PAC Realty Trust v. Board of Assessors of the City of New Bedford (January 30, 2001)

COMMONWEALTH OF MASSACHUSETTS
APPELLATE TAX BOARD
  
 
PAC REALTY TRUST	          v.     BOARD OF ASSESSORS OF 
			      THE CITY OF NEW BEDFORD

Docket No. F225623  		 	Promulgated:
							January 30, 2001


	This is an appeal under the formal procedure, pursuant to G.L. c. 59, §§ 64 and 65, from the refusal of the appellee to abate taxes on certain real estate in the City of New Bedford owned by and assessed to the appellant under G.L. c. 59, § 38, for fiscal year 1995. 
	Commissioner Burns heard this appeal.  Former Chairman Gurge, Commissioner Scharaffa, and former Commissioners O'Brien and Lomans joined her in the decision for the appellant.
	These findings of fact and report are made pursuant to a request made by the appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.

	Vincent P. Chesarone, pro se, for the appellant.

Burton Peltz, Esq. for the appellee.

FINDINGS OF FACT AND REPORT
On January 1, 1994, the appellant was the assessed owner of a parcel of commercial real estate in New Bedford.  At all relevant times, the subject property consisted of approximately 21,083 square feet of land that was improved with a sixty-year-old 19,000-square-foot cement-block building, the interior of which was fitted out for use as a liquor store.  The interior of the building was finished with a dropped ceiling, plywood paneling, and painted cement blocks, all of which showed signs of deferred maintenance.  The property also contained a significant amount of unfinished storage space.  There was parking for approximately twelve automobiles adjacent to the building.      
In fiscal year 1995, the Board of Assessors of the City of New Bedford ("Assessors") valued the property at $644,300 and assessed a tax thereon at the rate of $26.05 per thousand in the amount of $16,784.02.  The appellant timely paid the quarterly installments of the tax.  On January 18, 1995, the appellant timely filed an application for abatement with the Assessors within thirty days of the
sending of the tax bill.  On March 25, 1995, the Assessors granted the appellant a partial abatement and lowered the assessed value of the subject property to $628,400.  The appellant seasonably appealed the revised assessment to the Appellate Tax Board ("Board") on May 2, 1995.  On this basis, the Board found that it had jurisdiction to hear and decide this appeal.
According to a corporate deed from Vermette Enterprises, Inc. to PAC Realty Trust, Vincent P. Chesarone, Trustee, the appellant purchased the property on November 30, 1992 for $650,000 plus any outstanding real estate and personal property taxes for fiscal year 1993.  However, Mr. Chesarone testified that he actually purchased the subject property, which is comprised of the building and land plus a liquor business, for a total cost of $1,000,000.  He further testified that, initially, the parties to the sale had agreed to allocate approximately $350,000 to the real estate and $650,000 to the business, inventory, personal property, licenses, and fixtures.  However, after considering certain depreciation and amortization issues and the mortgagee's requirements for a loan, the parties changed the allocation to $650,000 for the real estate and $350,000 for all of the rest.  Mr. Chesarone testified that he provided the mortgagee with additional collateral, above and beyond the subject property and certain business assets, for the loan.  At the hearing, Mr. Chesarone lamented that he had overpaid for the property and business.  He believed that the subject property was only worth about $350,000 to $400,000.    
Robert M. Hunt, a licensed real estate broker and former New Bedford assessor also testified for the appellant.  He and Mr. Chesarone introduced documentation and pictures to demonstrate that the interior of the building was in poor condition.  This evidence revealed that the property suffered from serious water damage and associated problems that adversely affected its appearance and value, and possibly its structure.  Moreover, Mr. Hunt introduced sales and assessment analyses of ten commercial properties in New Bedford that demonstrated significantly lower per-square-foot-values for those properties than that attributable to the subject property.  The Board found that several of these properties, particularly the ones located on Rockdale and Acushnet Avenues, were reasonably comparable to the subject.  Mr. Hunt also testified in response to a question during cross-examination that the New Bedford commercial real estate market was in decline from the time of the sale to the relevant assessment date.
The Assessors did not present any witnesses or testimony at the hearing of this appeal.  They simply relied on the $650,000 purchase price recited in the November, 1992 deed as the best evidence of the property's value on January 1, 1994.      
On this basis the Board determined that the appellant met his burden in proving that his property was overvalued in fiscal year 1995.  The Board found that the Assessors did not adequately account for the water problems at the subject property despite the reduction in their assessment in response to the appellant's application for abatement.  In addition, the Board found that the appellant's comparable sales analysis revealed that the sale price recited on the deed was an excessive amount to allocate to the subject property when compared to the per-square-foot sale prices of reasonably comparable commercial buildings.  A further comparison of the comparable buildings' per-square-foot assessments to the subject's per-square-foot assessment similarly supported the Board's determination in this regard, as did Mr. Hunt's testimony that the New Bedford commercial real estate market was in decline from the date of the sale to the relevant assessment date.  
Relying on these findings, the Board found that the fair cash value of the subject property on January 1, 1994 was $580,000 and, therefore, decided this appeal for the appellant granting an abatement in the amount $1,260.82.  For the same reasons and because the Board gave appropriate weight to the November 30, 1992 sale of the subject property, the Board also denied the Assessors' post-decision "Motion to Reconsider Decision" that was premised on the Board's purported failure "to give full credence to the deed dated November 30, 1992 to the Appellant which recited a consideration paid of $650,000."  

