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McDonald v. Washington State Board of Tax Appeals

May 27, 1997

DONALD N. MCDONALD, APPELLANT,
v.
WASHINGTON STATE BOARD OF TAX APPEALS, RESPONDENT.



Appeal from Superior Court of King County. Docket No: 94-2-33530-8. Date filed: 08/07/95. Judge signing: Hon. Richard Eadie.

Authored by C. Kenneth Grosse. Concurring: Susan R. Agid, Ronald E. Cox.

The opinion of the court was delivered by: Grosse

GROSSE, J. -- Donald N. McDonald disputes the $20,000 valuation of his 1.22 acres of Lake Forest Park property by the Washington State Tax Board of Appeals, King County. His theory that the property is valueless as non-buildable due to its steep slopes is not supported by sufficient competent evidence to overcome a decision of the Washington State Tax Board of Appeals taking the steep slopes of the property into account.

FACTS

McDonald's 1.22 acres of unimproved land is large enough for four lots. However, the property is composed entirely of slopes exceeding 40 degrees which make development on the land difficult. The King County Assessor (Assessor) originally valued the property at $97,500. The King County Board of Equalization (Board of Equalization) lowered the value to $35,000. The Assessor did not appeal this decision, but McDonald appealed the Board of Equalization's decision to the Washington State Tax Board of Appeals, King County (the Board).

At the hearing, McDonald presented evidence that he was denied approval to subdivide his property into four lots under King County ordinances that limit development on land with slopes that exceed 40 degrees. *fn1 Although the law provides for the opportunity to apply for a reasonable use exception, *fn2 McDonald has not applied for a permit. It was his opinion that because of the expense (potentially $35,000 to $80,000 because of the need for studies) it was not worth the risk to him to apply for a permit. The Assessor stipulated that it is uncertain whether a reasonable use exception would be granted to build a single house on the property. The Assessor's appraiser, however, testified that it was his understanding, based on his interview with a county employee, that King County attempted to allow at least one building site whenever possible. The Assessor's appraiser testified that the cost to obtain a permit was a reasonable basis to reduce the value of the property from the original assessment of $97,000 to the $35,000 value determined by the Board of Equalization.

Using the comparable sales approach to assess the property, the Assessor submitted evidence of six sales of nearby properties. The evidence included sales of both non-buildable and buildable lots. The non-buildable properties were submitted to demonstrate the range of value ($10,000 to $35,000) for properties with topographic problems like those on McDonald's property. The buildable lots were given as evidence of the range of value ($34,000 to $80,000) for buildable sites in the area.

McDonald's expert asserted that McDonald's property was only worth a minimal value of $100. But, he had not completed an appraisal on the land. In addition, McDonald's appraiser provided no alternative comparable sales. He testified that he looked for two years, from 1994 to 1992. Although he conceded that there could have been comparable sales he missed, his opinion was that his failure to find one demonstrated that there were no comparable sales.

In making its decision, the Board relied on three of the sales submitted by the Assessor:

Sale 1: This property sold in 1990 for $10,000. It was listed on the market for some time and was purchased by a neighboring property owner. The owners bought it because "they didn't want development next to them and for future investment." It is approximately 18,000 square feet and has severe topographic problems similar to McDonald's property.

McDonald's expert testified that the fact that a neighbor bought the property demonstrated it was not comparable because of the limited market. The Assessor's appraiser testified that the property owner adjacent to McDonald's property may have similar motivations to purchase the land.

Sale 3: A one-half interest in this property sold in December 1987 for $10,000. The property is 1.01 acres with flood and drainage problems. It is documented at the Assessor's office as non-buildable. The sale was between two sisters. The Assessor's appraiser testified that the sisters researched the reasonable value of the property at the time of the purchase even though they did not conduct an appraisal.

Sale 6. This buildable property sold in 1990 for $34,000. The lot is 1.13 acres in a landslide hazard area with steep slopes. A new house was built after the sale in a small level area.

After hearing the evidence, the presiding officer of the Board found that the Assessor "has shown that non-buildable property can and does sell, albeit to a limited market." The presiding officer found that "because of its size, we find the subject property is worth more than the [nearby non-buildable lot worth $10,000] but less than the buildable $35,000 sale." The presiding officer concluded that a value of $20,000 was appropriate, stating that "this value ...


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