Oh my god.

I don't know where that lovely convenient is.

Okay.

Good morning.

This is Clark County Board of Equalization hearing for February 25th, 2026.

County Clerk has informed us that this meeting has been posted and properly noticed.

At this time, can we please call the role?

Terry Farr.

Present.

Glenn Anderson.

Present.

Tammy Campa.

TOD Federico.

Present.

Heidi Meidenbauer.

Present.

Thank you.

Motion to adopt the agenda.

Please cast your votes.

And that motion passes.

Before we start, microphone is open for any public comment.

Seeing none, I will close the microphone.

Uh we need to swear in the petitioners, anyone too who intends to testify on behalf of the petitioner and members of the assessor's office.

Please stand up face the county clerk to be sworn in.

So help you God.

Thank you.

Now we have a statement from the district attorney's office on what the Board of Equalization is and is not allowed to do.

Under NRS 361.356.

If a taxpayer believes there is an inequity in the assessment and their property was assessed higher than another property that is identical in use and has a comparable location, the board may review the assessor's determination.

If the board finds the assessment of taxable value is not equitable, they may raise or lower the value of the land or improvements or both, or they may raise or lower the value of the property that was used as the comparable property.

Under NRS 361.357, if a taxpayer believes the full cash value of their property is less than the assessed taxable value for the fiscal tax year being appealed, the board may review the assessor's determination.

If the board finds that the full cash value on the January 1st prior to the fiscal year being appealed, is less than the taxable value, the board may correct the land value or fix a percentage of obsolescence that is to be deducted from the improvement value to ensure the total taxable value corresponds as closely as possible to its full cash value.

Under NRS 361.355, if a taxpayer believes their property is overvalued by reason of another property being undervalued or not assessed, the board may examine any evidence submitted and then make a determination.

If the board finds the property complained of is undervalued or not assessed, they may increase the taxable value or place the property on the tax roll at its taxable value.

A public officer must disclose potential conflicts in public to the chair and other members of the board.

If a public officer has a personal, financial or private commitment that could reasonably affect their decision on an issue, they must publicly disclose this information to the chair and board before taking any action.

Additionally, the public officer must not vote on promote or participate in deliberations on an issue.

If a reasonable person would believe their judgment could be influenced by a gift or loan, a significant financial interest, or a personal or private obligation to another party.

Thank you.

Yes, Chairman Farr, Mary Ann Widener for the record.

Um the possible action we have the uh recommendations listed on page six of your agenda.

If you can look at those and take a vote on them.

That motion passes.

We have we don't have any NOAs or anything like that to go over.

No, and there are no additional uh no additional general business for us today.

So if you want to just review your procedural rules and we can proceed.

Very well.

This hearing is recorded and part of the public record.

It is difficult to transcribe the hearings with concurrent multiple voices.

Please do not speak if another party has the floor.

If you have the floor, please speak clearly into the microphone.

Please note we do not discuss property taxes in these hearings.

Your net property taxes may not be affected by the outcome of your case.

Procedural rules relative to presenting appeals are as follows.

When we call your case, please come up to the podium, state your name and address into the microphone for the record.

The assessor will briefly describe the property to the board.

You will then present evidence for your case.

The assessor's office staff will provide their evidence to support the assessor's opinion of the taxable value.

You may then respond to the assessor's case, but you are limited to the rebuttal of evidence presented by the assessor.

Please keep comments limited specifically to your case.

Please do not address the assessor staff.

The board will ask questions of the petitioner or the staff.

The board will discuss the testimony and information provided and move forward with the decision.

If you or the assessor's office are unhappy with the board's decision, both parties have the right to appeal with the state board of equalization.

Appeal forms are in the hallway outside the doors to the chamber.

Let's get started with case 32, town site solar.

Uh good morning.

Jesse Cruz of the Clark County Assessor's Office.

Case 32 begins.

Can you pause one moment, please, before we have to let the appellant state their name and address?

Gentlemen, name and address for the record, please.

Yes.

James Berkstrom, the address of the property is 13316 U.S.

Highway 95, Boulder City.

Your address, sir.

Oh, my address.

Uh sorry.

Uh 880, South Gainey Center Drive, Scottsdale, Arizona, 85258.

Thank you, sir.

Rocco De Bruno, uh addresses 32 Shamrock Road, Lumberton, New Jersey.

Very well.

Mr.

Cruz.

Uh Jesse Cruz with the Clark County Assessor's Office.

Case 32 begins in the addendum book, uh, page 1790.

Uh, this case is a personal property for townside solar at count number 224631.

Townside solar is a 193 megawatt AC photo votaque utility scale solar facility with bat battery storage.

It is located at over 1200 acres west and south of the border city airport.

The assessor's office recommends holding the taxable value of 306 million eight hundred forty-three thousand three hundred and fifty for the twenty-five-26 fiscal year.

Uh should be noted that last year this account was heard before the state BOE and currently in district court.

Gentlemen, yes, um, we're here today to talk about the value of this property.

Um, we've provided a discounted cash flow, which shows uh a much lower value, and in addition to that, we've provided a appraisal done by a third party, KPMG.

Um I have with me today uh Rocco, who is an appraiser.

I was gonna ask him a few questions about his uh uh his appraisal, if you won't mind, don't mind.

Uh could you please introduce yourself to the board?

Yeah, my name is Rocca De Bruno.

I'm a tax managing director at KPMG LLP.

I practice in the economic and valuation services group and and focus on primarily tax valuations.

Yes.

And how much experience do you have in appraising?

I've been an appraiser for 18 years.

Um I have a of a certified general real estate appraiser license in South Carolina.

I maintain my license regularly and perform primarily valuations of energy property.

And for the last 10 years, I've appraised solar facilities, battery storage facilities, wind, and other energy property.

And can you tell us your conclusion of value as far as the PPE is uh concerned in this proper project?

Sure.

We we appraised the property plant and equipment at town site at 221.5 million dollars to 237.5 million dollars.

And can you explain why your final conclusion used the income approach for your evaluation?

Sure.

We we considered multiple approaches, income and cost approach.

A market approach was excluded since there are not comp generally not comparable properties to specific solar and battery storage properties.

The income approach was our primary approach as we are able to estimate the production, the energy production of the facility, the price that that electricity would be sold, and calculate what the the value, the economic value would be over its remaining useful life.

This is a useful approach as it allows us to bifurcate the the value of the tangible taxable property from any intangible assets.

Uh we did conclude on certain intangible asset value.

We also concluded or could perform a cost approach, which ultimately reconciled to our income approach and ultimately concluded on the range of 221.5 to 237.5 million.

So we have an independent third party who came to about 220 million dollars.

And then when we did our income approach, we came to a conclusion of 260 million dollars.

Uh both of those are substantially lower than what the state concluded, and we believe somewhere in that range is a more accurate conclusion.

Thank you.

Mr.

Cruz.

Uh Jesse Cruz, Clark County Assessors Office.

Case uh 32 uh begins in the addenda book, uh page 2006.

Uh the valuation of personal property for townside solar was calculated as directed according to the NRS, NAC and the personal property manual using the taxpayers reported acquisition year and costs.

Uh as directed by the personal property manual, the newly adapted utility scale photovoltaic uh solar farm 30-year lifetable was applied.

Uh this state approved table uses market data to derive cost index factors and PV uh for the PV solar that makes takes into account the obsolescence that is inherent in this specific industry.

Uh this results in a replacement cost new that is less than the historical acquisition cost.

Uh appendix F of the PP manual explains the state's process for determining the new taxable value.

Uh that begins on page 2094.

Um a market study was conducted to produce a depreciation table to better reflect and ensure the taxable value of such structures do not exceed full full cash value according to NRS 361.227.

Um declaration was filed uh with a total reported acquisition cost for the equipment and fixtures of 531,238,486, and that can be viewed on page 1882.

Um addendum page 2106, you will see that after applying the cost index and percent good per the personal property manual, we arrived at a total taxable value or replacement cost new less depreciation of 306,843,350 for the 25-26 fiscal year.

Umrs 361.227 section five allows for three methods to determine if taxable value exceeds full cash value.

Sales comparison, cost approach, or income approach.

According to the IAAO and appraisal institute, the best valuation method for special uh purpose properties is the cost method.

Sales and income are not.

The cost approach is what was used in determining the taxable value.

The sales approach is not used as there are no sales within this industry.

Now uh Tom Wolusek will explain how the assessor arrived and analyzed the income approach.

Good morning.

Tom Walusick for the Clark County Assessor's Office.

Um let's while we're discussing, let's move to page 2095.

It's the uh utility scale photovoltaic solar farm 30-year life table that the PP manual recommends for this type of property.

The state has indexed costs for RCN appropriately, reflecting all of the market obsolescence and functional obsolescence that has been experienced.

This was based on a market study of the total installed costs as reported by 1,200 solar facilities.

As shown in column three, it's yellow, the estimates for replacement costs new have been indexed downward to recognize the rapid decrease in total cost installed costs for these facilities.

The table then accommodates depreciation for wear and tear using a double declining balance, as in the fifth and sixth column.

With double declining balance, depreciation reaches 50% in as little as 10 years.

Between the market supported rate of economic and functional obsolescence and the depreciation via double declining balance, the fully depreciated taxable value of the equipment can be calculated.

This is how the taxable value of 306,843,350 was developed for the subject.

We don't rely on the sales comparison approach either.

There are apparently no, there has been no open market arms length traded or retraded properties that we or anyone that we have contacted can point to.

The upshot of this is that there is no direct market evidence that would typically support discount rates, capitalization rates, and other economic metrics.

My testimony today will focus on why the income approach cannot be relied upon.

We will be using the appellants supplied investment analysis as an example.

On page 1855 through 1857, is the business enterprise value calculation.

Principally, I want to draw your attention to the treatment of two expenses, lines five and eight, more or less in the middle of the page.

The property tax expense on line five was estimated without the effects of the renewable energy tax abatement, RETA for short, which overstates the expense burden to the property by an additional undiscounted $7 million over the projection period.

The report's expense line eight for audit and tax expense started at $2 million a year and was escalated to $3.9 million in the final year and represented a roughly $88 million total undiscounted cost to the project.

However, a conversations with James Bergstrom, senior tax manager of with the taxpayer who is here today, indicated that the expense, which we brought to his attention, is an error and overstated.

The nearly $2 million should be closer to $125,000 annually, or roughly $5.2 million total on discounted cost to the project.

This alone provides an additional $83 million unwarranted on discounted expense to the analysis.

Our conclusion, the business enterprise value, as presented, seriously underreports the net income of the project.

The indicated value conclusion is materially understated.

Let's move to page 1860 through 1862.

This is the appellant's investment analysis for the property, plant, and equipment.

This replicates the prior enterprise analysis, but without the PPAs or power purchase agreements that essentially underwrote the project to begin with.

Revenue was estimated from market march and sales.

However, the report stated that the merchant pricing assumption was founded on Nevada pricing.

As presented in internal page one and two of the report, or pages 1803 and 1804, if you care to go there, California pricing is at least twice Nevada pricing, $90 per megawatt megawatt hour versus $40 per megawatt hour.

It is still considerably higher even today, not including California merchant pricing for the portion of the subject that receives contracted California pricing has the effect of significantly reducing the total revenue calculated in this DCF and materially understates the PPE result.

And this is before the issue of what we see as excessive discounting.

Let's go to page 1864 so we can address this.

On the left of the page in the center, there is a buildup estimate for the cost of equity, a component of the weighted average cost of capital or WACC.

Within the table, there's an equity risk premium of 475 basis points.

This was based on the notion that an investor of this class of institutional investor class coupon property backed by 20 and up to 30 year leases would either invest in this property or throw his money into the widely varying returns of the stock market, providing none of the after-tax benefits.

We don't think this makes complete sense and exaggerates the discount rate.

At the bottom of that table, the cost of equity table is a company-specific premium of an additional 300 basis points that was added.

Overall, the appellant has estimated a 775 basis point risk premium.

This is greater than the total expected returns for most institutional grade investments, not just the risk premium.

This risk premium, in our judgment, is not appropriate.

So what is the risk of receiving the revenue stream for a property such as the subject?

According to Berkeley Labs, renegotiations or terminations of PPAs are rare given the scale of the utility scale solar market.

And were mostly before 2026, 2016, excuse me.

Since then, there have only been a few cases involving concentrated solar tech like Crescent Dunes and Ivan Pau.

Overall, the market, considering its size, has been very secure.

This does not reflect extreme risk.

Quite just the opposite.

The selected discount rate that we used in our DCF is based on NREL's or the National Renewable Energy Laboratories survey of 174 solar development projects in this country and internationally.

The report, the reported WACC is 7.3%.

All things equal, this alone makes about a 20% change in value from the KPMG report's business enterprise value indication, roughly 60 million dollar swing.

Utilizing the same WACC for the property plant and equipment significantly alters the calculation results as well.

Lastly, the report utilized a DCF to attempt to report any perceived intangible value for the PPAs themselves.

This is on page 1870 through 1872.

This analytical method is not settled science.

Other practitioners report that in their analyses and valuation of solar facilities, which includes other kinds of power plants, that the contract is considered to be representative of net lease credit tenant contracts, and that the contract was at market at its inception, and considering its quality, term durability, market fluctuations do not endure to intangible value.

So there is some question if the analysis is even required.

That alone provides 112 million dollar swing indicated value.

Even if utilized, as already indicated, the merchant pricing assumption was founded on Nevada pricing.

In this case, not including California merchant pricing for the portion of the proper subject that receives this has the effect of significantly increasing the calculated differential and results in materially overstating the off-taker differential and resulting conclusion.

Basically, over 15 years and with 1600 solar farm solar facilities, there's been no open market arms length transactions.

There simply is not an open and competitive market for buyers and sellers.

This is a critical distinction because as presented on page 2246.

The definition of full cash value requires a competitive and open market.

NRS 361.2275 says the computed taxable value of any property must not exceed its full cash value, which by definition must be reflected in a competitive open market.

Currently, the fair market value definition does not provide commensurate value.

It's based on rule 59 to 60 of the IRS code and was uh created basically so that in thinly traded, closely held corporations for stock and things like that, you could have two guys sitting at a table as long as they weren't under duress and they came to some kind of agreement that that was fair market value.

The definition of full cash value says the most probable sales price.

You cannot have a distribution curve of one.

You need an open competitive market.

So we see these two values as mutually exclusive.

To take one of these investment analysis numbers, something you might base an offer letter on, and suggest that it tells us about the full cash value of the equipment, could be very misleading.

In point of fact, to suggest these investment analyses reflect full cash value is contrary to known fact.

Although we did develop a DCF that results in a value indication of 412 million, we do not rely on the income approach, and neither should you.

Let's wrap it up.

The sales comparison approach is not valid as there are no sales.

Although very well presented, there are too many points of variability to rely on the report's income approach conclusions.

It does not result in an estimate of full cash value, nor is it considered proof that full cash value was exceeded as NRS 361-2275 requires.

The county recommends this board of equalization support the county's estimate of taxable value of 306,843,350, as it is based on vast and unassailable market evidence until such time when market sales can clearly support another conclusion.

Thank you.

We are happy to answer any questions.

Any rebuttal?

Yes, sir.

Um, first, using the utility scale useful life that they've developed.

I think it's a great method.

I think they've come up with a lot of good ideas here, but that is by by using so many properties, they are watering it down and they're forgetting all the specifics that is to an individual project.

So inherently it's gonna get you somewhere closer to reality, but it's gonna miss the fact that this is its own project and it's gonna miss that.

They said that they used a discounted cash uh discounted rate of somewhere around 7%, and that ours is a really high.

The for centrally assessed properties, state of Nevada actually publishes discounted rates, and for renewable energy, they came to 11%.

So them saying 7% is close to reality, just seems way outside of what other people, even the state of Nevada concludes is an accurate number.

Um did you have anything regarding you know what is that about your report?

Uh I I would note that the discount rate range that the assessor provided reflects new build solar projects, which are typically contracted assets and therefore have lower risk than a merchant facility.

