{ "id": 6767199, "name": "IN THE MATTER OF APPEAL OF Pace/Dowd Properties Ltd. from the decisions of the Union County Board of Equalization and Review regarding the valuations of certain property for tax year 2010", "name_abbreviation": "In re Appeal of Pace/Dowd Properties Ltd.", "decision_date": "2014-03-18", "docket_number": "No. COA13-759", "first_page": "7", "last_page": "23", "citations": [ { "type": "official", "cite": "233 N.C. App. 7" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "652 S.E.2d 655", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12639735 ], "weight": 7, "year": 2007, "pin_cites": [ { "page": "656" }, { "page": "658", "parenthetical": "citation omitted" }, { "page": "657" } ], "opinion_index": 0, "case_paths": [ "/se2d/652/0655-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 105-273", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 2, "opinion_index": 0 }, { "cite": "296 S.E.2d 499", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1982, "pin_cites": [ { "page": "500" } ], "opinion_index": 0 }, { "cite": "59 N.C. App. 332", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526394 ], "year": 1982, "pin_cites": [ { "page": "333-34" } ], "opinion_index": 0, "case_paths": [ "/nc-app/59/0332-01" ] }, { "cite": "431 S.E.2d 203", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 8, "year": 1993, "pin_cites": [ { "page": "204" }, { "page": "204" }, { "page": "204" }, { "page": "205" }, { "page": "206" } ], "opinion_index": 0 }, { "cite": "110 N.C. App. 823", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526581 ], "weight": 2, "year": 1993, "pin_cites": [ { "page": "824" } ], "opinion_index": 0, "case_paths": [ "/nc-app/110/0823-01" ] }, { "cite": "661 S.E.2d 733", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2008, "opinion_index": 0 }, { "cite": "362 N.C. 339", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4150263 ], "weight": 2, "year": 2008, "opinion_index": 0, "case_paths": [ "/nc/362/0339-01" ] }, { "cite": "186 N.C. App. 567", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8158723 ], "weight": 2, "year": 2007, "pin_cites": [ { "page": "568" } ], "opinion_index": 0, "case_paths": [ "/nc-app/186/0567-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 105-394", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 2, "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 105-312", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "year": 2013, "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 105-287", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 3, "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 105-286", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "year": 2013, "pin_cites": [ { "page": "(a)" } ], "opinion_index": 0 }, { "cite": "215 S.E.2d 752", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 6, "year": 1975, "pin_cites": [ { "page": "761", "parenthetical": "citation omitted" }, { "page": "762", "parenthetical": "hereinafter \"the Amp presumption\"" }, { "parenthetical": "citations and quotation marks omitted" }, { "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "287 N.C. 547", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8564265 ], "weight": 2, "year": 1975, "opinion_index": 0, "case_paths": [ "/nc/287/0547-01" ] }, { "cite": "503 S.E.2d 679", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1998, "pin_cites": [ { "page": "682", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "130 N.C. App. 529", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11468793 ], "year": 1998, "pin_cites": [ { "page": "533", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc-app/130/0529-01" ] }, { "cite": "511 S.E.2d 319", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1999, "pin_cites": [ { "page": "323", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "132 N.C. App. 281", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11237571 ], "year": 1999, "pin_cites": [ { "page": "286", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc-app/132/0281-01" ] }, { "cite": "741 S.E.2d 416", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 2013, "pin_cites": [ { "page": "419", "parenthetical": "citation omitted" }, { "page": "419", "parenthetical": "citation omitted" }, { "page": "419", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 105-345.2", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "year": 2013, "pin_cites": [ { "page": "(b)" } ], "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 105-317", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 5, "pin_cites": [ { "parenthetical": "i.e. the availability of water and sewer to Parcels [3 and 3A]" }, { "page": "(a)(l)", "parenthetical": "emphasis added" }, { "parenthetical": "i.e. the availability of water and sewer to Parcels [3] and [3A]" } ], "opinion_index": 0 }, { "cite": "N.C. Gen. Stat. \u00a7 105-283", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "weight": 5, "opinion_index": 0 } ], "analysis": { "cardinality": 1137, "char_count": 36799, "ocr_confidence": 0.716, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.18200404734021172 }, "sha256": "e62f1bb8fa25b7dace8a0bea60414fe32c992bc4749eba1a0ec005c1094fd8b3", "simhash": "1:eb4912e1065f3092", "word_count": 6042 }, "last_updated": "2023-07-14T17:57:00.832613+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges ELMORE and DAVIS concur." ], "parties": [ "IN THE MATTER OF APPEAL OF Pace/Dowd Properties Ltd. from the decisions of the Union County Board of Equalization and Review regarding the valuations of certain property for tax year 2010." ], "opinions": [ { "text": "McCullough, Judge.