Gallatin County panel orders 12% cut to Town Pump land values after dispute over time-trend method

The Gallatin County tax appeal board directed a 12% reduction to the assessed land values for the parcels under appeal after a hearing in which Town Pump’s representatives argued the Department of Revenue used residential time trends to value commercial land.

The reduction followed testimony and competing analyses presented Wednesday by the taxpayers’ counsel, Wiley Barker of Crowley Fleck, and an economist, Jerome Patton, and by Department of Revenue staff modeler Tim Scaup. The appellants had asked the board to cut land valuations by about 20%.

Appellants’ case focused on how the department time-trended older land sales to reach values as of the Jan. 1, 2022 valuation date. Wiley Barker told the board that the department “used the wrong time trend to value these commercial properties” and that applying a commercial time trend would lower the valuations roughly 20% on average. Economist Jerome Patton, who said he helped develop time-trending methods while at the Department of Revenue and now consults for Tekton Consulting, testified he recalibrated the department’s land models using commercial sales and found materially lower appreciation for commercial land than the department’s residential-weighted trend.

“The department incorrectly used residential time trends or what we commonly call appreciation rates to value commercial property,” Patton testified, and said his reworked models produced an average appellant value that was about 80% of the department’s assessed land values for the parcels at issue. Patton provided a written hearing report (taxpayer exhibit 1) and explained he used the department’s models, inputs and adjustments but replaced the time trend with one calculated from the commercial sales in the relevant land models.

Department modeler Tim Scaup, who described the department’s approach and data checks, defended the department’s time trends as based on a broad set of verified sales across the market areas and neighborhoods the department uses for valuation. “The best way to determine market value is with verified sales from a willing seller to a willing buyer,” Scaup said, arguing the department’s time trends were drawn from a blend of sales the department verified and vetted. He told the board that removing many sales on which the department relies produced an incomplete data set and a lower trend that, in his view, did not reflect the market as a whole.

Board members discussed the competing presentations at length. The appellants emphasized that their challenge concerned only land time-trending, not improvement values, and that the department had already reduced improvements and aggregated some parcels during AB 26 reviews — a change the department said lowered total assessed value by roughly $6.7 million before the hearing. The appellants requested an additional $10.1 million reduction in land values; the board instead settled on a compromise 12% reduction to land values and asked the appellants to submit recalculated dollar values reflecting that percentage.

The board’s action was recorded as a direction to apply a 12% reduction to the land component of the assessed values for the parcels under appeal, with instructions that the appellant provide a recalculation and the department process the adjustment. The board and the department agreed that the formal revised assessments would be prepared and distributed after the parties exchange the recalculated figures.

The hearing record includes legal and technical references cited by the parties: Montana statutes and constitution, the Department of Revenue’s valuation manual and administrative rule language (the transcript cites rule text at 42.20.106), and appraisal standards such as those published by the International Association of Assessing Officers (IAAO). Appellants argued those authorities support using comparable (commercial) properties and commercial time trends to value commercial land; the department pointed to its methodology and to its use of verified sales and neighborhood stratification in constructing time trends.

The board did not record a roll-call roll vote in the transcript excerpt; members discussed and ultimately agreed on the 12% adjustment. The board said it would take the parties’ recalculated numbers and issue a formal written decision that reflects the 12% land reduction and the updated assessed values.

For now, the appeal outcome is a board direction rather than a fully detailed order: the board directed the appellant to submit a list of recalculated land values reflecting the 12% reduction and the department to incorporate those adjustments, after which the board’s written decision will be prepared and provided to the parties.

The hearing file includes the appellants’ hearing report and exhibits with model outputs and charts (taxpayer exhibit 1) and the Department of Revenue’s land model materials. The board indicated it would prepare and print the final decision once the recalculated figures are received.