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ATTORNEYS FOR PETITIONERS: MARK S. SAMILA GEORGE M. SCHOPMEYER KAHN, DEES, DONOVAN & KAHN, LLP Evansville, IN

ATTORNEYS FOR RESPONDENT: STEVE CARTER ATTORNEY GENERAL OF INDIANA ROBERT B. WENTE DEPUTY ATTORNEY GENERAL Indianapolis, IN

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IN THE INDIANA TAX COURT
JAMES K. JOHNSTON and JACQUELINE JOHNSTON, ) ) ) Petitioners, ) ) v. ) Cause No. 82T10-0206-TA-80 ) JOHN GERARD, CENTER TOWNSHIP ) ASSESSOR, VANDERBURGH COUNTY, ) ) Respondent. ) ) ______________________________________________________________________ ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX REVIEW NOT FOR PUBLICATION January 17, 2007 FISHER, J. James K. Johnston and Jacqueline Johnston (the Johnstons) appeal the final determination of the Indiana Board of Tax Review (Indiana Board) valuing their real property for the 1996 and 1997 tax years (years at issue). The issue for the Court to decide is whether the Indiana Board erred in denying the Johnstons' apartment complex a 67.5% obsolescence depreciation adjustment.

FACTS AND PROCEDURAL HISTORY The Johnstons own an apartment complex (Northwoods) in Evansville, Indiana. When the Johnstons purchased Northwoods, it consisted of twelve apartment buildings constructed between 1979 and 1993. building in the Northwoods complex. In 1996, the Johnstons constructed another After doing so, however, the Johnstons

discovered that their property was experiencing excessive settling due to a defect in the property's site preparation when the buildings were originally constructed. More

specifically, when the site was leveled in order to lay the buildings' foundations, it was filled with debris, soil, and trees. Because the fill was not properly drained and

compacted, the trees and debris have since decayed and rotted. This, in turn, has caused the fill to become very soft and collapse; likewise, the foundations are collapsing. For the years at issue, the Center Township Assessor (Assessor) assigned Northwoods an assessed value of $452,330 ($24,600 for the land and $427,730 for the improvements). In doing so, he applied a 5% obsolescence adjustment. Believing the improvements assessment was too high, the Johnstons appealed the 1996 and 1997 assessments to the Vanderburgh County Board of Review (BOR), requesting among other things, a twenty-five percent (25%) obsolescence depreciation adjustment. The BOR, however, upheld the Assessor's original 5% obsolescence adjustment. The Johnstons then appealed to the State Board of Tax Commissioners (State Board). The State Board held a hearing on May 17, 2001, during which the Johnstons

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requested a 67.5% obsolescence adjustment. On May 14, 2002, the Indiana Board issued a final determination denying the request. 1 The Johnstons initiated an original tax appeal on June 26, 2002. The Court heard the parties' oral arguments on May 2, 2003. Additional facts will be supplied as necessary. ANALYSIS AND OPINION Standard of Review This Court gives great deference to final determinations of the Indiana Board when it acts within the scope of its authority. Wittenberg Lutheran Vill. Endowment Corp. v. Lake County Prop. Tax Assessment Bd. of Appeals, 782 N.E.2d 483, 486 (Ind. Tax Ct. 2003), review denied. Consequently, the Court will reverse a final determination of the Indiana Board only if it is: (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; contrary to constitutional right, power, privilege, or immunity; in excess of statutory jurisdiction, authority, or limitations, or short of statutory jurisdiction, authority, or limitations; without observance of procedure required by law; or unsupported by substantial or reliable evidence.

(2) (3)

(4) (5)

IND. CODE ANN.

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