A History of Excessive Assessments

COMMONWEALTH OF MASSACHUSETTS
APPELLATE TAX BOARD

DAVID J. DUQUETTE, TRUSTEE OF THE DD REALTY TRUST v. BOARD OF ASSESSORS OF THE TOWN OF HINSDALE

Docket No. F288462
Karen Tonelli, Assessor, for the appellee.

Assessors are required to assess real estate at its fair cash value. G.L. c. 59, § 38. Fair cash value is defined as the price on which a willing seller and a willing buyer in a free and open market will agree if both of them are fully informed and under no compulsion.

After considering all of the evidence, the Presiding Commissioner agreed with the parties and found that there were no market sales of properties in the Plunkett Reservoir neighborhood during the relevant time period. The Presiding Commissioner further agreed that the neighborhood around Lake Ashmere was superior to the Plunkett Reservoir neighborhood and more attractive to potential buyers. Accordingly, the Presiding Commissioner found that properties on Lake Ashmere were generally not comparable to ones on Plunkett Reservoir and if used in comparable-sale or comparable-assessment analyses, they would require appreciable adjustment.

Of the parties’ purportedly comparable properties, the Presiding Commissioner primarily relied on two in finding that the subject property was overvalued. First and foremost was the property located at 49 South Shore Road, which sold for $162,000 on May 1, 2005 and was part of the appellant’s comparable-assessment submission. Even though this comparable property is only approximately one-half the size of the subject property’s parcel, it does have about the same amount of water frontage and is in a related neighborhood. The small cottage, which had been located on this comparable property at the time of the sale, was razed by the new owners and replaced with a newly constructed dwelling. Accordingly, the Presiding Commissioner regarded this comparable sale as similar to the sale of unimproved land and fairly indicative of land values in the subject property’s neighborhood.

In addition to the South Shore Road comparable property, the Presiding Commissioner also relied to some extent on the $260,000 sale on January 10, 2006 of an unimproved 0.83-acre parcel located on George Schnopps Road, which was part of the assessors’ comparable-sale submission. While this property is similar in size to the subject property, it has almost three times the subject property’s water frontage and is located in a neighborhood classified as a 6. The Presiding Commissioner found that, because of this property’s discrepancies with the subject property’s water frontage and neighborhood designation, the sale of this property should be adjusted downward by at least 30% to approach comparability with the subject property’s land.

FULL ATB FINDING OF FACT

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

DAVID J. DUQUETTE, TRUSTEE v. BOARD OF ASSSESSORS OF

OF THE DD REALTY TRUST THE TOWN OF HINSDALE

Docket No. F288462 Promulgated:

December 22, 2008

This is an appeal under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, from the refusal of the appellee to abate taxes on real estate located in the Town of Hinsdale owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal year 2007.

Commissioner Mulhern (“Presiding Commissioner”) heard the appeal and issued a single-member decision, under G.L. c. 58A, § 1A and 831 CMR 1.20, for the appellant.

These findings of fact and report are made pursuant to a request by the appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.

William E. Martin, Esq. for the appellant.

Karen Tonelli, Assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On January 1, 2006, David J. Duquette, Trustee of The DD Realty Trust (“appellant”) was the assessed owner of a parcel of real estate located at 190 Michaels Road in the Town of Hinsdale (“subject property”). For fiscal year 2007, the Board of Assessors of Hinsdale (“assessors”) valued the subject property at $277,400 and assessed a tax thereon, at a rate of $10.86 per $1,000, for a total amount of $3,012.56. On or about December 22, 2006, Hinsdale’s Collector of Taxes sent out the town’s actual real estate tax bills. In accordance with G.L. c. 59, § 57C, the appellant timely paid the tax assessed without incurring interest.

On or about January 11, 2007, in accordance with G.L. c. 59, § 59, the appellant filed an Application for Abatement with the assessors, which they denied on February 7, 2007. On or about May 6, 2007, in accordance with G.L. c. 58A, § 7 and c. 59, §§ 64 and 65, the appellant seasonably appealed the assessors’ denial of the abatement application by mailing a Petition Under Formal Procedure to the Appellate Tax Board (“Board”), which the Board receivedon May 8, 2007. On this basis, the Presiding Commissioner found and ruled that the Board had jurisdiction over this appeal.

