Ben & Carla Andrus v. Department of Revenue

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BEFORE THE MONTANA TAX APPEAL BOARD

Montana Tax Appeal Board

BEN & CARLA ANDRUS, CASE Ne: PT-2022-15
Appellants, FINDINGS OF FACT,
CONCLUSIONS OF LAW, ORDER,
v. AND OPPORTUNITY FOR
JUDICIAL REVIEW
STATE OF MONTANA,
DEPARTMENT OF REVENUE,
Respondent.
STATEMENT OF THE CASE

This is an appeal of a final decision by the Beaverhead County Tax Appeal
Board (CTAB) denying Ben & Carla Andrus (Appellants) a further reduction in value
on the subject property located in Glendale, Montana. The Appellants appealed that
outcome to Montana Tax Appeal Board (MTAB) on March 23, 2022. We affirm

CTAB’s determination in part and reverse in part.

ISSUE TO BE DECIDED
Whether CTAB erred in affirming the Department of Revenue’s (DOR or
Department) total value of $185,417, based on a revised land value of $81,857 and an

improvement value of $103,560.

EXHIBIT LIST
The following evidence was submitted at the hearing:
Appellants Exhibits:
1. Glendale plat map (1 page) DOR Bates #126,
2. Four photos of subject property (2 pages),
3. Parcel valuation comparison table (1 page),
4

. Tax protest form (1 page no receipt included),

BEFO”™, THE MONTANA TAX APPEA”™ BOARD
BEN & CARLA ...1.DRUS v. STATE OF MONTANA, DEPARTh...WT OF REVENUE

5. Beaverhead County Department of Environmental Health letter (1 page)
Bates #120,

Taylor Realty letter plus two maps (3 pages) Bates #121-123,

January 26 Andrus letter with appeal form 401 (3 pages) Bates #16-18,
February 23 Andrus presentation (4 pages) Bates #533-536,

March 9 Andrus Objections to No Decision (1 page) Bates #532.

om ID

DOR Exhibits:
A. Appraisal Notice Bates #1-4,
AB26 and Sept. 15, 2021 response Bates #7-9, 12,
AB26 checklist, review notes & response Bates #5-6,
. Revised 2020-22 Property Record Card for residence Bates #83-87, 364-78,
Revised map and photos Bates #309-13, 315-23,
Comparable sales report Bates #133
Vacant parcels’ AB-26 responses Bates #20-25
. Revised 2020-22 Property Record Cards for vacant lots Bates #413-14,
431-32,
Pictures of vacant parcels Bates #80-81

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Revised Land model sales info & maps; Land Model (electronic version
only) Bates #115-119, 537 confidential,

K. Maps and Property Record Card for neighboring parcel Bates #108-114,
L. New Department Procedure 2-3-001.1 Bates #304-308.

PROCEDURAL HISTORY
The DOR sent a Classification and Appraisal Notice dated July 9, 2021,
(Appraisal Notice) to the Appellants valuing the four parcels and improvements
thereon that comprise the 5.69 acre subject property at a total of $232,347 for the

2021/2022 valuation cycle.
On September 14, 2021, the Appellants filed DOR Form AB-26, Request for

Informal Classification and Appraisal Review. Ex. B. On January 26, 2021, while the
informal review was in process, the Appellants filed an appeal with the Beaverhead

County Tax Appeal Board (CTAB). MTAB Dkt. 3.

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BEFO”™ THE MONTANA TAX APPEA”™ BOARD
BEN & CARLA ...VDRUS v. STATE OF MONTANA, DEPART».—.NT OF REVENUE

The DOR sent the Appellants AB-26 Determination Letters for each geocode
dated February 15, 2022, denying the Appellants’ request for adjustments for Block 7,
China Gardens, and Deep Water (individually defined below, together “Vacant
Parcels”) and raising the value of the Homesite from $152,500 to $161,463 to account
for updated information regarding the home. MTAB Dhkt. 3.

The CTAB hearing was held on February 23, 2022, in Dillon. At the beginning
of the CTAB hearing, the DOR reduced the values of the Vacant Parcels by 70%
based on a letter from the Beaverhead County Department of Environmental Health
presented at the hearing which stated that the Vacant Parcels were unsuitable for
development. After reducing the value of the Vacant Parcels, the DOR’s amended
value requested at CTAB was $185,417 which included the reductions for the Vacant
Parcels as well as the increased value assigned to the house during the AB-26. MTAB
Dkt. 3. The CTAB denied the Appellants’ appeal and affirmed the DOR’s value of
$185,417, applying the new value to both 2021 and 2022. Jd.

The Appellants filed a timely appeal of the CTAB decision to MTAB on March
23, 2022, and a hearing was set for August 9, 2022. MTAB Dkt. 1. On July 22, 2022,
the Appellants filed a Motion for Summary Judgment. MTAB Dkt. 11. The Board
vacated the August 9, 2022, hearing to allow the parties to file response and reply
briefs to address the arguments made in the Appellants’ filing. MTAB Dkt. 13. After
reviewing the parties’ written briefs, the Board denied the Appellants’ motion on
August 26, 2022, based on the DOR’s argument that there were genuine issues of
material fact and the Appellants’ agreement with the DOR on that statement in their
reply brief. Because there were genuine issues of material fact, the Board was required
to hold a hearing to hear testimony and receive evidence and make a ruling on the
factual disputes. MT4B Dkt. 18. The Board rescheduled a hearing for December 8,
2022. MTAB Dkt. 20.

On November 30, 2022, the Appellants filed a written challenge to the DOR’s
authority to assess tax on their property. MTAB Dkt. 31. The Board issued an order on
December 2, 2022, to allow both parties to present their arguments on the challenge at
the beginning of the hearing scheduled for December 8, 2022. MTAB Dkt. 32. The

DOR filed its written response to the Appellants’ challenge in advance of the hearing.

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BEFQ” ™, THE MONTANA TAX APPEA” BOARD
BEN & CARLA-...VDRUS v. STATE OF MONTANA, DEPART»..NT OF REVENUE

MTAB Dkt. 33. The Board allowed both parties five minutes at the outset of the
hearing to provide oral argument in support of their positions. After hearing the oral
presentations and considering the written arguments, the Board determined that the
DOR has the authority to value and classify property in Montana, the subject of this
appeal, and proceeded with the hearing to determine the proper market value of the

subject property.

The MTAB hearing was conducted in Helena on December 8, 2022, at which
the following were present:
a. Ben and Carla Andrus, Appellants (via telephone);

b. Dave Burleigh, DOR Counsel; Chad Elser, DOR Regional Manager
(Area Manager at the time of the appraisal); Tedd Weldon, DOR Area
Manager (Lead Appraiser at the time of the appraisal); Tierani Losing,
Modeler; Kandy Fleurisma, DOR Paralegal; and

c. Two unidentified call-in observers who listened in but did not testify
during the hearing.

The record includes all materials submitted to CTAB, a recording of the CTAB
hearing, all materials submitted to MTAB with the appeal, and additional exhibits
submitted by the parties prior to and at the MTAB hearing.

FINDINGS OF FACT
1. To whatever extent the following findings of fact may be construed as

conclusions of law, they are incorporated accordingly.

