Diana M. & James L. Henry v. Board of Assessors of the City of New Bedford (April 27, 2010)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



DIANA M. & JAMES L. HENRY,   v.    BOARD OF ASSESSORS OF 
TRUSTEES                     		THE CITY OF NEW BEDFORD

Docket No. F297367				Promulgated:
							April 27, 2010
							   

	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 New Bedford ("assessors" or "appellee") to abate taxes on certain real estate located in New Bedford owned by and assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2008.
	Commissioner Mulhern heard the appeal.  Chairman Hammond and Commissioners Scharaffa and Rose joined him in the decision 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.
Diana M. & James L. Henry, Trustees, pro se, for the appellants.

	Burton Peltz, Esq. for the appellee.

FINDINGS OF FACT AND REPORT
	On January 1, 2007, Diana M. and James L. Henry, Trustees, ("appellants") were the assessed owners of a 18,034 square-foot parcel of real estate improved with a single-family dwelling, located at 78 Orchard Street in the City of New Bedford ("subject property").  For fiscal year 2008, the assessors valued the subject property at $655,400 and assessed a tax thereon, at a rate of $10.55 per thousand, in the amount of $6,914.48, which the appellants paid timely.  The appellants timely filed an abatement application with the assessors on January 31, 2008, which the assessors denied on March 27, 2008.  On June 27, 2008, the appellants seasonably filed a Petition Under Formal Procedure with the Board.  Based on these facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.
The subject dwelling was built in approximately 1882.  It is a three-story colonial-style structure, which contains a total living area of approximately 6,059 square feet.  The exterior of the home is wood shingles and it has an asphalt gable roof.  The dwelling is heated by a two-zone, forced-hot-water, gas-heating system, and there is also a two-zone, central air-conditioning system.  The dwelling has a total of fourteen rooms, including six bedrooms, and also three full bathrooms and one half bathroom.  Other features of the home include eight fireplaces, leaded glass cabinets, hardwood floors, detailed moldings, raised panel wood doors, and also large covered front and rear porches.  There is also an undersized two-car detached garage and a 351 square-foot carport.  No major repairs are needed.  However, some deferred maintenance exists due to water seepage in the basement.  Overall the subject dwelling is in average condition.
The subject property is located in an historically significant neighborhood and is within walking distance to local shopping, public schools, and parks, and is within one mile of highway access. 
In support of their contention that the subject property was overvalued for the fiscal year at issue, the appellants presented the testimony of James L. Henry and Diana M. Henry, the property owners, and also Arthur C. Larrivee, a certified real estate appraiser.  Based on his education, experience and certification, the Board qualified Mr. Larrivee as an expert real estate appraiser.  The appellants also offered into evidence the subject property's property record cards for fiscal year 2001, which listed the finished living area as 5,359 square feet, and fiscal year 2006, which listed the finished living area at 6,319 square feet.  The appellants also offered a copy of the Board's fiscal year 2007 decision involving the subject property, Diana M. & James L. Henry  v. Assessors of the City of New Bedford, Mass. ATB Findings of Fact and Reports 2008-1143 ("Henry I"), in which the Board determined that the appellants failed to meet their burden of proving that the subject property was overvalued for fiscal year 2007.  
Mr. Larrivee used the sales-comparison methodology to value the subject property. He first inspected both the interior and exterior of the dwelling.  He did not, however, measure the subject property's square footage.  Instead, he relied on the fiscal year 2001 property record card, which listed a finished living area of 5,352 square feet.  Mr. Larrivee further testified that for fiscal year 2001, there was unfinished attic space of approximately 300 square feet.  He deducted the attic space from the 5,352 square feet reported on the fiscal year 2001 property record card to arrive at a finished living area of 5,031 square feet for purposes of his valuation.
In his analysis, Mr. Larrivee primarily relied on three sales of properties that he deemed to be comparable to the subject property, all improved with older, historic, colonial-style dwellings and located within a one-mile radius of the subject property.    
Sale number one, located at 114 Hawthorne Street, is a 10,160 square-foot parcel improved with a 110-year-old, colonial-style, single-family dwelling.  The dwelling has a total of 16 rooms, including six bedrooms, and also three full bathrooms and one half bathroom, with a total living area of 5,003 square feet.  Like the subject property, this property has eight fireplaces and central air conditioning.  This property also has a detached three-car garage and a third-floor "in-law" apartment.  The property sold for $470,000 on July 22, 2005.  
Sale number two, located at 100 Hawthorne Street, is a 11,848 square-foot parcel improved with an historic, Colonial-style, single-family dwelling with a total living area of 6,709 square feet.  The dwelling has a total of sixteen rooms including ten bedrooms, as well as four full bathrooms and one half bath.  This property has only four fireplaces and no central air conditioning.  It does have a partially finished basement and an in-ground swimming pool.  The property sold for $450,000 on May 9, 2006.
