Present: Hassell, C.J., Keenan, Koontz, Kinser, Lemons,
and Agee, 1 JJ., and Lacy, S.J.
WEST CREEK ASSOCIATES, LLC, ET AL.
v. Record No. 071411 OPINION BY JUSTICE CYNTHIA D. KINSER
September 12, 2008
COUNTY OF GOOCHLAND
FROM THE CIRCUIT COURT OF GOOCHLAND COUNTY
Timothy K. Sanner, Judge
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
1
Justice Agee participated in the hearing and decision
of this case prior to his retirement from the Court on June
30, 2008.
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
2
Ninety percent of each of the 144 limited liability
companies is owned by another limited liability company,
with the remaining ten percent owned by Beverly W.
Armstrong.
3
The purpose of creating 144 parcels out of the 2,500
acres and deeding each parcel to a different limited
liability company was to obtain long-term capital gains tax
treatment should the parcels be subsequently sold.
2
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.
3
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.
4
Although 144 applications for relief were filed, the
circuit court dismissed 14 of the applications. The record
in this appeal does not disclose the basis for that
dismissal. The issues before this Court relate only to the
remaining 130 applications.
4
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
5
During the quadrennial reassessment, the function of
the BOA was to assess the real property in the County at
fair market value. The role of the BOE was to resolve
appeals by taxpayers challenging the assessed value of real
property set by the BOA and to equalize assessments when
needed.
5
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
6
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.
7
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
million dollars, which was the purchase price paid for the
2,500 acres. Miller opined that the parcels should be
appraised as a whole, rather than individually, for several
8
reasons: (1) there were no metes and bounds descriptions
for the parcels; (2) the Timmons Sketch was not an approved
subdivision of the property; and (3) over two-thirds of the
acreage was, according to Miller, “raw land, [with] no
infrastructure to it.” Miller considered the 34.1 million
dollar sale price of the 2,500 acres as “a controlling
factor” and used that sale as his comparable sale. He then
divided the total acreage into quadrants and assigned a per
acre value to each quadrant based on the availability of
infrastructure in the particular area of the Park.
In making his appraisal, Miller stated the price per
acre in relation to the average per acre sale price for the
2,500 acres, which was $13,552. For example, he valued the
best quadrant at about 5.5 times the average per acre sale
price, another quadrant with existing infrastructure at 3.5
times the average sale price, the quadrant close to
existing infrastructure at twice the average sale price,
the quadrant that would be in the third phase of
development at 1.3 times the average sale price, and the
quadrant with limited access and no infrastructure at about
half of the average sale price. Thus, Miller appraised the
most valuable quadrant at $75,000 an acre and the quadrant
with no infrastructure at $7,500 per acre. Finally, Miller
9
valued the areas of wetlands or waste at a little over ten
percent of the average per acre sale price, i.e., $1,614.
Except for the wetlands and waste areas, Miller
admitted that he agreed with and adopted the values that
Goodwin had placed on the 2,500 acres for purposes of
negotiating with Bank of America. In Miller’s words, “I
also agreed with . . . the way that [Goodwin] came up with
[the values]. And I concluded that that was logical and
reasonable, and that’s what I’ve come up with.” In fact,
he acknowledged that he simply did a mathematical
calculation in order to arrive at a per acre value for the
wetland and waste areas:
Q Okay. And when you say you do the math, what
you’re saying is when you got to the bottom line
on the fourth page of this chart and you see the
values listed, 2001 fair market value, that
bottom line, that bottom number, the total is
$33,096,832.79. What you’re saying is you change
the values of the waste parcels so that it would
add up to $31.9 million?
A What I did – that wasn’t the only thing. I
looked at the waste and I divided it out, the
million dollars difference, and then in my mind I
reconciled it.
Miller criticized Wampler’s assessment because, in
Miller’s opinion, Wampler treated the parcels as if they
all were “retail pad sites, where a site is ready to be
built upon, it’s approved, you have roads to it, you have
infrastructure, you have everything that you need in order
10
to go and build a building on it.” Miller also questioned
the validity of the comparable sales Wampler used in his
appraisal because those parcels already had access to
water, sewer, and roads. Unlike Wampler, Miller believed
that the lines on the Timmons Sketch creating the 144
parcels did not increase the value of the parcels because
they would not be developed and/or sold in accordance with
those lines.
After Miller testified, West Creek rested its case,
and the County moved to strike the evidence. The County
contended that West Creek had failed to establish a
sufficient record from which the circuit court could
conclude that the County had assessed the relevant parcels
in violation of Code § 58.1-3984. 6 In the County’s view,
West Creek proved only how Wampler appraised the parcels
but did not establish what the BOA did with the information
provided by Wampler. Similarly, the County argued that
West Creek did not show what information the BOE considered
in making the adjustments to the assessments set by the
BOA.
