Glen Wohl v. DOR

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BEFORE THE MONTANA TAX APPEAL BOARD FILED

OCT 15 2024
Montana Tax Appeal Board
GLEN WOHL, CASE Ne: PT-2024-9
Appellant,
V. FINDINGS OF FACT,
CONCLUSIONS OF LAW, ORDER,
STATE OF MONTANA, AND OPPORTUNITY FOR
DEPARTMENT OF REVENUE, JUDICIAL REVIEW
Respondent.
STATEMENT OF THE CASE

This is an appeal of a final decision by the Missoula County Tax Appeal Board
(CTAB) denying Glen and Johanna Wohl (Taxpayers) a reduction in value on the
subject property located at 2339 South Ave. West Missoula, Montana (Subject
Property). The Taxpayer appealed that outcome to Montana Tax Appeal Board
(MTAB) on January 9th, 2024. We uphold the CTAB’s determination.

ISSUE TO BE DECIDED
Whether CTAB erred in denying the Taxpayers’ request for a reduction in
value to the Subject Property.

EXHIBIT LIST
The Taxpayer attached the following exhibits to his notice of appeal:
1. Tabulation of Improved Sales, with property record cards and transfer
documents;
2. Oral appraisal dated January 24, 2024; and
3. Megan L. Garland and Kraig P. Kosena’s Appraiser’s Qualification,
license and insurance.
DOR Exhibits:
A. Property Record Card;

BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL vy. STATE OF MONTANA, DEPARTMENT OF REVENUE

Aerial Maps;

Classification and Appraisal Notice;
Calculation of Value;

Missoula Retail Model;

Land Model Summary;

Full Land Model;

Income Model; and

rmommononop

2023 DOR unloaded and overall cap rates.

PROCEDURAL HISTORY

The DOR valued the Subject Property at 952,100 for the 2023/2024 appraisal
cycle, with the land valued at $364,898 and the improvements valued at $587,202. Ex.
A. The Taxpayers appealed the DOR’s valuation to the CTAB on July 7, 2023,
requesting a total land value of 750,000. MTAB Dkt. 3. The CTAB hearing was held
on December 19, 2023, and the CTAB’s decision denying the Taxpayers’ application
for reduction was signed on December 22, 2023. Jd. The Taxpayers appealed to
MTAB on January 29, 2024, per Mont. Code Ann. § 15-2-301, requesting a total of
$755,000. MTAB Dkt. 1. The MTAB hearing was conducted in Helena on July 18,
2024. Before the beginning of testimony, the Board granted a motion by the DOR to
seal all confidential sales prices in evidence. MTAB Dkt. 10; MTAB Hr’g Tr. 4:7-12.
The following were present at the MTAB hearing:

a. Kristina Warren, DOR Counsel; Cindy McGinnis, Paralegal; Helen
Greenberg, Lead Appraiser; Jason Stevens, Modeler; and Michelle
Staples, Area Manager.

b. The Taxpayer did not attend the MTAB hearing. The Taxpayer was
offered a Zoom telephonic option but did not join.

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.

BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

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

conclusions of law, they are incorporated accordingly.

The Board held a telephonic scheduling conference on March 7, 2024, during
which the Board agreed to let the Taxpayer to appear at the July 18, 2024,
hearing telephonically. MTAB Dkt. 8. The Board scheduled a test call for July
15, 2024, in which the Taxpayer did not participate. Jd. The Board received a
letter on July 15, 2024, from the Taxpayer dated July 11, 2024, requesting that
the Board decide the appeal by reviewing all documents and testimony
submitted at CTAB. MTAB Dkt. 7. The Taxpayer, in his letter, stated he has no
additional information to offer. Jd. The Board issued an order stating that the
hearing would still be held on July 18, 2024. MTAB Dkt. 8. The Taxpayer did

not attend in person or telephonically.

The Subject Property is a commercial property owned by Glen and Johanna
Wohl in Missoula County. Ex. A. The Subject Property is located at 2339 South
Avenue West, Missoula, Montana, and is also identified by its geocode 04-
2200-32-2-76-60-0000. Jd. The Subject Property’s land encompasses 12,391
square feet and includes a 9,200 square-foot commercial improvement, a mini

storage warehouse and parking. Jd.

