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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Varilek v. Burke (6/10/2011) sp-6563

Varilek v. Burke (6/10/2011) sp-6563, 254 P3d 1068

        Notice:  This opinion is subject to correction before publication in the PACIFIC REPORTER. 
        Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 303 
        K   Street,   Anchorage,   Alaska   99501,   phone   (907)   264-0608,   fax   (907)   264-0878,   email 


LARRY VARILEK, PERSONAL                             )
REPRESENTATIVE OF THE                               )   Supreme Court No. S-13763
ESTATE OF MARTHA DUNNAGAN,                          )
                                                    )   Superior Court No. 3AN-08-07903 CI 
                        Appellant,                  ) 
        v.                                          )   O P I N I O N 
MARIANNE K. BURKE,                                  )   No. 6563 - June 10, 2011 
MUNICIPALITY OF ANCHORAGE,                          )
BOARD OF EQUALIZATION,                              )
                        Appellees.                  )

                Appeal from the Superior Court of the State of Alaska, Third 
                Judicial District, Anchorage, Eric A. Aarseth, Judge. 

                Appearances:        Larry   Varilek,   pro   se,   Houston,   Appellant. 
                Pamela D. Weiss, Assistant Municipal Attorney, and Dennis 
                A. Wheeler, Municipal Attorney, Anchorage, for Appellees. 

                Before:       Carpeneti,    Chief    Justice,   Fabe,   Winfree,     and 
                Christen, Justices.   [Stowers, Justice, not participating.] 

                CHRISTEN, Justice. 


                This appeal arises from the 2008 valuation of a parcel of real property in 

Anchorage.        Larry   Varilek,   the   personal  representative   of   the   estate   that   owns   the 

property, argues that the Board of Equalization overvalued the property. After reviewing 

the record, we affirm the superior court's decision upholding the Board's valuation. 

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                Martha Dunnagan owned a residential lot in Anchorage with a single-family 

home until her death in 2000.        The property passed to her estate when she died.             Larry 

Varilek is the personal representative of the Dunnagan estate. 

                In January 2008 the Municipality of Anchorage assessed the value of the 

property at $146,200 - $51,200 for the land and $95,000 for the building.  In February 

2008 Varilek appealed the assessment to the Board of Equalization.  He claimed that the 

valuation   was   overstated   because   the   building   was   incomplete   and   because   it   had 


                Municipal   Senior   Appraiser   Matt   Rowley   reassessed   the   value   of   the 
property after Varilek appealed.1        Rowley concluded the building was 50% incomplete 

and he reduced the value of the building from $95,000 to $60,900 - a total reduction of 

$34,100.      The overall assessment of the property was lowered to $112,100.                   Varilek 

persisted in his position that the property was overvalued; he appealed to the Board of 

Equalization for a hearing on valuation. 

                The   Board   held   a   hearing   on   Varilek's   appeal   in   April   2008.  Varilek 

attended the hearing and provided estimates of the costs for repairing and completing the 

dwelling.     The estimates were from 2004 and 2005; they were not timely filed, but the 

Board accepted them into evidence. Varilek claimed that the home was 75% incomplete 

and that the valuation should be reduced by another $35,000.  The Board noted that the 

estimates he provided were three to four years old, that the scope of the work described 

in   the   estimates   overlapped,   and   that  they   did   not   include   detailed   breakdowns   for 

        1       The transcript from the April 9, 2008 Board meeting identifies Rowley as 

Rolle.   Rowley was not asked to spell his name during the Board meeting which likely 
led to the discrepancy. 

                                                   -2-                                               6563 

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material   and   labor.   The   Board   concluded   Varilek   did   not   show   the   property   was 

incorrectly valued. 

                Varilek appealed the Board's decision to the superior court.  The superior 

court affirmed the decision of the Board, ruling that the Board did not err in determining 

that Varilek failed to meet the burden of proving the property was overvalued. 

                Varilek appeals the superior court's decision. 


                When      a  superior   court   acts  as  an  intermediate     court   of  appeal,   we 

independently review the merits of the underlying administrative decision and do not 
defer to the superior court's ruling.2     We apply a reasonable basis standard of review for 

decisions by municipal boards of equalization when their decisions involve questions of 
fact   and   law   that   involve   agency   expertise.3 We   have   specifically   held   that   taxing 

authorities are to be given broad discretion in selecting valuation methods.4 


        A.	     Varilek Did Not Demonstrate That The Board Lacked A Reasonable 
                Basis For Its Decision. 

                Varilek responded to the Municipality's 2008 notice of assessed property 

value by filing a notice of appeal.  Rowley then inspected the property, determined the 

        2       Black v. Municipality of Anchorage, Bd. of Equalization, 187 P.3d 1096, 

1099 (Alaska 2008) (citing ACS of Alaska, Inc. v. Regulatory Comm'n of Alaska, 81 P.3d 
292, 295 (Alaska 2003));Nelson v. State, Commercial Fisheries Entry Comm'n, 186 P.3d 
582, 585 (Alaska 2008) (citing Simpson v. State, Commercial Fisheries Entry Comm'n, 
101 P.3d 605, 609 (Alaska 2004)). 

