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Practitioners say recent tax rulings help clarify precedent

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When Indianapolis attorney Larry Stroble read two recent rulings from the Indiana Tax Court, he saw one consistent message that speaks broadly to an overall inadequacy of the legal system.

That lesson: Courts don't always provide enough guidance when issuing decisions, and that leads to more litigation in order to flesh out a final resolution.

Now, the pair of tax rulings reaches back more than a decade to when the Indiana Supreme Court threw out the state's property-tax infrastructure, which led to what attorneys describe as confusion for tax practitioners, assessors, appraisers, and property owners.

"The lack of guidance on this issue has shown a weakness of our system," the Barnes & Thornburg partner said. "These are important decisions, but I wouldn't go as far as saying they're landmark rulings. I'd say it's a step forward in clarifying a basic principle in determining property value using market valuation."

Indiana Tax Court Judge Thomas Fisher issued rulings March 26 in Meijer Stores Limited Partnership v. Betty Smith, Wayne Twp. Assessor, et al., No. 49T10-0609-TA-89, and Sue Ann Stinson, in her official capacity as the Washington Township Assessor, et al. v. Trimas Fasteners, Inc., No. 49T10-0702-TA-4, which both help lay out more guidance since the landmark Indiana Supreme Court decision in 1998.

In State Board. of Tax Comm'rs v. Town of St. John, 702 N.E.2d 1034, 1043 (Ind. 1998), justices held that the tax statutes at the time violated the Indiana Constitution's property-taxation clause. The court determined that real property must be assessed on the basis of "market value inuse," which is the value "of a property for its current use, as reflected by the utility received by the owner or a similar user, from the property," according to the state assessment manual. That system began in 2002. But the ruling didn't spell out how appraisals should be used to determine the "in-use" standards for the non-residential property-tax assessments.

Since then tax attorneys say the process has remained unclear about how the valuations are actually to be determined. That may be changing with these recent Tax Court rulings, though.

Stroble and his colleagues agree that these decisions are part of a larger puzzle spelling out how the property-tax assessment process and subsequent litigation should be handled.

Judge Fisher rejected assessor appraisals and found in favor of the property owners, based on specific market data. In both cases, the property owners cited external obsolescence - a loss of value that may be caused by an oversupply of the type of space it provides, light or noise pollution, crime, or other issues.

In Meijer, the retailer appealed its property assessments, charging they were too high. The Wayne County Property Tax Assessment Board of Appeals subsequently valued the property as: $10,954,800 for 2002; $12,420,400 for 2003; and $12,132,000 for 2005. Meijer then appealed to the Indiana Board of Tax Review and hired a licensed Indiana appraiser to complete an independent appraisal, which showed the value at $6.3 million for those years.

The appraiser Meijer hired used a cost approach, a sales comparison approach and an income approach, but in reconciling the value estimates, he concluded the sales comparison approach was the most reliable. The Wayne Township Assessor didn't present any evidence at a hearing but rejected those methods. In ruling on the issue, the tax board held the appraiser had utilized properties that weren't "comparable" to the Meijer property.

Judge Fisher reversed the tax board's judgment, finding that Meijer's appraisal was based on more reliable evidence presented in the case. Those representing Meijer were Baker & Daniels attorneys Brent Auberry, Jon Laramore, and Stephen Paul; they declined to comment on the rulings because the lawyers weren't certain if rehearings or appeals would be sought.

In the Trimas decision, Judge Fisher heard a case involving the Washington Township Assessor's office in Clinton County and an industrial complex in Frankfort. For the 2002 assessment, the assessor valued the 200,000-square-foot Trimas facility on 44 acres to be worth $7.7 million, though it was later reduced to $7.2 million. Trimas appealed and argued - based on an appraisal conforming to the Uniform Standards of Professional Appraisal Practice - the property's market value-in-use was $2.9 million. The assessor presented an appraisal along with testimony of the appraiser that the market value-in-use of Trimas' property was $8 million on March 1, 2002.

