IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

August 2, 2022 Session

WILLIAMSON COUNTY, TENNESSEE ET AL. v. TENNESSEE STATE 

BOARD OF EQUALIZATION ET AL.

Appeal from the Chancery Court for Williamson County

No. 47743 James G. Martin, III, Judge

___________________________________

No. M2021-01091-COA-R3-CV

___________________________________

A taxpayer appealed a County Board of Equalization’s property valuation to the State 

Board of Equalization. The State Board reduced the valuation. The County then sought 

judicial review. After a new hearing in which the trial court heard testimony from 

competing appraisers, it affirmed the State Board’s valuation. It also determined that the 

County’s request to reclassify the property was untimely. We affirm.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

W. NEAL MCBRAYER,J., delivered the opinion of the court, in which FRANK G. CLEMENT,

JR., P.J., M.S., and THOMAS R. FRIERSON II, J., joined.

Robert T. Lee, Mt. Juliet, Tennessee, for the appellants, Williamson County, Tennessee, 

and Brad Coleman, Williamson County Assessor of Property.

Stephen J. Jasper, and Matthew J. Sinback, Nashville, Tennessee, for the appellee, AT&T 

Services, Inc.

Herbert H. Slatery III, Attorney General and Reporter, Andrée Sophia Blumstein, Solicitor 

General, and Mary Ellen Knack, Senior Assistant Attorney General, for the appellee, 

Tennessee State Board of Equalization.

OPINION

I.

In late 2013, DC402 Franklin Road LLC purchased an office building/data center 

located in Brentwood, Tennessee, from AT&T Services, Inc. as part of a sale-leaseback 

11/28/2023
2

transaction. DC402 Franklin Road paid $109,220,000 for the approximately 43-acre 

property. It then leased the property back to AT&T for an initial term of ten years, with 

three ten-year renewal options. The lease was triple net with base rent starting at 

$7,645,330 per year, which increased 2 percent annually. So, over the initial term, AT&T 

would pay total rent of $83,714,230.47 plus taxes, insurance, and maintenance.

After the purchase, Williamson County assumed responsibility for assessing the 

property for ad valorem tax purposes.

1

 Its assessor of property assessed the property at 

$85,850,000 as of January 1, 2015. This assessment triggered the current dispute over the 

proper valuation of the property. 

A.

DC402 Franklin Road appealed the assessment to the Williamson County Board of 

Equalization. See Tenn. Code Ann. § 67-5-1407(a) (2018). The County Board upheld the 

assessment. So DC402 Franklin Road appealed to the State Board of Equalization, 

identifying AT&T as its authorized representative and the taxpayer. See id.

§ 67-5-1412(a)(1) (2018).

AT&T contended the value of the property was lower than assessed. Williamson 

County countered that the value was actually higher than assessed. The administrative 

judge determined that neither party carried its burden of proof to alter the assessed value. 

See TENN.COMP.R. ®S. 0600-01-.11 (2022) (placing the burden of proof on the “party 

seeking to change the current classification and/or assessment”). So it affirmed the 2015 

valuation.

 

AT&T then appealed to the State Board’s Assessment Appeals Commission. See

Tenn. Code Ann. § 67-5-1502(a) (Supp. 2017). Again, both parties objected to the 2015 

valuation. The Commission conducted a new evidentiary hearing on the valuation of the 

property as permitted by then-existing law.2 It heard from four witnesses.

AT&T called James “Jimmy” Brown, Ron Neyhart, and Richard Sullivan. 

Mr. Brown, an AT&T employee, oversaw the data center’s operations when it was sold to 

DC402 Franklin Road. He testified to the building’s outdated infrastructure and the 

extensive renovations that would have been necessary for the building to meet 2015 data 

 

1 Before the purchase, the Office of State Assessed Properties, a division of the Comptroller of the 

Treasury, assessed the property as public utility property. See Tenn. Code Ann. §§ 67-5-801(a), 67-5-1301 

(Supp. 2017); see also Colonial Pipeline Co. v. Morgan, 263 S.W.3d 827, 833 (Tenn. 2008). 