        3       CH Kelly Trust v. Municipality of Anchorage, Bd. of Equalization, 909 P.2d 

1381,   1382   (Alaska   1996)   (citing  N.   Star   Alaska   Hous.   Corp.   v.   Fairbanks   N.   Star 
Borough Bd. of Equalization, 778 P.2d 1140, 1144 n.7 (Alaska 1989)). 

        4       Id. (citing N. Star Alaska Hous. Corp., 778 P.2d at 1143-44). 

                                                  -3-	                                           6563

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building was 50% incomplete, and reduced the property valuation from $146,200 to 

$112,100.   Varilek persisted in his appeal and a hearing was scheduled before the Board 

of   Equalization.    He   argued   that   the   adjusted   2008   assessment   still   overvalued   the 
property because the building was 75% incomplete.5 

                A property assessor is tasked with determining the market value for real 
property.6   Alaska Statute 29.45.110(a) defines property value for assessment purposes: 

                The full and true value is the estimated price that the property 
                would bring in an open market and under the then prevailing 
                market conditions in a sale between a willing seller and a 
                willing   buyer   both   conversant   with   the   property   and   with 
                prevailing general price levels. 

Alaska Statute 29.45.210(b) provides: 

                The appellant bears the burden of proof.          The only grounds 
                for adjustment of assessment are proof of unequal, excessive, 
                improper, or under valuation based on facts that are stated in 
                a valid written appeal or proven at the appeal hearing.             If a 
                valuation is found to be too low, the board of equalization 
                may raise the assessment. 

In  Cool Homes, Inc. v. Fairbanks North Star Borough we outlined the standards for 

evaluating evidence at a hearing before the Board: 

                A taxpayer contesting an assessment need only prove that the 
                valuation is improper.      The taxpayer does not have to offer 
                the correct amount, range or method of valuation . . . .           The 

        5       On appeal to our court, Varilek argues the property was 70% incomplete 

in 2008.   He also claims that the Dunnagan estate's due process rights were violated in 
the 2002-2004 assessment cycles, but valuations for the years 2002-2004 are not the 
subject of this appeal. 

        6       CH Kelly Trust, 909 P.2d at 1382 (citing AS 29.45.110(a)). 

                                                  -4-                                            6563

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                 burden then shifts to the taxing authority to introduce credible 
                                                                          [  ] 
                 evidence which substantiates its assessment. 7 

                 We apply a reasonable basis standard of review to determine whether the 

Board      properly    valued    a  parcel    of  real estate    because     real  property     assessments 
encompass questions of fact and law that involve agency expertise.8  Because the Board 

possesses specific expertise, it is given broad discretion in selecting valuation methods.9 

                 1.       The Board considered the estimates that Varilek provided. 
                 Varilek appealed the 2005 property assessment for the same property,10 

primarily contesting the assessor's methodology. We affirmed the superior court's order 
upholding   the   Board's   2005  assessment.11             The   superior   court's   order   observed,"if 

Mr. Varilek had provided actual cost estimates for the necessary renovation work [the 

Board] would have been willing to consider further lowering the assessed value of the 

                 At the Board's hearing on the 2008 valuation, Varilek did present repair 

estimates.     He   argues   on   appeal   that   the   Board   did   not   consider   them   and   that   the 

property remains overvalued.             Contrary to Varilek's assertion, the record shows the 

Board accepted and considered his estimates - despite the fact that they were obtained 

         7       860 P.2d 1248, 1263 (Alaska 1993) (internal citations omitted). 

         8       CH Kelly Trust, 909 P.2d at 1382 (citing N. Star Alaska Hous. Corp., 778 

P.2d at 1144 n.7). 

         9       Id. (citing N. Star Alaska Hous. Corp., 778 P.2d at 1143-44). 

         10      Varilek v. Burke, Mem. Op. & J. No. 1379, 2011 WL 1441854 (Alaska, 

April 13, 2011). 

         11      Id. 

         12      Id. at *2. 

                                                     -5-                                                6563

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in 2004 and 2005. The estimates raised some concerns that reasonably caused the Board 

to place less weight on this evidence.         First, the estimates were three to four years old. 

Second, some of the work described in the estimates overlapped.  For example, both the 

BC   Custom   Interiors   and   J&S   Steamway   estimates   reflected   the   cost   of   removing 

damaged sheetrock.  In addition, the BC Custom Interiors estimate did not break down 

the estimate of each component of work included in the estimate.  This was significant 

because some of the work described in the estimates had already been completed. 

                Although Rowley was not presented with the repair estimates until the 

hearing, his adjusted assessment accounted for all of the repairs covered by the estimates. 

