                                 No. 88-80
                IN THE SUPREME COURT OF THE STATE OF MONTANA
                                    1988




                  Petitioner and Appellant,
         -vs-
THE DEPARTMENT OF REVENUE OF MONTANA;
MISSOULA COUNTY; and FERN HART, the
Missoula County Treasurer,
                  Respondents.




APPEAL FROM:      District Court of the Fourth Judicial District,
                  In and for the County of Missoula,
                  THe Honorable James B. Wheelis, Judge presiding.
COUNSEL OF RECORD:
         For Appellant:
                  David Rodli Law Offices, Missoula, Montana
         For Respondent:
                  Larry G. Schuster, Dept. of Revenue, Helena, Montana
                  Robert L. Deschamps, 111, County Attorney, Missoula,
                  Montana; Michael W. Sehestedt, Deputy County Atty.



                                    Submitted on Briefs:   June 22, 1988
                                      Decided: August 9 , 1988

Filed:   '&U6 9    "''
                                    Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.



     Mr. DeVoe appeals a decision of the District Court for
the Fourth Judicial District, Missoula County, which sus-
tained a prior decision of the State Tax Appeal Board (STAB)
regarding ad valorem taxes on certain commercial properties
for the years 1980, 1981, 1982, and 1984. We reverse the
District Court with directions to remand the matter to STAB.
     Mr. DeVoe argues that the District Court erred in up-
holding the STAB decision regarding the Department of Revenue
(DOR) appraisal of his property. He raises five issues on
appeal :
     1. Did STAB err by refusing to consider Mr. DeVoe's own
appraisal of the property?
     2. Was the STAB order erroneous because the board
failed to grant Mr. DeVoe a reduction in appraisal value
based on the manual disparity issue?
     3. Did STAB err by not reducing the value of Mr.
DeVoe's property by the same amount as it had other compara-
ble properties?
     4. Did STAB err by not considering the effect of a
zoning change on one of Mr. DeVoe's properties?
     5. Did the District Court err by refusing to review the
record or to consider the merits of Mr. DeVoe's appeal from
STAB?
     The appellant, Mr. DeVoe, owns two commercial apartment
complexes in Missoula, Montana. Beginning in 1980, Mr. DeVoe
challenged DOR's assessment of his properties for ad valorem
tax purposes. The last challenge for purposes of this appeal
was for the 1984 tax year. The Missoula County Tax Appeal
Board upheld DOR's valuations, with the exception of several
issues unrelated to the present appeal.     STAB consolidated
the appeals for all years and issued its Findings of Fact,
Conclusions of Law, and Order in December 1984. Mr. DeVoe
appealed that order to the District Court. That court "sus-
tained" the STAB decision, with the exception of the 1983 tax
year which was remanded to STAR.
                              I
     Did STAR err by refusing to consider Mr. DeVoe's own
appraisal of the property?
     In its order, STAB made the following finding:

          [A] sales ratio study is only one side of the
     equation which the Montana Supreme Court decreed
     must be satisfied.     The taxpayer presented no
     evidence to show the market value of the subject
     property or the ratio of that value to the ap-
     praised value as determined by the DOR.
Mr. DeVoe argues that he did present evidence of market
value. He presented letters from two bank officials regard-
ing a decline in property values in Missoula. More signifi-
cantly, he presented evidence of market value through his own
testimony. The board also reached the following conclusions:

          This Board has never accepted as valid an
     appraisal done by a property owner on his own
     property. The Board concludes that accepting the
     taxpayer's appraisal in preference to the appraisal
     done by the DOR would be highly improper.
          The taxpayer failed to meet the criteria set
     down by the Montana Supreme Court as a standard for
     this Board to follow in making its decisions in
     cases based on an alleged disparity between resi-
     dential and commercial properties.
Section 15-8-111, MCA, provides that generally all taxable
property must be assessed at 100% of its market value.
Subsection (2)(a) of that statute defines market value:

         Market value is the value at which property
    would change hands between a willing buyer and a
     willing seller, neither being under any compulsion
     to buy or to sell and both having reasonable knowl-
     edge of relevant facts.
     In Department of Revenue v. Paxson (1983), 205 Mont.
194, 198, 666 P.2d 768, 770, we held that the county and
state boards should have considered the theory and figures
offered by the taxpayer and given an indication why they did
not adopt the taxpayer's approach, although it did not follow
that those boards were bound to adopt the taxpayer's theory
and figures. We conclude that STAB's finding that Mr. DeVoe
presented no evidence of market value was clearly erroneous.
We further hold that STAB's conclusion that it would not
accept an appraisal done by the taxpayer and would not con-
sider the same was an abuse of discretion.      We therefore
remand in order that STAB may reconsider this evidence. We
point out that under Paxson, STAB is required in that recon-
sideration to consider the theory and evidence offered by the
taxpayer.
                             I1
    Was the STAB order erroneous because the board failed to
grant Mr. DeVoe a reduction in appraisal value based on the
manual disparity issue?
     This Court, in Department of Revenue v. State Tax Appeal
Bd. (1980), 188 Mont. 244, 613 P.2d 691, was faced with a DOR
practice of appraising residential property by using an
appraisal manual reflecting 1971 replacement costs while
appraising commercial property by using an appraisal manual
reflecting 1976 replacements costs.    Both residential and
commercial property were within the same legislative classi-
fication.   Section 15-6-134, MCA.    The Court stated the
following conclusion:

    Given the legal and factual premises noted, the
    method used by the Department in these cases would
     seem, on its face, to have violated uniformity,
     equal protection and due process requirements. If
     different valuation statistics are applied to
     different pieces of property in the same legal
     classification, an illegal disparity in valuation
     is likely to result.
Department of Revenue v. State Tax Appeal Bd., 613 P.2d at
693. Due to this disparity in manual valuations, STAB had
applied a 34 percent across-the-board reduction to all com-
mercial improvement appraisals in that case.      This Court
reversed on that issue concluding that the District Court
lacked adequate evidence for any reduction without conjecture
or speculation. The Court then set further criteria pursuant
to which evidence of true and assessed values of commercial
and residential property should conform:

    Workable criteria for concrete determination of
    discrepancy have been delineated by the Iowa Su-
    preme Court:
         "In order to obtain relief upon the ground
         that his property is assessed inequitably, it
         is essential that the taxpayer prove (1) that
         there are several other properties within a
         reasonable area similar and comparable to his;
         (2) the amount of the assessments on these
         properties; (3) the actual value of the compa-
         rable properties; (4) the actual value of his
         property; (5) the assessment complained of;
         (6) that by a comparison his property is
         assessed at a higher proportion of its actual
         value than the ratio existing between the
         assessed and actual valuations of the similar
         and comparable properties, thus creating
         discriminations." Maxwell v. Shivers (1965),
         257 Iowa 575, 133 N.W.2d 709, 711.
    We would adopt these criteria as at least a start-
    ing place for actual comparison of true value to
    assessed value ratios. They, and other reasonable
    criteria that might be devised by the Department or
    the Board, should set the standard for proof in
    each case.
Department of Revenue v. State Tax Appeal Bd.,   613   P.2d   at
694-95.
     STAB in Mr. DeVoe's case considered the above criteria
and found that he had presented no evidence to prove the
market value of his property; therefore, he failed to present
sufficient proof to meet the criteria. As previously dis-
cussed, STAB abused its discretion by failing to consider the
evidence presented by Mr. DeVoe. We do not reach a conclu-
sion as to the sufficiency of the evidence in relationship to
market value or true value.      We hold that such evidence
should be considered by STAB on remand as it makes an actual
comparison of true value to assessed value ratios as dis-
cussed in Department of Revenue v. State Tax Appeal Bd.

     Did STAB err by not reducing the value of Mr. DeVoe's
property by the same amount as it had other comparable
properties?
     The DOR argues that this issue was raised for the first
time in this appeal. Mr. DeVoe claims that DOR's position is
contrary to the facts because STAB required DOR to produce
evidence relative to this issue. We note that the parties
seem to be arguing two different issues here. On remand, we
direct that STAB consider the evidence on this issue and make
appropriate findings and conclusions.
                             IV
     Did STAB err by not considering the effect of a zoning
change on one of Mr. DeVoe's properties?
     This Court, in Department of Revenue v. Grouse Mt.
Development (Mont. 1985), 707 P.2d 1113, 42 St.Rep. 1642,
considered the effect of a public use restriction on the
market value of golf course property:
     In construing R.C.W.    84.40.030, the Washington
     state equivalent to § 15-8-111, MCA, the Washington
     Supreme Court stated that the market value of
     realty is to be measured by considering benefits to
     be garnered from the use of the property and the
     burdens placed upon it. Burdens are restrictions
     which may arise from zoning ordinances or other
     legal limitations on the use of land. Twin Lakes,
     548 P.2d at 540.     We hold that the public use
     restriction is a burden on the property that must
     be taken into consideration in determining the
     property's market value under S 15-8-111, MCA.
Grouse Mt., 707 P.2d at 1116, relying upon Twin Lakes Golf
and Country Club v. King County (Wash. 1976), 548 ~ . 2 d538.
The Washington court later explained its holding in
Twin Lakes by stating, "Twin Lakes ...  clearly states that
the bottom line is market value."   Sahalee Country Club v.
Bd. of Tax App. (Wash. 1987), 735 ~ . 2 d1320, 1322.       of
course, pursuant to S 15-8-111, MCA, market value is the
bottom line in Montana as well.
     The zoning ordinance referred to by Mr. DeVoe may be a
burden upon his property if, as he alleges, it renders his a
nonconforming use. That use may or may not adversely affect
the market value of his apartment complex.    STAB erred in
failing to consider the effect of the zoning ordinance, if
any, on market value and in failing to make findings on this
issue. On remand STAB shall determine whether the ordinance
does affect Mr. DeVoe's property and shall also determine if
the nonconforming use affects the market value of his
property.
                             v
     Did the District Court err by refusing to review the
record or to consider the merits of Mr. DeVoe's appeal from
STAR?
     An excellent discussion of the scope and standard of
judicial review of a STAB decision is found in Grouse Mt.,
707 P.2d at 1115:

         The District Court as a reviewing court may
    reverse or modify the decisions of the State Tax
    Appeal Board and remand the case for further pro-
    ceedings if substantial rights of the appellant
    have been prejudiced because the administrative
    findings, inferences, conclusions, or decisions are
    clearly erroneous in view of the reliable, proba-
    tive and substantial evidence of the whole record
    or are arbitrary, capricious or characterized by an
    abuse of discretion. Section 2-4-704, MCA.     This
    Court, however, has stated that it is not a judi-
    cial function to act as an authority on taxation
    matters. Tax appeal boards are particularly suited
    for settling disputes over the appropriate valua-
    tion of a given piece of property, and the judici-
    ary cannot properly interfere with that function.
    Northwest Land v. State Tax Appeal Board     (Mont.
    1983), 661 P.2d 44, 47, 40 St.Rep. 470, 473; Larson
    v. State (1975), 166 Mont. 449, 457, 534 P.2d 854,
    858; Blair v. Potter (1957), 132 Mont. 176, 183,
    315 P.2d 177, 180.     Assessment formulations are
    within the expertise of the State Tax Appeal Board
    and we will uphold their decisions unless there is
    a clear showing of an abuse of discretion.
    Northwest Land, 661 P.2d at 47, 40 St.Rep. at 473.
For the purpose of this case, we would add that pursuant to
S 2-4-704(2) ( g ) , MCA, the court may reverse or modify the
decision if substantial rights of the appellant have been
prejudiced "because findings of fact, upon issues essential
to the decision, were not made although requested."
     The District Court, in its December 8, 1987, order
"sustained" STAB ' s decision with respect to the appraised
values of the commercial improvements for tax years 1980,
1981, 1982, and 1984. The court did so without any discus-
sion or review of the record for sufficiency of evidence,
saying only, "[Tlhis Court will not proceed to review the
merits of this case."   This position was explained later in
the order:

          It is not our function as a reviewing court to
     establish the terms of valuation to be utilized by
     STAB with respect to Petitioner's property.      We
     will not agree to order STAB to reciv [sic] the
     evidence requested by Petitioner nor will we order
     Respondent to submit the requested Realty Transfer
     Certificate information or other requested informa-
     tion pertaining to valuation.
We are reversing the District Court's decision to affirm
STAB.   For reasons discussed already, we are ordering the
matter remanded to STAB.    The District Court abused its
discretion in refusing to review for error the record and
decision by STAB.
     Mr. DeVoe also had requested an order to DOR to produce
realty transfer certificate (RTC) information upon which it
based its comparable sales data.       We hold the District
Court's refusal to order production of that information was
erroneous, under our holding in O'Neill v. Department of
Revenue (Mont. 1987), 739 P.2d 456, 461, 44 St.Rep. 1037,
1043-44.   Upon remand, the District Court shall issue a
subpoena to compel DOR to release relevant RTC information,
under the guidelines of O'Neill.     Upon remand STAB shall
consider any such information which is relevant to the issues
before it.
     We reverse the decision of the District Court as to tax
years 1980, 1981, 1982, and 1984, and direct the court to
remand the matter to STAB for proceedings in accord with this
opinion.   In view of the previous remand by the District
Court in connection with tax year 1983, it appears that year
may also be considered by STAB in the same remand
proceedings.
     We reverse the judgment of the District Court and remand
to the District Court with instructions to issue the subpoena
described    above   and   to remand   the proceeding   to   STAB   as
herein provided.




We concur:           A
