The Merry Hill Corp., Inc. v. Board of Assessors of the Town of Concord (November 13, 2007)

 COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



THE MERRY HILL CORP., INC.  v.      BOARD OF ASSESSORS OF 
							 THE TOWN OF CONCORD


Docket No. F282257	 	    	      Promulgated:
							 November 13, 2007
							 

	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 appellee to abate taxes on certain real estate located in the Town of Concord owned by and assessed to the appellant under G.L. c. 59, § 11 and 38, for fiscal year 2005.
	Commissioner Egan heard the appeal and was joined by Chairman Hammond and Commissioners Scharaffa, Rose, and Mulhern in a 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.

	Jurgen Demisch, President of appellant, for the appellant.

	Lynn Masson, Assessor, and James Doherty, Appraiser, for the appellee.


FINDINGS OF FACT AND REPORT
On January 1, 2004, the appellant, Merry Hill Corp., Inc. ("appellant"), was the assessed owner of an improved parcel of real estate located at 48 Monument Square, Concord ("subject property").  For fiscal year 2005, the Board of Assessors of Concord ("assessors") valued the subject property at $6,401,300 and assessed a tax thereon, at the rate of $9.80 per thousand, in the amount of $62,732.74.  Concord's Collector of Taxes mailed the fiscal year 2005 actual tax bills on or about December 30, 2004.  In accordance with G.L. c. 59, § 57C, the appellant timely paid the tax due on or before February 1, 2005 without incurring interest.  On January 31, 2005, in accordance with G.L. c. 59, § 59, the appellant timely filed its Application for Abatement with the assessors, which was deemed denied on April 30, 2005.  Subsequently, on Monday, August 1, 2005, 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 over this appeal.
The subject property contains an approximately 40,003 square-foot parcel of land improved with a two-building facility known as the Colonial Inn (the "Inn").  The first building is a two-story wood-framed structure built in approximately 1716, to which a three-story addition was added in approximately 1970.  The original portion of the building contains the Main Inn, which has seven guest rooms and the East Wing, which offers nine guest rooms as well as the Inn's food, beverage, dining, lounge, and meeting-room facilities, and retail shop.  The 1970-addition is called the Prescott Wing and has thirty-four guest rooms.  The second building is a two-story wood-frame cottage ("Cottage") with two two-bedroom apartment-style suites, located to the rear of the subject parcel.
Some of the guest rooms in the early eighteenth century Main Inn have original wide-plank pine floors, wainscoting, and post-beamed ceilings.  The Thoreau Suite, located in the Main Inn, offers a king-size bed, living/dining area, a full kitchen and bathroom with Jacuzzi.  The Prescott Wing features twenty guest rooms that offer a Colonial country décor.  All rooms have a desk, bureau, full bath, wing back chair with reading lamp, and coffee maker.  The Prescott Wing also features ten "European" garden level rooms that offer the "best value for the discriminating traveler," and two suites which provide a queen-size bed, full bath, separate living room with a full-size sofa bed, and a kitchenette with a mini-fridge, microwave, toaster, china and glassware.  The Cottage is suitable for long-term accommodations and has two units with two bedrooms, a full kitchen and full bath.  All rooms reflect the Inn's Colonial style, decorated with antiques and reproductions, while offering amenities such as wireless high-speed Internet access and cable television.  The Inn also offers six meeting rooms which can accommodate up to one hundred people.
	The Inn is located in historic Monument Square in Concord and is surrounded by many landmarks of the nation's literary and revolutionary history.  Concord is 20 miles northwest of Boston and easily accessible by car via Routes 2, I-93 and I-95/128.  The Inn is one-half mile from the Concord Center Depot commuter rail station, from which commuter trains travel to North Station in Boston.
In support of its contention that the assessors had overvalued the subject property for fiscal year 2005, the appellant offered the testimony of Jurgen Demisch, appellant's President, and Randy Marchman, a property tax consultant hired by the appellant.  Mr. Demisch testified that the subject property contained fifty guest rooms and that it is an historic property, which is marketed in a way that attempts to highlight its historic nature in an effort to attract visitors to its suburban location. 
The appellant's valuation evidence was offered through the testimony and report of Mr. Marchman.  The Board found that Mr. Marchman, who was neither a real estate appraiser nor an owner of the subject property, did not have the requisite expertise to offer an opinion of value for the subject property.  However, because of his familiarity with the subject property, the Board allowed Mr. Marchman to testify on behalf of the appellant as a fact witness concerning the purported errors in the assessors' valuation of the subject property.
Mr. Marchman testified that, based on his review of the property record card for the subject property, which was included in his report, the assessors made three principal errors in arriving at the assessed value of the subject property for the fiscal year at issue.  First, Mr. Marchman testified that the assessors based their valuation on the assumption that the Inn had seventy-eight guest rooms, but the actual number of guest rooms was fifty.  
Mr. Marchman also testified that the expense figure shown on the property record card, approximately sixty-seven percent of effective gross income was inadequate because the subject property's actual operating expenses for calendar years 2002, 2003 and 2004 were in excess of ninety percent of effective gross income.  However, there was no evidence of record to establish that Mr. Marchman's suggested expense factor was reflective of the market and the Board, therefore, did not adopt it.  
Finally, Mr. Marchman testified that the value derived from the assessors' income capitalization approach shown on the property record card erroneously included the value of personal property that contributed to the Inn's income but was not properly included in the subject property's real estate tax assessment.  Therefore, he argued, to arrive at the subject property's fair cash value, the value of the personal property must be deducted.  The appellant did not dispute that the value of the personal property located at the subject property was $63,455, as reflected in the assessors' notice of proposed personal property tax assessment dated November 19, 2005. 
The assessors offered into evidence a packet containing photographs and a parcel map showing the subject property, a printout from the Inn's website and property record cards for the subject property, but offered no affirmative evidence of value and rested on their assessment.  The assessors did concede that they used an incorrect number of rooms in their valuation calculation and that they had corrected this error for future fiscal years.
After considering all of the evidence, the Board found that the appellant offered sufficient evidence to show that the subject property was overvalued based on flaws in the assessors' valuation analysis.  First, the Board found that the assessors overvalued the subject property because they overstated the number of guest rooms at the Inn.  The Board further found that the capitalization of income analysis shown on the property record card was also incorrect because it did not deduct the value of the personal property to arrive at the real property's fair market value.  
Therefore, in reaching its decision, the Board, while not adopting the assessors' methodology, nevertheless corrected these errors for purposes of this appeal.  The Board found that the correct number of rooms was fifty, substituted this number for the seventy-eight rooms that the assessors had erroneously used.  The Board then applied the rental rate, vacancy and expense percentages used by the assessors on the property record card, to calculate the subject property's corrected net operating income.  The Board then used the assessors' capitalization rate of 10.50 percent to arrive at an indicated fair market value of $4,447,552.  Finally, the Board deducted $63,455, the assessors' proposed value for personal property, to arrive at a final fair market value of $4,385,000.
Accordingly, the Board decided this appeal for the appellant and granted an abatement in the amount of $19,759.74.

