Opinion ID: 1892821
Heading Depth: 1
Heading Rank: 4

Heading: actual value

Text: Regarding assessment of property for taxation, Neb.Rev.Stat. § 77-201 (Reissue 1986) provides in part: [R]eal property in this state, not expressly exempt therefrom, shall be subject to taxation and shall be valued at its actual value. Such actual value shall be taken and considered as the taxable value on which the levy shall be made. Neb.Rev.Stat. § 77-112 (Reissue 1986) provides in part: [A]ctual value of property for taxation shall mean and include the value of property for taxation that is ascertained by using the following formula where applicable: (a) Earning capacity of the property; (b) relative location; (c) desirability and functional use; (d) reproduction cost less depreciation; (e) comparison with other properties of known or recognized value; (f) market value in the ordinary course of trade; and (g) existing zoning of the property. Section 77-112, which specifies factors for determining actual value of real estate for tax purposes, does not require use of all the specified factors, but requires use of applicable statutory factors, individually or in combination, to determine the actual value of real estate for tax purposes. Affiliated Foods Co-op v. County of Madison, supra ; Spencer Holiday House v. County Bd. of Equal., 220 Neb. 607, 371 N.W.2d 286 (1985). In tax valuation cases actual value is largely a matter of opinion and without a precise yardstick for determination with complete accuracy. Id. at 611, 371 N.W.2d at 288. See, also, Richards v. Board of Equalization, 178 Neb. 537, 134 N.W.2d 56 (1965). We find the Bank has not shown that the equalization board improperly determined actual value for the Bank's property. Ogden, who testified for the Bank, relied on two methods to determine the value of the Bank's property. In reference to the market approach, Ogden admitted that all but one of his comparable sales would require substantial adjustment to provide an accurate index for the value of the bank property in Syracuse. We believe that Ogden relied on insufficient or incomplete data in his determining the value of the Bank's property under the market approach. For that reason, Ogden's opinion on value under the market approach has little weight, if any. Applying the cost approach, Ogden valued the Bank's land at $47,000 and used $1,200,000 for the reproduction cost of the Bank's improvements. However, Ogden used 70 percent depreciation for the Bank's improvements, which were 16 months old on January 1, 1986, in determining value under the cost method, namely, $422,000. We accept Ogden's premises: A structure in a small community is worth less than the same structure would be in a larger community; a bank building will not retain the value of its unique features if the building is sold for use in another type of business; and economic conditions can depress the value of real estate. However, we find nothing in the record to support Ogden's applied depreciation rates of 40 percent for functional obsolescence and 30 percent for economic depreciation. Davidson's appraisal is also unpersuasive. Although Davidson claimed that his appraisal was based on comparable (similar) sales, there is no evidence that Davidson relied on sales of property similar to the bank property. Regarding Fritz' opinion on value, Fritz used average construction rather than good construction concerning reproduction costs in view of the Bank's location and functional obsolescence, which, according to Fritz, decreased valuation of the Bank's property by 24 percent. However, Fritz testified that the 24-percent decrease was accurate and was corroborated by valuations for improvements of similar financial institutions in Nebraska City, improvements for which values had been determined by using the classifications of good and average construction based on the quality of construction, as reflected in the 1981 Marshall-Swift manual. For a depreciation rate, Fritz considered the difference and relationship between construction costs and sales prices for commercial property in Otoe County and arrived at a depreciation rate of 5 percent. Fritz used this same method to determine depreciation rates for commercial property throughout Otoe County. We find that Fritz' appraisal and his opinion on value, which was adopted by the county board of equalization, is a credible expression of value for the Bank's property. Further, the district court, having heard the witnesses, chose to believe the county's witnesses and not believe the Bank's witnesses. In view of the record, we conclude that the Otoe County Board of Equalization acted properly in determining the actual value of the Bank's property.