                         IN THE NEBRASKA COURT OF APPEALS

              MEMORANDUM OPINION AND JUDGMENT ON APPEAL

                              GIFF V. SARPY CTY. BD. OF EQUAL.


  NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION
 AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).


                                 NANCY J. GIFF, APPELLANT,
                                            V.
                       SARPY COUNTY BOARD OF EQUALIZATION, APPELLEE.


                            Filed February 4, 2014.   No. A-13-345.


       Appeal from the Tax Equalization and Review Commission. Affirmed.
       Richard A. Drews, of Taylor, Peters & Drews, for appellant.
       Michael A. Smith, Deputy Sarpy County Attorney, for appellee.


       IRWIN, MOORE, and BISHOP, Judges.
       IRWIN, Judge.
                                     I. INTRODUCTION
       Nancy J. Giff appeals an order of the Nebraska Tax Equalization and Review
Commission (TERC) in which it largely denied her protests of the valuation placed on her
property in 2011 and 2012 by the Sarpy County assessor (County Assessor) and upheld by the
Sarpy County Board of Equalization (County Board). On appeal, Giff challenges the conclusions
with regard to the value placed on the land and with regard to equalization. We find no error
appearing on the record, and we affirm.
                                     II. BACKGROUND
        The present case arises out of the 2011 and 2012 valuations of Giff’s property, a
residential parcel located in Bellevue, Sarpy County, Nebraska. The parcel comprises 6.64 acres
of land, improved with a 3,882-square-foot residence, a swimming pool, and two tennis courts.
For tax year 2011, the County Assessor determined that the assessed value of the land was
$118,200 and that the assessed value of the “building” was $425,938, for a total assessed value
for the parcel of $544,138. For tax year 2012, the County Assessor determined that the assessed


                                             -1-
value of the land was $118,200 and that the assessed value of the “building” was $392,901, for a
total assessed value for the parcel of $511,101.
        Giff protested this assessment to the County Board and requested a total assessed value
for the parcel of $435,000 for tax year 2011 and a total assessed value for the parcel of $425,000
for tax year 2012. The County Board agreed with the values as assessed by the County Assessor.
        Giff appealed the County Board’s decisions to TERC. Prior to a hearing before TERC,
the parties exchanged 104 exhibits and stipulated to the receipt of the exchanged exhibits. TERC
held a hearing on Giff’s appeals in December 2012.
                                1. GIFF’S EVIDENCE BEFORE TERC
         Giff’s husband, Martin J. Giff, testified on her behalf. Martin testified that he had been
married to Giff and had lived on the subject parcel during all relevant times. Martin is a
professional real estate appraiser and also holds a real estate broker’s license.
         Martin described the subject parcel as consisting of “steep, rolling hill, heavily wooded,
heavy downfall of trees, very undulating.” He also testified that the subject parcel is “very
irregular shaped” and indicated that “[i]t has limitations in that there are washouts on the
property that are created because of the steep grade and runoff.” He testified that the residence
was located “on the peak of the hill and the only area that you could build a home, that’s flat
enough to build a home on.” He testified that of the total 6.64 acres of the parcel, only
approximately “an acre” was buildable.
         Martin testified that the tennis courts located on the subject parcel are “obsolete.” He
testified to gaps in the surface of the courts that “are approaching seven or eight inches wide,”
and he indicated that “[t]here are trees that are growing up through the asphalt.” He testified that
they have “no functional utility.” He opined that the cost of removing the obsolete tennis courts
should be reflected as a reduction in the value of the parcel.
         Martin testified that he had received a bid of $24,875 for removal of the tennis courts, the
sidewalk along the tennis courts, and concrete stairs. He testified that the County Assessor had
applied a $25,000 deduction for functional obsolescence to the assessed value of the subject
parcel from 2004 through 2009. The deduction was not applied starting in 2010. The evidence
demonstrated that there had previously been four tennis courts when the deduction had been
provided and that as of the effective date of the valuations at issue in this case, only two tennis
courts remained.
         Martin testified that the subject parcel is located in a neighborhood identified by the
County Assessor as “B09.” He testified that neighborhood B09 includes approximately 122
parcels, but that only 2 of them comprise 3 or more acres. He specifically identified one other
parcel that comprised 8.91 acres and that had an assessed value of $8,910. He also testified that
the parcels in neighborhood B09 which had sold between July 1, 2008, and June 30, 2010, all
ranged in size from .28 acres to .53 acres and that the sales prices per acre ranged from $38,000
per acre to $79,500 per acre. He opined that none of the sales was a “comparable sale” for the
subject parcel.
         Martin testified that “an acreage property is much, much different than a parcel in a
platted subdivision that has all amenities and a neighborhood surrounding it and covenants,
everything else.” He opined that “[t]he value of a smaller parcel is much, much higher than the