2. The DOR sent the Appraisal Notice dated July 9, 2022 to the Appellants
notifying them that the four parcels and improvements thereon that comprise
the 5.69 acre subject property was valued at a total of $232,347 for the
2021/2022 valuation cycle. The total value consists of the following:

a. $25,044 for geocode 18-0778-24-4-07-01-0000, a 0.28 acre vacant
parcel (referred to herein as Block 7);
b. $28,265 for geocode 18-0778-24-4-03-10-0000, a 0.42 acre vacant

parcel (referred to herein as China Gardens);

BEFC”% THE MONTANA TAX APPE4~ BOARD
BEN & CARLa« ..uNDRUS v. STATE OF MONTANA, DEPAR1.....NT OF REVENUE

c. $26,538 for geocode 18-0778-24-4-03-01-0000, a 0.34 acre vacant
parcel (referred to herein as Deep Water); and

d. $152,500 for geocode 18-0778-24-4-02-17-0000, a 4.652 acre parcel
including improvements (referred to herein as House Parcel or
Homesite). The value of $152,500 includes a value of $57,903 for the
land and $94,597 for the improvements. Ex. A.

The Appraisal Notice showed an increase in the total value of the subject
property from $178,496 in the previous cycle to $232,347 in the current cycle.

The increase from the previous cycle was greater than 10%. Ex. A.

On September 9, 2021, the Appellants mailed DOR Form AB-26, Request for
Informal Classification and Appraisal Review, to the Butte Field Office of the
DOR, contesting the value of the subject property and requesting comparable
sales data for the properties used to value the subject property. Ex. B. The DOR
received the Form AB-26 on September 14, 2021. Id.

The DOR sent the Appellants a letter on September 15, 2021, acknowledging
receipt of their AB-26. The letter further stated that because the AB-26 was
filed more than 30 days after the date shown on the Appraisal Notice, any
adjustments made would only apply for tax year 2022. Ex. B. The DOR
appraiser testified to the same at the MTAB hearing on December 8, 2022.
MTAB Hr’g Tr. 64:20-65:11.

On January 26, 2021, while the informal review was still in process, the
Appellants filed an appeal with the CTAB. MTAB Dkzt. 3. In their CTAB
appeal, the Appellants requested a total land value of $36,860, asking that their
land be valued at “no more than surrounding property, and reduce buildings’
valuations by the same ratio, or provide the background data the DOR owes us

(per AB26 request).” Jd. The Appellants had requested comparable sales data

BEFQC” = THE MONTANA TAX APPE4~ BOARD
BEN & CARLA ..iNDRUS v. STATE OF MONTANA, DEPART....NT OF REVENUE

for those properties used to value the subject property during the AB-26

process. Ex. B.

The Appellants further stated in the letter in support of their CTAB appeal that
they were rescinding the confidentiality agreement they signed when they filed

their AB-26. MTAB Dkt. 3.

On February 7, 2022, the DOR produced an information packet which they
distributed to the Appellants on February 8, 2022. Ex. C. The DOR appraiser
later testified at the MTAB hearing that the information packet sent to the
Appellants included the neighborhood land model which includes residential
sales data. MTAB Hr'g Tr. 68: 10-25. The appraiser also testified during the
MTAB hearing that he had a phone conversation with Mr. Andrus on February
8, 2022, to set up an internal/external review, but Mr. Andrus would not allow
the site visit. Jd. The AB-26 checklist submitted by the DOR indicates that as
of February 10, 2022, the appraiser would drive by the property only, per the
Appellants’ request. Ex. C. The AB-26 checklist also indicates that the
appraiser left a voicemail for the Appellants on February 10, 2022, to discuss
their rescindment of the confidentiality agreement. Jd. The AB-26 checklist
further indicates that the AB-26 was closed on February 15, 2022. Id.

The DOR mailed the AB-26 Determination Letters dated February 15, 2022, to
the Appellants. MTAB Dkt, 3, Ex. G. The DOR denied the Appellants’ request
for adjustments for Block 7, China Gardens, and Deep Water. Id. The DOR
did, however, raise the value of the Homesite from $152,500 to $161,463.
MTAB Dkt. 3. The DOR stated this change was due in part to updating their
records to reflect an increase in the size of the residence from 1,308 square feet
to 1,864 square feet, removing the porch from their records, and changing the

method of valuation from the market approach to the cost approach. Jd.

BEFQ™™ THE MONTANA TAX APPE4~ BOARD
BEN & CARLa« ...NDRUS v. STATE OF MONTANA, DEPART....NT OF REVENUE

10. Based on the Appellants’ request, the DOR did not conduct a full onsite review

11.

12.

13.

of the house, but instead took photos from the county road and used GIS
software to estimate exterior measurements. MTAB Dkt. 3. During the MTAB
hearing, the DOR appraiser testified he made dimensional reductions which
accounted for the structure’s overhanging eaves when estimating the square
footage of the house to only estimate the outside wall measurements of the

home. MTAB Hr'g Tr. 72:15-73:9.

The AB-26 Determination Letters also addressed the Appellants’ rescindment
of the confidentiality agreement, stating that the DOR would not provide
confidential sales data to them per their request, but that the DOR would
provide it should the Appellants sign and return an enclosed confidentiality

agreement. MTAB DKkt. 3.

The CTAB hearing was held on February 23, 2022. At the beginning of the
CTAB hearing, the DOR reduced the values of the Vacant Parcels by 70% to
$7,513 for Block 7, $8,480 for China Gardens, and $7,961 for Deep Water after
receiving a letter from the Beaverhead County Department of Environmental
Health stating that the Vacant Parcels were unsuitable for development. Ex. 5;
MTAB Dkt. 3. According to the letter, the parcels are small, not contiguous, and
too close to Trapper Creek for the installation of wells, septic tanks, and drain

fields, and therefore are not suitable for building homesites. Jd.

Based on the letter from the Beaverhead County Department of Environmental
Health, as well as the adjustments made during the AB-26 process, the DOR
requested a total value of $185,417, which consists of the following values: 1)
$7,513 for Block 7; 2) $8,480 for China Gardens; 3) $7,961 for Deep Water;
and 4) $161,463 for the Homesite ($57,903 for the land and $103,560 for the
house). MTAB Dkt. 3.

BEFOQ”™ THE MONTANA TAX APPEA4”™ BOARD
BEN & CARLA ..VDRUS v. STATE OF MONTANA, DEPART... .NT OF REVENUE

14. At the conclusion of the hearing and deliberations, the CTAB denied the
Appellants’ appeal and affirmed the DOR’s value of $185,417, applying the
new value to both 2021 and 2022. The county board cited Mr. Andrus’s health
as a good cause exception to the late filing of the AB-26 for 2021. MTAB Dit.

3.

15. The Appellants filed a timely appeal of the CTAB decision to MTAB on March
23, 2022, per Montana Code Annotated § 15-2-301. MTAB Dkt. J. In their
appeal, the Appellants claimed several grievances:

a. The DOR did not explain the more than 10% increase in their property
value from the previous cycle as required by Montana Code Annotated §
15-7-102(1)(b)(iv).

b. They refuted the DOR’s claim that they denied DOR access to walk
around the property as the DOR only asked to walk through the home.
(The Appellants stated they believed they were not permitted to speak to
the DOR after the CTAB secretary advised them they could not speak to
the CTAB board members until the hearing.)

c. The DOR did not show authorization to collect, have, or use confidential
sales data.!

d. The DOR violated Montana Code Annotated § 15-7-102(2)(a) by failing
to provide “sufficient information in a comprehensible manner designed
to fully inform the taxpayer’ as to the classification and appraisal of the
property and of changes over the prior tax year.”

e. The change from calculating the value of the subject property from the
acre method to the square foot method appeared to double the valuation

of the property from the previous valuation cycle.