When we applied our discounted cash flow approach, we utilized a merchant cash flow to understand what you would get for the price of of electricity sold today at current market rates.

There's inherently more risk selling into a merchant market than uh having a contracted asset, and our discount rate reflects that.

Um then the last thing I'd like to say is uh when we with his analysis when they did the cost of PPE and the income approach, they came to similar numbers, reasonably close to the same numbers.

So we we both can agree that uh you know comparable sales don't exist, but using both of the other methods we came to reasonably close to the same conclusions.

Members of the board.

I just have excuse me a question.

Tom uh you had mentioned they're using in their uh discounted cash flow for the merchant sales, only Nevada costs.

Correct.

And so is a portion of this being sold to California?

Yes.

So why didn't you include that in your discounted cash flow?

We considered what you would sell electricity for on a merchant basis locally, which is how a project typically would sell electricity on a merchant basis.

If you were to sell energy generated in Nevada, California, there would be significant transmission costs to deliver that power to California.

That is typically not economically viable on a merchant basis.

If you have a contract with California, it can be possible.

But if you are trying to understand if you were to sell electricity at merchant rates, looking to Nevada is the right way to do it.

Okay.

Just a question then.

A minute ago you said you need to be project uh specific.

And yet your project's selling to California.

And now you're telling me, but you can't value it selling, it's too risky to sell to California.

I mean, I think that to me, in my mind, you're contradicting yourself there.

Because you're actually doing that at this project.

So to say, well, we didn't do that in our discount, you should have my opinion, if you're selling that, then what you should have included it, and you can't come up here and say, well, it's too risky.

Well, you're doing it.

So how are you doing it if it's so risky?

I just doesn't click to me.

When when we perform our income approach, we look to the merchant forecast, which you could sell electricity for in a spot market.

We do that because we want to isolate the value to the taxable property, just the equipment.

When you sell electricity to California under a contract, it's a different risk profile than selling it in a merchant market.

So the intent is to value the taxable equipment, therefore it requires us to look at that merchant profile.

It doesn't make sense to me though, because you're not doing that.

So that just seems weird.

I mean, in this specific case, there's a specific contract which pays the cost of wheeling or the cost of moving the electricity.

And so if it were sold into merchant, then we we so if we were gonna do the cost of California, then we'd have to add the cost of wheeling, which would basically net the difference of the cost, the difference in value.

Well, I think you should have done that then.

Okay.

Then it would have shown us that yeah, we took.

But it costs more, so we addressed that.

Um so that that's where I'm kind of got trust in your numbers there.

Okay.

Starting in 2021 or completed in 2021.

And the reason I'm asking is is you made a comment.

There was a comment made about being brand new centers.

Sorry, I'd mix up my two projects.

This one was uh finished in 2020.

Finished in 2020.

Okay, so it's it's six years old.

Yes.

Why are you at your higher than the appraiser?

You're 260 in their 221.

I just, I mean, I ran out my discounted cash flows to what it was, and that was the conclusion I got to.

We weren't necessarily trying to get to the same conclusion.

That's just where I ended up.

Did you have any comments on what the assessor found as false in your DCFs?

Um I think there was the one expense that was uh overstated and that was a mistake.

Um I think his conclusion of how much that was worth is a little high.

Um I would also say that I didn't um adjust for the reducing of uh property taxes.

So I think if I were to increase my discounted cash flow rate by the amount of property taxes, I think that would actually probably about net to very little.

Mr.

Woolisick, do you can you explain that?

Yeah, there's a there's a couple of things here, and let's be clear.

We we actually like their work, and in fact, on our own at DCF, if you'd like to go to it on uh uh 2221, you'll find it in form and function uh reasonably very similar.

Uh I guess in this sense, maybe imitation is a sincere form of flattery.

We appreciated the work.

Our point here was not to discredit the effort that was put into this uh volume.

Our uh interest here was just really to show that with a seven million dollar swing in just tax property tax cost, eighty million dollar swing in audit and expense, which is an error.

That's kind of a big error.

Changes in cap rates.

We're not saying that 7.3 is the end all of end all discount rates.

It is backed up by 7 174 different facilities.

But uh it's an average by definition, right?

There were ones that were lower and the ones that were higher.

I don't know of any buyer or seller that will use average returns to determine what the value of their property is.

We're just making the case that we can't rely on it.

We don't find it substantial enough to provide the level of proof that's required by NRS that would dispresent a persuade somebody to ignore the vast and undeniable data that the cost approach itself is built on.

And let's focus on that for just a second.

The cost approach deals only with the equipment.

We're not interested in the business value and uh intangible or not intangible value that may or may not even be there based upon which an anal analyst you're gonna be speaking about.

We just want to determine what the equipment would be depreciated to, considering it's taken into consideration market evidence of all the functional and and and uh economic obsolescence, and then it put on an accelerated physical depreciation schedule.

We think that's perfectly reasonable.

At some point in time, I don't have a question that we're gonna be presenting with evidence that we'll we'll have to take into consideration.

Uh we just don't believe we have any here today.

Thank you.

Um thousand eleven.

And part of the the what the district attorney's office has analyzed is you know, is the discounted cash flow the most reliable method um under the statute?

And the only case I could really find that was similar to this is the count uh county of Clark versus Sun City Summerlin.

If you guys are familiar with the common element cases about 15 years ago.

And so in that in that case, you know, the board's uh the State Board of Equal Equalization found a nominal value because there was no comparable sales for uh clubhouses, pools, resorts, um different things like that.

But the Nevada Supreme Court overturned that those decisions, finding that when there's no usable evidence of a price that the property would fetch in an open market, that the board should consider other workable methods.

And in this case, even um they found the common elements, even though they have no resale value, they still have significant taxable value.

And so in that case, you know, the Nevada Supreme Court ended up ultimately upholding the county's valuation of 20 million dollars on those um equipment on those improvements because that was replacement cost minus depreciation.

And that's similar here, and using the personal property manual as the best evidence of full cash value.

The state, the state of Nevada has gone out and conducted a market study the best that they could through the personal property manual, and we believe that is the most reliable evidence in the record.

I'd refer again to the chart on page uh 2106, which shows the appellants reported acquisition cost and our valuation using the state, the mandated tables.

Chairman Farr.

2106.

Yes, I just like to make a comment um just about the the manual and these tables that are in the personal property manual.

Um these did not exist five years ago.

This this table did not exist.

Um the reason it is even here, in fact, when we were depreciating solar farms, they were actually on an index that was indexing them up, and because of that, it was causing them to be overvalued, and we agree with that, particularly the older older facilities because the newer facilities there being to build them for a lower cost.

Um, and so our office actually participated in a manual workshop, and uh Mr.

Woolesak had done uh extensive studies on uh what has been going on historically on that, and we provided that information, and then the state themselves did their own, I guess, in uh studies, and so this is why, and I think it's this is the second year, if you can correct me.

I believe it's the second year that we've had this table in our manual.

Is that correct?

Uh David Denman with the Clark County Assessor's Office.

This is the first year for 2526 is the first year.

Prior to that, we were applying obsolescence based on that study.

It took about two to three years to get it into the PP manual.

So I just want you to understand the history behind this table and why it's there that it did not exist, and it is the only table, I believe, in the personal property manual that actually indexes down over time instead of up.

Um, and so that what they're testifying to.

So I just want you to understand what's going on in the manual and how this table was derived.

Uh David Denman with the Clark County Assessors Office.

This is the only table in the PP manual that is specific to a very specific part of an industry.

The only uh facilities used to determine this were photovoltaic solar facilities.

No other renewable energy facility was used to determine the index, the cost index factors in that table in appendix Friedman.

The table on uh 2206, it has a taxable value of 306 million and change.

Is the difference between that and the 360 the land value?

Or because you're at 360.

Actually, our taxable value that we're recommending is the 306 million eight hundred forty-three hundred fifty.

Okay, I thought it was the 360.

No, because uh the land value in this particular facility is either is a possessor interest, so it's not on this particular it wouldn't be on this particular account that's being appealed today.

Um based on the information provided by the assessor and the appellant and the mistakes, I believe, were that are in the DCF.

Uh and the oh uh the overstatement and they're not using the California sales.

I think the assessors one more thing.

No, I'm talking.

I'm I'm gonna make a motion that we accept the assessor's value of 306 million uh eight hundred and forty-three thousand three hundred and fifty dollars.

Motion has been made, please cast your votes.

And that motion passes.

You do have the right to appeal, forms are outside the door, sir.

I'm assuming you're here for Eagle Shadow Mountain and Gemini as well.

I uh just Eagle Shadow Mountain.

Okay.

Please state your name and address again for the record.

James Bergstrom, 880 North Gainey Center Drive, Scott's down the or Scouts, Arizona, 85383.

And to be clear, I'm calling case 31 Eagle Shadow Mountain.

Thank you, Mr.

Chair.

Uh my name is Jim Waddams, spelled W A D H A M S with the law firm of black and waddhams here on behalf of um 325 MKLC, otherwise known as Eagle Shadow Mountain uh Solar Facility.

And address for the record, sir.

I apologize.

969 Edinburgh, E D I N B U R G H Fields, F I E L D S court, Los Vegas, Nevada, 89 uh 138.

Thank you, sir.

Good morning, members of the board.

Jacob Reyes with the Clark County Assessor's Office.

This is for case 31.

Is for assessor account number 229299.

It is an appeal concerning the personal property assessment of Eagle Shadow Mountain Solar for fiscal year 2025-2026 and can be found on page 647 of the addendum book.

Eagle Shadow Mountain Solar is a utility scale photovoltaic power plant located on the Moapa Band of Paiute tribal land within the Moapa Indian Reservation.

The facility occupies approximately 2,100 acres and operates under a long-term purchase agreement with NV Energy.

The Moapa Band of Paiutes does not own this property.

The solar farm is owned by Airvon Energy, a non-tribal entity.

Thank you.

Gentlemen.

This is already in the record, but we wanted to add page numbers for quick reference.

So can I go to the board?

I will be uh referencing a couple of uh the attachments on there, and my uh client, Mr.

Bertram can remind me of the page number and and what was just handed out.

I might be able to quickly direct direct you to which I to what I'm gonna be referring to.

Uh as as stated by the assessor's office, this is on Indian trust land.

There's just no question.

That's that's essentially a stated fact, not in disagreement.

Uh we're not going to take your time talking about discounted cla cash flows, uh uh capitalized income approach, comparable sales, that is not the issue.

The issue simply is the uh the assessed valuation is incorrect because this property is exempt.

Uh it is it is uh exempt under several basic um principles.

One is the United States Constitution that uh says that uh U.S.

land and and uh treaties are supreme.

Um the uh second is the Supreme Court cases, United States Supreme Court has addressed this issue in the cases of Rickert and Mescalero that are cited in there.

I'm not gonna go through the legal analysis of those because they are they are long-standing law.

The most important one, however, is the Ninth Circuit case that uh was decided in 2014.

Um legal time, that is fairly recent.

Uh that case uh held, and the Ninth Circuit is of course I think everybody knows, includes Nevada, so their decisions bind this state as well.

Uh the Ninth Circuit, in a uh case referred to as Chi Hallis, uh made the decision that state and local laws imposing taxes on um Indian land, Indian trust land uh are preempted.

They are preempted, and it matters not whether it includes improvements that may be owned and operated uh by private operators.

So that's the basic principle.

Pursuant to that decision in 2014, uh the state of Nevada issued guidance, uh, which is in the packet at page 18 and 19.

18 and 19.

Um that indicated to the county assessors that that exemption now is clear and applies at state and county level.

The second element is the is a letter that's attached at page probably 20 and 21.

Uh no uh 1516.

I'm sorry, 15 and 16, uh, from the office of the governor.

Uh office uh the the governor's office uh of energy stated in 2021 to the to the petitioner here today uh that they could rely upon that 2014 decision, the guidance letter and a statement from that office that the property and the improvements uh were exempt from uh state property tax sales and use tax.

Uh and you you can read the language of that letter.

It's it's it's specific and and broad.

And I should say the same thing about the language of the guidance.

Um the uh department was unequivocal in their statement uh going forward that as a result of that Ninth Circuit case to Hallis, uh this property is exempt from taxation.

I I will realize that there has been a suggestion that this is personal property, and um listening to the previous case and and of course this one with 2,000 acres and a solar field that we all see when we drive either north or south any direction out of this valley now, um challenges one's common sense to think that that's personal property that could be picked up and carried off.

And as in the letter that was on file, February 17th, it's made very clear that the construction process itself uh is an annexation to the land.

These are deeply driven piles that hold these solar fields in place.

Uh there's concrete uh foundations that could only be uh removed with substantial uh disruption to both the land and and the uh and the facility.

Uh this is not a trailer park that you could put wheels under and roll them off.

Um the adaptation, of course, to the land is uh through the engineering that is referenced in there.

It took several years, actually, or several months anyway, to engineer this so that these solar fields would be safely and permanently affixed to that land.

Um and the intent clearly was the between the parties between the Malapa tribe and um and uh my client to enter into a uh permanent long-term relationship.

There is a 50-year, 50-year lease.

And despite my white hair, that's almost a lot of 50 years is almost a lifetime.

Uh not quite, but almost.

Uh, but it's a long term.

It's not it's not a pick up and and and leave when you're ready, it is long term.

So these are permanent uh improvements.

Having said that, I remind that the Ninth Circuit case specifically said the duration of the improvements do not change their decision that taxation of the property on Indian trust land is preempted.

Um I I think that oh, and and by the way, if we have a suggestion that because it's personal property, which we clearly can test, and I think the law clearly does not allow that.

In fact, uh 361.035 says that structures, erections, and improvements in buildings on uh real property are real property and must be classified under the heading of real property.

So it's it's a bit it's a bit curious as to how this became personal property uh when it's clearly a structure and it's clearly uh erected on the land and uh without even getting into the engineering, it is it's there for the for the long haul.

That uh it can be taxed separately despite the Ninth Circuit decision.

And I just leave that to your to your review.

That Ninth Circuit case is without equivocation that that is preempted.

Should there have been some implication in this treaty uh or the agreement with the Indians that there could be taxation, uh there is a balancing test that was decided by another Supreme Court case called Bracker, B R A C K E R, which is referenced and cited in that uh letter that was filed on February 17th, that requires a balancing test.

We have no indication that such a test was ever done, and we think it's because it's preempted by the Ninth Circuit decision.

So, with all respect, I request that the board equalize this valuation it for tax purposes.

Although this property has market value, it has no taxable value because it is exempt.

And equalizing it with other tax exempt properties, that is taking it off the rolls and recording it as zero, is not only appropriate, it's mandated by state policy from the Department of Taxation, um and and uh the United States Supreme Court and the Ninth Circuit Court of Appeals.

I thank you for your time and appreciate uh any any questions that I can answer.

Thank you, Mr.

Reyes.

Yes, members of the board, Jacob Reyes with the Clark County Assessors Office.

Uh the assessors case begins on page 1586 of the addendum book.

The Department of Taxation has stated that the determination of real property versus personal property is left up to the county assessor.

The assessor office, the assessor's office, excuse me, values all of the utility great solar farms in Clark County as personal property.

The subject property was valued using NRS, NAC, and the personal property manual.

This year, the personal property manual, as you guys heard on the previous case, added a depreciation table specific to utility scale photovoltaic solar farms.

There's no exemption for property owned by non-tribal entity that is sitting on Lee's tribal land.

Thank you.

Just to give a little history, this was a direct appeal to the state board of equalization last year.

A lot of these same arguments were made to the state board.

The state board at that time determined to uphold the assessor's recommendation, and that decision is on appeal at the district court.

So just to give some context.

But here the land is not listed, be clear.

The land is not being taxed.

We've determined, you know, we've reviewed and there's a DA opinion on page here.

15 1588 through 1597.

So the first part of the district attorney's office opinion goes through real property versus personal property.

And so here, as is as the assessor's office has testified, these are improvements that have been determined to be personal property.

That's how we do all of the solar farms in Clark County.

So I think that's consistent.

