In re North Wilkesboro Speedway, Inc.

• Decision Date: 01 July 2003
• Docket Number: No. COA 02-660.,COA 02-660.
• Citation: 582 S.E.2d 39,158 NC App. 669
• Parties: In the Matter of NORTH WILKESBORO SPEEDWAY, INC.
• Court: North Carolina Court of Appeals

582 S.E.2d 39

158 NC App. 669

In the Matter of NORTH WILKESBORO SPEEDWAY, INC.

No. COA 02-660.

Court of Appeals of North Carolina.

July 1, 2003.

McElwee Firm, P.L.L.C., by John M. Logsdon, North Wilkesboro, for the taxpayer-appellant.

Vannoy, Colvard, Triplett, & Vannoy, P.L.L.C., by Anthony R. Triplett, North Wilkesboro, for appellee Wilkes County.

HUDSON, Judge.

North Wilkesboro Speedway, Inc. ("Taxpayer" or "Speedway"), a North Carolina corporation, owns real property ("the Property") located in Wilkes County, North Carolina. Located on the Property is a race track facility. Prior to 1995, NASCAR sponsored two annual races at North Wilkesboro Speedway as part of its Winston Cup Series. In 1995, New Hampshire International Speedway, Inc., and Speedway Motorsports, Inc., each acquired fifty percent of the shares of North Wilkesboro Speedway, Inc. Before these entities purchased the Speedway, NASCAR assured them that the Winston Cup race dates used by the Speedway could be moved to other race tracks. After the transfer of ownership, one race date was moved to Texas Motor Speedway and the other race date was moved to New Hampshire International Speedway. The last NASCAR-sanctioned race held at the Speedway was on 29 September 1996.

The Property consists of a 43.2 acre tract adjoining, but without direct access to, U.S. Highway 421. Improvements to the Property include a five-eighths mile oval paved race track with a pit and garage area; bleachers, grandstands and towers with private viewing suites; and various other structures, including restrooms and concession stands.

In 1998, Wilkes County ("the County") performed a county-wide tax reappraisal, and assigned a value of $8,580,400 to the Property. In early 1999, taxpayer requested an appraisal review. On 12 May 1999, the Tax Administrator's office advised taxpayer that it had inspected and reviewed the Property and recommended an increase in valuation to $9,560,300. Taxpayer requested a hearing on this valuation before the Wilkes County Board of Equalization and Review ("the Board"). After a hearing at which taxpayer presented an appraisal and testimony of an independent appraiser, the Board upheld the $9,560,300 valuation. From that decision, taxpayer appealed to the Property Tax Commission.

On 26 October 2001, the Property Tax Commission held a hearing on the Taxpayer's appeal. Taxpayer presented evidence through the testimony and appraisal report of its independent appraiser, Harvey P. Jeffers, and through the director of real estate for Speedway Motorsports, Inc., Robert E. Rourke. Mr. Jeffers appraised the Property at $2,800,000, concluding that its best and highest use is as a local (non-NASCAR) race track.

The County offered the testimony of its tax supervisor, Alexander Hamilton, and its independent appraiser, Arthur W. McElhannon. Hamilton testified that the County based its valuation of the Property on an appraisal using the cost approach, and assigned to the property a value of $9,560,300. McElhannon, on the other hand, appraised the Property using both the cost approach and the income approach. McElhannon concluded that the highest and best use of the Property is as a racing test and practice facility, and that the value of the Property was $7,125,000.

On 18 January 2002, the Commission issued a final decision concluding that the County had employed an arbitrary and capricious method when it appraised the Property and that the value assigned to the Property substantially exceeded the true value in money of the Property. The Commission ordered the County to revise its tax records to reflect a value of $7,125,000.

ARGUMENT

Taxpayer first argues that the findings and conclusions of the Commission regarding the income approach to valuation are arbitrary and capricious and not supported by the evidence. We disagree.

We review final decisions of the Property Tax Commission under the "whole record" test as governed by G.S. § 105-345.2, which provides that a decision may be reversed or modified if appellant's substantial rights have been prejudiced because the Commission's findings, conclusions, inferences, or decisions are:

(1) In violation of constitutional provisions; or

(2) In excess of statutory authority or jurisdiction of the Commission; or

(3) Made upon unlawful proceedings; or

(4) Affected by other errors of law; or

(5) Unsupported by competent, material and substantial evidence in view of the entire record as submitted; or

(6) Arbitrary or capricious.

G.S. § 105-345.2(b) (2001).

