Teton Valley Ranch v. State Board of Equalization

URBIGKIT, Justice,

concurring.

Value in empirical terms is an intangible product of time and place: willing seller— available buyer. Without buyer, there is no marketable value. 1 Bonbright, Valuation of Property (1st ed.) at 59.1 Any statistical comparison of Wyoming real estate time-distinguished values between 1982 and the present would reveal a market decrease which may total 50 percent overall. The specificity of economics cannot be mathematically converted into taxation assessment standards, Bonbright, supra, Ch. XVIII, Valuation for Tax Purposes: The General Property Tax, and is not within the uniformity, equality and fairness criteria of Art. 15, § 11, and Art. 1, § 28 of the Wyoming Constitution:

“All property, except as in this constitution otherwise provided, shall be uniformly assessed for taxation, and the legislature shall prescribe such regulations as shall secure a just valuation for taxation of all property, real and personal.” Article 15, § 11, Wyoming Constitution.
“No tax shall be imposed without the consent of the people or their authorized representatives. All taxation shall be equal and uniform.” Article 1, § 28, Wyoming Constitution.

I specially concur to address the particularized issue presented by appellant that the State, in failing to acknowledge the absorption factor in standard appraisal criteria, consequently fails to conform the assessment to the Wyoming Constitution, or Ch. 9, § 4 of the Wyoming Tax Commission’s rules and regulations, as well as the controlling statute, § 39-2-102, W.S.1977.

If value as a definable term is a price to be paid upon sale between a willing seller and a willing (available) buyer, see CF & I Steel Corporation v. State Board of Equalization, Wyo., 492 P.2d 529, 533 (1972), then absorption is a relevant issue for review. See generally Bonbright, supra, Ch. III.

“In legal valuations, the most serious' problems as to the use of sales as evidence of value occur in those cases where the objecting party to the dispute can present a forceful argument * * * that the sales were not in the quantities that would be involved in a sale of the existing property * * *.
“All of these types of objection are plausible and their force will be recognized by the appraisal profession. But their application in a given case cannot be determined by formulas * * * and the courts have wisely refused to lay down any but the most general rules on these issues.” Bonbright, supra, at 137.

Absorption (discount sellout), see Golder v. Department of Revenue, 123 Ariz. 260, 599 P.2d 216 (1979), and the counterpoint aggregation (sometimes called plottage), are in the essence of the criteria of the willing and omnipresent “available” buyer. See rejection of discount sellout as a requirement for tax assessment, Palm Beach Development and Sales Corp. v. Walker, *115478 So.2d 1122 (1985). See also discussion of the inefficient market concept of real estate valuation, M.A.I., The Appraisal of Real Estate (8th ed. 1983), at 62.

Axiomatic factors for appraisal decision in the law merchant or comparable judicial proceedings such as eminent domain cannot equivalently be transferred to constitutional criteria of assessment for taxation.

“Common to the legal appraisals treated in the four previous chapters is an objective which sets the starting point for an inquiry as to the definition and measurement of property value — the objective of indemnity. What the property is ‘worth’ must there be determined in the light of the purpose of the lawsuit, which is to fix a cash payment that will recompense the owner, in whole or in part, for the loss of his valued possession.
“When we turn to the valuations for tax purposes, a different situation is presented. No longer is the owner claiming a recompense for the loss of his property; on the contrary, he is being compelled to contribute to the government treasury, in an amount which, for some reason, is measured by an appraisal of his wealth, or of a specific portion of his wealth. The very meaning of ‘value of the property,’ no less than the practical technique of its measurement, now becomes dependent on issues that fall within the province of fiscal theory and tax administration.
“In canvassing the literature of public finance, one looks in vain for any master principle of tax apportionment which can take the place of the indemnity principle under the laws of damages and eminent domain, as the chief clue to the proper meaning of ‘value.’ ” Bonbright, supra, at 451.

The specific question presented is whether the local assessor by a process approved through action of the State Board of Equalization, can legally and constitutionally apply a unit price to multiple units in disregard of economic principles that may at the specific time control actual value, namely absorption in available market. See 1 Orgel on Valuation Under Eminent Domain, Ch. XIII, Assessed Valuations and Other Official Valuations as Evidence of Market Value (2d ed. 1953) at 629; and 5 Nichols on Eminent Domain, Ch. 22 (Rev. 3d ed.) at 22-1.

