In re Equalization Appeal of Krueger

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NOT DESIGNATED FOR PUBLICATION

No. 113,038

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

In the Matter of the Equalization Appeal of KRUEGER, KAREN for the Year 2013 in
WOODSON COUNTY, KANSAS.


MEMORANDUM OPINION

Appeal from the Board of Tax Appeals. Opinion filed November 20, 2015. Affirmed.

Karen Krueger, for appellant pro se.

Susan L. Mauch, of Cosgrove, Webb & Oman, of Topeka, for appellee.

Before ARNOLD-BURGER, P.J., ATCHESON, J., and WALKER, S.J.

Per Curiam: The County appraiser in Woodson County, Kansas, valued Karen
Krueger's home at $66,500 for the 2013 tax year. Krueger objected to the appraisal and
argued it was too high, but a small claims hearing officer and then the Board of Tax
Appeals (BOTA) upheld the County's valuation. Krueger petitioned for review to this
court, arguing both that the valuation is incorrect and that BOTA incorrectly applied a
rollover statute. Because we find that when we view the record as a whole there was
substantial evidence to support BOTA's decision and BOTA properly applied the law, we
affirm.

FACTUAL AND PROCEDURAL HISTORY

This appeal constitutes Krueger's latest challenge to the valuation of a home she
owned in Yates Center, Kansas. Other opinions of this court have discussed this property
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at length, but as a brief overview: Krueger purchased the home from her father and
brother in 1991. Shortly after purchase, she began a long-term restoration project that
lasted almost two decades. In response to the renovations, the County increased the
house's tax valuation. Krueger challenged many of the County's valuation determinations
before what is now BOTA and this court. See Krueger v. Board of Woodson County
Comm'rs, 31 Kan. App. 2d 698, 71 P.3d 1167 (2003) (Krueger I), aff'd 277 Kan. 486, 85
P.3d 686 (2004); In re Equalization Appeal of Krueger, No. 111,216, 2014 WL 4627619
(Kan. App. 2014) (unpublished opinion) (Krueger VI), rev. denied 302 Kan. ___ (2015);
In re Equalization Appeal of Krueger, No. 109,829, 2014 WL 1096904 (Kan. App. 2014)
(unpublished opinion) (Krueger V), rev. denied 301 Kan. ___ (2015); In re Equalization
Appeal of Krueger, No. 108,452, 2013 WL 4046463, at *1 (Kan. App. 2013)
(unpublished opinion) (Krueger IV), rev. denied 299 Kan. 1269 (2014); In re
Equalization Appeal of Krueger, No. 105,775, 2012 WL 3822600 (Kan. App. 2012)
(unpublished opinion) (Krueger III), rev. denied 297 Kan. 1245 (2013); Krueger v. Board
of Woodson County Comm'rs, No. 93,361, 2005 WL 2495864 (Kan. App. 2005)
(unpublished opinion) (Krueger II), rev. denied 280 Kan. 983 (2006). Many of these
appeals have concerned in part certain ratings assigned by the County, which Krueger has
frequently characterized as too high. See Krueger VI, 2014 WL 4627619, at *2-5;
Krueger V, 2014 WL 1096904, at *1; Krueger IV, 2013 WL 4046463, at *6-8.

In 2013, the County again assigned a value to Krueger's home, this time in the
amount of $66,500. The County based this figure on the condition of the house compared
to others like it and the previous years' valuations. And like in previous years, Krueger
objected. She argued that the appeals process had lowered previous valuations and that
the overall condition of the house required a lower figure. The small claims hearing
officer handling the case upheld the County's valuation.

Unsatisfied by this result, Krueger appealed to BOTA. In her prehearing brief, she
focused primarily on the homes that the County compared to hers when calculating the
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valuation. She outlined the history of valuation disputes with the County and reiterated
her long-standing position that the County had improperly inflated her home's condition,
desirability, and utility (CDU) and construction grade ratings over those of other
comparable homes. However, she only requested the physical condition rating be
changed, suggesting a rating of "Average" instead of "Good." Otherwise, Krueger simply
requested that BOTA value her home at $52,000. In a supplemental brief, Krueger added
that she believed the CDU rating of "Good" to be "'out of line'" and unwarranted.

