BEFORE THE STATE BOARD OF EQUALIZATION

Lowe’s HIW, Inc., Petitioner, (Petitioner), appearing by and through James R. Belcher and Lawrence J. Wolfe, of Holland & Hart, LLP.

Brenda Arnold, Laramie County Assessor, (Assessor), appearing by and through Peter Froelicher, 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 Assessor’s valuation of the real property and improvements in Laramie County, Wyoming. Petitioner asks the State Board to remand this case to the County Board with a directive that Petitioner’s property be assessed at the amount the Petitioner incurred to build the structure. We affirm the County Board’s decision as being supported by substantial evidence.

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. 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.

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 (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 State Board of Equalization and the Department of Revenue 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 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 the 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 Petitioner finds fault with the value the Assessor assigned to the improvements located in Laramie County, Wyoming. The Petitioner argues that its construction costs should set the value of its new, unique improvements.

1. The Petitioner is the owner of a warehouse at 2723 Christensen Parkway in Laramie County, Wyoming. The warehouse was completed in 2002. The main building is 1,119,750 square feet and the guard house is 1,152 square feet. It is located on 167 acres. [Exhibit A].

2. Originally, the Assessor valued the property based on the best information available because Petitioner failed to report the personal property for the facility. The Assessor used the best information she had available, a press release to estimate the value of the personal property as of March 1 deadline. Wyo. Stat. Ann. §39-13-103(b)(v). After the Petitioner received the original assessment schedule, the Petitioner provided information about the personal property and the Assessor reduced the value of the personal property to a value acceptable to the Petitioner. [Transcript pp. 26-27, 29, 53].

3. The Petitioner is not questioning the value of the land or personal property as assigned by the Assessor. [Exhibit 1, p. 67].

4. The 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. 30].

5. The Assessor used the cost method to value the improvements by using the Computer Assisted Mass Appraisal (CAMA) system to input the characteristics and the measurements. The CAMA system then utilized the Boeckh cost tables with adjustments to assign a value to the characteristics and measurements. [Transcript, p. 32]. The method used is a cost method using the assistance of a computer.

6. The Boeckh cost table is a national model of the average cost of specific attributes and measurements. The values derived from the Boeckh tables for each improvement are then added to derive a base cost. [Transcript, p. 48].

7. There are adjustments to the base cost derived from the application Boeckh tables. The adjustments in this valuation consisted of a story height adjustment, and a percent good adjustment. [Exhibit A, pp. 127-130]. There were not adjustments for time and location or market.

8. The Assessor derived a value for the improvements from the CAMA system as follows:

Parking	7,684,632
Buildings	33,560,872
Total Improvements	$41,245,504

9. The Petitioner believes the value of the improvements to be $34,461,195. [Exhibit 1, p. 67, Exhibit A, p. 130; Transcript, p. 33].

10. Petitioner presented four contracts dated in 2001 for the construction of the improvements. The total of the those contracts were $34,461,195. Those contracts were as follows:

Architect and Engineer Fees	242,000
Steel Contracts	4,725,038
Wall Panels	2,582,987
Construction Contract	26,911,170
Total	$34,461,195

11. Petitioner presented offering prices, listings of various sized warehouses in other states. The listings did not show the characteristics of the buildings. These listings were not actual sales information. [Exhibit 6, pp. 111-118]. Petitioner calculated the price per square foot for the listing prices and calculated that those listing prices were less than the price per square foot for the Assessor’s value.

12. Listing prices are not indicative of fair market value because the listing price may not amount to a sale and further a listing price does not indicate if the sale meets the criteria for a fair market sale.

13. The County Board denied Petitioner’s protest in an order dated July 29, 2003.

14. Petitioner appealed to the State Board by Notice of Appeal filed August 28, 2003.

16. The State Board has jurisdiction to hear and determine all issues raised by the Petitioner pursuant to Wyo. Stat. §39-13-109(b).

(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:

(I) Gross production of minerals and mine products in lieu of taxes on the land where produced;

18. All 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 . . ..

19. 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 & 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).

20. 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 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.

21. In this case, the Assessor utilized the CAMA system to value Petitioner’s property. Petitioner demonstrated no error or inaccuracy in the Assessor’s use of the CAMA system.

