389 P.3d 287
N.M. Ct. App.2016Background
- 2727 San Pedro LLC (Appellant) owns a commercial office building in Albuquerque; the Bernalillo County Assessor originally valued it at $1,113,300 for 2014, later reduced to $900,200 before the protest hearing.
- Appellant protested and submitted income approach evidence using its actual operating expenses (projected 2014 APOD); Assessor relied on the income approach but limited operating expenses to 45% of effective gross income based on market research.
- At the Protests Board hearing Assessor’s appraiser (Jaramillo) conceded comparable-sales data were insufficient and explained the 45% expense cap derived from sources such as CoStar and Business Weekly, but did not quantify scope (property type, period) of that market data.
- The Protests Board adopted the Assessor’s $900,200 valuation, noting a preference to see the Assessor’s underlying market studies but concluding the Assessor’s approach was most reliable.
- The district court affirmed, concluding substantial evidence supported use of market data and treating Jaramillo’s testimony as competent evidence that the Assessor’s 45% expense cap policy existed; the court also assumed Appellant had overcome the presumption of correctness.
- On certiorari this Court examined whether substantial evidence showed the Assessor used "generally accepted appraisal techniques" when applying the income approach with a 45% expense limitation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether substantial evidence supported that the Assessor used generally accepted appraisal techniques in applying the income approach (45% expense cap). | Appellant argued the Assessor should have used Appellant’s actual expenses (projected APOD) and that the 45% blanket cap is not shown to be appropriate for this property/time. | Assessor argued market research (CoStar, Business Weekly, etc.) supports a 45% expense limit and such use of market data is a generally accepted technique. | Court held Jaramillo’s testimony was insufficient to show the 45% cap was properly applied to this property/time; remanded for further proceedings. |
| Whether Appellant overcame the statutory presumption of correctness of the Assessor’s valuation. | Appellant introduced its income-method valuation based on actual expenses to dispute the Assessor’s method/facts. | Assessor relied on presumption and its market-based policy. | Court treated the presumption as overcome (consistent with district court) shifting burden to Assessor to prove its method used generally accepted techniques. |
| Whether the Protests Board’s 2009 decision rejecting blanket expense caps estops the Assessor or controls the 2014 valuation. | Appellant relied on the 2009 Protests Board decision to show blanket caps are not generally accepted. | Assessor and district court downplayed the 2009 order’s relevance/precedential effect. | Court found the 2009 order raised questions about the acceptability of blanket caps and could not be ignored; it undercuts the Assessor’s showing absent supporting market data. |
| Whether the court may adopt Appellant’s proposed valuation on appeal. | Appellant asked the Court to adopt its valuation for 2014. | Assessor opposed. | Court declined to adopt Appellant’s valuation because Appellant’s calculation also lacked a demonstrated foundation under generally accepted appraisal techniques; remanded for further proceedings. |
Key Cases Cited
- First Nat’l Bank v. Bernalillo Cty. Valuation Protest Bd., 560 P.2d 174 (N.M. Ct. App. 1977) (taxpayer who overcomes presumption shifts burden to assessor to prove method used generally accepted appraisal techniques)
- Dick v. City of Portales, 883 P.2d 127 (N.M. 1994) (preservation rules are limited in administrative/quasi-judicial appeals; substantial-evidence review applies)
- Peterson Props. v. Valencia Cty. Valuation Protests Bd., 549 P.2d 1074 (N.M. Ct. App. 1976) (taxpayer must present evidence based on generally accepted appraisal techniques to overcome presumption)
- Four Hills Country Club v. Bernalillo Cty. Prop. Tax Protest Bd., 616 P.2d 422 (N.M. Ct. App. 1979) (factfinder should not accept an expert who merely parrots hearsay market opinions without independent foundation)
- Willow Valley Manor, Inc. v. Lancaster Cty. Bd. of Assessment Appeals, 810 A.2d 720 (Pa. Commw. Ct. 2002) (in estimating expenses appraiser must consider actual expenses and industry standards)
- Smith v. Bd. of Supervisors of Fairfax Cty., 361 S.E.2d 351 (Va. 1987) (contract rent and actual expenses must be considered when capitalizing income for assessment purposes)