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In re The Appeal of Lowe's Home Centers, LLC

Court of Appeals of North Carolina

January 7, 2020


          Heard in the Court of Appeals 5 June 2019.

          Appeal by Union County from Final Decision entered 24 October 2018 of the Property Tax Commission sitting as the State Board of Equalization and Review Nos. 17 PTC 0146-48.

          Parker Poe Adams & Bernstein LLP, by Charles C. Meeker and Collier R. Marsh, and Perry, Bundy, Plyler & Long, L.L.P., by Terry Sholar and Ashley McBride, for Union County-appellant.

          Bell, Davis & Pitt, P.A., by John A. Cocklereece and Justin M. Hardy, for Lowe's Home Centers, LLC-appellee.

          MURPHY, JUDGE.

         Our statutes bar county boards of equalization and review from changing the appraisal value of-i.e. revaluating-real property in years in which general reappraisal is not made, except under certain specifically defined circumstances. One such reason for revaluation is to "[c]orrect an appraisal error resulting from a misapplication of the schedules, standards, and rules used in the county's most recent general reappraisal." N.C. G.S. § 105-287(a)(2) (2017). The only genuine issue in this case is whether the Union County Board of Equalization and Review's revaluation of Lowe's property values in a non-reappraisal year was, in fact, for the purpose of correcting a misapplication of the schedule of values. The revaluation did not correct a misapplication of the schedule of values and was not authorized under our statutes. We affirm the decision of the Property Tax Commission below in favor of Lowe's.


         At the beginning of 2015, the Union County Board of Equalization and Review ("the Board") revaluated three properties belonging to Appellee Lowe's Home Centers, LLC ("Lowe's") during a countywide revaluation pursuant to N.C. G.S. § 105-286(a)(1). During the revaluation process, property values were appraised according to the "Cost Approach," one of three assessment methods allowed by Union County's 2015 Uniform Schedule of Values, Standards, and Rules ("Schedule of Values") to assess market price:

1. Cost Approach: (also known as Depreciated Replacement Cost). This approach is based on the proposition that the informed purchaser would not pay more than the cost of producing a substitute property with the same use as the subject property. This approach is particularly applicable when the property being appraised is utilized at its highest and best use. It also applies when unique or specialized improvements are located on a site for which there exist no comparable properties in the market.
2. Market Data Approach: (also known as the Comparative Approach). This appraisal method is used to estimate the value of real property through a market search to ascertain the selling prices of similar properties. In this process, the appraiser compares the subject property to those which have sold, and estimates the value of the property by using those selling prices as a comparison.
3. Income Approach: [Not discussed in this case.]

         The Board evaluated the three properties owned in fee simple by Lowe's according to the Cost Approach at $12, 362, 100.00, $9, 204, 600.00, and $14, 667, 400.00, respectively, and reported the proposed values to Lowe's. This was the first evaluation relevant to this case, and we will refer to it hereinafter as "the Initial Evaluation."

         Later that same year, Lowe's properly appealed the evaluations with the assistance of an appraiser. Utilizing the Market Data Approach, it submitted documentation evincing that the properties were worth approximately half as much as the Board's initial assessment suggested-$6, 492, 000.00, $4, 386, 800.00, and $6, 555, 100.00, respectively. Lowe's presented comparisons of properties ostensibly similar to those owned by Lowe's, all of which were represented as "big box" retail properties owned in fee simple. Satisfied that the properties owned by Lowe's were, in fact, analogous to those in the appeal, the Board accepted the appeal at "face value" and revaluated the listed values to exactly those proposed by Lowe's ("the 2015 Revaluation"). From 8 April 2015 to 7 April 2017, the three properties belonging to Lowe's were taxed according to these amended assessed values.

         In 2017, a non-revaluation year under N.C. G.S. § 105-286(a)(1), the Board discovered what it deemed to be an error in the Lowe's property revaluations. During a hearing in which a separate retailer appealed its property values by comparison with the Lowe's properties, the Board recognized that the values assessed according to the 2015 Revaluation were abnormally low. In a five-minute hearing on 4 April 2017, the Board voted to restore the three Lowe's properties to their values under the Initial ...

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