' The Board notes that “confidential sales data” refers to sales data the DOR compiles to use in
valuing Montana property, discussed herein.

? Black’s Law Dictionary (11" Edition) defines the term “taxpayer” as someone who is subject to or
pays tax. Under Montana statutes, rules, and case law, the term “taxpayer” includes, but is not limited
to those who pay income tax and/or property tax. The term “taxpayer” as used in the statutes and case
law referenced herein refer to one who is subject to or pays property tax.

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16.

17.

18.

BEFO”™ ™ THE MONTANA TAX APPEA™ BOARD
BEN & CARLA ...WDRUS v. STATE OF MONTANA, DEPART». .NT OF REVENUE

f. That Montana Code Annotated § 15-7-102(3)(a) explicitly allows
property owners to object electronically or by checking a box to meet

the deadline to request DOR AB-26 informal review. Jd.

The Appellants asked that the tax rate on their land be reduced to no more than
that of surrounding property. M7TAB Dkt. 1. The neighboring property is
classified as nonqualified agricultural property and is valued at $55.35/acre.
MTAB Dit. 1; Ex. K. The Appellants argued that assigning a value of
$619.92/acre to the subject property would result in a comparable tax rate as
the neighboring property without changing the classification of the property. Jd.
The formula the Appellants provided to reach their requested value is: [$55.35
x 7x 2.16%] / 1.35%. Ex. 3. After applying this formula to each of their
parcels, the Appellants requested the following values for the land: 1) $174 for
Block 7; 2) $260 for China Gardens; 3) $211 for Deep Water; and 4) $2,264 for
the 3.652 acre residual portion of the Homesite, which does not include a value
for the 1 acre parcel beneath the house. MTAB Dkt. 1. During the MTAB
hearing, the Appellants clarified that the $2,264 they requested for the 3.652
acre residual portion of the Homesite would need to be added to the $36,600
land value they were requesting for the 1 acre parcel under the house. MTAB

HAr’g Tr, 22:8-23:12.

The Appellants requested the value of the improvements be left at the original
assessment of $94,597 before the DOR raised the value to $103,560 during the
AB-26 review. MTAB Dit. 1. Alternatively, the Appellants requested the house
be valued using the dimensions they provided of 1,277 square feet for the

interior and 1,736 square feet for the exterior. Jd.

During the April 21, 2022 scheduling conference, the Board explained that it
would hear testimony and receive evidence at a hearing. To accommodate Mr.

Andrus’s health, the Board permitted the Appellants to appear at the hearing by

19.

20.

21.

22.

BEFQ” % THE MONTANA TAX APPEA”™ BOARD
BEN & CARLA&...NDRUS v. STATE OF MONTANA, DEPARI:.. .NT OF REVENUE

telephone per their request. The Board initially scheduled the hearing for
August 9, 2022. MTAB Dkt. 2.

On July 22, 2022, the Appellants filed a motion for summary judgment, stating,
“We are not getting ‘sufficient information in a comprehensible manner
designed to fully inform’ us on the central issues per MCA 15-7-102(2)(a).”
MTAB Dkt. 11. They argued that the neighboring property was valued at
$36,600 for the first acre and $55.35 for the residual portion, thus they were
requesting values of: 1) $174 for Block 7; 2) $260 for China Gardens; 3) $211
for Deep Water; and 4) $38,864 for the Homesite, which includes $36,600 for
the first acre and $2,264 for the remaining acreage. Jd. These amounts are the
same as those they requested in their initial MTAB appeal with the clarification

that the Homesite value would include $36,600 for the acre beneath the house.

The Board vacated the August 9, 2022, hearing to give the DOR an opportunity
to file a response to the Appellants’ Motion for Summary Judgment and for the

Appellants to file a reply to the DOR’s response. MTAB Dkt. 13.

The DOR responded on August 10, 2022, citing numerous genuine issues of
material fact, including the dissimilar formulas and calculations each party
used, whether the Vacant Parcels were valued in a different neighborhood than
the Homesite, the classification of the subject property, and the dimensions of

the improvements. MTAB Dkt. 16.

The Appellants replied on August 24, 2022, agreeing that there were issues of
material fact in dispute. MTAB Dkt. 17. They also claimed not to have received
the following documents which were included in a list of documents in the
record provided by the DOR during discovery:

a. an official decision from CTAB as the one they received was not signed;

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23.

24.

BEFOQ”™, THE MONTANA TAX APPEA” BOARD
BEN & CARLA ...VDRUS v. STATE OF MONTANA, DEPART»..NT OF REVENUE

b. acopy of page 3 of the CTAB appeal form, indicating whether their
appeal was granted, denied, or granted in part with the signature of the
CTAB chair; and

c. two post-hearing documents they submitted to CTAB were not included
in a list of documents in the record the DOR provided to the Appellants

in discovery. Jd.

The Appellants’ reply of August 24, 2022, also states that “the first refusal of
DOR to access our property was done by the DoR itself when [the DOR]
summarily denied the Informal Review we requested over a year ago.” MTAB
Dkt. 17. They argued the next refusal was when the appraiser asked to walk
through the house while the CTAB hearing was pending. Jd. The Appellants
later refused to allow the DOR access when the DOR’s attorney requested the
appraiser be allowed access to measure the exterior of the house during the
MTAB discovery process to resolve the discrepancies between the dimensions
calculated by the DOR and the dimensions provided by the Appellants. Jd. The
Appellants state in their reply that it would be irresponsible to allow the DOR
personnel involved in the appeal or “anyone under their jurisdiction” access to

measure their house. /d.

The Appellants’ reply brief states they are asking for a total value of $134,106,
which includes $39,509 for all four parcels of land and $94,597 for the
improvements. MTAB Dkt. 17. The reply states the DOR’s increase to the
valuation of the house should not apply to 2021, and that “the house is not a
subject property for this Appeal.” /d. The Appellants state that because the
DOR switched to the cost method of valuation from the market method and
applied that change to 2022 only, the value for both 2021 and 2022 should have
been the amount shown under the cost method on the property record card prior
to the DOR’s adjustment at the AB-26. /d. In other words, the value of the
house should be $83,280 for both years, rather than $94,597 for 2021 and
$103,560 for 2022.

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BEFO”™™ THE MONTANA TAX APPEA” BOARD
BEN & CARLA ...VDRUS v. STATE OF MONTANA, DEPART»._.NT OF REVENUE

25. The Appellants argued that the letter they presented from Taylor Realty stating
the Vacant Parcels are unmarketable is unrefuted testimony that the market
price of that land is zero; however, they propose a value of $620/acre to arrive

at the same tax rate as the land surrounding them. MTAB Dkt. 17.

