Glen Wohl v. DOR

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BEFORE THE MONTANA TAX APPEAL BOARD FILED

OCT 15 2024
Yontana Tax Appeal Board
GLEN WOHL, CASE Ne: PT-2024-8
Appellant,
v. FINDINGS OF FACT,
CONCLUSIONS OF LAW, ORDER,
STATE OF MONTANA, AND OPPORTUNITY FOR
DEPARTMENT OF REVENUE, JUDICIAL REVIEW
Respondent.
STATEMENT OF THE CASE

This is an appeal of a final decision by the Missoula County Tax Appeal Board
(CTAB) denying Glen Wohl (Taxpayer) a reduction in value on the subject property
located at 3806 South Ave. West Missoula, Montana (Subject Property). The
Taxpayer appealed that outcome to Montana Tax Appeal Board (MTAB) on January
9, 2024. We uphold the CTAB’s determination.

ISSUE TO BE DECIDED
Whether CTAB erred in denying the Taxpayers’ request for a reduction in
value to the Subject Property.

EXHIBIT LIST
The Taxpayer attached the following exhibits to his notice of appeal:
1. Tabulation of Improved Sales, with property record cards and transfer
documents;
2. Oral appraisal dated January 24, 2024; and
3. Megan L. Garland and Kraig P. Kosena’s Appraiser’s Qualification, license

and insurance.

BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

The DOR submitted the following exhibits at the hearing:

A.

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Property Record Card;

Aerial Maps;

Classification and Appraisal Notice;
Calculation of Value;

Missoula Warehouse Model Output;
Land Model Summary;

Full Land Model;

Income Model; and

2023 DOR unloaded and overall cap rates.

PROCEDURAL HISTORY

The DOR valued the Subject Property at $996,400 for the 2023/2024 appraisal
cycle, with the land valued at $224,185 and the improvements valued at $772,215. Ex.
A. The Taxpayer appealed the DOR’s valuation to the CTAB on July 27, 2023,

requesting a

total value of $750,000. MTAB Dkt. 3. The CTAB hearing was held on

December 19, 2023, and the CTAB’s decision denying the Taxpayer’s application for

reduction was signed on December 22, 2023. Id. The Taxpayer appealed to MTAB on

January 29, 2024, per Mont. Code Ann. § 15-2-301, requesting a total value of
$760,000. MTAB Dkt. 1. The MTAB hearing was conducted in Helena on July 18,
2024. Before the beginning of testimony, the Board granted a motion by the DOR to
seal all confidential sales prices in evidence. MTAB Dkt. 10; MTAB Hr’g Tr. 5:1-16.

The following were present at the MTAB hearing:

a.

Kristina Warren, DOR Counsel; Cindy McGinnis, Paralegal; Helen
Greenberg, Lead Appraiser; Jason Stevens, Modeler; and Michelle
Staples, Area Manager.

The Taxpayer did not attend the MTAB hearing. The Taxpayer was
offered a Zoom telephonic option but did not join.

The record includes all materials submitted to CTAB, a recording of the CTAB

hearing, all materials submitted to MTAB with the appeal, additional exhibits

BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

submitted by the parties prior to and at the MTAB hearing, and a transcript of the
MTAB hearing.

FINDINGS OF FACT
1. To whatever extent the following findings of fact may be construed as

conclusions of law, they are incorporated accordingly.

2. The Board held a telephonic scheduling conference on March 7, 2024. MTAB
Dkt. 2. During the call, the Board agreed to let the Taxpayer appear
telephonically at the July 18, 2024, hearing. The Board scheduled a test call for
July 15, 2024, to test the Zoom technology for the Taxpayer’s convenience, in
which the Taxpayer did not participate. Later that day, the Board received a
letter from the Taxpayer dated July 11, 2024, requesting that the Board decide
the appeal by reviewing all documents submitted and testimony at CTAB.
MTAB Dkt. 7. The Taxpayer stated in his letter that he had no additional
information to offer. Jd. The Board issued an order stating that the MTAB
hearing would still be held on July 18, 2024. The Taxpayer did not attend in
person or by telephone. MTAB Dkt 8.