6
In relevant part, Code § 58.1-3984(A) provides that,
in a proceeding to correct an allegedly erroneous tax
assessment, “the burden of proof shall be upon the taxpayer
to show that the property in question is valued at more
than its fair market value or that the assessment is not
11
In ruling on the motion, the circuit court noted that
there is a “presumption in favor of the validity of the
assessment and that the taxpayer must show manifest error
in the manner of making the estimate, or that evidence
which should be controlling has been disregarded.”
Continuing, the circuit court concluded that Wampler
committed “manifest error” by applying a median value of
$75,000 per acre to all 144 parcels even though that figure
bore no relation to any particular parcel. The question
for the court, however, was whether that error could be
“reasonably inferred to serve as the basis for the
assessment ultimately arrived at by the board of assessors
and the board of equalization.”
As to the 90 parcels assessed at either $75,000 per
acre or $1,000 per acre, the circuit court overruled the
County’s motion to strike. Drawing all reasonable
inferences in favor of the non-moving party, the court
concluded that, since the assessed values matched Wampler’s
appraised values, Wampler’s manifest error could be imputed
to the County. The court also concluded that West Creek
had presented sufficient evidence at that point in the
uniform in its application, or that the assessment is
otherwise invalid or illegal.”
12
proceedings to establish that those assessments were in
excess of the fair market values of the parcels.
With regard to the 40 parcels assessed at $35,000 per
acre, the circuit court granted the motion to strike. In
the court’s view, West Creek had presented no evidence
regarding the “manner” in which the County arrived at the
assessment of $35,000 per acre for those parcels nor any
evidence from which it could infer the methodology used.
The court further stated that “the difference in values on
those parcels determined by the board of assessors and
those set forth by the taxpayers is insufficient to permit
the [c]ourt to reasonably infer there was manifest error in
the . . . manner of making the estimate or that controlling
evidence was disregarded.”
The County then presented its evidence, calling as one
of its witnesses, Joseph B. Call, III, who qualified as an
expert in the field of real estate appraisal. Call
explained that, when the County hired him, his assignment
was to appraise the 144 West Creek parcels “as separate and
distinct parcels, not recognizing the value of other
parcels in conjunction with each of the 144 subjects of
[his] assignment.” Call testified that he began his
assignment by researching information in the office of the
commissioner of revenue, inspecting portions of the
13
property from existing roadways, interviewing members of
the planning staff and the utilities department, and
reviewing various maps including the Timmons Sketch of the
144 parcels. Call also inquired about the availability of
utilities in the Park and learned about the exact location
of existing utility lines, the current capacity of the
water and sewer system, and the “chronology of the dealings
between Goochland County and Henrico County regarding
enhanced utility service as required by users of land
within the project.” Call concluded that, while the water
and sewer capacity at that particular time would not serve
the requirements of the Park if it were fully developed,
“the [C]ounty had shown good faith and persistence in
making efforts to ensure that there were sufficient
utilities and capacities to serve existing [land users], as
well as any requirements of land users as they might
develop within the foreseeable future.” He also collected
market data and identified “land sales that exhibited
similar function and economic characteristics as each of
the subject properties.”
Call decided that the appropriate valuation method was
the “sale comparison approach where comparable sales were
considered, evaluated, analyzed, [and] adjusted to . . .
provide for a credible value estimate for each parcel.”
14
Call determined that any other approach for arriving at the
fair market value for the 144 parcels would not have been
reliable. Call explained the sales comparison approach
that he conducted. First, he “identif[ied] sales which
[were] deemed as superior to the subject property and
others which [were] inferior to set the upper and lower
limits of value.” This method permitted Call “to then
consider each sale on its own merits and consider the
differences between the sale and subject [property] and
apply some adjustment.” Call explained that “[v]alue
factor considerations include those for time, location,
physical features, zoning, availability of utilities, and
size.”
Call identified a number of sales involving parcels
with acreage that approximated the sizes of the subject
parcels and having “similar soil types, topographical
features, locational features, and to some degree
availability of utilities and accessibility.” Even though
all the comparable sales were not timely, Call stated that
he could not “ascertain that the market had changed
measurably during the period of study [s]o there was no
time adjustment.” Since all the comparable sales involved
parcels in the Park, Call made neither a “locational
15
adjustment” nor “an adjustment for physical features of any
significance.”
Call did, however, make value adjustments for parcels
that did not have utilities or road access. Generally, he
valued such parcels at 40 to 50 percent less per acre than
parcels with such infrastructure. Call also made
adjustments to certain parcels because of their limited
marketability. For “lake parcels” as well as parcels
containing “floodplain,” “swamp,” or “wetlands,” he
assigned a value of $1,000 per acre. Call placed no value
on the “road parcels” because, in his opinion, “[w]hatever
value they have is inherent in the adjacent lands that
[they] serve.” Call also made adjustments for certain
parcels labeled on the Timmons Sketch as “waste parcels”
because they, nevertheless, have “considerable usable
land.” He valued the usable land in those parcels between
$15,000 and $37,500 per acre.
