            Decisions    of the Nebraska Court of Appeals
	                TJ 2010 CORP. v. DAWSON CTY. BD. OF EQUAL.	989
	                           Cite as 22 Neb. App. 989

                    TJ 2010 Corporation, appellant, v.
                        Dawson County Board of
                         Equalization, appellee.
                                     ___ N.W.2d ___

                         Filed June 23, 2015.     No. A-14-660.

 1.	 Taxation: Judgments: Appeal and Error. Decisions rendered by the Tax
      Equalization and Review Commission shall be reviewed by an appellate court for
      errors appearing on the record of the commission.
 2.	 Judgments: Appeal and Error. 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.
 3.	 Taxation: Appeal and Error. Questions of law arising during appellate review
      of Tax Equalization and Review Commission decisions are reviewed de novo on
      the record.
 4.	 Taxation: Valuation: Presumptions: Proof: Appeal and Error. There is a pre-
      sumption that a board of equalization has faithfully performed its official duties
      in making an assessment and has acted upon sufficient competent evidence to
      justify its action. That presumption remains until there is competent evidence
      to the contrary presented, and the presumption disappears when there is com-
      petent evidence adduced on appeal to the contrary. From that point forward,
      the reasonableness of the valuation fixed by the board of equalization becomes
      one of fact based upon all the evidence presented. The burden of showing such
      valua­tion to be unreasonable rests upon the taxpayer on appeal from the action
      of the board.
 5.	 Taxation: Valuation: Proof. The burden of proof is on the taxpayer to establish
      the taxpayer’s contention that the value of the taxpayer’s property has been
      arbitrarily or unlawfully fixed by the county board of equalization at an amount
      greater than its actual value, or that its value has not been fairly and properly
      equalized when considered in connection with the assessment of other property
      and that such disparity and lack of uniformity result in a discriminatory, unjust,
      and unfair assessment.
  6.	 ____: ____: ____. The burden of persuasion imposed on a 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 taxpayer’s prop-
      erty, when compared with valuations placed on other similar properties, is grossly
      excessive and is the result of a systematic exercise of intentional will or failure of
      plain legal duty, and not mere errors of judgment.
 7.	 Evidence: Words and Phrases. Competent evidence is evidence that is admis-
      sible and tends to establish a fact in issue.
 8.	 ____: ____. Clear and convincing evidence is evidence which produces in
      the trier of fact a firm belief or conviction about the existence of a fact to
      be proved.
   Decisions of the Nebraska Court of Appeals
990	22 NEBRASKA APPELLATE REPORTS


 9.	 Constitutional Law: Statutes: Appeal and Error. To raise a valid challenge
     to the constitutionality of a statute, a litigant is required to properly raise and
     preserve the issue before the trial court.

  Appeal from the Tax Equalization and Review Commission.
Affirmed.
   Patrick M. Heng, of Waite, McWha & Heng, for appellant.
   Katharine L. Gatewood, Deputy Dawson County Attorney,
for appellee.
   Irwin, Pirtle, and Riedmann, Judges.
   Riedmann, Judge.
                      INTRODUCTION
   TJ 2010 Corporation (TJ) appeals the order of the Tax
Equalization and Review Commission (TERC) affirming the
decision of the Dawson County Board of Equalization (Board)
regarding the 2013 taxable value of a hotel owned by TJ.
Because we find that TJ failed to establish by clear and con-
vincing evidence that the county’s valuation was arbitrary or
unreasonable, we affirm TERC’s decision.
                        BACKGROUND
   TJ owns property in Gothenburg, Dawson County, Nebraska.
The subject property is a 44,000-square-foot hotel operating
under a franchise, with 74 guestrooms, a swimming pool, a
small meeting room, and a breakfast area. The property is
located right next to Interstate 80. It was built in 2010 for
approximately $4 million.
   The Dawson County assessor determined that the value of
the property was $4,510,230 for tax year 2013. TJ protested
the assessment to the Board and requested a valuation of
$2.8 million. The Board determined that the taxable value was
$4,510,230, as originally assessed. TJ appealed the Board’s
decision to TERC. A hearing was held before TERC, during
which the following evidence was adduced:
   Terry Jessen is the president and sole owner of TJ, which
owns and operates the hotel at issue in Gothenburg. Jessen
testified that the property was constructed with funds secured
        Decisions  of the Nebraska Court of Appeals
	          TJ 2010 CORP. v. DAWSON CTY. BD. OF EQUAL.	991
	                     Cite as 22 Neb. App. 989

