ATTORNEY FOR PETITIONER: ATTORNEY FOR RESPONDENT:

BETH H. HENKEL BRADLEY D. HASLER

LAW OFFICE OF BETH HENKEL LLC DENTONS BINGHAM GREENEBAUM 

Indianapolis, IN LLP

Indianapolis, IN

IN THE

INDIANA TAX COURT

ELKHART COUNTY ASSESSOR, )

)

Petitioner, )

)

v. ) Cause No. 20T-TA-00003

) 

E R CARPENTER CO., INC., )

)

Respondent. )

ON APPEAL FROM A FINAL DETERMINATION

OF THE INDIANA BOARD OF TAX REVIEW

FOR PUBLICATION

January 12, 2021

WENTWORTH, J.

The Elkhart County Assessor has appealed the Indiana Board of Tax Review’s 

final determination that established the values of E R Carpenter Co., Inc.’s real property 

for the 2012, 2015, 2016, and 2017 tax years.1 Specifically, the Assessor claims that the 

Indiana Board erred by applying excess office space adjustments to the valuations of 

Carpenter’s manufacturing facility. Upon review, the Court reverses the Indiana Board’s 

1

 Portions of the administrative record have been designated as confidential. Consequently, this 

opinion will only provide the information necessary for the reader to understand its disposition of 

the issues presented. See IND. ST. ACCESS RULE 9(A)(2)(d) (2021).
2

final determination.

FACTS AND PROCEDURAL HISTORY

Carpenter, the “world’s largest manufacturer of comfort cushion products,” owns 

three contiguous parcels of land totaling 43.25 acres in Elkhart, Indiana. (See Cert. 

Admin. R. at 454, 1547.) An 853,000 square foot manufacturing facility built in phases 

between 1982 and 2003, a 6,400 square foot truck service building constructed in 1985, 

and various other improvements (e.g., utility sheds, fencing, paving, and other buildings) 

are situated on the land. (See Cert. Admin. R. 454, 596-600.)

Believing the assessed values of two of its three parcels were too high, Carpenter 

sought review with the Elkhart County Property Tax Assessment Board of Appeals and 

then with the Indiana Board. (See, e.g., Cert. Admin. R. at 1-6, 11-12.) Carpenter did not 

appeal the assessment of its parcel with 9.83 acres (“Parcel 3”). (See, e.g., Cert. Admin. 

R. at 603-04, 1098, 1138.) It claimed, however, that its other two parcels were 

overassessed for the 2012, 2015, and 2016 tax years and one was also overassessed 

for the 2017 tax year. (See, e.g., Cert. Admin. R. at 11-12, 23, 40, 64.) The assessments 

of the appealed parcels totaled $17,514,200 for 2012, $18,056,100 for 2015, $17,020,400 

for 2016, and $10,543,800 for 2017. (See Cert. Admin. R. at 13-17, 45-49, 60-63, 81-82, 

115-16.) 

On September 12, 2018, consistent with the parties’ agreement, the Indiana Board 

issued an appeal management plan that limited the administrative hearing on Carpenter’s 

appeals to determining the values of the parcels for the 2012 and 2016 tax years. (Cert. 

Admin. R. at 157, 161.) The Indiana Board explained that the parcels’ 2015 and 2017 

values would be determined based on the parties’ pre-determined formula. (Cert. Admin. 
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R. at 157.) 

In January of 2019, the Indiana Board conducted the hearing on Carpenter’s 

appeals. Although the parties could not agree on the value of the parcels, they did agree 

that Carpenter’s three parcels formed, and should be valued as, one economic unit that

then would be adjusted to remove the value of Parcel 3 that was not under appeal. (See

Cert. Admin. R. at 1301, 1554-55.) Accordingly, the parties presented appraisals that 

valued all three parcels as one for the 2012 and 2016 tax years. (Cert. Admin. R. at 228-

834.) Carpenter’s appraisals used the cost approach and the sales comparison 

approach, but not the income approach to estimate value. (See, e.g., Cert. Admin. R. at 

240-41, 328-29.) The Assessor’s appraisals also used those same two methodologies 

for 2012, but used all three appraisal methodologies for 2016. (See, e.g., Cert. Admin. 

R. at 428, 653.) The Indiana Board ultimately rejected both parties’ sales comparison 

approach valuations and the Assessor’s income approach valuation, finding that they 

lacked probative value. (Cert. Admin. R. at 1261-62 ¶¶ 92-94.) Neither party has 

challenged those findings on appeal.

