Opinion
No. A-10-1139
09-06-2011
MINDEN COUNTRY CLUB, INC., APPELLANT, v. KEARNEY COUNTY BOARD OF EQUALIZATION, APPELLEE.
Thomas G. Lieske, of Lieske Law Firm, for appellant. Bryan S. McQuay, Deputy Kearney County Attorney, for appellee.
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
MINDEN COUNTRY CLUB V. KEARNEY CTY. BD. OF EQUAL.
NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION
AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).
Appeal from the Tax Equalization and Review Commission. Affirmed.
Thomas G. Lieske, of Lieske Law Firm, for appellant.
Bryan S. McQuay, Deputy Kearney County Attorney, for appellee.
IRWIN, MOORE, and CASSEL, Judges.
CASSEL, Judge.
INTRODUCTION
Minden Country Club, Inc., appeals an order of the Tax Equalization and Review Commission (TERC) concerning the valuation of greens on a golf course. Because evidence of assessed values of other golf courses was not competent evidence of the actual value of Minden Country Club's greens and because the record does not show that the Kearney County Board of Equalization (Board) acted arbitrarily or unreasonably in determining the value, we affirm TERC's decision.
BACKGROUND
Minden Country Club is a nine-hole golf course located on leased land in Kearney County, Nebraska. The land is leased from the Minden Airport Authority. The improvements on the land include a clubhouse, cart sheds, and greens. Greens include tee boxes, fairways, sand traps, cart paths, an irrigation system, and the putting surfaces.
For 2009, the Kearney County assessor valued the improvements on the leased land at $699,840 as a result of a commercial reappraisal. Referee Larry Rexroth spoke with a member of Minden Country Club's board of directors, who requested Rexroth to compare the assessments of golf courses in Franklin, Harlan, and Buffalo Counties. Rexroth's notes stated that Franklin County had a nine-hole golf course assessed at $177,630; that Harlan County does not assess its course; and that Buffalo County did not respond. His notes further stated, "A review of golf course sales in the area indicates a market value of $40,000 per green. Improvements are valued at market value and equalized with similar structures. Change green values to $40,000 9 holes @ 40,000 = 360,000." After a referee hearing, the value was adjusted to $609,835.
Minden Country Club filed a property valuation protest, requesting that the property be valued at $120,435. After the protest was heard, Rexroth investigated further on behalf of the county assessor. According to his notes, "Analysis of recent sales of golf courses in the area indicates the market value of greens at $20,000. The value of other structures would be added at their contributary [sic] market value. The total value of golf courses in the area is in a range of $400,000 to $460,000."
The county assessor recommended that Minden Country Club be valued at $429,840, based upon Rexroth's notes. The Board changed the value to $402,840, in order to "change value of greens to compatibles [sic]." It valued the greens at $17,000 each. Minden Country Club appealed the decision to TERC, alleging that "[t]he value set does not accurately reflect the surrounding value of the real estate as set in the lease with the Airport Authority. Improvements are also to be excluded in determining value."
At the hearing before TERC, Minden Country Club offered an exhibit containing "valuation comparables." Its note for the Franklin Golf Course was that the assessor adds value for greens, but the board of equalization "takes them off to get to value of $170,010." The information for Crooked Creek golf course in Clay Center, Nebraska, showed values for land, buildings and improvements, and personal property in addition to a $91,193 value for "Golf Course." Information from the York County assessor for Sandy Meadows, a nine-hole golf course in York County, shows the replacement cost new less depreciation of the greens to be $100,000. Many of the other purported comparable properties did not show a value attributable solely to greens, but, rather, they showed assessor land values for other golf courses.
Rexroth, a licensed appraiser, created a sales comparison compilation for the appraisal of the property at issue. He used three nine-hole golf courses in his sales comparison and arrived at an estimated value of greens by subtracting from the sales price the value of the land and the value of improvements and then dividing that amount by the number of greens. The first comparable property was the Kearney Elks Lodge golf course, which had a sales price of $460,000; a land value of $102,540; an improvements value of $117,440; and an indicated value of greens of $26,669. The second comparable property, Sandy Meadows golf course, had a sales price of $400,000; a land value of $121,826; an improvements value of $113,800; and an indicated value of greens of $18,264. The last comparable was Craneview golf course, which was located about 10 miles from Minden and had a sales price of $400,000; a land value of $166,136; an improvements value of $27,370; and an indicated value of greens of $22,944. Rexroth valued Minden Country Club's greens at $450,000, which was $50,000 per green. He admitted that the comparable sales of the three courses did not show greens anywhere close to that $50,000 value. He believed his value came from the Marshall & Swift Valuation Service. When asked about his referee inspection form which recommended changing the value of Minden Country Club's greens to $40,000 per green, Rexroth explained that he arrived at that figure by using a sales comparison approach rather than Marshall & Swift. Rexroth also testified about a July 8, 2009, referee inspection form in which he stated that recent sales indicated a value of greens of $20,000. Rexroth testified that for purposes of that value, he only compared sales of nine-hole golf courses in the area.
