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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

WHEATLAND INDUS. v. PERKINS CTY. BD. OF EQUAL.

Cite as 304 Neb. 638

Wheatland Industries, LLC/Mid America Agri 

Products, appellee, v. Perkins County 

Board of Equalization, appellant.

___ N.W.2d ___

Filed December 6, 2019. No. S-19-305.

1. Taxation: Judgments: Appeal and Error. Appellate courts review 

decisions rendered by the Tax Equalization and Review Commission for 

errors appearing on the record.

2. Judgments: Appeal and Error. When reviewing a judgment for errors 

appearing on the record, an appellate court’s inquiry is whether the decision conforms to the law, is supported by competent evidence, and is 

neither arbitrary, capricious, nor unreasonable.

3. Administrative Law: Judgments: Words and Phrases. Agency action 

is arbitrary, capricious, and unreasonable if it is taken in disregard of the 

facts or circumstances of the case, without some basis which would lead 

a reasonable and honest person to the same conclusion.

4. Taxation: Valuation: Presumptions: Evidence. A presumption exists 

that a board of equalization has faithfully performed its official duties 

in making an assessment and has acted upon sufficient competent 

evidence to justify its action. That presumption remains until there is 

competent evidence to the contrary presented, and the presumption 

disappears when there is competent evidence adduced on appeal to 

the contrary.

5. ____: ____: ____: ____. Once the challenging party overcomes the presumption of validity by competent evidence, the reasonableness of the 

valuation fixed by the board of equalization becomes one of fact based 

upon all of the evidence presented.

6. Taxation: Valuation: Proof: Appeal and Error. The burden of showing a valuation to be unreasonable rests upon the taxpayer on appeal 

from the action of the board of equalization.

7. Taxation: Valuation: Proof. The burden of persuasion imposed on 

a complaining taxpayer is not met by showing a mere difference of 

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

02/28/2020 09:06 AM CST
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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

WHEATLAND INDUS. v. PERKINS CTY. BD. OF EQUAL.

Cite as 304 Neb. 638

opinion unless it is established by clear and convincing evidence that 

the valuation placed upon the property when compared with valuations 

placed on other similar property is grossly excessive and is the result of 

a systematic exercise of intentional will or failure of plain duty, and not 

mere errors of judgment.

Appeal from the Tax Equalization and Review Commission. 

Affirmed.

Richard H. Roberts, Perkins County Attorney, and Gary F. 

Burke for appellant.

Frederick D. Stehlik and Zachary W. Lutz-Priefert, of Gross 

& Welch, P.C., L.L.O., for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, 

Papik, and Freudenberg, JJ.

Cassel, J.

INTRODUCTION

This review proceeding addresses the taxable valuation of 

commercial real estate used as an ethanol plant. The taxpayer unsuccessfully protested the county’s $16.3 million valuation—a valuation based upon mass appraisal techniques—and 

then appealed to the Tax Equalization and Review Commission 

(TERC), which reduced the value to $7.3 million based upon 

the taxpayer’s appraisal. Here, because the county’s valuation relied upon admittedly incorrect information and lacked 

evidentiary support regarding applicable depreciation, the evidence showed more than a mere difference of opinion. Finding 

no error appearing on the record, we affirm TERC’s ruling. 

But our decision should not be read to categorically reject 

mass appraisal as a proper valuation methodology for an ethanol plant.

BACKGROUND

Wheatland Industries, LLC/Mid America Agri Products 

(Wheatland) owned an ethanol plant on commercial real estate 

in Madrid, Perkins County, Nebraska (Madrid property). The 
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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

WHEATLAND INDUS. v. PERKINS CTY. BD. OF EQUAL.

Cite as 304 Neb. 638

Perkins County assessor, Peggy Burton, assessed the value of 

the Madrid property at $16,364,768 for the 2017 tax year.

Wheatland protested the assessment to the Perkins 

County Board of Equalization (Board). At the protest hearing, Wheatland did not present evidence. The Board affirmed 

Burton’s valuation of the Madrid property.

