Evan Danno RLT v. Department of Revenue,

OCR transcription for search; preserved printed pages are authoritative

BEFORE THE MONTANA TAX APPEAL BOARD a
AUG 15 2022

montana Tax Appeal Board

EVAN DANNO REVOCABLE CASE Ne: PT-2021-42
LIVING TRUST,
FINDINGS OF FACT,
Appellant, | CONCLUSIONS OF LAW, ORDER,
AND OPPORTUNITY FOR
v. JUDICIAL REVIEW
STATE OF MONTANA,
DEPARTMENT OF REVENUE,
Respondent.
STATEMENT OF THE CASE

This is an appeal of a final decision by the Flathead County Tax Appeal Board
(CTAB) granting the Evan Danno Revocable Living Trust, represented by Evan
Danno, (Taxpayer) a partial reduction in value on the subject property located at 144
Highland Ridge Drive, Kalispell, Montana. The Taxpayer timely appealed that
outcome to the Montana Tax Appeal Board (MTAB) on December 28, 2021. We
affirm the CTAB’s determination.

ISSUE TO BE DECIDED
Whether the CTAB erred in arriving at a building and improvements value of

$647,630 and whether the DOR’s one acre land value of $80,750 is correct.

EXHIBIT LIST
The following evidence was submitted at the hearing:
Taxpayer Exhibits:

1. AB-26 Request for Information Classification and Appraisal Review
2. 2021 Revised Classification and Appraisal Notice

a) Appeal to the CTAB

b) CTAB Decision
3. Mont. Code Ann. § 15-8-111

BEFORE THE MONTANA TAX APPEAL BOARD
EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

a) Mont. Code Ann. § 15-2-301

4. Property Owner’s Comparable Sales

5. Pictures of Known Material Defects

6. Land Comparable Sales

7. Fee Appraisal by Travis Peterson
DOR Exhibits:

A. Property Record Card of subject

8 color photos of subject property
Aerial photo of subject property area
Land Value Comparables

VRBO Listing

AB-26 Determination Letter

msm oOo w

PROCEDURAL HISTORY

The Taxpayer received his notice of valuation assessment from the DOR
setting the property value for 2021/22 at $799,030 with a home and garage value of
$717,630, a one-acre homesite land value of $80,750, and the remaining acreage of
11.75 acres which is classified as non-qualified agricultural land value of $650. Ex. 2.
The Taxpayer filed an AB-26 request for an informal classification and appraisal
review which resulted in a land value reduction to the one-acre homesite. MTAB Hrg.
Tr. 47:12-24; Ex. F. On November 2, 2021, the Taxpayer filed another AB-26 request
for an informal classification and appraisal review. Ex. 1.

The Taxpayer then appealed to the CTAB on November 4, 2021, and a hearing
was held by the CTAB on December 8, 2021. The CTAB granted a partial reduction
in value for the improvements to $657,630 to reflect discoloration of the metal roofing
and fading of some of the siding of the home and garage. MTAB Dkt. 1.

The Taxpayer timely appealed to the MTAB on December 28, 2021, per Mont.
Code Ann. § 15-2-301. /d. During the exchange of information phase of the appeal,
the parties had two discovery disputes. The first was regarding the disclosure of a fee
appraisal of the subject property the Taxpayer requested from a licensed Montana

appraiser. MTAB Dkt. 8. The DOR objected that the fee appraisal was not disclosed

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BEFORE THE MONTANA TAX APPEAL BOARD
EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

until the deadline for disclosure of witnesses and exhibits, despite DOR having
requested any information regarding a fee appraisal during discovery. MTAB Dkt. 8.
During the hearing the DOR did not object to introduction of the fee appraisal and the
Board accepted it into evidence. MTAB Hrg. Tr. 14:20-23. The second discovery
dispute was regarding the DOR’s disclosure of two hybrid witnesses. Prior to the
hearing, the Taxpayer filed a motion with the Board to exclude the DOR’s only
witnesses based on lack of disclosure of what those witness would testify to during the
hearing. MTAB Dkt. 9. After receiving the response from the DOR and the Taxpayer’s
reply, the Board ruled that the DOR fulfilled the witness disclosure requirements and
allowed the witnesses to testify as hybrid witnesses. MTAB Dkt. 10-12. The MTAB
hearing was conducted in Helena on May 17, 2022, at which the following were
present: |

a. Evan Danno, Taxpayer Representative (via zoom); Travis Peterson, Fee

Appraiser (via zoom).
b. Kristina Warren, DOR Counsel; Dawn Cordone, DOR Area Manager

(via zoom); and Doug Wilkinson, Commercial Appraiser (via zoom).

The record includes all materials submitted to CTAB, a recording of the CTAB
hearing, all materials submitted to MTAB with the appeal, exhibits 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. By disclosing three potential witnesses during the initial phase of discovery,
naming them as hybrid witnesses, and disclosing them according to the
scheduling order on May 5, 2022, the DOR complied with the scheduling
order. MTAB procedures are less formal than District Court and the Board is

reliant on the testimony of the DOR appraisers and managers who typically

BEFORE THE MONTANA TAX APPEAL BOARD
EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

serve as hybrid witnesses. The Board’s practice is to thoroughly question the

witnesses and allow taxpayers adequate time to cross examine witnesses.

3. The 11.75 acres of non-qualified agricultural land are included in the property
geocode but are not in controversy in this valuation dispute. The land value
disputed is a one-acre homesite which is required to be valued at market value.
MTAB Hrg. Tr. 4:8-11; Mont. Code Ann. § 15-6-134(1)(c); Mont. Admin. R.
42.20.655(2).

4. The subject property is approximately 15 miles east of Kalispell, not in a

subdivision, with a gravel road that the homeowner must maintain. MTAB Arg.

