Darnall Ranch v. Banner Cty. Bd. of Equal.
| Decision Date | 01 August 2008 |
| Docket Number | No. S-07-811.,S-07-811. |
| Citation | 276 Neb. 296,753 N.W.2d 819 |
| Parties | DARNALL RANCH, INC., appellant, v. BANNER COUNTY BOARD OF EQUALIZATION, appellee. |
| Court | Nebraska Supreme Court |
Robert M. Brenner, of Robert M. Brenner Law Office, Gering, for appellant.
James L. Zimmerman, Banner County Attorney, Scottsbluff, for appellee.
Darnall Ranch, Inc. (DRI), owns several residences located on its ranch property in Banner County, Nebraska. It protested the 2004 valuation of each residence for tax purposes, but the protests were denied by the Banner County Board of Equalization (Board). DRI then appealed to the Tax Equalization and Review Commission (TERC), which upheld the valuations as determined by the Board. This is an appeal from the decision and order of TERC. We affirm in part, and in part reverse and remand with directions to adjust the 2004 valuations of two residences which are located in close proximity to a feedlot.
The 2004 valuations of the subject properties were based upon "replacement cost new less depreciation." The county assessor relied on data collected during a countywide reappraisal in 2003. She did not independently verify the data in determining the 2004 valuations. In a 2006 disciplinary proceeding before the Nebraska Real Estate Appraiser Board, the appraiser who conducted the 2003 countywide reappraisal admitted that she violated certain standards during the reappraisal and consented to disciplinary measures. The Banner County assessor was aware of the disciplinary proceeding, but was never informed that it involved deficiencies in the 2003 data collection. According to the county assessor, "[n]o one has ever proved that the data collection for 2003 was incorrect."
The 2003 data was entered into a computer program called TerraScan, which was used by the county assessor to compute all 2004 valuations for residential and agricultural property in the county. The data included floor plan dimensions and ratings of the quality and condition of each residence. The quality and condition ratings were based upon criteria found in the Residential Cost Handbook, published by Marshall & Swift, LP, a reference manual commonly used in the valuation of real property. In this context, "quality" refers to the overall quality of the characteristics of materials and workmanship, as well as design and functional utility. "Condition" measures the extent to which physical deterioration or structural defects are present. Marshall & Swift costing tables and local multipliers are built into the TerraScan program. The assessor testified that the Nebraska Department of Property Assessment and Taxation is aware that Banner County uses the TerraScan program and has never objected to or questioned its reliability.
After the 2004 valuations were established, DRI filed protests for the residential properties which are the subject of this case. In each instance, the assessor recommended no change in the valuations, and the Board accepted this recommendation.
We shall refer to residences by the colloquial nomenclature utilized by the parties during the TERC hearing.
The feedlot house is a two-story, single-family home built in approximately 1900, with a 90-percent stucco and 10-percent masonry veneer exterior and an area of 2,188 square feet. The assessor's data listed its quality as "Average" and its condition as "Badly-Worn." The 2004 assessed valuation was $17,765.
Gary Darnall, president of DRI, testified that this house is "basically in the middle of the feedlot." Trucks used to transport cattle, silage, grain, and manure pass within 40 feet of the house, day and night, causing problems with dust and flies. According to Gary, the house "is in disrepair" with defects in the doors and windows. Using his personal criteria, he described its quality as "very poor" and its condition as "badly-worn." In his opinion, the 2004 value of the feedlot house was $6,700.
Sheila Newell testified at the TERC hearing on behalf of DRI. Newell has held a real estate broker's license since 1989 and has been a certified general real property appraiser since 1996. At the time of her testimony, she served as chair of the Nebraska Real Property Appraiser Board. Newell inspected the feedlot house in November 2003 and again in September 2004, noting no changes between the two inspections. She described the house as being of "low" quality based upon its age, design, floor structure, windows, poor heating, lack of adequate utility outlets, and functional utility. She described the condition of the house as of January 1, 2004, as "[b]adly worn." Newell was not asked to express an opinion as to the 2004 valuation of the feedlot house.
