Nelson v. Board of Equalization of Salt Lake County
Annotate this CaseThis opinion is subject to revision before final publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
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A. Tom Nelson,
Petitioner,
v.
Board of Equalization of Salt Lake County, Stateoof Utah, and Utah State
Tax Commission,
Respondent.
No. 960081
F I L E D
August 19, 1997
Original Proceeding in this Court
Attorneys: Ted D. Blanchard, Salt Lake City, for Nelson
Karl L. Hendrickson, Mary Ellen Sloan, Douglas R.
Short, Salt Lake City, for Board of Equalization
Jan Graham, Att'y Gen., Kelly W. Wright, Asst.
Att'y Gen., Salt Lake City, for Tax Commission
DURHAM, Justice:
A. Tom Nelson petitioned us to review a final order entered by the Utah State Tax Commission
(the Commission) on a property valuation by the Salt Lake County Board of Equalization (the
Board). See Utah Code Ann. 63-46b-14(3)(a). In response to an order of remand by the
Commission to determine the value of Nelson's private dwelling and 1.61 acres of residential
property, the Board presented an appraisal valuing the property at $322,800. The Commission
rejected an appraisal made by petitioner valuing the property at only $92,192 and entered
judgment on the County's valuation. We affirm.
For the purposes of ad valorem taxation, the Board initially appraised petitioner's land and
residence at $340,090 as of January 1, 1993, using a computer-assisted mass appraisal system.
Nelson appealed this valuation to the Board, which reduced the valuation to $254,500. Nelson
appealed the Board's valuation to the Commission, and a settlement hearing was held on
September 9, 1994. As a result of the hearing, the Commission issued an order of remand to
determine the value of the property.
Following the order of remand, the Board performed a comparable sales analysis appraisal of the
Nelson property using three homes of similar size, type of construction, age, proximate location,
and land acreage. A state-certified appraiser performed the appraisal using the sale prices of the
three comparable properties, each of which was sold during 1993, making value adjustments for
differences in the properties. The three comparable properties each had slightly smaller land
acreage and a smaller house than the subject property, and each was located within one block of
Nelson's home. From this appraisal, the Board determined that Nelson's property and house
were worth $322,800.
Nelson, himself a certified public accountant with a Ph.D. in accounting, performed his own
valuation of the property. Nelson used appraisals of properties similar to his own within a mile
of the subject property. Rather than doing a comparable sales analysis, Nelson relied on the
allocation and abstraction method of appraisal, basing his valuation on appraised land values of
similar properties rather than on sales. He submitted a value of $92,192.
On May 15, 1995, the Commission affirmed the Board's valuation. Nelson once again sought
reconsideration of the valuation. A hearing was held on August 21, 1995, during which the
Commission considered Nelson's claim together with a similar claim by Daren B. Blanchard.
After hearing evidence from both sides, the Commission found that the valuations of the Board
regarding each of the two properties reflected market value and that petitioner had not met his
burden of proof to show that the market value was less than that asserted by respondents. The
Commission rejected Nelson's valuation, noting that he had misapplied the methods of valuing
land by going outside the relevant neighborhood to select comparable properties and by failing to
make the proper adjustments to the properties being compared in order to determine the market
value of the subject property. Nelson's request for reconsideration was denied, and he petitioned
for a writ of review. Nelson challenges the fair market valuation and claims that his rights to due
process and equal protection were violated. Nelson further argues that the State has not met its
constitutional requirement for uniform and equal taxation.
This case presents a straightforward question of the accuracy of the Commission's determination
of the fair market value of petitioner's property. We are required to uphold such findings when
they are supported by "substantial evidence when viewed in light of the whole record before the
court." Utah Code Ann. 59-1-610(1)(a).(1)
In challenging the Board's valuation, petitioner has a significant burden of proof that he must
meet. As this court said in Beaver County v. Utah State Tax Commission, 916 P.2d 344 (Utah
1996), to defeat an assessment made for purposes of ad valorem taxation, a petitioner must
"marshal all of the evidence supporting the findings and show that despite the supporting facts
and in light of the conflicting evidence, the findings are not supported by substantial evidence."
Id. at 355-56 (citations omitted). Furthermore, petitioner must not only show that the
Commission's finding lacks support, but also provide an adequate basis for adopting a lower
assessment: "'[W]here the taxpayer claims error, it has an obligation, not only to show
substantial error or impropriety in the assessment, but also to provide a sound evidentiary basis
upon which the Commission could adopt a lower valuation.'" Id. at 357 (alteration in original)
(quoting Utah Power & Light Co. v. Utah State Tax Comm'n, 590 P.2d 332, 335 (Utah 1979)).
Because Nelson failed to satisfy his burden of marshaling the evidence and showing that the
Commission's finding is not supported by substantial evidence, we affirm the Commission's
finding. Neither in his brief nor during oral argument did Nelson marshal the evidence in support
of the Commission's determination. Although Nelson offered anecdotal evidence showing that
the similarly situated Blanchard property was assigned a value much lower than his, this type of
evidence is insufficient to overturn the Commission's determination of fair market value. The
Commission's determination is supported by substantial evidence. The comparative sales
appraisal provided by the Board and relied upon by the Commission sufficiently justifies the
valuation in this case.
