Memorandum decisions of this court do not create legal precedent. A party wishing to cite a memorandum decision in a brief or at oral argument should review Appellate Rule 214(d).
MEMORANDUM OPINION AND JUDGMENT*
The personal representative of an estate appealed to the superior court from a decision by a municipality's board of equalization upholding the municipal assessor's valuation of real property. The superior court affirmed the board's decision, and the personal representative appeals. After independently reviewing the board's decision,1 we conclude that the superior court's decision provides a sufficient analysis of the board's decision and the arguments on appeal both to the superior court and this court, and we AFFIRM the superior court's decision for the reasons expressed in that decision, which we attach in relevant part as an appendix.
APPENDIX
IN THE SUPERIOR COURT FOR THE STATE OF ALASKA
THIRD JUDICIAL DISTRICT
LARRY VARILEK, )
)
Appellant, )
)
vs. ) Case No. 3AN-05-08048 CI
)
)
MARY ANN BURKE, BOARD OF )
EQUALIZATION, MUNICIPALITY) )
OF ANCHORAGE, )
)
Appellee. )
Order*
Larry Varilek assisted in the care of Martha Dunnagan and the upkeep of her house until her death in 2000. Professional Guardianship Services (PGSC) assumed guardianship of Ms. Dunnagan in [1997], and assigned her case to David Schade. [In 1999] PGSC banned Mr. Varilek from the residence and transferred Ms. Dunnagan to a nursing home. After Ms. Dunnagan was transferred to the nursing home, the heat was turned off in her residence, causing serious mold damage to the house that was built in 1952. Mr. Varilek petitioned . . . to assume duties as Personal Representative of the Estate of Martha Dunnagan, which was granted on August 27, 2002. He subsequently submitted a notice . . . to the Municipality. David Schade then [changed] the address [the Municipality used for corresponding with the Estate] in January 2003 and the Municipality did not notify Mr. Varilek about the change, or inquire about its legality. Because of the change of address, Mr. Varilek did not receive the tax assessments on the home for 2002, 2003, and 2004, and missed the 30-day deadline for appeals. PGSC did not make payments in the years it was receiving the tax assessments so that the Municipality initiated foreclosure proceedings on Ms. Dunnagan's home. On January 22, 2004, Mr. Varilek contacted the Municipality to inquire about the correct address because he had not received his 2004 "green card" showing the current tax assessment.
In a foreclosure action (3AN-04-05143 CI) the Superior Court entered a Judgment and Decree foreclosing upon the Municipality's lien for unpaid taxes. Appellant did not oppose the foreclosure or seek to set aside the judgment, but instead filed a motion in the Superior Court to prevent the foreclosure. By the time of his filing, the judgment and decree of foreclosure had already been entered.
On [February 14, 2005], Mr. Varilek requested a hearing before the Board of Equalization to appeal the 2005 appraised value for the house. The Municipality responded to Mr. Varilek's request by conducting an interior and exterior inspection of the residence. The inspection discovered significant deterioration of the home, reducing the value of the property from $131,500 to $100,100. At the hearing, conducted on April 13, 2005, [for the 2005 tax year,] Mr. Varilek raised two issues: (1) that the appraiser's estimate of the tax value of the house was still too high due to the extensive mold damage and substandard wiring, plumbing, and heating; and (2) that the delinquent taxes be reduced for the years 2002, 2003, and 2004 to reflect the reduced value of the house. In response to the second issue, the Board demurred, stating that it had no authority to address the tax assessments of the earlier years. Mr. Varilek did not object to or contest the Board's conclusion, other than uttering a non-committal "okay." The Board also recommended that Mr. Varilek contact a Janet Haynes at "treasury" to review his concerns about the tax assessments for prior years.
In regard to the first issue, the Municipality explained its calculations for the appraised value of the Dunnagan residence. The appraiser discovered in her inspection that the house was 22% incomplete, which changed the valuation technique from a market-based approach to a cost-based approach. The Municipality admitted that the computer program that applied the cost approach was new and that the bugs had not been worked out, but the Board was satisfied with the assessor's techniques and her evaluation. At the conclusion of the Municipality's testimony, Mr. Varilek presented photos documenting the deterioration of the house, which he claimed was more extensive than the assessor's original estimates.1 The Board upheld the assessor's estimate, but noted that if Mr. Varilek had provided actual cost estimates for the necessary renovation work it would have been willing to consider further lowering the assessed value of the residence.
Appellant's Position2
Argument
In his amended brief, Mr. Varilek raises five legal theories for appealing the Board of Equalization's decision.
1. That the Board erred in concluding that it did not have discretion to accept Larry Varilek's testimony for the value of the property in its deteriorated state.
2. That the Board erred in its conclusion that public policy dictated that it could not adjust the 2002-2004 appraisals.
3. That the Board erred in its conclusion that Larry Varilek would not suffer harm from a denial of his application for adjusted [appraisals], because back taxes are excessive and delinquent.
4. That the Municipality . . . was negligent in not providing notice to the personal representative that the property was in danger of foreclosure.
