Present: All the Justices 

KESWICK CLUB, L.P. 

 OPINION BY 

v. Record No. 060672 JUSTICE LAWRENCE L. KOONTZ, JR. 

 January 12, 2007 

COUNTY OF ALBEMARLE 

FROM THE CIRCUIT COURT OF ALBEMARLE COUNTY 

James A. Luke, Judge Designate 

 In this appeal, a taxpayer challenges a judgment upholding 

a county’s assessment of the fair market value of real estate 

owned by the taxpayer for the 2003 and 2004 tax years. 

Specifically, we consider whether the county failed to properly 

consider the income and sales approaches to valuation before 

basing its assessment solely on the cost approach. 

BACKGROUND 

 The property that is the subject of this appeal is Keswick 

Club, an approximately 153-acre property in Albemarle County 

(“the county”). Keswick Club is a private recreational club 

with facilities that include an eighteen-hole golf course, pro 

shop, clubhouse with restaurant, spa, swimming pools, tennis 

courts, exercise room and other amenities. Keswick Club is 

located adjacent to an upscale residential subdivision known as 

Keswick Estates and a luxury hotel known as Keswick Hall. 

During the relevant times, Keswick Club, L.P. (“the taxpayer”) 

was the record owner of the subject property. 
2 

 In 2003, the county performed its biennial reassessment of 

real estate values for the 2003 and 2004 tax years. 

Subsequently, the county issued to the taxpayer a notice of 

reassessment stating that Keswick Club’s assessed fair market 

value for 2003 was $12,771,500.1 The taxpayer disputed the 

county’s assessment of Keswick Club’s fair market value and 

submitted an appraisal report prepared by a private appraiser. 

This appraisal report reflected Keswick Club’s fair market value 

at $2.9 million utilizing the income and sales approaches to 

valuation, but not the cost approach.2

 In a letter to the taxpayer dated May 15, 2003, the county 

disagreed with the methodology used in the private appraisal 

report and explained that it had chosen to use the cost 

approach, not the income approach or the sales approach, in 

valuing Keswick Club. The county stated in the letter that: 

 

1

 The notice of reassessment indicated that the prior 

assessed value of Keswick Club was $11,318,900. 

2

The cost, income, and sales approaches are the three 

valuation approaches or methods most widely used to assess the 

fair market value of real estate. In simple terms, the cost 

approach values property by adding the value of land to the 

value of improvements, which is measured by the cost to 

reproduce those improvements minus depreciation. The income 

approach estimates the value of income-producing property by 

measuring the income the property is expected to generate. The 

sales method values property utilizing recent sale prices of 

comparable properties. Each of the three approaches has several 

commonly used names, but for simplicity and consistency, we will 

refer to them as the cost, income, and sales approaches. 
3 

 We have reviewed the appraisal report you 

provided and as a result disagree with the final value 

estimate. In our opinion, given the status of the 

golf clubs located within the County, it is difficult 

to arrive at a fair market valuation by employing the 

income approach. The sales comparison approach was 

also not used due to the lack of available sales 

information within our jurisdiction. We have chosen 

to value area golf clubs using the cost approach. 

 The county’s letter also noted that the other golf clubs in 

the county were assessed at $21,585,700, $13,281,200, and 

$9,159,800.3

 The taxpayer sought review by the county Board of 

Equalization, which reduced Keswick Club’s fair market value by 

$1,345,400 to account for functional obsolescence and other 

factors. The county subsequently made a further reduction to 

account for a decrease in acreage such that Keswick Club’s final 

assessed fair market value by the county was $11,175,700.4

 The taxpayer filed an application in the Circuit Court of 

Albemarle County pursuant to Code § 58.1-3984 requesting that 

the circuit court correct the county’s 2003 and 2004 

assessments. The taxpayer asserted that the county used only 

 

3

 In the letter, the county notified the taxpayer that 

Keswick Club’s assessed fair market value had been reduced by 

$227,900 to account for an additional depreciation allowance. 

4

 The taxpayer claims that it paid its 2003 tax based on 

Keswick Club’s assessed fair market value prior to the reduction 

by the Board of Equalization. The taxpayer paid its 2004 tax 

based on the $11,175,700 assessed fair market value after the 
4 

the cost approach in making its valuation and by doing so 

“failed to consider all factors required by law for a lawful and 

proper valuation of the subject property.” The taxpayer 

maintained that Keswick Club’s actual fair market value, 

estimated using the “proper and preferred” methods of valuation, 

was $2,900,000. The county filed a responsive pleading 

asserting, among other things, that its valuation method was 

proper and that it had used the cost approach “only after 

considering but properly rejecting the use of other valuation 

methods.” 