But with respect to the taxation on tribal land, um, the property owners argued that their tax exempt, and this is um, in my opinion, misplaced on the Chileus decision.

In that decision, what the ne uh what the Ninth Circuit ruled was it was regarding a Great Wolf Lodge that was created, and that Great With Lodge was owned by an LLC.

And so, but L the tribe owned 51% of that LLC.

And what the Ninth Circuit said is that um it doesn't the courts aren't gonna get into the tribe's business uh matters and it's not relevant of how they choose to have ownership in it, but they need to have ownership interest in the property.

And so here, these improvements are not owned by the tribe, they're not held in trust by the tribe.

Eagle shadow is the sole owner of those, and that's clear in the lease.

It's in section 7.04 of the lease.

And while the lease permits the tribe to purchase these at a later date, the tribe has no current uh property interest in those.

And so it's distinguishable from the Chileas case in that matter.

In Chileas, the tribe owned 51% through the LLC.

So, and I think that also shows in the guidance that has been issued by the uh tax commission, it says in the guidance, personal property owned by unrelated third parties and located on trust lands, however, may continue to be considered taxable property, and that's what the assessor's office is doing.

So we've looked at their ownership analysis and we've determined that the tribe doesn't have an ownership in this property.

So, and you know, being a complicated legal issue, we've we've looked at the case law across the country, and there's a recent decision out of Arizona.

Now it's an Arizona state court decision, but it's very similar to the circumstances in this case.

And so it's uh South Point Energy versus the Department, the Arizona Department of Revenue.

And in that case, the Arizona Supreme Court found that the federal law was did not preempt the state of Arizona from taxing these properties.

They determined that the Chile's decision was distinguishable, just as um the Fort Mojave tribe in that case didn't have any ownership interest in the solar facility.

And then the Arizona Supreme Court remanded it back to the Court of Appeals to determine the Bracker analysis under the U.S.

Supreme Court, White Mountain Apache versus Bracker.

And under the Bracker balancing tasks, the courts considers three factors.

The extent of federal and tribal regulations regarding the taxed activity, whether the economic burden of the tax falls on the tribe or the non-tribal entity, and the extent of the state's interest in justifying the imposition of taxes.

So here, the federal government uh has retains exclusive power to regulate Indian affairs, but the federal government's asserted little to no regulate regulatory power over the area of for the state to impose adval armed taxes.

There are various cases across the country which are cited in the DA opinion where non-tribal entities are taxed for improvements on tribal land.

Um while supporting tribal um economic sufficiency is an important federal interest, that interest can be diminished when commercial activity is structured to avoid taxes.

And under the second prong, um, here the tribal entity is not responsible for the taxes.

The lease is clear that these tax responsibilities are of eagle shadow.

And under the third prom, there's a strong state interest in justifying the imposition of taxes.

These property taxes support local services that also benefit the tribe and their members.

So here we think the facts are more aligned with the solar facility in Arizona in the case law that's come out of that.

And it is important to note too that in Arizona the solar facility in that case filed a writ to the U.S.

Supreme Court and that was denied.

So the U.S.

Supreme Court chose not to look at this.

So if it was so clearly federally preempted, I think it's you know saying that the that the federal justices, the U.S.

Supreme Court did not review this case.

So I think the taxation and these improvements in this case is not preempted by federal law and are lawfully taxed.

Members of the board.

Mr.

Chair, I apologize if I might.

I I don't want to put the board through listening to lawyers arguing about case law because that's what we're all trained to do.

I think the point here, a couple of quick points, if I might.

The reference to say that solar farms are personal property is fine.

Cars are personal property, lots of things can be in common.

The question is, is it is it in a circumstance where it's exempt?

As this board well knows, nonprofit schools, their property is exempt, not public schools, the nonprofit ones.

Their property is exempt as well.

And so the characteristic of the fact that a solar farm that it's commercial as opposed to an Indian land may be visually identical, doesn't mean it is treated the same for taxation.

And I again I don't want to belabor um the discussion about the the the case law, other than to say the state of Nevada, and and you have now a copy of it at your desk on page two, the second page of that opinion, which would be page 19.

Uh if you can turn to that, uh I'm gonna it's very simple.

Real property, such as buildings and improvements located on land held in trust by the United States government for an Indian tribe is not taxable property, even when owned by a person or entity other than the tribe.

That is a statement from the State Department of Taxation to county assessors.

I'm not sure I'm prepared to argue that there is any subtle meaning to that.

That seems pretty direct and pretty straightforward.

And I'm suggesting, I guess, under the law of Nevada, we're a Dillon's rule state, as everybody knows, the state sets the policy and the state has stated the policy.

The governor's office, one could argue under 360.294, that reliance upon the governor's office is different than the reliance in that statute of a written statement from an employee of the Department of Taxation.

I answer it this way the governor is the boss of all state employees.

Some credence should be given to his direction, and two, Terry Rubold, who I knew personally was an employee of the State Department of Taxation who issued that public guidance.

If taxpayers cannot rely upon the state that sets the policy and supervises the counties, who can we rely upon?

So appreciate appreciate your time and your consideration.

Thank you.

David Zinman with the Clerk County Assessors Office.

Is it all right if I make a comment?

Of course.

This a similar argument to this was brought up in the State Board of Equalization case last year.

And Jeff Mitchell, the deputy director of the department, told the State Board of Equalization that it was up to the county assessors to make a determination on whether something was real or personal property.

When we make that determination, we don't just go out and say, oh, today we want this to be personal property.

We use appendixy which has three tests in it, and down at the bottom of our of that appendix, we use the white co-tests, which is six tests set up in a court case to help us determine whether we put something on as real or personal property.

All of the photovoltaic solar farms in Clark County are on this personal property, and most of the ones through the rest of Nevada are.

They only own the land and we're not taxing the land.

Go ahead.

So I can confirm that as of right now, the tribe doesn't own any of the property, but they have an option to purchase it at the end of the uh the term of the lease.

Additionally, as far as the state saying that they use the same test on all the solar properties, since it's on tribal land, they have to use the federal test.

They can't use their same state test to be able to determine whether or not it's federal, whether it's real or personal property, and I don't believe they've said that they've done that.

Federal law dictates since it's on tribal land.

So I don't even believe they've done the proper test to determine whether or not it's real or personal, even though we contend that even if it's personal, it wouldn't matter.

Um I'm kind of struggling with this being personal property because as an appraiser for 40 years, I've followed what the appraisal institute is called personal property, and that is not permanently a fixed uh property, and we've everybody on this board I'm sure has appraised plenty of those and said we didn't include any personal property in this appraisal.

Uh in an apartment complex, you know, we don't include the lounge chairs.

Um, but this is permanently fixed, and this CFR states it doesn't matter who owns it.

You can't tax it.

So I I don't understand why this is we're here.

To me, this seems pretty cut and dry that this isn't taxable.

So I don't want to make a motion yet because I don't want to if somebody else has some ideas, but that's where I'm leaning.

Sure.

Jacob Rays with the Clare County Assessors Office.

Um I do want to bring up that this uh trust that's being used for this particular solar farm is one of the innovative uh type of trust systems that have been that are being used now.

It's called an NX Earth Trust System, which uh it takes about 4.28 or 4 minutes and 28 seconds to install one of the trust systems uh A frames, uh and they claim next power.com, which is the new company that bought out Ojo, uh, if I'm pronouncing that correctly, um, that this is a type of trust that you can install and to remove it, you simply reverse the process.

It takes one machine to primarily drive these uh anchors or not even anchors, because that's a different type of trust that they use that's it's an anchoring trust.

This one specifically actually just screws in and screws out of the ground.

In China, they build a hospital in one day.

So that doesn't that doesn't sway me.

I'm sorry, I do want to clarify the DA opinion.

Um, whether it's personal property or um real property under the federal analysis is the same, it's still taxable, at least under our analysis, and so there's no distinction under federal law whether the assessor's office has chosen to classify it as personal property or real property under our analysis.

Okay, but uh under the guidance letter, there is a difference, right?

Yes, and and we would you know, I would argue that the guidance letter doesn't go far enough.

It's just a blanket kind of statement relying on Chileas, and I think you have to have to read that in the context of Chileas, which means that the um tribe has an ownership interest in it.

And I think it's important when it says, you know, um held in trust on behalf of the tribe.

So um, and I think you know, and this is a you know fairly new, but there has been updated case laws since then out of Arizona recently, and um across the country.

Let me get my opinion here and I can tell you one about one out of California as well.

Um yeah, I was gonna ask about that too, because then it said held in trust by the United States government.

Right, and so these improvements are not held in trust because they're solely owned by Eagle Shadow.

But if the tribe you know had an own ownership interest in them, then we would be looking at a different analysis.

But the code of federal regulation says it doesn't matter who owns them.

What federal regulation?

25 CFR 6162017, the one that was provided on page 19.

It says, regardless, with without regard to ownership of those improvements.

So it doesn't matter who owns them, they're on federal land.

So that's where I'm struggling here.

I just don't I don't see it.

Yeah, let me um I address that in my opinion.

If we're gonna you know, if any I'll make a motion that we uh we deny the assessor and consider this uh non-taxable land.

I don't know how to I I wanted to hear before that though about the Arizona case that where they denied the writ.

Was that the same type of personal property or real property?

Was it were they buildings or what what is it?

It was a solar facility.

It was a complete solar um facility.

I believe in Arizona, they um taxed it as real property.

Where in Nevada we've determined that solar facilities are personal property, at least in Clark County.

Well, then that's a little different too, then they they taxed it as per personal property, and this guidance letter says real property correct.

Well, and I have a question too.

So I mean, we we talked about there's a lot of solar facilities around the state.

I know a lot of these are built on, for example, in Boulder City, which is uh non, you know, they're not taxed, they're tax exempt.

So you're considering all that personal property, right?

You're taxing those same manner.

Uh David Denman with the Clark County Assessor's Office, yes.

Whether it's on BLM land or private land, or the land of Boulder City or tribal land, we assess them as personal property.

So my my point, I guess, is even if it's tax exempt land for some other government entity, you're you're taxing it because you're considering it personal property.

Correct.

The only difference in this and what we do elsewhere is any other exempt land, there would be a possessory interest tax under NRS 361.157, because a taxable entity is using non-taxable land for its taxable purpose.

Mr.

Chair, if I might, and I promise I wouldn't get into a lawyerly debate, except I would point those last two questions.

I think are really important.

If you look at page 19 in your packet, that's the second page of the state's guidance, which, unless somebody can show me documents otherwise, that guidance has not been changed.

At the paragraph that carries over at the top of the page, the State Department of Taxation says about the Chihalis case, the Ninth Circuit case, the court concluded that the fact that the improvements were owned by a limited liability company rather than by the tribe itself was irrelevant.

And talking about other properties, Indian trust land is specific.

These cases are dealing with Indian Trust Land.

So I I again I don't want to be in a debate.

You're your counsel is very competent.

I we we could have long discussions, but this is a question of whether this property is taxable, and I think this the the Constitution, the federal law, and the state directives say that it is not.

Thank you.

My question for the assessor who owns the land that this is on David Denman with the Clark County Assessor's Office.

The Moapa tribe owns the land.

Okay so would that then mean that the land is held in trust by the U.S.

government on behalf of Indian tribes?

In my opinion, yes.

Okay.

Based on that information, I'm I'm gonna uh conclude uh concur with uh Mr.

DeFederico and and say because the land is on Moapa tribe because the property is on Moapa tribe land that it is not subject to taxation.

That's my motion.

Please cast your votes.

It's gonna be appealed anyway, so that motion passes.

Uh the assessor's office does have the right to appeal that decision.

Thank you, General, Mr.

Kieran member.

Next case uh 288, and I think this will be it for solar this year.

Gemini Solar.

Please state your name and address for the record.

Good morning, members of the board.

My name is Josh Hicks.

I'm with McDonald Carano.

Uh my business address is 100 Northwest Liberty Street, Reno, Nevada, 10th floor 89501.

Thank you, sir.

Good morning.

Patrick Craig, um Marshall and Stevens.

My address is 350 Fifth Avenue, New York, New York 10118.

Thank you.

Could we give us uh a few minutes to find him?

Of course.

Thank you.

Mr.

Chairman, I just wanted to note as well that Mr.

Craig was not in the chambers when the witnesses were sworn in.

So you may want to administer the oath to him.

I'm sorry, what was that?

Mr.

Craig was not in the chambers when we're going to be able to do it.

Okay, please stay uh uh stand and face the county clerk to be sworn in.

Do you solemnly swear that the testimony you are about to give during the course of this hearing is the truth, the whole truth, and nothing but the truth, so help you God.

I do afternoon, Mr.

Rusek.

Can you introduce the case, please?

I'm Tom O'Lusie for the Clark County Assessor's Office.

The subject is situated on 7,062 acres of land on 24 adjacent and non-adjacent parcels, just east of IA uh inner interstate highway 15, near the southeast corner of Valley of Fire.

The subject known as Gemini Solar and is a six hundred and ninety megawatt alternating current photovoltaic utility scale solar facility.

The subject is located on BLM land and acquired the supporting right-of-way grant, ground lease for a 30-year term on December 11th, 2020 for a term starting in 2021.

The assessor's office recommends holding the current taxable value of 148 million three hundred and one thousand nine hundred and thirty-four, or roughly twenty-one thousand per acre for the twenty-five-26 unsecured roll.

Thank you, sir.

Please continue with your case, sir.

Uh thank you, uh members of the board.

Uh, your last solar case of uh of this cycle, I presume.

Um I'd like to ask a couple questions of Mr.

Craig.

Um we did prepare an appraisal report.

Um I'm not sure if the board has received that.

I did bring paper copies if uh if they were not distributed to you.

Is it in the case, sir?

No, it was uh uh distributed to us.

I think uh you were supposed to bring in ten copies.

We couldn't put it in the okay.

We we received it late Monday night.

I have a copy, yes.

Thank you.

Thank you.

Okay, they've been distributed.

Thank you, Mr.

Chairman, members of the board.

Um, what we've distributed to you is um an appraisal um valuation prepared by Mr.

Craig.

Um as you heard the the issue in this case is about the possessory interest in the land and the correct valuation of that on this solar project.

Uh this is a solar project located on BLM land.

Um it's an extremely large project on 7,000 over 7,000 acres.

Uh and with your permission, I'd like to ask a few questions of Mr.

Craig regarding his report.

Proceed.

Uh Mr.

Craig, could you please um describe um your position and your experience?

Yes, I'm an executive managing director with Marshall and Stevens.

And I've been involved with uh solar projects and land underlying solar projects.

And I'm I am uh licensed in Nevada, and I have the MAI designation from the appraisal institute.

Thank you, Mr.

Craig.

Could you just give a brief high-level overview of this this project and what you looked at in terms of putting your valuation together?

Yes, we um valued the processory interest uh under a ground lease for the 7,000 plus acres, uh which has a 30-year ground lease term with 25 years remaining.

Um we determine a market rent and a market cap rate, and we uh our opinion of value is that it's 79 million.

And Mr.

Craig, just for reference, uh what is the actual per acre rent paid to the BLM under this leak ground lease?

Uh it's about two dollars, 210 dollars per acre.

Okay, thank you.

Um and can you can you just talk a little bit about which um about which approaches you took and and um what results you reached on those?

Yes, we did a direct capitalization approach and feel free to reference pages as your okay.

Yes, I'm referencing page 38 of the report, which is our reconciliation.

So under the direct capitalization approach, we capitalized our net operating income at 8%, resulting in a value of 79,450,000.

And again on page 38, um, we ran a discounted cash flow for the 25 years remaining on the lease, uh used a discount rate of eight and a half percent, and the value was 78 million eight hundred and ninety thousand.

In reconciling both, we came up to a value of seventy-number.

I thank you, Mr.

Craig.

And if you could just turn to page 33 of your report, okay this is the chart of rent comparables.

Could you explain to the board um why you selected the rent comparables that you did?

Yes.

Um reasons.

We looked at the annual rent per acre on the 12 comparable properties, and the annual rent per megawatt hour on nine of the 12 properties.

