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State Board of Tax Commissioners v. Garcia

Court: Indiana Supreme Court
Date filed: 2002-04-12
Citations: 766 N.E.2d 341
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7 Citing Cases

ATTORNEYS FOR APPELLANT                 ATTORNEYS FOR APPELLEES

Steve Carter                            Timothy D. Hernly
Attorney General of Indiana       John C. Smarrella
                                        Barnes & Thornburg
Nandita G. Shepherd                     South Bend, Indiana
Deputy Attorney General
Indianapolis, Indiana





                                   IN THE

                          SUPREME COURT OF INDIANA



STATE BOARD OF TAX COMMISSIONERS, )
                                        )
      Appellant (Respondent Below),     )
                                        )
            v.                          )  No. 71S10-0108-TA-366
                                        )
JUAN C. GARCIA and MARIA N. GARCIA,)
                                        )
      Appellees (Petitioners Below).)










                      APPEAL FROM THE INDIANA TAX COURT
                    The Honorable Thomas G. Fisher, Judge
                         Cause No. 71T10-9809-TA-104



                               April 12, 2002

SHEPARD, Chief Justice.



      In a property grading system based upon comparables, what happens when
a property is incomparable?


      In this case, the Indiana State Board of Tax Commissioners appeals the
Indiana Tax Court’s decision that  the  Board’s  methodology  for  assessing
Juan and Maria Garcia’s home at a grade of “A + 6” for  the  1993  tax  year
was arbitrary and capricious.  The State Board argues  that  the  Tax  Court
abused its discretion in overturning the grading.


      We conclude that the Tax Court did not give adequate deference to  the
Board’s method of calculation and thus affirm the grade of “A + 6”  for  the
Garcias’ residence.



                        Facts and Procedural History



      The Garcias’ home was assessed as of March  1,  1993.   The  resulting
proceeding has involved two  local  assessments,  two  hearings  before  the
State Board, two  published  opinions  from  the  Tax  Court,  and  now  our
decision.  Garcia v. State Bd. of Tax Comm’rs,  694  N.E.2d  794  (Ind.  Tax
1998) (“Garcia I”), appeal after remand, 743  N.E.2d  817  (Ind.  Tax  2001)
(“Garcia II”), review granted, 761 N.E.2d 415 (Ind. 2001).

      The Garcias reside in an 11,000 square foot dwelling  in  South  Bend.
The Penn Township Assessor originally assigned a grade  of  “A  +  10,”  the
highest grade assignable.  50 Ind.  Admin.  Code  2.1-3-2(b),  4(f)  (1992).
Displeased with this grade, the Garcias petitioned  the  St.  Joseph  County
Board of Review.  In February 1994, the County  Board  determined  that  the
Garcias’ home was properly assessed.

      The Garcias then filed a Form 131 Petition for  Review  of  Assessment
with the State Board in March 1994, and the Board held  a  hearing  on  July
14,  1994.   The  Board  heard  evidence  regarding  the  exterior  of   the
residence, the structural  elements  of  the  roof,  and  the  high  quality
amenities such as cabinets, light fixtures, plumbing fixtures, and  multiple
heating systems, features that were  all  generally  indicative  of  an  “A”
grade dwelling.  50 IAC 2.1-3-2 (1992).  The State  Board  agreed  that  the
Garcias’ home deserved an elevated “A” grade, but reduced the assessment  to
“A + 4.”


      The Garcias next filed an original tax appeal petition  with  the  Tax
Court, which held the Board’s methodology in grading dwellings above an  “A”
grade was arbitrary and capricious.  Garcia I, 694 N.E.2d at 795.   The  Tax
Court remanded to the Board for further consideration.  Id. at 800.

      Following the Tax Court’s decision, the  State  Board  held  a  remand
hearing on June 22, 1998.  Using a methodology discussed  in  detail  below,
the Board revised the grade of the Garcias’ dwelling to “A + 6.”


