Court Opinion

ID: 9883351
Source: CourtListenerOpinion
Date Created: 2023-10-06 01:40:41.627983+00
Date Added: 2024-06-11T07:48:22.708301
License: Public Domain

*867KEITH, Chief Justice
(concurring specially)-
I concur that this matter should be remanded to the tax court. In concluding that this property, which still generates $94,000 per year of income for the taxpayers — income which admittedly is offset by the costs of cleaning up the contamination — had a nominal value, the tax court appears to have concluded that the phrase “market value,” as used in Minn.Stat. § 273.11, subd. 1 (1992) means only the price which would be paid between an actual buyer and seller. This court has never held a county to such a standard under the statute.1 I agree that, though “[property] may have no market value by reason of no demand, it should not escape its just share of the tax burden.” Minnesota v. Federal Reserve Bank of Minneapolis, 25 F.Supp. 14, 18 (D.Minn.1938). This is particularly so where, as here, the taxpayers has some responsibility for the contamination which reduced or destroyed the demand for this property.
I agree that the traditional methods of appraising property — cost, sales comparison, and income capitalization — can be used to determine the value of contaminated property if appropriately modified to account for the contamination. The approach taken by the State of Oregon is instructive in determining how these methods may be modified. See Or.Admin.R. 150-308.205(E) (1993). Oregon requires that an appraiser “shall consider” all three methods of appraisal, though some approaches may not be applied in certain cases.2 Id. Oregon also requires that the income approach, which seems most applicable in this case, be modified in the following manner:
(A) The income stream may be adjusted to reflect the estimated annual cost of remedial work specific to the subject property to remove, contain, or treat the hazardous substance during those years the cost is incurred. The annual cost of remedial work may include the cost of environmental audits, surety bonds, insurance, monitoring cots [sic], and engineering and legal fees. The costs must be directly related to the clean up or containment of a hazardous substance.
(B) If the capitalization rate is derived from properties with similar contamination, no adjustment should be made to that rate. If the rate is developed from properties without contamination, or a built-up rate is used, consider adjustments for the increased present and contingent future risk of ownership, difficulties in future appreciation or depreciation, and the effect upon the ability to sell or transfer the property; that is, the liquidity of an investment in the property.
*868(C) Alternatively, an income approach projecting the income stream as if the subject property was not contaminated, may be used when the cost to cure is deducted from the resultant value indicator.

Id.

The majority opinion cites the appraisal and valuation testimony of the County’s expert, Mr. Glassing. But this testimony is only cited to show that the tax court’s finding of nominal value is not sustainable on this record. The market value of the property for tax purposes remains to be determined by the tax court on remand, where there will be further proceedings in accordance with the guidelines this court has here set out.

. Village of Burnsville v. Commissioner of Taxation, 295 Minn. 504, 202 N.W.2d 653 (1972), cited by Respondents, is not on point. In that case, we approved of the tax court’s finding that property could not be valued higher than what otherwise would be the value of its highest use simply because it provided a benefit to a particular owner, absent a showing that that benefit affected the market value of the property. Burnsville, 202 N.W.2d at 656-57. The highest use of the property in question was for park and recreation purposes. Id. at 656. The taxpayer, however, used the property as a generating plant and benefitted from the property’s close proximity to water because the company did not have to build a cooling tower. Id. at 655. Under those circumstances, we agreed that the taxpayer could not be taxed a greater amount because of a benefit it derived from the property which would not generally been derived by other potential purchasers.
In this case, by contrast, the Respondents’ property has a highest and best use as a manufacturing or distribution center and this is how Respondents currently use the property. They are not being taxed because of a benefit they derive from the property which could not be derived by other potential purchasers.

. The rules note that the sales approach should usually compare sales of similarly contaminated sites, but sales of property without contamination may be used with the following adjustments for cost to cure:
Adjustments shall be considered for the following:
(A) Limitations upon the use of the contaminated site due to the nature and extent of the contamination or due to governmental restrictions related to contamination;
(B) The increased cost to insure or finance the property;
(C) The potential liability for the cost to cure;
(D) Governmental limitations and restrictions placed upon the transferability of all or any portion of the contaminated sites;
(E) Other market influences.