BEFORE THE STATE BOARD OF EQUALIZATION
FOR THE STATE OF
MATTER OF THE APPEAL OF )
ESTATE & )
FROM A )
OF THE LARAMIE COUNTY ) Docket
BOARD OF EQUALIZATION- 2003 )
PROPERTY VALUATION )
DECISION AND ORDER
Estate and Satellite Corporation, Petitioner, appearing by and through Joel Terwilliger,
having filed the Preliminary Statement, and Patrick Sullivan, appearing at the Oral
Argument, of Echostar Communications Corporation.
Laramie County Assessor, appearing by and through Mark T. Voss, Laramie County Attorney.
This is an appeal
from the Laramie 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 hearing record and
decision of the County Board, briefs filed pursuant to a Briefing Order (Locally Assessed
Property) dated October 17, 2003, and oral arguments heard on February 2, 2004. The
Petitioner appealed a decision of the County Board affirming the Laramie County Assessor’s
valuation of its real and personal property in Laramie County, Wyoming. Petitioner asks
the State Board to remand this case to the County Board with a directive that: 1)
Petitioner’s value for improvements to real property be reduced for functional
obsolescence; 2) the personal property value be depreciated by a shorter economic life;
and 3) the base value of the personal property be the current market value. We affirm the
County Board’s decision as being supported by substantial evidence.
PROCEEDINGS BEFORE THE
The County Board
conducted a hearing on June 17, 2003. An Order was entered July 29, 2003, affirming the
Assessor’s valuation. A Notice of Appeal was filed with the State Board on August 28,
2003, and after receiving briefs the State Board heard oral arguments on February 2, 2004.
The State Board 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 the 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. 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 Wyoming State Board of Equalization Rules,
Chapter 2 and Wyoming State Board of Equalization Rules, Chapter 3. Statutory language
first adopted in 1995, when the Board of Equalization and the Department of Revenue,
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, Section 1; Wyo. Stat. Ann.
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 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 the county board action is:
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;
observance of procedure required by law; or
(d) Unsupported by
State Board of Equalization, Chapter 3, §9.
Since the State
Board Rules are patterned on the judicial review provision of the Wyoming Administrative
Procedure Act, we look to precedent under Wyo. Stat. Ann. §16-3-114(c) for guidance. For
example, we must apply this substantial evidence standard:
Our task is to
examine the entire record to determine if substantial evidence exists to support the
[county board’s] findings. We will not substitute our judgment for that of the [county
board] if [its] decision is supported by substantial evidence. Substantial evidence is
relevant evidence which a reasonable mind might accept in support of the agency’s
Clark v. State
ex rel. Wyoming Workers’ Safety and Compensation Division, 934 P.2d 1269, 1272 (Wyo.
There are two
classes of property being contested, real property improvements and personal property.
the real property issue as:
Whether the County
Assessor’s use of the Computer Assisted Mass Appraisal System (CAMA) without
consideration for additional factors such as economic or functional obsolescence
constitutes “fair” and “equal and uniform taxation” as applied to the Petitioner’s
the personal property issues as:
Whether the mandate
under Wyoming state law for valuing property at “fair market value” is properly
implemented by the county assessor’s use of a cost approach based on the concept of “value
and use?” (We will refer to the concept as “value in use”).
Whether the County
Assessor’s categorization of Petitioner’s property as “CATV Microwave Systems,
Origination, Service and Test” is supported by substantial evidence?
We find the County
Board’s decision is supported by substantial evidence, and is not arbitrary, capricious
or an abuse of discretion and is in accordance with law.
FACTS PRESENTED TO THE
is an appeal from a value determination of the Laramie County Assessor of $10,469,605.00
for real property and improvements located at 530 Echostar Drive, Cheyenne, Laramie
County, Wyoming. The lot was valued at $1,008,620 and the improvements were valued at
$9,460,985. [Exhibit A, p. 159].
property is located on 52 acres and has three buildings. The main structure is 9,015,377
square feet, the second structure is 3,640 square feet and the third structure is 3,811
square feet. The property was developed during the time period from 1995 to 1998. The
building permits for the improvements showed a total cost for the project of $30,593,000.
