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By Alex Ebert
CVS might need some Tylenol to soothe its property tax headache in Bloomington, Ind. where the Indiana Tax Court won’t prescribe a discount the retailer sought for a pharmacy’s valuation.
On Sept. 29, the Indiana Tax Court upheld lower decisions regarding the valuation of a 12,799-square-foot pharmacy for tax years 2011, 2012, and 2013, finding largely for Monroe County. CVS argued the store should be valued around its market rental price, between $1.81 and $1.94 million in those three years. But the court said the Board of Tax Review’s decision to use the store’s cash values between $2.35 and $2.48 million was reasonable ( CVS Corp. v. Monroe County Assessor , Ind. T.C., No. 49T10-1607-TA-00020, 9/29/17 ).
CVS claimed that the lower opinions were arbitrary and capricious—the legal standard for overturning an administrative court decision—because they didn’t rely on CVS’ lower-value “income approach,” which had won the pharmacy giant two property tax reductions in the last year. But Judge Martha Blood Wentworth, the Indiana Tax Court’s single judge, found CVS’ valuation approach “did not explain how the national and regional data it used related to the subject property,” and that previous administrative decisions don’t bind administrative decisions in different tax years and on different properties.
Wentworth wrote that the county’s cash valuation was more reasonable because there was little evidence that the Bloomington CVS should be valued less than the two other stores in the region. Although the court held that some parts of CVS’ land evaluation were more reliable than the county’s, Wentworth said the court wouldn’t reweigh evidence on appeal.
CVS was more successful in previous cases before the Indiana Tax Court challenging the valuations of its two previous Bloomington stores.
In May, the Indiana Tax Court upheld lower determinations that reduced a different Bloomington CVS store’s valuation from between $2.98 and $3.05 million in tax years 2007 through 2013 to between $1.85 and $2.24 million in the same period. CVS also won a similar victory in November 2016 for a different property, knocking more than $1 million off its valuation for years 2009 through 2013.
In both of those cases, administrative determinations found that the city was either improperly judging the value of the Bloomington stores based on valuations of only open stores, or that a CVS preferred income approach to valuation was best for those properties.
CVS was hoping these victories would carry over to its third store, and it argued that the Board of Tax Review should have taken “judicial notice” of these previous victories to consider favorable opinions of its income approach as recognized fact.
However, Wentworth said that while the board “may” take notice of prior rulings, it doesn’t have to and isn’t required to rely on those previous rulings.
“The Tax Court has long-held that ‘each assessment and each tax year stands alone,’ and the Indiana Board evaluates each property’s value based on its specific facts and circumstances,” Wentworth wrote. “Thus, ‘the Indiana Board is not bound to reach the same conclusions regarding the persuasive value of an appraiser’s reports and valuation methods for different tax years or different properties.’”
CVS’ lawyer Paul Jones, of Indianapolis-based Paul Jones Law, LLC, didn’t immediately respond to requests for comment. The Monroe County Legal Department and the Indiana Attorney General also didn’t immediately respond to requests for comment.
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