Marc Oliver Middleton v. Board of Assessors of the City of Lowell (August 9, 2016)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


MARC OLIVER MIDDLETON 	   v.	   BOARD OF ASSESSORS OF   
							   THE CITY OF LOWELL
						         
Docket No. F324693				   Promulgated:									   August 9, 2016


	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 City of Lowell ("appellee" or "assessors") to abate taxes on certain real estate in Lowell, owned by and assessed to Marc Oliver Middleton (the "appellant") under G.L. c. 59, §§ 11 and 38, for fiscal year 2014 ("fiscal year at issue").  
	Commissioner Rose heard this appeal and, in accordance with G.L. c. 58A, § 1A and 831 CMR 1.20, he issued a single-member decision for the appellant.  
	These findings of fact and report are made pursuant to the request under G.L. c. 58A, § 13 and 831 CMR 1.32 of the appellant.  

	Marc Oliver Middleton, Esq. for the appellant.
	
Elliot Veloso, Esq. for the appellee. 



Findings of Fact and Report

On January 1, 2013, the relevant assessment date for the fiscal year at issue, the appellant was the owner of a single condominium unit with an address of 219 Central Street, Unit 1D in Lowell (the "subject property").  For the fiscal year at issue, the assessors valued the subject property at $114,200 and assessed a tax thereon, at the rate of $31.75 per thousand, in the total amount of $3,625.85. The appellant paid the tax due without incurring interest. On January 14, 2014, in accordance with G.L. c.  59, § 59, the appellant timely filed an abatement application for the subject property with the assessors, which they granted in part, reducing the valuation of the subject property to $61,400.00. In accordance with G.L. c. 59, §§ 64 and 65, the appellants seasonably filed a Petition with the Appellate Tax Board ("Board") on July 9, 2014.  On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide the appeal for fiscal year 2014.
The subject property is a one-unit, 620-square-foot commercial condominium that is used for office space.  The subject property is store-front property and has a direct exit to the street as well as a second means of egress to an adjacent hall with access to the street.  The subject property is comprised of open space with half walls that are used to create a conference room and two small offices. 
The appellant had previously sought and obtained abatements for the subject property's assessments.  For fiscal year 2012, the appellant filed an abatement request with the appellee, and the appellee in response reduced the assessment for that fiscal year from $121,100 down to $65,000.  For the subsequent year, fiscal year 2013, the appellee again assessed the subject property at $121,100.  After the appellant filed an abatement application, the appellee reduced the subject property's fiscal year 2013 assessment down to $50,000.  
The appellant presented its appeal through his testimony as well as his comparable-sales analysis consisting of twelve purportedly comparable condominium sales in Lowell.  Mr. Middleton testified that he purchased the subject property in December of 2011 for $33,000.  He then pointed out other condominium units within the 219 Central Street building that had sold, including 2 sales of Unit 1F.  However, he testified that the appellee had "coded out" -- meaning excluded from consideration for purposes of making a fair market value determination -- all sales within the 219 Central Street building that had occurred prior to February 2013, because the appellee had determined that these sales were not negotiated at arm's length.  Mr. Middleton testified that the assessors gave him no reason for why they had deemed these sales not to be reasonable reflections of the subject property's fair market value other than their bare assertion that these sales were "coded out." 
The appellant then presented a comparable-sales analysis, which was also introduced in Lassard v. Assessors of Lowell, Mass. ATB Findings of Fact and Reports, 2016-329) and (GRL Realty Trust v. Assessors of Lowell, Mass. ATB Findings of Fact and Reports, 2016-347.  The Board found that this evidence "showed a widespread occurrence of assessed values vastly exceeding actual sale prices." Lessard v. Assessors of Lowell, Mass. ATB Findings of Fact and Reports, 2016-329, 331; GRL Realty Trust v. Assessors of Lowell, Mass. ATB Findings of Fact and Reports, 2016-347, 350. 
The appellee presented jurisdictional documents as well as the testimony of Joel Cohen, the assessor for the City of Lowell.  Mr. Cohen testified that the sale of the units within the subject property's building were "coded out" because the seller was in the process of a divorce proceeding during the times of the sales prior to February of 2013, suggesting to the appellee that the seller made these sales under financial duress.  To rebut this evidence, the appellant offered testimony that his purchase of the subject property was negotiated at arm's length and that during the negotiations process, the appellant perceived no pressure on the seller based on personal, financial or any other circumstances.  The Presiding Commissioner found the appellant's testimony to be credible on this issue and that the assessors offered no credible evidence to support their assertion that the sales were not made at arm's length. 
On the basis of the evidence presented, the Presiding Commissioner found the sale of the subject property to the appellant and the paired sales of Unit 1F in the subject property provided credible and persuasive evidence of the subject property's fair market value.  Unit 1F in the subject property sold for $30,000 in November, 2011, approximately one month before the appellant purchased the subject property for $33,000.  Unit 1F was then re-sold in February, 2013, for $40,000 just one month after the relevant assessment date for this appeal.  Accordingly, on the basis of all of the evidence of record, particularly the sale of the subject property and the paired sales of Unit 1F, the Presiding Commissioner found and ruled that the appellant met his burden of proving that his property was overvalued and that its fair cash value for the fiscal year at issue was $45,000.
Accordingly, the Presiding Commissioner issued a single-member decision for the appellant and granted an abatement in the amount of $520.70.

