County of Douglas v. Nebraska Tax Equal. & Rev. Comm.
296 Neb. 501
| Neb. | 2017Background
- The Nebraska Property Tax Administrator (PTA) submitted a statewide equalization report recommending valuation adjustments for three residential valuation-area subclasses in Douglas County (Areas 2, 3, and 4) based on sales-ratio studies from the state sales file.
- PTA recommended increasing Areas 3 and 4 by 7% and making no change to Area 2; TERC voted to increase Areas 3 and 4 by 7% and decrease Area 2 by 8% after a show-cause hearing.
- Douglas County’s chief field deputy, Jack Baines, testified that Douglas County’s historical assessment practices (e.g., lack of sales verification, possible sales-chasing) undermined the reliability of the sales file data and that reappraisal/model recalibration—not blanket equalization—was the correct remedy.
- After TERC’s vote but before a written order, Douglas County submitted a motion to reconsider with an affidavit alleging the PTA had included sales the county had marked as non-arm’s-length (and misallocated sales among valuation areas) without required notice; TERC denied the motion 2–1.
- The Nebraska Supreme Court reviewed TERC’s order (de novo on legal questions, for competence and arbitrariness on record) and affirmed in part and reversed in part: it reversed the Area 2 decrease, affirmed the increases for Areas 3 and 4, and upheld denial of the motion to reconsider.
Issues
| Issue | Plaintiff's Argument (Douglas County) | Defendant's Argument (TERC/PTA) | Held |
|---|---|---|---|
| Whether TERC’s decrease to Area 2 was supported by competent evidence and not arbitrary | Area 2’s high dispersion (COD) and vertical inequity (PRD) show the median is unreliable; sales skewed by many low-value sales; equalization cannot fix nonuniformity—reappraisal/model recalibration required | TERC relied on the PTA report median showing Area 2 out of statutory range and exercised equalization authority to remedy level concerns | Court: Reverse. TERC’s 8% decrease for Area 2 lacked competent evidence and was arbitrary; dispersion/vertical inequity required reappraisal rather than blanket equalization. |
| Whether TERC’s increases to Areas 3 and 4 were supported by competent evidence and reasonable | The county argued sales-file unreliability (sales verification failures, possible sales-chasing) made medians unreliable; thus no changes should be ordered | PTA relied on sales-ratio statistics: medians < statutory range, acceptable CODs/PRDs near limits, narrow 95% confidence intervals fully outside statutory range—supporting increases | Court: Affirm. TERC reasonably relied on PTA data; increases for Areas 3 and 4 were supported by competent evidence and not arbitrary. |
| Whether Douglas County’s post-hearing motion to reconsider should have been granted based on alleged improper inclusion/categorization of sales | The county presented an affidavit alleging PTA included sales the county had marked nonusable and misallocated sales among areas, claiming violation of regulation and data unreliability | TERC: allegations could have been raised at the show-cause hearing; AVU is not the vehicle for sales usability notice; county failed to show the sales-worksheet categorizations were contradicted or the misallocations’ impact | Court: Affirm. TERC did not abuse discretion in denying the motion; county delayed, failed to show material impact, and offered no proof sales-worksheet categorizations were overridden improperly. |
| Proper remedy for high dispersion/vertical inequity in assessment ratios | County: equalization adjustments are inappropriate for dispersion/vertical inequity; reappraisal/model recalibration is required | TERC: used equalization authority to adjust levels across area despite dispersion concerns | Court: Clarifies law—where COD/PRD show lack of uniformity, reappraisal (not blanket equalization) is the appropriate corrective tool; equalization cannot correct internal nonuniformity. |
Key Cases Cited
- County of Douglas v. Nebraska Tax Equal. & Rev. Comm., 262 Neb. 578 (Neb. 2001) (discusses TERC equalization authority and methodology)
- Douglas County v. Archie, 295 Neb. 674 (Neb. 2017) (standards for reviewing agency decisions and mass appraisal principles)
- State v. Bao, 269 Neb. 127 (Neb. 2005) (motion-for-reconsideration/new-trial procedural discussion)
- State v. Cerritos-Valdez, 295 Neb. 563 (Neb. 2017) (abuse-of-discretion standard explained)