*1 HOMES, INC., an Alaska COOL
Corporation, Appellant,
v. BOROUGH, STAR
FAIRBANKS NORTH
Tax List the Fairbanks Foreclosure Borough Against
North Star Certain Property
Real Located Therein and De Petition, Appellee.
scribed This HOMES, INC., an Alaska
COOL
Corporation, Appellant,
v.
FAIRBANKS NORTH STAR
BOROUGH, Appellee. HOMES, INC., Corpora an Alaska
COOL
tion, Lomond, Inc., and Ben a Utah
Corporation, Appellants,
v.
FAIRBANKS NORTH STAR BOROUGH EQUALIZATION,
BOARD OF
Appellee.
FAIRBANKS STAR NORTH BOROUGH EQUALIZATION,
BOARD OF
Cross-Appellant, HOMES, INC., an
COOL Alaska
Corporation, Cross-
Appellees. S-3995, S-4337,
Nos. S-4338 and S-4353.
Supreme Court of Alaska. 29, 1993.
Oct. *4 Wadsworth, M. As-
Brent Wadsworth & sociates, Anchorage, appellants/cross- appellees.
Eugеne Hardy, Borough Atty., Mark An- Fairbanks, drews, Borough Atty., Asst. appellee/cross-appellant. Call, Call, Burbank, H. Barrett &
David Fairbanks, Co., amicus for Aetna Life Ins. curiae. RABINOWITZ, C.J.,
Before and BURKE, MATTHEWS, and COMPTON MOORE, JJ.
OPINION PER CURIAM. out of the refusal of
These cases arise Homes, (CoolHomes) prop- pay Inc. provides for a nominal against byit the Fair- lease rental. assessed erty taxes turn, government, The federal leased the (Borough). The Borough North Star banks housing development underlying land following separate issues. raise the appeals from Ben Lomond for an annual lease rent- in No. S-3995 is whether The issue $3,600,000.00plus al of an annual mainte- summary granting superior court erred “Project nance fee. The term of this Homes in the Bor- against Cool judgment twenty years, running Lease” is concur- Homes’ in- foreclose Cool ough’s action to rently twenty years with the last Air Force buildings in its on Eielson terest Land Lease. buildings The court ordered the sold Base. The Land Lease is authorized under 10 for the and transferred provides: U.S.C. § interest, taxes, penalties, adver- amount of tising legal fees for which costs (a) Secretary Whenever the of a mili- property is liable. tary department considers it advanta- States, geous to the United he lease arises out of an action No. S-4337 to such lessee and such terms as he against personal judgment for a promote the considers will national de- Borough sought per- Cool Homes. interest, public fense or real or property tax- judgment sonal to recover the personаl property that is *5 against Homes' leasehold es assessed Cool land, (1) including statutory depart- under the control interest in the ment; penalties superior and interest. The court granted summary judgment in favor of the (2) public not for the time needed for Borough. The issue thus is whether Cool use; and may personally held under Homes be liable (3) property, by not excess as defined
the assessment and foreclosure statutes.
Property
the Federal
section 3 of
Nos. S-4338-4353 raise several discrete
(40
Administrative Services Act of 1949
concerning the
of the
issues
reassessment
472).
U.S.C.
including
properties,
Cool Homes’
whether
Borough
Meetings
Open
violated the
(e)
property
The interest of a lessee of
during
process,
Act
the reassessment
leased under this section'
taxed
be
taxing authority
relative burdens
by
governments.
or local
State
A lease
owner,
property
adjustments
and the
that,
provide
under
shall
if
this section
lease restrictions and whether the
proper-
and to
extent
leased
permitting
court
in
abused
discretion
ty
is later made taxable
State or local
supplementation
appeal.
of the record on
governments
an
Congress,
under
Act of
renegotiated.
the lease shall be
I. FACTUAL AND PROCEDURAL
Project
Lease is authorized under
BACKGROUND
Military
Construction Authorization
backdrop
appeals
for these
is set
(Act),
Act of 1984
Section
codified as
Lomond,
generally
forth
in Ben
Inc. v. 10
inaugurated
U.S.C. 2828. The Act
§
Borough
Fairbanks North Star
Board
program
test
if leasing
“to determine
(Alaska 1988).
Equalization,
II. DISCUSSION traditionally enforce liens on taxable inter- A. No. S-3995 tax-exempt property. ests It cites cases jurisdictions support from other OF REVIEW STANDARD position it upon foreclose ownership improvements, interest reviewing grant of sum “When notwithstanding the location of the build- must determine judgment, this court mary ings tax-exempt property. federal genuine issue of mate there was a whether Borough argues separation that such moving party rial fact and whether property purposes per- interests for tax applicable the law judgment on entitled to IX, mitted under article section 4 of the facts.” Merdes v. Un to the established Alaska Constitution.2 245, (Alaska 1987) derwood, 742 P.2d v. German (quoting Zeman agree Borough. We Ben Lufthansa (Alaska Airlines, Lomond, 760 P.2d at we stated that 1985)). matters of The court considers law Ben Lomond’s Cool “interest [now Homes’] adopts rules of law which are de novo and improvements upon it constructed light precedent, rea persuasive most the land under the [is taxable] Ha, (em- policy. property son and real taxation statutes.” Id. Guin added). 1979). phasis argument (Alaska CoolHomes’ 1284 n. 6 buildings personal property are be- corporation cause the does not own the FOR 2. THE BOROUGH’S MOTION underlying ignores previ- land the court’s JUDGMENT SUMMARY explicit holding ous that the property.3 are real Property a. Cool Homes Has a Interest Subject to Foreclosure. argument buildings foreclose on the collect cannot distinguishes its two delinquent merit. taxes also without First, taxed. it interests that have been Ownership consists of bundle in the land has a leasehold interest separate rights, powers privilеges. military housing.1 which it constructed Burby, E. e.g., Wm. Handbook on the See Second, ownership an interest in the has (3rd Property at 13-14 Law Real § buildings it constructed. Cool Homes ar *7 1965). Although does not ed. Cool Homes buildings gues that the cannot be consid land, underlying own the it owns the build- property any connection to ered real absent ings it on Eielson Air Force constructed Homes, According the land. to Cool Base. buildings subject interest in the is not gov property real taxes since the federal appears There to be no insurmountable underlying ernment owns the land. Cool difficulty foreclosing on the houses with- buildings Homes concedes that the are tax foreclosing on the land. This out was Hart, 517, personal property, as but maintains v. able situation Brown 213 Mont. (1984), upheld 14 they subject are not to foreclosure. where example practice separating property of 1. Cool Homes concedes that its leasehold inter- Nome, argues purposes. taxable. It can- City est is not foreclose on it since the land is owned interests for tax In we by IX, spatial held that article section 4 mandates However, government. the federal property apportionment exempt all into did not foreclose on Cool Homes’ leasehold in- Thus, nonexempt portions. city Id. at 881. terest. portions could not tax of a church used exclu- sively religious, charitable or educational IX, 2. Article section 4 of the Alaska Constitution purposes, portions could tax but other of, ”[a]ll, permits any portion property” to be building. Id. at same exempt from taxation. City Bishop 3.See Nome v. Catholic North- Alaska, 1985), (Alaska as an ern 870 position government The federal is cabin on privately of a owned
the tax sale that of a tenant whose landlord Brown, similar to the court stated: land. federal pay property has failed to taxes. The ten- on question is located The cabin prevent foreclosure the tax- ant cannot Seeley Lake. It land on Forest Service authority, ing just as tenant cannot twenty years ago than built more prevent by private foreclosure creditor if foundation, and, is although it lacks mortgage pay- to make the landlord fails by means of water to the land “affixed” ments.5 hair-splitting dis- lines. No and sewer however, are, required. The tinctions Appeal b. Cool Homes’ of its Tax As-
