277 P.3d 1135
Kan. Ct. App.2011Background
- Johnson County appeals COTA's 2008 ad valorem valuation of Joseph J. Brocato's 17,948 sq ft retail center in Overland Park, noting 50% vacancy since 2004 and access problems; property divided for multiple tenants; County proposed $2,871,100 and Brocato proposed not exceeding $1,794,800; COTA set $2,225,000.
- County used valuations from Linda Clark relying on income approach with market-based inputs: market rent $12–$20, used $16 initially, but actual rents were $18–$20.50; expenses $0.70–$2.65, used $1.25; vacancy 4% but rent loss adjustment added later; cap rate 8.25%.
- Brocato testified inputs differed (rental rate $14, expenses $3.77 or higher, chronic vacancy, access issues) and offered evidence of historic vacancy.
- COTA concluded value should be $2,225,000 using County inputs but with two of Brocato's inputs; found Brocato's testimony unsupported.
- Court notes errors in COTA’s methodology (rental rate, expenses, vacancy handling) and remands to apply USPAP standards and proper vacancy treatment.
- Decision reversed and remanded with directions to redetermine value consistent with USPAP and property-specific vacancy evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| whether COTA's valuation is supported by substantial evidence | Brocato | County | No; valuation not supported by substantial evidence on key inputs |
| whether rental rate and expense inputs were properly chosen | Brocato | County | No; inputs not adequately supported by record evidence |
| whether vacancy treatment was proper under USPAP | Brocato | County | No; chronic vacancy not accounted correctly; rent loss not proper mechanism |
| whether the court should remand for proper application of USPAP and vacancy data | Brocato | County | Yes; remand with directions for correct valuations |
Key Cases Cited
- Herrera-Gallegos v. H & H Delivery Service, Inc., 212 P.3d 239 (Kan. Ct. App. 2009) (substantial-evidence review; consider all evidence including detracting)
- Board of Saline County Comm'rs v. Jensen, 88 P.3d 242 (Kan. App. 2004) (adoption of USPAP standards; appraisal practice governs valuation)