      After this setback, the Garcias filed a  second  original  tax  appeal
petition to the Tax Court.  The Tax  Court  again  held  that  “neither  the
regulations nor generally accepted appraisal standards provide  for  setting
a grade above an ‘A,’” and it directed the State Board to enter a  grade  of
“A” on the Garcias’ home for 1993.  Garcia II, 743 N.E.2d at 821.


      The Board petitioned this Court to review the final  judgment  of  the
Tax Court pursuant to Indiana Appellate Rule 63.  We  granted  review.   761
N.E.2d 415.



                               What Lies Ahead


      This case arrives here  as  major  developments  in  Indiana  property
assessment law are underway.  On March 1, 2002, a  general  reassessment  of
all real property within Indiana began.[1]  In response to  our  holding  in
State Board of Tax Commissioners v. Town of St. John, 702 N.E.2d 1034  (Ind.
1998), and to satisfy  the  statutory  and  constitutional  requirements  of
property tax assessments, the State Board has developed  a  new  manual  and
guidelines.  See 50 IAC 2.3-1-1 (2001).

      At the heart of the new regulations is the State Board’s  endeavor  to
define “true tax value” so as  to  measure  property  wealth.[2]   True  tax
value is defined as  “[t]he  market  value-in-use  of  a  property  for  its
current use, as reflected by the utility received by the owner or a  similar
user, from the  property,  less  that  portion  of  use  value  representing
subsistence housing for its owner.”  State Board of Tax Commissioners,  2002
Real Property Assessment Manual 2 (2001).


      The manual further explains true  tax  value  as  “the  ask  price  of
property by the owner, because . . .  the  ask  price  represents  how  much
utility must be replaced to induce the owner to abandon the property.”   Id.
 Attempting to measure “value-in-use”  as  opposed  to  “value-in-exchange,”
the manual specifies  three  methods  for  determining  the  value  of  real
property:  (1) cost approach,[3] (2) sales comparison approach,[4]  and  (3)
income approach.[5]  Id.  Using one of  these  methods,  the  manual  states
that assessors will arrive at the true tax value, reduced by the  applicable
shelter allowance for owner-occupied housing units.  Id. at 3, 7, 23.


      The manual goes on to say:
      Appeal of assessments must operate within the rules and  utilize  data
      in the same manner as provided  in  this  manual.   In  general,  this
      requires that challenges to assessments be proven with aggregate data,
      rather than individual evidence of property wealth.  Since assessments
      are calculated using aggregate data, it  is  not  permissible  to  use
      individual data without first establishing its comparability  or  lack
      thereof to the aggregate data.  By requiring  taxpayers  to  make  any
      internal data “readily available” assessors are given the  opportunity
      to establish this comparability.


      There shall be a presumption that the value  determined  according  to
      the rules prescribed in this manual is  the  true  tax  value  of  the
      subject property.  However, the taxpayer shall be permitted  to  offer
      evidence relevant to the fair market value-in-use of the  property  to
      rebut such presumption and to establish the actual true tax  value  of
      the property as long  as  such  information  is  consistent  with  the
      definition of true tax value provided in this manual and  was  readily
      available to the assessor at the time the assignment was  made.   Such
      evidence may include  actual  construction  costs,  sales  information
      regarding the subject or comparable properties,  appraisals  that  are
      relevant to the market value-in-use of the  property,  and  any  other
      information compiled in accordance with generally  accepted  appraisal
      principles.

Id. at 5-6.

       The  State’s  declared  goal  is  to  establish  a  more  objectively
verifiable result that  will  satisfy  the  constitutional  requirements  of
uniform and equal property assessment.  See id. at 2-3.

