Parviz Tayebati, Trustee Parviz Tayebati 2004 Revocable Trust v. Board of Assessors of the Town of Sherborn (November 10, 2014)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



PARVIZ TAYEBATI, TRUSTEE		v.	   BOARD OF ASSESSORS OF
PARVIZ TAYEBATI 2004 			   THE TOWN OF SHERBORN
REVOCABLE TRUST			

Docket Nos. F315090, F315091		   Promulgated:
							   November 10, 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 Sherborn ("assessors" or "appellee) to abate taxes on certain real estate located in the Town of Sherborn, owned by Parviz Tayebati, Trustee of Parviz Tayebati 2004 Revocable Trust under G.L. c. 59, §§ 11 and 38 for fiscal year 2012 ("fiscal year at issue").
	Commissioner Rose heard these appeals.  Chairman Hammond and Commissioners Scharaffa, Mulhern and Chmielinski joined him in the decision 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.

	Joel E. Faller, Esq. and Arnold W. Hunnewell, Jr., Esq. for the appellant.

	Yvonne Remillard, Director of Assessing for the appellee.
FINDINGS OF FACT AND REPORT
Based on the testimony and exhibits offered into evidence at the hearing of these appeals, the Appellate Tax Board ("Board") made the following findings of fact. 
I. Jurisdiction & Description
On January 1, 2011, the relevant date of assessment for the fiscal year at issue, the appellant was the assessed owner of two contiguous parcels of real estate located at 134 Farm Road and 134A Farm Road (collectively "subject properties") in Sherborn.  The appellant purchased the subject properties, together with a 0.75-acre parcel not at issue in these appeals, for $7,500,000 on August 1, 2008.  
For fiscal year 2012, the assessors valued 134 Farm Road and 134A Farm Road at $4,737,000 and $1,346,600, respectively, and assessed taxes thereon at the rate of $18.22 per thousand, in the corresponding amounts of $86,308.14 and $24,535.04.  The Sherborn Collector of Taxes mailed the fiscal year 2012 tax bills on September 19, 2011.  In accordance with G.L. c. 59, § 57, the appellant timely paid the taxes assessed without incurring interest.  On October 25, 2011, in accordance with G.L. c. 59, § 59, the appellant timely filed Applications for Abatement with the assessors.  The assessors denied the appellant's abatement applications on January 11, 2012.  On April 10, 2012, in accordance with G.L. c. 59, §§ 64 and 65, the appellant seasonably filed his appeals with the Board.  On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide these appeals.
Sherborn is a small rural community, approximately 16.20 square miles, located about 18 miles southwest of Boston with a population slightly more than four thousand people.  The town has a very limited amount of commercial and industrial property, but its open space comprises more than 50% of the town's area.  The town is known for its excellent school system, which it shares with the town of Dover, high property values, horse farms and open land.  In addition to Dover, Sherborn is bordered by the towns of Natick, Framingham, Ashland, Millis, Holliston and Medfield.  Sherborn is considered a very desirable bedroom community.  
The subject property is part of a 12.24-acre estate of gently sloping land that abuts Farm Pond and is located in the most desirable part of Sherborn.  The estate is one of only thirty properties that surround the 124-acre glacier-formed recreational pond.  Situated on the Natick/Dover side of Sherborn, the subject properties are located close to schools, the town center and natural amenities.  The subject properties boast extreme privacy, spectacular views and direct water access via 134 Farm Road.  The subject properties are bordered on the south by Farm Pond, on the east by an abutting 9.15-acre estate, on the west by an abutting neighbor (5.58 acres), and on the north by two estate properties, Charlescote Farm (168+ acres) and the Massachusetts Audubon Society (277+ acres).     