Call concluded that these comparable sales occurring
between 1991 and 2000 “yielded prices of $83,333 to
$120,000 per usable acre[; the parcels] had usable areas
ranging from 7.3 to 38.43 acres[; and t]he mean price
during that 9-year period of study was $107,503 [p]er
acre.” In summary, Call appraised the 144 parcels at
values ranging from a high of $90,000-$100,000 per acre to
16
a low of $15,000-$17,500 per acre, excluding those parcels
valued at $1,000 per acre or with no value. According to
Call’s appraisal, the total fair market value for the 144
parcels ranged from approximately $103,200,000 to
$113,700,000. 7
Call testified about his use of the Capital One sale
as a comparable sale. He admitted “[t]here were some
inducements to the Capital One purchase.” Specifically,
according to Call, Capital One “would receive about $3
million from the state governor’s opportunity fund, about
$3 million in county rebates.” Call believed that Capital
One would expend over four million dollars for water and
sewer line extensions but that the “cost would be rebated
by the [C]ounty over the term.” Call concluded that the
Capital One sale “at approximately $77,000 an acre should
be viewed as a pertinent and excellent indication of
values” as to a certain group of the West Creek parcels.
Call further testified that he arrived at a value between
$70,000 and $75,000 per acre for this same group of parcels
without utilizing the Capital One purchase as a comparable
sale.
7
Armstrong testified that, if the cost of
infrastructure were added to the 34.1 million dollar
purchase price, that sum would approximate Call’s appraised
fair market value of the parcels.
17
When asked why he did not consider the June 2000
purchase price for the 2,500 acres when valuing the 144
separate parcels, Call responded:
First off, the sale in excess of 2,000 acres
has a totally different highest and best use as
concluded for each of the 144 units. Secondly,
. . . the large sale would appear to appeal to a
different type of purchaser than any anticipated
purchasers of [individual lots.] Thirdly, a
comparison of in excess of a 2,000-acre parcel
with a smaller of 7 to 25 acres is just
ludicrous. Comparisons in that instance are
odious.
The only comparability with regard to that
over 2,000-acre sale of the West Creek project is
the fact that it is approximate and timely. But
in no way is it physically similar. No way does
it offer the same economies. I don’t think a
size adjustment is possible. Relying on that
sale as an independent indicator of value for any
of the 144 parcels would produce an appraisal
report that would lack total credibility.
The use of that sale and that sale alone as
an indication of value would be grounds for
possible dismissal from The Appraisal Institute
and probably revocation of one’s appraisal
license.
On cross-examination, Call stated that, if someone
wanted to purchase the entire acreage in a single
transaction, the price would be discounted, maybe down to
34.1 million dollars. Call, however, reiterated that he
had appraised 144 separate parcels, not “the project.” He
also admitted that he appraised each parcel believing that
the acreage had been subdivided into 144 parcels and did
18
not initially realize the Timmons Sketch was not an
approved subdivision under the County’s ordinances. He,
nevertheless, insisted that fact would not affect his
appraisal of the parcels.
Call also admitted that, in making his appraisal, he
assumed each parcel had some form of “legal access,” except
for the few parcels that he had otherwise specifically
identified. Call testified that “[if he] were instructed
by [his] client to assume that certain parcels have no
legal access, then [he] would have to amend [his] opinion
of market value for . . . the particular parcels.” When
questioned about the fact that, after the Capital One
purchase, the remaining water and sewer allocation was
sufficient only to develop an additional 145 acres, Call
explained that he had “reached a comfort level” that led
him to believe that water and sewer allocations would be
increased as development occurred in the Park.
At the close of the trial after considering all the
evidence, the circuit court dismissed West Creek’s
remaining 90 applications with prejudice. In doing so, it
made several rulings that are the subject of this appeal.
The circuit court held that the law of the Commonwealth
requires an individual assessment of each of the parcels in
question even though the 2,500 acres were not “legally
19
subdivided.” In the court’s words, “[t]he difference in
how the parties regard these parcels has shaped the
presentation of the evidence, affected the determination of
value, and created a conflict regarding the applicable
law.” The court then explained the parties’ disagreement
about the applicable law. According to the court, West
Creek argued that evidence showing a great disparity
between real property’s assessed value and its fair market
value is sufficient to establish manifest error; whereas,
the County asserted that in order to establish manifest
error or disregard of controlling evidence, a taxpayer must
show “what information the assessing authority had, how
that evidence was considered and weighed, and ultimately
what was the basis for [the] decision.”
Relying on this Court’s decision in City of Norfolk v.
Snyder, 161 Va. 288, 170 S.E. 721 (1933), the circuit court
concluded that the County’s position was correct. The
court reasoned that manifest error cannot be established
merely by evidence of differing opinions about fair market
value but that, instead, a taxpayer must present evidence
establishing what information the taxing authority
considered and how it arrived at the assessment in
question. The court described the evidence as to how the
BOA and the BOE arrived at the assessments in question as
20
“nearly nonexistent” and therefore concluded that West
Creek had failed to prove by a preponderance of the
evidence either manifest error or disregard of controlling
evidence.
