Boise Community Hotel, Inc. v. Board of Equalization, Ada County

• Decision Date: 24 April 1964
• Docket Number: 9272,Nos. 9271,s. 9271
• Citation: Boise Community Hotel, Inc. v. Board of Equalization, Ada County, 391 P.2d 840, 87 Idaho 152 (Idaho 1964)
• Parties: BOISE COMMUNITY HOTEL, INC., Plaintiff-Appellant, v. BOARD OF EQUALIZATION, ADA COUNTY, State of Idaho, Defendant-Respondent. CASCADE EQUIPMENT CORPORATION, Plaintiff-Appellant, v. BOARD OF EQUALIZATION, ADA COUNTY, State of Idaho, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 840

391 P.2d 840

87 Idaho 152

BOISE COMMUNITY HOTEL, INC., Plaintiff-Appellant, v.BOARD OF EQUALIZATION, ADA COUNTY, State of Idaho, Defendant-Respondent.

CASCADE EQUIPMENT CORPORATION, Plaintiff-Appellant, v.BOARD OF EQUALIZATION, ADA COUNTY, State of Idaho, Defendant-Respondent.

Nos. 9271, 9272.

Supreme Court of Idaho.

April 24, 1964.

Richards, Haga & Eberle, Boise, for appellants.

Allan G. Shepard, Atty. Gen., and J. N. Leggat, Boise, for respondent.

TAYLOR, Justice.

Each of the plaintiffs(appellants) in separate proceedings petitioned the board of equalization of Ada county for a reduction in the value placed upon their respective properties for tax purposes by the assessor of Ada county for the year 1958.The petitions were denied by the board of equalization and the parties appealed to the state tax commission, and that commission, after hearings, affirmed the orders of the county board of equalization.The plaintiffs then appealed to the district court, where their causes were consolidated for trial.The plaintiffs brought these appeals from the judgments of the district court affirming the orders of the state tax commission.

Plaintiff, Boise Community Hotel, Inc., was, at all times pertinent hereto, the owner of Lot 1 and the W1/2 of Lot 2, Block 53, of Boise City Original Townsite, in Ada county.The land was occupied by a building designed and used as a garage and service station for servicing, repairing and storing of automobiles, and containing a 21 X 39 foot office room.The building, a one-story, concrete structure, occupied the entire surface of the one-and-one-half lots, and was located on the corner of Bannock and 9th streets, having a frontage of 75 feet on Bannock street.For the year 1958 the assessor fixed the value of the property for tax purposes at $13,554 for the land, and $6,035 for the building.The plaintiff, Boise Community Hotel, Inc., acquired the property in 1955 for a consideration of $75,000.

The Phoenix Corporation was the owner of Lots 11 and 12, Block 11, of the Boise City Original Townsite, in Ada county.These lots were occupied by a four-story, concrete, brick veneer office building, known as the Sun Building.In 1961, the plaintiff, Cascade Equipment Corporation, purchased the entire capital stock of the Phoenix Corporation, after offset of liabilities, for a consideration of $263,000.The property involved was the only asset of the Phoenix Corporation.For the tax year 1958 the assessor fixed the value of the property for tax purposes at $24,390 for the land and $62,570 for the building.The building occupied the entire surface of the two lots, located at the corner of 10th and Main streets, with a frontage of 100 feet on Main street.

In support of their contention that their properties were overvalued by the assessor, the plaintiffs by their assignments of error contend that the assessor did not pursue a proper or lawful method of fixing the assessed values because he did not determine the 'full cash value' of the properties; and that the values assessed by him were higher than, and not uniform with, the assessed values fixed upon other property in the county, and that the assessments against plaintiffs' properties were, therefore, discriminatory.

'The legislature shall provide such revenue as may be needful, by levying a tax by valuation, so that every person or corporation shall pay a tax in proportion to the value of his, her, or its property, except as in this article hereinafter otherwise provided. * * *'Const., art. 7, § 2.

'All taxes shall be uniform upon the same class of subjects within the territorial limits, of the authority levying the tax, and shall be levied and collected under general laws, which shall prescribe such regulations as shall secure a just valuation for taxation of all property, real and personal: * * *.'Const., art. 7, § 5.

'All real and personal property subject to assessment and taxation must be assessed at its full cash value for taxation * * *.'I.C. § 63-102.

