Darnall Ranch v. Banner Cty. Bd. of Equal.

dArNAll rANch , iNc ., AppellANt , v . bANNer
couNty boArd of equAlizAtioN, Appellee .
753 n.W.2d 819
Filed August 1, 2008. 	no. S-07-811.
1. Taxation: Judgments: Appeal and Error. Decisions rendered by the Tax
Equalization and Review Commission shall be reviewed by an appellate court for
errors appearing on the record of the commission.
2. Judgments: Appeal and Error. When reviewing a judgment for errors appearing
on the record, an appellate court’s inquiry is whether the decision conforms to
the law, is supported by competent evidence, and is neither arbitrary, capricious,
nor unreasonable.
3. Taxation: Appeal and Error. Questions of law arising during appellate review
of Tax Equalization and Review Commission decisions are reviewed de novo on
the record.
4. Taxation: Due Process: Evidence: Appeal and Error. The Tax Equalization
and Review Commission must be afforded some discretion in determining the
probative value and admissibility of evidence in an informal appeal hearing,
and a proper exercise of such discretion cannot constitute a denial of procedural
due process.
5. Taxation: Valuation. in tax valuation cases, actual value is largely a mat-
ter of opinion and without a precise yardstick for determination with com-
plete accuracy.
6. ____: ____. An assessor may reasonably rely on physical measurements made by
an appraiser as part of a mass appraisal.
7. Property: Valuation: Witnesses. A resident owner who is familiar with his or
her property and knows its worth is permitted to testify as to its value without
further foundation.
8. Taxation: Valuation: Proof. When a county board of equalization has determined
the value of the property, uniformly and impartially assessed through a formula in
substantial compliance with statutes governing taxation, for reversal of the board’s
action, a taxpayer must show more than a difference of opinion concerning the
assessed value of the taxpayer’s real estate.
9. Administrative Law: Words and Phrases. An administrative agency’s decision
is arbitrary when it is made in disregard of the facts or circumstances and without
some basis which would lead a reasonable person to the same conclusion.
Appeal from the Tax Equalization and Review Commission.
Affirmed in part, and in part reversed and remanded with
directions.
Robert M. brenner, of Robert M. brenner law office,
for appellant.
James l. Zimmerman, banner County Attorney, for appellee.
296 	276 nEbRASkA REPoRTS
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:53 AM CST

heAvicAN, 	C.J., 	W right, 	coNNolly, 	gerrArd, 	S tephAN,
mccormAck, and miller -lermAN, JJ.
S tephAN, J.
Darnall Ranch, inc. (DRi), owns several residences located on
its ranch property in banner County, nebraska. it protested the
2004 valuation of each residence for tax purposes, but the pro-
tests were denied by the banner County board of Equalization
(board). DRi then appealed to the Tax Equalization and Review
Commission (TERC), which upheld the valuations as determined
by the board. This is an appeal from the decision and order of
TERC. We affirm in part, and in part reverse and remand with
directions to adjust the 2004 valuations of two residences which
are located in close proximity to a feedlot.
i. bACkGRounD
The 2004 valuations of the subject properties were based upon
“replacement cost new less depreciation.” The county assessor
relied on data collected during a countywide reappraisal in 2003.
She did not independently verify the data in determining the
2004 valuations. in a 2006 disciplinary proceeding before the
nebraska Real Estate Appraiser board, the appraiser who con-
ducted the 2003 countywide reappraisal admitted that she vio-
lated certain standards during the reappraisal and consented to
disciplinary measures. The banner County assessor was aware
of the disciplinary proceeding, but was never informed that it
involved deficiencies in the 2003 data collection. According to
the county assessor, “[n]o one has ever proved that the data col-
lection for 2003 was incorrect.”
The 2003 data was entered into a computer program called
TerraScan, which was used by the county assessor to compute
all 2004 valuations for residential and agricultural property in
the county. The data included floor plan dimensions and rat-
ings of the quality and condition of each residence. The qual-
ity and condition ratings were based upon criteria found in the
Residential Cost Handbook, published by Marshall & Swift,
lP, a reference manual commonly used in the valuation of real
property. in this context, “quality” refers to the overall quality
of the characteristics of materials and workmanship, as well as
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design and functional utility. “Condition” measures the extent
to which physical deterioration or structural defects are pres-
ent. Marshall & Swift costing tables and local multipliers are
built into the TerraScan program. The assessor testified that the
nebraska Department of Property Assessment and Taxation is
aware that banner County uses the TerraScan program and has
never objected to or questioned its reliability.
