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Franklin v. Tax Equalization and Review Commission

Supreme Court of Nebraska

March 24, 2017

County of Franklin, appellant,
v.
Tax Equalization and Review Commission, appellee.

         1. Constitutional Law: Administrative Law: Taxation. Neb. Const. art. I V, § 28, provides that the Tax Equalization and Review Commission is empowered to review and equalize assessments of property for taxation within the state.

         2. Taxation: Property: Valuation. Neb. Rev. Stat. § 77-5022 (Cum. Supp. 2016) provides that the Tax Equalization and Review Commission shall annually equalize the assessed value or special value of all real property as submitted by the county assessors on the abstracts of assessments and equalize the values of real property that is valued by the state.

         3. ___: ___: ___. The Tax Equalization and Review Commission is required to increase or decrease the value of a class or subclass of real property in any county or taxing authority or of real property valued by the state so that all classes or subclasses of real property in all counties fall within an acceptable range.

         4. Taxation: Judgments: Appeal and Error. Appellate courts review decisions rendered by the Tax Equalization and Review Commission for errors appearing on the record.

         5. 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.

         Appeal from the Tax Equalization and Review Commission. Affirmed.

         Henry C. Schenker, Franklin County Attorney, for appellant.

         [296 Neb. 194] Douglas J. Peterson, Attorney General, and L. Jay Bartel for appellee.

          Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy, Kelch, and Funke, JJ.

          H eavican, C.J.

         I. INTRODUCTION

         The Tax Equalization and Review Commission (TERC) adjusted upward by 8 percent the value of the "Land Use Grass" subclass of the agricultural and horticultural land class in Franklin County, Nebraska. Franklin County appeals. We affirm.

         II. BACKGROUND

         1. Applicable Law

         Some background law is helpful to understand the facts presented by this appeal. Neb. Const. art. I V, § 28, provides that TERC is empowered "to review and equalize assessments of property for taxation within the state." Neb. Rev. Stat. § 77-5022 (Cum. Supp. 2016) provides that TERC "shall annually equalize the assessed value or special value of all real property as submitted by the county assessors on the abstracts of assessments and equalize the values of real property that is valued by the state."

         In doing so, TERC is required "to increase or decrease the value of a class or subclass of real property in any county or taxing authority or of real property valued by the state so that all classes or subclasses of real property in all counties fall within an acceptable range."[1] The acceptable range for "agricultural land and horticultural land [is] sixty-nine to seventy-five percent of actual value."[2] The median has been [296 Neb. 195] adopted by TERC as the preferred established indicator of central tendency.[3] Median is defined by regulation as "the value of the middle item in an uneven number of items arranged or arrayed according to size; the arithmetic average of the two central items in an even number of items similarly arranged; [or] a positional average that is not affected by the size of extreme values."[4] Thus, TERC prefers that valuation data "cluster" around the median value.[5]

         If TERC finds that

the level of value of a class or subclass of real property fails to satisfy the requirements of section 77-5023, [TERC] shall issue a notice to the counties which it deems either undervalued or overvalued and shall set a date for hearing at least five days following the mailing of the notice unless notice is waived.[6]

         Subsequent to such a hearing, TERC shall raise or lower the valuation of any class or subclass or real property in a county when it is necessary to achieve equalization.[7] TERC's order following such a hearing should be entered based on information provided to it at the hearing and should specify the percentage of increase or decrease and the class or subclass of real property affected.[8]

         Each county's assessor and the state's Property Tax Administrator (PTA) also have certain duties relating to the valuation process. Neb. Rev. Stat. § 77-1514 (Cum. Supp. 2016) provides that the county assessor must prepare abstracts of the property assessment rolls of locally assessed property, [296 Neb. 196] which should show the taxable value of property in the county as determined by the county assessor. These abstracts must be filed with the PTA.

         As for the PTA, § 77-5027(2) provides that on or before 19 days after each county assessor files its abstracts under § 77-1514, the PTA must prepare and deliver to TERC and to each county assessor its own annual reports and opinions. Those reports and opinions

shall contain statistical and narrative reports informing [TERC] of the level of value and the quality of assessment of the classes and subclasses of real property within the county and a certification of the opinion of the [PTA] regarding the level of value and quality of assessment of the classes and subclasses of real property in the county.[9]

         In addition, the PTA may make nonbinding recommendations for consideration by TERC.[10] In compiling this information and formulating its opinion, the PTA may employ various methods as provided by law and may use sales of comparable real property in market areas similar to the county or area in question or from another ...


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