Wheatland appealed to TERC. A hearing was held and both 

parties presented evidence. We first summarize the evidence 

regarding the county’s assessment, then the evidence of the 

taxpayer’s appraisal, and finally TERC’s decision.

County Assessment

For the county, Darrell Stanard conducted an appraisal of 

the Madrid property using the mass appraisal method. He had 

appraised five other ethanol plants in different counties using 

the mass appraisal approach. He agreed with the $16 million 

value of the Madrid property.

In order to aid the mass appraisal assessment, Burton prepared a spreadsheet of the values of all ethanol plants in 

Nebraska. She obtained the values directly from the other 

counties’ assessors but she was unaware how those counties 

assessed their ethanol plants. She maintained that the $16 million value was the proper value for the Madrid property.

Wheatland elicited evidence about the value shown on 

Burton’s spreadsheet for the Furnas County ethanol plant. 

Stanard agreed with Wheatland that the Furnas County plant’s 

nameplate capacity shown on the spreadsheet was incorrect. Its 

nameplate capacity was actually 44 million gallons, not 22 million gallons as shown on the spreadsheet. He explained that the 

nameplate capacity is critical to determining the value of the 

plant. Before this court, the Board in effect concedes the error. 

And Burton agreed that if the spreadsheet contained incorrect information about the nameplate capacity of the Furnas 

County plant, it would change her opinion about the value of 

the Madrid property. But she did not quantify how her opinion 

would change.
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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

WHEATLAND INDUS. v. PERKINS CTY. BD. OF EQUAL.

Cite as 304 Neb. 638

Wheatland’s appraiser, Joseph Calvanico, had valued the 

Furnas County plant twice. He stated that the Furnas County 

plant was “almost a mirror copy” of the Madrid property—both 

were constructed at the same time, used the same technology, and are about the same size. When appraising the Furnas 

County plant, he used the same methodology as he did for the 

Madrid plant. Wheatland’s chief executive officer stated that 

he owned the Furnas County plant and that it was identical 

to the Madrid property, except there was 200 more acres of 

land for the Furnas County plant. The Furnas County plant 

was assessed at $8,943,575. Stanard agreed that if Calvanico 

was correct that the Furnas County plant was a “sister” plant 

to the Madrid property, he would have no disagreement with 

Calvanico’s appraisal of the Madrid property.

Wheatland Appraisal

At the time of TERC’s hearing, Calvanico had been a 

real property appraiser for 35 years. Wheatland hired him to 

appraise the Madrid property. He testified that his appraisal 

conformed with the Uniform Standards of Professional 

Appraisal Practice.

Calvanico utilized the cost approach method to appraise 

the property. He stated that the income approach would not 

be useful, because the income stream associated with the 

property came from the separately assessed equipment rather 

than from the real estate. He opined that the sales comparison approach was useful to underscore the information from 

the cost approach. He explained that the sales comparison 

approach would not be effective as a stand-alone method of 

appraisal for the Madrid property, because most sales of ethanol plants were older and not from the area.

Calvanico explained his application of the cost approach 

method. He began by determining the value of the underlying 

land. He examined land sales of dry farmland and concluded 

that the price per acre was $1,600. He appraised the value 

of the underlying land at $277,000. He then appraised the 
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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

WHEATLAND INDUS. v. PERKINS CTY. BD. OF EQUAL.

Cite as 304 Neb. 638

buildings and improvements on the land. He classified the 

buildings and improvements and used the Marshall Valuation 

Service to estimate the replacement cost. He estimated the base 

actual value of the buildings at $9,387,529 and improvements 

at $5,641,172.

He then discussed depreciation. He concluded that the physical depreciation of the buildings that were 10 years old would 

depreciate 20 to 22 percent, the structures built within the past 

few years would depreciate 4 to 6 percent, and the improvements would depreciate 25 percent.

