Four Hills Country Club v. Bernalillo County Property Tax Protest Bd.

• Decision Date: 30 October 1979
• Docket Number: No. 3899,3899
• Citation: 1979 NMCA 141,94 N.M. 709,616 P.2d 422
• Parties: FOUR HILLS COUNTRY CLUB, Appellant, v. BERNALILLO COUNTY PROPERTY TAX PROTEST BOARD, Appellee.
• Court: Court of Appeals of New Mexico

Page 422

616 P.2d 422

94 N.M. 709

FOUR HILLS COUNTRY CLUB, Appellant, v. BERNALILLO COUNTY PROPERTY TAX PROTEST BOARD, Appellee.

No. 3899.

Court of Appeals of New Mexico.

Oct. 30, 1979.

Rehearing Denied Nov. 13, 1979.

Writ of Certiorari Quashed July 29, 1980.

George A. Dubois, Frank A. Dickson, Albuquerque, for appellant

Pedro G. Rael, Kenneth A. Hunt, Albuquerque, for appellee.

OPINION

WALTERS, Judge.

Following a protest hearing requested by the taxpayer, the Bernalillo County Valuation Protests Board (Board) upheld the county assessor's valuation of 156 acres owned by and operated as the Four Hills Country Club (Four Hills), and the tax assessed against it. Four Hills appeals, contending arbitrary, capricious, and erroneous valuation because the comparable sales data accepted by the Board lacked proper foundation and because the Board ignored the 10% limitation on annual tax increases mandated by § 7-36-17, N.M.S.A. 1978. We reverse.

In 1977 the parties stipulated that the taxable value of the property in 1975, 1976 and 1977 was $633,064. The contention of Four Hills made at the hearing and now in this court that the property had a zero value because of the restrictions and servitudes on it and the club's enhancement of surrounding properties cannot be considered. We do not disagree with such a finding made by the Washington Supreme Court in Twin Lakes Golf and Country Club v. King County, 87 Wash.2d 1, 548 P.2d 538 (1976), and similar decisions in Oregon and Michigan, but here the parties agreed there was substantial value to the property for the three years prior to 1978. There having been no showing below of a change in restrictions and servitudes between the date of stipulation and the 1978 assessment, Four Hills may not now retract its agreement and argue no value at all. Cf. Freedman v. Perea, 85 N.M. 745, 517 P.2d 67 (1973) (binding effect of stipulation). The truth of the facts contained in the stipulation cannot be contradicted by either party to it. Palmer v. City of Long Beach, 33 Cal.2d 134, 199 P.2d 952 (1948).

The Assessor did a "cost replacement" appraisal of the property in 1975 for the 1976 taxable year, and that figure of $1,403,283 was used as the assessed value for the 1978 tax notice. The million-plus valuation, however, was the contested figure from which arose the stipulation referred to above. Nevertheless, the 1975 appraisal was resurrected when a new appraiser was assigned to appraise the property for 1978 taxes, and upon that 1975 appraisal figure, the 1978 tax valuation notices were mailed to Four Hills. After Four Hills protested and before the hearing was held, the appraiser was instructed to make a comparable sales evaluation to justify the 1975 appraisal made by the cost replacement method. This was done to satisfy the obligation of § 7-36-15. N.M.S.A. 1978 (then § 72-29-5, N.M.S.A. 1953 (1975 Supp.)), which permits appraisal by the income or cost methods of appraisal only if there is a lack of data upon which to make an evaluation determined by the sales of comparable properties.

Our review, then, is focused upon the acceptability of the evidence of comparable sales and the Board's conclusion of valuation based upon those comparables.

Four Hills requested 107 findings of fact, almost all of which challenged in detail the properties submitted as comparables, and the methods used in arriving at an evaluation of Four Hills as related to the asserted values of those properties. The protestant's requested findings minutely described the dissimilarities between the comparables and the property being appraised, and specified the alleged errors of the appraiser in his adjustment techniques, his use of unverified data, and his incomplete information concerning those comparable sales. The Board's "Order" approving the 1978 valuation, on the other hand, contained ten numbered paragraphs, five of which dealt with the description of the property, its improvements, the stipulated value for 1975, 1976 and 1977, and the amount in dispute by reason of the 1978 valuation. The remainder of the Board's Order was as follows:

6. That there is no dispute as to the method of valuation for the subject property and that the value of the subject property for property taxation purposes as of January 1, 1978, and for the tax year 1978, is its market value as determined by sales of comparable property; that there is not a lack of comparable sales data for protestant's property; and that similar properties to the property which is the subject of his protest are properties which contain golf courses with country club facilities upon them.

