95-0957 and 95-0797

Centrally Assessed

Signed 2/9/94

BEFORE THE UTAH STATE TAX COMMISSION

____________________________________

XXXXX, )

:

Petitioner, ) FINDINGS OF FACT,

: CONCLUSIONS OF LAW,

v. ) AND FINAL DECISION

:

PROPERTY TAX DIVISION ) Appeal Nos. 95-0797 & 95-0957

UTAH STATE TAX COMMISSION, :

) Tax Type: Centrally Assessed

Respondent. : Property Tax

)

:

_____________________________________

STATEMENT OF CASE

This matter came before the Utah State Tax Commission for a Formal Hearing on XXXXX. Commissioner W. Val Oveson, heard the matter for the Commission. Present and representing Petitioner were XXXXX and XXXXX. Present and representing Respondent was XXXXX of the Property Tax Division.

Based upon the evidence and testimony presented at the hearing, the Tax Commission hereby makes its:

FINDINGS OF FACT

1. The tax in question is property tax.

2. The years in question are XXXXX, XXXXX, and XXXXX.

3. The subject property is centrally assessed mining property.

4. The XXXXX County Assessor's office assumed the jurisdiction to assess the subject property in years prior to XXXXX. In XXXXX Petitioner appealed the value of the subject property and the authority of XXXXX County Assessor to assess the property on the basis that the law requires mining properties to be assessed by Respondent. The value affirmed by the Salt Lake County Board of Equalization was $$$$$ for the year XXXXX. On XXXXX, this Commission issued an order requiring the subject property be assessed by Respondent pursuant to '59-2-201 for the XXXXX tax year and for all subsequent years. On XXXXX Respondent issued a supplemental assessment for the subject property as of XXXXX which valued the property at $$$$$ which represented $$$$$ per acre. On XXXXX, Petitioner filed a request for redetermination, asking for a value of $$$$$ per acre or $$$$$.

5. For the XXXXX tax year, the original assessment was done by the XXXXX County Assessor. The value affirmed by the Salt Lake County Board of Equalization was $$$$$. The assessment was appealed by Petitioner. When this Commission issued a decision for the XXXXX year relative to the centrally assessed issue, that decision applied to XXXXX as well as XXXXX. On XXXXX Respondent issued a supplemental assessment for the subject property as of XXXXX which valued the property at $$$$$ or $$$$$ per acre for XXXXX. Petitioner filed a request for redetermination on XXXXX asking for a value of $$$$$ or $$$$$.

6. For XXXXX the original assessment was done by Respondent and issued on XXXXX. On XXXXX Petitioner filed a request for redetermination on the subject property asking for a value of $$$$$ or $$$$$.

7. Petitioner asserts that the property must be valued as a patented mining claim if it is not being used for other purposes. There is an agreement between the parties that the property is not being used for any other purpose.

8. Respondent agrees that the law requires Respondent to value all mining property and mining claims, however, Respondent contends that if the value of the mining claim is less than the market value of the property, the property must be valued at the higher value.

9. Respondent presented an appraisal prepared by XXXXX, a valuation analyst. The appraisal indicates a value of the subject property of $$$$$ for XXXXX and XXXXX. The appraisal does not deal with the XXXXX year, however, Respondent indicates that all other similar property was valued at $$$$$ per acre for XXXXX and recommends leaving the value of the subject property at $$$$$ per acre or $$$$$ for XXXXX.

10. Mr. XXXXX weighted his valuation 100% on the market approach because there were no improvements to the property, the purchase price was too distant to be useful, and there is no income from the property to use the income method. Mr. XXXXX presented seven comparable sales to arrive at the value of $$$$$ per acre for the subject property for XXXXX and XXXXX. The comparable sales were of vacant land with the highest and best use as recreational property. All the sales have the same zoning as the subject property and all are located in the canyons of Salt Lake and Summit Counties.

11. Petitioner did not present an appraisal but challenged the comparability of the sales used by Respondent. Specifically, sales number 1, 2, and 7 are sales to the U.S. Forest Service and are represented by Petitioner to have been purchased by the Forest Service because of their unique characteristics that meet the criteria established by the Forest Service to purchase property in Big Cottonwood Canyon. Petitioner contends that the subject property has none of the characteristics that would meet the criteria for purchase by the Forest Service. To document this position, Petitioner has presented AFile Code 5420" from the Forest Service which indicates the procedures to be used to make an offer to sell land to the Forest Service. The document outlines eight criteria that are used to determine which properties are considered for purchase. The criteria include the following items: 1. Protect wetlands and flood plains; 2. Protect habitat of threatened and endangered species; 3. Protect critical wildlife habitat; 4. Protect cultural resources or provide developed recreation facilities; 5. Provide essential public access to the Forest; 6. Protect municipal watersheds; 7. Block up National Forest ownership, reduce the length of boundary lines, or reduce cost of boundary maintenance; 8. Provide administrative sites and improvements needed for management of the Forest. The steps necessary to successfully apply for the sale are then outlined. There are 8 steps that are quite demanding.

