BEFORE THE STATE BOARD OF EQUALIZATION

FOR THE STATE OF WYOMING

IN THE MATTER OF THE APPEAL OF )

RJ LAND AND DEVELOPMENT, INC. FROM )

A DECISION OF THE WASHAKIE COUNTY ) Docket No. 2003-104

BOARD OF EQUALIZATION - 2003 )

PROPERTY VALUATION )

DECISION AND ORDER

APPEARANCES

Nicholas G. Healey, of Dray, Thomson & Dyekman, P. C., for Petitioner RJ Land and Development, Inc. (Petitioner)

Kathy Treanor, Washakie County Assessor (Assessor).

DIGEST

This is an appeal from a decision by the Washakie County Board of Equalization (County Board). The State Board of Equalization (State Board), comprised of Roberta A. Coates, Chairman, Alan B. Minier, Vice-Chairman and Thomas R. Satterfield, Board Member, considered the County Board hearing record, County Board decision, briefs filed pursuant to a Amended Briefing Order (Locally Assessed Property) dated January 23, 2004, and oral argument on April 21, 2004. On July 30, 2003, the Petitioner appealed a decision issued by the County Board.

PROCEEDINGS BEFORE THE COUNTY BOARD

The County Board conducted a hearing on July 2, 2003. Warren A. Bower testified on behalf of the Petitioner, and the Assessor, Kathy Treanor, testified on her own behalf. Supporting documents from both parties were admitted into the record.

The County Board concluded that the Petitioner had not presented sufficient credible evidence to overcome the presumption that the Assessor’s valuation was valid, particularly where the Assessor has valued the property according to the Department of Revenue’s rules and regulations, using the CAMA system. The County Board upheld the Assessor’s assessment of the property.

JURISDICTION

The State Board of Equalization is required to “hear appeals from county boards of equalization.” Wyo. Stat. Ann. §39-11-102.1(c). A timely appeal from the County Board decision was filed with the State Board. Rules, Wyoming State Board of Equalization, Chapter 3, §2.

STANDARD OF REVIEW

When the State Board hears appeals from a county board, it acts as an intermediate level of appellate review. Laramie County Board of Equalization v. Wyoming State Board of Equalization, 915 P.2d 1184, 1188 (Wyo. 1996); Union Pacific Railroad Company v. Wyoming State Board of Equalization, 802 P.2d 856, 859 (Wyo. 1990). In its appellate capacity, the State Board treats a county board as the finder of fact. Id. In contrast, the State Board acts as the finder of fact when it hears contested cases on appeal from final decisions of the Wyoming Department of Revenue (Department). Wyo. Stat. Ann. §39-11-102.1(c). This sharp distinction in roles is reflected in the State Board Rules governing the two different types of proceedings. Compare Rules, Wyoming State Board of Equalization, Chapter 2 and Rules, Wyoming State Board of Equalization, Chapter 3. Statutory language first adopted in 1995, when the Board of Equalization and the Department were reorganized into separate entities, does not express the distinction between the State Board’s appellate and de novo capacities with the same clarity as our long-standing Rules. 1995 Wyo. Sess. Laws, Chapter 209, §1; Wyo. Stat. Ann. §39-1-304(a).

By Rule, the State Board’s standards for review of a county board’s decision are nearly identical to the Wyoming Administrative Procedure Act standards which a district court must apply to hold unlawful and set aside agency action, findings of fact, and conclusions of law. Wyo. Stat. Ann. §16-3-114(c)(ii). However, unlike a district court, the State Board will not rule on claims that a county board has acted “[c]ontrary to constitutional right, power, privilege or immunity.” Wyo. Stat. Ann. §16-1-114(c)(ii)(B). The State Board’s review is limited to a determination of whether a county board action is:

(a) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law;

(b) In excess of statutory jurisdiction, authority or limitations or lacking statutory right;

(d) Unsupported by substantial evidence.

Rules, Wyoming State Board of Equalization, Chapter 3, §9.

The Supreme Court in Laramie County Board of Equalization v. Wyoming State Board of Equalization, 915 P.2d 1184 Wyo. P. 1189 (1996), agreed that the State Board’s role is the following:

We examine the entire record to determine if there is substantial evidence to support an agency’s [county board’s] findings. If the agency’s [county board’s] decision is supported by substantial evidence, we cannot properly substitute our judgement for that of the agency [county board], and must uphold the findings on appeal. Substantial evidence is relevant evidence which a reasonable mind might accept in support of the conclusions of the agency. It is more than a scintilla of evidence.

