An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.



                                NO. COA13-623
                       NORTH CAROLINA COURT OF APPEALS

                             Filed:    4 February 2014


IN THE MATTER OF THE APPEAL OF:

109 KINSALE LAND TRUST                        North Carolina Property Tax
                                              Commission
                                              No. 11 PTC 944
From the decision of the Durham
County Board of Equalization and
Review regarding the valuation of
certain real property for tax year
2011.


      Appeal by taxpayer from final decision entered 10 December

2012 by the North Carolina Property Tax Commission.                      Heard in

the Court of Appeals 23 October 2013.


      Manning Fulton & Skinner P.A., by William S. Cherry, III,
      and Michael T. Medford, for taxpayer-appellant.

      Office of the Durham County Attorney, by Assistant County
      Attorney Marie Inserra, for respondent-appellee Durham
      County.


      CALABRIA, Judge.


      This appeal by 109 Kinsale Land Trust (“taxpayer”) is an

appeal from a Final Decision (“Final Decision”) of the North

Carolina Property Tax Commission (“the Commission”) upholding

the Durham County Board of Equalization and Review’s (“Review
                                        -2-
Board”)      property     tax   valuation     of   residential        property         and

granting     Durham     County’s    motion    to   dismiss.          We    vacate      and

remand.

                                   I. Background

       Taxpayer owns an improved residential property located in

The Oaks subdivision at 109 Kinsale Drive, Chapel Hill, North

Carolina 27517 (“the property”).              The property is a 6,583 square

foot    single    family    residence    situated        on    .80   acres      of   land

located in a subdivision in the southwest portion of Durham

County that borders Chapel            Hill, North Carolina.                 Since the

subdivision is situated on the line between Durham and Orange

counties, some of the homes in the subdivision are located in

Durham County and others are located in Orange County.

       The     property    originally       sold   in         1999   for       $522,500.

Although there were no improvements or additions from 1999 to

2001,    the    property    was    valued    for   tax    purposes        in    2001    at

$561,000.        Taxpayer purchased the property on 13 January 2011

for $525,000.

       On 1 January 2008, Durham County (“the County”) reappraised

the property and valued it at $1,086,842.                       In tax year 2011,

taxpayer appealed the County’s assessment to the Review Board.

On 6 October 2011, the Review Board reassigned the property a
                                         -3-
total value of $914,684.              Taxpayer appealed the Review Board’s

decision    to    the   Commission,      alleging      an   arbitrary     method   of

valuation      was   used    to   determine      the    property’s       value   that

resulted in an assessment that substantially exceeded the true

value of money for the property.                    According to taxpayer, the

true value of the property as of 1 January 2008 was $610,000.

       On 16 August 2012, the Commission heard taxpayer’s appeal.

Taxpayer appeared pro se through trustee Lee Lawrence, and the

County was represented by counsel.                  Taxpayer presented evidence

from   Brett     Leyburn     (“Leyburn”),       a     certified   North     Carolina

residential real estate appraiser who testified regarding the

property’s       “inferior     quality     of       construction,”         including

structural issues such as bowing in the rear wall, different

colors in the brick mortar, cracks in the bricks from settling,

and standing water in the basement.                 Leyburn also testified that

he valued the property using the sales comparison approach, and

his responsibility was “to find the most comparable properties.

County lines do not determine value.”                   In selecting comparable

properties,      Leyburn     sought    “the    most    similar    type    properties

with regard to location, quality, condition and site value.”

Leyburn valued the property at $610,000 as indicated by the

sales comparison approach to value.
                                        -4-
    Taxpayer        also       presented    evidence        from      the     County’s

appraiser,       Sheila   Thompson     (“Thompson”),       an   adverse       witness.

Taxpayer     questioned        her   regarding      the    subjectivity       of   the

County’s     choice       of   comparable        sales    in    the    Hope    Valley

subdivision, a completely different subdivision from The Oaks

located approximately five miles from the property:

            Q: So, in your professional opinion, you
            selected – you chose to not use homes in the
            subdivision that were outside the county?

            A: Yes.

            Q: And while that’s – would you say that’s
            subjective?

            A: Yes.

    The primary evidence offered by the County consisted of

Thompson’s       cross-examination.         On    cross-examination,          Thompson

testified regarding her use of the Durham County Schedule of

Values,    and    that    in   her   professional        opinion   the      property’s

value was $914,684.            Specifically, Thompson indicated that her

exclusive use of Durham County properties in the comparative

sales approach was related to the County’s Schedule of Values:

            Q: Please just tell the Commission briefly,
            for   the   record, about   [the  County’s]
            Schedule of Values.

            A: Our Schedule of Values are based on
            Durham County market analysis, January 1,
            2008, and they are only comprised of Durham
                                  -5-
           County sales.

           Q: And that is why, as a guideline, all
           Durham County appraisers look to comparables
           within Durham County?

           A: Yes.

