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No. 104,161 IN THE COURT OF APPEALS OF THE STATE OF KANSAS IN THE MATTER OF THE PROTESTS OF OAKHILL LAND COMPANY, et. al, Appellants/Cross-Appellees. SYLLABUS BY THE COURT 1. A county appraiser must make an initial classification and determine the value of each parcel by March 1, the date on which notice of this information is to be mailed to the taxpayer under K.S.A. 2010 Supp. 79-1460(a). After March 1, K.S.A. 79-1465 authorizes the county appraiser to make "any necessary changes" before the tax rolls are certified on June 15, but the appraiser may not make unnecessary changes solely at his or her own discretion after March 1.

2. Decisions of the Court of Tax Appeals are reviewed under the Kansas Judicial Review Act, K.S.A. 77-601 et seq. Accordingly, an appellate court considers all the evidence, including that contrary to the Court of Tax Appeals' decision, when determining whether the decisions are supported by substantial evidence. To uphold the Court of Tax Appeals' decision, the evidence in support of it must be substantial, meaning that a reasonable person could accept it as being sufficient to support the conclusion reached. When part of the evidence has been so undermined by crossexamination or other evidence that a reasonable person would no longer accept it as sufficient to support an administrative agency's conclusion, the appellate court essentially filters out that evidence and determines whether what remains is enough for a reasonable person to accept the agency's factual findings and conclusion.

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3. Under K.S.A. 2010 Supp. 79-1460(a)(2), when a taxpayer has won an appeal about the classification or appraised valuation of real estate for property-tax purposes, the county may not increase the valuation for the following year unless the county provides documented, compelling, and substantial reasons for the increase.

Appeal from the Court of Tax Appeals. Opinion filed January 27, 2012. Affirmed.

Linda Terrill and Darcy Demetre Hill, of Neill, Terrill & Embree, P.A., of Leawood, for appellants/cross-appellees.

Ryan Carpenter, assistant counsel, of Unified Government of Wyandotte County/Kansas City, Kansas, for appellee/cross-appellant.

Before LEBEN, P.J., GREEN and MARQUARDT, JJ.

LEBEN, J.: Three landowners dispute the reclassification of their real estate from agricultural use to vacant, made by Wyandotte County and upheld by the Court of Tax Appeals, which resulted in an increase in the landowners' property-tax assessment. But we may not overturn an administrative-agency decision when it is supported by substantial evidence, even though there may be evidence to the contrary. The Court of Tax Appeals' decision upholding the classification was based on substantial evidence, and we therefore must affirm it.

The Unified Government of Wyandotte County/Kansas City, Kansas, separately cross-appeals the Court of Tax Appeals' decision that the county could not revise its 2006 appraised values based on a procedural error. The county revised the 2006 valuation upward on three parcels after it had sent an initial notice of each appraisal on March 1; the county discovered the change in property use after March 1 but before the appraisal
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rolls were certified on June 15. But the property-tax statutes set up a detailed process for making the valuation, notifying the taxpayer, and allowing the taxpayer an informal appeal, all occurring before the rolls are certified. Here, the county didn't need to make a late-breaking change: it simply chose not to send a person out to look at the properties until well after March 1. In these circumstances, we agree with the Court of Tax Appeals that the county may not change the 2006 valuations set out in its March 1 notices to the taxpayers.

Last, the landowners also contend that the county couldn't increase their valuations in the second of 2 years involved in the appeal because the landowners had succeeded in getting the first year's valuation for three tracts lowered, and K.S.A. 2010 Supp. 791460(a)(2) prevents retaliation when a taxpayer wins an appeal by providing that the valuation not be raised the following year unless "documented substantial and compelling reasons exist" to do so. But the county has shown substantial and compelling reasons: according to evidence accepted by the Court of Tax Appeals, the land was in fact vacant--and not used for agricultural purposes--in both years; only a technical error by the county preserved the lower, agricultural-use value in the appeal of the first year's valuations. In addition, both appeals were handled in a single proceeding by the Court of Tax Appeals, so it's clear that the county did not in any way retaliate for the taxpayers' appeal. In these circumstances, the county had the ability to value the properties as vacant--thus increasing each valuation--in year two. We affirm the Court of Tax Appeals' decision.

FACTUAL BACKGROUND This tax appeal involves six tracts of land in Wyandotte County owned by three different legal entities: Oakhill Land Company, which owns three tracts; Quivira Village,

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LLC, which owns two tracts; and Quivira Village North, LLC, which owns one tract. Dale Barnhart is a principal owner of all three companies.

The tracts are near the golf course at Lake Quivira. When Barnhart bought them, they were zoned for agricultural use and were being used for agricultural purposes. Barnhart has sought--unsuccessfully so far--to get the properties rezoned to residential use. In the meantime, there is a significant advantage to maintaining the agricultural-use classification of these properties because Kansas has much lower property-tax rates for land used for agricultural purposes.

The dispute over the 2006 appraised values concerns only four of the six tracts. The county initially classified three of them as agricultural, and it mailed notices to the property owners with that classification and a corresponding valuation for property-tax purposes. The county's initial appraisal for a fourth tract classified it as vacant. But after additional inspection and a reevaluation of the properties in June, the county changed the classifications of the first three tracts to vacant, which caused a substantial increase in each tract's valuation for property-tax purposes. The county didn't send the taxpayers notice of these changes until August 29, 2006. Table 1 shows the original and amended 2006 classifications and appraised valuations. The taxpayers challenged each of the classifications of vacant and contended that each of the tracts should have been classified agricultural.