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value of a larger parcel.” Martin testified that there are “an abundance of acreages located . . . in
other areas that are adjacent to and nearby the [subject parcel and] most of them are in the B02
neighborhood . . . and others are in the B03 neighborhood.” He testified that as a certified
appraiser, he did not see any reason to distinguish the acreages that are in the B02 neighborhood
and the subject parcel in the B09 neighborhood. The B02 neighborhood designation includes
properties to the south, the southeast, and the northwest of the subject parcel, and includes
properties that are contiguous with other B09 designated properties.
        In the B09 neighborhood, the County Assessor values the first acre of property at
$80,000, the second acre at $15,000, and all additional acres after the second at $5,000 per acre.
In the B02 neighborhood, the County Assessor values the first acre of property at $60,000, the
second acre at $6,000, and all additional acres after the second at $3,000 per acre. Martin
identified nine properties in the B02 neighborhood that were relatively similar in size to the
subject parcel, ranging from 4.94 acres to 11.09 acres, and noted that the assessed valuation of
the land for each was less than that applied to the subject parcel.
        Martin also testified about parcels in the “Fontanelle area,” a group of lots developed
around a public golf course. He testified that the area was developed in the early 1970’s as “a
mixed-use development” that included various residential lots and an 18-hole golf course. The
area also included an apartment complex. In addition, there were tennis courts “for the people in
the neighborhood to use.” He testified that the neighborhood tennis courts “are the obsolete
tennis courts” currently found on the subject parcel. The golf course ceased to exist in 2009, and
the property has since been separated into ownership parcels that are “all wooded, rolling
fairways, grass, . . . very similar to the subject [parcel] and very similar in that it’s part of the old
recreational facilities for the neighborhood that became obsolete and now are in private
ownership.”
        He testified that the parcels comprised of the former golf course range in size from “five
and a half acres up to 15 acres, most of them in the 6 to 9 acre range.” He testified that those
parcels are all valued at $3,200 per acre. He testified that if the same $3,200 per acre was applied
to the subject parcel, the land would be valued at approximately $21,000 rather than the
$118,200 valued by the County Assessor. He also testified that one of the parcels had sold in
August 2010 at a price of $11,641 per acre.
        Martin opined that the subject parcel is not being taxed equally with similar properties
within the county. He testified that he did not see any reason to assess the land value of the
subject parcel differently than similar properties located in the B02 neighborhood, that there was
no comparable sale data to support such a distinction, and that the only comparable sale data was
of a parcel in the “Fontanelle area” that sold for $11,600 an acre.
        Martin testified that if the subject parcel was valued consistently with lots in the B02
neighborhood, the total valuation of the subject parcel’s 6.64 acres of land would be
approximately $79,920. He opined that the market value of the subject parcel was consistent with
that sale at $11,600 per acre. Applying such a per-acre value would result in a value of the
subject parcel’s 6.64 acres of land of $77,024. He testified that both alternative valuations for the
land should then be reduced to reflect the approximate $25,000 cost of removing the obsolete
tennis courts.



