INDIANA BOARD OF TAX REVIEWSmall ClaimsFinal DeterminationFindings and ssessment Year:53-017-14-1-4-00022Kooshtard Property I, LLCMonroe County Assessor53-02-33-100-017.000-0172014The Indiana Board of Tax Review (“Board”) issues this determination in the above matter,finding and concluding as follows:INTRODUCTION1.Kooshtard Property I, LLC, challenged the valuation of the subject property’s land. TheMonroe County Assessor submitted a restricted appraisal report that, despite someproblems, is generally probative of the land’s true tax value, and Kooshtard did not offerany probative valuation evidence of its own. We therefore find that the land portion ofthe property’s assessment should be changed to reflect the value from the appraisal.PROCEDURAL HISTORY2.Kooshtard filed a Form 130 petition challenging its assessment. On November 5, 2014,the Monroe County Property Tax Assessment Board of Appeals (“PTABOA”) issued itsdetermination upholding the assessment.3.Kooshtard responded by timely filing a Form 131 petition with the Board. It elected toproceed under our small claims procedures. On October 5, 2016, Jacob Robinson, ourdesignated administrative law judge (“ALJ”), held a hearing. Neither he nor the Boardinspected the property.4.Milo E. Smith, a certified tax representative, appeared for Kooshtard. Heather A. Scheelappeared as counsel for the Assessor. The following people were sworn as witnesses:Smith; Judith A. Sharp, Monroe County Assessor; Wayne F. Johnson, II, MAI, RM, FirstAppraisal Group, Inc.; and Ken Surface, vice president, Nexus Group.5.The subject property consists of a gas station and convenience store on 2.634 acres(115,129 square feet) of land. It is located at 7340 N. Wayport Road, Bloomington.6.The PTABOA determined the following values:Land: 1,200,000Improvements: 367,300Total: 1,567,300Kooshtard Property I, LLCFindings and ConclusionsPage 1 of 11

7.Kooshtard did not ask for any specific value on its Form 131 petition. At the hearing, itchallenged only the land component of the assessment, asking that a portion of the landthat it viewed as unusable be valued at 2,500 per acre.8.The official record includes the following:a. A digital recording of the hearingb. Petitioner Exhibit 1:Petitioner Exhibit 2:Petitioner Exhibit 3:Petitioner Exhibit 4R:Petitioner Exhibit 5R:Petitioner Exhibit 6R:Petitioner Exhibit 7R:Petitioner Exhibit 8R:Petitioner Exhibit 9R:Petitioner Exhibit 10R:Petitioner Exhibit 11R:Petitioner Exhibit 12R:Respondent Exhibit I:Respondent Exhibit M:c.1Property record card (“PRC”) for subject property,printed 6/20/2013PRC for subject property, printed 5/31/2014PRC for subject property, printed 6/19/2015Kooshtard Property I, LLC v. Monroe County Ass’r, 38N.E.3d 750 (Ind. Tax Ct. 2015)Kooshtard Property I, LLC v. Monroe County Assessor;Petition No. 53-017-10-1-4-00001, et al. (IBTR March 14,2014)GIS aerial view of subject propertyMonroe County GIS Slope Map of the subject propertydated 10/3/2016Chapter 804 – Monroe County Zoning Ordinance,revised 4/29/2016PRC and GIS aerial view – Parcel No. 53-01-10-602000.000-017PRC – Parcel No. 53-02-33-100-022.000-017GIS aerial view of subject property measuring undevelopedunusable landParcel information, PRC and GIS aerial view of 301 N.Gates DriveRestricted Real Estate Appraisal Report prepared byWayne F. Johnson, II, MAI, RM, MRICS, First AppraisalGroup, Inc., dated 9/22/2016Kooshtard Property I, LLC v. Monroe County Assessor, 38N.E.3d 750 (Ind. Tax Ct. 2015)1All motions, briefs, and documents filed in these appeals, and all orders and noticesissued by the Board or our ALJ.The assessor provided the Board with a three-ring binder containing exhibits marked A-M, but she only offeredExhibits I and M at the hearing.Kooshtard Property I, LLCFindings and ConclusionsPage 2 of 11

