BEFORE THE STATE BOARD OF EQUALIZATION

Terrance R. Martin, Deputy County Attorney for the Petitioner, Fremont County Assessor, Eileen Oakley,(Assessor).

This is an appeal from a decision by the Fremont 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 and briefs filed pursuant to a Briefing Order (Locally Assessed Property) dated October 1, 2003. The Assessor appealed a decision the County Board made on August 5, 2003, lowering the Assessor’s 2002 valuation of the residential property of Richard and Glenda Hlavnicka. The property, consisting of 19.84 acres, is Lot 7 of the O’Brien Subdivision, located at 38 O’Brien Drive Lander, Fremont County, Wyoming.

The County Board, conducted a hearing on July 14, 2003, with Hearing Officer Teresa M. McKee presiding. The Taxpayer, Richard Hlavnicka and the Assessor, Eileen Oakley, testified at the County Board Hearing. Supporting documents were admitted into the record.

The County Board’s findings of fact addressed the testimony offered on behalf of the parties. In summary, the County Board found that the Assessor’s value of the Taxpayer’s property at $257,900 was too high.

The County Board concluded, in its decision, that the Taxpayers testimony and presentation of a 2001 appraisal of $218,000 was sufficient, credible evidence to overcome the presumption that the Assessor’s valuation was valid.

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 Rules, Chapter 3, §2.

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, Section 1, §39-1-304(a).

By Rule, the State Board’s standards of review for 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 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;

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 conclusions.

Clark v. State ex rel. Wyoming Workers’ Safety and Compensation Division, 934 P.2d 1269, 1272 (Wyo. 1997).

The Assessor initially identified three issues in the County Board’s decision. [Petitioner’s Notice of Appeal, pp. 1-2].

1.The Assessor correctly valued the Taxpayer’s property as residential property at a value of $257,900.00 using the CAMA system.

3.The County Board’s decision to lower the value or the Taxpayer’s property was not in accordance with law, was arbitrary, capricious and an abuse of discretion, as well as unsupported by substantial evidence in the record.

[Petitioner’s Notice of Appeal, p.1]. We have organized our review of the County Board decision around these three issues.

1. The property which is the subject of this disputed is owned by Richard and Glenda Hlavnicka and was purchased in 1993 for $39,680. The area of land purchased is 19.84 acres. The house and barn were constructed in 1993. The two car detached garage was constructed in 1997 and the pole building was constructed in 1999.

2. On April 23, 2003, the Assessor, Ms. Oakley, issued a tax assessment schedule to the Taxpayer for residential property located at 38 O’Brien Drive north of Lander, Wyoming. The Assessor estimated the market value of the property (land and improvements) at $257,900.00. [County Board Record, p. 3]

3. On May 15, 2003, the Taxpayer filed a Statement to Contest Property Tax Assessment. A hearing before the Fremont County Board of Equalization was held on July 14, 2003. [County Board Record, p. 5]

4. During the County Board hearing the Taxpayer presented a residential appraisal prepared by Gary Demanche, a Wyoming certified residential appraiser, which was completed on April 27, 2001. Mr. Demanche estimated that the market value for the property as of that date was $218,000. [Taxpayer Exhibit #1, pp. 8-16]. Mr. Demanche did not testify or otherwise defend his appraisal.

5. The appraisal was prepared for the Atlantic City Federal Credit Union for refinancing rather than sale. In the appraisal the first comparable property for the sales comparison was next to the Taxpayer’s property and was very similar to the Taxpayer’s land and improvements. The other two comparables were twelve miles away in another subdivision. The second comparable was 4.3 acres and the third was 6.97 acres. The appraiser made substantial adjustments to the sales of the second and third comparables. The gross adjustment for the second comparable was 59.9 percent and for the third comparable it was 44.3percent. The net change for the second comparable was 36.7percent and for the third comparable it was 34.0 percent. The Appraiser stated in his appraisal that the property adjustments exceeded the appraisal industry recommended guidelines. [Taxpayers Exhibit No. 1, p.12].

6. The appraiser also reported that there were a limited number of properties in the market at that time. However, Mr. Demanche did point out in the Cost Approach Comments that “small tract irrigated land similar to the subject has been selling for $6,500 per acre and higher in the immediate vicinity of the subject.” If the Assessor would have used the Demanche appraisal fair market value of $6,500 per acre the value for the 19.84 acres would have been $128,960.00. This amount is $4,060 more than the amount that the Assessor used for the 2003 market value for the land.

7. The Assessor’s market value in the 2000 assessment schedule for the buildings (including the house) was $133,000. Similarly the market value in the 2003 assessment schedule for the buildings (including the house) was also $133,000. [County Board Record, pp. 2-3]. The increase in total value was due to the increase of land values in that area. The land was valued in the 2000 assessment at $67,700. The land was valued on the 2003 assessment at $124,900. [County Board Record, pp. 4-5]. This computes to a value of $6295 per acre.

8. The Assessor did not consider the 2001 appraisal which used three 2000 sales. The Assessor explained that each year’s assessment stands on its own and the reason the property had not been adjusted in the last few years was that there had been few sales in the Taxpayer’s neighborhood until the year 2002. The Assessor then presented a list of eleven current sales and explained how each was used in the assessment process and how these sales were entered into the computer for the Computer Assisted Mass Appraisal System (CAMA). [Exhibit J, p. 54].

