Kenneth Glowacki v. Board of Assessors of the Town of Upton (June 21, 2013)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


KENNETH GLOWACKI              v.	BOARD OF ASSESSORS OF THE TOWN OF UPTON

Docket Nos.: F313506 
		   F313507			  Promulgated:	
		   F313508			  June 21, 2013
        						  

These are appeals 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 Town of Upton ("appellee" or "assessors") to abate taxes on certain real estate in the Town of Upton, owned by and assessed to Kenneth Glowacki ("appellant") under G.L. c. 59, §§ 11 and 38 for fiscal year 2011 ("fiscal year at issue").
Commissioner Chmielinski ("Presiding Commissioner") heard the appeals and issued single-member decisions for the appellant in accordance with G.L. c. 58A, § 1A and 831 CMR 1.20. 
These findings of fact and report are made pursuant to requests by the appellant and the appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.

Andrew D. Crawley, Esq., for the appellant.

Thomas W. McEnaney, Esq., and Charles Marsden, 	assessor, for the appellee.

FINDINGS OF FACT AND REPORT
Based on the testimony and exhibits entered into evidence at the hearing of these appeals, the Presiding Commissioner made the following findings of fact.
On January 1, 2010, the appellant was the assessed owner of a 22,000-square-foot parcel of land improved with a ten-unit, Victorian-style, residential building known as Knowlton Manor Condominium, which was located at 145 Main Street in Upton. The building had been a nursing home, which the appellant renovated and converted to condominiums in 2006. At issue in these appeals were units 1C, 1D and 2D ("subject properties"), which had finished living areas of 630 square feet, 520 square feet and 657 square feet, respectively. Each of the units contained one bedroom and one bathroom.  
The assessors valued the subject properties and assessed a tax thereon at the rate of $14.64 per $1,000 of value as follows:
Unit	Assessed Value	Taxes Assessed	
1C	$149,600.00 	$2,190.14 	
1D	$125,400.00 	$1,835.86	
2D	$155,500.00 	$2,276.52 	

