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Tax Court rules against CVS in dispute over Monroe County store valuation

October 2, 2017

The most recent in a long line of tax disputes between the Monroe County assessor and CVS Corp. has ended with two rulings against CVS after the Indiana Tax Court affirmed assessed valuations of Monroe County CVS stores.

When the CVS Corp. believed the Monroe County assessor improperly valued one of its Bloomington locations during the 2011, 2012 and 2013 tax years, the company appealed the assessments to the Monroe County Property Tax Assessment Board of Appeals. CVS argued its valuations were too high, but the appeals board affirmed the assessments.

CVS then took its case to the Indiana Board of Tax Review, which considered stipulated evidence including the property report card, an edition of “The Appraisal of Real Estate” and the parties’ appraisal reports. Both appraisal reports used the sales comparison, income and cost approaches.

After denying CVS’ request to take judicial notice of the records of two prior administrative proceedings involving the same parties and appraisers, the Board of Tax Review determined the property’s value by adopting the land values from CVS’ appraisal and the improvement values from the assessor’s appraisal. Using that approach, the board determined valuation of $2.3 million for 2011 and 2013 and $2.4 million for 2012.

On appeal in CVS Corporation (#6698-02) v. Monroe County Assessor, 49T10-1607-TA-20, CVS argued the board’s final determination was contrary to law, arbitrary and capricious, and not supported by substantial evidence. But Indiana Tax Court Judge Martha Blood Wentworth disagreed, affirming the board’s valuations in a Friday opinion.

Specifically, Wentworth rejected CVS’ argument that the board was required to take judicial notice of Monroe County Assessor v. SCP 2007-C-26-002, LLC, 62 N.E.3d 478 (Ind. Tax Ct. 2016) and Monroe County Assessor v. SCP 2002 E19 LLC 6697, 77 N.E.3d 270 (Ind. Tax Ct. 2017). Indiana administrative code, evidence rules and case law do not require such judicial notice, as CVS contended, so the board’s final determination cannot be deemed contrary to law on that basis, she wrote.

Similarly, Wentworth wrote the board’s determination could not be considered arbitrary and capricious merely because it did not determine CVS’ appraisal income approach was the most probative evidence of value, as it did in the prior administrative proceedings. “’Each assessment and each tax year stands alone,’” the judge wrote, and there was evidence in the record to show the board reasonably determined the income approach was not the most probative in the instant case.

Finally, Wentworth rejected CVS’ argument that the final determination was not based on substantial evidence because the board explained why it weighed the credibility of the evidence as it did, and that weighing process was reasonable.

Wentworth then reached a similar decision in the case of CVS Corporation v. Monroe County Assessor, 49T10-1605-TA-11, affirming the Board of Tax Review’s final determination on the valuation of an Ellettsville CVS store for the same tax years in a second Friday opinion. In that case, the board considered similar stipulated evidence, including appraisal reports from both parties, and the board’s records of two previous cases involving Monroe County CVS stores.

Though the board found shortcomings in both reports, it ultimately found the assessor’s report more persuasive. However, it did not change the original assessment, but instead affirmed the valuations of roughly $1.4 million for each of the three years.

On appeal, CVS argued the board should have changed the 2011 assessment to equal its 2010 counterpart, because there was more than a 5 percent increase between those years. While Indiana Code 6-1.1-15-17.2(b) does require such a change when there is an increase that is greater than 5 percent, Wentworth wrote the “reversion remedy” in that statute does not apply in this case because the board determined the totality of the evidence proved the 2011 assessment was correct.

Similarly, “the Indiana Board expressly analyzed the evidence and provided the reasons it weighed the evidence as it did,” the judge wrote in her rejection of the argument that the board’s final determination was not supported by substantial and reliable evidence. And similar to her determination regarding the Bloomington store, Wentworth wrote the board did not err just because it reached a conclusion in the instant case that is different than what was reached in the previous administrative proceedings.

In a similar footnote to both opinions, Wentworth urged the local Monroe County government to seek a legislative remedy for issues they raised as amicus curiae in both cases. Specifically, the Monroe County Board of Commissioners argued the tax court’s “previous decisions interpreting market value-in-use are incorrect,” so the board’s final determinations should have been affirmed on that basis because the determinations were “a step away from those decisions.”

“The Court stands by its previous decisions,” Wentworth wrote. “If the Board of Commissioners wishes to change the market value-in-use standard, its remedy is with the Legislature rather than this Court.”

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