WENTWORTH, J.
Indiana MHC, LLC appeals from the Indiana Board of Tax Review's final determination that Indiana MHC failed to prove its 2007 real property assessment was incorrect. The Court affirms the Indiana Board's final determination.
Indiana MHC owns Amberly Pointe, a manufactured home community in Scottsburg, Indiana. The community is situated on approximately 33 acres of land and has 205 rentable pads.
The Indiana Board held an administrative hearing on April 1, 2010. During the hearing, Kurtis Keeney, Indiana MHC's managing partner, testified that due to the manufactured home industry's "credit crisis" of 2005, only 85 of Amberly Pointe's 205 pads (i.e., 40%) were rented and generating income between 2005 and 2008. Consequently, he believed only those 85 pads had value for purposes of the 2007 assessment.
On August 16, 2010, the Indiana Board issued a final determination affirming the PTABOA's assessment. In its final determination, the Indiana Board explained that when valuing property under the income capitalization approach,
(Cert. Admin. R. at 283.) The Indiana Board therefore concluded that because Indiana MHC's income capitalization approach failed to take into account any market data whatsoever, it lacked probative value. As a result, the Indiana Board held that Indiana MHC failed to demonstrate that its 2007 assessment was erroneous.
Indiana MHC filed this original tax appeal on September 27, 2010. The Court heard oral arguments on October 28, 2011. Additional facts will be supplied as necessary.
A taxpayer seeking to overturn an Indiana Board final determination bears the burden of demonstrating its invalidity.
On appeal, Indiana MHC argues that the Indiana Board's final determination is arbitrary and capricious because it disregarded the "substantial evidence" it presented demonstrating that Amberly Pointe's 2007 assessment should have been much lower: it had an occupancy rate of only 40% and its green space was "worthless." (Pet'r Br. at 1, 5-8.) Indiana MHC is incorrect.
An assessment, determined using the cost approach as set forth in Indiana's Property Assessment Manual and Guidelines, is presumed accurate. 2002 REAL PROPERTY ASSESSMENT MANUAL (2004 Reprint) ("Manual") (incorporated by reference at 50 IND. ADMIN. CODE 2.3-1-2 (2002 Supp.)) at 5. Nevertheless, a taxpayer that appeals an assessment
Id. (emphasis added). Thus, when contesting an assessment, a taxpayer may present evidence demonstrating its property's value using the income capitalization approach. See Manual at 3. See also APPRAISAL INSTITUTE, THE APPRAISAL OF REAL ESTATE 62-64 (12th ed. 2001)(explaining that the three generally accepted appraisal techniques for valuing property are the sales comparison approach, the cost approach, and the income capitalization approach).
The income capitalization approach values property based on its earning power and is informed not only by the principle of anticipation
Hometowne Assocs., L.P. v. Maley, 839 N.E.2d 269, 275 (Ind. Tax Ct.2005) (citation omitted)(emphasis added). Consequently, to provide a sound value indication
Here, Indiana MHC's income capitalization approach failed to comply with generally accepted appraisal principles because it did not consider the occupancy rates of comparable properties in the market. In fact, the administrative record contains evidence that indicates Amberly Pointe's low occupancy rate of 40% was actually the anomaly in the market place. (See Cert. Admin. R. at 424 (showing that five other mobile home communities in the immediate vicinity had occupancy rates between 70% and 95%, despite the fact they charged higher rents).) As the Indiana Board explained, "[w]here the income and expense data for the subject property is out of step with what the market data shows, generally accepted appraisal principles require further examination and analysis ... [in order] to protect against distortions and inaccurate value estimates that might be caused by extraneous factors (such as bad management or poor business decisions) that really have nothing to do with the inherent value of a property." (Cert. Admin. R. at 238.)
Based on Indiana MHC's failure to examine, analyze and reconcile its 40% occupancy rate in light of the much higher occupancy rates prevalent in the marketplace, the Indiana Board did not err in finding that Indiana MHC's income capitalization approach lacked probative value. Because Indiana MHC's income capitalization approach lacked probative value, the Indiana Board was correct in determining that Indiana MHC failed to prove its 2007 real property assessment was incorrect.
For the foregoing reasons, the Indiana Board's final determination is AFFIRMED.