In TPI of Montgomery County, LLC v. Montgomery County Assessor (Aug. 26, 2013), TPI argued that the 2009 and 2010 assessed values ($810,700) of its commercial office building should be reduced to its 2007 purchase price ($740,000).  The Assessor responded that the property was bought as an investment and was exposed to a local market only; it should have been – but wasn’t – marketed on a regional or national market.  The Assessor argued that her software showed a reproduction cost of nearly $2.7 million for this “premium office space.”  She didn’t develop an income approach but did examine “comparable” sales.

TPI prevailed for both tax years based on its purchase price.  “The sale of a property is often the best evidence of the property’s market value-in-use.”  (Page 5, ¶ 15(c)) (citing Hubler Realty Co. v. Hendricks County Assessor, 938 N.E.2d 311, 315 (Ind. Tax Ct. 2010)).  Here, the 2007 purchase occurred approximately six months before the valuation date for the 2009 assessment.  (For the March 1, 2009 assessment, the valuation date was January 1, 2008; starting in 2010, the assessment and valuation dates merged, i.e. March 1, 2010.)  The sale price supported a reduction for the property’s 2009 value.  (Page 5, ¶ 15(c).)

And the sale price supported a reduction for the March 1, 2010 assessment, even though the 2007 sale took place three years before the assessment date.  (Page 5, ¶ 15(d).)  The PTABOA (the local review board) had concluded that the property’s 2009 and 2010 were the same.  The Indiana Board found this “an indication that market values remained stable [from 2009 to 2010] and, therefore, no change would be necessary for the 2010 assessment date.”  Id.  The Board further observed that the property’s 2012 assessment was $780,100, which was “relatively close to the purchase price.”  Id.

The Assessor’s list of allegedly comparable sales didn’t rebut the purchase price.  The Board observed (as it has many times):  “In order to compare sales effectively, . . . the proponent must establish the comparability of the properties being examined.  Simple conclusory statements that a property is ‘similar’ or ‘comparable’ are not probative evidence.” (Page 5, ¶ 15(d)) (citation omitted).   The Assessor was required – and failed – to establish (a) the characteristics of TPI’s property, (b) how those characteristics compared to those of the supposedly comparable properties, and (c) how any differences affected the property’s market value-in-use.  (Page 5, ¶ 15(e).)   “Because the [Assessor] failed to identify or value the differences between the properties, the other sales have no probative value.”  (Page 6, ¶ 15(f).)

Moreover, the Assessor’s implication that the property would have sold for a higher price had it been more broadly marketed was “merely speculation” and did “nothing to effectively establish the value of the property.” (Page 6, ¶ 15(h).)

The Assessor also presented information showing the property was listed for sale at $999,900 on July 16, 2010; but “a listing for a property that still remains unsold after three years is not a credible indication of value.”  (Page 6, ¶ 15(i).)

The office building’s value was reduced to $740,000 for both the 2009 and 2010 tax years.  (Page 6, ¶ 16.)