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                           2. COUNTY BOARD’S EVIDENCE BEFORE TERC
         Larry Houlton, a residential real estate assessor for the County Assessor, testified on
behalf of the County Board. Houlton was responsible for valuing the subject parcel for tax years
2011 and 2012. Houlton testified that Sarpy County uses a “modified cost approach through the
Marshall and Swift Valuation Service” to “get a replacement cost estimate, depreciated
replacement cost estimate. It’s then adjusted for depreciation factors in the county and then more
specifically in the neighborhood.”
         Houlton testified that “neighborhoods” as used by the County Assessor for valuation
purposes, “would be areas that would have similar influences on properties that can be physical
or man-made or natural boundaries.” He testified that “you want to look for comparable houses
that are . . . going to be in competition with each other” and that are “going to be of the same
quality, near the same age.” With respect to land valuations, he testified that “[i]t’d be great to
have just land sales, but you don’t always have land sales, so you can also back into”
determining land value “by taking a sale of . . . an improvement with a land and improvement,
and the replacement cost for the improvement would be deducted from the sales price, which
would leave you with a land value.”
         Houlton testified the County Assessor uses a land table that has been established for the
particular neighborhood and that values property differently if it is “a lot, a basic unit,” or if it is
“under the acreage category.” In the B09 neighborhood, a lot is valued at $50,000; an acreage is
valued at $80,000 for the first acre, $15,000 for the second acre, and $5,000 per acre for
additional acres. He testified that the approach recognizes that with acreages, the first acre is
going to be the “buildable area” and is worth more than subsequent acres. He testified that the
values per acre are based on gathering sales data and setting up a model.
         Houlton testified that the properties classified as being in the B09 neighborhood were so
classified because “the properties in the B09 neighborhood [are] higher quality, newer homes,
and of larger square foot, and were generally in that [geographic] area . . . most fairly
contiguous.” He testified that the subject parcel “did fit as far as improvements were concerned,
and age, and size.”
         Houlton testified that the subject parcel and the other B09 neighborhood properties
differed from those classified in the B02 neighborhood. He testified that “[t]he B09
characteristics were much newer properties, average age about 1995. The B02 neighborhood
average age is about 1945. The quality grades for the [B09] neighborhood is averaged about 4-5
. . . good class, the quality grade for the B02 neighborhoods was right around the average quality,
3-0.” He testified that the subject parcel fits within the B09 neighborhood “much closer than it
would the B02” neighborhood. He testified that the subject parcel comprises a 1998, very good
quality house of 3,883 square feet; the B02 neighborhood averages are homes built around 1945,
of lower quality, and with an average size of 1,560 square feet. He also noted that the subject
parcel physically “sits connecting with much of the B09 neighborhood.”
         Houlton testified that the “Fontanelle area” golf course lots were also not comparable to
the subject parcel. He testified that the lots identified by Martin were still classified “in the
commercial department” and that, at the time, an owner could not “get a building permit” to
build a house on them. He also specifically testified about other exhibits offered by Martin as



                                                 -4-
comparable parcels, indicating that they were not comparable to the subject parcel because of
poor access or the presence of sewer lines and ravines running through the properties.
        Houlton testified that he had no personal knowledge about the condition of the tennis
courts on the subject parcel because he had not inspected them. He acknowledged that if he had
inspected the tennis courts and determined them to be “totally worthless,” then he could have
made an adjustment on the valuation. He testified that he would have used “the Marshall and
Swift” valuation service to determine an estimate for removal of the tennis courts. He testified
that he had not inspected the tennis courts and that “[e]very time [he] asked to inspect the
property, it’s been refused.” The record indicates that a certified letter requesting inspection was
sent, but no response was received from the taxpayer.
        On examination from TERC, Houlton testified that he was physically at the subject parcel
in January 2010 and that he had knocked and no one answered. He testified that there were dogs
in the back yard and he left the property. Martin called Houlton after Houlton returned to the
office and “told [Houlton] in no uncertain terms to not visit his property again without
permission.” Houlton testified, “So I have not been back on this property.”
        Houlton opined that the appropriate valuations for the subject parcel for 2011 and 2012
were as set by the County Assessor and accepted by the County Board. He testified that the
values were set using generally accepted mass appraisal principles.
                                         3. TERC FINDINGS
        TERC recognized that the topography of the subject parcel resulted in portions of it being
unbuildable, but found that those portions still contributed value to the subject parcel “by
providing a buffer from neighbors.” This finding was consistent with testimony by Martin that
Giff had acquired additional adjacent unbuildable land within the past 5 years.
        TERC found that Giff had presented clear and convincing evidence that the subject parcel
should receive a deduction for functional obsolescence associated with the deteriorating tennis
courts. TERC found that the estimate provided by Martin, however, was not clear and
convincing evidence of the appropriate amount for the deduction and, instead, relied upon the
“Marshall and Swift” valuation service guidelines for removal of the tennis courts. TERC
specifically found that Giff had not quantified “the size of the stairs and risers associated with the
tennis courts” and refused to allow any deduction associated specifically with them. TERC
concluded that Giff was entitled to a deduction of $15,581 for tax year 2011 and $16,180 for tax
year 2012.
        TERC found that the various properties argued by Giff as comparable to the subject
parcel were not comparable. TERC found that “there is no clear and convincing evidence that the
County determination regarding the Subject Property was arbitrary or unreasonable.”
        TERC found that the “modified cost approach” described by Houlton was “defined in
mass appraisal literature as the allocation method or allocation by subtraction.” TERC found that
the method is a commonly accepted mass appraisal technique most suitable for use for residential
properties in subdivisions with sufficient sales. TERC found that the determination of the market
“neighborhood” areas used by the County Assessor conforms to generally accepted mass
appraisal techniques.



