ATTORNEYS FOR PETITIONER:                       ATTORNEY FOR RESPONDENT:
MARILYN S. MEIGHEN                              PAUL M. JONES, JR.
ATTORNEY AT LAW                                 PAUL JONES LAW, LLC
Carmel, IN                                      Indianapolis, IN

BRIAN A. CUSIMANO                                             FILED
ATTORNEY AT LAW
                                                        Nov 04 2016, 3:59 pm
Indianapolis, IN
                                                              CLERK
_____________________________________________________________________
                                                         Indiana Supreme Court
                                                                        Court of Appeals
                                                                         and Tax Court


                               IN THE
                         INDIANA TAX COURT
_____________________________________________________________________

MONROE COUNTY ASSESSOR,               )
                                      )
     Petitioner,                      )
                                      )
                 v.                   )   Cause No. 49T10-1509-TA-00029
                                      )
SCP 2007-C-26-002, LLC a/k/a          )
CVS 3195-02,                          )
                                      )
     Respondent.                      )
______________________________________________________________________

                  ON APPEAL FROM A FINAL DETERMINATION OF
                      THE INDIANA BOARD OF TAX REVIEW

                                  FOR PUBLICATION
                                   November 4, 2016

WENTWORTH, J.

      On August 19, 2015, the Indiana Board of Tax Review issued a final

determination valuing a CVS store in Bloomington, Indiana for purposes of the 2009

through 2013 assessments. The Monroe County Assessor has challenged that final

determination, but the Court affirms.

                        FACTS AND PROCEDURAL HISTORY

      The property at issue in this case is the CVS store located at 1000 North College
Avenue in Bloomington, Indiana.         (Cert. Admin. R. at 1895-96.)        The store is

approximately 13,000 square feet and sits on 1.44 acres of land. (Cert. Admin. R. at

1895-96.)

       For the 2009 through 2013 assessments, the Assessor valued the subject

property as follows: $3,907,800; $3,856,500; $3,817,100; $3,907,000; and $3,933,900.

Believing those values to be too high, CVS filed appeals with the Monroe County

Property Tax Assessment Board of Appeals (PTABOA). The PTABOA affirmed the

assessments and CVS subsequently filed appeals with the Indiana Board.                 After

consolidating the appeals, the Indiana Board conducted an administrative hearing on

the matter in August of 2014.

       During the hearing, both CVS and the Assessor presented Appraisal Reports,

completed by certified appraisers in conformance with the Uniform Standards of

Professional Appraisal Practice (USPAP), valuing the subject property for each of the

assessment years at issue.       (See Cert. Admin. R. at 247-420, 1897-2143.)          Both

Appraisal Reports employed the sales comparison, income, and cost approaches to

value; nonetheless, they arrived at substantially different values for the subject property.

(Compare Cert. Admin. R. at 407-10 with 1903.) In addition to her Appraisal Report, the

Assessor also presented a review, completed by a third certified appraiser, critiquing

CVS’s Appraisal. (See Cert. Admin. R. at 2144-82.)

     On August 19, 2015, the Indiana Board issued its final determination in the matter.

In the final determination, the Indiana Board first addressed the Assessor’s review. The

Indiana Board explained that in critiquing CVS’s Appraisal Report, the Assessor’s

review had one primary complaint: it used data from properties that were being used for




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a general retail purpose both pre- and post-sale rather than data from properties that

were specifically used “for a successful ongoing CVS operation.”       (See, e.g., Cert.

Admin. R. at 166-68 ¶¶ 39, 43, 46, 178 ¶ 77.) (See also, e.g., Cert. Admin. R. at 2148.)

The Assessor’s review therefore claimed that the CVS Appraisal Report “failed to

capture all of the [subject property’s] utility received by [CVS]” and therefore merely

measured the subject property’s market value, not its market value-in-use. (See Cert.

Admin. R. at 176 ¶ 73, 178 ¶ 77.) (See also, e.g., Cert. Admin. R. at 2153.)

      The Indiana Board determined that the appraisal review carried no weight

because its criticism of CVS’s Appraisal Report was founded upon a misunderstanding

of Indiana’s market value-in-use standard. (See generally Cert. Admin. R. at 176-83 ¶¶

73-89.) More specifically, the Indiana Board explained that pursuant to well-established

Tax Court case law:

         a property’s market value-in-use should be measured against
         properties with a comparable use (e.g., general retail or light
         manufacturing) as opposed to properties with identical users;

         it is not improper to consider vacant properties as comparable to
         occupied properties because market value-in-use measures the
         value of a property for its use and not of its use; and

         a property’s market value and market-value-in use often coincide
         and thus, when determining a property’s market value-in-use, it is
         improper to reject out-of-hand an appraisal that estimates that
         property’s market value.