Rowley had reduced the value of the dwelling based on the absence of a heating system, 

sheetrock, interior paint, doors, trim, roof covering, appliances, cabinets, counter tops, 

and flooring, along with the partial absence or disrepair of joists, sub-flooring, windows, 

roughed electric, and exterior paint.   Rowley found that the absence or disrepair of these 

items along with the presence of the foundation, water and sewer hookup, wall and roof 

framing, siding, and insulation indicated that the building was 50% incomplete.                   His 

analysis   is   sufficient   evidentiary   support  to   demonstrate   that   the   Board   considered 
Varilek's repair estimates.13 

                2.	     Varilek   did   not   demonstrate   that   the   revised   valuation   was 

                Varilek also contends that the property was overvalued because it was 

compared to new buildings and completedbuildings in the neighborhood. He argues that 

there are no comparable buildings in the area. 

        13      Varilek requests that we remand the case for further proceedings pursuant 

to Kenai Peninsula Borough v. Ryherd, 628 P.2d 557, 563 (Alaska 1981).                    But Ryherd 
only provides for remand, "where an agency which has a duty to make written findings 
and conclusions has failed to do so."         Id.  Here, remand is not warranted because the 
Board made adequate findings to support its conclusions. 

                                                  -6-	                                          6563

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                Rowley appraised the property based on the market adjusted cost approach. 

He considered the size, architectural style, and age of the home, and he kept these factors 

in   mind   when   he   compared   the   property   to   other   homes.    Rowley   examined   five 

comparable sales near the property but he adjusted the assessed value of the dwelling 

based on its deteriorated condition.        Rowley acknowledged, "The property is in a state 

of disrepair and there is a considerable amount of deferred maintenance to the property." 

In addition to noting the deteriorated condition, Rowley also measured the degree of 

incompleteness of the building. The record includes the "Percent Incomplete Worksheet" 

he prepared.   It shows each aspect of the building that was incomplete and the respective 

contribution of each incomplete job to the overall incompleteness of the dwelling.  For 

example, the dwelling had no cabinets or counter tops and this made up 3% of the overall 

determination that the home was 50% incomplete. 

                Rowley      valued    the  lot  by   comparing     it  to  other   lots  in  the  same 

neighborhood. He explained, "I did a comparison with other properties for land value . . . 

. [T]his is a neighborhood of uniform sized lots, 5,310 square foot lots."              Each lot was 

assessed at a land value of $9.64 per square foot, for a total assessment of $51,200 per 

lot.   The land assessment for the Dunnagan lot was the same for all of the lots in the 

neighborhood that were included in Rowley's  land equity grid.                  Taking all of these 

factors   together,   Rowley   concluded   that   an   accurate   valuation   of   the   property   was 

$112,100.   Varilek did not refute the Municipality's valuation methodology. 

                The Board had a reasonable basis for its 2008 assessment; the testimony 

presented to the Board demonstrated that the property was valued by comparing it to 

similar properties in the same area and that its   deteriorated   and   partially-completed 

condition was taken into account.   We agree with the superior court that Varilek did not 

meet his burden of showing that the Board's valuation was improper. 

                                                  -7-                                            6563

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       B.	    Varilek    Waived     The   Argument     That   The    Board   Should    Have 
              Considered The 2006 Tax Value As A "Base Rate" For Subsequent 
              Tax Years. 

              Varilek argues on appeal to our court that the subject property was assessed 

at $85,000 in 2006 and that the Board should have considered the 2006 assessment when 
it valued the property in 2008.14  He argues the Board "erred when it did not consider the 

2006 tax assessment of $85,000 and gave no reason for its arbitrary and capricious 

decision."  Our understanding of this argument is that Varilek contends the Board was 

required to explain why the 2006 assessment was not used as the starting point for 

determining the 2008 assessment.  But apart from mentioning the 2006 assessed value, 

Varilek did not make this argument at the administrative hearing, and litigants may not 
raise issues for the first time on appeal.15 Because Varilek failed to squarely raise this 

argument at the administrative level, it is waived. 

              Even if this issue had been preserved, it would not be persuasive.  Varilek 

had the burden to show why the 2008 assessment was inaccurate.            As noted above, 

AS 29.45.110(a) defines "property value"  for assessment purposes as the "price the 

property   would    bring  in  an  open  market   and  under  the  then  prevailing   market 

conditions."   Property assessments must take into account the current market value, 

rather than previous assessed values, as Varilek suggests. 


              We AFFIRM the superior court's decision upholding the Board's valuation. 

       14     The record shows the assessed value in 2006 was $85,800. 

       15     See e.g., Mullins v. Oates, 179 P.3d 930, 941 (Alaska 2008) (citingBrandon 

v. Corr. Corp. of Am., 28 P.3d 269, 280 (Alaska 2001)). 

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