In the Matter of the Equalization Appeal of TALLGRASS PRAIRIE HOLDINGS, LLC, for the Year 2011 in SHAWNEE COUNTY, KANSAS.
No. 110,136
Court of Appeals of Kansas
August 15, 2014
333 P.3d 899 | 50 Kan. App. 2d 635
Opinion filed August 15, 2014.
Before Hill, P. J., Schroeder, J., and Hebert, S.J.
Schroeder, J.: Tallgrass Prairie Holdings, LLC (Tallgrass) appeals the Kansas Court of Tax Appeals’ (COTA) 2011 valuation of Tallgrass’ multitenant office complex (the Property) built in 2002. The Property has a prime location, and the building is also equipped with a large surgical suite leased by one of the tenants. Tallgrass seeks a fair and reasonable valuation for the property based on current market values in compliance with
FACTS
The record is extensive; to put some order to it all, we will set out each step of the property valuation process resulting in this appeal.
Property
The Property is a large three-story building in northwest Topeka. A related, but separate, Tallgrass L.L.C. operates the surgical suite on the first floor. Another related Tallgrass L.L.C. operates medical offices on the first and second floors, with other tenants renting space on the first and third floors.
Property Tax History
Tallgrass has challenged Shawnee County‘s tax valuation of the property every year since 2005. For 2010 and 2011, the County used the same mass appraisal methodology for both years and ap-praised the Property at $10,870,383. As a result of Tallgrass’ appeal to COTA for the 2009 tax year, COTA determined a 2009 market value of $8 million. With receipt of COTA‘s decision for 2009, the parties agreed the 2009 valuation should control the market value of the Property for tax year 2010 pursuant to the provision of
2011 Tax Assessment and Informal Meeting
After the County provided its original 2011 appraisal, the County adjusted its income approach and lowered its appraisal from $10,870,383 to $10,711,100 at the informal meeting. Tallgrass appealed the 2011 valuation notification of informal meeting results to COTA.
The County filed a motion for leave to issue discovery out of time and to order the taxpayer to allow an inspection of the Property. Over Tallgrass’ objection, COTA granted the motion in part, allowing a new county appraiser to inspect the property. However, COTA limited the appraiser to a rebuttal witness and the appraisal as a rebuttal exhibit only. Additionally, COTA denied the County the right to change the value or classification for the Property based on the second appraisal. Both parties petitioned COTA to reconsider, but COTA denied their motions.
COTA Hearing
The parties presented their respective analyses, appraisals, and arguments to COTA. COTA was presented with three different appraisals to consider. David Meyer initially valued the Property for the County. John Dillon appraised the Property for Tallgrass. The County presented Timothy Keller‘s appraisal of the Property through his rebuttal testimony. We will discuss each in turn.
Meyer Analysis
The County relied on the testimony of David Meyer, a commercial real property
Meyer testified the Property was in a very good location in Topeka and considered the Property in a prime, investment Class A+ location.
Meyer‘s initial valuation of the Property for tax year 2011 was $10,711,100. Before COTA, he lowered the value of the Property to $9,768,500. Meyer claimed the difference in recommended value stemmed from a reduced rental rate for the medical office and surgical center space in the Property.
Meyer used the usable square footage of the Property for the income approach calculation in his appraisal. Meyer defined usable square footage as the floor space of the Property, minus vertical penetrations such as stairwells, elevators, and common areas. For the sales approach, he used the net rentable square footage, which did include the common areas. To determine fair market value, Meyer considered what the Property was worth on the open market. Meyer considered the Property‘s current use to be its highest and best use.
