Peekamoose, LLC v. DOR

OCR transcription for search; preserved printed pages are authoritative

BEFORE THE MONTANA TAX APPEAL BOARD FILED

JAN 02 2025
Montana Tax Appeal Board
PEEKAMOOSE, LLC, CASE Ne: PT-2024-36
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 Madison County Tax Appeal Board
(CTAB) denying Peekamoose, LLC, (Taxpayer) a reduction in value on the subject
property located at the Warren Miller Lodge Condominium, Unit 307 in the
Yellowstone Club at Big Sky, Montana (Subject Property). The Taxpayer appealed
that outcome to Montana Tax Appeal Board (MTAB) on April 9, 2024. We uphold the
CTAB’s determination.

ISSUE TO BE DECIDED
Whether CTAB erred in denying Taxpayer’s request for a reduction in value on

the Subject Property.

EXHIBIT LIST
. The following evidence was submitted at the hearing:
Taxpayer Exhibits:
1. Email from Jefry Rosmarin to Kristina Warren on 9/17/24;
2. Sketch of Subject;
3. Sales Information Packet;
4. Property Record Card;
5. Comparable Sales Report dated 7/31/23;

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

6. Email from Jefry Rosmarin to Paul Bills dated 8/25/23;
7. Additional Sales Packet dated 8/17/23;
8. Picture of Loft Bunk Beds;

9. What Was Incorrect About the Prior Decision;

10. Supplement to Form MTAB 401;

11. Comparable Sales Report dated 1/29/24;

12. DOR Values Based on Assessment Numbers;

13. CTAB Exhibits I-V;

14. Comparable Sales Report dated 6/28/24; and

15. Calculation Memo.

DOR Exhibits:

A. Property Record Card;
AB-26 Determination Letter;
Revised Classification and Appraisal Notice;
Comparable Properties (5 Properties);
Comparable Properties (3 Properties);
Sales Packet; and

asm oO Do

First Amendment to Restated and Revised Declaration for WM Lodge

Condominiums.

PROCEDURAL HISTORY

The DOR valued the Subject Property at $6,280,900 for the 2023/2024
appraisal cycle, with the land valued at $527,502 and the improvements valued at
$5,753,398. Ex. A. The Taxpayer filed an AB-26, Request for Informal Classification
and Appraisal Review, with the DOR on July 24, 2023. MTAB Dkt. 2. The DOR sent a
Form AB-26 Determination Letter to the Taxpayer dated September 19, 2023,
partially granting the Taxpayer’s request by lowering the total value from $6,280,900
to $5,748,600. Jd. The Taxpayer appealed the DOR’s valuation to the CTAB on
December 4, 2023, requesting a land value of $438,533 and an improvement value of
$4,380,518. Id. The CTAB hearing was held on March 13, 2024, and the CTAB’s
decision denying the Taxpayer’s application for reduction, dated March 13, 2024, was

2

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

sent to the parties. MTAB Dkt. 1. The Taxpayer appealed to MTAB on April 9, 2024,
per Mont. Code Ann § 15-2-301, requesting a land value of $438,533 and an
improvement value of $4,380,518, for a total of $4,819,051. Jd. The MTAB hearing
was conducted in Helena on October 8, 2024, at which the following were present:

a. Jefry Rosmarin, Represenative for Peekamoose LLC. (via Zoom);
Denise Karahalis, Observing (via Zoom); Elizabeth Hendrieva,
Observing (via Zoom); and Evan Glass, Observing (via Zoom).

b. Kristina Warren, DOR Counsel; Paul Bills, Commercial Appraiser; Tina
Oliver, Area Manager; Tierani Losing, Modeler/CO Unit Manager; and
Marguerite Henning, Observing.

The record includes all materials submitted to CTAB, a recording of the CTAB
hearing, all materials submitted to MTAB with the appeal, additional exhibits
submitted by the parties prior to and at the MTAB hearing, and a transcript of 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 Subject Property is a residential condominium unit owned by Peekamoose
LLC. Ex. A. The Subject Property is condominium Unit 307 in the Warren
Miller Lodge located at the Yellowstone Club in Big Sky, Montana, and is also
identified by its geocode 25-0337-07-2-05-01-7307. Id. The Subject Property is
1,442 square feet in total and is in DOR neighborhood 225.715.K. Id.