After the 2004 valuations were established, DRi filed protests
for the residential properties which are the subject of this case.
in each instance, the assessor recommended no change in the
valuations, and the board accepted this recommendation.
We shall refer to residences by the colloquial nomenclature
utilized by the parties during the TERC hearing.
1. “feedlot houSe ” (pArcel 040001830)
The feedlot house is a two-story, single-family home built in
approximately 1900, with a 90-percent stucco and 10-percent
masonry veneer exterior and an area of 2,188 square feet. The
assessor’s data listed its quality as “Average” and its condition as
“badly-Worn.” The 2004 assessed valuation was $17,765.
Gary Darnall, president of DRi, testified that this house is
“basically in the middle of the feedlot.” Trucks used to transport
cattle, silage, grain, and manure pass within 40 feet of the house,
day and night, causing problems with dust and flies. According
to Gary, the house “is in disrepair” with defects in the doors and
windows. using his personal criteria, he described its quality as
“very poor” and its condition as “badly-worn.” in his opinion,
the 2004 value of the feedlot house was $6,700.
Sheila newell testified at the TERC hearing on behalf of
DRi. newell has held a real estate broker’s license since 1989
and has been a certified general real property appraiser since
1996. At the time of her testimony, she served as chair of the
nebraska Real Property Appraiser board. newell inspected the
feedlot house in november 2003 and again in September 2004,
noting no changes between the two inspections. She described
the house as being of “low” quality based upon its age, design,
floor structure, windows, poor heating, lack of adequate utility
outlets, and functional utility. She described the condition of
the house as of January 1, 2004, as “[b]adly worn.” newell was
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not asked to express an opinion as to the 2004 valuation of the
feedlot house.
2. “lANe ’S houSe ” (pArcel 040001822)
This is a single-family home occupied by lane Darnall and
his family, who have lived there since the home was built in
1992. it has a 100-percent masonry veneer exterior and an area
of 1,555 square feet. The assessor’s data listed its quality as
“Fair +,” meaning that it was between fair and average quality.
The assessor rated the condition of the home as “Average.” The
2004 assessed valuation was $101,492. There was no allowance
for locational depreciation, because the assessor did not consider
it to be “close enough” to the feedlot.
Gary, who is lane’s father, testified that lane’s house was
built at a cost of approximately $64,000, and there had been no
major remodeling prior to 2004. Gary testified that the house is
located across the road and about one-eighth of a mile from the
feedlot which has a capacity of 20,000 head of cattle. He also
testified that vibration from the 20 to 25 trucks going by the
house each day have caused cracking of its walls and founda-
tion. He stated that cattle are located on all sides of the house.
Gary testified that there had been “extensive” electrical prob-
lems in the home since a 1999 lightning strike. in his opinion,
the value of the home in 2004 was $52,264.
lane, who is the general manager for production of DRi,
agreed that cattle regularly graze on all sides of his home. He
testified that heavy truck traffic to the feedlot located one-
eighth of a mile from his home causes cracking in the drywall
and basement walls. He believes that the home receives “above
average wear” due to the presence of his teenage children and
foreign exchange students hosted by his family. lane expressed
his “lay opinion” that the quality of the home is “fair” and that
the condition is “fair to low.” in arriving at the claimed value of
$52,264, lane applied a 50-percent locational depreciation due
to the proximity to the feedlot.
newell personally inspected lane’s house in november 2003.
in her opinion, the quality of the home was “fair,” due to mate-
rial and workmanship which were below “market standards.” She
also rated the condition of the home as “fair,” due to evidence
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of “deferred maintenance.” She also testified that the proximity
of the home to the feedlot should be considered in determining
its value, but she did not quantify this opinion or express any
opinion as to the value of the home in 2004.
3. “gAry ’S houSe ” (pArcel 040002195 - b)
Gary and his wife reside in this 2,046-square-foot stucco home
built in 1920. An addition was built in 1977. The assessor’s data
listed its quality as “Average” and its condition as “Good.” The
2004 assessed valuation was $56,203.