Dillon Analysis
Tallgrass’ expert appraiser was John Dillon, a licensed general real estate appraiser who had been doing appraisals in the Kansas City area since the early 1980‘s. Dillon appraised all types of property but mainly worked with commercial property. Dillon first appraised the Property for Tallgrass in 2006 and had prepared other appraisals on the Property. Dillon was tasked with estimating the market value of the Property for presentation before COTA. Dillon claimed he quantified the physical factors and market data for the Property and believed the market for the Property did not extend beyond the immediate Topeka market. Dillon considered the Property a second tier property, not a Class A or Class A+ location. Dillon‘s analysis was aimed at finding market value, as defined by the Federal Register and USPAP. However, Dillon admitted that this definition contained some minor differences from the Kansas definition of fair market value. Dillon based his analysis on the rentable area of the Property, or the total square footage of the Property, minus vertical penetrations such as stairwells or elevators, but including common areas. Dillon believed this calculation to be a market-wide method of establishing how rental rates per square foot for office and medical office space are established. Ultimately, Dillon determined the valuation for the Property was $7.6 million.
Keller Analysis
The County presented Timothy Keller, a state licensed certified general real estate appraiser with around 20 years of appraisal experience, as a rebuttal witness. Keller appraised all types of commercial and residential properties, including offices and medical offices, mainly in the Topeka, Lawrence, and Kansas City areas.
Keller testified the County asked him to perform an appraisal of the Property to determine the market value of the Property. Keller‘s appraisal was admitted, and he defined market value in accordance with Kansas statutes. Keller labeled the Property as a Class A property, located in a competitive neighborhood and market location. Keller claimed the highest and best use for the Property would be its current use.
Like the other appraisers, Keller used cost, sales, and income approaches to establish the value of the Property. Keller appraised the Property at $10,250,000.
COTA Ruling
COTA stated the County determined the Property contained 12,139 square feet of office space, 50,031 square feet of medical office
COTA first addressed Tallgrass’ claim that the County failed to comply with
COTA agreed that under
COTA next discussed the law governing ad valorem taxes in Kansas. Under the
Tallgrass questioned whether the County‘s evidence complied with USPAP, particularly regarding scope-of-work requirements. COTA noted all county appraisers were required to perform appraisals in conformity with USPAP Standard 6, which governs the development and reporting of mass appraisals as the approved method for ad valorem taxation in Kansas. COTA stated its duty was to render decisions based on “substantial competent evidence in light of the record as a whole,” pursuant to
In determining the valuation of the Property, COTA relied heavily on the income approach because the Property was an income producing property, both parties relied on the income approach, and COTA determined the parties’ various income approaches provided the best indicia of the Property‘s value. COTA found the County‘s assessment of potential gross income to be supported by comparable market rental data after adjustments for escrow rent. Because Dillon‘s appraisal failed to make escrow rent adjustments, COTA found his rental rate to be “significantly understated.”
However, COTA found both Meyer‘s and Dillon‘s expense rate determinations to be in error. The County failed to give adequate consideration to the Property‘s actual expenses, while Tallgrass failed to determine if the Property‘s actual expenses were consistent with the market. According to COTA, an appraiser should estimate the income stream that would be produced in the highest and best use under “typical management” because the property, not the current management, is being valued. Thus, COTA determined Keller‘s expense rate determination,
COTA found the County‘s determination that the Property was an A+ investment class for the Topeka market to be supported by the age of the Property, the quality of finish, and its location in Topeka‘s premier commercial area. COTA therefore rejected Dillon‘s contention the Property was a second tier property. COTA further held Dillon‘s capitalization rate determination, when “properly arrayed for comparability,” supported a 9% capitalization rate.
Based on these findings, COTA concluded an income approach utilizing the County‘s income approach inputs, including rental, vacancy, collection, and capitalization rates, coupled with Keller‘s operating expense rate, produced the best indicator of fair market value for the Property. Thus, after implementing this change to the County‘s income approach, COTA reached a final appraised fair market value of $9,431,560 for tax year 2011.
Tallgrass filed a motion asking COTA to reconsider, and COTA denied the motion. Tallgrass timely appeals.