OBJECTIONSA. Objections to Exhibits9.The Assessor objected to Kooshtard’s Exhibits 4R through 12R because it failed toexchange those documents before the hearing even though the Assessor served a requeston Kooshtard more than 10 business days before the hearing asking for copies of all itsdocumentary evidence. Kooshtard did not claim that it complied with the Assessor’srequest. The ALJ took the objection under advisement.10.Under our small claims procedures, if no later than 10 business days before a scheduledhearing, a party requests copies of the opposing parties documentary evidence, theopposing must provide those copies at least five business days before the hearing. 52IAC 3-1-5(d). The exchange requirement allows parties to be better informed and toavoid surprises, and it promotes an organized, efficient, and fair consideration of theissues at a hearing. We may exclude evidence for failure to timely comply with such arequest. 52 IAC 3-1-5(f).Petitioner’s Exhibits 4R-6R and 12R11.We overrule the Assessor’s objection as to Petitioner’s Exhibits 4R-6R and 12R. ThePetitioner did not actually discuss or otherwise rely on Exhibits 4R and 5R—copies of aTax Court decision and our determination for prior years’ appeals. In any case, theAssessor cannot claim to have been unfairly surprised. The Assessor actually offered theTax Court decision as her own exhibit.12.Exhibit 6R is an aerial photograph of the subject property that is similar to an aerialphotograph contained in the restricted appraisal report offered by the Assessor.Admitting the exhibit would not unfairly surprise or prejudice the Assessor.13.The same is true for Petitioner’s Exhibit R12. That exhibit includes an excerpt from anappraisal report that the Assessor’s witness, Wayne Johnson, prepared in connection withKooshtard’s appeal of the 2012 assessment year. The excerpt references a property at301 North Gates Drive. The exhibit also includes a property record card for the GatesDrive property. Johnson explained that his restricted appraisal report for the 2014 appealat issue in this case supplements that earlier report. Without further explanation, whichthe Assessor did not provide, we fail to see how the Assessor could be unfairly surprisedor prejudiced by admitting an excerpt from that prior appraisal report or a property recordcard her own office prepared for one of the properties referenced in that report.Petitioner’s Exhibits 7R-11R14.We sustain the Assessor’s objection as to Petitioner’s Exhibits 7R-11R. Those exhibitsinclude: (1) a GIS map denoting slope percentages on the subject property, (2) excerptsfrom Monroe County’s zoning ordinance, (3) property record cards and an aerial view fortwo properties that were not addressed in Johnson’s appraisal reports, and (4) a GIS aerialKooshtard Property I, LLCFindings and ConclusionsPage 3 of 11

map purporting to measure the portion of the subject land Kooshtard claims isundeveloped and unusable. Kooshtard’s representative, Milo Smith, testified that theproperty’s slope had not been an issue in previous appeals, so we cannot assume that theAssessor was prepared to address that issue or the specific documents offered byKooshtard. The same is true for the property record cards for the two purportedlycomparable properties. Thus, admitting those exhibits would pose the type of unfairsurprise that our exchange rule is meant to avoid.B. Other Objections15.The Assessor also objected to a portion of Smith’s testimony, which the ALJ sustained,and to one question posed to Johnson during cross-examination, which the ALJoverruled. We need not revisit those objections, and we adopt the ALJ’s rulings.CONTENTIONS16.Summary of the Assessor’s case:a. Wayne F. Johnson, II, an MAI appraiser, prepared a restricted appraisal report estimatingthe market value-in-use of subject land at 1,035,000 as of March 1, 2014.2 He preparedthe report in conformity with USPAP. Johnson testimony; Resp’t Ex. I.b. Johnson described the property’s location as north of Bloomington along State Road 37.The property had not sold in the previous three years, but in February 2014, the IndianaDepartment of Transportation (“INDOT”) acquired 0.357 acres of the property’snorthwest corner to use as right-of-way for I-69. It paid 420,000. He determined thatthe site has excess or surplus area that provides “extra room for possible expansion.” Hefound that the highest and best use of the land as if vacant was as a commercial site. Theproperty is zoned LB (limited business), which Johnson explained discourages singlefamily residential use and protects environmentally sensitive areas. According toJohnson, zoning for non-residential use will continue to be “very limited” along S.R. 37because the plan commission wants to preserve the corridor into Bloomington. Johnsontestimony; Resp’t Ex. I.c. Johnson developed his opinion of value using the sales comparison approach. He did notfind regional sales to be appropriate because there were local sales available. Heidentified four sales of commercial parcels from Bloomington that ranged from .5 to 3.2acres. They sold between November 28, 2011, and October 20, 2015, for unadjustedprices ranging from 5.03/sq. ft. to 13.77/sq. ft. All four sales transferred a fee simpleinterest, and they were arms-length transactions with cash or cash-equivalent financing.Johnson testimony; Resp’t Ex. I.d. Next, Johnson considered adjusting his comparable properties’ sale prices to account forrelevant ways in which they differed from the subject property. He adjusted the prices by.17% per month (or 2% per year) to account for the time that had lapsed between the2His report actually covered three different valuation dates: March 1, 2013, March 1, 2014, and March 1, 2015.Kooshtard Property I, LLCFindings and ConclusionsPage 4 of 11