\nUnion County appeals from a decision by the North Carolina Tax Commission, holding that Union County used an arbitrary method of valuation in assessing two parcels of land owned by Pace/Dowd Properties, Ltd. Based on the following reasons, we affirm the decision of the North Carolina Tax Commission.\nI. Background\nUnion County appeals from a 24 January 2013 \u201cFinal Decision\u201d of the North Carolina Property Tax Commission (\u201cCommission\u201d) concerning the tax value of two parcels of land located within Union County. The two parcels of land at issue, purchased by appellee Pace/ Dowd Properties Ltd. (\u201cPace/Dowd\u201d), consist of Union County Tax Parcel Number 06-135-003 (\u201cParcel 3\u201d) and Parcel Number 06-135-003A (\u201cParcel 3A\u201d). Parcel 3 is comprised of 216 acres of land. Pace/Dowd purchased it in 2005 for $11,212,500, with the intent to develop Parcel 3 as the second and third phases of a residential development called \u201cLawson\u201d with 245 lots. Parcel 3A is comprised of 173.85 acres of land. It was purchased in 2003 for $7,375,298, with the intent to develop Parcel 3A as the fourth phase of the Lawson development with 404 lots.\nDuring Union County\u2019s 2008 countywide general reappraisal, Parcel 3 was valued by Union County at a property tax value of $10,201,240 and Parcel 3A was valued at $1,135,420. In 2009, Pace/Dowd did not appeal the tax valuations. However, in 2010, Pace/Dowd contested the value of both parcels by filing an appeal with the Union County Board of Equalization and Review (\u201cCounty Board\u201d).\nUnion County became aware it had wrongly classified Parcel 3A as a subdivision common area and notified Pace/Dowd that it was increasing the tax value of Parcel 3A to $9,166,280 effective 1 January 2008 for tax years 2008, 2009, and 2010. The County Board heard Pace/Dowd\u2019s challenges to Union County\u2019s assessments on 22 June 2010 and declined to consider Pace/Dowd\u2019s appeal on Parcel 3 for tax years 2008 and 2009. Furthermore, the County Board reduced the value of Parcel 3 from $10,201,240 to $7,975,200 effective 1 January 2010 and affirmed the valuation of Parcel 3A at $9,166,280.\nSubsequently, Pace/Dowd appealed to the Commission, presenting several issues. First, Pace/Dowd argued that the subject parcels were appraised in excess of the true value of the subject property as of 1 January 2008. Pace/Dowd asserted that the assigned values exceeded fair market value (\u201cFMV\u201d) as defined in N.C. Gen. Stat. \u00a7 105-283 and that the FMV of Parcel 3 should be $2,400,000 and the FMV of Parcel 3A should be $1,837,500. Next, Pace/Dowd argued that Union County applied an arbitrary method of appraisal in reaching the following values: Parcel 3 valued at $10,201,240 and later reduced to $7,975,220; Parcel 3A valued at $1,135,420 and later increased to $9,166,280. Lastly, Pace argued that Union County improperly \u201cdiscovered\u201d Parcel 3A for tax years 2008, 2009, and 2010.\nFollowing hearings held on 15 February 2012 and 18 April 2012, the Commission entered the \u201cFinal Decision\u201d on 24 January 2013. The Commission made the following findings of fact, in pertinent part:\n4. Under orders of the State of North Carolina (the \u201cState\u201d), Union County imposed a moratorium on new sewer taps in February 2007. Thereafter, the State denied Union County\u2019s request to expand its largest sewer treatment plant, and the moratorium continued.\n5. On September 17, 2007, Union County adopted the \u201cPolicy for Allocating Wastewater Treatment Capacity (\u201cSAP\u201d), after which the State allowed Union County to lift the moratorium.\n6. Pursuant to the SAP, 50 lots within Parcel [3] and 100 lots within Parcel [3A] were included within the first priority of properties to receive sewer and permits and 449 lots from Parcel [3] and [3A] were placed in the last priority of properties to receive sewer permits. Notwithstanding that [Pace/Dowd] purchased the subject parcels at purchase prices which included water and sewer capacity for residential development, the parcels were never developed.\n7. As of the January 1, 2008 countywide general reappraisal of all real property in Union County, Parcel [3] was assessed at a value of $10,210,240, and, based upon [Pace/Dowd\u2019s] 2010 appeal, the County Board reduced the assessment to a value of $7,975,220; and, based upon [Pace/Dowd\u2019s] 2010 appeal, Union County increased the assessed value of parcel [3A] from $1,135,420 to $9,166,280 and assigned the increased value of $9,116,280 for tax years 2008, 2009 and 2010. Further, Union County has collected taxes from [Pace/ Dowd] based on the increased value of Parcel [3A] ($9,166,280) for tax years 2008, 2009 and 2010.\n8. Union County is required to value all property for ad valorem tax purposes at its true value in money, which is \u201cmarket value.\u201d N.C. Gen. Stat. \u00a7 105-283....\n9. An important factor in determining the property\u2019s market value is its highest and best use. The highest and best use of the subject property, as improved, would be residential development....