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        In summary, due to the omission of a deduction for the tennis courts, TERC found
competent evidence to rebut the presumption that the County Board had faithfully performed its
duties and had sufficient competent evidence to make its determination and found there was clear
and convincing evidence the County Board’s decision was arbitrary or unreasonable. TERC
modified the County Assessor’s and the County Board’s valuation to reflect the above
deductions for the obsolete tennis courts, resulting in a total valuation of the subject parcel of
$528,557 for tax year 2011 and $494,921 for tax year 2012. This appeal followed.
                               III. ASSIGNMENTS OF ERROR
       Giff has assigned 13 errors on appeal. Giff’s assignments of error, restated and combined,
challenge TERC’s failure to further modify the valuation of the subject parcel for tax years 2011
and 2012.
                                        IV. ANALYSIS
        Although Giff has presented 13 assigned errors, the arguments presented in her brief on
appeal are focused on arguing that the valuation of the subject parcel was improper for tax years
2011 and 2012 because the parcel should not be valued according to land tables in the B09
neighborhood and should, instead, be valued as more consistent with the B02 neighborhood or
the “Fontanelle area” golf course lots. Giff also argues that TERC erred in finding that she had
refused inspection of the subject parcel and in applying the “Adverse Inference Rule” to
conclude that an inspection would have militated against her. Giff asserts that TERC erred in not
allowing a larger deduction for the obsolete tennis courts and in not finding that the subject
parcel was unequally treated compared to other property in the county. We find no merit to these
assertions.
        Appellate courts review decisions rendered by TERC for errors appearing on the record.
JQH La Vista Conf. Ctr. v. Sarpy Cty. Bd. of Equal., 285 Neb. 120, 825 N.W.2d 447 (2013).
When reviewing a judgment for errors appearing on the record, an appellate court’s inquiry is
whether the decision conforms to the law, is supported by competent evidence, and is neither
arbitrary, capricious, nor unreasonable. Id.
        Neb. Rev. Stat. § 77-5016(9) (Cum. Supp. 2012) provides:
        In all appeals, excepting those [involving the taxpayer-initiated appeal of a county tax
        levy], if the appellant presents no evidence to show that the order, decision,
        determination, or action appealed from is incorrect, the commission shall deny the
        appeal. If the appellant presents any evidence to show that the order, decision,
        determination, or action appealed from is incorrect, such order, decision, determination,
        or action shall be affirmed unless evidence is adduced establishing that the order,
        decision, determination, or action was unreasonable or arbitrary.
Accord JQH La Vista Conf. Ctr. v. Sarpy Cty. Bd. of Equal., supra.
        The language of § 77-5016(9) creates a presumption that the county board of equalization
has faithfully performed its official duties in making an assessment and has acted upon sufficient
competent evidence to justify its action. JQH La Vista Conf. Ctr. v. Sarpy Cty. Bd. of Equal.,
supra. That presumption disappears when there is competent evidence adduced on appeal to
demonstrate that the board has not faithfully performed its official duties or has not acted upon


