BEFORE THE STATE BOARD OF EQUALIZATION
FOR THE STATE OF WYOMING
IN THE MATTER OF THE APPEAL OF )
D BAR D RANCH, LLC FROM A )
DECISION OF THE SHERIDAN COUNTY ) Docket No. 2004-123
BOARD OF EQUALIZATION - 2004 )
PROPERTY VALUATION )
DECISION AND ORDER
Greg A. Von Krosigk, Pence and MacMillan, LLC, and Brian N. Beisher, on behalf of D Bar D Ranch, LLC (D Bar D or Petitioner).
Charmaine Reed, Deputy Sheridan County Attorney, on behalf of Paul Fall, Sheridan County Assessor (Assessor or Respondent).
This is an appeal from a decision of the Sheridan County Board of Equalization (County Board) affirming the Assessor’s valuation of Petitioner’s irrigated agricultural land, residential properties (land), and outbuildings. The State Board of Equalization (State Board), comprised of Alan B. Minier, Chairman, Thomas R. Satterfield, Vice-Chairman, and Thomas D. Roberts, Board Member, considered the hearing record and decision of the County Board. Petitioner’s Notice of Appeal was filed with the State Board effective August 27, 2004. The Petitioner and Respondent filed briefs as allowed by the State Board’s Briefing Order dated December 2, 2004. Neither party requested oral argument.
We affirm the decision of the County Board.
PROCEEDINGS BEFORE THE COUNTY BOARD
The County Board conducted a hearing on July 21, 2004, and entered an Order on July 30, 2004, which denied each of the four appeals filed by Petitioner and required the Deputy County attorney to prepare Findings of Fact and Conclusions of Law for the County Board’s consideration. It is this Order from which Petitioner filed a Notice of Appeal with the State Board. The County Board subsequently entered “Findings of Fact, Conclusions of Law, and Order” on September 21, 2004, concluding, with respect to all the matters at issue in this appeal, that the “Protestant did not show by a preponderance of the evidence that the Assessor’s valuation methods were improper.” The County Board affirmed the Assessor’s determination of values of the Petitioner’s property, except for a reduction in irrigated acreage by twenty acres as requested by the Petitioner which is not at issue in this appeal.
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 (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, §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 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;
(c) Without observance of procedure required by law; or
(d) Unsupported by substantial evidence.
Rules, Wyoming 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 conclusions.
Clark v. State ex rel. Wyoming Workers’ Safety and Compensation Division, 934 P.2d 1269, 1272 (Wyo. 1997).
Petitioner, D Bar D Ranch, LLC, brings three issues to the State Board in this appeal:
(1) the assessment of its irrigated crop land in terms of the production value and classification of that irrigated land;
(2) the assessment of two agricultural outbuildings located on D Bar D land which are not part of the residential farmsteads on the ranch; and
(3) the assessment of three one-acre residential farmsteads.
We conclude the decision of the County Board was not arbitrary, capricious, or contrary to law. We further conclude there was substantial evidence in the record supporting the County Board decision.
FACTS PRESENTED TO THE COUNTY BOARD
1. The Petitioner owns a 1,738.95 acre ranch in Sheridan County, Wyoming. The property is located at 38, 65, 66, and 192 Bear Gulch Road, Sheridan County, Wyoming. William J. Doenz is the manager of the D Bar D Ranch, LLC, and the representative of the current owner of the property. [Trans. pp. 18-19].
2. The Assessor sent Petitioner a Notice of Assessment for the 2004 tax year on April 19, 2004. [Trans. pp. 98-99].
3. On May 20, 2004, Petitioner filed five Official Appeals of Assessment. [County Board Record, pp. 1-5]. Four of the original five dockets are at issue in this appeal:
1) Appeal No. 4-1, asking that 280 irrigated acres be reclassified.
2) Appeal No. 04-2, asking the land values of three one acre farmsteads be reduced from $40,000 to $10,000 each.
3) Appeal No. 04-3, asking the appraised value of a riding arena be reduced from $72,499 to $56,700.
4) Appeal No. 04-4, asking the appraised value of a horse barn be reduced from $22,002 to $14,175.
4. On June 21, 2004, the executive secretary of the Sheridan County Commissioners advised Petitioner the Sheridan County Board of Equalization would hear its case on July 21, 2004. [County Board Record, pp. 6-7].
5. At the hearing, Mr. Doenz argued that the full 280 acres of D Bar D irrigated crop land should be classified as LRA (Land Resource Area) 2 with Land Capability Classification of Class V-VIII because the production rate of the irrigated land was only 1.5 tons of hay per acre. [Trans. pp. 28-30]. The 2004 Agricultural Land Valuation Study combines Class V thru Class VIII together in one category for irrigated crop land valuation. [Exhibit B, p. 7-7].