In contrast to its view when it overruled the motion
to strike West Creek’s evidence, the court refused to
impute Wampler’s manifest error in his appraisal to the
County. The court reached this contrary position because
of evidence that the BOA met at times when Wampler was not
present and had information other than that provided in his
appraisal. According to the court, the “best evidence”
that the BOA considered other evidence and was influenced
by factors unrelated to Wampler’s appraisal was its
assessment of certain parcels at $35,000 per acre, which
was a number not found in Wampler’s appraisal.
In an alternative holding utilizing the legal standard
urged by West Creek, the circuit court found West Creek’s
evidence about the parcels’ fair market values unpersuasive
because West Creek did “nothing more than spread the value
of the development across the individual parcels.” The
court noted that West Creek was able “to negotiate a bulk
sale of this property for cash at a price $5 million lower
than that initially sought by Bank of America.” The court
concluded that the bulk sale of the 2,500 acres was not a
21
comparable sale for the purpose of establishing the
assessed value of each individual parcel, despite West
Creek’s urging to the contrary. West Creek’s evidence
regarding the parcels’ fair market values, in the court’s
words, “fl[ew] in the face of the evidence that land in the
. . . Park was selling at prices ranging from $43,000 per
acre to $120,000 per acre.” The court found it “difficult
to accept that any kind of independent appraisal was
conducted by Mr. Miller when it matched the testimony of
Mr. Goodwin, except for the waste parcels, to the penny.”
In contrast, the circuit court was persuaded by Call’s
appraisal and concluded that it supported the assessments
in question. The court described Call’s appraisal as a
“detailed evaluation of each parcel with appropriate
adjustments.”
On appeal to this Court, West Creek assigns four
errors to the circuit court’s judgment. First, West Creek
asserts that the circuit court “erred when it eliminated
the ability of the Taxpayer to challenge the assessment by
showing ‘manifest error’ through the disparity between the
assessment and the fair market value of the property.”
West Creek also claims that the circuit court erred by
holding that it did not present sufficient evidence to
demonstrate that the County committed manifest error in the
22
methodology employed in assessing the parcels in question
when the assessment was based on Wampler’s appraisal that
the court had found to be erroneous. Next, West Creek
assigns error to the circuit court’s holding that the
property in question should be assessed as 144 separate
parcels without regard to the fair market value of the
parcels aggregated as a whole. Finally, West Creek asserts
that the circuit court erred by holding that the County’s
assessment may be based on sales of property with “fully
developed utilities and infrastructure where no such
infrastructure existed for the assessed property, and no
such improvements were imminent.”
ANALYSIS
We begin our analysis by repeating the well-
established principles that guide our review of a circuit
court’s judgment upholding a taxing authority’s assessment
of the fair market value of real property. A taxing
authority’s assessment is presumed to be correct, and a
taxpayer has the burden to rebut that presumption by
establishing that the real property in question is assessed
at more than fair market value or that the assessment is
not uniform in its application. Code § 58.1-3984(A);
Keswick Club, L.P. v. County of Albemarle, 273 Va. 128,
136, 639 S.E.2d 243, 247 (2007); Shoosmith Bros., Inc. v.
23
County of Chesterfield, 268 Va. 241, 245, 601 S.E.2d 641,
643 (2004); Arlington County Board v. Ginsberg, 228 Va.
633, 640, 325 S.E.2d 348, 352 (1985). “ ‘The effect of
this presumption is that even if the assessor is unable to
come forward with evidence to prove the correctness of the
assessment this does not impeach it since the taxpayer has
the burden of proving the assessment erroneous.’ ” R.
Cross, Inc. v. City of Newport News, 217 Va. 202, 207, 228
S.E.2d 113, 117 (1976) (quoting Norfolk & W. Ry. Co. v.
Commonwealth, 211 Va. 692, 695, 179 S.E.2d 623, 626
(1971)). We have held that a taxpayer must show by a clear
preponderance of the evidence that the taxing authority
committed manifest error or totally disregarded controlling
evidence in making the assessment. Keswick Club, 273 Va.
at 137-38, 639 S.E.2d at 247; Board of Supervisors v. HCA
Health Servs. of Va., 260 Va. 317, 329, 535 S.E.2d 163, 169
(2000); Tidewater Psychiatric Inst. v. City of Virginia
Beach, 256 Va. 136, 141, 501 S.E.2d 761, 763-64 (1998).
The initial issue we decide involves the legal dispute
between the parties regarding the means by which a taxpayer
can show manifest error by a taxing authority in assessing
the fair market value of real property. Relying on this
Court’s decision in Board of Supervisors v.