In terms of the annual rent per acre, the minimum of the range was 586, the maximum was 2,201, and the average was 1,356 per acre.

And we arrived at a market rent of $900 per acre.

And in terms of annual rent per megawatt hour, the range we had a minimum of $4,833, a maximum of 16,000 60, and an average of 9,291, and we came to a conclusion of annual rent per megawatt hour of 9,212.

Thank you, Mr.

Craig.

And I I noticed that many of these projects um are on a much smaller um footprint than um Gemini is.

And could you just explain how how you view that in terms of how that translates into uh rent per acre or rent per megawatt hour?

Yes, so we have a one of the largest uh solar projects here with a land area of 7,062 acres.

Um in terms of megawatts, it's uh 690 megawatts, so that's rather large.

Uh the comparables, the 12 comparables uh showed an average of 1,384 acres um with a minimum of 542 and a maximum of 5,778.

And I would point out that comparable nine is closest in size and that has an acreage of 5,778 and an annual minimum rent per acre of 586.

Okay, thank you.

And and um just to clarify to you looking through the lens of annual rent by megawatt hour, um, how does your evaluation stack up against these other comparables?

So our in terms of annual rent per megawatt hour, uh the average from the nine comparables where we had that annual rent per megawatt hour.

The minimum was 4,833, maximum 16,060, and the average was 9,291.

We uh concluded at 9,212, which is very close to the average.

Okay, so in your opinion, an acreage rent of 900 per acre is really the same thing as an average megawatt rent of 9,212?

Correct.

Uh thank you.

That's all for now.

I will comment after the assessor.

Mr.

Willusick.

Thank you.

Our analysis begins on page uh of the uh masterbook on 490, which presents our ground rent capitalization summary.

I'll provide an overview and then delve into the particulars uh inputs to this analysis.

Based on market leases within our jurisdiction, a 1,727 per acre lease rate was concluded for this analysis.

Due to the long term, usually 20, 35 years, power purchase agreements typically underwriting the lease of the land.

No vacancy was estimated, which reflects market action for this class of lease.

The terms of the lease were constructed to be similar to absolute net leases that are typical in this market space, with essentially translates into the landlord being completely insulated from any and all expense burdens.

A capitalization rate was used to reflect market survey data for the specific property type.

The capitalization rate was estimated from market data, and the recent expansion of cap rates, we concluded to a 7.5% cap rate.

The result was a value indication of 162 million, uh 601 23025.

Or I'm that's wrong.

It's 148 million in change, which supports the assessor's assessment of 21,000 per acre.

Let's examine the various inputs to the analysis.

On the next page, SB uh 491, a table represents or presents the annual lease payments per acre for 18 local utility scale solar projects.

The market rent for the majority of these leases was established by averaging the conclusions of two independent market appraisals, essentially the result of 26 market appraisals.

In fairness, the median of 1727 was utilized as the estimate for this market rent capitalization.

For illustration purposes, the subject's effective non-market rent is presented at the bottom of the list and was correctly identified by the appellant as roughly 210 dollars.

As you can see, the calculated lease rent is roughly 210.

This rent is made up of two components.

The first is a surcharge based on the number of market uh milliwatts, uh uh megawatts that the plant has the capacity to produce.

In this case, it's uh 690 megawatt facility and it's charged $2,000 per megawatt.

That's part of BLM program.

The second component is the BLM's estimate of rent per acre for the land.

Please see B SBE 510.

Approximately eight rows below the top of the first table, you'll find the state of Nevada identified.

The annual rent per acre is reported at $14.30 for $25 and $1,400, $1,450, excuse me, per acre annually for $26.

I think it's reasonable to state that this amount is not reflective of market rent.

When these two component charges are summed and then divided by the acres of the facility, it amounts to roughly 210 acres we've already spoken about today in testimony.

Based on NAC 361.1198, which you can find on SBE 505.

It states that when using the capitalization of ground rents to derive the value of the land, if a lease is outdated or no longer representative of current market rents, the county assessor must reject the lease or adjust the lease to current market conditions using verifiable market data, which was done.

Therefore, the highly incentivized in-place rent has been rejected in a market supported rent has been used.

Let's move back to SBE 492, which reports the results of our survey of capitalization rates for utility scale solar leased land.

Although our concluded capitalization rate of seven and a half is above the range of the reported rates, considering the historical escalation of Fed target rates and the expansion of cap rates followed, 100, the 50 to 150 basis point increases, increase is considered reasonable and in fact responsible.

Most recently, however, I've just concluded uh my research and have come up with a 6.32 for an 800 acre facility, and I'm working right now on concluding and confirming a 6.25 cap rate for a 1,200 acre facility.

Those are very current data points.

Starting on the next page on SBE 493, and the following pages, we represent sales of solar land throughout the local market, regionally and a few just nationally, just for representation.

The three sales and three three sales in Clark County for utility scale solar land were researched and arranged and priced per acre of about 28,000 to 35,000 per acre.

These transacted from 2011 and 2015, and as such are primarily provided as support and reference.

In addition, four sales in the region, Arizona and California, range from 419 acres to 636 acres, occurred in 22 through 24 and range from 15 to 29,000 per acre and average 22,000 per acre.

In the larger re uh national market, recently, 713 acres sold in 2024 for 20,000, and in that's in Tennessee, and 365 acres sold in 25 for 28,000.

What 28,800 actually per acre in New York?

The presented sales are not intended to be exhaustive, just a general indication of unadjusted price ranges for similar property.

We are well within these sales ranges.

Our concluded estimate of taxable value is supported by both the capitalization and sales comparison.

Although, in terms of sales comparison, the sales were really utilized just as a just a sense of a test of reasonableness for reasons I'll explain when commenting on the appellants provided appraisal.

No change in taxable value is recommended, and the assessor's office recommends holding the taxable value at the 148,301,934 for the 25-26 secured role.

Now let's let's talk just for a minute about uh the appraisal that was provided that we have.

I believe I'm only into it for 15 for five minutes, so we'll be able to get into this.

Um of the reasons why we agree with the appellants, not placing emphasis on the sales comparison approach, is because we have two, we have to deal with a couple of different things when we're dealing with these sales.

One is that you have a difference in property interest.

One is I I bought some land and someday I may hope it will become solar farm, and that's really a wonderful thought.

And then you have other things where we're actually selling the actual leases that are based on those things, and that's actually the possessory interest itself that we're supposed to be uh uh working through.

The other part of that is is that it's not uh I've got five to ten acres, and it which right next to these other industrial buildings, so I just want to put an industrial building out there.

The actual land and the analysis of purchasing the land involves a lot of other criteria that's in invol that's in use.

It's very similar to what you'd find, for example, in solar uh in uh large-scale data centers, and that's powered land.

So, in other words, where can I get my power to my data center?

This is the reverse.

How do I get my power off my land?

So interconnection is a critical component of the location of the purchase of this land.

When we're dealing with uh these kinds of properties, it can get very kind of confusing.

For example, and I'll I won't belabor the point, but when we started this, we came up and I I we ascertained there was about a 21,000 dollar value.

And then I started doing a lot of market research to make sure that we weren't, you know, just making stuff up.

Well, I came across a great sale for about 1200 acres in Arizona in Arizona, but it was like 16.5.

And I thought, uh uh, this is this is not so good, right?

I I this is not gonna support my value.

As you continue to confirm the sales and dig into the sales, we found out that there was an immediate after-purchase cost of 4.5 million dollars to bet a road to this place in the middle of literally nowhere, which confirmed our suspicion that you can't build these by helicopter.

You actually have to truck and trail everything in.

So when you figured that out, it was about 195 or 196, and I thought we were we were we were supported with that, as well as some of the other sales which I've already provided to you along that line.

So there's a lot more involved than just taking this number of acres and here's the price and on and on.

Um, to that point specifically, um, let's let's go to page.

It's the uh it's the land sales table that's on uh page 28.

Now we we understand that these sales are extremely difficult to come by, and that that's accepted.

I I I totally get that.

I'm a little gives me a little bit of heartburn to deal with sales all the way back in 2019 and 2017.

That's you know, six to eight years old.

The market certainly has changed uh since that point in time.

Those are the largest sales that we have in here, and then we have a number of more current sales, which are only through uh uh 2024.

The two that are most important or interesting, excuse me to me, is sales five and eight.

Those are part of the Papago uh uh assemblage that's happening in Arizona, and that's part of a uh basically a 3,500 uh acre uh solar farm that's gonna be put in there.

And those are about 15, 48.

I can tell you from looking at an aerial on that position.

Um you need to pick a pack of lunch and make sure you got a full tank of gas to get out that way.

So I don't really think it's really anywhere similar to ours, which is a five minute drive, 10 minute drive to get to where we want to go.

But the it the something else popped up in here that was interesting to me, and that was all of the sales were stopped at at 2024.

Um and that made me question some things.

Uh, one of which was that the data value on this is for January 2025.

This is uh, although this is being billed on the unsecured roll, it's actually real property.

And our data value is actually January 1st of 2026.

So there's a lot of 25 and 2025 sales that are not included in here that I'm sure that the appraisal would have found.

No, no question about that.

I don't know why he restricted it to this retrospective uh appraisal, but uh that was just one of the unfortunate um outcomes of that.

Um the lease rates, if we go into this, and that was on page I'm sorry, 33.

Um 33, right?

I I appreciated the increase the inclusion of our uh uh the lease rates that we have uh where we have it.

We we those are some of the same projects that we have listed on ours as well.

Um I'm a little concerned about some of the other ones, the four, the and not the size, because basically at this point in time for the last four years, the uh technology, the solar panels themselves are have been reasonably constant.

And so you're gonna get the same amount from the sun for this acre as you uh uh on on a 500 acre site or a 2,000 acre site.

So it really doesn't lend itself to that kind of thing.

But in this particular case, let's take number nine for example, and it's the only one I only had time to do this last night to look up Libra Solar in Mineral County.

A little bit slower.

Oh, I'm sorry, I'm sorry.

Um I'm starting to wind up here.

Um apologize for that.

I get do get kind of uh passionate about it.

Uh in Mineral County, it's right next to Lyon County, and it's this particular solar farm is about 12 miles, 10 to 12 miles, best I could estimate, uh, outside of Urington, Nevada, which I just had a the privilege of actually being in recently.

Um it's not anything like what we're used to here with our 2.4 million people here.

Eurington is a booming population of 3200.

The entire Mineral County has a booming population of 5,000.

This is classic rural Nevada, like some of the stuff that's going on by Ruby Mountain.

Um you do need a helicopter, actually on that.

So I'm I'm I wasn't able to actually go to all of the uh uh Penal County, uh some things in Maricopa can obviously be closer to Phoenix, but I wasn't able to track that.

So, but because of the significant decrease in and lease rate, it implied to me that there was some fundamental difference between that.

So I I I would prefer to rely on our own uh leases as far as that goes.

And I was a little uncomfortable with the reconciliation process, realizing these abrogations.

I mean, if you uh uh go to uh SB uh 498, it's just a location general location map, and it shows where Gemini is in relationship to the greater Las Vegas market space.

If you just scroll one more page, then you're gonna see all of the solar farms around Las Vegas.

Um on SB 500, if you scroll one more time, you're gonna see our calculation basically uh because the location could be an issue, right?

How far are these solar farms from the city center?

Well, you're gonna find this one is pretty close to average for all of them along that line.

Um it doesn't seem congruous to take highly remote uh solar farms or for sales for that matter, and then compare their lease rates to what we have here.

I made mention that the uh BLM has highly incentivized lens leases, and so we don't use them.

We can't use them, and they certainly aren't market here, but they may very well be in market in Urington, is my point.

So to use those in this kind of analysis is is something that I'm not really particularly comfortable with along that line.

Um can I ask you a question real quick on this?

License, because the most recent one it looks like was Maricopa County, and that's four and a half million people, and that one's at 750.

Yeah, and I don't know where that is.

I have no idea what it is.

No, I know what that is, but I don't know where it is in Maricopa County.

Neither do I.

Uh for example, uh just looking at the most recent down.

Laughlin is in Nevada County, and we have a solar farm down at Arita, but without Laughlin and uh Bullhead, you're 80 miles out of town.

So I don't know where this is.

So I can't respond to that.

It's a good question.

I would love to be able to take the time to do that.

No, no, no, no question about that at all.

Um you're not gonna.

I've just a couple quick points here.

And that was the uh the uh arrived at a uh capitalization rate of eight percent.

The uh I'm I'm already finding things trailing down to six, six point two five.

Now maybe that's just because the dates are year out of date to begin with, the whole thing is out of date.

But these are some of the more uh secure economically uh important types of net lease investments you can possibly have.

Just without being exaggerative.

You have 300 million dollars worth of equipment on your land.

Are you gonna skip your rent payment and have it taken from you?

I I don't think so.

I think you're gonna do whatever you can to to make sure that lease gets paid that at least gets paid.

So he has on page 35 some very good data, which is a year out of date, but it's still very good data for PwC and reality rates, and he reconciles to uh an 8% cap, whereas I would really be seeing from all the market data I presented to you today that it would really more than the 6.25, and and that's that's still current today, and the new uh reality rates is at uh 5.11.

So somewhere between you know six and and six and a half, as I think is a probably a a better better use of of that cap rate.

Um after that I didn't go through the calculations uh too much, but I did look at the uh the discounted cash flow.

You have over here on on the first period.

The leases of this kind are it's it's a lease, it's not a mortgage payment.

So they're paid up front.

Uh when BLM started, they were all paid the first year, January one for the for the whole year.

So discounting that uh uh for the whole year, uh even if you said, well, let's do quarterlies or whatever, you you should be able to accommodate a discount rate that would be midpoint or something like that.

That's not been done.

The other thing is is the discount rate itself is five point is eight point five percent.

We all know that you know the formula is right.

Uh our sub o right, yeah, that's your capitalization rate, has to equal your discount rate less your rate of change.

Well, if you've got an a discount rate would be your risk premium and your safe rates.

Well, in any case, if you're gonna have a 2.5% growth rate, which I I don't have any problem with at all, that's kind of telling me your discount rate has to be closer to about 11 to be mathematically even close to being accurate.

So I I just had some immediate reactions when I was looking at this.

I'm not saying that it has to be perfectly mathematically uh accurate, but there needs to be some accommodation to those types of uh things.

So we don't really consider the 79 based upon um lease rates that you would not find anywhere in our area surrounding our city to be uh valid, and we certainly wouldn't have reconciled to a rate that would it would have included them.

But that that uh that concludes my my testimony.

Thank you so much.

Um Stephanie Jones with the Clark County Assessors Office.

Um I just want to wanted to um just point out on the on the handout on page 33 um for the petitioners' rent comps.

Um I just did a quick calculation.

If you just use the uh lease leases in Clark County, um we would have a median of 1561 and an average of 1653.

If you um take 9, 10, 11, and 12 off of there, which are the lowest um annual rents per acre.

Um Mr.

Willusic's uh cap summary is on page 490.

Um you can see he used uh 1,726 for his lease rate, which is based on his lease comps.

Um even if you took the low of well, the median, I guess, which is the lower of the two numbers of 1561 from the petitioners' comps, um, and you cap that at 7.5 percent, as Mr.

Willusick did.

Uh we're at um almost 147 million, which is very close to our taxable value, which is at 148 million.

I just wanted to point that out.

Thank you.

Members of the board.

Actually, there was a question.

Uh, can you identify where Maricopa County that uh the your comp 12 was for your income approach?

That's in Arizona.

Right, we understand that.

What what part of Maricopa County?

I'm sorry, I don't I don't list an address there.

This is actually a project that our energy and infrastructure team valued.

So this facility this facility is about 20 plus miles out of town.

That sounds northeast.

Okay.

I was trying to get a distance on that.

It's about 30 31 miles outside of town.

Okay.

If it please if it please the board, that information is on uh page um uh 500.

Yeah, it's my view that nine hundred dollars an acre is probably probably low.

Um but on the other hand, it is relatively the site, the site's relatively large compared to all the comps in southern Nevada.

