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Deadwood Stage Run, LLC v. S.D. Dep't of Revenue

Supreme Court of South Dakota

December 17, 2014

DEADWOOD STAGE RUN, LLC, Plaintiff and Appellant,
v.
SOUTH DAKOTA DEPARTMENT OF REVENUE and ANDY GERLACH, in his individual capacity and in his official capacity as Secretary of Revenue, Defendants and Appellees

Considered on Briefs November 17, 2014

APPEAL FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT HUGHES COUNTY, SOUTH DAKOTA. THE HONORABLE MARK BARNETT, Judge.

MICHAEL F. MARLOW, BETH A. ROESLER of Johnson, Miner, Marlow, Woodward & Huff, Prof., LLP, Yankton, South Dakota, Attorneys for plaintiff and appellant.

MARTY J. JACKLEY, Attorney General, MATTHEW NAASZ, Assistant Attorney General, Pierre, South Dakota; ANDREW L. FERGEL, STACY R. HEGGE of South Dakota Department of Revenue Pierre, South Dakota, Attorneys for defendants and appellees.

GILBERTSON, Chief Justice. KONENKAMP, ZINTER, SEVERSON, and WILBUR, Justices, concur.

OPINION

Page 607

GILBERTSON, Chief Justice

[¶1] Appellant, Deadwood Stage Run, LLC (the Developer), appeals the Sixth Judicial Circuit Court's denial of its motion for summary judgment and that court's granting of the same to Appellee, the South Dakota Department of Revenue (the Department). The Developer argues the Department incorrectly calculated the tax incremental base for Tax Incremental District Number Eight (the District) in the City of Deadwood (the City) by using Lawrence County's (the County) November 1, 2006 annual assessment, rather than the Department's August 25, 2006 annual Certificate of Assessment, Equalization, and Levy. The Developer asks this Court to reverse the circuit court's summary judgment in favor of the Department and to direct the court to enter summary judgment in favor of the Developer. We affirm.

Facts and Procedural History

[¶2] The facts of this case are not in dispute.[1] On February 15, 2006, Steve Slowey, Wayne Ibarolle, William Pearson, and Clayton Johnson purchased real property located in Lawrence County, South Dakota,[2] from John Nick Heinen, Jackie

Page 608

Heinen, Douglass M. Mergen, and Tammy Hollenbeck for the amount of $1,000,000. At some point during the subsequent two-week period, but prior to March 1, 2006, the purchasers received an assessment notice from the County. The assessment classified the property as agricultural, valued the land at $13,070, and valued improvements on the land at $9,560. The total assessed value of $22,630 represented the value of the property as of November 1, 2005, as required by SDCL 10-6-2.[3] Shortly thereafter, in April 2006, Slowey, Ibarolle, Pearson, and Johnson transferred the property to the Developer--a limited liability company owned by Slowey, Ibarolle, Pearson, and Johnson, with a principal place of business in Deadwood, South Dakota--by a quit claim deed.

[¶3] On August 25, 2006, the Department issued a Certificate of Assessment, Equalization and Levy for 2007 showing the equalized valuation of all property located in Lawrence County assessed by the secretary of revenue, as required by SDCL 10-11-51. Per SDCL 10-6-2, the County again assessed the property at issue according to its value as of November 1, 2006. Because the purchase price of $1,000,000 was more than 150% of $22,630--the assessed value of the property at the time of sale--the County assessed the property's value at $934,520.[4] The assessed value of the land increased from $13,070 to $924,960, but the assessed value of the improvements to the land remained $9,560.

[¶4] On December 18, 2006, the City passed Resolution No. 2006-44, creating the District out of the property at issue here. On January 29, 2007, the City and the Developer entered into a " Contract for Private Development" of the District. Sometime thereafter, but prior to March 1, 2007, the County sent its 2007 assessment of the property to the developer reflecting the November 1, 2006 assessed value of $934,520. The City and the Developer amended the project plan on July 23, 2007. However, in the amended contract, the City and the Developer continued to agree that the assessed value of the property in the District was $15,800, [5] rather than the County's most ...


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