dissenting.
Because the majority has held that “the assessor may not consider the restrictions limiting profitability or the class of users to be benefitted in determining the assessed value of the property,” I must dissent.
In this case, the majority has correctly stated Arizona taxation principles, but has ignored the practical reality of how the non-profit use restriction affects fair market value. Market value is defined as “the highest price estimated in terms of money which the property will bring if exposed for sale in the open market allowing a reasonable time to find a purchaser who buys with knowledge of all the uses to which it is adapted and for which it is capable of being used.” Department of Revenue v. Transamerica Title Ins. Co., 117 Ariz. 26, 28, 570 P.2d 797, 799 (App.1977). The test for market and taxable valuation is one that takes into account what a willing buyer would pay a willing seller in an arms-length sale of the property.
In order for Recreation Centers to successfully challenge the assessment, it must prove that the assessment is excessive and present evidence from which the trial court can determine the full cash valué of the property. Graham County v. Graham County Electric Co-op. Inc., 109 Ariz. 468, 469-70, 512 P.2d 11, 12-13 (1973). Full cash value is synonymous with market value. A.R.S. § 42-201(4).
If the property has no market value, then it has no cash value and should not be taxed. We recognize that the property in question, which includes recreational facilities, social and meeting halls, golf courses, etc., seems to have intrinsic “value.” However, the issue here is does it have market value? If the use of the land is so restricted that its ownership is of no value, assessment for tax purposes should be nothing. Twin Lakes Golf and Country Club v. King County, 87 Wash.2d 1, 3, 548 P.2d 538, 540 (1976). Here, the recreational facilities cannot be run for a profit. Recreation Centers has presented evidence through expert testimony showing that the property does not have a fair market value.
Mr. Blakey: “[I]f a purchaser is presented a piece of property that has no upside potential, that is, he will not realize any income, then the property is of no value. And this appears to be the situation here. It’s not for profit. The use is perpetual as far as what can be done with the property. There’s no change possible. So there’s no development potential for the property.”
******
Q. [By Mr. Segall]: In your opinion is [the property] marketable?
A. [By Mr. Blakey]: No.
Q. In the real world of sales of property, fair market value, willing buyer, willing seller, what is the fair market value in your opinion of this property?
A. There is no fair market value. Nobody’s going to buy this property.
Another expert, Mr. Howarth, echoed Mr. Blakey’s testimony.
Q. [By Mr. Segall]: What is your opinion [as to the deed restrictions’ effect on market value]?
A. [By Mr. Howarth]: My opinion is it would have no marketability.
Q. How does the lack of marketability relate to fair market value as you have defined it?
A. In this case the property would have, in my opinion, with that clause in it, no effective market value because it could not be readily sold.
*292Q. What is the reason for your opinion?
A. Basically that this type of property cannot be operated for a profit so some willing buyer, if there was such an item or a person interested in buying it is a better way to put it, I don’t see in my opinion why they would purchase it with no profit incentive. All they could make is their expenses and certainly that doesn’t motivate people to buy property that is being used for services to third parties.
In the absence of evidence to the contrary, this testimony is sufficient to overcome the presumption that the tax assessor’s valuation was not excessive. See O’Donnell v. Maves, 103 Ariz. 28, 32, 436 P.2d 577, 581 (1968) (uncontradicted evidence may not be arbitrarily rejected by trier of fact, especially when corrorborated by a disinterested witness).
The state’s assessment of the property is based on the fiction that the property does not bear any restrictions. However, I cannot accept the use of such fictions. I agree with the court of appeals in Department of Revenue v. Transamerica Title Ins. Co., in which it stated:
The appraiser attempts to create a mythical sale in accordance with the definition of market value. However, although the sale may be mythical, this does not mean that the appraiser can use pure fiction in arriving at its value. He must face the realities of the marketplace.
