Salem Traders Way Realty, LLC v. Board of Assessors of the City of Salem (April 11, 2007)

 COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD




SALEM TRADERS WAY REALTY LLC	v.	BOARD OF ASSESSORS OF
							THE CITY OF SALEM

Docket Nos. F272753, F277638		Promulgated:
		  F272752, F277639		April 11, 2007			


	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 appellee to abate taxes on real estate located in the City of Salem, owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal years 2004 and 2005.
	Commissioner Gorton heard these appeals and was joined in the decision for the appellee by former Chair Foley and Commissioners Scharaffa, Egan and Rose.  
	These findings of fact and report are made pursuant to a request by the appellant under G.L. c. 58A, § 13 and 831 CMR 1.32.
		
	Matthew A. Luz, Esq. for the appellant.
Francis Kulik, Assistant Assessor, and Deborah Jackson, Assistant Assessor, for the appellee.



FINDINGS OF FACT AND REPORT

	On January 1, 2003 and January 1, 2004 ("the relevant assessment dates"), Salem Traders Way Realty LLC ("appellant"), was the assessed owner of two contiguous parcels of unimproved real estate located at 45 Traders Way and 40 First Street (collectively "subject properties"), in the City of Salem.
The subject properties are generally rectangular in shape.  Forty-five Traders Way contain 2.17 acres of land situated on the northeast side of Traders Way.  The lot is at street level and slopes gradually in a southerly direction.  Forty First Street is a corner lot with 6.78 acres of land situated at the northeast side of Traders Way and the northwesterly side of First Street.  The lot is at street grade along First Street and slopes gradually northward.  The lot's easterly bound is encumbered with utility and driveway easements.  No evidence was offered to show that the easements hinder the utility of the site.
The subject properties are located in the southwest portion of Salem, just off Route 107 (Highland Avenue) which is a divided two-lane highway that serves as the primary connector street joining Salem and Lynn.  Accessibility to Route 107 is good as a result of various intersections that facilitate movement of a relatively high volume of traffic.  Route 107 also joins with various secondary roads allowing travel in all directions.  There are a variety of uses in the immediate neighborhood of the subject parcels, including retail and service, residential and industrial properties.  Street improvements within the area include paved roads, some sidewalks, and granite, concrete and asphalt berm curbs, storm drains, streetlights, and overhead electrical and telephone wires.  Utilities include municipal water and sewer, gas, electricity and telephone service.
For fiscal year 2004, the Board of Assessors of the city of Salem ("assessors") valued 45 Traders Way and 40 First Street at $587,100 and $1,460,000, respectively, and assessed taxes thereon, at the rate of $22.59 per thousand, in the corresponding amounts of $13,262.59 and $32,981.40.  Salem's Collector of Taxes mailed the fiscal year 2004 actual tax bills on or about December 27, 2003.  In accordance with G.L. c. 59, § 57C, the appellant timely paid the taxes assessed without incurring interest.
On January 30, 2005, in accordance with G.L. c. 59, § 59, the appellant timely filed its applications for abatement with the assessors, which were deemed denied on April 30, 2005.  Subsequently, on May 19, 2004, the appellant seasonably filed its appeals with the Appellate Tax Board ("Board"). On the basis of these facts, the Board found that it had jurisdiction over the fiscal year 2004 appeals.
For fiscal year 2005, the assessors valued 45 Traders Way and 40 First Street at $587,100 and $1,460,000, respectively, and assessed taxes thereon, at the rate of $21.83 per thousand, in the corresponding amounts of $12,816.39 and $31,816.39.  Salem's Collector of Taxes mailed the fiscal year 2005 actual tax bills on or about December 22, 2004.  In accordance with G.L. c. 59, § 57C, the appellant timely paid the taxes assessed without incurring interest.
On January 7, 2005, in accordance with G.L. c. 59, § 59, the appellant timely filed its applications for abatement with the assessors, which were deemed denied on April 7, 2005.  Subsequently, on April 19, 2005, the appellant seasonably filed its appeals with the Board.  On the basis of these facts, the Board found that it had jurisdiction over the fiscal year 2005 appeals.
In support of its contention that the subject properties were overvalued for fiscal years 2004 and 2005 ("fiscal years at issue"), the appellant offered the testimony of Mr. Paul Beatie.  The appellant submitted also numerous exhibits into evidence, including Mr. Beatie's "valuation report."  Mr. Beatie is General Counsel and Clerk/Secretary of Fafard Real Estate Development Corporation ("Fafard") and its subsidiaries, which include the appellant.  Mr. Beatie's responsibilities at Fafard include acquisitions, financing, tax matters and general real estate management.  He is not a real estate appraiser.
To arrive at an estimate of value for the subject properties, Mr. Beatie reviewed sales of industrial properties in Salem but concluded that none were comparable to the subject properties.  Consequently, he looked to the surrounding areas and chose four sales of purportedly comparable properties located in Peabody, Beverly, and Middleton that sold during the time period March 2, 2000 through October 29, 2002.  These purportedly comparable properties, two industrially zoned and two commercially zoned, had land sizes of 18.22, 13.10, 3.83 and 38.84 acres, with unadjusted per-acre selling prices of $39,517, $83,969, $117,493 and $83,677.  Mr. Beatie suggested that all of his chosen comparables' locations were superior in comparison to the subject properties and, therefore, he adjusted all comparable sales downward by ten percent.  Although he testified that he made timing adjustments to comparable sales number two and number three, which occurred thirty-one and thirty-four months prior to the fiscal year 2004 date of assessment, no adjustments appeared in his analysis.  Furthermore, despite the vast discrepancies in size between the subject properties and his chosen comparable properties, Mr. Beatie analysis made no adjustments to reflect these differences.