Sale Price	Improvement Value	Land Value	CAMA Land Value	Sale’s Ratio	Area in Acres	Price per Acre
$388,000	$246,300	$141,700	$123,700	0.873	19.58	$7,233
$250,000	$ 93,300	$156,700	$128,700	0.821	20.53	$7,633
$97,500	0	$ 97,500	$110,300	1.059	15.15	$6,435
$120,170	0	$120,170	$110,300	0.918	16.67	$7,209
$64,880	0	$ 64,880	$ 64,600	0.996	7.33	$8,851
$33,695	0	$ 33,695	$ 32,500	0.965	3.71	$9,082
$32,500	0	$ 32,500	$ 32,500	1.000	3.71	$8,760
$232,000	$ 8,600	$223,400	$152,100	0.681	25.75	$8,675
$144,150	$ 11,700	$132,450	$135.600	1.024	22.18	$5,972
$79,000	$ 4,500	$ 74,500	$ 59,600	0.800	6.74	$11,050
$81,000	0	$ 81,000	$ 77,200	0.953	6.75	$12,000

The Median Ratio for these properties is 0.95. The dispersion factor is 9.07percent. These figures are within the rules of the State Board of Equalization. Rules, Board of Equalization, Chapter 5, Section 6.

9. Article 15, Section 11(d) of the Wyoming Constitution requires all property “[a]ll taxation shall be equal and uniform within each class of property. 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).

10. 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 Corp., 970 P.2d at 852.

11. 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).

[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 reasonably time.

13. 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).

14. 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).

15. 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. Rules which provide for the use of the CAMA system in the assessment of real property. Rules, Wyoming Department of Revenue, Chapter 9 § 6(b) and (d). The assessor’s determination of value must lead to fair market value and the burden is on the Taxpayer to establish and overvaluation. Hillard v. Big Horn Coal Co., 549 p.2d 294 (Wyo. 1976).

16. 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.

17. Each of the three issues raised by the Assessor turn on the question of whether 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); Amax Coal v. State Board of Equalization, 819 P.2d 825 (Wyo. 1991); 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).

18. The value of personal property for the purpose of taxation should be estimated according to the fair actual cash market value, or the price that the property would sell for in the usual course of business and the assessor should take into consideration all factors which relate to value. J. Ray McDermott & Co. V. Hudson, 370 P.2d 364 (Wyo. 1962).

A. The Assessor correctly valued the Taxpayer’s property as residential property at a value of $257,900 using the CAMA system.

19. The record shows that the Assessor complied with all requirements of state law in determining the value for the Taxpayer’s property by using the CAMA system pursuant to Wyo. Stat. Ann. § 39-11-102, and the sales comparison approach to value the property as prescribed in Chapter 9 of the Rules and Regulations promulgated by the Wyoming Department of Revenue.

20. The Taxpayer did not present any evidence at the hearing to contest the methods or information employed by the Assessor to determine the fair market value of the improvements and land. The Taxpayer presented a two year old appraisal prepared for the Atlantic City Federal Credit Union that was based on three 2000 sales. According to the information in the appraisal, the appraiser, Mr. Demanche had very few sales to compare in a sluggish market. The adjustments were higher than the industry recommendations and the appraisal was made for refinancing rather than open market sale. Two of the comparable sales were not in the same neighborhood but were twelve miles across town in another subdivision. The Taxpayer did not demonstrate that the outdated information was in any way more reliable than the Assessor’s information.

C. The County Board decision was not in accordance with law, was arbitrary, capricious, and an abuse of discretion and was not supported by substantial evidence in the record.

21. Wyoming Statute Annotated Section 39-13-102 (d) provides that “[t]he county board of equalization has no power to and shall not set tax policy nor engage in any administrative duties concerning assessments which are delegated to the board, the department or the county assessor.” To accept a 2001 private appraisal rather than the Assessor’s value was arbitrary, capricious and an abuse of discretion and was not supported by any substantial evidence that appeared in the record.

22. The County Board incorrectly discounted the Assessor’s comparable sales, which she offered in support of her valuation. The sales relied upon by the Assessor were of properties more comparable in size and location to the Taxpayers’ property than the properties selected by the fee appraiser. All the Assessor’s comparable properties were within two miles of the Taxpayers’ property. [Exhibit C, p.35]. The comparable sales relied upon by the Assessor were closer in time to the assessment date than the sales selected by the appraiser. The Assessor met her burden of proof by explaining the value determined for the Taxpayers’ property. See Amax Coal West, Inc. . State Board of Equalization, 896P.2d 1329, 1329, 1335 (Wyo. L995), citing Majority of Working Interest Owners in Buck Draw Field Area v. Wyoming Oil and Gas Conservation Commission, 721 P.2d 825, 831 (Wyo. 1986) and Amax Coal V. State Board of Equalization, 819 P.2d 825, 831 (Wyo. 1991).

23. The County Board concluded that the change of value was too high for one year. Each years assessment stands on its own. If there had been more sales in this area during the last three years there may have been a gradual increase of the fair market value. A large increase in value in one year is not a legitimate reason to reject the Assessor’s fair market value that was based on eleven actual sales for the current tax year.

24. Based on the record before us, we conclude there is not substantial evidence to reject the decision of the Assessor. We likewise conclude that on all three points the Assessor supported the argument in favor of her valuation.

25. The decision of the County Board, ordering the Assessor to lower the valuation of the taxpayer’s property, was not supported by substantial evidence, nor was it in accordance with procedures required by law, it was arbitrary, capricious and inconsistent with law.

IT IS THEREFORE HEREBY ORDERED that the decision of the Fremont County Board of Equalization Order overturning the Assessor’s valuation of the Taxpayers’ property, and setting a value of $218,000, shall be and the same is reversed, and the Assessor’s valuation of $257,900 shall be reinstated.

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.