\n10. However, under orders of [the State], Union County imposed a moratorium on new sewer taps in February 2007, which caused declines in the market values of the subject parcels. Accordingly, Union County shall, whenever any real property is appraised, consider the factors set forth in N.C. Gen. Stat. \u00a7 105-317. In particular, Union County shall consider how the county\u2019s sewer allocation policy affects the market value of the subject parcels, and the availability of water and sewer to Parcels [3 and 3A].\n11. Consequently, [Pace/Dowd] did rebut the initial presumption of correctness as to Union County\u2019s assessments of the subject parcels by offering evidence tending to show that Union County used an arbitrary method of assessment and that Union County\u2019s assessments of the subject parcels substantially exceeded the market values of the parcels when the county assessed Parcel [3] at a value of $7,975,220; and by increasing the valuation of Parcel [3A] from $1,135,420 to $9,166,280, and when Union County did not consider the factors set forth in N.C. Gen. Stat. \u00a7 105-317 (i.e. the availability of water and sewer to Parcels [3 and 3A]).\n12. Accordingly, the burden then shifts to Union County to go forward with the evidence and to demonstrate that its methods would in fact produce true value[.]\n13. [T]he Commission . . . determines that Union County did not meet its burden regarding the valuations of the subject parcels when Union County did not consider certain relevant factors, as required by N.C. Gen. Stat. \u00a7 105-317[.]\n14. Accordingly, the Commission, when considering the expert testimony of Mr. Willcox [sic], finds that the true value in money, which is \u201cmarket value,\u201d as that term is defined in N.C. Gen. Stat. \u00a7 105-283, for Parcel [3] was $3,987,600, and the true value in money of Parcel [3A] was $4,583,140.\nThe Commission concluded that Pace/Dowd rebutted the presumption that Union County\u2019s ad valorem tax assessment was correct by showing that the county tax supervisor used an arbitrary method of valuation and that the assessments substantially exceeded the true value in money of the parcels. Furthermore, the Commission determined that the true value in money of Parcel 3 was $3,987,600 and the true value in money of Parcel 3A was $4,583,140 as of the 1 January 2008 appraisal.\nUnion County appeals.\nII. Standard of Review\nIn reviewing a decision from the North Carolina Property Tax Commission:\n[this] court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning and applicability of the terms of any Commission action. The court may affirm or reverse the decision of the Commission, declare the same null and void, or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the appellants have been prejudiced because the Commission\u2019s findings, inferences, conclusions or decisions are:\n(1) In violation of constitutional provisions; or\n(2) In excess of statutory authority or jurisdiction of the Commission; or\n(3) Made upon unlawful proceedings; or\n(4) Affected by other errors of law; or\n(5) Unsupported by competent material and substantial evidence in view of the entire record as submitted; or\n(6) Arbitrary or capricious.\nN.C. Gen. Stat. \u00a7 105-345.2(b) (2013).\n\u201c[A]n act is arbitrary when it is done without adequate determining principle.\u201d In re Parkdale Mills,_N.C. App._,_, 741 S.E.2d 416, 419 (2013) (citation omitted).\nOur Court \u201cshall review the whole record or such portions thereof as may be cited by any party and due account shall be taken of the rule of prejudicial error.\u201d N.C.G.S. \u00a7 105-345.2(c).\nThe \u201cwhole record\u201d test does not allow the reviewing court to replace the [Commission\u2019s] judgment as between two reasonably conflicting views, even though the court could justifiably have reached a different result had the matter been before it de novo. On the other hand, the \u201cwhole record\u201d rule requires the court, in determining the substantiality of evidence supporting the [Commission\u2019s] decision, to take into account whatever in the record fairly detracts from the weight of the [Commission\u2019s] evidence. Under the whole evidence rule, the court may not consider the evidence which in and of itself justifies the [Commission\u2019s] result, without taking into account contradictory evidence or evidence from which conflicting inferences could be drawn.\nIn re Parkdale Mills,_N.C. App. at_, 741 S.E.2d at 419 (citation omitted).\nHowever, \u201cthe \u2018whole record\u2019 test is not a tool of judicial intrusion; \u2018instead, it merely gives a reviewing court the capability to determine whether an administrative decision has a rational basis in the evidence.\u2019 \u201d In re Appeal of Owens, 132 N.C. App. 281, 286, 511 S.E.2d 319, 323 (1999) (citation omitted). \u201c[T]his Court cannot reweigh the evidence presented and substitute its evaluation for the Commission\u2019s.\u201d In re Parkdale Mills,_N.C. App. at_, 741 S.E.2d at 419 (citation omitted). \u201cIf the Commission\u2019s decision, considered in the light of the foregoing rules, is supported by substantial evidence, it cannot be overturned.\u201d In re Appeal of Philip Morris, 130 N.C. App. 529, 533, 503 S.E.2d 679, 682 (1998) (citation omitted).\nIII. Discussion\nOn appeal, Union County argues that the Commission erred by: (A) concluding that Pace/Dowd had rebutted the presumption that Union County\u2019s ad valorem tax assessment was correct by finding that Union County used an arbitrary method of valuation, resulting in a valuation of the parcels substantially exceeding the true values; (B) finding that as of 1 January 2008, the true values of the parcels were $3,987,600 for Parcel 3 and $4,683,140 for Parcel 3A; and (C) concluding, in conclusion of law number 3, that Pace/Dowd does not owe additional 2008 and 2009 taxes for Parcel 3A.