Pirmantgen v. Roberts Cnty.

• Decision Date: 27 January 2021
• Docket Number: #29294
• Citation: 954 N.W.2d 718
• Parties: James PIRMANTGEN, Petitioner and Appellee, v. ROBERTS COUNTY, South Dakota, Respondent and Appellant.
• Court: South Dakota Supreme Court

954 N.W.2d 718

James PIRMANTGEN, Petitioner and Appellee,

v.ROBERTS COUNTY, South Dakota, Respondent and Appellant.

#29294

Supreme Court of South Dakota.

CONSIDERED ON BRIEFS NOVEMBER 16, 2020

OPINION FILED January 27, 2021

GORDON P. NIELSEN of Delaney, Nielsen & Sannes, P.C., Sisseton, South Dakota, JENNIFER M. JORGENSON of Delaney, Nielsen & Sannes, P.C., Webster, South Dakota, Attorneys for petitioner and appellee.

KAY F. NIKOLAS, Roberts County State's Attorney, Sisseton, South Dakota, Attorney for respondent and appellant.

DEVANEY, Justice

[¶1.] After the Roberts County Director of Equalization applied an across-the-board 10% increase to the value of James Pirmantgen's properties for the 2018 tax year, Pirmantgen challenged the tax assessment on 16 properties. The Office of Hearing Examiners held a trial de novo and modified the assessments on four properties but affirmed the County's remaining assessments. Pirmantgen appealed the hearing examiner's decision to the circuit court, and after considering the record evidence and arguments of counsel, the court reversed and modified the hearing examiner's decision. The court set aside the County's across-the-board 10% increase, modified the assessed values for some properties, and ordered the County to assess the remaining properties at the values existing prior to the 10% increase for the tax year in question. The court also ordered that the County reimburse Pirmantgen for any excess taxes collected. The County appeals. We affirm in part and reverse in part.

Factual and Procedural Background

[¶2.] James Pirmantgen owns multiple, non-agricultural properties in the City of Sisseton within Roberts County. For the 2018 tax year, the Director of Equalization applied an across-the-board 10% increase to the value of all non-agricultural property within the County. Pirmantgen challenged the assessment of his properties before the Roberts County Board of Equalization. The Board adjusted the value of two of the properties; one because it was not fit for habitation and another because of fire damage. The Board sustained the remaining assessments. Pirmantgen then appealed the Board's decision to the Office of Hearing Examiners (OHE), challenging the valuations of 16 properties.

[¶3.] At a June 20, 2018 hearing before the OHE, the audio recording device malfunctioned, and as a result there was not a complete transcript of the proceeding. The partial transcript reflects that Pirmantgen appeared at the hearing without the assistance of counsel and did not call any witnesses. The County appeared via its State's Attorney, and Shari Gamber, Director of the Roberts County Board of Equalization, testified. Pirmantgen referred to documents during his argument, but it is not clear whether the documents became part of the administrative record. The administrative record from this hearing contains exhibits submitted by the County related to Pirmantgen's properties and additional exhibits presumably submitted by Pirmantgen.

[¶4.] Following the hearing, the hearing examiner issued a written decision with findings of fact and conclusions of law upholding the Board's assessment of Pirmantgen's properties. Pirmantgen then obtained counsel and appealed to the circuit court. After counsel learned that only a portion of the proceeding before the hearing examiner had been recorded, he asked the circuit court to remand the matter so a complete record could be made. The County did not object, and the circuit court remanded the matter to the OHE to conduct a new hearing.

[¶5.] During the new hearing, Director Gamber testified similarly to her testimony at the first hearing. She explained the basis for her decision to apply an across-the-board 10% increase in value on all non-agricultural property in Roberts County. In particular, she testified that the properties in Roberts County, including Pirmantgen's, had not been systematically reappraised since the last County-wide reappraisal in 1994 and 1995. She explained that she was working with the South Dakota Department of Revenue to get the property valuations up to date and had created a seven-year plan to systematically reappraise all property in Roberts County. She noted that in 2021, the County would reappraise the properties in the City of Sisseton where Pirmantgen's properties were located. However, in the meantime, she completed a market analysis of properties sold in Sisseton in 2017 to determine whether the existing values of property in the County, when compared to the values at which properties sold in 2017, met the median level of assessment as required by statute (at least 85% of market value). Based on this market analysis, she learned that the values of non-agricultural property in the County, when compared to the values at which properties were selling for on the market, resulted in a median level of assessment of 62.3%. She then testified that because SDCL 10-3-41 requires the median level of assessment to be at least 85% of market value as determined by the Department of Revenue, she raised the valuations for all non-agricultural property within the County by 10%.