Telecommunications Indus., 246 Va. 472, 436 S.E.2d 442
24
(1993), West Creek contends that a taxpayer can establish
manifest error by proving a sufficient disparity between
the assessed value of real property and its fair market
value. Thus, according to West Creek, the circuit court
erred by holding, both in the motion to strike and at the
end of the trial, that a taxpayer must prove manifest error
in the “manner” in which the taxing authority arrived at
the assessed value of the real property in question, i.e.,
what information the taxing authority considered and how it
arrived at the assessment.
The County, on the other hand, agrees with the circuit
court’s ruling and argues that this Court’s precedent
establishes that a taxpayer must prove manifest error in
the taxing authority’s methodology and that a mere
difference of opinion as to fair market value is
insufficient to overcome the presumption of correctness
afforded an assessment. Continuing, the County argues that
a taxpayer must present evidence showing “what methodology
was used, how it was applied, what factual information was
available to the assessing authority when making the
assessments, how that information was considered and/or
what weight it was given, and what information was
disregarded.” Then, according to the County, a taxpayer
25
must identify the alleged error in the taxing authority’s
methodology.
In Snyder, we explained why a court cannot substitute
its judgment for that of a taxing authority with regard to
the assessed value of real property:
The value of property is a matter of opinion
and there must necessarily be left a wide room
for the exercise of opinion, otherwise courts
will be converted into assessing boards and in
assuming to act as such, would assume the powers
lodged elsewhere by the law-making branch of
government. Judge Cooley says in Cooley on
Taxation, section 1612: “Courts cannot substitute
their judgment as to the valuation of property
for the judgment of the duly constituted tax
authorities.”
Generally the question as to whether an
applicant’s property in any particular case has
been assessed at more than its fair market value,
or out of proportion to other like property,
presents a question of fact to be decided by the
assessors or the local board of equalization and
the result fairly arrived at by them should not
be disturbed by the court unless the applicant
has carried the burden of showing clearly that
the assessment is excessive or out of proportion
to that of other like property.
In Charleston & S. Bridge Co. v. Kanawha
County Court, 41 W.Va. 658, 24 S.E. 1002, 1005
[(1896)], the court said: “. . . if assessments
are to be based upon the opinions of individuals
. . . instead of being uniform and bearing
equally upon property of the same character
throughout the State, the assessments would be as
shifting and variable as the opinions of men
influenced oftentimes by local causes could
possibly make them.”
26
161 Va. at 292, 170 S.E. at 723. We then stated:
“Conclusions of a board of commissioners will not be
disturbed unless it appears that there has been a manifest
error in the manner of making the estimate, or that
evidence which should be controlling has been disregarded.”
Id. at 292-93, 170 S.E. at 723 (citing 4 Thomas M. Cooley,
The Law of Taxation § 1618, at 3235 & n.58 (4th ed. 1924))
(emphasis added).
Despite the emphasized language, the Court’s decision
upholding the assessment at issue in Snyder did not turn on
the taxpayer’s failure to demonstrate “a manifest error in
the manner of making” the assessment. Instead, the Court
noted that the evidence showed a difference of opinion
about the fair market value of the real property at issue.
Id. at 293, 170 S.E. at 723. The Court concluded that “so
long as the assessment comes within the range of a
reasonable difference of opinion, . . . when considered in
the light of the presumption in its favor, it cannot be
said that the assessment is erroneous.” Id. at 293, 170
S.E. at 723.
As the County contends, however, this Court has
affirmatively stated in some cases that, in order to rebut
the presumption of correctness, a taxpayer must show a
manifest error in the manner that the assessment was made
27
or that controlling evidence has been disregarded. See,
e.g., Tidewater Psychiatric Inst., 256 Va. at 141, 501
S.E.2d at 764 (deciding whether the trial court correctly
determined that the taxpayer failed to rebut the
presumption of correctness by “ ‘a showing of manifest
error or total disregard of controlling evidence’ in the
[taxing authority’s] method of determining the fair market
value of the property” (quoting Telecomm. Indus., 246 Va.
at 475, 436 S.E.2d at 444)); City of Richmond v. Gordon,
224 Va. 103, 110, 294 S.E.2d 846, 850 (1982) (“The taxpayer
must show ‘manifest error in the manner of making the
estimate, or that evidence which should be controlling has
been disregarded.’ ” (quoting Snyder, 161 Va. at 293, 170
S.E. at 723)); Tuckahoe Woman’s Club v. City of Richmond,
199 Va. 734, 739-40, 101 S.E.2d 571, 575 (1958) (holding
that the assessment will not be disturbed “ ‘unless it
appears that there has been a manifest error in the manner
of making the estimate, or that evidence which should be
controlling has been disregarded’ ” (quoting Snyder, 161
Va. at 293, 170 S.E. at 723)); City of Norfolk v. Holland,
163 Va. 342, 345-46, 175 S.E. 737, 739 (1934) (same).
Yet, in other cases, the Court stated only that a
taxpayer must show that the taxing authority committed
manifest error or disregarded controlling evidence in
28
making the assessment. The Court’s holdings, nevertheless,
turned on whether the taxing authority had employed an
improper methodology in determining fair market value.