The DOR valued the Subject Property at $952,100 for tax years 2023 and 2024,
allocating $364,898 for the land and $587,202 for the improvements. MTAB
Dkt. 3. At the December 6, 2023, CTAB hearing, the Taxpayers requested that
the land value be reduced to $273,867 and the improvements be reduced to
$476,163. Id. The CTAB denied the Taxpayer a reduction in value. Jd. The
Taxpayer appealed this decision to MTAB on January 29, 2024, requesting that
the total market value for the Subject Property be $755,000. Jd.

BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

The Taxpayer appealed two similar properties to the CTAB; for efficiency, the
CTAB heard both cases simultaneously. CTAB Hr’g 0:06-0:55; 3:50-4:14. The
Taxpayer only appealed the Subject Property of this appeal from the combined
CTAB hearing record. MTAB Dkt. 1.

The Taxpayer hired a Montana-licensed appraiser, Megan Garland of Kembel
Kosena & Company, to present during the CTAB hearing. CTAB Dkt. 1; CTAB
HAr’g 4:23-4:50. Ms. Garland testified that the information provided to the
CTAB and marked as Exhibit 3 is not an appraisal but a consultation of
comparable sales to the subject property tabulated into a list of 7 sales. CTAB
Ex. 6; CTAB Hr’g 5:25-6:10.

Ms. Garland testified that the Subject Property has a lower land-to-building
ratio than the rest of the comparable properties, except comparables six and
seven. CTAB Ex. 6; CTAB Hr’g 6:50-7:39. The Subject Property has a land-to-
building ratio of 1.3, while comparable properties one through five have a land-
to-building ratio between 2.1 and 2.9. Jd. Furthermore, comparable properties
six and seven had a ratio of 1.4. Jd. Ms. Garland testified that the lower land-to-
building ratio of comparable properties allows for more parking, and the DOR
should make a taxable value adjustment. CTAB Hr’g 7:35-8:08. Ms. Garland
presented an analysis of an adjustment to the land-to-building ratio for the first
five comparable properties, including an adjustment in the sales price. Ex. 4, 6;

CTAB Hr’g 8:10-12:20.

Ms. Garland further testified that the other adjustment to the comparable sales
price needed further adjustment because of the size price relationship between
the Subject Property and the comparable properties. CTAB Hr’g 12:05-13:10.

Using regression analysis, Ms. Garland determined that the Subject Property’s
land should be valued at $82.00 per square foot. Jd.

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

During the CTAB hearing, the Taxpayers testified that having less parking
affects the value of the property. CTAB Hr’g 18:10-19:20. The Taxpayer
testified that the city of Missoula has enlarged South Avenue, and if he could
rebuild his buildings, he would build them smaller to include additional off-
street parking. CTAB Hr’g 19:29-20:11. Taxpayer testified that he has long
term renters occupying the Subject Property and has maintained a low vacancy
rate. CTAB Hr’g 19:59-20:42. The Taxpayer testified he keeps his rents fair
because it is more profitable to keep a tenant than replace a tenant. CTAB Hr’g
22:10-23:20.

The Taxpayer did not introduce any evidence or testimony durring the MTAB
hearing. Since the Taxpayer did not attend the MTAB hearing, the DOR’s

arguments were not refuted.

DOR Lead Appraiser, Helen Greenberg, testified that the Subject Property was
valued using the income approach. MTAB Hr’g Tr. 4:13-15. Only one final
value is determined when valuing a property using the income approach, and
the DOR then apportions the final value between the land and buildings. MTAB
Hr’g Tr. 6:15-7:11. The land value is first determined using comparable sales,

and the remaining value is apportioned to the improvements. Jd.