assessment date and their sale dates. He also made adjustments to account for differencesin location, visibility and frontage, and site size. He premised his size adjustment on thefact that larger sites typically sell for less per square foot than smaller sites. Johnsontestimony; Resp’t Ex. I.e. Kooshtard did not give Johnson permission to inspect the property, so he did not “walk”it. He instead viewed if from the street. Johnson acknowledged that the property slopesdownward north of the parking lot. But he did not believe that much of the area withwhat he would characterize as “extreme topography” remained after the sell-off toINDOT. At different points in his report, he characterized the property as having either“level” or “[l]evel to sloping” topography. He also characterized Comparable 3’stopography as “generally level” and “level to sloping.” In his adjustment grid, hedescribed the topography of all the properties as “level.” He did not adjust any of the saleprices for differences in topography. Johnson testimony; Resp’t Ex. 1.f. Although the subject property had a septic field as opposed to sewer access like hiscomparable properties, Johnson did not adjust any of the sale prices to account for thatdifference. On cross-examination, Kooshtard asked Johnson whether the access toutilities meant that the comparable properties did not need as much land to support acommercial use as the subject property did. Johnson explained that he could not answerthe question because of differences between zoning requirements for the City ofBloomington and Monroe County. When asked why he applied a uniform rate to assessthe entire property, he testified that it is unnecessary to segregate land when comparingcommercial sites unless there is “an unusual amount of surplus or excess land.” Johnsontestimony.g. Johnson calculated median and mean adjusted sale prices of 8.41 and 8.55/sq. ft.,respectively. After weighing the sales, he settled on a value of 9.00/sq. ft. for thesubject property, which when multiplied by the property’s 115,129 square feet, indicateda value of 1,035,000 (rounded). Johnson testimony; Resp’t Ex. I.17.Summary of Kooshtard’s case:a. Kooshtard claims that 51,238 square feet of the property is unusable because of its slopeand believes that Johnson should have adjusted the sale prices of his comparableproperties, all of which he described as having level topography, to account for thatdifference. We have excluded the exhibits underpinning Kooshtard’s argument—sitemaps with slope percentages and calculations of area, and excerpts from MonroeCounty’s zoning ordinance. Smith testimony and argument; Pet’r Exs. 7R-8R, 11R.b. In a related argument, Kooshtard contends that the Assessor erred by pricing 1.643 acresof its property as usable/undeveloped instead of unusable/undeveloped. Once again, wehave excluded the exhibits on which Kooshtard premises that argument. Smithtestimony; Pet’r Exs. 7R-8R, 11R.Kooshtard Property I, LLCFindings and ConclusionsPage 5 of 11

c. Kooshtard also points to assessments for three other properties, apparently in an attemptboth to prove a lower value for the subject property and to show a lack of uniformity andequality in assessments. First, it claims that the subject property should be assessed like301 North Gates Drive, which Johnson used as a comparable sale in his appraisal reportfor 2012. According to Kooshtard, Johnson’s reliance on that sale shows that the GatesDrive property is comparable to the subject property. The Assessor classified 1.1 acres ofthe Gates Drive property as unusable/undeveloped, and she assessed it at 2,500/acre.Kooshtard believes the unusable part of the subject property should be assessed at 2,500/acre as well. Pet’r Ex. 12R.d. Second, Kooshtard points to two nearby commercial properties that were assessed using alower base rate than the rate the Assessor used to value the subject property. As is thecase with much of Kooshtard’s other evidence, we have excluded the property records forthose two properties. Smith testimony and argument; Pet’r Exs. 9R-10R.BURDEN OF PROOF18.Generally, a taxpayer seeking review of an assessing official’s determination has theburden of making a prima facie case both that the current assessment is incorrect andwhat the correct assessment should be. If the taxpayer makes a prima facie case, theburden shifts to an assessor to offer evidence to impeach or rebut the taxpayer’s evidence.19.Indiana Code § 6-1.1-15-17.2 creates an exception to that general rule and assigns theburden of proof to the assessor in two circumstances. Where the assessment under appealrepresents an increase of more than 5% over the prior year’s assessment for the sameproperty, the assessor has the burden of proving the assessment under appeal is correct.Ind. Code § 6-1.1-15-17.2(a) and (b). The assessor similarly has the burden where aproperty’s gross assessed value was reduced in an appeal and the assessment for thefollowing date represents an increase over “the gross assessed value of the real propertyfor the latest assessment date covered by the appeal, regardless of the amount of theincrease ” Ind. Code § 6-1.1-15-17.2(d). In any case, if an assessor has the burden andfails to meet it, the taxpayer may offer evidence to prove the correct assessment. Ifneither party offers evidence that suffices to prove the property’s correct assessment, itreverts to the previous year’s value. I.C. § 6-1.1-15-17.2(b).20.The parties agreed that the 2014 assessment did not increase by more than 5% over the2013 assessment as determined by the PTABOA. The ALJ therefore preliminarily ruledthat Kooshtard had the burden of proof in this appeal. However, the PTABOA’s rulingfor 2013 was not the last determination of that year’s assessment. In an appeal heard thesame day as this appeal, we determined that Kooshtard’s 2013 assessment must bereduced to 1,488,300,3 which is less than the 2014 assessment at issue in this appeal.The Assessor therefore has the burden.3We are issuing separate findings of fact and conclusions of law for that appeal.Kooshtard Property I, LLCFindings and ConclusionsPage 6 of 11

