Whitman Abington Realty Trust, Allan H. Tufankjian, Trustee v. Board of Assessors of the Town of Whitman (October 28, 2014)

COMMONWEALTH OF MASSACHUSETTS
APPELLATE TAX BOARD
	
WHITMAN ABINGTON REALTY TRUST       v.     BOARD OF ASSESSORS OF
ALLAN H. TUFANKJIAN, TRUSTEE               THE TOWN OF WHITMAN

Docket Nos. F315655, F319787 	             Promulgated:
		  					        October 28, 2014

 
	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 Whitman ("assessors" or "appellee"), to abate taxes on certain real estate located in the Town of Whitman owned by and assessed to Allan H. Tufankjian as Trustee of the Whitman Abington Realty Trust under G.L. c. 59, §§ 11 and 38 for fiscal years 2012 and 2013 ("fiscal years at issue").  
	Commissioner Good ("Presiding Commissioner") heard these appeals and, in accordance with G.L. c. 58A, § 1A and 831 CMR 1.20, issued single-member decisions 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.

Michael G. Doton, Esq. for the appellant.

Kathleen Keefe, principal assessor for the appellee.
  
FINDINGS OF FACT AND REPORT
On the basis of testimony and exhibits offered into evidence at the hearing of these appeals, the Presiding Commissioner made the following findings of fact. 
On January 1, 2011 and January 1, 2012, the relevant assessment dates for the fiscal years at issue, the appellant, Allan H. Tufankjian, Trustee of the Whitman Abington Realty Trust (the "Trust" or the "appellant"), was the assessed owner of a parcel of land improved with a single-family residence, identified on the appellee's Map 17D as Block 108, Lot 1 and with an address of 1208 Bedford Street in Whitman (the "subject property").  
For fiscal year 2012, the assessors valued the subject property at $174,900 and assessed a tax thereon, at the rate of $14.62 per thousand, in the total amount of $2,557.04.  On December 29, 2011, Whitman's Collector of Taxes sent out the town's actual real estate tax bills for fiscal year 2012.  In accordance with G.L. c. 59, § 57C, the appellant timely paid the tax due without incurring interest.  On January 27, 2012, in accordance with G.L. c. 59, § 59, the appellant filed an abatement application with the assessors, which the assessors denied on April 17, 2012.  In accordance with G.L. c. 59, §§ 64 and 65, the appellant seasonably filed his Petition Under Formal Procedure with the Appellate Tax Board (the "Board") on May 16, 2012.  On the basis of the preceding facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide the appeal for fiscal year 2012.
For fiscal year 2013, the assessors valued the subject property at $174,900 and assessed a tax thereon, at the rate of $15.79 per thousand, in the total amount of $2,761.67.  On December 28, 2012, Whitman's Collector of Taxes sent out the town's actual real estate tax bills for fiscal year 2013.  In accordance with G.L. c. 59, § 57C, the appellant timely paid the tax due without incurring interest.  On January 22, 2013, in accordance with G.L. c. 59, § 59, the appellant filed an abatement application with the assessors, which the assessors denied on March 26, 2013.  In accordance with G.L. c. 59, §§ 64 and 65, the appellant seasonably filed his Petition Under Formal Procedure with the Board on June 10, 2013.  On the basis of the preceding facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide the appeal for fiscal year 2013.
The subject property is a 0.479-acre parcel of land improved with a single-family, so-called "Old Style" building that was built in 1900 and contains 1,411 square feet of finished living area (the "subject building").  The appellant purchased the subject property pursuant to a foreclosure sale on April 20, 2007 for $170,000.  The property record cards on file with the appellee for both fiscal years at issue indicate that the subject building was "boarded up" and that its foundation was caving in as of August 29, 1996.  The property record cards classified the subject building in "poor" condition with a grade of D-.  For both fiscal years at issue, the assessors valued the subject property at $174,900, with $58,500 allocated to the subject building and $116,400 allocated to the subject land.
The appellant contended that the assessed value of the subject property exceeded its fair cash value.  The appellant presented his case-in-chief through his testimony and that of an appraiser, Dennis Devita.  The appellant also submitted Mr. Devita's appraisal report, photographs of the subject property's exterior, and a letter from a licensed building contractor, who was not presented as a witness at the hearing of these appeals.
The appellant testified that the subject building had not been inhabited since the appellant's purchase of the subject property in 2007, and in fact, it had been condemned by the fire department, and it was uninsurable.  He further testified that copper pipes from the subject building had been stolen.  The appellant submitted numerous photographs of the subject building's exterior, which depicted its deplorable condition.  
