214 Cal. App. 4th 720
Cal. Ct. App.2013Background
- Kern County appeals a trial court judgment that reversed an Assessment Appeals Board (board) ruling increasing plaintiffs’ 2006–2007 wind farm property valuations and related taxes.
- Sky River LLC and Mojave 16/17/18 LLC challenged the board’s determinations after the county value increased, pursuing refunds.
- The trial court found the assessor’s methodology flawed, adopted plaintiffs’ figures, and ordered recalculated values and refunds.
- The county contends the trial court used the wrong standard of review, admitted new evidence, and erred in rejecting certain revenue figures.
- The court ultimately held the proper standard was de novo for method-based challenges, admitted trial evidence, but remanded for remaining factual determinations.
- Remand was required because factual issues—especially the appropriate income tax rate for converting after-tax to before-tax discount rates—remained unresolved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review in method challenges | Maples-based de novo review for method. | Board findings treated as factual, review for substantial evidence. | De novo review for method; proper standard identified. |
| Income tax rate for conversion in the income approach | Use the potential purchaser's marginal rate as the handbook requires. | Use an average or expected rate as proposed by the board and assessor. | Marginal rate appropriate; average rate erroneous; remand for proper rate. |
| Admissibility of new trial evidence | Trial court may admit evidence challenging valuation method. | Only the administrative record should be used; new appraisals improper. | New appraisals admissible to challenge method; no error in trial court. |
| Remand vs. mathematical recalculation | Existing trial appraisals suffice to determine value. | Remand unnecessary if calculations can be recalculated. | Remand required to determine the correct rate and recompute value. |
Key Cases Cited
- Maples v. Kern County Assessment Appeals Bd., 96 Cal.App.4th 1007 (Cal. App. Dist. 4th 2002) (distinguishes method challenges (de novo) from application of facts (substantial evidence))
- Bret Harte Inn, Inc. v. City and County of San Francisco, 16 Cal.3d 14 (Cal. 1976) (valuation method validity is a question of law when challenged)
- ITT World Communications, Inc. v. County of Santa Clara, 101 Cal.App.3d 246 (Cal. App. Dist. 4th 1980) (whether board’s method is illegal is a legal question)
- Bontrager v. Siskiyou County Assessment Appeals Bd., 97 Cal.App.4th 325 (Cal. App. Dist. 6th 2002) (actual rate vs. face rate in debt component; method legality)
- Plaza Hollister Ltd. Partnership v. County of San Benito, 72 Cal.App.4th 1 (Cal. App. Dist. 6th 1999) (remand when valuation requires exercise of valuation function)