Main Street Property, Inc. v. Board of Assessors of the Town of Wayland (March 9, 2011)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



MAIN STREET PROPERTY, INC.		   BOARD OF ASSESSORS OF
							   THE TOWN OF WAYLAND

Docket Nos. F287964, F294446		   Promulgated:
		  F299560				   March 9, 2011


	These are appeals 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 Wayland ("appellee" or "assessors") to abate taxes on certain real estate in Wayland owned by and assessed to Main Street Property, Inc. ("appellant") under G.L. c. 59, §§ 11 and 38, for fiscal years 2007, 2008 and 2009 ("fiscal years at issue").
	Commissioner Mulhern heard these appeals and was joined by  Chairman Hammond and Commissioners Scharaffa, Egan and Rose in the decisions for the appellee. 
	These findings of fact and report are made pursuant to a request by the appellant under G.L. c. 58A, § 13 and 831 CMR 1.32.

	Matthew A. Luz, Esq., for the appellant.
	Mark J. Lanza, Esq., for the appellee.


FINDINGS OF FACT AND REPORT
	On January 1, 2006, January 1, 2007, and January 1, 2008, the appellant was the assessed owner of a 4.925-acre parcel of real estate in the Town of Wayland improved with two, one and two-story, retail/office buildings, with a total leasable area of 47,238 square feet ("subject property").  	
For fiscal year 2007, the assessors valued the subject property at $5,169,600 and assessed a tax thereon, at the rate of $13.82 per thousand, in the amount of $71,443.87.  On December 29, 2006, Wayland's Collector of Taxes sent out the town's actual real estate tax bills for fiscal year 2007.  In accordance with G.L. c. 59, § 57C, the appellant paid the tax without incurring interest.  On January 11, 2007, in accordance with G.L. c. 59, § 59, the appellant timely filed its abatement application with the assessors.  The assessors denied the appellant's application on February 12, 2007, and on March 16, 2007, the appellant timely filed an appeal with the Board.
For fiscal year 2008, the assessors valued the subject property at $5,282,800 and assessed a tax thereon, at the rate of $14.98 per thousand, in the amount of $79,136.34.  On December 20, 2007, Wayland's Collector of Taxes sent out the town's actual real estate tax bills for fiscal year 2008.  In accordance with G.L. c. 59, § 57C, the appellant paid the tax without incurring interest.  On January 18, 2008, in accordance with G.L. c. 59, § 59, the appellant timely filed its abatement application with the assessors.  The assessors denied the appellant's application on April 7, 2008, and on April 23, 2008, the appellant timely filed an appeal with the Board.
For fiscal year 2009, the assessors valued the subject property at $5,323,200 and assessed a tax thereon, at the rate of $16.37 per thousand, in the amount of $87,140.78.  On December 29, 2008, Wayland's Collector of Taxes sent out the town's actual real estate tax bills for fiscal year 2009.  In accordance with G.L. c. 59, § 57C, the appellant paid the tax without incurring interest.  On January 12, 2009, in accordance with G.L. c. 59, § 59, the appellant timely filed its abatement application with the assessors.  The assessors denied the appellant's application on April 10, 2009, and on May 8, 2009, the appellant timely filed an appeal with the Board.  On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide these appeals.
The subject property is located at 35 Main Street in the Town of Wayland, a residential suburb located in Middlesex County and situated approximately 17 miles west of Boston.  Wayland is served by a network of local highways including Routes 20, 27, 30 and 126, which also provide access to Routes 9, I90 (Mass Pike) and I95/128.  The subject property is located in the southwestern section of Wayland, known as Cochituate, at the intersection of Main Street (Route 27) and Commonwealth Road (Route 30) near the Natick and Framingham municipal borders.  Located across Main Street from the subject property is a multi-tenant retail building.  Located across Commonwealth Road are a bank branch office building, a bridal shop, and an animal hospital.  A gas station abuts the front of the subject property and a professional office building and undeveloped land abut to the rear.  Other properties in the immediate area include another bank branch office building, a post office, professional office buildings, retail buildings, and single family homes.  As a result of its location, the subject property is considered to have an active location for commercial uses.