ANALYSIS
Tallgrass raises five issues on appeal. First, Tallgrass claims COTA erred in interpreting
Kansas Judicial Review Act
Tallgrass’ appeal of the COTA decision is governed on review by the Kansas Judicial Review Act (KJRA),
“(i) The agency has erroneously interpreted or applied the law,
K.S.A. 2009 Supp. 77-621(c)(4) ; (ii) the agency has engaged in an unlawful procedure or has failed to follow prescribed procedure,K.S.A. 2009 Supp. 77-621(c)(5) ; (iii) the agency action is based on a determination of fact, made or implied by the agency, that is not supported by evidence that is substantial when viewed in light of the record as a whole,K.S.A. 2009 Supp. 77-621(c)(7) ; or (iv) the agency action is otherwise unreasonable, arbitrary, or capricious,K.S.A. 2009 Supp. 77-621(c)(8) .” In re Tax Appeal of Brocato, 46 Kan. App. 2d 722, Syl. ¶ 2, 277 P.3d 1135 (2011).
The KJRA defines the scope of judicial review of state agency actions unless the agency is specifically exempted from application of the statute.
Did COTA Err in Interpreting K.S.A. 2013 Supp. 79-1460(a)(2)?
The County initially provided identical appraisal values for the Property for tax years 2010 and 2011. With receipt of COTA‘s 2009 tax ruling while the 2010 and 2011 appeals were pending, the County lowered the 2010 value equal to COTA‘s 2009 value of the Property at $8,000,000. Tallgrass now argues application of
Standard of Review
Interpretation of a statute is a question of law over which appellate courts exercise unlimited review. Jeanes v. Bank of America, 296 Kan. 870, 873, 295 P.3d 1045 (2013). When a statute is plain and unambiguous, an appellate court does not speculate as to the legislative intent behind it and will not read into the statute something that is not readily found in it. In re Tax Appeal of Burch, 296 Kan. 713, 722, 294 P.3d 1155 (2013). The courts must construe statutes to avoid unreasonable or absurd results and presume the legislature does not intend to enact meaningless legislation. Northern Natural Gas Co. v. ONEOK Field Services Co., 296 Kan. 906, 918, 296 P.3d 1106, cert. denied 134 S. Ct. 162 (2013).
Statutes imposing a tax must be interpreted strictly in favor of the taxpayer. However, tax exemption statutes are “interpreted strictly in favor of imposing the tax and against allowing an exemp-tion for one who does not clearly qualify for the exemption.” In re LaFarge Midwest, 293 Kan. at 1045.
The Kansas Supreme Court no longer extends deference to an agency‘s statutory interpretation. 293 Kan. at 1044; Hill v. Kansas Dept. of Labor, 292 Kan. 17, 21, 248 P.3d 1287 (2011) (noting that the doctrine of operative construction has lost favor). Thus, we will proceed with no deference to COTA‘s interpretation of
“In the absence of valid statutory authority, an administrative agency may not, under the guise of a regulation or order, substitute its judgment for that of the legislature. It may not . . . modify, alter, or enlarge the legislative act which is being administered.” NCAA v. Kansas Dept. of Revenue, 245 Kan. 553, 557, 781 P.2d 726 (1989).
Application of K.S.A. 2013 Supp. 79-1460(a)(2)
The statute provides in relevant part:
“(a) The county appraiser shall notify each taxpayer in the county annually on or before March 1 for real property and May 1 for personal property, by mail directed to the taxpayer‘s last known address, of the classification and appraised valuation of the taxpayer‘s property, except that, the valuation for all real property shall not be increased unless: . . . (2) for the taxable year next following the taxable year that the valuation for real property has been reduced due to a final determination made pursuant to the valuation appeals process, documented substantial and compelling reasons exist therefor and are provided by the county appraiser.”
The County admitted to using and rolling over its 2010 tax year valuation of $10,870,383 to tax year 2011. Tallgrass argues
Tallgrass notes
Tallgrass now claims COTA erred in so ruling because nothing in
Another panel of this court in In re Equalization Appeal of California Crossing, No. 106,259, 2012 WL 2620997, at *6 (Kan. App. 2012) (unpublished opinion), held that ”
This issue arose with the passage of time, given appeals from three tax years were all pending when the first tax year (2009) was resolved. We hold the COTA-determined 2009 reduced fair market valuation only applies to the next tax year, i.e., tax year 2010. Tax year 2011 becomes a new independent tax valuation event. “Next” is defined as: “Immediately following, as in time, order, or sequence.” The American Heritage Dictionary 1189 (5th ed. 2011). By the very definition of “next” year, 2011 is not the next tax year after the tax year 2009 valuation was determined.