See, e.g., Keswick Club, 273 Va. at 139-41, 639 S.E.2d at
249-50 (assessment was not entitled to the presumption of
validity because the taxing authority did not properly
consider and reject certain methods of evaluation);
Shoosmith Bros., 268 Va. at 247, 601 S.E.2d at 644 (finding
that the taxing authority “did not commit manifest error in
assessing [the taxpayer’s property by] using the income
method of assessment”); HCA Health Servs., 260 Va. at 330-
31, 501 S.E.2d at 170 (evidence was insufficient to show
that the taxing authority considered and properly rejected
other methods of calculating the value of the taxpayer’s
real property when it used only a depreciated reproduction
cost approach as the sole method of determining fair market
value); County of Mecklenburg v. Carter, 248 Va. 522, 526,
449 S.E.2d 810, 813 (1994) (in deciding whether an
assessment was uniform in its application, there was “no
evidence that the methodology used was erroneous, or that
it was not followed in appraising the [taxpayer’s] property
and each property with which it was compared”); Clarke
Assocs. v. County of Arlington, 235 Va. 624, 629, 369
S.E.2d 414, 416 (1988) (finding assessment erroneous
29
because “neither the assessor nor the trial court factored
the contract rent into a determination of the fair market
value” of the taxpayer’s properties); Smith v. Board of
Supervisors, 234 Va. 250, 258-59, 361 S.E.2d 351, 355-56
(1987) (finding assessment erroneous because the taxing
authority did not consider actual rent and expense figures
in determining the fair market value of the taxpayer’s
property); Nassif v. Board of Supervisors, 231 Va. 472,
483, 345 S.E.2d 520, 526-27 (1986) (holding that assessment
was erroneous because the taxing authority’s methodology
gave no effect to contract rent); Board of Supervisors v.
Donatelli & Klein, Inc., 228 Va. 620, 627-28, 325 S.E.2d
342, 345-46 (1985) (affirming the trial court’s decision to
reduce the assessment because the taxing authority had
disregarded the recent sale price of the property and other
factors); Ginsberg, 228 Va. at 642-43, 325 S.E.2d at 353-54
(affirming trial court’s judgment reducing tax assessment
on the basis that the taxing authority “had ignored the
sale price and the contract rents and had relied entirely
on highly speculative economic rents”).
Despite these cases that support the County’s position
that West Creek had to demonstrate manifest error in the
County’s methodology, we also have decisions that turned on
nothing more than conflicting evidence of fair market value
30
and whether the taxpayer had demonstrated that the real
property at issue was assessed at more than fair market
value. See, e.g., City of Martinsville v. Commonwealth
Boulevard Assocs., LLC, 268 Va. 697, 699-700, 604 S.E.2d
69, 70-71 (2004) (after concluding that a taxpayer may
challenge an annual levy of taxes without demonstrating
that the previous general reassessment was erroneous, the
Court affirmed the trial court’s judgment, based on
conflicting evidence of value, that the real property was
assessed at more than its fair market value); Fray v.
County of Culpeper, 212 Va. 148, 151, 183 S.E.2d 175, 178
(1971) (because the evidence introduced by both the
taxpayer and the taxing authority showed a fair market
value less than the assessed value of the property in
question, the trial court erred in concluding that the
taxpayer had not shown that the assessed value of the
property was in excess of fair market value); City of
Harrisonburg v. Taubman, 212 Va. 28, 30, 181 S.E.2d 654,
656 (1971) (upon conflicting evidence of fair market value,
the trial court did not err in reducing the assessed value
of the subject property); Washington County Nat’l Bank v.
Washington County, 176 Va. 216, 222, 10 S.E.2d 515, 518
(1940) (evidence of fair market value from several
31
witnesses demonstrated that the value fixed by the trial
court was excessive).
This survey of the Court’s decisions leads to the
conclusion that 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, i.e., its
methodology. It is correct that, in the majority of our
cases, the dispositive issue was whether the taxing
authority had utilized an improper methodology in setting
the assessed value of real property. But, we have never
explicitly held that manifest error cannot be established
simply by evidence showing that real property is assessed
at more than its fair market value. In all cases, however,
a taxing authority’s assessment is presumed to be correct,
Keswick Club, 273 Va. at 136, 639 S.E.2d at 247, and the
taxpayer has the burden of proof “to show that the property
in question is valued at more than its fair market value or
that the assessment is not uniform in its application, or
that the assessment is otherwise invalid or illegal.” Code
§ 58.1-3984(A). When a taxpayer attempts to prove manifest
error solely by showing a significant disparity between
fair market value and assessed value without showing that
the taxing authority employed an improper methodology in
32
arriving at the property’s assessed value, the taxpayer
cannot prevail “so long as the assessment comes within the
range of a reasonable difference of opinion, . . . when
considered in light of the presumption in its favor.”