117 Ariz. 26, 29, 570 P.2d 797, 800 (App. 1977).
The majority holds that deed restrictions should not be considered at all. I do not believe this to be sound law. Several other courts have concluded that it is logical and equitable to take deed restrictions into account when assessing the value of property. In Dotson v. Henry County Bd. of Tax Assessors, 155 Ga.App. 557, 271 S.E.2d 691 (1980), enforced by 161 Ga.App. 257, 287 S.E.2d 696 (1982), the court remanded the case because the tax assessors had erroneously over-valued a restricted use flood plain that comprised a significant portion of the land being appraised. The court said that the assessor should have “first determin[ed] the criteria for zoning, existing use, and deed restrictions, if any, at which time other pertinent factors may be considered.” Dotson, 155 Ga.App. at 559, 271 S.E.2d at 693 (emphasis added).
Similarly, in Boston Edison Co. v. Bd. of Assessors, 387 Mass. 298, 439 N.E.2d 763 (1982), the court said, “If the property is known to be subject to a deed restriction or to a govemmentally-imposed restriction affecting its value or its earning power, that fact should be considered in any determination of its fair cash value.” Id. at 304, 439 N.E.2d at 767 (emphasis added). See Lochmoor Club v. City of Grosse Pointe Woods, 10 Mich.App. 394, 159 N.W.2d 756 (1968) (case required tax commission' to determine the extent of the effect of the use restrictions upon the value of the parcels to which they are applicable).
Thus, while the mere existence of deed restrictions may not necessarily render the property valueless, they should be considered.
In the present case, the property will never operate at a profit because profit is forbidden by the deed. Moreover, expert testimony established that no one would be willing to buy the property and in all practicality, Recreation Centers’ property probably could not be used as security since it is guaranteed to be unprofitable.
It strikes me as inherently inequitable to assess nonprofit recreational facilities the same as those capable of producing a profit. It ignores reason to say the two are of the same value.11
Support for Recreation Centers’ position may be found in Quivira Falls Community Ass’n v. Johnson County, 230 Kan. 350, 634 P.2d 1115 (1981) and Lodge v. Inhabitants of Swampscott, 216 Mass. 260, 103 N.E. 635 (1913). I believe that Recreation Centers’ position is supported by the logic of these two cases which the majority ignores.
*293In Swampscott, the Massachusetts Supreme Court stated:
To assess this property without regard to the restriction would ... be to assess it for an amount in excess of its fair cash value and in violation of the statute. No doubt assessors cannot be compelled to inquire into all the details affecting the title to property, but when their attention is called to matters relating to its value they are bound to pay due regard to them.
216 Mass, at 263, 103 N.E. at 636.
Similarly, in Quivira Falls, the Kansas Supreme Court accepted the rule that if a property were so highly restricted that no sensible person would buy it, such property would have no value for tax purposes. Quivira Falls, 230 Kan. at 355-57, 634 P.2d at 1120-21. In Quivira, the court distinguished its case from the cases announcing this rule because in all the other cases, the property had little or no value and in Quivira no testimony indicated that the property was without value.
The majority also overlooks the fact that the original cost of the facilities was recouped through increasing the purchase price of the residential properties served by the facilities. We cannot ignore the fact that the individual lots in Sun City have enhanced value because of these recreational facilities. Expert testimony was presented to establish that the value of the properties is increased by the restrictions, thus offsetting any loss of taxable value represented by the facilities themselves. See Arizona R.C.I.A. Lands, Inc. v. Ains-worth, 21 Ariz.App. 38, 515 P.2d 335 (1973) (in determining the market value of property the assessor is required to consider the additional value of the dominant estate, and the decreased value of the servient estate, resulting from the easement). Finding that Recreation Centers’ property has no value for tax purposes does not exempt it from the tax rolls, it merely prevents it from appearing on the rolls twice.
Because today’s decision may well force Recreation Centers to increase membership fees to pay the taxes, Sun City residents will be burdened with taxes directly through the value of their own property and indirectly through their dues that allow them to use the facilities.
The state argues that if we rule for Recreation Centers, owners of unrestricted and valuable property will subject it to irrevocable restrictions that render it valueless and unmarketable in order to avoid taxes. However, I do not see the threat to the tax base when any decrease in the value of the burdened property would be accompanied by reciprocal increases in the value of the property benefited by the restrictions.