2

 For appeals filed to the Commission before July 1, 2017, as here, the parties could provide “any 

additional or supplemental evidence . . . relevant to an issue raised in the appeal.” TENN.COMP.R. & REGS.

0600-01-.13 (2016).
3

center standards. And Mr. Sullivan, a representative from AT&T’s property tax group, 

said that AT&T did not intend to exercise the option to extend the initial lease term. 

Mr. Neyhart, an appraiser with a commercial real estate services firm, opined that the 

property’s highest and best use was for mixed use development. Based on this use, he 

believed its fee simple value was $21,850,000.

Mr. Sullivan also explained the 2013 sale-leaseback transaction had “little or 

nothing to do with market value of the applicable propert[y].” It was a financial transaction 

negotiated to maximize AT&T’s cash proceeds up front. AT&T often entered into such 

transactions, leasing the facilities back “at above-market rental rates to essentially pay back 

the loans.” So the sales price and lease payments were linked, irrespective of the property’s 

market value.

To support its valuation, Williamson County offered the testimony of David Horner,

an appraiser in its assessor’s office. He opined that the value of the property was higher 

than originally assessed. His valuation was based on DC402 Franklin Road’s “leased fee” 

interest in the property, specifically its interest subject to the lease with AT&T.

The Commission issued a final decision and order classifying the property as 

commercial property and reducing its valuation. In reaching its decision, the Commission

agreed with AT&T that the 2013 sale-leaseback was “not representative of market value.” 

Rejecting the opinions of both parties’ appraisers, the Commission arrived at its own 

valuation of $45,700,000.3

Williamson County filed a petition for reconsideration, asserting that the 

Commission failed to value the property in accordance with Tennessee law. Williamson 

County also argued, for the first time, that the property should be classified as public utility 

property for ad valorem tax purposes. The Commission denied the petition.4

B.

Williamson County and the assessor (together, “Williamson County”) petitioned for 

judicial review. They asked the trial court to find that the fair market value of the property 

was $103,500,000 as of January 1, 2015, and to reclassify the property as a public utility 

rather than commercial property. Rather than confining themselves to the record created 

before the Commission, the parties retained new valuation experts and engaged in 

discovery.

 

3 The Commission utilized the income approach to valuation, using data from AT&T’s appraisal 

report. 

4 Because the State Board did not seek to review the action, the Commission’s decision became the 

final decision of the State Board. See Tenn. Code Ann. § 67-5-1502(j) (Supp. 2017).
4

Williamson County’s expert, Peter F. Korpacz, determined the “leased fee” value 

of the property based on an assumption that the sale-leaseback contract rent was “market 

rent” that would continue in perpetuity. And the property’s highest and best use was as a 

data center. But he had not spoken to anyone at AT&T regarding the functional capabilities 

of the property in 2015 or whether AT&T intended to stay.

The appraisal also referenced DC402 Franklin Road’s sale of the property to a thirdparty buyer in 2017.5

 As Mr. Korpacz explained, the 2017 sale was not used to value the 

property. Rather it showed the “demand for the property” and supported his valuation for 

the property as of 2015. The 2017 sale was a “portfolio sale” in which the third-party buyer 

purchased fourteen data centers, including the Franklin Road property, for a total price of 

$750,000,000. The deed conveying the Franklin Road property stated the consideration 

was $110,000,000. Mr. Korpacz was uncertain how the parties determined the portion of 

the total portfolio price to allocate to the Franklin Road property. He had not spoken with 

the parties about the price allocation. 

In response, AT&T offered David C. Lennhoff as an expert on real estate appraisal 

methodology. Mr. Lennhoff testified that Mr. Korpacz’s reliance on the 2013 

sale-leaseback transaction was not appropriate. The transaction was a financing vehicle. 