6. Mr. Doenz testified that the ranch irrigated its crop land under a water right from the Big Goose Beaver Ditch Company. [Exhibit A]. Mr. Doenz said he had been growing grass hay on this land for over twenty years and he sometimes did not get water from the Big Goose Beaver Ditch until late May. This delay is one of the reasons the land does not produce more than 1.5 tons of hay per acre. [Trans. pp. 24-25].
7. In support of the figure of 1.5 tons per acre, Mr. Doenz referred to a letter from Jerry Forrester, District Conservationist, United States Department of Agriculture, Natural Resources Conservation Service. [Trans. pp. 26-27, 49, 140; Exhibit E]. Forrester was not called as a witness. Mr. Forrester’s letter only confirms that he will provide an overall stocking rate and forage balance, without stating any estimate of productive capacity or referring to irrigated agricultural land. [Exhibit E].
8. Mr. Doenz testified that the riding arena was built by the Morton Buildings Company in l984. The building is 48 feet wide and 210 feet long with approximately 10,080 square feet, and is an all purpose building. The same company built the horse barn the next year. The horse barn is 42 feet wide and 60 feet long. [Exhibits 9a, 9b; Trans. pp. 31-32]. Mr. Doenz testified that he had talked to Morton Buildings and was told it would now cost $7.50 per square foot to construct the same buildings. [Trans. p. 32]. Mr. Doenz, however, provided no documentation to support the claimed estimate, and called no witness from Morton Buildings.
9. Mr. Doenz apparently did not object that the Assessor valued the agricultural outbuildings by calculating their replacement cost new less depreciation. However, he took issue with the Assessor’s use of a market adjustment as part of the value calculation. [Trans. pp. 32-33, 53, 56-57]. Mr. Doenz believed only residential properties are to be market adjusted. [Trans. p. 33]. In support of his view, Mr. Doenz testified that he had contacted assessor’s offices in Johnson County, Natrona County, Laramie County, and Albany County, and he understood that each of these counties value agricultural outbuildings by use of replacement cost new less depreciation with no market adjustment. [Trans. pp. 34-35]. These contacts, however, were not documented in any way, and Mr. Doenz did not call representatives of the assessors in other counties to testify.
11. Mr. Doenz testified the ranch’s three farmsteads are assessed based on the area of one acre each. [Trans. pp. 34]. All of the farmsteads are located on land zoned agricultural, and Mr. Doenz testified that the farmsteads could not be sold in single acre parcels, due to zoning restrictions and covenants. [Trans. pp. 36-37, 42-43]. He concluded the Assessor’s value of $40,000 for each farmstead acre was too high. [Trans. p. 40]. Mr. Doenz pointed to sales from ERA Carroll Realty Co., Inc., to argue that the average sale price of appropriately sized parcels was $11,000 to $12,000 per acre. [Trans. pp. 39-40]. The Red Grade Road property was 30.192 acres in area with a list price of $369,000, and a sales price of $351,000. The Big Goose property was 35 acres in area with a list price of $367,500 and sold at that price. [Exhibit D; Trans. p. 39].
12. Mr. Doenz admitted he was not a certified appraiser, had no training concerning property tax appraisal, and was not familiar with the Computer Assisted Mass Appraisal system (CAMA). [Trans. p. 43]. Petitioner did not call any property valuation expert other than the Assessor.
13. In December, 2002, the D Bar D Ranch acquired the ranch property and had a fee appraisal done. [Trans. p. 44]. Mr. Doenz did not disclose any portion of that appraisal in support of his appeal, and would reveal only that none of the property appraised for $40,000 an acre. [Trans. pp. 44-46].
14. Mr. Doenz complained that in previous years, the Assessor’s office has given him relief in response to similar complaints, but did not do so for this year. [Trans. pp. 52-53].
15. Petitioner called Paul Fall, who testified that he has served as the elected Sheridan County Assessor since January, 1999. He is certified as a Wyoming property tax appraiser and has accreditation from the International Association of Assessing Officers. He is responsible for determining the taxable value of property within Sheridan County. He explained he followed Department and State Board Rules and Regulations which establish the procedures that must be used for appraising property. [Trans. pp. 59, 89-91].
16. Fall testified that Petitioner’s irrigated land is assessed under the Department’s LRA-2 category, with half of the land being assessed under production level IV and the other half under production levels V-VIII. [Trans. pp. 59-60]. Fall explained that his office typically does not reconsider productivity classification in the absence of some demonstration of inaccuracy by the taxpayer, and that a mere oral representation is insufficient. [Trans. pp. 60-62, 100]. Fall also explained that the specific assignment of productivity is done by his staff. [Trans. pp. 62-63].