      Tax Board and Tax Court practice  are  likewise  changing.   Effective
January 1, 2002, the State Board of Tax Commissioners was abolished and  its
duties distributed to two new agencies:  the Department of Local  Government
Finance, which has tax collection authority,[6] and  the  Indiana  Board  of
Tax Review, which will review property tax appeals.[7]

      As for the Tax Court, the legislature has abolished  the  Tax  Court’s
former practice of re-creating the evidence that had been before  the  State
Board as a substitute for making a formal administrative record at the  time
of the Board proceedings.[8]  Instead, the Board  of  Tax  Review  must  now
prepare a certified record of the proceedings related to  the  petition  for
judicial review that includes:
     1) Copies of all papers submitted to  the  Indiana  board  during  the
        course of the action and copies  of  all  papers  provided  to  the
        parties by the Indiana board.  For purposes  of  this  subdivision,
        the  term  “papers”  includes,  without  limitation,  all  notices,
        petitions, motions, pleadings, orders, orders on rehearing, briefs,
        requests, intermediate  rulings,  photographs,  and  other  written
        documents.
     2) Evidence received or considered by the Indiana board.
     3) A statement of whether a site inspection was conducted, and,  if  a
        site inspection was conducted, either:
        (A) a summary report of the site inspection; or
        (B) a videotape transcript of the site inspection.
     4) A statement of matters officially noticed.
     5) Proffers of proof and objections and rulings on them.
     6) Copies of proposed findings, requested orders, and exceptions.
     7) Either:
           A) a transcription of the audio tape of the hearing; or
           B) a transcript of the hearing prepared by a court    reporter.

Ind. Code Ann. § 6-1.1-15-6(b) (West Supp. 2001)(effective Jan. 1, 2002).

      A Tax Court appeal will now be heard on that record,  subject  to  the
provisions of the Administrative Orders and Procedures Act in  Indiana  Code
Ann. chapter 4-21.5-5.[9]  Relief will  be  granted  if  the  Board  of  Tax
Review’s  actions  were  arbitrary,  capricious,  an  abuse  of  discretion,
unsupported by  substantial  evidence,  or  otherwise  violate  one  of  the
standards listed in Ind. Code Ann. § 4-21.5-5-14(d) (West 1991).

      In short, Tax Court appeals will now bear strong  resemblance  to  the
review  of  other  agency  determinations,  like  those   of   the   Workers
Compensation Board or the Indiana Utility Regulatory  Commission,  presently
undertaken by the Court of Appeals.  Judge Shields summarized these  appeals
in language approximating the present basis for tax appeals:
      Judicial  review  of  an  administrative  decision  is  limited  to  a
      determination of whether the agency has jurisdiction over  the  matter
      and whether its order is in accordance with proper legal procedure, is
      based  on   substantial   evidence,   and   does   not   violate   any
      constitutional, statutory, or legal principle.


Ind. Civil Rights Comm’n v. Wellington Village Apartments, 594  N.E.2d  518,
529 (Ind. Ct. App. 1992)(citations omitted).

      From these appeals heard by the Court of Appeals and  the  Tax  Court,
this Court has discretion to grant further review.  App. R. 4(A)(2).



                     The Garcias’ Assessment of “A + 6”


      This case is thus a  trailing  example  of  assessment  from  the  era
before Town of St. John, 702 N.E.2d 1034.   In  Garcia  II,  the  Tax  Court
found the State Board’s methodology for assessing the  Garcias’  home  above
the grade of “A” to be arbitrary and capricious.  743 N.E.2d  at  818.   The
Board argues that the Tax Court failed  to  give  proper  deference  to  the
State  Board’s  final  determination.   (Appellant’s  Br.  at  13-15.)    In
response, the Garcias  claim  that  the  Board  exceeded  its  authority  by
adopting new assessment methodology and that the methodology  was  arbitrary
and capricious.[10]  (Appellees’ Br. at 3-5.)




      A. Assessment’s Basic Principles.  For residential improvements,  true
tax value is calculated by determining the whole dollar cost of  reproducing
the  improvement  as  determined  under  the   State   Board’s   rules   and
regulations.   See 50 IAC 2.1-3-4 (1992).  Assessors assign a  grade  factor
ranging  from  “A”  to  “E”  to  account  for  the   dwelling’s   particular
construction qualities and amenities.  See 50 IAC 2.1-3-2 (1992).

