46 N.E.3d 1
Ind. T.C.2015Background
- Washington Square Mall in Indianapolis (regional mall, ~72 acres) had assessments for 2006–2010 that Simon (owner) challenged; Board reduced values based on Simon’s appraiser (Korpacz).
- Simon’s appraisal (Korpacz) used sales-comparison and two income methods (yield and direct cap) and concluded reconciled values much lower than assessor’s figures; Korpacz testified a speculative redeveloper/similar-user would buy the mall given its condition and market.
- Marion County Assessor presented a review and alternative appraisal (Stump) criticizing Korpacz’s comparables, income inputs, and cap rates; Stump produced higher values using actual rents/expense recoveries and lower cap rates.
- Indiana Board found both parties’ USPAP-compliant appraisals raised prima facie cases, favored Korpacz overall (giving more weight to his analyses despite noting some flaws), and adopted Korpacz’s reconciled values for 2006–2010.
- Assessor appealed, arguing (1) Korpacz valued a speculative buyer, not market value-in-use to a similar user, and (2) the Board abused discretion by relying on parts of Korpacz’s appraisal that the Board itself found unsupported (notably 2008 sales-comparison adjustments and high cap rates).
- Court affirmed Board on the market value-in-use issue but reversed/remanded on parts of valuation where the Board accepted findings it had identified as not probative; directed valuation using the probative portions of Korpacz’s work with instructions and specific values for certain years.
Issues
| Issue | Plaintiff's Argument (Assessor) | Defendant's Argument (Simon) | Held |
|---|---|---|---|
| Whether Korpacz valued the property consistent with Indiana's market value‑in‑use standard | Korpacz valued what a speculator would pay (new use), not value to current owner/similar user; thus not market value‑in‑use | A speculative buyer who intends a similar commercial use can represent a "similar user"; market value‑in‑use is measured against the commercial market, not identical users | Affirmed: Court held Korpacz’s buyer characterization fit within markt value‑in‑use (similar user), so Board did not err on this ground |
| Whether the Board abused discretion by relying on parts of Korpacz’s appraisal that it found flawed (2008 sales-comparison "cherry‑picking") | Board found Korpacz manipulated comparables for 2008; such unexplained deviation renders that approach non‑probative and the appraisal unreliable | Simon: Korpacz used a consistent methodology across years; one-year adjustment did not render entire appraisal invalid | Reversed in part: Court held Board abused discretion by accepting Korpacz’s 2008 sales‑comparison result despite finding the adjustment unexplained and therefore not probative; directed rejection of that part |
| Whether the Board could adopt Korpacz’s income approaches despite finding his capitalization rates unsupported by evidence | Korpacz used cap rates higher than investor surveys/comparable‑sale indications; rates not supported so income approaches are not probative | Korpacz provided detailed explanations for his higher risk‑based cap rates; Board reasonably preferred his explanations over Stump’s | Reversed in part: Court held Board abused discretion by adopting values based on income approaches whose cap rates the Board itself found unsupported; remanded to accept only probative parts of Korpacz’s analyses |
| Remedy / valuation outcome on remand | Assessor urged rejection of Korpacz values entirely and reinstatement of assessor figures | Simon sought adoption of Korpacz reconciled values for all years | Mixed: Court affirmed Board on legal standard, but remanded with instructions to value the Mall using the probative portions of Korpacz’s appraisal; Court specified certain year values to reflect probative components |
Key Cases Cited
- Osolo Twp. Assessor v. Elkhart Maple Lane Assocs., 789 N.E.2d 109 (Ind. Tax Ct.) (burden to overturn Board determination rests with appellant)
- Stinson v. Trimas Fasteners, Inc., 923 N.E.2d 496 (Ind. Tax Ct.) (market value‑in‑use is value for use, measured by objective market data)
- Meijer Stores Ltd. P’ship v. Smith, 926 N.E.2d 1134 (Ind. Tax Ct.) (market value‑in‑use may be measured against comparable use, not identical users)
- Shelby Cnty. Assessor v. CVS Pharmacy, Inc., 994 N.E.2d 350 (Ind. Tax Ct.) (commercial/retail market participants can be appropriate comparables for market value‑in‑use)
- Hubler Realty Co. v. Hendricks Cnty. Assessor, 938 N.E.2d 311 (Ind. Tax Ct.) (standard for showing Board abused discretion)
- Lakes of Four Seasons Prop. Owners’ Ass’n v. Dep’t of Local Gov’t Fin., 875 N.E.2d 833 (Ind. Tax Ct.) (opinion of value must be supported by objective bases to be probative)
- Whitley Prods., Inc. v. State Bd. of Tax Comm’rs, 704 N.E.2d 1113 (Ind. Tax Ct.) (conclusory opinions are not probative evidence)
- Glass Wholesalers, Inc. v. State Bd. of Tax Comm’rs, 568 N.E.2d 1116 (Ind. Tax Ct.) (each assessment year stands alone)
- Hometowne Assocs. v. Maley, 839 N.E.2d 269 (Ind. Tax Ct.) (capitalization rate factors and extraction from market data)