The subject property consists of a 4.925-acre parcel of property improved with two multi-tenant retail and office buildings.  The subject property is identified by the assessors as Parcel 21 on Map 51D, and is located in the Business A and Business B zoning districts.  Although the subject property does not meet the current zoning requirements, it was constructed prior to the existing zoning regulations and therefore is considered a legal nonconforming use.  Access to the site is via curb cuts on both Main Street and Commonwealth Road.  There is about 274.31 feet of frontage along the easterly side of Main Street, 485.06 feet of frontage along the southerly side of Commonwealth Road, and 47.70 feet at the corner of Main Street and Commonwealth Road.  The site is reported to be level at grade with Commonwealth Road and above the grade of Main Street in its northwest corner and slopes downward in the area that fronts along Main Street.  The existing structures occupy about 18.6% of the parcel's total area.  The remainder of the site is asphalt-paved to provide parking for about 274 vehicles.  Utilities available include municipal water, gas and telephone, and there is an on-site septic system.  
The two multi-tenant, retail/office buildings located on the parcel were constructed in stages during 1960, 1968, and 1986.  The buildings are wood and masonry frame over a concrete foundation.  The roofs are partially flat with rubber membrane and partially pitched with an asphalt shingle cover.  The exteriors are a mix of facades which include brick, concrete panel, stone, and vinyl siding.  The interior finishes include suspended acoustical tile ceilings, carpet or ceramic tile floor covers, and sheetrock walls with plaster and paint, with some walls covered with wallpaper.  The lighting throughout is fluorescent panel, fluorescent strip, and recessed lighting fixtures.  Heating is gas-fired, forced hot-air, with each rentable unit separately zoned.  Both buildings are served by a wet sprinkler system.  The two building have a combined total leasable area of 42,840 square feet.   
Building 1 has approximately 29,692 square feet of gross building area.  The building contains two rentable retail units on the first floor that range in size between 1,000 and 16,200 square feet.  The first floor includes Donelan's Supermarket ("Donelan's"), the anchor tenant for this building.  The second floor is accessed from two interior staircases and is subdivided into nine office suites which range in size from 350 to 1,850 square feet.  There are two lavatories in the common area of the first floor, two lavatories in the common area of the second floor, and also three lavatories in the space occupied by Donelan's Supermarket.  
Building 2 is a smaller retail/office building with a gross floor area of 17,546 square feet.  The layout is similar to that of Building 1.  The first floor has four retail units and one office unit ranging in size from 800 to 6,000 square feet.  The anchor tenant is RiteAid Pharmacy which is located on the first floor.  Other retail users include a barber shop, J.J. McKay's Restaurant, and a Bank of America bank branch.  The second floor is subdivided into eight office suites, ranging in size from 300 to 1,000 square feet.  There are two lavatories in the ground floor common area, two lavatories in the second level common area, and two lavatories in the first floor retail space occupied by RiteAid Pharmacy.  