from his personal contributions, a mortgage, and tax incre-
ment financing. As part of the tax increment financing agree-
ment with the city of Gothenburg, he agreed not to request a
tax valuation of less than $2.8 million in any subsequent tax
protests or appeals.
   Jessen owns five hotels in Nebraska and one in Wyoming.
He testified that although he is not an appraiser, he is very
familiar with the market value of hotels and the various meth-
ods of valuation. He opined that the most important method
for valuing hotels is the income stream approach, which he
determines by using a multiplier of the property’s annual gross
revenue averaged over the past 3 years. He indicated that in
his experience, the appropriate multiplier for most mainstream
hotels is between 2.8 and 3.
   Jessen submitted the property’s profit and loss statements
for the year 2013, which indicate that the gross revenue for
2013 was $1,097,000. Using his income stream approach with
a multiplier of 3, Jessen opined that the actual value of the
property was approximately $3,291,000. He explained that the
value would be even lower if he had used the average annual
gross revenue over the past 3 years, rather than just the gross
revenue for 2013, because the property’s revenue increased
each year from 2011 to 2013. He testified that if the property
were placed on the market for sale, he would be able to find a
buyer in that price range.
   Mark Stanard is a licensed appraiser that was contracted by
the county assessor to determine the value of the subject prop-
erty as of January 1, 2013. Stanard testified that he used both
the cost approach and the income approach to calculate the
value of the property. Stanard opined that the income approach
is generally more applicable to income-producing properties,
but that for newer or unique properties such as this one, the
cost approach is a better indicator of actual value.
   Stanard testified that the cost approach is determined
by calculating the replacement cost new, less depreciation,
plus land. To determine the property’s value under the cost
approach, Stanard utilized the 2010 “Marshall Swift costing
tables,” which indicated a value of $4,546,446. He acknowl-
edged that the more current version of the tables would have
   Decisions of the Nebraska Court of Appeals
992	22 NEBRASKA APPELLATE REPORTS



been more accurate in determining the actual value of the
property as of January 1, 2013.
   Stanard calculated the property’s value under the income
approach by estimating the property’s potential gross income
(average room rate multiplied by the total number of rooms
for 365 days), then deducting estimated vacancy and expense
rates to determine the estimated net operating income, and then
dividing that by a market capitalization rate. Stanard testified
that he used market data, rather than actual data, to estimate
the property’s room rate, vacancy rate, expense rate, and capi-
talization rate. This approach yielded a valuation of approxi-
mately $4,538,000.
   Jessen criticized the use of market data in Stanard’s income
approach. He explained that Stanard’s analysis applied an
estimated vacancy rate of 30 percent, whereas the property’s
actual vacancy rate is 45.13 percent. Similarly, Jessen testified
that Stanard’s approach assumed an average room rate of $99,
while the property’s actual average room rate is only $78.91.
In response, Stanard testified that he did not have access to
the property’s profit and loss statements when he conducted
his income analysis, but that even if he had, he would have
elected to use market data instead of the property’s actual fig-
ures due to concerns that the property’s actual income had not
yet stabilized.
   Stanard testified that he did not conduct a full analysis
under the sales comparison approach due to the lack of truly
comparable properties. However, he did provide a list of “the
most comparable sales we could find . . . simply to supple-
ment or to support the assessed value based on sales.” Stanard
explained that if he had done a full sales comparison analysis,
he would have made adjustments for variables such as age,
location, functional utility, quality, and condition of the com-
parable properties. Stanard acknowledged that the capitaliza-
tion rate and other market factors used in his income analysis
were derived from this list of comparable sales, even though
he did not make necessary adjustments to account for the
differences between these comparable properties and the sub-
ject property. Jessen asserted that truly comparable properties
        Decisions   of the Nebraska Court of Appeals
	           TJ 2010 CORP. v. DAWSON CTY. BD. OF EQUAL.	993
	                      Cite as 22 Neb. App. 989

