Tax Court affirms assessment of Boone County Meijer store

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The Indiana Tax Court has affirmed a final determination rendered by the Indiana Board of Tax Review for a Boone County Meijer store that increased its assessed value over four years.

Meijer Stores Limited Partnership in 2014 built a Meijer store in Boone County with related site improvements that was later assessed by the Boone County Assessor.

Meijer argued the valuations were too high and appealed the store’s assessed values for the years 2014, 2015, 2016 and 2017 to the Boone County Property Tax Assessment Board of Appeals and then to the Indiana Board of Tax Review.

Following an administrative hearing, both Meijer and the assessor agreed to provide evidence for the 2016 tax year alone and stipulated that the assessments for the remaining years would be determined by applying their pre-determined trending formula to the Indiana Board’s final determination of assessed value for the 2016 assessment year.

Both parties used the sales comparison, income and cost approaches. For Meijer, it concluded that the market value-in-use for the property was $7,190,000 under the sales comparison approach, $7,750,000 for the income approach and $8,240,000 for the cost approach.

The assessor, however, estimated the value of the Meijer property to be $14,450,000 under the sales comparison approach, $14,400,000 under the income approach and $16,550,000 under the coast approach.

The Indiana Board ultimately concluded that the cost approach in certified appraiser and MAI Samuel Koon’s first appraisal, excluding the adjustment for entrepreneurial profit, was the most credible and the best indication of the property’s market value-in-use. It therefore valued the subject property at $12,798,600 for the 2016 tax year.

On appeal, the Indiana Tax Court affirmed upon finding that Meijer had not demonstrated that the Indiana Board erred in rejecting its sales comparison and income approach valuations, adopting the assessor’s cost approach, or rejecting its obsolescence calculation.

First, the Tax Court concluded that what Meijer claims is the Indiana Board improperly performing a market segmentation analysis of big box stores over 150,000 square feet “was simply the Indiana Board acting within the scope of its authority and weighing evidence to determine its reliability.”

“Because the Indiana Board did not perform a market segmentation analysis, but simply used ‘mega warehouse superstores’ as a guide for weighing comparability, the Court will not reverse the Indiana Board’s determination that (the) sales comparison and income approaches were unreliable,” Judge Martha Wentworth wrote.

It next affirmed the Indiana Board’s finding because, based on appraisal authority, the Tax Court concluded its reliance on the cost approach was reasonable and supported by substantial evidence.

Lastly, it addressed the obsolescence adjustment issue by finding it was reasonable for the Indiana Board to conclude that Koon’s first cost approach for the assessor inherently accounted for “substantial immediate obsolescence for features unique to the Meijer [s]tore.”

The case is Meijer Stores Limited Partnership v. Boone County Assessor, 19T-TA-30.

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