Indiana Code § 6-1.1-15-18, added to Indiana law by P.L. 146-2012, provides that to accurately determine a property’s market value-in-use, a taxpayer or an assessing official may: (1) in a residential property proceeding, introduce evidence of the assessments of comparable properties located in the same taxing district or within two miles of a boundary of the taxing district; and (2) in a non-residential property proceeding, introduce evidence of the assessment of any relevant comparable property, with preference given to comparable properties in the same taxing district or within two miles of a boundary of the taxing district.  The determination of whether properties are comparable shall be made using generally accepted appraisal and assessment practices.  Ind. Code § 6-1.1-15-18(c).  This statute applies to any proceeding pending or commenced after June 30, 2012, and to appeals before the Indiana Board of Tax Review (the “Board”) and the Indiana Tax Court.

            During the last six months, the Board has issued a number of determinations in which either the taxpayer or the assessing official presented an argument under Indiana Code § 6-1.1-15-18 (“Section 18″).  Brief highlights from some of these determinations are provided below.  In most determinations, but not all, the provision was raised unsuccessfully by the taxpayer or assessing official.  To date, the Indiana Tax Court has not yet addressed this statute.

Oldham/Oldham, Inc. v. Cass County Assessor, Pet. Nos. 09-009-09-1-5-00003, 09-009-09-1-5-00004, and 09-009-09-1-5-00005 (Oct. 9, 2012) (March 1, 2009 assessment).  The Petitioner challenged the assessment of three undeveloped residential lots in a subdivision, including “Lot 34,” which was covered by a large ditch and was highly eroded due to drainage.  According to Petitioner, all three of the parcels likely could not have been built upon due to topography, drainage, or access issues.  The Petitioner claimed that the subject parcels were assessed “too high” in comparison to other potentially buildable and non-buildable lots in the area, raising a Section 18 argument.  The Petitioner provided “Property Assessment Detail Reports,” a plat map, and in-person testimony in support of this argument. 

The Board stated that at a minimum, the Petitioner “must provide property record cards to show how the various properties are assessed,” which Petitioner failed to do.  However, because of Respondent’s testimony regarding the unbuildable conditions of Lot 34 in tandem with Petitioner’s evidence, the Board found that the “totality of the evidence” showed that the assessment for Lot 34 should be reduced to no more than the highest assessed value of nearby lots (unbuildable Lots 44, 45, and 46, respectively).

Fleetwood v. Monroe County Assessor, Pet. Nos. 53-005-08-1-4-00021 and 53-005-09-1-4-00012 (Oct. 30, 2012) (March 1, 2008 and 2009 assessments).  The Petitioner, raising a Section 18 argument, stated that the subject property’s land value was over assessed for the years at issue when compared to other parcels in the area.  In support of this argument, the Petitioner offered “Property Assessment Detail Reports,” calculations of assessed value/square foot, and a map for the other parcels in the area that Petitioner claimed as comparable. 

Like in Oldham, the Board stated that the proponent (in this case the Petitioner) must provide property record cards to show how the properties were assessed for the years in issue.  Further, the “Property Assessment Detail Reports” would not allow the Board to determine how the property was assessed and whether it was assessed differently from the subject property.  The Board noted that it also lacked evidence regarding the base rate and adjustments applied for each property.  Thus, the Board had no means of comparing the Petitioner’s land assessment to the land assessments for other properties that Petitioner claimed as comparable.

Kooshtard Property V, LLC v. Monroe County Assessor, Pet. Nos. 53-005-08-1-4-00020, 53-005-09-1-4-00018, and 53-005-11-1-4-00019 (Nov. 9, 2012) (March 1, 2008, 2009, and 2011 assessments).  Petitioner argued that the land value of the subject property, a gas station and convenience store in Bloomington, was over assessed for the years in issue.  The Respondent raised a Section 18 argument, countering that the land was correctly valued based upon the assessed values and sales prices of properties in the neighboring area.  In support, the Respondent submitted property record cards, photos, sales disclosure forms, a land abstraction grid, a map, and testimony that sales in the area support the land’s assessed value.  The Board found that the Respondent made a prima facie case, thereby shifting the burden back to Petitioner to rebut or impeach the offered evidence.

