Relevance of atypical sale of unique property.

Author:Blair, Benjamin A.

During the 2015 tax year, Wigwam Holdings LLC owned an 8.56-acre parcel containing an iconic 220,000-square-foot building known as "the Wigwam." The Wigwam included, among other things, a natatorium, maintenance shops, an auditorium, band and choral rooms, offices, a cafeteria, a two-story classroom, and an 8,996-seat basketball facility. The Wigwam was formerly owned by the school corporation but had fallen into significant disrepair; the building contained asbestos, was not ADA-compliant, lacked air conditioning and sprinklers, and was generally in poor condition.

Wigwam Holdings acquired the property in 2014 by quitclaim deed from the city Department of Redevelopment, which had acquired the property that same day from the city school corporation. The deed required the gymnasium to be repaired, restored, and maintained in a first-class manner by December 31, 2018, and granted the city school corporation an "irrevocable right" to use the gymnasium for up to twelve days each year for a period of ten years with an option to extend use another five years. An escrow agreement required the city school corporation to deposit $630,000 in an escrow account for Wigwam Holdings to use to restore the property. If Wigwam Holdings did not fulfill its obligations by December 31, 2019, the escrow funds would be returned to the city school corporation.

For the 2015 tax year, the county assessor assigned the property an assessed value of $11,415,000. Wigwam Holdings appealed the assessment to the county board, which reduced the assessment to $2,115,200, but Wigwam Holdings continued to believe the assessment was too high, so it sought review with the Indiana Board of Tax Review (Review Board).

Before the Review Board, Wigwam Holdings claimed its assessment should be reduced to $68,500, entirely attributable to the land. To support its claim, Wigwam Holdings presented a USPAP-compliant appraisal and documentation regarding the acquisition of the property. The appraisal relied on a conclusion that the highest and best use of the property was as vacant land. Subtracting the estimated land value from the estimate of the building's demolition and remediation costs resulted in a market value of negative $490,500. Wigwam Holdings also maintained that the property had no value because it was acquired for $0.

The assessor offered the testimony of a nonappraisal expert witness, who explained that Wigwam Holdings' appraisal was inconsistent with Indiana's market...

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