      “C” grade dwellings, defined  as  “[m]oderately  attractive  dwellings
constructed with average quality  materials,”  are  considered  average  and
assigned  a  grade  factor  of  100  percent  of  the  replacement  cost  as
determined by the State Board.  50 IAC 2.1-3-2(a), (b) (1992).  The  highest
major classification grade is  “A,”  which  is  defined  as  a  dwelling  of
“outstanding architectural style and design” that is “constructed  with  the
finest  quality  materials  and  workmanship  throughout.”   Id.  at   2(b).
Further on, the  regulation  states  that  “[m]ansion  type  dwellings  fall
within the upper limits of the grade ranging from AA to AAA [grades “A +  4”
to “A + 10”].”  Id.; 50 IAC 2.1-3-4(f) (1992).  “A” grade dwellings  have  a
grade factor of 160 percent of the base price.  50 IAC 2.1-3-2(b) (1992).


      Because dwellings can fall  between  the  major  classifications,  the
Board’s regulations provide a system of pluses and minuses to fine-tune  the
grades.[11]  See 50 IAC 2.1-3-4(f) (1992).  Grades that fall above  “A”  are
indicated by  “+1”  through  “+10,”  with  each  increment  representing  an
increase in value over the base grade of twenty percent.  Id.  The  Garcias’
grade of “A + 6” represents a factor of 280 percent.  See id.


      Within the State Board’s regulations, assessors must use models, which
are “conceptual tool[s] used  to  replicate  replacement  cost  of  a  given
structure using typical construction materials.”  50 IAC 2.1-3-2(a)  (1992).
  Included   within   the   regulations   are   “[g]raded   photographs   of
representative dwellings . . . [to] assist the  assessor  in  selecting  the
proper grade.”  Id.;  see  also  50  IAC  2.1-3-6  (1992).   Photographs  of
comparable homes with  grades  from  “A”  to  “E  –  1”  are  shown  in  the
regulation.  See 50 IAC 2.1-3-6 (1992).  No home  graded  above  an  “A”  is
pictured.  See id.  Additionally, a “Grade  Specification  Table”  describes
the   general   characteristics   of    dwellings    within    each    major
classification.[12]  50 IAC 2.1-3-2(b) (1992).



      B.  Methodology for Garcias’ Grade.  In reaching the “A  +  6”  grade,
the State Board started with the actual construction cost  of  the  Garcias’
home, $1,634,543.  The State Board subtracted items not assessed in  Indiana
or assessed as separate line items.[13]   The  net  cost  equaled  $918,677.
The Board then determined that the applicable regulations  concerning  grade
were based upon 1985 reproduction costs.


      Therefore, the State Board  equated  the  Garcias’  1991  construction
costs with the 1985 data.  To do this, it discounted the  1991  construction
costs by a consumer price index deflator[14] to arrive at an  adjusted  1985
cost of $741,005 for the Garcias’  home.   Additionally,  because  the  1985
cost schedules in the State Board’s Manual were further reduced  by  fifteen
percent, the State Board then reduced the $741,005  by  fifteen  percent  to
reach the figure of $629,854.  This  figure,  the  State  Board  determined,
represented the adjusted construction cost of the Garcias’ home.[15]


      Finally, the State Board  calculated  that  a  grade  of  “C”  on  the
Garcias’ home would have  equaled  a  reproduction  cost  of  $217,900.   To
arrive at an appropriate grade factor, the State Board divided  $629,854  by
$217,900, which equaled approximately 289 percent.  The State Board  rounded
that figure to 280 percent for a final grade of “A + 6.”

      In sum, the Garcias’ grade of “A + 6”  was  arrived  at  by  deflating
their dwellings’ actual cost of construction to  a  1985  cost  level,  then
dividing by the grade “C” reproduction costs from  the  State  Board’s  cost
schedules, to arrive at a rounded grade multiplier of 280 percent.


