County Wins Tax Appeal Case

LINCOLN — Cedar County correctly valued Cedar County farm land near Laurel, the Nebraska Court of Appeals recently ruled.
The Court’s decision approves the Tax Equalization and Review Commission (TERC) decision affirming the Cedar County Board of Equalization decision, which denied several Cedar County property valuation requests.
The protests were filed because the southern Cedar County land owners felt the market value system of valuing their land was unfair.

Fourteen land owners, which involved 48 pieces of ag land, filed property valuation protests with the Cedar County Board of Equalization challenging the 2005 assessed value that had been placed on their real estate.
All but one of the 48 pieces of real property involved in these appeals is located in Market Area Two, which was created by Cedar County Assessor Don Hoesing when he divided the county into two market areas for the 2005 assessment.
Market Area Two is located in the southeast portion of the county, consists of six townships, and is 18 miles long by 12 miles wide, according to Hoesing.
The area is bordered on the east and south by adjacent counties and township lines were used as the boundaries on the north and west.
Market Area One encompasses the balance of the county.
Arguments at the TERC hearing were centered on questions concerning the use of market areas in Cedar County.
The landowners questioned whether market areas should have been used in Cedar County to establish the value for tax purposes.
The litigants also asked if market areas within the same county were prohibited by Nebraska’s Constitution.
Another question the lawsuit posed asked if the taxpayers’ property was valued uniformly when the same or similar soil types within the same county have different values due to the use of market areas.
According to court records, at the TERC hearing the taxpayers alleged the market areas should not have been used and further alleged the market areas were not properly created.

Testimony from Hoesing showed there was irrigated ground in Market Area One being valued for less than dry land in Market Area Two.
Hoesing affirmed that irrigated ground is almost always valued higher than dry land.
According to Nebraska Property Tax Administrator Catherine Lang, the levels of value in each of the market areas were within the acceptable range, however.
Lang noted the average sale price and the average assessed value that had been placed on the ag property for the two market areas were significantly different from each other.
At the hearing Hoesing described differences in topography throughout the county. In the northeast part of the county along the Missouri River there is a certain amount of recreational property. There are more trees and brush, with grass area continuing to the south.
In the Northwest there is less tree cover with more farming and pasture ground.
Hoesing described the topography moving into the south part of the county became more gently rolling with larger farms and fields, minimal grass and less livestock production.
Hoesing said he split the land and created market areas to ensure property would be valued at market value.
“The state told me to develop market areas – it was hand forced,” said Hoesing.
The location of property helps determine the selling price, according to Hoesing.
“If you build three houses that are exactly the same but you locate the houses in three different towns they would not sell for the same amount. Location makes a difference,” said Hoesing. “In the south part of the county, land will sell for more. Realtors agree – it has been that way for a long time. The state told me to develop market areas.”
TERC issued their decision in March of 2007 affirming the decisions of the County Board of Equalization along with the values that had been arrived at by the Cedar County Assessor. This month’s Nebraska Court of Appeals ruling affirms TERC’s decision.

The Cedar County Board of Equalization had upheld the use of the market area method of determining value to compute taxation in 2005 and the Tax Equalization and Review Commission in Lincoln had upheld the use of the market area method in 2006.
“We have used the market area method of valuing property to determine taxes in Cedar County since 2003,” said Cedar County Assessor Don Hoesing.  “The state has used the market value method since 1992.”

The legal representative for the farmers and Cedar County Attorney George Hirschbach agreed to forgo legal oral arguments before the three-judge panel of the Court of Appeals to save the taxpayers’ money and submitted legal briefs to the court.