Opinion
A166631
02-01-2024
INJU KIM, Plaintiff and Appellant, v. COUNTY OF SAN MATEO, Defendant and Respondent.
NOT TO BE PUBLISHED
(San Mateo County Super. Ct. No. 18-Civ-06058)
GOLDMAN, J.
Following Plaintiff Inju Kim's purchase of real property in the County of San Mateo (County), the Assessor revalued the property for tax purposes in an amount substantially higher than the purchase price. After the Assessment Appeals Board (Board) denied Kim's application for a changed assessment, Kim filed this action challenging the Board's decision and seeking a property tax refund from the County. On appeal, Kim contends that the judgment entered in favor of the County must be reversed because there is no substantial evidence to support the Board's determination that the fair market value of the property is $675,000, rather than the purchase price of $450,000. We affirm.
Background
In October 2016, Kim purchased the single-family residence at issue in this proceeding (the Property) for $450,000. The Assessor initially overrode the purchase price and assessed the Property at a fair market value of $970,000. After Kim submitted photographs showing that the Property was "in disrepair" and "needed to be updated to meet current standards of habitability," the enrolled value of the Property was adjusted downward to $675,000 to account for the Property's condition as a "fixer upper."
In October 2017, Kim filed an application for changed assessment with the Board, asserting that the purchase price should have been enrolled as the fair market value of the Property. In July 2018, following a hearing during which both parties presented documentary evidence and testimony, the Board found that the Assessor had carried its burden of proving that the enrolled value of $675,000 reflected the fair market value of the Property. The Board explained, "The Assessor submitted a comparable sales analysis using comparable sales of three properties in the same neighborhood of Pacifica as the [Property]. To identify comparable properties, the Assessor selected properties that were similarly classified as 'fixer uppers,' meaning that the improvements were in poor condition at the time of sale but not torn down after sale.... The properties had sales dates ranging from August 10, 2015 through December 15, 2016, and purchase prices ranging from $605,000 to $650,000, all of which far exceed [Kim's] proposed value of $450,000.... To derive the market price of the [Property], the Assessor employed appraiser judgment to consider and make adjustments as necessary to account for differences in site size, time of sale, topography, view, style, condition, improvement size, age and improvement features.... The most significant adjustments were made to account for differences in site size, time of sale, and improvement size.... After accounting for adjustments, the Assessor's comparable sales analysis indicated a market value of $675,000....
"Applicant did not present any valuation methodology in support of a $450,000 valuation. Rather, Applicant's evidence chiefly dealt with the poor condition of the [Property]. Applicant submitted photographs showing a worn exterior, some rotted wood, a rotted beam, a damaged fence, and water damage.... Neither the full extent of this damage, however, nor its location within the house are evident from the photographs. Applicant's agent also testified that Applicant had to pay for repair work on the roof and foundation, as well as a replacement beam.... When questioned by Assessor's counsel, however, Applicant's agent was not able to provide even a ballpark figure for the cost of the repairs needed to render the [Property] in livable condition....
". . . While the Board credits Applicant's evidence that the [Property] required significant repairs, the Board nonetheless finds that a preponderance of the evidence supports the value indicated by the Assessor's comparable sales analysis. Significantly, the Assessor's analysis is based on comparable properties that, just like the [Property], encompassed "fixer upper" houses in poor condition that required significant repairs but were not torn down after purchase. While the specific nature and cost of such repairs may have varied from property to property, nothing in the record indicates that the [Property's] condition was of such a material degree poorer than the comparables so as to warrant significant adjustments to the Assessor's comparative sales analysis."
Thereafter, Kim filed the present tax refund action against the County. Following its review of the administrative record, the trial court upheld the Board's determination.
Discussion
I. Fair Market Value of the Property
"In California all real property . . . is taxable 'in proportion to its full value' unless specifically exempted." (County of Los Angeles v. Raytheon Co. (2008) 159 Cal.App.4th 27, 34; Cal. Const., art. XIII, § 1, subd. (b).) Under Revenue and Taxation Code section 110, subdivision (b) the "the purchase price paid" for real property is "rebuttably presumed" to be the "fair market value" of the property "if the terms of the transaction were negotiated at arms length between a knowledgeable transferor and transferee neither of which could take advantage of the exigencies of the other." To overcome this presumption, the party seeking an alternative valuation must prove "by a preponderance of the evidence" that the fair market value of the property "is significantly more or less than the . . . consideration paid for the property." (Cal. Code Regs., tit. 18, § 2, subd. (b); see also Rev. &Tax. Code, § 110, subd. (b); Dennis v. County of Santa Clara (1989) 215 Cal.App.3d 1019, 1028 ["an arm's length, open market sale for a price that is not influenced by an exigency of either buyer or seller permits the assessor to presume fair market value from the purchase price, but the presumption may nevertheless be rebutted by evidence that the fair market value of the property is otherwise"].)