Rexroth received information from the Franklin County assessor that the Franklin County golf course was assessed at $177,630. When asked why that course was not valued at least at $360,000, Rexroth replied, "From talking to the assessor, it was. But the Board of Equalization in Franklin County lowered it to this figure." The president of the Minden Country Club Board testified that Franklin Country Club put in a brand new green--which he clarified was just the putting surface--3 years ago with volunteer labor and that the materials cost $5,000 to $6,000.
Rexroth did not look at assessed values for golf courses in cities such as Blue Hill, Red Cloud, Ravenna, or Gibbon, Nebraska. Rexroth opined that Craneview golf course, which had a housing development surrounding it, was comparable to the Minden Country Club, which had no housing lots. Rexroth's final recommendation to the Board was to value the greens at $20,000. The Board lowered the value of each green to $17,000. Rexroth testified that included in the greens value is grading, irrigation, landscaping, and sand traps. He testified that greens are not subject to depreciation "[b]ecause the maintenance of them is an ongoing business decision and they do not physically depreciate because they're maintained daily."
Bart Woodward, a licensed and certified general appraiser, reviewed Kearney County's appraisal of Minden Country Club for 2009. He did not have an opinion as to the value of the greens. He testified that Craneview was a new golf course and housing development south of Kearney that had platted lots for sale. He believed Rexroth erred when he testified that Craneview was not platted and was not for sale. Woodward felt that Rexroth's valuation of Craneview was very low and that there should have been value allocated to the housing lots that were for sale because Woodward felt that they had more value than just straight pastureland. According to Woodward, Craneview was not functioning as a golf course at the time of its sale. Woodward testified that the Kearney Elks Lodge could be used as a comparable sale but that allowances needed to be made and that Rexroth did not make any allowances. Woodward testified that Sandy Meadows was not a comparable sale because there was no sale at all--the $400,000 was an asking price. He spoke with the York County assessor about valuing greens and discovered that the assessor "had a unique way of doing it. She called in the owner and they negotiated." Woodward did not believe that Rexroth properly valued the Minden Country Club because Rexroth did not "make any allocation for excess land" and because one of the comparable sales was not a sale at all.
TERC affirmed the Board's valuation. It determined that the records from Franklin County were not "competent evidence of value as they primarily illustrate a difference of opinion between the County Assessor and the County Board." TERC further stated that no evidence had been presented that a comparison of assessed values was "a professionally accepted mass or fee appraisal approach" and that "[t]he weight of authority is that assessed value is not in and of itself direct evidence of actual value."
Minden Country Club timely appeals. Pursuant to authority granted to this court under Neb. Ct. R. App. P. § 2-111(B)(1) (rev. 2008), this case was ordered submitted without oral argument.
ASSIGNMENTS OF ERROR
Minden Country Club assigns, restated, that TERC erred in (1) disregarding evidence of comparable assessed values for purposes of determining whether it presented competent evidence that the Board did not faithfully perform its duties and that the valuation was unreasonable and (2) affirming the Board's decision when evidence showed both that the methods the assessor used for valuation were incorrect and certain properties used were not comparable.
STANDARD OF REVIEW
Appellate courts review decisions rendered by TERC for error appearing on the record. Vandenberg v. Butler County Bd. of Equal., 281 Neb. 437, 796 N.W.2d 580 (2011). When reviewing a judgment for errors appearing on the record, an appellate court's inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable. Id. Questions of law arising during appellate review of TERC decisions are reviewed de novo on the record. Id.
ANALYSIS
Under TERC's standard of review in the appeal from the Board, TERC had to affirm the Board's determination "unless evidence is adduced establishing that the order, decision, determination, or action was unreasonable or arbitrary." Neb. Rev. Stat. § 77-5016(8) (Cum. Supp. 2010). There is a presumption that in making an assessment, a board of equalization has faithfully performed its official duties and has acted upon sufficient competent evidence to justify its action. See Brenner v. Banner Cty. Bd. of Equal., 276 Neb. 275, 753 N.W.2d 802 (2008). That presumption remains until competent evidence to the contrary is presented, and it disappears when there is competent evidence adduced on appeal to the contrary. See id. From that point forward, the reasonableness of the valuation becomes one of fact based upon all the evidence presented. Id.