22. The Department has promulgated rules for methods to value taxable property. The acceptable methods are a sales comparison approach, a cost approach, an income or capitalized earnings approach and the Computer Assisted Mass Appraisal (CAMA). Rules, Wyoming Department of Revenue, Chapter 9, §6 (a), (b), (c) and (d).

(B) “Cost” consists of all components of expense incurred in the building or manufacture of real and personal property.

(I) “Direct costs” include, but are not limited to, materials, labor, supervision, equipment rentals, installation of components, and utilities.

(II) “Indirect costs” include, but are not limited to architecture and engineering, building permits, title and legal expenses, insurance, interest and fees on construction loans, taxes incurred during construction, advertising and sales expenses, and reasonable overhead and profit.

(A) Costs may be estimated on the basis of typical reproduction or replacement costs.

(B)Typical reproduction and replacement costs may be estimated by the quantity survey method, the unit-in-place method, the comparative unit method, or the trended original cost method.

(C) The appraiser may use cost manuals where available or may design his own. Such manuals shall be based on actual costs and shall indicate which indirect costs are included. Such manuals shall also provide normal depreciation and age-life information.

25. The CAMA method employed by the Assessor utilized cost tables in valuing the property. The CAMA system used a cost manual method by applying the Boeckh tables.

26. The only attack on the Assessor’s use of the Boeckh method is that it was not adjusted for the Cheyenne area. The County Board could reject this attack because there was no evidence to demonstrate that a location and time adjustment was necessary.

27. The Petitioner advocates that the “Quantity survey method” should have been used. The Department Rules define the method:

(E) “Quantity survey method” means the procedure for estimating cost which requires complete itemization of all construction, labor, and material costs, by components and sub-components, and of all indirect costs. The method is most often used to derive a reproduction cost for a specific property or special-purpose property for which other methods may not be sufficiently accurate.

28. The Assessor does not have to consider the “Quantity survey method” if the necessary information to utilize this approach is unavailable. In this case, the necessary costs to use the “Quantity survey method” were not available. However, if an Assessor receives the necessary cost information to consider the “Quality survey method” then the Assessor must use the reconciliation process to determine if the value from the “Quality survey method” is more reliable than the value from CAMA or other methods in accordance with Department of Revenue Rule Chapter 9 §7. This reconciliation process is an exercise of appraisal judgment.

29. The record shows the costs presented to the Assessor and the County Board by the Petitioner were insufficient for use of the “Quantity survey method.” Below is a table of the cost information needed to apply the method, compared to the cost information that was supplied.

30. Petitioner also argues that because this is the largest building in Wyoming it was more cost efficient to build and therefore the value should be decreased. There is no testimony or documentary evidence to support this argument. The only evidence that might have demonstrated such a trend was the listing of offering prices of various sized warehouses. This exhibit fails to demonstrate a correlation between the size and the listing prices. [Exhibit 6, p. 111].

31. The Petitioner confused construction costs with the “Cost Approach.” Construction costs are not the “Cost Approach” because the “Cost Approach” is estimating the typical reproduction or replacement costs, not actual construction costs. This distinction is important to recognize because of uniformity of assessment. Uniformity can only be achieved if all similarly situated property is valued in a uniform manner not by giving a property a value because the owner was a good negotiator and the next property a higher value because the owner was a poor negotiator. The value demanded by our Wyoming Constitution is “full value” or fair market value. Wyo. Const. art. XV 15 §11. If a company can obtain a “good deal” when constructing an improvement the value is still fair market value.

32. The decision of the County Board affirming the Assessor’s value of Petitioner’s property was supported by substantial evidence, was in accordance with procedures required by law, and was not arbitrary, capricious nor inconsistent with law.

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.

Cost Information Needed	Cost Information Supplied
Direct Costs	$34,219,195
Architecture and Engineering fees	$242,000
Building Permit fees	Not Supplied
Title and Legal expenses	Not Supplied
Insurance	Not Supplied
Interest and fees on construction loans	Not Supplied
Taxes incurred during construction	Not Supplied
Reasonable Overhead and Profit	Not Supplied