BOTA scheduled and began a hearing on this matter on May 2014. However, due
to some confusion about the County's exhibits, the hearing was continued until July 2014.
Both times, County appraiser Jerry Mentzer testified concerning the 2013 valuation of
Krueger's home. Mentzer explained that the County originally arrived at a valuation of
$80,650 by using a sales comparison approach. This approach looked at the sale value of
five comparable homes, adjusted those sales, removed the highest and lowest values, and
averaged the remaining three for a final number. But because, at least as far as Mentzer
understood, BOTA had previously valued Krueger's home at $66,500, he ultimately
applied that number rather than the newer, higher value.

We pause here to note that the County's valuation of the property in 2012 was
$66,500, but because the 2011 valuation had been reduced on appeal to BOTA to
$56,900, the rollover statute required that the assessed valuation remain the same in 2012.
See K.S.A. 2013 Supp. 79-1460(a); Krueger IV, 2013 WL 4046463, at *3. Krueger did
not challenge her 2012 assessed value of $56,900. Instead, she unsuccessfully challenge
the application of the CDU and construction grade ratings prospectively. See Krueger V,
2014 WL 1096904, at *1.

In terms of the CDU grade, Mentzer explained that the County set the rating at
"Good" because of the extensive remodeling, which placed the 1900s-era house "in
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beautiful condition." Mentzer also testified that Krueger provided him no documents that
supported her suggested valuation.

In cross-examining Mentzer, Krueger focused mainly on recent changes to the
house, which Mentzer testified included a roof line alteration and repairs to the porch.
But Mentzer emphasized that a home's value is unaffected by simple maintenance such as
replacing the roof, residing or repainting the exterior, or the removal of mold. However,
Mentzer added that changing the type of siding—such as replacing wood siding with
vinyl—would affect the value.

Regarding the value of the home, Mentzer expressed some confusion as to the
previous court-ordered values and to the origin of the $66,500 figure. When asked about
the comparable properties, Mentzer could not provide detailed descriptions of the
remodeling to those homes. However, he noted that at least one had been partially rebuilt
and remodeled after a fire.

Krueger called no witnesses and elected to rest on her pretrial brief and short
arguments. Concerning the earlier valuation of the house, she noted that the final 2011
value for the home was $56,900 and that the 2012 value remained under review. She also
pointed out that the CDU rating was an issue in the 2012 case. Regardless, she argued
that the County failed to demonstrate that her home changed in such a way that would
support an increase in value. Moreover, she stressed that Mentzer provided no
justification for the construction grade and CDU ratings.

After the hearing, both the County and Krueger submitted written briefs. The
County argued that because the valuation had been applied from a proposed valuation
from the previous year, there was no new valuation for Krueger to challenge.
Additionally, the County insisted that Krueger essentially submitted no evidence, thereby
failing to demonstrate that the appraised value was incorrect. Krueger contended that the
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evidence did not support the $66,500 figure and that testimony from earlier tax years
contradicted Mentzer's most recent testimony. In fact, much of her brief focused on issues
from previous tax years, such as the increase in CDU and construction grade ratings.

BOTA ultimately disagreed with Krueger and ruled that the value of the property
was $66,500. Specifically, BOTA determined that the value was supported by adequate
evidence from the County. It noted that the results from the cost and sales approaches
appropriately indicated a higher value, but the County had actually decided to go with the
much lower value that had been indicated by the same process in 2012. BOTA
specifically determined that Krueger "offered no substantial credible market evidence in
support of her opinion of value." Krueger moved for reconsideration, but BOTA denied
her request.

Krueger timely petitioned for judicial review.

ANALYSIS

BOTA's decision was supported by substantial evidence.

Although Krueger separates her arguments concerning the County's appraisal into
two discrete issues, the overarching challenge is really the same: whether the County's
valuation is supported by substantial evidence. Krueger argues on appeal that the
County's appraisal is unsupported by the evidence and that she is entitled to a valuation
based on "appropriate ratings," as she still believes that the County inflated the CDU and
other ratings.

