Tax Court affirms Indiana Board’s final determination of fast-food facility valuation after renovations

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A Shelbyville fast-food restaurant owner has not prevailed in an appeal before the Indiana Tax Court after challenging the 2019 assessment of their more than 30-year-old restaurant building following hundreds of thousands of dollars in renovations.

Piotrowski BK #5643’s restaurant, built in 1987, underwent significant renovations in 2016 — which included constructing a detached masonry wall on its property and paving — that cost $300,000.

The Shelby County Assessor subsequently increased the assessment of Piotrowski’s improvements, effective for the 2017 tax year, from $466,700 to $623,200. For the 2018 tax year, the assessed value increased again from $623,200 to $652,800.

In 2019, Piotrowski initiated an appeal challenging the assessment solely of the restaurant building, which was denied by the Shelby County Property Tax Assessment Board of Appeals. The Indiana Board likewise denied,despite Piotrowski’s assertion that its building was over-assessed because the assessor failed to properly apply the depreciation tables contained in Indiana’s Assessment Guidelines.

Piotrowski argued that because of the building’s age, it would have received an 80% physical depreciation adjustment. Instead, it only received 10%. Meanwhile, the assessor asserted that the application of the guidelines’ depreciation schedules advocated by Piotrowski would not have accurately reflected the restaurant building’s market value-in-use.

In its final determination, the Indiana Board explained that because Piotrowski bore the burden of proof in its case, Tax Court precedent required it to do more than attack the methodology used to determine its assessment. It also found that because it presented no market-based evidence, Piotrowski failed to make a prima facie case that its property was over-assessed.

The Indiana Tax Court agreed, finding that Piotrowski’s appeal wrongly focused on the method of assessment, rather than the market value-in-use of its building.

“Piotrowski’s position is premised entirely on how it has interpreted the change to certain language in the administrative regulations that incorporate the DLGF’s Manuals and Guidelines for both 2002 and 2011. In its comparative reading of the two regulations, however, Piotrowski has ignored their language – as well as the language in each of the corresponding Manuals – that refutes its position,” Judge Martha Blood Wentworth wrote.

The Tax Court concluded that the Indiana Board did not err when it determined that the Assessor’s method of determining physical depreciation of Piotrowski’s restaurant building did not relieve it of the requirement to present objectively verifiable, market-based evidence to demonstrate it was over-assessed.

It also found failure in Piotrowski’s argument that the court should not allow Indiana’s 92 county assessors to continue to “intentionally manipulate” the methodology set forth in the guidelines because otherwise there is no way to ensure assessments meet the state’s constitutional requirement that they be “uniform and equal.”

As such, the Tax Court affirmed upon finding that Piotrowski failed to provide objectively verifiable, market-based evidence to show that its property was either over-assessed or that it did not bear the same relationship of its assessed value to its market value-in-use as other properties within its taxing jurisdiction.

The case is Piotrowski BK #5643, LLC v. Shelby County Assessor, 21T-TA-00004.

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