TAXATION - AD VALOREM - VALUATION OF REAL PROPERTY - PHYSICAL INSPECTION BY COUNTY ASSESSOR.
(1) Under RCW 84.41.040, it is necessary that, prior to changing the "true and fair value" of real property for purposes of taxation, a county assessor make a physical inspection of the subject property.
(2) There is no requirement in the state constitution with respect to the physical inspection of taxable real property prior to reevaluation for tax purposes.
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September 19, 1969
Honorable George Kinnear
Director, Department of Revenue
415 General Administration Building
Olympia, Washington 98501
Cite as: AGO 1969 No. 15
By letter previously acknowledged, you have requested an opinion of this office on two questions relating to the valuation of real property for ad valorem tax purposes. As background for your request, you have advised us that a certain existing state statute namely, RCW 84.41.040 has been administratively construed by the state tax commission (now, department of revenue) to require that the various county assessors, prior to changing the "true and fair value" of any parcel of real property for purposes of property taxation, make a physical inspection of the subject property.
You have asked for our opinion as to:
(1) Whether this administrative construction is correct; i.e., whether it is necessary, under RCW 84.41.040, that a county assessor, prior to changing the "true and fair value" of real property for purposes of taxation, make a physical inspection of the subject property and;
(2) Whether such a requirement of actual physical inspection may also be found in any provision of our state constitution.
[[Orig. Op. Page 2]]
We answer question (1) in the affirmative and question (2) in the negative for the reasons set forth in the following analysis.
Preliminarily, we would note that, in the absence of a constitutional provision or statute to the contrary, it is generally held by courts of other jurisdictions that an assessment is not invalidated by reason of the fact that the assessor has not actually inspected the subject property if, from other sources, he has obtained sufficient knowledge or evidence of its existence and value to make the appraisal and resulting assessment. See,Montgomery Ward & Co. v. Welch, 17 Cal. A.2d 127 [[17 Cal. App.2d 127]], 61 P.2d 790 (1963); accord, AGO 53-55-117, copy enclosed.
However, in this state we do have a statute relating to the matter. In 1955,1/ our legislature enacted a comprehensive statute setting forth the procedures to be followed by the various county assessors in reevaluating property for tax purposes. See, chapter 251, Laws of 1955, now codified as chapter 84.41 RCW. In § 4 of this act, which is now codified as RCW 84.41.040, the legislature set forth the following requirement:
"Each county assessor shall cause real property being valued to be physically inspected and shall require such examination as will provide adequate data from which to make accurate valuations. Property which may have been revalued after physical examination by the assessor subsequent to May 31, 1954, shall be considered to have been revalued pursuant to the requirements of this chapter."
Shortly after this statute was enacted, the state tax commission (now department of revenue), on June 7, 1955, issued its "Property Tax Bulletin No. 231" for the guidance of county assessors and in answer to certain questions they have raised concerning chapter 84.41. RCW, generally. With respect to the particular question of physical inspections, [[Orig. Op. Page 3]] the commission expressed itself as follows:
"4. If an assessor's property appraisal records are good and up-to-date, would it not be possible under this statute to revalue all improvements in the office without physical inspection?
"Answer No; the statute requires physical examination by June 1, 1958, of allreal property except such as has been revaluedafter physical examination since May 31, 1954. Thereafter, all property must be physically inspected and revalued every four years. When records have been developed on every parcel of property, showing sufficient data on which to base accurate valuation, the process of periodic physical examination will serve to insure: (a) that all taxable property is listed; and (b) that data on each parcel is kept reasonably up-to-date. Revaluation will help to insure that values are kept in line with the market."