Gary testified that the assessor’s data was incorrect, in that
there is a bathtub in the main floor bathroom, not a shower as
indicated by the assessor, and one of the closets is smaller than
indicated. He testified that the roof is damaged and that the
windows leak. He rated both the quality and condition of the
home as “fair.” in his opinion, the value of the home in 2004
was $30,626.
newell inspected Gary’s house in november 2003. She evalu-
ated the quality of the original structure as “fair” and the quality
of the addition as “average.” She rated the condition of the entire
structure as “fair.” newell did not express an opinion as to the
value of the home in 2004.
4. “pAreNtS’ houSe ” (pArcel 040002195 - A)
This 1,834-square-foot home was built in 1958. The exterior
is 90-percent vinyl siding and 10-percent masonry veneer. it is
occupied by Gary’s mother. The assessor’s data listed its quality
as “Average+” and its condition as “Average.” The 2004 assessed
valuation was $100,998.
Gary testified that the roof of this home had its original shake
shingles, which were badly worn, and that the roof leaked,
causing interior water damage. in his opinion, the quality and
condition of the home were both “fair.” in Gary’s opinion, the
value of the home in 2004 was $63,500, which he characterized
as “a layman’s valuation from seeing other properties of similar
homes that age, similar conditions.” There was no evidence of
other properties specifically considered by Gary in arriving at
his valuation.
newell testified that on the basis of her november 2003
inspection of this property, she considered its quality to be
300 	276 nEbRASkA REPoRTS

“average” and she agreed with the assessor that its condition was
also “average.” newell did not express an opinion as to the value
of the house in 2004.
5. “lAbor houSe ” (pArcel 040004627)
This house, located 3 miles west of the feedlot, was con-
structed in 1996 at a cost of $76,000. it is a one-story house
with an area of 1,160 square feet and a vinyl siding exterior. The
assessor’s data listed its quality as “Fair+” and its condition as
“Average.” The 2004 assessed valuation was $71,893.
Gary testified that there was a “continuing problem with
mold” in this house and that the problem existed as of January
1, 2004. Taking this into consideration, he expressed an opinion
that the quality and condition of the house were both “fair” and
that its value in 2004 was $58,307.
newell testified that while she was “not an expert in . . .
mold identification,” in 2002, she observed what she consid-
ered to be mold on both the main level and the basement of the
house. Her inspection in november 2003 revealed the mold was
increasing. newell considered both the quality and the condi-
tion of the house to be “[f]air.” She did not express any opinion
as to the value of the house or the effect of the observed mold
on value.
TERC determined that there were two issues raised by the
appeal: (1) whether the decision of the board determining
taxable value of the subject properties was unreasonable or
arbitrary and (2) the taxable value of the subject properties
on January 1, 2004. TERC determined that it would not con-
sider any equalization issues, because DRi had not raised such
issues in its protests to the board. TERC further determined
that DRi had not shown the 2004 valuations of the subject
properties to be unreasonable or arbitrary and that the evidence
of actual value presented by DRi was not persuasive and was
an insufficient basis for relief. TERC affirmed the determina-
tions of the board with respect to the 2004 valuations of the
subject properties.
ii. ASSiGnMEnTS oF ERRoR
DRi assigns, restated, renumbered, and consolidated, that
TERC erred in (1) applying an incorrect legal standard as to its
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burden of persuasion, (2) conducting the hearing in a manner
that deprived it of procedural due process, (3) failing to con-
clude on the basis of the evidence that the 2004 valuations by
the board were arbitrary and capricious, (4) failing to consider
equalization as an issue on appeal, and (5) failing to consider
and make findings on all issues presented.
iii. STAnDARD oF REViEW
[1-3] Decisions rendered by TERC shall be reviewed by an
appellate court for errors appearing on the record of the com-
mission.1 When reviewing a judgment for errors appearing on
the record, an appellate court’s inquiry is whether the decision
conforms to the law, is supported by competent evidence, and is
neither arbitrary, capricious, nor unreasonable.2 Questions of law
arising during appellate review of TERC decisions are reviewed
de novo on the record.3
iV. AnAlYSiS
1. tAxpAyer ’S burdeN of perSuASioN
Citing statutory authority and an opinion of the nebraska
Court of Appeals,4 the TERC order recited the legal principle
that TERC “can grant relief only if there is clear and convincing
evidence that the action of the County board was unreasonable
or arbitrary.” DRi argues that because of amendments to the
TERC statutes in 2004 and 2007, this principle is no longer cor-
rect. We considered and rejected this same argument in Brenner
v. Banner Cty. Bd. of Equal.,5 and we therefore do not address
it here.
