Braintree Real Estate Management Co., LLC v. Board of Assessors of the Town of Braintree (August 18, 2005)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



BRAINTREE REAL ESTATE     v.		BOARD OF ASSESSORS OF
MANAGEMENT CO., LLC				THE TOWN OF BRAINTREE

Docket No. F264840				Promulgated:
							August 18, 2005	


	This is an appeal filed under the formal procedure for fiscal year 2002 pursuant to G.L. c. 59, §§ 64 and 65, from the refusal of the appellee to abate taxes assessed on real estate located in the Town of Braintree owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38.
	Commissioner Rose heard the appeal and was joined in a Decision for the appellee by Commissioners Scharaffa, Gorton, and Egan.  The Decision was rendered on March 8, 2004.
	These findings of fact and report are promulgated at the request of the appellant pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

	Howard P. Speicher, Esq., William F. Griffin, Jr., Esq., and Neal J. Bingham, Esq. for the appellant.

	Richard P. Bowen, Esq. for the appellee.



FINDINGS OF FACT AND REPORT
On March 29, 2001, Braintree Real Estate Management Co., LLC, ("appellant") purchased a 55.6-acre parcel of unimproved land located in an office park off Columbian Street in the Town of Braintree ("subject property").  As of January 1, 2001, the fiscal year 2002 assessment date, the Board of Assessors of Braintree ("assessors") valued the subject property at $2,815,300 and assessed a real estate tax, at the rate of $23.34 per thousand, in the amount of $65,709.10.   The appellant timely paid the tax.  On January 18, 2002, the appellant timely filed an application for abatement with the assessors.  On March 25, 2002, the assessors denied the application, and, on June 25, 2002, the appellant seasonably filed its appeal with the Appellate Tax Board ("Board").  On the basis of these facts, the Board found that it had jurisdiction to hear and decide this appeal.  The trial in this matter was conducted on September 16, 2003.
	The appellant presented its case-in-chief through the testimony of four witnesses:  Harry P. Keegan, manager of the appellant; David Silverstein, vice president in the special assets group at Citizens Bank; Curtis R. Young, president and senior consultant of Wetlands Preservation Incorporated; and James J. Marotta, certified real estate appraiser.  The appellant also offered into evidence numerous exhibits, including an appraisal report prepared by its real estate valuation expert.  The assessors did not call any witnesses.  On the basis of all the evidence and inferences drawn therefrom, the Board made the following findings of fact.
	The subject property is located along the southwesterly side of Columbian Street and is one of three lots which comprise a development known as Tricon Park.  The subject property, identified as Lot 3, consists of an irregularly shaped parcel containing approximately 55.65 acres of unimproved land.  The site is hilly with a series of short glacial-till and rock ridges, as well as a series of lowlands containing, at a minimum, 18 acres of wetlands.  The upland portions of the site, approximately 37.65 acres, are rocky and contain hardwood forests.  Tricon Park has a total of 79.1 acres of land.  Lot 1 is improved with a 99,432 square-foot office building which is leased to the Massachusetts State Lottery.  Lot 2 is improved with a one-story, 20,600 square-foot building, which is currently owned and occupied by Braintree Laboratories, Inc. ("Braintree Labs").  Harry Keegan, manager of the appellant, is also president and CEO of Braintree Labs.  
Mr. Keegan testified that the appellant and its related entities, including Braintree Labs, have been in the office park as either a tenant or an owner for approximately 16 years.  Mr. Keegan described the subject property as rocky and stony with substantial wetlands.  He noted that it is bordered by residential properties on three sides and commercial use properties on the fourth side.
	Mr. Keegan testified that on June 14, 1995, the properties located in Tricon Park were transferred to Somerset Savings Bank ("Somerset Bank") for consideration of $1.00, in foreclosure.  At that time, Braintree Labs was simply a tenant of the building now occupied by the Lottery.  Consequently, Somerset Bank, as owner of the properties, became Braintree Labs' landlord.  Mr. Keegan then testified that sometime in 1997, he was contacted by a representative of Somerset Bank and asked if the appellant had any interest in purchasing and developing the subject property.  The appellant declined the offer.  Subsequently, Somerset Bank was acquired by USTrust which, in turn, was purchased by Citizens Bank at the end of 2000.  These purchases included several "OREO" properties, defined as other real estate owned, which had been acquired by either USTrust or Somerset Bank, through foreclosure.  
Upon its acquisition of USTrust, Citizens Bank immediately assigned to David Silverstein, vice president in the special assets group, the task of disposing of the newly acquired OREO properties, including the subject property.  Although Mr. Silverstein testified that Citizens Bank was eager to dispose of the subject property, it was not listed with a commercial broker.  Instead, Mr. Silverstein contacted Mr. Keegan, president and CEO of the abutting property tenant, Braintree Labs, to inquire if the appellant had any interest in purchasing the subject property.  He also claimed to have contacted other abutters, several real estate developers in the area, and additional people known to Citizens Bank who may have had an interest in purchasing the subject property or who knew people with an interest in purchasing the subject property.  