Burton stated that when performing mass appraisal, she did 

not apply depreciation to any property and did not believe 

that depreciation was applied to the Madrid property. Stanard 

agreed that physical depreciation should be factored into the 

value of the Madrid property.

Calvanico discussed the functional depreciation attributed to 

the buildings. He stated that if the fermentation and main process buildings were put to an alternative use, those buildings 

would be the most difficult to repurpose, because their function 

is to house the equipment. He applied a 20-percent functional 

depreciation to those buildings. Stanard stated that functional 

depreciation should not be applied.

Calvanico discussed the economic depreciation attributed 

to the buildings and improvements. He examined the ethanol industry in Nebraska and nationwide. He discussed the 

decrease in the price per bushel of corn and the diminished 

number of ethanol plants in Nebraska. He emphasized that in 

2011, there were 39 ethanol plants in Nebraska, and that at the 

time of appraisal, there were 26 ethanol plants. He articulated 

that this was a 40-percent decrease in the ethanol industry in 

Nebraska and concluded that the economic value of the Madrid 

property would depreciate 40 percent. Stanard agreed that 

“some” economic depreciation should be applied but did not 

quantify how much that should be.

Ultimately, Calvanico appraised the actual value of the 

Madrid property at $6.8 million.
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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

WHEATLAND INDUS. v. PERKINS CTY. BD. OF EQUAL.

Cite as 304 Neb. 638

TERC’s Decision

TERC found that because Calvanico performed the appraisal 

according to professionally approved standards, his appraisal 

report was competent evidence sufficient to rebut the presumption in favor of the Board’s determination.

TERC then found that, for two reasons, it was unreasonable and arbitrary for the Board to rely upon Burton and 

Stanard’s valuation. First, TERC agreed with Burton, Stanard, 

and Calvanico that physical depreciation should be applied to 

the Madrid property. It characterized Burton’s and Stanard’s 

testimony as to whether physical depreciation had been applied 

as “inconsistent,” and it determined that they had provided 

no evidence of the amount of physical depreciation. Second, 

TERC pointed to the incorrect information Burton’s spreadsheet contained and the absence of a revised opinion based 

upon the correct information.

TERC then discussed Calvanico’s appraisal and focused 

on his analysis of depreciation. First, TERC agreed with 

Calvanico’s assessment of physical depreciation. Second, it 

reasoned that the Madrid property was still operating as an 

ethanol plant with the “Delta-T technology” at the time of the 

assessment and that therefore, it did not suffer from functional 

depreciation. Finally, it agreed that

due to the state of the ethanol industry, including a reduction in the price per gallon paid for ethanol, a reduction 

if not contraction of the rate of ethanol plant construction 

and other factors the depreciation to be applied to the 

[Madrid property] for economic obsolescence should be 

40 [percent].

Except regarding functional depreciation, TERC found 

Calvanico’s appraisal persuasive and assessed the value of the 

Madrid property for 2017 at $7,336,042.

The Board timely petitioned for review of TERC’s decision.1

We moved the review proceeding to our docket.2

1 See Neb. Rev. Stat. § 77-5019(2)(a)(i) (Reissue 2018).

2 See Neb. Rev. Stat. § 24-1106(3) (Reissue 2016).
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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

WHEATLAND INDUS. v. PERKINS CTY. BD. OF EQUAL.

Cite as 304 Neb. 638

ASSIGNMENTS OF ERROR

The Board assigns that (1) there was insufficient evidence 

for TERC to find that the Board’s determination was unreasonable and arbitrary, (2) TERC erred when it allowed a 

40-percent economic depreciation, and (3) it erred when it 

found the value of the Madrid property to be $7,336,042.