'By the term 'value,''cash value' or 'full cash value' is meant the value at which the property would be taken in payment of a just debt due from a solvent debtor, or the amount the property would sell for at a voluntary sale made in the ordinary course of business, taking into consideration its earning power when put to the same uses to which property similarly situated is applied.'I.C. § 63-111.

'In ascertaining the value of any property the assessor shall not adopt a lower or different standard of value because the same is to serve as a basis of taxation * * *.'I.C. § 63-202.

The assessor is required to classify lands within his county (I.C. § 63-316) in accord with classes provided by the legislature(I.C. § 63-315).The plaintiffs' properties were properly classified as 'business lots.'The method employed by the assessor, the criteria factors and guides, used and considered by him in determining the assessed value of these properties, were the same as those employed and considered in assessing all other business property in Boise.The lands or lots were assessed separate and apart from the buildings or improvements thereon.

In assessing the business lots the assessor established what he termed a 'key corner,' or center of the downtown business district, at which he determined land values to be highest.At that intersection he assessed the corner lots at the highest value of any lots in the business classification, i. e., $428 per front foot.

Radiating out in all directions from the 'key corner,' the assessor fixed the assessed values of business lots on a sliding scale in relation to their distance from the key corner; that is, the farther from the key corner the lower were the assessed values, except that 'corner' lots were assessed at a higher value than 'inside' lots.These assessed values were lowered by the assessor on at least two occasions during the years preceding the assessments here involved, as the result of what the assessor determined to be a decrease in land values in the business district caused by the establishment of outlying shopping centers and a resultant decrease in pedestrian traffic in the downtown business area.In making these reductions in values in the downtown district, the assessor was also guided by the advice and opinions of a group of real estate appraisers and dealers, which he convened and consulted in regard thereto.

The assessor testified that he also noted and considered valuations as revealed by sales, occasionally occurring, of properties in the business district; and that such sales were relatively infrequent.However, in a deposition taken April 25, 1960, the assessor testified that his valuation was not based upon the standard of what the land would bring at a voluntary sale.His testimony was in part as follows:

'Q Then I take it in arriving at the value of $428 that is what you consider to be the price that that property would sell for at a voluntary sale on a front foot?

'A No, not at all.

'Q What is your criteria of arriving at the $428 per front foot?

'Q Well, it is just our judgment that valuation is comparable and then you have uniformity.'

Before the state tax commission, the assessor testified:

'Mr. Eberle: * * * You haven't used any cash value in your assessment of this property, that is the cash value of a free seller and a free buyer?

'Mr. Leonardson: No.'

In assessing buildings and improvements the assessor determined the replacement cost based upon the average cost of labor and materials during the years 1938 to 1941, allowing for depreciation according to the age of the building and the character and quality of construction, and, where deemed appropriate, allowing deductions for obsolescense.The reconstruction cost was determined in the case of one-story structures on the basis of the number of square feet of floor space and in the case of multiple stories upon the basis of cubic feet of enclosed space, along with the type and quality of materials, fixtures and equipment installed.The assessor also testified that, when available, he used and considered the earning power of the structure, capitalized at 6%.In such case the capitalized earnings value and the replacement value, less depreciation, were added together and divided by two.After having determined the value of the improvements in the foregoing manner, the assessor fixed the assessed value thereof at 40% of the value thus determined.However, when the assessor was asked whether his valuation figure represented a percentage of current market value, he responded as follows:

'We don't attempt to arrive at the valuation for present day, all we are trying to do is keep property equitably assessed and we are using the guide as to the labor and cost for 1938-1941 prices.'

Later in the same deposition proceeding the assessor was asked whether he knew the market value of the Boise Community Hotel property at the time of its assessment in 1958.He answered 'I don't know.'And before the tax commission he testified as follows:

'Mr. Eberle: I still come back to the same question of using this formula what value do you arrive at for this particular property?

'Mr. Leonardson: Well, we arrive at a value.To say market value is another thing.We arrive at the value that we say is fair and equitable.We are not saying what it cost, we are saying that the valuation that we have established is fair and equitable as compared to other property of like nature.

'Mr. Eberle: Mr. Leonardson may I ask you a question or two.Do you have an opinion as to the cash value between a willing buyer and a willing seller of the value of the Sun Building for assessment purposes?

'Mr. Leonardson: No.'

The plaintiff, Boise Community Hotel, Inc., produced testimony to the effect that its property had decreased in value and was not worth to exceed $60,000.The Cascade Equipment Corporation produced testimony to the effect that its property was not worth to...