3. The Subject Property is a commercial property owned by Glen Wohl in
Missoula County. Ex. A. The Subject Property is located at 3806 South Avenue
West, Missoula, Montana, and is identified by its geocode 04-2199-25-3-08-
03-0000. Jd. The Subject Property’s land encompasses 1.360 acres which

includes six mini storage structures with various sized units. Jd.

4. The DOR valued the Subject Property at $996,400 for tax years 2023 and 2024,
allocating $224,185 for the land and $772,215 for the improvements. MTAB
Dkt. 3. At the December 19, 2023, CTAB hearing, the Taxpayer requested
$750,000 for a total value. Jd. The CTAB denied the Taxpayer’s request for a
value reduction. Jd. The Taxpayer appealed this decision to MTAB on January

BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

29, 2024, requesting that the total market value for the Subject Property be
$760,000. Id.

The Taxpayer hired a licensed appraiser, Megan Garland of Kembel Kosena &
Company, to perform an appraisal of the Subject Property and present her
findings during the CTAB hearing. MTAB Dkt. 1; CTAB Hr’g 1:16-1:33. Ms.
Garland testified that the information provided to the CTAB and marked as
CTAB Exhibit 3 is a consultation of comparable sales to the Subject Property
tabulated into a list of six sales. MTAB Dkt. 1, 3; CTAB Ar’g 1:18-1:32.

Ms. Garland testified during the CTAB hearing that the comparable sales have
square foot pricing selling from $40.00 to $103 per square foot. CTAB Hr’g
1:32-1:39. Using a regression model, Ms. Garland plotted the Subject Property
as a midlife property valued at $39.00 per square foot. CTAB Hr’g 2:11-2:48.
The comparables selected were located not only in Missoula, but also other
surrounding counties. CTAB Ex. 4. Ms. Garland testified that the location of her
comparable sales does not affect their compatibility with the Subject Property
because they all receive approximately identical rent amounts. CTAB Ex. 4;

CTAB Hr’g 3:33-4:20.

The Taxpayer testified at the CTAB hearing that the Subject Property has a low
fence and no gates. CTAB Hr’g 12:03-13:15. Additionally, it lacks other

standard security measures typical of other mini warehouses. Jd.

The Taxpayer did not introduce any evidence or testimony during the MTAB
hearing. Since the Taxpayer did not attend the MTAB hearing, the DOR’s

arguments were not refuted.

At the MTAB hearing, DOR Lead Appraiser, Helen Greenberg, testified that
the Subject Property was valued using the income approach. MTAB Hr’g Tr.

10.

11.

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL y. STATE OF MONTANA, DEPARTMENT OF REVENUE

9:6-8. The income approach is the DOR’s preferred method of valuing
commercial properties because it represents market value which is what an
investor would consider when evaluating a property. MTAB Hr’g Tr. 10:18-24.
The DOR did value the Subject Property at $994,425 using the cost approach to
value. MTAB Hr’g Tr. 11:1-8. The DOR did not use the sales comparison
approach because commercial properties are unique, and it is hard to develop
an effective comparable sales model. MTAB Hr’g Tr. 1]:14-23. Ms. Greenberg
also stated that no mini storage properties in Montana are valued using the

sales comparison method. Jd.

When valuing a property using the income approach, only one total value is
determined which is then apportioned between the land and buildings. MTAB
Hr’g Tr. 12:10-13:25. The land value is first determined using comparable

sales, and the remaining value is apportioned to the improvements. Jd.

Ms. Greenberg testified that she assigned the Subject Property a rent rating of
$7.00 per square foot. Ex. D; MTAB Hr’g Tr. 14:11-15:2. The $7.00 per square
foot was multiplied by 19,440, the building’s square footage, to get a potential
gross income of $136,080. Jd. An allowance of $14,697 to account for vacancy
and collection was subtracted to get an effective gross income of $121,383. Jd.
Next, expenses amounting to $40,178 were subtracted from the effective gross
income to get the net operating income of $81,205. Jd. Lastly, the net operating
income was divided by the overall capitalization rate of 8.15% to get the final

value of $996,400. Id.