And, in appraisals, sale-leaseback transactions are “appropriate to ignore” when they are 

financing vehicles. He also diminished the significance of the 2017 portfolio sale. In such 

sales, the parties may “just allocate [the total portfolio sale price] as a matter of 

convenience.” 

Mr. Brown, the AT&T employee who oversaw the data center’s operations, and 

Russ McFadden, AT&T’s vice president of portfolio management and strategy, testified

about the property’s condition and use. The property’s infrastructure, technology, and 

power capabilities were all obsolete in 2015. Modernizing the property would require

tearing the building down. AT&T entered into the sale-leaseback transaction because it 

needed time to remove the property’s infrastructure while maintaining connectivity to its 

broader network. It never intended to renew the lease after the initial term.

Finally, AT&T offered the appraisal report and testimony of Richard Perutelli. 

Mr. Perutelli consulted with AT&T employees, a broker with specialized knowledge about 

data centers, and local zoning officials and developers. And he concluded that 

redevelopment, which would require demolition of the building, was the highest and best 

 

5 Although the 2017 sale occurred just a few months before the April 2018 hearing, the Commission 

allowed Williamson County to offer the evidence “for the limited purpose of substantiating a reasonable 

pre-assessment-date assumption” that the property continued to be marketable as a data center. The 

transaction did not affect AT&T’s lease.
5

use for the property. For purposes of redevelopment, Mr. Perutelli valued the property at 

$45,700,000.6

Before rendering its decision, the trial court requested that the parties and the State 

Board of Equalization provide post-trial arguments as to the appropriate standard of review. 

The trial court ultimately applied a de novo standard of review based on Tennessee Code 

Annotated § 67-5-1511(b) and case law. See Anderson Cnty. Tenn. v. Tenn. State Bd. of 

Equalization, No. E2018-00142-COA-R3-CV, 2020 WL 762511, at *7 (Tenn. Ct. App. 

Feb. 14, 2020) (citing Richardson v. Tenn. Assessment Appeals Comm’n, 828 S.W.2d 403, 

406 (Tenn. Ct. App. 1991)).

Based on this standard of review and the evidence, the trial court found the 

property’s value was $45,700,000 as of January 1, 2015. In doing so, the court credited 

Mr. Perutelli’s testimony and relied on his opinion of the fair market value. It noted that 

the Commission had independently arrived at the same valuation. It also found that the 

property was functionally obsolete and unmarketable as a data center in 2015. It concluded

that “Tennessee law require[d] valuation of the fee simple estate available to be leased at 

market rate.” Neither the 2013 sale-leaseback transaction nor the 2017 portfolio sale

reflected the market rate. 

The trial court also concluded that the property was properly classified as industrial 

and commercial property. Williamson County had waived the classification issue because 

it failed to act to reclassify the property within the statutory time limit. And even if the 

issue had not been waived, Williamson County had failed to establish the property should 

be reclassified. The court “ha[d] received little evidence demonstrating the [p]roperty’s 

use as a public utility in 2015.”

II.

Williamson County appeals, raising three issues. The first two issues focus on the 

valuation of the property. The last focuses on the classification of the property. But before 

reaching those issues, we must address the proper standard of review.

A.

Williamson County and AT&T agree on the standard of review. Because this case 

originated with a decision from the State Board of Equalization, they contend the

 

6 Mr. Perutelli arrived at his valuation by first determining the property’s value with the existing 

building was $47,327,940. He then deducted $2,016,000, the projected cost of demolition based on 

estimates obtained from local construction companies. And he added $393,000 for the value of some 

generators that could be salvaged. This resulted in a net value of $45,704,940, which Mr. Perutelli rounded 

to $45,700,000.
6

deferential standard of review under the Uniform Administrative Procedures Act

(“UAPA”) should apply. See Tenn. Code Ann. § 4-5-322(h) (2021). Under the UAPA, a 

court may reverse or modify an administrative decision only 

if the rights of the petitioner have been prejudiced because the administrative 

findings, inferences, conclusions or decisions are:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the statutory authority of the agency;

(3) Made upon unlawful procedure;

(4) Arbitrary or capricious or characterized by abuse of discretion or clearly 

unwarranted exercise of discretion; or

(5)(A)(i) [U]nsupported by evidence that is both substantial and material in 

light of the entire record;

(ii) In determining the substantiality of evidence, the court shall take into 

account whatever in the record fairly detracts from its weight, but the court 

shall not substitute its judgment for that of the agency as to the weight of the 

evidence on questions of fact.

