Crossroads Cent. (Rochester) v. Commissioner of Tax.
| Decision Date | 03 April 1970 |
| Docket Number | No. 41780,41780 |
| Citation | 286 Minn. 440,176 N.W.2d 530 |
| Parties | CROSSROADS CENTER (ROCHESTER), INC., et al., Relators, v. COMMISSIONER OF TAXATION, Respondent. |
| Court | Minnesota Supreme Court |
Syllabus by the Court
1. Land must be assessed on the basis of market value and Minn.St. 273.12 requires the assessor to consider and give due weight to every factor affecting the market value. Although income is one factor to be considered, other factors which bear on sale value include location, cost of construction, cost of reproduction, purpose for which building was used, the intrinsic value or worth of the building, the price at which the owner is willing to sell, the price at which buyers who may use the property for some purpose are willing to buy, and the price at which similar property, if any, has sold.
2. The Tax Court cannot base its findings exclusively on the assessor's testimony if the assessor did not consider all factors. However, the assessor's valuation is prima facie valid, and even though it appears that the assessor did not follow the statutory mandates in arriving at the estimates of value, the Tax Court's findings on these issues of value must be sustained if there is other evidence to support them. There is other evidence to support them in this case.
3. Minn.St. 273.11 provides that the value of the land, the value of structures, and the aggregate value shall be determined. The commissioner of taxation arrived at value in that manner. In their application to the commissioner for reduction in the assessed valuation of the properties in question, relators contended that the values of the structures were in the amounts ultimately determined by the commissioner. It appears that the Tax Court recognized its obligation under § 273.11 despite its statement that the only question on appeal was that of land value and notwithstanding the appeal to the latter court was de novo pursuant to § 271.06.
Erwin Mitch Goldstein and David Stanley, Minneapolis, for relators.
Douglas M. Head, Atty. Gen., C. H. Luther, Deputy Atty. Gen., Don J. Bottorff, Sp. Asst. Atty. Gen., St. Paul, for respondent.
Heard before KNUTSON, C.J., and NELSON, MURPHY, OTIS and THEODORE B. KNUDSON, JJ.
*
Certiorari to review a decision of the Tax Court which affirmed the commissioner of taxation's determination of the full and true values and assessed values of certain real property in Rochester, Minnesota, on May 1, 1965.
Two adjacent tracts of land are involved in this appeal. The first is the Crossroads Center tract of approximately 11 acres, which is owned by Crossroads Center (Rochester), Inc. On this tract there is an open-mall shopping center containing about 120,000 square feet and occupied by 23 tenants. The second tract consists of 6 1/2 acres, now owned by Luthern Brotherhood, containing a Sears department store and automotive service center.
In 1962 Crossroads Center purchased these two adjacent tracts for $343,800, about $20,000 per acre. The Sears tract cost $123,800 and the Crossroads tract, $220,000. Construction of buildings on the two tracts was completed in 1963 at a cost of $1,064,058 for Crossroads Center and $667,071 for Sears.
In December 1961 Crossroads Center entered into a lease with Sears to provide Sears with a retail store building and an automotive service center on the 6 1/2-acre tract, with a warehouse building on another parcel not involved in this case. The lease is for 25 years, with a rent equal to 2 1/2 percent of Sears' gross sales, less items returned, which the parties call 'net.' Under the terms of the lease the landlord is to pay real estate taxes, insurance, and some maintenance expenses.
In November 1961 Lutheran Brotherhood agreed to purchase the land and the buildings to be covered by the Sears lease for $1,300,000. The warehouse and the land on which it was situated were valued by the city at $172,051. As a result the commissioner determined that the price of the Sears tract involved here was $1,127,949. Under the sales agreement, Crossroads was to reimburse Lutheran if its expenses for taxes, insurance, and maintenance exceeded $21,500 during each of the first 5 years. When Lutheran Brotherhood purchased the land, it was pursuant to this agreement and subject to the Sears lease.
The commissioner made the following determinations as to the tracts' values:
SEARS: Market Value
Land ............. $ 327,583
Structures .......... 667,071
TOTAL ........................ $ 994,654
Full and True Value
Land ............. $ 115,265
Structures .......... 220,120
TOTAL ........................ $ 335,385
Total Assessed Value 134,154
CROSSROADS
Market Value
Land ............. $ 608,684
Structures ........ 1,064,058
TOTAL ........................ $1,672,742
Full and True Value
Land ............. $ 202,680
Structures .......... 351,140
TOTAL ........................ $ 553,820
Total Assessed Value ................. 221,528
In their applications for reductions of their assessed valuations, Crossroads had said the full and true value of its structures and improvements did not exceed $351,139, and Lutheran had said the full and true value of its structures did not exceed $220,120. These figures were the same as the valuations found by the commissioner. However, both Crossroads and Lutheran contended that the full and true value of their land was significantly less than that found by the commissioner.
The commissioner's determinations were essentially those of the county assessor. The commissioner ordered a $3,054 reduction in the total assessed value of the Sears tract and a $4,584 reduction in the total assessed value of the Crossroads tract. The commissioner's order was affirmed by the Tax Court.
1. Land is assessed on the basis of market value, and Minn.St. 273.12 requires the assessor 'to consider and give due weight to every * * * factor affecting the market value * * *.' Relators argue that the assessor did not give due weight to the income factor and that therefore the Tax Court's findings based on the assessor's determinations cannot be sustained.
In In re Delinquent Real Estate Taxes, Waseca County, 182 Minn. 543, 544, 235 N.W. 22, we said the factors which bear on sale value are:
'* * * Location, cost of construction, cost of reproduction, purpose for which building was used, the intrinsic value or worth of the building, the price at which the owner is willing to sell, the price at which buyers who may use the property for some purpose are willing to buy, the price at which similar property, if any, has sold, and many other things * * *.'
See, also, Alstores Realty, Inc. v. State, Minn., 176 N.W.2d 112, filed March 20, 1970. In Kalscheuer v. State, 214 Minn. 441, 447, 8 N.W.2d 624, 627, this court said that income is one factor to be considered in arriving at sale value. For other decisions holding income an important consideration in determining sale value, see Annotation, 96 A.L.R.2d 666.
2. The Tax Court cannot base its findings exclusively on the assessor's testimony if the assessor did not consider all factors. However, the assessor's valuation is prima facie valid, and even though it appears that the assessor did not follow the statutory mandates in arriving at the estimates of value, the Tax Court's findings on the issue of value must be sustained if there is other evidence to support them. Schleiff v. County of Freeborn, 231 Minn. 389, 43 N.W.2d 265; Alstores Realty, Inc. v. State, Supra; In re Taxes for 1968 of Nelson v. County of Meeker, Minn., 172 N.W.2d 753. We also held, in Kalscheuer, that the burden of proof is on the person challenging the valuation.
In the present case the county assessor, Mr. Austin Dunagan, based his valuation on cost, prior sales of the same property, and sales of comparable property. He testified that he used income value as a check on these values, but that he did not use income value directly to arrive at the properties' market value. The assessor testified that he could not get enough honest income information and that he did not know the income of these properties.
Mr. Dunagan, the county assessor, testified that the total value of the Crossroads Center was $1,675,500. This figure was the total of the value of the buildings--$1,066,816--and the land value--$608,684. In valuing the land, the cost--$220,000--was considered. However, the primary basis...
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