Mr. Beatie's per-acre adjusted sale prices calculated to $35,565.31, $75,572.52, $105,744.13 and $75,308.96.  He applied these values to the subject properties' combined total area of 8.95 acres, "because they were contiguous properties," to arrive at an indicated value of $946,000, rounded, for both fiscal year 2004 and 2005.  He then calculated each individual property's fair cash value based on its acreage percentage in relation to the combined total acreage.  His estimates of fair cash value were $229,365 for 45 Traders Way and $716,635 for 40 First Street.  The appellant offered no further evidence.
In support of their assessment, the assessors offered the testimony of Mr. Francis Kulik, assistant assessor for the City of Salem.  First, Mr. Kulik offered into evidence sales information for three sales of vacant land located on Highland Avenue and Traders Way, all located within one mile of the subject properties, which occurred during the period April 1996 through August 1998.  According to Mr. Kulik, at the time of sale all three properties reported significant ledge, twenty-five to fifty feet above road grade, and required considerable site preparation.  Despite the condition of the parcels, the sale prices ranged from $223,500 to $276,694 per acre.  Mr. Kulik acknowledged that these sales occurred nearly ten years before the relevant dates of assessment for the present appeals.  He noted, however, that the sales' information for these parcels was submitted "only as an indication of trending in the area."    
Mr. Kulik also presented to the Board sales information, including copies of deeds, for three additional sales of vacant land in Salem.  Sale number 1, 6.1 acres located at 201-205 Highland Avenue sold on January 10, 2001, for $381,148 per acre.  At the time of sale, the property was improved with a structure which was subsequently demolished and the site graded to street level.  Sale number two, 4.88 acres located at 209 Highland Avenue occurred on October 31, 2003, with a sale price of $394,467 per acre.  This parcel, which has a current address of 4 First Street, is located adjacent to the subject properties.  At the time of sale, the parcel was situated approximately twenty-five feet above road grade, thereby requiring significant site preparation.  Lastly, sale number three, 4.4 acres located at 80 Swampscott Road, occurred on June 15, 2001, for $211,000 per acre.  Reportedly, the seller agreed to pay for ledge removal and site leveling.  
After considering all of the evidence, the Board found that Mr. Beatie lacked expertise in the valuation of real estate and had insufficient familiarity and knowledge of the subject properties or relevant market conditions to offer an opinion of value for the subject properties.  Moreover, even assuming that Mr. Beatie were qualified to testify to an opinion of value, the Board found that Mr. Beatie's analysis was flawed in several respects.
The Board found and ruled that Mr. Beatie erroneously valued the subject properties as a single unit.  The subject properties are two separate parcels of real estate each capable of being sold to unrelated third parties and developed independently.  Therefore, the Board found and ruled that the subject properties should have been valued individually.  Mr. Beatie's failure to separately value the subject parcels undermined any probative weight his testimony might have had.  
The Board further found that Mr. Beatie's sales-comparison analysis was flawed and, therefore, unreliable.  First, the Board found that Mr. Beatie failed to establish comparability between his purportedly comparable sales and the subject properties.  The Board also found that Mr. Beatie failed to sufficiently explain how he determined the adjustments he made for locational differences.  Moreover, he failed to make other necessary adjustments for differences between his purportedly comparable properties and the subject properties. 
Accordingly, based on the evidence presented, the Board found and ruled that the appellant did not meet its burden of proving that the subject properties had been overvalued for fiscal years 2004 and 2005.  On this basis, the Board issued a decision for the appellee 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 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 of them are fully informed and under no compulsion.  Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).  
	The appellant has the burden of proving that the subject 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 [an] 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 [B]oard is entitled to 'presume that the valuation made by the assessors [is] valid unless the taxpayers . . . prov[e] the contrary.'" General Electric Co., 393 Mass. 591, 598 (1984) (quoting Schlaiker, 365 Mass. at 245). 
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. at 600 (quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983)).
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, ATB Findings of Fact and Reports 2005-414, 416.  However, as a general rule, an owner of property 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.  When the question relates to testimony by an officer of a corporation the mere holding of office is not enough, the officer must have knowledge which in fact qualifies him.  An officer of a corporation may testify to value of business assets but only if he has knowledge of and familiarity with the property at issue which qualifies him to express an opinion.  See  Winthrop Products Corp. v. Elroth Co., 331 Mass. 83, 85-86 (1954); Girl Scout Council, Inc. v. Mass. Turnpike Auth., 335 Mass. 189, 198 (1956).  Whether an owner or corporate officer is so qualified is a preliminary question for decision of the trier of fact.  Willey v. Cafrella, 336 Mass. 623, 624 (1958).  
In the present appeals, the Board found that Mr. Beatie did not possess the requisite expertise or familiarity with the subject properties to testify to an opinion of value.  Moreover, even had he been so qualified, the Board found that his sales-comparison analysis was flawed.  The Board found that Mr. Beatie erroneously valued the subject properties as a single unit, that he failed to establish comparability between his chosen comparables and the subject properties, and that he failed to sufficiently analyze existing differences.
Based on the evidence presented, the Board found and ruled that the appellant did not meet its burden of proving that the subject properties were overvalued for fiscal years 2004 and 2005.  On this basis, the Board issued a decision for the appellee in these appeals.

						APPELLATE TAX BOARD


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



A true copy,

Attest:____________________________
	  Assistant Clerk of the Board

 On January 11, 2002, Fafard Development Corporation transferred ownership of the subject properties to appellant, a wholly-owned subsidiary.

ATB 2007-236