Um so it seems to me maybe there's an adjustment to be made to the rental rate even through the assessors office, but not the $900.

I don't know if the board has any uh I was looking at the size too.

That was where I was I think these are I think you both did really good work if it pleases the board, I'd direct your attention to page um 491, which has not only the lease rates for over 18 projects surrounding our city, but also their size, just for your information.

It's interesting, by the way, um board member Canva, that the we talk about size.

I mentioned that because the return on the land is the same, but uh even the BLM doesn't recognize any change in size, it's still gonna be their rental rate for 100 acres or a million acres.

They don't make any differentiation between that whatsoever.

Thank you for that.

That's interesting.

I guess what I'm what I'm finding interesting is the most recent leases that have dates on them, because you don't have dates on yours.

Um sorry, Tom.

They're they're low.

So I'm wondering is there been change in this industry?

And can either one of you talk to that, what's going on in the solar industry, because I know that we've had new rules come out in July of 25 that have frozen the BLM permitting process.

I'll I'll uh take a stab at that, and with your forbearance a little bit, uh cut me off any time you want because I tend to go on.

But in this particular case, when you're talking B limb property, they're they're absolutely locked and leased to their lease rates that was generated in twenty in 2018 by something called the NASS, which is national agricultural uh uh uh statistical service.

And from that point in time, then they aggregate they they increased the rental rates by what they call the and uh the price deflator.

It's one it's 2.1 percent along that line.

That's where the that's where their leases rates came from now.

That's locked.

So there's no you you can't do much with that one, but if outside of the BLM, so we're talking about more market types of arrangements.

Um they're typically arrived at just like the ones in in Boulder City were or even in Clark County.

There are uh two separate appraisals are being done that that then find what the market land would be worth, with the land market value would be worth, and then the appraisers make estimations about what the return on that land would be.

Now, another deviation from market and BLM is BLM hat is limited to a two percent return on the land.

Well, that's just not realistic.

But other appraisers dealing with outside properties have a have variances uh along that line.

So once those things are generated, so what we're half what we're seeing right now is that N's land is becoming more competitive, that those release rates are in fact increasing.

The BLM's le locked in at a lockstep 2.1%.

That's that's that's done.

But uh, but the outside world is definitely seeing some some competition on that.

And the other part of that, that is that when you're looking at uh just like we have in this town with industrial property, if you were could find yourself a 300 acre prime site for industrial, you'd be bidding that up.

And it's the same thing's happening with its larger properties, which is why the ones I was talking about in Pop Ago, which are only small tiny portions of 3500 acres are being are being appropriately, I think, reflected.

Right, but everything we're talking about here is you know, that's eight years ago.

Yeah.

So uh do you have any you were doing stuff nationally, or are you seeing things different in more the current climate, because we're doing this as of January 26.

Um I'm sorry, this is a possessory interest, so we're billing it on the unsecured roll.

So this is for the 2526 fiscal year.

Yeah.

So this would be that that your your um it was just misstated that this is for the 2526 fiscal year.

So the valuation date would be January 1st of 2025.

And and all our leases reflect 2026.

Okay.

I'm sorry, sir.

Can you just restate your question?

How would you see what's I was under the assumption that we were doing this as January 26?

So I was asking, because I know things changed in mid-25, how that's affected this industry, but now I'm being told that we're doing this as of January 25th.

So that's irrelevant.

So I I guess I would draw my question because it doesn't matter.

And I I would just make a quick comment just as a reminder.

These BLM rents are set by our BLM rent schedule.

And in this case, the actual rent is 208 dollars an acre.

So that's what the BLM actually charges Gemini.

Um just to that point, Stephanie Jones with the Clark County Assessor's Office.

Uh Mr.

Wellusick already referred to it, but I'm just gonna remind the board.

Um NAC 361 um dot 1198, which talks about valuing land using the capitalization of ground rents.

Um, when using the capitalization of ground rents to derive the value of the land, um B says if a lease number two is outdated or no longer representative of current market rents, a county assessor must reject the lease or adjust the lease to current market conditions using verifiable market data.

So we don't believe that's a market lease.

I just bring that up for context to the question of what's market BLM is very low.

Can you can you tell me uh where the transmission line came from?

Did the solar company build it, or did they was it there?

Um I'm not sure I can tell you the exact point of interconnection, and I I believe it was interconnected into an existing substation.

I can address that.

The uh uh Gemini system was directly connected right across the highway onto the west into the crystal substation.

Did you did you say 208?

I said 208, but I think it's actually 210.

Okay, just clarification.

I'm curious, uh Mr.

Anderson, since you you felt the 17 is too high and the nine's too low.

Do you have a number?

So we can move this along.

Yeah, all right.

All right.

Ms.

Jones, you had done a little math, and I think you said 1561, is it?

Yeah, so the um of of the top eight, which are all in Clark County, um 1561 is the median, 1653 is the average.

And just to put a fine point on this is Tom Willusnick, um our rent that we assigned to arrive at the fifth at 21,000 was 1575, so I'll make a motion that um we adjust the taxable value by restating the rent at fifteen hundred dollars per acre.

So I'll make a motion that we adjust the taxable value by restating the rent at fifteen hundred dollars per acre, which equates to uh ten thousand five hundred and ninety-three dollars annually, and then capitalize that at eight percent, which would indicate uh value of a hundred and thirty-two million four hundred and twelve thousand five hundred dollars.

Motion has been made, please cast your votes.

That motion passes.

The assessor does have the right to appeal.

Next case is twenty-one, the boring company.

Okay, that's so I need anybody who intends to testify to state their name and address for the record, please.

Michael Welch, and I've not been sworn at the at the microphone, please.

Michael Welch with integrality resources, and I've not been sworn in yet.

Good morning, Stephanie Grown, our 1980 Festival Plaza Drive here on behalf of Boring Company with the law firm of Kemfer Kroll.

I was sworn in earlier, but I think everyone else needs to be Arun Prakash with the Boring Company, 3987 Paradise Road.

Schwarzbach, the Boring Company at the same address.

Okay, anybody who has not been sworn in, please face the county clerk.

Do you solemnly swear that the testimony you are about to give during the course of this hearing is the truth, the whole truth, and nothing but the truth, so help you guide.

Very good.

Mr.

Braun Steel, can you introduce the case to us, please?

Yes.

Um together as they are we're looking at them as basically one economic unit.

Um this appeal starts in page two fifteen in the addendum book.

This appeal is for six point oh two miles of underground transportation tunnels owned and operated operated by the boring company, including a nineteen thousand nine hundred and ninety-two square foot industrial building on one point six six six six six six six two acres of fenced land located at thirty-three ninety-five Cambridge Street, used for the boring company's control center, warehousing space, parking space, and supporting loop tunnel transportation costs.

Could you repeat the uh the size of the building in the 20,000 square feet?

Uh let me add this little portion too.

All real property improvements, including the industrial building at Cambridge and the six point oh two miles as of 71 2025 are situated on or under tax exempt land or under road easements that are controlled by Clark County.

As the tunnel system grows, it will expand under additional taxing jurisdictions and jurisdictions and tax districts and assuming under road easements.

The use of tax exempt land by a private company for profit enterprises considered possessory interest.

There are three personal property possessory interest accounts associated with this appeal.

Tunnels in tax district four hundred ten, tunnels in tax district four hundred seventy, and the operations building.

This appeal does not include approximately 2.1 miles of tunnels located on Las Vegas Convention Center property and serve one LVC station to another L V C C station.

There's a couple stations that run directly off site that are on their property that are valued.

These routes are controlled by the Las Vegas Convention and Visitor Authority and are considered tax exempt.

And we're recommending no change in value.

Very good.

Just to clarify, do you have any objection to combining the cases?

Okay, so we're combining cases 21, 22, and 23.

Please present your case.

Good morning, Mr.

Chairman, members of the board.

Stephanie Gronauer, as I mentioned with the law firm of Kempfer Kroll representing the Boring Company.

This is obviously a very different application than what you usually see, and new, I think, to everyone in in this room, probably.

So first, I just wanted to highlight and give you an overview of the system in case you're not familiar with it or if you haven't seen it.

The boring company is providing a brand new public transportation system for our valley.

This is a little under 70 miles of tunnel that you can see on this map that's been approved.

The dots are where individual stations will be on the map.

Um, but you can see in the center here that's colored that Jeff Excuse me.

What page is the map?

Sorry.

There's maps uh the different tunnel routes starting on page 416 in the addendum book.

Thank you, Jeff.

Sorry, I brought the map.

I can certainly submit it for the record if you'd like.

Um so this is what is approved.

There is a franchise agreement for all of the tunnel system within Clark County.

There's also a franchise agreement with the city of Las Vegas, which is this portion up here to the north.

Um it's a little unique because the whole system started with the convention center.

They put out a bid several years ago and actually paid the boring company to create the transportation system at the convention center.

That is tax exempt, as Jeff mentioned.

It's not part of this tax appeal.

It's the portion here in blue that's operating, and they've put almost four million people through that system successfully.

So it's Tesla's in the tunnels.

Um it's so it's a very efficient system, and it's done really well for conventiers.

It's connected now to the resorts world and Encore and now Fountain Blue as well.

Um resorts, excuse me, resorts world and Encore are not part of the franchise agreement, so they have not been reported on.

That has been reported on.

Um, it's required in the franchise agreement that we we report quarterly.

I think it was about 260 dollars that was reported.

So obviously it's new, it's not yet making money.

Um, and the entire system is privately funded.

So, with the exception of that convention center tunnel system, everything else is privately funded by the boring company.

It does not cost taxpayers any money, it does not cost Clark County or the City of Las Vegas money.

It's a privately funded operation.

You can imagine there's a ton of obsolescence associated with that.

We're just not yet making money, so that's the reason for the appeal today.

Um, I Arun will go through uh some cash flow.

In fact, he has some new information after we reviewed Jeff's information, so I wanted to hand that out, please.

And then Michael is our appraiser who has been working on tunnels and sp in specifically on tunnels.

He's an expert appraiser on this subject matter, and um we'll weigh in on the report that should be in your backup as well.

But I just wanted to give a little bit of an overview first, and I will turn it over to Arun.

Just real quick, also for the record before I turn it over to Arun.

Um, they did not appeal last year's.

We would love for you to consider that we take this back to last year's as well.

They received their notices, I believe, in April and May on the property, and it was um they did not have enough time to appeal that.

So that would be a request for you as well as to look back one year also.

Okay, hi, thank you, Stephanie.

Uh good morning.

My name is Arun Prakash.

I'm currently the chief financial officer of the boring company.

I've been with the company for about four and a half years, and prior to that I was CFO for almost five years for an enterprise software company.

And prior to that, I spent 10 years in private equity, where uh my firm acquired and managed technology companies, and I was the person who was uh mainly in charge of all of the valuations of uh companies we were considering and annual valuations of our portfolio, which were audited under GAAP.

And so um needless to say I just wanted to clarify that I've done a lot of discounted cash flows and valuations, some of the stuff I'm gonna talk about today involves that.

Some of the stuff I'm going to talk about today involves that.

So just first of all, thank you to the um to you guys and to the assessors.

Appreciate all your efforts, appreciate the efforts of Carr County for the support of the boring companies, uh Vegas Loop System.

And with the assessors, thank you for being um uh collaborative.

We've had had some collaboration over the past on how this system would be assessed, and we've talked about it.

We haven't obviously agreed with all the uh conclusions, but um there has been collaboration, so we appreciate that.

Um we talked about combining the tunnels and the warehouse.

So I'm gonna just start with the warehouse.

Uh we call it the warehouse, it's 3395 Cambridge Street.

It's um owned by the convention center authority.

Um this warehouse, uh, we we started using this warehouse during the aforementioned project for the LVC uh loop, which was the one that was procured by the convention center authority uh several years ago under the uh the RFP, which we won and then and then bought it.

And part of the operation was please use this building to which is on our property to operate this L VCC loop.

And so we did that.

We uh in the documents is a license agreement that was put together uh for use of that building uh to um I think to be good, just good stewards of of public resources to have an agreement of how we can use it, et cetera.

In that is a nominal license fee of a thousand dollars uh per month.

That very well could be one dollar per month.

It's a nominal number to just put in there.

Um and the entire basis of the use of this building is to support the LV CVA, the L VCC loop.

Uh the boring company owns six other seven other properties in Clark County uh through subsidiary, and we could easily use our own private property, which we pay property taxes on to support the the part of Vegas loop that we uh we own.

We actually do that in a number of ways already.

This building is there for the convention center authority.

The use of this building is there for the convention center authority 100%.

It's not also it's it's let's just say it's it's not in if we were operating our in the entire Clark County uh loop in the city loop, we would not choose that location.

We've chosen other locations.

Uh we would not choose this level building.

It's a 60-year-old building.

Uh it's if you looked at replacement value that the assessors use, that's for a nice brand new warehouse.

Uh I even question the the high value of it, but in general, it's for a brand new great awesome warehouse, which would probably be a lot better than what we have.

So just assessing it in general is in questionable because it's purely for an exempt use.

And then assessing it at such a value is also questionable because it would we don't believe it has that value.

Uh if it were to be assessed and the exemption part would be ignored, which we don't agree with, um, we would we submitted in the appeal that you know 550,000 was the value, which is a kind of a combination of what it might be rented for, what it could be replaced.

So that's on the warehouse.

With respect to the tunnels, um, so part of the collaboration we talked about, and we we appreciate the assessor in learning about our tunnels, and that our tunnels are not the typical construction tunnels historically.

In fact, the country has hardly seen any tunnel construction over the past 20 or 30 years.

If you look at who has constructed tunnels, it's on the Bedar company.

Um so the cost of tunnels in the guides, the Marshall Swift guides are not even close to reflective of what our tunnels cost, and the assessor has been accommodating to that, so we appreciate that.

However, um the cost used does not factor in in the assessment, the economic obsolescence of the tunnels, which Stephanie alluded to.

So what we've done is we've attempted to collaborate with the assessor on understanding the economic obsolescence of the system and how it operates and how it's not currently fully built up, it's partial, it's still trying to figure it out, it doesn't make any money, uh, et cetera.

And the we we had put together some very rough discounted cash flow models to just show quickly that it's not there yet.

Um the assessor has included in the packet modified versions of those models, which um have some issues that we some things we take issue with.

Um the models are not fully informed of our operations, which the models that I brought today show our actual costs of operation from our accounting systems.

Um then uh the models also have some assumptions that uh involve you know crazy high growth in some cases, uh miscalculations of what actual fees are and and how they relate.

Some some knowledge that you would not have unless you were in the operations, granted, but it in it's nonetheless incorrect.

Um I think we all understand that any discounted cash flow model can be manipulated in a number of ways to get any result you want.

There are a number of levers that can do this, primarily the weighted average cost of capital, um, the leverage, and the growth rates of the various uh inputs.

So in sh in making this point, I've provided in the in the attachments three models.

One I call conservative, one I call aggressive, and one I call very aggressive, that I've just changed all the numbers around and I've I've gotten various results.

Um the point is that you can you can make these these models say anything you want.

The assessor has chosen numbers in the models to make it approximate the assessment that was made.

I've presented to you models that show zero value.

Like it can be it, you can if someone wanted to show 10, he would show 10.

It's easily done, as you know that.

Um it does, however, show that the current operations are losing money.

4.6 million dollars.

If you include the direct costs of operating the loop, you uh subtract uh you take the revenue of the loop, you remove all the L V C VA contributions, which by the way, whatever revenue we're charging them is what it costs us to provide that revenue.

And then you show that we have built up in any business, you have your variable cost and your fixed costs.

Our fixed costs are still very large.

We have personnel that are not just drivers in attendance, but they are uh operators of the control center.

They're mechanics of Teslas.

They are software engineers who build the software that manages everything and is going to be able to manage everything.

We also have uh overhead like insurance.

We have to uh insure uh a hundred plus Teslas.

We have to have liability insurance to satisfy the county.

Uh we and and in general, good good business practice.

We have to have um we have to have shared services with human resources and finance to help operate the loop.