(See Cert. Admin. R. at 178-80 ¶¶ 79-82 (citing Shelby Cnty. Assessor v. CVS

Pharmacy, Inc. # 6637-02, 994 N.E.2d 350, 354 (Ind. Tax Ct. 2013); Millennium Real

Estate Inv., LLC v. Assessor, Benton Cnty., 979 N.E.2d 192 (Ind. Tax Ct. 2012), review

denied; Meijer Stores Ltd. P’ship v. Smith, 926 N.E.2d 1134 (Ind. Tax Ct. 2010); Stinson

v. Trimas Fasteners, Inc., 923 N.E.2d 496 (Ind. Tax Ct. 2010)).) Thus, continued the



                                           3
Indiana Board, the appraisal review’s ultimate conclusion – that the CVS Appraisal

Report was not probative – was incorrect. (See Cert. Admin. R. at 181 ¶ 85, 182 ¶ 88

(rejecting the Assessor’s argument that CVS’s use of general retail properties was

irrelevant to valuing the property or that, in using those properties, CVS was

determining something other than the property’s market value-in-use).)

      The Indiana Board also evaluated the competing Appraisal Reports. The Indiana

Board meticulously examined how each party conducted their sales comparison,

income, and cost approaches to value. (See Cert. Admin. R. at 160-66 ¶¶ 22-37, 170-

75 ¶¶ 54-67.) Then, in a lengthy discussion, the Indiana Board addressed the strengths

and weaknesses of each of those approaches within each Appraisal Report. (See Cert.

Admin. R. at 183-90 ¶¶ 91-111.) Ultimately, the Indiana Board determined that the

values as determined under the CVS Appraisal Report’s income approach were the

most credible indication of the subject property’s market value-in-use. (Cert. Admin. R.

at 154-55 ¶ 1, 190 ¶ 112.)      Accordingly, the Indiana Board reduced the subject

property’s value to be consistent with those values. (See Cert. Admin. R. at 165 ¶ 36,

190-91 ¶¶ 113-14 (reducing the subject property’s 2009 assessment to $2,456,542; its

2010 assessment to $2,110,000; its 2011 assessment to $2,290,000; its 2012

assessment to $2,380,000; and its 2013 assessment to $2,620,000).)

      The Assessor initiated this original tax appeal on September 4, 2015. The Court

heard the parties’ oral arguments on May 19, 2016. Additional facts will be supplied as

necessary.




                                           4
                                STANDARD OF REVIEW

       The party seeking to overturn an Indiana Board final determination bears the

burden of demonstrating its invalidity. Osolo Twp. Assessor v. Elkhart Maple Lane

Assocs., 789 N.E.2d 109, 111 (Ind. Tax Ct. 2003). Accordingly, the Assessor must

demonstrate to the Court that the Indiana Board’s final determination in this matter is

arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

contrary to constitutional right, power, privilege, or immunity; in excess of or short of

statutory jurisdiction, authority, or limitations; without observance of procedure required

by law; or unsupported by substantial or reliable evidence. See IND. CODE § 33-26-6-

6(e)(1)-(5) (2016).

                                        ANALYSIS

       On appeal, the Assessor argues that the Indiana Board’s final determination

must be reversed because it is contrary to law. (See Pet’r V. Pet. Judicial Review Final

Determination of Ind. Bd. Tax Review (“Pet.”) at 5-6 ¶¶ 15-16, 19-22.) The Assessor

also argues that the Indiana Board’s final determination must be reversed because it

arbitrary and capricious. (Pet. at 7 ¶ 23.)

                                              I.

       The Assessor contends that the Indiana Board’s final determination is contrary to

law and must be reversed because it does not value the subject property in accordance

with Indiana’s market value-in-use standard. (See, e.g., Pet. at 5-6 ¶¶ 15-16, 19-22;

Oral Arg. Tr. at 14.) More specifically, the Assessor argues that the Meijer, Trimas

Fasteners, and Millennium cases were wrongly decided by the Tax Court and thus, the

Indiana Board’s “attachment” to them for purposes of determining a property’s market




                                              5
value-in-use is “unreasonable.”      (See, e.g., Pet’r Br. at 2-3, 8-11.)       The Assessor

reasons that the Legislature enacted Indiana Code §§ 6-1.1-4-43 and -44 in 2015 to put

the Indiana Board on notice that the Tax Court’s holdings in Meijer, Trimas Fasteners,

and Millennium were “defective” and did not comport with the intended meaning of

market value-in-use.1 (See Pet’r Br. at 2, 9-11.)