17. Historically, the Assessor has used the average of the high value and low value allowed by the Department for production on the various classifications of agricultural land. [Trans. p. 70]. The Assessor’s office does not get into production per se in the County’s CAMA system. [Trans. p. 70].
18. Fall testified that his office uses replacement cost less depreciation plus either a cost-location multiplier or a market adjustment to value residences and agricultural outbuildings. [Trans. p. 71]. The data underlying these calculations is field measurement, by staff in the assessor’s office, of the size and quality of construction of all buildings in the county. The data is maintained in the CAMA system. [Trans. p. 92].
19. Fall stated that all buildings in the County, including agricultural outbuildings, must be assessed at fair market value. [Trans. pp. 71-72]. The Assessor’s system computes a value adjustment for such outbuildings by reference to confidential sales information. [Trans. p. 73].
20. The Department provides the cost figures that are applied to the known size of Petitioner’s buildings, in this case, $7.50 per square foot; this figure is intended to represent new construction. [Trans. p. 77]. Petitioner’s buildings were then depreciated from this cost based on their age. [Trans. pp. 77-78; Exhibit 15]. The result, which was a value for the building but not the land, was then adjusted upward by a market adjustment of fifty percent. [Trans. pp. 78, 94-95; Exhibit 15]. The Department allows the County to use either the market adjustment or a cost-location multiplier; for the year in question, the cost-location multiplier would be 1.54, or an adjustment of 54% rather than the 50% actually used. [Trans. pp. 78, 91]. The Assessor understands that the Department requires an adjustment to reach fair market value. [Trans. pp. 78, 91]. A calculation that only uses replacement cost less depreciation will fall short of fair market value. [Trans. p. 83].
21. The amount of the market adjustment is based on confidential sales information, known as Statements of Consideration, collected under state law. [Trans. pp. 92-93]. The market adjustments are also made on the basis of neighborhood groups; the entire county is divided into neighborhood groups in order to arrive at locally appropriate adjustments. [Trans. p. 93]
22. Fall denied that agricultural outbuildings may be treated any differently than residential buildings. [Trans. pp. 79, 82].
23. Fall agreed that the result of the County’s calculation may be a value greater than what it would cost to build the building new. [Trans. pp. 79-80].
24. Fall denied that the adjustment represented the value of the land beneath the buildings. For the building valuation, land value is extracted out. [Trans. pp. 80-82].
25. The Assessor testified the three one acre farmsteads were valued using the sales comparison approach with one or two acre comparables not 35 acre parcels. [Trans. p. 84]. The Assessor is trying to determine a market value for the farmsteads without regard to the fact that the land is zoned agricultural. [Trans. pp. 84-85]. The Assessor’s job is to reach that value even though the residences cannot, as a practical matter, be sold as one acre parcels. [Trans. p. 86]. The Assessor would not use 30 acre sales, because they would not reach the same value as one acre parcels. [Trans. p. 87]. Zoning is not taken into account by the Assessor unless the property is commercial or industrial. [Trans. pp. 84-85]. Fall testified that the size of the parcel is a more important value factor than zoning. [Trans. p. 88].
26. Sales from the confidential Statements of Consideration are validated before being entered into the CAMA system. The Assessor’s office tries to use comparable sales within the same neighborhood to control the ratios as required by the Department. When comparing agricultural buildings, the land value is removed in order to place a value on only the building. [Trans. pp. 93-95].
27. The Assessor called Rita Glantz, the Assessor’s Chief Field Appraiser. [Trans. p. 97]. Glantz is a certified field appraiser. [Trans. p. 97]. Her general responsibility is to identify and value all taxable property for ad valorem taxation. [Trans. p. 98]. She personally inspected the D Bar D property after Mr. Doenz first questioned the valuation. [Trans. p. 99].
28. When valuing agricultural land, Glantz begins with state guidelines for resource (production) areas. [Trans. p. 101]. The D Bar D is in Land Resource Area 2. [Trans. p. 102; Exhibits 12, 13, 14]. The Assessor has some discretion to account for different productivity within a Land Resource Area by reference to tables that allow the Assessor to break land into classifications reflecting higher to lower production. [Trans. p. 102]. Sheridan County started mapping county lands in the late 1970's using the Department of Agricultural Stabilization and Conservation Service information for production. [Trans. p. 104]. The agricultural land is valued on its capability to produce. [Trans. p. 105].
