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Tax court rules in favor of property's market value over its value-in-use.

The state tax court properly determined that the tax assessments of one of a bank's branch locations were based on market value, rather than focusing on the property's value-in-use (the property's value to its present owner), according to the Supreme Court of Minnesota.

The Marquette Bank National Association challenged the 1994-96 property tax assessments of one of its branch bank facilities located in the City of Brooklyn Center. The property includes a single-tenant, owner-occupied building of 17,920 square feet after improvements were made in 1991. Those renovations cost $1 million and added 5770 square feet to the building. The property's market value was assessed in 1994 and 1995 at $1.5 million and approximately $1.6 million in 1996. The bank challenged the assessments. The bank's appraisal expert testified that the property's value was diminished because its physical attributes did not correspond with the smaller, less elaborate branch bank designs preferred by many banks today. The tax court determined that the market value of the property for all three years in question was $1.1 million, a reduction of more than $400,000 per year. The county appealed.

On appeal, the county argued that the tax court's reliance on the bank's expert witness's testimony led the court to improperly concentrate on the property's potential "value-in-use" to that portion of the market that preferred smaller, less ornate branch bank facilities, rather than in considering the bank's value in the overall marketplace. But the court concluded that this argument was without merit because the tax court's adoption of the appraiser's opinion was simply an attempt to determine the property's value to the typical purchaser, rather than an attempt to consider the subject property's intrinsic value to the bank. The tax court decision was affirmed.

Marquette Bank Nat. v. County of Hennepin

Supreme Court of Minnesota

March 4, 1999

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Publication:Appraisal Journal
Article Type:Brief Article
Geographic Code:1U4MN
Date:Jul 1, 2000
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