There's a number of costs in that in that document that are provided.

So when you bring all those in, the operating costs are still quite largely negative.

And in the future, we hope that they will not be.

That's the whole point.

Is this a long-term project, 50 years if you look at the actual agreements, but they could last longer.

In the back end of that timeline, this will be making money and generating returns.

That's the whole point of these projects.

But uh we believe, and but in the front end of those, you have to have that investment period where there is a large amount of economic obsolescence until you can get to that point.

Um just another aspect of the DCF, the county has discounted, not not in the sense of the cash flow, but they've discounted the what we've used in terms of construction costs because they believe you have to take the system as is today.

Um Mike will talk about it more, but there's really no one who's gonna buy that as is today, uh, and the investment required is important.

In the county's model, they have included vehicle financing, so they've included costs of different capital structure, but they haven't included the cost of the construction financing, which we very well could include as a cost, but it would just be like manipulating the structure of the of the entity, which is not required to show this.

Um then lastly, the the the cost of capital.

The county is used 7%, 8% in their model.

If you look at the attachment provider, I provide a calculation of uh a cost of capital using the CapM model.

If you get to a 7% cost of capital, at today's risk-free rates and cost of equity, you're implying that the beta or the risk, the volatility of that project is that of a utility like SoCal Edison or Excel Energy.

That is not the beta of this project.

This project is very uh still at high risk, and that's why it's privately private funded capital that expects future returns.

Uh that cost of equity is very large.

And so um if you use a beta of what I would say is like probably the one of the closest things you could find in the public markets is maybe a cruise line where you have to put a lot of capex into building your fleet and then hope the people come, which is kind of what we're doing.

Uh you're talking about betas of two and a half, two to two and a half, and so if you if you use something like that, you're talking about a 14% cost of capital or more.

And it probably is actually a lot more.

But just being generous here, um, and if you apply those costs of capital to the model, they they start to show very little future value.

And so these are all just a number of details, very in the weeds details of these this kind of cash flow models.

I just want to throw out there saying we cannot uh project too far, we cannot make too many assumptions.

The facts are the costs are are there, and and and we agree upon the costs, but the economic obsolescence is way higher than the costs, and for that reason, we believe the tunnels should not be assessed at all, and we'd be happy to revisit this when the economic obsolescence factor goes away.

And that's not today.

So that's that's our that's the company's view.

Um, so in going through that, we're kind of back to you know, this square one of the approaches, and I'll let uh our appraiser, Mike Welch, uh speak next on kind of high level stuff.

Morning, Mr.

Chairman and the board.

My name is Mike Welch.

I'm an independent real estate appraiser with integra realty resources, uh formerly the head of valuation for JLL and on the global board evaluation for JLL.

I spent about 35 years of my career valuing largely for infrastructure projects.

I've appraised a little over 3,000 subsurface easements and facilities.

Um it's they have standard uh appraisal methodology, which you're all aware of, but some things are a little different.

And today we're gonna talk about something that's very different.

Oftentimes when an appraiser represents a company uh in a tax protest, they do so on a contingent fee, makes them part of the team.

I've never in my career accepted a contingent fee.

I don't have one today, nor will I ever do that.

I'm not part of the boring company's team.

I'm here to talk about the value of this property and how it should be taxed.

And I don't have a dog in their fight, uh, so I just like to lay that out there.

Uh this property is certainly unique, but the valuation principles are not.

Today we're talking about a subsurface tunnel uh for transportation.

Originally designed, or the thought process is this will be used as part of a hyperloop, which will be the newest form of transportation since flight.

Now they haven't figured that out yet, so they're using Teslas to run through here.

But you folks are having the uh privilege or the difficulty of being the first people in the country to deal with these tunnels.

And so they are unique, uh, and it requires some special consideration.

Now, Clark County uses a cost approach, and the cost approach doesn't always measure some of the market influences that Mr.

Procash was talking about, but it also says you have to consider depreciation, which is almost irrelevant here because these are brand new, but obsolescence.

And here that is going to be significant because the tunnels as they exist today do have functional and economic obsolescence that creates nominal value.

I believe in the future these things are gonna have value when the system's built out and it's more complete.

But as it sits today for this tax year, there's been more money spent than it can ever recover.

It's not obsolescence points to a negative number.

So when we talk about there being no other of these in the country, um this system as it's designed, as you see on the map there, doesn't exist today.

We're talking about a really small piece.

And so part of this obsolescence is really functional in that it's not a complete system.

You still have to build a control center, whether you're doing three cars on one mile or three thousand cars on 70 miles, and you still have to have a tunnel, even though you don't have ridership yet.

Because of the agreements that were in place, and because of the boring company's attempt to kind of build this proof of concept, they started the convention center, which was great, and it serves a purpose.

But I think we all understand this facility is really not going to have its full value until it attaches the airport and the strip and everything in between, and then the ridership can grow to a level to erase that obsolescence.

And then the ridership can grow to a level to erase that obsolescence.

And so today I want to talk a little bit about, I want to also echo uh what Mr.

Procast said about the county and their uh collaboration.

We met with them four months ago.

Uh they're very gracious with their time because this was something that was new and unique.

Um had great conversation back and forth about the uniqueness of it, the difficulty in valuing it.

Uh they have been I've been in situations where things have been contested, but Mr.

Bone Steel and his team were they were great to work with.

I don't disagree with I disagree with where the the two parties are right now, but have no disagreement with how the county uh acted and in their stewardship.

So when you talk about um the cost approach as a system, it is true these tunnels have a cost, they have an extreme cost.

So much so these are almost always done as public-private partnerships, where an entity will go in, build this system under some sort of tolling agreement, and then they're allowed to get their money back, and once they do that, then they have a sharing agreement.

But that didn't happen here, largely because I think a timing of getting through certain government protocols and development that way takes longer, and I think the boring company is trying to get this done quicker and to get it moving forward, and so it doesn't satisfy the normal techniques you would see for a public-private partnership when you build something like this.

So we have private dollars being spent on what's really a public infrastructure, but they will derive a profit for it at some point in the future.

So today I think you're gonna see uh some competing DCFs, and which I think is probably one of the most boring things from evaluation standpoint, except when we have a panel full of appraisers, it gets a little more interesting.

And so Mr.

Prakesh is gonna have his numbers, the county's gonna have their numbers, and and and I will I will submit to you that the initial information given by the boring company was intentionally general in nature because they thought that would solve the problem.

It didn't, so there's some new numbers that um the county is now aware of that are actual.

But I think you should spend some time looking at the discount rate because we're talking about you know the discount rate having one of its major elements as being risk.

Now we're talking about a system that someone's building, in this case the boring company, that's using cars that are Teslas and use an operational system that no one else right now in the United States has the ability or the gumption to go do.

And so when we're talking about risk, who's gonna take this over?

You know, if we're talking about a casino operator, a lot of people would step into your shoes.

Maybe not currently, but typically, uh, a lot of people would step into your shoes, or if you have an office building or multifamily, a lot of us would step into that ownership position because we see the return.

Here, if I took over this tunnel, I don't have the ability to build it because I don't have their tunneling machines, I don't have access to the Teslas, but I guess I could buy them, and I don't have the software and the necessary technology that manages these autonomous driving vehicles when they do that.

And so there's extreme risk in this system because it doesn't exist anywhere else in the country, has no proof of concept.

This is the proof of concept, and we don't know who the market would be if this thing were even available to be taken over by someone else.

So when you look at the two different DCFs, I urge you to focus on that discount rate.

I heard some solar farm discussions around 13 or 14.

Those are proven commodities with lots of operators that know what they're doing.

This is not, so I think it could be something even higher than that, which really pushes those numbers well below any type of nominal value.

But I do want to say, I want to make sure I've made this clear.

I think this thing will make money in the future, but when you value it on a tax year by tax year basis, I think it's incumbent upon the county to look at it how it sits today where it's an incomplete system, and the ridership does not cover its cost.

Next year you look at it again, and next year and so on, but right now it doesn't make that money.

So I urge you to look at that, measure the risk of this DCF compared to the others, because we're talking about these tunnels that you guys are now valuing.

There's one in Hawthorne, California, goes under roadway, it was a test tunnel.

They understood the value was nominal, and I believe the county acknowledges that when these tunnels, their easement areas are underneath roadways and things that can't be used for other things, that has nominal value.

There's one in Austin, which ties the Tesla factory to their delivery standpoint on the other side of 130.

The Texas Department of Transportation understood that had a nominal value, both the easement area and the tunnel that's in it.

It's been looked at in Los Angeles.

The Department of Interior looked at it in Washington, D.C.

on a potential project to move some certain individuals out of Washington in a hurry through some federal lands.

And you know, when you do something by the federal yellow book, it's the before and after, and they acknowledge that this land and the tunnel under it had no impact on the before and after of say a national park at grade, a nominal value.

You guys have the first one that will ultimately be a transportation system, the first in the country.

And so I think that in order to accurately measure the taxable authority or the taxable liability, DCFs out into the future become speculative in nature because now we're talking about what's the ridership going to be when it's built.

That's not, I don't believe that's the charge.

On July, what was it?

It was a partially built system that is front loaded cost because of the cost of building your control center, your tunnels and getting in operational, so it loses money.

When it makes money, then I believe those things will have value.

So I urge you to look at that when you talk about risk.

When I talk about there not being any more in the country, that also means I can't bring you any sales of these.

So we're not in a market county, but those market forces do apply to a cost approach when you consider obsolescence.

So if we don't have a buyer for the system, we don't have anyone we can rent it to, then that affects when you measure the risk in the obsolescence.

And so I acknowledge that Clark County is a cost approach, but those market forces do impact when we measure obsolescence.

So currently, I don't believe it has a market value by the cost approach or any other system.

Um the DCFs are going to show you the tunnel system as it's currently built, is negative or nominal.

Um and at six miles, that makes sense.

But I do want to be on record uh that I'm not saying these tunnels won't ultimately have value.

I believe they will.

I just don't believe partially constructed with a front loaded cost clears the economic hurdles to be taxed now.

So I would agree with Mr.

Parkash that the current tunnels as they're built and as it sits have a nominal value, acknowledging that's as of this July, and I would look at it again next July and the following July.

But for the previous years and to date, I don't believe they have value that satisfies a market even by the cost approach because of the extreme economic obsolescence, which is largely part of the risk and the lack of ridership.

Pause there for any questions.

Thank you.

Does that conclude your case?

Yes, sir.

Mr.

Bromsteel.

Jeff Ponsel for the uh Clark County Assessor's Office.

All right, let's get through the dueling DCFs first, and then we'll kind of answer some of these questions.

Um we already talked about the cost, they're really not um arguing the cost, we're using their costs.

Um my uh consolidated uh DCF begins on page 360.

If I want to refer you to um see, this is 360.

I want to refer you to 360 359 first.

And I kind of broke down what this appeal encompasses.

Um, if you look up in the upper left-hand corner, um this is boring analysis per tunnel, and this was the information that we received back several months ago that we created our DCF off of.

So these are just kind of general numbers, just kind of give you an overview where they have the negative numbers.

Um, and then based on our our cash flow, um, the values that we put on for the different tunnels.

Um, so we have the um below that you know on the left-hand side, we have um the um cessory interest values is what they're broken down to per account number.

So we have a total value of 19 million one forty-five nine sixty-two on the total system, um, including the building, um, which is the last one on there.

Um you can see where it says control central um industrial building with the 1.662 acres of land, and then they see our DCF and how that breaks it down per the uh information.

We're not we're we are um recognizing that the um control building is part and parcel to the operation of the tunnels.

Um so we didn't add any value to that in our DCF.

Um, but our overvalue came into 21 million, 843 and some change.

Um casual analysis with the original construction cost, including estimated time to recoup cost was provided to us to support a negative value on the operation of the loop tunnel system, and that's good.

That's on page 247 and 248.

So if we go there real quick, this is what we originally were provided.

We requested all this information that is on you know the new one that we we got today, and we weren't provided it.

Um what we were provided several months ago when we had our meeting was what you see on um 247 and 248.

So very rudimentary breakdown on the resorts world, we see ramp up costs on the fares.

That goes from 150 to 500 to 660, which is about a 233% increase from year one to two, and then about another, I don't know, it's like 30 or 40 percent increase for the next year.

Um, and also ramp up on um direct personnel costs.

Um if you were look at the other tunnels that were valued, they have there's no ramp ups.

Um there's no change in the values going forward, and they did um have the um they frontloaded the construction costs.

So we did not frontload the construction costs on ours, was trying to figure out who would buy these, why would they buy them?

Would Resorts World buy it?

Would Encore buy it?

I mean, they're providing people to their access to their resorts from the convention center, it could be conventionaires, could be people going to conventionaires, could be exhibitors, um, we don't know.

So that's where the kind of the major difference is.

Um my discounted cash flows on um 361.

And we did look at them as a system.

Um let's see.

Completed system a complete, well, a compl uh we looked at the operational tunnels as a system together.

So we did um kind of combine the numbers they had, did the ramps up ramp ups, um sorry, 360 is the overall.

Um, did the ramp ups.

We did I did do there is a math melt layer, it's uh just on the the reporting on the on the direct personnel expense growth rate.

Um we did a ramp up of 200% in the first year and four percent in the second year.

You can see those numbers going up at that rate, even though it says 2% above that.

Um I got off my script.

The revenues and expenses from the appellants report were used by the county to create a 10-year discounted cash flow on the operational tunnels for the sole purpose of testing our cost value against the market uh for potential economic obsolescence.

Revenues and expenses were consolidated to a single cash flow as a loop tunnels are being looked at as a system.

Initial ramp-up numbers reported by the appellant on for the resorts world leg, again on their original form that they gave us, were applied to Encore and Westgate tunnels.

After the two-year ramp up period, a conservative growth rate of 2% was applied to the remaining years of the cash flow to account for inflation.

Based on estimated stable revenue stream, an increased future size of the system, a discount rate of 8.5 and a terminal cap rate of 7% were used based on the county's DCF and uh the pre-tax terminal value of 12 million, some change of the three operational tunnels and the control center building required for the daily operation supports the county's taxable value of 9.6 million for the same three assets.

The county also estimates that so since no economic obsolescence is justified for the completed tunnels, that no obsolescence should be attributed to the tunnels under construction.

So based on the information provided, we're holding the value or we're recommending holding value at 19 million one forty-five.

Um so a lot of a lot of other information was brought up into you know, who would buy this?

So Encourse tunnels completed, it is currently valued at 1.9 million.

Um resorts world tunnel is completed, it's currently valued at 1.8 million.

Um, there's ridership numbers out there.

These casinos know who's come in and isn't coming in, and once they get them in the door, besides room rates, gambling, dining, um, that's a true, you know, that's that's a that's a projectable asset for them to coming through their building that they're dropping cash on them.

Um, you know, again, we don't have ridership numbers.

We requested those, we have not received them.

Um but if we want to ask a question of who's gonna buy it.

I mean, resorts world or Encore could potentially buy these and pay you know whomever to operate them.

Um we talked about a proof of concept.

I think it's been proven by the operations um at the Las Vegas Convention Center.

Um it's been open for multiple years.

We heard earlier how I mean what the ridership number was on them.

Now, granted, when you're you know having people jump in a car for free instead of walking two and a half miles from one hall to another, that's pretty attractive, but um that's kind of that's kind of where we're at.

We're holding value based on the information provided to us and how we kind of we didn't front load their costs and we tried to you know use their own projections on ramp ups and you know uh made a uh push in the future at basically an inflation rate.

We're holding value um based on the information provided to us and how we kind of we didn't front load their costs and we tried to you know use their own projections on ramp ups and you know uh made a uh push in the future at basing an inflation rate just a quick note um the terminal cap rate of seven o'clock uh seven percent was actually in the cap the discounted cash flow that they gave us seemed reasonable that secondly their discount rate was also the discount rate that they gave us.

Um we did our level best to actually provide a present value of the property, which means all of its future value brought back to present value.

We didn't go back in time and uh include costs that had already been spent, which was what was first presented to us on page 247.