Mr. Devita, whom the Presiding Commissioner qualified as an expert in the area of residential real estate valuation, also testified and presented his appraisal report.  Mr. Devita considered the subject building to be a "tear down."  Mr. Devita performed a comparable-sales analysis, using three purportedly comparable properties in Whitman, two of which were improved with "tear downs" similar to the subject building -- 744 Plymouth Street and 726 Plymouth Street -- and a third property which was improved with a building in need of renovations but habitable -- 17 Rye Hill Street.  While Mr. Devita opined that the value of the subject property lay solely in its land value, Mr. Devita did not choose any vacant lots for his comparable-sales analysis, because he assumed that the subject building would have to be torn down at a cost of approximately $20,000.  However, Mr. Devita did not explain or offer support for his estimate.  After adjustments to his purportedly comparable properties for lot size (726 Plymouth Street) and condition of structure (17 Rye Hill Street), Mr. Devita's adjusted-sales analysis yielded a range of $95,000 to $112,222.  Mr. Devita's opinion of fair market value for the subject property was $97,000. 
The appellant also submitted a letter from a licensed building contractor, Mark A. Ridder (the "Ridder Construction Letter"), concerning the condition of the subject building and an opinion as to the cost of razing it, which the letter stated to be between $35,000 and $40,000.  Based on the high cost to demolish as quoted in the Ridder Construction Letter, the appellant contended that the subject building detracted from, rather than added, to the subject property's value.  The appellant stipulated that the land component of the subject assessments -- $116,400 -- reflected the fair market value of the subject property's land.  The appellant's opinion of fair market value thus includes a deduction for the cost to demolish the subject building.
The appellee presented its case-in-chief through the testimony of Kathleen Keefe, the Principal Assessor for Whitman, as well as the submission of several documents, including the relevant jurisdictional documents.  Ms. Keefe testified that the appellee had given a high depreciation factor and low value to the subject building, in recognition of its inhabitable condition, and that the subject assessments reflected those adjustments.  
The appellee submitted property record cards for purportedly comparable neighborhood properties -- 1196, 1198, and 1200 Bedford Street -- each containing 0.479 acres of land.  The land values for 1196 and 1200 Bedford Street were listed as $116,400, and the land value for 1198 Bedford Street, which included an easement, was listed at $110,600, reflecting a discount of about 5%.  The Presiding Commissioner thus found that the assessment of the land component of the subject property was consistent with that of neighboring parcels, as evidenced by the property record cards.   
The appellee also submitted the property record cards and deeds for the purportedly comparable properties relied upon by Mr. Devita for his comparable-sales analysis.  The property record cards and deeds indicated that 744 Plymouth Street and 726 Plymouth Street were bank sales and that 17 Rye Hill Street was sold in conjunction with a divorce of the grantors.  The Presiding Commissioner thus found that the three purportedly comparable properties relied upon by Mr. Devita were non arm's-length sales and thus not reliable indicators of the fair market value of the subject property.  Moreover, the property record card for Mr. Devita's second comparable-sale property, 726 Plymouth Street, indicated that the original tear-down structure was demolished in September of 2010 for a reported cost of $8,000.
On the basis of the evidence, the Presiding Commissioner found that the subject building was a tear-down structure, and that the subject assessments did not account for the uninhabitable condition of the subject building.  Therefore, the Presiding Commissioner found and ruled that the subject property's value was $116,400, the value of the land component of the subject assessments for both fiscal years at issue.  
In reaching an opinion of fair market value, the Presiding Commissioner found that the appellant did not substantiate the demolition costs involved in removing the subject building from the subject property.  The Presiding Commissioner found that Mr. Devita, who was an expert in the area of real estate valuation, was not an expert in the area of costs involved in building or demolition, and therefore, was not qualified to give an estimate of the demolition cost that would be involved in razing the subject building.  The Presiding Commissioner further found that the other evidence presented by the appellant, the Ridder Construction letter, was not corroborated by any testimony or other evidence, and further, it was contradicted by the $8,000 actual demolition cost reported on the property record card for neighboring 726 Plymouth Street.  The Presiding Commissioner thus found that the appellant did not provide reliable evidence of the demolition costs associated with razing the subject building and she, therefore, did not deduct this cost from the subject property's land value. 
Accordingly, the Presiding Commissioner issued decisions for the appellant and ordered abatements as follows: $855.27 for fiscal year 2012 and $923.72 for fiscal year 2013.