29. For the agricultural irrigated land in this appeal there were four different classifications, ranging from Class II (the highest) to Class V-VIII (the lowest), in Petitioner’s assessment schedule the previous year. [Exhibit 5; Trans. p. 103]. This year Glantz revised D Bar D’s assessment schedule to reflect only Class IR-IV and Class IR-V, and evenly divided Petitioner’s land between the two classes, effectively lowering the value of Petitioner’s irrigated land. [Exhibit 6; Trans. p. 103]. We could have wished for more explanation from the Assessor about the limitations that warranted a change to Class IR-IV and Class IR-V and eliminating Class II and Class III. By definition, “Class IV soils have very severe limitations that reduce the choice of plants or require very careful management or both.” [Exhibit 22, p. 5-15]. Further, “Class V soils are not likely to erode but have other limitations, impractical to remove, that limit their use.” [Exhibit 22, p. 5-15]. Those limitations might include shallow, droughty, or stony soil, or very cold or dry climate. [Exhibit 22, p. 5-15]. The limitations are not apparent from Petitioner’s photographs of the irrigated lands. [Exhibit F]. However, the only issue before the County Board was whether all of the Petitioner’s irrigated land should be categorized as Class V, and therefore assigned a lower value.
30. The Assessor is willing to lower its evaluation of the productive capacity of the land if the taxpayer provides suitable documentation regarding precipitation and soil. [Trans. pp. 105, 129]. On the other hand, value should not be reduced just because the taxpayer is not using the land to its capacity. [Trans. pp. 105, 127-128]. Petitioner presented documentation from the USDA Natural Resource Conservation Service showing general range soils and a letter concerning stocking rates and forage information. This information concerns rangeland and not irrigated crop land. [Exhibit E]. The Petitioner presented no documentation to support its claim that all of his land should be Class V-VIII.
31. Ms. Glantz testified that farmsteads are exempt from agricultural values (agricultural valuation applies only to land used for agriculture) and are valued on fair market value which is the same for all houses and outbuildings. [Trans. pp. 105-106]. In the end, the D Bar D horse barn is a pole building which is essentially the same as pole buildings found elsewhere in the County. [Trans. p. 114; Exhibits 9a, 9b]. The Assessor’s office tries to treat everyone equally. [Trans. p. 114].
32. At one time, the Assessor’s office manually depreciated outbuildings. [Trans. p. 107]. The office now values the outbuildings in a miscellaneous format based on the BOECKH costing program. [Trans. p. 108]. Glantz believes the BOECKH system cost of $7.50 per square foot for outbuildings is in fact low. [Trans. p. 117]. The Assessor’s office is in the process of moving to a different costing system that the office considers superior. [Trans. p. 112].
33. All farmsteads and outbuildings are included in the Assessor’s neighborhood system. [Trans. p. 106]. Every outbuilding will get some sort of market adjustment based on the neighborhood in which it is located. [Trans. pp. 111-114].
34. Glantz stated the Assessor has the ability to make minor adaptations to the general CAMA system, and in keeping with this ability, uses a market adjustment rather than a cost multiplier. The Assessor’s office found using the market adjustment gets better results, particularly when valuing miscellaneous improvements attached to residences. [Trans. pp. 108-126]. The Assessor found that the cost-location multiplier tended to result in too high a value. [Trans. p. 108]. However, the market adjustment serves the same general purpose, which is to bring the cost estimate up to market value. [Trans. p. 116].
35. When asked why the Assessor’s office was using one acre for the farmstead Ms. Glantz informed the County Board the previous County Assessor, Doug Minick, selected the one acre size when the CAMA system was first introduced. [Trans. p. 126]. The County wished to be uniform in its approach to valuing farmsteads, and settled on one acre per home site with an eye to water and septic requirements. [Trans. p. 127].
36. Glantz testified that the Assessor’s office looks for one and two acre comparables rather than ten or twenty acre comparables because the small parcels sell differently than the larger parcels. The Assessor believes this approach is the fairest way to reach fair market value for residential properties on land zoned agricultural. [Trans. pp. 122-123]. Glantz also noted that she cannot use agricultural land sales to determine residential values. [Trans. p. 120]. For sources of value, the Assessor must look strictly to properties that are not agricultural in nature and not being used for agriculture. [Trans. pp. 119-122].
37. On July 30, 2004, the County Board issued an order affirming the Assessor’s values except to reduce the acreage of Petitioner’s irrigated lands, and directed the preparation of Findings of Fact and Conclusions of Law. [County Board Record, Volume III, item 14]. On September 21, 2004, the County Board accepted the Findings of Fact, Conclusions of Law and Order which was subsequently signed and dated by the Chairman of the County Board. [County Board Record, Volume III, Item 15].