3. The DOR originally valued the Subject Property at $6,280,900 for tax years
2023 and 2024. Ex. A. The Taxpayer filed an AB-26 Request with the DOR on
July 24, 2023, and the DOR partially granted the Taxpayer’s request by
lowering the total value from $6,280,900 to $5,748,600. MTAB Dkt. 2. The
Taxpayer appealed to CTAB on December 4, 2023, requesting the total value
be lowered to $4,819,051. Jd. The CTAB hearing was held on March 13, 2024,
and the CTAB denied the Taxpayer’s request for a reduction. Jd. The Taxpayer

3

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

appealed to MTAB on April 9, 2024, requesting $438,533 allocated to the land
and $4,380,518 allocated to the improvements, for a total value of $4,819,051
as the most accurate represented market value for the Subject Property. MTAB
Dkt. 1. The DOR maintained that the value assigned after the AB-26 Review of
$5,748,600 was the most accurate market value. MTAB Hr’g Tr. 3:4-6.

At the MTAB hearing, Taxpayer Representative, Jefry Rosmarin, contended
that the Subject Property’s price per square foot was higher than other units in
the condominium complex. MTAB Hr’g Tr. 6:14-18. Additionally, Taxpayer
Representative argued that using multiple regression analysis (MRA) to value a

property when suitable comparable properties exist was flawed. MTAB Hr’g
Tr. 7:18-8:14.

Taxpayer Representative testified that he had conversations with DOR
Appraiser Paul Bills concerning five comparable properties, located in the
Warren Miller Lodge, which the DOR used to determine the Subject Property’s
original value. MTAB Hr’g Tr. 7:18-8:14. Taxpayer Representative raised
concerns with Mr. Bills regarding comparable number four, which was larger
than the Subject Property, arguing that the DOR should have adjusted the
comparable property to account for the difference in price per square foot. Id.
Mr. Bills ultimately removed comparable properties four and five from the
DOR’s calculation. Jd. Of the remaining three comparable properties, numbers
one and three were also removed during the appraisal process. Instead, the
DOR used the Subject Property’s MRA, weighted estimate, and comparable
number 2 to determine value. MTAB Hr’g Tr. 7:18-8:14, 10:3-20. Mr.
Rosmarin argued that when five very similar properties, all located within the
same building, are available, the comparable sales method should be the

appraisal methodology used. Jd.

Taxpayer Representative presented data from a DOR sales report, which
included MRA estimates and a price per square foot value for the Subject

Property and each of the five comparable properties. Ex. 3, 15; MTAB Hr’g Tr.

4

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

10:21-11:23. Taxpayer Representative contended that the wide range of price
per square foot values spanning from $2,188 to $3,898 indicated that MRA is
an unreliable statistical tool for appraisals. Jd. The Subject Property had the
highest listed price per square foot of the six properties at $3,898, which was
between 22 and 78 percent higher than the comparable properties. Jd.

Taxpayer Representative questioned why comparable property number one was
sold for roughly $4 million dollars one month before the lien date and the DOR
then reassessed at the lien date for $5.9 million. Ex. 1; MTAB Hr’g Tr. 12:10-
13:6. Mr. Bills felt the $5.9 million valuation was correct because while there
was a condo in the Warren Miller Lodge that sold for $4 million, there was also
a sale of a condominium for $12 million in the Warren Miller Lodge. Ex. 5;

MTAB Hr’g Tr. 59:6-16.

Taxpayer Representative presented a portion of the CTAB hearing’s audio
recording in which Mr. Bills indicated that the DOR does not prefer to use
MRA because it is subjective and hard to defend. MTAB Hr’g Tr. 16:20-17:15.
Taxpayer Representative again questioned why MRA was used in the Subject

Property’s calculation instead of the comparable sales method. Jd.

Taxpayer Representative calculated the Subject Property’s value using his
adjusted sales price method to test the validity of the DOR’s MRA price. Ex.
13; MTAB Hr’g Tr. 21:16-22:6. Taxpayer Representative’s calculation using
adjusted sales prices resulted in a value of $5,145,056 for the Subject Property,
whereas the DOR’s calculation using MRA returned a value of $5,748,600. Id.
Taxpayer Representative testified that in his calculation he removed the
comparable properties with the highest and lowest adjusted sales prices as the
DOR does when calculating using MRA. Jd. Taxpayer Representative then
averaged the remaining three adjusted sales prices to get an average per-square-
foot price and applied it to the Subject Property for his final value of
$5,145,056. Id. Taxpayer Representative argued that the discrepancy between

the comparable properties’ adjusted sales price per foot versus the MRA price

5

10.