So we actually took a present value and and projected it forward based upon the numbers that had been supplied.

Now, today we are seeing considerably different numbers, and that's fine.

That's fine.

Uh 15 minutes ago, or which was why I was late coming down here, I was looking at this for the first time.

Um the only thing that stood out to me um is that I think and and Jeff can correct me on this because he's really the expert here, but um, as part of their um um franchise agreements, they're anticipating or expected to have fully autonomous uh vehicles that they're gonna be using here uh because of some recent delays and such and so forth.

That's now not gonna probably happen until the AI five boards come out for the new the new models in 2027.

So we we expect that.

But I would just draw your attention to any one of their cash flows and uh the conservative aggressive or very aggressive models that you have in front of you, where they have a uh direct personnel and an indirect personal cost, which is almost as much as the entire revenue that they have at some point along the line, and I don't know when it would be or that it's not what we're here to determine, but you would think that at some point in time they're gonna be trying to eliminate that 90 percent, 95 percent expense by utilizing the technology which they're so well known for.

So, but that's not attributed to this cash flow in any way.

So there may that that's just an omission to me that needs to be discussed, but um uh anyway, thank you so much.

Um, Stephanie Jones with the Clark County Assessors Office.

I just wanted to make a comment about a project under construction.

Um we had the I'm just as an example, we had the found the font the fountain blue um on our record.

We put it on in uh 2009-2010 at 50% complete.

We had it on our record at 50% complete until um 2324 when they um started construction again on it.

So for all those years we had that property um paying taxes and our taxable value included a 50 percent um complete building.

Um and then finally in 24-25, we've added all the buildings up to 100% complete, and now the Fountain Blue is open.

Um daily, we add homes on, we add um commercial properties on at a percent complete um as of July 1st of that fiscal year.

So I just wanted to make a comment on uh a project under construction.

Thank you.

Can I make one response to that very quickly?

Uh actually you can do a full rebuttal on what the assessor's office said.

Just really quick on that particular point.

A casino that's partially built or a home that's partially built, there are hundreds of casino operators that would step into those shoes and build a casino because we know they make money.

There are thousands of home builders that can finish a house and they know that it can make money.

As they pointed out, the technology necessary for these tunnels and these autonomous driving cars is owned by a total of one company right now in the United States.

So there's not a lot of people that can step into these shoes.

So partially complete for these tunnels is vastly different than a casino we'd all love to own or home that we could all stay in.

So I don't think it's a direct direct comparison.

I recognize partial construction having some value to someone, but we need to remember here that it goes directly to the specific improvement we have here.

When they made the comment that they used a seven percent uh they're mirroring numbers that were used in our report, those were used to show that even at ridiculously low discount rates they didn't make sense.

The actual numbers would be significantly higher.

The discount rate would be significantly higher.

The initial reports at 7% showed it still didn't make money.

So copying those and then changing the assumptions goes to Mr.

Pakash's initial statement, which I couldn't believe he said, where he said you can make a DCF say whatever you want.

Now we know it's true, but you typically don't testify to that under oath.

But if you use the actual numbers, and we all know this is riskier than the multifamily or uh shopping center that you guys appraise on a daily basis, this would have a discount rate significantly higher than seven percent or thirteen percent or fifteen percent.

And when you put that discount rate on any type of DCF, this has nominal value because of its current status.

Not talking about the future, the current status.

Yeah, on that point, in the collaborative meetings we had, we discussed the discount rate as what Mike just said.

And in fact, there is another member of the assessor team, Tom, I think that was we was you there it is.

Yeah, we talked about that.

Yeah, you you indicated that you know, yes, the discount rate is the key question here, and we agreed on that point.

Um so, yeah, just you know, and the comment about we were not providing the information again.

We we had a collaborative meeting, there was emails back and forth from Mr.

Bones deal, and I attempted to respond to them, but they were not very clear, and so we were going back and forth, and then all of a sudden on Monday night we get the the answers, and now we can actually say, okay, this is what you meant to do.

Here's actually what you wanted to do, and so that's the crunch, the time crunch element.

The same thing happened the prior year, which uh our attorney mentioned we met in August of 2024 and received the assessments without a peep since then in April and May of 2025, only a few days before the statutory deadline of May 15th.

That's why we want the prior year brought back.

And there was no guidance on how to appeal in that notice, which is you typically get in I I live in Texas, so I get that when I get my house, I get the guidance, but I don't know if that's standard, but it would be good to have just to know hey, this is how you appeal, given you only have a few days to do it.

Um those are kind of things that were brought up, but I just want to clarify that we're we're attempting to be collaborative error and to work together, it has to be on a uh mutual basis.

Okay, I'd like to ask just a question.

Um I I read I didn't read it all, but I see you have a management agreement in here.

Pretty long with the uh visitor convention visitor authority.

You have a franchise agreement with Clark County.

Did you try to negotiate any abatement of taxes during construction?

In well, because you that was a lot of negotiating.

Yeah, I wasn't here then.

I don't know the answer to that.

Um I don't know if Stephanie for the franchise agreement.

I don't believe we ever did ask for an abatement of taxes.

And I don't think we're arguing that we're an exempt, you know.

I'm not, I'm just saying during construction.

Oh, during concern.

Not that I'm only someone say, hey, how about you know don't tax us till we get this thing built?

I mean, so that sounds like a very smart thing we should have done.

I think you're describing their plan that they're using in other cities now based upon what they're learning here, that they're looking for that in advance.

I think this I think this horse got out of the barn before it was fully baked and ready to go, I think.

Well, before we go on with any additional board member questions, what specifically would you like to rebut about the assessor's case?

Sorry, excuse me, Chairman Farrell.

Chairman Farr, really quickly, I just want to make a couple comments before the rebuttal, if that's okay.

Timeout for for you guys.

Go ahead.

Um, I just want to address some things uh with the laws of our state, um, because that's my role here for the board.

Um, first of all, um we do have the bills and we can provide those to you.

Um they they were billed on April 9th of 2025 for their personal property.

Um NRS 361.360 um section three says any taxpayer who real whose real or personal property placed on the unsecured tax rule was assessed after December 15th, but before or on the following April 30th, may likewise protest to the state board of equalization.

Each appeal must be filed on or before May 15th.

If May 15th falls on a Saturday or Sunday or legal holiday, the appeal may be filed on the next business day.

A meeting must be held before May 31st to hear those protests.

Um anyway, it goes on.

But basically, just like this board has a deadline for filing an appeal, it would be January 15th of that year.

If the um bill had come out before December 15th, but if it comes out after December 15th, they do still have a provision to file to the state board.

They did not do so.

Um, in fact, they had about the same amount of time that any other taxpayer has because the bills usually get mailed about around December 15th for anybody that can file, and January 15th is the deadline for filing.

In this case, the bills were sent out on April 9th, and they had all the way till May 15th to actually file their appeal, and they did not do so.

So I want to make sure we've cleared that up to know that we are not hearing the 2425 fiscal year.

We are only hearing 2526.

We do not have an appeal that they filed to us for 2425.

We only have the appeal that they filed to us for 2526.

Um, in addition, there was some comments about um different states, and so I just want to um remind the board that Nevada law governs these states, not California law, not Arizona law.

We do look to case law sometimes as we did in previous cases today, to kind of understand some things when we have unique properties.

But specifically when it comes to nominal value, there are no laws in the state of Nevada that allow us to put a nominal value, which I'm not really sure what that means, nominal value.

I don't know what that number looks like.

Um it sounds to me like exemption or abatement.

Um there have been negotiations in our state uh uh with regards to I'm I know you're familiar with the stadiums that are currently one that's under construction and one that's already in operation where negotiations were made where portions of that are exempt, and but some portions are still taxable.

Um, and so that is not a situation we have in this situation.

So our exemption statutes are supposed to be strictly construed, and we understand you may conclude to some kind of obsolescence today, which you have all the privilege to do as the board members, but we want to make sure we understand what the laws of the state are.

Thank you.

And um, Stephanie Jones with the Clark County Assessors Office, just to add to what Ms.

Widener said.

The second, um the property uh personal property tax bill is their notice of value.

And um, on the second page of the tax bill, it does go over these deadlines.

It goes over um anything billed prior to December 15th, um, the appeal on or before the following January 15th to the county board of equalization.

If the property is assessed after December 15th, but before or on the following April 30th, an appeal may be filed on or before May 15th.

So they are their tax bill does contain that information.

Just to respond to that, so we can we acknowledge the statute, acknowledge the laws of Nevada govern what what I said earlier is that when we spoke with the county, Jeff, Mr.

Bones still told us there'd be three assessments for the complete title, and he was right.

We received two of them in mid-April.

The dates, regard regardless of the dates, they arrive in our office mid to late April.

Um, and the warehouse we received on May 1st.

Now, we know the U.S.

Postal Service is not extremely fast.

However, I have received letters from the county that are dated one date.

They say please respond by this date 10 days later, and that date that they're asking me to respond by is the day I'm opening it.

So there can be an interpretation of when things are received.

If we're digitally transmitting them, then they are received immediately.

These were not digitally transmitted, and no notice was given.

Again, we had collaborated and said we're going to get this done.

Mr.

Bernsteel said to us in August of 2024, I will try to have this done by December.

And then in April, a mail comes in and no no message from him saying it's been posted, FYI.

I know it's late, sorry, let's talk about it or whatever.

It's here it is, and then never hear from again.

So we acknowledge the deadline has been missed.

That's why we're respectfully requesting that something can be done about that.

Uh, and we acknowledge we're in in accordance with the deadlines for this year, and that's why we're here today.

Quickly um to answer a question as to what our request is for this year, and hopefully moving forward, this will set the baseline for how we move forward every year.

We did receive Jeff's analysis Monday evening, and Arun has worked quickly to rebut that and address that, and that's the information that we're giving you today.

I'm sorry it's late and not in your packet, but the reason is we're we're trying to understand how the county came up with their number and and provide the right data.

We can do that moving forward.

We already report to the franchising department.

Certainly we can provide that same information.

I told Jeff that earlier today, so we'll provide him all the information and that what we've given you today in the future moving forward.

Um, as far as the warehouse is concerned, we think that's an exempt property if you're going to tax it because they are a for-profit company.

Then our argument is that the most it could be valued at is that 550,000 that we provided.

And he put that analysis in the appeal, how he got to that number.

Um, it is primarily used for the convention center, which is a tax-exempt entity.

There are Teslas parked there, and there is operation that uh trickles over into the loop system, um, but it's not the value that the county has assessed us at.

As far as the tunnels go, the obsolescence makes it not currently valuable, and I think it is different.

That is the whole point of today is it is different than a casino, it is different than anything you've ever seen.

And so we're hoping your decision today sets that baseline for how you're gonna look at it from the start and moving forward.

We know we'll be paying taxes on it.

It was not negotiated as part of the franchise agreement.

So there's no question that hopefully we wish we were paying taxes.

We wish it was making all kinds of money today, and we could tell you it's it's successful and making money, and at that point, of course, we'll pay taxes on it.

But right now, um, there's not a value to those partially developed system.

I'm not making any motions right yet, but uh the 550 doesn't make any sense to me.

That's 27.50 cents for the building.

Um, if that's what it's worth, I'll buy it right now.

That's because there's it's definitely worth more than that.

So that's not a real number.

I did provide a cap summary for the building on page 364.

And there are photos of the uh aerial images of the building on between 409 and 412.

I think they valued at about a dollar a square foot or around there.

Um it's just not the same as a normal industrial building.

It's not out of there on the market because it's owned by the L L V C C They are charging a thousand dollars a month just to charge something and have a license agreement, but they can take that building back and use it for their own use at any given point.

In fact, right now it's difficult to get in there because the whole parking lot is filled up for connects.

So it's not your normal market warehouse that you can go buy right now for a dollar per square foot.

I'm I'm looking at it uh not as particularly risky.

I think it's most people are looking at it as a big win, a big winner and exciting.

And you have long-term financial, you have a long-term franchise.

I'm making notes agreement, long-term franchise agreement.

Your stations are tied to major resorts.

Um I thought you have guaranteed contractual revenue at some point.

I mean, right now you're partially I don't think I wouldn't look at it and think, oh, this is really risky just because one person is doing it, that's not unusual for for the person who's doing it.

Um so I I don't I think I don't see a whole lot of risk.

I I anyway, I'm not making a motion either, but that's my thought at the moment.

Can you tell me where the if you summarize the cost of of the tunnels in the in your packet?

Yeah, it's on uh I think 359.

Which one?

Page 359.

359.

Okay, thank you.

If you need more clarification on that, just let me know.

So that's just a bulk number.

I mean, where did that come from?

Did you so they did um they provided me um their costs?

And um I put in their cost sheets.

So are these uh I mean, has there been any depreciation factor against this number yet?

Or uh there is state mandated depreciation into that number, but that's that would be all of it.

So some of the tunnels were built in um uh 2425.

Okay.

So but that that's basically the cost that was provided to me by um by the boarding company.

Okay, so that's basically so account 177, 1778.

That was that was information provided to you by the by board.

Uh Stephanie Jones with the Clark County Assessors Office.

We do start, we started um we built a cost using Marshall and Swift, just like we um, you know, that's how we establish our taxable value.

They submitted their costs for the tunnels, and Mr.

Bones still made that reduction down to their costs.

So we are using their actual costs per ring.

Um he he he knows a little bit more about it than I do as far as that goes, but um these are built per ring, so he's got a cost per ring, and that's how we valued them.

We've reduced all of our cost value down to their cost.

And then our statutory depreciation on top of that.

Yeah, Jeff Bolsonaro for Clark County Assessor's office, their costs are on page 413.

Um what we did, we really broke these down.

Because uh, so what these are they're they're 13 and a half foot diameter by five linear feet constitutes a ring.

So all those rings are bolted together, um, and then they're finished off with uh fire suppression, lighting, electrical, blah blah, all that information.

So that information is on their sheet of what their cost is for on this year for as of July 1st, 2025.

Um they're showing a 4109 dollar cost per ring.

Now they have if you look at the very top, you'll see RW phase one, 457.

Those are the number of rings in that portion of that tunnel for the resorts world tunnel.

There's 457 rings, which comes at 1.9 million dollar cost.

And then I think I stated earlier, we have um with the state mandated appreciation for that resorts world um leg, we have 1.881 million dollars.

And again, Stephanie Jones with the Clark County Assessors Office.

We have these split into two um unsecured uh accounts because of the tax districts, so we're billing for different tax districts, just so you can understand that.

And I know we talked a lot about the discount rate.

Yeah, I was kind of surprised there was some you uh Tom, you said uh or they used his discount rate, but you said that discount rate is should be way higher, which I I kind of agree with.

I mean, what kind of discount rate would you put on something like this?

I think it would be north of 15.

I mean, I don't know what it would be, but you know, we use office buildings multi-family, we do some riskier investments at 10 and 12s, and this is this is something different, and it's partially built.

So I think there's some speculation as to what it's going to look like in the future.

Uh, and as I said, those low discount rates were used to show even at that low rate it didn't make sense.

And so uh it kind of is a test of reasonableness.

And I don't know where that number would have to get before it would make sense, but it doesn't make sense at any reasonable number yet.

I don't I'm gonna be want to say that again.

I'm not saying this probably should be exempt.

I'm not trying to violate a statutory example.

I'm saying that currently its value is nominal, say a thousand bucks, based upon standard DCFs and discount rates that would be appropriate.

I do believe, as commissioner said, in the future, this thing's going to make money, but it's not yet, and this is the tax year we're talking about.

I don't know anything about Cambridge that wasn't involved there, and I don't know about previous tax years, but for this tax year on these tunnels, they have a nominal value until the system's built out, gets bigger, and has more ridership.

And just real quick to mention state law.

I there's nothing in 361 that says you can't value something at a nominal value.

I think that's the analysis we're asking you to look at is what applescence.

I I'm the worst at saying that word, sorry.

What's appropriate for this project right now?

That's what we're asking you to look at, and we know it's the first that you've ever seen.

It's the first that we've ever seen.

This is the first of its kind.

