Court Opinion

ID: 9691141
Source: CourtListenerOpinion
Date Created: 2023-08-24 20:13:23.162431+00
Date Added: 2024-06-11T18:19:11.480423
License: Public Domain

AMUNDSON, Justice.
[¶ 1.] Richter Enterprises, Inc. and Kenneth Barber (Taxpayer) appeal the circuit court’s decision to affirm the Sully County Director of Equalization’s (Director) assessment of value to two parcels of commercial property in Sully County. We affirm.
FACTS AND PROCEDURAL HISTORY
[¶ 2.] On March 5, 1993, Taxpayer purchased two parcels of property in the City of Onida, Sully County, South Dakota. The buildings located on these parcels both share a common wall with the Onida Masonic Hall. Located in the building on the east is the ASCS office; located in the building on the west is the United States Post Office. The ASCS office has historically operated under an annual lease, which has been renewed since Taxpayer purchased the building. The *843Post Office has traditionally held five-year leases, and the lease has been renewed through 1999.
[¶ 3.] In early 1992, the parcels were listed for sale at a price of $110,000. In 1993, Taxpayer purchased the property for $53,-750. Taxpayer admits the buildings represent a reasonable investment, and there is an intention to use the buildings for their current purpose. Taxpayer additionally stipulates that the property has a useful life of fifteen years.
[¶4.] Director assessed the value of the two parcels for tax purposes. In 1994, the property was initially valued at $148,651 using a “cost approach” but, when Taxpayer protested, Director acquired actual income information and determined a value of $115,-576. Taxpayer did not appeal this valuation. In 1995, Taxpayer refused to supply income data for the appraisal. Director then performed an appraisal under a “replacement cost approach,” reaching a value of $119,424.
[¶ 5.] For the 1994 and 1995 appraisals, Director disregarded the 1993 sale price because she determined that the unique situations of two parcels separated by individual party walls and an intervening building distorted the true value. In addition, Director did not use economic obsolescence in valuing the property.
[¶ 6.] Taxpayer appealed this valuation and the circuit court affirmed. Taxpayer again appeals. We affirm.
ISSUES
I. Whether Taxpayer produced sufficient evidence to overcome presumption that Director’s valuation was correct.
II. Whether Director’s valuation was invalid due to failure to use economic obsolescence.
STANDARD OF REVIEW
[¶ 7.] As stated in Hutchinson County v. Fischer:
This court’s proper scope of review of a trial court’s decision in a trial de novo of an assessment matter is whether the decision of the trial court was “clearly erroneous.” When applying the clearly erroneous standard, the question is not whether this court would have made the same findings that the trial court did, but whether on the entire evidence this court is left with a definite and firm conviction that a mistake has been committed.
393 N.W.2d 778, 781 (S.D.1986) (citations omitted). Furthermore, there is a presumption that tax officials act in accordance with the law and not arbitrarily or unfairly when assessing property. Lincoln Toumship v. South Dakota Bd. of Equalization, 1996 SD 13, ¶ 5, 543 N.W.2d 256, 257; Hutchinson County, 393 N.W.2d at 782. Taxpayer also has the burden of overcoming the presumption that Director’s value was correct. National Food Corp. v. Aurora County Bd. of Comm’rs, 537 N.W.2d 564, 568 (S.D.1995); Hutchinson County, 393 N.W.2d at 782; Knodel v. Board of County Comm’rs, etc., 269 N.W.2d 386, 389 (S.D.1978). Specifically, Taxpayer “must produce sufficient evidence to show the assessed valuation was in excess of true and full value, lacked uniformity in the same class or was discriminatory.” Id.
DECISION
[¶ 8.] I. Sufficiency of the Evidence.
[¶ 9.] Taxpayer claims there is sufficient evidence to demonstrate that the assessed valuation of the property is in excess of the true and full value, lacked uniformity in the same class, or is discriminatory and, therefore, violates the South Dakota Constitution, Article XI, § 2.1 Taxpayer asserts *844the sale in 1993 between a willing buyer and a willing seller shows the assessed valuation is in excess of the true and full value. The assessment was for $119,424, while the sale was for $53,750.
[¶10.] SDCL 10-6-33 provides the basis for determining valuation for tax purposes:
All property shall be assessed at its true and full value in money. The true and full value is the taxable value of such property upon which the levy shall be made and applied and the taxes computed. In determining the true and full value of property the director of equalization may not adopt a lower or different standard of value because it is to serve as a basis of taxation. The director may not adopt as a criterion of value the price for which the property would sell at a forced sale, or in the aggregate with all the property in the third class municipality or district. The director shall value each article or description by itself and at an amount or price as he believes the property to be fairly worth in money. The true and full value shall be determined by appropriate consideration of the cost approach, the market approach and the income approach to appraisal. The director of equalization shall consider and document all elements of such approaches that are applicable prior to a determination of true and full value.
The record reveals that Director considered the cost approach to value the property, resulting in a valuation of $148,651. The income approach was also considered, including a new five-year lease being negotiated. The income approach resulted in a valuation of $115,576. Director disregarded the market approach due to lack of comparable sales within the county.2 Since the record discloses Director applied the cost and income approaches, and considered the market approach, she followed the required basis for determining valuation according to SDCL 10-6-33. As stated in Brookings Assocs. v. State Bd. of Equalization: ‘“Substantial compliance with legislative directives is sufficient in determining assessed valuation.’ ” 482 N.W.2d 873, 882 (S.D.1992) (Wuest, J., dissenting) (quoting Knodel, 269 N.W.2d at 389).
