Tax Court rules for Hendricks Co. convenience store in appraisal dispute

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A Hendricks County convenience store has won its appeal for a lower real property assessment after the Indiana Tax Court struck down an underlying appraisal and market adjustment.

In October 2014, Mac’s Convenience Stores LLC purchased commercial property in Hendricks County that included a convenience store and gas station, a car wash and personal property. The total sale was for a little more than $2.7 million.

In 2018 and 2019, the real property was assessed at $1,913,400, a 10% increase over the 2017 assessment. The Hendricks County assessor argued neither assessment exceeded the property’s market value, while Mac’s cautioned against putting too much emphasis on the 2014 purchase price because the price of convenience stores with gas stations is based on the value of the realty as well as related personal property.

The Indiana Board of Tax Review ultimately upheld the 2018 and 2019 assessments despite an appraisal report’s “imperfections.” But the Tax Court reversed in a Tuesday opinion in Mac’s Convenience Stores, LLC v. Hendricks County Assessor, 21T-TA-00005.

On appeal, Mac’s argued that the appraisal report — completed by Erick Landeen, a certified general appraiser — contravened assessment guidelines by including personal property.

Likewise, according to Judge Martha Wentworth, “The Assessor’s evidence … did not reveal whether the five comparable properties used in the appraisal report (convenience stores that also sold fuel) included or excluded non-realty costs in their unadjusted sales prices. Moreover, the sales disclosure forms for each of the comparable properties, unlike the sales disclosure form for Macs’s property, indicated just one sales price, and Landeen used these unadjusted sales prices as the basis for his analysis.

“… The Indiana Board’s final determination stated that the fuel pumps, underground storage tanks, walk-in coolers, and portable racks/shelves were personal property items and that they were included in the appraisal report’s valuation. The Indiana Board also explained that it had unanswered ‘concerns’ about the appraisal report’s valuation of the personal property and the real property,” Wentworth continued. “… Consequently, the totality of the evidence demonstrates that the appraisal report valued more than the real property contrary to Indiana’s real property assessment laws. Accordingly, the Indiana Board erred in finding that the appraisal report supported the real property assessments at issue.”

As for the 2014 purchase price, Landeen’s appraisal had adjusted the sales prices of the comparables upward by 3%, and the board determined that any “appreciation due to improving market conditions more than offset any deprecation … [incurred] between the subject property’s sale [and] the valuation date[s].”

“The record, however, contains no evidence or analysis regarding the extent of the subject property’s depreciation since its 2014 purchase,” Wentworth wrote. “Moreover, the Indiana Board, flirting with taking an advocacy role as it sometimes does, did little to explain how the ‘offset’ would work, and it did not, and could not, point to any evidence or argument from either party for this concept.

“… Here, the Indiana Board abused its discretion by finding the 3% market conditions adjustment was sufficient to relate Macs’s 2014 purchase price to the relevant assessment dates because that finding was based on speculation, not evidence,” Wentworth concluded, citing CVS Corp. v. Searcy, 137 N.E.3d 1053 (Ind. Tax. Ct. 2019). “Accordingly, the Court finds that (the) Indiana Board erred in upholding Macs’s real property assessments for the 2018 and 2019 tax years.”

The case was remanded to reinstate the assessment from the 2017 tax year of $1,734,100.

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