12. Petitioner also presented documents from XXXXX, President of the XXXXX denying a request for water rights and a letter from the XXXXX County Engineer stating that the subject property had a slope that exceeded the 40% maximum for building. It is stipulated by both parties that the subject property cannot be used for building lots.

13. Petitioner argues that none of the comparables used by Respondent can be used to value the subject property because they are not mining properties. Petitioner contends that the Tax Commission cannot change the character of the mining claims based upon highest and best use because the law prohibits this recharacterization.

14. Numerous other comparability problems were pointed out by Petitioner relative to the other comparable sales presented by Respondent.

APPLICABLE LAW

The Tax Commission is required to oversee the just administration of property taxes to ensure that property is valued

for tax purposes according to fair market value. (Utah Code Ann. '59-1-210(7).)

Petitioner has the burden of proof to establish that the market value of the subject property is other than that as determined by Respondent.

The specific statute reference for valuing mining claims is as follows:

'59-2-201(2) In no event may the fair market value of the mining property be less than the fair market value of the land, improvements, and tangible personal property upon or appurtenant to the mining property.

CONCLUSIONS OF LAW

15. To the issue of recharacterization of mining claims, the Commission reads the statutes as requiring an analysis of highest and best use and assessing the mining claims at no lower than the market value of the land and improvements. Therefore, the value of the mining claims set the floor to value and not the ceiling. In reading Crystal Lime & Cement Co. v. Robbins, 209 P.2d 739 (Utah 1949), the Commission agrees with Respondent. At issue is who should value mining property, the county or the state not whether the value of the mining claims set the ceiling for property tax purposes. The Crystal Lime decision did not require the assessing of the mining property at the mining value. Indeed the $$$$$ value asserted by Petitioner was the floor value required by the statutes until 1987 when the statutes were changed. There is now no floor value for the mineral property but AIn no event may the fair market value of the mining property be less than the fair market value of the land, improvements and tangible personal property upon or appurtenant to the mining property,@ according to '59-2-201(2). If it was determined that the market value of the vacant land was zero, that would be the value used for property tax purposes, not a flat $$$$$.

16. The Commission agrees with Respondent on the comparability of the subject property to the Forest Service sales number 1, 2, and 7. The subject property appears to be comparable because some of the characteristics required for the sale of property in Big Cottonwood canyon to the Forest Service appear to be present. Specifically, the subject property could be considered to: Protect critical wildlife habitat; Protect municipal watersheds; Block up National Forest ownership, reduce the length of boundary lines, or reduce cost of boundary maintenance. Petitioner has not offered to sell the subject property to the Forest Service and therefore cannot determine whether or not the Forest Service is interested in purchasing the subject property. Inherent in the concept of market value is the principle of exposure to the market for a reasonable period of time. It is not unreasonable to have a parcel of property on the market for several months to a year. This is not inconsistent with the Forest Service process.

17. Comparable sales numbers 3, 4, 5, and 6 appear to be less comparable than the Forest Service sales. The values, however, do support the value placed on the subject property by Respondent. Per acre values of $$$$$, $$$$$, $$$$$ and $$$$$ respectively, seem consistent with the value of the subject property at $$$$$ per acre giving a discount to the subject property because of a steeper grade.

18. Petitioner pointed out problems with comparables number 3,4,5, and 6. The problems on comparable sales number 3 were addressed to the Commission=s satisfaction by Respondent in their post hearing brief. Respondent did not address the comparability issues on comparable sale number 4. Respondent stated that comparable sales number 5 and 6 could not be verified.

19. After analyzing the allegations of Petitioner and the rebuttal of Respondent, the Commission determines that Petitioner did not meet its burden of proof to show that the value of the subject property is other than that asserted by Respondent in their appraisal. Even throwing out comparable sales numbers 4, 5,and 6, the strength of comparable sales numbers 1, 2, 3, and 7 tip the balance in favor of Respondent.

DECISION AND ORDER

Based upon the foregoing, the Tax Commission finds that the market value of the subject property as of XXXXX of XXXXX, XXXXX and XXXXX is $$$$$. It is so ordered.

DATED this 9th day of February, 1996.

BY ORDER OF THE UTAH STATE TAX COMMISSION.

W. Val Oveson Roger O. Tew

Chairman Commissioner

Joe B. Pacheco Alice Shearer

Commissioner Commissioner

NOTICE: You have twenty (20) days after the date of a final order to file a Request for Reconsideration with the Commission. If you do not file a Request for Reconsideration with the Commission, you have thirty (30) days after the date of a final order to file a.) a Petition for Judicial Review in the Supreme Court, or b.) a Petition for Judicial Review by trial de novo in district court. (Utah Administrative Rule R861-1A-5(P) and Utah Code Ann. ''59-1-601(1), 63-46b-13 et. seq.)

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