11.

12.

13.

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

per square foot and the difference in final values between the two calculations

shows that the MRA method is flawed. Jd.

Taxpayer Representative contended that unusually high interest in
condominium units in the Warren Miller Lodge during the COVID-19
pandemic may have inflated the sales prices used by the DOR in calculating the
value of the Subject Property. MTAB Hr’g Tr. 22:6-13. Mr. Rosmarin stated
that during the pandemic, the Warren Miller Lodge had roughly eighty people

on their wait list and currently, there are none. Jd.

Taxpayer Representative presented a list of properties provided by the DOR in
their sales report dated August 17, 2023, which appeared to be single-family
homes with amenities such as basements and garages, rather than condominium
units. Ex. 7; MTAB Hr’g Tr. 23:16-24:21. Furthermore, the properties are
generally much larger than the Subject Property, with homes ranging from five
to eleven thousand square feet. Jd. Taxpayer Representative questioned why the
DOR used these properties in valuing the Subject Property when more similar

sales were available from condominium units located inside the same complex.
Td.

Taxpayer Representative testified that the DOR incorrectly listed the Subject
Property as having a mountain view. MTAB Hr’g Tr. 25:1-4. The DOR also did
not properly remove a fireplace from their record, which was removed during
construction of the Subject Property’s loft. Jd. Additionally, the DOR did not
account for a half bath present inside the Subject Property. Jd.

Taxpayer Representative argued that the DOR should adjust the Subject
Property's value to account for the limited value and utility of the second-floor
loft area. Ex. 8; MTAB Hr’g Tr. 26:16-27:22. Taxpayer Representative stated
that the second-floor loft has limited vaulted ceiling space, contains no

windows, bathrooms, or closets, and should be valued differently than the first-

14.

15.

16.

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

floor space. Jd. Taxpayer Representative conceded on cross-examination that
the loft does have beds and could be used as a bedroom. MTAB Hr’g Tr. 33:8-
13.

Mr. Bills testified that the DOR could use comparable properties that were sold
up to six years prior to the lien date. MTAB Hr’g Tr. 37:7-17. However, all of
the comparable properties used by the DOR to value the Subject Property were

sold within two years of the lien date. Jd.

Mr. Bills stated that the comparable sales approach was, in fact, the valuation
method used to value the Subject Property. MTAB Hr’g Tr. 37:23-38:20. The
International Association of Assessing Officers (IAAO) standards and DOR
procedure requires three to five comparable properties to be found to use the
comparable sales method to value a property. MTAB Hr’g Tr. 37:23-38:20,
89:16-20. Regardless of whether the DOR uses three or five comparable
properties, the weighted estimate and MRA are also used. MTAB Hr’g Tr.
37:23-38:20. In this case, the DOR used three comparable properties and
removed the highest and lowest values and averaged the remaining three to get
a final comparable sales value. Jd. After removing the highest and lowest
values, the three remaining values that were averaged in the Subject Property’s
valuation were comparable two’s adjusted sales price, the MRA value, and the
weighted estimate. MTAB Hr’g Tr. 14:18-15:10. Additionally, if the DOR has
five comparable properties, the DOR, using the MRA, weighted average, and
the comparable properties, will remove the two highest and the two lowest
leaving three values that are averaged for value the Subject property. MTAB
Ar’g Tr. 37:23-38:20.

Mr. Bills stated that for the second-floor loft area to be considered a bedroom,
it must have a window and closet according to DOR policy. MTAB Hr’g Tr.
42:3-8. Since the second-floor loft area does not have a closet or window, the

DOR considers it living space and is valued less than a bedroom. Jd.

17.

18.

19.

20.

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

Mr. Bills testified that after the AB-26 Review process, the only changes made
were to remove comparable properties four and five as comparables used to
value the Subject Property. Ex. B; MTAB Hr’g Tr. 44:24-45:9, 46:20-47:2.
This change was made because the comparable properties differed in size and
amenities. Jd. Mr. Bills stated that removing the two comparable properties
from the comparable sales analysis substantially lowered the Subject Property’s

value. Ex. E; MTAB Hr’g Tr. 47:8-12.