would need to be located along Interstate 80 in a similarly
sized town to Gothenburg that could not be classified as a des-
tination location.
   TERC concluded that TJ provided competent evidence to
rebut the presumption that the Board had faithfully performed
its duties and had sufficient competent evidence to make its
determination. It criticized Stanard’s valuation for using out-
dated costing tables in the cost approach and for using market
factors derived from comparable sales without making the
necessary adjustments to the comparable properties. However,
it determined that TJ’s valuation method was not a commonly
accepted real property appraisal method and was not supported
by market data. Therefore, it found that while there were con-
cerns about the reliability of Stanard’s appraisal, there was no
market data received in evidence to support a different opinion
of any of the income approach factors. Thus, it concluded that
TJ failed to present clear and convincing evidence that the
Board’s valuation was unreasonable or arbitrary.
                 ASSIGNMENTS OF ERROR
   TJ assigns, summarized and restated, that TERC erred in (1)
determining that TJ failed to establish by clear and convincing
evidence that the county’s valuation was arbitrary or unrea-
sonable, (2) failing to apply the proper statutory standard of
review, and (3) denying TJ due process by applying an uncon-
stitutional presumption in Neb. Rev. Stat. § 77-5016(9) (Cum.
Supp. 2014).
                  STANDARD OF REVIEW
   [1-3] Decisions rendered by TERC shall be reviewed by an
appellate court for errors appearing on the record of the com-
mission. Darnall Ranch v. Banner Cty. Bd. of Equal., 276 Neb.
296, 753 N.W.2d 819 (2008). 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. Questions of law arising during appel-
late review of TERC decisions are reviewed de novo on the
record. Id.
   Decisions of the Nebraska Court of Appeals
994	22 NEBRASKA APPELLATE REPORTS



                            ANALYSIS
Reasonableness of County’s Assessment.
   TJ assigns that TERC erred in determining that TJ failed to
establish by clear and convincing evidence that the county’s
valuation was arbitrary and unreasonable. In support of this
assignment of error, TJ argues that TERC erred in failing to
accept TJ’s valuation of the property, and by accepting the
county’s flawed valuation.
   [4] Under § 77-5016(9), TERC’s standard of review in
appeals from a board of equalization is as follows:
      In all appeals, excepting those arising under section
      77-1606, if the appellant presents no evidence to show
      that the order, decision, determination, or action appealed
      from is incorrect, [TERC] shall deny the appeal. If the
      appellant presents any evidence to show that the order,
      decision, determination, or action appealed from is incor-
      rect, such order, decision, determination, or action shall
      be affirmed unless evidence is adduced establishing that
      the order, decision, determination, or action was unrea-
      sonable or arbitrary.
The Nebraska Supreme Court has construed this statutory stan-
dard of review to mean that
         “‘[t]here is a presumption that a board of equalization
      has faithfully performed its official duties in making an
      assessment and has acted upon sufficient competent evi-
      dence to justify its action. That presumption remains until
      there is competent evidence to the contrary presented, and
      the presumption disappears when there is competent evi-
      dence adduced on appeal to the contrary. From that point
      forward, the reasonableness of the valuation fixed by the
      board of equalization becomes one of fact based upon
      all the evidence presented. The burden of showing such
      valuation to be unreasonable rests upon the taxpayer on
      appeal from the action of the board.’”
Zabawa v. Douglas Cty. Bd. of Equal., 17 Neb. App. 221, 224-
25, 757 N.W.2d 522, 526 (2008), quoting Brenner v. Banner
Cty. Bd. of Equal., 276 Neb. 275, 753 N.W.2d 802 (2008).
   Here, TERC determined that there was competent evidence
to rebut the statutory presumption in favor of the Board, and
         Decisions  of the Nebraska Court of Appeals
	           TJ 2010 CORP. v. DAWSON CTY. BD. OF EQUAL.	995
	                      Cite as 22 Neb. App. 989

the county does not challenge that finding on appeal. Thus,
TJ presented competent evidence to overcome the presump-
tion that the Board faithfully performed its official duties in
making an assessment and acted upon sufficient competent
evidence to justify its action. From that point forward, the
reasonableness of the county’s valuation became a ques-
tion of fact based upon all the evidence presented, and the
burden of showing such valuation to be unreasonable rested
upon TJ. We find, based on the evidence presented and the
factual findings set forth in TERC’s order, that TJ failed to
meet its burden of establishing by clear and convincing evi-
dence that the valuation adopted by the Board was arbitrary
and unreasonable.
   [5,6] In Omaha Country Club v. Douglas Cty. Bd. of Equal.,
11 Neb. App. 171, 645 N.W.2d 821 (2002), we addressed what
is required after the presumption of § 77-5016(9) has been
overcome. We said:
         The burden of proof is on the taxpayer to establish
      the taxpayer’s contention that the value of the taxpayer’s
      property has been arbitrarily or unlawfully fixed by the
      county board of equalization at an amount greater than
      its actual value, or that its value has not been fairly and
      properly equalized when considered in connection with
      the assessment of other property and that such disparity
      and lack of uniformity result in a discriminatory, unjust,
      and unfair assessment. Newman v. County of Dawson,
      167 Neb. 666, 94 N.W.2d 47 (1959). Such a burden 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 taxpayer’s property, when
      compared with valuations placed on other similar proper-
      ties, is grossly excessive and is the result of a systematic
      exercise of intentional will or failure of plain legal duty,
      and not mere errors of judgment. Id.
Omaha Country Club v. Douglas Cty. Bd. of Equal., 11 Neb.
App. at 174-75, 645 N.W.2d at 826.
   Our focus in this case is not on equalization, but, rather, on
the initial question of whether the property valuation was fixed
arbitrarily, which cannot be established simply by showing a
   Decisions of the Nebraska Court of Appeals
996	22 NEBRASKA APPELLATE REPORTS