       This very same argument has already been advanced in – and rejected by – the

Tax Court. See Howard Cnty. Assessor v. Kohl’s Indiana LP, 57 N.E.3d 913, 916-19

(Ind. Tax Ct. 2016), notice of intent to petition for review filed Oct. 4, 2016. See also

Marion Cnty. Assessor v. Simon DeBartolo Group, LP, 52 N.E.3d 65, 68-69 (Ind. Tax

Ct. 2016); Marion Cnty. Assessor v. Washington Square Mall, LLC, 46 N.E.3d 1, 9-10

(Ind. Tax Ct. 2015); CVS Pharmacy, Inc. # 6637-02, 994 N.E.2d at 354 n.5 (rejecting

the assessor’s argument that the holdings in Meijer and Trimas Fasteners were wrong

and, that in holding as it did, the Court was “impermissibly attempting to convert

Indiana’s market value-in-use system into a fair market value system”).) Because the

Court believes its previous cases correctly explain the market value-in-use standard and

that the Court is not the proper arena to change a law, it continues to stand by its

analyses in those cases and need not repetitively address the argument in this opinion.




1
   The plain language of these statutes limited the use of certain comparable properties in
valuing big box stores and nonincome producing commercial properties without implying any
change to the market value-in-use standard. See IND. CODE §§ 6-1.1-4-43, -44 (2015). The fact
that the Legislature repealed the statutes less than a year after it enacted them, see 2016 Ind.
Acts 2987-89, belies the Assessor’s claim that the Legislature intended to override the Meijer,
Trimas Fasteners, and Millennium decisions.




                                               6
                                             II.

       The Assessor also argues that the Indiana Board’s final determination must be

reversed because it is “muddled, inconsistent . . . [and] doesn’t make sense.” (Oral Arg.

Tr. at 9, 11, 14 (asserting that the final determination’s inconsistencies make it arbitrary

and capricious).) For instance, she asserts that in its final determination, the Indiana

Board stated that the use of “general retail” comparables was proper when estimating a

value for the subject property under the sales comparison approach, but then later

stated that data from “drugstore/pharmacy” properties might be more appropriate under

the cost and income approaches to value. (See Pet’r Reply Br. at 1-3 (comparing

paragraphs 79 and 85 of the final determination); Oral Arg. Tr. at 4.) She also contends

that the Indiana Board indicated that for purposes of the sales comparison approach

“general retail” did not include small neighborhood shopping centers but then allowed

CVS to use aggregate data – which included information relating to small neighborhood

shopping centers – to support its selection of market rents and cap rates under the

income approach. (See Pet’r Reply Br. at 4 (comparing paragraphs 97 and 108 of the

final determination); Oral Arg. Tr. at 4-5, 24, 30.) The Assessor insists that given these

inconsistencies, “the assessment community doesn’t know what it should be doing”

because it “doesn’t know what market value-in-use means to the Indiana Board.” (See

Oral Arg. Tr. at 18, 27.)

       Through this argument, the Assessor invites the Court to both revisit her first

claim that the Tax Court has interpreted market value-in-use incorrectly, (see, e.g., Oral

Arg. Tr. at 30-32 (challenging the Court to “tell me how . . . th[ese] different jumbled

thoughts value the utility to this CVS” and asserting that “I don’t think value has anything




                                             7
to do in property tax cases anymore”)), and establish bright-line rules for the application

of comparable properties under the various approaches to value. The Court need not

do either. See, e.g., Kohl’s, 57 N.E.3d at 916-19 (providing in no uncertain terms why

the Court’s construction of market value-in-use is proper); Trimas Fasteners, 923

N.E.2d at 502 (explaining that because the valuation of property is an opinion and not

an exact science, it is up to each party to convince the Indiana Board why its opinion –

which includes the use of comparable properties – is more probative).

                                     CONCLUSION

      The Assessor has not demonstrated that the Indiana Board’s final determination

is either contrary to law or arbitrary and capricious. Accordingly, the Indiana Board’s

final determination in this matter is AFFIRMED.




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