Mr. Bills stated that this was the most sales he had ever seen in the
Yellowstone Club area, and he had more than enough comparable sales to
properly value the Subject Property this tax cycle. MTAB Hr’g Tr. 50:1-17.
The Warren Miller Lodge had at least five sales occur during the specified
period while the Yellowstone Club itself had approximately 135 sales. Jd.

Mr. Bills agreed that the Subject Property does not have a mountain facing
view as listed on the property record card but instead faces the parking lot. Ex.
A; MTAB Hr’g Tr. 56:4-23. However, Mr. Bills testified that the difference in
view had no bearing on the DOR’s value of the Subject Property. Jd. Mr. Bills
agreed that while the difference does not change the value according to the
DOR’s assessment, it may change how a potential buyer views the value of the

Subject Property. Jd.

Mr. Bills stated that the DOR’s procedures require appraisers to list amenities
as they appear in the condominium declaration and was following procedure
when he listed comparable property number one as having two bathrooms.
MTAB Hr’g Tr. 57:7-58:6. However, if comparable property number one has
two and a half bathrooms as Taxpayer suggested, The DOR would correct the
bathroom count and remove $40,000 as an adjustment. Jd. Mr. Bills has not
inspected comparable one and cannot confirm the bathroom count making an

adjustment inappropriate. Jd.

21.

adi

20%

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

DOR Modeler and Unit Manager, Tierani Losing, stated that single-family
residences were used in the multiple regression analysis to determine the
Subject Property's MRA value and adjustments for different variables or
property characteristics. MTAB Hr’g Tr. 65:6-66:6. This was due to having
shared physical, economic, governmental, and societal factors, also referred to
as the PEGS standard. Jd. Since the Subject Property and the single-family
residences both receive their building materials, labor, and membership from
the same place or suppliers, it is appropriate under the PEGS standard to use
the single-family residences in the valuation process based on that exclusivity.
Id. Ms. Losing testified that condominium units and single-family residences
were incorporated into the same model in other areas around the state such as
in Butte-Silver Bow and the Ranch at Rock Creek. MTAB Hr’g Tr. 66:7-21.
Ms. Losing testified that 77 of the 132 sales were condominium sales. Jd.
Additionally, the DOR grouped the 132 sales into neighborhoods, and when
looking for comparable properties, the DOR looked within the Warren Miller

Lodge and other similar condominium complexes before using single-family

residences. MTAB Hr’g Tr. 77:5-16.

Ms. Losing testified that the DOR does not assign value specifically to a
property’s view or other locational aspects, such as easy access to a ski hill.
MTAB Hr’g Tr. 68:9-17. Instead, the value of those characteristics is baked
into the land value assigned to the property. Jd.

Ms. Losing stated that she believes MRA estimates are reliable. MTAB Hr’g
Tr. 71:9-18. The MRA estimate, the weighted estimate, and the comparable
sales value all being within the same range indicated to her that the MRA
estimate is reliable in this case. Jd. Ms. Losing described creating an MRA
estimate as building a house piece by piece and obtaining a value estimate
through the sum of a property’s parts. MTAB Hr’g Tr. 70:5-71:8. Furthermore,
Ms. Losing testified that MRA is important to the assessment process because

the MRA measured the price differences between properties’ different

24.

25.

26.

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

characteristics, such as having additional bathroom fixtures or additional square
footage of living area. Jd. By knowing the price of the different characteristics,
the DOR is able to value each aspect of the Subject Property individually and
add them together to get a total value. Jd.

Ms. Losing stated that, in her opinion, Mr. Rosmarin’s proposed method of
valuing the Subject Property would not work as the DOR must consider more
property characteristics than just price per square foot. MTAB Hr’g Tr. 72:12-
24. For example, Ms. Losing testified that Mr. Rosmarin’s proposed method
would not account for differences in land value, in plumbing fixtures, or

whether the property has a garage. Jd.

Ms. Losing maintained that the most accurate way to value the Subject
Property was to develop a multiple regression model using the 132 sales that
occurred in the Subject Property’s market area instead of using only the five
sales within the Warren Miller Lodge. Ex. 15, F; MTAB Hr’g Tr. 76:5-77:7.
Ms. Losing stated that a subset of five sales would not be enough to make a
valid statistical assumption. Jd. Using multiple regression analysis on the 132
sales allows the DOR to determine how much contributory value characteristics
such as plumbing fixtures and additional square footage afford the Subject
Property. Jd. Once the DOR determined the value of such characteristics, they
are able to value the Subject Property’s characteristics and make price

adjustments. Jd.

