Kent v. County of Douglas
| Decision Date | 21 December 2020 |
| Docket Number | 21-CV-19-726 |
| Parties | David A. Kent, Petitioner, v. County of Douglas, Respondent. |
| Court | Tax Court of Minnesota |
ORDER FOR JUDGMENT
This matter came for trial before the Honorable Wendy S. Tien Judge of the Minnesota Tax Court.
The petitioner, David A. Kent, is self represented.
Tara J. Ulmaniec, Assistant County Attorney, represents respondent Douglas County.
The court, having heard the testimony of witnesses and the arguments of counsel, having received and reviewed the exhibits admitted at trial, and based upon all of the files records, and proceedings herein, now makes the following:
FINDINGS OF FACT
1. Petitioner has sufficient interest in the property to maintain this petition; all statutory and jurisdictional requirements have been complied with, and the court has jurisdiction over the subject matter of the action and the parties hereto.
2. The subject property is located at 12435 State Highway 29 South Hudson Township, in Douglas County.
3. The estimated market value of the subject property as of January 2, 2018, pursuant to the County's assessment, was $646 200.
4. Petitioner testified that the January 2, 2018 estimated market value for the property exceeds its actual market value by approximately $150, 000.
5. The actual market value of the subject property as of January 2, 2018, is $646, 200.
1. Based upon the facts presented at trial, the petitioner has not submitted sufficient evidence to overcome the prima facie validity of the assessed value of the subject property as of January 2, 2018.
2. The estimated market value of the the subject property as of January 2, 2018, does not exceed its actual market value.
1. The County's motion to dismiss the petition pursuant to Minnesota Rule of Civil Procedure 41.02(b) is granted.
2. The County's assessment with respect to the subject property as of January 2, 2018, is affirmed. IT IS SO ORDERED. THIS IS A FINAL ORDER. LET JUDGMENT BE ENTERED ACCORDINGLY.
Petitioner David A. Kent filed a petition in this court's Small Claims Division on April 29, 2019, for taxes payable in 2019, with respect to real property located at 12435 State Highway 29 South, Hudson Township, in Douglas County. The petition alleges the estimated market value of the subject property as of January 2, 2018, exceeds its actual market value.[1] Mr. Kent is the owner of the subject property.
Trial took place on October 27, 2020. Mr. Kent did not offer expert testimony (such a written appraisal)[2] concerning the January 2, 2018 valuation of the subject property, nor did he offer any testimony of other fact witnesses concerning its valuation as of that date. Mr. Kent stated that he does not dispute the County's method of valuing the subject property or the qualifications of its assessors. Rather, Mr. Kent argued the subject property is unique and lacks relevant comparable properties. For this reason, Mr. Kent contended that an actual sale of the subject property was the only valid basis for determining its market value.
Mr. Kent testified on his own behalf as follows concerning the subject property, which he owned and occupied as of the assessment date with his spouse. The subject property comprises approximately 5.22 acres of land on Maple Lake, with two structures - one, the Kents' residence, and the other, a pole shed. He testified that the subject property was part of a larger, 6.7 acre parcel he purchased in August 2015, in the amount of $500, 000, which he promptly subdivided following purchase; Mr. Kent sold the smaller of the two subdivided parcels to a third party for $150, 000 in 2015, and its value is not at issue in this petition.
Mr. Kent offered his own opinion testimony, based on his ownership and occupancy as well as his experience as the previous owner of several parcels of real estate, that the County incorrectly valued the subject property relative to other properties on similar parcels of lake frontage. Mr. Kent testified about the condition of the subject property when he purchased it in August 2015, including the reasons for his offering price. Specifically, he testified the subject property required numerous repairs, including the replacement of virtually all its windows. In addition, Mr. Kent testified that the subject property has a gravel driveway that requires significant maintenance, and lacks access to city sewer services, being serviced by a private well that is shared with the adjacent parcel. He stated that these characteristics of the subject property factored into his opinion of its value.
Mr. Kent opined that the home was unique in the juxtaposition of the size of the parcel when compared to the quality of the home. He opined the subject property was unlike others in the vicinity, which he testified were typically cabins, or were more modern homes when compared to the subject, although he did not offer evidence of the assessed values, sale prices, or specific characteristics of any particular properties by way of comparison. Rather, Mr. Kent characterized the subject as a manufactured home that is smaller, less modern, and more modestly fitted than those built on other, comparably sized parcels of Maple Lake frontage.