In this context, COTA properly found the 2010 tax valuation was subject to application of
Did COTA Err in Adopting the County‘s Valuation by Implicitly Finding the County Did Not Have the Burden of Proof?
In addition to the requirements of
Interpretation of
“In light of the record as a whole” is statutorily defined by
“that the adequacy of the evidence in the record before the court to support a particular finding of fact shall be judged in light of all the relevant evidence in the record cited by any party that detracts from such finding as well as all of the relevant evidence in the record, compiled pursuant to
K.S.A. 77-620 , and amendments thereto, cited by any party that supports such finding, including any determinations of veracity by the presiding officer who personally observed the demeanor of the witness and the agency‘s explanation of why the relevant evidence in the record supports its material findings of fact. In reviewing the evidence in light of the record as a whole, the court shall not reweigh the evidence or engage in de novo review.”
Although not statutorily defined, “substantial evidence” refers to “evidence possessing something of substance and relevant consequence to induce the conclusion that the award was proper, furnishing a basis [of fact] from which the issue raised could be easily resolved.” Saylor v. Westar Energy, Inc., 292 Kan. 610, 614, 256 P.3d 828 (2011).
Did COTA Misinterpret or Misapply K.S.A. 2013 Supp. 79-1609?
To support its claim, Tallgrass points to Garvey Grain, Inc. v. MacDonald, 203 Kan. 1, 14, 453 P.2d 59 (1969), where the Kansas Supreme Court held that a county‘s valuation which fails to consider all statutory factors is invalid. These statutory factors are listed in
Tallgrass’ interpretation of COTA‘s ruling is inaccurate. COTA adopted Meyer‘s income approach valuation for every aspect of its own valuation except expense rates. COTA ruled Meyer‘s expense calculation failed to give adequate consideration to the Property‘s actual expenses. COTA instead utilized the Keller appraisal, saying it “included consideration of the subject property‘s actual operating expenses based on a review of expenses from comparable area properties” to be most reflective of the market. COTA properly considered operating expenses in its valuations, finding Keller‘s operating expense calculations were valid by a preponderance of the evidence standard. COTA clearly considered the operating expense analysis of all three experts. Without reweighing the evidence, substantial evidence exists when viewed in light of the evidence as a whole to support COTA‘s reliance on Keller‘s expense rate valuation coupled with Meyer‘s income analysis to reach the fair market valuation COTA found.
Therefore, COTA did not shift the burden; it merely relied on the expense rate provided by Keller, the County‘s rebuttal expert witness, rather than either of the expense rates provided by Meyer or Dillon. While COTA denied the County the use of Keller‘s appraisal during its case-in-chief to adjust its valuation, his testimony was allowed and relevant for rebuttal purposes. Tallgrass provides no authority why COTA could not utilize the relevant testimony of the County‘s rebuttal witness. Tallgrass has failed to
Did COTA‘S Valuation Violate USPAP Standards and Kansas Law?
Tallgrass argues Meyer‘s appraisal was the result of a valuation by summation in violation of USPAP Standards and Kansas law. Tallgrass appears to be arguing COTA violated
Standard of Review
When determining the validity of an assessment of real property for uniformity and equality in the distribution of taxation burdens, the essential question is whether the standards prescribed in
To the extent the issue involves statutory interpretation, tax exemption statutes are interpreted strictly in favor of imposing the tax and against allowing an exemption for one who does not clearly qualify, without deference to the agency‘s statutory interpretation. See In re LaFarge Midwest, 293 Kan. at 1044-45.