cabin, long it remains so Superior sessment and the Court’s land, objective An property.... is real Remand for Reassessment Precludes taxing authority need applies: test Foreclosure. structure; present observe parties intentions of the are or future argues that no valid building rest- The cabin is a irrelevant. 22, 1989, May existed until tax assessment may The fact that it ing on the land. Equalization when the Board of reassessed moved or have to be removed property following remand of the 1986- not, recording for tax and future does to it court. 88 assessments change the nature of the cabin purposes, provide Alaska statutes that an annu Since property. as real al foreclosure list must be on the based assessment, 29.45.330, previous year’s P.2d at 15-16. also First Nation- See argues on v. Cool Homes that foreclosure Beresford, South Dakota al Bank of (S.D.1983) Anderson, could not occur until 1990. 1989 assessment 332 N.W.2d argues Homes also that interest (holding that real estate can be severed begin against to accrue exemption penalties and the could not preserve a homestead May until when a corporation sold to sat- non-exempt remainder ordered made. valid assessment was isfy money judgment). a civil stat- Borough argues that Alaska distinguishable simply Brown is not pay a landowner to the taxes non-posses- require is utes Homes’ interest because Cool if the' and then sue for a refund nature of Cool assessed sory. non-possessory is errone- taxpayer the assessment precludes neither taxation believes Homes’ interest According Borough, ous. nor foreclosure.4 Anchorage City generally 5. Cool Homes’ reliance liable for taxes on the 4. A lessor is Baker, (Alaska 1962), though misplaced. the lessor’s interest even P.2d 482 leased represents only non-possessory First, a fraction interpretation of a involved the Baker property. M. Second, value of the Frank of the total longer in effect. law no territorial Keesling, Property Other Taxation Leases and appeal is not a leasehold interest at issue in Interests, 47 Calif.L.Rev. *8 476-77 Limited buildings it owns the interest. Cool Homes case, (1959). project specifical- lease In this the Finally, Air Force Base. constructed at Eielson any ly provided was liable for that Cool Homes holding than is much narrower the Baker against property. the Under taxes assessed Contrary suggests. Cool Homes' to Cool Homes belief, law, upon property a lien the taxes are Alaska of hold that foreclosure the court did not for property be foreclosed assessed general is fruitless. leasehold interests in pay the taxes owned. failure to leasehold of Baker’s held that foreclosure court 29.45.300(b) provides: Alaska Statute city the to the because be of value would no taxes, penalty Property together in- with and the Alaska Baker and lease between written assessed, terest, property lien the are a of Baker’s provided forfeiture for Railroad prior paramount and to all and the lien is against pay levied rights all taxes if he failed to against prop- liens or encumbrances the other erty. Baker, at land. on the 483. 29.45.320(a) provides: Alaska Statute municipality delinquent real shall enforce foreclosure, property annual un- tax liens provided less otherwise ordinance. a rever- stage. taxpayer has obtained and avoided the interest could have foreclosure, the action of the Board and vacation by paying sal of penalties as well assessment, has the and the matter been The Bor- of against it. the taxes assessed rectify its er- remanded to the Board Homes could that Cool ough also asserts rors.7 of the tax assess- stayed execution have appeal by posting bond. pending
ment Borough’s summarily rejected8 the We pay any of has failed to Cool Homes Since may proceed that it with fore- argument post and failed to bond taxes superior notwithstanding closure enforcement, tax stay execution of Equaliza- Board of court’s remand to the it entitled to fore- Borough argues that is the amount for reassessment.9 Since tion buildings. close on Cool tax due had not been determined of the foreclosure, Borough initiated when the provide aggrieved Alaska statutes its lien had not established. amount of been remedies. The taxpayers with a number of penalties could not be deter- Interest and protest taxpayer may pay taxes under and mined, figure since there was no on which taxpayer is a refund. If the then sue for taxpayer’s right them. The of re- to base refund, he or she receives entitled to a the tax- demption impaired, because costs, and in addition to interest payer could not ascertain what amount collected in amount of taxes that had been right.10 pay to avail itself of the had 29.45.500(a).6 addition, In a tax error. AS stay tax execu payer can obtain a of the and Interest. appeals superior c. Penalties pending
tion City by posting supreme courts bond. of calculating obligations the tax on re- Bishop Northern Nome v. Catholic court must decide mand Alaska, 1985). (Alaska payment penalties late and inter- whether R.App.P. 603. Alaska appropriate. lien are We est on the tax However, the issue of whether interest case us the tax- thus address before original run from the beyond appeal penalties should payer proceeded has 29.45.500(a) appeal provides: 2. consideration of this Additional 6. AS stayed following pending submission of pays protest, the taxpayer taxes under If a appeals to the court for consideration on the bring taxpayer may suit in the merits. recovery against municipality for Inc, Homes, v. Fairbanks North S-4337 recovery given judgment taxes. If Borough (4FA Civil) or, 89-1415 Star municipality, against if in the absence Inc, Lomond, Homes, Ben suit, Cool Inc, governing S-4338/S- obvious to the it becomes North Star Fairbanks recovery body judgment of the taxes Equalization (4FA 89-1078) Board of legal proceedings were obtained if would be brought, municipality shall refund reject contention that 9. We also taxpayer inter- taxes to the amount of the Cool Homes’ failure to avail itself payment eight percent from the date of est at statutory paying remedies for the taxes under plus costs. protest staying makes foreclosure execution immediately upon possible reassessment. Thus, filing address whether the we need not alone, assessment, standing appeal of a tax of an questions 10. argues also precludes foreclosure. summary preclude fact exist which material charging judgment. These issues arise from case, S-3995, was ar- appeal No. 8. The in this prior date penalties and interest to the appeals gued prior in the three other *9 Borough’s alleged non-com- and the assessment argument Following in No. oral Homes cases. statutory requirements for fore- pliance the with S-3995, provided in an order which we entered issues, however, are ac- of these closure. Both part: legal hold as tually determinations. Because we do, legal not address the issues. we However, we need IT IS ORDERED: remand, guidance the for to offer judgment of foreclosure and decree 1. The 7, 1990, penalties are discussed be- issues May interest and on entered the low. Civil is REVERSED. in case 4FA 89-405 1257 Equalization, 1175, the year only ough, tax from Bd. 659 P.2d due date for each 1983). (Alaska Alascom, after remand.11 date of reassessment 1180 the mu- nicipality property failed to list real certain court ordered foreclosure property on its tax rolls and the therefore statutory pen- on a tax lien which included “escaped” property taxation. Instead the interest, dating to alties and back prior was assessed 1979 for the six contends that 1987 and 1988. Cool Homes years. Id. at 1177. We held that interest tax assess- improper this is because the penalties and were not authorized because May until ment remand not made after municipality’s discharge of the failure to its Borough argues the inter- 1989. The timely as to responsibility property real to may dated penalties properly est be and property taxpay- notify assess the and the original due as distin- the date back to stated: er. We assessment guished from the actual date of appeal. following property an responsibility As to real the
assessing
parcels
notify-
taxable
and for
municipal
Alaska
allow a
statutes
ing
taxpayer
liability
a
his tax
rests
’
ity
penalty
“delinquent”
to all
to add a
solely
borough.