134 Farm Road, which is identified for assessing purposes as Map 15, Lot 15E on the assessors' map, is a 4.74-acre waterfront parcel of land improved with a two-story, custom-built, arts-and-crafts style home built in 2000.  The home is set to the rear of the parcel, allowing for dramatic views of the water and privacy from the street.  The dwelling has a total of twelve rooms, including five bedrooms, as well as four full bathrooms, two half bathrooms and one three-fourth bathroom, with a total living area of 7,887 square feet.  The first floor of the home features: a double-door entry into the foyer; a formal dining room; a chef's kitchen wing, with an adjoining butler's pantry and also a family room with a floor-to-ceiling stone fireplace; a formal living room with a cathedral ceiling; and a billiards room with a wet bar.  Interior finishes include cherry-wood floors and woodwork, tray ceilings, and custom crown and base moldings.
Other amenities include:  a three-car attached garage; two additional fireplaces; a home theater; a meditation room; a fitness room; a wine cellar; an in-ground pool and a cabana with bath; a private beach, a dock and patio area; a central vacuum system; an alarm system; and a lawn sprinkler system.  There is also a screened-porch with built-in grill and refrigerator.  The exterior of the dwelling is a mix of wood-shingle and fieldstone, with an asphalt-shingled gable roof.  
134A Farm Road, which is identified for assessing purposes as Map 15, Lot 5F on the assessors' map, is a 6.75-acre, irregularly-shaped parcel of land, with approximately 2.58 acres of wetlands.  The parcel is improved with a large barn and attached guest house.  These improvements are located closer to the front of the parcel but are still situated far enough from the road to provide considerable privacy.
The barn portion of the improvement contains a two-car garage, which is at grade level with the guest house, and also four stables, an office and a full bathroom all of which are located in the lower level.  The guest house, which is attached to the garage, has a total of five rooms, including one bedroom and also one full bathroom.  There is additional finished space for two bedrooms. Other amenities include a screened-porch, a greenhouse, an open porch, and a central vacuum system.  Located on the parcel is a dry hydrant which would allow firefighters to pump water from the pond in the case of a fire on either of the subject properties.  The exterior of the structure is wood-shingled, with an asphalt-shingled gable roof.  
Both structures are heated by a hydro-air heating system fueled by oil and also include central air conditioning.  The subject properties are serviced by private water and sewer systems.  
At the time the appellant purchased the subject properties, the parcels were subject to certain conditions and limitations set forth in a Subdivision Plan ("Plan") created by the previous owner, Cynthia Margolis.  The intent of the original subdivision was to allow Ms. Margolis to build an accessory apartment with 1,500 square feet, for her parents, which is in excess of the 800 square-feet allowed by Sherborn Zoning By-Laws.  In return, Ms. Margolis voluntarily limited the transfer and usage of the subject properties. 
Pursuant to the Plan, as last modified on June 25, 2003, the subject properties were subject to the following limitations:  (1) all lots were to be maintained in common ownership; (2) 134 Farm Road was limited to no more than one dwelling unit; (3) 134A Farm Road was limited to a single-family dwelling with a living area no greater than 1,500 square feet; and, (4) occupancy of 134A Farm Road was limited to blood relatives of the owners of 134 Farm Road, a  caretaker of the property or other domestic employee, or persons qualifying as low or moderate income tenants under state law.  Additionally, the property owner could still seek approval to add an 800-square foot apartment, as allowed by Sherborn Zoning By-laws, on 134A Farm Road but not on 134 Farm Road.  
II. Appellant's Case-in-Chief 
The appellant presented its case-in-chief through the testimony and appraisal reports of William F. Curley, a certified appraiser whom the Board qualified as an expert in the area of real estate valuation.  Mr. Curley testified that the subject properties are very much "married" to one another and that the highest and best use of 134 Farm Road was as a single-family residence, and that the highest and best use of 134A Farm Road was as an ancillary component. Because the two lots were classified by the assessors as two separate independent single family residences, Mr. Curley valued them as such in his appraisal reports.  