Id.

The State Board contends that the standard of review should be de novo. Under 

Tennessee Code Annotated § 67-5-1511(b), the statute providing for judicial review of 

State Board decisions, the review must “consist of a new hearing in the chancery court

based upon the administrative record and any additional or supplemental evidence which 

either party wishes to adduce relevant to any issue.” Id. § 67-5-1511(b) (2018). Here, the 

trial court did conduct a new hearing and the parties submitted additional evidence. The 

State Board reasons that receipt of additional evidence is incompatible with the UAPA 

standard. Judicial review under the UAPA is confined to the administrative record, except 

“[i]n cases of alleged irregularities in procedure before the agency, not shown by the 

record.” Id. § 4-5-322(g). If the evidence on which the State Board relies must be 

measured by a “substantial and material” standard as required by the UAPA, the 

introduction of “additional or supplement evidence” would make no difference. 

More importantly, the Tennessee Supreme Court has defined “de novo judicial 

review” using the same language that appears in Tennessee Code Annotated 

§ 67-5-1511(b). See Frye v. Memphis State Univ., 671 S.W.2d 467, 469 (Tenn. 1984). In 

other words, “[a] statute requiring de novo judicial review means ‘a new hearing in the 

chancery court based upon the administrative record and any additional or supplemental 

evidence which either party wishes to adduce relevant to any issue.’” Tenn. Waste Movers, 

Inc. v. Loudon Cnty., 160 S.W.3d 517, 520 (Tenn. 2005) (quoting Frye, 671 S.W.2d at 

469). 
7

Under the version of the statute in effect when Williamson County sought judicial 

review of the decision of the State Board, this Court has held in at least one reported 

decision that the standard of review is de novo.7 Maury Cnty. ex rel. Maury Reg’l Hosp. 

v. Tenn. State Bd. of Equalization, 117 S.W.3d 779, 782 (Tenn. Ct. App. 2003). But, in 

other reported decisions, this Court has held that judicial review falls under the deferential 

standard found in the UAPA. Coal Creek Co. v. Anderson Cnty., 546 S.W.3d 87, 97 (Tenn. 

Ct. App. 2017); Willamette Indus., Inc. v. Tenn. Assessment Appeals Comm’n, 11 S.W.3d 

142, 147 (Tenn. Ct. App. 1999). Because later decisions did not expressly reverse earlier 

decisions, it is difficult to discern which reported decision should be deemed controlling. 

See TENN. SUP. CT. R. 4(G)(2) (providing that “[o]pinion[s] reported in the official reporter 

. . . shall be considered controlling authority for all purposes unless and until such opinion 

is reversed or modified by a court of competent jurisdiction”). Most of this Court’s

unreported decisions have held that the UAPA governs judicial review of decisions of the 

State Board. See, e.g., Am. Bus. Supply, Inc. v. Tenn. State Bd. of Equalization, No. M2022-

01411-COA-R3-CV, 2023 WL 7101290, at *5 (Tenn. Ct. App. Oct. 27, 2023); In re TWT 

Acquisition, LLC, No. M2020-01100-COA-R3-CV, 2022 WL 554312, at *1 (Tenn. Ct. 

App. Feb. 24, 2022); Cress v. Tenn. State Bd. of Equalization, No. E2021-00093-COA-R3-

CV, 2021 WL 5148088, at *4 (Tenn. Ct. App. Nov. 5, 2021); Vanderbilt Univ. v. Tenn. 