\nA. Union County\u2019s Method of Valuation\nFirst, Union County asserts that the Commission erred by concluding that Pace/Dowd had rebutted the presumption set out in In re Appeal of Amp, Inc., 287 N.C. 547, 215 S.E.2d 752 (1975). Union County argues that the Commission erroneously found that Union County used an arbitrary method of valuation, resulting in a valuation of the parcels which substantially exceed the true value in money. We disagree.\nIn In re Appeal of Amp, Inc., 287 N.C. 547, 215 S.E.2d 752 (1975), our Supreme Court stated that it is a \u201csound and [] fundamental principle of law in this State that ad valorem tax assessments are presumed to be correct.\u201d Id. at 562, 215 S.E.2d at 761 (citation omitted). \u201c[T]he presumption is only one of fact and is therefore rebuttable.\u201d Id. at 563, 215 S.E.2d at 762 (hereinafter \u201cthe Amp presumption\u201d).\n[I]n order for the taxpayer to rebut the presumption he must produce competent, material and substantial evidence that tends to show that: (1) Either the county tax supervisor used an arbitrary method of valuation; or (2) the county tax supervisor used an illegal method of valuation; AND (3) the assessment substantially exceeded the true value in money of the property.\nId. (citations and quotation marks omitted) (emphasis in original). \u201c [I]t is not enough for the taxpayer to show that the means adopted by the tax supervisor were wrong, he must also show that the result arrived at is substantially greater than the true value in money of the property assessed, i.e., that the valuation was unreasonably high.\" Id. (citation omitted) (emphasis in original).\nN.C. Gen. Stat. \u00a7 105-286(a) (2013) provides:\n(a) Octennial Cycle. - Each county must reappraise all real property in accordance with the provisions of G.S. 105-283 and G.S. 105-317 as of January 1 of the year set out in the following schedule and every eighth year thereafter[.]\nN.C. Gen. Stat. \u00a7 105-283 (2013), entitled \u201cUniform appraisal standards,\u201d states that:\n[a]ll property, real and personal, shall as far as practicable be appraised or valued at its true value in money. When used in this Subchapter, the words \u201ctrue value\u201d shall be interpreted as meaning market value, that is, the price estimated in terms of money at which the property would change hands between a willing and financially able buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of all the uses to which the property is adapted and for which it is capable of being used.\nWhen real property is being appraised, our General Assembly has mandated that\nit shall be the duty of the persons making appraisals:\n(1) In determining the true value of land, to consider as to each tract, parcel, or lot separately listed at least its advantages and disadvantages as to location; zoning; quality of soil; waterpower; water privileges-,... adaptability for agricultural, timber-producing, commercial, industrial, or other uses;. . . . and any other factors that may affect its value except growing crops of a seasonal or annual nature.\nN.C. Gen. Stat. \u00a7 105-317(a)(l) (2013) (emphasis added).\nAt the hearing before the Commission, Pace/Dowd called four witnesses: Steven Pace, principal and president of Pace/Dowd who was tendered as an expert in real property acquisition and residential development; Robert Palmer Wilcox, Jr., an expert in soil science; Alfred Tucker, an appraiser; and Phillip Every, serving as an adverse witness.\nSteven Pace testified that Pace/Dowd purchased the parcels with the intention to develop Parcel 3 as phases 2 and 3 of the Lawson development, with 245 lots, and to develop Parcel 3A as phase 4 of the Lawson development, with 404 lots. When Pace/Dowd purchased the parcels, Pace/Dowd did not have sewer and water permits, but Steven Pace testified that he made the purchases after he \u201cconfirmed [verbally] with Union County that there would be absolutely no restrictions at all on me having sewer and water to develop this site[.]\u201d Steven Pace admitted that although he did not have written confirmation from Union County, he did receive reasonable assurances from the Director of Public Works that he would \u201cbe able to get sewer and water without any restrictions for capacity or moratoriums.\u201d At no point during his testimony did Steven Pace testify as to Union County\u2019s method of valuing the parcels.\nRobert Palmer Wilcox, Jr., a soil science expert with Soil and Material Engineers, testified regarding his evaluation of the septic system needs and sewer capacity of both parcels. Wilcox testified that in September 2007, he performed a preliminary soil evaluation of Parcel 3. Wilcox determined that greater than fifty (50) to sixty (60) percent of Parcel 3 was \u201cin that category of not being able to be utilized for septic suitability.\u201d In January 2012, Wilcox separately evaluated Parcel 3 and testified that there was no chance that the soil conditions could have changed from 1 January 2008. Wilcox\u2019s findings in regards to Parcel 3A were \u201cvery identical\u201d to the findings of Parcel 3 \u201cas there is very limited capacity to use on-site septic systems[.]