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 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).  
"[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. Board of Assessors of Foxborough, 385 Mass. 679, 682 (1982).  Actual sales of the subject "are 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. Board of Assessors of Boston, 383 Mass. 456, 469 (1981), quoting First Nat'l Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971).  However, the consideration stated on the deed may not always be the best evidence of a property's fair cash value at any given instance.  See Halstead v. Assessors of Wales, 24 Mass. App. Tax Bd. Rep. 122, 125 (1988), and the cases cited therein.    
In this appeal, the Board found and ruled that the consideration associated with the November, 1992 sale of the subject property, while relevant, exceeded the fair cash value of the subject property on the January 1, 1994, assessment date.  The Board also found and ruled that the sale price resulted from an allocation recommended by the buyer's mortgagee, and it did not necessarily represent the property's fair cash value.    Cf. The Westwood Group, Inc. v. Board of Assessors of Revere, 391 Mass. 1012, 1013 (1984), citing United-Carr, Inc. v. Cambridge Redevelopment Auth., 362 Mass. 597, 600 (1972); Foxboro Associates v. Board of Assessors of Foxborough, 385 Mass. at 682-83.  In addition, using a comparable-sales analysis that compared the square-foot-values of reasonably comparable buildings, including land, to the square-foot-value of the subject property's building, including land, as determined by the assessment, the Board found that the subject was overvalued.  Moreover, the Board found that the Assessors did not adequately account for water damage to the property.  Finally, the appellant's real estate appraiser testified that the New Bedford commercial real estate market was in decline during the relevant time period.  This depreciating market rendered the consideration for the more than one-year-old sale of the subject property excessive for assessment purposes.  On this basis, the Board found and ruled that the property was overvalued.     
In reaching its opinion of fair cash value, the Board was not required to believe the testimony of any particular witness or to adopt any particular method of valuation that a witness suggested.  Rather, the Board could accept those portions of the evidence that the Board determined had more convincing weight.  Foxboro Associates v. Board of Assessors of Foxborough, 385 Mass. at 683; New Boston Garden Corp. v. Assessors of Boston, 383 Mass. at 473; Board of Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 701-702 (1972).  An owner of property is entitled to express his opinion of its value during the relevant time period if he is experienced in dealing with the property, is familiar with its characteristics, and recognizes its proper uses or potential uses.  Menici v. Orton Crane & Shovel Co., 285 Mass. 499, 503-504 (1934), and the cases cited therein.  Accord Correia v. New Bedford Redevelopment Authority, 5 Mass. App. Ct. 289, 295 (1977), rev'd on other grounds, 375 Mass. 360 (1978).  In this appeal, the Board found and ruled that the appellant possessed the requisite familiarity, knowledge, and experience about his property, as well as the circumstances surrounding his purchase of it, to express meaningfully his opinion of its value.  Accordingly, and in conjunction with the other evidence that he presented, the Board considered his opinion of the subject's value.  
In evaluating the evidence before it in this appeal, the Board selected among the various elements of value and formed its own independent judgment of fair cash value.  See General Electric v. Assessors of Lynn, 393 Mass. 591, 605 (1984); North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass 296, 300 (1984).