	The appellant presented its case-in-chief through the testimony of its commercial real estate valuation expert, Eric Wolff, and the introduction of his summary appraisal report.  Based on his education and experience, the Board qualified Mr. Wolff as an expert witness in the field of real estate valuation.  Given the location and zoning requirements of the subject property, Mr. Wolff concluded that the subject property's highest and best use was its current use as a mix of retail and office buildings. 
	To ascertain the subject property's potential gross income, Mr. Wolff first reviewed the subject property's actual rents provided by the owner of the subject property.  According to Mr. Wolff, the subject property's average retail rent, excluding Donelan's, was $19.83 per square foot as of January 1, 2006, $19.44 per square foot as of January 1, 2007, and $22.60 per square foot as of January 1, 2008.  The Donelan's space rented at $11.11 as of January 1, 2006, $12.00 as of January 1, 2007, and $13.09 as of January 1, 2008.  The subject property's average office rent was $22.84 per square foot as of January 1, 2006, $23.33 per square foot as of January 1, 2007, and $26.82 as of January 1, 2008.  
	To determine if these rents were consistent with the market, Mr. Wolff researched rents of similar retail and office space in the Wayland area.  His research revealed that for fiscal year 2007, retail rents ranged from $18.50 to $24.45 per square foot and office rents ranged from $13.00 to $21.00 per square foot; for fiscal year 2008 retail rents ranged from $16.54 to $30.00 per square foot and office rents ranged from $15.30 to $19.50 per square foot; and, for fiscal year 2009, retail rents ranged from $13.00 to $25.00 per square foot and office rents ranged from $13.00 to $23.00 per square foot.
	Relying on these purportedly comparable rents, Mr. Wolff estimated market rents for the subject property's retail space, excluding Donelan's, at $20.00 per square foot for fiscal years 2007 and 2008, and at $23.00 for fiscal year 2009.  He estimated market rents for the subject property's office space at $23.00 for fiscal years 2007 and 2008 and at $26.00 per square foot for fiscal year 2009.  Lastly, Mr. Wolff estimated market rent for the Donelan's retail space at $11.00 per square foot for fiscal year 2007, $12.00 per square foot for fiscal year 2008, and $13.00 per square foot for fiscal year 2009.
	All of Mr. Wolff's purportedly comparable leases were for properties located in Framingham, Sudbury and Natick.  He cited no leases for properties in Wayland.  In addition, a majority of the retail leases offered in his study had triple-net terms, with the tenant bearing most of the expenses.  A majority of the office leases he cited were rented on a modified gross basis, with the tenant bearing the responsibility for only some of the expenses.  He reported that in the case of the subject property, the spaces were leased on a gross basis, requiring the landlord to pay all expenses.
	He then multiplied his projected market rents by the applicable leasable areas to calculate potential gross income ("PGI") for the fiscal years at issue.  To reach his effective gross income ("EGI") amounts, Mr. Wolff deducted a vacancy rate of 10%, which he asserted was based on conversations with local brokers and consistent with the market.  Mr. Wolff conceded, however, that during the fiscal years at issue, the subject property's actual vacancy was less than 2%.
For expenses, Mr. Wolff noted that within the subject property's competitive market area, the landlord is responsible for all operating expenses of the building, including those associated with the management and structural maintenance of the building.  Actual operating expenses for the subject property included insurance, utilities, repairs and maintenance, landscaping, snow removal, trash removal, cleaning, and legal and profession fees.  A study of the subject property's expenses as provided by the owner revealed that the subject property's expenses totaled approximately 21% of the subject property's effective gross income.  Mr. Wolff found this to be reasonable and consistent with market averages in the area and he therefore utilized actual expenses in his projections.  In addition, he deducted from the subject property's EGI a management fee equal to 5% of EGI, a replacement reserve allowance equal to 3% of PGI, and a commission expense equal to 1% of PGI to derive a stabilized net operating income ("NOI").
The final step in Mr. Wolff's income-capitalization analysis was the selection of a capitalization rate.  Mr. Wolff developed his capitalization rates using a band-of-investment technique.  In his analyses, Mr. Wolff assumed interest lending rates ranging from 6.75% to 7% and equity yield rates ranging from 13% to 14.5%.  He also reviewed rate ranges for "non-investment" grade retail and office properties located in suburban markets published in industry surveys such as the    with support from the Price-Waterhouse Coopers-Korpacz Report ("Korpacz Report").  From his assumptions, Mr. Wolff selected a capitalization rate of 9.0% for fiscal year 2007, 8.75% for fiscal year 2008, and 9.5% for fiscal year 2009.  Finally, to his base capitalization rates he added the applicable tax factor to derive his overall capitalization rates of 10.382%, 10.248% and 11.137%, respectively.
Mr. Wolff's income-capitalization calculations are reproduced in the following tables.