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 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 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 instant appeal, the appellant relied in part on the subject property's November 11, 2011 purchase price of $33,000 as evidence of the subject property's overvaluation.  Actual sales of the subject property generally provide "very strong evidence of fair market value, for they represent what a buyer has been willing to pay to a seller for [the] particular property [under appeal]."  New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469 (1981), (quoting First National Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971)).  However, circumstances may significantly diminish the evidentiary weight accorded to the sale of the subject.  See Foxboro Associates v. Assessors of Foxborough, 385  Mass. 679, 682-83 (1982).  "[T]he evidentiary value of . . . sales in less than arm's-length transactions is diminished."  New Boston Garden Corp., 383 Mass. at 469 (quoting Jordan Marsh Co. v. Assessors of Malden, 359 Mass. 106, 108 (1971)).  Therefore, the circumstances surrounding actual sales of the subject property must be examined.  See Pepsi-Cola Bottling Co. v. Assessors of Boston, 397 Mass. 447, 449 (1986).  The burden of proof that a sale price was fixed fairly rests with the proponent of the sale.  See Epstein v. Boston Housing Authority, 317 Mass. 297, 300-01 (1944).  
The Supreme Judicial Court has "given a narrow definition to the 'compulsion' that requires exclusion of evidence of a sale."  The Westwood Group, Inc. v. Assessors of Revere, 391 Mass. 1012, 1013 (1984) (citing United-Carr, Inc. v. Cambridge Redevelopment Auth., 362 Mass. 597, 600 (1972)).  See, e.g., Kane v. Assessors of Topsfield, Mass. ATB Findings of Fact and Reports 2000-409, 413 (upholding a sale where "the record failed, by any standard, to demonstrate duress or compulsion on the part of the seller").  In the instant appeal, the Presiding Commissioner found credible the appellant's testimony on the circumstances surrounding the negotiations between him and the seller that culminated in the sale of the subject property.  See Lorusso v. Board of Concord, Mass. ATB Findings of Fact and Reports 2016-257, 276 (finding "[taxpayer's] testimony concerning the lengthy negotiation process, which the Board found credible, contradicted any suggestion that the sale was made with an imbalance of bargaining from either side and therefore not at arm's length").  The Presiding Commissioner thus found that the record failed to demonstrate duress or compulsion associated with that sale.  Accordingly, the Presiding Commissioner found and ruled that the price which the appellant paid for the subject property on December 14, 2011 constituted relevant evidence of the value of the subject property as of the relevant assessment date.
However, while the Presiding Commissioner found the sale of the subject to be relevant evidence of its fair market value, the Board is also guided by the principle that a "single sale does not necessarily reflect market value."  Appraisal Institute, The Appraisal of Real Estate 317 (13th ed. 2008).  General Laws c. 58A, § 12B provides, in pertinent part, that "at any hearing relative to the assessed fair cash valuation or classification of property, evidence as to fair cash valuation or classification of property at which assessors have assessed other property of a comparable nature or class shall be admissible."  The Presiding Commissioner thus looked to sales of other comparable property in the subject property's relevant market area.  "[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, 385 Mass. at 682.  See also 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) (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).  
In particular, the Presiding Commissioner looked to the evidence of the paired sale of Unit 1F, which was located within the subject property's same building and was highly comparable to the subject property.  The $40,000 sale of Unit 1F about a month after the relevant assessment date, as well as the sale of the same unit in November of 2011 for $30,000 constituted persuasive evidence to support the conclusion that that the appellant met his burden of proving a fair market value for the subject property that was lower than its assessed value.  On the basis of the evidence of record, particularly the sale prices of the subject property and Units 1F, the Presiding Commissioner found and ruled that the subject property's fair cash value for the fiscal year at issue was $45,000.
Accordingly, the Presiding Commissioner issued a single-member decision for the appellant and granted an abatement in the amount of $520.70.

					    THE APPELLATE TAX BOARD


				  	By: ________________________________
				         James D. Rose, Commissioner



A true copy,


Attest: ____________________________
	    Clerk of the Board

 In addition to the instant appeal involving the subject property, the Presiding Commissioner also heard on the same day appeals involving two other commercial condominium units in the same building: Unit 1B (Lassard v. Assessors of Lowell, Mass. ATB Findings of Fact and Reports, 2016-329) and Unit 1E (GRL Realty Trust v. Assessors of Lowell, Mass. ATB Findings of Fact and Reports, 2016-347). The appeals were tried together and, with minor variations in the size and assessed values of the units, the evidence and operative facts are essentially the same in all three appeals.

ATB 2016-336