The Board need not specify the exact manner in which it arrived at its valuation.  Jordan Marsh v. Assessors of Malden, 359 Mass. 196, 110 (1971).  The fair cash value of property cannot be proven with "mathematical certainty and must ultimately rest in the realm of opinion, estimate and judgment."  Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 72 (1941).  "The credibility of witnesses, the weight of evidence, the inferences to be drawn from the evidence are matters for the [B]oard."   Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977). 
The burden of proof is upon the appellant to make out his right as a matter of law to an abatement of the tax.  Schlaiker v. Board of Assessors of Great Barrington, 365 Mass. 243, 245 (1974).  The appellant must show that the assessed valuation of his property was improper.  See Foxboro Associates v. Board of Assessors of Foxborough, 385 Mass. at 691. The assessment is presumed valid until the taxpayer sustains his burden of proving otherwise.  Schlaiker v. Board of Assessors of Great Barrington, 365 Mass. at 245.  With respect to the sale price recited in the deed, the burden of proof that the price was fixed fairly, and not in some other way, rests with the proponent of the sale; but there is a rebuttable presumption that the price was freely established.  See Epstein v. Boston Housing Auth., 317 Mass. 297, 300-01 (1944).  The Board ruled in this appeal that the so-called presumption was successfully rebutted, and the appellant met his burden in this regard.  In addition, circumstances may significantly diminish the evidentiary weight accorded to the sale of the subject.  See Foxboro Associates v. Board of Assessors of Foxborough, 385 Mass. 682-83.  The Board found and ruled that such circumstances existed with respect to the sale of the subject property in this appeal.
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. v. Assessors of Lynn, 393 Mass. at 600, quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983).  In the present appeal, the Board ruled that the appellant prevailed by introducing relevant, credible, affirmative, and substantial evidence.    
The Board applied these principles in reaching its opinion of fair cash value of the subject property in this appeal.  On this basis, the Board found and ruled that the value of the property was $580,000 for fiscal year 1995 and thus decided that the subject was overvalued in the amount of $48,400.  The Board, therefore, granted the appellant an abatement of the real estate tax for fiscal year 1995 in the amount of $1,260.82.  As discussed in its findings above and in further consideration of its rulings, the Board denied the Assessors' post-decision "Motion to Reconsider Decision."

    						  THE APPELLATE TAX BOARD
 


 				By: ___________________________
  Abigail A. Burns, Chairman
A true copy,




Attest: ______________________
Clerk of the Board

 At all relevant times, Vincent P. Chesarone was the trustee of the trust. 
 The record reveals a slight discrepancy regarding the size of the three parcels that comprise the subject's land area.  The square footage found by the Board is based on the area of the three parcels recited in the deed.  The Assessors' property record card estimates the land area at 21,007 square feet.  The appellant testified that the land area is 19,309 square feet.  
 There is no evidence that the appellant paid any real estate or personal property taxes in this regard.  Nor is there any evidence regarding any outstanding amounts of these taxes.  Accordingly, the Board did not consider them as part of the purchase price of the subject property.  
 Using property record cards and deeds that were supplied by Mr. Hunt, the Board made a similar determination by comparing his comparable buildings' square-foot values to the subject property's building's square-foot value based on its sale price recited in the deed and its assessment. 

ATB 2001 - 108