43 N.E.3d 279
Ind. T.C.2015Background
- Gateway Arthur owned six parcels comprising three retail buildings (~270,000 sq ft), a retention pond, two access roads, and a pylon sign at The Shoppes at County Line Road.
- Marion County Assessor assigned assessed values totaling roughly $17–18.1 million across tax years 2007–2010.
- Gateway Arthur submitted an income‑approach appraisal (Correll & Schlemmer) valuing the subject property at $12.8M (2007), $13.8M (2008), $12.9M (2009), and $10.3M (2010).
- Assessor submitted an Income Analysis valuing only the buildings at higher amounts (~$18.8M–$22.2M) and pointed to a computerized record of a $21M 2007 purchase.
- The Indiana Board found the Assessor’s evidence non‑probative, accepted the appraisal as probative but concluded it omitted roughly $120,000 per year in tax reimbursements and therefore increased Gateway Arthur’s appraised values by ~ $1M per year, producing final values of $13.8M (2007), $14.8M (2008), $13.9M (2009), and $11.3M (2010).
Issues
| Issue | Petitioner (Assessor) Argument | Respondent (Gateway Arthur) Argument | Held |
|---|---|---|---|
| Whether the appraisal was non‑probative because it used "loaded" capitalization rates | Loaded caps are not allowed under Indiana guidelines; appraisal should be disregarded | Guidelines do not prohibit loaded rates and income approach application is appropriate | Court: Guidelines do not bar loaded rates; appraisal may be probative |
| Whether appraisal omitted income from pond, sign, and access roads making it undervalued | Appraisal unreasonably assumed those parcels generated no income; undervalues property | No record evidence that Gateway collected rent for those parcels; appraiser’s assumptions reasonable | Court: No evidence Assessor collected such income; appraisal remains probative |
| Whether Assessor’s Income Analysis and other evidence were probative (caps, expense treatment, 2007 sale) | Income Analysis used inappropriate national power‑center caps, omitted taxes in expense ratio, and sale data supports higher value | Appraisal witnesses classified property as a "hybrid" center; Gateway showed the sale was a portfolio allocation and the expense/ tax treatment in Assessor testimony was inconsistent | Court: Board reasonably discounted Assessor’s analysis on caps and tax treatment and rejected the $21M sale as non‑probative |
| Whether Board exceeded authority by augmenting the appraisal by ~$1M to account for omitted tax reimbursements | Once appraisal is flawed, Board should have rejected it and found Assessor rebutted taxpayer’s prima facie case | Parties agreed appraisal omitted ~$120K; Board used record caps to capitalize omitted income and adjust valuations | Court: Board acted on record evidence to adjust (not "salvage") appraisal; augmentation lawful; Board affirmed |
Key Cases Cited
- Hubler Realty Co. v. Hendricks Cnty. Assessor, 938 N.E.2d 311 (Ind. Tax Ct.) (party challenging Board bears burden and standard of review)
- Kooshtard Prop. VI, LLC v. White River Twp. Assessor, 836 N.E.2d 501 (Ind. Tax Ct.) (assessment guidance focus on cost approach; income approach application explained)
- Meijer Stores Ltd. P’ship v. Smith, 926 N.E.2d 1134 (Ind. Tax Ct.) (Board may not discount taxpayer evidence without record evidence to weigh against)