Sale number three, located at 691 County Street, is a 4,345 square-foot parcel also improved with an historic Colonial-style dwelling, built circa 1893, with a total living area of 4,345 square feet.  The dwelling has a total of twelve rooms, including eight bedrooms, as well as four full bathrooms.  There are six fireplaces and no central air conditioning.  The property sold for $405,000 on October 5, 2006.
Mr. Larrivee testified that the New Bedford real estate market had reached its highest point in the summer of 2006 and that property values then began to decline.  He further testified that the older stately dwellings in New Bedford, such as the subject property, did not incur exactly the same market fluctuations as the less expensive properties and that these types of properties tend to increase and decrease at a slower pace compared to other less expensive residential properties.  Therefore, Mr. Larrivee determined that no time adjustments were necessary.  He did, however, make adjustments to account for differences in lot size, the number of bedrooms and bathrooms, the number of fireplaces, finished basement, overall functional utility and the existence of central air conditioning, a carport, a pool, and an in-law apartment.
Mr. Larrivee's sales-comparison analysis yielded adjusted sale prices that ranged from $402,000 to $467,000. Based on this analysis, his final opinion of the value of the subject property for fiscal year 2008 was $450,000.
In support of their assessment for fiscal year 2008, the assessors relied on the testimony of Carlos Amado, city appraiser for the City of New Bedford.  Mr. Amado offered into evidence a comparable-sales analysis and supporting documentation.  The assessors' comparable-sales analysis included five purportedly comparable properties located within three-quarters of a mile of the subject property.  The assessors' purportedly comparable properties' lot sizes ranged from 5,785 square feet to 12,796 square feet, with finished living area sizes that ranged from 2,761 square feet to 5,353 square feet.  All but one of the comparable properties has less than 40% of the finished living area of the subject property.
The properties sold during the period August 1, 2005 through November 21, 2006, with sale prices that ranged from $412,000 to $520,000.  The assessors made adjustments to account for differences in location, age, condition, lot size, finished living area, and special features.  The assessors also made time adjustments to account for the dates of the purportedly comparable properties' sales and the relevant date of assessment for the fiscal year at issue.  The assessors based their time adjustments on the argument that the New Bedford real estate market continued to appreciate throughout 2006.  In support of their assertion, the assessors offered into evidence a time adjustment report of fourteen properties that sold in 2005 and resold in 2006.  Thirteen of the fourteen properties were in the sales-price range of $150,000 to $300,000.  Further, three of the properties experienced a decline in sale price and one remained unchanged.
The assessors' comparable-sales analysis yielded adjusted sale prices that ranged from $343,242 to $628,842.  Based on these sales, Mr. Amado's final opinion of value for the subject property for fiscal year 2008 was $678,600.
Based on all of the evidence, the Board found that the appellants met their burden of proving that the subject property was overvalued for the fiscal year at issue.  In so doing, however, the Board found that Mr. Larrivee's determination of finished living area was erroneous and that his reliance on the subject property's fiscal year 2001 property record card was unwarranted and inappropriate.  
The Board further found that the best evidence of the subject property's fair market value as of January 1, 2007, was the sale of 100 Hawthorne Street, which occurred approximately six months prior to the assessment date, for $450,000.  The Board noted that the property at 100 Hawthorne Street has a smaller lot size than the subject property and that a premium would be paid for the subject property's larger lot considering the size of the home.    Therefore, the Board found that an upward adjustment of $50,000 was warranted.  
The Board noted that, in their fiscal year 2007 appeal, the appellants also relied on the sales at 100 Hawthorne Street, as well as 114 Hawthorne Street, to support their claim that the subject property was overvalued for fiscal year 2007.  Henry I Mass. ATB Findings of Fact and Reports 2008-1145.  However, despite the differences between the subject property and the cited comparables' lot size, finished living area or the number of rooms, bathrooms, and bedrooms, the appellants made no adjustments to their comparable sales in their fiscal year 2007 appeal.  Id.  Accordingly, based on the evidence presented in Henry I, the Board found that the appellants failed to meet their burden of proving that the subject property was overvalued for fiscal year 2007. 
In contrast, the Board found in the present appeal that the appellants' real estate expert made adjustments to the sales at 100 Hawthorne Street and 114 Hawthorne Street, which supported a finding that the subject property was overvalued.   
With respect to the assessors' comparable-sales analysis in the present appeal, the Board found that both the lot sizes and finished living areas of the assessors' purportedly comparable properties were significantly smaller than the subject property and, therefore, lacked comparability.  Further, the Board found that the assessors' time-adjustment report, which cited only properties selling for $335,000 and less, was unreliable.
Based on all of the evidence, the Board found that the subject property was overvalued by $155,400 for the fiscal year at issue.  Accordingly, the Board found that the subject property's fair cash value for fiscal year 2008 was $500,000 and granted an abatement of $1,639.47. 

