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                                                        - 166 -
                                  Nebraska Supreme Court A dvance Sheets
                                          298 Nebraska R eports
                                   BURDESS v. WASHINGTON CTY. BD. OF EQUAL.
                                               Cite as 298 Neb. 166




                        William Burdess, appellant, v. Washington County
                                Board of Equalization, appellee.
                                                   ___ N.W.2d ___

                                        Filed November 3, 2017.   No. S-17-026.

                1.	 Taxation: Judgments: Appeal and Error. An appellate court reviews
                    decisions rendered by the Tax Equalization and Review Commission for
                    errors appearing on the record. When reviewing a judgment for errors
                    appearing on the record, an appellate court’s inquiry is whether the deci-
                    sion conforms to the law, is supported by competent evidence, and is not
                    arbitrary, capricious, or unreasonable.
                2.	 ____: ____: ____. An appellate court reviews questions of law aris-
                    ing during appellate review of decisions by the Tax Equalization and
                    Review Commission de novo on the record.

                 Appeal from the Tax Equalization and Review Commission.
               Affirmed.
                  Aaron F. Smeall, of Smith, Gardner & Slusky Law, L.L.P.,
               for appellant.
                 M. Scott Vander Schaaf, Washington County Attorney, and
               Emily A. Beamis for appellee.
                  Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy,
               K elch, and Funke, JJ.
                    K elch, J.
                                 I. NATURE OF CASE
                 William Burdess filed a petition for review of an order made
               by the Nebraska Tax Equalization and Review Commission
               (TERC), which affirmed the valuation of the Washington
                            - 167 -
          Nebraska Supreme Court A dvance Sheets
                  298 Nebraska R eports
           BURDESS v. WASHINGTON CTY. BD. OF EQUAL.
                       Cite as 298 Neb. 166

County Board of Equalization (Board) wasteland acres and
homesite acres owned by Burdess for tax years 2013 through
2016. On review, Burdess argues that Nebraska law requires
that wasteland acres be valued at $0 per acre and that the
valuation of his homesite acres is unreasonable because it is
not equalized with an allegedly comparable homesite property
located one-half mile away.

                          II. FACTS
              1. Valuation of Land and Protest
   This case involves two parcels of land owned by Burdess
and located in Washington County, Nebraska. Both parcels
consist of agricultural land, a homesite, a secondary build-
ing, and wasteland. The first parcel contains 80 acres of land,
25.56 of which the parties have stipulated are wasteland.
The second parcel contains 60 acres of land, 29.12 of which
the parties have stipulated are wasteland. The wasteland on
Burdess’ two properties, along with all other wasteland in
Washington County, was assessed at $290 per acre for tax year
2013, $335 per acre for tax year 2014, and $450 per acre for
tax years 2015 and 2016. The homesite acres were assessed
at $41,000.
   Burdess protested the 2013 through 2016 assessed values of
the two parcels to the TERC, arguing that the wasteland should
be valued at $0 and that the homesite acres should be assessed
at a value no higher than another homesite (the “Sully prop-
erty”) one-half mile away. A hearing was held in November
2016, and evidence was received.

                  2. November 2016 Hearing
                     (a) Value of Wasteland
  At the hearing, Burdess testified that the wasteland was not
cultivatable or profitable, but was instead used for mushroom
hunting and walnut-tree harvesting. Burdess testified that he
permitted family members and friends to hunt and gather
mushrooms on the land, but did not charge anyone any money
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                Nebraska Supreme Court A dvance Sheets
                        298 Nebraska R eports
                 BURDESS v. WASHINGTON CTY. BD. OF EQUAL.
                             Cite as 298 Neb. 166

to do so. Burdess also testified that he had earned approxi-
mately $7,500 over the past 50 years selling a few walnut trees
on the property, none of which was earned during the tax years
at issue. Burdess testified that he had some immature walnut
trees still on the property, but that it takes 75 to 100 years for
the trees to mature and have any significant value.
   On behalf of the Board, the Washington County assessor
testified at the hearing. He explained that because Burdess
had elected “special value,” Burdess’ wasteland acres were not
valued according to their market value, but according to their
special value. “Special valu[e]” is the “value that land would
have for agricultural or horticultural purposes or uses without
regard to the actual value the land would have for other pur-
poses or uses.”1 Accordingly, special value does not take into
account urban development potential.
   The assessor testified that in order to determine the special
value for properties in Washington County, he looked to the
values of property in other counties, such as Burt County,
Nebraska, where there is less development potential. The asses-
sor testified that he assessed the wasteland acres based upon
actual sales of farmland containing wasteland acres in Burt
County and then increased the per acre value in proportion to
the increases in the value of other classes of property, such as
dryland or irrigated land.

