John O. Kunz v. Board of Assessors of the Town of Middleton (April 4, 2006)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


JOHN O. KUNZ				v.	BOARD OF ASSESSORS OF 
THE TOWN OF MIDDLETON

Docket No. F271957				Promulgated:
							April 4, 2006


	This is an appeal under the formal procedure pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes on certain real estate in the Town of Middleton assessed under G.L. c. 59, §§ 11 and 38 for fiscal year 2004.  
	Commissioner Scharaffa (the "Presiding Commissioner") heard this appeal and, pursuant to G.L. c. 58A, § 1A and 831 CMR 1.20, issued a single-member decision 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.  

	Mark F. Murphy, Esq. for the appellant.

	Brad Swanson, Assessor, for the appellee.  



FINDINGS OF FACT AND REPORT
	On January 1, 2003, Appellant John O. Kunz ("appellant") was the assessed owner of a 9.33 acre vacant parcel of land known as 8 Bishop Lane in the Town of Middleton ("subject parcel").  
	For fiscal year 2004, the appellee Board of Assessors of the Town of Middleton ("assessors") valued the subject parcel at $126,400 and assessed a tax, at the rate of $10.58 per thousand, in the amount of $1,337.31, which appellant paid without incurring interest.  Appellant timely filed his Application for Abatement with the assessors on January 27, 2004.  Following the assessors' February 10, 2004 denial of the application, appellant timely filed his appeal with the Appellate Tax Board ("Board") on March 8, 2004.  On the basis of these facts, the Presiding Commissioner ruled that the Board had jurisdiction over this appeal.  
	At the hearing of this appeal, appellant presented his case through his own testimony and the testimony and appraisal report of Rebecca Kilborn, whom the Presiding Commissioner qualified as an expert witness in the field of real estate valuation.  The assessors presented their case through the testimony of two members of the assessors, Brad Swanson and Deborah Carbone, together with documentary evidence concerning properties that the assessors considered comparable to the subject parcel.  On the basis of the testimony and evidence of record, the Presiding Commissioner made the following findings of fact.
	In 1984, appellant purchased a forty-acre parcel in Middleton, which he developed into a residential subdivision in 1996.  The subdivision is known as "Eddington Place" and includes lots on Eddington Street and Bishop Lane.  Access to the subdivision is via Essex Street, which is situated roughly northeast of Route 114 in Middleton.  
The subdivision contains fourteen lots, including the subject parcel.  Between 1997 and 2000, appellant sold two-acre vacant lots in the subdivision for prices ranging from $118,000 to $194,000.  Most of the lots have since been improved with single-family homes, which were selling at the time of hearing for between $600,000 and $1,000,000.  All of the lots were sold by 2000, with the exception of the subject parcel.
The subject parcel is significantly impacted by wetland.  The upland portion of the parcel is located toward that part of the parcel most distant from its frontage on Bishop Lane.  Accordingly, access to any proposed residence to be constructed on the upland portion of the parcel would necessitate the construction of a driveway through the wetland portion of the parcel.
Appellant went before the Town's Planning Board, Zoning Board of Appeals, Building Inspector, and Conservation Commission in an attempt to gain Town approval for development of the subject parcel.  Appellant was, however, unable to secure the necessary Town approvals to develop the parcel.  
In particular, the Conservation Commission determined that a "wetland crossing" was required to access the upland portion of the parcel from Bishop Lane.  In a letter dated June 5, 2000 to Bradford W. Swanson, Interim Assessor for the Town of Middleton, the Building Inspector stated:

This is to advise you that [the subject parcel] meets frontage and area requirements to qualify for a building permit.

However, the Conservation Commission has determined that a wetland crossing would be required for which no permit has been issued.

Because of that issue no building permit can be issued for this parcel.