USPAP Standards
Kansas law requires county appraisals be performed in accordance with generally accepted appraisal standards promulgated by the appraisal standards board of the Appraisal Foundation in effect on March 1, 1992, and consistent with the definition of fair market value in
USPAP Standards have been embodied in the statutory scheme of valuation, and COTA‘s failure to adhere to these standards may constitute a deviation from prescribed procedure or an error of law. Board of Saline County Comm‘rs v. Jensen, 32 Kan. App. 2d 730, Syl. ¶¶ 5-6, 88 P.3d 242, rev. denied 278 Kan. 843 (2004). Panels of this court have found an aggregate (summation) sales comparison approach to violate USPAP. See In re Dillon Stores, 42 Kan. App. 2d at 890-91; Jensen, 32 Kan. App. 2d at 735-36 (aggregated sales approach not permissible in any appraisal context).
Here, the County relied on Meyer‘s income approach methodology, which considered the three different ways the tenants used the Property. Meyer then applied the relevant rental rates to the useable square footage to determine potential gross and effective income, subtracted operating expenses, and calculated the net operating incomes. Meyer divided the net operating income by the calculated capitalization rate to determine the value of the Property. Tallgrass argued the County‘s valuation methodology was a valuation by summation, which was a single-property appraisal that violated USPAP Standards. COTA disagreed, holding “nothing in the record suggests that the County‘s valuation is premised on an appraisal approach expressly prohibited by USPAP.” COTA
In fair market value cases where the mass appraisal system is used to assess the value of real property, as it was here, Kansas law dictates that Standard 6 of the USPAP be applied to the resulting appraisal, not Standards 1 and 2. See In re Equalization Appeal of Johnson County Appraiser, 47 Kan. App. 2d 1074, Syl. ¶¶ 10-11, 283 P.3d 823 (2012). Standard 6 governs mass appraisal practice and states that an appraiser must employ “generally accepted methods and techniques necessary to produce and communicate credible appraisals.” USPAP Standard 6, p. 29.
Additionally, we note PVD Directive No. 92-006 indicates the County is not held to Standard 1, even though Tallgrass argues Standard 1-4(c) applies. Standard 1 applies to single-property appraisals, not mass appraisals. Here, COTA found this was a mass appraisal process governed by Standard 6, not Standard 1. We find it unnecessary to discuss Standard 1 or 1-4(c) as they are separate and distinguished standards from the mass appraisal process under Standard 6.
Tallgrass states the value of the whole should not be estimated by adding together individual values of component parts. Tallgrass emphasized the County‘s valuation methods did just that; therefore, Tallgrass claims COTA erred in relying on the County‘s methodology, as it did not comply with USPAP Standards.
We have found two cases discussing the issue of valuation by summation with any depth in Kansas: Jensen and In re Dillon Stores. Jensen involved the Board of Tax Appeals’ (BOTA) approval of the county conducting a separate sales comparison approach on each fourplex built on a single parcel containing 30 units, then adding up the individual value of each fourplex to get the value of the entire parcel. The Court of Appeals panel rejected this assessment as being violative of USPAP Standards Rule 1-4(e), noting that Standards Rule 6-5(d), which governs mass appraisals, also prohibits such a valuation. The panel determined these Standard Rules furthered its conclusion that “the practice [of aggregated sales approaches] is simply not permissible in any appraisal context.” 32 Kan. App. 2d at 736. The panel further rejected the county‘s argument that BOTA referenced alternate cost and income approaches to support its finding, as the panel emphasized BOTA‘s final decision relied exclusively on the sales comparison as its best estimate of fair market value. 32 Kan. App. 2d at 736.
Similarly, in In re Dillon Stores, a panel of this court again rejected summation valuations. The subject property consisted of 10 separate but contiguous buildings located on an 84-acre site. The county valued each building separately and summed the values to reach its final valuation. The panel held there was “no question” the county‘s valuation violated USPAP Standards Rule 1-4(e) because the county segmented the property, valued each segment individually, and added the values to get the final valuation. 42 Kan. App. 2d at 891. On appeal, the county argued it had complied with the USPAP by assessing the value for its highest and best use, “which required an appraisal of the property in separate parcels.” The panel disagreed, pointing out that “USPAP‘s Statement on Appraisal Standards No. 10 (E)(3) clearly demonstrates that highest and best use of a property intended to be divided or subject to division may not be achieved by the summation approach.” In re Dillon Stores, 42 Kan. App. 2d at 891.