I am not alone in this view. In Locke Lake Colony Ass’n Inc. v. Town of Barnstead, 126 N.H. 136, 489 A.2d 120 (1985), the property involved was a lake, a lodge, a golf course, a marina, a ski slope, ball fields, tennis courts, beaches and swimming pools. The New Hampshire Supreme Court found that the property was so encumbered with easements that it had no taxable value. The court also noted:
The town’s claim that the result in Waterville Estates [Assoc. v. Town of Campton, 122 N.H. 506, 446 A.2d 1167 (1982)] will encourage taxpayers to create homeowners’ associations as vehicles to avoid the payment of taxes on valuable property, and thereby deprive municipalities of tax revenues, is without merit. Municipalities will not lose significant tax revenues in cases such as the one before us, because, although “a landowner whose property is subject to an easement is entitled to a reduced valuation, the value of the easement [is] added to the estate of the dominant owner.”
Locke Lake, 126 N.H. at 141, 489 A.2d at 123-24 (quoting Gowen v. Swain, 90 N.H. 383, 387-88, 10 A.2d 249, 252 (1939)).
In Supervisor of Assessments of Anne Arundel County v. Bay Ridge Properties, Inc., 270 Md. 216, 310 A.2d 773 (1973), the property was a beach whose use was reserved exclusively to lot owners for nonprofit beach purposes. The Maryland court of appeals held that the proper assessment was upon the benefited lots, not the restricted property.
*294The combination of the grant of easements for the recreational use of the beach and the imposition of restrictions against disposition and improvements deprived the beach, as the servient estate, of whatever value it might otherwise have had. What value it had become [sic] exclusively and permanently attached to the lots____
... The easement rights in the beach, held by the owners of lots in the subdivision, enhance the values of the lots themselves, and such enhancement is directly reflected in the assessments of those properties.
Bay Ridge, 270 Md. at 222-23, 310 A.2d at 776-77.
Neither do I agree with the majority that such restrictions are similar to leases. Property burdened by long-term leases or mortgages is not appraised at its potential selling price, but is compared to similar property without the burdens. Steinfield v. State, 37 Ariz. 389, 393, 294 P. 834, 835 (1930); Magna Investment & Dev. Corp. v. Pima County, 128 Ariz. 291, 294-95, 625 P.2d 354, 357-58 (App.1981); Caldwell v. Dept. of Revenue, 122 Ariz. 519, 521, 596 P.2d 45, 47 (App.1979). I agree with the court of appeals that there is a pragmatic reason for this rule. Such restrictions are voluntarily assumed by the present owner and would make fixing the value even more complex. As the court of appeals stated, “In the case of leases, the lessor and lessee may allocate the payment of a tax among themselves, and in the case of mortgages, such may be extinguished at any time.” Recreation Centers, Inc. v. Maricopa County, 162 Ariz. 277, 280, 782 P.2d 1170, 1173 (App.1986).
Furthermore, an encumbrance, lien, mortgage or lease on property does not necessarily increase the fair market value of the adjoining property. However, the contrary is true regarding deed restrictions. If a deed restriction is placed on property, the adjoining landowners have an enforceable interest in the subject property that would tepd to increase the value of their property and would be subject to property tax.
Another reason why leases are distinguishable from deed restrictions is that the property owner has voluntarily created the lease and has retained full title to the property. Caldwell v. Dept. of Revenue, 122 Ariz. 519, 521, 596 P.2d 45, 47 (App.1979). Full use will revert to him when the lease expires. Contrast the present case in which the owner of the property subject to the restriction has not created the situation, will never receive a reversion, and does not retain full title to or usé of the property.
An additional distinguishing factor is that if the value of a leasehold is not taxed with the fee, it will not be subject to taxation at all. Peabody Coal Co. v. Navajo County, 117 Ariz. 335, 339, 572 P.2d 797, 801 (1977) (no statutory authority to tax a leasehold interest.) This is not a problem with easements or deed restrictions because there is by definition another parcel of property which is benefited by the restriction and whose resulting increased value can be taxed accordingly.
Based on the case law and the evidence Recreation Centers has presented, I believe the court of appeals was correct in affirming the trial court’s judgment that the tax assessor should take deed restrictions into account when valuing property for tax purposes. I would approve the opinion of the court of appeals and affirm the trial court.
. This is not to say, however, that being nonprofit is the same as being unprofitable. Merely operating at a loss is not equal to a deed restriction prohibiting a profit.