Taxpayer did not show mass appraisal was invalid

Where the taxpayer challenged tax as­sessments of an idled meatpacking plant on 12 acres of land, the taxpayer did not overcome the presumption of correctness that attached to a mass appraisal for two of the tax years in question, and a re­duced assessment for the third tax year after taking into account the building’s deteriorated condition.

Overview

Smithfield Foods shuttered a hot dog factory in 2012. The taxpayer bought the property and building in 2013 for $875,000. After stripping the building and selling equipment and fixtures, the taxpayer sold the building in 2015 for $575,000. The buyer demolished the building and built a distribution center on the property.

For tax years 2013 and 2014, the build­ing was assessed at $5.106,400, and the land was assessed at $1,026,120. For tax year 2015, the land assessment remained the same but the building’s value was dropped to $2,742,040.

The taxpayer challenged all the assess­ments. At a hearing the taxpayer offered expert testimony from Colorito, who said the highest and best use of the property was to demolish the building and build a new industrial building. He valued the land at $1,422,580, deducted demolition costs of $500,000 and arrived at a fair market value of $950,000.

The city offered its assessor, Butt, as an expert. He explained that a mass ap­praisal methodology was employed. For the 2015 assessment, Butt took into ac­count the building’s deteriorating condi­tion and lowered the overall assessment.

The court also heard from Pierce, who challenged Colorito’s conclusions on a number of different grounds. The taxpay­er offered testimony from Dove, another experienced appraiser. Dove supported Colorito’s conclusions. Dove also au­thored a report “critiquing the City’s ap­praisal and citing a number of violations of the Uniform Standards of Professional Appraisal Practice (‘USPAP’) as well as additional criticisms. The circuit court admitted this report into evidence.”

The court upheld the assessments. The taxpayer has appealed.

Assessment challenges

“Code § 58.1-3984(B) establishes ‘a pre­sumption that the valuation determined by the assessor or as adjusted by the board of equalization is correct.’ … As we held in McKee Foods Corp. v. City. of Au­gusta, 297 Va. 482, 499 (2019), the plain language of the statute establishes a pre­sumption of correctness in favor of the lo­cality, which the taxpayer must rebut by proving two things by a preponderance of the evidence:

“(1) ‘that the property in question’ (a) ‘is valued at more than its fair market val­ue’ or (b) ‘the assessment is not uniform in its application’ and

“(2) the assessment ‘was not arrived at in accordance with generally accepted ap­praisal practices, procedures, rules, and standards … and applicable Virginia law relating to valuation of property[.]’

“The Taxpayer, citing West Creek As­socs., LLC v. County of Goochland, 276 Va. 393, 417 (2008), contends that it can rebut the presumption of regularity by ‘proving a significant disparity between fair market value and assessed value.’

“Our 2008 decision in West Creek, how­ever, predates a significant revision of the statute. The General Assembly redrafted the statute in 2011, and in so doing made it clear that a taxpayer must shoulder the twofold burden of proof summarized above.”

Mass appraisal

“The 2013-14 assessment for the prop­erty was derived from a mass apprais­al. Professional standards permit mass appraisals. See USPAP, Standards Rule 6.3. An assessment derived from a mass appraisal benefits from a presumption of correctness. A taxpayer challenging an assessment based on a mass appraisal may rebut the presumption of correctness in two ways.

“First, a taxpayer can rebut the pre­sumption of correctness by proving, by a preponderance of the evidence, that the property is valued at more than fair market value (or that the assessment is not uniform in its application) and that the mass appraisal was not arrived at in accordance with generally accepted ap­praisal practices, procedures, rules, and standards” that govern mass appraisals. See Code § 58.1-3984(B).

“Second, in the context of a mass ap­praisal, a taxpayer can rebut the pre­sumption of correctness by proving, by a preponderance of the evidence, that the property is valued at more than fair mar­ket value and that the mass appraisal has indefensibly inflated the fair market value of the property. …

The Taxpayer indisputably presented a prima facie case that ‘the property in question is valued at more than its fair market value.’ Code § 58.1-3984(B).

“The Taxpayer offered not only the tes­timony of a highly qualified expert to that effect, along with an exhaustive report, but the Taxpayer also offered evidence that the property had sold recently on two occasions – each time well below the City’s assessed value.”

However, the taxpayer did not carry its burden of showing that the mass apprais­al did not conform to professional stan­dards. …

“As the trial court observed, none of the witnesses for the Taxpayer specifically testified under oath that the City’s assess­ment ‘was not arrived at in accordance with generally accepted appraisal prac­tices.’ Code § 58.1-3984(B). The Taxpayer responds that it did, in fact, allege a viola­tion of a number of USPAP standards via a written report Dove authored. …

“[T]he trial court had before it a writ­ten report alleging a violation of profes­sional standards found in USPAP. On a number of points, the report claimed ‘po­tential’ violations of USPAP standards. The report cites but does not quote the USPAP Standards Rules.

“Without specific testimony explaining how the standards were, in fact, violated by the mass appraisal and the lowered 2015 assessment, and with some of the assertions in Dove’s report contradicted by live testimony, we cannot conclude that the trial court erred in finding that the Taxpayer had not met its burden of proof.”

Moreover, the trial court correctly de­termined that the property lacked dis tinctive characteristics that produced a false result under the mass appraisal methodology.

“The trial court found persuasive the fact that the facility was a functional meatpacking facility when Smithfield Foods shuttered it, and the Taxpayer in­troduced no evidence ‘sufficient to war­rant a conclusion that the former Smith­field plant was unsuitable for use by any other manufacturer.’

“The trial court concluded that ‘the Property’s long history as a manufactur­ing facility, coupled with its fixtures and site design, suggest that, at least in 2013, it had not outlived its useful life.” As for tax year 2015, the Board of Equaliza­tion adjusted the assessment downward based on the condition of the building, which had deteriorated.’” The trial court properly weighed the conflicting evidence when determining the taxpayer did not overcome “the presumption of correctness attached to the mass appraisal.”

Affirmed.

Portsmouth 2175 Elmhurst LLC v. City of Portsmouth, et al., Record No. 181439 (McCullough) Jan. 23, 2020, Portsmouth Cir. Ct. (Melvin). Barry Randolph Koch, Thomas Emden Snyder, Jennifer Tennile Langley for Appellant, James Arthur Cales III for Appellee. VLW 020-6-004, 23 pp.