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TJ 2010 Corp. v. Dawson County Bd. of Equalization

Court of Appeals of Nebraska

June 23, 2015

TJ 2010 CORPORATION, APPELLANT,
v.
DAWSON COUNTY BOARD OF EQUALIZATION, APPELLEE

Page 94

[Copyrighted Material Omitted]

Page 95

Appeal from the Tax Equalization and Review Commission.

Patrick M. Heng, of Waite, McWha & Heng, for appellant.

Katharine L. Gatewood, Deputy Dawson County Attorney, for appellee.

IRWIN, PIRTLE, and RIEDMANN, Judges.

OPINION

Page 96

[22 Neb.App. 990] Riedmann, Judge.

INTRODUCTION

TJ 2010 Corporation (TJ) appeals 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. Because we find that TJ failed to establish by clear and convincing evidence that the county's valuation was arbitrary or unreasonable, we affirm TERC's decision.

BACKGROUND

TJ owns property in Gothenburg, Dawson County, Nebraska. The subject property is a 44,000-square-foot hotel operating under a franchise, with 74 guestrooms, a swimming pool, a small meeting room, and a breakfast area. The property is located right next to Interstate 80. It was built in 2010 for approximately $4 million.

The Dawson County assessor 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. A hearing was held before TERC, during which the following evidence was adduced:

Terry Jessen is the president and sole owner of TJ, which owns and operates the hotel at issue in Gothenburg. Jessen testified that the property was constructed with funds secured [22 Neb.App. 991] from his personal contributions, a mortgage, and tax increment financing. As part of the tax increment financing agreement with the city of Gothenburg, he agreed not to request a tax valuation of less than $2.8 million in any subsequent tax protests or appeals.

Jessen owns five hotels in Nebraska and one in Wyoming. He testified that although he is not an appraiser, he is very familiar with the market value of hotels and the various methods of valuation. He opined that the most important method for valuing hotels is the income stream approach, which he determines by using a multiplier of the property's annual gross revenue averaged over the past 3 years. He indicated that in his experience, the appropriate multiplier for most mainstream hotels is between 2.8 and 3.

Jessen submitted the property's profit and loss statements for the year 2013, which indicate that the gross revenue for 2013 was $1,097,000. Using his income stream approach with a multiplier of 3, Jessen opined that the actual value of the property was approximately $3,291,000. He explained that the value would be even lower if he had used the average annual

Page 97

gross revenue over the past 3 years, rather than just the gross revenue for 2013, because the property's revenue increased each year from 2011 to 2013. He testified that if the property were placed on the market for ...


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