Ron Scharf & Aylit Schultz v. Board of Assessors of the Town of Brookline (June 8, 2015)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


RON SCHARF & 		  	  v.	   	   BOARD OF ASSESSORS OF   
AYLIT SCHULTZ				   	   THE TOWN OF BROOKLINE
					
	         
Docket No. F320551				   Promulgated:
							   June 8, 2015


	This is an appeal filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65 from the refusal of the Board of Assessors of the Town of Brookline ("appellee" or "assessors") to abate a tax on certain real estate in Brookline, owned by and assessed to Ron Scharf and Aylit Schultz ("appellants") under G.L. c. 59, §§ 11 and 38, for fiscal year 2013 ("fiscal year at issue").  
	Commissioner Rose heard this appeal. He was joined by Chairman Hammond and Commissioners Scharaffa, Chmielinksi and Good in a decision for the appellee. 
	These findings of fact and report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32. 

	Ron Scharf, pro se, for the appellants.
	
Gary McCabe, Chief Assessor, and Rachid Belhocine, Deputy Chief Assessor, for the appellee.

Findings of Fact and Report

On the basis of the evidence presented, including the testimony and documentary exhibits entered into the record, the Appellate Tax Board ("Board") made the following findings of fact.    
On January 1, 2012, the relevant assessment date for the fiscal year at issue, the appellants were the assessed owners of a 3,072-square-foot condominium unit, numbered Unit 1, identified on the assessors' Map 168 as Block 4, Lot 1 and located at 19 Harris Street in the Town of Brookline (the "subject unit").  
For the fiscal year at issue, the assessors valued the subject unit at $1,718,300 and assessed a tax thereon, at the rate of $11.65 per thousand, in the total amount, after application of the Brookline residential exemption, of $18,063.78.  In accordance with G.L. c. 59, § 57C, the appellants paid the tax due for the fiscal year at issue without incurring interest.  On February 1, 2013, in accordance with G.L. c. 59, § 59, the appellants timely filed an Application for Abatement with the assessors, which they denied on April 23, 2013.  On June 27, 2013, in accordance with G.L. c. 59, §§ 64 and 65, the appellants seasonably filed their petition with the Board.  On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.
The subject unit is situated in a two-family home, which was built in 1887 and was completely renovated and converted into two condominium units in 2010.  According to a floor plan on file with the assessors, the subject unit contains 3,062 square feet of living area on four floors, plus an additional 544 square feet of finished basement area that constitutes an au pair suite.  The subject unit consists of thirteen rooms, including four bedrooms, as well as five full bathrooms.  The assessors rate the subject unit as in "good" to "very good" condition.  
Having been completely renovated in 2010, the subject unit boasts a modern kitchen with granite countertops, newly tiled bathrooms, hardwood floors, new interior finishes, new heating, plumbing and electric units, new windows and doors, new exterior siding and a new roof.  It is heated by forced hot air fueled by gas.  Additional amenities include central air conditioning, one fireplace and three open parking spaces.
To support their contention that the subject unit was overvalued for the fiscal year at issue, the appellants submitted various exhibits including, but not limited to, the following: a copy of the property record card and attached floor plan for the subject property on file with the assessors; two appraisals of the subject property; site plans and photographs of the subject property; Multiple List Service ("MLS") listings of purportedly comparable properties; self-compiled charts based on sales information from the appraisal reports; a copy of a mass appraisal condominium model from the assessors' office; a self-compiled chart reflecting sales information from the appellee's comparables; and copies of various e-mail communications between the appellants and the appellee.  The appellants maintained that this evidence supported their opinion of value of $1,180,000 for the subject unit for the tax year at issue.  
One of the appellants, Ron Scharf, testified that the appellants had purchased 19 Harris Street in 2009 and, after they converted it to two condominium units, the appellants sold the second unit, which was approximately 1,100 square of finished living area, in August of 2011 for $790,000.
Mr. Scharf presented two appraisal reports of the subject unit, one performed by Mercedes M. Calkins and the other by Bill Larkin, both prepared at the request of prospective lenders in connection with mortgage applications for the subject property.  Neither appraiser was presented as a witness in this appeal and thus was not available for cross-examination by the appellee or questioning by the Presiding Commissioner.  Therefore, the opinions contained in the appraisal reports were unsubstantiated hearsay, and accordingly, the Board credited the appraisal reports solely with respect to their undisputed descriptions of the subject unit.
Mr. Scharf next offered several purportedly comparable properties.  He presented two charts detailing his evidence.  The first chart, comparing properties from the two appraisal reports as well as comparables that the appellants believed were relied upon by the assessors, compared factors of "CDU" or condition, design and utility.  Mr. Scharf testified that the appellants derived the CDU factors using a mass appraisal model that they had obtained from the assessors' office.  This chart then listed the non-adjusted prices per square foot of these twelve condominium units.  The second chart simply detailed the parcel identification and address for four purportedly comparable properties, the sale dates and prices, certain features including building style, unit size, number and quality of bathrooms, kitchen quality and garage and open parking spaces.  It then listed the sale price and fiscal year 2013 assessment per square foot.  Neither chart provided adjustments to sale prices for differences between the purportedly comparable properties and the subject property.
The assessors presented their case-in-chief through the testimony of Gary McCabe and Rachid Belhocine, the Chief Assessor and Deputy Chief Assessor, respectively, and the submission of documents, including the standard jurisdictional documents as well as: a master deed of the property located at 19 Harris Street, including the subject unit as well as the second unit; a site plan of the subject unit and the second unit located at 19 Harris Street; and a deed for the second unit that the appellants sold in 2011.
