits property. Clark v. State Bd. of Tax Comm'rs, 694 N.E.2d 1230, 1241(Ind. Tax Ct. 1998). Thus, the Petitioner must present probative evidence thatthe causes of obsolescence identified by the Petitioner are causing an actualloss in value to its property. See Miller Structures, Inc. v. State Bd. ofTax Comm'rs, 748 N.E.2d 943, 954 (Ind. Tax Ct. 2001). It is not sufficientfor a Petitioner to merely identify random factors that may cause the propertyto be entitled to an obsolescence adjustment. See Champlin Realty Co. v.State Bd. of Tax Comm'rs, 745 N.E.2d 928, 936 (Ind. Tax Ct. 2001). ThePetitioner must explain how those purported causes of obsolescence cause theproperty's improvements to suffer an actual loss in value. Id. Here, thePetitioner identified factors that could cause obsolescence but he onlyassigned a random value to those factors. There is no evidence, for example,that a facility with an obsolete manure storage system is worth 15% less than abuilding with deep pit manure storage. Similarly, the Petitioner presented noevidence that “quad barns” sell for 15% more than his “conventional finishingbarns.” The Board therefore finds that the Petitioner’s cost approach analysisis too unreliable to be given any probative weight.
Further, in simply applying anobsolescence factor to the reproduction cost determined by the assessor, thePetitioner has merely recalculated the mass appraisal version of the costapproach set out in the Guidelines. This the Indiana Tax Court held fails tomake a case that a property’s assessment should be changed. See Eckerling v.Wayne Township Assessor, 841 N.E.2d 764 (Ind. Tax Ct. 2006). In Eckerling,Judge Fisher found that it is insufficient to simply dispute the method bywhich a property is assessed. A Petitioner must show through the use ofmarket-based evidence that the assessed value does not accurately reflect theproperty’s market value-in-use. The Board is unconvinced that labeling aGuidelines-based argument as a “cost approach valuation” is sufficient toovercome the Tax Court’s ruling in Eckerling. See also O’Donnell v.Department of Local Government Finance, 854 N.E.2d 90 (Ind. Tax Ct. 2006).
Finally, the Petitioner contendsthat his properties are over-valued based on the sales prices of threeadditional properties – two properties that the Petitioner purchased in 2008and a third property in Carroll County that sold in 2008. Grabbe testimony;Petitioner Exhibit 16. According to Mr. Grabbe, the subject properties’ valueis $184,311 based on a price per pig space of $42.50. Id.
Here, the Petitioner merelytestified “I’m just going to let this record speak for itself.” Id. Accordingto Mr. Grabbe, “I compared [the other properties] as good as any appraiser hasever done.” The Petitioner, however, made no attempt to explain the deductionshe made for houses, land and tool sheds on the comparable properties. “[I]t isthe taxpayer's duty to walk the Indiana Board . . . through every element ofthe analysis.” See Indianapolis Racquet Club, Inc. v. Washington TownshipAssessor, 802 N.E.2d 1018, 1022 (Ind. Tax Ct. 2004). It is not the Board’sresponsibility to determine how Mr. Grabbe calculated the value of other landand buildings on nearby properties. Thus, the Petitioner failed to raise aprima facie case that his properties were over-valued based on a salescomparison analysis.
Most importantly, thePetitioner failed to show that his income approach, cost approach or salescomparison approach valuations conformed to the Uniform Standards ofProfessional Appraisal Practice (USPAP) or any other generally accepted standards.Consequently, the Petitioner’s income approach, cost approach and salescomparison approach calculations lack probative value in this case. SeeInland Steel Co. v. State Board of Tax Commissioners, 739 N.E.2d 201, 220(Ind. Tax Ct. 2000) (holding that an appraiser’s opinion lacked probative valuewhere the appraiser failed to explain what a producer price index was, how itwas calculated or that its use as a deflator was a generally accepted appraisaltechnique). Ultimately, Mr. Grabbe’s assertions may not differ significantlyfrom those made by a certified appraiser in an appraisal report. But theappraiser’s assertions are backed by his education, training, and experience.The appraiser also typically certifies that he complied with USPAP. Thus, the Board,as the trier-of-fact, can infer that the appraiser used objective data, whereavailable, to quantify his adjustments. And where objective data was notavailable, the Board can infer that the appraiser relied on his education,training and experience to estimate a reliable quantification. Mr. Grabbe,however, is not a certified appraiser; he did not establish that he has anyparticular expertise in applying generally accepted appraisal principles; andhe did not certify that he complied with USPAP in performing his valuationanalysis. Moreover, Mr. Grabbe, as the owner of the property, has an interest inthe subject property’s value being lowered and therefore cannot be relied uponto provide an unbiased assessment of the subject properties’ values. The Boardtherefore will not simply defer to Mr. Grabbe’s “market observations” withoutevidence showing the data upon which he grounded his observations.
http://www.in.gov/ibtr/files/Grabbe_08-002-10-1-1-00001_and_2.pdf
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