 At a bench trial held in the circuit court, the parties 

presented evidence of Keswick Club’s financial performance on 

the issue of whether the income approach could feasibly be 

applied in appraising Keswick Club. The undisputed evidence 

showed that Keswick Club had operated at an uninterrupted loss 

for many consecutive years. Keswick Club’s general manager 

testified, however, that Keswick Club was projected to become 

profitable in future years as the result of aggressive efforts 

initiated by Keswick Club’s new owner, Orient Express Hotels, 

Inc. (“Orient Express”). Orient Express had purchased Keswick 

Club in 2002 when the previous owner, Metropolaris, Inc., 

 

reduction by the Board of Equalization and the further reduction 

made by the county. 
5 

exercised its option under a 1999 “put and call agreement” 

between itself and Orient Express to sell all of Keswick Club 

L.P.’s stock to Orient Express for $3.7 million.5 Keswick 

Club’s general manager testified that, although the “loss-making 

situation” had decreased since Orient Express purchased Keswick 

Club, the club continued to operate at a loss. 

 The county assessor who had assessed Keswick Club testified 

that, in making his appraisal, he “looked at all three 

approaches to value” before choosing to base his assessment 

solely on the cost approach. The assessor stated that he chose 

to use the cost method because it rendered the “most accurate 

appraisal of the property” and is “appropriate when you have a 

special-use property” such as a golf course. 

 The county assessor testified that he rejected the income 

approach because he did not receive any income statements or 

other financial information pertaining to Keswick Club. 

However, the assessor acknowledged that he never requested any 

such information. On the issue of whether he would utilize the 

 

5

 The put and call agreement involved the transfer of shares 

in a subsidiary of Metropolaris, KGC Inc. This subsidiary of 

Metropolaris was the sole shareholder of Keswick Club General 

Partner, Inc., the general partner of Keswick Club, L.P., and 

the majority shareholder of Keswick Club, Inc., the sole limited 

partner of Keswick Club, L.P. It suffices for purposes of this 

appeal that the transfer of the shares in KGC, Inc. amounted to 

a sale of all of the beneficial ownership in Keswick Club. 
6 

income approach on a for-profit business that was losing money, 

the assessor stated that he would still consider such property 

“income producing property.” He further stated that he would 

not use the income approach because he could not “do a proper 

analysis of a property with a negative income to create . . . an 

accurate reflection of market value.” 

 The county assessor testified that he attempted to develop 

an appraisal based on the sales approach but could locate only 

one comparable sale inside the county. The assessor testified 

that “[a]fter careful examination” of that sale he chose not to 

use the sales approach in appraising Keswick Club. The assessor 

testified that he did not look outside the county for comparable 

sales, but gave no reason for his failure to do so. The 

assessor also testified that he did not consider the 2002 sale 

of the beneficial ownership of Keswick Club as a comparable sale 

because there was no record of the sale in the county real

estate records and because he did not consider the sale to be an 

arms-length sale on the open market. The assessor’s testimony 

indicated that he had not seen any documents related to the put 

and call agreement governing the sale, that he knew nothing 

about the terms of that agreement, and that he did not make any 

effort to become aware of the terms of the agreement. 
7 

 Both parties presented expert testimony by private 

appraisers and presented as evidence appraisal reports prepared 

by those experts. The taxpayer’s expert, David Sangree, 

testified that he utilized the income approach and the sales 

approach, but not the cost approach, to appraise Keswick Club. 

Sangree testified that he used the income approach despite the 

fact that Keswick Club was losing money based on his projection 

that, due to improved operating performance and capital 

improvements undertaken by the new management, Keswick Club was 

likely to become profitable. Sangree testified that, in 

applying the sales approach, he used the 2002 sale of Keswick 

Club as a comparable sale because “the subject sale is certainly 

the most important sale to consider.” Sangree also used several 

golf courses outside Albemarle County and two out-of-state golf 

courses as comparable sales. Sangree estimated the fair market 

value of Keswick Club at $2,900,000. 

 The county’s expert, Ivo Romanesko, testified that he did 

not use the income approach to appraise Keswick Club because 

projecting future profits would require a great deal of 

speculation given the club’s history of losing money. Instead, 

Romanesko utilized the cost and sales approaches. In using the 

sales approach, Romanesko located comparable sales outside the 

county but did not search for comparable sales occurring outside 
8 

the State. Romanesko did not consider the 2002 sale of Keswick 

Club as a comparable sale because in his opinion the situation 

created by the put and call agreement did not amount to an open 

market sale. Romanesko’s final valuations of Keswick Club using 

the cost and sales approaches were $12,950,000 and $12,000,000, 

respectively. 

