County of Douglas v. Nebraska Tax. Equal. & Rev. Comm.
296 Neb. 501
| Neb. | 2017Background
- TERC held a statewide equalization hearing and the PTA submitted a report recommending adjustments to residential valuation in Douglas County by valuation-area subclasses.
- PTA recommended increasing Areas 3 and 4 by 7% (medians ~89.77% and 90.08%) and recommended no change for Area 2 (median 104.82%) because quality statistics showed high dispersion.
- At the show-cause hearing Douglas County (through Chief Field Deputy Jack Baines) contested the PTA data, alleging unreliable sales data, verification failures, and sales-chasing; Baines recommended model fixes/reappraisal rather than blanket adjustments.
- TERC voted to increase Areas 3 and 4 by 7% and to decrease Area 2 by 8%; Douglas County moved to reconsider, submitting an affidavit alleging the PTA included county-designated non-arm’s-length sales and misallocated sales among areas.
- TERC denied the motion to reconsider (2–1) and issued its written order; Douglas County appealed to the Nebraska Supreme Court (bypass granted).
- The Supreme Court reversed TERC’s Area 2 decrease (finding lack of competent evidence and arbitrariness) but affirmed the increases for Areas 3 and 4 and upheld denial of the motion to reconsider.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TERC’s 8% decrease for Area 2 was lawful and supported by competent evidence | Area 2’s high COD and PRD show non-uniformity; equalization cannot fix dispersion; PTA’s median unreliable; decrease was unsupported and arbitrary | TERC relied on PTA median and believed an adjustment necessary to address overassessment of low-value properties | Reversed: decrease to Area 2 unsupported by competent evidence, arbitrary and unreasonable; reappraisal, not equalization, is appropriate for dispersion/vertical inequity |
| Whether TERC’s 7% increases for Areas 3 and 4 were lawful and supported by competent evidence | County argued PTA’s sales-file data unreliable (sales verification failures, possible sales-chasing), so medians are unreliable | PTA presented medians, COD, PRD, and tight 95% confidence intervals showing medians reliably below statutory range | Affirmed: increases to Areas 3 and 4 supported by competent evidence and not arbitrary or unreasonable |
| Whether TERC abused its discretion by denying Douglas County’s motion to reconsider | Motion and Baines affidavit showed PTA included county-designated non-arm’s-length sales and misallocated sales among areas; TERC should have reopened the record | TERC argued the AVU is not the vehicle for sales usability categorization; alleged discrepancies could/should have been raised at the hearing; County failed to show impact on medians | Affirmed: denial of reconsideration not an abuse of discretion; County delayed raising issues and failed to show material impact on results |
| Proper remedy for assessment problems of dispersion and vertical inequity | County: adjustments should not be made via TERC equalization when data unreliable; suggests model recalibration/reappraisal | PTA/TERC: where medians and quality statistics reliably show out-of-range levels, equalization is permissible | Court: equalization is proper when central-tendency indicators are reliable; but reappraisal is the correct remedy for lack of uniformity/vertical inequity when data do not cluster |
Key Cases Cited
- County of Douglas v. Nebraska Tax Equal. & Rev. Comm., 262 Neb. 578, 635 N.W.2d 413 (Neb. 2001) (discusses TERC’s authority and equalization principles)
- Douglas County v. Archie, 295 Neb. 674, 891 N.W.2d 93 (Neb. 2017) (addresses review standards and statistical measures in assessment equalization)
- State v. Cerritos-Valdez, 295 Neb. 563, 889 N.W.2d 605 (Neb. 2017) (defines abuse-of-discretion standard referenced for reconsideration)