The subject property is located in a waterfront neighborhood situated around Plunkett Reservoir or Pond. The subject property’s parcel contains approximately one acre with about 170 feet of water frontage. The site is improved with a small, single-story, wood-framed, seasonal cottage that contains approximately 880 square feet of living area along with an attached open deck. The cottage has one bathroom and one bedroom and is in average condition overall. For fiscal year 2007, the assessors valued the subject property’s land at $210,000 and the cottage at $67,400, for a total assessment of $277,400. The appellant purchased the property 3½ years prior to the relevant valuation date for $127,500.

The appellant, who is a contractor and real estate investor in the area, primarily challenged the portion of the assessment attributed to the subject property’s land. In support of his case, he submitted an analysis of the assessments of nine purportedly comparable waterfrontproperties located in the area. He also testified that while local non-waterfront building lots were selling for $70,000, there were limited sales or turnover of properties around Plunkett Reservoir. He further stated that the properties around Ashmere Lake, another waterfront neighborhood in town, were more desirable and attractive to out-of-state buyers than those around Plunkett Reservoir, which only appealed to locals. Based on the overall and land component assessments attributed to his comparable properties, as well as his experience as a builder and investor in the area, and his assertion that land in excess of a primary building site has little value, he testified that the assessed value of the land associated with the subject property should be reduced by about $100,000 to a value of $110,100, thereby commensurately reducing the overall assessed value of the subject property to $177,500.

In support of the assessment, the assessors submitted an analysis of three purportedly comparable waterfront property sales. The sales included two properties with small cottages and one property with unimproved land, but none located in the Plunkett Reservoir neighborhood. In addition, the assessors testified that neighborhoods in Hinsdale are classified between 1 and 6, with 6 being the most expensive. Properties around Lake Ashmere, for example, are in a neighborhood classified as a 6, while the subject property is located in a neighborhood classified as a 5. The assessors valued the land associated with one-acre properties in a neighborhood classified as a 6 at $345,000 and in a neighborhood classified as a 5 at $210,000. The assessors derived their overall or total assessments by adding the value of any improvements, developed from standard cost manuals, to the land values.

On this basis, the Presiding Commissioner found that both sales supported a land value for the subject property of about $175,000 and, along with other evidence, an overall or total fair cash value for the subject property of $242,400 for fiscal year 2007. This finding resulted in a $35,000 reduction in the subject property’s assessment for fiscal year 2007 and a tax abatement, at a rate of $10.86 per $1,000, in the amount of $380.10. Accordingly, the Presiding Commissioner decided this appeal for the appellant.

OPINION

The assessors are required to assess real estate at its fair cash value. G.L. c. 59, § 38. Fair cash value is defined as the price on which a willing seller and a willing buyer in a free and open market will agree if both of them are fully informed and under no compulsion. Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).

The appellants have the burden of proving that the property has a lower value than that assessed. “‘The burden of proof is upon the petitioner to make out its right as [a] matter of law to [an] abatement of the tax.’” Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974) (quoting Judson Freight Forwarding Co. v. Commonwealth, 242 Mass. 47, 55 (1922)). “[T]he [Presiding Commissioner] is entitled to ‘presume that the valuation made by the assessors [is] valid unless the taxpayer[] . . . prov[es] the contrary.’” General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 598 (1984) (quoting Schlaiker, 365 Mass. at 245).

In appeals before this Board, a taxpayer “‘may present persuasive evidence of overvaluation either by exposing flaws or errors in the assessors’ method of valuation, or by introducing affirmative evidence of value which undermines the assessors’ valuation.’” General Electric Co., 393 Mass. at 600 (quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983)). Actual sales generally “furnish strong evidence of market value, provided they are arm’s-length transactions and thus fairly represent what a buyer has been willing to pay for the property to a willing seller.” Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 682 (1982); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469 (1981); First National Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971). Sales of comparable realty in the same geographic area and within a reasonable time of the assessment date contain credible data and information for determining the value of the property at issue. See McCabe v. Chelsea, 265 Mass. 494, 496 (1929). “A major premise of the sales comparison approach is that an opinion of the market value of a property can be supported by studying the market’s reaction to comparable and competitive properties.” Appraisal Institute, The Appraisal of Real estate 297 (13^th ed., 2008). When comparable sales are used, however, allowance must be made for various factors which would otherwise cause disparities in the comparable prices. See Pembroke Industrial Park Co., Inc. v. Assessors of Pembroke, Mass. ATB Findings of Fact and Reports 1998-1072, 1082. “Adjustments for differences in the elements of comparison are made to the price of each comparable property . . . . The magnitude of the adjustment made for each element of comparison depends on how much that characteristic of the comparable property differs from the subject property.” The Appraisal of real estate at 322.

