CDI, Inc. v. State Bd. of Tax Com'rs

• Decision Date: 08 February 2000
• Docket Number: No. 49T10-9701-TA-84.,49T10-9701-TA-84.
• Parties: CDI, INC., Petitioner, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.
• Court: Indiana Tax Court

725 N.E.2d 1015

CDI, INC., Petitioner, v. STATE BOARD OF TAX COMMISSIONERS, Respondent.

No. 49T10-9701-TA-84.

Tax Court of Indiana.

February 8, 2000.

Publication Ordered March 7, 2000.

Curtis J. Dickinson, Dickinson & Abel, Indianapolis, IN; David L. Pippen, Indianapolis, Attorneys for Petitioner.

Jeffrey A. Modisett, Attorney General of Indiana, Jeffrey S. McQuary, Deputy Attorney General, Indianapolis, IN, Attorneys for Respondent.

FISHER, J.

Petitioner CDI, Inc. (CDI) appeals the final determination of the State Board of Tax Commissioners (State Board) denying CDI's request to lower the assessed value of its warehouse for the 1991 assessment year. In this original tax appeal, CDI presents the following issues for the Court's review:

I. Whether the State Board exceeded its legislative authority in conducting a hearing in this matter without having issued a letter of appointment to its hearing officer;

II. Whether the State Board improperly denied CDI's warehouse grading and kit building adjustments; and III. Whether the State Board erred in using the forty-year economic life table in determining the warehouse's physical depreciation.¹

FACTS AND PROCEDURAL HISTORY

CDI owns a truck warehouse in Vigo County. CDI filed a Form 130 petition for review of assessment with the Vigo County Board of Review (BOR) on or about December 9, 1991, challenging the assessment of its property (parcel number XX-XX-XX-XXX-XXX) as of the March 1, 1991 assessment date. The BOR conducted a hearing on the petition on November 18, 1992 and issued its determination on November 19, 1993. Thereafter, on December 15, 1993, CDI filed a Form 131 petition for review of assessment with the State Board. On February 22, 1996, the State Board held a hearing on the petition. The State Board issued its final determination on November 22, 1996. CDI filed an original tax appeal with this Court on January 6, 1997. A trial in this matter was conducted on December 14, 1998. Additional facts will be supplied where necessary.

ANALYSIS AND OPINION

Standard of Review

This Court gives the final determinations of the State Board great deference when the State Board acts within the scope of its authority. See Wetzel Enters., Inc. v. State Bd. of Tax Comm'rs, 694 N.E.2d 1259, 1261 (Ind. Tax Ct.1998)

. Accordingly, this Court reverses final determinations of the State Board only when those decisions are unsupported by substantial evidence, are arbitrary or capricious, constitute an abuse of discretion, or exceed statutory authority. See id.

DISCUSSION

The Court will consider each of CDI's issues in turn.

I. Hearing Officer's Appointment

CDI asserts that the State Board issued no written order appointing Hearing Officer Stephen King (King). To support its position, CDI points to King's testimony at trial, where King admitted to not having received any written prescription of duty for CDI's specific appeal. (Trial Tr. at 7.) Therefore, CDI contends that the State Board's actions exceeded its legislative authority. However, there is no evidence in the record that CDI objected to King's authority at the administrative level, either at the hearing or during the physical inspection of the warehouse, to hear CDI's appeal on behalf of the State Board. Therefore, the Court finds that CDI's silence at the administrative level on the issue of King's authority to conduct the hearing constituted consent to the hearing. CDI thus waived the issue and may not now raise the issue for the first time in its original tax appeal. See Hoogenboom-Nofziger v. State Bd. of Tax Comm'rs, 715 N.E.2d 1018, 1021-22 (Ind.Tax Ct.1999)

; see also State Bd. of Tax Comm'rs v. Gatling Gun Club, Inc., 420 N.E.2d 1324, 1328 (Ind.Ct.App.1981).

II. Grade & Kit Adjustments

CDI argues that the State Board did not support its final determination with substantial evidence, as regards its decisions assigning the warehouse a grade of D plus two, see IND. ADMIN. CODE tit. 50, r. 2.1-4-3 (1992) (codified in present form at IND. ADMIN. CODE tit. 50, r. 2.2-10-3 (1996)) and denying the warehouse a kit building adjustment, see IND. ADMIN. CODE tit. 50, r. 2.1-4-5 (1992)² (codified in present form at IND. ADMIN. CODE tit. 50, r. 2.2-11-6 (1996)). CDI contends that the warehouse's physical structure deviates from the model used to determine its base reproduction cost and that a kit building or grade adjustment could account for such deviations. While the State Board did lower the building's grade, CDI maintains that the State Board's grade adjustment was arbitrary. According to CDI, the State Board lacked "any lawful basis for [its] determination of pricing adjustment." (Pet'r Br. at 9.)