      C.  Review of the Tax Court’s Decision.  We review Tax Court decisions
under a “clearly erroneous” standard of review. In doing  so,  we  recognize
that the Indiana Tax Court was established to develop and apply  specialized
expertise in the prompt, fair, and uniform resolution of  state  tax  cases.
Ind. Dep’t of State Revenue v. Caylor-Nickel Clinic, P.C., 587  N.E.2d  1311
(Ind. 1992).

      In reviewing the State Board’s approach in Garcia II,  the  Tax  Court
again found fault with the State Board’s methodology  and  directed  that  a
grade of “A” be entered on the Garcias’ home.  743 N.E.2d at  821.   Despite
acknowledging that the “State Board’s method of calculating  grade  in  this
case does make some sense,” Id. at 820 n.7, the  Tax  Court  held  that  “no
support exists in the regulation for the above calculation.”   Id.  at  820.
The court further stated, “[I]f the State Board wishes to use such a  method
when dealing with  future  appeals  .  .  .  it  must  be  included  in  the
regulations.”  Id. at 820 n.7.

      Like  other  courts  conducting  judicial  review  of   administrative
actions, the Tax Court owes a certain deference to  the  executive  body  to
which  is  assigned  the  principal  responsibility  for  carrying  out  the
mission.  The Tax Court may reverse  a  final  determination  of  the  State
Board only when its decision is  unsupported  by  substantial  evidence,  is
arbitrary or capricious, constitutes an  abuse  of  discretion,  or  exceeds
statutory authority.  Wetzel Enters., Inc. v. State Bd. of Tax Comm’rs,  694
N.E.2d  1259  (Ind.  Tax  1998).   The  taxpayer   bears   the   burden   of
demonstrating that the State Board’s final determination is invalid.   Clark
v. State Bd. of Tax Comm’rs, 694 N.E.2d 1230 (Ind. Tax 1998).

      Indiana Code Ann. § 6-1.1-35-1 (West 1998) establishes  the  following
duties of the State Board:
      (1)   interpret the property tax laws of this state;
      (2)   instruct property tax officials about their taxation and
           assessment duties and ensure that the county assessors, township
           assessors, and assessing officials are in compliance with
           section 1.1 of this chapter;
      (3)   see that  all  property  assessments  are  made  in  the  manner
           provided by law;  and
      (4)   develop and maintain a manual for all  assessing  officials  and
           county assessors concerning:
           (A)   assessment duties  and  responsibilities  of  the  various
                 state and local officials;
           (B)   assessment procedures and time limits for  the  completion
                 of assessment duties;
           (C)   changes in state assessment laws;  and
              D)  other  matters  relevant  to  the  assessment  duties   of
                 assessing officials, county  assessors,  and  other  county
                 officials.


Given this clear legislative grant of authority to develop  regulations  and
interpret the property tax law within Indiana, the  Tax  Court  should  have
accorded more deference in this instance to the State Board’s actions.

      The Tax Court’s ruling that any methodology not appearing  within  the
regulations would be arbitrary and capricious effectively  prevents  grading
of dwellings above “A.”  The regulation at issue,  however,  50  IAC  2.1-3-
4(f) (1992), clearly contemplates that dwellings will fall above grade  “A.”
 On this point, the regulation states:
      Grades that fall above “A” (which represents a  factor  of  160%)  are
      indicated by “+1” through “+10” (each of which represents an  increase
      of the factor by 20%, so that “A +  10”  equals  a  factor  of  360%).
      Grade “A + 4” may be designated “AA”, and grade “A + 10” may  also  be
      designated as “AAA”.


50 IAC 2.1-3-4(f) (1992).

      The Tax Court’s conclusion,  therefore,  flies  in  the  face  of  the
regulations.  First, regulation 2.1-3-4(f) explicitly contemplates ten  plus
factors above “A.”   Second,  the  regulation  assigns  specific  percentage
increments to these higher grades.  A “C” house has a grade  factor  of  100
percent, an “A” house has a grade factor of 160 percent,  and  an  “A  +  6”
house has a grade factor of 280 percent.  And  third,  while  not  providing
pictorial representations, regulation 2.1-3-2(b) does describe houses at  or
above “A + 4” as “mansion type dwellings.”  50 IAC 2.1-3-2(b) (1992).