[Transcript, p. 56]. The main structure is seven years old and therefore the Assessor
applied a depreciation factor. [Transcript, pp. 55-56, 67; Exhibit 1, p. 139].
Petitioner is not questioning the value of the land as assigned by the Assessor.
[Transcript, p. 52].
agrees with the cost method the Assessor used in valuing the property. [Transcript, p.
Assessor believes the cost method is the most appropriate method for valuing this
property. The Assessor testified that she considered the sales comparison approach but
rejected that approach because of lack of sales. The Assessor rejected the income approach
to value because of lack of income information and because no other property in the county
is valued using income information. [Transcript, pp. 35, 54-55].
agrees that the Assessor used the correct square footage in calculating value but argues
that the building is “superadequate” due to multiple levels, big rooms, a lot of wire
for computers and an enhanced cooling and HVAC system. The Petitioner argues the value
derived from the cost method should be reduced for functional obsolescence. [Transcript,
pp. 19, 27, 34].
argues for a 25 percent reduction for functional obsolescence using two methods of
reasoning. The first method is that the Petitioner estimates that another entity using the
buildings will have to remodel and Petitioner estimates the cost of remodel will be $20
per square foot. Therefore, Petitioner argues for a 25 percent functional obsolescence
reduction. [Exhibit 1, p. 139]. Other than Petitioner’s estimate for remodel costs no
other evidence was presented to verify such costs. Also, the current use of the buildings
does not demand a remodel.
second method Petitioner used to argue for functional obsolescence was what Petitioner
called a “pro-forma income” method. Petitioner first gathered rental price quotes for
various structures in Denver, Larimer, and Weld counties, Colorado. The Petitioner also
asked the Cheyenne Downtown Development Authority for rental information for office
buildings in Downtown Cheyenne. [Exhibit 1, pp. 141-157]. There was no showing of
similarity between the location and attributes of the buildings for which rental
information was gathered and the subject property. The Petitioner estimated a rental
income for the buildings as follows:
$7.50 per sq. ft.
for floors 1 & 2, (72,272 sq. ft.) - Annual Income $542,040;
$6.00 per sq. ft.
for basement, (57,268 sq. ft.) - Annual Income $343,608;
$3.00 per sq. ft.
for utility buildings. (7,451 sq. ft.) - Annual Income $22,353.
[Exhibit 1, p.
140]. Using this assumed rental rate the Petitioner calculated an “Indicated Market
Value” of $7,853,301 and then deducted the “Indicated Market Value” from the
Assessor’s Value to conclude a 25 percent obsolescence should apply. [Exhibit 1, p.
140]. Because the rental calculation was supported by questionable evidence the County
Board could reject the Petitioner’s ultimate argument.
income evaluation was not an appraisal even though the evaluation was done by Petitioner’s
employee, Patrick Sullivan, who has the training and ability to do an appraisal. Mr.
Sullivan holds appraisal licenses in Colorado and Utah and is designated as a CMI by the
Institute of Professionals for Taxation. Mr. Sullivan’s income evaluation did not use
Petitioner’s income. Mr. Sullivan did some sales comparisons but agrees that this is not
a “full-blown sales comparison approach.” [Transcript, pp. 19, 23, 32, 35, 37-38].
Assessor disagrees that there should be an adjustment for functional obsolescence because
the improvements were built to be a satellite center, the improvements are being used as a
satellite center, and that is the highest and best use. If property is being used for its
highest and best use there is no functional obsolescence. [Transcript, pp. 56, 60-61].
agrees that the current use of the improvements by Petitioner is the highest and best use
and the improvements are not functionally obsolete for the current use. [Transcript, p.
Assessor’s field agents visited the property and took pictures and measurements to
verify the characteristics and measurements of the improvements. The Petitioner has not
presented any evidence that the measurements or characteristics are incorrect.
[Transcript, p. 57].
Assessor used the cost method to value the improvements by using the CAMA system to input
the characteristics and the measurements of the improvements. The CAMA system then
utilized the Boeckh cost tables with adjustments to assign a value to the characteristics
and measurements. The Boeckh cost tables are updated annually by the Department of
Revenue, Department. [Transcript, pp. 53-54, 59]. The method used is a cost method using
the assistance of a computer.
