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Marion County, Simon tangle over valuation of Indianapolis malls

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Arguments in two cases before the Indiana Tax Court in recent weeks featured wildly divergent views of the valuation of two Indianapolis shopping malls that have seen better days.

The Marion County assessor argues the cases represent far more than just determining whether the assessments of Washington Square and Lafayette Square for property-tax purposes were lowballed. In both cases, the Indiana Board of Tax Review sided with the mall owners at the time, Indianapolis-based Simon Property Group or a subsidiary.

rop-washington-mall04-15col.jpg Washington Square (left) and Lafayette Square malls both have dealt over the years with declining sales and high rates of vacancy, factors which have helped drive down their assessed values. But the Marion County Assessor’s Office has appealed to Indiana Tax Court, claiming plummeting assessments in some cases were two- to three-times too low. (IL file photo)

Assessor’s office attorney John C. Slatten seized on a finding in the Indiana Board of Tax Review’s final determination that lowered the assessed value of Washington Square for the 2006-2010 assessment years. While the board sided with Simon’s appraisers, it wrote the methods used to arrive at the value “were not supported by his evidence and he made income and expense assumptions that seemed designed to value property at the lowest possible rate.”

“It would be a novel finding then in Indiana that a totally flawed appraisal can support a reduction of value,” Slatten argued to Tax Court Judge Martha Blood Wentworth in Marion Co. Assessor v. Washington Square Mall, LLC, et al., 49T10-1211-TA-70.

“If the court upholds this case, these are bad appraisals, and that’s the takeaway,” Slatten argued.

Ice Miller LLP attorney Paul M. Jones Jr. represented Simon interests in both cases. He said the board justified its findings, that it found fault in all the appraisals before it and didn’t abuse its discretion.

focus-malls-facts.jpg“This is a simple case that can be decided quickly,” Jones argued. He disputed that the flaws in the Washington Square appraisal were serious and said the board exercised its right to determine which appraisal was most persuasive.

“The board properly weighed the evidence and gave more weight to the taxpayer’s assessment,” he said. “It’s also not surprising the board arrived at the decision it did.”

Wentworth noted that the board also explained its rationale, and she challenged Slatten’s suggestion that the findings were “flawed in every approach.”

“You can’t look in isolation and say the board just completely eviscerated the probative value (of appraisals),” Wentworth said. But Slatten said that when presented with defective assessments, the tax review panel should have deferred to the assessments affirmed by the Marion County Property Tax Assessment Board of Appeals.

That board determined Washington Square’s total assessment for the 2010 tax year, for instance, was more than $36.5 million. But the Indiana Tax Review Board reduced that assessment to $9.5 million.

“This particular property is struggling,” Jones said, noting that Simon’s appraiser addressed issues from a high rate of tenant vacancy to condition issues, such as a bad roof. “I think it’s not surprising why the board found that evidence was more persuasive.”

“For this court to overturn the Indiana board decision in this case, it would have to get into the business of reweighing the evidence,” he told Wentworth.

rop-lafayette-mall02-15col.jpg Lafayette Square was sold in 2007 for $18 million to Ashkenazy Acquisition Corp. in 2007 after a tax appeal began on the property.(IL file photo)

Jones said Simon also presented evidence that the shopping center wouldn’t attract the interest of real estate investment trust giants similar to Simon as potential buyers.

Wentworth challenged Jones on whether that should have been a factor in the assessment. “Even though in reality an entrepreneurial investor with a new focus might be the only buyer you would get, you still have to meet the market value in use definition,” she said. Jones replied that while sale prospects were considered, the property was valued in Simon’s assessment as a regional mall.

Sale prices also factored into Slatten’s arguments. Simon sold Lafayette Square for $18 million to Ashkenazy Acquisition Corp. in 2007 after a tax appeal began on that property. He argued that Washington Square is considered a much more valuable property, which makes the $9.5 million assessment for 2010 questionable.

“Lafayette Square sold for twice as much, so you know the value’s low,” he said. “We need to value (Washington Square) as the value that it has to the owner.”

Slatten told Indiana Lawyer it’s unusual for the assessor’s office to push a case to Tax Court, and typically such disputes are resolved before this third-level appeal. “It’s a continuing problem we have with them,” he said of some Simon properties, “appraisals that just don’t make any sense.”

Jones could not be reached for comment. Ice Miller associate Matthew J. Ehinger, who also represents Simon in the litigation, said he could not comment on the pending cases.

Regarding the Lafayette Square case, Marion Co. Assessor v. Simon DeBartolo Group, LP, et al., 49T10-1211-TA-76, Jones said at oral argument that the Tax Court should affirm valuations of $15.2 million and $16.4 million for the 2006 and 2007 years, which represent assessments that employed a trending analysis based on the sale price.

That’s a more logical approach than the assessor’s proposed valuations that in one year was more than twice as high. “Or is it logical the alternative the assessor would suggest, that this same publicly traded group, the world’s largest … would sell a property for a 30 percent or a 50 percent discount like one of the retailers at the mall when they’re trying to unload things at the end of a season,” Jones argued.

“It’s outrageous that the assessor’s value – $36 million and $30 million – represent the market value in use when the property sold for $18 million.”

In the case of Lafayette Square, neither side agreed with the Marion County Property Tax Assessment Board of Appeals, which set assessments at $28 million for 2006 and $20 million for 2007.

But Slatten said the sale price analysis in determining assessment value was insufficient. “It’s too remote from the valuation data of 2005 (for the 2006 assessment value) and goes against generally accepted valuation principles,” he argued.

“It doesn’t indicate the market value in use,” Slatten said of the purchase price versus the assessment standard. “It indicates what someone was willing to pay for it.”

But Jones argued Wentworth should affirm Simon’s Lafayette Square assessments that were approved by the Tax Review Board, noting that the sale was exposed to the market, which determined its value.

“If the standard is value for its use,” he said, “and you have a property that is marketed and sold and then market factors are used to trend that, then that is sufficient.”•

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

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  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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