      Under this scheme, graded dwellings  can  be  thought  of  as  falling
somewhere on a bell-shaped  curve,  with  the  few  houses  of  the  poorest
quality construction (grades “E – 4” to “E – 1”) on one  end  of  the  curve
and the few mansions of the highest quality construction (“A + 4”  to  “A  +
10”) on the opposite end.  The average house (the “C” classification)  falls
somewhere around the mean of the curve.

      Because few homes fall within these fringe categories (below  “E”  and
above “A”), the regulations provide specific comparisons to guide  assessors
only for grades between “A” and “E - 1.”  This is  understandable.   If  the
State Board tries to provide assessors with  a  picture  of  a  dwelling  it
considers of the highest quality, what happens when an even  more  expensive
and luxurious home is built in the future?

      Predictably, it is only those few dwellings of especially high quality
that will be heard to complain.  No homeowner is likely to challenge  a  tax
appraisal as too low.

      In this rare situation, the Garcias built a home so upscale  that  the
“comparables” available to assessors  were  simply  not  comparable.   There
were no general specifications or graded  photographs  to  guide  the  local
assessors.  But  the  State  Board  did  have  the  general  description  of
“mansion type dwellings” and specific grade factors  over  the  average  “C”
classification from which to work.  See 50 IAC 2.1-3-2(b), 4(f) (1992).


      As the Tax Court agreed in Garcia II, the State Board’s methodology of
using discounted construction costs  in  comparison  to  reproduction  costs
derived from the regulations for average “C” dwellings  makes  sense.    743
N.E.2d at 820  n.7.   It  is  a  reasonable  approach  that  results  in  an
objectively verifiable grading.  Given that the Garcias’ house  was  one  of
the few dwellings falling within the elevated “A” category,  it  was  within
the State Board’s discretion to  identify  the  rationale  for  grading  the
Garcias’ home at “A + 6.”


      The Garcias argue, in essence, that because the State  Board  did  not
contemplate a home of this caliber it must assess the  Garcias’  home  based
upon the best it did contemplate and assign a grade of  “A.”   We  disagree.
The State Board found an objective, logical method  to  assess  a  literally
incomparable property  within  the  existing  guidance.[16]   This  was  not
arbitrary or capricious.


      We conclude that the State Board acted within its statutory  authority
and assessed the Garcias’ residence using a  methodology  that  was  neither
arbitrary nor capricious.[17]  The Garcias’ home was properly graded  at  “A
+ 6.”





                                 Conclusion

      We affirm the decision of the State Board of Tax Commissioners.