OPINION
The assessors are required to assess all property at its fair cash value.  G.L. c. 59, § 38; Coomey v. Assessors of Sandwich, 367 Mass. 836, 837 (1975).  Fair cash value is customarily 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); Reservoir Place Realty v. Assessors of Waltham, Mass. ATB Findings of Fact and Reports 1995-48, 69.
Generally, the taxpayer has the burden of proving that the property has a lower value than that assessed.  "[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 v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974).  "'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, 365 Mass. at 245, quoting Judson Freight Forwarding Co. v. Commonwealth, 242 Mass. 47, 55 (1922). 
Evidence of the value of real estate is properly presented by experts in the appraisal of real property.  See Val Kyrie Co. v. Assessors of the City of Worcester, Mass. ATB Findings of Fact and Reports 2005-414, 416.  In addition to expert witnesses, an owner of property generally is allowed to testify as to the property's value.  Menici v. Orton Crane & Shovel Co., 285 Mass. 499, 503 (1934).  An owner of property is typically familiar with its characteristics, has some acquaintance with its uses and has had experience in dealing with it.  It is this familiarity, knowledge and experience which qualify him to testify as to its value.  Id. at 503-504.  
In the present appeal, the Board found that Mr. Marchman lacked the requisite expertise to allow him to testify to an opinion of value.  The Board did, however, allow Mr. Marchman to testify on behalf of the appellant concerning the facts, apparent on the assessors' property record card, that the assessors erred by overstating the number of guest rooms in the subject property and by failing to deduct a value for personal property from the assessors' value using the capitalization of income approach.  See Analogic Corporation v. Assessors of Peabody, Mass. ATB Findings of Fact and Report 1999-267, 280 (ruling that value of assessable personal property must be removed to estimate a value for assessable real estate).  
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 the present appeal, the Board found that the appellant was able to show flaws and errors in the assessors' valuation analysis by showing that the assessors used the wrong number of guest rooms, and also failed to account for the value of personal property associated with the hotel.  By adjusting, but not adopting, the assessors' valuation analysis to correct for these errors, the Board found that the property was overvalued.
In reaching its opinion of fair cash value in this appeal, the Board was not required to believe the testimony of any particular witness or to adopt any particular method of valuation.  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. 679, 683 (1982); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 473 (1981); Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 702 (1972).  
The Board need not specify the exact manner in which it arrived at its valuation.  Jordan Marsh v. Assessors of Malden, 359 Mass. 106, 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 the evidence, and 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).  
On this basis, the Board found and ruled that the appellant met its burden of proving that, in arriving at the assessed value of the subject property for the year at issue, the assessors relied on an incorrect number of rooms and failed to account for the value of personal property.  After adjusting, but not adopting, the assessors' analysis for these errors, the Board found and ruled that the subject property was overvalued in the amount of $2,016,300 for fiscal year 2005 and, therefore, granted the appellant an abatement in the amount of $19,759.74.

					       THE APPELLATE TAX BOARD

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




A true copy,


Attest:					_________
            Clerk of the Board

 Pursuant to G.L. c. 58A, § 6, an application for abatement is deemed denied when a board of assessors fails to act on the application within three months of its filing.  Three months "means three calendar months."  G.L. c. 4, § 7, Nineteenth; see also Berkshire Gas Company v. Assessors of Williamstown, 361 Mass. 873 (1972). Therefore, appellant's application for abatement was deemed denied on April 30, 2005.  See Corcoran Shoe Co. v. Assessors of Stoughton, 2 Mass. A.T.B. 276, 277 (1935) (ruling that, under prior version of § 6 providing for deemed denial of an application where no action taken within four months of its filing, an application filed on October 29, 1934 was deemed denied on February 28, 1935, because a calendar month means "the time from any day of such a month to the corresponding day (if any; if not to the last day) of the next month.").  
 The appellant's abatement application was deemed denied on Friday, April 30, 2005. Therefore, the three-month deadline for filing an appeal with the Board was Saturday, July 30, 2005.  When the last day for filing falls on a Saturday, Sunday, or legal holiday, a filing made on the following business day is considered timely. G.L. c. 4, § 9.

ATB 2007-1232