BEFORE THE STATE BOARD OF EQUALIZATION
FOR THE STATE OF WYOMING
IN THE MATTER OF THE APPEAL OF )
ALBANY COUNTY ASSESSOR FROM )
A DECISION OF THE ALBANY COUNTY ) Docket No. 2004-134
BOARD OF EQUALIZATION - 2004 )
PROPERTY VALUATION (Bonds Property) )
DECISION AND ORDER
James Schermetzler, Deputy Albany County Attorney on behalf of Deborah J. Smith, the Albany County Assessor (Petitioner or Assessor).
Steven L. Bonds, appearing pro se, on behalf of himself and Terry Ann Bonds (Respondent or Taxpayer).
This is an appeal from a decision of the Albany County Board of Equalization (County Board). 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. The Petitioner’s Notice of Appeal was filed with the State Board effective October 6, 2004. The Petitioner and Respondent filed briefs as allowed by the State Board’s Briefing Order issued December 16, 2004. Neither party requested oral argument.
The Assessor appealed a decision of the County Board modifying the Assessor’s 2004 valuation of the Bonds Property from $105,600 to $83,050. We reverse the decision of the County Board and reinstate the Assessor’s valuation.
PROCEEDINGS BEFORE THE COUNTY BOARD
The County Board conducted a hearing on July 23, 2004. A “Findings of Fact, Conclusions of Law and Order” was entered by the County Board on September 7, 2004, directing the Assessor to lower the Taxpayer’s valuation from $105,600 to $83,050.
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 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).
The Assessor raises two issues with the County Board decision: whether the County Board decision is unsubstantiated by the evidence, and whether the decision arbitrarily and capriciously determines the property’s fair market value for the 2004 tax year.
We conclude the decision of the County Board was arbitrary, capricious, and unsupported by substantial evidence. We further conclude there was substantial evidence in the record supporting the Assessor’s valuation.
FACTS PRESENTED TO THE COUNTY BOARD
1. The Respondents own a residential property at 165 USFS FDR #633, Albany County, Wyoming. [County Board Record, p. 4].
2. The Assessor sent Respondent a Notice of Assessment for the 2004 tax year in May of 2004. [County Board Record, p. 87].
3. On June 23, 2004, Respondent filed a Petition For Appeal. The Albany County Assessor sent a letter to the Taxpayer advising him of the July 23, 2004 hearing before the Albany County Board of Equalization. [County Board Record, pp. 15, 84-85].
4. At the hearing the Taxpayer testified that he was concerned about the increase in the assessed value of his property since 2003 and the properties in the south end of the county that were used as comparisons. [Trans. p. 94].
A. The Respondent’s evidence before the County Board consisted of a written statement. [County Board Record, pp. 84-85].
B. The Respondent expressed concern that the comparable properties used by the Assessor were “located in prime recreational spots such as lakes, ski areas, etc. Locations such as these tend to command a premium price. Cabins in remote, undeveloped northeast corner tend to command a lesser price.” The map of the comparable properties submitted by the Assessor confirms that the Respondent’s property is located in the northeast corner of Albany County while four of the comparable properties used by the Assessor are in the southwest corner of Albany County and the fifth comparable is south of Laramie. [County Board Record, p. 84; Exhibit 20, p. 28].
C. The Respondent expressed concern that the valuation of his property increased from $60,500 in 2003 to $105,600 in 2004. [County Board Record, p. 96].
5. Cheri Frank, Residential Appraiser for the Albany County Assessor’s Office, testified that she was a Certified Property Tax Appraiser in the State of Wyoming and had a permanent certification from the International Association of Assessing Officers (IAAO). [Trans. p. 107].
6. The Appraiser testified with regard to the valuation process using the Computer Assisted Mass Appraisal system (CAMA). She testified that all sales in Albany County are recorded with the county clerk and verified by her office to make sure the sales are arms-length transactions. Only qualified sales are used in the sales approach for valuation and these sales are entered into the computer. [Trans. p. 108].
7. The Appraiser testified these comparable sales took place between 2001 and 2003 and are similar to the Taxpayer’s property. Since the sales are more current for the comparable properties fewer adjustments are needed to make them look like the subject property. Like a fee appraisal, when these properties are chosen by the computer, adjustments are made. For instance, in the square footage there would be a slight adjustment on most of the comparable parcels so they represent the same square footage as the subject property. [Trans. p. 110].
8. The Appraiser testified the Assessor’s Office is able to establish a value to create a model to apply to these properties so all 16,000 parcels in the county can be valued at one time utilizing the mass appraisal process. She verifies all sales to ensure they are arms-length transactions. Bankruptcy or foreclosure sales are not used. [Trans. p. 109].
9. The Appraiser testified the Taxpayer’s property was a cabin, basically a recreational use structure similar to many cabins in the southern part of the county, which are in the area where a majority of recreational sales have taken place. In the northern part of Albany County there are several 35 acre subdivisions that can not be used as comparables since they are larger sections of land; for the most part there are no residential structures on these parcels. [Trans. p. 111]. The sales used for comparison were verified. The Appraiser personally reviewed the sales that took place in the last five years to create the model based on the statistical analysis of sales. In that model the variables were created that were applied to the 16,000 parcels allowing the office to do a full mass appraisal of the entire county on an annual basis. [Trans. p. 115].
10. The Respondent questioned whether or not three sales in the Harris Park area were used as comparables (the Hensel property, Beatty property and Hubbard’s Cupboard). [Trans. p. 95].