Dickson, Sullivan, Boehm, and Rucker, JJ., concur.
-----------------------
[1] See Linda Mullen, “Plymouth Native Poised for Challenge; Laramore Set
to Take Charge of Statewide Reassessment,” S. Bend Trib., June 27, 2001 at
D1.
[2] The Indiana Constitution requires “a system of assessment  and  taxation
characterized by uniformity, equality and just valuation based  on  property
wealth, but the Clause does not require absolute and precise  exactitude  as
to the uniformity and equality of each individual assessment.”  Town of  St.
John, 702 N.E.2d at 1040 (discussing Ind. Const.  art.  X,  §  1).   Indiana
Code Ann. § 6-1.1-31-6(c) (West 2001) states that  “[w]ith  respect  to  the
assessment of real property, true  tax  value  does  not  mean  fair  market
value.”
[3] The “cost approach” attempts to “estimate[] the value of the land as  if
vacant and then add[] the  depreciated  cost  new  of  the  improvements  to
arrive at a total estimate of value.”  Id. at 3.
[4] The “sales comparison approach” purports to “estimate[] the total  value
of the  property  directly  by  comparing  it  to  similar,  or  comparable,
properties that have sold in the market.”  Id.
[5] The “income approach,” typically used for income  producing  properties,
attempts to convert an estimate of what the property is expected to  produce
“into a value through a mathematical process know as capitalization.”  Id.
[6] Ind. Code Ann. §§ 6-1.1-30-1.1, 14 (West Supp. 2001).
[7] Ind. Code Ann. §§ 6-1.5-1-3, 4-1 (West Supp. 2001).
[8] Ind. Code Ann. § 6-1.1-15-6  (West  2000)(repealed  2002)  required  the
board to assemble a certified transcript of  the  proceedings  for  judicial
review, but expressly stated that “the  transcript  shall  not  include  the
evidence compiled by the board with respect to  the  proceedings.”   Because
the evidence compiled by the board was not included in the transcript,  “the
evidence must be reconstructed on judicial review through  the  introduction
of the same exhibits, the same testimony  of  the  same  witnesses,  or  the
testimony of the hearing officer.”  State Bd. of Tax Comm’rs v. Gatling  Gun
Club, Inc., 420 N.E.2d 1324, 1329 (Ind. Ct. App. 1981).
[9] See Ind. Code Ann. § 6-1.1-15-5(b) (West Supp. 2001)(effective  Jan.  1,
2002).
[10] The Garcias also claim that the “A + 6” grade violated Indiana Code §
4-22-2-19.1.  (Appellees’ Br. at 11.)  The statute provides that it is
unlawful for a state agency to “retroactively apply a change in the
agency’s interpretation of a . . . regulation . . . if that change
increases a taxpayer’s liability.”  Ind. Code Ann. § 4-22-2-19.1 (West
1998).  As we discuss below, because the Garcias’ home was of such high
quality, the State Board had to extrapolate from its existing guidelines,
not change an interpretation, to grade the dwelling.  The statute is
inapplicable in this case.
[11] The State Board’s regulations governing intermediate grading say:

      Dwellings sometimes fall in between the major classifications,  or  at
      intermediate grade levels.  A method  of  interpolation  is  therefore
      built into the system whereby intermediate grade levels are  indicated
      by suffixing  the  letter  symbol  (“A”  through  “E”)  of  the  major
      classification with one of the following.


      +/-2 to indicate that the grade falls  halfway  between  the  assigned
      grade classification and the grade immediately above or below it.


           Example:  a grade of “C + 2”  indicates  that  the  quality  and
           design grade classification is estimated to fall halfway between
           “C” and “B” (average to good construction).


      +/-1 to indicate that the grade falls  slightly  above  or  below  the
      assigned grade classification (or at a point approximately 25% of  the
      interval between the  assigned  grade  classification  and  the  grade
      immediately above or below it).


           Example:  a grade of “C + 1”  indicates  that  the  quality  and
           design grade classification is estimated to be  slightly  better
           than average or approximately halfway between a “C” grade and  a
           “C + 2” grade.


      Grades that fall below “E” (which represents  a  factor  of  40%)  are
      indicated by “-1” through “-4” (each of which represents  a  reduction
      of the factor by 10%, so that “E – 4” equals a factor of 0%).


      Grades that fall above “A” (which represents a  factor  of  160%)  are
      indicated by “+1” through “+10” (each of which represents an  increase
      of the factor by 20%, so that “A +  10”  equals  a  factor  of  360%).
      Grade “A + 4” may be designated “AA”, and grade “A + 10” may  also  be
      designated as “AAA”.

