Amert v. Lake County Bd. of Equalization

• Decision Date: 29 April 1998
• Docket Number: No. 20264,20264
• Citation: 1998 SD 66,580 N.W.2d 616
• Parties: Henry H. AMERT, Arleen R. Amert, Richard Amert, Donald Amert, Kay Amert, and Susan Amert, Appellants, v. LAKE COUNTY BOARD OF EQUALIZATION, Appellee. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 616

580 N.W.2d 616

1998 SD 66

Henry H. AMERT, Arleen R. Amert, Richard Amert, Donald Amert, Kay Amert, and Susan Amert, Appellants, v. LAKE COUNTY BOARD OF EQUALIZATION, Appellee.

No. 20264.

Supreme Court of South Dakota.

Considered on Briefs April 29, 1998.

Decided June 24, 1998.

Jerome B. Lammers of Lammers, Lammers & Kleibacker, Madison, for appellants.

Chris S. Giles, Lake County State's Attorney, Madison, for appellee.

GILBERTSON, Justice.

¶1 Property owners Henry, Arleen, Richard, Donald, Kay, and Susan Amert (family collectively referred to as Amert) contest the assessed valuation imposed upon four parcels of property by the Lake County Director of Equalization, Brian Seitz (assessor). Amert initially appealed to the Lake County Board of Equalization (Lake County), which concluded each of Amert's seventeen properties were properly assessed. Amert then appealed to the circuit court for Lake County which affirmed sixteen of seventeen assessments. Amert appeals the circuit court's order only as it relates to four of the sixteen parcels the circuit court concluded were properly assessed. We reverse and remand for further proceedings consistent with this opinion.

FACTS AND PROCEDURE

¶2 Amert alleges Lake County improperly assessed the following four properties located in Madison, South Dakota for 1995 tax-year purposes:

1. The 207 West Avenue North property was assessed at $43,800 (an increase of 43% over 1994).

Amert claims $30,525 to be the correct assessment value;

2. The 202 N.E. First Street property was assessed at $40,200

(an increase of 74% over 1994).

Amert claims $23,157 to be the correct assessment value;

3. The 113 North Union Avenue property was assessed at $40,800

(an increase of 38% over 1994).

Amert claims $22,870 to be the correct assessment value; and

4. The 210 North Harth Avenue property was assessed at $51,800

(an increase of 69% over 1994).

Amert claims $30,713 to be the correct assessment value.

¶3 Each of the subject properties is an older home built in the early 1900's and at the time of the contested assessment in November, 1994, had been converted into multi-unit rentals. A two-day trial was held in May, 1997, wherein Amert provided testimony which contradicted assessor's valuation. Amert's witnesses criticized assessor's methodology and results. A brief summary of the methods used and results obtained by Amert and assessor for each property follows:

¶4 207 West Avenue North

¶5 The West Avenue property was valued by assessor at $43,800 utilizing the cost and market approaches. Amert's appraiser, Norma Goth ¹ (Goth), believed the cost approach was not very accurate "because of the age of the property there's so much depreciation, and normally that would be at the very high end of any values that you would come up with." Instead, Goth utilized the market approach to arrive at a $28,000 valuation. She compared the property to three similar properties and then took into account the repairs that would have to be made and that the basement apartments were not suitable for rental after a 1994 flood. Under the income approach, Goth valued this property at $37,000.

¶6 202 N.E. First Street

¶7 Assessor valued this property at $40,200 using the cost and market approaches. Goth discounted the cost approach used by assessor based upon the age and depreciation of the property. Goth gave the most weight to the market approach in making a valuation on this property. She concluded that the larger size of Amert's property compared with the other properties used under this approach did not necessarily translate into greater rental value because of the increased utility and maintenance costs. Under the income approach, Goth valued this property at $18,630.

¶8 113 North Union Avenue

¶9 Assessor valued this property at $40,800 relying on the cost and market approaches. Again Goth criticized assessor's use of the cost approach as not being accurate. Goth valued the property at $22,000 under the market approach.

¶10 210 North Harth

¶11 Assessor valued this property at $51,800 using the cost and market approaches. Goth gave no weight to assessor's calculations under the cost approach reiterating her concerns of the age and large depreciation factors. Instead, Goth relied on the market approach to arrive at a valuation of $24,000.