DOR Modeler, Jason Stevens, testified that he develops rent ratings using
reported data from taxpayers. MTAB Hr’g Tr. 24:13-25:15. The rent ratings
were created using 17 similar properties from the Missoula area. MTAB Hr’g
Tr. 26:1-27:23. The rent rating is determined using a mini warehouse multiple

regression analysis. Ex. E, G, H; MTAB Ar’g Tr. 24:13-25:15. Mr. Stevens

13.

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL vy. STATE OF MONTANA, DEPARTMENT OF REVENUE

testified that he checked the accuracy of the model by comparing it to other
markets. Jd. The rent rating developed by the DOR ranges from $3.50 to
$10.50. Jd. The Subject Property is assigned a rent rating of six or $7.00 per
square foot. Ex. I, E; MTAB Hr’g Tr. 24:13-25:15.

The DOR develops three urban capitalization rates, and the Subject Property
was assigned the middle urban capitalization rate of 8.15%. MTAB Hr’g Tr.
15:22-16:17. The capitalization rate is determined by looking at commercial
property sales in the “Big Seven” urban areas and dividing the sales price by
the operating income. /d. An overall capitalization is the capitalization rate plus
the effective tax rate. MTAB Hr’g Tr. 18:6-14. The DOR does not allow taxes
to be used as an expense in the income approach and taxes are instead added to

the capitalization rate to get an overall capitalization rate. /d.

Ms. Greenberg testified that she reviewed the Taxpayer's comparable properties
and agreed that the comparable properties in Ravalli County might have similar
construction costs, but their investment and cash flow are not

comparable. MTAB Hr’g Tr. 12:2-9. Additionally, the comparable properties
used by the Taxpayer were much smaller units or were located in different
markets areas. MTAB Hr’g Tr. 22:19-23:2. DOR Area Manager, Michelle
Staples, testified that there are multiple differences between the Subject
Property and the comparable properties used by the taxpayer such as age,
market location, and that some were sold after the 2023/2024 common

statewide lien date MTAB Hr’g Tr. 32:21-33:3.

Ms. Greenberg testified that the Taxpayer did not report his income and

expense information to the DOR and therefore it was not used in developing
the model used to value the Subject Property. MTAB Hr’g Tr. 15:5-21. Ms.
Greenberg testified that the Subject Property’s value increased by 36% from

16.

17.

18.

18,

20.

21.

BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

the previous 2021/2022 valuation cycle and is consistent with taxable value

increases in the Missoula area. MTAB Hr’g Tr. 21:17-22:5.

Ms. Staples gave uncontested testimony that she views the appraisal presented
by the Taxpayer during the CTAB hearing as more of a comparative market
analysis and that it fails to include the scope of a full appraisal. MTAB Hr’g Tr.
311-8.

JURISDICTION AND STANDARD OF REVIEW
The Montana Tax Appeal Board is an independent agency not affiliated with
the Montana Department of Revenue. Mont. Const., Art. VIII $ 7; Mont. Code
Ann. § 15-2-101. The Taxpayer filed a timely appeal of the DOR’s decision to
the MTAB. Therefore, this Board maintains jurisdiction to hear and decide this
matter. Mont. Code Ann. § 15-2-301.

This Board may hear appeals de novo. Dept. of Revenue v. Burlington N., 169
Mont. 202, 213-14, 545 P.2d 1083 (1976). “A trial de novo means trying the
matter anew, the same as if it had not been heard before and as if no decision
had been previously rendered.” McDunn vy. Arnold, 2013 MT 138, § 22, 370
Mont. 270, 275, 303 P.3d 1279, 1282.

The Board’s order is final and binding upon all parties unless changed by

judicial review. Mont. Code Ann. § 15-2-301(6).

