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