26. Under Montana Code Annotated § 25-20-56(c)(d), the Board may grant
summary judgment on a claim without a hearing if the pleadings, discovery,
and affidavits show that no genuine issue of material fact exists, and the
movant is entitled to judgment as a matter of law. The Board denied the
Appellants’ motion on August 26, 2022, based on the DOR’s argument that
there were genuine issues of material fact and the Appellants’ agreement with

the DOR on that statement in their reply. MTAB Dkt. 18.

27. The Appellants sent an email to the Board and the DOR on September 2, 2022,
stating that the documents listed in their reply of August 24, 2022, were still
unaccounted for. The DOR replied to the Appellants on September 7, 2022,
with copies of the documents the Appellants referred to, stating the DOR did
not have a copy of page 3 of the CTAB’s decision but that the DOR understood
that the Appellants attached the document the CTAB likely intended to be its
decision to their original MTAB appeal filing.

28. On September 9, 2022,? the Board issued an order to reschedule the hearing
and provide the Appellants with the entire MTAB record as of that date. MTAB
Dkt 19.

29. On September 14, 2022, the Appellants responded to the Board’s order stating
they were still missing documents, including documents they submitted to
CTAB themselves before and after their CTAB hearing. The Board issued an
order on September 15, 2022, to set the hearing for December 8, 2022, to

3 The Order was dated and sent September 9, 2022, but erroneously stamped September 13, 2022.

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30.

31.

32.

33.

BEFO”™™ THE MONTANA TAX APPEA”™BOARD
BEN & CARLA ...vDRUS v. STATE OF MONTANA, DEPART»....VT OF REVENUE

clarify the process, and to notify the Appellants they could submit additional
documents per the scheduling order. MTAB Dkt. 22.

On November 2, 2022, the Appellants requested MTAB clarify the order issued
September 15, 2022, and stated that none of the exhibits they provided to
CTAB were in the MTAB record. MTAB Dkt. 21. On November 4, 2022, the
Board issued an order again stating that either party could submit any

additional documents not in the record. M/7AB Dkt. 22.

On November 23, 2022, the Board issued a clarification stating the Board had
received additional documents from CTAB on November 21, 2022, including
the Appellants’ exhibits from the CTAB hearing, which were not previously
provided. MTAB Dkt. 29.

On November 30, 2022, the Appellants filed a challenge to the DOR’s
authority to assess tax on their property. MTAB Dkt. 31. The DOR sent an
email stating they intended to respond to the challenge. Because the hearing
date was approaching, the Board issued an order on December 2, 2022, to
allow both parties to present their arguments on the challenge at the beginning
of the hearing scheduled for December 8, 2022. MTAB Dkt. 32. The DOR filed
its written response to the Appellants challenge on December 5, 2022, in

advance of the hearing. MTAB Dkt. 33.

At the hearing, the Appellants argued that the DOR has never explained how
their property is owned in “fee simple.” MTAB Hr’g Tr. 9:23-10:9. They
testified the DOR provided the deed to the property but nothing on the deed
indicated “fee simple.” Jd. In response, the DOR argued that Montana Code
Annotated § 70-15-203 states, “Every estate of inheritance is a fee, and such
estate, when not defeasible or conditional, is a fee simple or absolute

fee.” MTAB Hr’g Tr. 11:1-9. The DOR further argued it is authorized in

several places in the Montana Code to appraise and classify property, and the

34.

35.

BEFO”™ THE MONTANA TAX APPEA”BOARD
BEN & CARLA...1DRUS v. STATE OF MONTANA, DEPART». NT OF REVENUE

Montana Constitution contemplates the state government taxing its citizens and
assessing and taxing property. M7AB Hr’g Tr. 11:1-9; MTAB Dkt. 33. The
United States Constitution, Article I, Section 8, and the 10th amendment

authorizes the states to tax citizens. Jd

There was conflicting testimony and evidence as to whether the Appellants
contested the value of the improvements on the property. MTAB Hr’g Tr. 3:10-
24; MTAB Dkt. 17. The Board proceeded with the hearing on the assumption
that the value of the improvements was still in dispute as the Appellants asked
the value to be left at $94,597, and the DOR was defending the value of
$103,560, which is the value it determined during the AB-26 review and which
the CTAB affirmed. MTAB Dkt. 1. The Appellants alternatively requested in
their appeal that the house be valued using the dimensions they provided of
1,736 square feet for the exterior. Jd. However, in their reply to the DOR’s
response to their motion for summary judgment, the Appellants attached emails
exchanged between the Appellants and the DOR which stated the Appellants
calculated the exterior measurements at 1,717 square feet, which they
acknowledged is 19 square feet less than they reported at the CTAB hearing.
MTAB Dkt. 17. The DOR estimated the dimensions at 1,864 square feet. Ex. D;
MTAB Dit. 3.

The Appellants rescinded the confidentiality agreement they signed when they
requested comparable sales data during the AB-26 process but did so in their
appeal to CTAB. Shortly thereafter, the DOR prepared and sent the information
the Appellants requested in their AB-26 form, including confidential sales data.
MTAB Dkt. 3. The DOR also mailed additional sales data, including
confidential sales data, to the Appellants as part of the discovery process prior
to the MTAB hearing. When asked by the Board at the beginning of the MTAB
hearing to clarify their position on holding sales data confidential, the
Appellants argued that no confidential information was provided to them, so no

confidentiality agreement was necessary. MTAB Hr’g Tr. 6:18-7:25.

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36.

37.

38.

BEFO” ™ THE MONTANA TAX APPEA” BOARD
BEN & CARLA....vDRUS v. STATE OF MONTANA, DEPART »...VT OF REVENUE

Furthermore, the Appellants claimed the DOR does not have the authority to
collect such sales information. Jd. To prevent dissemination of confidential
sales information during the MTAB hearing, the DOR refrained from
identifying parcels with their sales prices during their presentation. MTAB Hr’g
Tr. 6:18-7:25.

The Board adhered to its uniform practice of requesting that all proposed
exhibits be moved for admission and explained that the opposing party would
have a chance to object to any exhibit. MTAB Hr'g Tr. 12:8-13:12. The
Appellants testified they felt ambushed because they were unaware of the
procedure to admit documents to the record. MTAB Hr'g Tr. 19:16-20. Id. The
DOR agreed to admit all the Appellants’ exhibits at once and objected to
Exhibits 5 and 6 on hearsay grounds. Jd. The Board admitted all the
Appellants’ exhibits and preserved the DOR’s objections in the record.

The Appellants argued that the DOR never explained the reason for the greater
than 10% increase in their property value from the prior cycle, nor did they
explain the reason for using square feet when valuing the subject property
instead of acres. MTAB Hr’g Tr. 24:1-16. They further testified that because
the DOR did not provide the data they requested (confidential sales data)
during the AB-26 process until after they filed their CTAB appeal, they were
unable to understand the appraisal process. MTAB Hr’g Tr. 18:20-24, 22:8-
23:7, 24:20-25:10.

Evidence and testimony in this appeal is contrasting between parties as it
relates to whether the DOR was allowed on the land or in the improvements for
inspection and measurement of the improvements. The Appellants claim that
when the DOR refused the Appellants’ request for informal review (AB-26),
the DOR also refused to inspect the property. MTAB Hr'g Tr. 27:4-18, 46:9-
17. The DOR appraiser tried to inspect the property between the CTAB hearing
and the MTAB hearing, but the Appellants informed the appraiser that they had

15

39.

