Tax Court stands by lower assessment basis for big-box store

Indiana Tax Court rejected a county assessor’s appeal of the slashed assessed valuation of a department store, forcefully affirming that large retailers may base their assessments on the sale prices of similar vacant or “dark” retail store properties.

Tax Court Judge Martha Blood Wentworth wrote that the Kohl’s store in Kokomo was entitled to reductions of more than $2 million — nearly 40 percent — of its assessment for property tax purposes, affirming the Indiana Board of Tax Review. Wentworth wrote that the decision affirms a line of similar cases, citing Meijer Stores Ltd. P’ship v. Smith, 926 N.E.2d 1134, 1137 n.6 (Ind. Tax Ct. 2010), Stinson v. Trimas Fasteners, Inc., 923 N.E.2d 496 (Ind. Tax Ct. 2010); Millennium Real Estate Inv., LLC v. Assessor, Benton Cnty., 979 N.E.2d 192 (Ind. Tax Ct. 2012), (review denied).

Howard County Assessor Mindy Heady challenged the Indiana Board of Tax Review’s adoption of Kohl’s proposed valuations of $3.69 million for 2010, $3.82 million for 2011 and $3.68 million for 2012. The store originally was assessed at $5.98 million, $5.68 million and $5.9 million for those respective years. Among other things, the assessor argued the sale price of a dark store was an inappropriate basis for valuation because it would need substantial investment for reuse.

“On appeal, the Assessor has done nothing more than express her disagreement with the Court’s decisions in the Meijer, Trimas Fasteners, and Millenium (sic) cases. The Court, however, does not believe it 'got it wrong' and therefore continues to stand by those decisions,” Wentworth concluded in affirming the Board of Tax Review.

“(T)he Assessor believes that, contrary to the Tax Court’s holdings in those cases, the sales of properties to secondary users can not be the type of comparables contemplated under Indiana’s market value-in-use standard because they simply do not provide evidence of utility, and thus value, for the 'first generation' user,” Wentworth wrote. “Accordingly, the Assessor invites the Court to reconsider – and abandon – its holdings in Meijer, Trimas Fasteners, and Millenium.(sic) … The Court, however, finds no infirmities in its decisions and therefore declines the Assessor’s invitation on the basis of stare decisis.”

Wentworth in a concluding footnote wrote that attorneys in this case and others have asserted similar arguments that Tax Court was “impermissibly attempting to convert Indiana’s market value-in-use system into a fair market value system” in cases involving the valuation of Washington Square Mall and Lafayette Square Mall in Indianapolis, and a CVS pharmacy in Shelbyville. “The Court rejected those arguments then as it does again today,” she wrote in Howard County Assessor v. Kohl's Indiana LP, 49T10-1502-TA-4.