with
As we have
provide
may
that interest
accrue
taxes and
ruled,
previously
property
a
on
tax
real
is
date.” AS
Inter
“from the due
29.45.250.
borough discharges
ineffective until the
penalties
est
serve different functions
and
responsibilities by making
an assess-
appropri
separate
and thus
standards are
ment, notifying
taxpayer
of his liabil-
punish party
are meant
ate. Penalties
to
ity,
providing
taxpayer
with an
Interest, however, is not
payment.
for late
opportunity
pay
his taxes. Until the
Rather,
punitive.12
it is intended to com
borough
right
has
to de-
exercised its
pensate
party to
is
whom the sum owed
property
mand real
in the manner
taxes
money
period
during
use of the
by statute
provided
there can be no valid
Gaudiane,
Lundgren
nonpayment.
v.
delinquency
hence no
tax and
within the
(Alaska 1989).13
Neither
P.2d
29.53.180,
meaning of AS
authо-
which
postjudgment interest de
prejudgment nor
delinquent
penalties
rizes
interest on
pends
party
is at fault for the
on
taxes.
delay.
Steiner,
v.
Farnsworth
Alascom,
(footnote
ted). applicable rationale This is not where municipality makes an assessment of previously have held that for We property question, but makes a 29.53.180, the real purposes of former AS as to the of the assess- 29.45.250,14 mistake amount precursor to AS there can be a case owner until a tax is as ment. In such is delinquency no “valid” Alascom, Slope being Inc. v. Bor- that taxes are demanded and sessed. North aware imprecision 11. claims that such as this he has under circumstances grounds reversing misconduct, is guilty amount alone for of no interest stands on been summary judgment. Because we reverse the footing. non-pejorative.” It different North summary judgment grounds, other Corp., Slope Sohio Petroleum rely argument. need not on this Howev- Homes (Alaska 1978). er, imprecision create we note that this does not genuine that sum- issue material fact so corollary party purpose deprive the A is to 13. Instead, judgment mary would be reversed. money being unjustly from en- that held judgment proper be action would to vacate the money. Lundgren, of use riched because respect amount for a and remand P.2d at 289. proper amount. This determination analysis applies penal- same the interest language penalties ties raised in S-4337. 14. The material issue “delinquent" and interеst shall assessed on taxes payment late "The assessment interest for present in the due both accrue “from date" logical punitive has no element. While it is 29.45.250; former AS 29.53.180. statutes. taxpayer paying penalty, relieve a where *10 immediately protest, under assessed on pay them leasehold interest can 29.45.500, an administra- or it can take AS in the land on Eielson Air Force base. The Equalization, appeal to the Board of tive superior granted summary court judgment court, 29.45.190, superior AS AS and to Borough. in favor Fairbanks North property is taxpayer whose 29.45.200. Homes, Inc., Borough Star v. Cool Case that in all timely assessed should be aware 19, (Sup.Ct. No. 4FA-89-1415 Civil Nov. generate property likelihood its will some 1990). summary CoolHomes contends that liability plan and can for that eventuali- tax judgment inappropriate genu- was because propo- not stand for the ty. Alascom does ine issues of material fact exist and be- imposed taxes sition that interest on superior improperly applied cause timely property which is assessed should the law. original not relate back to the due date. However, we view Alascom as au a. Standard of Review. thority respect penalties. Although question applica is a close one and the reviewing grant When a 29.45.250, statute, guid gives no ble summary judgment, this court must deter ance, appropriate require an seems genuine a mine whether issue of material penalties free can error assessment before moving party fact exists and whether Thus, case, penalties imposed. be this judgment entitled to as a matter of law. may charged only from the due date Underwood, Merdes v. 742 P.2d May superior which follows 1989. The (Alaska 1887).15 charging penal court erred in Cool Homes dated ties which back Propriety of a Personal b. Action. interest, respect to the “due With summary judg- Cool Homes asserts that date” refers to when cause of action improper ment is because the foreclosure judgement arises and not when a is award compensates Borough action alone arises, ed. of action “When cause unpaid supe- all taxes. It contends that the injured party immediately become entitled rior court as a erred matter of law its whole,
to be made
and the amount later
interpretation of AS 29.45.320.
adjudicated
damages
becomes due.”