This administrative construction is, of course, entitled to great weight in determining the intent of the legislature in accordance with the rule announced by the court in such cases as Bradley v. Dept. of Labor and Ind., 52 Wn.2d 780, 329 P.2d 196 (1958), and others cited therein. Furthermore, it is in full conformity with the view which was recently expressed by our state supreme court in Carkonen, et al. v. Williams, et al., (No. 40868, September 4, 1969). There, in considering the question of whether or not certain assessors, in their valuation of the plaintiffs' properties, had violated the various federal and state constitutional requirements of uniformity in taxation, the court said:
"The evidence indicates quite clearly that, to the best of their ability, and with their limited staffs, the assessors involved were honestly endeavoring to pursue a systematic nondiscriminatory cyclical approach to revaluation. In this veinit is to be borne in mind that the statute (RCW 84.41.040) requires a physical inspection of each of the parcels revalued and that King County had some 400,000 and Snohomish County some 250,000 parcels [[Orig. Op. Page 4]] subject to revaluation. The sheer physical problem of annually inspecting the units of property involved, coupled with the staff and budgetary allocations required to accomplish such, lends wisdom to the legislative act authorizing and directing a cyclical approach, and virtually lays to rest any viable claim to intentional discrimination inhering in the system." (Emphasis supplied.)
We understand your request for our review of this long-standing administrative construction of the statute has arisen because of recent suggestions that RCW 84.41.040, supra, might, instead, be construed to mean that once "adequate data" has been obtained from a single physical inspection of a subject property, such data could properly be used as the basis for all future reevaluations without any further physical inspection. In our opinion, however, the statutory requirement that the examination shall be such as will ". . . provide adequate data from which to make accurate evaluations . . ." cannot, properly, be used as a basis for such a construction. Instead, as we see it, this requirement was placed in the statute simply to insure that when the real property is physically inspected, it is not to be inspected in a superficial manner but rather, in a manner sufficient to provide adequate information to aid in determining the new values.
With regard to the question of what constitutes the "adequate data" which is to be acquired in subsequent physical inspections, we believe that the proper standard is that set forth in Property Tax Bulletin No. 231, quoted above; i.e., it must be determined ". . . that data on each parcel is . . . reasonably up-to-date. . . ." Thus, physical inspections which take place after the initial physical inspection of each parcel must be sufficient to determine what relevant physical changes, if any, have occurred in the data gathered in the prior inspection. Accordingly, we would expect that, absent extensive changes such as new construction or major additions to a building, subsequent inspections would serve mainly as a check on data gathered previously, and would not require "starting from scratch" so far as gathering data is concerned. However, as already concluded, this check, by means of a physical [[Orig. Op. Page 5]] inspection, must be made prior to any change in the true and fair value.2/
This disposes of your first question. In addition, however, you have inquired as to whether a requirement for actual physical inspections of taxable real property, prior to the reevaluation thereof, may be found in any provision of our state constitution so as to preclude the legislature from either eliminating or altering the requirement by an ordinary statutory amendment. We believe that this question is answerable in the negative.
The only provision in our constitution which could possibly apply to the reevaluation of taxable real property is Article VII, § 2 (Amendment 17), establishing the "forty mill limit." While this section provides that all taxable property shall be assessed at fifty percent of its "true and fair value" in money, it says nothing whatsoever with regard to the procedure to be followed in making this determination.
We trust the foregoing will be of assistance to you.
Very truly yours,
HENRY W. WAGER
Assistant Attorney General
*** FOOTNOTES ***
1/Subsequent to the date of issuance of AGO 53-55-117, above noted.
2/One final point: Our research has disclosed that authority exists in other states for the proposition that even where a statute provides for actual physical inspection of property for assessment purposes, the failure to physically inspect, while being n irregularity, does not, by itself, defect the validity of an assessment already made. See,People ex rel. Smith v. Coen, 415 Ill. 63, 112 N.E.2d 119 (1953). However, no such case has been found in this state. Indeed, in view of the fact that our supreme court, in Carkonen, et al. v. Williams, et al., supra, referred to the requirements of RCW 84.41.040 as a justification for a cyclical approach to revaluation, and for the specific revaluation programs in King and Snohomish counties, we would not expect that this same court would countenance any systematic disregard of the requirement.