WRC Company by Randall Cole v. Dept. of Local Government Finance

PETITIONER APPEARING PRO SE:    ATTORNEYS FOR RESPONDENT:
RANDALL COLE    STEVE CARTER
Tell City, IN    ATTORNEY GENERAL OF INDIANA
    Indianapolis, IN
    
     TED J. HOLADAY
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN
_____________________________________________________________________
 
    IN THE INDIANA TAX COURT _____________________________________________________________________

WRC COMPANY BY RANDALL COLE, ) ) Petitioner, ) ) v. ) Cause No. 49T10-0104-TA-33 ) DEPARTMENT OF LOCAL ) GOVERNMENT FINANCE, See footnote         )
            )
    Respondent.                )
                )    
______________________________________________________________________________
 
ON APPEAL FROM A FINAL DETERMINATION
OF THE STATE BOARD OF TAX COMMISSIONERS
______________________________________________________________________________
NOT FOR PUBLICATION
June 27, 2002
FISHER, J.
 
    WRC Company (WRC) appeals the final determination of the State Board of Tax Commissioners (State Board) establishing the assessed value of WRC's property as of March 1, 1995. WRC raises two issues, which the Court restates as:
Whether WRC's land was entitled to more than the 50% negative influence factor already applied to it for the floodplain that existed on part of WRC's property; and

Whether WRC's apartment's interior stairways should have been assessed using a different base rate than the apartment building.