In estimating the fair market value of real property, an assessor may "consider . . . the price or prices at which the property and comparable properties have recently sold." (Cal. Code Regs., tit. 18, § 3, subd. (a).) "When valuing property by comparison with sales of other properties, in order to be considered comparable, the sales shall be sufficiently near in time to the valuation date, and the properties sold shall be located sufficiently near the property being valued, and shall be sufficiently alike in respect to character, size, situation, usability, zoning, or other legal restriction as to use." (Rev. &Tax. Code, § 402.5.) When using sales of comparable pieces of property, the assessor must "[m]ake such allowances as he deems appropriate for differences between a comparable property at the time of sale and the subject property on the valuation date, in physical attributes of the properties, location of the properties, legally enforceable restrictions on the properties' use, and the income and amenities which the properties are expected to produce." (Cal. Code Regs. tit. 18, § 4 subd. (d).)
The Assessor's duty to assess property at its full value is mandatory. (Simms v. Pope (1990) 218 Cal.App.3d 472, 477.) "In order to perform this duty an assessor may request information and records regarding the property. [Citation.] Where the taxpayer has been accorded the first opportunity to produce the required data, and refuses to do so, 'the assessor is . . . authorized to utilize whatever evidence is available to him.' [Citation.] Where . . . the taxpayer fails to furnish an assessor with an opportunity to gather information necessary to allow the assessor to perform his statutory duty, the assessor is required to 'estimate the value of the property and, based upon this estimate, promptly assess the property.' [Citation.] 'If that evidence is less than the best, the [t]axpayer has no one to blame but himself.... The law then requires only that the assessor act "based upon information in his possession." '" (Ibid., fn. omitted.)
Here, the Board concluded that the purchase price presumption applied but that the Assessor had proven by a preponderance of the evidence based on other comparative sales that the fair market value of the Property was significantly greater than the purchase price. On appeal, Kim does not challenge the Assessor's use of the comparative sales approach to value the Property, but contends there is no substantial evidence that the other properties relied on by the Assessor were in fact comparable to the Property. (See Dennis v. County of Santa Clara, supra, 215 Cal.App.3d 1019, 1026 [in reviewing the Boards' application of a valid valuation method, both the trial court and the appellate court review the administrative record to determine if the findings are supported by substantial evidence].)
Substantial evidence supports the Board's determination that the three properties relied on by the Assessor were comparable. The properties were all similarly sized, single-family homes in the same general condition, located in the same "immediate neighborhood." The appraiser who appeared for the Assessor explained at the hearing before the Board that he used "fixer uppers" for the comparative sales analysis, rather than empty lots or teardowns, because the Property was in "poor condition" but had not been torn down after the purchase. While his description of the comparable properties as "fixer uppers" is not itself substantial evidence that the properties are in a similar state of disrepair, other evidence in the record supports the Board's determination that the properties were sufficiently alike in their condition so that the sale prices of the selected properties "may fairly be considered as shedding light on the value of the property being valued." (Rev. &Tax. Code, § 402.5)
The appraiser explained that he selected the comparable properties after searching the multiple listing service for all single-family homes sold in the immediate neighborhood between June 2015 and January 2017. The results of his search, which are included in the record, show a sales price range from $605,000 to $1,600,000. The comparable properties were three of the four lowest priced sales in that time period. The real estate listings for those properties described the homes as "fixer uppers" and at least one of the properties was listed as for sale "as is."
Contrary to Kim's argument, the Assessor did not ignore the damage to the Property and the significant repairs needed to make it livable. The appraiser explained that he did not make additional adjustments to account for the differing conditions of the properties because they were all in "poor condition." His selection of the least expensive homes sold in the 18 months prior to Kim's purchase reflects a reasonable effort to identify homes in a similarly dilapidated condition as the Property.
