Some may say this is a self-serving post. So be it. Last week, while traveling I received a call from an attorney handling a tax assessment appeal for a golf property with which I was familiar. The trial, being held this week was looming and counsel was interested in my services as an expert witness. The property had sold in 2020 and the taxpayer’s appraisal was relatively consistent with the sale price, which was the result of an “arms-length” transaction. The school district’s appraisal was considerably higher and supported an assessment far exceeding the sale price, which included both tangible and intangible personal property, which isn’t taxable.
Since it was too late for us to produce an appraisal and discovery had already occurred, Counsel and I discussed how I might assist. First, there was the option of reviewing each of the appraisals submitted and opining on them and proper appraisal procedures for golf courses in general and the specifics of the subject property. This was somewhat troublesome since after quickly reading both appraisals, it was obvious not only that both were severely flawed, but that impeaching either of the appraisals would expose flaws in the other.
Both the taxpayer’s and school district’s appraisals failed to develop the income approach (because, they said the property had negative cash flow) and both developed the sales comparison approach using the flawed methodology of comparing sales on a price per hole basis, which has been shown to be irrelevant. Thus, if I would’ve testified that the school district’s appraisal was flawed by not doing the income approach, and by using $ per hole analysis, it would’ve impeached the taxpayer’s appraisal. Additionally, the school district’s appraisal analyzed the golf course and then, clearly not recognizing the unity of use between a golf course and its clubhouse added a value for the clubhouse facility, which should’ve been included in the overall analysis, a clear “double-dip” which suggests a thinly veiled attempt to inflate the value conclusion.
Both of the appraisals were conducted by presumably experienced, state certified appraisers, with two appraisers signing each report. Only one of the 4 appraisers (for the taxpayer) carried the MAI designation. None of the appraisers listed any experience in the valuation of golf properties. It showed in the reports submitted.
We also discussed my role as potential “fact witness” (as opposed to expert) since experts had already been named. Clearly, with only one week to go, the “two minute drill” was on. Given the travel, time and costs involved, I suggested to counsel that my involvement may impeach his expert and could cost a significant amount of money. He decided to contact the broker that handled the sale to attest that it was an arms-length transaction.
The moral of the story here is that whether an appraisal, legal matter, medical issue or any other problem, it pays to retain the expert most capable of and focused on your particular problem. In this case, counsel (for both sides) are saddled with experts unable to provide the needed expertise and it could come back to bite one of them.