TJ 2010 Corporation (TJ) appealed the order of the Tax Equalization and Review Commission (TERC) affirming the decision of the Dawson County Board of Equalization (Board) regarding the 2013 taxable value of a hotel owned by TJ.
The Dawson County assessor had determined that the value of the property was $4,510,230 for tax year 2013. TJ protested the assessment to the Board and requested a valuation of $2.8 million. The Board determined that the taxable value was $4,510,230, as originally assessed. TJ appealed the Board’s decision to TERC.
At the TERC hearing, TJ asserted that the most important method for valuing hotels is the income stream approach, which is determined by using a multiplier of the property’s annual gross revenue averaged over the past 3 years. TJ indicated that the appropriate multiplier for most mainstream hotels is between 2.8 and 3.
The County’s appraiser testified that he used both the cost approach and the income approach to calculate the value of the property. The appraiser opined that the income approach is generally more applicable to income-producing properties, but that for newer or unique properties such as this one, the cost approach is a better indicator of actual value.
TERC concluded that TJ had provided competent evidence to rebut the presumption that the Board had faithfully performed its duties and had sufficient competent evidence to make its determination. It criticized the appraiser’s valuation for using outdated costing tables in the cost approach and for using market factors derived from comparable sales without making the necessary adjustments to the comparable properties. However, it determined that TJ’s valuation method was not a commonly accepted real property appraisal method and was not supported by market data. Therefore, it found that while there were concerns about the reliability of the County’s appraisal, there was no market data received in evidence to support a different opinion of any of the income approach factors. Thus, it concluded that TJ failed to present clear and convincing evidence that the Board’s valuation was unreasonable or arbitrary.
The Court of Appeals affirmed, finding that TJ failed to establish by clear and convincing evidence that the county’s valuation was arbitrary or unreasonable.