To arrive at his estimate of value for 134 Farm Road, Mr. Curley relied on the sales of three purportedly comparable properties in Sherborn that sold between February 26, 2010 and May 29, 2012.  His first purportedly comparable sale, 137 Forest Street, was a 4.9-acre waterfront parcel, located on the opposite side of Farm Pond, which was improved with a single-family dwelling with a finished living area of 7,165 square feet.  Additional amenities included an 800-square-foot guest house which may only be occupied by family and may never be rented.  This property sold on May 15, 2012 for $3,400,000.  
Mr. Curley's second sale was 122 Farm Road, which was a 5.58-acre waterfront parcel located adjacent to the subject properties and improved with a single-family home, built in 1983, with a finished living area of 4,850 square feet.  Additional structures include a detached-garage, a barn, a tennis court, and a changing house near the water.  This property sold on February 26, 2010 for $3,925,000.  At the time of sale the property was not on the market. 
Mr. Curley's final sale was 214 Farm Road, which was a 9.2-acre waterfront parcel improved with a single-family dwelling built circa 1958 with a finished living area of 4,015 square feet.  This property sold on June 29, 2012 for $1,650,000.   
Mr. Curley testified that the although the property located at 137 Forest Street was the better comparable in terms of quality and amenities, he determined that the sale of the property located at 122 Farm Road represented the upper limit for what a purchaser would pay for the subject properties.  Therefore, Mr. Curley determined that the subject properties' fair market value for the fiscal year at issue was $3,925,000.
Mr. Curley testified that $3,925,000 represented the value of the subject properties combined and that because the two properties were not independently transferable, a portion of the total value was attributable to each.  To arrive at a value attributable to 134A Farm Road, Mr. Curley reviewed the affordable housing guidelines established by the U.S. and Massachusetts Departments of Housing and Urban Development, and determined that the allowable low-income rent for a two-bedroom apartment in the town of Sherborn was $710 per month.  He then carried that amount through the economic life of the building and concluded that 134A Farm Road had a contributory value of $125,000.00.  Mr. Curley did not take into consideration any contributory value that may have been derived from the horse stalls. 
On cross-examination Mr. Curley testified that because of the limitations imposed on the subject properties, notably that they cannot be sold separately and that the use of 134A Farm Road is limited, in his opinion, the subject properties were misclassified as two separate Class 101 single family residences.  Instead, Mr. Curley suggested that the two parcels be treated as a single entity and classified and assessed as a Class 109 estate property.  Despite his assertion, Mr. Curley admittedly did not analyze any estate sales in his analysis.  
Mr. Curley further testified on cross-examination that "ordinarily appraisers make numerical adjustments in their comparable-sales analysis."  However, with respect to the purportedly comparable properties used in his comparable-sales analysis for 134 Farm Road, Mr. Curley testified that "I can offer my opinion that it is either superior or inferior, but I can't make a numerical adjustment." 
III. Assessors' Case-in-Chief 
In support of their assessments, the assessors relied primarily on the testimony of Yvonne Remillard, Director of Assessing for Sherborn.  The assessors also introduced into evidence the requisite jurisdictional documentation; the assessors' maps, plot plans and aerial maps of the subject properties; comparison photographs of 134 Farm Road and 122 Farm Road; building plans for 134A Farm Road; and the Plan Modification dated June 25, 2003.  
Ms. Remillard testified that Mr. Curley's analyses were flawed for several reasons.  First and foremost, Ms. Remillard noted that while the Plan appears to impose limitations on the subject properties, the limitations were actually self-imposed restrictions, by the previous owner, calculated to create an estate.   Therefore, she argued, Mr. Curley should have used similar estate-type properties in his sales-comparison analysis.
Ms. Remillard also argued that just because the property located at 122 Farm Road had the highest selling price of Mr. Curley's three purportedly comparable properties, does not mean that the sale represents the fair market value of 134 Farm Road.  Ms. Remillard noted that there were substantial differences between the two properties, including their ages, sizes, amenities, lack of an attached garage, lack of beach frontage, and overall curb appeal.  Despite these disparities, she noted that Mr. Curley failed to make any numerical adjustments in his sales-comparison analysis.  Ms. Remillard testified that if she had applied appropriate adjustments to 122 Farm Road, she would have calculated an adjusted sale price of $5,027,008.
	Lastly, Ms. Remillard questioned Mr. Curley's use of an income-capitalization analysis to value 134A Farm Road and also his calculations.  She noted that Sherborn is 96% residential and maintained that a potential buyer is not going to purchase the subject properties to rent one of them to low- or moderate-income individuals.  Assuming arguendo that 134A Farm Road should be valued using the income-capitalization method, Ms. Remillard questioned Mr. Curley's rental income of $710 per month.  She testified that the median income in Sherborn is about $97,000 per year and therefore, using the same federal and state mathematical guidelines used by Mr. Curley, the more probable rent would be $1,711 per month.  Furthermore, Ms. Remillard questioned why Mr. Curley did not include in his analysis any rental income that could be derived from renting the horse stalls, which she testified approaches $1,000 per stall per month.
IV. Conclusion
On the basis of all of the evidence and its subsidiary findings, the Board ultimately found that the appellant failed to meet his burden of proving that the subject properties were overvalued.  First, the Board found that the subject properties' highest and best use was, as combined, part of a large waterfront estate-type property improved with a single-family residence with a large guest-house and stables.  The Board found that this highest and best use was legally permissible, physically possible, financially feasible, and maximally productive. 
In making this decision, the Board credited both Mr. Curley's and Ms. Remillard's testimony and opinion in this regard, as well as its own evaluation of the evidence, including photographs of the subject properties, maps of the subject properties and the neighborhood, and descriptions of the subject properties.  The Board's determination of highest and best use was also based on the limitation, of which the appellant was aware at the time of purchase, that the subject properties be maintained in common ownership. 
The Board, therefore, found that Mr. Curley's use of a sales-comparison method to value 134 Farm Road coupled with an income-capitalization analysis to value 134A Farm Road was erroneous.  Instead, the Board found that the appropriate method to value the subject properties was a comparison to other similarly situated estate-type residential properties.  Moreover, the Board found that the 122 Farm Road comparable sale property that Mr. Curley relied on in his comparable sales analysis was not comparable enough to the subject properties to provide any indication of the value of 134 Farm Road.  This purportedly comparable property was sixteen years older than the subject property and had not been significantly renovated, had approximately 40% less living area, did not have the high-end finishes and amenities of the subject property, and lacked the overall appeal of 134 Farm Road.  Despite these significant differences, Mr. Curley made no adjustments to the sale price in arriving at his opinion of fair market value.    
On this basis, the Board found that the appellant failed to meet his burden of proving that the subject properties were overvalued for the fiscal year at issue.  Accordingly, the Board decided these appeals for the appellee. 
  