[¶ 11.] Director disregarded the 1993 sale price of $53,750 because she determined the unique situation of two parcels separated by individual party walls and an intervening building distorted the true value. The circuit court held this determination was supported by the evidence, as the record reveals testimony stating that circumstances such as property with party walls,3 sales of less than the entire realty, and sales on contract for deed may prevent a sale from being a true measure of value. See, e.g., Kassnel v. Village of Rosemont, 135 Ill.App.3d 361, 90 Ill. Dec. 49, 481 N.E.2d 849, 853 (1985) (noting expert testimony that common walls often reduce the fair market value of a building). Moreover, the circuit court mentioned that Taxpayer offered no testimony, expert or otherwise, to the contrary. In addition, the validity of the assessment is supported by the closeness in proximity between Director’s valuation under the “income approach” ($115,576) and the “replacement cost approach” ($119,424).
[¶ 12.] Taxpayer failed to cite authority for the statement that “[a] recent sale between a willing buyer and a willing seller must be given weight in determining the tax assessment.” It is well established that the “[flailure to cite authority violates SDCL 15-26A-60(6) and constitutes a waiver of that issue.” State v. Phillips, 489 N.W.2d 613, 616 (S.D.1992). Taxpayer cites only to Willow, Inc. v. Yankton County, which states that a recent sale should not be “entirely *845excluded from consideration.” 89 S.D. 643, 650, 237 N.W.2d 660, 664 (1975). However, Willow, Inc. is distinguishable because the 1993 sale in this case was not entirely excluded from consideration. Director considered the sale, but determined it distorted the true value of the buildings.
[¶ 13.] Contrary to Taxpayer’s assertions, there is authority stating that “[a] single sale of property ... does not ordinarily determine true and full value of a property as there may be economic conditions of a temporary nature and other factors which prevent the same from being a true measure of value.” Sheraton-Midcontinent Corp. v. County of Pennington, 77 S.D. 554, 560, 95 N.W.2d 892, 896 (1959). See also Willow, Inc., 89 S.D. at 647, 237 N.W.2d at 662 (stating great weight should not always be given to a sale).
[¶ 14.] Even more compelling is that Taxpayer failed to offer an appraisal different from Director’s valuation via expert testimony or otherwise. According to Lincoln Township, “Without an appraisal showing [Director’s] assessment was erroneous, [Taxpayer has] not overcome the presumption of correctness.” 1996 SD 13, at ¶ 26, 543 N.W.2d at 260; see also Brookings Assocs., 482 N.W.2d at 882 (Wuest, J., dissenting). Simply asserting that the valuation was in excess of the true and full value does not make it so. Cf. Baatz v. Arrow Bar, 452 N.W.2d 138, 142 (S.D.1990) (noting that merely stating that a corporation is underca-pitalized does not make it so). Taxpayer must demonstrate that the tax assessment was unjust and inequitable. See Knodel, 269 N.W.2d at 389 (holding, “Even if the director of equalization fails to fully comply with statutory mandates, rendering the assessment void, a taxpayer cannot avail himself of such invalidity without also showing that the tax levied was unjust and inequitable.”).
[¶ 15.] We emphasize the lack of evidence and authority presented by Taxpayer, as well as our deference to the circuit court’s determination of credibility of the witnesses and the weight to be accorded their testimony. See, e.g., Kost v. Kost, 515 N.W.2d 209, 212 (S.D.1994). The circuit court was not clearly erroneous in finding Taxpayer did not meet his burden of presenting sufficient evidence to show that Director failed to act in accordance with the law, or to overcome the presumption that Director’s assessment is valid.
[¶ 16.] II. Failure to Use Economic Obsolescence.
[¶ 17.] Taxpayer also attacks Director’s failure to use economic obsolescence when assessing the value of the property.4 The circuit court held Taxpayer failed to demonstrate the “property is either functionally or economically obsolescent to a degree that would render the 1995 appraisal unjust and inequitable.” The record clearly supports this conclusion, as Taxpayer’s witness even admitted economic obsolescence exists only in the absence of any “demand for the property and a potential for other uses if the present use is not continued,” and such uses by the Post Office and ASCS are to be continued. Therefore, Taxpayer’s assertion regarding economic obsolescence is based on conjecture, ¡which is insufficient to demonstrate the circuit court erred.
[¶ 18.] Afijirmed.
[¶ 19.] SABERS and KONENKAMP, JJ, concur. j
[¶ 20.] MÍLLER, C.J., and GILBERTSON, J., dissent.

. SDConstArt XI, § 2, reads:
To the end that the burden of taxation may be equitable upon all property, and in order that no property which is made subject to taxation shall escape, the Legislature is empowered to divide all property including moneys and credits as well as physical property into classes and to determine what class or classes of property shall be subject to taxation and what property, if any, shall not be subject to taxation. Taxes shall be uniform on all property of the same class, and shall be levied and collected for public purposes only. Taxes may be imposed upon any and all property including privileges, franchises and licenses to do business in the state. Gross earning and net incomes may be considered in taxing *844and all property, and the valuation of property for taxation purposes shall never exceed the actual value thereof. The Legislature is empowered to impose taxes upon incomes and occupations, and taxes upon incomes may be graduated and progressive and reasonable exemptions may be provided.

. A sale was considered, but rejected, because the property was not comparable due to the age and low quality of construction.

. In addition to Shirley Barber, the Director of Equalization for Sully County, Lyle Wendell, who is involved in the mass appraisal business, testified that a common wall may cause a reduction in the value of property.

. Economic obsolescence means, "Loss of desirability and useful life of properly due to economic developments (e.g. deterioration of neighborhood or zoning change) rather than deterioration (functional obsolescence).” Black’s Law Dictionary 513 (6th Ed 1990).