1 neb. Rev. Stat. § 77-5019(5) (Cum. Supp. 2006); Marshall v. Dawes Cty.
Bd. of Equal., 265 neb. 33, 654 n.W.2d 184 (2002).
2 See Marshall v. Dawes Cty. Bd. of Equal., supra note 1.
3 City of York v. York Cty. Bd. of Equal., 266 neb. 297, 664 n.W.2d 445
(2003); City of Alliance v. Box Butte Cty. Bd. of Equal., 265 neb. 262, 656
n.W.2d 439 (2003).
4 neb. Rev. Stat. § 77-5016(8) (Cum. Supp. 2006); Omaha Country Club v.
Douglas Cty. Bd. of Equal., 11 neb. App. 171, 645 n.W.2d 821 (2002).
5 Brenner v. Banner Cty. Bd. of Equal., ante p. 275, 753 n.W.2d 802 (2008).
302 	276 nEbRASkA REPoRTS

2. procedurAl due proceSS
DRi argues that TERC conducted the appeal hearing in
a manner which deprived it of due process rights to present
evidence and be heard before an impartial board.6 it contends
that formal rules of evidence were applied, despite the fact that
the hearing was to be informal, and that the chairman of the
TERC panel frequently interrupted its presentation and “became
an advocate.”7
The Tax Equalization and Review Commission Act (TERCA)8
specifies the procedures applicable to taxpayer appeal hearings.
Such hearings are to be informal “unless a formal hearing is
granted” upon the request of a party.9 in this case, the order
for hearing specified that the hearing was to be informal.
TERC was required to “give probative effect to evidence which
possesses probative value commonly accepted by reasonably
prudent persons in the conduct of their affairs excluding incom-
petent, irrelevant, immaterial, and unduly repetitious evidence”
and to honor statutory privilege rules, but was “not other-
wise . . . bound by the usual common-law or statutory rules
of evidence.”10
[4] As we held in Brenner v. Banner Cty. Bd. of Equal.,11
TERC must be afforded some discretion in determining the pro-
bative value and admissibility of evidence in an informal appeal
hearing, and it follows that a proper exercise of such discretion
cannot constitute a denial of procedural due process.
DRi states that TERC sustained objections to several exhibits
it offered and argues that the cumulative effect of these rulings
was prejudicial. DRi makes no attempt to explain why the rul-
ings excluding these exhibits were incorrect. We note that after
the initial rulings, at least two of the exhibits were subsequently
6 See Krusemark v. Thurston Cty. Bd. of Equal., 10 neb. App. 35, 624 n.W.2d
328 (2001).
7 brief for appellant at 27.
8 neb. Rev. Stat. §§ 77-5015 to 77-5019 (Cum. Supp. 2006 & Supp. 2007).
9 § 77-5016.
10 See § 77-5016(1).
11 Brenner v. Banner Cty. Bd. of Equal., supra note 5.
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reoffered and received. TERC excluded several exhibits offered
by the board, based upon objections by counsel for DRi.
Viewing the record as a whole, TERC applied the same standard
of admissibility to evidence offered by both parties and DRi
therefore suffered no prejudice.
DRi also argues that the TERC chairman interrupted its pre-
sentation in a manner which demonstrated bias. While interrup-
tions did occur, we cannot conclude from the record that they
were indicative of bias. We regard the interruptions as attempts
to clarify or focus a particular question or line of inquiry, or to
indicate an area in which additional information was needed.
TERC has statutory authority to “utilize its experience, techni-
cal competence, and specialized knowledge in the evaluation of
the evidence presented to it.”12 in an informal hearing, TERC
must have a certain degree of latitude in seeking clarification
and focus of testimony as it is received.13 There is nothing in the
record to suggest that TERC exercised this authority in a manner
prejudicial to DRi.
For these reasons, we conclude that DRi was not deprived of
procedural due process.
3. vAluAtioN
[5] The “actual value” of real property is defined by nebraska
law as
the most probable price expressed in terms of money that
a property will bring if exposed for sale in the open mar-
ket, or in an arm’s length transaction, between a willing
buyer and willing seller, both of whom are knowledge-
able concerning all the uses to which the real property
is adapted and for which the real property is capable of
being used.14
in tax valuation cases, actual value is largely a matter of opinion
and without a precise yardstick for determination with complete
12 § 77-5016(5).
