RFM-Trei Jefferson Apartments, LLC v. Stark Cnty. Bd. of Comm'rs
| Decision Date | 21 October 2020 |
| Docket Number | No. 20190399, No. 20190397, No. 20190398,No. 20190396,20190396 |
| Parties | RFM-TREI JEFFERSON APARTMENTS, LLC, Appellant v. STARK COUNTY BOARD OF COMMISSIONERS, Appellee RFM-TREI Lincoln Apartments, LLC, Appellant v. Stark County Board of Commissioners, Appellee Dickinson Homestay, LLC, Appellant v. Stark County Board of Commissioners, Appellee Lodgepros Dickinson, LLC, Appellant v. Stark County Board of Commissioners, Appellee |
| Court | North Dakota Supreme Court |
Michael S. Raum (argued) and Aubrey J. Fiebelkorn-Zuger (on brief), Fargo, N.D., for appellants.
Mitchell D. Armstrong (argued) and Brian D. Schmidt (on brief), Bismarck, N.D., for appellee.
[¶1] RFM-TREI Jefferson Apartments, LLC; RFM-TREI Lincoln Apartments, LLC; Dickinson Homestay, LLC; and Lodgepros Dickinson, LLC (together "the Taxpayers") appeal from district court judgments affirming the Stark County Board of Commissioners’ ("the Board") denials of their applications for tax abatements or refunds. On appeal, the Taxpayers argue the Board's decisions are arbitrary and unreasonable, the Board applied an incorrect legal standard, and the Taxpayers’ right to due process was violated. We reverse the judgments and the Board's decisions and remand for further proceedings.
[¶2] The Taxpayers collectively own two apartment complexes and two hotels located in the City of Dickinson. The Taxpayers filed applications for abatement or refund of their 2016 property taxes. The Taxpayers’ opinions of value for each property differed from the City's valuations by a range of roughly $1.8 million to $20.3 million. After holding a hearing, the City recommended the Board deny each application.
[¶3] After briefly discussing the applications at its regular meeting, the Board decided to hold a special hearing due to the limited time available at the regular meeting. County representatives sent the Taxpayers an agenda for the special meeting. The agenda listed each abatement application in fifteen-minute time intervals. The Taxpayers’ counsel raised concerns with County representatives by email and letter indicating the Taxpayers would not have enough time to present their material. County representatives were largely unresponsive and replied with a revised agenda that omitted the time designations.
[¶4] At the special hearing, the Taxpayers’ counsel began his presentation by informing the Board he had intended to call witnesses but chose not to do so because he was unsure whether the Board would grant him enough time. Rather than calling witnesses, the Taxpayers’ counsel submitted what he described as an "offer of proof," which contained detailed information on each property and stated:
[W]e would anticipate eliciting expert testimony which would demonstrate that the decline in oil prices had a significant and immediate impact on the Dickinson market for commercial real estate, particularly with respect to apartments and lodging properties like the Subject Properties. This testimony would also establish that the assessment for each parcel has not declined with the market, and therefore exceeds the true and full value of each parcel.
The Taxpayers’ counsel presented valuations for each property based on an income approach. The Dickinson City Assessor presented valuations based on a replacement-cost approach. The assessor informed the Board he was unable to conduct an income-approach analysis because his attempts to obtain income information from the Taxpayers were unsuccessful.
[¶5] The Board denied the abatement applications in four separate written decisions. Using the same language in each, the Board concluded the assessor's valuations were not "in error, invalid, inequitable, unjust, or arrived at in an arbitrary, capricious, or unreasonable manner." The decisions also explained the Board did not believe the Taxpayers provided "sufficient enough information relating to the subject properties, or the local market for competing properties, to lead us to the same value conclusions requested by the applicant." The district court affirmed each denial in separate, written orders and judgments. The cases have been consolidated on appeal.
[¶6] We review local governing bodies’ decisions on tax rebate and abatement applications under the arbitrary, capricious, or unreasonable standard:
Our review of a local governing body's assessment of value for tax purposes is limited by the doctrine of separation of powers. Taxation of property is a legislative function, not a judicial function, and courts may not substitute their judgment for that of the local governing body. A reviewing court may not reverse the Board's decision simply because it finds some of the evidence more convincing; rather, the reviewing court may reverse only where there is such an absence of evidence or reason that the Board's decision is arbitrary, capricious, or unreasonable. A decision of a local governing body is arbitrary, capricious, or unreasonable only if it is not the product of a rational mental process, by which the facts and the law are considered together for the purpose of achieving a reasoned and reasonable interpretation.
Dakota Northwestern Assocs. v. Burleigh Cty. Bd. of Cty. Comm'rs , 2000 ND 164, ¶ 8, 616 N.W.2d 349 (citations omitted). Our limited scope of review does not permit us "to weigh the material on value to determine which part of it is more convincing." Ulvedal v. Bd. of Cty. Comm'rs of Grand Forks Cty. , 434 N.W.2d 707, 710 (N.D. 1989). "Weighing factual material for tax purposes is the responsibility of county commissioners, not the courts." Id.
[¶7] The Taxpayers assert the Board implied an improper standard by approaching their abatement applications as an appellate review of the assessor's valuations rather than as an independent fact finder. The Taxpayers argue that "[r]ather than consider the evidence submitted by Taxpayers, the Board was concerned about whether or not the Taxpayers had provided the City of Dickinson's Assessor with its evidence and arguments prior to the assessment."
[¶8] Although N.D.C.C. § 57-23-06 requires the Board to give the City's recommendation "consideration" in tax abatement and refund proceedings, the Board is also required to determine a property's true and full value based upon all of the evidence before it. Dakota Northwestern Assocs. , 2000 ND 164, ¶ 13, 616 N.W.2d 349. The Board may grant an abatement or refund when an assessment is "invalid, inequitable, or unjust." N.D.C.C. § 57-23-04(1)(h). On appeal, we "presume, in the absence of contrary evidence, that the assessing officers performed their duty."
Ulvedal , 434 N.W.2d at 709 (quoting Appeal of Johnson , 173 N.W.2d 475, 482 (N.D. 1970) ).
[¶9] On a number of occasions during the hearing, the assessor advised the Board that his requests for income information from the Taxpayers went unanswered. This prompted discussion about what information the assessor had when he completed his valuation, which prompted more discussion about what the appropriate standard was for the Board to apply. The Stark County State's Attorney and the Taxpayers’ counsel repeatedly advised the Board it was required to consider all of the evidence before it to determine whether the assessor's valuation was invalid, inequitable, or unjust.
[¶10] After the hearing, the Board issued identical, conclusory explanations for its denial of each Taxpayer's abatement application. The Board should have provided better explanations for its decisions. Cf. Dakota Northwestern Assocs. , 2000 ND 164, ¶ 15 n.2, 616 N.W.2d 349 (). A review of the evidence before the Board shows the Board engaged in a determination of whether the assessor's process was reasonable without regard to whether the resulting assessment itself was invalid, inequitable, or unjust.
[¶11] During the hearing, the assessor conceded, on the basis of his 17 years of experience as an appraiser and assessor, the properties at issue would not have sold in 2016 for the assessed values.
Despite his concession, the Board adopted the assessor's determination of true and full value as reflected by the assessments.
[¶12] Every property within North Dakota, including the properties at issue, must be assessed at its "true and full value." True and full value is "the value determined by considering the earning or productive...
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