State Bd. of Equalization, No. M2014-01386-COA-R3-CV, 2015 WL 1870194, at *5 

(Tenn. Ct. App. Apr. 22, 2015); Spring Hill, L.P. v. Tenn. State Bd. of Equalization, No. 

M2001-02683-COA-R3-CV, 2003 WL 23099679, at *4 (Tenn. Ct. App. Dec. 31, 2003). 

But the trial court relied on a recent, unreported case of this Court that described the review 

of final decisions as de novo. See Anderson Cnty. Tenn., 2020 WL 762511, at *7. 

Given this Court’s conflicting precedent, we rely on the Tennessee Supreme Court’s

definition of de novo judicial review. It means, as Tennessee Code Annotated 

§ 67-5-1511(b) provides, “a new hearing in the chancery court based upon the 

administrative record and any additional or supplemental evidence which either party 

wishes to adduce relevant to any issue.” See Frye, 671 S.W.2d at 469. It does not “mean 

a complete repetition of all of the evidence.” Id. at 469 n.2. But the parties may avail 

themselves of the opportunity to submit additional or supplemental evidence.

We use the scope of review from Tennessee Rule of Appellate Procedure 13(d). See 

Wells v. Tenn. Bd. of Regents, 9 S.W.3d 779, 783 (Tenn. 1999). The trial court’s findings 

of fact derived from the additional or supplemental evidence are reviewed de novo upon 

the record, accompanied by a presumption of correctness, unless the preponderance of the 

 

7 For appeals filed on or after July 1, 2023, the Legislature has resolved the question of the proper 

standard of review by amending Tennessee Code Annotated § 67-5-1511(b) to clarify that the review “is a 

de novo appeal, with no presumption of correctness of the decisions of the lower tribunals of the case at 

hand.” See S.B. 148, 113th Gen. Assemb., Reg. Sess. (Tenn. 2023). An earlier version of the judicial 

review statute also used the words “de novo appeal.” Cress v. Tenn. State Bd. of Equalization, No. E2021-

00093-COA-R3-CV, 2021 WL 5148088, at *4 n.3 (Tenn. Ct. App. Nov. 5, 2021). 
8

evidence is otherwise. TENN. R. APP. P. 13(d). We review the trial court’s conclusions of 

law de novo with no presumption of correctness. Colonial Pipeline Co. v. Morgan, 263 

S.W.3d 827, 836 (Tenn. 2008). 

B.

Turning to the issues raised on appeal, Williamson County first faults the trial court 

for allegedly failing to consider the property’s intrinsic value. It argues that part of that 

intrinsic value is the AT&T lease. Property value must “be ascertained from the evidence 

of its sound, intrinsic and immediate value, for purposes of sale between a willing seller 

and a willing buyer without consideration of speculative values.” Tenn. Code Ann. 

§ 67-5-601(a) (Supp. 2017). Williamson County reasons that it would be “highly unlikely 

that a ‘willing seller’ would sell the subject property on January 1, 2015, for the proposed 

value of $45,700,000 . . . when the property would generate over $76,000,000 in rent over 

the remaining term of the lease.” 

In valuing property, assessors must “be guided by, and following the instructions 

of, the appropriate assessment manuals issued by the division of property assessments and 

approved by the [State Board].” Id. § 67-5-602(b) (2018). Those manuals consider several 

factors, including “current use” and “whether the property is income-bearing or nonincome bearing.” Id. § 67-5-602(b). But those manuals also consider “other factors and 

evidence of value generally recognized by appraisers as bearing on the sound, intrinsic and 

immediate economic value at the time of assessment.” Id. Here, the court determined, 

based upon the report of AT&T’s appraiser, Mr. Perutelli, that “[i]t is widely accepted and 

recognized in the appraisal field that, when valuing the fee simple interest in a property, all 

rentable space must be estimated at market rent levels, and any rent attributed to specific 

leases must be disregarded.” And it found the 2013 sale-leaseback transaction “was a 

financing transaction and not an arm’s length sale.” So the sales price and rent were not 

reflective of the market. Use of the 2013 transaction would inflate the market value of the 

property and not be credible.