Ms. Greenberg testified that the DOR assigned a rent rating of $11.25 per
square foot to the Subject Property. Ex. D; MTAB Hr’g Tr. 7:12-8:5. The
$11.25 per square foot was multiplied by 9,200, the building’s square footage,
to get a potential gross income of $103,500. Jd. An allowance of 10.2% or
$10,557 to account for vacancy and collection was subtracted from the
potential gross income to get the effective gross income of $92,943. Id. Next,
expenses amounting to $26,395 were subtracted from the effective gross
income to get the net operating income of $66,548. Jd. Lastly, the net operating
income was divided by the overall capitalization rate of 6.99% to get the final

market value of $952,100, rounded to the nearest hundred. Jd.

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

The Subject Property has an overall capitalization rate of 6.99%, representing
the “urban two” or middle capitalization rate. MTAB Hr’g Tr. 9:13-25. An
overall capitalization is the capitalization rate plus the effective tax rate. Jd. The
tax rate is added to the capitalization rate because the DOR does not allow
taxes to be added as an expense in the income approach. Jd. Ms. Greenberg
stated that she thinks the urban middle capitalization rate is the proper risk
assessment because of the limited parking and the Subject Property's location

on a secondary artery. Jd.

Ms. Greenberg testified that the DOR must use market rents to value
properties, and management decisions regarding rent are not factored into the
DOR's income approach. MTAB Hr'g Tr. 8:9-15. Local taxpayers with similar
properties provide information to the DOR to determine the nine rent ratings,
including operating expenses, vacancy, and collection expenses. Ex. H; MTAB
Hr'g Tr. 15:2-16:11. DOR Modeler, Jason Stevens, testified that the rent
ratings were determined using regression analysis using data reported by eight
similar commercial properties. Jd. The Subject Property has a lower rent rating
of four, or $11.25, because of the mixed-use of the tenants. Ex. E, H, 1; MTAB
Hr’g Tr 11:13-25, 15:2-16:11. Additionally, the Taxpayer did not provide
income and expense information to the DOR to help value the Subject

Property. MTAB Hr’g Tr. 8:17-9:2

If the DOR adjusts values for the land-to-building ratio, the DOR will typically
develop an influencing factor derived from market sales, indicating that a
property with a high land-to-building ratio is selling differently than similar
properties. MTAB Hr’g Tr. 10:1-19. Ms. Greenberg reviewed the Taxpayer's
comparable properties and noted that several were sold after the DOR lien date

of January 1, 2022, for the 2023-2024 tax cycle. MTAB Ar’g Tr. 10:20-11:9.

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL vy. STATE OF MONTANA, DEPARTMENT OF REVENUE

Additionally, there were major size variances between the properties, and one

sale was a bank foreclosure, making the sale invalid. Jd.

Ms. Greenberg testified that the DOR valued the Subject Property using the
cost approach to value at $974,898. MTAB Hr’g Tr. 6:6-10. Ms. Greenberg
stated that she thought the income approach and cost approach reconciled. /d.
Additionally, Ms. Greenberg testified the Subject Property’s value increased
30% from the last tax cycle which is aligned with the Missoula County average

increase of 30%-38%. Ex. C; MTAB Hr’g Tr. 13:3-15.

DOR Area Manager, Michelle Staples, gave uncontested testimony that the
packet of comparable sales provided by the Taxpayer was not a valid appraisal.
MTAB Hr’g Tr. 21:3-18. Ms. Staples testified that the Taxpayer’s packet was

more of a consultation and a tabulation of market land sales. Jd.

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 v. Arnold, 2013 MT 138, § 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).

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL vy. 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

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL 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).

Except as provided in subsection (3)(b), the Montana tax appeal board shall
consider an independent appraisal provided by the taxpayer if the appraisal meets
standards set by the Montana board of real estate appraisers and the appraisal
was conducted within 6 months of the valuation date. If the Montana board does
not use the appraisal provided by the taxpayer in conducting the appeal, the
Montana board shall provide to the taxpayer the reason for not using the

appraisal. Mont. Code Ann. § 15-2-301(a).

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 Taxpayer presented a two page oral appraisal to the Board. For an
appraisal to be considered a valid independent appraisal, it must have been
conducted according to the Montana Board of Real Estate Appraisers standards
and conducted within six months of January 1, 2022, the DOR’s lien date
which for the 2023/2024 tax cycle. In his MTAB filing, the Taxpayer submitted
a two-page oral appraisal dated January 24, 2024, well after the DOR lien date.
At the CTAB hearing, the Taxpayer witness and certified appraiser, Ms.