\u201d\nPhillip Every, appraisal manager of Union County and mass appraiser certified by the State of North Carolina, testified that he reviewed the final numbers for the 1 January 2008 revaluation. Every testified, that as a mass appraiser valuing 93,000 parcels, he uses \u201cmodels to capture valuation - to reflect valuation in the marketplace and apply that to large masses of the properties to come up with a, hopefully, rational, reasonable reflection of the value of the property.\u201d As part of mass appraisal, a schedule of values (\u201cSOV\u201d) is developed. Every testified that a SOV is \u201cour means, our methods, our numbers we\u2019re going to use to determine valuation, and it has to be approved by our commissioners.\u201d \u201cThe objective of the schedules is to develop standards by which all property is valued at market value.\u201d Every agreed that \u201cfor a property to be developed residentially, you would have to have some sewer and water available\u201d and also agreed that all other things being equal, \u201cthe value of property with access to sewer and water... is greater than the value of the same property without the access.\u201d\nIn regards to the 1 January 2008 valuation, Every testified that Union County was required by statute to appraise the parcels at its true and actual value in money, which meant that Union County \u201cis required to consider each parcel separately listed as to its particular advantages and disadvantages and its adaptability to particular uses.\u201d Nonetheless, Every testified to the following:\n[Pace/Dowd:] Do you make a determination in carrying out that analysis of what the highest and best use of the property is?\n[Eveiy:] Yes.\n[Pace/Dowd:] Aud did you make a determination - did the County make a determination with respect to the Pace parcels as to what the highest and best use of those parcels were as of the date of revaluation?\n[Every:] We valued it as raw land. Large acreage, raw land.\n[Pace/Dowd:] Did you value it as raw land for residential construction or not for residential construction?\n[Every:] Just say large acreage of raw land. We didn\u2019t go any further than that.\n[Every:] We did not parse it down that fine, no. We valued the land all of the parts. We made no premium - put no premium on it to be a subdivision.\n[Pace/Dowd:] Okay. Now, did you - did the County, in conducting the reappraisal of these lots in connection with the countywide revaluation in January of 2008, take the SAP into account?\n[Every:] Directly, no.\n[Pace/Dowd:] When you say, \u201cDirectly, no,\u201d what do you mean?\n[Every:] In that this problem had been well-known for a great period of time, I believe back to 2003, that the County was our [SIC] sewer and water. I believe that the sales we used, the majority of the sales in this list were sold and bought knowing that sewer and water was an issue. So I believe that this problem was already accounted for in these land sales. So I believe in that way, yes, we did. Did we then go out and do something in addition after the sale? No, we didn\u2019t.\nFurthermore, Every testified that in selecting comparable parcels to assist in valuing the parcels at issue, Union County did not take sewer and water availability into account.\n[Every:] [W]e weren\u2019t going and looking at these large-acreage tracts and go, which ones have sewer and water, which ones don\u2019t. We just were looking at, we have sales, and there are large-acreage tracts, and we\u2019ll use them for the valuation of other large-acreage tracts.\nThe comparables Every used concerned sales of property made from 2004 through 2006. None of the comparables used were from dates on or after Union County adopted the SAP in 2007. Also, in selecting compara-bles, Every testified that Union County selected comparables that were within the same school district. When questioned regarding this method of selecting a comparable, the following exchange occurred:\n[Pace/Dowd:] And, Mr. Every, do you have any evidence that you\u2019re prepared to present that would say that the market value, the school zones of raw, undeveloped land would affect market value so significantly that you\u2019re only going to consider comparables in the same school zone?\n[Every:] I believe that location is a very well-established appraisal principle. You can get fairly close [geographically], and we did that.... And I believe, again, that in our - in our situation, schools are a prime driver....\n[Pace/Dowd:] But - but beyond just that general statement, you don\u2019t have anything specifically that would correlate property value to the school zone?\n[Every:] Do I have anything prepared for you today? No.\nEvery explained that he did not rely on any data that supported the idea that a specific school zone had a greater increase in value over a property located in another school zone but rather limited comparables to school zones because it was \u201cthe simplest solution.\u201d\nAlfred Louis Tucker, Jr., also testified at the hearing. Tucker, an expert witness for Pace/Dowd, testified that he owned his own appraisal company, A.O. Tucker and Associates. Tucker completed two appraisals of the properties; one on 29 June 2007 valued as of 12 June 2007, and one on 10 May 2011 valued as of 1 January 2008. The purpose of the June 2007 appraisal was for mortgage loan financing. As of 12 June 2007, Tucker appraised Parcel 3 at $14,565,000 and Parcel 3A at $15,321,750, with both of these values reflecting his assumption that sewer and water would be available.