7. That the method of valuation by which market value is determined by sales of comparable property is a process of analyzing sales of similar recently sold properties in order to derive an indication of the most probable sales price of the property.

8. That the protestant and the assessor presented to the board evidence of an analysis of sales of recently sold properties similar to the protestant's property, as follows:

                         Assessor                   Protestant
                St. Andrews Golf Club,      Rio Rancho Golf and
                Overland Park, Kansas       Country Club
                                            Rio Ranch, New Mexico
                Blue Springs Country Club
                Blue Springs, Missouri      Ranchland Hills Golf Course
                                            and Country Club
                Tomahawk Hills Golf Course  Midland, Texas
                Overland, Kansas
                Croc Meadows Golf Course
                Ruidoso, New Mexico
                Rio Rancho Golf and
                Country Club
                Rio Rancho, New Mexico
                Albuquerque Sunport
                Albuquerque, New Mexico
                Cloudcroft Country Club
                Cloudcroft, New Mexico
                

9. That based on the evidence presented the assessor contended that the value of the property which is the subject of this protest for the 1978 tax year is a range of value from $1,382,376.00 to $1,957,166.00, that the assessor's final conclusion about the value is $1,600,000.00; that based on the evidence presented the protestant contended that the value of the property for the 1978 tax year is -$0-.

10. That the most probable sales price of the property of the protestant as of January 1, 1978 is $1,382,376.00.

IT IS THEREFORE ORDERED that no change be made in the valuation records of the Bernalillo County Assessor, and that the Bernalillo County Assessor take appropriate action to carry out this order.

Four Hills Country Club obtained its deed from the developer of the Four Hills area for no consideration, but with a permanent restriction that the 156 acres comprising the golf course could never be used for any other purpose. The county's appraiser was unaware of any such use limitation and did not take that fact into consideration when he adopted the 1975 cost replacement valuation and later attempted to justify it by the comparable sales method.

Section 7-36-15(D), N.M.S.A. 1978, requires the Tax Department of the State of New Mexico to promulgate and adopt regulations to implement the methods of valuation required to be used by county assessors. It has done so, and PTD Regulation 29-5:8, in effect at the time of the hearing, provided:

The market data approach to valuation is a process of analyzing sales of similar recently sold properties in order to derive an indication of the most probable sales price of the property being appraised. The reliability of this technique is dependent upon: (a) the availability of comparable sales data, (b) the verification of the sales data, (c) the degree of comparability or extent of adjustment necessary for differences in time of sale and time of appraisal, and (d) the absence of non-typical conditions affecting the sales price.

Keeping in mind the sparse "findings" made by the Board as we have quoted above, and the admonition of First Nat'l Bank v. Bernalillo County Valuation Protest Bd., 90 N.M. 110, 115, 560 P.2d 174, 179 (Ct.App.1977) that an administrative body "must, at least, indicate the reasoning of the board and the basis on which it acted," we perceive the Board's order to rest upon its determination that comparable sales data were not lacking, that golf courses with country club facilities were similar properties, and that evidence of prices such properties sold for sustained the assessor's conclusion of value for purposes of taxing Four Hills.

We think an analysis of the data relied on by the appraiser, together with the data developed by the protestant and presented at the hearing, and applying the test of reliability established by PTD Regulation 29-5:8, sufficiently destroys the basis of the County's appraisal to require reversal. We summarize some of that evidence:

St. Andrews Golf Club, $1,077,200 sales price:

(a) Of the 271 acres purchased, 120 acres were available for recreational, residential or commercial development, and the value of the 120 acres was not subtracted from the total value.

(b) The land was purchased by a local government using federal funds for one-half the cost of purchase, but the appraiser did not know that;

(c) The county's appraiser used another appraiser's analysis and information concerning the sale, and did not verify any of the information contained in that report;

(d) Other factors not considered by or known to the county's appraiser:

(i) Whether the purchase was made primarily to acquire open or park space, or to regulate development under zoning laws;

(ii) Whether there were permanent restrictions on the use of the land developed as a golf course;

(iii) Whether additional acquisitions, such as water rights or a liquor license, were included in the purchase price;

(iv) That the acquisition of the golf course was incidental to the City of Overland Park in acquiring the 271-acre parcel.

Tomahawk Hills Golf Course, $1,068,200 sales price:

(a) All information on this 225-acre purchase was obtained from another appraiser, and not verified by the county's appraiser;

(b) The property was not looked at by the county's appraiser;

(c) The county's appraiser did not talk with anyone connected...