Representative Matters

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Client: County
Minnesota Supreme Court interpreted state statutes specifying which structures at industrial plants were subject to property tax, affirming continued validity of "special purpose" property designation, and describing proper application of cost and sales approaches to valuation.

A regional agribusiness cooperative filed petitions in the Minnesota Tax Court challenging the valuation of its massive sugarbeet processing plant located in outstate Minnesota. The County, the taxing authority, retained Briggs because of the anticipated scope and complexity of the litigation. In May 2006, the parties tried the value of the taxable real property for taxes payable in 2004 and 2005 in an eight-day trial at the Minnesota Tax Court. The principal legal issues at trial were whether the bins, tanks, and silos at the plant were taxable real property and whether the plant was a "special purpose property." Briggs obtained a victory for the County on all of the legal issues, but the Tax Court declined to independently determine the value. The taxpayer appealed the Tax Court's decision to the Minnesota Supreme Court, which affirmed the County's position on all of the legal issues, but remanded for a valuation. Southern Minn. Beet Sugar Coop v. Renville County, 737 N.W.2d 545 (Minn. 2007).

Rather than litigate the remand before the Tax Court, the taxpayer chose to litigate the value for taxes payable in 2007 and 2008 in the local District Court. As a result of the appraisal that had been prepared for the County in anticipation of the first trial, the County determined that it had been undervaluing the property, and thus it had revised the assessment for taxes payable in 2006 and thereafter. The taxpayer argued the property's value was $8.5 million, while the County's position was that its value was $66 million. The taxpayer also argued that the County's valuation practices, and the increase in the County's value in the intervening years, were illegal and unconstitutional. Before trial, the County won partial summary judgment prohibiting the taxpayer from re-trying issues that had been established in the previous trial and appeal.

Valuation and unequal assessment for taxes payable in 2007 and 2008 were tried in an eleven-day trial before the District Court in April and May 2008. The County won almost every issue at trial, and the District Court decided that the value of the taxable real property at the plant was about $50 million. Key issues in the trial included whether a trial subpoena can be used to access an appraiser's files, the reliability of "allocated" sales (i.e. whether real property value can be extracted from going-concern stock transactions in which whole businesses are sold), defending the integrity of the County's assessment practices, and the identification of the proper "cost model" for use in the cost approach. The taxpayer appealed to the Court of Appeals, which affirmed as to all issues. In re Southern Minn. Beet Sugar Coop., No. A10-255, 2010 WL 3632534 (Minn. Ct. App. Sept. 21, 2010), rev. denied.

The parties engaged in additional motion practice relating to the tax years that had been remanded from the Minnesota Supreme Court. Eventually, through mediation, the parties reached a settlement of all disputed issues.

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