Title: City of Richmond v. Jackson Ward Partners, L.P.
Citation: N/A
Docket Number: 110820
State: Virginia
Issuer: Virginia Supreme Court
Date: June 7, 2012

PRESENT: All the Justices 
 
CITY OF RICHMOND  
 
 
 
OPINION BY 
v.  Record No. 110820 
CHIEF JUSTICE CYNTHIA D. KINSER 
 
 
 
June 7, 2012 
JACKSON WARD PARTNERS, L.P. 
 
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 
Melvin R. Hughes, Jr., Judge 
 
The City of Richmond (the City) appeals from a judgment of 
the circuit court correcting erroneous tax assessments on real 
property owned by Jackson Ward Partners, L.P. (JWP).  Because we 
conclude that JWP failed to carry its burden to prove the fair 
market value of the eight parcels of real property at issue, we 
will reverse the judgment of the circuit court. 
FACTS AND PROCEEDINGS 
JWP owns real property, designated as Jackson Ward 
Apartments (the Properties), in the Jackson Ward area of the 
City of Richmond, which it operates as an affordable housing 
development.1  The Properties are considered a "scattered site 
community" and consist of 11 structures with 18 residential 
rental units situated on eight, non-contiguous tax parcels 
located on three different streets, West Clay, West Marshall, 
and North 1st Streets.  The Properties consist of various types 
of dwellings: three parcels contain a single duplex, i.e., one 
                     
1 The Properties were originally purchased by Jackson Ward 
Associates, an affiliated company, and subsequently assigned to 
Jackson Ward Partners, L.P.  In this opinion, these companies 
will be referred to collectively as JWP. 
2 
 
structure with two units, four parcels contain single-family 
homes, and one parcel contains four attached duplexes with a 
total of eight units.  The parcels are zoned R-6, single family 
or duplex,2 and contain both two-bedroom and three-bedroom units. 
In purchasing the eight parcels, JWP agreed to renovate the 
structures and operate the Properties as affordable rental 
housing.  The required renovations were financed through 
Virginia Housing & Development Authority (VHDA) loans, the terms 
of which were pre-negotiated by the Richmond Redevelopment & 
Housing Authority (RRHA) and United States Department of Housing 
and Urban Development (HUD) through the Properties' 
participation in HUD's Section 8 affordable housing program. 
The eight, non-contiguous tax parcels are subject to a deed 
of trust and a regulatory agreement with VHDA.  Under that 
agreement, the parcels are required to be operated as an 18-
unit, affordable, multifamily rental housing development for a 
40-year period.3  The VHDA treats the Properties as comparable to 
an 18-unit apartment complex.  The regulatory agreement 
prohibits the sale of individual structures or parcels and 
requires that the units be rented to persons whose income is 40% 
                     
2 See Richmond City Code § 114-412.1. 
3 In addition, a regulatory agreement restricting the 
property for a 30-year period was required for participation in 
the low income housing tax credit program.  VHDA administers the 
low income housing tax credit. 
3 
 
or less than the area median income.4  Pursuant to the various 
agreements, HUD dictates the rental rates on the Properties and 
conducts periodic inspections to ensure compliance with certain 
regulatory requirements. 
Pursuant to Code § 58.1-3984, JWP filed a second amended 
complaint in the circuit court for correction of erroneous tax 
assessments on the Properties for the tax years 2005-2008.  In 
its complaint, JWP claimed the assessments were "clearly 
erroneous and in excess of fair market value in violation of the 
Constitution of Virginia, Article X, § 2," and "lacked 
uniformity . . . with respect to the same class of subjects 
within the City in violation of the Constitution of Virginia, 
Article X, § 1." 
At a five-day bench trial, Eugene Joseph, a licensed 
commercial real estate appraiser, testified for JWP regarding 
his appraisal of the Properties for the tax years in question.  
Joseph stated that the "cornerstone of any appraisal" is 
determining the highest and best use.  He explained the "four 
general areas of the highest and best use": what is "legally 
permissible, . . . physically possible, financially feasible, 
and . . . maximally productive."  Because the eight parcels were 
"restricted by an extended use regulatory agreement" and could 
                     
4 By receiving the low income housing tax credit, JWP must 
rent the units to individuals whose income is 50% or less than 
the area median income. 
4 
 
not "be sold off as a single family [home] or duplex," Joseph 
opined that the only legally permissible use, and thus the 
highest and best use, was a multifamily, 18-unit parcel.  
According to Joseph, he had "to value the property as what it 
truly is and that is a scattered site single, multifamily 
property per what's legally permissible." 
To determine fair market value, Joseph considered the cost, 
sales comparison, and income approaches to valuing the 
Properties.  Joseph deemed the income approach to be the primary 
indicator of value but used the sales comparison approach for 
"some additional support."  According to Joseph, the income 
approach is more reliable because "typical buyers and investors 
consider the income potential of a property."  In applying the 
income approach, Joseph considered the contract rents set by 
HUD, the typical vacancy and collection losses, typical 
operating costs for such a property, and the historical 
operating expenses of the Properties to arrive at the net 
operating income.  Joseph then determined a capitalization rate, 
primarily by "extract[ing] capitalization rates from . . . other 
sales," and capitalized the net operating income to arrive at 
his value estimate.5  Under the sales comparison approach, Joseph 
                     