Petitioner appealed the value for its personal property as set by the Assessor at
$117,045,295 and argues the value for the 11,000 items of personal property should be
$82,388,666. [Exhibit C, p. 465; Transcript, p. 71]. The reported original cost for the
personal property was $181,048,776.01. [Exhibit C, p. 467].
process to value personal property in Wyoming is as follows: 1) a taxpayer is to report
its personal property including the acquisition dates, the type of equipment, and the
original cost of acquisition to the assessor by March 1 every year; 2) the Assessor then
assigns categories according to the Boeckh tables supplied by the Department of Revenue to
each piece of equipment; 3) the Assessor enters the equipment information into the CAMA
system. The CAMA system uses the Boeckh tables to adjust the acquisition costs for
trending factors and depreciates the equipment using Boeckh’s assigned equipment life.
[Exhibit C, pp. 478-480].
Boeckh tables are adjusted annually by the Department. The Department utilizes Marshall
& Swift/Boeckh cost information and information presented by industry in developing
the equipment life tables. There is a floor of 25 percent depreciation for equipment in
use. (None of Petitioner’s equipment has reached the floor level so that issue is not in
question). [Transcript, pp. 104-106; Exhibit B, pp. 235, 256, 487].
reported its equipment list to the Assessor on March 3, 2003, instead of March 1.
[Transcript, p. 103]. Using the equipment tables as designed by the Department the
Assessor assigned a large majority of Petitioner’s high technology equipment to Category
2849, Cable Television Microwave equipment (CATV), which has a nine year life economic
life to calculate depreciation in value. [Exhibit 2, p. 290; Exhibit C, p. 467;
Transcript, pp. 106-107].
assessor is not allowed to establish depreciation schedules different from the Department’s
tables unless the assessor first submits another table to the state for approval.
[Transcript, p. 108; Exhibit B, p. 255].
broadcasts a television signal and music signal and thus uses a great deal of high
technology equipment. [Transcript, p. 82]. Petitioner is in competition with cable
television because the service it provides to the ultimate consumer is very similar to the
service provided by cable television. There are some factors that distinguish Petitioner’s
digital television service from cable television and those are: 1) a viewer cannot watch
one program and tape another on a VCR with digital service as on cable service; 2) there
is a higher quality of picture on digital service than on cable television; 3) there is a
more varied selection of channels on digital service as compared to cable television; and
4) digital service is a more extended area because it does not depend on cable lines as
cable television service. However there are similarities such as: both services uses a
radio spectrum, both use satellite transmission and both use microwave links. [Exhibit B,
pp. 261, 265, 267-268, 270].
argues the broadcasting equipment, the electronic equipment and the high-technology
equipment should not have a nine year economic life, but rather a six to three year
economic life. [Transcript, pp. 72-74]. Specifically, Petitioner testified that it uses a
Divicom (M50 model) encoder to distribute signal since 1995 and 1996. This product is on
the seventh or eighth model. When originally acquired the Divicom equipment cost was
$47,000 per unit. Petitioner believes an improved mode can be purchased for $17,200 in
2003. [Transcript, p. 86; Exhibit B, p. 182]. Thus, Petitioner argues the Divicom encoders
should have a three year instead of nine year economic life. [Transcript pp. 87-88]. When
the Petitioner brought this argument to the Assessor the assessor wrote a letter
requesting information to support the position that the high technology equipment should
have a three life. There is no evidence of a response from the Petitioner to the Assessor.
[Exhibit C, p. 486].
argues that the correct economic life for its high technology equipment is found in Radio
and Television Board Casting Equipment, Category 2710, in the Marshall & Swift/Boeckh
cost tables. The economic life for this category of equipment is six years. [Transcript,
definitions provided for the two categories at issue in the Boeckh cost tales are:
CATV - Program Origination; cameras, film chains, video
tape recorders, lighting, and remote location equipment. Category
CATV - Service and Test; includes oscilloscopes, field
strength meters, spectrum analyzers, and cable testing equipment. Category 2849.
CATV - Microwave Systems; includes towers, antennas,
transmitting and receiving equipment, and broad band microwave equipment used in the
preparation of common carrier services. Category 2849 (emphasis added).
Radio and Television Broadcasting = (sic) Includes assets
used in radio and television broadcasting. Does not include transmitting towers. Category 2710
[Exhibit C, pp.