Tr. 13:14-24; Ex. 7, at 8.

5. The Taxpayer’s witness is Travis Peterson, a real estate appraiser and real
estate agent who has been a licensed appraiser in Montana since December of
2004 and a real estate agent since 1994. MTAB Arg. Tr. 8:4-11, Taxpayers Ex.
7.

6. Mr. Peterson appraises approximately 350 to 400 residences a year and has
conducted approximately 5,000 to 6,000 residential appraisals. MTAB Arg. Tr.
9:1-5.

7. Mr. Peterson was first contacted about conducting an appraisal by the Taxpayer
between January and March of 2022. MTAB Arg. Tr. 18:24-19:6. He was paid
$600 to conduct the appraisal, which is his normal fee. MTAB Arg. Tr. 19:7-14.

8. Mr. Peterson visited the property on April 15, 2022, but did not visit the
property in 2020, the effective year of appraisal, though he had visited the
property in either 2012 or 2014. MTAB Hrg. Tr. 21:12-16.

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST vy. STATE OF MONTANA, DEPARTMENT OF REVENUE

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Mr. Peterson conducted a residential appraisal and created an appraisal report
for the one-acre homesite, and all improvements located on that one acre of the
Danno Trust Property, dated April 15, 2022. The appraisal effective date was
January 1, 2020, to match the same date used by DOR statewide for the
2021/2022 valuation cycle. Peterson testified he utilized the Montana Board of
Real Estate Appraisers standards. MTAB Hrg. Tr. 9:6-25; Ex. 7, at 5.

The cover letter in the appraisal report states that the appraisal.is only for use
by Mr. Danno and “[n]o third parties are authorized to rely upon this report
without [Mr. Peterson’s] express written consent.” MTAB Hrg. Tr. 19:21-20:3;
Ex. 7, at 3. Mr. Peterson said that he could change that to include the DOR and

MTAB. Id.

One special condition accepted by the appraiser and disclosed in his appraisal
notes states: “At the clients (sic) request the property was valued on 1 acre
which includes all the improvements.” Ex. 7, at 3. This was presumably so the
fee appraisal was comparing the same land as the DOR appraisal in that the
value arrived at by both parties for purposes of the tax appeal did not include

the entire 12.75 acres of the geocode.

Mr. Peterson included 14 photographs of the property in his appraisal report
that he took on April 15, 2022. MTAB Hrg. Tr. 12:10-13:11; Ex. 7, at 15-18.

Relying upon the comparable sales approach to appraise the property, Mr.
Peterson arrived at a total value for the improvements and the one-acre
homesite of $550,000 as of January 1, 2020. MTAB Arg. Tr. 10:5-11; Ex. 7, at
4. To arrive at this value, Mr. Peterson searched for comparable property sales
that he felt were like the subject property, of which he included four within his
report. MTAB Hrg. Tr. 10:14-18; Ex. 7, at 7, 12. He based his comparable

search on room count, square footage, and site size, which he then adjusted to

the subject property. Jd.

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST vy. STATE OF MONTANA, DEPARTMENT OF REVENUE

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Mr. Peterson selected the four comparable sales he used through the MLS
database. MTAB Hrg. Tr. 14:17-19; Ex. 7, at 7, 12. Mr. Peterson initially
pulled 18 property sales with sale prices between $500,000 and $850,000, from
within the subject neighborhood that sold within the 12 months preceding the
January 1, 2020, effective date. MTAB Arg. Tr. 22:16-23:6; Ex. 7, at 7, 12. Mr.
Peterson chose four comparables from those 18 that he argued were most like

the subject property. Jd. MTAB Hrg. Tr. 22:16-23:6; Ex. 7, at 8.

None of the four comparables had sold in the 12 months preceding the January

1, 2020, statewide lien date. MTAB Hrg. Tr. 23:20-24; Ex. 7, at 7.

Mr. Peterson chose comparables that were older than the subject property with
the intent of compensating for the six-year effective age of the subject property.

MTAB Arg. Tr. 23:7-19; Ex. 7, at 6-7, 12.

Mr. Peterson testified that land values are similar on both the west and east

sides of Kalispell. MTAB Arg. Tr. 18:8-21.

Using the cost approach as an acceptable alternative method of valuation to the
comparable sale method, Mr. Peterson found a cost value of $598,250 for the
subject property. MTAB Hrg. Tr. 10:19-21; Ex. 7, at 8.

Mr. Peterson argued that the sales approach is the best approach to value this

property as it is market driven, and therefore the most reliable. MTAB Hrg. Tr.
10-22-25.

Mr. Peterson testified that he felt that the DOR’s value of $799,030 using the
cost approach for the improvements was too high as of January 1, 2020. MTAB
Arg. Tr. 11:1-5.

BEFORE THE MONTANA TAX APPEAL BOARD
EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

21. The Taxpayer argued several material defects affecting the home, totaling
$115,000 in reduced value: 1) faded touch up paint on his metal roof, $40,000;
2) a ceiling ventilation problem that causes interior condensation in the ceiling
and leaking, $10,000; 3) high radon gas levels which required remediation
$5,000, 4) sun faded siding on south facing sides of the home and garage,
$20,000; 5) faded and rotting pine decking, $10,000; 6) an unfinished laundry
area, $10,000; and 7) some defective windows on the home, which have
developed condensation between the panes of glass over time allegedly due to
defective seals, $20,000. MTAB Arg. Tr. 26:9-28:17, 29:14-18; Ex. 5; MTAB
Dkt. 4, at 25-26.

22. He claimed these problems had not been taken into consideration by the DOR
when determining the value of his property. MTAB Arg. Tr. 26:6-9; Ex. 5.
MTAB Hrg. Tr. 26:9-28:17, 29:14-18; Ex. 5. The Taxpayer argues that he
would be legally bound to disclose all these defects to a potential buyer. MTAB
Hrg. Tr. 27:17-28:2.