5 Because the real estate taxes were in dispute, Joseph 
excluded them from the operating expenses in determining net 
operating income and compensated for the real estate taxes by 
adjusting the capitalization rate. 
5 
 
compared the sale of similar properties, which in this case 
meant multifamily apartment complexes.  Joseph then made "lump 
sum adjustment[s] to account for" the rent restrictions, again 
because "the property is encumbered and you have to account for 
that." 
Using these methods, Joseph determined that the fair market 
value of the Properties as a whole was $600,000 for each of the 
tax years 2005-2008.  Joseph opined that "the overall value of 
$600,000 should be allocated on a per unit basis to reflect the 
individual tax parcels as identified by the City."  According to 
Joseph, "you can simply allocate on a per unit basis to the 
various parcels and to the various units."  By allocating the 
$600,000 value equally on a per unit basis to the 18 units, 
Joseph determined the fair market value of each unit to be 
$33,333.  Joseph then determined the fair market value of each 
tax parcel based on the number of units located on the parcel. 
On cross-examination, Joseph conceded that the parcels 
could be assessed individually, though only as a "fractional 
appraisal" because the highest and best use of the Properties 
was as one multifamily housing development.  According to 
Joseph, "you have to value the property as one" because of the 
restrictions contained in the regulatory agreement.  He further 
admitted that his appraisal was not a fee simple valuation for 
the same reason.  When asked if his allocation method "was 
6 
 
simply a mathematical calculation," Joseph indicated that it was 
and opined that the method was "a valid technique." 
Several witnesses who testified for JWP stated that the 
Properties operate at a loss due, in large part, to the City's 
tax assessments.  According to those witnesses, the Properties 
could neither generate sufficient income to justify the assessed 
value nor be sold at the assessed value.  
Richard Woodson, the Deputy Assessor for the City and also 
a licensed real estate appraiser, testified regarding the City's 
assessment of the Properties for tax years 2005-2008.  In 
contrast to Joseph, Woodson stated that the "true test of 
highest and best use" is "[w]hat use produces the highest 
value."  Woodson explained that in the Jackson Ward area of the 
City, the trend is for "rooming houses" to be converted back to 
single family dwellings.  That factor, along with the applicable 
zoning and the type of construction on each parcel led Woodson 
to conclude that the highest and best use of the Properties is 
as single-family homes and duplexes.  Woodson did not consider 
the Properties to be a scattered site apartment complex because 
he was required to assess the "fee simple interest [de]void of 
any encumbrances."  Woodson stated the City's assessment method 
was not restricted by the deed of trust or the regulatory 
agreement's treatment of the Properties as a multifamily housing 
development and, with one exception, he did not consider the 
7 
 
restrictions imposed by the regulatory agreement in arriving at 
the assessed value of the eight parcels.6  Doing so, he opined, 
would mean assessing a leasehold interest rather than a fee 
simple interest. 
Woodson believed the City was required to assess each 
parcel individually: "Each parcel gets a separate tax bill, so 
it has to have a separate assessment."  He pointed out that the 
RRHA has numerous single-family dwellings scattered throughout 
the City that have similar rent restrictions.  Nevertheless, the 
City assesses each parcel individually under a fee simple 
valuation.  Woodson opined that other than the fact that the 
parcels are owned by one entity and are rented as a package, 
they do not resemble an apartment complex. 
To determine the fair market value of each of the eight tax 
parcels, Woodson considered the income, cost, and sales 
comparison approaches.  Unlike Joseph, Woodson utilized the 
sales comparison approach because it provided "[t]he most 
                     
6 As of the 2007 tax year, to determine fair market value, a 
taxing authority had to consider restrictions on rent and 
alienation of title, and the actual operating expenses for real 
property "containing more than four residential units operated 
in whole or in part as affordable rental housing."  Former Code 
§ 58.1-3295 (as in effect prior to amendments by 2009 Acts ch. 
264, 2010 Acts chs. 552, 791, 824, and 2011 Acts ch. 137).  
Woodson applied that statute only to the parcel on Clay Street, 
with four attached duplexes, for tax years 2007 and 2008.  Under 
the statute, Woodson accounted for the "below market rents and 
higher than normal expenses" by applying a "lower gross rent 
multiplier." 
8 
 
readily identifiable and trackable information for single family 
and duplex houses" that was "readily available" to the City.  To 
apply the sales comparison approach, Woodson used properties 
"most similar in size, location, condition, quality, land sizes, 
et cetera."  As Woodson noted, the structures on the parcels 
have unique "individual characteristics" with respect to 
setbacks, entries, porches, and square footage.  The City 
assessed the eight tax parcels at the following fair market 
values for the years in question: 
 Address 
2005 
2006 
2007 
2008 
509 N. 1st St. 
$150,000 
$150,500 
$162,000 
$186,000 
511 N. 1st St. 
$150,000 
$133,000 
$155,000 
$171,000 
517 N. 1st St. 
$185,000 
$185,000 
$190,000 
$200,000 
519 N. 1st St. 
$169,000 
$153,000 
$163,000 
$174,000 
521 N. 1st St. 
$155,000 
$182,000 
$215,000 
$220,000 
315-321 W. Clay St. $565,000 
$725,000 
$605,000 
$605,000 
409 W. Marshall St. $165,000 
$185,000 
$225,000 
$225,000 
411 W. Marshall St. $155,000 
$194,000 
$215,000 
$235,000 
TOTAL VALUES 
$1,694,000 $1,907,500 $1,930,000 $2,016,000 
 
Woodson criticized Joseph's assessment as not valuing the 
fee simple interest but instead the leased fee, an "entirely 
different subject[]."  In addition, Woodson believed the 
properties used by Joseph as comparable properties were 
completely different types of property.  Joseph, Woodson stated, 
should have assessed each parcel individually and his assessment 
was "nothing more than an appraisal for investment value in a 
leasehold context." 
9 
 
Following the close of evidence, JWP asked the circuit 
court to correct the City's assessments on the eight tax 
parcels.  According to JWP, the City, in assessing the 
Properties, ignored their highest and best use as an 18-unit, 
multifamily housing development.  Because the regulatory 
restrictions required that the Properties be operated as an 
affordable housing development, JWP argued, the City committed 
manifest error by basing its assessment on a false premise: that 
the units were single-family homes and duplexes.  While JWP 
conceded that the Properties consisted of distinct tax parcels 
and that "the law require[d] that all property be taxed," it 
argued there was no requirement for an "individual appraisal on 
each parcel." 
Responding, the City argued that it was not a party to the 
restrictions placed on the Properties and the restrictions, 
therefore, could not alter its assessment obligations.  The City 
argued that "the biggest flaw" in JWP's appraisal was the 
determination of highest and best use, which ignored the 
Properties' R-6 zoning and the fact that there are eight, non-
contiguous tax parcels.  The City also claimed that by 
appraising all the parcels as a whole and then allocating that 
value to each of the individual parcels with a "mathematical 
calculation," JWP ignored this Court's holding in West Creek 
Associates, LLC v. County of Goochland, 276 Va. 393, 665 S.E.2d 
10 
 