40.

41.

42.

BEFQ” “ THE MONTANA TAX APPEA~ BOARD
BEN & CARLA ...VDRUS v. STATE OF MONTANA, DEPART)...NT OF REVENUE

missed their opportunity. Jd. The Appellants testified they believed that neither
the Appellants nor the DOR was supposed to communicate with the other while
the CTAB appeal was pending. Jd. The Appellants stated that the CTAB
secretary told them they were not allowed to talk with anyone on the board or
to CTAB, and their contact point should be the CTAB secretary. MTAB Hr'g
Tr. 46:22-47:5; Ex. 8; MTAB Dkt. 1.

The Appellants claim the DOR knew or should have known the Vacant Parcels
were unbuildable since a DOR appraiser looked at the property in previous

years. MTAB Hr’g Tr. 18:24-19:5.

The Appellants argued at the hearing that the tax rate on their land should be no
more than that of the neighboring property. MTAB Hr’g Tr. 22:8-23:12. The
subject property and the neighboring property are very similar, but because
their neighbor owns more than 20 acres, his land is classified as nonqualified
agricultural land, which the Appellants testified they believe is based on an
arbitrary rule. MTAB Hr’g Tr. 22:8-23:12, 36:23-25; Ex. 3.

The Appellants testified they attempted to get an independent fee appraisal but
were unsuccessful because of the lack of sales of comparable properties for the
appraiser to use in valuing the properties. MTAB Hr’g Tr. 20:19-22:4. The
Appellants also introduced a letter from Taylor Realty stating that the Vacant
Parcels are unmarketable, thus they argue the market value is zero. MTAB Hr’g
Tr. 19:9-11, 20:20-22, Ex. 6. The Appellants testified that the comparable sales
of properties used by the DOR in building the land model were either too far
away, in the resort town of Polaris, or were classified as nonqualified

agricultural land. MTAB Hr’g Tr. 26:8-14.

The DOR testified it initially appraised the subject property using the
comparable sales approach to value. MTAB Hr'g Tr. 61:13-16. The land value

was derived using a land sale model, and adjustments were made for

16

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44.

45.

BEFO” ™ THE MONTANA TAX APPEA”~ BOARD
BEN & CARLA ....VDRUS v. STATE OF MONTANA, DEPARTn._..NT OF REVENUE

differences in size and time of sale adjusted to statewide lien date. MTAB Hr'g

Tr. 63:9-11.

When valuing a property, the DOR first creates neighborhoods consisting of
groups of properties that are homogenous in nature and share similar physical,
economic, governmental, and social factors. MTAB Hr’g Tr. 49:1-12. The
DOR modelers then validate sales in those neighborhoods, put those sales into
a model, run regression analysis on those models and then work with the
appraisers to ensure those values are legitimate. Jd. The DOR also time trends
the sales validated in a neighborhood model to the lien date to ensure all
properties are equalized. MTAB Hr’g Tr. 55:4-11. The DOR assigned the
subject property to neighborhood 218.001, northeastern Beaverhead County.

The model used by the DOR does not account for building restrictions like
those imposed on the Vacant Parcels because the DOR did not find sales of
properties with such restrictions in those particular neighborhoods. MTAB Hr’g
Tr. 51:9-52:4. Because of this, the DOR looked to other neighborhood land
models from Beaverhead County and other counties with similar
neighborhoods and used influence percentages built into those models to find a
defensible reduction for unbuildable lot value of the Vacant Parcels. /d. On
average, the models of other neighborhoods with sales of similarly restricted
property suggested a 70% reduction in market value. /d. The area manager for
the DOR, Chad Elser, testified that based on 10 to 15 other sales of non-
buildable lots in the area, the DOR felt that the 70% reduction the DOR applied
to the Vacant Parcels was fair. MTAB Hr’g Tr. 94:5-95:1.

The DOR uses an acre or square foot calculation in their model. MTAB Hr’g
Tr. 52:5-11. The base size of land for the model used by the DOR to value the
subject property was 43,560 square feet, roughly equal to one acre of land.
MTAB Hr’g Tr. 52:5-11. The valuation under the square foot analysis is very

similar to the valuation under the acre analysis but results in a value difference

17

46.

47.

48.

49.

BEFQ” ™ THE MONTANA TAX APPEA” BOARD
BEN & CARLA#...VDRUS v. STATE OF MONTANA, DEPART»..NT OF REVENUE

effected only by the rounding to the nearest dollar for the square foot analysis
and to the nearest hundred dollars for the acre analysis. MTAB Ar’g Tr. 52:5-
11, 86:5-9, 87:13-16,; 99:3-7.

The base rate of the model used to value the subject property is $36,616 per
acre or per 43,560 square feet. MTAB Hr’g Tr. 52:15-53:3. The DOR
determines the base rate by using independent variables to see how land values

are impacted and then verifies the values using a statistical analysis. Id.

The incremental or residual rate used to value the remainder of the property is
0.2984. MTAB Hr'g Tr. 53:5-54-24. The incremental rate is used to adjust for
differences in land sizes or account for additional or lesser sized parcels. Id.
The incremental rate is developed using the land size and sale prices of sold
properties in the sales model. /d. The formula used multiplies the base rate by
the subject land size raised to the incremental rate. Jd. The comparable sales are
also time adjusted to the common January 1, 2020, lien date in Montana set by

Montana Code Annotated § 15-7-111. MTAB Hr'g Tr. 84:20-25.

JURISDICTION AND STANDARD OF REVIEW
The Montana Tax Appeal Board is an independent agency not affiliated with
the Montana Department of Revenue. Mont. Const., Art. VIII $7; Mont. Code
Ann. § 15-2-101. The Appellants filed a timely appeal of the DOR’s decision to
the MTAB. Therefore, this Board maintains jurisdiction to hear and decide this
matter. Mont. Code Ann. § 15-2-301.

This Board may hear appeals de novo. Dept. of Revenue v. Burlington N., 169
Mont. 202, 213-14, 545 P.2d 1083 (1976). “A trial de novo means trying the
matter anew, the same as if it had not been heard before and as if no decision
had been previously rendered.” McDunn v. Arnold, 2013 MT 138, § 22, 370
Mont. 270, 275, 303 P.3d 1279, 1282.

18

50.

51.

52.

53.

54.

55.

56.

BEFQ” ™, THE MONTANA TAX APPEA”~™ BOARD
BEN & CARLA «..VDRUS v. STATE OF MONTANA, DEPART»..NT OF REVENUE

The Board’s order is final and binding upon all parties unless changed by

judicial review. Mont. Code Ann. § 15-2 302(6).

CONCLUSIONS OF LAW
To whatever extent the following conclusions of law may be construed as

findings of fact, they are incorporated accordingly.

“All taxable property must be appraised at 100% of its market value....” Mont.
Code Ann. § 15-8-111.

Per Montana Code Annotated § 15-2-301(5), MTAB is not bound by common
law and statutory rules of evidence or rules of discovery in appeals of CTAB

decisions and may affirm, reverse, or modify any decision.