OPINION
The assessors are required to assess real estate at its fair cash value.  G.L. c. 59, §§ 11 and 38; Coomey v. Assessors of Sandwich, 367 Mass. 836, 837 (1975).  Fair cash value is defined as the price on which a willing buyer and a willing seller will agree if both are fully informed and under no compulsion. Boston Gas. Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).  Fair cash value, therefore, means fair market value.  Id.	 
"[T]he Board is entitled to 'presume that the valuation made by the assessors [is] valid unless the taxpayers ... prov[e] to the contrary.'"  General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 598 (1984)(quoting Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974)).  Accordingly, the appellant has the burden of proving that the subject properties have a lower value than that assessed.  "The burden of proof is upon the taxpayer to make out a right to an abatement."  Schlaiker, 365 Mass. at 245 (quoting Judson Freight Forwarding Co. v. Commonwealth, 242 Mass. 47, 55 (1922)).  The appellant must show that the assessed valuation of its 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)).  In these appeals, the appellant attempted to demonstrate overvaluation "'by introducing affirmative evidence of value which undermined the assessors' valuation.'"  Id.  
"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, Mass. 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 . . . 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. Assessors of Framingham, Mass. 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. Assessors of Boston, 345 Mass. 494, 504 (1963); Boston Gas Co., 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 277-81 (13th ed., 2008); see also Skyline Homes, Inc. v. Commonwealth, 362 Mass. 684, 687 (1972);  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 appeals, the appellant's real estate valuation expert testified that the subject properties operated as a single entity and were very much "married" to one another.  In his analysis, however, he concluded that 134 Farm Road's highest and best use was as a single family and that 134A Farm Road's highest and best use was as an ancillary parcel.  Although classified, for assessment purposes, as two single-family residences, the assessors determined that the subject properties' highest and best use was as an estate.  After considering all of the evidence, the Board agreed with the assessors and found and ruled that the subject properties' highest and best use was as a large waterfront estate improved with a single-family dwelling, a large guest house and stables.  
Generally, real estate valuation experts, the Massachusetts courts, and this Board rely upon three approaches to determine the fair cash value of property:  income capitalization, sales comparison, and cost 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).  In these appeals, the appellants' real estate valuation expert valued the two parcels separately and used a sales-comparison analysis to value 134 Farm Road coupled with an income-capitalization analysis to value 134A Farm Road.  Based on the Board's finding that the subject properties' highest and best use was to combine them as part of a large waterfront estate property with a single-family residence with a large guest-house and stables, the Board gave little credence to Mr. Curley's analyses.  
"The board [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 afd the board."  Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977).

Based on all of the evidence presented, the Board found and ruled that the appellant failed to meet his burden of proving that the subject properties were overvalued for the fiscal year at issue.  Accordingly, the Board issued a decision for the appellee in these appeals.

					    THE APPELLATE TAX BOARD


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


A true copy,


Attest: ____________________________
	       Clerk of the Board

ATB 2014-838