 In its closing argument and post-trial brief, the taxpayer 

contended, among other things, that the county erred in basing 

its assessment solely on the cost approach. The taxpayer 

asserted that the cost approach is less reliable for determining 

the fair market value of income producing property than the 

income and sales approaches. Because the county only utilized 

the cost approach in making the assessment, without a credible 

basis for not considering the income or sales method, the 

taxpayer contended that the assessment was not entitled to the 

presumption of validity normally afforded to a taxing 

authority’s assessment. In response, the county generally 

contended that it considered all three valuation approaches in 

making its assessment and that the assessment should be upheld 

as not manifestly erroneous. 

 In a letter opinion, which subsequently was incorporated by 

reference into a final order, the circuit court approved the 

county’s $11,175,700 assessment of Keswick Club. The circuit 
9 

court ruled that, under Tidewater Psychiatric Institute, Inc. v. 

City of Virginia Beach, 256 Va. 136, 501 S.E.2d 761 (1998), a 

taxing authority may use the cost approach as its sole valuation 

method if no reliable data for the income or sales methods is 

available. The circuit court noted the county assessor’s 

testimony that he considered all three valuation approaches 

before determining that the cost approach would be “best” for 

Keswick Club. The circuit court also noted that Romanesko had 

appraised Keswick Club’s fair market value at $12,500,000. 

Accordingly, the circuit court concluded that the taxpayer 

failed to prove that the county committed manifest error in 

assessing Keswick Club’s fair market value and approved the 

county’s $11,175,700 assessment. This appeal followed. 

DISCUSSION 

 The principles that guide our review of a judgment 

upholding a taxing authority’s assessment of the fair market 

value of real estate are well established. The Constitution of 

Virginia requires that real estate be assessed at its fair 

market value. Va. Const. art. X, § 2; see also Code § 58.1-3201 

(requiring taxing authorities to assess real property at onehundred percent fair market value). We have defined the fair 

market value of a property as its sale price when offered for 

sale “by one who desires, but is not obliged, to sell it, and is 
10 

bought by one who is under no necessity of having it.” Tuckahoe 

Woman’s Club v. City of Richmond, 199 Va. 734, 737, 101 S.E.2d 

571, 574 (1958); see also Lake Monticello Service Co. v. Board 

of Supervisors, 237 Va. 434, 438, 377 S.E.2d 446, 448 (1989). 

 A taxpayer seeking relief from an allegedly erroneous 

assessment has the burden to show that the assessment exceeds 

fair market value. Code § 58.1-3984; see Shoosmith Bros. v. 

County of Chesterfield, 268 Va. 241, 245, 601 S.E.2d 641, 643 

(2004); Board of Supervisors of Fairfax County v. HCA Health 

Services, Inc., 260 Va. 317, 329-30, 535 S.E.2d 163, 169-70 

(2000); Tidewater Psychiatric Inst., 256 Va. at 140-41, 501 

S.E.2d at 763. Generally, a taxing authority’s assessment of a 

property’s fair market value is presumed valid and a circuit 

court will reject and correct a taxing authority’s assessment 

only if the taxpayer demonstrates that the taxing authority 

committed manifest error or disregarded controlling evidence in 

making the assessment. See Shoosmith Bros., 268 Va. at 245, 601 

S.E.2d at 643; HCA Health Servs., 260 Va. at 329-30, 535 S.E.2d 

at 169-70; Tidewater Psychiatric Inst., 256 Va. at 140-41, 501 

S.E.2d at 763.

In determining the fair market value of real estate, taxing 

authorities commonly use one or more of three valuation 

approaches: the cost approach, income approach, and sales 
11 

approach. Each of these approaches utilizes different 

characteristics of a property to estimate fair market value, and 

each analyzes different elements of the property which would 

likely affect the price a potential buyer would be willing to 

pay for the property on the open market. Ideally, an appraisal 

should, if possible, derive its final determination of a 

property’s value using all three approaches in order to maximize 

the likelihood that the valuation accurately reflects the 

property’s fair market value. See Arlington County Board v. 

Ginsberg, 228 Va. 633, 641, 325 S.E.2d 348, 353 (1985)(stating 

that “[e]verything which affects market value must be 

considered”); see also Lake Monticello Serv. Co., 237 Va. at 

439, 377 S.E.2d at 449 (fair market value “focuses on those 

elements which influence a buyer and a seller in arriving at a 

sale price”). 