DISCUSSION OF PETITIONER’S ISSUES AND APPLICABLE LAW
38. Petitioner’s Notice of Appeal to the State Board was filed timely. The State Board has jurisdiction to hear and determine all issues properly raised pursuant to Wyo. Stat. Ann. §39-13-109(b)(ii).
39. 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, 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).
40. The Department is required to confer with, advise and give necessary instructions and directions to the county assessors as to their duties, and to promulgate rules and regulations necessary for the enforcement of all tax measures. Wyo. Stat. Ann. §39-11-102(c)(xvi) and (xix). In particular, the Department “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)(ii). The Assessor is required to follow these rules and regulations.
Value Classification of Petitioner’s Irrigated Land
41. Petitioner’s first complaint concerns the County Board’s affirmation of the Assessor’s classification of 50% of the Petitioner’s irrigated crop land Class IR-IV. Petitioner asked the County Board to classify all of the irrigated crop land as Class IR-V-VIII. In other words, rather than splitting the value of the land between the two lowest classifications, Petitioner insisted that all of its irrigated land be placed in the lowest classification for irrigated agricultural land.
42. The primary consideration in classifying agricultural land for assessment purposes is the land’s capability to produce agricultural products. Wyo. Const. Art. 15 §11(b); Wyo. Stat. Ann. §39-13-103(b)(x)(B)(IV); Rules, Wyoming Department of Revenue, Chapter 11, §4 (a)(ii).
43. The Department’s Rules, Chapter 11, §5(a) require the Department to develop valuation amounts for agricultural land using the “Mapping and Agricultural Manual.” The Department publishes this valuation information through the annual Agricultural Land Valuation Study:
Valuation amounts for agricultural land for assessment purposes shall be based upon the Department’s Mapping and Agricultural Manual, and shall be published annually by January first or as soon thereafter as possible by the Department of Revenue. The valuation of agricultural land is based upon the land’s capability to produce forage or crops.
Rules, Wyoming Department of Revenue, Chapter 11, §5(a). The land’s capability to produce is determined by a process that relies on reported hay prices converted to a five year weighted average. Rules, Wyoming Department of Revenue, Chapter 11, §5(b)(ii)(A)(I).
44. The Department is obliged by statute to prescribe the appraisal methods and systems that county assessors must use to determine fair market value. Wyo. Stat. Ann. §39-14-103(b)(ii); Rules, Wyoming Department of Revenue, Chapter 11. Likewise, a county assessor is required to “[f]aithfully and diligently follow and apply the orders, procedures and formulae of the department of revenue or orders of the state board of equalization for the appraisal and assessment of all taxable property.” Wyo. Stat. Ann. §18-3-204(a)(ix). The Department’s annual Agricultural Land Valuation Study, as an order, procedure, or formula, is binding on an assessor. Neither the Assessor, nor the County Board have the authority to deviate from the valuation ranges established by the Department. Rules, Wyoming Department of Revenue, Chapter 11, §5(c). [County Board Record, p. 108].
45. An assessor is “responsible for developing and maintaining current maps, in accordance with the [standards of the Department’s] Mapping and Agricultural Manual, which depict all three categories of agricultural land use, which include irrigated crop land, dry crop land and rangeland.” Rules, Wyoming Department of Revenue, Chapter 11, §3(g), (h) and (j), §4(a), and (b)(iii). Standards and productivity sources are specified in the Department’s Mapping and Agricultural Manual. Rules, Wyoming Department of Revenue, Chapter 11, §4(b). The proper valuation of each agricultural parcel is accomplished through the use of Natural Resources Conservation Service’s Soil Surveys, color infrared photography, aerial photography and U.S.G.S. [United States Geological Survey] orthophotos. Mapping and Agricultural Manual, §5, p. 5. (July 30, 1996).
46. At the County Board hearing, Mr. Doenz testified about the relatively low productivity of D Bar D’s land over the past twenty years. However, Petitioner did not support his testimony about this production history with documents or the testimony of other witnesses, leaving the County Board with nothing more than the testimony of Mr. Doenz, who was not an unbiased observer. The Assessor also had a practice and policy of not accepting unsubstantiated claims of substandard productivity. Supra, ¶16. The County Board could properly have found that Mr. Doenz failed to carry D Bar D’s burden of proof with respect to productivity.
47. Even if the County Board had accepted Mr. Doenz’s testimony about what the irrigated lands of the ranch had produced in recent years, the productivity of agricultural land is based on the classification of the land and its ability to produce, not what it actually produces. Rules, Wyoming Department of Revenue, Chapter 11, §4(a)(ii). While the Petitioner argues that Mr. Doenz did indeed testify to what the land can produce, the County Board could still properly have found that Mr. Doenz failed to carry D Bar D’s burden of proof with respect to the capability of the land to produce. At the same time, the Assessor valued the land consistent with the capability of the land to produce, and with the Department requirements.
