Summerlin developer sues county over tax methods

Grace Leong

Wednesday, June 14, 2000 | 11:05 a.m.

Howard Hughes Corp., developer of the Summerlin master-planned community, says in a lawsuit it's being overcharged for property taxes by Clark County and is demanding nearly $1 million in refunds.

A Hughes lawsuit in Clark County District Court against the county assessor's office says Hughes overpaid taxes for fiscal year 1999-2000 because the county separately appraised 42 parcels in Summerlin, resulting "in a taxable value greatly in excess of the full cash value of 42 parcels as a unit."

The county stands by its assessment method.

"We assessed the taxable value of the property to be $304 million. But Howard Hughes assessed it to be about $205 million in their petition for review before the Clark County Board of Equalization in 1999," said Jim Slark, the assessor's assistant director of appraisal services.

"We've done extensive analysis of vacant land sales and we feel that the values that we established are conservative and closer to the market value than the opinion rendered by Hughes."

"Howard Hughes sold the parcels of land as individual pieces and not as a single subdivision or economic unit. So taxes should be assessed that way in line with (Nevada code)," Slark said. "The statute charges us with valuing each individual parcel."

Besides challenging the assessor's lumping together of all 42 parcels, Hughes said the assessor's "comparable sales approach" resulted in an "arbitrary and capricious" valuation of the Summerlin property.

"This approach has no basis in reality as there are no sales of property comparable to the Summerlin property to provide a basis for valuation," the Hughes lawsuit said.

Slark disagreed.

"Howard Hughes' taxable value of the property was lower because they used discounted cash flow analysis. We don't use this analysis because it is too subjective an approach since it's based on a forward-looking business plan."

Hughes also alleged the county taxation method is discriminatory.

"The methodology used by the county assessor to value the plaintiffs' property is discriminatory in that it effectively affords owners of improvements to property a discounted tax valuation as compared to owners of unimproved real property," the suit said. "This difference in the mode of assessment has resulted in an unequal distribution of the tax burden," which violates Nevada property law.

Hughes attorney Paul Bancroft said Hughes had filed similar cases in Clark County District Court for previous years' assessments, and said it intends to appeal each year's assessment until the matter is resolved. He said there's been no ruling yet on the earlier cases.