August 25, 2015

Kentucky Board Overturns 2014 Property Assessment and Presses Both Parties for Better Evidence of Value

Written By

By Erica Horn and Maddie Schueler

In JIC, d/b/a Days Inn v. Carter County Property Valuation Administrator, K14-S-76, Final Order No. K-24885 (KBTA July 30, 2015), the Carter County PVA assessed a Days Inn hotel at $1,425,000 for the 2014 tax year.  The PVA’s assessment was based upon the 2006 sales price of the property.  The taxpayer appealed to the Carter County Board of Assessment Appeals, which upheld the PVA’s assessment.  The taxpayer then appealed to the KBTA, claiming a value of $650,000.  The parties filed a joint motion to waive the evidentiary hearing before the KBTA and to submit the case on the record. 

In support of her assessment, the PVA relied solely upon the 2006 sales price of the property and several other assessments she had made for similar properties.  The PVA did not make any adjustments to the sales price for the passage of time – eight years – nor did she explain whether the state of the market in 2014 remained the same as it was in 2006.  Thus, the KBTA found the information submitted by the PVA lacked probative value as supporting evidence of the property’s value in 2014 because the 2006 sales price was too old to use as the sole basis for the valuation eight years later.

The KBTA noted that it remains the taxpayer’s burden, however, to prove the assessment overvalues the property.  The taxpayer submitted an appraisal of the property prepared for the mortgagor, which appeared to have been prepared as a result of a past due obligation as of August 10, 2014.  The appraisal gave an “as is” value of the property of $650,000; however, the appraisal failed to show a breakdown or calculation of how this number was reached.

In its Opinion, the KBTA first noted the record was not “ideal”, as the PVA presented no probative evidence of value and the taxpayer’s evidence was incomplete.  However, the KBTA found it had no evidence upon which to fix the fair cash value of the property other than the evidence submitted by the taxpayer.  Thus, based upon this limited record, the KBTA held the value of the property for 2014 only was $650,000.  The KBTA specifically cautioned that in the future, the PVA would need to conduct an independent review of the property, and the taxpayer would need to be prepared to submit a more complete appraisal.  The KBTA also stated that an evidentiary hearing would be preferable, with the appraiser available for questioning.