ISSUES

Petitioner contends that the County Board’s decision is unsupported by substantial evidence, as well as arbitrary, capricious and contrary to law, for two reasons:

A. The fair market value determined by the County Assessor does not comport with the statutory requirement that the property’s fair market value reflect what a well-informed buyer would pay to purchase the Property; and

B. A 40% discount applied by the County Assessor was arbitrary and contrary to law.

We will uphold the decision of the County Board.

FACTS PRESENTED TO THE COUNTY BOARD

1. Petitioner RJ Land Development, Inc., owns 18 unimproved lots located in the City of Worland, Washakie County, Wyoming. [Hearing Tape]. The lots are located in a platted subdivision. [Hearing Tape; Petitioner’s Exhibit 2].

2. Warren A. Bower is the President of RJ Land Development, Inc., and appeared on its behalf at the hearing of the County Board of Equalization. [Hearing Tape]. Assessor, Kathy Treanor, appeared on behalf of herself, with the assistance of County Attorney G. Albert Sinn. [County Board Record, p. 11].

3. Prior to 2003, the Washakie County Assessor valued the 18 lots as agricultural land. The lots are located next to a large farming operation. [Hearing Tape; Exhibit 1].

4. Effective January 1, 2003, a platted subdivision could no longer be classified as agricultural land. Wyo. Stat. Ann. §39-13-103(b)(x). As a courtesy, the Assessor notified potentially affected taxpayers of this change. [Hearing Tape; Exhibit F].

5. The lots sit adjacent to currently improved residential lots of similar size. [Hearing Tape]. The lots are bordered by a primary county road, and could be provided utilities via the county road and other improved lots. [Hearing Tape]. The Assessor viewed the highest and best use of the property as being residential. [Hearing Tape; Exhibit 6].

6. The Assessor acknowledges that she had no comparable sales of unimproved vacant lots. [Hearing Tape]. She used a CAMA model to determine the value of the lots, but applied an adjustment because the lots were unimproved. [Hearing tape]. The Assessor used the same CAMA approach to value other platted subdivisions in Washakie County, although without the adjustment unique to the Petitioner. [Hearing Tape].

7. As a part of its general attack on the Assessor’s valuation, the Petitioner specifically objects to a discount of 40% that the Assessor applied to the CAMA computed value, even though this discount reduced the computed value. The Assessor applied this discount based on guidelines from the Department titled, in pertinent part, “Land Influence Factors & Guidelines.” [Hearing Tape; Exhibit J]. Further, the Assessor applied a factor of 40% that was specifically suggested by the guideline for an “Unimproved Building site with neither public sewer or water available.” [Exhibit J, record page 83, (emphasis in original)].

8. At all times, the Assessor was mindful of the published regulations and guidelines of the Department and State Board of Equalization, as well as the general requirement that sold and unsold property cannot be valued differently. [Hearing Tape; Exhibits G, H, I, J].

9. As a check on her results, the Assessor used data from fifty-four valid improved property sales over the four preceding years to calculate values for unimproved lots in alternative way. She used two established alternative methods, the Allocation Method and the Abstraction Method. [Hearing Tape; Assessor’s Exhibits M, N, O; Petitioner’s Exhibit 6]. She concluded from these alternative value calculations that land values were already somewhat low, but took her results as a further justification for her use of the land influence factor found in the Department’s guidelines. [Hearing Tape; Exhibit J]. The Assessor did not prepare any calculations of the cost to develop the subdivision because she did not view the subject property as land in transition. [Hearing Tape]. There is no dispute that the land had been used the same way for twenty-five years. [Hearing Tape].

10. The Assessor’s valuation of the 18 lots for 2003 was $228,845, a substantial increase from the 2002 valuation of $28,733. [Exhibit D].

11. On behalf of the Petitioner, Mr. Bower stated that no one has offered to buy the property for at least twenty-five years. [Hearing Tape]. However, the record includes no indication that Petitioner has made any effort to solicit buyers. [Hearing Tape].

