ILNews

Marion County, Simon tangle over valuation of Indianapolis malls

Back to TopCommentsE-mailPrintBookmark and Share
Indiana Lawyer Focus

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.”•

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. I'm going to court the beginning of Oct. 2015 to establish visitation and request my daughters visits while she is in jail. I raised my grandchild for the first two and half years. She was born out of wedlock and the father and his adopted mother wantwd her aborted, they went as far as sueing my daughter for abortion money back 5mo. After my grandchild was born. Now because of depression and drug abuse my daughter lost custody 2 and a half years ago. Everyting went wrong in court when i went for custody my lawyer was thrown out and a replacment could only stay 45 min. The judge would not allow a postponement. So the father won. Now he is aleinating me and my daughter. No matter the amount of time spent getting help for my daughter and her doing better he runs her in the ground to the point of suicide because he wants her to be in a relationship with him. It is a sick game of using my grandchild as a pawn to make my daughter suffer for not wanting to be with him. I became the intervener in the case when my daughter first got into trouble. Because of this they gave me her visitation. Im hoping to get it again there is questions of abuse on his part and I want to make sure my grandchild is doing alright. I really dont understand how the parents have rights to walk in and do whatever they want when the refuse to stand up and raise the child at first . Why should it take two and a half years to decide you want to raise your child.The father used me so he could finish college get a job and stop paying support by getting custody. Support he was paying my daughter that I never saw.

  2. Pence said when he ordered the investigation that Indiana residents should be troubled by the allegations after the video went viral. Planned Parenthood has asked the government s top health scientists at the National Institutes of Health to convene a panel of independent experts to study the issues surrounding the little-known branch of medicine.

  3. State Farm is sad and filled with woe Edward Rust is no longer CEO He had knowledge, but wasn’t in the know The Board said it was time for him to go All American Girl starred Margaret Cho The Miami Heat coach is nicknamed Spo I hate to paddle but don’t like to row Edward Rust is no longer CEO The Board said it was time for him to go The word souffler is French for blow I love the rain but dislike the snow Ten tosses for a nickel or a penny a throw State Farm is sad and filled with woe Edward Rust is no longer CEO Bambi’s mom was a fawn who became a doe You can’t line up if you don’t get in a row My car isn’t running, “Give me a tow” He had knowledge but wasn’t in the know The Board said it was time for him to go Plant a seed and water it to make it grow Phases of the tide are ebb and flow If you head isn’t hairy you don’t have a fro You can buff your bald head to make it glow State Farm is sad and filled with woe Edward Rust is no longer CEO I like Mike Tyson more than Riddick Bowe A mug of coffee is a cup of joe Call me brother, don’t call me bro When I sing scat I sound like Al Jarreau State Farm is sad and filled with woe The Board said it was time for him to go A former Tigers pitcher was Lerrin LaGrow Ursula Andress was a Bond girl in Dr. No Brian Benben is married to Madeline Stowe Betsy Ross couldn’t knit but she sure could sew He had knowledge but wasn’t in the know Edward Rust is no longer CEO Grand Funk toured with David Allan Coe I said to Shoeless Joe, “Say it ain’t so” Brandon Lee died during the filming of The Crow In 1992 I didn’t vote for Ross Perot State Farm is sad and filled with woe The Board said it was time for him to go A hare is fast and a tortoise is slow The overhead compartment is for luggage to stow Beware from above but look out below I’m gaining momentum, I’ve got big mo He had knowledge but wasn’t in the know Edward Rust is no longer CEO I’ve travelled far but have miles to go My insurance company thinks I’m their ho I’m not their friend but I am their foe Robin Hood had arrows, a quiver and a bow State Farm has a lame duck CEO He had knowledge, but wasn’t in the know The Board said it was time for him to go State Farm is sad and filled with woe

  4. The ADA acts as a tax upon all for the benefit of a few. And, most importantly, the many have no individual say in whether they pay the tax. Those with handicaps suffered in military service should get a pass, but those who are handicapped by accident or birth do NOT deserve that pass. The drivel about "equal access" is spurious because the handicapped HAVE equal access, they just can't effectively use it. That is their problem, not society's. The burden to remediate should be that of those who seek the benefit of some social, constructional, or dimensional change, NOT society generally. Everybody wants to socialize the costs and concentrate the benefits of government intrusion so that they benefit and largely avoid the costs. This simply maintains the constant push to the slop trough, and explains, in part, why the nation is 20 trillion dollars in the hole.

  5. Hey 2 psychs is never enough, since it is statistically unlikely that three will ever agree on anything! New study admits this pseudo science is about as scientifically valid as astrology ... done by via fortune cookie ....John Ioannidis, professor of health research and policy at Stanford University, said the study was impressive and that its results had been eagerly awaited by the scientific community. “Sadly, the picture it paints - a 64% failure rate even among papers published in the best journals in the field - is not very nice about the current status of psychological science in general, and for fields like social psychology it is just devastating,” he said. http://www.theguardian.com/science/2015/aug/27/study-delivers-bleak-verdict-on-validity-of-psychology-experiment-results

ADVERTISEMENT