23. The Taxpayer stated that despite having installed a radon mitigation system in
the home, the home is still subject to higher-than-normal levels of radon.

MTAB Arg. Tr. 34:21-25.

24. The Taxpayer testified he has not requested that the window provider replace
all 93 of the defective windows because they are no longer under warranty and
the window manufacturer is replacing them without charge as the windows fail.

MTAB Firg. Tr. 35: 1-13.

25. The Taxpayer did not introduce receipts, invoices, or bids for the cost to cure
the material defects he alleges and determined the requested discount based on

his personal experience as a homeowner. MTAB Hrg. Tr. 34: 16-20.

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

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Mr. Wilkinson contends that if the Taxpayer had provided estimates for a cost
to cure the defects he alleges, the DOR would have evaluated them and may

have reduced his value to reflect the estimate. MTAB Hrg. Tr. 52:7-18.

Ms. Cordone testified that typically, if a Taxpayer can provide documentation
regarding defects that support a value reduction, the DOR will reduce the
value. MTAB Arg. Tr. 6871-5.

Mr. Peterson testified that though he is not a home inspector, he would possibly
be able to notice material defects in the roof or siding that was on the exterior

but not on the interior. MTAB Arg. Tr. 20:4-7; Ex. 7, at 3.

Mr. Petersen testified that he accounted for the material defects the Taxpayer
alleges through the overall condition determination and the effective age he
selected, not through line-item adjustments in his appraisal. MTAB Hrg. Tr.
11:8-24; Ex. 7, at 6. However, he also posited that a formal property inspection
could reveal material defects that could further affect the value of the property.
Id.

In the appraisal report, Mr. Peterson determined 2010 as the year built and
testified at the hearing that he set an effective age of six years for the subject
property. MTAB Hrg. Tr. 20:16-21:5; Ex. 7, at 6-7. He noted that the physical
depreciation is slightly higher than typical. Jd. Mr. Peterson testified that a few
things throughout the house needed repair, including the siding, which was
faded more than an average 10-year-old house. He estimated that a typically

maintained 10-year-old home would have an effective age around three to four

years. Id.

The appraisal report states that the improvements are in average condition and

that they have been adequately maintained. MTAB Hrg. Tr. 21:6-11; Ex. 7, at

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

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6. Mr. Peterson testified that most houses in the price range of the subject

property have been well maintained rather than adequately maintained. Id.

Mr. Peterson testified that when discussing adequately maintained versus well
maintained wood siding, he would consider well maintained wood siding in
similar conditions to the subject property to be re-stained every three to four
years while the subject property has not been re-stained since being built.

MTAB Hrg. Tr. 24:1-18.

The home includes a full bathroom on the basement level, and one and a half
baths on the main level. MTAB Hrg. Tr. 15:8-11; Ex. 7, at 7. The accessory
unit also has a bathroom. MTAB Arg. Tr. 15:11-24; Ex. A, at 18. Peterson
testified the value added by the accessory unit is accounted for in the appraisal
under additional improvements because the grids are not set up to break out
accessory units to account for their value. /d. Mr. Peterson testified that he
assigned a value for all the bathrooms in the subject property. Jd. The fee
appraisal does not include any data to support the testimony that the accessary

apartment bathroom was included in the value of the improvements.

Mr. Peterson testified that he did measure and account for the living space in
the accessory apartment, though he did not grid the accessory apartment nor
was he aware of what size the DOR had measured the accessory apartment.
MTAB Hrg. Tr. 16:11-20. The fee appraisal does not include an accounting for

the square footage of the accessary apartment.

The square footage of living space utilized by Mr. Peterson for the home is
different than the square footage used by the DOR. MTAB Hrg. Tr. 16:5-10;
Ex. 7, at 7. Mr. Peterson testified that it is common for appraisers and the DOR
to have different square foot values because the DOR often does not measure

inside the homes. /d. He contends that he measured the property and that his

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

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measurements reflect 2,563 square feet above grade level and 1,588 square feet

below grade level. Id.

The Q ratings used by Mr. Peterson rate quality and are based on quality of
construction. MTAB Hrg. Tr. 17:14-18:6; Ex. 7, at 7, 12. The Q ratings give a
starting value, but adjustments can be made within the same Q ratings. Jd. For
example, though comparables one and four had the same Q rating as the subject
property, comparable one’s value was increased by ten dollars! per square foot
because Mr. Peterson felt that comparable one was inferior to the subject
property, while comparable four’s value was decreased because he felt it was

superior to the subject property. Jd.

In the appraisal report, Mr. Peterson noted that the subject home had not been
updated in the last 15 years, even though the house was built less than 15 years
ago. MTAB Arg. Tr. 21:17-22:2; Ex. 7, at 6. He testified that the timeframes
are part of the standard form which asks if the home has been updated in less

than one year, one to five years, five to 10 years, or 10 to 15 years. Id.

Mr. Peterson has a work file for this appraisal. MTAB Arg. Tr. 19:15-20. He
testified that the Taxpayer did not request the work file nor was he aware that

the DOR had requested the work file through discovery. Jd.

The Taxpayer argued that he does not have to disclose that he ordered an
appraisal and that he only must provide it if he intends to use it at the hearing.

MTAB Hrg. Tr. 33:19-34:15.

Mr. Peterson testified that if this appraisal was produced for a bank, the

conclusions and valuations would remain the same. MTAB Hrg. Tr. 20:8-15.

1 The appraisal report states that comparable one’s value was increased by $20 per square foot but Mr. Peterson
testified that was a typo and the actual adjustment to comparable one was an increase of $10 per square foot.

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BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

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The only difference would be whether it was a purchase or refinance

transaction. /d.

