86-0239 - Centrally Assessed

BEFORE THE UTAH STATE TAX COMMISSION

_____________________________________

XXXXX                                                                                  :

c/o XXXXX,                                                                            )

                                                                                    :

            Petitioner,                                                         )

                                                                                    :           INFORMAL DECISION

v.                                                                                 )

                                                                                    :

PROPERTY TAX DIVISION OF THE                       )

UTAH STATE TAX COMMISSION,                        :           Appeal No. 86-0239

                                                                                    )           Acct. No. XXXXX

                                                                                    :

            Respondent.                                                     )

_____________________________________

STATEMENT OF CASE

            An Informal Hearing was held on XXXXX.  James E. Harward and XXXXX, Hearing Officers, heard the matter for the Utah State Tax Commission.  XXXXX and XXXXX represented the Petitioner.  XXXXX and XXXXX represented the Respondent.

            The Petitioner presented evidence that Respondent's valuation was based on the assumption that Petitioner had a debt-equity structure of 30% debt to 70% equity.  However, Petitioner has no debt and 100% equity.  The Petitioner requested that Respondent's capitalization rate of 16.5% be adjusted to 17.5%.

            Respondent showed that the national trend in similar companies is a debt-equity structure of 30% debt to 70% equity and, therefore, a capitalization rate of 16.5% is reasonable.

DECISION AND ORDER

            The Commission finds that although the Petitioner is a 100% equity company, industry standards and specified norms support using a debt-equity structure of 30% debt to 70% equity to determine the capitalization rate.  The market does not support using a Petitioner-specific debt-equity structure; therefore, Respondent's capitalization rate is reasonable.

            Moreover, the Petitioner did not shift the burden of proof to Respondent by showing that the Respondent's capitalization rate was unreasonable or unsupported by the market.

            Therefore, it is the Decision of the Utah State Tax Commission that the Property Tax Division's valuation be sustained.

            DATED this 3 day of September, 1986.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

R. H. Hansen                                                                Roger O. Tew

Chairman                                                                      Commissioner

Joe B. Pacheco

Commissioner