Farnsworth,
interest on a tax assessment runs from the personal against rizes a action the delin year original due date in the assess ment rather than from the quent taxpayer date of reas if a tax assessed on a tax sessment. in tax-exempt property able interest is not paid.16 Cool Homes claims that this means B. No. S-4337 only delinquency that a tax on an interest
THE PERSONAL ACTION AGAINST in real not foreclosable COOL HOMES through personal be remedied ac tion. Borough personal taxing Cool Homes concludes that a filed a action against authority may personal recover the taxes institute a action Borough superior may bring personal 15. The notes that the court’s action to enforce tax ineffective; summary judgment 2) order of without liens when foreclosure is cases, judgment statement of reasons. In such this court foreclosure court col- laterally estops presumes contesting Cool Homes from court ruled in mov- liens; 3) validity grounds put and valuation of the tax ant’s favor on all of the forward payment "Accordingly, Cool Homes cannot withhold of its summary judg- the movant. pending judicial assessed only ground taxes exhaustion of its ment should be reversed if no However, remedies. since we have reversed the supports asserted the trial court’s decision." foreclosure, we need consider the first and Anchorage, Municipality Reed v. grounds. (Alaska third 1987). assert- following grounds support ed the of its mo- 1) summary judgment: 29.45.320(b) tion for 16. Alaska Statute reads: *11 seeks remand to the Board fore- subject not property is if the Equalization for redetermination. disagree. We closure. claiming cross-appeals, the su- Board 29.45.320(b) a authorizes Alaska Statute review, court, perior on intermediate im- delinquent tax a action to collect personal supplemented the record. properly in tax-ex- interest on a taxable assessed in- taxable Homes’s empt property. Cool THE DID 1. BOARD NOT VIOLATE prop- in real interest is its leasehold terest THE OPEN MEETINGS ACT States, which is by erty owned the United unpaid Cool Homes’ tax-exempt property. a. Standard of Review. personal action. subject to a tax is complied Board Whether or not the possi- Homes also contends Act, 44.62.310, Meetings Open interest overlapping of a foreclosable ble may question is a of law. This court sub personal to the subject interest and an judgment for that of the stitute mate- genuine a issue of creates judgment Lomond, Inc. v. Fairbanks court. Ben disagree. rial fact. We Equalization, Borough, North Star Bd. of (Alaska 1988). 29.45.320(b) specifically Alaska Statute remedy personal action states remedies “in addition to other
available The Board’s Executive Session Was b. the lien.” Foreclosure available to enforce Improper. Not to enforce the remedy available is another may pur- personal action be lien and 3, 1989, the Board con May On in addition to foreclosure.17 sued Borough’s assessment to review the vened property. Its first order of
of Cool an executive session to was to call business Nos. S-4338/4353 C. “the ins and outs and status discuss Housing the Alaska Cool Homes and appeals affirmance of both Cool Homes Andrews, “litigation.” Mark by cases” and taxes assessed property penal- judgment dispute as interest and in AS was the tax on described 29.45.- If We held in S-3995 that tax-exempt ties were miscalculated. or on a taxable interest due, uncertainty preclude alone does not sum- municipality this paid property is not when a mary judgment. pеrsonal may action enforce the tax taxpayer brought against delinquent as follows: 18. The Board’s action was court, to other or in addition district going We are to entertain MADAMCHAIR: to enforce the lien. remedies available go an Executive Session for a motion to into discussing personnel? purpose genuine issue Cool Homes also claims that No, personnel. MR. ANDREWS: it’s not respect to value of material fact exists with purpose and outs of this will be the ins uncertainty whether the Bor- because there is and the Alaska status of both Cool Homes assessing proper procedure ough followed the Housing cases. adequate contends that the tax. Cool Homes Okay. thought I it had to MADAMCHAIR: is, provided. That notice was not personnel jeopardy. Homes the amount never disclosed to Cool Well, (indis- this is VOICE]: [UNKNOWN gave foreclosure action. which Moreover, rise to the speech). cernible—simultaneous given for the the notice which Okay. Okay. Litigation, CHAIR: MADAM assessment was in error. entire fine. explain being Although compelling point, After asked be a session, purpose chairwoman stat- point proof Homes does not affirmative simply bring us back in review ed: "It is in the record that the debt was treated as one year last happened between the purposes. what has debt for notice Instead it cites the findings_” today the Court proper proce- as to of indications that the session absence subjects cоnsidered in the The act limits the followed. Cool Homes had failed to dures were pre- mentioned in genuine executive session to "those issue of material fact to raise calling unless summary judgment. executive session motion auxiliary for the clude question.” AS 44.62.- summary judg- main Cool Homes also claims that 310(b). precluded the amount of the ment was because *12 concurrently erates 44.62.310 al- the Board’s and the with AS as both served who though expressed exception, it is not an the attorney, present at the ses- was session, called to discuss was held over Board’s executive The session sion. attorney, the status of this case did objection.19 with 44.62.310.” not violate AS contends that this executive Open proper Meet- that in violation of the The Board claims session was Act, privilege Homes thus in this case 44.62.310.20 Cool assert because ings AS actions be rendered had been threatened with asks that the Board’s Board members personal liability they if failed to follow the void. given by the courts in the numer- directions Meetings requires Act that all Open The preceded hearing. appeals ous which any be meetings of administrative board hearing, three before the Su- months Just act allows for open public. to the The spe- perior Judge Richard D. Saveli Court subjects at excepted to be discussed certain Andrews, cifically suggested that Mr. public. closed to the executive sessions counsel, capacity Board’s his as the advise excepted subjects are “mat- Among those any appearance that of noncom- Board law, charter, municipal or by which ters poten- pliance previous with orders could required are to be confidential.” ordinance expose personal lia- tially them to financial 44.62.310(c)(3). provided remedy Thus, bility.21 the executive session was con- by the Act is to void all action taken merely to allow the Board to re- members 44.62.310(f). the Act. AS trary to legal protect advice to themselves ceive personal liability. from that the Act found the executive ses- was not violated because lawyer-client privilege is set attorney pro-
sion with the Board’s
in Evidence Rule 503: “A client has a
out
tected communication.
court held
pre-
privilege op-
privilege to refuse to disclose and to
“[bjecause
attorney-client
jects may
sought
litigated
executive
not be considered at the
The Board
to have this issue
19.
hearings
spare
except
went further to
motion
before
Board from
session
those mentioned in the
having
the claims should
to rehear
calling
unless auxil-
for the executive session
be declared unlawful. The
the executive session
iary
question.
may
main
Action
not be
to the
issue,
superior court did not rule on this
howev-
taken at the executive session.
er,
hearings were held.
until after the
(c)
following excepted subjects may be
in an executive session:
discussed
provides:
Alaska Statute 44.62.310
(a)
mеetings public,
All meet-
Government
law,
(3)
by
municipal
char-
matters
ings
legislative body,
of a board of re-
of
ter,
required
are
to be confiden-
or ordinance
board,
gents,
body,
of an administrative
or
tial.
committee, subcommittee,
commission,
au-
organiza-
thority,
agency, or other
council/
(f)
contrary
Action taken
to this section
tion, including subordinate units of the above
void.
any
political
groups,
the state or
of its
subdivision, including but not limited to mu-
21."[Cjounsel
profes-
boards,
can tell
in his
[the Board]
boroughs,
nicipalities,
school
...
profession-
assemblies, councils,
sional discretion and in a manner of
departments,
agencies,
division, bureaus,
any
appearance
organiza-
advice-giving
al
such
would
commissions or
tions,
otherwise,
advisory
displeasure
of the state or
or
looked
with the
supported
it,
government
or in
carry
assuming
pur-
local
in whole
Court and
spend
part by public money or authorized to
warning
place,
poses
take
that has or could
except
public money,
open
public
are
to the
carry with it financial costs which
that could
provided by this section....
otherwise
might
not be borne
alone.”
(b)
excepted subjects are to be discussed
If
According
Borough, Judge Saveli's
meeting,
meeting must first be con-
at a
warning
repeated
Homes'
was the result of Cool
meeting
public
question
as a
and the
vened
of,
contempt
castigation
actions
and threats of
holding an executive session to
mаt-
discuss
ignoring
against,
the court’s di-
exceptions
the Board for
con-
that come within the
ters
(c)
of this section shall be deter-
tained
rections.
by majority
body.
Sub-
mined
vote
members,
disclosing
from
con-
dimensions....
