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Tax Court affirms assessments of Shelbyville CVS store

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The assessment of a Shelbyville CVS store is lower than the county wanted, higher than the drugstore chain wanted, but just right, the Indiana Tax Court concluded.

The court issued an opinion affirming the Indiana Board of Tax Review’s determination upholding the assessment of the property at $2.375 million in 2007 and about $2.46 million for 2008.

After those assessments were made on the store built in 2001 and operated under a sale-leaseback agreement, CVS appealed first to the Shelby County Property Tax Assessment Board of Appeals and then to the Indiana Board of Tax Review, both of which affirmed the county’s original assessment.

CVS argued in those earlier appeals that based on the value of vacant former drugstore properties where market rent is about $10 per square foot, its Shelbyville store should be assessed at only about $1.25 million for the property tax years in question. But the Tax Review Board noted CVS failed to investigate and understand why those properties were vacant, which “destroyed” the credibility of its preferred method of assessment.

The Shelby County assessor then pursued its own alternate approach in its appeal to the Tax Court, Shelby County Assessor v. CVS Pharmacy, Inc. #6637-02, 49T10-1112-TA-96. The assessor argued that based on the sale-leaseback’s contractual rent of $27.20 per square foot, the property should have been assessed at about $3.77 million.

“In its final determination, the Indiana Board explained that CVS provided probative evidence demonstrating that there was a significant difference between the subject property’s market rent and contractual rent,” Senior Judge Thomas Fisher wrote.

“The Indiana Board noted that this difference was consistent with CVS’s claim that it used sale-leaseback transactions to sell more than just the ownership rights in its properties; rather, it used those types of transactions as a means to generate additional business capital from investors,” Fisher wrote. “The Indiana Board found that the Assessor’s … approach likely was capturing more than the value of the real property (i.e., the “sticks and bricks”) in her computation.”

Fisher concluded in affirming the review board that the assessor essentially asked the Tax Court to reweigh the evidence, which it may not do.

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