Value — assessment—taxation, has been addressed by this court in nine cases: Wyoming Board of Equalization v. State ex rel. Basin Electric Power Cooperative, Wyo., 637 P.2d 248 (1981); Hillard v. Big Horn Coal Co., Wyo., 549 P.2d 293 (1976); Weaver v. State Bd. of Equalization, Wyo., 511 P.2d 97 (1973); CF & I Steel Corporation v. State Board of Equalization, supra; Chicago, Burlington & Quincy R. Co. v. Bruch, Wyo., 400 P.2d 494 (1965); Scott Realty Company v. State Board of Equalization, Wyo., 395 P.2d 289 (1964); J. Ray McDermott & Co., Inc. v. Hudson, Wyo., 370 P.2d 364 (1962); State ex rel. Greenwood v. Pearson, 46 Wyo. 307, 26 P.2d 641 (1933); and Bunten v. Rock Springs Grazing Association, 29 Wyo. 461, 215 P. 244 (1923).

In those cases, this court has consistently required only a rational method, equally applied to all property, which results in essential fairness. County assessors and the taxation system are not required to annually duplicate sales-transaction transient market conditions, and specifically so in regard to defining events related to the individual taxpayer, such as absorption or prospective future value. See Annot., 24 A.L.R. 649; Finch v. Grays Harbor, 121 Wash. 486, 209 833, 24 A.L.R. 644 (1922).

I specifically concur to make clear that in no way may mandates of the Constitution, Art. 1, § 28, and Art. 15, § 11 be subverted in the property assessment and taxation process. Sparks v. McCluskey, Ariz., 84 Ariz. 283, 327 P.2d 295 (1958);2 Appeal of Farmers, 80 Idaho 72, 325 P.2d 278 (1958); Gerner v. State Tax Commission, 71 N.M. 385, 378 P.2d 619 (1963); City of Arlington v. Cannon, Tex.Civ.App., 263 S.W.2d 299 *116(1953), rev’d in part on other grounds 153 Tex. 566, 271 S.W.2d 414 (1954); Finch v. Grays Harbor, supra. However, that requirement would not impose on the system an unmanageable burden as would result from the application of the differentiated market factor for which appellant contends.

The uniformly computed and fairly applied appraisal methodology here in evidence, described in the testimony of the county assessor, can be sustained under the standards of our precedent. Bunten v. Rock Springs Grazing Association, supra. See also In re Protest of Taxpayers of Town of Nichols Hills, 198 Okl. 500, 180 P.2d 157 (1947); City and County of Denver v. Lewin, 106 Colo. 331, 105 P.2d 854 (1940); and Twentieth Century Investment Company v. City of Juneau, Alaska, 359 P.2d 783 (1961).

In Bunten, supra, the principal Wyoming case, this court said:

“There is no such thing as absolute value * * *. [O]ne man may give a different valuation to a piece of land than another * * 215 P.2d at 248,

and:

“* * * [P]laintiff had the right [pursuant to the Wyoming Constitution, Art. 15, § 11] to have all the taxable property in the county, as well as in the state, assessed at a uniform rate, and a departure therefrom if made in an illegal manner is, where its property is assessed at full value, a discrimination against it which would not only be a fraud against plaintiff but would also violate the constitutional provision of uniformity. Such discrimination may arise in various ways, for instance by the adoption of a wrong or illegal rule, principle, or method; and an unjust tax resulting therefrom has frequently been enjoined as illegal.” 215 P.2d at 251.

I concur in this case on the basis that appellant failed to demonstrate that the assessor’s rejection of absorption factoring in multiple-lot valuation was a constitutionally unacceptable tax-assessment method.

. "A current definition of market value is

“The most probable price in cash, terms equivalent to cash, or in other precisely revealed terms, for which the appraised property will sell in a competitive market under all conditions requisite to fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress.
"Fundamental assumptions and conditions presumed in this definition are
"1. Buyer and seller are motivated by self-interest.
"2. Buyer and seller are well informed and are acting prudently.
"3. The property is exposed for a reasonable time on the open market.
"4. Payment is made in cash, its equivalent, or in specified financing terms.
"5. Specified financing, if any, may be the financing actually in place or on terms generally available for the property type in its locale on the effective appraisal date.
"6. The effect, if any, on the amount of market value of atypical financing, services, or fees shall be clearly and precisely revealed in the appraisal report.” M.A.I., The Appraisal of Real Estate (8th ed. 1983) at 33.

. A detailed analysis and critique of the Arizona general property assessment system under the Arizona differentiated class valuation system is found in Handy, Valuation and Taxation of Residential Real Property in Arizona, 1985 Ariz. State L.J. 145 (1985). See also a different critique of Kansas property tax, Note, Kansas Property Tax: Mischievous, Misunderstood, and Mismanaged, 22 Washburn L.J. 318 (1982).