We discern no error in the court’s acceptance of Mr. Perutelli’s opinion that the 

2013 sale-leaseback transaction should not be taken into account in valuing the property. 

See Brown v. Crown Equip. Corp., 181 S.W.3d 268, 275 (Tenn. 2005) (recognizing “[t]he 

weight of the theories and the resolution of legitimate but competing expert opinions are 

matters entrusted to the trier of fact”). Mr. Perutelli demonstrated sufficient experience 

and familiarity with real estate appraisals. And professional literature supported his 

opinion that the terms of a sale-transaction should not be used to value property unless 

those terms can be confirmed to be at market. The evidence also supports the findings that 

the sales price and rent from the 2013 sale-leaseback transaction were above market. The 

proof showed that the terms of the transaction were negotiated like a loan, with the purchase 

price dependent on the rent AT&T was willing to pay.
9

Williamson County next faults the trial court’s determination of the highest and best 

use of the property. It claims that the court found that the highest and best use of the 

property was for the improvements on the property to be demolished and the land 

redeveloped. But we agree with AT&T that the court made no such determination. Rather,

the court recognized that “Mr. Perutelli ultimately concluded that the [p]roperty’s highest 

and best use was ‘redevelopment,’ which requires demolition of the building.” This 

conclusion informed the appraiser’s opinion of the property’s value, including which 

valuation approaches were appropriate. Although it might be surmised that the court 

agreed with this aspect of Mr. Perutelli’s opinion, the court made no finding concerning 

the property’s highest and best use. 

C.

For taxation purposes, property classified as real property is subclassified according 

to its use. The use subclassification, in turn, determines the applicable assessment ratio 

(and tax burden for the taxpayer): 

(1) PUBLIC UTILITY PROPERTY. Public utility property shall be assessed 

at fifty-five percent (55%) of its value;

(2) INDUSTRIAL AND COMMERCIAL PROPERTY. Industrial and

commercial property shall be assessed at forty percent (40%) of its value;

(3) RESIDENTIAL PROPERTY. Residential property shall be assessed at 

twenty-five percent (25%) of its value; and

(4) FARM PROPERTY. Farm property shall be assessed at twenty-five

percent (25%) of its value.

Tenn. Code Ann. § 67-5-801(a) (Supp. 2017). When real property is used for more than 

one purpose, the property is apportioned among the different subclasses according to State 

Board guidelines. Id. § 67-5-801(b)(1). As its final issue, Williamson County contends 

that the property should be subclassified as public utility property and not as industrial and 

commercial property. 

We conclude that the issue was waived. The trial court denied Williamson County’s 

request to reclassify the property on two alternative and independent grounds. The court 

concluded that Williamson County “ha[d] failed to timely preserve the issue and waived 

its right to pursue classification,” and the court determined that Williamson County had 

failed to prove that the property should be classified as public utility property. In its brief, 

Williamson County only addressed the latter ground. It addressed the former ground in its 

reply brief. 
10

“Generally, where a trial court provides more than one basis for its ruling, the 

appellant must appeal all the alternative grounds for the ruling.” Hatfield v. Allenbrooke 

Nursing & Rehab. Ctr., LLC, No. W2017-00957-COA-R3-CV, 2018 WL 3740565, at *7 

(Tenn. Ct. App. Aug. 6, 2018). When an appellant fails to do so, the lower court must be 

affirmed. Id. at *8. Although the timeliness issue is addressed in the reply brief, reply 

briefs are not “vehicle[s] to correct deficiencies in initial briefs.” Augustin v. Bradley Cnty. 

Sheriff’s Office, 598 S.W.3d 220, 227 (Tenn. Ct. App. 2019). 

III.

The evidence did not preponderate against the trial court’s valuation of the property. 

And the issue of the correct subclassification of the property was waived. So we affirm.

 s/ W. Neal McBrayer 

W. NEAL MCBRAYER, JUDGE