Howard County Assessor v. Kohl's Indiana LP
57 N.E.3d 913
| Ind. T.C. | 2016Background
- Kohl’s owns an 88,242 sq. ft. big-box retail store in Kokomo, built 2003; contested assessments for 2010–2012.
- Howard County Assessor assessed values near $5.7–5.98M; Kohl’s appealed arguing much lower market value-in-use.
- Both sides submitted USPAP-compliant appraisal reports: Kohl’s used sales comparison, income, and cost approaches (valuing the property ~$3.68–3.82M); Assessor used sales comparison and cost approaches (valuing ~$4.77–4.92M).
- Primary dispute concerned appropriate comparable sales: Kohl’s relied on vacant ‘‘dark box’’ fee-simple big-box sales; Assessor relied on leased-fee sales to first-generation users (operating Kohl’s or similar tenants).
- The Indiana Board found Kohl’s appraiser more probative, concluding the property was not a special-purpose asset, its current use was its highest and best use, and market value-in-use equals market value for such retail properties; the Board set assessments near Kohl’s appraised values.
- Assessor appealed, arguing the court’s precedents allowing secondary-user and vacant comparables (Meijer, Trimas Fasteners, Millennium) were wrongly decided; the Tax Court affirmed under stare decisis.
Issues
| Issue | Assessor's Argument | Kohl’s / Indiana Board's Argument | Held |
|---|---|---|---|
| Whether sales to secondary users (including vacant “dark boxes”) are appropriate comparables under Indiana’s market value-in-use standard | Secondary-user and vacant sales do not show utility/value for a first-generation operator and therefore are not valid comparables | Market value-in-use measures current use broadly; sales of similar-use properties (even to secondary users or vacant at sale) can reflect the property’s utility and thus are valid comparables | Court held secondary-user and vacant comparables can be probative; affirmed Board’s reliance on Kohl’s sales comparison approach |
| Whether the subject property is a special-purpose property (which would make market value-in-use differ from market value) | Assessor: building tailored to Kohl’s specifications could be special-purpose, requiring different comparable selection | Board/Kohl’s: evidence showed frequent market exchanges for general retail use and that current use was highest and best use; Assessor didn’t prove special-purpose status | Court agreed with Board: subject not special-purpose; current use = highest and best use; market value-in-use equals market value here |
| Whether the Indiana Tax Court should overturn its precedents (Meijer, Trimas Fasteners, Millennium) relied on by the Board | Precedents were wrongly decided and improperly allow secondary-user comparables; invites the Court to reconsider them | Precedents correctly interpret market value-in-use and have been consistently applied; stare decisis supports retention | Court declined to overrule precedent, applied those cases, and affirmed Board’s determination |
Key Cases Cited
- Meijer Stores Ltd. P’ship v. Smith, 926 N.E.2d 1134 (Ind. Tax Ct. 2010) (sales-comparison for retail big-box market value-in-use may use comparable properties with similar general retail use)
- Trimas Fasteners, Inc. v. Assessor, 923 N.E.2d 496 (Ind. Tax Ct. 2010) (vacant properties can be probative comparables for occupied properties under market value-in-use)
- Millennium Real Estate Inv., LLC v. Assessor, Benton Cnty., 979 N.E.2d 192 (Ind. Tax Ct. 2012) (when current use equals highest and best use and market exchanges are regular, market value-in-use equals market value)
- Kimble v. Marvel Entm’t, LLC, 135 S. Ct. 2401 (U.S. 2015) (explaining the strong presumption in favor of stare decisis when considering overruling precedent)