208-209; Transcript, pp. 81, 93].
does not use cable testing equipment so it argues Category 2849 is not applicable. This
ignores the additional portion of Category 2849, microwave systems. The Petitioner does
use equipment similar to CATV-Microwave Systems. [Transcript, pp. 81-82].
category of equipment in the 2003 Boeckh tables that could be used for the Petitioners
Telephone & Telegraph Station Equipment = (sic)
Includes communications related assets used to provide domestic radio-telegraph,
wire-telegraph, and satellite communications services. Includes such station apparatus and
connections as teletypewriters, telephones, booths, private exchanges, and comparable
equipment. Category 2667.
[Exhibit C, p.
209]. This category has an assigned economic life of nine years so it does not meet the
economic life criteria the Petitioner would like.
County Board denied Petitioner’s protest in an order dated July 30, 2003.
appealed to the State Board by Case Notice for Review filed August 29, 2003.
APPLICABLE LAW AND PETITIONER’S ISSUES
timely filed an appeal from the County Board decision.
Board has jurisdiction to hear and determine all issues raised by the Petitioner pursuant
to Wyo. Stat. Ann. §39-13-109(b).
Wyoming Constitution, Article XV, §11, states that:
(a) All property,
except as in this constitution otherwise provided, shall be uniformly valued at its full
value as defined by the legislature, in three (3) classes as follows:
production of minerals and mine products in lieu of taxes on the land where produced;
(ii) Property used
for industrial purposes as defined by the legislature; and
(iii) All other
property, real and personal.
taxable property must be valued annually at fair market value. Wyo. Stat. Ann.
§39-13-103(b)(ii). Fair market value is defined as:
[T]he 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 reasonable time . . ..
Wyo. Stat. Ann.
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 & Company 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).
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 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.
this case, the Assessor utilized the CAMA system to value Petitioner’s property.
alleges error because there was no adjustment for functional obsolescence because the
building is “superadequate.” A “superadequacy” is defined as a condition in which
the component is more than adequate for its intended function. Property Assessment
Valuation, Second Edition, International Association of Assessing Officers, 1996, p.
169. The superadequacies identified by Petitioner are: multiple levels, big rooms, a lot
of wire for computers and an enhanced cooling and HVAC system. These components are
essential for the current use of the building. Therefore, while the building is being used
for its intended use there are no “superadequacies.”
formulas the Petitioner presented to calculate functional obsolescence are not supported
with evidence that demands the County Board accept the calculation of functional
obsolescence. The remodel formula has no evidence to support a $20.00 per square foot
remodel cost. Indeed, we have found the building does not need to be remodeled for its
current use. The “rental income” formula is not supported by data demonstrating that
rental rates are comparable to the type of building and location of Petitioner’s
decision of the County Board affirming the Assessor’s value of Petitioner’s real
property was supported by substantial evidence, was in accordance with procedures required
by law, and was not arbitrary, capricious nor inconsistent with law.
Department has promulgated rules prescribing the methods for valuing personal property.
The acceptable methods include a sales comparison approach, a cost approach, and an income
or capitalized earnings approach. Rules, Wyoming Department of Revenue, Chapter 9, §6
(a), (b), (c). The Department has further noted that, “[f]or personal property, the
valuation methodology selected shall reflect the trade level at which personal property is
found, and shall account for factors influencing the value in place including utility,
usefulness to the owner or the actual income produced.” Rules, Wyoming Department of
Revenue, Chapter 9, §6.
this case, the Assessor utilized the cost approach to value Petitioner’s property and
the Petitioner agrees with this approach. The Petitioner questions the economic life used
to calculate depreciation and the Petitioner asserts that the base cost for calculating
value should be the current cost of the equipment, value in exchange, instead of the
historical cost, value in use. The Assessor’s valuations are presumed valid, accurate
and correct. Teton Valley Ranch v. State Board of Equalization, 735 P.2d 107,113
(Wyo. 1987). Thus, the burden is on Petitioner to rebut the presumption with sufficient
cost approach is used “to establish value for personal property through the process of
cost estimation. The cost approach relies on the principle of substitution in which an
informed buyer will not pay more for a property than its comparable replacement.” Rules,
Wyoming Department of Revenue, Chapter 9, §6(b).