Public board
person
other
vent
law,
pur-
uphold
may
made for
sworn to
not arbi-
communications
fidential
profes-
facilitating
trarily
unnecessarily
the rendition
or
inflate
pose of
confiden-
legal
to the client
... be-
services
tiality
purpose
deflating
sional
lawyer.” Alaska
and his
himself ...
meeting
tween
spread
public
law. Nei-
503(b).
includes an “or-
A “client”
R.Evid.
attorney’s presence
hap-
ther the
nor the
public
pri-
entity,
either
or
ganization
kind of
penstance
some
lawsuit
*13
503(a)(1). Thus, the
R.Evid.
vate.” Alaska
pretext
serve as the
for secret consulta-
privilege.22
may exercise the
Board
not injure
tions whose revelation will
the
public interest.
question is thus whether
The threshold
lawyer-
Open Meetings Act
jurisdictions have limited a
Other
can coexist.
privilege
client
lawyer-public body exception
open
to their
can,
not
argues
they
that
but
in this situa- meeting acts to
of pending
consideration
disagree.
We
tion.
litigation. Such a limitation reflects a con
body is
public
party
cern that when the
a
to
underlying
princi
policies
lawsuit,
disadvantaged
a
it should not be
open meetings are set out
ple of
allowing
by
opponents
its
to its
access
peo
is
“the
Among
44.62.312.
these
that
County
with counsel. Smith
meetings
pro
right to
informed
ple’s
remain
shаll be
Anderson,
328,
Ass’n v.
Educ.
676
S.W.2d
may retain
over
they
so that
control
tected
(Tenn.1984) (would impair
334
the attor
they have created.” AS
the instruments
ability to
ethical
ney’s
fulfill
duties as an
Thus,
44.62.312(a)(5).
applicability
of
court);
Oklahoma Ass’n of
of the
adjunct
lawyer-client privilege must
narrow
State,
Attorneys
1310,
Mun.
v.
577
objective maximum realiza
to afford this
(Okla.1978) (might seriously impair
1315
Newspaper
The Sacramento
tion.
body
ability
public
process
of
to
County
v. Sacramento
Board
Guild
of
litigation);
Chan
pending
claim or conduct
58,
Supervisors, 263
Cal.App.2d 41,
69 Cal.
10,
Independent
Inc. v.
School Dist.
nel
(since
(1968)
superseded by stat
Rptr. 480
709,
306,
County, 298 Minn.
No.
St. Louis
ute),
by
court be
upon
relied
814,
(the
(1974)
machin
215 N.W.2d
825-26
low,
Appeals
of
noted
the California Court
adversely
ery
justice
of
would be
affected
importance
limiting
privilege:
of
legal
to
if clients were not free
discuss
attorneys
with their
without fear
of matters
capable
The two enactments are
disclosure).23
exception
ap
is not
lawyer-client
if the
operation
concurrent
request
general
for
for
privilege
beyond
propriate
is
its true
“the mere
not overblown
According
borough
govern-
If
others will be informed....
client and
to the
ordinance
that
hearing,
public
hearings,
view and
ing
counsel must confer in
Board
"Formal rules of evidence
however,
stripped
privilege
policy are
value."
apply;
both
all
must be
do not
evidence
Newspaper Guild v.
being
Sacramento
Sacramen-
FNSB
relevant
the matter
heard.”
41,
Cal.App.2d
County
Supervisors, 263
Thus,
Bd.
arguable
is
that the Evidence
3.24.015.
53-54,
(since
(1968)
Cal.Rptr.
superseded
Rather,
apply
not
at all in
case.
Rules do
statute).
by
lawyer’s
duty
confidentiality,
Code
ethical
Responsibility
would
of Professional
DR 4-10-1
jurisdictions
imply the
have refused to
23. Some
County
apply.
v.
See
Educ. Ass’n
Smith
public meetings
exception
open
to their
statutes
328,
Anderson,
(Tenn.1984)
332-35
676 S.W.2d
pending litigation. Neu v. Miami Her-
even for
(holding
duty
grounds
that
the ethical
better
Co.,
(Fla.1985)
Publishing
462 So.2d
ald
meetings act).
exception
open
for
statute);
(since superseded by
Laman
held, however,
jurisdictions
McCord,
Other
have
245 Ark.
432 S.W.2d
755-56
just
lawyer-client privilege
(1968) ("The city attorney,
a testi-
is more than
with the assistance
heads,
privilege against
mayor, department
“The
disclo-
monial exclusion.
and other munici-
achieving poli-
certainly
essentially
prepare
pal employees,
a means for
a case
sure
cy objective
can
objective
discussing
plans in
law. The
is to
his
detail
trial without
body].
analogy,
By
society places
[public
the State
enhance the value which
litigation,
continually engaged
legal representation by assuring
the client full
Arkansas is
Attorney Gen-
attorney
is scant
for its
fear
but there
occasion
disclosure
unfettered
However,
public body in
legal
opinion
very
advice or
we find this case to be a
Minne-
specific exception
public agency.”
Open Meetings
capacity
as a
Housing
v. The
Act. The Board
had been
apolis Star & Tribunе Co.
members
threat-
Authority
personal
liability.
ened with
Redevelopment
liability
&
(Minn.
ongoing litigation.
was with reference to
Minneapolis, 246 N.W.2d
session,
By calling the executive
the Board
1976).
merely following through
Judge
Saveli’s admonition to the
coun-
ap
privilege
should not be
legal
sel. The Board was entitled to
advice
Id.
plied blindly.
enough
at 453. It is not
as to how it and its members could avoid
public body
litiga
be involved
legal liability, although
general
legal
not
Rather,
tion.
the rationale for the confi
advice. The
did not violate the
dentiality
specific
communication at
Open Meetings Act.
confidentiality
issue must be one which the
*14
protect:
doctrine seeks to
candid discussion
2. TAXING AGENCY METHODOLO-
litigation strategies.
of
facts
GY
10,
should
Adjustment
c.
for Lease Restrictions.
prevail because the
must
should
justify its valuation method
demon-
Borough employed
a valuation
supported by
it is
substantial
strate that
whеreby
method
the land subject to Cool
evidence.
valued
sim
leasehold was
as a fee
ple
adjusted
then
reflect the
interest and
taxpayer contesting an assess-
leasehold’s restrictions and the reversion-
prove
need
that the valuation is
assess
ary interest of the United
States.
*15
not
improper.
taxpayer does
have
Borough
percent adjustment
used a 10
fac
amount, range
correct
or method
offer the
method
tor
reflect the restrictions. This
valuation,
Borough repeatedly
as the
percent
ap
and the
factor
10
have been
Alascom,
Inc.