\nTucker also performed an appraisal of the parcels in May of 2011 valued as of 1 January 2008, the date of the last Union County tax revaluation. Parcel 3 was valued at $2,400,000 and Parcel 3A was valued at $1,837,500. Tucker\u2019s 2008 appraisal took into consideration the SAP, providing that \u201c [according to local developers and officials in the Union County Public Works Department, no water or sewer taps are expected to be available to the [parcels] for some 6 to 8 years from January 1,2008, the date of the last Union County tax revaluation.\u201d Union County argues, and Pace/Dowd concedes, that the Commission extensively questioned Tucker\u2019s 2007 appraisal and ultimately did not adopt his valuation or cite his opinion in the 24 January 2013 Final Decision.\nUnion County argues that even if Pace/Dowd was able to rebut the Amp presumption, Union County was able to establish that its method of valuing the parcels produced true values. Union County relies on Every\u2019s testimony to support its contention that there was no evidence to support the conclusion that Union County used an arbitrary appraisal method. However, we find this argument to be without merit. The evidence discussed above sufficiently supports the Commission\u2019s finding that Pace/Dowd rebutted the Amp presumption \u201cby offering evidence tending to show that Union County used an arbitrary method of assessment . . . when Union County did not consider the factors set forth in N.C. Gen. Stat. \u00a7 105-317 (i.e. the availability of water and sewer to Parcels [3] and [3A]).\u201d Applying the whole record test, we conclude that the Commission\u2019s finding is rationally based on testimony provided by Every, which established that Union County failed to consider water and sewer availability in its valuation of the parcels.\nBecause the challenged findings and conclusions of the Commission have a rational basis in the evidence and it is not our duty to substitute our judgment for that of the Commission, we overrule Union County\u2019s arguments.\nB. True Value of Parcel 3 and Parcel 3A as of 1 January 2008\nNext, Union County argues that the Commission erred by finding the true value of Parcel 3 to be $3,987,600 and Parcel 3A to be $4,583,140 as of the 1 January 2008 general reappraisal where there was no competent evidence in the record to support this valuation. We disagree.\nIn the 24 January 2013 \u201cFinal Decision,\u201d the Commission found the following:\n14. Accordingly, the Commission, when considering the expert testimony of Mr. Willcox [sic], finds that the true value in money, which is \u201cmarket value,\u201d as that term is defined in N.C. Gen. Stat. \u00a7 105-283, for Parcel [3] was $3,987,600, and the true value in money of Parcel [3A] was $4,583,140.\nIn a footnote to finding of fact 14, the Commission stated that:\nBased upon the expert testimony of Mr. Robert P. Willcox [sic], Jr., L.S.S., an expert in soil sites, Union County should reduce the county\u2019s values of Parcels [3] and [3A] by fifty percent (50%). (See' Stipulation 3(w) stating that the county contends the value of Parcel [3] to be $7,975,200. ($7,975,200 divided by 50% = $3,987,600 for Parcel [3] and $9,166,280 divided by 50% = $4,583,140 for Parcel [3A]).\nAfter thorough review, we conclude that the record sufficiently supports the Commission\u2019s finding that Union County\u2019s arbitrary method of assessment resulted in an assessment of the parcels that substantially exceeded the market values of the parcels. The Commission relied on Wilcox\u2019s testimony, which provided that greater than fifty (50) to sixty (60) percent of the parcels was \u201cin that category of not being able to be utilized for septic suitability.\u201d Based on Wilcox\u2019s expert testimony, the Commission reduced Union County\u2019s values of the parcels by fifty percent (50%) resulting in values of $3,987,600 ($7,975,200 divided by 50%) for Parcel 3 and $4,583,140 ($9,166,280 divided by 50%) for Parcel 3A. Accordingly, we overrule Union County\u2019s arguments.\nC. Conclusion of Law Number 3\nIn its last argument, Union County contends that the Commission erred by concluding the following:\n3. ... Union County improperly \u201cdiscovered\u201d Parcel [3A] for tax years 2008 and 2009 when N.C. Gen. Stat. \u00a7 105-287 is the applicable statute regarding [Pace\u2019s] appeal.\nOriginally, after Pace/Dowd challenged Union County\u2019s property tax values of Parcel 3A in 2010, Union County sent notice to Pace/Dowd that it had \u201cdiscovered\u201d Parcel 3A by increasing the value to $9,166,280 for tax years 2008 and 2009. This \u201cdiscovery\u201d implicates N.C. Gen. Stat. \u00a7 105-312 (2013), titled \u201cDiscovered property; appraisal; penalty.\u201d Union County now argues that N.C.G.S. \u00a7 105-287 is not applicable to the case subjudice and that N.C. Gen. Stat. \u00a7 105-394 is the correct statute regarding Pace/Dowd\u2019s appeal, allowing Union County to recover taxes on the corrected value of Parcel 3A for years 2008 and 2009. We disagree.\nN.C. Gen. Stat. \u00a7 105-287, titled \u201cChanging appraised value of real property in years in which general reappraisal is not made,\u201d provides the following:\n(a) In a year in which a general reappraisal of real property in the county is not made under G.S. 105-286, the property shall be listed at the value assigned when last appraised unless the value is changed in accordance with this section. The assessor shall increase or decrease the appraised value of real property, as determined under G.S. 105-286, to recognize a change in the property\u2019s value resulting from one or more of the following reasons....