12. Mr. Bower offered information from a variety of sources, including Marshall Swift guidelines, in support of an argument that the cost to develop the subdivision could not be squared with the Assessor’s valuation. [Hearing Tape; Exhibits 8, 9, 10, 11, 12, 13]. Based on his calculations, Mr. Bower states that the appropriate valuation for all 18 of the lots under a cost approach should be $23,500. [Exhibit 13].

13. Mr. Bower stated that he had declined to vacate the plat due to the value of the investment he had already made in obtaining the plat. [Hearing Tape]. He secured an estimate to show that the cost of staking the lots, submitting a plat and working with the city planning office to secure approval of a plat would be $12,000. [Hearing Tape; Exhibit 15].

14. The Assessor and Mr. Bower sought to secure information from the Department concerning the source of the 40% discount factor. [Hearing Tape; Exhibit 4]. The Department’s response was not detailed. [Exhibit 7]. However, the Department identified the original source of the discount factor as the firm of Cole Layer Trumble. [Exhibit 7]. Mr. Bower, himself a Certified Assessment Evaluator with extensive prior experience as an employee of the Department, volunteered his familiarity with the expertise of Cole Layer Trumble in the field of appraisal. [Exhibit 3; Hearing Tape].

15. Petitioner filed a timely appeal to the County Board of Equalization. [Exhibit A].

16. The Washakie County Board of Equalization heard Petitioner’s appeal on July 2, 2003. [County Board Record, p. 11]. William L. Glanz, John Dent and Terrence D. Wolf were present as County Board Members. [County Board Record, p. 11]. Attorney William R. Shelledy Jr. acted as Hearing Officer. [County Board Record, p. 11].

17. The County Board issued its Findings of Fact, Conclusions of Law and Order on July 30, 2003. [County Board Record, pp.103-107]. The County Board’s Conclusions of Law rested on the well-know presumption in favor of the Assessor’s valuation; the support provided for that presumption by a value reached with the CAMA system; and the Assessor’s general compliance with applicable statutes, rules, and regulations.

DISCUSSION OF APPLICABLE LAW AND PETITIONER’S ISSUES

18. The Wyoming Constitution, Article 15, §11, requires all property “be uniformly assessed for taxation, and the legislature shall prescribe such regulations as shall secure a just valuation of taxation of all property, real and personal.”

Early on, Justice Blume recognized a truth inherent in the area of property valuation: ‘There is no such thing as absolute value. A stone cannot be other than a stone, but one man may give a different valuation to a piece of land than another.’ Bunten v. Rock Springs Grazing Ass’n, 29 Wyo. 461, 475, 215 P. 244, 248 (1923). Accordingly, this court has consistently interpreted Wyo. Const. Art. 15, § 11 to require ‘only a rational method [of appraisal], equally applied to all property which results in essential fairness.’

Basin Electric Power Coop. v. Dept. of Revenue, 970 P.2d 841, 857 (Wyo.1998) quoting: Holly Sugar Corp. v. State Board of Equalization, 839 P.2d 959, 964 (Wyo.1992).

19. Broken into its component parts, the constitutional standard requires: (1) a rational method; (2) equally applied to all property; and (3) essential fairness. It is the burden of one challenging an assessment to prove by a preponderance of the evidence that at least one of these elements has not been fulfilled. Basin Electric Power Coop., 970 P.2d at 852.

20. All property must be valued annually at fair market value. Wyo. Stat. Ann. §39-13-103(b)(ii). Further, all taxable property must be valued and assessed for taxation in the name of the owner of the property on January 1. Wyo. Stat. Ann. §39-13-103(b)(i)(A).

21. Fair market value is defined as:

The amount in cash, or terms reasonably equivalent to cash, a well informed buyer is justified in paying for a property, and a well informed seller is justified in accepting, assuming neither party to the transaction is acting under undue compulsion, and assuming the property has been offered in the open market for a reasonably time.

Wyo. Stat. Ann. §39-11-101(a)(vi).

22. The legislature, in turn, has required the Department to “prescribe by rule and regulation the appraisal methods and systems for determining fair market value using generally accepted appraisal standards,” Wyo. Stat. Ann. §39-13-103(b)(ii), and required assessors to “[f]aithfully and diligently follow and apply” those rules for the appraisal and assessment of all taxable property. Wyo. Stat. Ann. §18-3-204(a)(ix).