CONCLUSIONS OF LAW
To whatever extent the following conclusions of law may be construed as

findings of fact, they are incorporated accordingly.

“All taxable property must be appraised at 100% of its market value....” Mont.
Code Ann. § 15-8-111.

22.

23.

24.

25.

26.

BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL y, STATE OF MONTANA, DEPARTMENT OF REVENUE

“I]n connection with any appeal under [Mont. Code Ann. § 15-2-301], the
Montana board is not bound by common law and statutory rules of evidence or
rules of discovery and may affirm, reverse, or modify any decision. To the
extent that this section is in conflict with the Montana Administrative
Procedure Act, this section supersedes that act.” Mont. Code Ann. $ 15-2-
301(5).

DOR is entitled to a “presumption of correctness if its decisions are pursuant to
an administrative rule or regulation, and the rule or regulation is not arbitrary,
capricious or otherwise unlawful.” Burlington N., 169 Mont. at 214, 545 P.2d
at 1090. However, DOR cannot rely entirely on the presumption in its favor
and must present a modicum of evidence showing the propriety of their action.

Western Air Lines v. Michunovich, 149 Mont. 347, 353, 428 P.2d 3, 7 (1967).

The Taxpayer bears the burden of proving the error of DOR’s decision.
Farmers Union Cent. Exch. v. Dep’t of Revenue, 272 Mont. 471, 476, 901 P.2d
561, 564 (1995); Western Air Lines, 149 Mont. at 353, 428 P.2d at 7.

“* Assessment formulations’ by [the Montana Tax Appeal Board] should be
upheld unless there is a clear showing of an abuse of discretion.” Peretti v.
Dep’t of Revenue, 2016 MT 105, 4 15, 383 Mont. 340, 344, 372 P.3d 447, 450
(citing O’Neill v. Dep’t of Revenue, 2002 MT 130, § 23, 310 Mont. 148, 155,
49 P.3d 43, 47); see Northwest Land & Dev. v. State Tax Appeal Bd. , 203
Mont. 313, 317, 661 P.2d 44, 47 (1983) (overruled on other grounds by DeVoe
v. Dep’t of Revenue, 263 Mont. 100, 866 P.2d 228 (1993)).

The term “improvements” includes all buildings, structures, fences, and

improvements situated upon, erected upon, or affixed to land. Mont. Code Ann.

§ 15-1-101(1)().

27.

28.

29.

BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

Except as provided in subsection (3)(b), the Montana tax appeal board shall
consider an independent appraisal provided by the taxpayer if the appraisal meets
standards set by the Montana board of real estate appraisers and the appraisal
was conducted within 6 months of the valuation date. If the Montana board does
not use the appraisal provided by the taxpayer in conducting the appeal, the
Montana board shall provide to the taxpayer the reason for not using the

appraisal. Mont. Code Ann. § 15-2-301(a).

The Legislature intended the Department to utilize a number of different
approaches or combination of approaches, including the income approach,
sales comparison approach, and cost less depreciation approach, depending on
the market where the appraisals take place, when it assesses property and
estimates market value. Albright v. State, 281 Mont. 196, 208-09, 933 P.2d
815, 823 (1997).

DISCUSSION
The Taxpayer presented a two page oral appraisal to the Board. For an
appraisal to be considered a valid independent appraisal, it must have been
conducted according to the Montana Board of Real Estate Appraisers standards
and conducted within six months of January 1, 2022, the DOR’s lien date for
the 2023/2024 tax cycle. In his MTAB filing, the Taxpayer submitted his two-
page oral appraisal dated January 24, 2024, well after the DOR’s lien date. At
the CTAB hearing, the Taxpayer’s witness and certified appraiser, Ms.
Garland, testified that she had only performed a consultation and had compiled
a list of tabulated sales comparable to the Subject Property. Ms. Staples
testified at the MTAB hearing that the Taxpayer’s exhibit was a market
comparative analysis and lacked the scope of a full appraisal. Because of the
facts presented, the Board did consider the Taxpayer’s market analysis. The
Board does not believe the Taxpayer’s appraisal meets the standards of
Montana Code Ann. § 15-2-301(3)(a) and was not given the weight of an

independent appraisal.