"The `whole record' test is not a tool of judicial intrusion; instead, it merely gives a reviewing court the capability to determine whether an administrative decision has a rational basis in the evidence." In re Owens, 132 N.C.App. 281, 286, 511 S.E.2d 319, 323 (1999), appeal after remand, 144 N.C.App. 349, 547 S.E.2d 827 (2001), disc. review denied, 354 N.C. 361, 556 S.E.2d 575 (2001). Under the "whole record" test, we must determine "whether the [Commission's] findings are supported by substantial evidence contained in the whole record." Whiteco Outdoor Adver. v. Johnston County Bd. of Adjust., 132 N.C.App. 465, 468, 513 S.E.2d 70, 73 (1999). Substantial evidence is that which a reasonable mind might accept as adequate to support a conclusion. Id.

Our courts have long held that "it is the function of the administrative agency to determine the weight and sufficiency of the evidence and the credibility of the witnesses, to draw inferences from the facts, and to appraise conflicting and circumstantial evidence." In re McElwee, 304 N.C. 68, 87, 283 S.E.2d 115, 126-27 (1981). As the reviewing court, "[w]e cannot substitute our judgment for that of the agency when the evidence is conflicting." Id. at 87, 283 S.E.2d at 127. Thus, we may not "weigh the evidence presented to the [Commission] and substitute [our] evaluation of the evidence for that of the [Commission]". In re AMP, 287 N.C. 547, 562, 215 S.E.2d 752, 761 (1975).

Moreover,

The "whole record" test does not permit the reviewing court to substitute its judgment for the agency's as between two reasonably conflicting views; however, it does require the court to take into account both the evidence justifying the agency's decision and the contradictory evidence from which a different result could be reached.

Floyd v. N.C. Dept. of Commerce, 99 N.C.App. 125, 128, 392 S.E.2d 660, 662 (1990), disc. review denied, 327 N.C. 482, 397 S.E.2d 217 (1990) (citations omitted). As to the credibility of the witnesses, this Court has noted that:

Credibility determinations and the probative value of particular testimony are for the administrative body to determine, and it may accept or reject in whole or part the testimony of any witness. Moreover, even though the ALJ has made a recommended decision, credibility determinations, as well as conflicts in the evidence, are for the agency to determine.

Oates v. N.C. Dept. of Correction, 114 N.C.App. 597, 601, 442 S.E.2d 542, 545 (1994) (internal citations and quotation marks omitted).

We note initially that taxpayer has brought forth arguments concerning only exceptions 1, 2, 3, 4, 5, and 7. Thus, the exception 6 is deemed abandoned. N.C. R.App. P. 10(a).

Taxpayer first argues that the Commission's findings of fact numbers 9, 14, and 19 are not supported by the evidence. The enumerated findings of fact read as follows:

9. A typical fee paid by Winston Cup race teams for practice sessions on NASCAR-sanctioned tracks would be $5,000 per day plus additional expenses for emergency medical personnel. The fee for practice sessions on non-sanctioned tracks, such as the subject property, by Winston Cup race teams, would range between $3,000 and $3,5000 per day.

14. The highest and best use of the subject property, which represents a former NASCAR-sanctioned Winston Cup racetrack, is the use as a practice and test facility. The numerous race teams located within the proximity of the subject property would contract for use of this facility to perform practice and test sessions.

19. The true value in money of the subject property as of January 1, 1999, was $7,125,000.

After a review of the whole record, we find that there is sufficient evidence to support these findings of fact. As to finding number 9, Mr. McElhannon, explained both in his testimony before the Commission and in his appraisal report that he arrived at the $3,500 figure based upon his interviews with various NASCAR team members:

Mr. Jerry Freeze, team manager for Petty Enterprises, ... indicates typical fees on Winston Cup Series tracks for practice sessions at $5,000 per day with an additional expense to the team for emergency medical personnel to be on standby. This fee was also confirmed with Mr. Bob Bahre [owner of New Hampshire International Speedway] who indicates practice sessions at his New Hampshire Speedway are also $5,000 per day. Based on additional interviews with other race team managers, such as Mike Brown with Bill Davis Racing, Richard Yates with Robert Yates Racing, and Steve Hmeil with Dale Earnhardt, Inc., (DEI), this is a typical fee for Winston Cup teams on NASCAR-sanctioned tracks. Mr. Mike Brown with Bill Davis Racing indicated that their team would probably be reluctant to pay the $5,000 per day for non-Winston Cup-sanctioned tracks, but would be more inclined to pay between $3,000 and $3,500 per day.

In addition, Mr. McElhannon testified before the Commission that:

the majority of people that ... that I interviewed said that they would be reluctant to pay the $5,000 a day since it wasn't a sanctioned track. So, I've heard $3,800 a day for Charlotte and I've heard $1,700 a day for Bristol. I'm going based on information of people who would be using this, on what they'd be willing to pay.

Mr. McElhannon also testified that there are more than eighty-five race teams within a 100-mile radius of the Speedway and that there is an ongoing demand by these race teams to use the Speedway as...