Elixir Industries v. Department of Local Government Finance

ATTORNEY FOR PETITIONER:    ATTORNEYS FOR RESPONDENT:
DAVID L. PIPPEN    STEVE CARTER
ATTORNEY AT LAW     ATTORNEY GENERAL OF INDIANA
Indianapolis, IN     Indianapolis, IN
 
     JOEL SCHIFF
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN
    
 
_____________________________________________________________________

    IN THE INDIANA TAX COURT _____________________________________________________________________

ELIXIR INDUSTRIES, ) ) Petitioner, ) ) v. ) Cause No. 49T10-0005-TA-61 ) DEPARTMENT OF LOCAL ) GOVERNMENT FINANCE, See footnote         )
                )
                )
    Respondent.            )    
_____________________________________________________________________

ON APPEAL FROM A FINAL DETERMINATION
OF THE STATE BOARD OF TAX COMMISSIONERS
 
 
NOT FOR PUBLICATION
September 16, 2003
FISHER, J.
 
    The Petitioner, Elixir Industries (Elixir), appeals the final determination of the State Board of Tax Commissioners (State Board) valuing its industrial improvement for the 1995 tax year. The issue for the Court to decide is whether the State Board erred when it denied a reduction to the base rate of Elixir's improvement to account for its office partitioning. See footnote
    For the reasons stated below, the Court AFFIRMS the final determination of the State Board.
FACTS AND PROCEDURAL HISTORY
    Elixir owns an industrial improvement with an office component in Elkhart County, Indiana. Elixir filed a Form 131 Petition for Review of Assessment (Form 131) with the State Board on October 7, 1997, claiming that an it should receive a reduction in its 1995 assessment to account for partitioning in its office. The State Board held a hearing on the matter on March 1, 2000. On March 30, 2000, the State Board issued its final determination denying Elixir's request.
    On May 4, 2000, Elixir initiated an original tax appeal. The parties stipulated to the record and, on September 6, 2001, presented oral arguments to this Court. Additional facts will be supplied as needed.
 
ANALYSIS AND OPINION
Standard of Review
    This Court gives great deference to the final determinations of the State Board when it acts within its authority. Wetzel Enters., Inc. v. State Bd. of Tax Comm'rs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct. 1998). This Court will reverse a final determination by the State Board only when its findings are unsupported by substantial evidence, are arbitrary or capricious, constitute an abuse of discretion, or exceed statutory authority. Id.
    Further, a taxpayer who appeals to this Court from a State Board final determination must demonstrate that the final determination was incorrect. Thousand Trails, Inc. v. State Bd. of Tax Comm'rs, 757 N.E.2d 1072, 1075 (Ind. Tax Ct. 2001). The taxpayer must present a prima facie case by submitting probative evidence. Id. Probative evidence is evidence sufficient to establish a given fact that, if not contradicted, will remain sufficient. Id.
Discussion
     The issue in this case is whether the State Board erred when it denied a reduction to the base rate of Elixir's improvement to account for its partitioning. More specifically, Elixir claimed its improvement does not have the "typical" amount of office partitioning assumed in the General Commercial Industrial Model (GCI) applied in its assessment.
    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. See also Ind. Admin. Code tit. 50, r. 2.2-11-6 (1996). To help classify structures, the State Board has categorized improvements into several models. Ind. Admin. Code tit. 50, r. 2.2-11-1 to 3 (1996). Models are "conceptual tool[s] 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 State Board's regulations also provide for adjustments to be made to the base price when an improvement varies from the model criteria. Ind. Admin. Code tit. 50, r. 2.2-10-6.1(c) (1996).
    Elixir claims that the GCI model assumes that its entire office area is fully divided by partitions. (Cert. Admin. R. at 15 -16.) However, Elixir claims that while its office has numerous movable partitions, only 50% of the office has permanent partitions. (Cert. Admin. R. at 16.) Therefore, Elixir requests a Unit Cost Adjustment of $5.15 be applied to the partitioning in its office area. (Cert. Admin. R. at 16.) See also Ind. Admin. Code tit. 50 r. 2.2-11-6 (Sched. C)(1996). (Stating that, the GCI model assumes "typical" partitioning in an office with a cost of $10.35 per square foot of floor space; the unit cost adjustment table indicates the cost per square foot of partitioning space is $5.15).
    To establish a prima facie case, this Court requires that taxpayers present probative evidence regarding the alleged assessment error. Hoogenboom-Nofziger v. State Bd. of Tax Comm'rs, 715 N.E.2d 1018, 1023 (Ind. Tax Ct. 1999). This Court has previously held that in cases such as this one, taxpayers can meet their burden by showing that their partitioning is not "typical" by converting the cost figures contained in 50 IAC 2.2-11-6 into the "typical" linear footage of partitioning assumed by the model and then comparing that to the actual linear footage of partitioning present in the subject improvement. Sollers Pointe Co. v. Dep't of Local Gov't Fin., 790 N.E.2d 185, 188-89 (Ind. Tax Ct. 2003). In the instant case, however, Elixir has merely submitted two photographs of its partially partitioned office and the testimony of its tax consultant, Mr. Drew Miller, who stated that the office has only 50% partitioning. Elixer's presentation of photographs without explanation as to how they relate to its requested adjustments is not probative evidence. See Heart City Chrysler v. State Bd. of Tax Comm'rs, 714 N.E.2d 329, 333 (Ind. Tax Ct. 1999).
    The petitioners in Sollers Point provided the State Board with detailed measurements of their partitioned offices and calculated the difference between their reproduction costs versus those found in the GCI model. Sollers Point, 790 N.E.2d at 189. This is the quantum of proof required to establish that an improvement is entitled to an adjustment for "non-typical" partitioning. Such proof is lacking in this case: the only thing that Elixir's photographic evidence proves is that, indeed, there is some partitioning in its office. That is all it proves. Therefore, this partition petition must be denied for want of a tape measure and calculator.
 
CONCLUSION
    Elixir has not presented probative evidence to support its request for a base rate reduction to account for its office partitioning. Thus, for the foregoing reasons, the State Board's final determination is AFFIRMED.

Footnote: The State Board of Tax Commissioners (State Board) was originally the Respondent in this appeal. However, the Legislature abolished the State Board as of December 31, 2001. 2001 Ind. Acts 198 § 119(b)(2). Effective January 1, 2002, the Legislature created the Department of Local Government Finance (DLGF), and the Indiana Board of Tax Review (Indiana Board). Ind. Code §§ 6-1.1-30-1.1; 6-1.5-1-3 (West Supp. 2001); 2001 Ind. Acts 198 §§ 66, 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. 2002); 2001 Ind. Acts 198 § 95. Nevertheless, the law in effect prior to January 1, 2002 applies to these appeals. I.C. § 6-1.5-5-8. See also 2001 Ind. Acts 198 § 117. Although the DLGF has been substituted as the Respondent, this Court will still reference the State Board throughout this opinion.
Footnote: In addition, Elixir's counsel raises various state and federal constitutional claims that this Court has declined to reach in previous cases. See, e.g., Barth, Inc. v. State Bd. of Tax Comm'rs, 756 N.E.2d 1124, 1127 n.1 (Ind. Tax Ct. 2001). Because Elixir's claims and supporting arguments are identical to those previously rejected, this Court will not address them.