834 (2008), that each parcel must be assessed individually.  In 
addition, the City noted that JWP’s appraisal failed to account 
for differences in size, location, age, and features of the 
individual structures, as well as the fact that some units had 
recently been renovated. 
The circuit court held that JWP satisfied its burden of 
proving the City's assessments for years 2005-2008 were 
erroneous and ordered the City to correct its assessments and 
issue refunds to JWP for taxes it overpaid based on the 
erroneous assessment, plus interest.  The circuit court agreed 
with JWP that consideration of the Properties' highest and best 
use compelled consideration of the applicable regulatory 
restrictions.  Invoking the definition of fair market value as 
"[w]hat a willing buyer while under no compulsion to buy" will 
pay, the court held that the "deed restrictions have to come 
into play."  Because the City's assessments failed to consider 
the restrictions on the Properties, the court concluded that JWP 
had carried its burden to show by a clear preponderance of the 
evidence that the City committed manifest error in its 
assessments of the eight tax parcels.  The City, according to 
the court, did not "take into account the reality of the 
situation." 
The circuit court stated: 
11 
 
[Valuing the property as an apartment 
complex is] the best way to approach it given the 
deed restrictions and the regulatory agreement.  
It has to be.  It just defies reality . . . that 
any purchaser approaching a seller of these 
properties wouldn't have to take these things 
into account, and the fee simple analysis is just 
not appropriate.  
 
In addition, the court opined that "the income approach as urged 
by [JWP] is the correct and more readily available vehicle for 
determining . . . the fair market value."  The circuit court 
thus concluded that the City’s tax assessments should be 
"adjusted according to [JWP's] evidence and the refunds 
allowed." 
The circuit court denied the City's motion to reconsider, 
and this appeal followed. 
ANALYSIS 
We granted the City an appeal on the following assignments 
of error: 
1. 
The Circuit Court of the City of Richmond 
erred in ruling that eight non-contiguous 
tax parcels should be valued as one 
apartment complex. 
2. 
The Circuit Court of the City of Richmond 
erred by accepting Plaintiff's values, which 
were determined in bulk. 
3. 
The Circuit Court of the City of Richmond 
erred by ruling that the City's values had 
to be determined under the income approach 
to valuation at less than fee simple 
interest. 
4. 
The Circuit Court of the City of Richmond 
erred by determining that Plaintiff overcame 
12 
 
the presumption of correctness under 
Virginia Code § 58.1-3984. 
With regard to these issues, the parties make essentially the 
same arguments on appeal as they did before the circuit court.  
If the City is correct on any one of the issues raised in the 
assignments of error, the circuit court's judgment must be 
reversed. 
The question presented by the first two assignments of 
error is dispositive of the appeal, i.e., whether the circuit 
court erred as a matter of law by holding, based on JWP's 
appraisal of the Properties, that eight separate, non-contiguous 
parcels of real property can be appraised as one parcel and that 
the appraised value could then be allocated among the individual 
parcels based solely on the number of rental units situated on 
each parcel.  This question is a mixed question of law and fact, 
and we thus conduct a de novo review.  See Ford Motor Credit Co. 
v. Chesterfield Cnty., 281 Va. 321, 334, 707 S.E.2d 311, 317 
(2011). 
The Constitution of Virginia, with certain exceptions not 
relevant here, requires that all property be taxed, and that all 
taxes "shall be uniform upon the same class of subjects within 
the territorial limits of the authority levying the tax."  Va. 
Const. art. X, § 1.  In addition, all assessments of real 
property "shall be at their fair market value."  Va. Const. art. 
13 
 
X, § 2.  A taxing authority's assessment is presumed to be 
correct, and a taxing authority need not "prov[e] the 
correctness of its assessment."  TB Venture, LLC v. Arlington 
Cnty., 280 Va. 558, 563, 701 S.E.2d 791, 794 (2010).  The lack 
of such evidence " 'does not impeach [the correctness of an 
assessment] since the taxpayer has the burden of proving the 
assessment erroneous.' "  Id. (quoting West Creek, 276 Va. at 
409, 665 S.E.2d at 843). 
A taxpayer challenging an assessment must show, "by a clear 
preponderance of the evidence," that the taxing authority 
"totally disregarded controlling evidence in making the 
assessment" or "committed manifest error."  TB Venture, 280 Va. 
at 563, 701 S.E.2d at 794 (internal quotation marks omitted).  
To establish manifest error in the assessment, the taxpayer must 
prove  
that the taxing authority employed an improper 
methodology in arriving at a property's assessed 
value or by establishing "a significant disparity 
between fair market value and assessed value 
. . . so long as the assessment [does not come] 
within the range of a reasonable difference of 
opinion, . . . when considered in light of the 
presumption in its favor." 
 
Id. (quoting West Creek, 276 Va. at 414, 665 S.E.2d at 845) 
(alterations in original) (internal quotation marks omitted). 
Regardless of the manner in which a taxpayer attempts to 
establish manifest error,  
14 
 
to satisfy the statutory requirement of showing 
that real property is assessed at more than its 
fair market value, a taxpayer must necessarily 
establish the property's fair market value.  This 
is so irrespective of whether a taxpayer is 
attempting to show manifest error or disregard of 
controlling evidence by proving a significant 
disparity between fair market value and assessed 
value, or by establishing a flawed methodology by 
the taxing authority in setting the assessed 
value. 
 