Ms. Losing testified that the three comparable properties used in the DOR’s
comparable sales approach to value the Subject Property were also used to
determine the weighted estimate. Ex. E; MTAB Hr’g Tr. 80:6-81:5. A portion
of the comparable properties’ adjusted sales prices were combined to get the
weighted estimate. Jd. Comparable property number one had 42.3% of its
adjusted sales price used, comparable property number two had 31.2% of its

adjusted sales price used, and comparable property number three had 26.5% of

10

Zi

28.

29,

30.

31.

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

its adjusted sale price used to determine the Subject Property’s weighted
average value of $5,938,076. Ex. E; MTAB Hr’g Tr. 81:12-24.

DOR Area Manager, Tina Oliver, testified that comparable properties number
four and five were removed from the Subject Property’s valuation calculation
due to excessively high comparability points. Ex. D; MTAB Hr’g Tr. 89:4-15.
The comparability points for comparable properties four and five were 130 and
181, respectively. Jd. Higher square footage, differences between internal
components and fixtures, and variations in bedroom and bathroom count

attributed to the high comparability points. Jd.

Ms. Oliver and Mr. Bills testified that the Subject Property’s second-floor area
is currently considered extra square footage and is not designated as a

bedroom. MTAB Hr’g Tr. 92:1-12.

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 Taxpayer 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 vy. Arnold, 2013 MT 138, 4 22, 370
Mont. 270, 275, 303 P.3d 1279, 1282.

The Board’s order is final and binding upon all parties unless changed by
judicial review. Mont. Code Ann. § 15-2-301(6).

11

32.

33.

34.

om

36.

37.

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

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.

“[I]n connection with any appeal under [Mont. Code Ann. § 15-2-301], the
Montana board is not bound by common law and statutory rules of evidence or
rules of discovery and may affirm, reverse, or modify any decision. To the
extent that this section is in conflict with the Montana Administrative
Procedure Act, this section supersedes that act.” Mont. Code Ann. § 15-2-
301(5).

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, 4 23, 310 Mont. 148, 155,
49 P.3d 43, 47); see Northwest Land & Dev. v. State Tax Appeal Bd., 203

12

38.

39.

40.

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT 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)).

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

DISCUSSION
The Board agrees with the Taxpayer and the DOR that the comparable sales
method is the best way to value the Subject Property. Where the parties diverge
is the use of the weighted average and the MRA. The Board heard credible
testimony that DOR procedures and IAAO standards for mass appraisal were
followed when valuing the Subject Property using the sales comparison
approach. When valuing a property, the DOR must use either three or five
comparable properties, the weighted average, and the MRA value. The DOR
first valued the Subject property using five comparable properties, the weighted
average and the MRA. The DOR removed the two highest and lowest values of
the seven values and averaged the remaining three to get the Subject Property’s
value. Afterwards, the Taxpayer filed an AB-26 and argued that comparable
four, which was used to value the Subject Property, was not comparable. In
response to the Taxpayer’s concerns, the DOR dropped comparables four and
five because of their size and valued the Subject Property using three
comparable properties, the weighted average, and the MRA. Following IAAO
standards for mass appraisal and DOR procedures, the DOR removed the

13

41.

42.

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

highest value, comparable three, and the lowest, comparable one. The DOR
averaged the remaining values, which were comparable property two, the
weighted average, and the MRA to get a final value for the Subject Property.
The Board would like to note that removing comparable four and five did
lower the Subject Property’s value. The Board finds the DOR’s comparable
sales method is credible. The DOR did not use just one comparable property to
value the Subject Property but instead used three comparable properties, the
weighted average and the MRA value.

The Taxpayer suggests his valuation method is superior to the DOR’s, where
the highest and lowest values are removed. The remaining values are averaged
to get a price per square foot. The average price per square foot is then applied
to the Subject Property’s square footage to get a value. While the Taxpayer
valuation method is innovative, it does not account for differences in property
characteristics. Every property is different, whether it be plumbing fixtures or
the finishes used in the property, and these need to be accounted for when
performing an appraisal. Taking an average price per square foot of property
and applying it to the Subject Property's square footage, without consideration
for the property characteristics, would create an inequity among the taxpayers
of Montana. Additionally, the Taxpayer's valuation method goes against the

IAAO standard of mass appraisal and the DOR regulations for mass appraisal.