    For the reasons stated below, the Court AFFIRMS the State Board's final determination on both issues.
FACTS AND PROCEDURAL HISTORY
    WRC's property is located in Troy Township, Perry County, Indiana. WRC's property consists of twelve lots See footnote with an apartment building that occupies six of those lots. See footnote Under the Perry County Land Order, the base rate values for platted commercial lots in WRC's area ranged between $100 to $150 per front foot. The township assessed WRC's property at $125 per front foot. The township valued WRC's land at $19,500 and valued the improvements at $128,170.
    WRC then filed a Form 130 Petition for Review with the Perry County Board of Review (BOR). WRC argued, among other things, that its assessment should be reduced because one-half of its property was in a floodplain, that its assessment of its apartment building should not have included its interior stairways, and that the measurement of its asphalt was incorrect. The BOR gave WRC a 50% negative influence factor on four of its unimproved lots in the floodplain (Lots 7-10), See footnote lowered the grade of the apartment building to a D+2, and assigned 10% obsolescence depreciation to its asphalt paving. As a result, the BOR lowered WRC's assessment of its land to $16,870 and its improvements to $115,930.
    On February 5, 1997, WRC filed a Form 131 Petition with the State Board, who denied WRC's petition. WRC subsequently appealed to this Court. On November 1, 2000, pursuant to a joint motion, this Court ordered the petition remanded to the State Board. On remand, WRC argued that it should have received more than a 50% negative influence factor for the floodplain on its property because a prior State Board final determination from its 1989 assessment granted it a 65% negative influence factor on Lots 1-6 and 95% negative influence factor on Lots 7-12. WRC also argued that the assessment of its apartment building should be reduced because of its interior stairways. The State Board conducted its remand hearing and issued its final determination on March 1, 2001. The State Board refused to increase the negative influence factor to WRC's property because it found that WRC had failed to present probative evidence supporting its argument for a greater negative influence factor. The State Board also found that its regulations did not provide for an adjustment to the base rate when an apartment has an interior stairway. Finally, pursuant to the parties' stipulation, the State Board reduced the measurement of WRC's paving area. Thus, the State Board decreased the assessment of WRC's improvements to $109,870 but affirmed the assessment of WRC's land at $16,870.
    WRC filed this original tax appeal on April 11, 2001. This Court conducted a trial on November 29, 2001. Additional facts will be supplied as needed.
ANALYSIS AND OPINION
Standard of Review
    The Court gives great deference to the State Board's final determinations when the State Board acts within the scope of its authority. Wetzel Enters., Inc. v. State Bd. of Tax Comm'rs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct. 1998). Accordingly, this Court reverses final determinations of the State Board only when those decisions are unsupported by substantial evidence, are arbitrary or capricious, constitute an abuse of discretion, or exceed statutory authority. Id.
    The taxpayer bears the burden of demonstrating the invalidity of the State Board's final determination. Clark v. State Bd. of Tax Comm'rs, 694 N.E.2d 1230, 1233 (Ind. Tax Ct. 1998). The taxpayer must present a prima facie case, which is a case in which the evidence is "sufficient to establish a given fact and which if not contradicted will remain sufficient." Damon Corp. v. State Bd. of Tax Comm'rs, 738 N.E.2d 1102, 1106 (Ind. Tax Ct. 2000) (citations and internal quotation marks omitted). To establish a prima facie case, the taxpayer must offer probative evidence concerning the alleged error. King Indus. v. State Bd. of Tax Comm'rs, 699 N.E.2d 338, 343 (Ind. Tax Ct. 1998).
Discussion
I. Negative Influence Factor
    WRC contends that the State Board erroneously declined to increase WRC's 50% negative influence factor to account for the fact that half of its lots are in a floodplain. Specifically, WRC argues that Lots 1-6 should have been assigned a 65% negative influence factor while Lots 7-12 should have received a 95% negative influence factor because a 1989 State Board final determination previously applied those particular influence factors to WRC's property. The State Board does not dispute that half of WRC's lots are in a floodplain but argues that WRC has failed to make a prima facie showing that the 50% negative influence factor already awarded to these floodplain lots is erroneous. The State Board further argues that WRC has failed to present any probative evidence to support the application of any negative influence factor to WRC's remaining lots where the apartment building sits.
    An influence factor refers to a condition peculiar to the lot that dictates an adjustment, either positive or negative, to the extended value to account for variations from the norm. Ind. Admin. Code tit. 50, r. 2.2-4-10(a)(9) (1996). To apply an influence factor, an assessor must identify the deviations from the norm in the property. White Swan Realty v. State Bd. of Tax Comm'rs, 712 N.E.2d 555, 562 (Ind. Tax Ct. 1999), review denied. These deviations are then expressed as a percentage that represents the composite effect of the factor that influences the value. Id. A taxpayer seeking to have a negative influence factor applied has the burden to produce "probative evidence that would support an application of a negative influence factor and a quantification of that influence factor." Phelps Dodge v. State Bd. of Tax Comm'rs, 705 N.E.2d 1099, 1106 (Ind. Tax Ct. 1999), review denied.
    WRC argues that it is entitled to an increase in its negative influence factor on all of its lots because half of its lots (Lots 7-12) are in a floodplain. The State Board did not dispute that these six lots are in the floodplain. The State Board agreed that the existence of the floodplain on these six lots would support an application of a negative influence factor. (State Bd. Tr. at 36.) Indeed, the State Board affirmed the 50% negative influence factor that the BOR had given to WRC for four of the lots in the floodplain. However, WRC still has the burden of showing the quantification of that influence factor for these floodplain lots. See Phelps Dodge, 705 N.E.2d at 1106. Furthermore, WRC has the burden of showing probative evidence that would support an application of a negative influence factor to the lots not in the floodplain (Lots 1-6) and a quantification of that influence factor. See id.
    To try to meet its burden of showing that it is entitled to a higher negative influence factor, WRC introduced evidence of a 1996 State Board final determination issued in response to the appeal of WRC's 1989 reassessment in which the State Board applied a 65% influence factor to Lots 1-6 and a 95% influence factor to Lots 7-12. WRC argues that because these 65% and 95% influence factors were applied to its property before, it is entitled to these same influence factors in this case. WRC is mistaken. In original tax appeals, each assessment and each tax year stands alone. Quality Farm and Fleet, Inc. v. State Bd. of Tax Comm'rs, 747 N.E.2d 88, 93 (Ind. Tax Ct. 2001). The fact that WRC's property received these influence factors in one tax year is not necessarily indicative of the influence factor for a subsequent reassessment. Thus, the State Board's final determination from a 1989 appeal is not probative as to how the property should be assessed for the 1995 tax year.
    WRC also introduced into evidence a property record card of a "comparable" property (half of Block 163) that was located down the street from its property (Block 104). (See Pet'r Exs. 2 & 6.) The property record card shows that the property originally received a 50% negative influence factor for being located in the floodplain but later received a 90% influence factor after a State Board final determination. Other than stating that both properties were comparable because they were on the same block and were in the floodplain, WRC provided no explanation of how the property was comparable. However, a statement that properties are comparable is nothing more than a conclusion, and conclusory statements do not constitute probative evidence. Quality Farm and Fleet, 747 N.E.2d at 93. Thus, WRC has failed to provide the State Board with probative evidence to support its position on the negative influence factor issue. See footnote Accordingly, this Court AFFIRMS the State Board's determination that the lots in the floodplain are entitled to a 50% negative influence factor.
II. Base Rate
    WRC argues that it was entitled to a reduction to its base rate for the interior stairways in its apartment building. Specifically, WRC claims that the apartment's interior stairways should have been assessed using a different base rate than the apartment building because the stairways were lit but did not have heating, air conditioning, or plumbing. The State Board argues that WRC is not entitled to relief on this issue because WRC did not present any evidence to show that the interior stairways were not already factored into the base price used in pricing apartment units.
    Under Indiana's property tax assessment system, assessors use cost schedules to determine the base reproduction cost of a particular improvement. Inland Steel Co. v. State Bd. of Tax Comm'rs, 739 N.E.2d 201, 223 (Ind. Tax Ct. 2000), review denied. Schedule A of the State Board's regulations includes cost schedules listing the base prices for different commercial, industrial, and residential improvements. See Ind. Admin. Code tit. 50, r. 2.2-11-6 (1996). To compute the base rates for an improvement, an assessor must locate the model that best matches the improvement being assessed. Barth, Inc. v. State Bd. of Tax Comm'rs, 756 N.E.2d 1124, 1132 (Ind. Tax Ct. 2001). The State Board's regulations describe a model as a "conceptual tool used to replicate reproduction cost of a given structure using typical construction materials. The model assumes that there are certain elements of construction for a given use type." Ind. Admin. Code tit. 50, r. 2.2-10-6.1(a)(1) (1996). The base prices in Schedule A for the various models have corresponding values for the different floor levels. The cost of each floor level includes the cost of some structural components. Ind. Admin. Code tit. 50, r. 2.2-10-6.1(a)(3) (1996).
    The Court agrees with the State Board that WRC has failed to show that the interior stairways were not reflected in the base price of the cost schedules used for pricing apartments. Indeed, the regulations state that "stairways and access ways" are included as a structural component in the prices for the different floor levels. Ind. Admin. Code tit. 50, r. 2.2-10-6.1(a)(3)(B)(ii). Because the stairways were taken into consideration in the cost schedules used for calculating the base price of WRC's apartment, WRC has failed to meet its burden of showing that its apartment was erroneously assessed. Thus, this Court AFFIRMS the State Board's final determination on this issue.
CONCLUSION
    For the aforementioned reasons, the Court AFFIRMS the State Board's final determination on both issues.