Substantial evidence supports the Board's finding that Kim's evidence did not establish that the Property's "condition was of such a material degree poorer than the comparables so as to warrant significant adjustments to the Assessor's comparative sales analysis." Kim described the damage at the Property as "a leaking roof, extensive water damage, mold and debris." He claimed that the home "required re-roofing, new beams, a new kitchen, new bathrooms, floors, [and] dry walls." At the hearing, he claimed the foundation also needed to be "reinforced." However, as the Board noted, the scope of those repairs could not be determined from the photographs submitted and Kim would not quantify the cost of the repairs when asked at the hearing. In addition, although disputed by Kim, the appraiser indicated that he was denied the opportunity to conduct an investigation of the home. The Board reasonably concluded that the Assessor fairly determined the value of the Property with the information that was available to him.
Finally, the Assessor's purported failure to consider other adjustments did not "equate[] to a failure to carry his burden." On appeal, Kim suggests for the first time that the Assessor failed to make necessary adjustments for "the subject property's proximity to Highway 1 vis-a-vis the more desirable locations of the comparable properties" and for the "inflated real estate market at the time of sale." Kim did not, however, raise these issues or request any such adjustments before the Board. The Assessor is not required to address every conceivable adjustment. Rather, the Assessor must explain any specific adjustments he makes to the sales data and address any specific claims raised by the taxpayer regarding other purportedly required adjustments. (Farr v. County of Nevada (2010) 187 Cal.App.4th 669, 686.) The absence of explanation for adjustments not previously raised does not undermine the sufficiency of the comparative sales analysis as proof of the fair market value of the Property.
In sum, substantial evidence supports the Board's determination that the Assessor established by a preponderance of the evidence that the fair market value of the Property was $675,000.
II. Procedural Arguments
Kim asserts several procedural arguments, all of which can be disposed of summarily.
First, Kim faults the Assessor for failing to disclose information regarding the comparable properties prior to the hearing. He argues that the belated disclosure made it "impossible for [him] to prove they were not comparable." Kim, however, despite having been given notice of his right to request an exchange of information in advance of the hearing, did not make any such request. Nor did he object or request a continuance of the hearing on this ground. Accordingly, the matter has been forfeited on appeal.
Kim also contends that he was improperly denied the opportunity to cross-examine the Assessor at the hearing before the Board. Kim's application for changed assessment was submitted on his behalf by Andrew Kim, identified on the form as Kim's attorney, child, and a person affected. A person identified as Andrew Kim (and who indicated he was Kim's son) represented Kim at the hearing. The transcript shows that Andrew Kim was informed at the start of the hearing that he would have the opportunity to "cross-examine" the Assessor. At the conclusion of his presentation, however, despite repeatedly being given the opportunity, he did not ask any questions of the Assessor. In his reply brief, Kim states that his son, Andrew Kim, who represented him at the hearing, is not attorney Andrew Chan Kim, who represented him in the trial court and who is representing him on appeal. He asserts that his son is not an attorney and that neither he nor his son are native English speakers. Although his application to the Board was submitted by an Andrew Kim who identified himself both as the applicant's son and as an attorney, providing the same bar number as the attorney who represents him in this appeal, ultimately it does not matter whether the person Kim chose to represent him at the hearing was an attorney. Kim does not dispute that his representative was told he could cross-examine the Assessor but failed to take advantage of that opportunity.
Finally, Kim suggests that the Board's written decision is inadequate. The Board's written findings of fact should "include all legally relevant subconclusions supportive of its ultimate decision so that a reviewing court is able to trace and adequately examine the Board's mode of analysis." (Farr v. County of Nevada, supra, 187 Cal.App.4th at p. 686, citing Topanga Assn. for a Scenic Community v. County of Los Angeles (1974) 11 Cal.3d 506, 515, 516.) "While it is not necessary for the findings to cover every evidentiary matter, the Board should address specifically its reasoning for accepting or rejecting each issue raised by the parties." (Ibid.) The Board's written findings, set forth more fully above, satisfy this requirement.
Disposition
The judgment is affirmed.
WE CONCUR: STREETER, Acting P. J. SMILEY, J.
Judge of the Superior Court of California, Alameda County, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.