 However, with respect to any given property, a taxing 

authority may determine that the use of one or more of these 

approaches is not feasible. In cases where a taxing authority 

bases an assessment of fair market value solely on one approach 

in determining the fair market value of property, the resulting 

assessment is entitled to the presumption of validity so long as 

the taxing authority “consider[s] and properly reject[s]” the 

other valuation methods. HCA Health Services, 260 Va. at 330-
12 

31, 535 S.E.2d at 170; Tidewater Psychiatric Inst., 256 Va. 140-

41, 501 S.E.2d at 763. In applying the “considers and properly 

rejects” standard to a taxing authority’s decision to apply a 

single approach, we have refused to afford a presumption of 

validity to an assessment when the taxing authority failed to 

make an “effort to acquire the data necessary to perform 

appraisals” based on the other approaches. HCA Health Services, 

260 Va. at 330, 535 S.E.2d at 170. 

 Since the taxpayer challenges the assessment in this case 

based on the county’s choice of the cost approach as the sole 

method used to make the assessment, we must determine whether 

the evidence in this case reflects that the county considered 

and properly rejected the income and sales approaches before 

relying solely on the cost approach. In doing so, we reiterate 

that “courts must be hesitant, within reasonable bounds, to set 

aside the judgment of assessors; otherwise, the courts will 

become boards of assessment thereby arrogating to themselves the 

function of the duly constituted tax authorities.” City of 

Richmond v. Gordon, 224 Va. 103, 110, 294 S.E.2d 846, 850 (1982) 

(internal quotation marks omitted). 

 The assessment of real estate, especially with regard to 

unique properties such as golf courses, is a process upon which 

even experts can disagree, as reflected by the disparity between 
13 

the approaches used and the results reached by the county 

assessor and the experts in this case. Accordingly, in 

determining whether the county considered and properly rejected 

the income and sales approaches in this case, we do not review 

the ultimate conclusions of the professional appraisers 

regarding the utility or non-utility of applying a certain 

approach to valuing Keswick Club’s fair market value over an 

alternate approach. 

 We begin our review of the evidence with the county’s May 

15, 2003 letter to the taxpayer. In that letter, the county, in 

explaining its method for valuing Keswick Club, stated that 

“[w]e have chosen to value area golf clubs using the cost 

approach.” The county further stated that due to the “status of 

golf clubs in the county” it would be difficult to determine 

fair market value using the income approach and that the sales 

approach was not used in valuing Keswick Club due to the lack of 

comparable sales in the county. The county’s statement that it 

had chosen to value all area golf clubs using solely the cost 

approach evidences a categorical determination by the county 

that golf courses as a class of property would not be appraised 

using the income and sales methods. Such a determination 

disregards the fact that golf courses, like other properties, 

are constantly vulnerable to changing market forces that may 
14 

affect fair market value and each is a unique property. For the 

county to apply the cost approach in an arbitrary, categorical 

fashion to all golf courses invokes a serious risk that 

information relevant to the determination of fair market value 

will not be considered.6

 The evidence adduced at trial further suggests that the 

county applied the cost approach to Keswick Club in an automatic 

fashion without sufficiently attempting to gather the data 

necessary to utilize the income approach or sales approach. 

Regarding the income approach, the county assessor’s testimony 

indicates that he rejected the income method because he was not 

provided income statements or other financial information 

concerning Keswick Club. However, the assessor acknowledged in 

his testimony that neither he nor any other county official ever 

requested Keswick Club’s income statements or financial 

information, even though the county was entitled to request this 

 

6

 The county indicated at trial that its reference to the 

“status of golf clubs in the county” in the May 15, 2003 letter 

reflected its belief that, while golf courses in the county 

operated to generate income, no club was operating to maximize 

income, and that the income approach would thus not accurately 

reflect fair market value. However, even if the county’s golf 

courses do not operate in a fashion so as to maximize profit, 

such a fact would not be a reason to reject the income approach 

outright but, rather, would be a factor to consider in 

determining what weight the income approach would have in the 

ultimate assessment of the property’s value with respect to each 

golf course. 
15 

information under Code § 58.1-3294.7 The fact that the county 

did not attempt to obtain the financial information that would 

be crucial to a determination whether the income approach would 

be feasible or appropriate, despite being statutorily empowered 

to do so, further indicates that the county arbitrarily 

determined to use the cost method in appraising Keswick Club 

without properly considering the feasibility of using the income 

approach. 

