Kocer v. Bon Homme County Com'rs, No. 20875

• Decision Date: 15 December 1999
• Docket Number: No. 20876., No. 20875
• Parties: Kenneth J. KOCER and, Rhonda A. Kocer, Plaintiffs and Appellees, v. BON HOMME COUNTY COMMISSIONERS, acting in their capacity as Bon Homme County Board of Equalization, Defendants and Appellants. Kathy Kocer and Robert Kocer, Plaintiffs and Appellees, v. Bon Homme County Commissioners, acting in their capacity as Bon Homme County Board of Equalization, Defendants and Appellants.
• Court: South Dakota Supreme Court

604 N.W.2d 1

1999 SD 155

Kenneth J. KOCER and, Rhonda A. Kocer, Plaintiffs and Appellees, v. BON HOMME COUNTY COMMISSIONERS, acting in their capacity as Bon Homme County Board of Equalization, Defendants and Appellants.

Kathy Kocer and Robert Kocer, Plaintiffs and Appellees, v. Bon Homme County Commissioners, acting in their capacity as Bon Homme County Board of Equalization, Defendants and Appellants.

Nos. 20875, 20876.

Supreme Court of South Dakota.

Considered on Briefs October 21, 1999.

Decided December 15, 1999.

John P. Blackurn of Blackburn, Stevens & Fox, Yankton, South Dakota, Attorneys for plaintiffs and appellees.

Lisa Z. Rothschadl, Bon Homme County State's Attorney, Tyndall, South Dakota, Attorney for defendants and appellants. AMUNDSON, Justice.

[¶ 1.] Bon Homme County Commissioners (Commissioners) appeal the trial court's reversal of its 1997 tax assessment of Kenneth and Rhonda, Robert and Kathy Kocer's (Kocers) real property. We affirm.

FACTS

[¶ 2.] Kocers collectively own nine parcels of agricultural land, approximately 533 acres, in Bon Homme County, South Dakota (County).¹ In preparation for the 1997 tax assessment, the Director of Equalization (Director) had the entire county reassessed. County hired Arvid Meland (Meland), a soil expert, to analyze the county property. Meland testified at trial that this "county-wide analysis" took only two days to complete. After Meland's analysis, County reassessed the county property. County's overall assessment of the county decreased by approximately 6%. However, Kocers' property valuations increased on each of the nine parcels at a range of 37% to 87%, for an average increase of 48%.

[¶ 3.] The Kocer property has many physical aspects that reduces its usability as farmland. The previous director had made valuation adjustments based upon the factors present on Kocers' property. However, the present Director testified that she used a computer to calculate the assessment based exclusively upon the soil survey manual and sales data. In fact, Director stated that to complete a mass appraisal, she never has to leave her office because all she needs is the computer and records to assess the fair market value of the property.

[¶ 4.] In conducting an assessment, the Director considers the cost, market, and income approaches. In addition, she utilizes the additional guidelines under SDCL 10-6-33.1 to consider the capacity of the land to produce and the location, size, soil, terrain, and topographical condition of property by relying on comparable sales of agricultural property.

[¶ 5.] Director began her assessment of Kocers' property by first considering the capacity of the Kocers' land to produce. A soil survey, which provided analysis of soil types and yield data for each soil type, was used to determine the Kocer property's capacity to produce. In addition to the soil survey, Director also took the advice of Meland in making an adjustment for a gravel pit located on Kocers' property.² This was the only gravel pit adjustment made despite the presence of numerous gravel pits on the property. In addition to the one gravel pit adjustment, Director also made a downward adjustment for two creeks on Kocers' property.

[¶ 6.] After utilizing the soil survey, Director gathered information of comparable sales of agricultural land with similar characteristics to Kocers' property. Despite the initial thirty-four comparable sales compiled by Director, she found that only seven were comparable to Kocers' property. The comparable sales ranged from $405.00 to $650.00; Kocers' property was assessed by Director at an average price of $527.00 per acre.

[¶ 7.] After determining comparable sales, the Director used the market approach to develop the "top dollar" of the property. Director found that the "top dollar" of Kocers' property was $700.00. Director then took the soil type rating, multiplied it times the $700.00 "top dollar," and finally, multiplied that number by the number of acres to arrive at the full and true value of Kocers' property. [¶ 8.] Kocers, believing that their property had been assessed excessively high, sought a reassessment from the Board.³ After being denied a change in valuation by the Board, Kocers appealed the Board's decision to circuit court.

[¶ 9.] Director's testimony indicates that she was unaware of and failed to make any adjustment for drains, drainage, drainage problems, or flooding. Further, Director testified that she was not aware that there were "at least four culverts" and "one bridge" on the Kocer property. She relied solely on the soil survey and the market; a market comprised of thirty-four sales, of which, only one contained a creek on the property.

