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Howard County Assessor v. Kohl’s Indiana LP, 57 N.E.3d 913

Facts

Kohl's Indiana LP owns an 88,242 square foot retail store in Kokomo, Indiana, which was constructed in 2003. For the 2010, 2011, and 2012 assessments, the Howard County Assessor valued the property at $5,984,000, $5,685,300, and $5,906,300 respectively. Kohl's contested these valuations, arguing they were too high, and presented appraisals that estimated the property's market value-in-use significantly lower. The Indiana Board of Tax Review conducted a hearing and ultimately sided with Kohl's appraisal, which utilized sales data from comparable 'big box' retail stores.

Kohl's Indiana LP owns and occupies an 88,242 square foot retail store on 10.65 acres of land at the Boulevard Crossing shopping center in Kokomo, Indiana (the subject property).

Issue

Did the Indiana Board of Tax Review err in its determination of the property tax assessments for Kohl's retail store by favoring certain comparators over others?

The Assessor initiated this original tax appeal on February 13, 2015.

Rule

The court applied the principle that market value-in-use is determined by the value of a property for its current use, as reflected by the utility received by the owner or a similar user, from the property.

Market value-in-use, in turn, is defined as the value 'of a property for its current use, as reflected by the utility received by the owner or a similar user, from the property.'

Analysis

The court analyzed the competing appraisals presented by both Kohl's and the Assessor, noting that the Indiana Board found Kohl's appraisal more probative as it better reflected the market value-in-use standard. The Board emphasized that the properties used by Kohl's as comparables were appropriate because they were vacant at the time of sale and reflected the value of the real property alone, while the Assessor's appraisal relied on properties that were not comparable due to their leased status.

After weighing the competing appraisals, the Indiana Board found the one submitted by Kohl's more probative than the one submitted by the Assessor because it better reflected the meaning of market value-in-use as stated in Indiana's assessment manual and as consistently interpreted in Tax Court jurisprudence.

Conclusion

The Indiana Tax Court affirmed the Indiana Board's final determination, reducing the subject property's assessments to $3,690,000 for 2010, $3,820,000 for 2011, and $3,680,000 for 2012.

Accordingly, the Indiana Board reduced the subject property's 2010 assessment to $3,690,000; the 2011 assessment to $3,820,000; and 2012 assessment to $3,680,000.

Who won?

Kohl's Indiana LP prevailed in the case as the court upheld the Indiana Board's decision to reduce the property tax assessments based on the more accurate appraisal methodology presented by Kohl's.

The Indiana Board found the one submitted by Kohl's more probative than the one submitted by the Assessor because it better reflected the meaning of market value-in-use.

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