difference of opinion on value between the property owner
and the appraiser. Rather, arbitrariness must be demonstrated
by evidence that the assessment is grossly excessive and is a
result of arbitrary or unlawful action and not just a mere error
in judgment. Cabela’s Inc. v. Cheyenne Cty. Bd. of Equal., 8
Neb. App. 582, 597 N.W.2d 623 (1999).
   TERC found that “Stanard’s valuation approach contained
errors in the application of accepted mass appraisal tech-
niques.” It concluded that its concerns over Stanard’s meth-
ods “call into question the reliability of Stanard’s appraisal”;
however, “no market data was received in evidence sup-
porting a different opinion of any of the income approach
factors.” It therefore determined that “there is not clear and
convincing evidence that the . . . Board’s determination of
value was unreasonable or arbitrary.” We interpret TERC’s
remarks as a finding that TJ did not satisfy its burden of
proof. We agree.
   Stanard used a cost approach and an income approach
supported by an examination of sales of alleged compa-
rable properties. However, Stanard testified that the included
properties were from dissimilar locations without appropriate
adjustments. TERC concluded that without appropriate adjust-
ments, the alleged comparable properties were less relevant
indicators of the actual value of the property.
   As to the cost approach, TERC was critical of Stanard’s
use of outdated costing tables. It found that “the use of out-
dated costing tables is less likely to produce the actual value
of the Subject Property as of January 1, 2013.” As to the
income approach, TERC stated it had “concerns about the
methods employed by Stanard to develop his market fac-
tors.” These concerns were based in part upon testimony from
Jessen that it would be inappropriate to compare the subject
property, located in a rural community, to destination hotels
in larger communities. The concerns were also based upon
Stanard’s use of published room rates to determine potential
gross income when Jessen testified that the published rate
for the subject property was not the actual room rate. TJ pro-
duced evidence of gross income based upon actual numbers,
         Decisions  of the Nebraska Court of Appeals
	           TJ 2010 CORP. v. DAWSON CTY. BD. OF EQUAL.	997
	                      Cite as 22 Neb. App. 989

which were significantly lower than the numbers proffered
by Stanard.
   While these deficiencies are the basis for finding that the
presumption of correctness by the Board has been overcome,
we find them insufficient to satisfy the second half of TJ’s
burden of proof: to show by clear and convincing evidence that
the Board’s valuation is arbitrary. In order to meet this burden,
TJ needed to present competent evidence of the property’s
actual value as of January 1, 2013.
   Pursuant to Neb. Rev. Stat. § 77-201(1) (Reissue 2009),
all taxable property shall be valued at actual value for taxa-
tion purposes. “Actual value” means the market value of
real property in the ordinary course of trade. Neb. Rev. Stat.
§ 77-112 (Reissue 2009). Additionally, real property value
shall be assessed as of January 1 of each tax year. Neb. Rev.
Stat. § 77-1301 (Cum. Supp. 2014). TJ failed to present any
evidence of the property’s actual value as of January 1, 2013,
because its income valuation was based on the property’s 2013
profit and loss figures. In order to support its calculation of the
property’s actual value as of January 1, 2013, TJ should have
produced the profit and loss statement for 2012. In addition, as
noted by TERC, the property’s income had not yet stabilized
and TJ failed to produce any market data to support its income
approach valuation.
   We acknowledge the deficiencies in both parties’ valua-
tions; however, TJ failed to produce competent evidence of the
property’s actual value as of January 1, 2013. While Stanard’s
income approach had deficiencies, particularly in the develop-
ment of the market factors, TJ did not present any market data
supporting a different opinion of any of the income approach
factors. We therefore affirm TERC’s decision that TJ failed to
present clear and convincing evidence that the county’s valua-
tion was arbitrary and unreasonable.

