West Creek Assocs. v. County of Goochland

• Decision Date: 12 September 2008
• Docket Number: Record No. 071411.
• Court: Virginia Supreme Court
• Parties: WEST CREEK ASSOCIATES, LLC, et al. v. COUNTY OF GOOCHLAND.

665 S.E.2d 834

276 Va. 393

WEST CREEK ASSOCIATES, LLC, et al. v. COUNTY OF GOOCHLAND.

Record No. 071411.

Supreme Court of Virginia.

September 12, 2008.

Edward J. Fuhr (Eric H. Feiler; Hunton & Williams, on briefs), Richmond, for appellants.

Debra L. Mallory (Tracy Taliaferro; Andrew R. McRoberts, County Atty.; Taliaferro & Mallory, on brief), for appellee.

Local Government Attys. of Virginia, Inc.; Virginia Ass'n of Counties; Virginia Mun. League (James V. McGettrick; Joseph L. Howard, Jr.; Phyllis Audrey Errico; Mark K. Flynn, on brief), amici curiae in support of appellee.

Present: HASSELL, C.J., KEENAN, KOONTZ, KINSER, LEMONS, and AGEE,¹ JJ., and LACY, Senior Justice.

OPINION BY Justice CYNTHIA D. KINSER.

This appeal involves numerous applications for relief from the allegedly erroneous assessment of real property taxes. The primary issue concerns whether a taxpayer must prove manifest error in the "manner" in which a taxing authority arrived at the assessed value of real property or whether a taxpayer can prevail by proving a sufficient disparity between the assessed value of real property and its fair market value. Because we conclude the circuit court erred by holding that, in order to show manifest error, a taxpayer must prove what information the taxing authority considered and how it arrived at the assessment in question, we will reverse that portion of the circuit court's judgment sustaining a motion to strike the evidence with regard to certain parcels. We will, however, affirm the portion of the circuit court's judgment holding that the taxpayers failed to present credible evidence of fair market value with regard to certain other parcels.

MATERIAL FACTS AND PROCEEDINGS

In June 2000, 144 separate limited liability companies with various names (collectively, West Creek) purchased from Bank of America, N.A., as Trustee of the WC Land Trust, approximately 2,500 acres of real estate located in the West Creek Business Park (the Park) in Goochland County (the County).² Each limited liability company was conveyed only a small portion of the acreage, but the total purchase price for the 144 separate parcels comprising the 2,500 acres was approximately 34.1 million dollars. For the purpose of preparing the deeds, a map of the 2,500 acres was drawn to create 144 separate parcels for recordation purposes. The map, which the parties referred to as the "Timmons Sketch," did not contain a metes and bounds description for any of the 144 parcels, but the Timmons Sketch was recorded in the land records of the County along with the 144 deeds.³

The Timmons Sketch contained the following notation:

The parcels described on this sketch do not constitute a subdivision under the provisions of Article IV, Section 1 of the Code of Ordinances, Goochland County, Virginia ("Goochland County"), and a recording of this sketch and the reference to parcels depicted thereon in any deed of conveyance shall not be deemed to imply any approval by Goochland County for a division of property pursuant to the subdivision ordinance of Goochland County, nor shall the depiction of any parcel thereon as a road or right-of-way or the recording of this sketch constitute a dedication of such parcel to Goochland County, the Commonwealth of Virginia, or political subdivision thereof.

Prior to the 2000 sale, the County had assessed the 2,500 acres as 20 separate parcels having a total assessed value of 54.8 million dollars. In 2001, the County conducted its quadrennial reassessment of real property pursuant to Code § 58.1-3252. In that reassessment, the County assessed the 2,500 acres as 144 separate parcels, reflecting the 144 recorded deeds conveying various acreages to the 144 limited liability companies. The total 2001 assessed value of the 144 parcels was 105.4 million dollars. The County assessed a few of the parcels at a value of approximately $1,000 per acre, 40 parcels at a value of approximately $35,000 per acre, and the majority of the 144 parcels at a value of approximately $75,000 per acre.

On December 28, 2004, each limited liability company filed an application for relief from an erroneous assessment of real property taxes for the years 2001, 2002, 2003, and 2004.⁴ In each application for relief, the respective limited liability company asserted that, "[a]lthough there were no changes to the infrastructure and no improvements to the Park between 2000 and 2001, the County ignored the fact that the Park had not been subdivided and subsequently assessed the Park . . . as if it had been subdivided into 144 parcels." Such assessment was allegedly in error and resulted in an assessed value that "substantially exceeded the fair market value of the Property and was invalid." The limited liability companies further alleged that the County's assessments were not uniform in their applications and that the County disregarded controlling evidence in making the assessments.