STANDARD OF REVIEW

[1-3] Appellate courts review decisions rendered by TERC 

for errors appearing on the record.3 When reviewing a judgment for errors appearing on the record, an appellate court’s 

inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.4

 Agency action is arbitrary, capricious, and unreasonable if it is taken in disregard of the 

facts or circumstances of the case, without some basis which 

would lead a reasonable and honest person to the same 

conclusion.5

ANALYSIS

[4] We begin by noting that the presumption of validity 

does not apply at this stage. A presumption exists that a board 

of equalization has faithfully performed its official duties in 

making an assessment and has acted upon sufficient competent 

evidence to justify its action. That presumption remains until 

there is competent evidence to the contrary presented, and 

the presumption disappears when there is competent evidence 

adduced on appeal to the contrary.6 Neither party disputes that 

Wheatland presented competent evidence through Calvanico’s 

appraisal and thereby overcame the presumption of validity of 

the Board’s valuation.

3 Betty L. Green Living Trust v. Morrill Cty. Bd. of Equal., 299 Neb. 933, 

911 N.W.2d 551 (2018).

4 Id.

5 Id.

6 Id.
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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

WHEATLAND INDUS. v. PERKINS CTY. BD. OF EQUAL.

Cite as 304 Neb. 638

[5-7] This leads to the principles governing TERC’s decision. Once the challenging party overcomes the presumption 

of validity by competent evidence, the reasonableness of the 

valuation fixed by the board of equalization becomes one of 

fact based upon all of the evidence presented.7 That applies 

here. The burden of showing a valuation to be unreasonable 

rests upon the taxpayer on appeal from the action of the board 

of equalization.8 The burden of persuasion imposed on a complaining taxpayer is not met by showing a mere difference 

of opinion unless it is established by clear and convincing 

evidence that the valuation placed upon the property when 

compared with valuations placed on other similar property is 

grossly excessive and is the result of a systematic exercise of 

intentional will or failure of plain duty, and not mere errors 

of judgment.9

The Board makes three arguments that there was insufficient 

evidence to support TERC’s determination. First, it argues 

that once the presumption of the Board was rebutted, there 

was sufficient evidence to support that the Board’s valuation 

of the Madrid property, when compared to a similar property, was not grossly excessive. Second, it argues that there 

was insufficient evidence to support the 40-percent economic 

depreciation, because the Madrid property had been profitable and the ethanol plant numbers Calvanico relied upon 

were proposed plants not completed plants. Third, it argues 

that if we determine the economic depreciation percentage 

was incorrect, then we should value the Madrid property 

without economic depreciation or remand the matter to TERC 

with instruction to determine the correct amount of economic 

depreciation, if any.

Wheatland presented evidence of the Furnas County plant as 

a comparable property. Calvanico stated that he had appraised 

7 See id.

8 Id.

9 Id.
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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

WHEATLAND INDUS. v. PERKINS CTY. BD. OF EQUAL.

Cite as 304 Neb. 638

the Furnas County plant twice and that it was nearly identical 

to the Madrid property in blueprint, technology, and capacity. He referred to the Furnas County plant as a “sister” plant. 

Wheatland owned the Furnas County plant, and its chief executive officer affirmed that they were identical.

Stanard explained that Burton’s spreadsheet contained incorrect information about the Furnas County plant. The Furnas 

County plant was not a 22-million-gallon plant, but, rather, 

it was a 44-million-gallon plant. This affirmed Wheatland’s 

evidence that the plants were identical in capacity. Stanard’s 

statement—that the nameplate capacity of a plant was critical to determining its value—emphasized the importance of 

the relationship in value between the Furnas County plant 

and the Madrid property. Although Burton did not state how 

her opinion of the Madrid property value would change from 

the incorrect spreadsheet, she did not dispute the $8.9 million 

value of the Furnas County plant. Stanard did state that if 

the Furnas County plant was a “sister” plant, he would have 

no disagreement with Calvanico’s appraisal of the Madrid 

property. Clearly, the evidence presented showed that the 

Furnas County plant was a “sister” plant. Calvanico’s opinion 

purported to show that the Board had overvalued the Madrid 

property by well over $6 million—hardly a mere difference of 

opinion. Stanard’s acceptance of Calvanico’s appraisal undermines the Board’s argument attempting to characterize it 

as such.