23. The Department has promulgated rules prescribing the methods for valuing property. The acceptable methods include a sales comparison approach, a cost approach, an income or capitalized earning approach, and the CAMA system. Rules, Wyoming Department of Revenue, Chapter 9, §6 (a), (b), (c), and (d).

24. An Assessor’s valuation is presumed valid, accurate, and correct. This presumption survives until overturned by credible evidence. Teton Valley Ranch v. State Board of Equalization, 735 P.2d 107, 113 (Wyo. 1987). A mere difference of opinion as to value is not sufficient to overcome the presumption. J. Ray McDermott & Co. v. Hudson, 370 P.2d 364, 370 (Wyo. 1962). The presumption is especially valid where the Assessor valued the property according to the Department’s Rules and Regulations, which provide for the use of the CAMA system in the assessment of real property. Rules, Wyoming Department of Revenue, Chapter 9 §6(b), (d). “The burden is on the Taxpayer to establish any overvaluation.” Hillard v. Big Horn Coal Co., 549 p.2d 294 (Wyo. 1976).

25. The Wyoming Supreme Court has recognized the validity of valuations derived from the CAMA system. Gray v. Wyoming State Board of Equalization, 896. P.2d 1347 (Wyo. 1995). In fact, the Wyoming Supreme Court rejected the use of actual sales price for properties in favor of the value established by the CAMA system because of the equality and uniformity derived by its use. Id. at 1351.

26. Some of the issues raised by the Petitioner turn on the question of whether or not there is substantial evidence in the record that reasonably supports the County Board decision. In determining whether or not there is substantial evidence in the record, the State Board will not substitute its judgment for findings reasonably supported by evidence in the County Board record. Laramie County Board of Equalization v. State Board of Equalization, 915 P.2d 1184, 1188-1189; Holly Sugar Corp. v. Wyoming State Board of Equalization, 839 P.2d 959 (Wyo. 1992); Sage Club, Inc. Employment Sec. Comm’n., 601 P.2d 1306, 1310 (Wyo. 1979). While substantial evidence may be less than the weight of the evidence, it cannot be clearly contrary to the overwhelming weight of the evidence. The Wyoming Supreme Court has stated, “[s]ubstantial evidence is a term of art best described as relevant evidence that a reasonable mind can accept as adequate support for an agency’s conclusion.” Sidwell v. State Workers’ Compensation Div., 977 P.2d 60, 63 (Wyo. 1999).

A. Petitioner’s claim that the assessment does not reflect statutory fair market value

27. Petitioner directs our attention to the fact that it has and expects to have no prospective buyers for the lots, then argues that the assessment cannot therefore satisfy the “well-informed buyer” test found in the statutory definition of fair market value. Wyo. Stat. Ann. §39-11-101(a)(vi). We do not need to recite that definition to conclude that Petitioner has made the mistake of ignoring another pertinent provision of statute that constrains the authority of the Assessor to determine value:

All taxable property shall annually be valued at its fair market value. Except as otherwise provided by law for specific property, the department [of revenue] shall prescribe by rule and regulation the appraisal methods and systems for determining fair market value using generally accepted appraisal standards;

Wyo. Stat. Ann. §39-13-103(b). The record includes ample evidence that the Assessor was at all times guided by the pertinent procedures and regulations for determining fair market value. The Petitioner’s reliance on its own interpretation and application of the general statutory definition of fair market value does not provide a basis in law for challenging the valuation of an assessor who has complied with the Department’s requirements as prescribed under Wyo. Stat. Ann. §39-13-103(b).

28. To the extent that Petitioner is instead claiming that the Assessor has failed to take into account the economic environment in which the property operates, we conclude that there is substantial evidence to the contrary. This includes, but is not limited to, the Assessor’s use of the two alternative approaches as a check on her value.

29. Petitioner next argues that the Assessor has failed to follow simple economic principles by inadequately accounting for profit and the agricultural characteristics of Petitioner’s lots. Taken even in the most favorable light, these arguments amount to mere differences of opinion with the Assessor’s exercise of judgment, and cannot overturn the presumption that the Assessor’s valuation is accurate, valid, and correct. Teton Valley Ranch, 735 P.2d at 113 (Wyo. 1987).