[¶6.] The Director also testified specifically about Pirmantgen's properties. She acknowledged that before increasing the value of his properties by 10%, she did not personally inspect his properties. However, when asked whether she had used a cost approach program called "Marshall & Swift" in valuing Pirmantgen's properties prior to November 1, 2017, she responded, "Yes." When asked if she used a market approach to value the land, she also replied, "Yes." Yet she admitted (with respect to the market approach) that she did not compare individual sales to Pirmantgen's properties, and also admitted (with respect to the cost approach) that she did not adjust the value of the properties for economic obsolescence or depreciation. When explaining her valuation of the properties, she stated, "[T]his is a market adjustment[;] it is not an individual assessment." The State's Attorney directed her to the exhibits related to each of Pirmantgen's properties and asked whether the documents "reflect true and correct values that you assessed the properties at prior to November 1st or on November 1st, 2017." The Director replied, "Yes."

[¶7.] During cross-examination, Pirmantgen questioned the Director about her use of the cost and market approaches, and she admitted she did not individually value Pirmantgen's properties for the 2018 tax year under those approaches. She testified that she "compared the whole town as a whole." However, she explained that when she reappraises the properties in Sisseton in 2021, she will break the properties into different categories, look at comparables for similar properties, and then do an individual assessment of the properties in town, which "will be a more true and fair and a more comparable based assessment than the market approach is."

[¶8.] The Director further acknowledged on cross-examination that there was no way to know for sure whether all non-agricultural property in the County had increased 10% in value. However, she claimed that "on the flip side, [she] had sales showing that in Sisseton" there were "good sales to accommodate that market adjustment." She also testified that she believed Pirmantgen's property values had increased by 10% "on average." When asked whether someone from the Department of Revenue told her to apply an across-the-board 10% increase, she testified: "No. I did the 10 percent myself. I needed to make a market adjustment ...."

[¶9.] To refute the County's assessed valuations, Pirmantgen offered testimony from Tony Valnes, a real estate broker for northeastern South Dakota whose main office is in Sisseton. Valnes's testimony related only to six of Pirmantgen's 16 properties. He indicated that he had identified comparable sales and personally inspected the six properties to arrive at his stated valuations, which were lower than the County's assessed values on all but one of the six properties. Valnes's six valuations as compared to the County's valuations are reflected in the table below.

Parcel Number	County Assessment after 10% increase	Valnes's Appraisals
5929	$37,104	$20,000
4466	$35,346	$20,000
8426	$44,976	$18,000
2202	$27,380	$16,000
6346	$18,865	$20,000
14355	$35,120	$12,500

[¶10.] On cross-examination, the State's Attorney asked Valnes whether the market value of properties in Sisseton had increased, decreased, or stayed the same in the past 15 years, and more specifically, whether the market had increased at least 10%. He disagreed that there had been an overall increase in the value of properties across the board in Sisseton. In his opinion, "[s]ome properties did [increase], some properties could be in worse condition. You have to take each individual property and look at it .... The only way you can determine its value is based on comparable sales of what things sell for on the open market."

[¶11.] Following the hearing, the hearing examiner issued a written decision with findings of fact and conclusions of law. The decision identified the parcel number for each challenged assessment and the final values adopted by the Board. The hearing examiner noted that a County-wide reappraisal had not been performed since 1994 and 1995; and for the 2018 tax year, the County raised the value of all properties by 10% in an attempt to reach the 85% median level of assessment required by statute. The examiner further found that in valuing Pirmantgen's properties, the Director "considered the cost, market (sales comparison) and income approaches" and used "the cost method to value the structures and the market approach to value the land."

[¶12.] The hearing examiner affirmed all but four of the County's assessments. The examiner declined to modify the values for two parcels appraised by Valnes, determining that the County's assessments were "not unreasonable" because the County's assessed values for these two properties were similar to their most recent...