So we know it's unique, but there's certainly nothing in 361 NRS 361 that says you can't value it that way.

The question is, is it does it exceed the full cash value?

And yes, it does.

19 million dollars is beyond what someone would pay for these tunnels right now.

The contractual rent is guaranteed.

If you're building a house, you don't have that.

If you're building a casino, you don't have that.

You have risk because you don't have the county guaranteeing something.

Um I I just don't think it's that risky.

That's there's no financial backing.

What can I what contractual are you right are you are you referring to?

And I know you're saying now we're looking at right today, but you have a long-term financial agreement.

I was listening to when you were talking, your stations are tied to major resorts.

I just don't think it's that risky.

That's my opinion.

There are no long-term financial agreements.

Franchise agreement.

Pardon?

Franchise.

That that's a right to construct.

That's not a right to generate revenue.

Uh the ridership generation is purely our ability to attract riders to provide a service that's useful, more useful than their alternative, and to deal with the standard uh business risks.

There's no guarantee that that will generate anything.

Uh in fact, um, if we were to stop now, people would be that's not that useful.

Read the news articles.

They are saying the boring company's not done anything useful in the future when we have the rest of the county and the city connected.

I believe it will be useful, but there's no guarantee to that.

And the and the agreements we have with the uh casinos and the resorts are uh low dollar fee operating agreements that are uh I think one year the renew one annually.

And same thing with the LVC VA, though, not remaining to this agreement, is a one-year agreement.

Um and so everything is at risk.

If the world changes in a year, we have just a lot of concrete underground and nothing to show for it.

I just don't think there's a big risk that you're gonna stop doing it.

So also can I ask um how do you go about getting the right-of-way?

So is do you have right-of-way set for this entire map?

Yes, so the franchise agreement allows us to construct the tunnels under the right-of-way, and the county will receive money through the ridership.

So that's what that agreement says.

So at the very beginning, when I mentioned we we provide quarterly reports to the county on the ridership, and they get a percentage of that.

We're not yet profitable.

They the last quarterly report was just over 200.

So it'll be profitable at some point, and that benefits the county, obviously, and and also the boring company and the general public.

I mean, this really is a project that benefits the public and the people that are gonna use this system.

It's just unique because it's a privately funded transport public transportation system, which you don't see very often.

And we probably should have negotiated something in that franchise agreement to handle the taxation issue.

Unfortunately, we didn't, and so this is unique and different and new.

Um, but I do think it's it really does warrant your consideration because the risk is on us 100%, us meaning the boring company.

There's no risk to the county.

The only risk is is if we did stop building, we'd have to do a deconstruction plan, decomposition plan, just like casinos do, but that costs us money too.

So really the entire risk is on the boring company, and we're confident that it will be successful.

And I wish we weren't here.

I wish we were paying taxes on a highly profitable system.

We're just not there yet.

In response to board member campus' point, I think we were unclear.

We have the right to construct and build those stations, but there is no guarantee of the revenue.

This is being built entirely at risk by a private entity, which is what makes it so different.

The Western Federago was talking about where we should have had or couldn't should consider in the future private public partnership.

So we have the right to be there, but there's no guarantee of revenue.

So this is being built entirely at risk.

So every mile that goes in adds to the risk of the boring company until the ridership reaches a level to justify those calls.

So it is entirely built at risk.

You may think it's a great idea.

I do too.

It's something new and different, but from a risk profile, it's never been done, and there is no guarantee of ridership.

They have to attract them through efficiency.

They have the right to build it, but there's no guarantee of income.

Tom Alusick for the clock county assessors office.

I think there's some talking past each other on some of these things, and I'm gonna respond to a comment by a board member Anderson when we're talking about uh discount rates, for example, that were used.

The information that we were really presented originally presented with was uh cash flows based upon the three completed tunnels that they had.

Uh what was included in those cash flows were the costs to construct them.

No, the person that would be interested in buying the the would the property would be looking at the revenue from now for the next 10 years.

As it turns out, using their numbers, we were able to construct the cash flows that uh Jeff Mr.

Bonesfield has presented to you that clearly show the three completed tunnels have significant value.

Now, that having been said, we added to that the replacement cost, new less depreciation for the uncompleted tunnels.

Yes, it's all one part of system, but the new cash flows that we have in front of us, and I'm not saying it's wrong.

I just want to be clear that we're completing comparing apples to apples here on this, include the ever growing expansion of a system and all of the costs that are involved.

Well, as an entire system, you can say, well, there could be some risk and I don't know.

They're saying there's tremendous risk, we don't know if we're gonna have revenue.

Well, they clearly presented evidence that the three completed tunnels are making excellent money, and at that point, I think that saying it's tremendously risky for the ones that have already been completed, uh it kind of misses some of the analysis and mixes some of our terms.

But um the way that Mr.

Bonesdale has constructed this, I think was appropriate based upon our looking at each individual constructed tunnel, ignoring the L V C BA, and saying, okay, based upon that, these things do have value to say they don't have value when you yourself have provided the revenue and the expenses to indicate they have millions of dollars of value, seems disingenuous along that line.

Now, if we include all of the future potential costs, 10 million, 50 million, 70 million dollars a year in such and so fast as they continue to build out the 185 miles or whatever it's gonna be.

Uh that's a different analysis.

That's all I'm trying to say is that when you we don't want to compare the two on discount rate or risk on something that's completed, running, working, making money with the entire system as it's going to reach its full build out.

Thank you.

I have a question for the assessor, just on the numbers.

So the recommended number for the warehouse is 2,578 943.

Yes.

And the tunnels is 17 million 370 397.

So the total is 19 million 849,340?

Correct.

Um 1914, 962.

Okay.

Um my opinion, this company is run by what's supposed to be the smartest man in the world.

And if he didn't feel it was necessary to negotiate abatement for taxes during construction, then he didn't feel it was important.

And I think he had to know they were gonna get taxed.

And I don't think they're overassessing them, they're assessing them at cost, less depreciation.

So therefore, I make a motion that we accept the assessor's number and deny the appellate based on the information provided motion to be made, please, Castro Vrokes.

That motion passes.

You do have the right to appeal.

Thank you.

Appreciate your consideration.

Forums are outside the door.

We are gonna take a 10-minute recess before we call the next case.

Please state your name and address for the record.

Yes, my name is David Milner, 16435 North Scottsdale Road, suite 230, Scottsdale, Arizona, 85254.

Thank you.

And you sir?

Uh Charlie Young at the same address.

Okay.

We have exhibits to distribute.

Well, let's set the assessor introduce the case and then we can get to your case.

Good morning, Jason Yamashita for the Clark County Assessor's Office.

The subject property is the Marriott Grand Chateau timeshare, located at 75 East Harmon Avenue, just east of South Las Vegas Boulevard.

It is three 35 story towers and was built in three phases starting in 2005.

It has a total of 1,114 units, of which 22 are currently being used as office space.

We're recommending no changes to the total taxable value of 260 million 197,901 or 238,276 per unit.

His case is in the master book, um, starting on page 67.

My information is in the addendum for case um 621, and that starts on page 2323.

There is an aerial subject, um aerial of the subject on page two three four one in the addendum book.

Thank you, gentlemen.

Um we distribute these exhibits.

All right, thank you for the board's time this morning.

Um, as introduced by the assessor, we are talking about the Marriott Grand Chateau today.

Um it is a timeshare property owned in trust by the individual timeshare owners with some interest retained by the developer, Marriott Vacations.

Uh, because of the distortions in revenue generated by use by the timeshare owners, uh, both myself and the assessor have elected to use an income pro forma to establish a value in exchange, um, as that's usually how these timeshares are traded after their timeshare use has expired.

Um page just under the cover sheet, uh numbered page one is our income pro forma.

Uh and I'm gonna focus on the points that differentiate from the assessor's analysis.

Uh first and foremost, we used a 200 ADR and a 77% occupancy ratio, uh, which was the ADR and occupancy ratio actually experienced by the subject property over 2025 for those units utilized on a nightly basis, aka not the timeshare owners.

Um the assessor's office was provided this information, yet elected to use a 270 dollar ADR and an 80% occupancy ratio.

Obviously, not much discrepancy on the occupancy ratio, but using uh 200 ADR versus 270 dollars leads to a large discrepancy in potential revenue.

Um so that's the first point of differentiation between our pro forma and the assessors.

Um the second is we actually utilize a significantly lower expense ratio, uh, likely due to the assessor's inclusion of property taxes and expenses.

Uh we excluded property taxes and expenses, but then loaded the cap rate as is suggested by the appraisal institute and IAAO.

Um so running through our pro forma.

Lastly, last point of differentiation between us and the assessor.

Assessor utilized an 8% base cap rate.

We utilized 8.25%.

Uh we utilized CBRE, which indicated 8 to 8.5% cap rate, and Green Street, which indicated 9.2%.

On the assessors analysis, they indicated a cap rate between eight and eight and a half percent.

So we are right at their midpoint.

Um however they selected the lower end of that range where we selected the midpoint.

Um so capitalizing our value, uh, we get an enterprise value of 267 million around 400,000.

We then deducted FFE, as did the assessor.

Um last point of differentiation is that we also deducted in intangible value, uh, which is based on an intangible appraisal included in the packet completed by Mary O'Connor.

Um not sure if she is presented to this board at all.

Uh, but she is the imminent authority at the moment on intangibles in hospitality properties.

That intangible appraisal was based on uh three factors she deemed to be intangible.

One was the return on, not return of the management fee, uh, return on, not return of the FFE investment, and then lastly the value of an assembled workforce.

Um as we're all aware, hospitality properties generally trade on the basis of the ongoing or going concern.

Um, how much of that is directly attributable to the real estate has been a point of contention for decades now.

Um, but we believe Mary's report is is reasonable and points to the value of an assembled workforce as a value to the property in the going concern, but not directly attributable to the real estate.

Um so including all those factors, we are requesting a value of 246,195,552 dollars.

Correct.

Yep.

So I conclude your case.

Um anything to add?

I think we're concluded, thank you.

Okay.

Yes, Jason Yamashita for the con excuse me, Clark County Assessor's Office.

If you go to the indendum book, um page 2323, excuse me, 2328, you'll find my cap summary.

Our analysis was based on available information on the subject property and market data.

We used an ADR of 270, which was based on the advertised rates for a week's day from the subject website, and also another um website, hotels.com, which you can find on page 2329.

Um, we used an occupancy of 80%.

Um the LBCVA reported report ending December 2025 for Las Vegas was at 80.3, and for the strip properties, it was 83.2.

Other income of 6.5% was used with an expense ratio of 75%, which was based on comparable type properties, which included management fees, franchise fees, and reserves.

A cap rate of 8% was used based on the full service segment for from various sources.

A reduction for FF and E's was made, and after the reduction, we conclude to a value of 276 million seven forty-two oh two, which you won't get any judgment from me on the car.

Which covers our 260 million one ninety-seven nine oh one taxable value.

I just want to note that our taxable value does not include intangible assets, as it is valued based on replacement costs new on based on Marshall and Swift for the improvements, less statutory depreciation of one and a half percent per year, plus the land value.

We test this value against the market to determine if we are exceeding the full cash value of the property.

We deduct expenses that are typically used in the Rushmore method and take into account expenses including management, franchise fees, and reserves fees for replacement personal property is then deducted from the total amount.

Um if you look at page 2334, although we don't have any recent local sales of full service hotels, there was a sale in late December of 2023, early 2024 of a Spring Hill Suites that was located at 2989 Paradise Road that sold for 74 million based on the deed, which equates to approximately 249,000 per unit.

Um this is not a typical um limited service or extended stay hotel as it is.

It had seven-level parking garage and 17 floors, although they had no kitchens.

If you turn to page 2336 to 2339 of the addendum, you'll see sales of other full service hotels within the U.S.

ranging between 194,783 to 365,079.

There was a recent sale in December of 2025 for an NBA C suites by Hilton in La Jolla that sold for 326,000 per room.

But at this point, we are recommending holding the value at 260 million 1979, which is again 238,276 per unit.

Tom Verheen for the Clark County Assessor's Office.

And also just wanted to understand who prepared this.

So we're 5.69% apart.

I'd like to play judge and split the split the baby.

But I mean it's not a big difference.

I just curious.

So it's it's a little bit of a moving target because their base unit is so they maybe you can speak 20.

I believe that's the 22 office dedicated spaces.

Was the 200 dollars that you have in yours, the actual average daily rent, or was that it was a 270 and asking on the email from the uh taxpayers included in our uh so the 200 was actual or just actual, yeah, 77 percent.

And did you provide that to the assessor?

We did.

He gave it to me an email that says that the ADR is 200 and the um occupancy was 77 percent with no backup information.

That's pretty much all I got.

And again, the numbers are all different from the original, so no financials were provided, just an email that's not a good idea.

Well, the financials were provided, but I don't believe that was the financials for the hotel component only.

Um, I think it was for the he said it was for the hotel, but it looking at the financials, it looks like it may be a cross between the times and the hotel.

I'm not quite sure.

Oh, go ahead.

That's correct.

The financials provided were generated by the HOA, which commands the timeshare use with the non-timeshare use.

So yes, they were provided, no, they are not indicative of the performance, what the performance would be if this were a for-profit hotel.

Tom Berhan for the Clark County Associates Office.

We did review the financials that were provided.

Um we were unable to derive any of the numbers that were actually used on their analysis, so we didn't give a lot of weight to the information that was provided uh as far as the financial data.

Also, um, as far as average daily rate, um, I think on addendum page uh 2329, Miss Yamashid stated she went and actually searched for these rooms by month for the property to look at what the high low and average asking rates are uh throughout the year for the property, and that's how the 270 was derived.

I just happened to Google it's 329 today, so I'm not quite sure where the 200 is coming from.

This page is great.

Well, even with the difference in the in the uh in the room rate, I mean the assessor's got an NOI that's below yours.

So the difference really is it's less than tangible value, the 13 million bucks that you're deducting for intangibles.

Correct, yeah.

We did conclude a higher NOI than the assessor's office did that higher cap rate and the uh intangibles uh chairman Farr, if I may Tom Verhan for the Clark County Assessor's Office.

Um although our primary valuation method is the cost approach, which does not include intangibles.

When we test these, we do use the Rushmore method, which is the recommended method by the IAAO, um, which is taking out the uh expenses that are related to the intangibles, including management franchise fees, reserves, things of that nature, and then capitalizing that.

So there is consideration for that in our methodology when we're testing the full cash value as well.

Yeah, these intangibles back.

You give everybody's got the same number.

Yeah, that's that's what it is.

It's the difference.

That's the difference.

I I'm just not seeing that it exceeds full cash value.

Um so I'm gonna make a motion that we accept the assessor's recommendation.

Motion has been made, please cast your votes.

And that motion passes.

You do have the right to appeal.

Forms are outside the door.

Thank you.

Okay.

All we have left is open the microphone.

Uh actually, and I need a motion to accept the assessor's recommendations on any cases where the petitioners did not attend this hearing, and those that have been stamped stipulated or withdrawn, please cast your votes.

And that motion passes.

Open up the uh microphone for public comment.

Chairman Farr, I have a public comment.

I would I would just like to say um on behalf of the county assessor's office uh and for the county, just thank you for your service to the board.

I don't know that many in the community realize that um this is time that you dedicate to serve on this board, and I know not all the members are here today, but we do appreciate your expertise and your service to this community, um, both all of you that are here today and the others that have served on the various sports throughout February every year.

And so I just want to thank you.

It's been a pleasure working with you all for many years, and um we appreciate your expertise and your knowledge that you bring to our community.

Thank you.

Anyone else want to give us some lavish praise?

Yes, I'd like to thank the assessor's office for doing such a great job and getting the majority of these cases you guys take care of.

So we come here to do a little bit of work.

Yeah, but so thank you.

Thank you.

Agreed.

Yeah.

Thank you for your time.

We are adjourned.

I'd like to review Ms.

O'Connor's report.

Uh huh.

She says it's in compliance with use patch.

She might want to read it.

I was thinking too about this.

Yeah.