DOR is entitled to a “presumption of correctness if its decisions are pursuant to
an administrative rule or regulation, and the rule or regulation is not arbitrary,
capricious or otherwise unlawful.” Burlington N., 169 Mont. At 214, 545 P.2d
at 1090. However, DOR cannot rely entirely on the presumption in its favor
and must present a modicum of evidence showing the propriety of their action.

Western Air Lines v. Michunovich, 149 Mont. 347, 353, 428 P.2d 3, 7 (1967).

The Taxpayer bears the burden of proving the error of DOR’s decision.
Farmers Union Cent. Exch. V. Dep’t of Revenue, 272 Mont. 471, 476, 901 P.2d
561, 564 (1995); Western Air Lines, 149 Mont. At 353, 428 P.2d at 7.

““ Assessment formulations’ by [the Montana Tax Appeal Board] should be
upheld unless there is a clear showing of an abuse of discretion.” Peretti v.
Dep’t of Revenue, 2016 MT 105, ¥ 15, 383 Mont. 340, 344, 372 P.3d 447, 450
(citing O’Neill v. Dep’t of Revenue, 2002 MT 130, { 23, 310 Mont. 148, 155,
49 P.3d 43, 47); see Northwest Land & Dev. V. State Tax Appeal Bd., 203

19

57.

58.

59.

60.

61.

62.

BEFO” ™ THE MONTANA TAX APPEA”™ BOARD
BEN & CARLA ...VDRUS v. STATE OF MONTANA, DEPART)..NT OF REVENUE

Mont. 313, 317, 661 P.2d 44, 47 (1983) (overruled on other grounds by DeVoe
v. Dep't of Revenue, 263 Mont. 100, 866 P.2d 228 (1993)).

When construing a statute, it is the Board’s role to “determine what in terms or
substance is contained in it, and not to insert what has been omitted or to omit
what has been inserted.” State v. Minett, 2014 MT 225, § 12, 376 Mont. 260,
263, 332 P.3d 235, 238; Mont. Code Ann. § 1-2-101.

“In the construction of a statute, the intention of the legislature is to be pursued
if possible. When a general and particular provision are inconsistent, the latter
is paramount to the former, so a particular intent will contro! a general one that

is inconsistent with it.” Mont. Code Ann. § 1-2-102.

“When faced with a problem of statutory construction great deference must be
shown to the interpretation given the statute by the officers or agency charged

with its administration.” Dep ’t of Revenue v. Puget Sound Power & Light Co.,
179 Mont. 255, 262, 587 P.2d 1282, 1286 (1978) (citing Udall v. Tallman, 380
U.S. 1, 16 (1965)).

“TT ]ax statutes are to be strictly construed against the taxing authority and in
favor of the taxpayer.” Western Energy Co. v. Dep’t of Revenue, 1999 MT 289,
{ 10, 297 Mont. 55, 58, 990 P.2d 767, 769.

The term “improvements” includes all buildings, structures, fences, and

improvements situated upon, erected upon, or affixed to land. Mont. Code Ann.

§ 15-1-101(1)(i).

The Legislature intended the Department to utilize several different approaches
or combination of approaches, including the income approach, sales
comparison approach, and cost less depreciation approach, depending on the

market where the appraisals take place, when it assesses property and estimates

20

63.

64.

65.

66.

BEFO” ™ THE MONTANA TAX APPEA” BOARD
BEN & CARLA ...vDRUS v. STATE OF MONTANA, DEPARTh..VT OF REVENUE

market value. Albright v. State, 281 Mont. 196, 208-09, 933 P.2d 815, 823
(1997).

Under Montana Code Annotated § 15-7-139(7)(b), if a landowner refuses to
allow DOR valuation staff to enter the land to appraise the property, the DOR
is required to estimate the value of the property. Under Montana Code
Annotated § 15-7-139(7)(a), neither the CTABs, nor MTAB may adjust the
DOR’s estimated value if a landowner refuses to allow the DOR access to the
land unless the landowner provides an appraisal that meets the requirements set

forth therein from a certified Montana appraiser.

Under Montana Code Annotated § 15-7-102(3)(a)(ii), property owners may file
an objection (a DOR AB-26 informal review) for class three and class four
property only once each cycle. A written objection must be made within 30
days from the date on the classification and appraisal notice for any reduction
granted to be applied to both years in the cycle. If a property owner files an
objection more than 30 days from the date on the classification and appraisal
notice, but before June 1° of the second year of the cycle, any adjustment

granted will only apply to the second year of the cycle.

DISCUSSION
The Board heard and considered arguments at the beginning of the hearing as
to whether the DOR has legal authority to value and classify Montana property
as a part of our state system of taxation. We are convinced by the authorities
cited by the DOR in their briefing and oral arguments in favor of their legal
authority to value and classify property.

The Board’s role in valuation and classification disputes is to weigh the
evidence and testimony presented and decide whether the DOR’s appraised
value is reflective of market value on the lien date. It is also this Board’s duty

to consider arguments and evidence and decide the correct classification of

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BEFQ” ™. THE MONTANA TAX APPEA~ BOARD
BEN & CARLA «.VDRUS v. STATE OF MONTANA, DEPART»..NT OF REVENUE

disputed property by interpreting the definitions of the various property

classifications set forth by the Legislature into the Montana Code Annotated.

This Board is responsible for applying the law to the findings of fact above.

The Appellants argued that the DOR did not explain the more than 10%

increase in their property value from the previous cycle as required by Montana

~ Code Annotated § 15-7-102(1)(b)(iv). Subsection (iv) was added to the statute

in 2021 and became effective October 1, 2021. This means that notices mailed
after October 1, 2021, must include this information. The Notice in this matter
was dated July 9, 2021, prior to the effective date, thus the DOR was not in
violation of Montana Code Annotated § 15-7-102(1)(b)(iv) when it sent the

Notice to the Appellants without an explanation of the increase.

The Appellants also argued that the DOR violated Montana Code Annotated §
15-7-102(2)(a) by failing to provide “sufficient information in a
comprehensible manner designed to fully inform the taxpayer as to the
classification and appraisal of the property and of changes over the prior tax
year.” This Board finds that the DOR provided the Appellants with multiple
documents to explain how they valued the subject property, including the
property record cards of the subject property, the dimensions of the subject
home the DOR used to calculate value, a comparable sales report, the land
model used to value the subject property, and a map of the subject property.
The DOR also provided the Appellants with information regarding differences
between the subject property and the neighboring property that led to the
properties being classified and valued differently, including the property record
card for the neighboring property and a map of the neighboring property
demonstrating the difference in acreage of the neighboring property and the
subject property. We find that the DOR provided the Appellants numerous
documents with information and explanations to demonstrate how the subject

property was valued. Thus, we disagree with the Appellants that the DOR was

22

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BEFO” ™ THE MONTANA TAX APPEA~ BOARD
BEN & CARLA ...VDRUS v. STATE OF MONTANA, DEPART»...VT OF REVENUE

in violation of Montana Code Annotated § 15-7-102(2)(a) for failing to provide

the required information.