In
Here, it was not wrong to consider the different uses of a single property because different tenant finishes result in different rental rates, costs, expenses and values. If one considers only the cheapest rental income to determine value, then the fair market value would be too low. Likewise, if one considered only the highest rental income to determine value, the fair market value would be too high. There must be a balanced valuation approach in compliance with USPAP Standard 6 for mass appraisals and that is accomplished by looking at all the ways in which the property is used and designed to be used.
We find USPAP Standards Rule 6-5(d) applies only when multiple structures are valued separately to reach an aggregate valuation of an entire property. Under this interpretation, COTA did not err in utilizing a combination of Meyer‘s and Keller‘s appraisals to reach a reasonable fair market value for the Property.
Tallgrass argues a panel of this court held USPAP Standards Rule 6-5(a)(v) (1992) provides that when “necessary for credible assignment results, the appraiser must assess value by potential earnings, including rentals, expenses, interest rates, capitalization rates, and vacancy data.” In re Tax Appeal of Brocato, 46 Kan. App. 2d 722, 730, 277 P.3d 1135 (2011). An analysis of Brocato reveals the panel actually quoted the 2008 USPAP Standards, not the 1992 USPAP Standards. Per Kansas statute, we must apply the 1992 USPAP Standards. There is no USPAP Standard Rule 6-5(a)(v) (1992). Thus, Tallgrass’ reliance on Brocato to support property-specific expenses fails.
Kansas Law Standards
This second standard requires that we consider Kansas law. Under
Instead, Tallgrass argues market rent should be determined by analyzing the current real estate market and the effective rent, which the Appraisal Institute‘s textbook, The Appraisal of Real Estate, p. 454 (13th ed. 2008), defines as the rental rate after adjusting for “free rent, excessive tenant improvements, moving allowances, lease buyouts, cash allowances, and other leasing incentives.” Because COTA adopted the County‘s rental rates, Tallgrass argues COTA erroneously relied on an unadjusted and untimely market rental rate, contrary to
According to Tallgrass, Kansas law also prohibits a use valuation except for agricultural land. Tallgrass supports its claim with Board of Douglas County Comm‘rs v. Cashatt, 23 Kan. App. 2d 532, 545-46, 933 P.2d 167 (1997), where a panel of this court held
In Cashatt, another panel of this court concluded that residential land must be valued at fair market value even if it resulted in some residential land being valued higher than others due to its suitability for commercial use. Doing so would not result in unequal or nonuniform taxation. 23 Kan. App. 2d at 545. The panel agreed with the county‘s valuation of a home as a commercial property because it would be the property‘s highest and best use. See 23 Kan. App. 2d at 537, 539-40. Thus, focusing only on the present use of the property for valuation without regard for fair market value failed to account for all the factors in Tallgrass claims that Meyer relied on leases that had been in place for more than 10 years is unfounded in the record. The older leases Meyer considered were owner leases that were removed from his consideration, in keeping with COTA‘s 2009 order. Meyer considered both current nonowner leases and leases on comparable properties. Dillon‘s appraisal considered only property-specific lease rates and asking rates of vacant space. Under COTA held an income approach using the County‘s inputs with Keller‘s operating expense rates was the best indicator of value for the Property. Tallgrass argues COTA‘s order does not contain detailed findings which explain its rationale for selecting the County‘s income approach methodology and claims the County‘s methodology and inputs are not supported by and are contrary to the substantial evidence of the case. We disagree and hold that COTA‘s decision is supported in light of the record as a whole. As amended, the KJRA now defines substantial evidence “in light of the record as a whole” to include the evidence both supporting and detracting from an agency‘s finding. Courts must now determine whether the evidence supporting the agency‘s factual findings is substantial when considered in light of all the evidence. The income capitalization approach analyzes a property‘s capacity to generate future Tallgrass argues Meyer based his findings on incorrect assumptions of how the tenants used the office space. COTA adopted Meyer‘s inputs without adjustment and determined several tenants were using medical office space when Tallgrass claims they should have been considered at a regular office rate. To support its claim, Tallgrass points to the