Fiscal Year 2007
						
INCOME	
Size	
Rate 	Potential Income			
  Retail Space (Donelan's)   
  Retail Space
  Office Space
Potential Gross Income ("PGI")	14,400
18,240
10,200
42,840	$11.00
$20.00
$23.00	$158,400
$364,800
$234,600
		



$ 757,800	
						
Less Vacancy @ 10%					-$ 75,780	
						
Effective Gross Income ("EGI")					$ 719,910	
						
EXPENSES

Operating Expenses @ 21% of EGI					

$ 143,224	
Management Fee @ 5% of EGI					$  34,101	
Reserves for Replacement @ 3% of PGI					$  22,734	
Commissions @ $1% of PGI					$   7,578	
Less Total Expenses					-$207,637	
						
Net-Operating Income ("NOI")					$  474,383	
						
Capitalization Rate					   9.000%	
Tax Factor					   1.382%	
Total Capitalization Rate					  10.382%	
						
Capitalized Value (rounded)					$ 4,570,000	


Fiscal Year 2008
					

INCOME	
Size	
Rate	Potential Income		
  Retail Space (Donelan's)   
  Retail Space
  Office Space
Potential Gross Income ("PGI")	16,200
16,660
 9,980
42,840	$12.00
$20.00
$23.00	$194,400
$333,200
$229,540	



$ 757,140	
					
Less Vacancy @ 10%				-$ 75,780	
					
Effective Gross Income ("EGI")				$ 681,426	
					
EXPENSES

Operating Expenses @ 21% of EGI				

$ 143,099	
Management Fee @ 5% of EGI				$  34,071	
Reserves for Replacement @ 3% of PGI				$  22,714	
Commissions @ $1% of PGI				$   7,571	
Less Total Expenses				-$207,456	
					
Net-Operating Income ("NOI")				$ 473,970	
					
Capitalization Rate				   8.750%	
Tax Factor				   1.498%	
Total Capitalization Rate				  10.248%	
					
Capitalized Value (rounded)				$ 4,625,000	




Fiscal Year 2009
						
INCOME	
Size	
Rate	Potential Income		
  Retail Space (Donelan's)   
  Retail Space
  Office Space
Potential Gross Income ("PGI")	16,200
16,660
 9,980
42,840	$13.00
$23.00
$26.00	$210,600
$383,180
$259,480	



$ 853,260	
					
Less Vacancy @ 10%				-$ 37,268	
					
Effective Gross Income ("EGI")				$ 767,934	
					
EXPENSES

Operating Expenses @ 21% of EGI				

$ 161,266	
Management Fee @ 5% of EGI				$  38,397	
Reserves for Replacement @ 3% of PGI				$  25,598	
Commissions @ $1% of PGI				$   8,533	
Less Total Expenses				$ 233,793	
					
Net-Operating Income ("NOI")				$ 534,141	
					
Capitalization Rate				   9.500%	
Tax Factor				   1.637%	
Total Capitalization Rate				  11.137%	
					
Capitalized Value (rounded)				$ 4,800,000	

	The assessors presented no affirmative evidence of value but instead relied on the presumed validity of the assessment.
Based on the evidence presented, the Board agreed with the appellant's expert that the income capitalization approach was the appropriate method to use in valuing the subject property for the fiscal years at issue.  The Board found, however, that Mr. Wolff's analysis was flawed in several respects and was, therefore, unreliable.  
In his analysis, Mr. Wolff used projected retail and office rents derived from a review of the subject property's existing leases.  In his analysis, however, Mr. Wolff did not provide, nor did he know the start dates or duration of the subject property's existing leases.  Without this information, the Board found that it was unable to determine whether or not the subject rents were reflective of the market rentals for the fiscal years at issue.  Also, Mr. Wolff included in his analyses listings of numerous retail and office rents in the surrounding area.  All of these leases were located outside of Wayland.  Although Mr. Wolff testified that the majority of his rental comparables had a superior location compared to the subject property, he failed to offer an explanation for any adjustments made but instead simply chose a lower per square value, compared to the average rental rate of his chosen comparables, to attribute to the subject property.  Further, Mr. Wolff did not claim that there were no Wayland rents available, but instead stated that he was unable to obtain the information in his research.  
Further, Mr. Wolff stated in his report that the subject property's retail and office spaces were leased on a gross basis, with the landlord responsible for the payment of all expenses.  His comparables, however, were primarily triple-net and modified-gross leases with the tenant responsible for at least some of the operating expenses.  Despite the disparity in lease terms, Mr. Wolff made no adjustments in his analyses.
Mr. Wolff further testified that according to conversations with real estate brokers in the Wayland area the vacancy rate for retail and office space similar to the subject property ranged between 5% and 10%.  From these discussions, he determined that 10% was an appropriate vacancy rate to use for all of the fiscal years at issue.  However, the Board found that Mr. Wolff's use of a 10% vacancy factor, at the high end of the range and despite the subject property's actual vacancy rate of less than 2% for each of the fiscal years at issue, was overstated and resulted in an understatement of the subject property's EGI for each of the fiscal years at issue.
The Board further found that Mr. Wolff's adoption of the subject's property's reported operating expenses, as a percentage of EGI, without providing substantiating market evidence beyond his personal statement that it was "reflective of the market," lacked reliability and further undermined the validity of his analysis.  Finally, the Board found that Mr. Wolff's capitalization rates, which presumed equity returns ranging from 13.0% to 14.5%, were unsubstantiated.  
Moreover, the Board found other errors in Mr. Wolff's appraisal report, including mathematical and typographical errors.  For example, Mr. Wolff stated in his report that for fiscal year 2009 the subject property's office rents ranged from $21.60 to $35.56 per square foot with an average of $23.33 per square foot.  At trial, however, Mr. Wolff testified that the average office rent was in fact $26.82 per square foot.  He did not, however, make any adjustments to his income-capitalization analysis to reflect this discrepancy.  Also, in his income-capitalization analyses, for all fiscal years at issue, Mr. Wolff stated that the vacancy allowance was 10% of PGI.  For fiscal years 2008 and 2009, however, Mr. Wolff used the same number that was used for fiscal year 2007, despite the differences in PGI. 
On this basis, the Board found that the appellant failed to meet its burden of proving that the subject property was overvalued for the fiscal years at issue.  Accordingly, the Board issued decisions for the appellee in these appeals.

