Bodwell Extension, LLC v. Board of Assessors of the Town of Avon (November 19, 2007)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



BODWELL EXTENSION, LLC		v.	BOARD OF ASSESSORS OF 
THE TOWN OF AVON

Docket No. F278463				Promulgated:
							November 19, 2007
							


	This is an appeal 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 in the Town of Avon assessed to appellant under G.L. c. 59, §§ 11 and 38 for fiscal year 2005 ("fiscal year at issue").  
	Commissioner Egan heard the appeal.  Chairman Hammond and Commissioners Scharaffa and Rose joined her in a decision for appellant.  Commissioner Mulhern took no part in the deliberation or decision on this appeal.   
	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.  

	Matthew A. Luz, Esq. for appellant.
Ellen M. Hutchinson, Esq. for the appellee. 

FINDINGS OF FACT AND REPORT
On the basis of the testimony and documents submitted into evidence at the hearing, the Board made the following findings of fact.
On January 1, 2004, Bodwell Extension, LLC ("appellant") was the assessed owner of a 4.95-acre parcel of land improved with an industrial building located at 660 Bodwell Street Extension in the Town of Avon ("subject property").
For fiscal year 2005, the appellee, the Board of Assessors of Avon ("assessors"), valued the subject property at $3,866,200 and assessed a tax, at the rate of $20.83 per thousand, in the amount of $80,532.95.  Appellant timely paid the tax due without incurring interest.  Avon's tax bills were mailed on February 4, 2005, and appellant timely filed its Application for Abatement with the assessors on February 10, 2005.  Following the assessors' April 26, 2005 denial of the application, appellant timely filed its appeal with the Appellate Tax Board ("Board") on May 17, 2005.  On the basis of these facts, the Board ruled that it had jurisdiction over this appeal.
The subject property is a rectangular-shaped lot located at the end of a cul-de-sac within the Avon Industrial Park ("Industrial Park") on Bodwell Street Extension, near its intersection with Wales Avenue.  The neighborhood is developed with other industrial uses along Bodwell Street and the other industrial feeder streets off Bodwell Street.  The subject property's location is near the Stoughton/Avon town line and is about two miles east of Exit 19 off Route 24.  Route 24 is a major state highway connecting to Route 128/I-95 to the north and I-495 to the south. 
The subject property is improved with a structure containing warehouse space and office space.  It consists of a steel-frame, concrete-slab foundation, and metal siding.  The original warehouse space, built in 1981, is a one-story industrial structure, 200 feet wide by 354 feet long and containing approximately 73,954 square feet.  It has a 22-foot ceiling.  Its interior consists of a sealed concrete floor, open truss ceiling, painted concrete block and insulated metal walls, and ceiling-mounted florescent lighting.  A 114-by-200-feet addition, with a 24-foot ceiling, was added to the building in 1983.  This addition contains a two-story office section.  The interior of the office is carpeted and has resilient floors, painted drywall partitioned walls with some paneling, and suspended acoustic ceilings with recessed florescent lighting.  A sprinkler system services the entire building, the walls have been insulated, and the electrical service is adequate for its current use.  The subject property has also been improved with a paved parking lot with landscaping and fencing.  The building is owner-occupied.
The Board recently rendered a decision in appellant's appeal of the subject property's assessment for the fiscal year preceding the fiscal year at issue.  See Bodwell Extension, LLC v. Board of Assessors of the Town of Avon, Mass. ATB Findings of Fact and Reports 2006-336, 338-40 ("Bodwell Extension I").  In Bodwell Extension I, the Board issued a decision for the appellee, finding that appellant failed to meet its burden of proving that the assessment for that fiscal year exceeded the subject property's fair cash value.  Specifically, the Board found credibility flaws with appellant's witness primarily because his evidence was based upon an appraisal report prepared by a third-party "consultant," who was hired by appellant on a contingent-fee basis.  Id. at 344-45.  In contrast, the Board found that the assessors' expert witness had presented credible analyses, including a review of eight contemporaneous sales of comparable properties and eight leases of comparable space within the Industrial Park, to arrive at an opinion of value for the subject property of $3,070,000.  Id. at 346.  Accordingly, the Board found that the $2,829,100 assessed value did not exceed the fair cash value of the subject property for fiscal year 2004.  Id. at 353.
In the present appeal, appellant presented its position that the $3,866,200 assessed value for the fiscal year at issue exceeded the subject property's fair cash value through the testimony and appraisal report of Donald Griffin ("Mr. Griffin"), a commercial real estate appraiser, whom the Board qualified as an expert in the field of real estate valuation.  Mr. Griffin first analyzed the value of the subject property using the income approach to value.  Mr. Griffin's analysis focused on six "comparable rents" that he used to derive a market rent for the subject property.  Based upon his analysis, Mr. Griffin arrived at a fair market value of $2,726,000 for the subject property. 
On cross-examination, however, the appellee uncovered several shortcomings in Mr. Griffin's rental figures.  Mr. Griffin failed to review any of the leases for his comparable properties and did not speak to any of the lease participants to determine the terms of the rental agreements.  In addition, for his first comparable property, Mr. Griffin "backed-in" to his rental amount by multiplying the reported sale of the comparable property in March, 2004 by a reported capitalization rate from an unspecified source which he did not verify.  Finally, Mr. Griffin admitted that his fifth and sixth rentals were not rentals at all but merely the rents being asked by the owners in an attempt to lease the space. 
Mr. Griffin also analyzed the value of the subject property using the sales approach to value, selecting sales from within the Industrial Park, as the assessors' expert did in Bodwell Extension I.  Mr. Griffin selected six sales from within the Industrial Park, which he regarded as representative of the marketplace.  He applied adjustments to his sales, including a positive adjustment for appreciation in the market rate at four percent annually, which the appellee did not dispute, as well as other adjustments to account for differences in the comparable properties when compared to the subject property.  On the basis of his sales approach to value, Mr. Griffin concluded that the fair market value of the subject property was $2,970,000 for the fiscal year at issue.
Again, the appellee uncovered shortcomings in Mr. Griffin's analysis on cross-examination.  Mr. Griffin's primary shortcoming was his nearly exclusive reliance on an on-line data source, CoStar, for his sales data.  He did not speak with the buyers, sellers, brokers, or attorneys for the buyers or sellers to determine if the sales were negotiated at arms'-length, nor did he review the terms of the sales for other relevant information which might have impacted the sale price.      
Mr. Griffin reconciled the values derived from his analyses under the income approach and the sales approach and arrived at an opinion of value for the subject property of $2,800,000.  
The Board found that the shortcomings in Mr. Griffin's analyses of fair market value of the subject property cast some doubt on the reliability of some of his data and his opinion.  He failed to review the leases or speak to the market participants concerning the lease terms for his comparable rental properties, or the terms and conditions of sales for his comparable sales properties.  The failure to review the terms and conditions of leases and sales for his comparable properties diminished the persuasiveness of his analysis.  The Board noted, however, that his opinion of value was reasonably close to the $2,829,000 assessed value for the prior fiscal year and the $3,070,000 opinion of value offered by the appellee's expert witness in Bodwell Extension I, which the Board found to be credible and persuasive.  See Bodwell Extension I, at 346.  Accordingly, under these circumstances, the Board gave some weight to Mr. Griffin's opinions. 
For its part, the appellee did not present a case in the present appeal, choosing instead simply to rest on its assessment, which reflected a 36.7% increase from the fiscal year previous to the fiscal year at issue.  There was no evidence of any significant changes to the subject property or the relevant market from the previous fiscal year to the fiscal year at issue, and no evidence of market data to support the subject assessment.  Faced with a record that included: an assessed value for the previous fiscal year of $2,829,000; a thorough and well-reasoned analysis by the assessors' expert in the previous fiscal year's appeal that arrived at a fair market value of just over $3,000,000; imperfect analyses by appellant's expert in the present appeal that nevertheless arrived at opinions reasonably close to the appellee's opinion of value and the subject property's assessed value for the prior fiscal year; uncontroverted evidence presented by appellant that the market increased by approximately 4% between the relevant valuation dates for fiscal years 2004 and 2005; and the subject assessment, which exceeds the prior year's assessment by about $1 million, or roughly 38%, with nothing in the record to support such an increase; the Board, after weighing these facts, found that the fair cash value of the subject property was $3,000,000 for the fiscal year at issue.  The Board noted that this value represents an approximately 4% increase over the prior fiscal year's assessment.  Accordingly, for all of the foregoing reasons, the Board issued a decision for appellant, granting an abatement of $18,042.95 in the instant appeal.