The Taxpayer argued that under Mont. Code Ann. § 15-8-111, market value is
defined as “the value between a willing seller and a willing buyer, both having
knowledge of relevant facts including known material defects,” and real estate
agents must disclose all material defects, therefore a buyer makes his decision
based on the disclosure of the material defects. MTAB Hrg. Tr. 25:7-16; Ex. 3.
The same statute requires that comparable properties used in the sales

comparison approach must be within “acceptable proximity” of the subject

property. Jd.

The Taxpayer also testified to the content of Mont. Code Ann. § 15-2-301
which states that the taxpayer provided appraisals of residential property are
“presumed to establish assessed value in the state board proceeding” if
Montana Board of Real Estate Appraisers’ standards are complied with. MTAB
Hrg. Tr. 25:19-23; Ex. 3a.

Mr. Wilkinson testified he last visited the subject property on October 1, 2019,
when he met with the Taxpayer in the main living area of the home and

discussed the characteristics of the house with Mr. Danno. MTAB Hrg. Tr.
37:4-12.

The one-acre parcel of land under the improvements is valued separately from

non-qualified agricultural land per ARM 42.20.655. MTAB Hrg. Tr. 38: 11-15.

The DOR’s witness, Mr. Wilkinson, valued the improvements using the cost
approach and stated that all improvements that are on non-qualified agricultural

land must be valued using the cost approach. MTAB Hrg. Tr. 36:20-37:3.

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BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

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Mr. Wilkinson testified that it is ARM 42.20.655 that requires the DOR to
utilize the cost approach when valuing improvements on non-qualified
agricultural land. MTAB Arg. Tr. 52:20-23. However, he did not know of any
statutory authority that requires the use of the cost approach to value the

improvements on the non-qualified agricultural land. MTAB Arg. Tr. 55:22-24.

Ms. Cordone testified all improvements on non-qualified agricultural land

statewide are valued using the cost method. MTAB Hg. Tr. 72:19-20.

The Taxpayer argued that the DOR and the CTAB erred by using the cost
method without evidence of market conditions. MTAB Hrg. Tr. 28:15-20. The
Taxpayer contends that DeVoe v. Department of Revenue is applicable in this
case because the Montana Supreme Court held “that evidence of construction
costs alone, without consideration of any market factors, does not satisfy the
requirement of § 15-8-111(1), MCA, that the assessed value equal market
value.” 263 Mont. 100, 112, 866 P.2d 228, 235 (1993). He argues that the DOR
only used the cost method without considering any market factors. MTAB Hrg.
Tr. 28:25-29:1.

According to Ms. Cordone, the DOR performs a market sales analysis to
identify comparable sales even when utilizing the cost approach to create a

defensible and reasonable value. MTAB Hrg. Tr. 61:17-62:6.

Ms. Cordone testified that MCA § 15-8-111 requires that the DOR defend the
cost approach conclusion of value as a market value. To do this, the DOR
makes market adjustments in the cost calculations. MTAB Hrg. Tr. 70:17-
71:19. The DOR also reconciles the cost method with the comparable sales
method to ensure the cost method is not overvaluing the subject by a

percentage that is too high. MTAB Hrg. Tr. 72:7-9.

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BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

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The Taxpayer contends that the DOR is incorrect in their assertion that they
must use the cost approach for non-qualified agricultural land and
improvements. MTAB Hrg. Tr. 29: 1-9. He also contends that because he
introduced comparable sales at the CTAB level, but the DOR did not, his

evidence was uncontroverted. Id.

Ms. Cordone testified that the cost approach is used in situations with
discounted land prices such as non-qualified agricultural land because there are
fewer sales of similar properties to consider. Further, she testified that unique
properties such as the subject fall outside normal market analysis, and in these
cases the cost approach is appropriate. She cited to Mont. Code Ann. § 15-7-
102 and § 15-8-111 for this argument. MTAB Hrg. Tr. 60:5-61:3.

Ms. Cordone testified that Mont. Code Ann. § 15-8-111 does not require use of
the cost method but instead, indicates what the DOR’s responsibilities are if

they use the cost method. MTAB Arg. Tr. 75:9-12.

Ms. Cordone explained that the cost approach to value is based on replacing the
subject with something of similar quality of construction. The replacement cost
new (RCN) considers all the information that would be needed to replace the
subject including square footage, room count, quality of construction, and age.
The depreciation and/or appreciation is then either added or subtracted to arrive

at estimated market value. MTAB Arg. Tr. 61:6-16.

The construction costs used to estimate the value are from a combination of the
Marshall and Swift residential cost handbook and the DOR’s own cost
collection that is collected from local sources. MTAB Hrg. Tr. 38:24-39:10.
Marshall and Swift is a nationally accepted residential cost handbook. MTAB
Hrg. Tr. 52:24-53:4. To collect the local data, the DOR calls builders and

retailers to get material and labor costs. Jd.

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BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

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The DOR calculates the RCN less depreciation by taking the RCN multiplied
by the local cost index, then multiplied by the economic condition factor, and
lastly multiplied by the percent good, which represents depreciation. MTAB
Hrg. Tr. 39:11-24. The local cost index indicates what percent of the national
average living costs it estimates to live in a certain area. Jd. The economic
condition factor is a “market adjustment uniformly applied across all properties
in a given market area” that reflects the growth of an area in Montana. MTAB
Arg. Tr. 53:5-19. In this case, that calculation would look like $559,837 times
94% which equals $526,246.78 times 1.23, which equals $647,283.54, times
0.9 which equals $582,555.19, which rounded equates to $582,560. Ex. A, at
15.

A typical single-family residence has a life of 60 years. The DOR estimated a
10% depreciation for the subject, which considers material defects in this

residence, resulting in a percent good of 90%. MTAB Arg. Tr. 40: 1-7.