The state's tax board later decided the company's appraisal was more probative than the assessor's data and reduced Trimas' assessment to $2.9 million. The local assessor appealed, and Judge Fisher ruled that other comparable properties since vacated could be used in the analysis.

"Generally speaking, market value-inuse, as determined by objectively verifiable market data, is the value of a property for its use, not the value of its use," Judge Fisher wrote.

Trimas' attorneys, David Suess and Thomas Atherton at Bose McKinney & Evans, described the rulings a triumph for the property owners. They said it was entirely consistent with what the Supreme Court had said in the 1998 decision, that market value means more than looking at the sticks and bricks.

"I don't see this as a revolutionary decision," Atherton said. "In 1998 we were sent on a voyage of complete subjectivity to objectivity, and this case is an important stop on that voyage," he said. "If you look at the two cases jointly, this will eliminate a theory being advanced that vacant properties are inherently less valuable than those occupied as far as what you could sell it for."

Suess said from a practitioner's point of view, the rulings reinforce that it's important for any party to get appraisals and evidence in on a timely fashion. That didn't happen in the Meijer case when the board excluded the assessor's late filings, he said.

Analyzing the decisions, Stroble said this isn't the end of the issues. More lawsuits will need to go before the appellate courts, he said.

"This is a growing problem, as assessors and taxpayers continue trying to arrive at the best market value," he said. "It will take several other decisions to completely establish a clear picture and a full set of rules for assessors and appraisers to follow."

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  1. What is the one thing the Hoosier legal status quo hates more than a whistleblower? A lawyer whistleblower taking on the system man to man. That must never be rewarded, must always, always, always be punished, lest the whole rotten tree be felled.

  2. I want to post this to keep this tread alive and hope more of David's former clients might come forward. In my case, this coward of a man represented me from June 2014 for a couple of months before I fired him. I knew something was wrong when he blatantly lied about what he had advised me in my contentious and unfortunate divorce trial. His impact on the proceedings cast a very long shadow and continues to impact me after a lengthy 19 month divorce. I would join a class action suit.

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  4. Dear Fan, let me help you correct the title to your post. "ACLU is [Left] most of the time" will render it accurate. Just google it if you doubt that I am, err, "right" about this: "By the mid-1930s, Roger Nash Baldwin had carved out a well-established reputation as America’s foremost civil libertarian. He was, at the same time, one of the nation’s leading figures in left-of-center circles. Founder and long time director of the American Civil Liberties Union, Baldwin was a firm Popular Fronter who believed that forces on the left side of the political spectrum should unite to ward off the threat posed by right-wing aggressors and to advance progressive causes. Baldwin’s expansive civil liberties perspective, coupled with his determined belief in the need for sweeping socioeconomic change, sometimes resulted in contradictory and controversial pronouncements. That made him something of a lightning rod for those who painted the ACLU with a red brush." http://www.harvardsquarelibrary.org/biographies/roger-baldwin-2/ "[George Soros underwrites the ACLU' which It supports open borders, has rushed to the defense of suspected terrorists and their abettors, and appointed former New Left terrorist Bernardine Dohrn to its Advisory Board." http://www.discoverthenetworks.org/viewSubCategory.asp?id=1237 "The creation of non-profit law firms ushered in an era of progressive public interest firms modeled after already established like the National Association for the Advancement of Colored People ("NAACP") and the American Civil Liberties Union ("ACLU") to advance progressive causes from the environmental protection to consumer advocacy." https://en.wikipedia.org/wiki/Cause_lawyering

  5. Mr. Foltz: Your comment that the ACLU is "one of the most wicked and evil organizations in existence today" clearly shows you have no real understanding of what the ACLU does for Americans. The fact that the state is paying out so much in legal fees to the ACLU is clear evidence the ACLU is doing something right, defending all of us from laws that are unconstitutional. The ACLU is the single largest advocacy group for the US Constitution. Every single citizen of the United States owes some level of debt to the ACLU for defending our rights.

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