This is a single-family home occupied by Lane Darnall and his family, who have lived there since the home was built in 1992. It has a 100-percent masonry veneer exterior and an area of 1,555 square feet. The assessor's data listed its quality as "Fair +," meaning that it was between fair and average quality. The assessor rated the condition of the home as "Average." The 2004 assessed valuation was $101,492. There was no allowance for locational depreciation, because the assessor did not consider it to be "close enough" to the feedlot.
Gary, who is Lane's father, testified that Lane's house was built at a cost of approximately $64,000, and there had been no major remodeling prior to 2004. Gary testified that the house is located across the road and about one-eighth of a mile from the feedlot which has a capacity of 20,000 head of cattle. He also testified that vibration from the 20 to 25 trucks going by the house each day have caused cracking of its walls and foundation. He stated that cattle are located on all sides of the house. Gary testified that there had been "extensive" electrical problems in the home since a 1999 lightning strike. In his opinion, the value of the home in 2004 was $52,264.
Lane, who is the general manager for production of DRI, agreed that cattle regularly graze on all sides of his home. He testified that heavy truck traffic to the feedlot located one-eighth of a mile from his home causes cracking in the drywall and basement walls. He believes that the home receives "above average wear" due to the presence of his teenage children and foreign exchange students hosted by his family. Lane expressed his "lay opinion" that the quality of the home is "fair" and that the condition is "fair to low." In arriving at the claimed value of $52,264, Lane applied a 50-percent locational depreciation due to the proximity to the feedlot.
Newell personally inspected Lane's house in November 2003. In her opinion, the quality of the home was "fair," due to material and workmanship which were below "market standards." She also rated the condition of the home as "fair," due to evidence of "deferred maintenance." She also testified that the proximity of the home to the feedlot should be considered in determining its value, but she did not quantify this opinion or express any opinion as to the value of the home in 2004.
Gary and his wife reside in this 2,046-square-foot stucco home built in 1920. An addition was built in 1977. The assessor's data listed its quality as "Average" and its condition as "Good." The 2004 assessed valuation was $56,203.
Gary testified that the assessor's data was incorrect, in that there is a bathtub in the main floor bathroom, not a shower as indicated by the assessor, and one of the closets is smaller than indicated. He testified that the roof is damaged and that the windows leak. He rated both the quality and condition of the home as "fair." In his opinion, the value of the home in 2004 was $30,626.
Newell inspected Gary's house in November 2003. She evaluated the quality of the original structure as "fair" and the quality of the addition as "average." She rated the condition of the entire structure as "fair." Newell did not express an opinion as to the value of the home in 2004.
This 1,834-square-foot home was built in 1958. The exterior is 90-percent vinyl siding and 10-percent masonry veneer. It is occupied by Gary's mother. The assessor's data listed its quality as "Average+" and its condition as "Average." The 2004 assessed valuation was $100,998.
Gary testified that the roof of this home had its original shake shingles, which were badly worn, and that the roof leaked, causing interior water damage. In his opinion, the quality and condition of the home were both "fair." In Gary's opinion, the value of the home in 2004 was $63,500, which he characterized as "a layman's valuation from seeing other properties of similar homes that age, similar conditions." There was no evidence of other properties specifically considered by Gary in arriving at his valuation.
Newell testified that on the basis of her November 2003 inspection of this property, she considered its quality to be "average" and she agreed with the assessor that its condition was also "average." Newell did not express an opinion as to the value of the house in 2004.
This house, located 3 miles west of the feedlot, was constructed in 1996 at a cost of $76,000. It is a one-story house with an area of 1,160 square feet and a vinyl siding exterior. The assessor's data listed its quality as "Fair+" and its condition as "Average." The 2004 assessed valuation was $71,893.
Gary testified that there was a "continuing problem with mold" in this house and that the problem existed as of January 1, 2004. Taking this into consideration, he expressed an opinion that the quality and condition of the house were both "fair" and that its value in 2004 was $58,307.
Newell testified that while she was "not an expert in . . . mold...
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