950 N.W.2d 160
N.D.2020Background
- Four taxpayers (two apartment complexes, two hotels in Dickinson) sought 2016 property tax abatements/refunds after large valuation disputes with the City (differences of ~$1.8M to $20.3M).
- The City Assessor used a replacement-cost approach; taxpayers submitted income‑approach valuations. The assessor said he could not perform an income approach because taxpayers did not provide income data.
- The Stark County Board held a special hearing with a compressed agenda; taxpayers’ counsel, fearing time limits, submitted an "offer of proof" instead of calling witnesses.
- The assessor conceded at the hearing that, based on his experience, the properties could not have sold in 2016 for their assessed values (i.e., assessed values exceeded market/true and full value).
- The Board issued identical, conclusory denials, stating the assessor’s valuations were not erroneous and that taxpayers had not provided sufficient information; the district court affirmed.
- The North Dakota Supreme Court reversed, holding the Board acted arbitrarily and unreasonably by adopting assessments the assessor conceded exceeded true and full value and remanded for a new hearing to determine true and full value.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Board applied an improper standard (acted as appellate reviewer of assessor rather than independent factfinder) | Board improperly focused on whether assessor followed process instead of independently determining true and full value from all evidence | Board considered assessor's recommendation and process appropriately and may rely on assessor's methods | Court: Board used the wrong focus; it adopted assessment despite evidence (assessor conceded) that assessments exceeded true and full value, making the Board's action arbitrary and unreasonable |
| Whether the Board's denials were arbitrary, capricious, or unreasonable | Denials arbitrary because only evidence showed assessments exceeded true and full value; statute requires correction when assessments exceed true value | Board reasonably concluded assessor's valuations were not in error and taxpayers failed to supply sufficient evidence | Court: Reversed — adopting assessments known to exceed true and full value is contrary to statutory duty and therefore arbitrary/unreasonable |
| Whether taxpayers were denied due process by hearing format and time constraints | Time limits and unclear responses effectively denied opportunity to present live witness testimony | Board never explicitly barred witnesses; written submissions and oral summary suffice for quasi‑judicial board; no statutory violation | Court: No due process violation found — opportunity to be heard was adequate, and offers of proof/written materials may be considered by the Board |
| Whether use of unexplained multipliers rendered assessments arbitrary | Multipliers inflated assessments (~85%) without explanation, undermining reliability of valuations | Multipliers are a methodological tool; true and full value must be determined regardless of method | Court: Did not decide on multipliers (remanded), but noted unexplained methodology could be relevant to arbitrariness analysis |
Key Cases Cited
- Dakota Northwestern Assocs. v. Burleigh Cty. Bd. of Cty. Comm’rs, 616 N.W.2d 349 (N.D. 2000) (sets limited "arbitrary, capricious, or unreasonable" standard for reviewing local taxing bodies)
- Ulvedal v. Bd. of Cty. Comm’rs of Grand Forks Cty., 434 N.W.2d 707 (N.D. 1989) (courts must defer to taxing authorities on weight/credibility of valuation evidence)
- Am. Crystal Sugar Co. v. Traill Cty. Bd. of Comm’rs, 714 N.W.2d 851 (N.D. 2006) (boards are not judicial tribunals; due process requires meaningful opportunity to be heard, not judicial procedures)
- Koch Hydrocarbon Co. v. State Bd. of Equalization, 454 N.W.2d 508 (N.D. 1990) (boards may consider information not admissible in courts and may rely on members’ knowledge/experience)