In October, 2001, appellant filed a "Notice of Intent" with the Town pursuant to the Wetlands Protection Act.  The Notice of Intent showed a proposed six-hundred foot driveway to connect a proposed residence on the upland portion of the parcel with Bishop Street.
By letter dated February 7, 2002, the Conservation Commission informed appellant that it had denied permission for appellant's proposed development of the subject parcel.  In its letter of denial, the Conservation Commission stated:
On February 5, 2002 at its regular monthly meeting the Commissioners unanimously voted to deny an Order of Conditions to build a long driveway through Conservancy District upland and wetland (red maple swamp) to access the highland on [the subject parcel].

Mr. Kunz's Notice of Intent plan shows over 600 ft. of driveway in Conservancy District close by and crossing the swamp itself.  The Commission denied the project under provisions of the Wetland Protection Act, MGL Chapter 131, Sec. 40 and Zoning Bylaw section 4.8.  It recommends that a special permit (4.8.2) not be allowed for the planned work in the Conservancy District.


	Appellant attempted to solve the subject parcel's access problem by proposing a purchase of abutting land from another developer and by securing an easement over abutting land owed by New England Power Company.  Both the developer and New England Power Company turned down appellant's proposals. 
Because the upland portion of the subject parcel had no feasible or allowable street access, appellant's valuation expert concluded that the parcel was unbuildable.  The assessors offered no substantial evidence to refute appellant's documentary evidence and testimony or his valuation expert's opinion that the parcel was unbuildable.  Accordingly, the Board found that as of the January 1, 2003 valuation date at issue in this appeal, the parcel was unbuildable and that, therefore, the highest and best use of the parcel was as an unbuildable lot. 
Because the property was neither improved with a structure nor income producing, both parties relied on a sales-comparison approach to arrive at their opinions of the subject parcel's fair cash value.  On the basis of her conclusion that the subject parcel was a land-locked, unbuildable lot with substantial wetlands, appellant's valuation expert determined that the potential market for the parcel was limited to abutters who might want to purchase it as a "buffer."  Appellant's valuation expert analyzed sales of unbuildable land in the North Shore area to estimate the value of the parcel using three criteria to select her comparable properties: 1) the comparable was unbuildable with a significant portion of wetlands; 2) the land area of the comparable was between five and seventeen acres; and 3) the comparable sold during calendar year 2002.  She excluded from consideration sales of parcels that could be combined with other property to create a buildable lot.
Appellant's valuation expert identified six sales which met her criteria of comparability.  The following table sets forth relevant information concerning each sale.
LOCATION	SALE DATE 	AREA	PRICE	PRICE/ACRE	
Essex	01/10/02	14.69 Acres	$45,000	$3,063.31	
Ipswich	02/08/02	16.90 Acres	$29,900	$1,769.00	
West Newbury	02/15/02	12.00 Acres	$35,000	$2,916.00	
Essex	04/04/02	6 Acres +/-	$12,000	$2,000.00	
Ipswich	06/27/02	7.00 Acres	$14,000	$2,000.00	
Essex	12/09/02	7.50 Acres	$12,000	$1,600.00	