                  (b) Value of Homesite Acres
   Burdess’ homesite acres were assessed at $41,000 for each
of the 4 tax years at issue. The Sully property was assessed
at $27,000 for tax year 2014. Testimony at the hearing estab-
lished that both are farm properties, zoned agricultural, and
that they are located one-half mile apart.
   The assessor testified that the difference in their valua-
tion was due to their location and the difference in the ter-
rain. Despite the properties’ proximity to each other, they

 1	
      Neb. Rev. Stat. § 77-1343(5) (Reissue 2009).
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               Nebraska Supreme Court A dvance Sheets
                       298 Nebraska R eports
                BURDESS v. WASHINGTON CTY. BD. OF EQUAL.
                            Cite as 298 Neb. 166

are located within different market areas within the county.
Burdess’ homesite is located within “Market Area 6,” and the
Sully property is located within “Market Area 7,” which is
classified as a flood plain. The assessor testified that the Sully
property is located on a river bottom, while Burdess’ property
is located on a bluff, and that people will not pay as much to
build on the river bottom.
   Burdess testified that the Sully property has “never flooded
in 52 floods” because “the building site . . . is on high ground.”
He compared that to his property, which was flooded by a
creek in 1999 and 2016.
                   3. TERC’s December 2016
                       Order and A ppeal
   In December 2016, the TERC affirmed the Board’s deci-
sion as to the value of the wasteland and homesite acres. The
TERC found that Burdess did not produce clear and convinc-
ing evidence that the wasteland should have been assessed
and valued at $0 per acre. The TERC also found that the
homesite acres did not warrant value equalized to the Sully
property’s because the properties are located in two different
market areas with significantly different physical characteris-
tics. Burdess appeals.
              III. ASSIGNMENTS OF ERROR
  Burdess assigns that the TERC erred in its valuation of the
wasteland and in its valuation of the homesite acres associated
with the property.
                IV. STANDARD OF REVIEW
   [1,2] “We review TERC decisions for errors appearing on
the record.”2 When reviewing a judgment for errors appearing
on the record, our inquiry is whether the decision conforms
to the law, is supported by competent evidence, and is not

 2	
      Lozier Corp. v. Douglas Cty. Bd. of Equal., 285 Neb. 705, 708, 829
      N.W.2d 652, 655 (2013).
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                Nebraska Supreme Court A dvance Sheets
                        298 Nebraska R eports
                 BURDESS v. WASHINGTON CTY. BD. OF EQUAL.
                             Cite as 298 Neb. 166

arbitrary, capricious, or unreasonable.3 We review questions of
law arising during appellate review of decisions by the TERC
de novo on the record.4
                        V. ANALYSIS
   Burdess argues that the TERC erred in its valuation of the
wasteland and in its valuation of the homesite associated with
the property. We address each of these arguments in turn.
                           1. Wasteland
   Before beginning our analysis, we note that “wasteland” is
a subclass of “agricultural and horticultural land.”5 “Wasteland
includes land that [is] not suitable for agricultural or horticul-
tural purposes.”6
   Neb. Rev. Stat. § 77-201(1) (Cum. Supp. 2016) sets forth
the general rule that all real property, unless expressly exempt,
is subject to taxation and is to be valued at its actual value.
However, pursuant to the authority granted by our State
Constitution,7 the Legislature has made agricultural land and
horticultural land a separate and distinct class of property for
purposes of property taxation.8 While most real property is
valued for taxation purposes at 100 percent of its actual value
(“[a]ctual value” is “the market value of real property in the
ordinary course of trade”9), the Legislature has determined
that agricultural land and horticultural land shall be valued

 3	
      Lozier Corp, supra note 2.
 4	
      Id.
 5	
      See Neb. Rev. Stat. § 77-1359(1) (Cum. Supp. 2016) (“[a]gricultural
      land and horticultural land means a parcel of land . . . which is primarily
      used for agricultural or horticultural purposes, including wasteland lying
      in or adjacent to and in common ownership or management with other
      agricultural land and horticultural land”) (emphasis supplied).
 6	
      350 Neb. Admin. Code, ch. 14, § 002.54 (2007).
 7	
      See Neb. Const. art. VIII, § 1.
 8	
      § 77-1359. See, also, Neb. Const. art. VIII, § 1(4).
 9	
      Neb. Rev. Stat. § 77-112 (Reissue 2009).
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               Nebraska Supreme Court A dvance Sheets
                       298 Nebraska R eports
                BURDESS v. WASHINGTON CTY. BD. OF EQUAL.
                            Cite as 298 Neb. 166

