Shelby County Assessor v. CVS Pharmacy, Inc. 6637-02
2013 Ind. Tax LEXIS 22
| Ind. T.C. | 2013Background
- CVS Pharmacy, Inc. #6687-02 challenges Indiana Board of Tax Review’s final determinations upholding CVS’s 2007 and 2008 real property assessments in Shelbyville, Indiana.
- The subject property is a CVS retail store and pharmacy built in 2001, owned indirectly through SCP 2001A-CSF-19 LLC and leased back to Hooks; Hooks pays the property taxes.
- Two tax years (2007 and 2008) were assessed at $2,375,600 and $2,459,700, respectively, which CVS contested via PTABOA and then the Indiana Board.
- At an April 19, 2011 hearing, CVS and the Assessor agreed the income capitalization approach was the reliable valuation method but disputed using market rent versus contractual rent.
- CVS argued market rents around $10 per square foot reflect real estate value, while the Assessor argued contractual rent of $27.20 per square foot reflects market CVS operations and financing aspects; CVS presented sale-leaseback context.
- The Indiana Board upheld the original assessments, rejecting CVS’s use of market rent due to vacancy considerations and rejecting the contractual-rent approach as potentially capturing value beyond real estate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Board properly weighed market value-in-use evidence. | CVS contends market data should govern value, not contractual rents reflecting business value. | Board found market rent and vacancy data more credible; contractual rent risks overvaluing beyond real estate. | Affirmed; Board’s weighing of evidence and rejection of contractual rent was proper. |
| Whether using contractual rent as the income approach distorts property value under sale-leaseback rules. | CVS argues contractual rent reflects investment component and should be excluded from real property value. | Assessor argues contractual rent captures market CVS practice and should reflect the lease as true lease; sale-leaseback considerations require excluding investment value. | Affirmed; Board did not include investment component and properly limited to real property value. |
| Whether the assessor’s burden of proof is met and whether the Board’s final determination is supported by substantial evidence. | CVS asserts the assessor’s data should prove error in assessments. | Board determined CVS failed to demonstrate the sold-use value was lower; substantial evidence supports original assessments. | Affirmed; Court will not reweigh evidence; substantial evidence supports Board. |
Key Cases Cited
- Kerasotes Showplace Theatres, LLC v. Grant County Assessor, 955 N.E.2d 876 (Ind. Tax Ct.2011) (investor components must be excluded to determine market value-in-use)
- Stinson v. Trimas Fasteners, Inc., 923 N.E.2d 496 (Ind. Tax Ct.2010) (market value-in-use is value for use rather than value of use; compare with comparable uses)
- Meijer Stores Ltd. P’ship v. Smith, 926 N.E.2d 1134 (Ind. Tax Ct.2010) (measure MV-in-use against comparable uses, not identical tenants)