275 P.3d 56
Kan. Ct. App.2012Background
- Prieb Properties, LLC appeals a COTA valuation order for 2006 and 2007 ad valorem taxes on a 45,814-square-foot Topeka retail building leased to Best Buy.
- The property was valued by Shawnee County at $4,291,900 (2006) and $3,850,000 (2007); Prieb sought $2,520,000 for each year.
- COTA initially valued at $3,337,000 (2006) and $3,850,000 (2007); Judge Kubik dissented in favor of Prieb’s proposed values.
- The property is governed by a build-to-suit lease from 1996, with first-generation build-to-suit rents of about $10.50–$11 per square foot.
- Prieb argues COTA erred on res judicata/collateral estoppel, COTA’s constitution when certifying the order, and reliance on build-to-suit rents for market value.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Res judicata/collateral estoppel applicability | Prieb contends BOTA/earlier decision bars change | Shawnee County argues issues not preserved and years differ | Not applicable; years differ and issues not preserved |
| COTA constitution at certification | COTA was improperly constituted when the order was certified | COTA membership valid; successor appointment pending | Harmless error; certification valid despite timing |
| Reliability of build-to-suit rental rates for market value | Build-to-suit rents do not reflect market value | County relied on available appraisals and comparables | Build-to-suit rents are not intrinsically market rents and cannot be used without adjustments |
| Value basis—fee simple vs leased fee | Value should reflect fee simple interest | Property under lease should be valued as leased fee | Kansas ad valorem taxation contemplates fee simple valuation; value must reflect fee simple |
Key Cases Cited
- In re Tax Appeal of Fleet, 293 Kan. 768 (2012) (res judicata and annual tax-year differences affect appeal scope)
- In re Tax Complaint of Wine, 46 Kan. App. 2d 134 (2011) (value of fee simple not inflated by leases; capitalization of rents inappropriate)
- In re Appeal of K-Mart Corp., 238 Kan. 393 (1985) (stare decisis not generally binding on agencies; need reasoned explanations for deviation)
- Amoco Production Co., 33 Kan. App. 2d 329 (2004) (precedent on valuing fee simple vs leased fee in ad valorem context)
- Horizon Tele-Communications, Inc., 241 Kan. 193 (1987) (substantial evidence standard; deference to agency determinations)