testimony of one of the owners and treasurer of Tallgrass, who gave uncontroverted testimony demonstrating these tenants were not medical providers. Based on this testimony, Tallgrass calculated that COTA overvalued 11,388 square feet of non-medical space at a rental rate difference of $2 per square foot. Thus, Tallgrass urges the panel to recalculate the net operating income with 38,643 square feet of medical office space, 23,527 square feet of office space, and 12,533 square feet of surgical space, for a total square footage of 74,703. The County concedes COTA made a mathematical error in allocating the square footage between office, medical, and surgical space. The County agrees with Tallgrass’ adjustment to the square footage of office, medical, and surgical space except for Tallgrass’ inclusion of 122 square feet in office space for MC Concessions, which Meyer did not use in his indication of value. Thus, the County asks the panel to remand the case with instructions to recalculate the fair market value with the office and medical square footage the parties now agree is correct or, in the alternative, to recalculate the fair market value with the corrected numbers. With the exception of MC Concessions, the parties agree on how the Property rental area should be calculated and valued, pursuant to the rest of COTA‘s holding. However, when reviewing the County‘s calculation of the square footage of the Property, the County erred in its total calculation of square footage. The County posited the Property had 74,703 square feet of usable space based on the rent rolls. COTA relied on this number in its ruling, as did Tallgrass in its appellate brief. Upon further review, the total square footage, excluding MC Concessions, only adds to 74,508 square feet. The parties’ agreement on how the rental area should be calculated indicates COTA made a mathematical error in failing to adjust the rental area to match its ruling, not an error in interpreting the law itself. The parties also failed to notice that the County‘s calculation of total usable area was slightly off until Tallgrass indicated as much in its reply brief. Because both miscalculations are mathematical in nature, not indicative of a misinterpretation of law or the evidence, we must remand back to COTA with instructions to recalculate the 2011 valuation. In calculating the final valuation, Tallgrass argues MC Concessions should be included in the total square footage calculation, as this addition makes the actual number from the rent roll closer to what COTA relied upon. Despite Tallgrass’ claim, Meyer clearly testified MC Concessions was not considered in his appraisal. Because COTA relied on Meyer‘s appraisal and we cannot reweigh evidence, MC Concessions should not be considered in the calculation on remand. On remand, COTA shall utilize the lease rate previously determined for each of the three types of spaces for office, medical, and surgical. COTA shall recalculate the value of the property by correctly allocating the total square feet of the building of 74,508 square feet based on the agreed-upon space allocation between office, medical, and surgical spaces. Again, the space used by MC Concessions shall not be considered, and by our calculations, is not in the square foot total of 74,508. Tallgrass next argues COTA erred in adopting the County‘s lower capitalization rate. The capitalization rate was a battle of When considered in light of all evidence, there is substantial evidence to support COTA‘s decision to adopt the County‘s capitalization rate. While Tallgrass is correct that class A investment properties over 20,000 square feet were given a capitalization rate of 9.25% in the Shawnee County benchmark study, COTA agreed with the County‘s determination that the Property was an A+ investment class property. The same benchmark study advocated a capitalization rate of 8.75% for such properties, which Meyer increased by .25% to account for the Property‘s size. Further, COTA noted Tallgrass’ expert did not adjust his proposed capitalization rate for comparability; after making such an adjustment, COTA determined Dillon‘s appraisal supported a 9% capitalization rate. Tallgrass also fails to show any statutory or caselaw authority to support the rejection of the County‘s capitalization rate. Thus, Tallgrass has again failed to meet its burden to demonstrate the invalidity of COTA‘s ruling. Tallgrass argues COTA failed to rule on whether the Property has been subjected to intentional and systematic excessive valuations by the County and argues it was, in fact, subjected to such valuations. We will first consider our standard of review and then address Tallgrass’ claims. Given the record presented below we find no arbitrary, capricious, or unreasonable acts by COTA. A