The appellant paid the taxes due without incurring interest and on January 20, 2011, timely filed abatement applications with the assessors, which the assessors denied on April 20, 2011.  On July 7, 2011, the appellant timely filed Petitions Under Formal Procedure with the Appellate Tax Board ("Board"). Based on these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide these appeals.
In support of his assertion that the subject properties were overvalued for the fiscal year at issue, the appellant offered his own testimony and valuation data as well as the testimony and appraisal reports of two real estate appraisers. The appellant testified at length regarding the subject properties and submitted various documents that chronicled the stages of the appeals. The appellant also submitted a table that reflected assessment and sales data for eight properties located in Upton to demonstrate that the subject properties had been overvalued. With one exception, these properties were roughly three times the size of the subject properties, ranging in living area from 1,731 square feet to 1,875 square feet, size differences that were reflected in the properties' assessed values and sale prices. On this basis alone, the Presiding Commissioner found that the cited properties were not comparable to the subject properties and therefore did not provide reliable evidence of the subject properties' fair cash value. Moreover, the appellant made no attempt to document or account for existing differences between the properties and the subject properties. For these reasons, the Presiding Commissioner gave no weight to the appellant's assessment and sales data.   
Ms. Lori Natterstad, a certified appraiser, testified after the appellant and submitted her appraisal report for the subject properties. As a threshold matter, the report's valuation date was October 1, 2011, some twenty-one months after the relevant assessment date. This fundamental lapse was compounded by changing real estate values in Upton, which both parties acknowledged and were not addressed by Ms. Natterstad. Further, of the four properties chosen by Ms. Natterstad for inclusion in her comparable-sales analysis, one was a "short sale," another was a foreclosure sale, and one, the sole property located in Upton, was a property listing, not a sale. Although Ms. Natterstad asserted that foreclosure sales "were the market," her claim was not substantiated with relevant market data or otherwise. On balance, the Presiding Commissioner found that Ms. Natterstad's testimony and appraisal report provided little if any credible evidence of the subject properties' fair cash value for the fiscal year at issue.
The appellant's last witness, Alita Gaskin, a certified appraiser as well, also testified regarding the subject properties' values and presented an appraisal report. Ms. Gaskin, like Ms. Natterstad, performed a comparable-sales analysis that included four properties, three of which were outside of Upton. Two of the properties, which were located in Milford, were foreclosure sales, and one was a "short sale" in Grafton. Also like Ms. Natterstad, Ms. Gaskin, without substantiation, claimed that foreclosure sales "were the market." Finally, Ms. Gaskin's last property was a property listing and not a sale. Notwithstanding adjustments made to her chosen properties, including a six-percent per year time adjustment, the Presiding Commissioner found that the cited flaws in Ms. Gaskin's analysis rendered it of little probative value.
Ultimately, the appellant opined that the fair cash values of the subject properties for the fiscal year at issue were $74,800, $73,800, and $77,750 for units 1C, 1D and 2D, respectively. These values reflected the approximate midpoint between the indicated values derived by Ms. Natterstad and Ms. Gaskin. Given the significant shortcomings of the appellant's valuation data and the substantial flaws in Ms. Natterstad's and Ms. Gaskin's valuation methodologies, the Presiding Commissioner found virtually no support for these proposed valuations.
For their part, the assessors offered the requisite jurisdictional documentation and offered the testimony of Charles Marsden, Chairman of the assessors, and John Hocking, a real estate appraiser who had served as a project supervisor in Upton's revaluation process. Mr. Hocking also submitted an appraisal report for the subject properties. 
In his opening statement, Mr. Marsden acknowledged that the subject properties' assessed values for the fiscal year at issue were "high." Consistent with this implicit acknowledgement of overvaluation, Mr. Hocking presented his comparable-sales analysis, which reflected valuations that were significantly lower than the subject properties' assessed values. Mr. Hocking's analysis incorporated three sales, one of which was in Upton and upon which he placed the greatest reliance. Mr. Hocking made adjustments to these sales, including a six-percent per year time adjustment, and derived indicated values of $120,000, $115,000, and $122,000 for units 1C, 1D and 2D, respectively. Although the Presiding Commissioner found Mr. Hocking's chosen properties comparable to the subject properties and his analysis probative of the subject properties' fair cash values, he also found that Mr. Hocking failed to account fully for differences between his chosen properties and the subject properties, particularly with respect to locational and condition factors. Consequently, and having taken into account the record as a whole, the Presiding Commissioner refined Mr. Hocking's methodology and found that the subject properties' fair cash values for the fiscal year at issue were $105,000 for unit 1C, $90,000 for unit 1D and $110,000 for unit 2D. Accordingly, the Presiding Commissioner issued single-member decisions for the appellant in these appeals. 