West Creek, 276 Va. at 417, 665 S.E.2d at 847 (citation omitted) 
(emphasis added). 
"[F]air market value 'is the present actual value of the 
land with all its adaptations to general and special uses, and 
not its prospective, speculative or possible value, based on 
future expenditures and improvements.'"  Id. at 416, 665 S.E.2d 
at 846 (quoting Fruit Growers Express Co. v. City of Alexandria, 
216 Va. 602, 609, 221 S.E.2d 157, 162 (1976)); see also Keswick 
Club, L.P. v. County of Albemarle, 273 Va. 128, 136, 639 S.E.2d 
243, 247 (2007) (fair market value of real property is the "sale 
price when offered for sale by one who desires, but is not 
obliged, to sell it, and is bought by one who is under no 
necessity of having it") (internal quotation marks omitted). 
There are many factors to be considered in 
arriving at the fair market value of property.  
While size and cost of the property may be 
factors to be given weight, there are many other 
factors which tend to increase or diminish such 
value; for instance, the design, style, location, 
appearance, availability of use, and the economic 
situation prevailing in its area, as well as 
other circumstances. 
15 
 
 
Smith v. City of Covington, 205 Va. 104, 108-09, 135 S.E.2d 220, 
223 (1964). 
In West Creek, 144 separate limited liability companies 
(collectively, West Creek) challenged the tax assessments of 144 
parcels of real property comprising a total of 2,500 acres, a 
portion of which had been deeded to each company.  276 Va. at 
397-98, 665 S.E.2d at 836.  Citing the lack of metes and bounds 
descriptions of the parcels, an approved subdivision, and 
infrastructure on many of the parcels, West Creek's expert real 
estate appraiser valued the parcels "as a whole" and then 
"assigned a per acre value . . . based on the availability of 
infrastructure."  Id. at 401, 665 S.E.2d at 838.  On appeal, one 
of the issues was whether the trial court erred in concluding 
that the taxpayer had failed to establish the fair market value 
of certain parcels of real estate because the taxpayer "had done 
nothing more than spread the value of the development across the 
individual parcels."  Id. at 414, 665 S.E.2d at 845 (internal 
quotation marks omitted). 
This Court affirmed the trial court's judgment "that West 
Creek failed to present credible evidence of the parcels' fair 
market values."  Id. at 416-17, 665 S.E.2d at 847.  We held that 
"[i]n order to satisfy the statutory requirement of showing that 
real property is assessed at more than its fair market value, 
16 
 
see Code § 58.1-3984(A), a taxpayer must necessarily establish 
the property's fair market value."  Id. at 417, 665 S.E.2d at 
847.  Citing Code § 58.1-3290, we pointed out that even West 
Creek agreed the County was required to assess the 144 parcels 
individually.  Id. at 414, 665 S.E.2d at 846. 
In relevant part, Code § 58.1-3290 provides 
that, "[w]hen a tract or lot becomes the property 
of different owners in two or more parcels, 
subsequent to any general reassessment of real 
estate in the city or county in which such tract 
or lot is situated each of the two or more 
parcels shall be assessed and shown separately 
upon the land books, as required by law."  
Although the assessments at issue in this appeal 
were part of the County's quadrennial 
reassessment, other statutes also require the 
parcels to be assessed individually.  See, e.g., 
Code § 58.1-3281 (commissioner of revenue shall 
annually, on January 1, "ascertain all the real 
estate in his county or city, . . . and the 
person to whom the same is chargeable with taxes 
on that day"); Code § 58.1-3303 (requiring clerk 
of each circuit court to provide commissioner of 
revenue with deed recordation receipt showing, 
among other things, description of real property 
conveyed and names of grantor and grantee); Code 
§ 58.1-3309 (requiring information appearing in 
receipts provided pursuant to Code § 58.1-3303 to 
be transferred "on the land book and charged to 
the person to whom the transfer is made"). 
 
Id. at 414 n.8, 665 S.E.2d at 846 n.8 (emphasis added). 
In response to West Creek's argument that the trial court 
had failed "to consider the recent purchase price for the 
amassed parcels as evidence of [their] fair market value," we 
held that West Creek was required to establish the fair market 
value of each parcel, regardless of any error on the part of the 
17 
 
taxing authority.  Id. at 415-17, 665 S.E.2d at 846-47.  
Continuing, we explained that West Creek's expert appraiser had 
"accepted the sale price of the 2,500 acres as controlling and 
assigned portions of the price as the per acre value for parcels 
depending on the developmental phase in which the parcels were 
located."  Id. at 417, 665 S.E.2d at 847.  We noted that the 
appraiser's methodology was "'an arithmetic formula,' which is 
not an accepted appraisal method."  Id.  Thus, we concluded that 
"West Creek's evidence did not rebut the presumption of 
correctness afforded the assessments."  Id. at 417-18, 665 
S.E.2d at 847. 
This Court's decision in TB Venture is even more 
compelling.  There, TB Venture, LLC (TB Venture) alone owned a 
condominium development containing 21 units that were subject to 
an agreement requiring the units "to be rented to qualifying, 
low-income households for a period of 40 years and specif[ying] 
limitations on rental amounts and occupancy."  280 Va. at 560-
61, 701 S.E.2d at 792.  TB Venture challenged the taxing 
authority's tax assessments on the condominium units and at 
trial presented testimony from an expert qualified in real 
estate appraisal.  Id. at 561, 701 S.E.2d at 793.  Valuing the 
units on a "'leased fee' rather than a fee simple basis" to 
account for the 40-year rental restrictions encumbering the 
units, the expert admitted that he appraised " 'all 21 units as 
18 
 
a whole' " and "then allocated a value to each unit 'based on 
the pro rata share of the income of each of the units derived by 
the overall income.' "  Id. at 561-62, 701 S.E.2d at 793.  Like 
JWP's appraiser, Joseph, TB Venture's expert appraiser testified 
that "he did not determine the fair market value of each unit 
because 'the units [could not] be sold individually as 
condominiums' but are 'basically tied together through this 
covenant.' "  Id. at 562, 701 S.E.2d at 793 (alteration in 
original). 
The trial court sustained the taxing authority's motion to 
strike TB Venture's evidence.  Id. at 562, 701 S.E.2d at 793. In 
part, the court concluded that TB Venture had " 'failed to prove 
the value of the subject properties.' "  Id.  On appeal, we 
affirmed the trial court's judgment.  Id. at 565, 701 S.E.2d at 
795.  Noting that "the taxpayer's burden to prove that real 
property is assessed at more than its fair market value 
necessarily requires that the taxpayer establish the property's 
fair market value," we held that TB Venture did not carry its 
"burden to establish each unit's fair market value."  Id. at 
564-65, 701 S.E.2d at 794-95. 
We explained that "just as the [taxing authority] was 
required to separately assess each unit, TB Venture was required 
to establish the fair market value of each unit."  Id. at 564, 
701 S.E.2d 795.  According to Code § 55-79.42, "each condominium 
19 
 