The appellee's witnesses pointed out that the sale of the second unit was not persuasive evidence of fair market value for the subject unit because of the differences affecting value between the two units, including the subject unit's au pair suite and its three on-site parking spaces versus the second unit's one on-site parking space. 
On the basis of the evidence submitted to the Board, the Board made the following ultimate findings of fact.  The Board found that the appellants' comparable-sales data lacked adjustments to account for crucial differences between the purportedly comparable properties and the subject unit, including but not limited to: living space area, including the subject unit's additional au pair suite; number of bedrooms; number of bathrooms; condition; and location.  Therefore, the Board was unable to make a meaningful comparison between the subject unit and the offered comparables.  The Board further agreed with the appellee that, because of the differences affecting fair market value between the two units, the sale of the second unit was not persuasive evidence of the fair market value of the subject unit.  Accordingly, the Board found that the appellants' purportedly comparable properties, as well as the self-compiled charts created with reference to those properties, were not reliable indicators of the subject unit's fair cash value.  
The appellants offered no other evidence of value other than the opinion hearsay from the appraisal reports, the purportedly comparable properties and charts that lacked adjustments, and various communications that also lacked information on adjustments to purportedly comparable properties that would provide a meaningful comparison with the subject unit.  Therefore, the Board found and ruled that the appellants failed to meet their burden of proving a value for the subject unit that was less than its assessed value.  Accordingly, the Board issued a decision for the appellee in this appeal.
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 at 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 his 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 board 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) (quoting Schlaiker, 365 Mass. at 245)).
In appeals before the Board, taxpayers "'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)).  
In the present appeal, the appellants contended that the subject unit was overvalued.  In support of their case, they presented two appraisal reports.  Both appraisal reports included a sales-comparison valuation analysis of the subject property.  However, neither appraiser testified at the hearing nor was available for cross-examination by the appellee or for questioning by the Board.  The Board therefore considered their opinions contained in the appraisal reports to be unsubstantiated hearsay.  Ward Brothers Realty Trust v. Assessors of Hingham, Mass. ATB Findings of Fact and Reports 2012-515, 525 (rejecting opinion of value contained in an appraisal report as hearsay where author of the report did not testify at hearing).  
Next, the appellants submitted MLS listings of three purportedly comparable condominium properties that had sold in Brookline, as well as self-compiled charts with sales information based on the appraisal reports and sales information from the comparable properties relied upon by the assessors.  The appellants also offered the 2011 sale of the second condominium unit.  See Graham v. Assessors of West Tisbury, Mass. ATB Findings of Fact and Reports 2007-321, 394, aff'd, 73 Mass. App. Ct. 1107 (2008) ("The fair cash value of property may often best be determined by recent sales of comparable properties in the market."); see also Lattuca v. Robsham, 442 Mass. 205, 216 (2004) ("Evidence of the sale prices of 'reasonably comparable property' is the next best evidence to the sale of the property in question.").  Properties are "comparable" to the subject property when they share "fundamental similarities" with the subject property, including similar age, locations, sizes and dates of sale.  Id.  The appellants bear the burden of "'establishing the comparability of . . . properties [used for comparison] to the subject propert[ies].'"  Wood v. Assessors of Fall River, Mass. ATB Findings of Fact and Reports 2008-213, 225 (quoting Fleet Bank of Mass. v Assessors of Manchester, Mass. ATB Findings of Fact and Reports 1998-546, 547). "Once basic comparability is established, it is then necessary to make adjustments for the differences, looking primarily to the relative quality of the properties, to develop a market indicator of value."  New Boston Garden Corp. v. Board of Assessors of Boston, 383 Mass. 456, 470 (1981).  Therefore, when comparable sales are used, allowances must be made for various factors that would otherwise cause disparities in the comparable property's sale prices.  See Pembroke Industrial Park Co., Inc. v. Assessors of Pembroke, Mass. ATB Findings of Fact and Reports 1998-1072, 1082.  
	In the instant appeal, the appellants made no adjustments to these properties, despite the existence of significant differences between the subject property and each of the purportedly comparable properties, including the second condominium unit with its au pair suite and additional on-site parking space, which affect the valuation of those properties.  Absent appropriate adjustments, the Board found that the appellants' comparable-sales data did not provide a reliable indicator of the subject unit's fair cash value for the fiscal year at issue.  "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."  Appraisal Institute, The Appraisal of Real Estate 322 (13th ed., 2008).  The Board found that, without the necessary adjustments, the appellants' comparable-sales and comparable-assessments analyses were fundamentally flawed and thus carried little weight. 

Conclusion
Based on the evidence presented, the Board found and ruled that the appellants failed to meet their burden of proving that the subject unit was overvalued for the fiscal year at issue.  On this basis, the Board decided this appeal for the appellee.

             			 THE APPELLATE TAX BOARD

				  By: _________________________________
					 Thomas W. Hammond, Jr., Chairman




A true copy,

Attest: _____________________________
           Clerk of the Board

ATB 2015-232