As part of Wheatland’s evidence intended to show a grossly 

excessive value, it focused on the failure to apply depreciation. 

Burton, Stanard, and Calvanico all agreed that physical depreciation should be applied to the Madrid property. Burton and 

Stanard were unaware if physical depreciation was applied, and 

there was no evidence that it was. Additionally, Stanard agreed 

with Calvanico that “some” economic depreciation should be 

applied to the Madrid property but the Board did not present 

evidence as to an appropriate amount. This evidence showed 

that the Board’s valuation was unreliable, because it failed to 
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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

WHEATLAND INDUS. v. PERKINS CTY. BD. OF EQUAL.

Cite as 304 Neb. 638

take into account any depreciation, which in turn resulted in an 

excessively high valuation.

Because the evidence showed that the Furnas County plant 

was comparable and that the Board’s valuation was unreliable, 

there was competent evidence to show that the Board’s valuation was grossly excessive. Accordingly, TERC’s determination 

that it was arbitrary and unreasonable to rely on the Board’s 

determination of value was supported by competent evidence 

and was not arbitrary, capricious, or unreasonable.

The Board argues that there was insufficient evidence to 

support economic depreciation of 40 percent. “Based upon 

the applicable law, the Board need not put on any evidence to 

support its valuation of the property at issue unless the taxpayer establishes the Board’s valuation was unreasonable or 

arbitrary.”10 Because Wheatland established that the Board’s 

valuation was unreasonable and arbitrary, TERC did not err in 

relying upon Calvanico’s appraisal.

“Economic depreciation results from external economic 

forces which depress the value of the property.”11 Calvanico 

observed the state of the ethanol industry, the decrease in the 

price per gallon of ethanol, and the reduction of the rate of 

ethanol plant construction. He emphasized that Nebraska had 

39 ethanol plants in 2010 and 26 ethanol plants in 2017. From 

his observations, he opined that economic depreciation of 40 

percent was appropriate.

We cannot say that TERC’s reliance on Calvanico’s opinion 

was arbitrary, capricious, or unreasonable. Stanard asserted that 

the numbers that Calvanico relied upon were not all constructed 

and operational ethanol plants—that is, some were proposed 

plants that never came to fruition. But he did not expound why 

proposed plants versus operational plants makes a difference 

10 Bottorf v. Clay Cty. Bd. of Equal., 7 Neb. App. 162, 168, 580 N.W.2d 561, 

566 (1998).

11 First Nat. Bank v. Otoe Cty., 233 Neb. 412, 414, 445 N.W.2d 880, 882 

(1989).
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Nebraska Supreme Court Advance Sheets

304 Nebraska Reports

WHEATLAND INDUS. v. PERKINS CTY. BD. OF EQUAL.

Cite as 304 Neb. 638

to the state of the Nebraska ethanol industry or how it would 

affect economic depreciation. Moreover, Stanard admitted that 

“some” economic depreciation was appropriate, but failed to 

quantify his opinion. TERC was left with the choice between 

“some” and 40 percent. Further, the Board failed to present 

evidence as to how the profitability of the ethanol plant would 

affect economic depreciation of the property and quantify 

that amount. Accordingly, TERC’s determination of economic 

depreciation was based on competent evidence and was not 

arbitrary, capricious, or unreasonable.

CONCLUSION

We reiterate that our decision does not mean that mass 

appraisal valuation techniques do not apply to ethanol plants. 

Here, because evidence was presented to show that a similar 

property was valued comparably to Wheatland’s appraisal and 

the Board’s valuation was unreliable, we conclude that TERC’s 

determination that the Board’s valuation was unreasonable and 

arbitrary was supported by competent evidence and was not 

arbitrary, capricious, or unreasonable. Additionally, we conclude that TERC’s determination of economic depreciation was 

supported by competent evidence and was not arbitrary, capricious, or unreasonable. We affirm its decision.

Affirmed.