Grant County Assessor v. Kerasotes Showplace Theatres, LLC
955 N.E.2d 876
| Ind. T.C. | 2011Background
- Subject property is a 12-screen theater in Marion, Indiana, built in 2000 at cost $6,487,110.
- In 2005, Kerasotes sold a portfolio including the subject property to Crest Net Lease and leased it back; annual rent was $633,569.
- For 2006, Grant County Assessor initial AV was $6,137,800, PTABOA raised to $7,821,000, Indiana Board heard the matter in 2009.
- Two USPAP-compliant income approaches yielded divergent values: Kerasotes favored $4,200,000 (rent-based analysis); Assessor favored $7,450,000 (sale-leaseback and comparable rents).
- Indiana Board concluded the allocated sale price/contract rent did not reflect real-property value alone, favored Kerasotes’ approach, reduced AV to $4,200,000.
- Assessor appealed; Court review is limited to statutory bases and substantial evidence, without reweighing credibility.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Board correctly valued the property under market value-in-use. | Assessor argues rental data reflect real value; sale-leaseback distorts value. | Kerasotes’ appraiser isolated real property value using market rents; better probative. | Board’s approach adopted; affirmed. |
| Whether the Board properly treated sale-leaseback data in determining market rent. | Rent data from sale-leaseback overstates true market rent; must adjust for non-property value. | Sale-leaseback data provide relevant market rent; caution advised but data credible. | Board did not rely on unadjusted sale-leaseback data; favored Kerasotes’ cautious approach. |
| Whether the Indiana Board impermissibly reweighed evidence or misapplied standards of review. | Court should reweigh evidence to reflect true value-in-use. | Court must defer to Board on credibility and probative value of evidence. | Court defers to Board; no abuse of discretion found. |
| Whether Wisconsin Walgreen Co. precedent appropriately informs Indiana value-in-use analysis. | Argues Wisconsin approach not applicable to Indiana system. | Wisconsin principle aligns with valuation concept that lease rights do not set fee simple value; use guidance. | Precedent considered appropriately; not controlling to the extent of altering Indiana framework. |
Key Cases Cited
- Walgreen Co. v. City of Madison, 311 Wis.2d 158, 752 N.W.2d 687 (Wis. 2008) (leases generally do not increase fee-simple property rights; treat rent as contract—not property right)
- Stinson v. Trimas Fasteners, Inc., 923 N.E.2d 496 (Ind. Tax Ct.2010) (market value-in-use based on objective market data; not use value via use of a specific user)
- Freudenberg-NOK Gen. P'ship v. State Bd. of Tax Comm'rs, 715 N.E.2d 1026 (Ind. Tax Ct.1999) (standard of review and evidentiary sufficiency in Board determinations)
- Kimball Int'l, Inc., 865 N.E.2d 732 (Ind. Tax Ct.2007) (affirmation of Board's probative value determination when competing appraisals exist)
- Cedar Lake Conf. Ass'n v. Lake Cnty. Prop. Tax Assessment Bd. of Appeals, 887 N.E.2d 205 (Ind. Tax Ct.2008) (defers to Board’s findings when supported by substantial evidence)
- Osolo Twp. Assessor v. Elkhart Maple Lane Assocs., 789 N.E.2d 109 (Ind. Tax Ct.2003) (deference to Board on factual determinations; substantial evidence standard)