The other buildings and yard improvements (OBY) include a detached garage
with a living area above it and a second-floor deck coming off that living area,
two lean-tos off the garage, and a concrete slab under the deck. MTAB Arg. Tr.
40:8-18; Ex. A, at 18. The garage and living area have a percent good of 81%
and 88% respectively, which, the DOR stated, considers the deteriorated siding

issue on that part of the accessory apartment/garage. Id.

The OBY values plus the RCN less depreciation value of the home is added
together to come to an improvement value of $717,630. MT. ‘AB Hrg. Tr. 40:19-

23; Ex. A, at 14.

The DOR took pictures of the outside of the home but not the inside on
October 1, 2019, because, Mr. Wilkinson testified, it is very rare that DOR
appraisers get inside houses. MTAB Hrg. Tr. 41:13-22; Ex. B. Mr. Wilkinson

stated, with the caveat that he is not a home inspector, that, from the pictures,

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BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

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he would say the house was in typical condition, with what he would call some
deferred maintenance. MTAB Arg. Tr. 41:23-42:14. The percent good, Mr.
Wilkinson testified, is based on the overall condition of the home. /d. He did
not put an effective age on the home, but instead left the age of the home as the
actual age of 12 years with a build date of 2008 since there had been no updates
and there was limited maintenance. MTAB Hrg. Tr. 42:14-16; Ex. A, 15. Mr.
Wilkinson testified that, by doing this, he gave the Taxpayer about a 5%
discount to account for the defects the Taxpayer alleges. If the effective age
were to be changed to five or six years as would be typical, Mr. Wilkinson
testified, the percent good would increase by 5% to 95%. MTAB Hrg. Tr.
51:15-25.

Depreciation, or percent good, acts as an estimated cost to cure in the cost
approach, which in this case gave a $65,000 reduction, however, there was no
additional consideration based on visual inspection or information that was

provided. MTAB Hrg. Tr. 76:6-10; Ex. A, 000015.

The Taxpayer asserts that the cost approach is “fictitious and residential
properties don’t sell based on that estimate of value.” MTAB Arg. Tr. 31:11-12.
The average listing price of the comparable properties that Taxpayer presented
is $538,762, which includes the land value. MTAB Arg. Tr. 31:13-14. The
Taxpayer stated that these comparable properties are “way higher-end than the
Danno Trust property,” and they contain more than the one-acre parcel being

valued in this case. MTAB Arg. Tr. 31:14-23; Ex. 4, at 1.

The Taxpayer introduced evidence of comparable properties by listing price but
was not privy to the sale prices. MTAB Arg. Tr. 30:1-21; Ex. 4. The Taxpayer
argued that sale prices would certainly be less than the listed prices because in
an ordinary market, which he maintains we were in on the lien date of January

1, 2020, houses sell for less than the asking price. MTAB Hrg. Tr. 30:22-31:4.

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BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

64.

65.

66.

67.

68.

Mr. Wilkinson testified that the DOR would not consider Taxpayer’s
comparable one truly comparable to the subject because the house is older than
the subject property, the location is considered inferior, there is less land, the
house is smaller, and the garage and garage living area are inferior. MTAB Hrg.
Tr. 48:24-49:6; Ex. 4, at 1-8. Ms. Cordone testified that the sale of comp one
was the consequence of the death of the owner and considered a forced sale
thus invalid as a reflection of a willing seller willing buyer transaction. MTAB

Hrg. Tr. 68:16-20.

Mr. Wilkinson also testified that the DOR would not use the Taxpayer’s
comparable two because the lot is half the size of the entire subject property,
the house is older without updates, the house is smaller than the subject home,
there are no outbuildings besides a detached shed with no value, and there are

HOA fees. MTAB Arg. Tr. 49:13-22; Ex. 4, at 1, 9-16.

Land Value

The Taxpayer also provided land comparables with an average listing price per

acre of $18,878. MTAB Arg. Tr. 32:1-7; Ex. 6, at 1.

The Taxpayer argues that if listing the one-acre land parcel, all material defects
of that parcel would have to be disclosed. MTAB Hrg. Tr. 32:8-16. He contends
that the fact that his one-acre is not surveyed out of the rest of his property, and
therefore cannot be sold, would be a material defect requiring disclosure. Id.
Therefore, the land comparables do not represent actual market value of the

one-acre parcel of the subject property. Jd.
The DOR also introduced comparable land sales to illustrate the market value

of the land if the larger tract was being used and it was not being valued as

non-qualified agricultural land. The sale prices ranged in value from $79,365 to

16

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

69.

70.

71.

72.

$88,149 per acre. These land sales were demonstrative and were not used in

valuing the subject property. MTAB Arg. Tr. 45:12-22; Ex. D, at 23.

Mr. Wilkinson chose the four land comparables used by the DOR in its land
model from the sales in the market area because they were most comparable to
the subject property and because the four comparables were vacant land sales,
close to one-acre in size, in acceptable proximity to rural areas, outside of

town, and had a sale within the cycle. MTAB Hg. Tr. 44:10-45:6; Ex. D.

Ms. Cordone testified that land sales that occurred within the required
timeframe of two years before the lien date would be included within the
market model. However, large acre land sales cannot be valued at a per acre
price and then used to value a single acre as suggested by the taxpayer. MTAB
Arg. Tr. 63:6-17.

Fee Appraisal

Ms. Cordone also testified the DOR does consider fee appraisals prepared on
the Taxpayer’s behalf and will adjust the value if the fee appraisal offers a
defensible reason to make an adjustment. Often, fee appraisals have up to date

information which is why an adjustment is made. MTAB Hrg. Tr. 64:5-22.

