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ATTORNEYS FOR PETITIONERS: JOHN S. DULL ATTORNEY AT LAW Merrillville, IN BRIAN P. POPP LASZLO & POPP PC Merrillville, IN DOCK MCDOWELL JR. THE MCDOWELL LAW FIRM Merrillville, IN

ATTORNEYS FOR RESPONDENT: THOMAS M. ATHERTON DAVID A. SUESS BOSE MCKINNEY & EVANS LLP Indianapolis, IN

FILED
Feb 09 2009, 3:06 pm
of the supreme court, court of appeals and tax court

CLERK

CHARLES C. MEEKER CHARLES E. RAYNAL PARKER POE ADAMS & BERNSTEIN LLP Raleigh, NC _____________________________________________________________________

IN THE INDIANA TAX COURT
_____________________________________________________________________ LAKE COUNTY ASSESSOR, CALUMET TOWNSHIP ASSESSOR, and LAKE COUNTY PROPERTY TAX ASSESSMENT BOARD OF APPEALS, ) ) ) ) ) Petitioners, ) Cause No. 49T10-0703-TA-19 ) v. ) ) UNITED STATES STEEL CORPORATION, ) ) Respondent. ) _____________________________________________________________________ ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX REVIEW FOR PUBLICATION February 9, 2009 FISHER, J.

The Lake County Assessor, the Calumet Township Assessor, and the Lake County Property Tax Assessment Board of Appeals (PTABOA) (collectively, Lake County) appeal the final determination of the Indiana Board of Tax Review (Indiana Board) valuing United States Steel Corporations (US Steel) real property as of the March 1, 2001 assessment date. Because the pleadings, orders, and other materials in this case have been filed under seal, see generally Indiana Administrative Rule 9, this Courts opinion will provide only that information necessary for the reader to understand its disposition of the issues. RELEVANT FACTS AND PROCEDURAL HISTORY US Steel owns and operates an integrated steel manufacturing plant, known as the Gary Works, in Calumet Township, Lake County, Indiana. The plant, which was initially constructed in 1906, has been greatly modified over the years to accommodate new technologies in the steelmaking industry. As of March 1, 2001, US Steels plant consisted of 3,155 acres of land and over 700 buildings with more than 15 million square feet of space. A portion of the Grand Calumet River runs through US Steels property. For the year at issue, the Calumet Township Assessor (the Assessor) assigned US Steels plant an assessed value of $269,801,300: $59,582,900 for the land and $210,218,400 for the improvements. In arriving at the assessed value of the

improvements, the Assessor applied a functional obsolescence adjustment of $23,112,230. Believing the assessment to be too high, US Steel filed an appeal with the PTABOA. The PTABOA denied US Steels request for relief. US Steel then filed an

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appeal with the Indiana Board, claiming that its improvements were entitled to a larger obsolescence adjustment and that its land was entitled to a reduction in value to account for the presence of environmental contamination therein. In June of 2006, the Indiana Board conducted a four-day hearing on US Steels appeal. During the hearing, US Steel presented two alternate calculations quantifying the amount of obsolescence it believed was present in its property. The first calculation was comprised of three separate parts: part one utilized a "change-in-pricing"

methodology to calculate the amount of functional obsolescence present in the improvements due to superadequate construction, excessive clearance, and excessive building size; part two utilized an "excess operating cost" methodology to calculate the amount of functional obsolescence present in the improvements due to inefficient building layout; and part three utilized a "business enterprise value" methodology to calculate the amount of economic obsolescence present in the improvements due to excess global capacity, market competition, and reduced product demand (hereinafter, "Calculations #1-A, #1-B, and #1-C"). US Steels alternate obsolescence calculation quantified the total amount of obsolescence present in its property (i.e., functional and economic forms combined) by comparing the propertys market value as determined by the Marshall & Swift cost approach with its market value as determined by a sales comparison approach (the difference between the two values representing total obsolescence) (hereinafter, "Calculation #2").1 With respect to its land, US Steel

presented evidence demonstrating that the portion of the Grand Calumet River running through its property was environmentally contaminated as of the assessment date and In the end, Calculation #2 called for an obsolescence adjustment 14% higher than that called for by Calculations #1-A, #1-B, and #1-C combined. 3
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what it subsequently spent to remediate that contamination. On February 23, 2007, the Indiana Board issued its final determination in the matter. The Indiana Board found that US Steel had prima facie demonstrated that its improvements were entitled to both functional and economic obsolescence adjustments, as it had both identified the causes of obsolescence from which its property suffered and then quantified the amount of obsolescence present using generally accepted appraisal techniques.2 The Indiana Board also found that US Steel had prima facie demonstrated that its land was entitled to a reduction in value

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