OPINION
"All property, real and personal, situated within the commonwealth . . . shall be subject to taxation."  G.L. c. 59, § 2.  The assessors are required to assess real estate at its fair cash value determined as of the first day of January of each year.  G.L. c. 59, §§ 2A and 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 are fully informed and under no compulsion.  Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).
Appellant has the burden of proving that the property has a lower value than that assessed.  "'The burden of proof is upon the petitioner to make out its right as a matter of law to abatement of the tax.'"  Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974) (quoting Judson Freight Forwarding Co. v. Commonwealth, 242 Mass. 47, 55 (1922)).  "[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, 363 Mass. at 245). 
The Board found that shortcomings in Mr. Griffin's analyses, particularly his failure to review any lease documents and to speak with any market participants, cast some doubt on his data and opinion of fair market value under both the income and sales approaches.  See, e.g., Saunders v. Board of Assessors of Boston, Mass. ATB Findings of Fact and Reports 1993-1, 9.  However, given the consistency of Mr. Griffin's opinion of value with the prior year's assessment and the well-reasoned opinion of the appellee's expert in Bodwell Extension I, the Board inferred that Mr. Griffin's sales and rental data were reasonably reliable indicators of market value, and thus gave some weight to his opinions of value.  See General Electric, 393 Mass. at 606 (ruling that the substantial evidence upon which the Board must rely to support its conclusion includes the entire record).  Applying an approximately 4% rate of appreciation, as testified to by Mr. Griffin and not challenged by the appellee, the Board found and ruled that the fair cash value of the subject property for the fiscal year at issue was $3,000,000.
The fair cash value of property cannot be proved 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).  Market value is a matter of judgment; the board must make its decision on evidence presented but need not adopt the valuation of any particular witness.  Assesssors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60 (1941).  Moreover, the Board is not required to believe the testimony of any particular witness or to adopt any particular method of valuation that an expert witness may suggest, but can accept those portions of the evidence which the Board determines have the more convincing weight.  Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 683 (1982); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469, 473 (1981); Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 701-702 (1972).  In evaluating the evidence before it, the Board may select among the various elements of value and form its own independent judgment of fair cash value.  North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984).  
On this basis, the Board entered a decision for appellant in this appeal, and granted an abatement of $18,042.95.   


				  	  THE APPELLATE TAX BOARD



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


     


A true copy,


Attest: _________________________________
  	                    Clerk of the Board

ATB 2007-1257