Carpenter’s Cost Approach Valuations

Carpenter’s cost approach valuations, prepared by Sara Coers, a certified 

appraiser and member of the Appraisal Institute (MAI), “estimate[d] the value of the land 

as if vacant and then add[ed] the depreciated cost new of the improvements to arrive at 

a total estimate of value.” (See, e.g., Cert. Admin. R. at 399-400.) See also 2011 REAL 

PROPERTY ASSESSMENT MANUAL (incorporated by reference at 50 IND. ADMIN. CODE 2.4-1-

2 (2011)) at 2. To value the manufacturing facility, Coers used Marshall Valuation Service 

(“MVS”) cost schedules to determine its replacement cost for each year. (See, e.g., Cert. 
4

Admin. R. at 284, 1321-22.) Coers observed that if she had used the “industrials/light 

manufacturing” cost schedule (the “Manufacturing Schedule”), the value of Carpenter’s 

manufacturing facility would have reflected built-in costs of 4% to 12% of finished office 

space even though it actually only contained 1% of finished office space. (See, e.g., Cert. 

Admin. R. at 372, 1031, 1044, 1322-23.) Thus, Coers believed that using the 

Manufacturing Schedule would overstate the value of Carpenter’s manufacturing facility 

by millions of dollars because finished office space costs more than industrial shell square 

footage. (See Cert. Admin. R. at 1322-23, 1448-49.) (See also Cert. Admin. R. at 1114-

15, 1180.) 

Coers therefore estimated replacement costs using the MVS alternate calculator 

method, beginning with the “light industrial/warehouse shell building” cost schedule (the 

“Warehouse Shell Schedule”) to “price out the [facility] as an industrial shell [without] any 

office space” and then using the “industrial interior office space” cost schedule (the “Office

Space Schedule”) to add in costs for “the office finish to the exact square footage[.]” (See,

e.g., Cert. Admin. R. at 372-74, 1062, 1065, 1321-24.) For the 2012 tax year, Coers 

concluded to a total value for all three parcels of $12,700,000, and after subtracting the 

$220,000 value of Parcel 3, arrived at a final value for the two appealed parcels of 

$12,480,000. (See Cert. Admin. R. at 289, 1319-38.) For the 2016 tax year, Coers 

concluded to a total value for all three parcels of $15,220,000, and after subtracting the 

$280,000 value of Parcel 3, arrived at a final value for the two appealed parcels of 

$14,940,000. (See Cert. Admin. R. at 377, 1363-69.)

The Assessor’s Cost Approach Valuations

The Assessor’s cost approach valuations were prepared by Michael C. Lady, a 
5

certified general appraiser and real estate broker, and J. David Hall, a certified general 

appraiser. (See, e.g., Cert. Admin. R. at 424-26, 583-85.) Hall and Lady, unlike Coers, 

used the Manufacturing Schedule to estimate the value of Carpenter’s manufacturing 

facility because the property was used for manufacturing purposes, not primarily for 

storage. (See Cert. Admin. R. at 1031, 1044, 1458-60, 1563.) In addition, Hall testified 

that the inherent construction differences between manufacturing facilities and industrial 

warehouse shells (e.g., the amount of insulation, the weight of concrete slabs, and the 

need for electrical power) supported the use of the Manufacturing Schedule. (See Cert. 

Admin. R. at 1459-60.) For purposes of the cost approach, the appraisal reports valued 

all three parcels at $17,310,000 for the 2012 tax year and $16,550,000 for the 2016 tax 

year. (See Cert. Admin. R. at 433, 435, 771.) In addition, knowing that Parcel 3 was not 

under appeal and would be excluded, the appraisers developed a value for Parcel 3 in 

the amount of $241,800 for 2012 and $250,000 for the 2016 tax year. (See Cert. Admin. 

R. at 841, 1651-52, 1749-50.)

The Indiana Board’s Final Determination

The Indiana Board issued its final determination on December 9, 2019. (See Cert. 

Admin. R. at 1239-66.) Specifically, it found the Assessor’s cost approach valuations

were more credible than Carpenter’s cost approach valuations. (See Cert. Admin. R at 

1262-64 ¶¶ 97-100.) Notwithstanding, the Indiana Board concluded that the Assessor’s 

estimates overvalued the manufacturing facility by failing to adjust for its “atypical” office 

space. (See Cert. Admin. R. at 1264-65 ¶ 101.) As a result, the Indiana Board deducted 

from the Assessor’s total building costs the costs attributable to the amount of office space 

included in the Manufacturing Schedule that exceeded the costs for Carpenter’s actual 
6

amount of office space (i.e., the excess office space adjustments). (See Cert. Admin. R. 

at 1264-65 ¶ 101.) 