unit constitutes for all purposes a separate parcel of real 
estate" and, "[i]f there is any unit owner other than the 
declarant, each unit, together with its common element interest 
. . . shall be separately assessed and taxed."7  See also West 
Creek, 276 Va. at 414 n.8, 665 S.E.2d at 846 n.8 (listing 
statutes that require parcels of real property to be assessed 
individually). 
Addressing TB Venture's argument that "each unit's location 
in the complex, its amenities, and even its view [were] 
irrelevant because of the restrictions" applicable to all the 
units, the Court stated:  
To the extent there are market-driven 
impediments to selling the units individually and 
limitations on the rental income that can be 
realized, such factors may affect each unit's 
fair market value.  But, they do not alter the 
statutory requirement that condominiums be 
treated as separate parcels of real estate and 
separately assessed.  Nor do such factors alter 
TB Venture's burden to establish each unit's fair 
market value in order to show that its real 
property is assessed at more than fair market 
value. 
 
Id. at 565, 701 S.E.2d at 795 (citations omitted) (emphasis 
added). 
The statutes at issue in TB Venture and West Creek 
requiring individual assessments of the real properties at issue 
in those cases are not unique in the realm of real property 
                     
7 TB Venture was not the "declarant."  Id. at 564, 701 
S.E.2d at 794. 
20 
 
assessments by taxing authorities.  Instead, both statutes, Code 
§§ 55-79.42 and 58.1-3290, respectively, merely apply to unique 
circumstances the general rule that each tax parcel must be 
assessed individually.  Regarding Code § 55-79.42, at issue in 
TB Venture, it is essential to note that "condominiums are 
creatures of statute wholly unknown at common law."  Orchard 
Glen East, Inc. v. Board of Supervisors, 254 Va. 307, 311, 492 
S.E.2d 150, 153 (1997).  Thus, being a creature of statute, the 
General Assembly had to direct the treatment of condominium 
units for purposes of assessment by taxing authorities.  It did 
so by requiring taxing authorities to assess each condominium 
unit as a separate tax parcel, like all other parcels of real 
property. 
The same can be said of time-shares and cooperatives.  
Because both are creatures of statute, Code § 55-363 directs how 
to treat time-share estates for purposes of tax assessment, and 
Code § 55-428 does the same for cooperative interests.  
Specifically, Code § 55-363(B) states that "[e]ach time-share 
estate constitutes for purposes of title a separate estate or 
interest in a unit," and subsection C requires that each time-
share unit be taxed as if it were owned by a single taxpayer.  
Code § 55-363(C).  Similarly, Code § 55-428(A) states that a 
cooperative interest "is real estate for all purposes" and 
subsection C commands that in certain instances, "[t]he fair 
21 
 
market value of each such cooperative apartment unit shall be 
established by determining its fair market value for sale as an 
individual unit, determined in the same manner . . . as the fair 
market value of condominium units." 
The statute at issue in West Creek states that  
[w]hen a tract or lot becomes the property of 
different owners in two or more parcels, 
subsequent to any general reassessment of real 
estate in the city or county in which such tract 
or lot is situated each of the two or more 
parcels shall be assessed and shown separately 
upon the land books, as required by law. 
 
Code § 58.1-3290.  Similarly, Code § 58.1-3285 provides: 
Whenever a tract of land is subdivided into 
lots under the provisions of law and plats 
thereof are recorded, subsequent to any general 
reassessment of real estate in the city or county 
in which such real estate is situated, each lot 
in such subdivision shall be assessed and shown 
separately upon the land books, as required by 
law. 
 
Rather than imposing a unique requirement for the assessment of 
a tract of real property that has been subdivided or has become 
the "property of different owners in two or more parcels," these 
statutes simply require that such real property be assessed like 
all other tracts of real property, as individual parcels. 
As we noted in West Creek, numerous statutes require that 
separate parcels of real property be assessed on an individual 
basis.  Code § 58.1-3281 requires the commissioner of the 
revenue to annually "ascertain all the real estate in his county 
22 
 
or city, . . . and the person to whom the same is chargeable 
with taxes."  In addition, the commissioner "shall assess the 
value of any building and enclosure not previously assessed" and 
the "value shall be added to the value at which the land was 
previously charged."  Id.  Under Code § 58.1-3302, the 
commissioner of the revenue is required to "enter separately" in 
the table of town or city lots "each lot and [to] set forth 
. . . the value of the buildings on the lot [and] the value of 
the lot including buildings."  Code § 58.1-3303 requires the 
clerk of each circuit court to provide the commissioner of the 
revenue with a deed recordation receipt for "all deeds for the 
partition and conveyance of land" that states, among other 
things, a description of the real property conveyed and the 
names of the grantor and grantee.  Furthermore, the Attorney 
General expressed the opinion that certain statutes, Code §§ 58-
772, -772.1, -773 and -805 (now Code §§ 58.1-3285, -3290, -
3302), "provide a general legislative mandate that separate 
parcels of real property shall be separately assessed."  1974-
1975 Op. Atty. Gen. 89. 
Despite opining that the highest and best use of the eight 
tax parcels is a single apartment complex, Joseph, as JWP's 
appraiser, nonetheless recognized that he had to establish the 
fair market value of each parcel when he allocated a numerical 
value to each of the eight parcels.  But, the methodology used  
23 
 