30. Petitioner next argues that its own failure to honor an Improvements Agreement with the City of Worland means that it must stop all development activity, and hence that the property must be overvalued because it is legally impossible to proceed with development. We note that the Petitioner did not raise this argument to the County Board. [Hearing Tape; Exhibits 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17]. Instead, the argument was raised for the first time on appeal to this Board, based on a passing remark made by the Assessor during the hearing before the County Board. [Hearing Tape]. This circumstance alone would be enough to dismiss the argument and support the decision of the County Board. See: RT Communications v. Public Service Commission, 2003 WY 145 ¶39, 79 P3d 36, 49 (2003).

31. The Petitioner also failed to demonstrate at the time of the hearing that securing an Improvement Agreement was in fact a legal impediment. Further, the Assessor’s remark was more in the nature of a comment on the Petitioner’s absence of diligence in promoting the property, and the County Board could correctly have viewed the remark as irrelevant. Either way, the Petitioner did not and has not come forward with credible evidence to overturn the presumption that the Assessor’s valuation is accurate, valid, and correct. Teton Valley Ranch, 735 P.2d at 113 (Wyo. 1987).

32. In its Reply Brief to this Board, the Petitioner argued that the Assessor could have, and should have, used sales of comparable agricultural land to reach a fair market value. The Assessor plainly chose to value Petitioner’s land at its highest and best use, and this argument does nothing to persuade us that the Assessor’s judgment was incorrect. Perhaps more important, the legislature has specifically stated that platted subdivisions do not qualify as agricultural land. Wyo. Stat. Ann. §39-13-103(b)(x). In effect, the Petitioner argues that the Assessor should have acted in a way to circumvent the intent of the legislature. The argument has no merit.

B. Petitioner’s claim that the 40% discount was arbitrary and contrary to law

33. Petitioner attacks the Assessor’s use of a Department guideline, without apparently being aware of the statutory authority of the Department to “[c]onfer with, advise and give necessary instructions and directions to county assessors as to their duties under the laws of the state.” Wyo. Stat. Ann. § 39-11-102(c)(xvi). The Department’s guidelines, thus supported by statute, have greater force and effect than the Petitioner supposes. There is substantial evidence in the record that the Assessor thoughtfully and diligently followed the Department’s guidelines.

34. Petitioner attacks the Assessor’s judgment in employing the guidelines. However, this is once again a mere difference of opinion about how the guidelines ought to be applied, and insufficient to overturn the presumption that the Assessor’s valuation is accurate, valid, and correct. Teton Valley Ranch, 735 P.2d at 113 (Wyo. 1987).

35. Finally, Petitioner argues that the guideline itself is arbitrary because the 40% discount has not been substantiated by sufficient logic or authority. Contrary to this argument, Mr. Bower acknowledged the expertise of the original authority for the guideline, the firm of Cole Layer Trumble. There is also no question that, from the standpoint of the Assessor, the guideline originated with the Department. This once again boils down to a matter of judgment, with the twist that Mr. Bower believes that the Assessor and the Department are obliged to substantiate the source and validity of the 40% figure. However, the burden rested on the Petitioner to mount a challenge to the 40% figure before the County Board, and it did not do so. We conclude that the County Board correctly determined that the Petitioner did not come forward with credible evidence to overturn the presumption that the Assessor’s valuation is accurate, valid, and correct. Teton Valley Ranch, 735 P.2d at 113 (Wyo. 1987).

36. We conclude that the County Board’s decision was supported by substantial evidence, and was not arbitrary, capricious, or contrary to law.

THIS SPACE INTENTIONALLY LEFT BLANK

ORDER

IT IS THEREFORE HEREBY ORDERED that the Order of the Washakie County Board of Equalization affirming the Assessor’s 2003 assessed valuation of $228,845 of the Petitioner’s property, being 18 lots located in the City of Worland, Washakie County, Wyoming shall be and the same is affirmed.

Pursuant to Wyo. Stat. Ann. §16-3-114 and Rule 12, Wyoming Rules of Appellate Procedure, any person aggrieved or adversely affected in fact by this decision may seek judicial review in at the appropriate district court by filing a petition for review within 30 days of the date of this decision.

Dated this 21^st day of May, 2004

STATE BOARD OF EQUALIZATION

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Roberta A. Coates, Chairman

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Alan B. Minier, Vice-Chairman

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Thomas R. Satterfield, Board Member

ATTEST:

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Wendy. J. Soto, Executive Secretary