ANALYSIS21.Indiana assesses property based on its “true tax value,” which does not mean “fair marketvalue” or “the value of the property to the user.” I.C. § 6-1.1-31-6(c) and (e). For mosttypes of real property, true tax value is determined under the rules of the Department ofLocal Government Finance (“DLGF”).4 I.C. § 6-1.1-31-6(f). The DLGF defines “truetax value” as “[t]he market value-in-use of a property for its current use, as reflected bythe utility received by the owner or by a similar user, from the property.” 2011 REALPROPERTY ASSESSMENT MANUAL 2.22.The cost, sales-comparison, and income approaches are three generally accepted ways todetermine true tax value. 2011 MANUAL at 2. In an assessment appeal, parties may offerany evidence relevant to a property’s true tax value, including appraisals prepared inaccordance with generally recognized appraisal principles. 2011 MANUAL at 3; Eckerlingv. Wayne Twp. Ass’r, 841 N.E.2d 674, 678 (Ind. Tax Ct. 2006) (reiterating that a USPAPcompliant market-value-in-use appraisal is the most effective method for rebutting thepresumption that an assessment is correct).23.As discussed above, Ind. Code § 6-1.1-15-17.2 shifts the burden of proof to the Assessorin this appeal. In applying that statute, we look at whether a property’s overallassessment has increased between years rather than focusing on individual components,such as land or improvements. That being said, if a taxpayer limits its appeal to onecomponent, an Assessor may meet its burden by offering evidence addressing only thatcomponent.524.That is what the Assessor attempted to do here by offering Johnson’s appraisal of theland only. Although Kooshtard’s appeal petition was not limited to the land portion of itsassessment, that is all it challenged at the hearing. Under these circumstances, theAssessor could make her case by addressing only the value of the land.25.With that in mind, we turn to the Assessor’s evidence. She offered Johnson’s USPAPcompliant appraisal report in which he applied a generally accepted appraisalmethodology—the sales-comparison approach—to estimate the subject land’s value at 1,035,000 as of March 1, 2014.4The legislature has specifically defined true tax value for various property types, including certain rental properties(I.C. § 6-1.1-4-39), casinos (I.C. § 6-1.1-4-39.5), low-income rental properties (I.C. § 6-1.1-4-41), and golf courses(I.C. § 6-1.1-4-42).5Just because parties may make a case by focusing on only one component of an assessment does not mean it isadvisable to do so. Countervailing evidence of the property’s overall value will normally be more persuasive. Andthere are other less obvious pitfalls. The 2011 Real Property Assessment Guidelines, on which assessments areusually based, represent a mass-appraisal approach that may not always mirror how appraisers normally appraiseindividual properties. For example, when appraising land as if vacant, appraisers may not include things like thecosts associated with sewers, utility lines, grading, and landscaping. But those things are included in determiningthe base rate for primary commercial land that has been improved. See 2011 GUIDELINES, ch. 2 at 66. If a land-onlyappraisal of an improved property does not account for those costs, it will understate the property’s value. In thiscase, it is unclear whether Johnson’s appraisal included those costs. To the extent it did not, the error benefitedKooshtard.Kooshtard Property I, LLCFindings and ConclusionsPage 7 of 11

26.Kooshtard mainly criticizes Johnson’s appraisal on grounds that he did not adjust the saleprices for his comparable properties to account for differences between their leveltopography and the subject property’s sloping topography. We agree that Johnson’streatment of the subject property’s topography was less than ideal. We have excludedKooshtard’s specific evidence about slope percentages and the effect of Monroe County’szoning ordinance on its ability to develop the land north of the parking lot. Nonetheless,although Johnson did not believe there were extreme problems with the property’stopography, he acknowledged