OPINION
The assessors are required to assess real estate at its fair cash value determined as of the first day of January of each year.  G.L. c. 59, §§ 2A, 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 appellant has the burden of proving that the subject property has a lower fair market value than the value assessed for both fiscal years at issue. "'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 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 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)).  
"[S]ales of property usually 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).  Sales of comparable realty in the same geographic area and within a reasonable time of the assessment date generally contain probative evidence for determining the value of the property at issue.  Graham v. Assessors of West Tisbury, Mass. ATB Findings of Fact and Reports 2007-321, 400 (citing McCabe v. Chelsea, 265 Mass. 494, 496 (1929)), aff'd, 73 Mass. App. Ct. 1107 (2008)).  However, "the evidentiary value of such sales in less than arm's-length transactions is diminished."  New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469 (1981) (citing Jordan Marsh Co. v. Assessors of Malden, 359 Mass. 106, 108 (1971)).  The Board has consistently held that evidence of sales may be considered "only if they are free and not under compulsion."  Congregation of the Mission of St. Vincent dePaul v. Commonwealth, 336 Mass. 357, 360 (1957) (other citation omitted).  Any sale which "inherently suggests a compulsion to sell" will require "a proponent of evidence of such sale [to] show circumstances rebutting the suggestion of compulsion."  DSM Realty, Inc. v. Assessors of Andover, 391 Mass. 1014, (1984).  
In the instant appeals, the Presiding Commissioner found that, based on the property record cards as well as the assessor's credible testimony, a suggestion arose that all three of Mr. Devita's comparable-sale properties were not sold at arm's length.  With respect to 726 and 744 Plymouth Street, the Presiding Commissioner determined that these bank sales were not, in the absence of contrary evidence from the appellant, reliable or persuasive evidence of fair cash value.  See, e.g., Glowacki v. Assessors of Upton, Mass. ATB Findings of Fact and Reports 2013-685, 694 (quoting DSM Realty, 391 Mass. at 1014 ("A foreclosure sale inherently suggests a compulsion to sell."); see also Finigan v. Assessors of Belmont, Mass. ATB Findings of Fact and Reports 2004-533, 544 and Waters v. Assessors of Wayland, Mass. ATB Findings of Fact and Reports 2001-460, 469.  With respect to 17 Rye Hill Street, Ms. Keefe's credible testimony, as well as the information on the property record card, raised a suggestion that this sale, which occurred in the context of the owners' divorce, was not sufficiently exposed to the market.  Without sufficient market exposure, the Board may infer that the relied-upon sale was not an arm's-length transaction reflecting fair market value.  See American House, LLC v. Assessors of Greenfield, Mass. ATB Findings of Fact and Reports 2005-39, 53 (because "there was insufficient evidence produced to show that the property was exposed to the market for a sufficient period to maximize the number of potential buyers," the Board found "that the circumstances surrounding the [ ] sale raised an inference that it was less than arm's-length.").  The appellant failed to introduce further evidence to counter the assessors' evidence of compulsion and lack of sufficient exposure to the market.  The Presiding Commissioner thus found that Mr. Devita's three comparable-sales properties were not reliable or persuasive evidence of the fair cash value for the subject property. 
Notwithstanding the evidentiary deficiencies in the appellant's comparable-sales analysis, the Presiding Commissioner did find and rule that the appellant met his burden of proving that the subject building, which was uninhabitable and uninsurable, added no value to the subject property.  See Roman Catholic Bishop of Worcester - St. Joseph Parish v. Assessors of Auburn, Mass. ATB Findings of Fact and Reports 2013-886, 890, 893 (finding that a structure located on a parcel of real estate had no value when it was "functionally obsolete and in a complete state of disrepair") (citing General Electric Co., 393 Mass. at 599-600).  The subject assessments did not adequately account for these defects to the property.  Contrast, Filippone v. Assessors of Newton, Mass. ATB Findings of Fact and Reports 1995-216, 220-21.  
The Presiding Commissioner also found that the assessment of the land component of the subject property was consistent with that of neighboring parcels, as evidenced by the property record cards submitted by the appellee.  In addition, the appellant stipulated that the assessment of the land component reflected its fair market value.  Therefore, the Presiding Commissioner found and ruled that the fair market value of the subject property was $116,400, the assessed value of the land component of the subject property.
However, as a real estate appraiser, Mr. Devita was not competent to testify to the costs of demolition of the subject building.  See generally, Tigar v. Mystic River Bridge Authority, 329 Mass. 514, 519-20 (1952) (finding that a generally qualified real estate appraiser is not competent to testify to construction and other costs).  The Presiding Commissioner further found that the reliability of the appellant's other evidence, the estimate in the Ridder Construction Letter, was undercut by the reported cost on the property record card maintained by the appellee for 726 Plymouth Street, which indicated that the home on that property had been razed at a cost of $8,000.  For these reasons, the Presiding Commissioner declined to deduct the cost of razing the subject building from the subject property's fair market value.  
"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 various elements of value as shown by the record and from them form . . . its own independent judgment."  Assessors of Quincy v. Boston Consolidated Gas Co., 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., 383 Mass. at 473; Jordan Marsh Co., 359 Mass. at 110.  
On the basis of these principles and the evidence advanced by the parties, the Presiding Commissioner found and ruled that the fair market value of the subject property was $116,400 for both fiscal years at issue.  Accordingly, the Presiding Commissioner issued decisions for the appellant and granted abatements of $855.27 for fiscal year 2012 and $923.72 for fiscal year 2013.
					THE APPELLATE TAX BOARD

				By: _________________________________
					Patricia M. Good, Commissioner
A true copy,

Attest: __________________________
		Clerk of the Board

ATB 2014-777