¶12 Assessor testified he utilized the "replacement cost new less depreciation tempered against the existing market, so ... a cost approach and the market approach [were used] in deriving the 95 assessments" on the properties. Amert provided testimony that the income approach provided a more realistic valuation.

¶13 Amert raises the following issues for our review:

1. Whether assessments by Lake County of four real properties for the tax year 1995 were in excess of their true and full value.

2. Whether the trial court properly entered findings of fact and conclusions of law under SDCL 15-6-52(a).

STANDARD OF REVIEW

¶14 As stated in Richter Enterprises, Inc. v. Sully County:

This court's proper scope of review of a trial court's decision in a trial de novo of an assessment matter is whether the decision of the trial court was "clearly erroneous." When applying the clearly erroneous standard, the question is not whether this court would have made the same findings that the trial court did, but whether on the entire evidence this court is left with a definite and firm conviction that a mistake has been committed.

1997 SD 61, p 7, 563 N.W.2d 841, 843 (quoting Hutchinson County v. Fischer, 393 N.W.2d 778, 781 (S.D.1986) (citations omitted)). ² In addition, we must presume that tax officials act in accordance with the law and not arbitrarily or unfairly when assessing property. Id. (citing Lincoln Township v. South Dakota Bd. of Equalization, 1996 SD 13, p 5, 543 N.W.2d 256, 257; Hutchinson County, 393 N.W.2d at 782). "Taxpayer also has the burden of overcoming the presumption that Director's value was correct" by producing "sufficient evidence to show the assessed valuation was in excess of true and full value, lacked uniformity in the same class or was discriminatory." Id. (citations omitted).

ANALYSIS AND DECISION

¶15 1. Whether assessments by Lake County of four real properties for the tax year 1995 were in excess of their true and full value.

¶16 Amert claims the assessed valuations of the properties are in excess of their true and full value, lack uniformity in the same class, or are discriminatory and, therefore, violate the South Dakota Constitution, Article XI, § 2. ³

¶17 SDCL 10-6-33 concerns the procedure to be utilized in making property valuations:

All property shall be assessed at its true and full value in money. The true and full value is the taxable value of such property upon which the levy shall be made and applied and the taxes computed. In determining the true and full value of property the director of equalization may not adopt a lower or different standard of value because it is to serve as a basis of taxation. The director may not adopt as a criterion of value the price for which the property would sell at a forced sale, or in the aggregate with all the property in the third class municipality or district. The director shall value each article or description by itself and at an amount or price as he believes the property to be fairly worth in money. The true and full value shall be determined by appropriate consideration of the cost approach, the market approach and the income approach to appraisal. The director of equalization shall consider and document all elements of such approaches that are applicable prior to a determination of true and full value.

(Emphasis added).

¶18 Amert has provided sufficient evidence that the valuation lacked uniformity which directly contradicts the presumption that assessor's valuation is correct. Brookings Assoc. v. South Dakota Bd. of Equal., 482 N.W.2d 873, 876 (S.D.1992). An assessor must consider each of the three approaches (cost, market, and income) to valuation before making an appraisal. SDCL 10-6-33. While assessor testified he had a "working knowledge" of the subject properties, he admitted he did not personally view the properties in making his assessment. SDCL 10-6-36 provides that the assessor [S]hall actually view, when practicable, and determine the true and full value of each tract or lot of real property listed for taxation, and shall enter the value thereof in one column, and the value of all improvements or structures thereon in another column, opposite each description of property, also the total value of the same including improvements and structures.

(Emphasis added). Amert's appraiser, Goth, testified as to the importance of viewing property in making a competent appraisal and stated she "wouldn't even try to do an appraisal without looking at [the properties]." Goth testified that properties at issue were unique because they were older homes converted into multi-unit rentals. Goth noted several problem areas that could be detected through physical inspection and result in a change to the properties' valuations including physical deterioration to the interiors and exteriors of some of the properties, possible asbestos wrapping on pipes, possible lead based paint, unstable foundation and outdated electrical and heating services at some of the properties. ⁴ Amert argues that assessor did not consider functional obsolescence in making his valuation which both testified could only be taken into account by viewing the property.

¶19 Assessor testified that viewing the 17 Amert properties was not practicable due to his extraordinary workload. SDCL 10-6-36. He noted that Amert's properties were only 17 of the 10,000 properties appraised each year in Lake County. Appraiser estimated that although he spent considerably more time with the Amert property valuations, he would have to appraise five properties per hour to complete his duties.

¶20 Under these circumstances, we...