Opinion ID: 1119615
Heading Depth: 3
Heading Rank: 1

Heading: Valuation of the Papkes Landing Property

Text: Jeff first argues that the court's valuation of Lot 14 at $85,000 was clearly erroneous and that the court committed legal error when it relied on a 1996 appraisal that Jeff believes was a low-ball appraisal rather than accepting a 1997 appraisal that yielded a significantly higher value. We disagree. The first appraisal report on the Papkes Landing property, prepared by Gaylord Orsborn of the firm of Thomas P. King and Associates, was released February 1996. Orsborn inspected the property, took photographs, and conducted comparative analysis between the Berg property and similar sales of waterfront real estate in the Petersburg market. He estimated the value of the land using a price-per-acre measure of $10,000 per acre, adjusting for the condition of the Bergs' property and sales prices of comparable lots. Orsborn valued Lot 14 at $85,000. He noted that the property's value would increase if Lot 14 were divided into two separate lots. At Jeff's request, the King firm performed another appraisal of Lot 14 in December 1996; this time Thomas King prepared the appraisal. Jeff asked King to appraise the land's value if it were subdivided into three separate parcelsLots 14A, 14B, and 14C. The subdivision corresponded to the agreement for sharing the land contemplated in Jeff and Shannon's dissolution agreement: Lot 14C comprised the southern tip of the property and measured 2.97 acres, while Lots 14A and 14B were split equally into two 1.25 acre parcels. [8] Unlike Orsborn, King did not take into account actual improvements on the land. And King valued the lots based on the amount of waterfront acreagea per-front-foot of beachfront measure instead of a price-per-acre measure. Thus, the King appraisal employed methodology significantly different from that of Orsborn's appraisal. King's appraisal of the hypothetically divided Lot 14 produced dramatically different land values than the Orsborn appraisal had. King concluded that the entire parcel, undivided, was worth $107,100. He also appraised the values of the divided parcel, valuing Lots 14A and 14B at $50,000 each and Lot 14C at $110,000, for a total of $210,000. King stated that the only reason for the significant difference in the two appraisals was the differing valuation methods used. After considering these widely divergent appraisal values for Lot 14, the superior court concluded that the Orsborn assessment was more sound. To support its conclusion, the court noted several flaws in King's appraisal. First, the court observed that Orsborn thoroughly compared the Berg property to similar nearby parcels, while King's analysis in this area was much weaker. Second, the court criticized King's per frontage foot measure as lacking a reliable foundation in the Petersburg land market because King did not explain how he arrived at the value per frontage foot. Third, the court did not find it reasonable that King's assessment valued Lot 14C alone as being worth more than all of Lot 14 together. Fourth, the court was skeptical that the selling price of the Berg land could have increased so dramatically in less than a year and found King's assessment inconsistent with real estate sale prices of comparable parcels in the Petersburg area. Finally, the court pointed out that King admitted that his estimates did not include the costs that subdividing Lot 14 would create, including the need to build a road to ensure access to each parcel. These criticisms of the King appraisal are all reasonable and supported by the record. Accordingly, we conclude that the court's decision to rely on the Orsborn assessment rather than the King assessment was not clearly erroneous. Jeff also argues that the court committed legal error because it discounted the findings in the most recent appraisal. In support of his position, Jeff cites a line of Alaska cases in which this court has held that marital property should be valued as close to the time of trial as possible. For example, in Ogard v. Ogard, [9] we explained that the valuation date for marital property should normally be as close as practicable to the date of trial in order to provide the most current and accurate information possible and [to] avoid[ ] inequitable results. [10] Jeff relies on this language in arguing that the court erred when it based its valuation of the Papkes Landing property on the Orsborn appraisal rather than the King appraisal since the King appraisal was performed most recently and closer to the trial date. Jeff's reliance on these cases is misplaced. The cases Jeff cites dealt with the question of whether the court should determine marital property values as of the date of separation or the date of trial. We have held that the proper inquiry is normally the value of the property as of the time of trial rather than the date of separation. [11] But here, Judge Jahnke did conduct the valuation inquiry on the basis of the property's worth at the time of trial. [12] It is true that, in doing so, he accepted an appraisal value other than the most recent one. But nothing in the cited cases supports the idea that the court must automatically accept the most recent estimate of an item's value. Indeed, the last-in-time rule urged by Jeff would be unwise from a policy perspective: Rather than asking, as the superior court did here, which appraiser used the better methods and depended upon the most reliable information, the superior court would be required to accept the most recent appraisal no matter how it was obtained. The Ogard line of cases does not support this interpretation.