The Indiana Board did not make an additional adjustment for the values for Parcel 

3, stating that it “declines to make an allocation for [Parcel 3, which is] not on appeal, but 

orders that the combined assessed values of the three parcels shall not exceed the values 

concluded in this determination.” (Cert. Admin. R. at 1264-65 ¶¶ 101-04.) Accordingly, 

after applying the pre-determined formula to its new 2016 estimate, the Indiana Board 

concluded that the market value-in-use of the three parcels together must not exceed 

$16,153,610 for 2012, $14,966,585 for 2015, $15,047,747 for 2016, and $15,423,941 for 

2017. (Cert. Admin. R. at 1264-65 ¶¶ 101-04.)

On January 22, 2020, the Assessor initiated this original tax appeal. The Court 

heard the parties’ oral arguments remotely on July 16, 2020. Additional facts will be 

supplied when necessary.

STANDARD OF REVIEW

The party seeking to overturn an Indiana Board final determination bears the 

burden of demonstrating its invalidity. CVS Corp. v. Searcy, 137 N.E.3d 1053, 1055 (Ind. 

Tax Ct. 2019). Accordingly, the Assessor must demonstrate to the Court that the Indiana 

Board’s final determination in this matter is arbitrary, capricious, an abuse of discretion, 

or otherwise not in accordance with law; contrary to constitutional right, power, privilege, 

or immunity; in excess of or short of statutory jurisdiction, authority, or limitations; without 

observance of the procedure required by law; or unsupported by substantial or reliable 

evidence. See IND. CODE § 33-26-6-6(e)(1)-(5) (2021).
7

LAW AND ANALYSIS

On appeal, the Assessor claims that the Indiana Board’s final determination must 

be reversed because its adjustments for excess office space are arbitrary and capricious 

and unsupported by substantial evidence.2 (See Pet’r Br. at 14, 16-19; Oral Arg. Tr. at 

6.) The Assessor maintains that the values of the appealed parcels must be consistent 

with the only probative evidence in the record (i.e., her cost approach valuations and the 

parties’ pre-determined formula) that valued the parcels at $17,310,000 for 2012, 

$16,493,730 for 2015, $16,550,000 for 2016, and $16,963,750 for 2017. (See Pet’r Br. 

at 19; Oral Arg. Tr. at 47-53.)

Carpenter, on the other hand, responds that the Indiana Board’s adjustments for 

excess office space are reasonable and supported by the evidence because the 

Assessor’s cost approach valuations inflated the value of its manufacturing facility by 

including the value of more office space than it actually had. (See Resp’t Br. at 4, 7-9.) 

Moreover, Carpenter contends that even if the Court finds the Indiana Board erred by 

applying its excess office space adjustments, it must still subtract the Assessor’s values

for Parcel 3 from the combined valuations to establish the correct values for the two 

appealed parcels. (See Resp’t Br. at 14-17; Oral Arg. Tr. at 44-47.)

I. The Excess Office Space Adjustment

The Assessor challenges the Indiana Board’s finding that replacement costs 

determined using the Manufacturing Schedule must be adjusted to address the “‘impact 

of [Carpenter’s manufacturing facility’s] small office space.’” (See Pet’r Br. at 16 (citation 

2

 The Assessor also claims that the Indiana Board made a math error in applying the excess 

office space adjustments. (See Pet’r Br. at 19-20.) The Court does not need to address this 

additional claim, however, given the disposition of the case. 
8

omitted).) In its final determination, the Indiana Board explained that it removed the costs

attributable to the amount of office space included in the Manufacturing Schedule that 

exceeded Carpenter’s actual amount of office space: 

The Board notes that under the MVS schedules the “costs listed are 

actually midpoints of cost ranges.” At a range of 4%-12% for office 

space, the midpoint is 8%. Because the [manufacturing facility’s] 

actual office space is 1%, Hall’s replacement cost must be adjusted 

to remove the 7% excess office space contemplated in the 

[Manufacturing Schedule]. Fortunately, the cost of the excess office 

space can be easily calculated by applying Coers’ office base costs 

[from the Office Space Schedule] to the square footage equal to 7% 

of the [manufacturing facility’s] total square footage.