Finally, Mr. Kent offered his opinion that the home on the subject property (independent of the land) had a fair market value, based on the foregoing characteristics, of $250, 000. Mr. Kent stated this opinion was based on what he would pay for the subject property, taking into account his experience buying and selling real estate, [3] the square footage of the home, the quality of its fixtures compared to neighboring homes, and what he described as its modest curb appeal relative to comparable properties on Maple Lake.[4] Mr. Kent did not offer evidence of sales of specific properties on Maple Lake for comparison.
In response to the court's questions, Mr. Kent testified relating to improvements to the subject property between the date of its purchase and the petition date. Specifically, Mr. Kent testified that, following his August 2015 purchase, he replaced the windows throughout the subject property and repaired structural damage to the building's siding and floors that was discovered while replacing the windows. Mr. Kent also testified he replaced the deck attached to the home after moving in, and added a pole shed to the subject property in 2017. Despite these improvements, Mr. Kent argued, the whole of the subject property's components should not be considered the sum of its parts - in other words, as he described it, the subject property should not be regarded as a composite of its land, its lake frontage, the home, and the cost of the improvements to the home and the land. Rather, it should be regarded as a unique parcel.[5]
Mr. Kent also relied on a prior order of this court in case no. 21-CV-16-663 (the "Pay-2016 Case").[6] The 2016 Order after trial determined the market value of the subject property as of June 1, 2015 to be $445, 000.[7] Mr. Kent also contended the 2016 Order established a valuation "basis" binding the County for subsequent years. Based on the foregoing trial order, and considering the improvements made after his purchase of the subject property, Mr. Kent contends the County's assessed value of the subject property, $646, 200, exceeds its actual market value by about $150, 000.
Following the close of Mr. Kent's case, the County moved for involuntary dismissal of the petition pursuant to Minnesota Rule of Civil Procedure 41.02(b) on the grounds Mr. Kent failed to meet his burden to demonstrate the estimated market value of the subject property was excessive.[8]
The tax court shall hear every appeal de novo. Minn. Stat. § 271.06, subd. 6(a) (2020). At a public hearing concerning the assessed value of property, the parties shall have an opportunity to offer evidence and arguments, but the assessment shall be prima facie valid. Id. In other words, a county's assessment enjoys prima facie validity at trial, and the burden is on the party appealing the assessment to show it is excessive. S. Minn. Beet Sugar Coop v. Cty. of Renville, 737 N.W.2d 545, 557-58 (Minn. 2007). The taxpayer has the burden of proof at trial "to show that [the assessment] does not reflect the true market value of the property." Id. at 558 (alteration in original) (quoting Gale v. Cty. of Hennepin, 609 N.W.2d 887, 890 (Minn. 2000)).
"[A] prima facie case simply means one that prevails in the absence of evidence invalidating it." Id. (quoting Tousignant v. St. Louis Cty., 615 N.W.2d 53, 59 (Minn. 2000)). To overcome the prima facie validity of an assessment, the taxpayer must offer evidence to invalidate the assessment. Id. "Substantial evidence" the assessment is incorrect is required to overcome the presumptive validity of the assessment. Harmon v. Comm'r of Revenue, 894 N.W.2d 155, 159 (Minn. 2017) (citing Conga Corp. v. Comm'r of Revenue, 868 N.W.2d 41, 53 (Minn. 2015)). For evidence to be "substantial," it must be "credible evidence that the assessor's estimated market value is incorrect." Guardian Energy, LLC v. Cty. of Waseca, 868 N.W.2d 253, 258 n.6 (Minn. 2015). Such evidence may include the testimony of a property owner, who is entitled to testify as to the value of the property. Ranum v. Cty. of Washington, No. 82-CV-13-2005, 2017 WL 253752, at *2 & n.19 (Minn. T.C. Jan. 6, 2017); Elo v. Cty. of St. Louis, No. 149787, 1983 WL 1096, at *2 (Minn. T.C. Nov. 16, 1983).
The court may consider the three traditional approaches to valuation - cost, income, and sales comparison - in determining market value. See Equitable Life Assur Soc'y of the US. v. Cty....
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