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 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).  
Generally, real estate valuation experts, the Massachusetts courts, and this Board rely upon three approaches to ascertain the fair cash value of property: income capitalization; sales comparison; and cost of reproduction.  Correia v. New Bedford Redevelopment Authority, 375 Mass. 360, 362 (1978).  "The Board is not required to adopt any particular method of valuation."  Pepsi-Cola Bottling Co. v. Assessors of Boston, 397 Mass. 447, 449 (1986).  Regardless of which method is employed to determine fair cash value, the Board must determine the highest price which a hypothetical willing buyer would pay to a hypothetical willing seller in an assumed free and open market.  Irving Saunders Trust v. Board of Assessors of Boston, 26 Mass. App. Ct. 838, 845 (1989).  The validity of a final estimate of market value largely depends on how well it can be supported by market data. The Appraisal Institute, The Appraisal of Real Estate 134 (12th Ed., 2001). 
	The income capitalization method "is frequently applied with respect to income producing property." Taunton Redevelopment Associates v. Assessors of Taunton, 393 Mass. 293, 295 (1984).  Under this approach, a valuation figure is determined by dividing net operating income by a capitalization rate.  Board of Assessors of Brookline v. Buehler, 396 Mass. 520, 522-23 (1986).  The net income figure is computed by deducting operating expenses from gross rental income.  General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 609 (1984).
In applying the income-capitalization method, the income stream used must reflect the property's earning capacity or market rental value.  Pepsi-Cola Bottling, 397 Mass. at 451.  Imputing rental income to the subject property based on fair market rentals from comparable properties is evidence of value if, once adjusted, the rents are indicative of the subject property's earning capacity.  See Correia v. New Bedford Redevelopment Authority, 5 Mass. App. Ct. 289, 293-94 (1977), rev'd on other grounds, 375 Mass. 360 (1978); Library Services, Inc. v. Malden Redevelopment Authority, 9 Mass. App. Ct. 877, 878 (1980) (rescript); AVCO Manufacturing Corporation v. Assessors of Wilmington, Mass. ATB Findings of Fact and Reports 1990-142.  It is the earning capacity of real estate, rather than its actual income, which is probative of fair market value.  Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 64 (1941).  Vacancy rates must also be market based when determining fair cash value.  Donovan v. City of Haverhill, 247 Mass. 69, 71 (1923). 
After accounting for vacancy and rent losses, the net operating  income is obtained by deducting the landlord's appropriate expenses.  General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 610 (1984).  The expenses should reflect the market.  Id.  Real estate taxes are not considered operating expenses for purposes of determining net operating income.  Alstores Realty Corporation v. Assessors of Peabody, 391 Mass. 60, 70 (1984).  "The expense of local taxation turns on the very point in dispute, the fair cash value of the property.  Logically, therefore, income should be capitalized before taxes."  Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 700 n.2 (1972). See also, Board of Assessors of Lynn v. Shop-Lease Co., Inc., 364 Mass. 569, 572 (1974) (property's net operating  income is determined before real estate taxes).  Real estate taxes are accounted for by use of an effective tax factor in the capitalization rate.  Taunton Redevelopment, 393 Mass. at 295.  
The capitalization rate should consider the return necessary to attract investment capital.  Taunton Redevelopment, 393 Mass. at 295.  The "tax factor" is a percentage added to the capitalization rate "to reflect the tax which will be payable on the assessed valuation produced by the [capitalization] formula."  Assessors of Lynn v. Shop-Lease Co., 364 Mass. 569, 573 (1974).  "Logically, therefore, income should be capitalized before taxes 'with the capitalization rate increased to yield the return the investor expects plus the amount of local taxes payable.'"  Alstores, 391 Mass. at 70 n. 19, quoting New England Oyster House, Inc. 362 Mass. at 700 n. 2.      