TERC’s Standard of Review.
  TJ next assigns that TERC erred in failing to apply the
proper standard of review. It argues that TERC merged its
consideration of the reasonableness presumption with the
   Decisions of the Nebraska Court of Appeals
998	22 NEBRASKA APPELLATE REPORTS



taxpayer’s ultimate burden of persuasion, causing improper
deference to the county’s determination without consideration
of all the evidence.
   Once the statutory presumption is overcome, as it was in
this case, the reasonableness of the valuation fixed by a board
of equalization becomes one of fact based upon all the evi-
dence presented. The burden of showing such valuation to
be unreasonable rests upon the taxpayer on appeal from the
action of the board. Brenner v. Banner Cty. Bd. of Equal., 276
Neb. 275, 753 N.W.2d 802 (2008). The taxpayer must prove
unreasonableness by clear and convincing evidence. See JQH
La Vista Conf. Ctr. v. Sarpy Cty. Bd. of Equal., 285 Neb. 120,
825 N.W.2d 447 (2013).
   [7,8] We reject TJ’s argument that TERC merged its con-
sideration of the reasonableness presumption with the tax-
payer’s ultimate burden of persuasion. TERC recognized that
TJ overcame the presumption by the production of competent
evidence; however, it found that TJ failed to present clear
and convincing evidence that the valuation was arbitrary or
unreasonable. Competent evidence is evidence that is admis-
sible and tends to establish a fact in issue. See Mathes v. City
of Omaha, 254 Neb. 269, 576 N.W.2d 181 (1998). Clear and
convincing evidence, however, is evidence which produces in
the trier of fact a firm belief or conviction about the existence
of a fact to be proved. See In re Interest of Zachary D. &
Alexander D., 289 Neb. 763, 857 N.W.2d 323 (2015). While
TJ’s evidence may have been competent to overcome the pre-
sumption, that does not mean that it was clear and convincing
to produce a firm belief that the valuation was arbitrary or
unreasonable. Thus, we find this assignment of error to be
without merit.
Constitutionality of § 77-5016.
   Finally, TJ argues that the procedures to appeal tax assess-
ments as set forth in § 77-5016 are unconstitutional because
they violate due process and are impermissibly biased toward
the government.
   [9] To raise a valid challenge to the constitutionality of a
statute, a litigant is required to properly raise and preserve
            Decisions of the Nebraska Court of Appeals
	               CANAS-LUONG v. AMERICOLD REALTY TRUST	999
	                        Cite as 22 Neb. App. 999

the issue before the trial court. See Clark v. Tyrrell, 16 Neb.
App. 692, 750 N.W.2d 364 (2008). TJ did not challenge
the constitutionality of § 77-5016 until the present appeal.
Additionally, we note that TJ failed to comply with the notice
provision for challenging the constitutionality of a statute as
set forth in Neb. Ct. R. § 2-109(E) (rev. 2014). Because this
issue was not raised before TERC, it is not properly before
this court and we will not address it further on appeal.
                       CONCLUSION
  We conclude that TJ failed to prove by clear and convincing
evidence that the Board’s valuation was arbitrary and unrea-
sonable. Accordingly, we affirm TERC’s decision.
                                                  Affirmed.



                Elizabeth S. Canas-Luong, appellee, v.
                 Americold R ealty Trust, appellant.
                                    ___ N.W.2d ___

                        Filed June 23, 2015.     No. A-14-751.

 1.	 Workers’ Compensation: Appeal and Error. A judgment, order, or award of
      the Workers’ Compensation Court may be modified, reversed, or set aside only
      upon the grounds that (1) the compensation court acted without or in excess of its
      powers; (2) the judgment, order, or award was procured by fraud; (3) there is not
      sufficient competent evidence in the record to warrant the making of the order,
      judgment, or award; or (4) the findings of fact by the compensation court do not
      support the order or award.
 2.	 ____: ____. In determining whether to affirm, modify, reverse, or set aside a
      judgment of the Workers’ Compensation Court, the findings of fact of the trial
      judge will not be disturbed on appeal unless clearly wrong.
 3.	 Workers’ Compensation: Time. A claimant has not reached maximum medical
      improvement until all the injuries resulting from an accident have reached maxi-
      mum medical healing.
  4.	 ____: ____. The appropriate time to award permanent disability benefits is after
      the worker reaches maximum medical improvement.
 5.	 Workers’ Compensation. The Nebraska Workers’ Compensation Act authorizes
      an award of permanent disability, either partial or total, as a means of compensat-
      ing the injured worker for the loss of earning capacity.
  6.	 ____. When a whole body injury is the result of a scheduled member injury,
      the member injury should be considered in the assessment of the whole body