Judicial review of BOTA rulings is governed by the Kansas Judicial Review Act.
K.S.A. 2013 Supp. 77-621; In re Equalization Appeal of Prieb Properties, 47 Kan. App.
2d 122, 125, 275 P.3d 56 (2012). As applied to the instant case, this court must grant
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relief if it determines that BOTA's "action is based on a determination of fact, made or
implied by the agency, that is not supported to the appropriate standard of proof by
evidence that is substantial when viewed in light of the record as a whole," if BOTA
improperly interpreted or applied the law, or if BOTA otherwise acted in an
unreasonable, arbitrary, or capricious manner. K.S.A. 2013 Supp. 77-621(c)(4), (7), (8).
On appeal, the burden of proving the action's invalidity is on the party asserting the
invalidity. K.S.A. 2013 Supp. 77-621(a)(1).

When reviewing evidence in the light of the record as a whole, this court is not to
reweigh evidence or engage in unlimited review. K.S.A. 2013 Supp. 77-621(d). Instead,
this court must review evidence both supporting and detracting from the agency's
findings, examine any credibility determinations made by the presiding officer who
personally observed the witnesses, and review the agency's explanation as to why the
record supports its findings. K.S.A. 2013 Supp. 77-621(d); Redd v. Kansas Truck Center,
291 Kan. 176, 182, 239 P.3d 66 (2010). To uphold a decision, the evidence supporting it
must be substantial, meaning that a reasonable person could accept it as being sufficient
to support a conclusion. In re Protests of Oakhill Land Co., 46 Kan. App. 2d 1105, 1114,
269 P.3d 876 (2012). Additionally, finding a lack of substantial evidence requires that the
decision be "so wide of the mark as to be outside the realm of fair debate." In re
Equalization Appeal of Prieb Properties, 47 Kan. App. 2d at 137.

As a preliminary matter, Krueger has objected to the current CDU and
construction grade ratings in several appeals. When she challenged the ratings and value
from 2010 tax year, this court reversed the case for reconsideration but upheld BOTA's
decision on remand. See Krueger VI, 2014 WL 4627619, at *1-5. In that case, Krueger
asked for the CDU rating to be lowered from "Good" to "Average," which both BOTA
and this court each declined to do. 2014 WL 4627619, at *1-4. In fact, this court found
specifically that Krueger provided little evidence other than her own opinion and
photographs to support the rating change and that her arguments essentially asked the
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court to reweigh the evidence. 2014 WL 4627619, at *4. In a challenge to the valuation
for the 2011 tax year, this court again held that substantial evidence supported BOTA's
determination. See Krueger IV, 2013 WL 4046463, at *6-8. There, the court recognized
that "some of the evidence presented by Krueger tended to contradict [BOTA's] finding"
regarding the ratings, especially in light of the comparable properties, but still upheld
BOTA's determination. 2013 WL 4046463, at *8. And although Krueger accepted the
County's 2012 valuation, she still argued that the County assigned inflated ratings to her
property—ratings that this court declined to change on a prospective basis. Krueger V,
2014 WL 1096904, at *1.

Here, Krueger briefly raised the issue of the CDU and other ratings before BOTA.
On appeal, she adds a large amount of nuance and detail to this argument that she failed
to develop below. As this court often reiterates, issues and legal theories not raised before
the trial court cannot be raised on appeal for the first time. See Wolfe Electric, Inc. v.
Duckworth, 293 Kan. 375, 403, 266 P.3d 516 (2011). Regardless, it is clear that Krueger
is challenging the same ratings as in previous tax years. See Krueger IV, 2013 WL
4046463, at *1; Krueger III, 2012 WL 3822600, at *1-2. A review of the record suggests
that Krueger has again provided little evidence other than her own opinion and
photographs to support the rating change and that her arguments essentially asked the
court to reweigh the evidence—an argument this court has repeatedly rejected.

Moreover, substantial evidence in the light of the record as a whole clearly
supports the County's determination. Mentzer explained how he arrived at the value of
the home. Although his testimony was brief, he outlined the method he used and
explained the rollover value. Krueger, in contrast, called no witnesses at the hearing and
presented no testimony concerning the value of her home or the appropriate ratings. And
as with previous appeals, although some of the exhibits submitted to BOTA suggest that
a few of the comparable homes are of a different quality than her own, nothing suggests
that they are so impossibly different that it renders either the ratings or overall adjusted
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value incorrect. More importantly, nothing in Krueger's exhibits explains how she arrived
at her suggested valuation of $52,000.