North
insisted. See
proved by
court before
a similar
this
for
Borough
Equalization, 659
Slope
Bd. of
housing project
lease and
States
United
(Alaska 1983) (noting
1180
P.2d
that military lands. North Star Alaska Hous
has
responsibility making
778
1145-46.
ing,
P.2d at
assessment); North Star Alaska
valid
percent
contends that 10
Cool Homes
(stating
P.2d
Housing, 778
at 1146
that the
adequately
does not
reflect the extensive
remedy is
to the
proper
to remand
Board
argues
its leasehold.26 It
restrictions on
redetermination). The burden then
for
put
has never
forward
taxing authority
to the
to introduce
shifts
percent
10
evidence to demonstrate
evidence which substantiates its
credible
Hoblit,
accurately reflects
The evidence before improperly account- lease restrictions were Equalization upheld The Board of Kenneth ed for consisted of the affidavit of improvements and assessed valuations for Lomond, Inc., Lougee, D. counsel for Ben $24,- Cool Homes’ interest the sum of 1986; which was filed with the Board 527,500 1987, $22,633,512 testimony Mr. Norm depositiоn and $21,690,449 for 1989. These valuations Homes, pre- Thompson, president of Cool replacement were arrived at cost hearing; Loug- Mr. sented in the 1987 this method the current method. Under argument ee’s before the Board replacement cost of the merely Lougee’s Mr. affidavit stated that using for calculated two alternative cost and the Rail- both mulas. The assessor used the lower result. *16 property Industrial Area in Fairbanks road by This was then reduced a factor of 15 percent the same 10 deduc- were assessed presumed savings percent to account for tion, though Railroad is even the because of size of Thomp- not located on a federal enclave. project. resulting figure was in turn deposition son’s detailed the lease restric- percent per depreciated at the rate of four Air tions in Cool Homes’ contract with the year years used as the over 20 with 1987 testimony Lougee’s Thus, Force. Mr. noted that year. Borough assumed base distinguishable interest was improve Cool Homes’ Homes’ interest in the that Cool project percent that of the North Star be- from ments would lose 80 of its value project remaining land lease outlasted the of the lease. The cause the over the term value, salvage percent 20 was attributed to lease. Borough’s deputy Although points must set forth the 27. assessor admitted at statement terms, general interest was the 20 least that Cool Homes’ in more than an elaboration of year legal upon required. lease for which the had assessed not Lew- theories relied is Co., He also stated that Cool Homes’ interest taxes. Anchorage Asphalt Paving is v. 535 P.2d pro- Star was considered similar the North (Alaska 1975). key that the 1195 is ject. not unlike the assessment of the "[ItJ’s party adequately notify opposing statement North Star. We felt that we treated this one as possible sources of error. and court of the fair as that one.” Sill, (Alaska 1972). Myers v. Thus, we will an issue omitted from consider Borough contends that the issue of "rec points appeal on if the issue was raised at ognized properly is not before us differences” opposing the trial level and the counsel listed in Cool Homes' State because it was not Homeowners, apprised of it. Oceanview Appeal. Generally, on an issue ment of Points Here, "recognized differences” is P.2d at 797. Ap the Statement of Points on not included in subcategory point of the stated on appeal. an obvious peal on Ocean will not be considered Thus, appeal concerning percent it the 10 rate. Quadrant view Homeowners Ass’nv. Constr. (Alaska 1984). Engineering, properly this court. is before is, percent from the 20 sal- that the value defends vage referring testimony by end value could at the recover which Cool Deputy suggests Assessor McManus which of the lease. buildings can moved29and that be personnel cross- Borough assessment if any they еvent even had to disman- be replace- reached checked the result site, percent salvage a 20 value tled on mar- approach by referring to ment value figure appropriate. would be McManus capitalization in- ket indicators and stated: that Testimony indicated approach. come saying entrepreneur that if We’re or en- that market indicator was the fact best trepreneurs just or people that wanted to Company had loaned Aetna Life Insurance 20$ buy things, they’d willing pay if $30,000,000 predecessor Cool Homes’ dollar, they’d on the dismantle and cart permanent financing project. for the Bor- off, appropriately them but more that if ough personnel testified that assessment place. relocate them they as units had approach a market been used “we Certainly Ray there’s a cost and Mark come in somewhere would have cost, averaged indicated it around $30,000,000”based this transac- around $8,500 to move Hutchinson Career tion. on the income stream calcula- Based out to four-bedroom North Pole. And he tion, Borough personnel testified that can price vary depending said that $28,000,000 roughly would valuation many way; electrical how lines are year.28 appropriate have the first been obstacles; fairly many how it’s a clear Deputy Assessor McManus testified to, Eielson the North perhaps, shot from employed replacement cost method was area; probably Pole clear than more comparisons market rather than direct off University from out there Avenue. capitalization replacement income because But, basically, appeared from the mar- uniformly throughout cost used the Bor- willing ketplace that individuals were ough improved property. for all 50$ pay on the dollar new ones. We at also took a look homes that were replacement method Focusing on the cost condition, salvage value and either Borough, by the Homes con- employed refurbished, or completely need to be salvage tends that the use of value or, in actually relocated elsewhere and— inappropriate. following It relies on the cases, salvaged, some dismantled by Superior Judge finding made Court them, any way components of prior in a appeal: R. Blair James *17 up looked at them we still came with we twenty-year up, After the term is So, percent a 20 value. we about government’s at lease is renewable 20 fair over thought percent that the was government option. opts If the not to period.30 20-year lease, Cool Homes’ sole re- renew point further ex- At another McManus the buildings is to remove within course plained salvage figure: restore thirty days and the land to prior undisputed It is one of years condition. And at the end of that 20 buildings options so available is that Cool Homes cannot bе removed. subject percent expert 20 did 28. called an on the 30.McManus made clear that the Cool Homes who, using an possibility income stream meth- valuation that not include valuation for the valuation, $22,711,- figure od arrived at a government the lease. would renew the federal assuming years left 18 on the lease. Since "No, assumptions those would not be He stated: valid; years be left on the as of would lease mean, they just crystal that have I don’t compared figure Bor- should be with the they’d be worst case is that ball. In the scenario ough’s assessment. structures, why that’s remove those asked to appropriate.” percent salvage the 20 we felt project four-plexes, consists of 51 48 du- 29. The plexes, office/shop building. All build- and one ings are wood frame construction. 2x6 from the Eiel- fails to consider the residual improvements remove value to the will government land and that’s where since Air Force Base son salvage buildings comes in. To useful life of the is at least 40 percent the 20 years. percent took a look determine that 20 we Center who has at Hutchinson Career argument This lacks merit. The Bor- now, building, years for several been ough depreciated improvement over 20 build, they’re they that do but homes years rather than 40 because an earlier sitting relocat- sitting they’re to be on— appeal superior of this case court the ranged prices And those have from ed. accepted predе- Cool Homes’ $52,000 $25,001 depend- way up all the argument assessing cessor’s its inter- size, ing magnitude of the I on the 40-year est based on a useful life not did say, They’re the should of the structure. take into account the fact that there was structures, placed on a tract same once 20-year Lomond, lease. See Ben land, improvements, full site on foun- Equalization, Inc. v. Board dation, sewer, generating with water and (Alaska 1988). To contend that $51,000, of—The lowest was a value 20-year depreciation schedule does not $96,000. highest was And we rounded government’s reversionary account for the .50$ this to conclude that it was on the clearly wrong. interest is Because of the willing dollar that individuals were depreciation, accelerated Cool Homes will pay for a structure that had to be relo- years be taxed in future on a value which Ray checked cated. We with Mark with progressively replacement than less Acres to find out the cost of relo- Mark project cost of the taken as a whole. The cating these and in our mind structures difference between amount on which people safely 50$ was that could invest replacement Cool Homes is taxed and the But, looking on dollar. we’re at cost, depreciation keyed less to the true large project rather here so had to we buildings, life useful is the reversion- percent deduct the 20 from there and government. ary interest to the 40$ up
