Marion Cnty. Assessor v. Simon DeBartolo Grp., LP

52 N.E.3d 65

MARION COUNTY ASSESSOR, Petitioner

v.SIMON DeBARTOLO GROUP, LP, DeBartolo Realty Partnership, LP, and SPG Lafayette Square, LLC, Respondents.

No. 49T10–1211–TA–00076.

Tax Court of Indiana.

April 8, 2016.

Attorney for Petitioner¹ .

Paul M. Jones, Jr., Matthew J. Ehinger, Ice Miller, LLC, Indianapolis, IN, Attorneys for Respondents.

WENTWORTH, J.

This 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.

FACTS AND PROCEDURAL HISTORY

The 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.)

In 2006 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, 1490–91, 1506.)

At the 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.² (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.

In July 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.)

Simon 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,³ 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.)

In 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 approach⁴ 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.)

The 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.)

The 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.

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, 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; without observance of the procedure required by law; or unsupported by substantial or reliable evidence. See Ind.Code § 33–26–6–6(e)(1)–(5) (2016).

ANALYSIS

On appeal, the Assessor maintains that the Indiana Board's final determination must be reversed because it is not in accordance with the law. He also contends that the Indiana Board's final determination constitutes an abuse of discretion as it is not supported by substantial or reliable evidence.

I.

The Assessor claims that the Indiana Board's final determination must be reversed because it is not in accordance with the law. (Pet'r Br. at 7.) The Assessor's entire argument supporting this claim is as follows:

The 2002 Real Property Assessment Manual defines “true tax value” of real property as “the market value[-]in[-]use of a property for its current use, as reflected by the utility received by the owner or similar user from the property.” The value if purchased for a use different from the current use by a purchaser that is not similar to the owner, is not in accordance with the law.

(Pet'r Br. at 7 (citation omitted).) The Assessor's claim and argument, however, warrant no attention from the Court. See, e.g., Crystal Flash Petroleum, LLC v. Indiana Dep't of State Revenue, 45 N.E.3d 882, 886 n. 7 (Ind. Tax Ct.2015) (indicating that the Court will not resolve an issue when its proponent fails to provide sufficient legal analysis); Scopelite v. Dep't of Local Gov't Fin., 939 N.E.2d 1138, 1145 (Ind. Tax Ct.2010) (explaining that when a litigant fails to provide any citations to evidence contained in the certified administrative record as factual support for his argument, the argument is waived as the Court does not bear the burden of searching the administrative record to make his case for him); U.S. Fid. & Guar. Ins. Co. v. Hartson–Kennedy Cabinet Top. Co., 857 N.E.2d 1033, 1038 (Ind.Ct.App.2006) (stating that when a party presents no cogent argument to support its assertion, the assertion is waived).

II.

Next, the Assessor argues that the Indiana Board's final determination must be reversed because it constitutes an abuse of discretion. (See Pet'r Br. at 3.) More specifically, he argues that Indiana Board erred in determining that the Mall's sales price and the Coers Analysis were probative in establishing that the Mall's assessed value should be reduced. (See Pet'r Br. at 3–6; Pet'r Reply Br. at 1–6.) To...