The Taxpayer argues that the MRA is unreliable because it uses single-family
residences and properties much larger than the Subject Property in valuing the
Subject Property. Taxpayer also argued that the DOR should have used only
the comparable properties located in the Warren Miller Lodge. DOR testified
that the MRA values each piece of the Subject Property individually and
combines those pieces to arrive at a final value. Using multiple regression
analysis and a large sample size of sales, the DOR can determine how much
people are willing to pay for specific features in a property. For example, by

comparing the sales price of a two-bedroom house with a three-bedroom house,

14

43.

44,

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

the DOR can determine how much a buyer is willing to pay for the extra
bedroom. When all the pieces of the Subject Property are combined, the DOR
arrives at the MRA value of a property. While the DOR did use the sales in the
Warren Miller Complex in its MRA calculation, using just those five sales
would not have produced a reliable MRA value or model. The Board found that
using the large sample size of sales was necessary to produce a reliable MRA
value. The three sales used in the DOR’s sales report were those used to
directly compare to the Subject Property. The 132 sales in the DOR sale
placket were only used to determine the value of the house's parts and make
price adjustments. The Board would like to note that all 132 sales are from the
same market area inside the Yellowstone Club. Additionally, the Subject

Property was only valued using comparable properties within the Warren

Miller Complex.

Next, the Taxpayer argues that the weighted average is not reliable. The DOR
used the sales prices of the three comparable properties in its sales report to
find the weighted average. Depending on the comparability points, weights are
assigned to each comparable property. The lower the comparability points, the
more weight is given to that sale. The Board finds that the DOR properly
determined the Subject Property’s weighted average.

The Taxpayer argued that the DOR had some of the characteristics of the
comparable properties wrong. The DOR testified that they used the
condominium declarations to ascertain the characteristics of the condominiums.
The DOR has no way of knowing what improvements have been made to a
property unless they are able to physically inspect it. Since they have not been
granted access to the comparable properties, using the condominium
declaration is reasonable to obtain the comparable properties’ characteristics
and square feet. Additionally, Mr. Bills testified that he corrected the fireplace

during a prior review.

15

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

45. The Taxpayer argues that the value of his loft space is too high. The Taxpayer
contends that the loft has a low ceiling and no windows or closets, so it is not a
regular bedroom. The DOR testified that they value the loft as an additional
living space, not an additional bedroom. Because of the lack of windows and
closets, the DOR does not consider the loft a bedroom. Additionally, the
Taxpayer admitted there were beds on the loft area, and it could be used as a
bedroom when rented. The Board finds the DOR valuing the loft as living

space reasonable.

46. The Taxpayer argues that he does not have a mountain view and instead faces
the parking lot. The DOR did concede that a buyer might be willing to pay for
a view of the mountains, but that view is built into the land value, not the
improvements' value. The DOR testified that the existence of a view is not
considered when valuing the Subject Property. Additionally, the Board heard
no testimony relating to how much a prospective buyer would pay for a view

and declined to make an adjustment.

47. Lastly, the Taxpayer's argument that the MRA values vary widely across
comparable sales is unreliable is unfounded. The DOR testified that the sales
prices varied wildly across the comparable properties. The DOR saw sales from
$4 million to $12 million in the same condo complex within two years of each
other. The DOR also testified that they had record sales in the Yellowstone
Club area because of the high demand during COVID-19. The Board affirms
the CTAB decision and values the Subject Property at $5,748,600.

16

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT OF REVENUE

ORDER
48. The Board denies the Taxpayer’s appeal and upholds the Madison County Tax
Appeal Board.

49. The DOR is ordered to set the value of the property at $5,748,600

Dated this 2nd day of January 2025.

es vo

Travis Brown, Chairman

a

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).

17

BEFORE THE MONTANA TAX APPEAL BOARD
PEEKAMOOSE, LLC v. STATE OF MONTANA, DEPARTMENT 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 January 2, 2025, to:

Peekamoose, LLC

Jefry Rosmarin

10 Mount Misery Road
Huntington, NY 11743-6609

Kristina Warren

State of Montana, Department of Revenue
Legal Services Office

P.O. Box 7701

Helena, MT 59604-7701

Paula Gilbert

State of Montana, Department of Revenue
Property Assessment Division

P.O. Box 8018

Helena, MT 59604-8018

Emily Wilder

Madison County Tax Appeal Board
P.O. Box 278

Virginia City, MT 59755

Rina San¥erson, Legal Secretary

18