The taxpayer has the burden of showing such valuation to be unreasonable. See id. To rebut the presumption that the board of equalization properly performed its official duties, the taxpayer must do more than show a mere difference of opinion unless clear and convincing evidence establishes that the valuation placed upon the property when compared with valuations placed upon other similar property is grossly excessive and is the result of a systematic exercise of intentional will or failure of plain duty. See id.
Generally, real property subject to taxation is to be valued at its actual value. See Neb. Rev. Stat. § 77-201(1) (Cum. Supp. 2010). "Actual value may be determined using professionally accepted mass appraisal methods, including, but not limited to, the (1) sales comparison approach using the guidelines in section 77-1371, (2) income approach, and (3) cost approach." Neb. Rev. Stat. § 77-112 (Reissue 2009). The Board used a sales comparison approach while Minden Country Club offered evidence of the assessed values of other golf courses. As TERC pointed out, "[c]omparison of assessed values is not identified in the Nebraska Statutes as an accepted approach for a determination of actual value for purposes of mass appraisal." But such a comparison is relevant to equalization. Equalization is the process of ensuring that all taxable property is placed on the assessment rolls at a uniform percentage of its actual value. Zabawa v. Douglas County Bd. of Equal., 17 Neb. App. 221, 757 N.W.2d 522 (2008). If a taxpayer's property is assessed in excess of the value at which others are taxed, then the taxpayer has a right to relief. Id.
There are at least two problems with the comparable properties offered by Minden Country Club. First, the value attributed solely to the greens cannot be determined for many of the properties. Instead, Minden Country Club appeared to rely on the total assessed value of the golf courses. And as TERC observed for the properties that did have a value attributable to greens, Minden Country Club did not adduce evidence of the length of the holes or the age of the course--information which would be needed in order to adjust for differences between Minden Country Club and the comparables. Second, most of the comparables were from outside of Kearney County. The purpose of equalization of assessments is to bring the assessment of different parts of a taxing district to the same relative standard, so that no one of the parts may be compelled to pay a disproportionate part of the tax. Brenner v. Banner Cty. Bd. of Equal., 276 Neb. 275, 753 N.W.2d 802 (2008). Values of properties located outside of Minden Country Club's taxing district are not pertinent to the equalization of assessments within the district. Accordingly, TERC did not err in disregarding evidence of assessed values of properties outside the taxing district.
Minden Country Club also argues that the Kearney County assessor used incorrect methods and that the assessor used properties that were not comparable. Woodward testified that contributory value should be assigned to a golf course with a surrounding housing development. Thus, Minden Country Club argues that the assessor should have subtracted some value from the value of greens for Kearney Elks Club, making the value of its greens lower. Minden Country Club further contends that the value of the housing lots at Craneview was a factor in the sales price and should have been subtracted out before determining the value attributable for greens. Minden Country Club also asserts that Kearney Elks Club is not comparable because it is composed of 18 fewer acres and has only par three holes. Further, the purported sales price of Sandy Meadows was actually the asking price.
However, as stated above, Minden Country Club cannot meet its burden of persuading TERC that the Board's valuation of its property was arbitrary or unreasonable by showing a mere difference of opinion. See Brenner v. Banner Cty. Bd. of Equal., supra. Nor can it meet its burden by questioning the assessor's valuation methods. In Beynon v. Board of Equalization, 213 Neb. 488, 329 N.W.2d 857 (1983), the taxpayer presented no evidence of the actual value of her land and only produced evidence that was aimed at discrediting the valuation methods utilized by the county assessor. The Nebraska Supreme Court determined that the taxpayer failed to meet the burden of proving that value of the property was not fairly and proportionately equalized or that valuation placed upon the property for tax purposes was unreasonable or arbitrary. Similarly, Minden Country Club adduced evidence to challenge the valuation method used by Rexroth, but did not produce evidence of the actual value of its property under "professionally accepted mass appraisal methods." See § 77-112.
We conclude that Minden Country Club's evidence did not clearly and convincingly establish that the Board's decision was unreasonable or arbitrary. Thus, we cannot say that TERC erred in determining that Minden Country Club failed to overcome the presumption that the Board had faithfully performed its official duties in making an assessment and had acted upon sufficient competent evidence to justify its action.
CONCLUSION
We affirm TERC's decision, which upheld the valuation of the Board, because it was supported by competent evidence and was not arbitrary, capricious, or unreasonable.
AFFIRMED.