The Appellants also argued that they only denied the DOR access to the house
but did not deny access to the land to walk around the land. This Board
understands the Appellants’ reluctance to allow the DOR personnel into the
house due to Mr. Andrus’s health. However, if a landowner refuses to allow the
DOR access to the land to appraise the property, the DOR is required to
estimate the value of the property, and then the CTAB and MTAB may not
change the DOR’s value unless the landowner provides an appraisal from a
certified Montana appraiser performed according to the requirements of
Montana Code Annotated § 15-7-139(7)(a)(ii). The Appellants stated in the
reply to their motion for summary judgment that the DOR first refused to
access the property when they denied the informal review. They also state that
the CTAB secretary told them they could not speak with the CTAB or board
members until the hearing and that their only point of contact should be her.
This Board agrees that parties should not be in direct contact with the CTAB
board members while a hearing is pending. This is to avoid ex parte
communication, which is communication between a party and board members
without the other party present. This means appellants may not communicate
with or correspond with CTAB board members in any way about their pending
hearing unless the DOR personnel are also present. The same is true for the
DOR. The DOR may not speak with CTAB board members about their
pending hearing unless the appellant in that hearing is also present. The CTAB
secretary’s statement that the Appellants could not speak with the CTAB board
members did not prevent the Appellants and DOR personnel from speaking
with each other, nor did it prevent the DOR from being able to walk around the

subject property land for appraisal purposes.

The Appellants provided copies of emails between themselves and the DOR in
preparation for the MTAB hearing in which the parties calculated different
measurements for the house. The DOR asked to come to the property to

23

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BEFQ’ “ THE MONTANA TAX APPEA”™” BOARD
BEN & CARLA ...VDRUS v. STATE OF MONTANA, DEPART »....VT OF REVENUE

measure the outside dimensions of the house, but the Appellants did not grant
the request. The Appellants stated in their reply to their motion for summary
judgment that it would be irresponsible to allow access to the DOR now. Based
on the evidence and testimony presented, this Board finds the DOR reasonably
believed it was not permitted on the property to measure the house during the
pendency of the AB-26 review and the CTAB and MTAB appeals. Because of
this, the DOR was required to estimate the value per Montana Code Annotated
§ 15-7-139(7)(b). As a result, this Board may not reduce the value per Montana
Code Annotated § 15-7-139(7)(a).

The Appellants also argued that the DOR did not show authorization to collect,
have, or use confidential sales data. This Board notes that such authorization
can be found in the Realty Transfer Act (Mont. Code. Ann. § 15-7-301, et
seq.), and that Montana Code Annotated § 15-7-308 specifically states that
information included on the Realty Transfer Certificates, including confidential
sales data, is not a public record and must be held confidential by the county
clerk and the DOR. The statute further states that such information may be
shared with a property owner to demonstrate how the DOR valued their
property once the property owner signs a written or electronic confidentiality
agreement. The confidential information covered by the confidentiality
agreement includes information such as the amounts people in their community
paid or received when they purchased or sold their properties. The Appellants
rescinded their confidentiality agreement in their CTAB appeal. The CTAB is
separate from the DOR, so it is unclear when the DOR received the notice that
the Appellants had rescinded that agreement. Although the DOR did send the
sales data to the Appellants, the Appellants rescindment of the confidentiality
agreement rescinded their entitlement to the sales data. Montana is a non-
disclosure state regarding property sales prices, but the information is
necessary for the DOR to value properties each valuation cycle. Thus, the
Realty Transfer Act authorizes the DOR to collect such information to use in

valuing Montana properties.

24

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BEFQO” ~ THE MONTANA TAX APPEA”” BOARD
BEN & CARLA .vDRUS v. STATE OF MONTANA, DEPARTh... NT OF REVENUE

The Appellants also argued that they initially believed the value of their land
appeared to double when the DOR calculated it using square feet rather than
acres. As stated above, the difference between using square feet and acreage in
the calculation is a function of rounding and was not a factor in the increase in
the value of the subject property in the current cycle. This Board finds the use
of square feet over acreage in calculating the value made a minimal difference
and the change in value from the prior cycle was a function of market sales and

updated property characteristic information in the DOR’s records.

The Appellants also argued that Montana Code Annotated § 15-7-102(3)(a)
explicitly allows property owners to object electronically or by checking a box
to meet the deadline to request informal review. This Board notes the statute
allows property owners to request an informal review (AB-26) “by submitting
an objection on written or electronic forms provided by the department for that
purpose or by checking a box on the notice and returning it to the department
in a manner prescribed by the department.” (Emphasis added.) The Appellants
testified that they attempted to file their AB-26 request online, and when that
method failed, they called the DOR. They did not mail their request to the DOR
until September 9, 2021, more than 60 days after the date shown on the
Appraisal Notice and more than 30 days after the deadline. Based on the plain
language of Montana Code Annotated § 15-7-102(3)(a)(ii), any adjustments
made either through the AB-26 process or through an appeal only apply to the
second year of the cycle, which is 2022 in this appeal. While we understand the
Appellants’ frustration with the process, the law provides all property owners
30 days from the date shown on their classification and appraisal notice to
submit their AB-26 to the DOR or to appeal to CTAB. This deadline is clearly
stated in the Appraisal Notice. The law speaks for itself and the evidence and
testimony in this appeal are unrefuted that the Appellants submitted their AB-
26 to the DOR more than 30 days after the date shown on the Appraisal Notice.
While we agree that the value of the Vacant Parcels must be reduced, as

discussed below, this Board does not have the legal authority to disregard

25

75.

76.

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BEFO”™ THE MONTANA TAX APPEA” BOARD
BEN & CARLA ...1DRUS v. STATE OF MONTANA, DEPARTM.NT OF REVENUE

Montana Code Annotated § 15-7-102(3)(a)(ii). Therefore, the 70% reduction in
value for the Vacant Parcels may only apply to 2022, and not to 2021.

As to the subject of this appeal, the DOR must prove to the Board through
evidence and testimony that they followed Montana law and appraisal practices
in classifying and valuing the subject property. The Appellants have the burden
to show the Board that the DOR valued their property incorrectly. The Board
must decide the classification and valuation of the property based on the

evidence and testimony presented.

The Appellants made a logical argument that if their land is identical or very
similar to their neighbor’s land, the parcels should all be valued the same.
However, this view does not acknowledge that Montana law distinguishes or
classifies differing uses of land. In Montana, the legislative branch of
government sets classification categories for lands, typically based on size and
use, and assigns varying categories to those property class definitions. The
legislature has the legal authority to set qualification thresholds and to define
agricultural uses and record them in the law, formally referred to as the

Montana Code Annotated.

The neighboring land meets the requirements of Montana Code Annotated §
15-6-133(1)(c) and is therefore classified as nonqualified agricultural land
because the parcels total over 20 acres. Montana Code Annotated § 15-6-
133(3) states, “The taxable value of land described in subsection (1)(c)
[nonqualified agricultural land] is computed by multiplying the value of the
land by seven times the taxable percentage rate for agricultural land.” Montana
Code Annotated § 15-6-133(2) states, “Subject to subsection (3), class three
property is taxed at 2.16% of its productive capacity value.” How the value is
set for nonqualified agricultural property is beyond the scope of this appeal.
This Board notes that the value of nonqualified agricultural land in the
2021/2022 cycle is $55.35 per square foot.

26

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79.

80.

