Court Opinion

ID: 9788762
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:17:45.191105+00
Date Added: 2024-06-11T07:37:16.582797
License: Public Domain

Justice KIDWELL,
dissenting as to the analysis of part III A.
The Ada County assessor failed to give major consideration to the actual and functional use of The Senator’s real property when assigning a market value for tax assessment purposes. Therefore, I respectfully dissent.
ANALYSIS
Real property in Idaho is subject to a tax based on its market value. Idaho Code § 63-205 (2002). Market value refers to the amount of money a willing buyer would pay a willing seller for the real property in a voluntary transaction. I.C. § 63-201(10). Market value is determined by the requirements of Title 63 of the Idaho Code and by the rules promulgated by the Idaho Tax Commission (Commission). This, of course, includes the requirement that an assessor give major consideration to the “actual and functional use” of the real property when assigning a market value. I.C. § 63-208.
There seems to be confusion over the meaning of the phrase “actual and functional use” as used in I.C. § 63-208. If a statute is clear, this Court need not engage in an exercise of statutory construction. Hamilton ex rel. Hamilton v. Reeder Flying Serv., 135 Idaho 568, 572, 21 P.3d 890, 894 (2001). The statute will be given its plain meaning. Canal/Norcrest/Columhus Action Comm. v. City of Boise, 136 Idaho 666, 670, 39 P.3d 606, 610 (2001).
The Senator is a manufactured home park that rents spaces to tenants fifty-five (55) years of age or older. The Senator is a “limited use” mobile home park. The Senator is not a general use mobile home park, as the assessor determined. The majority correctly states, “what is being valued for assessment purposes is real property, not the business being operated on the real property.” However, when giving major consideration to the actual and functional use of real property in order to determine its market value, the assessor cannot ignore the realities of a business operating on the property. A willing buyer and seller would undoubtedly take into consideration the limited use of The Senator in identifying the real property’s market value. Broadly categorizing any mobilé/manufactured home park as a general mobile home park is akin to broadly categorizing both a full service Albertson’s and a small corner grocer as “grocery stores” for purposes of assessing the market value of the real property on which they operate. In order to give major consideration to the actual and functional use of real property, an assessor must consider the nature of the business operating on the real property.
Three cases cited by the majority support this position. In Riverside Dev. Co. v. Vandenberg, this Court upheld the assessor’s determination that the actual and functional use of unsold lots in a subdivision were as single-family residence lots, not inventory, as the taxpayer had argued. 137 Idaho 382, 384, 48 P.3d 1271, 1274 (2002). This determination *576led to a greater market value, and consequently, a higher tax assessment of the property. Id. In Greenfield Vill. Apartments, L.P. v. Ada County, the assessor mistakenly applied the sales comparison method, a market valuation method where one property’s market value is based on the sale price of a similar property, when assigning a market value to the taxpayer’s apartment complex because the apartment complex was subject to a restrictive covenant binding the owner to lowered rent charges for twenty years. 130 Idaho 207, 210, 938 P.2d 1245, 1248 (1997). This Court determined the assessor ignored the actual and functional use of the apartment complex as low income housing in estimating its market value. Id. In Fairway Dev. Co. v. Bannock County, a fifty-six-unit apartment complex was converted to condominiums, resulting in a three-fold increase in the property’s assessed value even though forty-seven of the units remained unsold and were rented as apartments. 113 Idaho 933, 935, 750 P.2d 954, 956 (1988). In estimating the market value, this Court found the assessor failed to consider the actual and functional use of the property as an apartment complex rather than as condominiums. Id. at 936, 750 P.2d at 957.
In these three cases, the nature of the business operating on the real property was a major consideration in determining the actual and functional use of the property, and consequently, the correct market value for assessment purposes. The Senator’s over fifty-five age restriction, a socially acceptable and beneficial classification, has significant impact on the market value of its real property. By ignoring The Senator’s age restriction, the assessor failed to give major consideration to actual and functional use.
In addition to the requirements of Title 63, as discussed above, in determining a real property’s market value, an assessor must also take into account the rules promulgated by the Commission. However, a search of the Commission’s rules reveals no guidance on how an assessor should give major consideration to the actual and functional use of real property when assigning a market value. The Commission improperly leaves such determinations to the unfettered discretion of the assessor. It is necessary for the Commission to promulgate rules that provide guidance to assessors on how to give major consideration to the actual and functional use of real property when assigning a market value.
The majority finds there is substantial, competent evidence supporting The Senator’s assessed value. The majority dismisses the dissent by stating the issue of the age restriction was not raised by either party and that the impact of the age restriction on the fair market value would be speculative. In doing so, the majority misses the point of the dissent. There is no question that fair market value of The Senator, as assessed by the county, is supported by substantial, competent evidence. However, this does not change the fact that assessors act without the benefit of guidance from the Commission in making their decisions. There is absolutely no doubt that a willing buyer and seller, in a voluntary transaction, would seriously consider The Senator’s occupancy rate in determining its fair market value. The standard occupancy rate for general use manufactured home park, or even an age-restricted park, should not control the assessor’s decision. The Commission should promulgate regulations instructing assessors on how to give major consideration to the actual and functional use of the property they are assessing rather than allowing assessors to use their unfettered discretion in determining the value of real property, such as The Senator’s, based on inapplicable occupancy rates.
For these reasons, I would remand this case to reconsider The Senator’s assessed tax based on its actual and functional use.