MONTAGE MARKETING, LLC, F/K/A MONTAGE MARKETING CORPORATION, A DELAWARE LIMITED LIABILITY COMPANY, Appellant,
WASHOE COUNTY EX REL. WASHOE COUNTY BOARD OF EQUALIZATION; AND WASHOE COUNTY ASSESSOR JOHN WILSON, Respondents.
from a district court order denying a petition for judicial
review in a property tax matter. First Judicial District
Court, Carson City; James Todd Russell, Judge.
Maupin, Cox & LeGoy and Rick R. Hsu and Debra O.
Waggoner, Reno, for Appellant.
Christopher J. Hicks, District Attorney, and Herbert B.
Kaplan, Deputy District Attorney, Washoe County, for
CHERRY, HARDESTY and PARRAGUIRRE, JJ.
appeal, we consider the appropriate method for assessing the
taxable value of fully developed but unsold condominium units
held by the developer. This case arises from a decision by
the State Board of Equalization finding that the county
assessor properly assessed each unsold condominium unit based
on its retail price. Appellant Montage Marketing, LLC,
contends that, because the condominium building qualifies as
a subdivision, the unsold condominium units instead should
have been valued together as a single unit and discounted to
determine the net sellout or wholesale value to a single
buyer, which would result in a significantly lower assessment
appeal requires us to interpret two statutory provisions: NRS
361.227(2)(b), which pertains to valuation of parcels in a
qualified subdivision, and NRS 361.227(5)(c), which permits
the "discounted cash flow" method to be used for
assessing the full cash value of real property. We conclude
that neither of these statutory provisions required the
county assessor to value the condominium units as a single
unit or to apply the discounted cash flow method to determine
their full cash value. We thus affirm the district
court's order denying judicial review of the State Board
of Equalization's decision.
AND PROCEDURAL HISTORY
appeal involves tax assessment valuations for the tax years
2009-2010 and 2010-2011 for the Montage, a 21-story luxury
condominium development located in downtown Reno in Washoe
County. The condominium building was converted from a hotel
and subdivided into 376 residential units with 11 different
floor plans. The individual residential units were fully
developed by February 2009, and the first units were sold to
individual purchasers in March 2009. As of May 2009, 30 out
of the 376 units were sold, and only 3 more units were sold
as of February 2010. The unsold units remained under the
common ownership of appellant Montage Marketing, LLC
(Montage) and continued to be marketed as individual
residential units for sale.
Washoe County Assessor (Assessor) determined the taxable
value of the unsold condominiums owned by Montage to be $86,
804, 500 for the 2009-2010 tax year and $71, 120, 370 for the
2010-2011 tax year. In assessing the condominiums, the
Assessor followed the process prescribed under NRS 361.227.
First, the Assessor calculated the full cash value of the
land of each condominium. Because the condominium building
qualified as a subdivision under NRS 361.227(2)(b), the
Assessor applied a discount to the value of the land based on
its expected absorption period- the number of years it would
take for all of the units to be sold or otherwise absorbed
into the market. Next, the Assessor calculated the taxable
value of the improvements of each condominium. Then, to
ensure that the taxable value of each condominium did not
exceed its full cash value, the Assessor utilized the sales
comparison method permitted by NRS 361.227(5) and reduced the
taxable value of each condominium to 90 percent of its list
sought review with the Washoe County Board of Equalization,
arguing that the assessed taxable value of the unsold
condominiums exceeded their full cash value. The County Board
upheld the Assessor's valuations, and Montage appealed
that decision to the State Board of Equalization (the State
hearing before the State Board, Montage contended that the
Assessor should have valued the condominium units
collectively as one unit to derive a wholesale or net sellout
value, which is what the unsold condominiums would be worth
if sold in bulk to a single investor. Montage presented a
report from its own appraiser, which calculated the full cash
value of the unsold condominiums at $40, 350, 000 for the
2009-2010 tax year and $24, 000, 000 for the 2010-2011 tax
year based on the net sellout values. The appraiser's
report explained that these values were reached by first
assessing the aggregate retail prices of all the condominium
units and then, because the units would likely not be sold
for a period of years, applying a discounted cash flow
analysis to determine the present value of the condominium
units to a single buyer. Montage argued that, because the
condominium building qualified as a subdivision under NRS
361.227(2)(b), the Assessor was required to view the
condominiums as a single unit and to discount the value of
the entire property-both land and improvements-to
determine the full cash value.
Assessor argued that Montage's method of appraisal was
improper because Montage was marketing each condominium to
individual buyers and not to a single investor and thus the
proper valuation method was what each condominium was worth
if sold individually. The Assessor agreed that the
condominiums qualified as a subdivision under NRS
361.227(2)(b), but asserted that the subdivision discount
only applied to land and not to the valuation of any
improvements on the land.
State Board upheld the Assessor's valuations. The State
Board acknowledged that under NRS 361.227(2)(b), a
subdivision discount methodology must be used to assess the
taxable value of parcels that comprise a qualified
subdivision. The State Board found that the Assessor had
appropriately applied a subdivision discount of 50 percent to
the land and that both the land and improvements had been
appraised at the proper taxable value for both tax years.
filed a petition for judicial review in the district court.
The district court upheld the State Board's ...