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sufficient competent evidence to justify its action. Id. From that point forward, the
reasonableness of the valuation fixed by the board becomes one of fact based upon all of the
evidence presented. Id.
         The burden of showing that the county board’s valuation is unreasonable rests upon the
taxpayer on appeal from the action of the board. Id. The burden of persuasion imposed on the
complaining taxpayer is not met by showing a mere difference of opinion unless it is established
by clear and convincing evidence that the valuation placed upon the property when compared
with valuations placed on other similar property is grossly excessive and is the result of a
systematic exercise of intentional will or failure of plain duty, and not mere errors of judgment.
Id.
         Giff challenged only the land valuation for the subject parcel for tax years 2011 and
2012. Giff argued to TERC that the subject parcel should not be valued according to the land
tables for the B09 neighborhood and should, instead, be valued as being more consistent with
properties in the B02 neighborhood or the “Fontanelle area” golf course lots.
         Before TERC, Houlton, the real estate assessor for the County Assessor, testified that the
properties classified in the B09 neighborhood, including the subject parcel, were so classified
because they were all “higher quality, newer homes, and of larger square foot, and were
generally in that [geographic] area . . . most fairly contiguous.” He specifically testified that the
subject parcel “did fit” with the B09 neighborhood classification “as far as improvements were
concerned, and age, and size.”
         He specifically testified that the subject parcel and the other B09 neighborhood properties
were not comparable to those classified in the B02 neighborhood and that the subject parcel fits
within the B09 neighborhood “much closer than it would the B02” neighborhood. He testified
that the subject parcel comprises a 1998, very good quality house of 3,883 square feet, while
properties in the B02 neighborhood were, on average, homes that were built around 1945, of
lower quality, and with an average size less than half that of the subject property. He also
testified that the subject parcel physically is connected with much of the B09 neighborhood.
         Houlton similarly testified that the subject parcel and the properties in the “Fontanelle
area” golf course lots were not comparable. He noted that the golf course lots were still classified
as commercial parcels and that, at the time, an owner could not get a building permit to build a
house on them. He specifically testified about particular exhibits offered by Giff as comparable
parcels, indicating that they were not comparable to the subject parcel because of poor access or
the presence of sewer lines and ravines.
         TERC found that the valuation method used by the county is a commonly accepted mass
appraisal technique suitable for residential properties in subdivisions and that the determination
of the market “neighborhood” areas used by the County Assessor conforms to generally accepted
mass appraisal techniques. We find no merit to Giff’s challenges to the County Board’s
acceptance of the valuation of the property as consistent with the B09 neighborhood parcels and
TERC’s affirmance of that valuation on the basis of her assertions that the subject parcel should
have been valued as being more consistent with other classifications. The burden of showing that
the valuation was unreasonable rested upon Giff, and we conclude that she has not overcome her
burden of showing that the county’s valuation was unreasonable or arbitrary. There was clear
competent evidence to support the county’s valuation.