Footnote: The State Board of Tax Commissioners (State Board) was originally the Respondent in this appeal. However, as of December 31, 2001, the legislature abolished the State Board. P.L. 198-2001, § 119(b)(2). Effective January 1, 2002, the legislature created the Department of Local Government Finance (DLGF), Ind. Code § 6-1.1-30-1.1 (West Supp. 2001)(eff. 1-1-02); P.L. 198-2001, § 66, and the Indiana Board of Tax Review (Indiana Board). Ind. Code § 6-1.5-1-3 (West Supp. 2001)(eff. 1-1-02); P.L. 198-2001, § 95. Pursuant to Indiana Code § 6-1.5-5-8, the DLGF is substituted for the State Board in appeals from final determinations of the State Board that were issued before January 1, 2002. Ind. Code § 6-1.5-5-8 (West Supp. 2001)(eff. 1-1-02); P.L. 198-2001, § 95. Moreover, the law in effect prior to January 1, 2002 applies to these appeals. Ind. Code § 6-1.5-5-8 (West Supp. 2001)(eff. 1-1-02); P.L. 198-2001, §§ 95, 117. Although the DLGF has been substituted as the Respondent, this Court will still reference the State Board throughout this opinion.
Footnote: The twelve lots made up Block 104 in Troy Township. ( See Pet'r Ex. 2.) Lots 1, 2, 11, and 12 each measure 48 feet x 70 feet, while Lots 3-10 each measure 48 feet x 140 feet.

Footnote: WRC's apartment building occupies Lots 1-6.
Footnote: The Court notes that the township assessor did not assess Lots 11 and 12 during the 1995 assessment. (State Bd. Tr. at 24, 74.) The Court will make no determination as to these lots.

Footnote: WRC also appears to argue that its property is improperly assessed because if one were to convert its property into acreage, then its land would have been assessed higher than the land order section on acreage would allow. However, WRC's commercial land is divided into platted lots. The plain language of the land order for commercial and industrial platted land requires that WRC's land be assessed on a front foot basis. (State Bd. Tr. at 71.) Therefore, WRC's land was correctly was assessed under the platted section of the land order on a front foot basis, and WRC's argument has no merit. See McDonald's Corp. v. Indiana State Bd. of Tax Comm'rs, 747 N.E.2d 654, 657-58 (Ind. Tax Ct. 2001)