OPINION
Assessors are required to assess real estate at its fair cash value as of the first day of January preceding the fiscal year at issue. G.L. c. 59, §§ 11 and 38. The fair cash value of property is defined as the price upon which a willing buyer and a willing seller would agree if both are fully informed and under no compulsion. Boston Gas. Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).
The burden of proof is upon the taxpayer to make out a right to an abatement. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). The assessment is presumed to be valid unless the taxpayer meets its burden of proving otherwise. Id. A right to an abatement can be proven by either introducing evidence of fair cash value, or by proving that the assessors erred in their method of valuation. General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 600 (1984).
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 the present appeal, both the appellants and the assessors relied on the sales-comparison method to value the subject property for fiscal year 2008.
The appellants' expert advanced a comparable-sales analysis in an attempt to prove that the subject property had a lower value than that assessed.  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 2008-321, 400, aff'd, Graham v. Assessors of West Tisbury, 73 Mass. App. Ct. 1107 (2008).
"Evidence of the sale prices of 'reasonably comparable property' is the next best evidence to the sale of the property in question."  Lupacchino v. Assessors of Southborough, 42 Mass. 205, 216 (2004). Required are "fundamental similarities" between the subject property and the comparison properties. Id. at 216. The appellant bears the burden of "establishing the comparability of . . . properties [used for comparison] to the subject propert[ies]." Fleet Bank of Mass. v. Assessors of Manchester, Mass. ATB Findings of Fact and Reports 1998-546, 554. Accord New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 470 (1981). "Once basic comparability is established, it is then necessary to make adjustments for the differences, looking primarily to the relative quality of the properties, to develop a market indicator of value." New Boston Garden Corp., 383 Mass. at 470.	
Based on all of the evidence, the Board found that the sale at 100 Hawthorne Street, the appellants' comparable sale number two, was the most comparable to the subject property.  The Board further found that a premium would be paid for the larger lot size of the subject property given the size of the existing improvement, therefore requiring an upward adjustment to the sale price of 100 Hawthorne Street.  Moreover, the Board found that the assessors failed to establish comparability between their purportedly comparable sales and the subject property.
Based on the foregoing facts and findings, the Board found and ruled that the appellants met their burden of proving that the subject property was overvalued for fiscal year 2008. Accordingly, the Board issued a decision for the appellants in this appeal and granted an abatement in the amount of $1,639.47.
				   THE APPELLATE TAX BOARD

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



A true copy,


Attest:  _________________________________
		      Clerk of the Board

 The record indicates that both Diana and James are trustees; however, the name of the trust was not provided.
 In the text of his appraisal report, Mr. Larrivee stated that he allowed a functional obsolescence deduction of 30% to account for the subject property's "super adequacy of extras."  No such adjustment, however, was taken in his calculations.

ATB 2010-350