13 See Brenner v. Banner Cty. Bd. of Equal., supra note 5.
14 neb. Rev. Stat. § 77-112 (Reissue 2003).
304 	276 nEbRASkA REPoRTS

accuracy.15 As we have noted, DRi had the burden of persuading
TERC that the board’s valuation of its property was arbitrary
or unreasonable. An administrative agency’s decision is “arbi-
trary” when it is made in disregard of the facts or circumstances
without some basis which would lead a reasonable person to the
same conclusion.16
Actual value of real property for purposes of taxation “may be
determined using professionally accepted mass appraisal meth-
ods, including, but not limited to . . . (1) [the] sales comparison
approach . . . (2) [the] income approach, and (3) [the] cost
approach.”17 The assessor testified that values were determined
on the basis of “[r]eplacement cost new less depreciation when
compared to the sales roster.” DRi does not criticize the use of
this approach, but contends that it was not correctly applied by
the assessor and the board.
(a) Physical Characteristics of Property
[6] DRi contends that neither the assessor nor the board
had personally inspected any of the residences to determine
their actual physical characteristics before arriving at the 2004
valuations. The assessor acknowledged this, but testified that
she relied on data collected during the 2003 countywide reap-
praisal. The assessor also acknowledged that the person who
conducted the 2003 reappraisal was subsequently disciplined
for certain irregularities which occurred during the reappraisal,
but the assessor was never informed that there was any problem
with the 2003 data collection. Generally, an assessor may rea-
sonably rely on physical measurements made by an appraiser as
part of a mass appraisal.18 Here, the assessor also testified that
when she inspected the properties subsequent to the 2004 valu-
ations, she found no errors in the data utilized in 2004. under
similar circumstances, the Court of Appeals concluded that the
15 US Ecology v. Boyd Cty. Bd. of Equal., 256 neb. 7, 588 n.W.2d 575 (1999);
Cabela’s, Inc. v. Cheyenne Cty. Bd. of Equal., 8 neb. App. 582, 597 n.W.2d
623 (1999).
16 Phelps Cty. Bd. of Equal. v. Graf, 258 neb. 810, 606 n.W.2d 736 (2000).
17 § 77-112.
18 See Cabela’s, Inc. v. Cheyenne Cty. Bd. of Equal., supra note 15.
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presumption of validity was properly applied to the valuation as
determined by a board of equalization.19
Gary testified generally that the data collected in 2003 was
inaccurate, but the record does not reflect any significant errors.
The assessor conceded that one property was shown on her
records as having a “crawl area” when, in fact, it did not.
However, she explained that the TerraScan program uses “crawl
area” as the default description of the base of a residential struc-
ture and attributes no value to it. if the structure has a basement,
which does affect value, that information is manually included
in place of the “crawl area” designation.
The record does not reflect any significant errors or discrep-
ancies in the description of the physical characteristics used to
determine the 2004 valuations. lane admitted that he utilized the
county assessor’s data in arriving at his opinion of the value of
the residence where he lived.
(b) Costing Methodology
DRi argues that the board’s 2004 valuations were arbitrary
and unreasonable because the assessor did not follow regulations
and manuals promulgated by the Property Tax Administrator,
and specifically those published by Marshall & Swift, lP,
such as the Residential Cost Handbook and Marshall Valuation
Service. The assessor testified that the TerraScan program which
she utilized in determining the 2004 valuations utilized costing
information published by Marshall & Swift, and the record cards
generated by TerraScan include a notation that data used for
calculations is supplied by Marshall & Swift. The reports make
reference to a “Manual Date,” and the record cards reference
“Marshall Swift tables” dated June 2001. The assessor testified
that she did not know if Marshall & Swift published new cost-
ing tables in June 2001 and that she did not manually compare
the TerraScan information on the DRi properties to the Marshall
& Swift tables, but, rather, relied upon the program to use the
correct information.
19 Kohl’s Dept. Stores v. Douglas Cty. Bd. of Equal., 10 neb. App. 809,
638 n.W.2d 877 (2002). See Brenner v. Banner Cty. Bd. of Equal., supra
note 5.