that’s where come we imрrovements recog- the dollar for their
nizing years that these would be 20 old CROSS-APPEAL: SUPPLEMENTA- forty] year on a four economic life is THE BY THE TION OF RECORD [sic saying the same as that we’d reduce it SUPERIOR COURT then, 40$ 20$ up. from or half used May, In Equali 1989 the Board of 20$ And the on the dollar then we felt affirmed the tax zation assess salvage fair estimate was a value and ment of Cool Homes’ real inter equates percent. to 20 June, appealed ests. Although presented During there was evidence court. the course of the appeal, Cool Homes that the structures could Homes noticed that a docu relocated, testimony “Assignment not be of Mc- ment entitled of Rents and *18 Manus, especially part relates to the build- Leases” was not of the record. On state, ings’ in a May Supple value dismantled is suffi- it filed a Motion to cient, view, in our granted by to substantiate the as- ment Record. The motion was superior sessment. in order of the court October. Borough appeals, contending part argument As a of its that the Bor- supplement improperly motion to was ough using percent salvage in erred a 20 granted. value, “The use of a states: salvage in equalization value connection with ‘accelerat- A board of is authorized in depreciation,’ Municipal ed is also the title of the Alas- erroneous.” Cool Government argument depreci- A Homes’ seems to be that ka Statutes. AS 29.45.200. determina- ating 20-year equalization may life of the over a tion of a board intеrest provided buildings “as Cool Homes’ in its superior to court on appealed the appeals applicable Base, to of court Eielson Air Force by the rules REVERSED and agencies.” decisions of administrative proceedings from REMANDED for further con- superior 29.45.210(d). The court hears AS opinion. sistent this grant with The court’s appeals the record established at the “on summary judgment per- of in S-4337 for equaliza- hearing the of board the before judgment sonal to recover tax as- 29.45.210(d). AS tion.” against sessed Cool Homes’ leasehold inter- est is AFFIRMED. on the record The limitation was Concerning the Nos. S-4338/4353 Board provision 1985. section to the added Open Meetings did not the by violate Act replaced, was former AS 29.53.- private conferring attorney with its be- 140(f), appeal trial for de novo allowed hearing fore Cool Homes’ case. With re- legislature superior court. The thus validity spect to the of the tax assessment scope limit expressly to review chose property, of Cool Homes’ the Board did determinations. See Wine board’s affirming Area have a Anchorage Bor reasonable basis gardner Greater (Alaska 1975)(not Borough’s ough, 534 P.2d assessment which included a sal- ing that a trial novo allowed former depreciation. de vage value accelerated on issue of whether assessment statute The Board had a reasonable basis affirm proper “represents a decision was percent the use of the 10 factor to reflect assessments, legislature in tax that lease restrictions. borough assembly shall not be summary superior grant court’s case”). in its This is in contrast judge own judgment is REVERSED and REMAND- governing appeal to the statute proceedings ED for further consistent with superior of some state administrative court opinion. this 44.62.570(d).31 agencies. AS However, supplementation of the record COMPTON, Justice, dissenting part. Borough. prejudiced has not Even record, supplemented C, holding I from the in section dissent ruled in the favor. The court (2)(d), salvage regarding value. subsection impact not supplemented document does my neither the nor this view court’s it has not been this decision because satisfactorily court answered Cool has argued in before Cool Homes’ briefs arguments. Thus, granting of the court. motion harmless error which this will Borough depreciated was Cool Homes’ Smith, disregard. Boyles v. See improvements using a 4 interest (Alaska 1988). twenty percent over depreciation rate Thus, period. Borough assumed
year that interest would lose Cool Homes’ III. CONCLUSION the terms of its percent its value over remaining percent at- lease. was summary judgment grant The court’s is, S-3995, value, salvage the value Borough’s action to foreclose tributed applicable other provisions also be Under court is its rules those required agencies "only to find "that there is relevant evi- still dence gence, as to those functions to which which, in the exercise of reasonable dili- applicable by the statutes relat- made [the act is] produced been or which could not have 44.62.330(b). ing agency." The stat- to that hearing....” improperly excluded at the appeals equaliza- allowing ute of board *19 44.62.570(b). AS not reference the Ad- tion determinations does 44.62.570(d) Cool Homes contends that Rather, "rules Procedure Act. the ministrative applies equalization. to a board of Howev- also er, appellate the which it are of court” to refers agencies statute are the covered that listed ap- dealing superior court an with the rules 44.62.330, opening in AS the section Ad- R.App.P. pellate See 601-12. court. Alaska provides Act. The act ministrative Procedure the Cool of dismantled and salvaged, components them, up recover at the end of lease. ... we still could came percent a 20 about value. Homes contends that because of the Cool added). (Emphasis Force, the Air nature of its contract with This not evidence is that substantiates salvage any inappropriate. value is a buildings salvageable that will in be prior appeal regarding property, Supe- condition when the land expires. lease Judge rior Court James R. Blair made the following finding: quoted McManus’ next testimony is simi- larly flawed: twenty-year up, is
After the term percent To determine that 20 we took a government’s lease is renewable at the look at Hutchinson Career who' Center option. government opts If the not to building, now, has been years several lease, renew the Homes’ sole re- Cool they build, that they’re homes do but buildings is to within course remove the sitting they’re sitting to be relocat- on— thirty days land and restore the to its ed. prior undisputed condition. It is buildings cannot be so removed.1 These are homes that are built to be relo- place. cated in first Homes, Inc. v. Fairbanks North Star Borough looked to Hutchinson Ca- Borough, Case No. 4FA-87-1093 Civil Center, reer buildings which constructs to (Alaska 19, 1987). Super., Dec. This find- relocated, in be determining twenty ing has not been contested. percent salvage Borough value. The con- salvage The court fig- affirms the value people pay cluded that were willing on testimony ure the basis of the of Deputy cents the dollar on for these relocated McManus, Assessor which it claims “sub- buildings. an obtained esti- I assessment.” submit stantiate[s] mate Mark confirming from Acres that the testimony begs question, that rath- relocating “the cost these structures and answering than er it. in our mind was people safely that could cents on invest .50 the dollar.” The Bor- quoted testimony, McManus’ first and ough then discounted the fifty percent to conclusion, predicated person being on a forty percent because of the size willing pay on the dollar for $.20 project. Homes' further building salvage value condition. These reduced that half to twenty percent to qualifiers are two to this conclusion: account for the fact buildings that twenty years (half would be old entrepreneur entrepreneurs or or [I]f forty year estimate). Again, economic life people buy