(Cert. Admin. R. at 1264-65 ¶ 101 (citation omitted).) Accordingly, the Assessor’s 

challenge hinges on whether the evidence shows that the Manufacturing Schedule’s

replacement costs require an excess office space adjustment to adequately value

Carpenter’s manufacturing facility that has only 1% of finished office space rather than 

8% of finished office space.

The Indiana Board used the MVS cost schedules to calculate its excess office 

space adjustments, but it failed to identify the actual origin of the adjustment. 

Furthermore, none of the tendered MVS evidence suggests or recognizes an adjustment 

to replacement costs when the range of finished office space is greater in the

Manufacturing Schedule than the actual amount of a property’s finished office space. 

(See Cert. Admin. R. at 1031-87; Confd’l Cert. Admin. R. at 1085-86.) In contrast, the 

MVS evidence explicitly provides adjustments for other items not represented in the 

Manufacturing Schedule. (See, e.g., Cert. Admin. R. at 1044 (indicating, among other 

things, that costs for sprinklers must be added and costs for elevators must be deducted 

for buildings without elevators for purposes of the Manufacturing Schedule).) Likewise, 
9

the MVS evidence explains that when “[q]ualities [] vary in buildings which are structurally 

similar, by reason of the interior finish[,] . . . [o]nly a thorough inspection by the appraiser 

or estimator of all items affecting quality, and the use of his experience or judgment, will 

give [the] correct [valuation] answers” for identical buildings with differing interior finishes. 

(See Cert. Admin. R. at 1033.) Here, comparatively, the MVS evidence does not 

authorize any adjustment for atypical office space as it does for sprinklers and elevators, 

and the Indiana Board cannot make adjustments for different interior finishes because the 

record does not indicate that it inspected the property or that it has the necessary authority 

to appraise property as the MVS directs. (See, e.g., Cert. Admin. R. at 458, 1239-66.) 

Furthermore, the Manufacturing Schedule includes costs for “[a]n average amount 

of office space commensurate with the quality of the building[,]” typically between 4% and 

12% of the total square footage. (See Cert. Admin. R. at 1031.) Coupled with the 

absence of an explicit excess office space adjustment, the Manufacturing Schedule’s 

incorporation of average costs as a range rather than as exact amounts reasonably 

indicates wide applicability, not a mandate that manufacturing buildings must contain a 

precise amount of finished office space. (See Cert. Admin. R. at 1031-32.) 

Pulling the band-aid off fully, the Indiana Board plucked the 8% midpoint out of the 

range as the benchmark without explaining why it used 8% rather than another 

percentage within the range (e.g., 4% - the lowest percentage in the range) to make its 

excess office space adjustments. (See, e.g., Cert. Admin. R. at 1232-1266.) Moreover, 

there is not even any evidence in the record that refers to, much less supports, any excess 

office space adjustment: not any witness testimony, not any exhibit, not the parties’ post 

hearing briefs, and not any authoritative source. (See, e.g., Cert. Admin. R. at 228-1217, 
10

1267-1812.) Accordingly, the Court holds that the Indiana Board’s excess office space 

adjustments were unsupported by substantial evidence and are arbitrary and capricious. 

See CVS Corp. (#6698-02) v. Monroe Cnty. Assessor, 83 N.E.3d 1281, 1284 (Ind. Tax 

Ct. 2017) (“A final determination is arbitrary and capricious when there is no basis in the 

record that would lead a reasonable person to the same conclusion”) (citation omitted). 

See also, e.g., Madison Cnty. Assessor v. Sedd Realty Co., 125 N.E.3d 676, 680-81 (Ind. 

Tax Ct. 2019) (holding that the Indiana Board’s failure to explain its rationale for choosing 

a capitalization rate was unsupported by any evidence and therefore was arbitrary and 

capricious).

II. Parcel 3

The Court now turns to Carpenter’s claim that the Indiana Board failed to 

meaningfully deal with the evidence that demonstrated the combined cost approach 

valuations for Carpenter’s three parcels must be reduced by the value of Parcel 3, which

was not appealed. (See Resp’t Br. at 14-17.) Carpenter explains that this reduction is 

necessary to conform to the record evidence. (See, e.g., Oral Arg. Tr. at 45-47 (stating 

that the Assessor seeks to have her appraisers’ cost approach valuations followed “lock, 

stock and barrel,” which assumed the removal of the value for Parcel 3).) 