306 	276 nEbRASkA REPoRTS

newell testified as to her understanding that Marshall & Swift
compiles data and issues updates on a regular basis. She stated
that “quarterly multipliers should then be used to trim the costs
published on the pages that you already have in your Handbook
to a current date to adjust the costs.” The following exchange
then occurred:
[DRi’s counsel:] now, specifically were there sheets
distributed for — it comes out in a book for June 1st of
2001 for average — low quality, fair quality, average qual-
ity, good quality, that would cover the — a change made
for June, 2001?
[newell:] For residential there were not.
Q That’s —
A For residential —
[TERC chairman]: is that for the cost factors . . . or
is that —
[newell]: it —
[TERC chairman]: i’m sorry. i can’t tell whether coun-
sel is asking you the definitions of change or did the cost
factors change.
[newell]: i believe the question was, did you receive a
new page, printout, data.
[TERC chairman]: Cost factors?
[newell]: on June of 2001 for the residential section.
[TERC chairman]: All right.
[newell]: That’s why i said, no, not for the residential.
[TERC chairman]: but it’s a cost factor. it’s not the
descriptor. it’s not the definitions.
[newell]: Yes, cost.
[TERC chairman]: And it wasn’t a factor that you would
apply to a prior value.
[newell]: Wasn’t the multipliers.
[TERC chairman]: Wasn’t the multiplier, all right.
[DRi’s counsel]: Thank you.
The record lists a Marshall & Swift Valuation Service Manual
dated “6/2001” as one of the documents which TERC could
consider and utilize without inclusion in the record pursuant to
§ 77-5016(3), although it does not appear that TERC made spe-
cific reference to this manual in this case.
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DRi argues, on the basis of this evidence, that the TerraScan
program utilized incorrect Marshall & Swift costing information
in arriving at the 2004 valuations. We cannot determine from
the rather confusing record whether or not this is so. Moreover,
DRi offered no evidence as to which Marshall & Swift manual
should have been used, or whether the use of a different manual
would have resulted in lower valuations. While we acknowledge
that this evidence raises some questions regarding the costing
methodology employed by the assessor, we cannot conclude on
the basis of this evidence alone that the valuations derived from
the TerraScan program utilizing Marshall & Swift costing infor-
mation were arbitrary or unreasonable.
DRi also argues that an audit of the banner County assessor’s
office conducted by the Department of Property Assessment
and Taxation for the period of october 2001 through January
2002 is probative of deficiencies in the 2004 valuations at issue
here. We are not persuaded by this argument and agree with
the conclusion of TERC that on this record, it cannot be deter-
mined that “discontinued assessment practices for years prior
to 2003 affected valuation of the subject property for the tax
year 2004.”20
(c) Taxpayer’s opinions Regarding
Quality, Condition, and Value
DRi argues that TERC failed to properly consider the tax-
payers’ opinions and those of its expert regarding the quality,
condition, and value of the subject properties. TERC determined
that Gary’s testimony regarding the quality and condition of the
properties was not related to any specific criteria or standards.
The record supports this determination. When asked on cross-
examination what he considered “low” quality, he replied, “i
don’t have the definition of it. it would be just my definition.”
He conceded that what he might consider to be “low” quality,
someone else might consider “average.” He could not say if his
definition of “fair” was the same as that utilized by Marshall
& Swift.
20 See Brenner v. Banner Cty. Bd. of Equal., supra note 5.
308 	276 nEbRASkA REPoRTS

in contrast, newell’s testimony regarding the quality and
condition of the subject properties was based on the Marshall
& Swift criteria. She agreed with the assessor’s determination
of the “average” quality and condition of the parents’ house, but
her ratings of the other properties were somewhat lower than
those of the appraiser. For example, newell testified that she
observed mold in the labor house and rated the condition of the
structure as “fair,” compared to the assessor’s rating of “aver-
age.” newell acknowledged that the determination of quality
and condition was somewhat subjective and that the opinions
of qualified appraisers with respect to the same property could
vary. As noted, newell expressed no opinion of the value of
any of the subject properties, and the record therefore does not
indicate whether or how newell’s opinions regarding quality and
condition would affect values as determined by the assessor and
the board. The conflicting testimony regarding condition, qual-
ity, and value of the subject properties reflected nothing more
than differences of opinion, with no correlation to value even if
newell’s opinions were accepted.
[7,8] Although newell gave no opinions of value, Gary did.