Garland, testified that she had only performed a consultation and had compiled

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

a list of tabulated sales comparable to the Subject Property. Additionally, the
DOR Area Manager, Ms. Staples, testified that the Taxpayer’s packet was more
of a consultation and a tabulation of market land sales. Because of the facts
presented, the Board did consider the Taxpayer’s Market Analysis. The Board
does not believe the Taxpayer’s appraisal meets the standards of Mont. Code
Ann. § 15-2-301(3)(a) and not was given the weight of an independent

appraisal.

The DOR is authorized to use several different methods to value a property. In
this case, the DOR used the income approach, which the Board feels is the
most defensible method. The DOR also valued the Subject Property using the
cost approach to value. The difference between the values is less than $25,000

and the DOR assigned the lower of the two values.

The Taxpayer brought licensed fee appraiser, Ms. Garland, to the CTAB
hearing to testify about the Subjects Property’s value. Ms. Garland compiled
seven sales for the Taxpayers. Ms. Garland adjusted five of the comparable
sales prices to bring them more in line with the Subject Property for the land-
to-building ratio. The Board is unsure what adjustments Ms. Garland made to
account for the “size price relationship” between the Subject Property and the
comparable properties. The Board is also uncertain about how Ms. Garland’s
regression analysis was completed or if there were any safeguards to ensure its
accuracy. On the other hand, the DOR provided both the land sales and income
models used to determine the land value, and the rent rating used in the income
approach to value the property. DOR also had the model’s creator and lead
appraiser testify to its accuracy. Additionally, the DOR’s model had more
inputs. The Board acknowledges that the Taxpayer’s model measures sale price
per square foot, and the DOR’s model determines the rent rating. The Board
finds the DOR’s regression models more credible for finding the Subject

Property’s market value.

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL vy. STATE OF MONTANA, DEPARTMENT OF REVENUE

Ms. Garland argued at the CTAB hearing that the first five properties had to be
adjusted to fit the land-to-value relationship. The DOR presented uncontested
testimony from Ms. Greenberg that the Subject Property was assigned a lower
capitalization rate because of the lack of parking and location of the Subject
Property. The Board agrees that the lower capitalization rates account for the
lack of parking. Additionally, the DOR testified that they account for other
property deficiencies when they see properties with the same deficiency sell
differently on the market and affecting the final sales price. The DOR
presented uncontested evidence that properties with limited parking in
Missoula are not selling differently and do not have enough information to

create a parking influence.

The Taxpayer argued that he keeps rents low to keep tenants in the building.
The Taxpayer contested that it is less expensive to keep a current tenant than to
find a new one. We understood the Taxpayer's argument but point out that the
DOR is tasked with finding the market value of the Subject Property regardless
of the property owner's management decision and using market rents is part of

that process.

The Taxpayers had the burden to prove the DOR made a mistake in its
appraisal. While the Taxpayer did present some valid arguments at CTAB, the
DOR presented uncontested testimony and evidence at MTAB to discredit the
Taxpayers’ arguments. Because the Taxpayers did not overcome his burden,

the Board must uphold the CTAB’s determination.

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL v. STATE OF MONTANA, DEPARTMENT OF REVENUE

ORDER
36. The Taxpayers’ appeal is denied

37. The DOR will value the Subject property at $952,100 for the 2023-2024 tax

cycle.

Dated this 15th day of October 2024.

David L. McAlpin, Chairman

SRK \

Amie Zendron, Member

Fa a

Travis Brown, 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).

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BEFORE THE MONTANA TAX APPEAL BOARD
GLEN WOHL 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 October 15, 2024, to:

Glen Wohl
2610 Glen Drive
Missoula, MT 59804

Kristina K. 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

Cyndie Aplin

Missoula County Tax Appeal Board
c/o 1015 Washburn St.

Missoula, MT 59801

Yer

Rina Sanderson, Legal Secretary

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