           Q: And when we talk about what Durham County
           is going to assess an unfinished basement
           space, that’s going to be guided by the
           Durham County Schedule of Values, which was
           passed by the Durham County Board of
           Commissioners, which has no relevance in
           Chapel Hill, which is Orange County?

           A: Correct.

Thompson   also   testified   regarding   certain    conditions   on   the

property that influenced her valuation:

           Q:   And you have taken into – in fact, you
           were critical in your appraisal – critical,
           I mean, significance – in reducing the value
           of 109 Kinsale for all of the conditions
           that Mr. Lawrence mentioned today, with the
           exception of structural integrity, correct?

           A: Yes.

           Q: And you made some         dramatic    changes   –
           reductions in value?

           A: Yes.

           Q: From $1,000,089 to 914. And            you even
           indicated that you would – if it          warranted
           and provided a proof of cost to          cure, you
           would make any other changes that        there was
           evidence to support?

           A: Yes.
                                        -6-
    At the conclusion of the evidence, the Commission granted

the County’s oral motion to dismiss for taxpayer’s failure “to

meet the burden of production to show by material and competent

evidence that the County’s appraisal was arbitrary or capricious

or illegal and exceeded true value.”                In the Commission’s Final

Decision   on   10    December      2012,     the    Commission     affirmed    the

County’s   assigned      value    of   $914,684     and   stated    that   “Durham

County met its burden of going forward with the evidence and of

persuasion that its valuation method did in fact produce true

value of the property[.]”          Taxpayer appeals.

                                 II. Jurisdiction

    A party has an appeal as of right from any final order of

the Property Tax Commission.            N.C. Gen. Stat. § 7A-29 (2011).

See N.C. Gen. Stat. § 105-345(d) (2011) (stating an appeal of

the Commission’s final order shall lie with this Court).

                          III. Standard of Review

    When reviewing decisions of the Commission, this Court may

affirm or reverse the Commission’s decision, remand the case for

further proceedings, or reverse or modify the decision if “the

substantial     rights    of     the   appellants      have    been   prejudiced

because the Commission’s findings are . . . [u]nsupported by

competent,    material     and    substantial       evidence   in   view   of   the
                                       -7-
entire record as submitted” or arbitrary or capricious.                    N.C.

Gen. Stat. § 105-345.2 (b) (2011).              “[W]hether a decision is

arbitrary and capricious is reviewed de novo.” In re Parkdale

America, 212 N.C. App. 192, 193, 710 S.E.2d 449, 450 (2011)

(“Parkdale I”) (citation omitted).              “In making the foregoing

determinations, the court shall review the whole record or such

portions thereof as may be cited by either party[.]”                 N.C. Gen.

Stat. § 105-345.2 (c) (2011).

    “The      whole   record    test     only   allows   [this   Court]     to

determine whether the decision of the Commission was based on

substantial      evidence.      The    weight   and   credibility     of   the

evidence remains for the Commission."           In re Lane Co. – Hickory

Chair Div., 153 N.C. App. 119, 128, 571 S.E.2d 224, 229 (2002).

“If the Commission’s decision, considered in the light of the

foregoing rules, is supported by substantial evidence, it cannot

be overturned.”       In re Philip Morris U.S.A., 130 N.C. App. 529,

533, 503 S.E.2d 679, 682 (1998) (citation omitted).

                               IV. Discussion

    As an initial matter, taxpayer argues that the Commission’s

decision   was    arbitrary    and    capricious,   “lack[ing]   a    rational

basis in fact[.]”      However, because there are no findings in the

Final Decision addressing the weight of taxpayer’s evidence or
                                            -8-
the County’s valuation methods, we cannot properly address this

argument under the applicable standard of review.

       Taxpayer also argues that the written Final Decision is

inconsistent      with    the     proceedings          at    the       hearing,     and   the

Commission’s conclusion that the County carried its burden of

persuasion that its valuation methods produced true value is

arbitrary and capricious.              We agree.

       A   county’s      ad    valorem      tax     assessment          is   presumptively

correct.      In re AMP, Inc., 287 N.C. 547, 562, 215 S.E.2d 752,

761 (1975).       “This presumption may be                     rebutted by material,

substantial, and competent evidence that an arbitrary or illegal

method of valuation was used and the assessment substantially

exceeded    the   true        value    in   money      of   the    property.”         Philip

Morris     U.S.A.,    130       N.C.    App.      at    533,      503    S.E.2d     at    682

(citations omitted).             “[I]t is not enough for the taxpayer to

show that the means adopted by the tax supervisor were wrong, he

must   also   show    that       the    result      arrived       at    is   substantially

greater than the true value in money of the property assessed,

i.e., that the valuation was unreasonably high.”                             In re Appeal

of Parkdale Mills, ___ N.C. App. ___, ___, 741 S.E.2d 416, 419-

20 (2013) (quoting In re AMP, 287 N.C. at 563, 215 S.E.2d at

762)   (“Parkdale     II”).            If   the   taxpayer         rebuts     the   initial
                                              -9-
presumption, the burden shifts to the County, which must then

demonstrate that its methods produce true values.                              In re IBM

Credit Corp., 201 N.C. App. 343, 345, 689 S.E.2d 487, 489 (2009)

(citation omitted).