48. Based on the applicable constitutional provision; the Wyoming Statutes and Rules and Regulations of the Department, which require the Assessor to classify agricultural land based on its capability to produce; and the absence of scientifically sound evidence to establish a different land classification, we conclude that the County Board properly affirmed the Assessor’s land classification. The County Board was not arbitrary or capricious, did not abuse its discretion, and did not otherwise fail to act in accordance with law.
49. We further conclude that there was substantial evidence in the record to support the findings of the County Board.
Market adjustment to outbuildings
50. Our evaluation of Petitioner’s arguments on this issue must take place in the context of the Department’s regulations governing Appraisal Methods, and in particular, the fit between specified methods and the CAMA systems in use in all Wyoming counties. Rules, Wyoming Department of Revenue, Chapter 9,§6. From the face of the regulations, we know that the CAMA systems authorized by the Department are not in and of themselves appraisal methods. Rules, Wyoming Department of Revenue, Chapter 9,§6(d). We also know that the Wyoming Supreme Court has upheld the use of such CAMA systems. Gray v. State Board of Equalization, 896 P.2d 1347 (Wyo. 1995).
51. As the assessor testimony in this case indicated, a common feature of the CAMA applications statewide, whether CLT or WYS, is information about each building in a county, from which a cost estimate can be generated. Rules, Wyoming Department of Revenue, Chapter 9,§6(d)(i). However, the Department’s regulations do not limit a county assessor who uses a CAMA system to only the cost approach to value. To the contrary, the Department’s regulations oblige the assessor to weigh alternative approaches to value, and “to place the most weight and reliance on the value indicator which, in his professional judgment, best approximates the value of the subject property.” Rules, Wyoming Department of Revenue, Chapter 9, §7.
52. In addition to the cost approach, Rules, Wyoming Department of Revenue, Chapter 9,§ 6(b), an assessor may also consider the sales comparison approach for the same property, Rules, Wyoming Department of Revenue, Chapter 9,§6(a), as the Assessor did in this case through a market adjustment. The income approach is also available. Rules, Wyoming Department of Revenue, Chapter 9,§6(c). The principal restriction on alternative approaches is that, “each approach used shall be an appropriate method for the type of property being valued; that is, the property shall fit the assumptions inherent in the appraisal method in order to calculate or estimate the fair value of the property.” Rules, Wyoming Department of Revenue, Chapter 9,§6.
53. As CAMA systems are currently configured in some counties, an assessor who applies a sales comparison approach may need to do so by grafting their approach on top of the results of CAMA’s cost calculations, which is what the Assessor has done here. While an assessor may occasionally have reason to pursue a formal sales comparison for a specific property, some counties have the capability to do an independent sales comparison valuation within the particular version of the CAMA system available in that county. The Department’s restrictions on the sales comparison approach are modest, and accommodate these alternative mass appraisal techniques:
....The use of [the sales comparison] approach to value depends upon:
(i) The availability of comparable sales data;
(ii) The verification of the sales data;
(iii) The degree of comparability or extent of adjustment necessary for time differences; and
(iv) The absence of non-typical conditions affecting the sales price.
Rules, Wyoming Department of Revenue, Chapter 9, §6(a)(i) through (iv). As their principal source of information regarding sales, the county assessors, the Department, and this Board have access to confidential real estate sales data which must be filed by law and made available for such comparisons. Wyo. Stat. Ann. §34-1-142(a), (d). The County Board could properly have found that the information which the Assessor used to make market adjustments satisfied the criteria of the sales comparison approach regulations.
54. In this regard, we note that the market adjustment is not the same as, and should not be confused with, use of the trended original cost method authorized by the Department’s cost approach regulations. Rules, Wyoming Department of Revenue, Chapter 9, §6(b)(v)(H).
55. Distilled to its fundamentals, the Petitioner argues that if the Assessor relies on the powerful cost approach features of CAMA, the Assessor is restricted to the cost approach, and nothing more.
56. First, Petitioner argues that there is no evidence to support the use of a 50% market adjustment. We disagree. The Assessor and Ms. Glantz testified that the adjustment was based on sales from neighborhoods throughout the county, and on information from sales of similar properties. While the Petitioner may find those explanations unsatisfactory, the presumption nonetheless favored the Assessor, and the County Board could properly have found that Petitioner failed to carry its burdens of proof and persuasion. We also conclude that there was substantial evidence to support the County Board’s conclusion.