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Table 1

Owner Quivera Village North, LLC Quivera Village, LLC

Parcel No. 930005

County's Initial 2006 Classification Agricultural

County's Initial 2006 Value

County's County's Amended Amended 2006 2006 Value Classification $1,900 Vacant $633,100

929902

Agricultural

$3,300

Vacant

$793,700

930002 Oakhill Land Co. 929811

Residential Vacant

$15,500 $11,300

Vacant N/A

$169,900 N/A

The county's 2007 appraised value for each property is shown in Table 2. For 2007, all of the tracts were classified by the county as vacant, and the taxpayers again contended that they should have been classified as agricultural.

Table 2

Owner Quivera Village North, LLC Quivera Village, LLC

Parcel No. 930005

County's 2007 Classification Vacant

County's 2007 Value $371,500

929902 930002

Vacant Vacant Vacant Vacant Vacant
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$1,533,200 $12,500 $11,300 $36,000 $6,100

Oakhill Land Co.

929811 929805 929808

The appeals from both tax years were ultimately heard by the Court of Tax Appeals in a single, consolidated hearing. Barnhart was the only witness for the taxpayers.

Barnhart testified that he bought the properties in 2002 or 2003 with the long-term goal of turning them into a residential development. So far, he said, he hadn't been able to obtain residential zoning.

Barnhart presented a lease entered into in 2003 with farmer Don Marrs under which Marrs agreed "to harvest the saleable timber" on the properties. Barnhart said that he had observed Marrs thinning out underbrush and pruning trees so that they would be more valuable in the future, and that there were walnut trees on the properties that would be worth up to $20,000 in total when fully grown. Barnhart said he had made no money on the properties in 2006 but claimed to have paid taxes on $511 received in cash from agricultural use of parcel 929902 in 2007; he did not present any documents showing that. Nor did he present any documents showing a plan to remove walnut trees or other timber from the properties. Additionally, Barnhart resides in Florida, and he had no firsthand knowledge of whether the land was actually put to agricultural use, relying instead on Marrs to take whatever actions were needed to remove timber from the land. Marrs did not testify.

Two witnesses testified for the county: Ralph Bellamy and Roy Wheat, both appraisers working for the county. Bellamy testified that landowners who grew trees on their property usually had a plan that set out expected time frames for harvesting the product and that tree farms usually had rows of trees planted for harvesting on a schedule. He said that the lack of these indications of the agricultural production of timber was a

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factor considered when the county changed the classification of some tracts from agricultural to vacant.

Wheat inspected the properties at issue in the 2006 appeal on June 9, 2006, after someone had reported that no agricultural activity was taking place there. On visual inspection, Wheat found no evidence of agricultural use. He also looked at aerial photographs taken 5 years earlier to determine whether there was evidence that trees had been harvested; he found more tree growth in recent years than in the past with no evidence of harvesting. So Wheat changed the classifications for the three tracts from agricultural to vacant.

The Court of Tax Appeals found that Barnhart's testimony about timber activity was not persuasive because it wasn't specific or based on firsthand knowledge. The court noted that there was no evidence of any agricultural income from the property in 2005 or 2006, no evidence of timber harvesting in 2005 or 2006, and no evidence of other activity during those years that might be part of a long-term timbering business. The court concluded that the evidence wasn't sufficient to show agricultural use.

I. The County Has Not Shown a Legal Error by the Court of Tax Appeals Because the Court Correctly Concluded that a County May Make Only Necessary Changes to a Parcel's Classification or Appraised Valuation after March 1. We first consider the issue cross-appealed by the Unified Government because its resolution will affect another issue on appeal. The landowners won one contested issue before the Court of Tax Appeals, which concluded that a county could not--at its "sole discretion"--change the classification for a parcel, thus increasing the property tax due, after sending the required notice of classification that must be mailed by March 1. The Unified Government has appealed that ruling, and it seeks to apply the vacant
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classification to three parcels it had initially classified as agricultural or residential for 2006. The county reviewed its appraisal of those properties in June 2006 and notified the owners of the change to vacant in late August 2006, but the Court of Tax Appeals concluded that the county was bound by the notice sent March 1.

The county notes that K.S.A. 79-1465 authorizes the county appraiser "to make any necessary changes to the classification or appraised value" until the appraisal rolls are certified on June 15. The county also notes that the statute requiring mailed notice of the classification by March 1 explicitly provides that the "[f]ailure to timely mail or receive such notice shall in no way invalidate the classification or appraised valuation as changed." K.S.A. 2010 Supp. 79-1460(a). In the county's view, if the failure to mail the notice by March 1 doesn't invalidate "the classification or appraised value as changed," surely the county may still make changes after March 1.

The Court of Tax Appeals disagreed. In its view, if the appraiser is required to mail notice of the classification by March 1, surely the appraiser must "complete its valuation prior to mailing the valuation notice." Moreover, the Court of Tax Appeals concluded that taxpayers should be able to rely upon that notice as the county's final classification and appraised value. The Court of Tax Appeals provided two points in support of that conclusion. First, it noted that taxpayers have a detailed system of appeals available to them between the March 1 notice and the June 15 certification of the appraisal rolls. If the county can make a change after June 1, as it did here, the taxpayer loses the right to use the appeal system that's available before the tax is due: A later appeal system, available by paying the tax "under protest," requires that the taxpayer first pay the higher amount before getting an appeal. See K.S.A. 2010 Supp. 79-2005. Second, the Court of Tax Appeals noted that finality in tax matters is usually quite important,

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citing our court's decision in In re Tax Protest of United Ag Services, 37 Kan. App. 2d. 902, 912, 159 P.3d 1050, rev. denied 285 Kan. 1174 (2007).

The question is one of statutory interpretation, and we must make our own independent determination of statutory meaning. Our goal is to determine the legislature's intent through the statute's language, which is generally done by giving ordinary words their ordinary meaning. State v. Finch, 291 Kan. 665, Syl.

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