by Joseph to value each tax parcel, which was in turn sanctioned 
by the circuit court, is the same methodology this Court 
rejected in TB Venture.  Joseph opined that the fair market 
value of the eight parcels was $600,000 for each of the tax 
years in question.  When asked how that value translated to the 
eight tax parcels, he responded that "you can simply allocate on 
a per unit basis to the various parcels and to the various 
units."  During cross-examination, Joseph admitted that he took 
the $600,000 value and performed a "mathematical calculation" to 
arrive at the fair market value of each parcel.  He also 
admitted that he appraised the eight parcels as a single 
apartment complex only because of the applicable restrictions 
contained in the regulatory agreement. 
Admittedly, TB Venture involved condominium units, not 
parcels of real property.  But, as we have already explained, 
Code § 55-79.42 requires each condominium unit to be assessed as 
a separate parcel of real estate, just like all other individual 
parcels of real property.  TB Venture's expert appraiser, like 
Joseph, valued numerous condominium units in bulk and placed a 
single value on all the units.  He then assigned a fair market 
value to each unit by performing a mathematical calculation.  TB 
Venture, 280 Va. at 561-62, 701 S.E.2d at 793.  We affirmed the 
trial court's judgment granting the taxing authority's motion to 
strike TB Venture's evidence on the basis that, as a matter of 
24 
 
law, TB Venture failed to carry its burden of establishing the 
fair market value of each unit.8  TB Venture, 280 Va. at 564-65, 
701 S.E.2d at 794-95.  Interestingly, the same methodology was 
also employed and rejected in West Creek, 276 Va. at 401-02, 
417-18, 665 S.E.2d at 838-39, 847-48.  In other words, TB 
Venture and West Creek are dispositive of the case before the 
Court. 
As we explained in City of Covington, fair market value 
includes considerations of a parcel's unique characteristics 
such as "size and cost[,] design, style, location, [and] 
appearance."  City of Covington, 205 Va. at 108-09, 135 S.E.2d 
at 223.  A value that has been mathematically assigned to 
individual tax parcels from a bulk appraisal of multiple parcels 
considers none of these factors.  As the City correctly argued 
to the circuit court, JWP's appraisal failed to account for 
differences in the eight parcels with respect to size, location, 
style, unique features like porches, and the fact that certain 
units had received recent renovations.  According to Woodson, 
one of the parcels has "the original [wrought] iron porch 
columns and filigree."  Thus, like TB Venture, JWP failed as a 
matter of law to carry its burden to establish the fair market 
                     
8 If TB Venture's methodology of valuing the condominium 
units had been an issue for the fact-finder, it would have been 
error for the trial court to strike TB Venture's evidence. 
25 
 
value of the eight tax parcels.  See West Creek, 276 Va. at 417, 
665 S.E.2d at 847. 
The circuit court's decision implies that a taxpayer's 
burden of proving the fair market value of each tax parcel is 
somehow vitiated by the requirement to assess real property 
according to its highest and best use.  See Shoosmith Bros., 
Inc. v. County of Chesterfield, 268 Va. 241, 246, 601 S.E.2d 
641, 644 (2004) ("[I]n assessing all tangible properties for tax 
purposes such properties should be assessed at their highest and 
best use.") (internal quotation marks omitted).  Because the 
Properties are subject to certain regulatory restrictions, the 
circuit court held, the highest and best use is a single 
apartment complex.  But, the principle that real property be 
assessed at its highest and best use does not mean real property 
should be assessed as something other than what it actually is.  
In this case, there is no dispute that the real property at 
issue is eight separate, non-contiguous parcels.  Appraising the 
Properties according to their highest and best use does not 
justify treating the Properties as if they were not eight 
individual parcels. 
Our decision in TB Venture makes clear that assessing 
according to a property's highest and best use is compatible 
with assessing each individual parcel even when there are 
restrictions on the property.  There, the taxpayer justified its 
26 
 
bulk assessment because the condominium units at issue could not 
be sold individually.  280 Va. at 561-62, 701 S.E.2d at 793.  We 
held that this restriction did not alter either the requirement 
that the units be assessed individually or the taxpayer's burden 
to establish fair market value.  Id. at 565, 701 S.E.2d at 795.  
Such "market-driven impediments to selling the units 
individually and limitations on the rental income that can be 
realized" could, however, "affect each unit's fair market 
value."  Id.  The same applies here.  The particular 
restrictions that apply to the Properties undoubtedly affect the 
fair market value of each of the eight parcels, but they do not 
obviate JWP's burden to prove the fair market value of each 
parcel.  See West Creek, 276 Va. at 417, 665 S.E.2d at 847 ("to 
satisfy the statutory requirement of showing that real property 
is assessed at more than its fair market value, a taxpayer must 
necessary establish the property's fair market value").  That 
burden also is not affected by the circuit court's finding that 
the City committed manifest error in its assessments of the 
eight parcels.  See TB Venture, 280 Va. at 563, 701 S.E.2d at 
794 (because the taxpayer has the burden of proving a tax 
assessment erroneous, the taxing authority's failure to prove 
the correctness of its assessment does not impeach that 
assessment). 
CONCLUSION 
27 
 
In sum, "to satisfy the statutory requirement of showing 
that real property is assessed at more than its fair market 
value, a taxpayer must necessarily establish the property's fair 
market value."  West Creek, 276 Va. at 417, 665 S.E.2d at 847 
(citation omitted).  By appraising the eight separate, non-
contiguous parcels of real property in bulk as a single 
apartment complex, i.e., as one tax parcel, and then assigning a 
value to each constituent tax parcel based on a mathematical 
calculation, JWP failed as a matter of law to carry its burden 
of proving the fair market value of each parcel. 
For these reasons, we will reverse the judgment of the 
circuit court and remand for entry of an order reinstating the 
City's tax assessments on the eight parcels for the tax years in 
question. 
Reversed and remanded. 
 
JUSTICE McCLANAHAN, with whom JUSTICE POWELL joins, dissenting. 
 