57. As a variation on this theme, Petitioner argues that the Assessor himself introduced evidence that demonstrated inconsistent market adjustments within two neighborhoods, one of which was the neighborhood in which Petitioner is located. [Petitioner’s Reply Brief, argument 2(b)(i); Confidential Exhibits 17a-17h]. The problem with Petitioner’s argument is that these exhibits were not discussed during the hearing. The County Board had no way of knowing whether the selected exhibits were representative, were a collection of anomalies, or could be readily distinguished from one another on grounds not discussed before the County Board. The County Board could properly have given these exhibits little weight, and found for the Assessor.
58. Second, Petitioner argues that the Assessor’s valuation cannot meet the fair market value test. To support this argument, Petitioner correctly observes that the market adjustment raises the value of the outbuildings to a value greater than the cost of building new buildings. The Petitioner asserts that this result is contrary to the general principle found in the Department’s regulations concerning the cost approach, i.e., “[t]he 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).
59. However, as we have already explained, Petitioner incorrectly assumes that the Assessor was limited to the cost method alone. The market adjustment represents a sales comparison approach applied within the context of the practical constraints of the Sheridan County Assessor’s version of CAMA. The Assessor is not only authorized but obliged to reconcile the results of different approaches to value, supra, ¶51, and exercised his discretion to do so by use of the market adjustment. The Petitioner’s coy refusal to disclose the results of its own recent appraisal, supra, ¶13, could have given rise to an inference that the Petitioner agreed that the cost approach understated fair market value.
60. This is not to say that a different assessor may have exercised his discretion in a different way, or that a county with a different State-authorized version of CAMA may have accounted for the results of sales comparison information in a different way. We only conclude that under current statute and regulation, the County Board did not err in finding for the Assessor. To the extent the Petitioner believes current regulations are in some way too lax, its remedy lies with the Department rather than the County Board.
61. Third, the Petitioner argues that the Assessor has mistakenly applied the market adjustment to compensate for the perceived shortcomings of the BOECKH cost tables in Sheridan County. We would agree with the Petitioner if the Assessor were confined only to use of the cost approach; the solution to outdated cost tables is updated or corrected cost tables. At the same time, we disagree that the Assessor was limited to a cost approach. If the BOECKH tables were outdated, mathematically there would be a larger indicated difference between the cost approach calculations and related sales comparison results, and therefore a larger market adjustment than if the tables were as accurate as possible. This fact does not prevent the Assessor from making the adjustment indicated by sales comparisons.
62. Fourth, the Petitioner argues there is no uniformity in the assessment of agricultural outbuildings in the State of Wyoming, because Assessors in other counties do not apply a flat market adjustment to the results of their cost approach. [Reply Brief, Argument 2(b)(v)]. We conclude that the County Board’s ruling was proper. Our conclusion rests on the general reconciliation principles set forth above; on the County Board’s ability to evaluate the credibility of Mr. Doenz, and reject his testimony; and on potential mistakes in Petitioner’s assumptions about practices in other counties.
63. Setting aside for a moment the County Board’s authority to evaluate the credibility of Mr. Doenz’s testimony, Mr. Doenz has ignored the possibility that in some counties, the CAMA system enables the assessor to generate two independent calculations – a cost approach and a sales comparison approach – then reconcile the results if they are different. If the assessors that Mr. Doenz contacted had generated two separate calculations, Mr. Doenz would have indeed learned that other assessors did not adjust the cost approach results. However, without asking more questions, Mr. Doenz would not have learned anything more, and could have mistakenly assumed that the cost approach was the only approach to value used in those counties. Moreover, without further questions, Mr. Doenz might not have learned whether market conditions and the availability of sales data in other counties vary from the circumstances in Sheridan County, so that other assessors may have had reasons for favoring the cost approach even if sales comparisons were available. Nothing in the transcript leads us to believe that Mr. Doenz either appreciated or cared to appreciate these potential differences. The County Board would in any event have been justified in concluding that Mr. Doenz presented an incomplete, and hence inaccurate, picture of assessment practices in other counties.
64. To dispose of the farmstead valuation issue, we must provide some context. As the record in this case attests, Wyoming provides favorable tax rates for agricultural and grazing lands. While other property in the state is to be uniformly valued at full value, agricultural and grazing lands must be valued “according to the capability of the land to produce agricultural products under normal conditions.” Wyo. Const., Art. 15, §11(b). We have already described the process by which values for such lands are generated, pursuant to statute, Wyo. Stat. Ann. §39-13-103(b)(x), and regulation, supra, ¶42 et. seq. This favorable treatment applies only to land, not to residential or commercial buildings or agricultural outbuildings.
