THIS MATTER came on for hearing on December 2, 2005, in Moscow, before Board Member Vernon L. Driver. Board Members Lyle R. Cobbs and David E. Kinghorn participated in this decision. Appellant Hill Family Properties was represented by Jacob Hill, owner, and Mindy Vance, manager. County Assessor Patrick J. Vaughn, Appraisal Supervisor Susan Ripley, and Commercial Appraiser Victor Racicot appeared for Latah County. This appeal is taken from a decision of the Latah County Board of Equalization (BOE) modifying the protest of the valuation for taxing purposes of property described as Parcel No. RP M05200020010 A.

    The issue in this appeal is the market value of an apartment complex.

    The decision of the Latah County Board of Equalization is affirmed.

    The assessed land valuation is $68,400 and the improvements' valuation is $435,440, totaling $503,840. Appellant requests no change to land value and that the improvements' valuation be reduced to $377,413, totaling $445,813.

    The BOE adjusted the assessed value of subject property based on private fee appraisal information submitted by Mr. Hill at hearing.

    The subject property is a multi-family dwelling consisting of 10, two-bedroom units, and 2, one-bedroom units. Total square footage is 9,360. Construction was in 1972.

    The Hill Family has been in the apartment business for 40 years and sees the rental market becoming very competitive. They anticipate the current vacancy rate of 25% will increase to 33% in the spring. The rate used by the County does not consider current vacancies.

    Appellant compared the Otto Hill apartments located across the street to subject. Otto Hill is very similar except for partial renovation -- the improvement value is $366,429, compared to the $435,440 on subject. The subject apartments have not been renovated.

    Mr. Hill challenged the vacancy rate used by the County. It was reported that the actual 2004 vacancy rate was 0%, 2005 was 25%, and yet anticipated the vacancy will increase to 33%.

    County Exhibit No. 1, page 1, is a photograph and description of the subject apartments. Subject is located at 235 Lauder Avenue, was built in 1972, has 12 units and is assessed at $41,987 per unit. Pages 2 through 5 include a spreadsheet, photographs and statistics on four comparable sales (comps.) The sale prices have been time-adjusted and the prices computed on a per unit basis. Prices range from $45,880 (comp #4) for 16 units built in 1976 to $51,300 (comp #1) for a newer 16-unit building built in 1981. Comps #2 and #3 are 12- and 11-unit structures. The indicated prices per unit are $50,333 for comp #2 constructed in 1983 and $47,904 for comp #3 built in 1962.

    The County Appraiser testified that if the subject property was assessed using just the income approach, the total value would be $540,707. There was no cost approach submitted at the Board of Tax Appeals hearing.

    Testimony and County Exhibit No. 2 (aerial photograph) show subject located at the southeast corner of Lauder Avenue and Lenter Street, and the Otto Hill apartments located at the southwest corner of the referenced intersection. The Otto Hill complex contains five buildings. Each is the approximate size of subject building. The Latah County BOE combined the individual buildings, and with the economy of scale lowered the assessed value accordingly. This purportedly recognized that the market for the single apartment building was together with the other four (total 66 units.)

    There was a comparison made of the subject land value to a property located at 115 South Lilly. Mr. Racicot testified the land area for 115 South Lilly is 12,388 square feet. The subject land is 15,625 square feet, and was argued to be worth more with the larger size.

CONCLUSIONS OF LAW

    The Board's goal in this hearing is the acquisition of sufficient, accurate evidence to support a determination of fair market value, or exempt status. This Board, giving full opportunity for all arguments and having considered all testimony and documentary evidence submitted by the parties in support of their respective positions, hereby enters the following.

    Idaho Code § 63-208, Rules pertaining to the market value - Duty of Assessor -- Rules promulgated by the State Tax Commission shall require each assessor to find market value for assessment purposes.

    Idaho Code § 63-201(10) defines market value:

"'Market Value'" means the amount of United States dollars or equivalent for which, in all probability, a property would exchange hands between a willing seller, under no compulsion to sell and an informed, capable buyer, with a reasonable time allowed to consummate the sale, substantiated by a reasonable down or full cash payment."

    Idaho Code § 63-205(1) states: "Assessment - Market Value for Assessment Purposes -- All real, personal and operating property subject to taxation must be assessed annually at market value for assessment purposes as of 12:01 A.M. of the first day of January in the year in which such property taxes are levied."

    The County submitted four comparable sales to show the probable market value of the subject. They range in building date from 10 years older to 11 years newer, and in size from 11 to 16 units. The time adjusted sale prices are higher than the subject assessment. There was no information admitted to support or validate the time adjustment.

    The Board also looked at the comparable sales without any time adjustment. The unadjusted price per unit ranged from $38,750 to $50,000. The most comparable properties sold (unadjusted) for $45,360 (11 units) and $38,750 (16 units) per unit. The County Appraiser testified that the condition of the comparable sales was in general, the same or similar to subject and all were located in close proximity. A comparison of total units to sale price per unit, tends to substantiate the existence of the economy of scale indicated by the County.

    Taxpayer submitted evidence concerning and comparing the treatment of other multi-family improvements in relation to subject. It contends subject's assessed value is unfairly higher than the Otto Hill property which is similar and very close by. Another concern was that subject will be "fixed" with the current assessed value for the next five years.

    The Board finds County testimony, explanations, and exhibits adequately responded to Appellant's concerns of equitable treatment. The County further declared the future valuation of multi-family dwellings would be reviewed annually and indexed as required.

    The court has consistently held that the only criterion for determining value of property for ad valorem tax purposes is the full cash or market value. Merris v. Ada County, 100 Idaho 59 at 63, 593 P.2d 394 (1979).

    Idaho Code § 63-511(4) establishes "In any appeal taken to the board of tax appeals or the district court pursuant to this section, the burden of proof shall fall upon the party seeking affirmative relief to establish that the valuation from which the appeal is taken is erroneous. A preponderance of the evidence shall suffice to sustain the burden of proof."

    The Board finds Appellant has not established by a preponderance of the evidence that the value decision of the Latah County Board of Equalization for 2005 was incorrect.