\nN.C.G.S. \u00a7 105-287(a) (2013). The statute proceeds to list reasons such as: to correct a clerical or mathematical error; to correct an appraisal error resulting from a misapplication of schedules, standards, and rules used in the county\u2019s most recent general appraisal; to recognize an increase or decrease in the value of the property resulting from a conservation or preservation agreement, a physical change in the land or improvements on the land, and a change in the legally permitted use of the property, etc. Id.\nN.C. Gen. Stat. \u00a7 105-394, titled \u201cImmaterial irregularities,\u201d provides the following:\nImmaterial irregularities in the listing, appraisal, or assessment of property for taxation or in the levy or collection of the property tax or in any other proceeding or requirement of this Subchapter shall not invalidate the tax imposed upon any property or any process of listing, appraisal, assessment, levy, collection, or any other proceeding under this Subchapter.\nN.C.G.S. \u00a7 105-394 (2013). Examples of immaterial irregularities are listed. Union County argues that \u201c[t]he failure to list, appraise, or assess any property for taxation or to levy any tax within the time prescribed by law\u201d is the applicable subsection to the facts before us. N.C.G.S. \u00a7 105-394(3).\nUnion County relies on two cases for their arguments: In re Appeal of Morgan, 186 N.C. App. 567, 652 S.E.2d 655, (2007), rev\u2019d, 362 N.C. 339, 661 S.E.2d 733 (2008), and In re Appeal of Dickey, 110 N.C. App. 823, 431 S.E.2d 203 (1993). However, we find both of the cases to be distinguishable from our present case and hold neither of these cases to be controlling.\nIn Morgan, although the taxpayers had listed their residence on the county tax listing form in 1993 and an appraiser with Henderson County\u2019s Tax Assessor\u2019s Office visited the taxpayers\u2019 property during countywide reappraisals in 1999 and 2003, the tax assessor failed to assess any taxes on the residence from the years 1995 through 2003. Morgan, 186 N.C. App. at 568, 652 S.E.2d at 656. In 2004, Henderson County\u2019s Tax Assessor\u2019s Office finally assessed taxes on the residence and asserted that the taxpayers owed back taxes and interest in the amount of $8,533.61 for tax years 1995 through 2003. Id. The Commission concluded, and our Court affirmed, that the failure of the tax assessor to assess taxes on the residence was not an \u201cimmaterial irregularity\u201d pursuant to N.C.G.S. \u00a7 105-394 and barred Henderson County from attempting to collect back taxes. Id. Our Court held that N.C.G.S. \u00a7 105-394 was \u201cintended to cover cases where there is no dispute that but for the clerical error, the tax would have been valid.\u201d Id. at 571, 652 S.E.2d at 658 (citation omitted) (emphasis in original). Henderson County\u2019s failure to assess the residence was not an \u201cimmaterial irregularity\u201d because it was neither a clerical nor administrative error. Id. at 570, 652 S.E.2d at 657. In a dissenting opinion, Judge Geer stated that the plain language of N.C.G.S. \u00a7 105-394 did not require that the failure to assess any property for taxation be due to a clerical or administrative error. Rather, Judge Geer opined that Henderson County\u2019s failure to assess the taxpayers\u2019 residence within the time prescribed by law constituted an immaterial irregularity pursuant to N.C.G.S. \u00a7 105-394 and that it did not invalidate the tax levied on the property. Id. For the reasons stated in Judge Geer\u2019s dissent, our Supreme Court reversed the Court of Appeal\u2019s opinion in In re Appeal of Morgan, 362 N.C. 339, 661 S.E.2d 733 (2008).\nIn Dickey, the taxpayers purchased a lot and a newly constructed house in 1988 for $272,500.00. The taxpayers submitted their \u201c1989 Property Tax Listing\u201d and the 1989 tax bill from Forsyth County assessed the taxpayers\u2019 real property valued at $37,500.00. Dickey, 110 N.C. App. at 824, 431 S.E.2d at 204. In 1990, the tax assessor notified the taxpayers that their property \u201cha[d] been taxed improperly\u201d for the year 1989. The tax assessor, \u201cpursuant to N.C.G.S. \u00a7 105-312 (discovered property), added to the previously assigned value the sum of $185,500.00, and assessed the [taxpayers] an additional $2,094.30 in taxes.\u201d Id. at 825, 431 S.E.2d at 204. The taxpayers appealed to Forsyth County, which dismissed their appeal. Id. The taxpayers then appealed to the Commission, and the Commission found that the taxpayers properly listed their house on the property tax listing dated 17 January 1989 \u201con a portion of the listing form which was designed to be tom off if it was not completed.\u201d The Commission stated that \u201c [ajfter receipt by the County, this portion of the form was removed and destroyed even though it had been completed by the [taxpayers.]