65. Just how favorable this treatment is can be seen by comparison of the value per acre Petitioner seeks for its irrigated lands – $446 – and the value the Assessor had determined for the acre underlying each of Petitioner’s three farmsteads – $40,000.
66. As the Assessor has explained, he determines the value in generally the same way for all residential property owners. The holder of agricultural lands, like D Bar D, is not entitled to favorable treatment for the lands on which residences are located. This point is not at issue.
67. State statute does not dictate the size of a farmstead. The pertinent regulation of the Department authorizes a range:
(c) “Non-agricultural lands” shall include but not be limited to lands as described in the State of Wyoming market valuation of Residential, Commercial and Industrial Lands as published by the Department of Revenue, Ad Valorem Tax Division:
* * *
(iv) Farmsteads with lands occupied by buildings which constitute the homesite including one or more acres of land used in direct connection with the homesite;
Rules, Wyoming Department of Revenue, Chapter 10, §3(c)(iv). [emphasis supplied].
68. The Assessor has previously exercised his discretion to establish the size of the farmstead at one acre, the minimum authorized by State regulation. The Petitioner does not dispute this exercise of the Assessor’s discretion. By regulation, a county assessor has the discretion to select a larger farmstead size. Given the vast differential between the value of residential lands and agricultural lands for ad valorem tax purposes, it is easy to see why the Petitioner tacitly approves of the Assessor’s exercise of discretion.
69. Having accepted the favorable aspects of the Assessor’s use of his discretion, Petitioner would have the County Board, and this Board, limit that same discretion when it comes to comparisons used to determine the value of the land on which the residence rests. Petitioner argues that agricultural zoning must be taken into account. The practical effect of this argument is a claim that Petitioners are entitled to a single farmstead acre valued on the basis of property sales of much larger acreage, for much less an acre than sales of smaller parcels.
70. Of course, Petitioner’s argument could readily be turned on its head. If agricultural zoning means that the only reasonable, correct, and permissible comparison is with 35 acre parcels, then it makes as much sense to insist that each farmstead should be deemed to rest on 35 acres. The result of this logic would be to deprive the Petitioner of the enjoyment of its low agricultural land valuation on 35 acres of farmstead rather than just one acre.
71. Whether framed for or against the interests of the Petitioner, Petitioner’s argument misses the point plainly grasped by the Assessor, which is to equitably treat all owners of residential property without creating unwarranted privilege for those whose residential properties rest on what would otherwise be agricultural lands. By regulation, the Petitioner’s farmsteads are non-agricultural lands, and Petitioner is not entitled to more favorable treatment than other similarly situated homeowners in Sheridan County. The County Board properly found for the Assessor.
72. The County Board properly rejected Petitioner’s argument for the independent reason that the farmstead dispute can readily be viewed as a mere difference of opinion between the Petitioner and the Assessor over the significance of agricultural zoning on determining value in a mass appraisal context. A mere difference of opinion as to value is not sufficient to overcome the presumption in favor of the Assessor’s valuation. Supra, ¶39.
The amicus curaie brief of Douglas Minick
73. The State Board granted Douglas K. Minick, previously the County Assessor in Sheridan County, leave to file an amicus curiae brief. An amicus curiae is a person who is not a party to a lawsuit but who is granted leave to file a brief in an action because that person has a strong interest in the subject matter. See Black’s Law Dictionary, p. 83 (7th Edition, 1999). While the State Board generally welcomes important expressions of principle, it appears that Mr. Minick was under the impression that this Board can or should take into account material that, on its face, was more in the nature of an expert opinion than a brief in the customary format anticipated by the State Board. See Wyoming Rules of Appellate Procedure, Rule 7.12. The State Board bears some responsibility for this misunderstanding, because it did not insist that a copy of the proposed brief be filed with Mr. Minick’s motion to submit the brief. See Wyoming Rules of Appellate Procedure, Rule 7.12(b). In any event, if Mr. Minick’s opinions were to be included in the record in this case, the correct way to do so was for D Bar D to call Mr. Minick as a witness during the County Board hearing. We have accordingly disregarded any assertions of fact by Mr. Minick that were within the exclusive province of the County Board to weigh and evaluate.
IT IS THEREFORE HEREBY ORDERED that the Sheridan County Board of Equalization Order Denying the Petitioner’s Protest and Affirming the 2004 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.
Dated this _______ day of April, 2005.
STATE BOARD OF EQUALIZATION
Alan B. Minier, Chairman
Thomas R. Satterfield, Vice-Chairman
Thomas D. Roberts
Wendy J. Soto, Executive Secretary