Appellant's valuation expert determined that her comparable sale properties' significant wetlands and their lack of feasible access resulted in use and marketability constraints similar to those encumbering the subject parcel.  Finding a range of values between $1,600 and $3,063 per acre, appellant's valuation expert concluded that the fair cash value of the subject parcel as of January 1, 2003 was $2,000 per acre, or $18,660, which she rounded to $19,000 for the 9.33-acre parcel.  
As evidenced by the property record card for the subject parcel and confirmed by the assessors' testimony, the assessment on the parcel was premised on the assumption that the parcel was developable land.  The property record card for the subject parcel bears the notation "Dev. Land" and the assessors testified that their valuation analysis for the parcel began with a base price that was the same base price used for buildable lots in Middleton, which they adjusted for topography and "shape."  Using this approach, they arrived at an assessed value for the subject parcel of $126,400, or approximately $13,500 per acre, for fiscal year 2004. 
In support of their assessment, the assessors introduced deeds and property record cards for twelve properties in Georgetown, Middleton, North Reading and Topsfield, that sold between December 2001 and June 2004.  The comparable sales appear to be parcels with no frontage on public ways.  With the exception of one sale to a developer, all of the assessors' comparable sales were to abutters.  The parcels ranged in size from 0.53 acres to 22.87 acres, with per-acre prices ranging from $3,000.00 to $47,348.  The average of the twelve sale prices was $15,890 per acre.  
The assessors offered no evidence concerning the circumstances surrounding these sales, including the purposes for which the buyers purchased the parcels.  There was no showing that the existence of wetlands on the assessors' comparable properties interfered with the development and marketability of the parcels.  There was also no indication of whether any access limitations which existed on the comparable properties could be cured.  The assessors also made no attempt to adjust the sale prices for their comparables to arrive at an indicated value for the subject parcel.  
On the basis of all the evidence of record, the Board found that appellant's approach best estimated the fair cash value of the subject parcel for the fiscal year at issue.  Appellant's comparable sale properties were specifically chosen to reflect the impact on value of the type of wetlands and access limitations that hindered the use, development, and marketability of the subject parcel.  Further, appellant's valuation recognized that the parcel was unbuildable, a fundamental factor which the assessors failed to properly consider.  
The Board found further that the assessors failed to establish that their purportedly comparable properties were, in fact, comparable to the subject parcel.  In addition, the Board found that, to the extent these properties may have been comparable, the assessors failed to offer any adjustments to account for differences between the sale properties and the subject parcel.  The lack of adjustment is particularly troublesome here because of the wide range of per-acre prices paid for the comparables; a simple arithmetic average of widely varying sale prices is not an accurate indicator of the per-acre value of the subject parcel.
Accordingly, the Board agreed with the opinion of the appellant's valuation expert that the fair cash value of the subject parcel was $19,000 for the fiscal year at issue.  The Board therefore issued a decision for the appellant and granted an abatement of $1,136.29.