I disagree that either TB Venture, LLC v. Arlington Cnty., 
280 Va. 558, 701 S.E.2d 791 (2010) or West Creek Associates, LLC 
v. County of Goochland, 276 Va. 393, 665 S.E.2d 834 (2008) is 
dispositive of this case.  Applying an overly simplistic 
analysis, the majority has isolated one aspect of the holdings 
in TB Venture and West Creek to formulate its own policy of 
28 
 
appraisal methodology in Virginia.1  Furthermore, the majority 
has summarily judged the highest and best use of the parcels 
comprising Jackson Ward Apartments – a determination which 
necessarily drives methodology, but which neither TB Venture nor 
West Creek address.  In short, the majority has placed its 
judicially created policy of appraisal methodology above the 
constitutional mandate requiring assessment of property at fair 
market value, and appointed itself both finder of fact and 
expert to justify its reversal of the circuit court's judgment. 
The circuit court properly recognized that the 
determination of fair market value, not methodology, was the 
controlling issue for its consideration.  As the circuit court 
stated, "[u]nder the constitution, we have to approach these 
assessments with the aim of determining what the fair market 
value is.  We know from the experts that we have to determine 
what the highest and best use is."  See Va. Const. art. X, § 2 
(All assessments of real estate and tangible personal property 
"shall be at their fair market value."); Code § 58.1-3201; 
                     
 
1 The majority concludes that "[b]y appraising the eight 
separate, non-contiguous parcels of real property in bulk as a 
single apartment complex, i.e., as one tax parcel, and then 
assigning a value to each constituent tax parcel based on a 
mathematical calculation, JWP failed as a matter of law to carry 
its burden of proving the fair market value of each parcel."  
Although it is not entirely clear what component of Joseph's 
appraisal the majority rejects, or whether the majority rejects 
his appraisal in its entirety, what is clear is that the 
majority deems the appraisal improper as a matter of law.  
29 
 
Shoosmith Bros. v. County of Chesterfield, 268 Va. 241, 246, 601 
S.E.2d 641, 644 (2004) (in assessing fair market value, property 
should be valued at its highest and best use).  Thus, as the 
circuit court correctly noted, determining the fair market value 
of the property is the overriding objective.  The method by 
which the value is determined is dependent on the highest and 
best use of the property to be valued.  "The Constitution does 
not prescribe that the valuation of all property for taxation 
shall be ascertained in the same way or manner.  It is not even 
implied.  In the nature of things, it could not be done.  The 
many kinds or species of property with their diverse 
characteristics render it impossible."  R. Cross, Inc. v. City 
of Newport News, 217 Va. 202, 206-07, 228 S.E.2d 113, 116 (1976) 
(internal quotation marks omitted).2 
Joseph, a commercial real estate appraiser specializing in 
multifamily VDHA and low income tax properties, testified in 
detail as to how he determined the fair market value of each tax 
                     
2 The majority discusses at length two basic principles – 
that each tax parcel must be individually assessed by the taxing 
authority and that the taxpayer must establish the fair market 
value of the property.  See, e.g., West Creek, 276 Va. at 414-15 
& n.8, 665 S.E.2d at 846 & n.8 (discussing requirement that tax 
parcels be "assessed individually"); TB Venture, 280 Va. at 563-
64, 701 S.E.2d at 794 (discussing requirement that taxpayer 
establish the property's fair market value).  But these 
principles are not disputed by JWP and the application of these 
principles does not compel reversal of the circuit court's 
judgment since Joseph did value each tax parcel.  The majority 
simply rejects his values as a matter of law. 
30 
 
parcel.  His values were based on his appraisal of the parcels 
comprising Jackson Ward Apartments according to their highest 
and best use as part of a single multifamily apartment 
community.  Joseph explained that under the Uniform Standards of 
Appraisal Practice, he must consider the eight tax parcels as 
one property from a legally permissible point of view, and that 
it would have been appraisal error for him to value the Property 
as single-family homes, duplex homes, or anything other than an 
18-unit affordable multifamily rental housing community.  He 
further testified his determination of value for each parcel 
using an "allocation method" was a valid technique for apartment 
communities and the same method used by the City on other 
apartment communities. 
Persuaded by Joseph's opinion regarding the highest and 
best use for the parcels comprising Jackson Ward Apartments and 
his utilization of the income method appropriate for appraisal 
of apartment communities, the circuit court ruled that JWP 
proved the fair market value of each parcel.  In doing so, the 
circuit court found that the City's determination of highest and 
best use ignored "the reality of the situation" in light of 
evidence, found credible by the circuit court, that the parcels 
are bound together, must legally be operated as multifamily 
affordable rental housing, and could not be sold as separate 
parcels.  In fact, the evidence established that the City 
31 
 
initially worked with RRHD to bind these parcels together for 
multifamily affordable rental housing and has continued to 
approve the operation of the parcels as an apartment community.3  
As we have previously held, "[i]n cases where the circuit court 
is presented with such conflicting testimony, we 'will defer to 
the circuit court's judgment of the weight and credibility to be 
given [the witness'] testimony.' "  County of Albemarle v. 
Keswick Club, L.P., 280 Va. 381, 388, 699 S.E.2d 491, 495 (2010) 
(quoting Board of Supervisors v. HCA Health Servs., 260 Va. 317, 
                     
3 Before the parcels were acquired by JWP, the City of 
Richmond and the RRHA presented JWP with a purchase contract 
that packaged these tax parcels together for renovation and 
operation as one affordable rental housing development.  The 
project resulted from an application made by the City and RRHA 
to HUD for Section 8 funds in an effort to rejuvenate 
deteriorated areas of the City and decentralize assisted housing 
in connection with the City's Neighborhood Strategies program.  
A subsequent renovation was undertaken by JWP thirteen years 
following its purchase and was also financed through VHDA.  The 
renovations were endorsed by the City in a letter to the Deputy 
Director of the Department of Housing & Community Development 
stating as follows: 
 
The construction or rehabilitation of the Jackson 
Ward Apartments and the allocation of loan and/or 
grant money from the Virginia Housing Partnership and 
federal housing tax credits available under Internal 
Revenue Code Section 42 for that development will help 
meet the housing needs and priorities outlined in the 
City of Richmond's 1993 Comprehensive Housing 
Affordability Study (CHAS). 
This project meets the stated priority of 
neighborhood preservation to conserve and improve 
physical structures.  This project is in census tract 
302 which the City has targeted as an area in which to 
concentrate its rehabilitation efforts. 
 
