Opinion ID: 1348704
Heading Depth: 1
Heading Rank: 2

Heading: The City's Valuation

Text: The primary method used by the City tax appraiser to value the Steiner property was to establish (1) a typical lot size and (2) a benchmark value, in dollars per square foot, for the particular neighborhood or area. The benchmark value was calculated by reviewing the sales data for ocean-front property in the surrounding areas from the year before last (e.g. 1986 sales data for the 1988 tax year). If, as in the case of the Steiner property, a lot were larger than the typical lot, the excess area or overage would be valued per square foot at a percentage of benchmark value. If a lot were smaller than the typical lot, the benchmark would be adjusted upward to reflect the greater value per square foot. For the 1988 and 1989 tax years, the City assessed the property based on a typical lot size of 20,000 sq. ft. The assessor, Irene Nakamura, applied the Black Point benchmark to 20,000 sq. ft. and 50% of benchmark to the remaining 26,707 sq. ft. The benchmark value, based on comparable sales data, was $75 per sq. ft. for 1988 and $95 per sq. ft. for 1989 in the Black Point area. Based on this formula, she assessed the property as follows: 1988 100% × $75 × 20,000 sq. ft. = $1,500,000 50% × $75 × 26,707 sq. ft. = 1,001,513 __________ $2,501,513 1989 100% × $95 × 20,000 sq. ft. = $1,900,000 50% × $95 × 26,707 sq. ft. = 1,268,583 __________ $3,168,583 For the 1988 benchmark, the City relied heavily on the 1986 sales of three Black Point properties which it considered comparable to the Steiner property. These properties were calculated to have land values of $83.66, $110.27 and $82.56 per sq. ft. [5] The City also considered sales of oceanfront properties in the Diamond Head and Kahala areas that ranged from $81.08 to $155.53 per sq. ft. From these sales data, the City determined that the benchmark should be $75 per sq. ft. for the Black Point area. Ms. Nakamura testified that the Black Point benchmark also reflected a discount for the topography in the Black Point area; she made no other adjustments to the valuation of the Steiner property based on its topography. Similarly, the 1989 Black Point benchmark of $95 per sq. ft. was based on 1987 sales in the surrounding areas, including the sale of one Black Point property. The City used the same 50% (of benchmark) overage factor for all ocean-front lots which exceeded 20,000 sq. ft. in both the Black Point and Kahala Beach areas. No adjustment was made based on the topography or usability of the overage area. Thus, level (buildable) beach-front overage on Kahala Avenue was valued at only $10 per sq. ft. more than steep, boulder strewn (unbuildable) overage with no beach access such as on the Steiner parcel. Both the City and Steiner argued about whether there was evidence that certain lots were level and 100% usable and whether these lots were given a 25% overage adjustment in past years. However, a careful review of the record only reveals evidence that: (1) the Steiner property and the adjoining two parcels had large areas of rocky unusable land; (2) these three parcels were previously subject to a three part valuation, 100% of benchmark for 10,000 sq. ft., 50% for 1,000 to 1,780 sq. ft., and 25% for the remaining area (roughly 25,000 to 35,000 sq. ft.); [6] (3) three other ocean-front Black Point properties were previously subject to a two part valuation, 100% of benchmark for 10,000 sq. ft. and 50% for the balance  no evidence was presented as to the topography of these parcels; (4) several Kahala Beach properties (thirteen) were subject to variable formulas in the past  some were assessed at 100% of benchmark for the first 10,000 sq. ft. with the balance at 50%, for others a three part valuation was used; however, the latter properties had been assessed at 100% of benchmark for 10,000 sq. ft. and 50% for an average of 26,000 sq. ft. (range  10,000 to 40,000 sq. ft.) with relatively small remaining areas valued at 25% (average of 6,500 sq. ft., range  1,800 to 14,000 sq. ft.); (5) no specific evidence was presented as to the topography of the individual Kahala Beach properties, but the City assessor testified that (at least) some of them were level and had beach access  and, no distinction was made in valuing the overage of these lots as compared to those at Black Point.