McNeilus owned and operated a large cement drum and refuse container manufacturing plant in Dodge County. In valuating McNeilus’s property, Dodge County’s certified appraiser used the Sales Comparison Approach and selected 10 comparable industrial property sales out of a small pool. The supposedly comparable properties were actually of dissimilar uses and sizes.
The company’s expert appraiser used a Sales Comparison and Cost Approach to valuation, but with comparable sales of properties having similar uses from a much larger market. The two valuations resulted in drastically different property values.
The tax court refused to accept out-of-state sales comparables. The Minnesota Supreme Court held that the lower court’s rejection of out-of-state comparable sales violated the tax court’s obligation to use its independent judgment in evaluating testimony and evidence.
The state supreme court held that the tax court is required to follow Minn.Stat. § 273.11, subd. 1 (2004), which provides that “all property shall be valued at its market value.” It further held that “fair market value for property assessment purposes is the compensation which a willing purchaser would pay to an owner – taking into consideration the highest and best use of the property.”