On February 27, 2001, Mr. Silverstein submitted to his supervisor, David Brown, a memorandum regarding the sale of the subject property.  In his report, Mr. Silverstein noted that there was an offer from Braintree Labs to purchase the subject property for $1,000,000 and to close within a short period of time.  He also indicated that there was an offer of $1,150,000 from a third party, subject to a 60-day contingency period to allow the purchaser to perform "physical due diligence."  Ultimately, based on the short turn-around time for sale, Braintree Labs' status as a Citizens Bank customer, and Braintree Labs' ownership interest in the abutting property where its company was headquartered, Mr. Silverstein recommended that this offer of $1,000,000 be accepted.  Citizens Bank accepted the offer.  On March 29, 2001, the appellant, an entity controlled by Braintree Labs, purchased the subject property from Citizens Bank for $1,000,000.  
The appellant also offered the testimony of Curtis Young, President and senior consultant of Wetlands Preservation Incorporated.  Mr. Young testified that he has a Bachelor of Science degree in Forestry, a Masters of Science degree in Fishery, and is a member of several professional associations.  Based on his education and experience, the Board qualified Mr. Young as an expert in wetlands evaluation.
The primary focus of Wetlands Preservation is to conduct wetlands delineations and evaluate a property's development potential as a result of the determined wetlands.  In the present appeal, however, Mr. Young was retained by the appellant simply to "look at the property" from the standpoint of the previously reported wetlands, Land Court Plan 23646E, and EOEA maps, and "compare whether there had been any changes, marked changes in the location of wetland resource areas since the earlier delineation."  Also, Mr. Young was asked to determine whether there were significant constraints with regard to the utilization of the land as a result of the wetlands.  
Mr. Young did not conduct a wetlands delineation of the subject property, noting that such an inspection could take several days to complete.  Instead, Mr. Young relied primarily on a review of the subject property's site plans and maps of the Braintree area, including geological maps, flood zone maps, and "Natural Heritage" maps.  After reviewing the map information, Mr. Young made a cursory visit to the subject property, lasting a total of only two-and-one-half hours.  Mr. Young testified that, while at the site, he walked portions of the subject property and drove along two sides of the subject property's perimeter.  Based on his observations, he testified that he was able to determine "where the water was flowing and [in] what direction," and that, "the areas shown on the [existing] site plans and bordering vegetated wetlands were . . . likely accurately shown on the site plans that [he] reviewed."     
In his testimony Mr. Young also noted that Braintree's wetlands bylaw imposes a setback requirement for development and makes additional portions of the subject property unbuildable.  Moreover, the locations of the wetlands cut the parcel into a number of smaller pieces which negatively impacts the property's development opportunities.  Mr. Young did not, however, offer evidence to show how much developable land actually existed on the subject property or how these factors impacted the subject property's fair market value. 
Mr. James J. Marotta, a certified real estate appraiser, also testified for the appellant.  Based on his education and experience, the Board qualified Mr. Marotta as an expert witness in real estate valuation.   Mr. Marotta estimated the value of the subject property using the sales-comparison approach.  He concluded that the subject property's highest and best use would be the eventual development of office space.
In his sales-comparison approach, Mr. Marotta's appraisal report states that he analyzed eight sales of vacant land located in Braintree, Bellingham, Weymouth, Canton, Bridgewater, Norfolk, Marlborough and Boxborough.  The properties ranged in size from 14.03 acres to 142.996 acres.  The sales occurred during the period of July 1997 to November 1999, with unadjusted per-acre-sale prices that ranged from $10,516 to $48,743.   
	Mr. Marotta reported that each sale was a fee simple interest, financed at market terms, and that each was an arm's-length transaction.  Further, "although market conditions have been improving over the last several years, [he] did not consider there to be sufficient information to quantify an adjustment for these differences."  Therefore, Mr. Marotta concluded that no quantitative adjustments were warranted for market conditions. 
Mr. Marotta analyzed the comparable sales for characteristics considered to have an impact on value including location, size, and site utility.  Again, he considered there to be insufficient information to quantify adjustments for these characteristics.  Instead, he used the following "Qualitative Analysis Grid" to determine each property's overall comparability to the subject property.
Comparable	Location	Price	Size (acres)	Utility	Permits	Comparability	$/Unit	
Canton 
   (#4)	Superior	$  950,000	19.49+/-	Superior	None	Superior	$48,743	
Marlborough    
   (#7)	Superior	$2,900,000	61+/-	Superior	Partial	Superior	$47,541	
Weymouth 
   (#3)	Similar	$  525,000	14.03+/-	Superior	None	Superior	$37,420
	