After the circuit court granted West Creek's motion to consolidate the 130 applications into a single action, the case proceeded to a bench trial. During its case-in-chief, West Creek called numerous witnesses, including William H. Goodwin, Jr., who was Armstrong's business associate and participated in the decision to purchase the 2,500 acres and to deed the property to 144 limited liability companies; Steven I. Wampler, the reassessment contractor hired by the County to appraise all real property in the County for purposes of the quadrennial reassessment; members of the County's board of assessors (BOA) and board of equalization (BOE);⁵ and its own real estate appraiser, Michael G. Miller.

Goodwin testified that, for purposes of determining how much to offer Bank of America for the 2,500 acres, the Park was divided into three or four phases or quadrants that represented the presence of infrastructure, or lack thereof, and charts were prepared that contained estimates of the costs of developing the water, sewer, and roads in the quadrants that still needed such infrastructure. Using three methods to estimate the value of the 2,500 acres, Goodwin concluded that the property was worth approximately 33 to 34 million dollars. To form his opinion as to the value of the 144 parcels assessed by the County, Goodwin assigned a portion of the purchase price to each phase or quadrant, divided that number by the acres in the quadrant, and thereby arrived at the per acre value.

Wampler testified that he used a mass appraisal method to assess real property in the County because that method provided a systematic approach to valuing parcels in large quantities by using characteristics of similar parcels. With regard to the West Creek parcels, Wampler received 144 separate tax cards from the commissioner of revenue, with each card containing the acreage for that parcel. Wampler assessed the West Creek parcels at $75,000 per acre, except for parcels labeled on the Timmons Sketch as "floodplain," "waste," "lakes," or "roads," which he valued at $1,000 per acre. The total assessed value of the 144 parcels, according to Wampler, was $128,664,800.

Wampler acknowledged that, although he was appraising each individual parcel, he spread the $75,000 per acre value "across every bit of dirt out there except waste and roads." Wampler, however, did not believe that every parcel was worth $75,000 an acre. He agreed that the parcels in phase one of the Park's development were worth more than $75,000 per acre and those parcels in phases two and three were worth less than $75,000 per acre. Wampler admitted that he did not consider the cost of infrastructure in his appraisal because County officials told him that the infrastructure "was coming." At the time of his appraisal, he also knew that the water and sewer allocations then available would only support the development of an additional 110 acres of the Park.

In making his appraisal, Wampler used comparable sales of parcels in the Park, which ranged from $63,000 to $120,000 per acre. Wampler stated that he "threw out the highest and the lowest [sales] . . . and came up with [$]75,000." Most of the comparable sales were in the range of $100,000 per acre, but Wampler discounted the 144 parcels to $75,000 per acre in part because they lacked improvements for water and sewer. Wampler also testified that he valued the 144 parcels at $75,000 per acre before he learned about a contract to sell 27 of the 144 parcels for approximately $77,500 per acre to an entity known as "Capital One."

Wampler provided his appraisal and all the information he had collected to the BOA. The BOA adopted only part of Wampler's appraisal of the 144 parcels. It reduced the assessed value of parcels in phase two of the Park to $35,000 per acre. Wampler was not present at all of the BOA meetings and did not know what information the BOA possessed in addition to that which he had provided.

Three individuals who served as members of the BOA during the quadrennial reassessment testified at trial. They indicated that the BOA reviewed Wampler's appraisal, but none of the board members who testified could remember why the BOA reduced the assessed value of certain parcels from $75,000 to $35,000 per acre. One member explained that the BOA members rode through the West Creek property, discussed the land, and performed their job with the information they had.

Members of the BOE also testified at trial. The BOE did not agree with the BOA's assessment of the parcels designated as "roads." Thus, the BOE increased the assessed value of the road parcels from $1,000 per acre to either $35,000 or $75,000 per acre, thereby increasing the total assessment by $594,000. The BOE also changed the description of those parcels from "road" to "commercial/industrial." Like the BOA, the BOE members who testified could not recall how the BOE arrived at its equalization numbers.

Miller, who qualified as an expert in the field of real estate appraisal, valued the 144 parcels at 34.1...