County scores partial victory on mall assessments

The Marion County assessor, who argued the values assigned to an east side mall for 2006-2010 were too low, will see an uptick in the assessed value of the mall in three of those years following a ruling from the Indiana Tax Court.

Simon Capital LP, Washington Square Mall LLC, and DeBartolo Realty Partnership LP appealed the Marion County assessor’s valuations of Simon-owned Washington Square Mall, in which assessed values ranged from $32 million to $26 million. The Indiana Board of Tax Review heard evidence from experts on both sides regarding the valuation of the property. Simon presented the testimony of Peter Korpacz, who employed a sales comparison approach and income approach to value the mall. His final estimations for the mall ranged from $9.5 million for 2010 up to $14.9 million for 2008.

The assessor presented testimony of its preparer, Will Stump, who analyzed Korpacz’s appraisal valuation approaches and did not agree with them. He performed his own income approach and came up with a range of $22 million for 2006 up to $32.15 million for 2007, with 2008 and 2009 having similar values of around $24.5 million. A deputy assessor valued the mall at $17 million for 2010.

The tax review board found flaws in both reports, but found Korpacz’s to be more persuasive than that of Stump’s. The board ordered the mall to be valued at $12.25 million for 2006, $14.2 million for 2007, $14.9 million for 2008, $12 million for 2009 and $9.5 million for 2010.

The assessor appealed in 2012 in Marion County Assessor v. Washington Square Mall, LLC, DeBartolo Realty Partnership, LP, and Simon Capital, LP
49T10-1211-TA-70.

In its final determination, the board found that Korpacz used capitalization rates that were higher than those indicated in the investor surveys and comparable sales data, and, as a result, his rates were not supported by the evidence, Judge Martha Wentworth wrote. The board then ignored this finding and adopted all of Korpacz’s values anyway, stating he had provided “lengthy and detailed explanations … for each of his assumptions” whereas Stump had not. This was an abuse of discretion, she found.

Wentworth reversed and remanded with the following instructions:

“[T]o value the Mall in accordance with the probative parts of the Korpacz Appraisal: The Mall’s 2006 assessed value should be $12,000,000, consistent with the value estimates contained in Korpacz’s sales comparison approach and direct capitalization method income approach; The Mall’s 2007, 2009, and 2010 assessed values should be $20,000,000, $14,000,000, and $14,000,000 respectively, consistent with the value estimates contained in Korpacz’s sales comparison approach; The Mall’s 2008 assessed value should be $14,500,000, consistent with the value estimate contained in Korpacz’s direct capitalization method income approach.”