                                                -7-
        Giff also argues that TERC erred in not awarding a larger deduction to the valuation for
the obsolete tennis courts. The County Board did not allow any deduction, but TERC found that
a deduction was warranted, concluding that Giff had presented clear and convincing evidence
that a deduction was appropriate. TERC based the amount of the deduction allowed on the
“Marshall and Swift” valuation service guidelines for the removal of the tennis courts, rather
than on the specific bid that Giff presented as evidence.
        Giff also argues that TERC erred in applying the “Adverse Inference Rule” to conclude
that she had denied inspection of the property and that an inspection would have militated
against her. She argues that the evidence did not support the conclusion that she denied
inspection of the property.
        As TERC noted, the Nebraska Supreme Court has held that the County Assessor is to act
upon his own information and make personal inspection of the property in order to be entitled to
the presumption as to the validity of the official assessment. Grainger Bros. Co. v. Lancaster
Cty. Bd. of Equal., 180 Neb. 571, 144 N.W.2d 161 (1966). Based on this notion, TERC
concluded that it “has previously found that . . . where the taxpayer refuses the County’s request
to inspect the property, the provisions of the Adverse Inference Rule are triggered.” TERC cited
to a Nebraska Court of Appeals opinion in a workers’ compensation case, wherein this court
noted that the workers’ compensation court properly considered the claimant’s failure to call an
available witness who the claimant purported at trial would possess information important to
proving the claim. See Yarpe v. Lawless Distributing Co., 7 Neb. App. 957, 587 N.W.2d 417
(1998). We also noted that after evidence has been introduced tending to prove a case, if the
opposing party fails to testify to matters peculiarly within his knowledge and necessary to his
defense, a presumption exists that his testimony, if produced, would militate against his interest.
Id.
        In the present case, it is not particularly clear how any “Adverse Inference Rule” was
actually applied against Giff. Although it is true that TERC referenced the “Rule” in its opinion
and indicated that in the context of tax equalization cases, the “Rule” provides that where the
taxpayer refuses to allow inspection of the property and challenges the assessed value as
determined by the county, there is created a rebuttable presumption that the results of the
inspection would militate against the taxpayer’s interest. TERC then specifically held that Giff
had provided clear and convincing evidence that she was entitled to a deduction for the obsolete
tennis courts, despite the county’s failure to personally inspect them.
        We agree that there is not clear evidence that an inspection was ever requested and
refused. Houlton testified that after he had visited the property and knocked on the door without
receiving an answer, he was told not to return “without permission.” He also testified that “every
time he was asked to inspect it’s been denied.” He did not, however, testify about any instance in
which he had requested permission to inspect the tennis courts and permission was actually
denied. Giff’s husband, Martin, testified that permission would have been granted if requested.
        Even assuming, however, that TERC erroneously concluded that permission to inspect
was denied, a finding we specifically conclude we need not make, there is no indication that
TERC actually applied the “Adverse Inference Rule” to Giff’s detriment. As noted, TERC
specifically found that Giff had proven that she was entitled to a deduction for the obsolete tennis
courts, notwithstanding the lack of any inspection by the county. This is not consistent with a


                                               -8-
conclusion that inspection would militate against Giff’s interest, as it is a specific recognition
that even without inspection, Giff had demonstrated her entitlement to relief.
        TERC relied upon the “Marshall and Swift” valuation service to determine the
appropriate amount of the deduction for the obsolete tennis courts, rather than agreeing to allow
a deduction for the full amount of the bid submitted by Giff. In JQH La Vista Conf. Ctr. v. Sarpy
Cty. Bd. of Equal., 285 Neb. 120, 825 N.W.2d 447 (2013), the Nebraska Supreme Court
specifically recognized that the “Marshall and Swift” valuation service is a mass appraisal tool
approved by Nebraska’s Tax Commissioner and the Department of Revenue. Moreover, TERC
specifically pointed out that Giff had not quantified the size of the stairs and risers associated
with the tennis courts, further explaining its rationale for awarding a deduction that was less than
the bid submitted by Giff.
        When the taxpayer overcomes the presumption of validity for the county’s valuation, the
reasonableness of valuation becomes a question of fact based upon all of the evidence presented.
See id. In this case, TERC made a factual determination about the appropriate amount of the
deduction to which Giff was entitled for the obsolete tennis courts. That determination is
supported by competent evidence and is neither arbitrary, capricious, nor unreasonable.
        Similarly, Giff’s remaining arguments that the valuation of the subject parcel was grossly
excessive are without merit. As noted, there was abundant evidence and testimony presented
concerning the various properties Giff asserted as comparable to the subject parcel and why they
were, in fact, not comparable. There was no evidence adduced to demonstrate that the valuation
placed upon Giff’s property when compared with valuations placed on other similar property is
grossly excessive and is the result of a systematic exercise of intentional will or failure of plain
duty. See id. As such, we find Giff’s appeal to be without merit and we affirm.
                                                                                         AFFIRMED.




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