\u201d Id. at 825, 431 S.E.2d at 204. Because the taxpayers submitted a timely and accurate property tax listing, the improvements on the taxpayers lot were not considered \u201cdiscovered\u201d property under N.C.G.S. \u00a7 105-312. Furthermore, the Commission found that because the tax assessor appraised the house at a value of $0.00 for the tax year 1989, pursuant to N.C.G.S. \u00a7 105-287, the assessor was authorized to reappraise the house in 1990. Such reappraisal was effective as of 1 January of the year in which it is made and was not retroactive. Id. at 825, 431 S.E.2d at 205. Forsyth County appealed. Our Court held that because the tax assessor never \u201cappraised\u201d the taxpayer\u2019s house for tax purposes in 1989 as defined in N.C.G.S. \u00a7 105-273, N.C.G.S. \u00a7 105-287 had no application. \u201cThere is no evidence that the Assessor prior to 1990 attempted to ascertain the true value of the [taxpayers\u2019] house, and it is undisputed that the true value of the house in 1989 was not zero dollars.\u201d Id. at 828, 431 S.E.2d at 206. Forsyth County argued that the tax assessor\u2019s failure to levy any tax on the house was an \u201cimmaterial irregularity\u201d and our Court agreed that N.C.G.S. \u00a7 105-394 applied since it had been previously established that \u201ca clerical error by a tax supervisor\u2019s office is an immaterial irregularity under G.S. 105-394 so as not to invalidate the tax levied on the property.\u201d Id. at 829, 431 S.E.2d at 207 (citing In re Notice of Attachment, 59 N.C. App. 332, 333-34, 296 S.E.2d 499, 500 (1982)).\nIn both Morgan and Dickey, the properties at issue had never been \u201cappraised\u201d as defined in N.C. Gen. Stat. \u00a7 105-273 or assessed for taxation purposes. The facts in both Morgan and Dickey support the conclusion that the tax assessors\u2019 actions constituted an \u201cimmaterial irregularity\u201d pursuant to N.C.G.S. \u00a7 105-394, in that the assessors failed \u201cto list, appraise, or assess any property for taxation or to levy any tax within the time prescribed by law.\u201d N.C.G.S. \u00a7 105-394(3) (2013). In the case sub judice, Union County did not fail to appraise the parcels for the years 2008 and 2009. To the contrary, Union County appraised the parcels, but did so using an arbitrary method of valuation that resulted in an assessment that substantially exceeded the true value of the parcels.\nBased on the foregoing, the Commission did not err by concluding that N.C.G.S. \u00a7 105-287 applied to Pace/Dowd\u2019s appeal, as Union County attempted to change the value of the parcels in a year in which a general reappraisal was not made. Furthermore, the Commission did not err by holding that Union County \u201cimproperly \u2018discovered\u2019 Parcel [3A] for tax years 2008 and 2009\u201d as the General Assembly has stated that \u201c[a]n increase or decrease in appraised value made under this section is effective as of January 1 of the year in which it is made and is not retroactive.\u201d N.C.G.S. \u00a7 105-287(c).\nAffirmed.\nJudges ELMORE and DAVIS concur.\n. N.C. Gen. Stat. \u00a7 105-273 (2013) defines \u201cappraisal\u201d as \u201c[t]he true value of property or the process by which true value is ascertained.\u201d", "type": "majority", "author": "McCullough, Judge." } ], "attorneys": [ "K&L Gates LLP, by Samuel T. Reaves, for Pace/Dowd Properties, Ltd.", "Hamilton Stephens Steele & Martin, PLLC, by Rebecca K Cheney, for Union County." ], "corrections": "", "head_matter": "IN THE MATTER OF APPEAL OF Pace/Dowd Properties Ltd. from the decisions of the Union County Board of Equalization and Review regarding the valuations of certain property for tax year 2010.\nNo. COA13-759\nFiled 18 March 2014\n1. Taxation \u2014 ad valorem tax \u2014 arbitrary method of valuation\u2014 findings of fact \u2014 conclusions of law \u2014 rational basis\nThe North Carolina Tax Commission did not err by holding that Union County used an arbitrary method of valuation in assessing two parcels of land owned by Pace/Dowd Properties, Ltd. The challenged findings and conclusions of the Commission had a rational basis in the evidence and it was not the duty of the Court of Appeals to substitute its judgment for that of the Commission.\n2. Taxation \u2014 ad valorem tax \u2014 true value \u2014 general reappraisal\nThe North Carolina Tax Commission (Commission) did not err in a tax valuation case by finding the true value of Parcel 3 to be $3,987,600 and Parcel 3A to be $4,583,140 as of the 1 January 2008 general reappraisal. The record sufficiently supported the Commission\u2019s finding that Union County\u2019s arbitrary method of assessment resulted in an assessment of the parcels that substantially exceeded the market values of the parcels. Based on expert testimony, the Commission reduced Union County\u2019s values of the parcels by fifty percent.\n3. Taxation \u2014 ad valorem tax \u2014 conclusions of law \u2014 improper discovery of parcel of land \u2014 increase or decrease in appraisal value not retroactive\nThe North Carolina Tax Commission did not err by holding in conclusion of law number three that Union County improperly discovered Parcel 3A for tax years 2008 and 2009. The General Assembly has stated that an increase or decrease in appraised value made under N.C.G.S. \u00a7 105-287(c) is effective as of January 1 of the year in which it is made and is not retroactive.\nAppeal by Union County from final decision entered 24 January 2013 by the North Carolina Property Tax Commission. Heard in the Court of Appeals 20 November 2013.\nK&L Gates LLP, by Samuel T. Reaves, for Pace/Dowd Properties, Ltd.\nHamilton Stephens Steele & Martin, PLLC, by Rebecca K Cheney, for Union County." }, "file_name": "0007-01", "first_page_order": 17, "last_page_order": 33 }