A fee appraisal differs from a DOR mass appraisal in a few ways. One way is
that fee appraisers normally can measure the interior while the DOR does not
always have the opportunity to do so. MTAB Hrg. Tr. 65:4-11. The DOR
normally develops inside measurements from estimates based on external
measurements. Jd. Fee appraisals also typically have more pictures which gives
a more thorough review of the property characteristics making the quality of

construction and condition determinations easier. MTAB Hrg. Tr. 65:14-20.

17

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

73.

74.

75.

76.

Square footage, quality of construction, and condition affect the valuation of

properties the most. MTAB Arg. Tr. 65: 11-13.

The DOR rarely disregards fee appraisals provided to them. MTAB Hrg. Tr.
65:21-23. However, in this case, Ms. Cordone testified that she would not
adjust the DOR’s value based on this fee appraisal. M7AB Arg. Tr. 65:24-66:1.
She testified that the information in this fee appraisal was unusually limited
compared to other fee appraisals the DOR receives. Therefore, the DOR could
not support or defend the valuation from either method that the fee appraisal
provided based on the information within the fee appraisal. MTAB Hrg. Tr.
66:3-7.

Ms. Cordone testified that this fee appraisal was inconsistent with other fee
appraisals because a Fanny Mae mortgage form was used, which restricts some
of the options an appraiser has. These types of appraisals are usually only
received when the appraisal was done for the purposes of a bank loan.
Normally, the fee appraisals the DOR receives are on a generic form. MTAB

Arg. Tr. 66:8-20.

Ms. Cordone contends that it was also unusual for the fee appraiser to only
value the one-acre parcel because most fee appraisers, even when dealing with
unique situations like non-qualified agricultural land, value the property as a
whole and then use the appropriate method of abstraction to determine how
much land value is associated with each sale. MTAB Hrg. Tr. 66:21-67:3; Ex.
7, at 1, 4. Ms. Cordone also contends that the interior photos are extremely
limited in a way that she has never received. MTAB rg. Tr. 67:3-8; Ex. 7, at
15-18. She testified that there is not a single picture of the bathrooms or the
interior of the garage, there is only one kitchen photo, and the pictures of the

deck are inferior. MTAB Arg. Tr. 67:11-15; Ex. 7, at 15-18.

18

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

77.

78.

79.

80.

81.

82.

Ms. Cordone pointed to conflicting statements within the appraisal, including

. the age and when the septic was done. The DOR records have the house built in

2008 but the fee appraisal has the house built in 2010 based on information
from the Taxpayer. MTAB Arg. Tr. 67:19-25; Ex. 7, at 4.

In reviewing the comparables offered by the fee appraiser, the DOR, and the
fee appraiser arrived at similar quality and condition/grade for the subject

property. MTAB Hrg. Tr. 68:6-16; Ex. 7, at 7, 12.

The other comparables used within the fee appraisal were included within the
sales information used to build the model but the DOR was concerned with the
number of adjustments that were made, which the DOR would consider

excessive adjustments. MTAB Hrg. Tr. 68:21-69:2; Ex. 7, at 7, 12.

Ms. Cordone testified that the price per square foot the appraiser used does not
comport with the market standards for the quality of construction. MTAB Hrg.
Tr. 69:19-70:2. The DOR’s overall valuation is $154 per square foot while the
fee appraisers is approximately $120 per square foot. MTAB Hrg. Tr. 70:3-16.

Ms. Cordone testified that she has never received a fee appraisal that is 30 to
40% less than the DOR’s valuation. MTAB Arg. Tr. 73:23-25. Further, she
testified that usually the DOR can reconcile valuation differences because of
data or condition differences, but that is not the case here. MTAB Hrg. Tr.
72:25-73:2.

Ms. Cordone testified that without the fee appraiser’s work file, it was difficult
to reconcile the cost information. For example, the square footage the fee
appraisal listed is higher than the DOR’s, yet the value is lower than the DOR’s
and the square footage of the garage is lower than the square footage of the
garage the DOR has recorded. Comparable two did not make an adjustment for

the accessory unit even though comparable two’s accessory unit was only a

19

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

83.

84.

85.

86.

87.

studio with no improvements. Further, there were sales available that required
less adjustments than the comparables the fee appraiser selected. Ms. Cordone
argued there was also a lack of information in the report regarding why other

sales were not used. MTAB Hrg. Tr. 74:3-75:2; Ex. 7, at 7, 12; Ex. A, at 15, 18.

Due to the confidential information contained in them, the DOR is allowed to
provide Realty Transfer Certificates (RTC) for properties used in the DOR’s
valuation when a taxpayer has signed a confidentiality agreement but is not
allowed to provide RTCs for properties they did not use. MTAB Hrg. Tr. 77:14-
78:2; Mont. Code Ann. § 15-7-308.

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. VII § 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, an appeal of a County Tax Appeal Board decision. 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 v. Arnold, 2013 MT 138, { 22, 303 P.3d
1279, § 22.

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.

20

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

88.

89.

90.

91.

92.

93.

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

Except as otherwise provided in Mont. Code Ann. § 15-2-301(2)(c), the Board
is not bound by common law and statutory rules of evidence or rules of
discovery and may affirm, reverse, or modify any decision in connection with
any appeal under Mont. Code Ann. § 15-2-301. To the extent Mont. Code Ann.
§ 15-2-301 conflicts with the Montana Administrative Procedure Act, § 15-2-
301 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., Inc., 169 Mont. at 214, 545
P.2d at 1090. However, DOR cannot rely entirely on the presumption in its
favor and must show 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, ¢ 15, 383 Mont. 340, 344, 372 P.3d 447, 450
(citing O'Neill v. Dep’t of Revenue, 2002 MT 130, 4 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)).

When construing a statute, it is the Board’s role to “determine what in terms or

substance is contained in it, and not to insert what has been omitted or to omit

21

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

94.

95.

96.

97.