A resident owner who is familiar with his or her property and
knows its worth is permitted to testify as to its value with-
out further foundation.21 This principle rests upon the owner’s
familiarity with the property’s characteristics, its actual and
potential uses, and the owner’s experience in dealing with it.22
Similarly, a corporate officer may be competent to offer an opin-
ion of value, provided the officer is familiar with the property
and has knowledge of general values in the vicinity.23 When a
county board of equalization has determined the value of the
property, uniformly and impartially assessed through a formula
in substantial compliance with statutes governing taxation, for
reversal of the board’s action, a taxpayer must show more than
21 See, US Ecology v. Boyd Cty. Bd. of Equal., supra note 15; Livingston v.
Jefferson Cty. Bd. of Equal., 10 neb. App. 934, 640 n.W.2d 426 (2002);
Schmidt v. Thayer Cty. Bd. of Equal., 10 neb. App. 10, 624 n.W.2d 63
(2001).
22 Schmidt v. Thayer Cty. Bd. of Equal., supra note 21.
23 See Kohl’s Dept. Stores v. Douglas Cty. Bd. of Equal., supra note 19.
DARnAll RAnCH v. bAnnER CTY. bD. oF EQuAl. 	309
Cite as 276 neb. 296

a difference of opinion concerning the assessed value of the
taxpayer’s real estate.24
Gary resided in one of the subject properties and was the
president of the corporation which owned each of them. He did
not utilize the Marshall & Swift valuation system in arriving at
his opinions of the value of each property. His opinions were
based upon his knowledge of unidentified “other properties” and
“just a judgment call on my part of those experiences of having
bought property and sold property in this area.” He offered no
details of any valuation or sales of comparable residential prop-
erty. When asked on cross-examination how he arrived at the
value of the residence occupied by his family, he replied: “Well,
i don’t want to get into it, but i have my own little formula that i
use to — on depreciation and so forth. it has nothing to do with
the way the State does it or anybody else does and that’s what
i came up with.”
The record supports TERC’s finding that the taxpayer’s evi-
dence of actual value was not persuasive.
(d) External Depreciation
DRi argues that TERC erred in rejecting its argument that
external or “locational” depreciation should have been applied
in determining the value of lane’s house and the feedlot
house, due to their proximity to a cattle feedlot. This argument
has merit.
The nebraska Court of Appeals addressed this issue in
Livingston v. Jefferson Cty. Bd. of Equal.,25 which involved
the valuation of a rural home located less than 1 mile from the
owner’s hog farrowing facility. TERC affirmed the assessed
valuation of the home, and on appeal, the property owner argued
that TERC erred in rejecting any external depreciation based on
the proximity of the house to the hog facility. noting that “[t]he
whole concept of determining value must assume both a willing
buyer and [a willing] seller,” the court concluded:
24 Livingston v. Jefferson Cty. Bd. of Equal., supra note 21, citing Cabela’s,
Inc. v. Cheyenne Cty. Bd. of Equal., supra note 15.
25 Livingston v. Jefferson Cty. Bd. of Equal., supra note 21.
310 	276 nEbRASkA REPoRTS

it was arbitrary for the board and TERC to ignore
the effect that the nearby hog facility would have on the
house’s fair market value in the ordinary course of trade.
no reasonable fact finder could conclude that in the real
estate marketplace, a potential buyer would not notice,
and react economically, to having a large hog facility very
nearby while living in a remote location. Thus, the board’s
valuation, and TERC’s decision upholding that valuation,
was arbitrary and capricious.26
in an unpublished opinion,27 the Court of Appeals applied
Livingston to the 2002 valuation of the DRi property which we
refer to in this case as lane’s house. As in this case, Gary testi-
fied in that case that the home was located next to a 20,000-head
cattle feedlot, causing problems with trucks en route to and from
the feedlot, as well as dust and flies. He also testified that the
truck traffic caused the home to vibrate and that the well for the
home is connected to the cattle-watering facility. The Court of
Appeals held that because this competent evidence was undis-
puted, TERC’s decision upholding the board’s valuation for the
property was unreasonable and arbitrary. The court reversed that
portion of the TERC order and remanded the cause with direc-
tions to consider the proximity of the home to the feedlot in
decreasing its value.
At the TERC hearing in this case, the assessor acknowl-
edged that TERC ordered an adjustment in the 2002 and 2003
valuations of lane’s house due to its proximity to the feedlot.