Norfolk 
   (#6)	Similar	$1,050,000	34.06+/-
	Superior	None	Superior	$30,828	
Bellingham 
   (#2)	Similar	$4,390,000	142.996+/-	Superior	Partial	Superior	$30,700	
Boxborough 
   (#8)	Inferior	$  400,000	17.023+/-	Superior	None	Superior	$23,498	
			Subject					
Braintree 
   (#1)	Slightly Inf.	$  600,000	44.1+/-	Similar	None	Slightly Inf.	$13,605	
Bridgewater 
   (#5)	Similar	$1,500,000	142.64+/-	Inferior	None	Inferior	$10,516	

In estimating the subject property's fair market value using a comparable sales approach, Mr. Marotta stated that the following factors were also taken into consideration: the subject property's lack of permits or approvals; the subject property's high site-development costs; that its development would be subject to the Sewer Bank and possibly increased water costs; the subject property's 'secondary' office/R&D location; and, the lack of similar size sites in the general area.  
Overall, "based on the comparable sales analyzed and taking into consideration the above factors," Mr. Marotta concluded that the subject property had a value within the range of $12,500 to $17,500 per acre, with "a value towards the mid-point of this range, $15,000 per acre, being the most reasonable."  Applied to the subject property's 55.65 acres, Mr. Marotta's appraisal report, dated September 4, 2003, calculated an "as is" fair market value as of January 1, 2001, of $825,000.
In his testimony, Mr. Marotta acknowledged that he and a colleague, Jeff Moody, had prepared an earlier appraisal report for the subject property, dated April 6, 2000.  He further testified that, as significant contributors, and in accordance with Uniform Standards of Professional Appraisal Practices ("USPAP"), both gentlemen signed the earlier report.  The appraisal report offered into evidence in the present appeal was, as Mr. Marotta testified, a "slightly tweaked" version of the earlier report.  Notably, the two reports used the same eight comparables and substantially all of the form and content was the same.  Despite the remarkable similarities, and the fact that Mr. Moody was a significant contributor to the preparation of the earlier appraisal report, the report offered into evidence in this appeal was signed by only Mr. Marotta.  
In an effort to explain Mr. Moody's absence from the new report, Mr. Marotta testified that he retraced the footsteps traveled to compile the earlier report to inspect, verify, and confirm the information presented in this appeal.  He later testified, however, that he had inspected the subject property on, at most, two short visits, and that of the eight cited comparables, he had visited only "one or two."  Mr. Marotta acknowledged on cross-examination that he had not verified all of the sales data presented and that the chosen comparables were "taken" from the earlier report.  
With regard to his sales-comparison analysis, Mr. Marotta listed each of the eight comparable sales as arm's-length transactions requiring no adjustment for conditions of sale.  On cross-examination, however, he admitted that one sale was made to an abutter and at least two were sales at foreclosure, thereby calling into question the arm's-length status of these transactions.  Also, the chosen sales occurred between 14 months and 41 months prior to the January 1, 2001 date of assessment of the subject property.  Notwithstanding these facts, Mr. Marotta reiterated his conclusion that no quantitative adjustments were warranted.
Although he admitted that marketing time is a "factor to consider" which may impact the ultimate selling price of a property, Mr. Marotta testified that he had no knowledge of the marketing time for any of the chosen comparables, and his report made no indication of the efforts made to determine the marketing time.  Also, even though he testified that it is necessary to ascertain the development potential of a property to estimate its fair cash value, for two of his chosen comparables, Mr. Marotta was unaware of the properties' developable area.  
On the basis of the evidence presented, the Board found that Citizens Bank acted more like an owner who was anxious to sell "OREO" properties, rather than one who wanted to maximize the sale price of the subject property.  Thus, the Board found that Citizens Bank acted not as a willing seller but one under compulsion to rid itself of unwanted properties acquired as part of its purchase of USTrust.  Under the circumstances, the Board found that the sale price of the subject property was not indicative of its fair cash value, and that the appellant had not met its burden of showing that the March 29, 2001 sale price reflected the fair cash value of the subject property on January 1, 2001.
Further, while the Board found Mr. Young to be an expert in wetlands delineations, his testimony in the present appeal was given little weight.  The Board found that Mr. Young did not perform a wetlands delineation of the subject property, but instead relied on a review of a previously conducted study and a cursory inspection of the subject property.  Further, Mr. Young presented no explanation as to how the existing wetlands affected the subject property's fair market value.
The Board further found that the appellant's expert appraiser, Mr. Marotta, was not sufficiently familiar with many of the purportedly comparable properties so as to establish comparability with the subject property.  The Board also found that many of the chosen comparables required too many subjective adjustments to reliably support a meaningful value of the subject property.  Furthermore, the Board found that Mr. Marotta had limited first-hand knowledge about the chosen comparables and relied on an unattributed source in contravention of USPAP.   Therefore, the Board found that Mr. Marotta's testimony and appraisal report lacked credibility and were unreliable.