98.

what has been inserted.” State v. Minett, 2014 MT 225, § 12, 376 Mont. 260,
332 P.3d 235; Mont. Code Ann. § 1-2-101.

In the construction of a statute, the intention of the legislature is to be pursued
if possible. When a general and particular provision are inconsistent, the latter
is paramount to the former, so a particular intent will control a general one that

is inconsistent with it.” Mont. Code Ann. § 1-2-102.

“When faced with a problem of statutory construction great deference must be
shown to the interpretation given the statute by the officers or agency charged

with its administration.” Dep’t of Revenue v. Puget Sound Power & Light Co.,
179 Mont. 255, 262, 587 P.2d 1282, 1286 (1978) (citing Udall v. Tallman, 380
USS. 1, 16 (1965)).

“TT ]ax statutes are to be strictly construed against the taxing authority and in
favor of the taxpayer.” Western Energy Co. v. Dep’t of Revenue, 1999 MT 289,
4] 10, 297 Mont. 55, 990 P.2d 767.

“Administrative agencies enjoy only those powers specifically conferred upon
them by the legislature. Administrative rules must be strictly confined within
the applicable legislative guidelines. Indeed, it is axiomatic in Montana law
that a statute cannot be changed by administrative regulation. We look to the
statutes to determine whether there is a legislative grant of authority.” Bick v.
State, Dep’t of Justice, Div. of Motor Vehicles, 224 Mont. 455, 457, 730 P.2d
418, 420 (1986).

“Administrative regulations interpreting the statute made by agencies charged

with the execution of the statute are entitled to respectful consideration.” Puget

Sound Power & Light Co., 179 Mont. at 266, 587 P.2d at 1288.

22

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

99.

100.

101.

102.

103.

104.

The Board “may not amend or repeal any administrative rule of the
department,” but may enjoin its application if the Board concludes the rule is

“arbitrary, capricious, or otherwise unlawful.” Mont. Code Ann. § 15-2-301.

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) (9.

Mont. Code Ann. § 15-2-301 creates the presumption that when a valid fee
appraisal is submitted, the appraisal should be considered correct unless the

DOR introduces sufficient evidence to rebut the presumption.

DISCUSSION
Improvement Defects
The Board does not find the alleged defects themselves to be in dispute but
rather whether the DOR’s valuation method took them into full account.
Whether the alleged defects are material and must be disclosed to future buyers

is not in dispute either.

The Board confines our analysis to whether these conditions, be they deferred
maintenance or material defects, are considered within the DOR analysis which
yielded the value assigned. No property is perfect, the stock and trade of this
Board’s opinions in most property tax appeals is to weigh, from the evidence
and testimony presented, whether the DOR adequately reduced value to

account for the condition of the property.

Taxpayer’s central argument for error by the DOR revolved around the DOR
failing to account for defects in his home. The DOR witnesses argued in the
first instance that had evidence of the defect and the cost to cure them been
presented and documented, the DOR would have undergone a more thorough
review to determine whether an adjustment should be made. In the second

23

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

105.

106.

107.

instance the DOR witnesses argued by increasing the depreciation, whether
problems with the home were due to deferred maintenance, contractor error, or
inferior building materials, they had fully captured the effect of the home’s
flaws with the information available to them. With the grant of an additional
5% depreciation beyond what similarly constructed homes were allowed, DOR
witnesses testified that this 5% of additional depreciation fully compensated for

the problems with the home.

Regarding the Taxpayer’s maintenance of the home, it is surprising that a home
of this quality and age has not had the siding re-stained nor the decking
repaired or treated where it has failed in the last 10 years. It is also surprising
that the warranty on all the windows was not claimed when some began to fail.
Neither the CTAB nor this Board received any estimates of cost to cure the
defects. We do not consider an unfished laundry room or limited photos of

minor deterioration to untreated pine decking to be material defects.

This Board finds the testimony and evidence from both sides unconvincing as
to whether the problems described have already been mitigated as in the case of
the radon by a radon collection system, or fully litigated by the homeowner as
in the case of the windows and damage to the second metal roof. It is
inexplicable that if a roof design causes condensation to drip into the living
room of the home that a homeowner would simply be resigned to his fate.
Without more testimony and evidence on the issue, we decline to make further
reductions and defer to the local knowledge and judgment of the Flathead
County CTAB members who partially reduced the value of the improvements
by $60,000 to reflect depreciation they believed the DOR had not captured in

their analysis.

The Taxpayer’s request for reduction to account for these numerous defects
totaled $115,000. We agree that if this was disclosed to a future buyer, it would
likely reduce the value of the home, so accordingly uphold the CTAB reduction

24

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

108.

109.

of $60,000 to acknowledge the defects were more impactful on value than the
5% increase in depreciation applied by the DOR. We would restate that the
DOR testified that had the Taxpayer provided documentation of the cost to cure
these defects the DOR may have been more thorough in their review which
could have resulted in further reductions. This information, if presented, could
be a factor in future valuation cycles, but we are bound to consider only the

2021/2022 cycle.

Use of Cost Method

The Taxpayer challenged the DOR’s authority and legal basis for using the cost
method to estimate the value of his improvements. The DOR’s witnesses
testified that they are not only permitted but required to default to the cost
method of valuation for improvements when the property includes non-
qualified agricultural land. While their citation to Mont. Code Ann. 15-8-111
does not explicitly require the use of cost, we agree that it allows the DOR to
use cost as the most reliable method of finding the value of the improvements
when non-qualified ag land is part of the property. The DOR’s rationale for that
approach is that through public policy the legislature has deemed certain land
meeting agricultural definitions receives a classification which is irrespective
of true market value. We agree that comparable sales of similarly sized parcels
with similarly classified non-qualified agricultural land would be so rare as to
make building a statistically significant comparable sales model extremely
unreliable. Within the confines of mass appraisal theory and the DOR appraisal
manual the DOR is allowed to use cost as the best indication of market value
for these improvements. We would note that the Taxpayer did not provide any
examples of sales including non-qualified agricultural land he believes the

DOR should have used to disprove use of the cost method.