Potter v. Tippecanoe County Assessor, Pet. Nos. 79-032-10-1-5-00001, 79-032-10-1-5-00001A, and 79-032-10-1-5-00001B (Dec. 21, 2012) (March 1, 2010 assessment).  In Potter, the Petitioner argued that three duplexes on three contiguous parcels in Lafayette were over assessed for the 2010 assessment date.  The Petitioner then raised a Section 18 argument by offering assessment information for three comparable properties located on public streets (note: Petitioner’s properties were located on a private street).  The Board stated that Petitioner failed to sufficiently explain his valuation method and how certain values were reached.  The Board determined that Petitioner did not support his claim with probative evidence and thus the Respondent’s “duty to support the assessments with substantial evidence [was] not triggered.”

Waltman v. Brown County Assessor, Pet. No. 07-005-06-1-5-00004 (Dec. 21, 2012) (March 1, 2006 assessment).  In Waltman, the Respondent argued that the subject property, a “tourist home” in Nashville, was correctly assessed based upon the assessed values of eight other tourist homes in the county.  Supporting documentation from the Respondent included a summary sheet and property record cards for each of the eight other tourist homes.  The Board found that the Respondent failed to effectively use the comparison approach as evidence in the appeal.  In particular, said the Board, a party must first demonstrate that the properties being examined are comparable – conclusory statements regarding comparability are not probative.  The party must also explain how any differences between the properties affect their market value-in-use.[1]

Ashwood Homeowners Association, Inc. v. Hamilton County Assessor, Pet. Nos. 29-020-03-3-5-00052 etc. (Dec. 28, 2012) (March 1, 2003 – 2005 assessments).  In Ashwood Homeowners Association, Inc., the Board issued a final determination dismissing Petitioner’s Form 133 petitions.  The Petitioner described the parcels at issue as common areas of a residential neighborhood, subject to transfer restrictions and with zero market-value-in-use.  These parcels had been assessed with some market value in the pre-2006 years and assessed with a value of zero for the years of 2006 and later.

A Form 133 is used to correct “objective” errors in an assessment.  The Petitioner unsuccessfully argued that, because “no subjective judgment is required to establish comparability” of the exact same common areas, evidence of the zero value assessments for 2006 and later could be used to make its Form 133 case.  The Board stated that Petitioner “misses the fundamental point,” explaining that “determining a property’s market value-in-use from external evidence—as opposed to simply plugging-in or subtracting pre-determined costs from assessment regulations—is a qualitative decision that requires one to exercise judgment.”  Section 18 “explicitly makes the assessments of comparable properties relevant and admissible in determining a given property’s market value-in-use,” but it “does not make that determination objective.”  (Page 19.)  The Board determined that Petitioner’s relief sought was beyond the scope of a Form 133 petition.[2]

Bushman, LLC v. Allen County Assessor, Pet. No. 02-074-11-1-4-00129 (Jan. 8, 2013) (March 1, 2011 assessment).  In Bushman, LLC, the Respondent argued that under Mac Convenience Stores, LLC v. Hamilton County Assessor, a property’s market value-in-use cannot be proven through the assessments of comparable properties.  The Board distinguished the appeal in Mac from the present case, stating that Mac was decided before Section 18 was enacted.  The Board also stated that although Section 18 applied to the present appeal, it “does not automatically make evidence of other properties’ assessments probative.”  As with a sales-comparison analysis, the offering party is required to show (1) that the properties in question are comparable to the property under appeal, and (2) how relative differences affect their relative values.[3]

Miller v. Brown County Assessor, Pet. Nos. 07-005-06-1-5-00001 and 07-005-06-1-5-00002 (Jan. 18, 2013) (March 1, 2006 assessment).  In Miller, the Respondent bore the burden of proving the 2006 assessments correct for the two parcels at issue, which were paved parking lots in Nashville, Indiana.  In support of the case, Respondent raised a Section 18 argument and offered assessments of two other properties in the same taxing district.  The Respondent provided property record cards for the properties, which showed that their land values were assessed at $22.00/square foot, the same value as the parcels at issue. The comparable properties were also the same square footage as the subject properties, were paved, and were used for parking.  The Petitioner did not challenge any of these comparisons.

 Therefore, the Board determined that the Respondent established that the land of the subject properties and the two other parcels was comparable.  However, the Board went on to state that “[w]hile Ind. Code § 6-1.1-15-18(c) provides authority for the admissibility of comparable assessments, the point does not establish that $22.00 per square foot corresponds to the land’s actual market value-in-use.”  Further, said the Board, the Respondent failed to provide substantive, probative evidence that the assessed values of the improvementswere correct.  The Board determined that Respondent failed to carry the burden of proof and ordered the assessments to be changed to their 2005 values.