IN THE MATTER OF THE EQUALIZATION APPEALS OF SUMNER COUNTY APPRAISER/ FARMERS COOPERATIVE GRAIN ASSOC. FOR THE YEAR 2004 FROM SUMNER COUNTY, KANSAS
Now the above-captioned matters come on for consideration and decision by the Board of Tax Appeals of the State of Kansas.
This Board conducted a hearing in these matters on August 9, 2006. The Board has jurisdiction of the subject matter and the parties as equalization appeals have been filed pursuant to K.S.A. 79-1609. After considering all of the evidence and arguments presented, the Board finds and concludes as follows.
The subject matter of these tax equalization appeals is described as follows:
Docket No. 2004-8646-EQ
Real estate and improvements commonly known as 534 East Parallel, Conway Springs, Sumner County, Kansas, also known as Parcel ID# 096-058-34-0-30-15-006.00-0; and
Docket No. 2004-8647-EQ
Real estate and improvements commonly known as 112 S. Lincoln Street, Belle Plaine, Sumner County, Kansas, also known as Parcel ID# 096-111-02-0-10-19-001.00-0.
The Taxpayer, Farmers Cooperative Grain Association, appeared by Victor W. Miller, Attorney. The County appeared by Michael A. Montoya, Attorney; Della Rowley, County Appraiser; and Dennis Vogan, Witness. The Board admitted County Exhibits #1 and #2 and Taxpayer Exhibit #1. The Taxpayer's objection to the admission of County Exhibits #1 and #2 is noted. At the conclusion of the hearing, the Board allowed the parties thirty (30) days to provide legal briefs addressing the K.S.A. 79-1460 issue. On September 11, 2006, the Board received Sumner County's Brief Addressing the Application of K.S.A. 79-1460.
For tax year 2004, the County originally valued the Conway Springs commercial property at $846, 360 and the Belle Plaine property at $751, 380. There is an agricultural use value of $460 included in the Conway Springs property that is not at issue. The Taxpayer appealed the valuations to the Small Claims Division of the Board of Tax Appeals. The tax year 2003 commercial valuations "CU" were $585, 820 and $326, 640, respectively. See County Exhibits #1 and #2. The Small Claims Hearing Officer found that the County provided an insufficient amount of documentation to justify an increase in valuation for 2004. The County appealed the decisions to the regular division of the Board.
Della Rowley, Sumner County Appraiser, stated that the County utilized the CAMA (computer assisted mass appraisal) cost approach to originally value the subject properties for tax year 2004. To value the elevators, Ms. Rowley applied a grade factor to the bushel capacity. Ms. Rowley graded both elevators as "C" grades, "Good concrete built in the 1950's and good steel built in the 1970's, " with a value of $0.35 per bushel. See County Exhibits #1 and #2. The County utilized the same methodology in valuing both properties. The County actually used the CAMA cost approach to value the land and some improvements, but did not utilize the CAMA cost approach to value the elevators. The County did not calculate a replacement cost new or depreciation for the elevators. The "800" field on County Exhibits #1 and #2 are conclusions of value for the elevators. Ms. Rowley stated that she relied upon a guide or manual written by Dennis Vogan to develop the grade values, but she did not provide the guide or manual to the Taxpayer or to the Board.
Further, Ms. Rowley explained that Taxpayer Exhibit #1 is the information she provided to the Taxpayer in response to its request for documentation used to value the property. The first paragraph of Taxpayer Exhibit #1 provides that "We took elevators that we had sales on, and took these sales as depreciated value. Then we took the new construction cost added physical and economical depreciation to the new cost. The physical depreciation was based on the age life method and this is based on a 50 year life. The economic depreciation was based on average depreciation." Ms. Rowley admitted that this was not the valuation procedure followed in these cases. She was unable to produce documents to support the method outlined in her response and was unsure whether the documentation exists.
In June of 2005, Dennis Vogan, Certified General Appraiser in the State of Kansas, prepared appraisals of the subject properties as of January 1, 2004. See County Exhibits #1 and #2. Mr. Vogan utilized the three approaches to value: the cost approach, income approach, and sales comparison approach. Mr. Vogan's testimony at the hearing was that the value of Conway Springs property should be $931, 500 and the Belle Plaine property should be $544, 100. The County requests that the Board adopt the opinions of value of Mr. Vogan due to his specialized knowledge.
The Taxpayer and the County identify different central issues in these appeals. The County outlines the issue before the Board as a question of which party presented the best evidence to arrive at values for the subject properties. The County contends that the Taxpayer failed to provide any evidence relating to value, and as a result, the County's recommended values should be adopted. In contrast, the Taxpayer frames the issue as whether the County complied with K.S.A. 79-1460(a)(1). The Taxpayer contends that the County did not comply with the statute, and as a result, the 2004 valuations should not be increased from 2003.
The Board reasons that the preliminary question to be considered is the K.S.A. 79-1460(a)(1) issue. Subsequently, if the issue is resolved that the County did satisfy K.S.A. 79-1460(a)(1), the second question to be considered is the ...