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BEFO”™™ THE MONTANA TAX APPEA”™ BOARD
BEN & CARLA ....1DRUS v. STATE OF MONTANA, DEPARTM.NT OF REVENUE

The subject property is classified as class four residential property. Montana
Code Annotated § 15-7-103(6) requires all class four property to be valued as
provided in § 15-7-111 on its market value. Montana Code Annotated § 15-8-
111(1) and (8)(d) require class four properties to be assessed at 100% of market
value. Class four property is taxed at 1.35% of market value under Montana

Code Annotated § 15-6-134.

We find that within the constraints of these laws, the DOR has properly
classified the Appellants’ parcels as class four residential property. Unlike their
adjoining neighbor, the Appellants’ 5.69 acres of land cannot be classified as
nonqualified agricultural land under existing Montana law as they own less
than the statutory minimum of 20 acres. The neighbor’s land they compare
their land to is more than 20 contiguous acres thereby qualifying as

nonqualified agricultural land under Montana Code Annotated § 15-7-202.

The Appellants were clear that they were not requesting their land be
reclassified. However, they provided a formula, [$55.35 x 7 x 2.16%] / 1.35%,
which would yield a value of $620 per acre, which they calculated to provide
the same tax rate as their neighbor’s nonqualified agricultural land. We decline
to adopt the values sought by the Appellants because their land does not qualify
for the same treatment under the Montana law classifying different types of
land by size and use. It is clear by the size of the Appellants’ parcels that they
do not meet the standard set forth in law to be classified as agricultural, thus
they do not qualify to be taxed at a similar rate. Class four property, such as the
Appellants’ property, must be valued at 100% of its market value based on
Montana law and standard appraisal practices. This Board does not believe the
resulting value the Appellants requested is indicative of market value and

declines to adopt the values they request.

The DOR reduced the value of the Vacant Parcels by 70% at the CTAB hearing

after receiving evidence they were not suitable for development. The

27

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BEFO”™ THE MONTANA TAX APPEA~ BOARD
BEN & CARLA .../DRUS v. STATE OF MONTANA, DEPART...NT OF REVENUE

Appellants argued that the statement in the Taylor Realty letter that the broker
believed there was no way they could sell the Vacant Parcels was proof that the
value of the Vacant Parcels is zero. Rather than request a value of zero, the
Appellants argued for a value of $620 per acre based on the formula discussed
above. We are not convinced by the evidence the Appellants presented that the
value of the Vacant Parcels is zero or that the Board would be justified in
reducing the values as much as the Appellants requested. Although the Vacant
Parcels are small and not suitable for development, they still have value. We
agree with the DOR’s 70% reduction in value for the Vacant Parcels. Based on
evidence and testimony presented, the DOR applied their standard procedures
to correctly assign the influence factor of “unbuildable” to the lots and
correctly reduced the value by 70% as applied to other unbuildable lots. We
uphold the 70% reduction the DOR applied to the Vacant Parcels.

The Board will apply the law as required and affirm the CTAB’s decision in
part and reverse in part. The Appellants have not provided any credible
evidence and testimony to convince us the DOR has erred in their valuation
and classification of these parcels of land or the improvements, thus we affirm
the CTAB’s decision as to the value of the subject property. We reverse the
CTAB’s decision to apply the 70% reduction in value of the Vacant Parcels to
both years of the valuation cycle because plain language of the statute is clear
that the changes may only apply to the second year of the cycle (2022), and
there is no legal authority granted to CTAB or MTAB to make an exception for

an untimely filed appeal.

28

BEFO” ™, THE MONTANA TAX APPEA” BOARD
BEN & CARLA .../DRUS v. STATE OF MONTANA, DEPARTM..NT OF REVENUE

ORDER
83. We affirm the CTAB’s decision upholding the DOR’s valuation for 2022.

84. We reverse the CTAB’s decision to apply the DOR’s 70% reduction to the

value of the Vacant Parcels to 2021.

85. The DOR shall maintain the land value of the three Vacant Parcels at $25,044,
$28,265, and $26,538 for 2021 and at $7,513, $8,480, and $7,961 for 2022.

86. The value of the improvements on the land shall remain at $97,597 for 2021
and $103,560 for 2022.

87. The DOR shall maintain the land value of the Homesite at $57,903 for both
2021 and 2022.

Dated this 2nd day of March 2023.

Deel Ie,

David L. McAlpin, Chairman

hk eS

Amie Zendron, Member

Notice: You are entitled to judicial review of this Order by filing a petition in district
court within 60 days of the service of this Order. The Department of Revenue shall
promptly notify this Board of any judicial review to facilitate the timely transmission

of the record to the reviewing court. Mont. Code Ann. $15-2-303(2).

29

BEFO”™ THE MONTANA TAX APPES BOARD
BEN & CARLA....VDRUS v. STATE OF MONTANA, DEPARTm.NT OF REVENUE

Certificate of Service

I certify that I caused a true and correct copy of the foregoing Findings of Facts and
Conclusions of Law to be sent by email and United States Mail via Print & Mail

Services Bureau of the State of Montana on March 2, 2023, to:

BEN & CARLA ANDRUS
P.O. Box 8

5100 Trapper Creek Rd
Melrose, Montana 59743

Dave Burleigh

STATE OF MONTANA, DEPARTMENT OF REVENUE
Legal Services Office

P. O. Box 7701

Helena, MT 59604-7701

Kory Hofland, Division Administrator
DOR PAD

340 North Last Chance Gulch

Helena, MT 59601-5012

Amy Walker, Secretary

Beaverhead County Tax Appeal Board
2 South Pacific Street, CL#1

Dillon, MT 59725

Sac ree

} Wynn Cochran, Legal Secretary

BEFORE THE MONTANA TAX APPEAL BOARD

APR 24 2023
Montana Tax Appeal Board

BEN & CARLA ANDRUS, CASE Ne: PT-2022-15
Appellants,
Vv. ORDER CORRECTING CLERICAL
MISTAKE
STATE OF MONTANA,
DEPARTMENT OF REVENUE,

Respondent.

The parties are hereby notified that the Findings of Fact, Conclusions of Law,
Order, and Opportunity for Judicial Review of March 2, 2023, contains a clerical
mistake. A clerical mistake may be corrected by the Board at any time. Rule 60(a), M.
R. Civ. P.

On page 26 number 77, the Findings of Fact, Conclusions of Law, Order, and
Opportunity for Judicial Review states, “This Board notes that the value of
nonqualified agricultural land in the 2021/2022 cycle is $55.35 per square foot.” The
Order should read, “This Board notes that the value of nonqualified agricultural land

in the 2021/2022 cycle is $55.35 per acre.”

Drdt. MeL,

David L. McAlpin, Chairman \ }

Dated this 24" day of April 2023.

DEAS @ f° d5oF EXD 8
BEN & CARLA ANDRUS vp STATE C6 UWONT IN

Certificate of Service

I certify that I caused a true and correct copy of the foregoing Order Correcting
Clerical Mistake to be sent by email and United States Mail via Print & Mail Services
Bureau of the State of Montana on April 24, 2023, to:

Ben & Carla Andrus
P.O. Box 8 ,
5100 Trapper Creek Rd
Melrose, MT 59743

Dave Burleigh

State of Montana, Department of Revenue
Legal Services Office

P.O. Box 7701

Helena, MT 59604-7701

yfn Cochran, Legal Secretary