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Assessments not entitled to presumption of correctness

A county’s tax assessments of appellant’s industrial property are not entitled to the presumption of correctness. One assessment was not based on any of the three accepted approaches, and another was based on only one approach without considering and rejecting the other two approaches.

McKee Foods owns an 828,619 square foot industrial building in Augusta County where it manufactures “Little Debbie” snack foods and other products. McKee has appealed the assessments on this property for tax years 2011-14. After a four-day bench trial, the circuit court concluded that the assessments were entitled to a presumption of correctness, which McKee did not overcome, and denied McKee relief. McKee appealed.


Hickey worked for the firm the county hired to assess McKee’s facility. He assessed the property at $31.7 million but after McKee’s appeal, the amount was reduced to $28.5 million. The county based McKee’s taxes on this figure for 2011-13.

“Hickey testified that he used a cost method to appraise the property, and then he referred to a list of 52 industrial sales he had previously accumulated to see if he was in the correct range of price per square foot. The properties on this list ranged in size from 28,360 square feet to 714,278 square feet, and all but two of the buildings were less than half the square footage of the Property. …

“Hickey admitted that he assessed the Property using an average of the sale price divided by the square footage for each of the 52 properties on the list.”

Thomas performed the assessment upon which McKee’s 2014 taxes were based. McKee appealed the $31.7 million assessment but did not obtain relief.

“Thomas testified that his appraisal of the Property was the price he thought it could sell for if McKee sold the Property to a buyer who also intended to use the Property as a food processing plant. Thomas used the cost approach to determine the value of the property. He testified that he was unable to use the comparable sales approach due to the lack of comparable sales for special purpose food processing plants, and he rejected the income approach due to a lack of rental market data because the Property was owner-occupied.

“Although Thomas testified that the market for the McKee Property was national in scope, he admitted that he did not search for rental data outside of Augusta County, and he did not search for comparable sales outside of the eastern region of the United States.”

Legal principles

“Assessments by taxing authorities are afforded a presumption of correctness, and the burden is on the taxpayer to rebut the presumption. … Generally, a taxing authority’s assessment of a property’s fair market value is presumed valid and a circuit court will reject and correct a tax authority’s assessment only if the taxpayer demonstrates that the taxing authority committed manifest error or disregarded controlling evidence in making the assessment. …

“Taxing authorities commonly use one or more of three valuation approaches: the cost approach, income approach, and sales approach. … ‘Ideally, an appraisal should, if possible, derive its final determination of a property’s value using all three approaches in order to maximize the likelihood that the valuation accurately reflects the property’s fair market value.’ …

“In cases where a taxing authority bases an assessment of fair market value solely on one approach, the resulting assessment is still entitled to the presumption of validity so long as the taxing authority considered and properly rejected the other valuation methods.”


“Hickey did not properly use any of the three generally accepted approaches to valuation. First, Hickey did not perform an income approach valuation at all. Second, to the extent he considered comparable sales, Hickey’s methodology was so improper it did not meet the definition of the sales approach.
“Hickey identified 52 properties and simply used the average price per square foot of those properties as the price per square foot for the McKee property, without any adjustments for the size or location of the other properties. … [A]lthough the sales approach involves the averages of properties, first an assessor must find similar properties and make necessary adjustments, which Hickey completely failed to do.

“Hickey also failed to properly utilize the cost approach. … Instead of estimating depreciation based upon the Property’s actual characteristics, Hickey used the average price per square foot to guide his depreciation. …

“Even though Hickey failed to properly utilize any of the three accepted valuation methods, the circuit court still applied the presumption of validity to his 2011 assessment. … However, because this assessment did not properly apply any of the three accepted methods of valuation, it was not entitled to the presumption of validity. …

“Thomas’ assessment was based upon a single valuation approach, the cost approach. … Because Thomas’ assessment of fair market value is based solely on the cost approach, the resulting assessment is only entitled to the presumption of correctness if the taxing authority considered and properly rejected the other valuation methods. … [T]he evidence at trial demonstrates that Thomas applied the cost approach without sufficiently attempting to gather the data necessary to utilize the income or sales approach. …

“Therefore, the circuit court erred when it applied the presumption of correctness to the assessments at issue in this case.”

Reversed and remanded for further proceedings.

McKee Foods v. County of Augusta. Record No. 180521. (Lemons) July 18, 2019. (Appeal from Augusta Circuit Court) Joseph Ray Pope, Shane Landon Smith for Appellant, Sharon Elizabeth Pandak, Zachary Cole Packard, Randall Thomas Greehan, James Radi Benkahla  for Appellee. VLW 019-6-050, 20 pp.

VLW 019-6-050