However, she testified that no similar adjustment was made in
the 2004 valuation because she did not consider the home to
be “close enough to the feedlot that it has the problems that
the taxpayer contends.” As to the feedlot house, which she
acknowledged to be “actually in the feedlot,” the assessor testi-
fied that she did not apply any “locational depreciation” because
the house had “an 85 percent physical depreciation, which
means that it’s about worn out,” and that she was “not sure” an
26 Id. at 947, 640 n.W.2d at 437.
27 Darnall Ranch, Inc. v. Banner Cty. Bd. of Equal., no. A-04-199, 2005
Wl 780379 (neb. App. Mar. 22, 2005) (not designated for permanent
publication).
DARnAll RAnCH v. bAnnER CTY. bD. oF EQuAl. 	311
Cite as 276 neb. 296

additional depreciation allowance based upon location “would
make that much difference.”
[9] An administrative agency’s decision is arbitrary when it
is made in disregard of the facts or circumstances and without
some basis which would lead a reasonable person to the same
conclusion.28 it is undisputed that an external depreciation was
applied in determining the valuations of these properties for
2002 and 2003, but not for 2004. Gary’s description of the
problems associated with the location of lane’s house, situ-
ated approximately one-eighth mile from the feedlot and next
to its access road, is essentially the same as that summarized
in the prior case decided by the Court of Appeals. The board
produced no evidence to refute these facts, other than the
assessor’s unsubstantiated opinion that the property was not
“close enough” to the feedlot and a photograph which depicts
the home situated across the road from the feedlot. As to the
feedlot house, there is no competent evidence in the record to
support the assessor’s position that depreciation based on use-
ful life obviates the applicability of external depreciation based
on the feedlot. The board’s valuations of lane’s house and the
feedlot house and the affirmance by TERC were, for these rea-
sons, arbitrary and unreasonable.
4. equAlizAtioN
DRi argues that TERC erred in concluding that equalization
was not an issue on appeal because it had not been raised before
the board. our review of the record shows that equalization was
not raised or considered by the board in setting the 2004 valu-
ations for the subject properties. Equalization with respect to
the subject residential properties is not mentioned on the protest
forms filed by DRi or the summaries of the board’s disposition
of each protest. The record includes a transcript of the hear-
ing conducted by the board at which Emilie Darnall appeared
and spoke with respect to the protests. There is no reference to
equalization, although it appears that the transcription is incom-
plete. Emilie testified at the TERC hearing that she discussed
equalization when she appeared before the board, but could
28 See Phelps Cty. Bd. of Equal. v. Graf, supra note 16.
312 	276 nEbRASkA REPoRTS

not recall the specifics of her remarks in this regard. From this
record, it cannot be determined with any certainty that any spe-
cific issue pertaining to equalization was presented to the board,
either in the protest forms or the subsequent hearing.
DRi argues that TERC should nevertheless have considered
its equalization arguments under § 77-5016(7), which provides
that TERC “may determine any question raised in the proceeding
upon which an order, decision, determination, or action appealed
from is based” and further provides that TERC “may consider
all questions necessary to determine taxable value of property as
it hears an appeal or cross appeal.” We do not read this permis-
sive statutory language as requiring TERC to consider issues not
presented to a county board of equalization. based on our review
of the record, we conclude that TERC did not err in ruling that
equalization was not an issue on appeal.
V. ConCluSion
For the reasons discussed, we reverse the TERC order with
respect to the valuation of lane’s house, parcel 040001822, and
the feedlot house, parcel 040001830. As to those properties, we
remand the cause to TERC with directions to adjust the 2004
valuations by applying external, or “locational,” depreciation in
the same manner as in 2002 and 2003. in all other respects, we
affirm the TERC order.
A ffirmed iN pArt , ANd iN pArt reverSed
ANd remANded With directioNS.
STATE v. HEnSE 	313
Cite as 276 neb. 313
S tAte of N ebrASkA, AppellANt , v .
gleNN A. heNSe , Appellee .
753 n.W.2d 832
Filed August 1, 2008. 	no. S-07-875.
1. Statutes: Appeal and Error. Statutory interpretation presents a question of law,
for which an appellate court has an obligation to reach an independent conclusion
irrespective of the determination made by the court below.
2. ____: ____. Statutory language is to be given its plain and ordinary meaning, and
an appellate court will not resort to interpretation to ascertain the meaning of statu-
tory words which are plain, direct, and unambiguous.