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Wigwam Holdings LLC v. Madison County Assessor

Tax Court of Indiana

May 8, 2019

WIGWAM HOLDINGS LLC, Petitioner,
v.
MADISON COUNTY ASSESSOR, Respondent.

          ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX REVIEW

          ATTORNEYS FOR PETITIONER: MATTHEW S. CARR JACOB V. BRADLEY COURTNEY S. FIGG QUARLES & BRADY LLP Indianapolis,

          ATTORNEYS FOR RESPONDENT: CURTIS T. HILL, JR. ATTORNEY GENERAL OF INDIANA ZACHARY D. PRICE DEPUTY ATTORNEY GENERAL Indianapolis,

          WENTWORTH, J.

         Wigwam Holdings LLC ("Holdings") challenges the Indiana Board of Tax Review's final determination that upheld the assessment of its real property for the 2015 tax year. Upon review, the Court affirms the Indiana Board's final determination.

         FACTS AND PROCEDURAL HISTORY

         On September 2, 2014, Holdings was formed as a limited liability company pursuant to the Indiana Business Flexibility Act. (See Cert. Admin. R. at 11-45.) See also, e.g., Ind. Code § 23-18-2-4(a) (2019) (providing that a person "may form a limited liability company by causing articles of organization to be executed and filed for record with the office of the secretary of state"). That same day, Holdings, the Anderson Community School Corporation, and the City of Anderson Department of Redevelopment executed a series of interrelated agreements by which Holdings acquired four parcels of land in Anderson, Indiana. (See Cert. Admin. 193, 273-92.) Only one of those parcels is at issue in this case: an 8.56 acre parcel containing a 220, 000 square foot building with, among other things, an 8, 996 seat basketball facility (the "Wigwam"). (See Cert. Admin. R. at 189, 218-20, 473-76.) For the 2015 tax year, the Madison County Assessor assigned the parcel an assessed value of $11, 415, 000 ($428, 000 for land and $10, 987, 000 for improvements).

         On December 12, 2015, Holdings appealed the 2015 assessment to the Madison County Property Tax Assessment Board of Appeals (PTABOA). On September 19, 2016, after a hearing, the PTABOA reclassified the entire property as utility/storage and reassessed it based on that use type under Indiana's assessment guidelines, reducing its assessed value to $2, 115, 200 ($423, 700 for land and $1, 691, 500 for improvements). (See Cert. Admin. R. at 74-77, 298-301, 682-84.)

         Unsatisfied with the reduction, Holdings sought review with the Indiana Board on November 3, 2016. The Indiana Board conducted a hearing on April 18, 2017, during which Holdings presented an Appraisal that was completed in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP). (See Cert. Admin. R. at 187-267.) The Appraisal, which valued the property at only $68, 500 as of May 30, 2014, provided in substance that the Wigwam's "highest and best use" was as vacant land because its building was "functionally and economically obsolete" due to a variety of physical deficiencies. (See Cert. Admin. R. at 243-47 (indicating, among other things, that portions of the building contained asbestos, were not ADA compliant, lacked air conditioning, and lacked a sprinkler system).) (See also Cert. Admin. R. at 477-80.) Holdings also presented the documentation associated with its acquisition of the property and explained that it 1) acquired the property for $0 on September 2, 2014, in a "fair, arm's length [market] transaction[;]" 2) agreed to repair, restore, and maintain the gymnasium by December 31, 2018; and 3) received access to an escrow account containing $630, 000 to use to restore the property.[1] (See Cert. Admin. R. at 273-92, 396-97, 605-16.) In addition, one of the Appraisal's preparers testified that the assessment was incorrect because the property was classified under the wrong use type (i.e., utility/storage) and did not account for abnormal obsolescence[2] in its cost approach.[3](See Cert. Admin. R. at 508-10, 761-66, 777-78.) Holdings asserted that the totality of its evidence demonstrated that the 2015 assessment should be reduced to $68, 500. (See Cert. Admin. R. at 395-401, 460.)

         In response, the Assessor asserted that Holdings' Appraisal should be disregarded because it estimated the property's market value rather than its market value-in-use, even though the two standards were not equivalent in this case. (See Cert. Admin. R. at 378-84, 701-06.) The Assessor also claimed that the Appraisal had "issues" because it valued the property as vacant land, ignoring the restriction in Holdings' acquisition documentation that required the Wigwam gymnasium to be restored. (See Cert. Admin. R. at 709, 717-18, 723-25.) Moreover, the Assessor asserted that the September 2014 sale was not a market transaction because the seller, a governmental entity, was atypically motivated by its desire to restore the Wigwam for the community's future use. (See Cert. Admin. R. at 378 n.2, 706-09.) Finally, the Assessor maintained that assessing the property as utility/storage under the cost approach was proper because 1) the Wigwam is a special purpose property and 2) the cost approach methodology typically produced the lowest possible assessment for unoccupied commercial properties like the Wigwam. (See Cert. Admin. R. at 710-18, 729.)

         On March 29, 2018, the Indiana Board issued its final determination, finding that Holdings "failed to make a prima facie case for reducing its assessment" because it did not support its claim with probative evidence. (See Cert. Admin. R. at 421 ¶ 52 (emphasis added).) Accordingly, the Indiana Board upheld the property's assessment of $2, 115, 200. (See Cert. Admin. R. at 422 ¶ 53.)

         On May 11, 2018, Holdings initiated an original tax appeal and filed a Petition to Enjoin the Collection of Tax pursuant to Indiana Code § 33-26-6-2. On December 14, 2018, after holding a hearing, the Court denied Holdings' Petition to Enjoin. See Wigwam Holdings LLC v. Madison Cty. Assessor, 115 N.E.3d 531 (Ind. Tax Ct. 2018). After the matter was fully briefed on March 1, 2019, the Court took the case under advisement. Additional facts will be supplied when necessary.

         STANDARD OF REVIEW

         The 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, Holdings must demonstrate to the Court that the Indiana Board's final determination is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law; contrary to constitutional right, power, privilege, or immunity; in excess of or short of statutory jurisdiction, authority, or limitations; ...


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