OPINION
	"All property, real and personal, situated within the commonwealth . . . shall be subject to taxation."  G.L. c. 59, § 2.  The assessors have a statutory obligation 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 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 Board is entitled to presume that the valuation made by the assessors is valid unless the taxpayer proves the contrary. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). However, this presumption has been rendered moot in the present appeals as the parties agreed, and the record demonstrated, that the subject properties' assessed values exceeded their fair cash values for the fiscal year at issue. The dispute, therefore, was limited to the extent of the properties' overvaluation.
In support of his view of the subject properties' fair cash values, the appellant offered his own testimony and valuation data as well as the testimony and appraisal reports of Ms. Natterstad and Ms. Gaskin. The evidence presented consisted of assessment and sales data and comparable-sales analyses, none of which the Presiding Commissioner found provided reliable evidence of the subject properties' fair cash values. 
The appellant's submission consisted of a table containing assessment and sales data for a number of properties located in Upton. With one exception, these properties were approximately three times the size of the subject properties and their assessed values and sale prices reflected the size disparities.  
It is axiomatic that timely sales and assessments of comparable realty in the same geographic area as a given property contain probative evidence for determining the value of that property. 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). Properties are "comparable" to another property when they share "fundamental similarities" with the property, including similar age, location, size and date of sale.  Lattuca v. Robsham, 442 Mass. 205, 216 (2004). Further, the proponent of the sales must establish comparability. See Wood v. Assessors of Fall River, Mass. ATB Findings of Fact and Reports 2008-213, 225.
That the appellant failed to establish comparability with the subject properties is obvious. Simply by virtue of their size and value, the properties offered by the appellant cannot be said to share fundamental similarities with the subject properties. The Presiding Commissioner therefore found that the appellant's sales and assessment data should be afforded no weight.   
 	The Presiding Commissioner also found the valuation analyses submitted by Ms. Natterstad and Ms. Gaskin to be fatally flawed. For example, both appraisers employed foreclosure sales in their analyses. Evidence of sales may be considered "only if they are free and not under compulsion." Congregation of the Mission of St. Vincent dePaul v. Commonwealth, 336 Mass. 357, 360 (1957). "A foreclosure sale inherently suggests a compulsion to sell; a proponent of evidence of such sale must show circumstances rebutting the suggestion of compulsion." DSM Realty, Inc. v. Assessors of Andover, 391 Mass. 1014 (1984)(rescript opinion). In the present appeals, there was no evidence to rebut the suggestion of compulsion beyond the appraisers' unsubstantiated assertions that foreclosures "were the market." 
Each appraiser also incorporated a "short sale" in her analysis, a transaction in which the proceeds of the sale are less than the balance owed to a mortgage holder by a property owner who cannot pay the full amount owed and the mortgagee agrees to accept less than the full amount of the debt. Like foreclosure sales, these circumstances suggest compulsion and should not be considered absent rebuttal of that suggestion, which was absent in these appeals. See Id.
Finally, both Ms. Natterstad and Ms. Gaskin used property listing prices in their analyses. Listing prices do not constitute persuasive evidence of value.  See Sands v. Assessors of Bourne, Mass. ATB Findings of Fact and Reports 2007-1098, 1103 ("[L]isting prices of unsold properties . . . are not reliable indicators of the fair cash value of a property."). 
In sum, the Presiding Commissioner found that the cited flaws, taken together, compelled the conclusion that Ms. Natterstad's and Ms. Gaskin's comparable-sales analyses did not provide a reliable indication of the subject properties' fair cash values.
Notwithstanding the appellant's failure to establish his claim of the subject properties' values, the Presiding Commissioner, relying on the entire record, found and ruled that the assessed values of the properties substantially exceeded their fair cash values for the fiscal year at issue. See, e.g., General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 599-600 (1984). The Presiding Commissioner is "entitled to 'select the various elements of value as shown by the record and from them form . . . [his] own independent judgment.'" Id. at 605 (quoting North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984))(additional citation omitted). 
In the present appeals, the Presiding Commissioner in large measure looked to Mr. Hocking's comparable-sales analysis, which included three sales of comparable properties, the sale prices of which Mr. Hocking adjusted to account for differences with the subject properties. See Pembroke Industrial Park Co., Inc. v. Assessors of Pembroke, Mass. ATB Findings of Fact and Reports 1998-1072, 1082. ("[w]hen comparable sales are used, allowances must be made for various factors which would otherwise cause disparity in the comparable prices."). The Presiding Commissioner also found, though, that Mr. Hocking's analysis failed to account fully for the differences between his chosen properties and the subject properties. As a result, the Presiding Commissioner, having refined Mr. Hocking's methodology, found that the subject properties' fair cash values for the fiscal year at issue were $105,000, $90,000, and $110,000 for unit 1C, 1D, and 2D, respectively.

 Accordingly, the Presiding Commissioner issued single-member decisions for the appellant in these appeals.

    	    		    APPELLATE TAX BOARD
	

				By:				______	undefinedundefinedundefinedundefined_________
				   Richard G. Chmielinski, Commissioner




A true copy,


Attest:	______		_____
	    Clerk of the Board

 During the hearing relating to the appeals, the appellant noted his contention that all of the units in the Knowlton Manor Condominium had been overvalued and stated that he had filed appeals with respect to the subject properties as "test cases."
 Mr. Hocking also included a property listing in his analysis, which the Presiding Commissioner found was of no probative value.

ATB 2013-685