Here, Mr. Korpacz developed specific values for the subject
property for each assessment year under appeal.
His sales comparison analysis was based on timely sales of regional malls
deemed comparable to the subject property that were qualitatively adjusted to
Washington determine the likely sale price in terms of a price per square foot
for the Washington Square Mall. Mr.
Korpacz further refined his sales comparable values by graphing each property’s
sale price with its net operating income per square foot of gross leasable
area. And despite the fact that Mr.
Korpacz rejected the value he determined for 2008 and regraphed the data using
only Class D malls, the Board finds this to be a reasonable method for
determining the value of the mall.
Conversely, Mr. Stump used sales of retail properties that
were not regional malls. Mr. Stump used grocery store-anchored retail centers
and community centers that are not comparable to enclosed regional malls and
failed to make any adjustments for differences in the properties. Further, Mr.
Stump did not determine a specific value for any year but simply contends that
the range of values from the five sales from 2005 through 2008 supports his
income approach to value for each year.
Thus, the Board gives little weight to the Respondent’s sales comparison
approach.
The income approach analysis, however, is more difficult. The Petitioners’ appraiser used
capitalization rates that were not supported by his evidence and he made income
and expense assumptions that seemed designed to value the property at the
lowest possible rate.
The Respondent’s
appraiser, however, made no attempt to account for the prevalence of long term
leases at rents that no longer represented the market rate at the property. In addition, the Respondent’s approach relied
upon the sale of properties that were not comparable to the subject property to
develop a capitalization rate. Because of the lengthy and detailed explanations
that Mr. Korpacz provided for each of his assumptions and the lack of
explanation that Mr. Stump gave for his analysis, the Board therefore gives
more weight to the Petitioners’ appraiser’s income analysis.
Moreover, the Board notes that the Respondent’s appraiser
made no attempt to value the property for the March 1, 2010, assessment
date. The Respondent’s witness, Ms. Beckman,
provided an “income approach analysis” for the 2009 and 2010 assessment years. In her analysis, Ms. Beckman argued that she
disagreed with Mr. Korpacz’s value conclusions for 2009 and 2010 primarily
because of the gross lease assumption and the high capitalization rates Mr.
Korpacz used. Despite her arguments,
however, Ms. Beckman used the same capitalization rate as Mr. Korpacz; she just
did not add the effective tax rate. Ms.
Beckman contends it was not necessary to add the tax rate because she accounted
for the reimbursement of the taxes.
However, even considering the leases in place during the relevant time
period, the taxes were not reimbursed 100% for any assessment year. For
example, in 2008 the property’s income and expense statement shows an actual
real estate tax expense of $1,646,554,but a reimbursement of only $446,548.
Further, while Ms. Beckman’s analysis may not differ
significantly from the calculations made by a certified appraiser in an
appraisal report, the appraiser’s assumptions are backed by his education,
training, and experience. The appraiser
also typically certifies that he complied with the uniform standards of
professional appraisal practice. Thus,
the Board, as the trier-of-fact, can infer that the appraiser used objective
data, where available, to quantify his adjustments. And where objective data was not available,
the Board can infer that the appraiser relied on his education, training and
experience to estimate a reliable quantification. Here, however, there is no evidence that Ms.
Beckman is a certified appraiser; she did not establish that she has any
particular expertise in applying generally accepted appraisal principles; and
she did not certify that she complied with USPAP in performing her valuation
analysis. Consequently, the Board places greater weight upon Mr. Korpacz’s
testimony and analysis as to this issue.
