Date Issued: September 24, 2018
Property Type: Former foundry with environmental contamination
Assessment Date: Jan. 1, 2016
Point of Interest: Taxpayer claimed that contaminated industrial land purchased for $1 had $0 value, but it offered no probative evidence that the sale was a reliable indication of value. The administrative record lacked facts showing (i) the property had been exposed to the market, (ii) the property had no value due to the contamination, or (iii) how the 2014 sale price related to the 2016 valuation date.
Synopsis: Taxpayer was in the business of acquiring, remediating, and reselling contaminated properties. In June 2014, it purchased a former foundry with soil and ground water contamination for $1. After entering into a Voluntary Remediation Program with the State of Indiana, Taxpayer sold a ten-acre portion of the property at a discount to a local school corporation for purposes of building a new middle school. The 2015 assessment of $200,000 was appealed; the parties agreed to keep the total value at that level but re-allocated the spilt between land improvements and land, reducing the land value to $68,900. The Assessor and Taxpayer signed a Form 134 Joint Report to memorialize this agreement. In 2015, Taxpayer transferred nearly five acres to another entity and demolished all buildings on the retained portion. For the 2016 assessment, Taxpayer protested the $131,700 assessment — $121,700 for land and $10,000 for improvements. The County Board reduced the land to $95,400, and Taxpayer appealed to the Indiana Board of Tax Review.
Before the Indiana Board, Taxpayer argued the land had $0 value but indicated it would accept the stipulated 2015 value of $68,900. To support its claim, Taxpayer relied on the $1 purchase price, a list of “comparable” properties with their tax records, and the 2015 Form 134. The Indiana Board ruled that the improvements had $0 value, where the evidence showed no building remained on the property as of the January 1, 2016 assessment date, but the evidence did not support a reduction in the property’s land value.
The 2014 $1 purchase. To represent a “market value” transaction, a sold property must have had “reasonable exposure in a competitive market under all conditions requisite to a fair sale.” Here, Taxpayer failed to show that the property had been exposed to the market for a reasonable time before the $1 purchase. The sale also appeared to be influenced by undue duress, according to the Indiana Board. Taxpayer’s conclusory statements to the contrary were not probative of the property’s value.
No evidence of $0 value. Contamination can impact a property’s value, but the fact of contamination “does not by itself necessitate a finding that a property is valueless.” (emphasis in original). The Tax Court observed that the “record is devoid of any objective factual basis that would support Garrett’s claim that its property has no value simply because its contaminated.” Evidence suggested the contaminated property did have some value, e.g. Taxpayer’s sale of a portion of the land to a local school corporation.
Failure to relate 2014 purchase to 2016 assessment date. Even if the 2014 sale price was probative, Taxpayer offered no evidence to relate that price to the January 1, 2016 assessment date. The Court rejected Taxpayer’s “bald assertion” that the 18-month gap was insignificant.
No evidence of comparability. Taxpayer listed three properties it claimed were comparable and supported a reduction, submitting property tax records for two of them. Evidence indicated the purported comparable properties had been transferred by Commissioner’s Tax Deed, or either sold or failed to sale at tax sale. The Indiana Board concluded that the evidence was not probative because Taxpayer “did not provide evidence, explanation, or analysis comparing these properties to the subject property and did not explain how any differences may affect determining the subject property’s market value-in-use.” The Court observed that Taxpayer “provided so little information about these three properties that the Indiana Board had to infer the reason [each property] was presented.” Taxpayer failed to analyze and compare the impact of contamination, if any, on the values of the three comparable properties. Parties must walk the Indiana Board and the Court “through every element of their analyses.” Taxpayer failed to do so.
2015 land stipulation. Taxpayer argued that the 2016 land value could not be higher than the 2015 stipulated value because the land was still contaminated and the property in 2016 was smaller after selling off almost five acres. But the Court declined to “follow Garrett down the rabbit hole and hold that just because fewer acres were assessed in 2016 than 2015, the 2016 assessed value can be no greater than that in 2015.” Each tax year stands alone, and “a prior year’s assessed value is not necessarily probative evidence of a subsequent year’s assessed value in other contexts.” In addition, the 2015 stipulation on its face addressed only that year.
The Court rejected Taxpayer’s “thinly veiled request that the Court reweigh the evidence” presented to the Indiana Board. The Indiana Board’s final determination was affirmed.