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

The Taxpayer argued, at CTAB, that the Subject Property should be valued at
$39.00 per square foot. The $39.00 per square foot value was determined using
regression analysis, valuing the Subject Property as midlife property. The
Taxpayer entered the regression curve into evidence at the CTAB hearing. The
DOR also used regression analysis to determine the Subject Property’s rent
rating of $7.00 per square foot. While the Taxpayer’s regression Taxpayer’s
model arrived at a sale price per square foot and the DOR’s model arrived at a
rent rating, the Board found the DOR model more credible. Mr. Stevens built
the model, presented uncontested testimony on how the model functioned, and

the model was checked for accuracy.

The Board found the Taxpayer’s regression analysis less credible because of
the comparable properties used by Ms. Garland. Many of the comparables used
by the Taxpayer were significantly smaller than the Subject Property and were
after the DOR lien date of January 1, 2022, for the 2023/2024 tax cycle.
Additionally, several of the comparable properties are in different market areas.
At the CTAB hearing, Ms. Garland testified that the comparable properties
receive similar rents and would, therefore, still be comparable. The Board
heard credible, uncontested testimony from Ms. Greenberg about how the
construction cost may be similar, but the investment and rent differed

considerably depending on the location of the comparable properties.

The DOR's use of the income method to value the Subject Property was proper
and the best indicator of market value. The Board agrees that a potential
investor would look at the projected income of a property before investing. The
Board also acknowledges that the DOR had few mini warehouse sales and the
fact that the sales fluctuate in size, type of construction and location makes it
hard to create a reliable sales comparison model. The Board finds the rent

rating of 6 assigned to the Subject Property, also shown as $7.00 per square

10

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

foot, was proper. The middle cap rate of 8.5% was developed using sales from
the biggest markets in Montana and is a reasonable measure of risk for the
Subject Property. Lastly, the Board felt the urban middle capitalization rate was
justified for the Subject Property's age, condition, and security.

The Taxpayer testified at the CTAB hearing about the Subject Property’s lack
of security infrastructure and technology. The Board did not receive
conclusive, credible evidence to warrant a reduction for these alleged

deficiencies.

The Taxpayer did not provide sufficient evidence to overcome the burden and
did not demonstrate to the Board that the DOR’s valuation was incorrect. The

Board upholds the CTAB determination.

11

BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

ORDER
35. Taxpayer’s appeal is denied.

36. The DOR will value the Subject Property at $996,400 for the 2023-2024 tax

cycle.

Dated this 15" day of October 2024.

ped Meet ——

David L. McAlpin, Chairman

OR 3 =

Amie Zendron, Member

an Le So

Travis Brown, Member

Notice: You are entitled to judicial review of this Order by filing a petition in district
court within 60 days of the service of this Order. The Department of Revenue shall
promptly notify this Board of any judicial review to facilitate the timely transmission

of the record to the reviewing court. Mont. Code Ann. §15-2-303(2).

12

BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

Certificate of Service

I certify that I caused a true and correct copy of the foregoing Findings of Facts and
Conclusions of Law to be sent by email and United States Mail via Print & Mail

Services Bureau of the State of Montana on October 15, 2024, to:

Glen Wohl
2610 Glen Drive
Missoula, MT 59804

Kristina K. Warren

State of Montana, Department of Revenue
Legal Services Office

P.O. Box 7701

Helena, MT 59604-7701

Paula Gilbert

State of Montana, Department of Revenue
Property Assessment Division

P.O. Box 8018

Helena, MT 59604-8018

Cyndie Aplin

Missoula County Tax Appeal Board
c/o 1015 Washburn St.

Missoula, MT 59801

Yee

Rina Sanderson, Legal Secretary

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