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Thursday, September 29, 2016

Ind. Decisions - "Dark Boxes are Comparable Properties in Indiana "

Howard County Assessor v. Kohl's Indiana LP (ILB summary here), the first of the big box/dark box appeals to be decided by the Indiana Tax Court, is the subject of an article from Bingham Greenebaum Doll LLP. Some quotes:

The primary issue on appeal was whether the use of “dark boxes” as comparable properties was appropriate when appraising the market value-in-use of the property. Dark boxes are big box retail stores (exceeding 50,000 square feet) that are vacant at the time of sale. Kohl’s argued these were appropriate comparable properties because their sales prices reflected the value of the real property absent the value of the business or other fixtures, each of the properties was sold for continued retail use, and properties similar to these dark boxes were regularly sold in the market. The assessor argued that dark boxes were not comparable properties because “dark boxes do not have any utility to either the original owner or another owner/user in the same retail tier,” and that the store was a special purpose property based on the modifications made by Kohl’s. The assessor’s argument hinged on the idea that a “second-generation user” would have a significant expense in transforming the dark box into a usable space.

The Tax Court rejected the Assessor’s argument and plea to overturn past cases finding that sales of properties to second generation retailers are comparable under the market value-in-use standard. [citations omitted] The Tax Court upheld that use of dark boxes are permissible as comparable properties for the Indiana market value-in-use valuation process.

Posted by Marcia Oddi on September 29, 2016 10:36 AM
Posted to Ind. Tax Ct. Decisions