5. That the Municipality erred in accepting David Schade's change of address request, and denied Mr. Varilek his constitutional right to due process.
Appellee's Position3
Argument
1. Substantial evidence supports the Board's affirmation of the Municipality's revised 2005 tax assessment.
2. Public policy played no part in the Board's decision, and it did not have authority to address prior years' valuations as the 30-day statute of limitations had run.
3. The harm to an appellant is irrelevant in an appeal of a tax valuation.
4. The lack of notice [regarding the address change] is irrelevant to the 2005 tax assessment.
5. The final issue [regarding acceptance of Schade's change of address] was not raised in the Notice of Appeal, was not raised below or properly briefed, and cannot be considered by the court.
DECISION
Standard Of Review
The Municipality correctly states that either the substantial evidence test or the reasonable basis test applies to the Board's decisions.4 The Alaska Supreme Court has also set a discrete standard for the Board's valuation: "Taxing authorities are to be accorded broad discretion in deciding among recognized valuation methods. If a reasonable basis for the taxing agency's method exists, the taxpayer must show fraud or the clear adoption of a fundamentally wrong principle of valuation."5
Arguments
1. The Board had a reasonable basis to affirm the valuation conducted by the Municipality's assessor, and by failing to submit cost estimates, Mr. Varilek did not meet his burden of production or persuasion in rebutting the valuation.
The Alaska Supreme Court established the process and standards for submitting and evaluating evidence at a hearing before the Board of Equalization in Cool Homes, Inc. v. Fairbanks North Star Borough:
A taxpayer contesting an assessment need only prove that the valuation is improper. The taxpayer does not have to offer the correct amount, range or method of valuation, as the Borough repeatedly insisted. The burden then shifts to the taxing authority to introduce credible evidence which substantiates its assessment.
However, AS 29.45.210(b) still requires that the taxpayer prove facts at the hearing.6
The Municipality responded to Mr. Varilek's original appeal by dispatching an assessor who conducted an interior and exterior inspection and decreased the [house's] valuation by $31,400 due to the deteriorated condition. The assessor was alerted to the presence of mold in Mr. Varilek's appeal form, and would have knowledge of the photographs as Mr. Varilek refers to them. Nothing in the photographs, or Mr. Varilek's appeal, refers to these problem areas in the heating, plumbing, and electrical systems, although he later claimed they were substandard. The assessor did report that the inspection did not reveal any unreported inadequacies, which [implies] that she looked beyond the immediate concerns over mold to conduct a comprehensive inspection. In light of the uncertainty, the Board's knowledge and expertise should be deferred to, regarding the competency of the inspectors and the scope of the inspection.
The Municipality explained to the Board its rationale behind the valuation, including the functioning of its computer-based valuation program and the decision to change the assessment from a market-based approach to a cost-based approach because of [the house's] incomplete construction. Recognizing the deferential standard that a court is to exercise in considering the valuation methods, the court finds that the Board had a reasonable basis to affirm the Municipality's methodology and computations. The Board's decision is affirmed.
2. The Municipality correctly states that public policy concerns played no part in the Board's decision not to address the notice issue of the prior years' valuations, and the most liberal interpretation of the appeals statute would still weigh against Mr. Varilek[`s] appeal [of] the prior valuations.
The Municipality correctly states that public policy concerns played no part in the Board's refusal to address the 2002-2004 valuations. The Board clearly stated that it did not have the authority to address the prior valuations, and discussed only the 2005 valuation.
Board procedure according to the statute prohibits a taxpayer from filing an appeal after thirty (30) days unless it finds that the taxpayer was "unable to comply."7 Mr. Varilek did not argue this point in front of the Board or in his brief, and the issue of the 2002-2004 valuations was not properly before the Board.
3. The Board is correct that the extent of harm to the appellant is irrelevant in an appeal of a tax assessment.
The Board of Equalization is not governed by equitable principles, and the Municipality correctly states that the degree of harm is irrelevant in its assessment.
4. The potential negligence of the Municipality is irrelevant in the review of the 2005 tax assessment.
The Municipality correctly argues that the alleged negligence of the Municipality is irrelevant for the consideration of the 2005 tax valuation. As stated in section 2 of the decision above, the Board could not have addressed the 2002-2004 valuations, and did not do so in the hearing of April 13, 2005. Mr. Varilek's "chain reaction" theory does not apply.
5. The notice issue cannot be considered as it has not been properly briefed.
The stated issue was not part of the Notice of Appeal, and Mr. Varilek's factual argument is essentially a restatement of his brief in issue no. 4. The causal event is the same, the Municipality's alleged failure to notify Mr. Varilek of the change of address to PGSC.
CONCLUSION
The Board's decision on the 2005 tax valuation met the applicable standards of substantial evidence and reasonable basis, and is AFFIRMED.
Mr. Varilek's appeal on the lack of notice is DENIED as Mr. Varilek failed to timely file his notice of appeal for the 2002-2004 tax valuations.
Dated: May 15, 2009
/s/ Craig F. Stowers
Superior Court Judge