rebuttable presumption of validity attaches to all actions of an administrative agency. The burden of proving arbitrary and capricious conduct lies with the party challenging the agency‘s actions. Jones v. Kansas State University, 279 Kan. 128, 140, 106 P.3d 10 (2005). Under Tallgrass claims COTA erred by failing to rule on its excessive valuation claim, but Tallgrass fails to provide a record citation showing where it raised such a claim before COTA and fails to explain how COTA erred in failing to address a claim not raised before it. A point raised incidentally in a brief and not supported by the record is deemed abandoned. Friedman v. Kansas State Bd. of Healing Arts, 296 Kan. 636, 645, 294 P.3d 287 (2013). Thus, Tallgrass’ claim is not properly before us, and we decline to address it. However, we may still address Tallgrass’ underlying claim that COTA‘s decision Uniform and equal taxation is guaranteed under the In Allegheny, the Court found systematic and intentional discrimination against a coal company in finding the coal company‘s property had been assessed at 35 times that of comparable neighboring property for 6 years with no basis for the discrepancy. 488 U.S. at 341. Additionally, the Court found no constitutional basis for challenge in the county‘s approach to valuation, even when two different methods were used to assess property in the same class. 488 U.S. at 342. The Court, in Allegheny, considered the valuation of the coal company intentionally discriminatory because it was assessed at many times the rate of a comparable neighboring property over an extended period of time. 488 U.S. at 341-42. Here, Tallgrass merely complains that it has been forced to challenge the County‘s valuation for multiple years without demonstrating a difference between how the County has valued the Property in relation to other comparable properties in Shawnee County. “Mere excessiveness of an assessment or errors in judgment or mistakes in making unequal assessments will not invalidate an assessment, but the inequality or lack of uniformity, if knowingly high or intentionally or fraudulently made, will entitle the taxpayer to relief.” Addington v. Board of County Commissioners, 191 Kan. 528, 532, 382 P.2d 315 (1963). Here, Tallgrass fails to show any indicia of bad faith, arbitrary, or oppressive action by the County. When “the only evidence of excessiveness is in dispute and evidence offered to establish a base for comparison in attempting to show lack of uniformity is found to be inadequate and insufficient by the trier of facts, an assessment, made within statutory confines, will not be invalidated by judicial intervention.” Cities Service Oil Co. v. Murphy, 202 Kan. 282, 294, 447 P.2d 791 (1968). Tallgrass does not show how its market valuation is excessive in relation to comparable properties, and the only evidence of its excessive market valuation is in dispute. Tallgrass has further failed to sustain its burden of proof to show that its property has been valued excessively. See Northern Natural Gas Co. v. Dwyer, 208 Kan. 337, 368, 492 P.2d 147 (1971). Because Tallgrass’ only claim of excessive valuation is based on evidence in dispute, Tallgrass fails to demonstrate indicia of bad faith or intentional action on the part of the County. Tallgrass has failed to sustain its burden of proof in demonstrating that the Property has been systematically and intentionally valued excessively. As the appealing party, Tallgrass had the burden to show the acts of COTA were not supported by the record. The record reflects this is a difficult property to appraise under a mass appraisal with the 1992 USPAP Standards. Tallgrass argued for the application of the rollover provision of Affirmed in part, reversed in part, and remanded with instructions to recalculate the rental area based on the agreed-to rent rolls from the County‘s appraisal but excluding MC Concessions from the total area of 74,508 square feet, basing tenant usage as the parties have agreed, and using all other valuation inputs and expenses as originally adopted by COTA. Affirmed in part, reversed in part, and remanded with directions.Were COTA‘s Findings of Fact Supported by Substantial Evidence?
Standard of Review
Were COTA‘S Findings Supported by Substantial Evidence in Light of the Record as a Whole?
Square feet calculation
Capitalization Rate
Did COTA Act in an Arbitrary, Capricious, and Unreasonable Manner by Failing to Decide Whether Tallgrass Had Been Subjected to Intentional and Systematic Excessive Valuations?
Standard of Review
Did COTA Act Arbitrarily and Capriciously in Failing to Rule on Whether the County Subjected Tallgrass to Intentional and Systematic Excessive Valuations?
Did the County Systematically and Intentionally Discriminate Against Tallgrass?
Conclusion