Meanwhile, Mentzer explained that the ratings were due to the extensive
remodeling and the overall quality of the home. He testified that many of the problems
Krueger highlighted—such as the need for a new roof—constituted maintenance needs
and did not affect valuation. And while Mentzer failed to name the exact nature of the
comparable homes' remodeling, he clearly explained that they, like Krueger's home, had
been remodeled or rebuilt.

In short, and as BOTA pointed out, Krueger presented no evidence demonstrating
why her proposed value is more accurate than that provided by the County. A reasonable
person could certainly find the evidence presented by the County as sufficient to support
BOTA's conclusion regarding the house's value.

As a final note, Krueger devotes a portion to her reply brief to discussing the sale
of her Yates Center home. She argues that the home's $60,000 sale price further
demonstrates that the County's valuation is inaccurate and invalid. But this contention is
simply an attempt to undermine BOTA's determination with unverified information from
outside the record. By Krueger's own account, the sale occurred in July 2015, after
BOTA's decision. Therefore, this particular argument was never presented to BOTA, and
as previously explained, this court cannot consider the argument on appeal for the first
time. See Wolfe Electric, Inc., 293 Kan. at 403. In sum, BOTA's decision regarding the
value of Krueger's property for tax year 2013 is affirmed.

BOTA did not misapply the rollover statute.

Ancillary to her arguments regarding the value of her home, Krueger also argues
that BOTA misapplied the rollover statute found in K.S.A. 2014 Supp. 79-1460(a). As
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previously explained, this court may grant relief if BOTA misinterpreted or misapplied
the law. K.S.A. 2013 Supp. 77-621(c)(7). Statutory interpretation is a question of law
over which this court exercises unlimited review. Milano's Inc. v. Kansas Dept. of Labor,
296 Kan. 497, 500, 293 P.3d 707 (2013). Important to this particular issue, a statute
generally operates prospectively unless (1) the statutory language clearly indicates that
the legislature intended the statute to operate retroactively, or (2) the change is procedural
or remedial in nature. State v. Todd, 299 Kan. 263, 274, 323 P.3d 829 (2014).

The current version of the statute that Krueger insists BOTA misapplied, K.S.A.
2014 Supp. 79-1460(a) provides, in relevant part, that a property's annual valuation must
be provided to the taxpayer by March 1 of the tax year. If that property had its value
reduced through the appeals process, that reduced valuation is rolled over for the next 2
years. K.S.A. 2014 Supp. 79-1460(a)(2). The appraisal can only be increased from that
rollover value if certain documentation demonstrates substantial and compelling reasons
for the change. K.S.A. 2014 Supp. 79-1640(a).

Krueger argues that because her BOTA appeal took place after the effective date
of this statute, which was July 1, 2014, BOTA needed to apply the 2-year rollover rule to
the 2013 tax year and rollover the final determination from the 2011 tax year. But this
statute applies to the value of property as supplied by the County, not as determined by
BOTA. K.S.A. 2014 Supp. 79-1460(a). On March 1, 2013, which is the tax year at issue
in this case, the statute Krueger now relies on did not yet exist. And the version of the
statute in effect at the time that the County appraised her property in the 2013 tax year,
K.S.A. 2013 Supp. 79-1460(a)(2), provided for a 1-year rollover period. Additionally,
nothing in the 2014 version of the statute supports Krueger's theory of retroactive
application, and indeed, Krueger fails to present an argument on this point. Instead, she
simply insists that because her case was still pending when the 2014 version of the statute
went into effect, the 2014 statute must apply. Under these circumstances, rolling over the
final determination from the 2011 tax year is clearly inappropriate.
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BOTA appropriately declined to apply a 2-year rollover period as the statute in
effect when the County set its valuation required only a 1-year rollover period. Krueger
raises no other arguments concerning the appropriateness of rolling over the appraised
value from the 2012 tax year.

Affirmed.