APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX
FOR RESPONDENTS: PAUL M. JONES, JR., MATTHEW J. EHINGER, ICE
MILLER, LLC, Indianapolis, IN.
case examines whether the Indiana Board of Tax Review erred
when it reduced the Respondents' real property
assessments for the 2006 and 2007 tax years. Upon review, the
Court finds that the Indiana Board did not err.
AND PROCEDURAL HISTORY
subject property, Lafayette Square Mall, is located on the
northwest side of Indianapolis. At the time the Mall was
constructed in 1968, it was the first enclosed mall in
Indiana and one of the largest midwestern shopping centers
outside of Chicago. (See Cert. Admin. R. at 624.)
and 2007, the Mall was owned by Simon DeBartolo Group, LP;
DeBartolo Realty Partnership, LP; and SPG Lafayette Square,
LLC; all three were a part of the Simon Property Group
(collectively, " Simon" ). ( See, e.g., Cert.
Admin. R. at 3, 7, 38, 42, 624, 1498.) In December of 2007,
however, Simon sold the Mall to the Ashkenazy Acquisition
Corporation for $18,000,000. (See Cert. Admin. R. at 734-869,
time of that sale, Simon had already initiated an
administrative appeal challenging the Mall's 2006
assessed value of $56,341,000. (See, e.g., Cert. Admin. R. at
6, 9, 531 ¶ 2.) While that appeal was pending with the
Marion County Property Tax Assessment Board of Appeals
(PTABOA), Simon initiated another administrative appeal
challenging the Mall's 2007 assessment. (See, e.g.,
Cert. Admin. R. at 531 ¶ 2.) On November 24, 2009, the
PTABOA reduced the Mall's 2006 assessment to $28,000,100
and on January 27, 2010, the PTABOA reduced the Mall's
2007 assessment to $20,000,000. (See, e.g., Cert. Admin. R.
at 6, 531 ¶ 2, 534-35 ¶ ¶ 11-12.) Believing
those values were still too high, Simon pursued its appeals
with the Indiana Board.
of 2012, the Indiana Board conducted a hearing on Simon's
appeals. During that hearing, Simon presented testimonial
evidence explaining that in the spring of 2007, it began to
market the Mall for sale because it was suffering from
vacancy and leasing issues and the property no longer fit
Simon's strategic investment mission. (See, e.g., Cert.
Admin. R. at 1485, 1493-94, 1496, 1505, 1507-08, 1554-57.) To
facilitate the sale, Simon hired a third-party broker to
oversee the distribution of marketing materials to a targeted
group of potential buyers. (See Cert. Admin. R. at 621-733,
1485-87.) In the fall of 2007, Simon made a call for offers
amongst those potential buyers; on December 27, 2007, Simon
closed on the Mall's sale with the highest bidder,
Ashkenazy. (See Cert. Admin. R. at 1488, 1490-91.) (See also
generally Cert. Admin. R. at 734-869.)
also presented an analysis prepared by Sara Coers, a
certified general appraiser and an MAI (the Coers Analysis).
(See, e.g., Cert. Admin. R. at 870-71, 897, 1499-1501.) The
Coers Analysis independently verified the terms of the
Mall's sale and concluded that it had been consummated in
an arm's-length transaction. (See Cert. Admin. R. at
875-79 (explaining, among other things, that the Mall had
been exposed in the open market for an adequate period of
time; that there was no relationship between Simon and
Ashkenazy; that as buyer and seller, Ashkenazy and Simon were
knowledgeable and typically motivated parties to the sale;
and that there were no reported special concessions or
financing that affected the terms of the sale), 1504-14,
1650-52.) Moreover, based upon an examination of certain
economic data, the Coers Analysis developed trending
factors that Simon could use to relate the Mall's
December 2007 sales price of $18,000,000 to the appropriate
valuation dates for the 2006 and 2007 assessments. (See Cert.
Admin. R. at 880-93, 899, 1515-22.) See also 50 Ind. Admin.
Code 21-3-3(b) (2006) (see http://www.in.gov/legislative/iac/
) (indicating that prior to 2010, a property's March 1
assessment was to reflect its market value-in-use on January
1 of the preceding year) (repealed 2010). In applying the
trending factors to the $18,000,000 sales price, Simon
maintained that the Mall's 2006 assessment should have
been $15,281,398 and its 2007 assessment should have been
$16,849,758. (See Cert. Admin. R. at 899.)
response, the Assessor challenged certain aspects of
Simon's evidence. Specifically, the Assessor, through his
deputy, claimed that
1) the Mall's December 2007 sale might not have been an
arm's-length transaction because " it seem[ed] to
have sold pretty quickly" despite the fact that it was
such a risky (i.e., poorly performing) property;
2) the Mall's performance declined gradually over time,
and therefore logically the Mall would have been worth more,
not less, prior to the sale;
3) the trending factors contained in the Coers Analysis were
not calculated properly; and
4) the Mall's $18,000,000 sales price could not have
reflected its 2006 and 2007 market value-in-use because
Ashkenazy was using the Mall differently than Simon had.
(See generally Cert. Admin. R. at 1566-1602.) As better
evidence of the Mall's value, the Assessor's deputy
submitted an income approach that she prepared valuing
the Mall at $34,600,000 for 2006 and $30,800,000 for 2007.
(See Cert. Admin. R. at 1251-52, 1570-71, 1592-98.)
Indiana Board issued its final determination on October 3,
2012. In it, the Indiana Board explained that the Mall's
December 2007 sales price of $18,000,000 was the best
indication of its market value as of that date. (See Cert.
Admin. R. at 545 ¶ 25.) Thus, to the extent Simon "
presented sufficient evidence that the [Mall] was sold in a
valid, arms' length [sic.] transaction and [it] trended
the sale price to the relevant valuation dates[,]" the
Indiana Board found that Simon's evidence established a
prima facie case that its 2006 assessment should have been
$15,281,398 and its 2007 assessment should have been
$16,849,758. (Cert. Admin. R. at 545 ¶ 25.) The Indiana
Board also explained why the Assessor's evidence failed
to rebut Simon's prima facie case: 1) his deputy
ultimately conceded that the time frame in which the Mall
sold was reasonable; 2) his own evidence indicated that the
Mall's performance -- as shown through its occupancy and
income levels -- while poor, was nonetheless stable in the
years leading up to the December 2007 sale; 3) his deputy
erroneously relied on the Mall's actual income and
expenses instead of market income and expenses in performing
her income approach valuation; and 4) his deputy failed to
provide any support for the capitalization rates she used in
her income approach valuation. (See Cert. Admin. R. at
546-548 ¶ ¶ 27, 29-31.)
Assessor initiated this original tax appeal on November 19,
2012. The Court conducted oral argument on October 3, 2013.
Additional facts will be supplied when necessary.
party seeking to overturn an Indiana Board final
determination bears the burden of demonstrating its
invalidity. Osolo Twp. Assessor v. Elkhart Maple Lane
Assocs.,789 N.E.2d 109, 111 (Ind.Tax Ct. 2003).
Accordingly, the Assessor must demonstrate to the Court that
the Indiana Board's final determination in this matter is
arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law; contrary to constitutional right,
power, privilege, or immunity; in excess of or short of
statutory jurisdiction, authority, or limitations; ...