We find the DOR arguments convincing that the most defensible way for them
to find market value of the improvements as part of a unique land classification

such as the subject is to use the cost method for the improvements. We do not

25

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

110.

111.

112.

113.

believe the DOR could have found truly comparable sales of enough parcels
like the subject to be able to defend a comparable sales method for this
property, and no evidence was presented to the contrary. The Montana
Supreme Court in Albright authorized the DOR to use more than one appraisal
method to set value. The DOR must use a mass appraisal method to find value

unlike a fee appraisal and must treat all Taxpayers equally in so doing.

We find that DeVoe does not preclude the use of the cost method if market
considerations are applied and by using the market sales approach to valuing
the land DOR did consider and use more than the cost method to find value.
The DOR witnesses gave credible testimony the Economic Condition Factor
used in calculation of the property value add additional evidence that market

considerations were applied, further satisfying the DeVoe requirements.

Fee appraisal

Mont. Code Ann. § 15-2-301 was recently amended to set a new standard for
valuation when a fee appraisal is introduced into the analysis. It creates a
presumption that the appraisal should be considered correct unless the DOR

introduces sufficient evidence to rebut the presumption of correctness of the fee

appraisal.

The new law does apply in this case and the fee appraisal introduced into
evidence meets the standard set for us to consider. This Board has fully
considered the Taxpayer’s arguments that the fee appraisal can be relied on, as

well as the DOR’s arguments that it is unreliable and does not adhere to IAAO

appraisal standards.

The Board welcomes the admission of an independent fee appraisal into
evidence for this or any other dispute because they give us additional useful
information in our deliberations we would not have otherwise had. That said

we find the DOR’s critique of the appraisal raised enough doubts to dissuade us

26

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

114.

that the fee appraisal was sufficient to find market value. We question the
selection of the four lowest sale prices of a pool of 18 sales as credible basis for
framing a reliable market sales analysis. We concur with the DOR that the ages
of the four comps are not like the age of the subject or in the alternative are not
adjusted to the subject. Nor were the comps similar in character and amenities,
for example the only comp with an accessory dwelling unit was a comp with an
apartment above the garage. In theory that sounds comparable to the subject
with its accessory dwelling unit, but DOR witness Mr. Wilkinson testified he
had been in that garage room of the comp, which was inferior in finish and
amenities to the subject apartment with a kitchen, wood stove, private
bathroom and bedroom as described and pictured in Taxpayer’s Exhibits 7 and
4 and DOR Ex E. From the limited photographic evidence and testimony, the
quality of the comparables seem inferior to the subject. The DOR’s witness,
Ms. Cordone, credibly testified that it was very unusual to receive a fee
appraisal with no photos of bathrooms or a finished basement, and that the ~
number of adjustments made to the comparables selected was
uncharacteristically high when many other comparable sales were available.
The Board received conflicting testimony from the fee appraiser as to the date
range of the comparable sales chosen, which could have a bearing on value.
Finally, despite testimony to the contrary, there is no evidence proving that all
the bathrooms in the subject were correctly valued and accounted for in the fee
appraisal, namely the bathrooms in the garage apartment and basement of the
home. Not accounting for these amenities would artificially reduce the
appraised value of the subject. These errors or omissions did not give the Board

confidence the fee appraisal could be relied on as the best indication of market

value.

One-Acre Value

We find the DOR did have the authority to use market sales analysis to

estimate the value of one acre of land associated with the improvements. That

27

BEFORE THE MONTANA TAX APPEAL BOARD

EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

115.

116.

117.

value of $80,000 is not substantially higher than the fee appraisers estimate of
$70,000 for that acre.

We find it was required, in the performance of mass appraisal, for the DOR to
separately value the one acre of land from the 11.75 acres which meet the
statutory definition of non-qualified land. The law sets this non-qualified

agricultural land’s value at $650, without regard to what a willing buyer would

pay.

The Taxpayer’s evidence of real estate listing prices was unconvincing as
evidence of land value. The DOR’s use of actual land sales adjusted for

location and date of sale was more credible in finding market value for the one-

acre in dispute.

We thereby uphold the one-acre land value of the subject and determine the

DOR met their burden to be presumed correct in valuing the one-acre homesite.

28

BEFORE THE MONTANA TAX APPEAL BOARD
EVAN DANNO REVOCABLE LIVING TRUST v. STATE OF MONTANA, DEPARTMENT OF REVENUE

ORDER
118. The one-acre parcel under the improvements shall remain at the DOR value of

$80,750.
119. The improvements value set by CTAB at $647,630 is affirmed.

120. Total value of this property shall be recorded at $729,030 for tax years 2021 and
2022.

Dated this 15 day of August 2022.

Turik t VE (Mex

David L. McAlpin, Chairman

-! ane

ie Zendron, Meme

Daniel oobi 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. MCA $15-2-303(2).

29

BEFORE THE MONTANA TAX APPEAL BOARD
EVAN DANNO REVOCABLE LIVING TRUST 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 August 15, 2022, to:

Evan Danno
144 Highland Ridge Dr.
Kalispell, MT 59901

Kristina Warren

State of Montana, Department of Revenue
Legal Services Office

P.O. Box 7701

Helena, MT 59604-7701

Kory Hofland

PAD Administrator

State of Montana, Department of Revenue
P.O. Box 7701

Helena, MT 59604-7701

Dori Magar, Secretary

Flathead County Tax Appeal Board
800 S. Main, Rm. 302

Kalispell, MT 59901

use —

Tara M. Green, Legal Secretary

30