Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Madison County Assessor v. Sedd Realty Company

Tax Court of Indiana

May 22, 2019

MADISON COUNTY ASSESSOR, Petitioner,
v.
SEDD REALTY COMPANY, Respondent.

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

          ATTORNEYS FOR PETITIONER: MARILYN S. MEIGHEN BRIAN A. CUSIMANO ATTORNEY AT LAW

          ATTORNEY FOR RESPONDENT: BETH H. HENKEL LAW OFFICE OF BETH HENKEL LLC

          WENTWORTH, J.

         The Madison County Assessor has challenged the Indiana Board of Tax Review's final determination that reduced the assessed value of Sedd Realty Company's River Ridge shopping center for each of the 2009 through 2012 assessment years. Specifically, the Assessor claims that the Indiana Board erred by applying a capitalization rate in its income approach that was different than the capitalization rates offered by either of the parties. Upon review, the Court reverses the Indiana Board's final determination.

         RELEVANT FACTS AND PROCEDURAL HISTORY[1]

         The subject property, referred to as River Ridge, is part of the larger River Ridge Plaza retail center in Anderson, Indiana. (See Cert. Admin. R. at 712, 717-18, 1181.) River Ridge consists of ten buildings grouped into two main strip shopping centers (north and south) both with corresponding freestanding outlot improvements. (See Cert. Admin. R. at 718, 1181, 3178 ¶¶ 8-9, 3440.) The property has approximately 350, 000 square feet of building area, over 300, 000 square feet of leasable space, and 75 acres of land. (See Cert. Admin. R. at 718, 1181.)

         River Ridge, owned by Sedd Realty Company, Sedd Anderson, LLC, Dori Development Co., Neal Development Co., and S&I East Development Co., (collectively, "Sedd"), was constructed by Sidney Eskenazi over several decades beginning in the 1960's. (See Cert. Admin. R. at 1106-34, 4453-56.) While River Ridge was located in Anderson's primary retail corridor when it was built, retail development has since proceeded southward causing River Ridge's daily customer traffic and tenant occupancy to decline. (See Cert. Admin. R. at 726, 1229, 3744, 3850-53.) Consequently, its occupancy had fallen to 55% during the years at issue. (See Cert. Admin. R. at 4548-49.)

         The Madison County Assessor valued River Ridge at $12, 469, 000 for 2009, $11, 778, 110 for 2010, $11, 968, 600 for 2011, and $9, 950, 400 for 2012. (See Cert. Admin. R. at 1106-34, 3178 ¶ 7.) Believing those values to be too high, Sedd filed appeals first with the Madison County Property Tax Assessment Board of Appeals ("PTABOA") and thereafter with the Indiana Board.[2] (See Cert. Admin. R. at 1-406.)

         In February and March of 2017, the Indiana Board conducted a hearing on Sedd's appeals. While the parties could not agree on the property's assessed value, they did agree that 1) as a lower-tier shopping center, the original assessments were too high and 2) the Assessor bore the burden of proof with respect to the 2009 assessment. (See Cert. Admin. R. at 3416-19, 3443, 3826-27.) Both parties presented appraisals that valued River Ridge for each of the years at issue using the income approach, the sales comparison approach, but not the cost approach. (See Cert. Admin. R. at 712-1054, 1178-2885, 3463-64, 3837-38.) The Indiana Board afforded no weight to either parties' sales comparison valuations, finding the analyses were not credible. (See Cert. Admin. R. at 3220-22 ¶¶ 147-52.) On appeal, neither party has challenged that finding.

         The Assessor's Income Approach Valuations

         The Assessor's appraisals were prepared by David Hall, a member of the Appraisal Institute (MAI). (See Cert. Admin. R. at 3432-34.) Under the income approach, [3]Hall first determined River Ridge's net operating income ("NOI") for each year at issue. (See Cert. Admin. R. at 1359, 1786, 2213, 2640, 3549-50.) Specifically, Hall estimated River Ridge's annual potential gross income and then subtracted the vacancy and collection losses and total operating expenses to conclude that the NOI was $998, 718 for 2009, $968, 610 for 2010, $966, 428 for 2011, and $948, 725 for 2012. (See, e.g., Cert. Admin. R. at 1355-59, 1781-88, 2209-15, 2635-40, 3549-50, 3571-80.)

         Next, Hall developed capitalization rates by averaging the rates he extracted from 1) four selected retail sales, 2) Pricewaterhouse Coopers (PwC) national investor surveys, 3) the CoStar analytic survey data for Madison County, and 4) an analysis using the band of investment method. (See, e.g., Cert. Admin. R. at 1364, 3580-84.) Hall then loaded each year's capitalization rate by 1.35% to account for Sedd's share of the real estate tax expense. (See Cert. Admin. R. at 1364, 1791, 2218, 2645, 3499-500, 3584.) Hall concluded that the capitalization rate was 11.25% for tax years 2009, 2011, and 2012 and 11.70% for 2010. (Cert. Admin. R. at 1364, 1791, 2218, 2645.) After applying his capitalization rates to the property's NOI, Hall added $100, 000 to each year's value to account for the property's 39-acre tract of surplus floodplain land. (See Cert. Admin. R. at 1365, 1792, 2219, 2646, 3501-02, 3584.) Accordingly, Hall determined the appraised values of River Ridge were $8, 980, 000 for 2009, $8, 380, 000 for 2010, $8, 690, 000 for 2011, and $8, 530, 000 for 2012. (See Cert. Admin. R. at 1365, 1792, 2219, 2646.)

         Sedd's Income ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.