Snyder, 161 Va. at 293, 170 S.E. at 723; accord Gordon, 224
Va. at 112, 294 S.E.2d at 851. Thus, we conclude that the
circuit court erred in granting the County’s motion to
strike.
This conclusion does not end our analysis because the
circuit court had an alternative basis for dismissing the
90 applications that remained after the court sustained the
County’s motion to strike the evidence. The court
concluded that West Creek had not established those
parcels’ fair market values because West Creek had done
“nothing more than spread the value of the development
across the individual parcels.” West Creek challenges the
circuit court’s alternative holding in two respects. It
claims that the court erred by valuing the property as 144
separate parcels without giving due regard to the fair
market value of the parcels aggregated as a whole and by
accepting the County’s appraisal that was based on sales of
parcels with fully developed utilities and infrastructure.
We do not agree with West Creek’s position.
33
First, West Creek acknowledges on brief that the
circuit court was correct in finding that, pursuant to Code
§ 58.1-3290, the County was required to assess the 144
parcels individually. 8 West Creek, nevertheless, contends
that the circuit court erred by failing to consider the
recent purchase price for the amassed parcels as evidence
of fair market value. According to West Creek, the
creation of the 144 parcels on the Timmons Sketch was for
income tax planning purposes and the total sale price
represented the highest and best use of the property as a
business park comprised of parcels containing 10 to 20
acres.
8
In relevant part, Code § 58.1-3290 provides that,
“[w]hen a tract or lot becomes the property of different
owners in two or more parcels, subsequent to any general
reassessment of real estate in the city or county in which
such tract or lot is situated each of the two or more
parcels shall be assessed and shown separately upon the
land books, as required by law.” Although the assessments
at issue in this appeal were part of the County’s
quadrennial reassessment, other statutes also require the
parcels to be assessed individually. See, e.g., Code
§ 58.1-3281 (commissioner of revenue shall annually, on
January 1, “ascertain all the real estate in his county or
city, . . . and the person to whom the same is chargeable
with taxes on that day”); Code § 58.1-3303 (requiring clerk
of each circuit court to provide commissioner of revenue
with deed recordation receipt showing, among other things,
description of real property conveyed and names of grantor
and grantee); Code § 58.1-3309 (requiring information
appearing in receipts provided pursuant to Code § 58.1-3303
to be transferred “on the land book and charged to the
person to whom the transfer is made”).
34
Contrary to West Creek’s argument, the circuit court
did not ignore the 34.1 million dollar purchase price of
the 2,500 acres. In weighing the evidence, the court,
however, concluded that West Creek negotiated a bulk sale
of the property at a price significantly lower than Bank of
America first sought and that the bulk sale price was not a
comparable sale for the purpose of establishing the
assessed value of the 144 parcels. Although the purchase
of the 2,500 acres was an arms-length transaction between a
willing buyer and a willing seller, the court’s factual
determination that the sale was a “bulk sale” is not
challenged on appeal by West Creek. Since the 34.1 million
dollar figure represented the “bulk sale” of the 2,500
acres, the County is correct in its assertion that the mere
difference between the purchase price and the assessed
value was not sufficient to show manifest error or
disregard of controlling evidence. As we have previously
stated, the recent sale price of real property is “merely
one of the factors to be taken into consideration” when
determining whether such property has been assessed at more
than fair market value. American Viscose Corp. v. City of
Roanoke, 205 Va. 192, 196, 133 S.E.2d 795, 798 (1964). The
sale price is accorded substantial weight but, contrary to
West Creek’s position, it is not “conclusive evidence of
35
[the property’s] fair market value.” Id.; accord Ginsberg,
228 Va. at 640, 325 S.E.2d at 352; Donatelli & Klein, 228
Va. at 628, 325 S.E.2d at 345.
The circuit court’s factual finding also distinguishes
the present case from the situation in Donatelli & Klein.
There, the recent sale of the subject property “was not a
sale in bulk, because the sale of each individual property
was negotiated separately to its ultimate purchase price.”
228 Va. at 625, 325 S.E.2d at 343. Thus, we concluded that
the trial court did not err by according “substantial
weight” to the sale price and concluding that the fair
market value of each property was the sale price paid by
the taxpayer. Id. at 628, 325 S.E.2d at 345-46.
With regard to West Creek’s second challenge to the
circuit court’s alternative holding, we agree that “fair
market value ‘is the present actual value of the land with
all its adaptations to general and special uses, and not
its prospective, speculative or possible value, based on
future expenditures and improvements.’ ” Fruit Growers
Express Co. v. City of Alexandria, 216 Va. 602, 609, 221
S.E.2d 157, 162 (1976) (emphasis in original) (quoting
Appalachian Power Co. v. Anderson, 212 Va. 705, 708, 187
S.E.2d 148, 152 (1972)). West Creek’s assertion, however,
that the County’s assessment was based on sales of parcels
36
with fully developed utilities and infrastructure is not
entirely accurate. Despite the manifest error in Wampler’s
appraisal methodology, 9 Call took into account the lack of
infrastructure and reduced the per acre value of parcels
that did not have utilities or road access by forty to
fifty percent of the per acre value of comparable sales of
parcels having such infrastructure. His appraisal supports
the assessments at issue.