OPINION
	General Laws chapter 59 authorizes cities and towns to impose a tax upon all real estate situated within the Commonwealth.  In so doing, the assessors are required to assess the property 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 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).  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).
	Actual sales of property generally "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)("Foxborough Associates"); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469 (1981)("New Boston Garden Corp."); First National Stores, Inc. v. Assessors of Somerville, 358 Mass. 558, 560 (1971).  Nevertheless, the sale price recited in the deed is not conclusive evidence of fair cash value.  Foxborough Associates, 385 Mass. at 682-683.  Evidence of sales may be considered "only if they are free and not under compulsion."  Congregation of the Mission of St. Vincent de Paul v. Commonwealth, 336 Mass. 357, 360 (1957).  The Board found and ruled that the March 29, 2001 sale of the subject property was not a transaction that was representative of the subject property's fair market value.  The Board found that the seller was not a "willing seller" because it sold the property under compulsion.  Therefore, the Board ruled that while the sale price may set the floor for the value of the subject property during the fiscal year at issue, it certainly did not set the ceiling.
	While it is uncontested that the subject property contains wetlands, the Board found that the appellant failed to demonstrate their quantitative effect on the fair market value of the subject property.  Furthermore, the Board found and ruled that the appellant's expert appraiser, Mr. Marotta, failed to sufficiently establish comparability between the subject property and his chosen comparable sales.  The Board further found that many of Mr. Marotta's purportedly comparable sales were not properly adjusted for existing differences particularly where he presented limited first-hand knowledge about them and relied on an unattributed source in contravention of USPAP.  Accordingly, the Board found and ruled that in his sales-comparison analysis, Mr. Marotta did not introduce competent evidence that supported his conclusion and estimates of the subject property's value for the fiscal year at issue.
	An assessment is presumed valid until the taxpayer sustains its 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 its right as a matter of law to an abatement of the tax.  Id.  The taxpayer must show that the assessed valuation of its property was improper.  See Foxboro Associates, 385 Mass. at 691.  Based on all the evidence, the Board found and ruled that the appellant failed to meet its burden of proving to the Board that its property was overvalued.  The mere going forward with some evidence is not enough to meet the appellant's burden in this regard; the evidence must be credible and persuasive.  See Id.  Furthermore, the Board may disbelieve a witness or reject evidence as long as it has an "'explicit and objectively adequate reason.'"  New Boston Garden Corp., 383 Mass. at 470-471, quoting L.L. Jaffe, Judicial Control of Administrative Action, 598, 607 (1965). 
In this regard, the Board found and ruled in the present appeal that the testimony and appraisal report of the appellant's expert appraiser, Mr. Marotta, as well as the other evidence presented by the appellant, did not sufficiently support Mr. Marotta's estimate of the subject property's fair market value for the fiscal year at issue.  The Board found that Mr. Marotta's sales-comparison approach was unreliable and, therefore, of little probative value.  Similarly, the testimony of the appellant's wetlands expert, Mr. Young, was afforded minimal weight.  The Board found that Mr. Young did not perform a wetlands delineation of the subject property, and that, most importantly, he presented no explanation as to how the existing wetlands affected the subject property's fair market value.  
	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. 591, 600 (1984), quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983).  In the present appeal, the Board found and ruled that the appellant failed to present persuasive evidence to meet either of these standards.
	Accordingly, the Board decided this appeal for the appellee.
					THE APPELLATE TAX BOARD

By:_____________________________Chair

   _____________________________Commissioner


   _____________________________Commissioner


   _____________________________Commissioner


   _____________________________Commissioner
					

A true copy,



Attest:_____________________________
 	  Assistant Clerk of the Board

	

ATB 2005-432