just things, that wanted to if buildings this is not evidence that the will they’d willing pay be the dol- $.20 relocated, capable being inor an lar, they’d off, dismantle and cart them salvageable condition, otherwise when more appropriately they but relocate expires. land lease place.... them as units in We also took look at homes that the salvage were in moving There is no evidence that these condition, value and either need to be buildings possible. will be There nois evi- refurbished, completely actually relo- dence to take into cost account or, cases, cated elsewhere some buildings removing which were not eon- and— finding buildings could not be so much utilidor and concrete work days especially salvageable removed in a project, bring equipment in to even [do] condition is based on the ny affidavit testimo- really very impossible would be demolition appeal of John R. Jones in the 1987 thing. spend taking We’d more time Equalization. Board Jones testified: equipment out of the holes ditches and the taking would It taking be like a bucket of sticks and deep 12-foot size of some utilidors for the out; they would bottom one crum- equipment.... moved, they ble. ... Even if there could be
1269 record, improper. thrust of this the The Cool Homes’ ar- relocation. On structed for gument depreciation is that the accelerated value to Cool will have no improvements adequately does method not account lease term of the land Homes when the reversionary government the the interest expires. improvements have the after the will Board, the Cool appeal the before 1989 expires. Again, lease land Cool Homes testimony Deputy elicited from Homes also complains Borough put the has that not Borough that the did Assessor McManus any justify forward evidence method findings Judge consider Blair’s not producing itself without facts which cast improvements could not be removed when argument keys it. doubt on Its on the salvage value. And al- calculating the contention that the assessed value bears no the Air Force though possible it is that project’s relation to the cash flow. change its mind and renew the lease could The the evidence before Board that buildings, Borough the ad- purchase or the excluding govern- the was the improper base mitted that it would be in the improvements ment’s interest from possibilities.2 mere assessments the assessment was from McManus: “We proving met its burden of Cool Homes that, yes, doing feel in that we’re accelerat- all, value, salvage any if at that the exists depreciation.” Borough’s “feeling” ed erroneously. did Board was assessed reversionary the interest is is that excluded to affirm the not have a reasonable basis not evidence. salvage the I would assessment of value.3 possible It is that over the life of the to the Board to deter- remand this issue twenty year reversionary the lease interest mine the rubble would be worth. what excluded, be no will but there was evidence of also contends that the use presented Cool Homes substantiates how this that depreciation presented was method Evidence was the accelerated method works. Board, deputy the Before 1989 the assessor that the worst case scenario was “removal” the testified follows: as of the structures. record, just using Q: the And the curiae 3. Cool Homes and amicus Aetna Life way making any you’re any not number Company urge also the court to direct Insurance government assumptions about what the the the Board on remand further exclude lease, might renewing far as the extend- do as beyond improvements value of the land the land lease, ing issuing a new the lease? lease term the tax. "To the extent that the from No, assumptions A: those would not be any of ex estimated useful life of these items valid; they just crystal mean don’t have that I lease, beyond tends the term the the value they’d ball. In the worst case scenario period structures, such must be excluded attributable to be asked to remove those represents why percent salvage was from the tax since Govern we felt the 20 that’s Lomond, appropriate. ownership Ben ment’s interest.” justified salvage Housing (quoting value Co. v. Coun P.2d at 512 Offutt 814, 1, ”[a]lthough may be ty Sarpy, not 76 S.Ct. becausе U.S. 262 n. buildings (1956)). at the end of able lease, remove See Du n. also 100 L.Ed. possible it will benefit from the sale Hoppe, 102 Co. v. Wash.2d wamish Warehouse Homes, government.” (1984) (reversing judg structures to Lomond, North Inc. and Ben Inc. Fairbanks building ignored of a the reversion ment Borough, No. Equalization, Board Case Star public long expired). life before useful its 19, 1990). (Alaska Super., Nov. 4FA-89-1078 govern- caution that the The contract does however, admitted, that such may possession of the ment take Rather, the asses- sale not a consideration. payment at the end of land lease. without corporation had to re- sor considered merely possibility which that is one However refurbish, relocate otherwise move and then salvage happen expires. lease Tak- when land However, Judge property. Blair government ing housing not still possibil- found that none of these was a realistic any possibili- likely the other more than ity. like lease. ties renewal contradictory contention in possibilities urges should elsewhere that such performed assessment was assum- brief that the just im- Thus it seems not be considered. ing "the case scenario from the owner’s worst remaining proper useful life from to deduct viewpoint of the houses destruction —the value) (a salvage negative as it would supported the tax the end of the lease” is not Instead, salvage value. deputy testified to calculate a record. assessor *21 year that in the first Cool Homes would be ORDER imprоve- of the value of the taxed 100% On consideration petition for re- ments, gov- nothing deducted for the 24, 1993, hearing, May filed on and the reversionary interest. In the ernment’s 5, response, August 1993, filed on 4%, deducted, year second would be and the presented year next No evidence was 8%. IT IS ORDERED: valuing method justifies reversionary interest. 5, Due to error in footnote the recita- dispute Homes does not below, Opinion 3953, tion of events No. reversionary Borough may use a method of by released the clerk of court on begins by “This tax assessment. method 14, 1993, May hereby withdrawn. This valuing property simple at its fee value. having by matter now been settled reduced, discounted, This value is then parties, (corrected) opinion second will representing a factor the restrictions on not be issued. property. The value is further reduced Entered direction of the court at An- pertaining to remove value to the re- chorage, Alaska on November 1993. versionary government interest of straight- the land.” Cool Homes claims a depreciation
line to reduce the initial value salvage
down value at the end of the period
lease does not exclude the value of reversionary pre- interest. Cool Homes straight depreci-
sented evidence that a line salvage
ation over the life of the lease “fundamentally wrong” way
value is a governments reversionary
account for the Borough presented
interest. The no evi-
dence that its method was reasonable. experts
Cool Homes’ testified that the in- approach
come stream was the more sound I method. conclude that Cool Homes’ ar- Alaska, Petitioner, STATE persuasive. gument
v. McLAUGHLIN, Respondent. David L. No. A-4590. Alaska, By acting Through STATE of DEPARTMENT OF TRANSPORTA Appeals Court of of Alaska. FACILITIES, Ap TION AND PUBLIC pellants, Cross-Appellees, Oct. 1993.
EASTWIND, INC., Appellee,
Cross-Appellant.
No. 4547.
Supreme Court of Alaska.
Nov. MOORE, C.J.,
Before WITZ, BURKE,
RABINO MATTHEWS
COMPTON, JJ.