General Laws c. 58A, § 12B provides in pertinent part that “at any hearing relative to the assessed fair cash valuation or classification of property, evidence as to fair cash valuation or classification of propertyat which assessors have assessed other property of a comparable nature or class shall be admissible.” The introduction of such evidence may provide adequate support for either the granting or denial of an abatement. Chouinard v. Assessors of Natick, Mass. ATB Findings of Fact and Reports 1998-299, 307-308 (citing Garvey v. Assessors of West Newbury, Mass. ATB Findings of Fact and Reports 1995-129, 135-36; Swartz v. Assessors of Tisbury, Mass. ATB Findings of Fact and Reports 1993-271, 279-80); see also Turner v. Assessors of Natick, Mass. ATB Findings of Fact and Reports 1998-309, 317-18.

In this appeal, the Presiding Commissioner found that the appellant met his burden of demonstrating that the subject property was overvalued for fiscal year 2007 by showing that the assessors had substantially overvalued the land component of the assessment thereby rendering the overall assessment commensurately excessive. Comparable assessment and sale information introduced by both parties and appropriately adjusted by the Presiding Commissioner from other evidence in the record underpinned and substantiated the Presiding Commissioner’s finding in this regard. Sands v. Assessors of Bourne, Mass. ATB Findings of Fact and Reports 2006-190, 195 (recognizing that the amount of water frontage “is an important consideration for valuing waterfront property”); Graham v. Assessors of West Tisbury, Mass. ATB Findings of Fact and Reports 2007-321, 398 (recognizing that the quality and rating of neighborhoods are also important considerations in valuing waterfront property), aff’d, Mass. App. Ct. No. 07-P-1024, Memorandum and Order under Rule 1:28 (November 28, 2008).

In abatement proceedings, “the question is whether the assessment for the parcel of real estate, including both the land and the structures thereon, is excessive. The component parts, on which that single assessment is laid, are each open to inquiry and revision by the appellate tribunal in reaching the conclusion whether that single assessment is excessive.” Massachusetts General Hospital v. Belmont, 238 Mass. 396, 403 (1921). See also Guernsey v. Assessors of Williamstown,Mass.ATB Findings of Fact and Reports 2006-158, 168; Buckley v. Assessors of Duxbury, Mass. ATB Findings of Fact and Reports 1990-110, 119; Jernegan v. Assessors of Duxbury, Mass. ATB Findings of Fact and Reports 1990-39, 48-9; Everhart v. Assessors of Dalton, Mass. ATB Findings of Fact and Reports 1985-49, 54. In the present appeal, the Presiding Commissioner ruled that the excessive value attributed to the land component of the subject property’s assessment resulted in the assessors commensurately overvaluing the subject property as a whole.

“The [B]oard [is] not required to believe the testimony of any particular witness but [may] accept such portions of the evidence as appear to have the more convincing weight. Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 72 (1941). “The credibility of witnesses, the weight of evidence, and inferences to be drawn from the evidence are matters for the [B]oard.” Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977). “The market value of the property c[an] not be proved with mathematical certainty and must ultimately rest in the realm of opinion, estimate, and judgment . . . . The [B]oard [may] select the various elements of value as shown by the record and from them form . . . its own independent judgment.” Boston Consol. Gas Co., 309 Mass. at 72 (citations omitted). See also North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984); New Boston Garden Corp., 383 Mass. at 473; Jordan Marsh Co. v. Assessors of Malden, 359 Mass. 106, 110 (1971). Based on the evidence presented in this appeal, the Presiding Commissioner selected the most credible and probative evidence and exercised his independent judgment in finding and ruling that the subject property was overvalued by the assessors for the fiscal year at issue. On this basis, the Presiding Commissioner found and ruled that the fair cash value of the subject property for fiscal year 2007 was $242,400, and he, therefore, decided this appeal for the appellant and granted an abatement in the amount of $380.10.

APPELLATE TAX BOARD

By: ____

Thomas J. Mulhern, Commissioner

A true copy,

Attest: _______

Clerk of the Board