50 IAC 2.1-3-4(f) (1992).
[12] For instance, an “A” grade dwelling is described as having general
characteristics such as high grade plumbing fixtures, high quality
cabinets, hardwood or high quality carpet, and outstanding architectural
style.  50 IAC 2.1-3-2(b) (1992).
[13] Items not assessed included landscaping, fill dirt, extra concrete, a
fence, and a security system totaling $228,332.  (Joint Exh. 50 at 8.)  The
items separately assessed included the pool house, tennis court, tennis
pavilion, tool shed, pool, and spa, with a total value of $487,534.  (Id.
at 9.)
[14] The consumer price index deflator  was  based  on  the  consumer  price
index from the Bureau of Labor Statistics.  (Id.)
[15] The Garcias argue that the State Board’s use of  consumer  price  index
data and an actual construction cost multiplier violate due process  because
they did not have an opportunity to rebut the figures.  (Appellees’  Br.  at
15.)  We disagree.  Due process requirements  can  be  adequately  protected
“by procedures imposed after the government  deprivation  acts  against  the
property.”  Clifft v. Ind. Dept. of  State  Revenue,  660  N.E.2d  310,  318
(Ind. 1995)(emphasis  in  original)(citation  omitted).   “[W]here  property
rights are involved, mere postponement of the opportunity  to  be  heard  is
not a  denial  of  due  process  if  the  opportunity  ultimately  given  is
adequate.”  Id. (citing  Commissioner  v.  Shapiro,  424  U.S.  614,  631-32
(1976)).  While the Garcias have argued to  both  this  Court  and  the  Tax
Court that  they  have  had  no  opportunity  to  rebut  the  State  Board’s
evidence, they have not presented alternative numbers  or  demonstrated  how
the State Board’s calculations were  wrong.   (See  Joint  Exh.  51  at  40;
Appellees’ Br.  at  15.)   Conclusory  assertions  that  the  State  Board’s
formula was erroneous are insufficient to  meet  the  taxpayers’  burden  of
demonstrating that the final determination is invalid.   See  State  Bd.  of
Tax Comm’rs v. Indianapolis Racquet Club, Inc., 743 N.E.2d  247,  252  (Ind.
2001) (citations omitted).

[16] The Garcias argue at length in their brief that “most of the  homes  in
the Garcias’ neighborhood were of comparable quality to the Garcias’  home.”
 (Appellees’ Br. at 18.)  However, the  assessments  of  nearby  properties,
which the Garcias cite, lead us to a different conclusion.  (See  Appellees’
App. at 21.)  The six  neighbors  the  Garcias  reference  received  initial
assessments ranging from “A + 3” (220 percent) to “A” (160 percent).   (Id.)
 The County and State Boards lowered these assessments to between  “A”  (160
percent) and “B + 2” (140 percent).  (Id.)  The Garcias’ initial  assessment
of “A + 10” (360 percent) was upheld on review by  the  County  Board,  then
lowered by the State Board to “A +  6”  (280  percent).   Before  and  after
review, the Garcias’ home was viewed as a higher quality property.
     The Garcias also introduced the  testimony  of  their  home’s  builder,
James Rans, who stated that the Garcias’ neighbors’ homes were of the  “same
quality,” except that the Garcias’ home was “bigger.”  (Id. at  56.)   After
Rans testified that he had built several of the Garcias’  neighbors’  homes,
the State Board hearing officer  requested  that  the  Garcias  provide  any
available construction cost data  on  a  particular  neighborhood  property.
(Id. at 80-82,  92.)   The  Garcias  failed  to  provide  this  information.
(Joint Exh. 51 at 18.)
[17] The Board’s latitude in carrying out its responsibilities is not, of
course, unlimited.  See, e.g., State Board of Tax Commissioners v. New
Castle Lodge #147, Loyal Order of Moose, Inc., No. 49S10-0011-TA-720, April
12, 2002, where the Board repeatedly applied an incorrect exemption
standard to the fraternal lodge, then switched focus mid-stream and argued
that the lodge did not meet the “predominate use” standard for partial
property tax exemption.  We remanded for reconsideration of the exemption
allowed.
     Here, in contrast, the Garcias built a home more luxurious than any
“comparables” pictured in the Board’s assessment manual.  The Board
extrapolated from existing standards to assess the home at an “A + 6” grade
as contemplated by Board regulations and allowed the taxpayer a reasonable
opportunity to respond to its assessment methodology.  This was an
appropriate exercise of the Board’s discretion.