at 75 percent of its value.10 And the Legislature has further
distinguished agricultural land and horticultural land from
other types of real property by allowing the owners of certain
agricultural land and horticultural land (land that meets the
qualifications set forth in Neb. Rev. Stat. § 77-1344 (Reissue
2009)) to elect “[s]pecial valuation,” rather than having their
properties valued according to their actual value.
    “Special valuation means the value that the land would have
for agricultural or horticultural purposes or uses without regard
to the actual value the land would have for other purposes or
uses.”11 This is in contrast to “[a]ctual value,” which takes into
account “all the uses to which the real property is adapted and
for which the real property is capable of being used.”12
    The special valuation statutes13 were enacted because
of the economic impact that urban development and other
­nonagricultural development have on neighboring agricultural
 and horticultural land.14 Special valuation protects persons
 engaged in agricultural endeavors from excessive tax burdens
 that might force them to discontinue those endeavors.15
    Because Burdess has elected special valuation, the value of
 his agricultural land, including his wasteland, must be valued
 under the special valuation statutes.
    Burdess argues that Nebraska law requires that the special
 value of wasteland acres must be $0 per acre. In support of this
 argument, Burdess relies solely on Neb. Const. art. VIII, § 1(5),
 which authorizes the Legislature to enact § 77-1343. In turn,
 § 77-1343(5) defines “[s]pecial valuation” as “the value that
 the land would have for agricultural or horticultural purposes

10	
      § 77-201.
11	
      § 77-1343(5).
12	
      § 77-112.
13	
      Neb. Rev. Stat. §§ 77-1343 to 77-1347.01 (Reissue 2009 & Cum. Supp.
      2016).
14	
      350 Neb. Admin. Code, ch. 11, § 001 (2007).
15	
      Id.
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               Nebraska Supreme Court A dvance Sheets
                       298 Nebraska R eports
                BURDESS v. WASHINGTON CTY. BD. OF EQUAL.
                            Cite as 298 Neb. 166

or uses without regard to the actual value the land would have
for other purposes or uses.” Because Burdess’ wasteland is
“not suitable for agricultural or horticultural purposes,”16 he
argues that it must necessarily be valued at $0 per acre.
    However, Burdess ignores the statutory provisions that dic-
tate how special value is to be determined. Section 77-201(3)
sets forth that certain agricultural land and horticultural land,
such as Burdess’ wasteland, shall be valued for taxation at
75 percent of its special value. Regarding calculation of spe-
cial value, § 77-1346 sets forth that the “Tax Commissioner
shall adopt and promulgate rules and regulations to be used
by county assessors . . . in determining the special valua-
tion of such land for agricultural or horticultural purposes
under section 77-1344.” Thus, to determine whether the Board
was arbitrary, capricious, or unreasonable in its valuation of
the wasteland, we must turn to 350 Neb. Admin. Code, ch.
11, § 005 (2007), which sets forth how special value is to
be determined.
    Subsection 005.02B of 350 Neb. Admin. Code, ch. 11, pro-
vides that “[s]pecial valuation of agricultural and horticultural
land shall be based on a market analysis of arms length sales
that may include property that sold subject to certain probable
and legal agricultural and horticultural purposes and uses.”
    Here, the assessor determined the special value of Burdess’
wasteland by valuing it based on a market analysis of arm’s-
length sales of property sold subject to certain probable and
legal agricultural purposes and uses. Specifically, the asses-
sor used actual sales of farmland containing wasteland in a
nearby county (Burt County) where urban development had
little influence on the price of sales. Burdess does not dis-
pute the value of these sales or argue that the Burt County
property was not comparable to his. In sum, he has failed
to show that the Board’s valuation was arbitrary, capricious,
or unreasonable.

16	
      See 350 Neb. Admin. Code, supra note 6.
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           Nebraska Supreme Court A dvance Sheets
                   298 Nebraska R eports
           BURDESS v. WASHINGTON CTY. BD. OF EQUAL.
                       Cite as 298 Neb. 166

   Per our standard of review, the question presented is whether
the TERC’s decision to affirm the Board’s valuation of the
wasteland was based on competent evidence. We find that
it was. Therefore, Burdess’ first assignment of error is with-
out merit.
                       2. Homesite Acres
   Burdess also argues that the homesite acres were not prop-
erly valued because they should have been valued simi-
larly to those of the Sully property. Burdess argues that the
Sully property is comparable to his homesite acres because
both properties are zoned agricultural and they are one-half
mile apart.
   However, despite their similarities and proximity, we agree
with the Board that Burdess’ property and the Sully property
have sufficient differences to justify the $14,000 difference in
valuation. The assessor testified that the properties are located
in different market areas; that the Sully property is located
on a river bottom, while Burdess’ property is located on a
bluff; and that people will not pay as much to build on the
river bottom.
   Competent evidence supports the TERC’s decision to affirm
the Board’s valuation of Burdess’ homesite acres. The assessor
testified that he based his valuation of Burdess’ homesite acres
on the sale of similarly sized parcels within the same market
area. Although the valuation of Burdess’ homesite acres may
not be as low as Burdess would like, the TERC’s decision to
affirm the Board’s valuation of Burdess’ homesite acres was
not arbitrary, capricious, or unreasonable. Therefore, Burdess’
second assignment of error is without merit.
                     VI. CONCLUSION
   For the reasons stated above, we find no errors appearing
on the record. Therefore, the TERC’s December 2016 order
is affirmed.
                                                 A ffirmed.
