Opinion ID: 1596506
Heading Depth: 3
Heading Rank: 2

Heading: Expense Estimates Contained In Challenged Consultant Reports

Text: The county claims the tax court's DCF analysis should have excluded the expense estimates contained in the consultants' reports. Equitable delivered these reports to Patchin less than 27 days before trial. The county objected to their admission into evidence on the grounds that they were not timely submitted. Specifically, the county maintains the reports should have been excluded from evidence because Equitable failed to submit them within 45 days before trial as required by Minnesota law. Minn. Stat. §§ 271.06, subd. 7(b), 278.05, subd. 6(a). Minnesota Statute § 271.06, subd. 7(b) states in pertinent part: information, including income and expense figures, verified net rentable areas, and anticipated income and expenses, for income-producing property which is not provided to the county assessor at least 45 days before any hearing under this chapter, is not admissible except if necessary to prevent undue hardship or when the failure to provide it was due to the unavailability of the evidence at that time. Minnesota Statute § 278.05, subd. 6(a) contains identical language. These statutes apply to this case because the trial was held after the statutes' effective dates. 1992 Minn.Laws, ch. 511, art. 2, § 61. Patchin's original opinion of the value of the subject property was $82 million on January 2, 1990 and $84 million on January 2, 1991. Patchin did not incorporate the expenditure estimates contained in the challenged reports into his original DCF analysis. Patchin testified that because he had not received the consultant reports by the time he prepared his original appraisal, he did not have time to conduct his own studies, and he had no basis upon which he could contest the reports' validity. Nevertheless, Patchin did incorporate the expense estimates contained in the reports in a revised DCF that he prepared during the trial. After accounting for the expenses contained in the reports and after correcting a computation error in his revised DCF, Patchin stated that his opinion was that the value of the subject property was closer to $70 million on both assessment dates in question. [11] In its memorandum supporting its denial of the county's alternative motion for amended or additional findings or a new trial, the tax court stated: A review of Mr. Patchin's testimony, in particular his responses to questions asked during cross-examination, indicates without a doubt that Mr. Patchin relied upon the information [the county] is attempting to exclude and that he changed his opinion of value in reliance upon it. The court also found that the county was not `surprised' by this information at trial. Further, the court declared that if [Patchin] had exercised ordinary prudence, he would have known the condition and age of the roof, HVAC system and parking lot and would have known that there was asbestos on site. [12] Moreover, Patchin asserted that a misleading indication of value would result if the expenses contained in the reports were not taken into account. Indeed, Patchin's revised DCF indicates that excluding the evidence results in an overstatement of value of at least $12 million or $14 million. Under the circumstances, the court did not abuse its discretion by admitting the engineering consultant reports.