equipment is assigned a category under the Boeckh tables those tables set an economic life
for the life of the equipment. Using the economic life, the equipment’s historical cost
is adjusted for depreciation. The economic life is determined for each category of
equipment by the Department. Rules, Wyoming Department of Revenue, Chapter 9 §6(b)(iv)
and §6(b)(v)(H). The Department develops economic life tables “based on information
from such sources as, but not limited to, the Internal Revenue Service publications 534
and 946 as well as Marshall Swift Valuation Service and recommendations from the Wyoming
County Assessors Association.” The County Assessor may develop different economic lives
but only after approval for the County’s tables is received by the Department with an
assurance that the tables result in uniformity throughout the state. Rules, Wyoming
Department of Revenue, Chapter 9 §6(d)(iii). The Petitioner does not point to any
deficiencies in the tables as developed by the Department. Instead, the Petitioner chooses
to attack the category its “high technology” equipment has been assigned by the
pivotal issue is whether the Assessor correctly assigned the Petitioner’s “high
technology” equipment to Category 2849, CATV Microwave Systems, Origination, Service and
Test. Considering that Petitioner’s major competition is Cable Television and that the
“Microwave Systems” describes Petitioner’s equipment, the category assigned by the
Assessor and affirmed by the County Board is correct. The category the Petitioner
advocates does not describe Petitioner’s equipment. Great deference should be accorded
an assessor when she assigns equipment to a category. Annually, the Department reviews the
Personal Property Valuation Manual and it is during this process that economic lives
are assigned to categories. If a taxpayer disagrees with the economic life assigned to a
particular category it is incumbent upon the taxpayer to convince the Department that
another economic life is appropriate.
Petitioner points to one category of equipment, the Divicom encoders, to argue that the
category assigned by the Assessor is incorrect and that the economic life of nine years is
incorrect. The County Board was not arbitrary in rejecting an argument based on one type
Petitioner points to the current market price for encoders to demonstrate that the “value
in exchange” is lower than the depreciated historical cost. The Assessor argues that
Petitioner’s equipment should be valued as “value in use” by depreciating historical
cost. When we examine generally accepted appraisal principles we agree with the Assessor.
Value in use As applied to personal property, the concept
of value in use implies that equipment is installed and in continual use for generating
income or performing its function. Value in use usually sets the upper limit of value and
is the concept used with the cost approach.
The following tests
are used to determine whether the concept of value in use applies to industrial machinery
• the machine is
• the highest and
best use is as installed for the purpose of producing income or a product/service
• the machine is
employed; that is, it is part of the business enterprise used to produce income
• the machine is
state of the art or a percentage of its productivity is measurable and economical; that
is, its operation is economically feasible
Value in Exchange As applied to personal property, the
concept of value in exchange implies that the equipment is a commodity and is not
installed or, if installed, is to be removed from its present site and reinstalled
The following tests
are used to determine whether the concept of value in exchange applies to industrial
machinery and equipment:
• the machine is
not installed, or is to be removed if in place
• highest and
best use is not considered because the property is not in use
• the machine is
not employed as part of the business enterprise
• the machine is
not state of the art
Assessment Valuation, Second Edition, International Assessing Officers,1996,
pp. 344 - 345, 377.
demonstrates that the value to be used is “value in use.” The encoders are installed.
As installed, they are being used for their highest and best use. They are part of the
business enterprise used to produce income. Their operation is economically feasible. It
is important to note that Petitioner is pointing to only one category of equipment to make
the argument that all equipment should be reduced in value.
County Board’s decision on the valuation of Petitioner’s property was supported by
substantial evidence, according to procedures required by law, and neither arbitrary,
capricious, nor inconsistent with law.
THIS SPACE INTENTIONALLY LEFT BLANK
IT IS THEREFORE HEREBY ORDERED that the Laramie County
Board of Equalization Order denying the Petitioner’s protest and affirming the 2003
assessment of Petitioner’s property 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.
this 18th day of March, 2004.
STATE BOARD OF EQUALIZATION
A. Coates, Chairman
B. Minier, Vice-Chairman
Thomas R. Satterfield
Wendy J. Soto,