Petitioner also raised several constitutional issues for our review, but none justifies relief.
Although petitioner, acting pro se, may not have fully understood the proceedings below, the
record indicates that the Commission gave adequate notice and hearing thus satisfying the due
process requirements of the state and federal constitutions. Petitioner's claim that his equal
protection rights were violated because the valuation of his property was disproportionately high
compared to the valuation of the Blanchard property is likewise without merit. Nowhere in the
record does petitioner establish that the Blanchard property is "comparable" for purposes of
appraisal. Further, the means used by the County to determine the valuation of the Blanchard
property have not been submitted. Without a sufficient basis in the record for demonstrating that
Nelson was discriminated against, the agency's action will be presumed to be valid and made in
good faith.(2)
Petitioner also claims that the valuation of his property violates the equal and uniform rate of
taxation and assessment requirements found in article XIII, sections 2 and 3 of the Utah
Constitution. Because petitioner failed to meet his burden of demonstrating that the
Commission's fair market valuation is erroneous, this claim is unfounded. Article XIII, section 2
states, "All tangible property in the state . . . shall be taxed at a uniform and equal rate in
proportion to its value, to be ascertained as provided by law." Utah's property tax system
satisfies this requirement by valuating and assessing property according to "fair market value."
Utah Code Ann. 59-2-103(1) ("All tangible taxable property shall be assessed and taxed at a
uniform and equal rate on the basis of its fair market value, as valued on January 1, unless
otherwise provided by law." (emphasis added)). Similarly, section 3 of article XIII requires the
state to assess property at "a uniform and equal rate . . . according to its value in money." Once
again, the uniformity requirement is satisfied when the property valuation is made at fair market
value. See Rio Algom Corp. v. San Juan County, 681 P.2d 184, 191 (Utah 1984). Because
Nelson has not marshaled the evidence to show that the Board's valuation does not reflect fair
market value and cannot be supported by substantial evidence, his claim that the State violated
the uniform and equal taxation requirement cannot be sustained.(3) Therefore, we must defer to
the Commission's finding that the Board's valuation reflects the fair market value of Nelson's
property and satisfies the constitutional requirement of uniform and equal taxation.
We conclude that (1) substantial evidence supports the Commission's determination valuating
Nelson's property at $322,800; (2) petitioner failed to meet his burden of proof by marshaling all
the evidence in support of the Commission's determination and demonstrating that the valuation
is not supported by substantial evidence; (3) the record does not support Nelson's constitutional
arguments; (4) we must defer to the Commission's finding that the valuation of the Board
reflects the fair market value of Nelson's property. Nelson's uniform and equal rate of taxation
claim fails. We therefore affirm.
Chief Justice Zimmerman, Associate Chief Justice Stewart, Justice Howe, and Justice Russon
concur in Justice Durham's opinion.
Opinion Endnotes:
1. Cases involving valuation, especially where a choice of valuation methodology is required, sometimes raise mixed questions of law and fact or questions of law, to which cases the court applies a less deferential standard. See, e.g., Alta Pac. Assocs. v. Utah State Tax Comm'n, 931 P.2d 103 (Utah 1997). In that case, a majority of the court treated a question of choice of appraisal methodology as one of law but rejected as "simplistic" a sharp dichotomy between total deference to agency action (on so-called questions of fact) and no deference (on so-called questions of law). As Justice Zimmerman explained in a separate opinion:
The fact that labeling a question a matter of law may permit this court to define and, ultimately, to constrict the pasture within which an agency . . . is permitted to roam, does not mean that we must do so . . . . As we noted in Pena, there are substantial institutional reasons why appellate courts refrain from substituting their judgment for that of an agency . . . on mixed questions of fact and law in any particular area, even if they have the power to do so. Those reasons apply with particular force when we are addressing fact-intensive valuation decisions dependent on a multitude of factors and made by an agency that has expertise in an area.
Id. at 117 (citations omitted).
2. The United States Supreme Court and several state courts have recognized that valuations made by government agencies have a presumption of validity. See Sunday Lake Iron Co. v. Township of Wakefield, 247 U.S. 350, 353 (1918); see also, e.g., Justus v. Board of Equalization of Kootenai County, 620 P.2d 777, 781 (Idaho 1980) ("A presumption of constitutionality attaches to state taxing decisions."); Appeal of Wagstaff, 255 S.E.2d 754, 755 (N.C. Ct. App. 1979) (stating that courts presume ad valorem tax assessments are correct); State ex rel. Brighton Square Co. v. City of Madison, 504 N.W.2d 436, 438 (Wis. Ct. App. 1993) (holding that assessor's valuation is presumed to be correct).
3. Demonstrating a constitutional violation where a petitioner's property is assessed at market value while the property of others has been systematically and intentionally undervalued may be possible. See Allegheny Pittsburgh Coal Co. v. County Comm'n, 488 U.S. 336, 346 (1989) (holding that under state requirement of uniform and equal taxation, assessment method that causes newly purchased properties to be assessed at significantly higher rates than other property violates equal protection under the Fourteenth Amendment). However, Nelson neither alleged nor showed in this case that he suffered harm by bearing a disproportionate tax burden because of the systematic and intentional undervaluation of others' property.
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