[¶ 10.] Further evidence was presented at trial through the testimony of the county's soil expert, Meland, that a soil survey is not a "perfect tool" and only provides a basis for an assessment. He also stated there were limitations to the tool; it does not take into consideration land features, such as potholes or gravel pits, which limit soil productivity. Finally, he noted that from previous experience you cannot take the soil survey book and plug in the values listed into the computer to receive a correct value assessment.

[¶ 11.] Kocers provided expert testimony of a land appraisal from appellee Robert Kocer (Robert). The trial court found Robert to be a qualified land appraiser whose opinions were supported by sufficient, credible evidence. In addition, the court found that any inherent bias of Robert's appraisal was overcome by his evidence. Robert's testimony provided an appraised value of Kocers' 533.09 acres to be $324 per acre, as opposed to the approximate value of $526 per acre as assessed by Commissioners.

[¶ 12.] At the conclusion of trial, the court disagreed with the valuation method used by the Director. The court found that the valuation method used did not adequately take into consideration the physical features on Kocers' property which limit its productivity. The court found that Commissioners failed to use comparable sales considerations, failed to consider the actual ability of Kocers' land to produce, failed to consider the soil, terrain and topographical conditions of the property, and failed to make adjustments for: sandy soil, gravel, gravel pits, creeks, water run off, flooding, drainage problems, weed and disease problems brought by flooding, unproductive and low productive land, willow trees, six culverts running water onto the Kocer property, and two creeks of sufficient size that they are covered by bridges. In addition, the court noted in its findings that 45% of Kocers' property is not tillable due to gravel pits, sand, creeks, rocks, and steep terrain subject to the damaging effects of water and wind erosion. The court, in finding the assessment figures excessive, declared new assessment figures for the Kocer property.⁴ [¶ 13.] The Commissioners appeal, raising the following issues:

1. Whether the Director correctly followed SDCL 10-6-33.1 in determining the full and true value of the plaintiff's property.

2. Whether Kocers met their burden of proof to overcome the presumption that the Director's valuations are correct?

STANDARD OF REVIEW

[¶ 14.] Our standard of review in assessment matters is well settled. We have often stated:

"This court's proper scope of review of a trial court's decision in a trial de novo of an assessment matter is whether the decision of the trial court was `clearly erroneous.' When applying the clearly erroneous standard, the question is not whether this court would have made the same findings that the trial court did, but whether on the entire evidence this court is left with a definite and firm conviction that a mistake has been committed."

Amert v. Lake County Bd. of Equalization, 1998 SD 66, ¶ 14, 580 N.W.2d 616, 618 (quoting Richter Enterprises, Inc. v. Sully County, 1997 SD 61, ¶7, 563 N.W.2d 841, 843 (quoting Hutchinson County v. Fischer, 393 N.W.2d 778, 781 (S.D.1986) (citations omitted))). Additionally, it is presumed that "tax officials act in accordance with the law and not arbitrary or unfairly when assessing property." Id. at 618-19 (citing Richter, 1997 SD 61, ¶ 7, 563 N.W.2d at 843 (citing Lincoln Township v. South Dakota Bd. of Equalization, 1996 SD 13, ¶ 5, 543 N.W.2d 256, 257; Hutchinson County, 393 N.W.2d at 782)). A "`[t]axpayer also has the burden of overcoming the presumption that Director's value was correct' by producing `sufficient evidence to show the assessed valuation was in excess of true and full value, lacked uniformity in the same class or was discriminatory.'" Amert, 1998 SD 66, ¶ 14, 580 N.W.2d at 619 (quoting Richter, 1997 SD 61, ¶ 7, 563 N.W.2d at 843 (citations omitted)). In addition to the taxpayer's heavy burden, "`[e]ven if the director of equalization fails to fully comply with statutory mandates, rendering the assessment void, a taxpayer cannot avail himself of such invalidity without also showing that the tax levied was unjust and inequitable.'" H.A. Poindexter v. Hand County Bd. of Equalization, 1997 SD 71, ¶ 12, 565 N.W.2d 86, 89-90 (quoting Knodel v. Board of County Comm'rs, 269 N.W.2d 386, 389 (S.D.1978) (citing Brink v. Dann, 33 S.D. 81, 144 N.W. 734 (1913))). "`Substantial compliance with legislative directives is sufficient in determining assessed valuation.'" Id. at 90 (quoting Knodel, 269 N.W.2d at 389 (citing Hot Springs v. Fall River Landowners, 262 N.W.2d 33 (S.D.1978))).

DECISION

[¶ 15.] 1. Whether the Director correctly followed SDCL 10-6-33.1 in determining the full and true value of the plaintiff's property.

[¶ 16.] Under Article XI, Section 2, of the South Dakota Constitution, "`[t]axes shall be uniform on all property of the same class, ... and the valuation of property for taxation purposes shall never exceed the actual value thereof.'" Knodel, 269 N.W.2d at 389. It also states under SDCL 10-6-33 that "`[a]ll property shall be assessed...