11. The Appraiser testified that the Assessors’ Office had no record that a valid sale actually took place for the Beatty property in the last five years, although it may have been recorded in Platte County. However, the Hensel property sold on September 16, 2003 for $75,000. The current valuation for 2004 is $116,400. [Trans. p. 126]. It was not used as a comparable because of differences in square footage, age, bathrooms and heating. The Appraiser testified there are many differences between neighboring properties. The Hubbard’s Cupboard property is not a residential property. It is a bar and listed as a commercial property. [Trans. pp. 112-114]. Although the Taxpayer understood that Hubbard’s Cupboard recently sold for less than a hundred thousand dollars [Trans. p. 95], the Appraiser testified that the property had in fact sold for $240,500. [Trans. p. 115].
12. Deborah Smith, the County Assessor, testified to the history of recreational property in Albany County. Beginning in l993 the Assessor began to separate the recreational property from the residential property to make assessment more fair and equitable. She struggled with the differences between a cabin, a summer home and recreational property, comparing these with residential property and how the prices varied. In l993 the Assessor removed the Multiple Regression Analysis for cost and sales verification based on the Statements of Consideration. Verification documents for the Bonds property were mailed to the taxpayer but were never returned. The county neighborhoods were changed in l997 due to revaluation of land. In 2002 after running Multiple Regression Analysis to check progress, the overrides were removed and replaced with market value, letting the market drive the values. During this time “[i]f it had a roof over it and it was in the woods, people wanted to pay an enormous price for it.” By 2004 all recreational property was on the exact same playing field, using current comparable sales method and sales within the last five years. A five year period was used to soften the rise in value that would have occurred if only one year had been used. [Trans. pp.132-135, 142].
13. On September 7, 2004, the County Board issued its decision modifying the Assessor’s valuation. [County Board Record, pp. 150-152].
DISCUSSION OF PETITIONER’S ISSUES AND APPLICABLE LAW
14. 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).
15. The Department of Revenue 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).
16. An assessor is required to annually value property within the assessor’s county for tax purposes at its fair market value. In completing this task, an 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).
17. The Wyoming Constitution, Article 15 §11, requires all property “be uniformly assessed for taxation, and the legislature shall prescribe such regulations as shall secure a just valuation of taxation of all property, real and personal.”
Early on, Justice Blume recognized a truth inherent in the area of property valuation: “there is no such thing as absolute value. A stone cannot be other than a stone, but one man may give a different valuation to a piece of land than another.” Bunten v. Rock Springs Grazing Ass’n, 29 Wyo. 461, 475, 215 P. 244, 248 (l923). 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)
18. Broken into its component parts, the constitutional standard requires: (1) a rational method; (2) equally applied to all property; and (3) essential fairness. It is the burden of one challenging an assessment to prove by a preponderance of the evidence that at least one of these elements has not been fulfilled. Basin Electric Power Coop., 970 P.2d at 852.
19. 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).
20. Fair market value is defined as:
[T]he amount in cash, or terms reasonable 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. §39-11-101(a)(vi).
21. 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).
22. 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 Mc Dermott & Co. v. Hudson, 370 P.2d 364, 370 (Wyo. 1962). The presumption is especially valid where the Assessor valued the property according to the Department’s Rules and Regulations which provide for the use of CAMA system in the assessment of real property. Rule, 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).
23. 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.
24. Each of the issues raised by the Assessor turns on the question of whether or not there is substantial evidence in the record that reasonably supports the County Board’s decision. In determining whether or not there is substantial evidence in the record, the State Board will not substitute its judgement of 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 (Wyo. 1996); Holly Sugar Corp. v. Wyoming State Board of Equalization, 839 P.2d 959 (Wyo. 1992); Sage Club, Inc. v. 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).
25. The record shows the Assessor complied with the requirements of state law in determining the value for the Taxpayer’s property by using the sales comparison approach to value the property as prescribed in Chapter 9 of the Rules promulgated by the Department. Rules, Wyoming Department of Revenue, Chapter 9, §6(a). The uncontroverted testimony of the Appraiser showed that she followed the Department’s Rule.
26. The Taxpayer did not demonstrate that the Assessor’s CAMA based results were incorrect. While the Taxpayer is obviously of the opinion that different properties should have been used as comparables, and questioned the location of some of the comparables upon which the Assessor relied, the Taxpayer can not prevail simply by having an opinion contrary to that of the Assessor. As we have already noted, a mere difference of opinion is not sufficient to overcome the presumption in favor of the Assessor’s valuation. Supra, ¶ 22 . The County Board’s decision to accept the lay opinion of the Taxpayer is contrary to law.
27. What the County Board did was to simply calculate a compromise value, splitting the difference between the prior year valuation of $60,500 and the present year valuation of $105,600. The County Board is not authorized to compromise valuations, or to order a valuation which does not take into account the requirements of the Department’s Rules. “The county board of equalization has no power to and shall not set tax policy or engage in any administrative duties concerning assessments which are delegated to the [state] board, the department, or the county assessor.” Wyo. Stat. Ann.§39-13-102(d). The County Board’s substituted value is therefore arbitrary and capricious.
28. The County Board’s value is likewise unsupported by substantial evidence. It is not the result of a CAMA based recalculation, or of any justifiable alternative valuation method consistent with the Department’s Rules.
29. Further, we conclude there is substantial evidence in the record to support the valuation of the County Assessor. The appraiser testified how the CAMA based valuation was reached.
IT IS THEREFORE HEREBY ORDERED that the Albany County Board of Equalization Order modifying the valuation of Respondent’s 2004 property is reversed. The Assessor’s 2004 assessment of Respondent’s property is 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.
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