Generally, in multiple tenancy properties like the subject property, it is appropriate to add a tax factor to the capitalization rate because the landlord is assumed to be responsible for paying the real estate taxes, and the tenants' contribution toward the real estate tax, if any, is included in the landlord's gross income.  Taunton Redevelopment, 393 Mass. at 295-96; see also General Electric Co., 393 Mass. at 610.        
The Board is entitled to presume that the assessment is valid until the taxpayer sustains his or her burden of proving otherwise.  Schlaiker v. Board of Assessors of Great Barrington, 365 Mass. 243, 245 (1974).  Accordingly, the burden of proof is upon the taxpayer to make out his or her right as a matter of law to an abatement of the tax.  Id. The taxpayer must demonstrate that the assessed valuation of his or her property was improper.  See Foxboro Associates v. Board of Assessors of Foxborough, 385 Mass. 679, 691 (1982).  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 [can] accept such portions of the evidence as appear 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 Corp. v. Board of Assessors of Boston, 383 Mass. 456, 473 (1981); Jordan Marsh Co. v. Assessors of Malden, 359 Mass. 106, 110 (1971).  
In the present appeals, the Board found that Mr. Wolff's income capitalization analyses were flawed.  First, the Board found that by utilizing the subject property's actual rents without knowing the start dates and duration, Mr. Wolff was unable to ascertain if in fact these rents were reflective of the market.  The Board also found that Mr. Wolff's research of area rents, while failing to include any rents from Wayland, was flawed.  Further, the Board found that a majority of Mr. Wolff's comparable leases had triple-net or modified-gross terms compared to the subject property's purportedly gross leases whereby the landlord was responsible for all operating expenses.  Despite the significant difference in lease terms, Mr. Wolff failed to make any adjustments when determining his suggested market rate rents.  The Board further found that Mr. Wolff's vacancy rate of 10%, which was at the top of the range provided to him by area brokers and was more than five times the subject property's actual vacancy during the fiscal years at issue, was excessive and resulted in an understatement of the subject property's EGI for each of the fiscal years at issue.
Next, the Board found that Mr. Wolff's adoption of the subject property's operating expenses, as a percentage of EGI, based solely on his personal statement that they were reflective of the market and without offering any substantiating market data, lacked reliability.  Finally, the Board found that Mr. Wolff's capitalization rates, which presumed equity returns ranging from 13.0% to 14.5% lacked supporting evidence and therefore were unreliable.
Based on the foregoing facts, the Board found that appellant failed to meet its burden of proving that the subject property was overvalued for the fiscal years at issue.  Accordingly, the Board entered decisions for the appellee in these appeals.

					   THE APPELLATE TAX BOARD

				By:	___________________________________
					Thomas W. Hammond, Jr., Chairman
A true copy,

Attest:	____________________________
		    Clerk of the Board

 During fiscal year 2007, Donelan's Supermarket underwent a renovation project and expanded its net leasable area by 1,800 square feet.  There was a corresponding decrease of 1,580 square foot in the appellant's leasable retail space and a 220 square foot decrease in the appellant's leasable office space. 
Mr. Wolff's vacancy figure does not represent 10% of the PGI.  Despite this error, his EGI value is correct.
 Again Mr. Wolff's figure for vacancy does not represent 10% of the PGI.  However, despite this error his final figure for EGI is correct.

ATB 2011-97