OPINION
	The assessors are required to assess real estate at its fair cash value.  G.L. c. 59, § 38; Coomey v. Assessors of Sandwich, 367 Mass. 836, 837 (1975).  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) ("Boston Gas").
"Prior to valuing the subject property, its highest and best use must be ascertained, which has been defined as the use for which the property would bring the most."  Tennessee Gas Pipeline Co. v. Assessors of Agawam, ATB Findings of Fact and Reports 2000-859, 875 (citing Conness v. Commonwealth, 184 Mass. 541, 542-43 (1903); Irving Saunders Trust v. Assessors of Boston, 26 Mass. App. Ct. 838, 843 (1989) and the cases cited therein). "[T]he phrase 'highest and best use' implies the selection of a single use for a single property and . . . the Board is required to make its best judgment as to what that use is likely to be, considering all the evidence presented."  New England Telephone and Telegraph Co. v. Board of Assessors of the Town of Framingham, ATB Findings of Fact and Reports 1988-95, 150.  In determining the property's highest and best use, consideration should be given to the purpose for which the property is adapted.  See Leen v. Board of Assessors of Boston, 345 Mass. 494, 504 (1963); Boston Gas, 334 Mass. at 566.  A property's highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive. Appraisal Institute, The Appraisal Of Real Estate at 305-308 (12th ed., 2001); see also Skyline Homes, Inc. v. Commonwealth, 362 Mass. 684, 687 (1972) ("Skyline Homes");  DiBaise v. Town of Rowley, 33 Mass. App. Ct. 928 (1992).  Property cannot be valued on the basis of hypothetical or future uses that are remote or speculative.  See Skyline Homes, 362 Mass. at 687; Tigar v. Mystic River Bridge Authority, 329 Mass. 514, 518 (1952); Salem Country Club, Inc. v. Peabody Redevelopment Authority, 21 Mass. App. Ct. 433, 435 (1986).  
In the present appeal, the Board ruled that appellant met his burden of proving that the highest and best use of the subject parcel was as an unbuildable lot.  Appellant proved through credible and persuasive evidence that the subject parcel was unbuildable as of the relevant assessment date.  A willing buyer fully apprised of the parcel's attributes as of the relevant assessment date would know that the Town's Conservation Commission and Building Inspector had turned down appellant's efforts to develop the parcel and that there was no foreseeable likelihood that this situation would change in the future.  Such a buyer, therefore, would conclude that the parcel was not developable as of the relevant assessment date and would purchase the property at a price reflecting that reality.  
	The appellant has 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) ("Schlaiker") (quoting Judson Freight Forwarding Co. v. Commonwealth, 242 Mass. 47, 55 (1922)). "[T]he [B]oard is entitled to 'presume that the valuation made by the assessors [is] valid unless the taxpayers . . . prov[e] the contrary.'" General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 598 (1984) ("General Electric Co.") (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)).  The Board found and ruled in this appeal that the appellant produced substantial evidence that the assessors' valuation method was flawed and also produced affirmative evidence showing that the assessed value exceeded fair cash value.
First, appellant established, and the Board found, that the most accurate method to value the subject parcel was to consider sales of comparable properties which were not only unbuildable but also suffered from the same type of wetland and access problems that existed on the subject parcel.  Because the assessment at issue was premised on the assumption that the property was developable, it was flawed from the outset.  Further, because the assessors' comparable sales analysis relied on unadjusted sales prices paid for parcels not shown to be comparable to the subject parcel, the Board could draw no meaningful conclusions concerning the fair cash value of the subject parcel from the assessors' analysis. 
Second, the appellant produced credible and persuasive affirmative evidence of value through his valuation expert's comparable-sales approach.  The fair cash value of property may be determined by recent sales of comparable properties in the market.  McCabe v. Chelsea, 265 Mass. 494, 496 (1929).   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) ("New Boston Garden"); First National Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971).  
Appellant's valuation expert found six sales of comparable parcels that, like the subject parcel, were encumbered by significant wetland and a lack of feasible access that restricted their use, development and marketability.  The Board agreed with the appellant's valuation expert that the sale prices of these parcels best reflected the impact on value resulting from the subject parcel's wetland and access problems, and the Town's refusal to authorize development of the parcel.  Accordingly, the Board found that the sale prices of appellant's valuation expert's comparable properties provided a reliable indicator of the fair cash value of the subject parcel.
In contrast, the assessors failed to establish the comparability of their comparable-sale properties.  In particular, they introduced insufficient evidence to establish that development of their comparable-sale properties was hindered by the type of wetlands and lack of access problems existing on the subject parcel or that development was foreclosed for the foreseeable future; in fact, one of the sales on which the assessors relied was a sale to a developer.  In addition, the assessors made no reasonable effort to adjust the sale prices from their comparable properties to arrive at an indicated value for the subject parcel.
"[The Board can] accept such portions of the evidence as appear[s] to have the more convincing weight.  The market value of the property [can] not be proved with mathematical certainty and must ultimately rest in the realm of opinion, estimate, and judgment . . . .  The board [can] select the various elements of value as shown by the record and from them form . . . its own independent judgment."  Assessors of Quincy v. Boston Consolidated Gas Company, 309 Mass. 60, 72 (1941).  See also North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984); New Boston Garden, 383 Mass. at 473; Jordan Marsh Co. v. Assessors of Malden, 359 Mass. 106, 110 (1971).  
On the basis of all the foregoing, the Board ruled that appellant met his burden of proving that the fair cash value of the subject parcel as of the January 1, 2003 assessment date was $19,000.  Because appellant met his burden of proving that the fair cash value of the subject parcel was less than its assessed value for fiscal year 2004, the Board issued a decision for appellant and granted an abatement in the amount of $1,136.29.
						THE APPELLATE TAX BOARD

				By: _____________________________________
				     Frank J. Scharaffa, Commissioner

A true copy,


Attest:	____________________________
		Assistant Clerk of the Board					

ATB 2006-211