Folsom v. County of Spokane

This case raises the principal issue of whether, in capitalizing income for ad valorem property tax valuation, the taxing authority should capitalize actual rental income reserved in a long-term commercial lease if the existing fair market rate exceeds rent reserved. We hold that it should, but remand the case for additional proceedings consistent with this opinion.

I

Respondents (Owners) own land and buildings at North 6600 Division Street in Spokane, Washington. The Owners lease property to an anchor tenant, K-Mart, and several others. The parties only dispute the assessed valuation of the…