Board of County Com'rs of Johnson County v. J.A. Peterson Co., 58181

• Decision Date: 28 March 1986
• Docket Number: No. 58181,58181
• Citation: 239 Kan. 112,716 P.2d 188
• Parties: BOARD OF COUNTY COMMISSIONERS OF JOHNSON COUNTY, Kansas, Appellant, v. J.A. PETERSON COMPANY, Appellee.
• Court: Kansas Supreme Court

Page 188

716 P.2d 188

239 Kan. 112

BOARD OF COUNTY COMMISSIONERS OF JOHNSON COUNTY, Kansas, Appellant, v. J.A. PETERSON COMPANY, Appellee.

No. 58181.

Supreme Court of Kansas.

March 28, 1986.

Syllabus by the Court

1. The scope of review in an appeal from a decision of an administrative agency is stated and applied.

2. Generally, issues not presented to the trial court will not be considered for the first time on review.

Bruce F. Landeck, Asst. Co. Counselor, argued the cause and Philip S. Harness, Co. Counselor, was with him on brief, for appellant.

John Ivan, Shawnee Mission, argued the cause and was on brief, for appellee.

HOLMES, Justice:

The Board of County Commissioners of Johnson County (Board) has appealed from an order of the district court which affirmed an order of the state board of tax appeals (BOTA) granting certain ad valorem tax relief to the property owner J.A. Peterson Company (JAP).

The facts are essentially undisputed. JAP, as owner of the Tomahawk Shopping Center and three apartment complexes known as Fox Run I and II Apartments, Thousand Oaks Apartments, and Kings Cove Apartments, objected to the ad valorem tax valuations placed upon its properties and the resultant taxes for the years 1976 through 1980. The proceedings before the BOTA, which included appeals from the Johnson County Board of Equalization and direct protests, were consolidated for hearing. The Johnson County Board of Equalization had affirmed the property appraisals of the county appraiser, leading to the appeals and protests by JAP. The BOTA granted an 8% reduction in the appraisal values of the three apartment complexes based upon the functional obsolescence of their total energy plants and a 10% reduction in the shopping center appraisal value based upon a "location adjustment" or location depreciation due to the poor geographic location and accessibility of the center. Upon appeal to the district court, the order of the BOTA was upheld in its entirety, leading to this appeal by the Board. Although JAP had sought larger reductions on all the properties, it did not cross-appeal from the district court decision.

In its order on rehearing, the BOTA explained the basis of its decision:

"The County contends that the Board's order granting additional functional obsolescence reductions because of the 'Total Energy Plants' is excessive since the taxpayer still uses these plants for air conditioning and heating and are therefore not 'totally obsolescent.' This contention is based on a premise that this Board found these plants to be 'totally obsolescent.' The Board never made such a finding. The Board found that these plants no longer generate electricity for the apartments. The Board never made a finding that these plants do not still provide air conditioning and heating for these apartments and the 8% functional obsolescence arrived at by the Board is allowance only for the loss of function of the plants for electrical generation purposes. The County also contends that functional obsolescence represents an 'excessive credit' to taxpayer since 'taxpayer has never been charged for nor paid any ad valorem taxes relative to' the Total Energy Plants. No evidence in support of this contention is presented to this Board and none was presented at the hearing in this matter. In fact the Property Assessment Record Cards for these properties clearly show a valuation for the plants (for example, the Fox Run Apartments shows an Adjusted 100% Value of $31,800 for the 'powerhouse, cooling tower' and described structures.) This value appears to have been placed on the structure in 1971 (the year of its completion) and appears to have remained unchanged since that date. There is no notation on the card to demonstrate that less than a complete appraisal of the plant was made at the original appraisal and this Board must presume that the original appraisal was a complete appraisal of the property, absent clear evidence to the contrary. The cessation of electrical generation capabilities of these plants did not occur until 1975.

"Finally, the County contends that the 'location adjustment' granted by this Board with respect to the Tomahawk Shopping Center is not 'consistent with the definition of location depreciation recognized' by the Director of Property Valuation Division. Again no evidence is presented to this Board in support of that contention and none was presented at the hearing in this matter. Therefore the Board is not entirely certain what the County's contention in this regard is based on. However, generally recognized principles of appraising support the Board's conclusions in this regard. A 'location adjustment' is nothing more than an allowance for economic obsolescence, which is nothing more than a form of depreciation which is caused by changes external to the property. It is generally recognized that the best measure of this form of depreciation is a capitalized value of the rental loss due to the economic obsolescence. See, e.g. American Institute of Real Estate Appraisers, The Appraisal of Real Estate 217 (Fifth Ed.1967). It is also generally accepted that the vacancy rate in commercial property and the accessibility of the property (to both automobile and pedestrian traffic) are valid considerations in arriving at the conclusion that economic obsolescence exists and as factors to be considered in valuing the property.

"In conclusion, the Board finds that the Motion for Rehearing in this matter states no new evidence or presents no legal argument[s] which have not already been presented to this Board and which were considered by this Board in arriving at its decision in this matter."

The scope of review in an appeal from a decision of an administrative agency has been stated many times. In Kansas State Board of...