 Regarding its consideration of the sales approach, the 

county stated that it considered that approach but rejected it 

due to the paucity of comparable sales within the county and its 

decision not to look for comparable sales outside the 

jurisdiction. The county also chose not to consider the 2002 

sale of Keswick Club, which the county concluded was not an 

arms-length transaction. In reviewing whether the county 

considered and properly rejected the sales approach, the 

evidence shows that the county considered only one sale within 

the jurisdiction. The evidence in the record is insufficient 

for us to decide that the county’s decision not to look for 

comparable sales outside of the jurisdiction was error. 

 

7

 Code § 58.1-3294 provides, in relevant part, that “[a]ny 

duly authorized real estate assessor . . . may require that the 

owners of income-producing real estate . . . furnish . . . 
16 

However, the evidence supports the conclusion that the county’s 

refusal to sufficiently investigate, or investigate at all, the 

terms and circumstances of the 2002 sale of Keswick Club amounts 

to a failure by the county to consider and properly reject the 

sales approach. 

 It is well settled that a recent sale of the subject 

property, while not conclusive in determining fair market value, 

is entitled to “substantial weight.” Arlington County Board, 

228 Va. at 640, 325 S.E.2d at 352; Board of Supervisors v. 

Donatelli & Klein, Inc., 228 Va. 620, 628, 325 S.E.2d 342, 345 

(1985); American Viscose Corp. v. City of Roanoke, 205 Va. 192, 

196, 135 S.E.2d 795, 798 (1964). As the county correctly 

contends, a taxing authority may choose not to consider a sale 

of the subject property that is not an arms-length transaction 

made on the open market. See Tidewater Psychiatric Inst., 256 

Va. at 140-41, 501 S.E.2d at 763 (recent sale of subject 

property rejected by taxing authority where sale price was well 

below the recent sale price of comparable properties). 

Nevertheless, given the strong evidence of fair market value 

that a recent sale of the subject property can provide, a taxing 

authority should carefully scrutinize the factual circumstances 

 

statements of the income and expenses attributable over a 

specified period of time to each such parcel of real estate.” 
17 

of such a sale before determining that it does not meet the 

criteria for an arms-length transaction. 

 In this case, the county stated that it did not consider 

the 2002 sale of Keswick Club to be a comparable sale because 

the sale took place under a put and call agreement negotiated 

three years prior to the sale. However, the county assessor 

acknowledged at trial that he knew “nothing” about the terms of 

this agreement or the circumstances pertaining to it. 

Furthermore, the evidence does not reflect that the county made 

any attempt to acquire information relevant to this agreement 

that would have informed its conclusion that the sale was not an 

arms-length transaction. The fact that the sale was of the 

beneficial interest of an entity owning Keswick Club, as opposed 

to the outright sale of the real estate, is not a sufficient 

reason, in and of itself, to fail to investigate the terms of 

that sale. In light of the principle that a recent sale of a 

subject property is to be afforded substantial weight in 

assessing that property’s fair market value, the county’s 

failure even to attempt to familiarize itself with the terms of 

the put and call agreement leads to the conclusion that the 

county did not “consider and properly reject” the sales 

approach. 
18 

 For these reasons, we are of opinion that the county’s 

categorical application of the cost approach to the valuation of 

all golf courses resulted in a failure by the county to consider 

and properly reject the income and sales approaches before 

solely utilizing the cost approach in assessing the fair market 

value of Keswick Club. Here, the county did not attempt to 

obtain the data necessary to perform appraisals based on the 

income and sales approaches. An assessment based on a single 

approach to the determination of market value, where the taxing 

authority failed to consider and properly reject the other 

approaches, is not entitled to a presumption of validity. HCA 

Health Servs., 260 Va. at 329-30, 535 S.E.2d at 169-70. 

Therefore, the taxpayer was required only to show that the 

county’s assessment was erroneous, not that the county committed 

manifest error or disregarded controlling evidence in making its 

assessment. Id. at 330, 535 S.E.2d at 170. 

CONCLUSION 

 The circuit court’s letter opinion reflects that the court 

reviewed the county’s 2003 and 2004 assessments of Keswick Club 

under the standard of review applicable when the assessments are 

entitled to a presumption of validity, requiring the taxpayer to 

prove that the county committed manifest error or disregarded 

controlling evidence. However, since the assessments were not 
19 

entitled to a presumption of validity, the proper standard of 

review was the less stringent standard, requiring the taxpayer 

only to prove that the county’s assessments were erroneous. The 

circuit court erred in reviewing the taxpayer’s application to 

correct the county’s assessments of Keswick Club under the wrong 

standard of review. Accordingly, we will reverse the judgment 

of the circuit court and remand this case so that the circuit 

court can apply the proper and less stringent standard of review 

applicable under the facts of this particular case. 

Reversed and remanded.