The Assessor counters that Carpenter has waived this claim by failing to file its 

own petition for review on the issue.3 (See Pet’r Reply Br. at 13-16.) Moreover, the 

Assessor contends that requiring the Indiana Board to deduct the values for Parcel 3 is 

3 In addition, the Assessor made two additional conclusory arguments: 1) that any error for failure 

to make an adjustment for the value of Parcel 3 is de minimis and 2) that the Court should not 

substitute its judgment regarding the value of Parcel 3 for that of the Indiana Board. (See Pet’r 

Reply Br. at 16-17.) The Court will not consider the naked de minimis claim; moreover, the Court 

does not substitute its judgment for that of the Indiana Board because it remands for the Indiana 

Board to weigh the evidence and reach a conclusion on this issue. See infra pp. 11-12.
11

unnecessary because it instructed the parties to make appropriate allocations. (See Oral 

Arg. Tr. at 47-53.) The Assessor’s contentions are not persuasive for two reasons. 

First, Carpenter did not waive the issue regarding Parcel 3 by raising it in its 

response brief because it was raised in opposition to the result sought by the Assessor in 

her original tax appeal. Here, the Assessor asked the Court to value Carpenter’s property 

consistent with her appraisers’ cost approach valuations, (see Pet’r Br. at 19), and 

Carpenter responded with its reasons why the Assessor should not prevail. (See, e.g.,

Resp’t Br. at 14-17.) Cf. also, e.g., Ind. Trial Rules 12-13 (permitting the filing of defenses, 

counterclaims, and cross-claims in responsive pleadings); Ind. Tax Court Rule 1

(incorporating the Indiana Rules of Trial Procedure unless they are clearly inconsistent 

with the Tax Court Rules); Ind. Appellate Rule 9(D) (allowing cross-appeals to be raised 

in an appellee’s brief). Accordingly, the Court finds that Carpenter did not waive this issue 

on appeal. 

Second, although the Assessor argues that the Indiana Board meaningfully dealt

with the evidence regarding the removal of values allocated to Parcel 3 by instructing the 

parties to make the appropriate allocations, (see Oral Arg. Tr. at 47-53), the certified 

administrative record shows that it did not. The final determination stated that “[t]he Board 

declines to make an allocation for the parcel not on appeal, but orders that the combined 

assessed values of the three parcels shall not exceed the values concluded in this 

determination.” (Cert. Admin. R. at 1265 ¶103.) Nonetheless, during the Indiana Board 

proceedings, both parties’ appraisers explained how they valued Parcel 3 and testified 

that those values should be subtracted from the final combined valuations of Carpenter’s 

property. (See, e.g., Cert. Admin. R. at 282-83, 370-71, 841, 1319-21,1651-53.) 
12

As trier of fact, the Indiana Board is required to assign relevance and weight to the 

evidence before it. See Sedd Realty, 125 N.E.3d at 680-81. See also, e.g., Stinson v. 

Trimas Fasteners, Inc., 923 N.E.2d 496, 498-99 (Ind. Tax Ct. 2010) (explaining that the 

Indiana Board is the finder of fact and consequently must weigh the evidence). 

Accordingly, the Indiana Board may not simply refuse to consider probative evidence or 

the parties’ related arguments, as it has here, but must deal with both in some meaningful 

way. See Hebron-Vision, LLC v. Porter Cnty. Assessor, 134 N.E.3d 1077, 1085 (Ind. Tax 

Ct. 2019); Clark v. State Bd. of Tax Comm’rs, 694 N.E.2d 1230, 1235 (Ind. Tax Ct. 1998)

(explaining that the failure to consider probative evidence in some meaningful manner is 

arbitrary and capricious); Jackson v. Cigna/Ford Elec. & Refrigeration Corp., 677 N.E.2d 

1098, 1102 (Ind. Ct. App. 1997) (stating the general rule that administrative agencies 

must set out written findings of fact so that on judicial review, courts do not have to 

speculate as to the agency’s reasoning). The Court will not invade the province of the 

Indiana Board as trier of fact, but instead remands the issue for the Indiana Board to 

weigh the evidence and argument that was before it regarding the amount and the impact 

of the value of Parcel 3 in determining the proper valuation of Carpenter’s two appealed 

parcels. 

CONCLUSION

For the foregoing reasons, the Indiana Board’s final determination is REVERSED 

and REMANDED. On remand, the Indiana Board shall weigh the competing evidence 

regarding the value of Parcel 3, adjust the Assessor’s 2012 and 2016 cost approach 

valuations accordingly, and then apply the pre-determined formula to the newly adjusted 

2016 cost approach valuation for purposes of the 2015 and 2017 tax years.