The Court need not discuss whether the State Board's decision is supported by substantial evidence, because CDI points to no probative evidence of record indicating what the correct grade should be or whether the structure is a kit building. When a taxpayer contests the grade assigned an improvement, he must offer probative evidence concerning the alleged assessment error. See Meridian Hills Country Club v. State Bd. of Tax Comm'rs, 512 N.E.2d 911, 914 (Ind. Tax Ct.1987)

(finding taxpayer's evidence, standing alone, that like golf course facility received lower grade, even though it hosted a major tournament, was insufficient to prove "violation of the uniform and equal mandate"); see also Whitley Prods., Inc. v. State Bd. of Tax Comm'rs, 704 N.E.2d 1113, 1119 (Ind. Tax Ct.1998) ("[T]he taxpayer must offer probative evidence concerning the alleged error.") (citations omitted); White Swan Realty v. State Bd. of Tax Comm'rs, 712 N.E.2d 555, 559 (Ind. Tax Ct.1999) ("[T]he taxpayer must offer probative evidence relating to the grade issue."). A taxpayer's conclusory statements do not constitute probative evidence concerning the grading of the subject improvement. See Whitley Prods.,

704 N.E.2d at 1119. Where the taxpayer fails to provide the State Board with probative evidence supporting its position on the grade issue, the State Board's duty to support its final determination with substantial evidence is not triggered. See id. at 1119-20.

Also, a taxpayer must provide the State Board with probative evidence as to whether an improvement qualifies as a kit building. As this Court recently explained:

When a taxpayer seeks a kit adjustment, it is incumbent upon the taxpayer to offer evidence tending to show the improvement qualifies for the kit adjustment. If the taxpayer fails to do so, the taxpayer's claim fails. This is not an onerous burden.... Instructional Bulletin 91-8³ outlines a large number of specific characteristics of kit buildings. Accordingly, it should not be difficult for taxpayers to identify those characteristics in an improvement alleged to qualify for the kit adjustment.

Whitley Prods., 704 N.E.2d at 1121 (citation omitted).⁴ See also King Indus. Corp. v. State Bd. of Tax Comm'rs, 699 N.E.2d 338, 343 (Ind.Tax. Ct.1998)

("The kit building adjustment is one example of a case where the taxpayer must attempt to offer... a competing view of the assessment. The taxpayer must first offer probative evidence tending to prove it is entitled to the kit adjustment."). See generally Clark v. State Bd. of Tax Comm'rs, 694 N.E.2d 1230, 1234 (Ind.Tax Ct.1998) (citing examples where taxpayer must provide evidence supporting a competing view of the assessment). As with the issue of grade, the State Board is not required to support its denial of the kit building adjustment until the taxpayer comes forward with probative evidence demonstrating it is entitled to the adjustment. See King Indus.,

699 N.E.2d at 343.

CDI failed to provide probative evidence as to either the grading of the warehouse or the classification of the improvement as a kit building. CDI's chief witness, Mr. Mark Drew Miller (Miller), observed that the warehouse was "basically a pre-engineered structure, with steel framing, metal walls, minimal heat, [and] numerous doors."⁵ (Trial Tr. at 19.) When asked how he determined the improvement was pre-engineered, Miller responded "You can see that ... it's more along a kit-type, where you order the parts and put them together. There is—at least that's my opinion, anyway. That you can see certain modifications if it's not a pre-engineered structure." (Trial Tr. at 19.) He added that he was not "aware of" any structural modifications. (Trial Tr. at 20.) Miller did indicate that roof supports were "basically" steel framing with tapered columns. (Trial Tr. at 21.) He indicated that the roof supports could thus be considered "low cost" or "economical." (Trial Tr. at 21.) When asked if the warehouse qualified as a kit building under Instructional Bulletin 91-8, Miller answered "Given the vagueness of the definition, I would say yes, it would qualify. I can't see anything that would make it not qualify." (Trial Tr. at 20.) Further, Miller opined that, given the State Board's past grading of other truck terminals in similar situations, equity required that CDI's warehouse be assigned a grade of D minus one. (Trial Tr. at 20.)

Miller's testimony does not constitute probative evidence as to the issues at hand. His comments were conclusory in nature. He provides the Court with absolutely no insight as to why the structure should be classified as a kit building. Miller stated that the warehouse was "basically" a pre-engineered structure having certain basic features, i.e. steel framing and metal walls, without explaining how these features qualify the warehouse as a kit building. Miller appeared to make a feeble attempt to apply the standards found in Instructional Bulletin 91-8 by pointing out that the roof supports consist of "basically" low cost, economical metal framing with tapered columns. He never referenced the bulletin, which calls on assessors to identify the type of interior column and roof beam support in a purported kit building.⁶ (Joint Ex. 3 at 4.) Rather, he expects the Court to link up and...