Furthermore, the circuit court, in weighing the
evidence, found Call’s testimony “the most compelling.”
“It was within the province of the court, as the fact-
finder, to determine the credibility of the witnesses. The
factual determinations of the [circuit] court, like those
of a jury, are binding on this Court, and we will reverse
such findings only if they are plainly wrong or without
evidence to support them.” Nusbaum v. Berlin, 273 Va. 385,
408, 641 S.E.2d 494, 506 (2007) (citations and internal
quotations omitted) (alteration in original); see also Code
§ 8.01-680; Ivy Constr. Co. v. Booth, 226 Va. 299, 301, 309
S.E.2d 300, 301 (1983) (trial court’s findings based on
conflicting evidence heard ore tenus will not be disturbed
9
The circuit court held that Wampler committed
manifest error by applying a median value of $75,000 per
acre to all 144 parcels. That holding is not challenged on
appeal.
37
on appeal unless they are plainly wrong or without evidence
to support them).
Moreover, the crux of the circuit court’s alternative
holding was not that it accepted the County’s appraisal
but, instead, that West Creek failed to present credible
evidence of the parcels’ fair market values. In order to
satisfy the statutory requirement of showing that real
property is assessed at more than its fair market value,
see Code § 58.1-3984(A), a taxpayer must necessarily
establish the property’s fair market value. This is so
irrespective of whether a taxpayer is attempting to show
manifest error or disregard of controlling evidence by
proving a significant disparity between fair market value
and assessed value, or by establishing a flawed methodology
by the taxing authority in setting the assessed value.
The circuit court enunciated several reasons why it
rejected West Creek’s evidence regarding the fair market
values of the parcels. First, the court found that West
Creek’s valuation method of “spread[ing] the value of the
development across the individual parcels” was not
persuasive. The court explained that West Creek purchased
2,500 acres for 34.1 million dollars and now wants to
allocate that sale price to the individual parcels. The
court, however, rejected the use of the sale price of the
38
2,500 acres as a comparable sale because West Creek was
ignoring the “economy of scale” realized when it purchased
the 2,500 acres at one time. The court pointed out that
even Goodwin testified that there is an inverse
relationship between the size of a parcel and the purchase
price, i.e., the larger the parcel, the cheaper the price.
Finally, the court concluded that Miller had not conducted
an independent appraisal because his testimony “matched the
testimony of . . . Goodwin, except for the waste parcels,
to the penny.”
We cannot say that the circuit court’s findings are
plainly wrong or without evidence to support them. See,
e.g., Booth, 226 Va. at 301, 309 S.E.2d at 301. There is
no question that Miller accepted the sale price of the
2,500 acres as controlling and assigned portions of the
price as the per acre value for parcels depending on the
developmental phase in which the parcels were located. In
the words of one of the County’s witnesses, Miller’s
methodology was “an arithmetic formula,” which is not an
accepted appraisal method. Thus, we conclude, as did the
circuit court, that West Creek did not carry its burden of
showing that the parcels are assessed at more than fair
39
market value. See Code § 58.1-3984(A). 10 West Creek’s
evidence did not rebut the presumption of correctness
afforded the assessments. Because of the presumption, the
County did not have to come forward with evidence to prove
the correctness of the assessment. See R. Cross, Inc., 217
Va. at 207, 228 S.E.2d at 117; Norfolk & W. Ry. Co., 211
Va. at 695, 170 S.E.2d at 626.
CONCLUSION
The circuit court erred in granting the motion to
strike West Creek’s evidence with regard to the parcels
assessed at $35,000 per acre. We will, therefore, reverse
that portion of the circuit court’s judgment and remand for
further proceedings consistent with this opinion. See Gina
Chin & Assocs., Inc. v. First Union Bank, 260 Va. 533, 540,
537 S.E.2d 573, 576 (2000) (“following the trial court’s
grant of [a] motion to strike [the] evidence [this Court
is] unable to review [the] case in consideration of all the
evidence that may have been produced on the issue in
10
This conclusion makes it unnecessary for the Court
to address West Creek’s remaining assignment of error
challenging the circuit court’s holding that the County did
not commit manifest error in the methodology it used in
setting the assessments with regard to the 90 parcels that
remained in the case after the court sustained the motion
to strike the evidence. Assuming without deciding that the
court erred in refusing to impute Wampler’s flawed
methodology to the County at that point in the proceeding,
40
question [and is] unable to reach the ultimate merits [of
the case]”). With regard to the 90 remaining parcels, we
will affirm the circuit court’s judgment.
Affirmed in part,
reversed in part,
and remanded.
West Creek, nevertheless, did not establish the fair market
values of those 90 parcels.
41