       In   Parkdale      I,   212    N.C.     App.    192,   710     S.E.2d    449,   the

taxpayer appealed the Commission’s final decision (“the order”)

upholding Davidson County’s ad valorem property tax valuation of

two textile mills because the county’s valuation exceeded the

properties’ true value.               212 N.C. App. at 192, 710 S.E.2d at

450.    Although the order stated that Davidson County had met its

burden,     no     language      in     the     order    indicated       Parkdale      had

presented      sufficient        evidence       to    rebut     the    presumption      of

correctness.        Id. at 197, 710 S.E.2d at 452-53.                     In addition,

the    order     lacked    findings       of    fact    and     conclusions      of    law

explaining       why   Davidson       County’s        methods    were    arbitrary      or

illegal. Id., 710 S.E.2d at 453.                     “More importantly, the order

[did]   not      explain   why    the    Commission       concluded      the    County’s

ultimate assessment was correct.”                    Id. at 197-98, 710 S.E.2d at

453.    This Court remanded the case to the Commission because the

findings in the Commission’s final decision failed to explain

the respective burdens of the parties.                    “Because the Commission

failed to explain why the County’s appraisal methods ascertained
                                                    -10-
true   value        despite          being     arbitrary          or    illegal,”       this     Court

vacated the order and remanded for specific findings explaining

how    the         Commission             weighed     the         evidence       to     reach       its

conclusions. Id. at 198, 710 S.E.2d at 453.

       In     the     instant         case,         the     Commission’s         Final       Decision

includes       language            reciting         the     presumption         of     correctness,

refers to the burden shifting framework, and grants the County’s

motion to dismiss.                 According to the Commission, “Durham County

met    its    burden          of     going     forward       with       the     evidence      and    of

persuasion that its valuation method did in fact produce true

value of the property[.]”                     However, the Commission here, just as

in Parkdale I, failed to make findings explaining how taxpayer

rebutted      the     presumption,            or     how     the       County    met    its    burden

afterward.          Instead, the findings are simply a recitation of

some    of    the     hearing             testimony        and    do    not     explain      how    the

Commission weighed the evidence to reach its conclusions.

       Leyburn,          as    taxpayer’s           independent          appraiser,         testified

that the County did not properly consider a number of issues

with   the     property.              However,        the    written       findings         attribute

Leyburn’s      testimony             to    Thompson.        Thompson      testified         that    the

County       did    in        fact        consider        those    issues       in     valuing      the

property.           In    addition,           the    Commission          found       that    Thompson
                                        -11-
testified that the County’s Schedule of Values was considered in

the valuation, and that “she reviewed comparable sales in Durham

County and not Orange County because those sales were comparable

to   the   property   and    provide     supporting       evidence     that   Durham

County properly assessed” the property.

      While these     findings effectively summarize the testimony

presented at the hearing, there is no indication in the findings

themselves    that    the    Commission        properly    applied     the    burden

shifting analysis in reaching its conclusion.                   Instead, the only

indication    that    the    Commission        applied    the    burden      shifting

analysis     comes in the unsupported final conclusion indicating

that the County had met its burden.              Because the County enjoys a

presumption of correctness, the County had no burden to meet

unless taxpayer first showed the valuation to be arbitrary or

illegal.     Philip Morris U.S.A., 130 N.C. App. at 533, 503 S.E.2d

at 682.     However, the Commission made no findings that taxpayer

had shown the valuation to be arbitrary or illegal, and made no

findings     regarding      how   the     County     showed      its    valuations

established the property’s true value.                   “The lack of findings

undermines our confidence in the Commission’s conclusion that

the County has met its ultimate burden of establishing a true

value.”     Parkdale I, 212 N.C. App. at 198, 710 S.E.2d at 453
                                    -12-
(citation    omitted).    We    therefore     vacate    and   remand   to    the

Commission.

                               V. Conclusion

    While the Commission’s findings summarize the testimony of

the appraisers at the hearing, there are no findings addressing

whether or how taxpayer rebutted the County’s presumption of

correctness.    Additionally, there are no findings addressing how

the County met its burden of showing that its appraisal methods

produced true value, despite a conclusion indicating that the

County bore and met a burden of proof.                The lack of specific

findings is the result of a lack of competent, material, and

substantial    evidence   regarding     how    taxpayer’s        evidence    was

evaluated and how the Commission properly applied the burden

shifting    analysis.     We    therefore    vacate    and    remand   to    the

Commission    for   further    proceedings    with    specific    findings    of

fact supported by competent, material, and substantial evidence.

    Vacated and remanded.

    Judges HUNTER, Robert C. and HUNTER, JR., Robert N. concur.

    Report per Rule 30(e).