32 
 
332, 535 S.E.2d 163, 171 (2000)).  Departing from this general 
rule, the majority judges Joseph's opinion not worthy of 
credibility and rejects his values as being the product of 
appraisal methodology it deems improper as a matter of law.  
Neither the Constitution nor the Code mandates, however, 
that the value of each tax parcel comprising Jackson Ward 
Apartments be determined without consideration of the other 
parcels, or that the highest and best use of the parcels be 
anything other than an apartment community.4  That, alone, 
distinguishes TB Venture from this case.  In TB Venture, we 
upheld the circuit court's determination that the taxpayer 
failed to establish the fair market value of each condominium 
unit where the taxpayer's expert valued the condominium units as 
a whole and allocated an amount to each unit based on the unit's 
pro rata share of overall income.  280 Va. at 565, 701 S.E.2d at 
795.  Although the taxpayer appraised the condominium units as 
rental units, because Code § 55-79.42 requires each unit to be 
                     
 
4 Although Code § 58.1-3302, relied on by the City, requires 
the table of town or city lots to contain the name of the owner, 
the number of each lot, the value of the buildings on the lot, 
the value of the lot including buildings, and the amount of tax 
at the legal rate, this administrative record-keeping provision 
does not address the methodology to be used in determining the 
value of each lot.  The majority cites several additional 
statutory provisions to reinforce its point that tax parcels 
must be individually assessed, see Code §§ 58.1-3281, -3285, -
3290, -3303 and -3309, none of which addresses appraisal 
methodology applicable in this case. 
 
33 
 
appraised independently from the other units, the condominium 
complex could not be appraised as an apartment community 
notwithstanding testimony that there was no market for sale of 
one condominium.  This was so because the highest and best use 
of condominium units, registered as such, is mandated by 
statute.  See Orchard Glen East, Inc. v. Board of Supervisors, 
254 Va. 307, 311-12, 492 S.E.2d 150, 153 (1997) (Under Code 
§ 55-79.42, upon recordation of the condominium units, a 
condominium complex may not be treated as an apartment complex 
for purposes of valuing the condominium units for tax 
assessment).  Since Code § 55-79.42 does not apply to the 
parcels comprising Jackson Ward Apartments, it does not prohibit 
appraisal of the parcels as an apartment community.5 
Instead of analyzing whether the evidence supports the 
circuit court's finding that JWP proved the fair market value of 
the parcels comprising Jackson Ward Apartments, as the Court did 
in West Creek, the majority singles out methodology as the 
guiding principle in valuing real property and disregards the 
significance of the property's highest and best use to that 
methodology.  In West Creek, we affirmed the circuit court's 
                     
 
5 While acknowledging Code § 55-79.42 does not govern this 
case, the majority reasons that individual assessment is a 
requirement applicable to all tax parcels.  Under the majority's 
reasoning, then, any methodology comparable to that used by the 
taxpayer in TB Venture is improper, as a matter of law, for all 
tax parcels.  But this rationale ignores a property's highest 
and best use, which necessarily controls the methodology. 
34 
 
ruling that the taxpayer failed to prove the fair market value 
of the parcels at issue after reviewing the totality of evidence 
considered by the circuit court and the basis for its ruling.6  
In upholding the circuit court's findings, we recognized that 
"[i]t was within the province of the court, as the fact-finder, 
to determine the credibility of the witnesses."  West Creek, 276 
Va. at 416, 665 S.E.2d at 847 (internal quotation marks 
omitted).  Reviewing the evidence before the circuit court and 
deferring to its role as fact-finder, we could not say that the 
circuit court's findings were "plainly wrong or without evidence 
to support them."  Id. at 417, 665 S.E.2d at 847.  The majority, 
however, dispenses with the review it undertook in West Creek, 
                     
 
6 The circuit court ruled the taxpayer failed to prove fair 
market value of the parcels at issue for "several reasons."  
West Creek, 276 Va. at 417, 665 S.E.2d at 847.  It found the 
taxpayer's expert appraiser "had not conducted an independent 
appraisal" but valued the 144 parcels at the sale price, which 
was negotiated as a bulk sale due to the large acreage.  Id.  
The circuit court also noted that the method of spreading the 
value of the 2,500-acre development across the 144 parcels was 
"not persuasive" since the expert ignored the " 'economy of 
scale' " realized considering the sale price was discounted due 
to the large number of acres.  In weighing the evidence before 
it, the circuit court found the testimony from the County's 
expert " 'the most compelling.' "  Id. at 416, 665 S.E.2d at 
847.  The circuit court was persuaded by the expert's testimony 
that the highest and best use of the Park property was sale as 
individual parcels, not as a sale of "in excess of 2,000 acres" 
and that "[r]elying on [the bulk sale of the 2,500 acres] as an 
independent indicator of value for any of the 144 parcels would 
produce an appraisal report that would lack total credibility" 
and "be grounds for possible dismissal from The Appraisal 
Institute and probably revocation of one's appraisal license."  
Id. at 406, 665 S.E.2d at 841. 
35 
 
extrapolates from West Creek a finding that was affirmed because 
it was supported by the evidence, and adopts it as the 
determining principle of law in this case to rationalize its 
reversal of the circuit court's judgment. 
 
In sum, TB Venture and West Creek do not support the 
majority's conclusion that Joseph's appraisal of the parcels 
comprising Jackson Ward Apartments was improper as a matter of 
law.  Neither case purports to establish any rule of appraisal 
methodology or dictates the determination of highest and best 
use of the parcels comprising Jackson Ward Apartments.  In 
removing issues involving appropriate appraisal methodology from 
the realm of expert opinion and assuming for itself the role of 
final arbiter of proper appraisal practice in Virginia, I 
believe the majority has set a dangerous precedent.  More 
importantly, I believe the majority's singular focus on 
methodology jeopardizes the constitutional right to just 
valuation of property.