Raynham Real Estate Holdings, Co. v. Board of Assessors of the Town of Raynham (December 14, 2016)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


RAYNHAM REAL ESTATE	            v.		   BOARD OF ASSESSORS OF HOLDINGS, CO.     					   THE TOWN OF RAYNHAM

Docket Nos.: F321237-238 (FY 2013)          Promulgated:
             F323362-363 (FY 2014)          December 14, 2016
		

	These are appeals 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 Raynham (the "assessors" or the "appellee") to abate taxes on certain contiguous real estate parcels in Raynham, assessed under    G.L. c. 59, §§ 11 and 38 for fiscal years 2013 and 2014, which were owned by and assessed to Raynham Real Estate Holdings Co. (the "appellant").
	Commissioner Rose heard these appeals.  Chairman Hammond and Commissioners Scharaffa, Chmielinski, and Good joined him in decisions for the appellee.  
	These findings of fact and report are made pursuant to a request by the appellant under G.L. 58A, § 13 and 831 CMR 1.32.  

	David J. McCool, Esq. and James F. Sullivan, Esq. for the appellant.

	William Lewis, Chairman of the assessors, for the appellee. 
FINDINGS OF FACT AND REPORT
The appellant presented its case-in-chief through the testimony of George Turner, an experienced developer and a trustee of the Turner Family Trust and member of Berry Hill, LLC, the successors in interest to the appellant.  The appellant also introduced seven exhibits, including deeds, cost estimates, listings, a settlement statement, and a plan of the subdivision which contains the parcels at issue in these appeals.  
The assessors' case-in-chief consisted of William Lewis' testimony, including his uncontroverted representations that the appellant holding company, which held title to the subdivision until it was sold to the Turner Family Trust and a related entity, Berry Hill, LLC, on January 24, 2013, was created by the two banks that had foreclosed on the subdivision in 2011.  The assessors also introduced the requisite jurisdictional documents, as well as a table listing the assessed values of the subject parcels from fiscal years 2009 through 2014, pertinent property record cards, a building permit showing the representative cost to build a home on a parcel comparable to the subject parcels, and some comparable-sale and comparable-assessment information.  Based on this evidence, the Appellate Tax Board (the "Board") made the following findings of fact.  
On January 1, 2012 and January 1, 2013, the valuation and assessment dates for fiscal years 2013 and 2014, respectively, the appellant was the assessed owner of a subdivision in Raynham, known as Berry Hill.  At all relevant times, Berry Hill was an adult community originally composed of fifty primarily 10,000-square-foot parcels, along with infrastructure, a new community building, and some common or open space.  During the relevant time period, there were at least twelve homes which had been built on twelve of the fifty lots and several other lots that were in various stages of development.  For fiscal years 2013 and 2014, the appellant appealed the assessments on thirty-three and twenty-seven of the parcels, respectively (the "subject parcels"). 
The relevant assessment information for the subject parcels is contained in the following four tables.
Fiscal Year 2013 - Docket No. F321237


Address	
Parcel	
Acreage	Assessed Value	Tax @ $14.66 per $1,000	
					
0 Clubhouse Circle	10-20-02	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-03	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-05	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-06	0.29	$72,800	$1,067.25	
0 Clubhouse Circle	10-20-08	0.24	$72,300	$1,059.92	
0 Clubhouse Circle	10-20-09	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-11	0.28	$72,700	$1,065.78	
0 Clubhouse Circle	10-20-12	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-18	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-48	0.23	$72,300	$1,059.92	
0 Berry Hill	10-20-16	0.23	$72,200	$1,058.45	
0 Berry Hill	10-20-15	0.23	$72,200	$1,058.45	
0 Berry Hill	10-20-14	0.23	$72,200	$1,058.45	

Fiscal Year 2013 - Docket No. F321238


Address	
Parcel	
Acreage	Assessed Value	Tax @ $14.66 per $1,000	
					
0 Clubhouse Circle	10-20-20	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-21	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-22	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-23	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-24	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-25	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-27	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-28	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-30	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-31	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-32	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-33	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-35	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-37	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-38	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-39	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-40	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-41	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-42	0.23	$72,200	$1,058.45	
0 Clubhouse Circle	10-20-43	0.23	$72,200	$1,058.45	

Fiscal Year 2014 - Docket No. F323362


Address	
Parcel	
Acreage	Assessed Value	Tax @ $15.42 per $1,000	
					
0 Clubhouse Circle	10-20-20	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-21	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-22	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-23	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-24	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-27	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-28	0.23	$ 72,200	$1,113.32	
55 Clubhouse Circle	10-20-30	0.23	$170,500	$2,629.11	
0 Clubhouse Circle	10-20-31	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-32	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-33	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-35	0.23	$ 72,200	$1,113.32	
6 Clubhouse Circle	10-20-37	0.23	$158,000	$2,436.36	
0 Clubhouse Circle	10-20-38	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-39	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-40	0.23	$ 72,200	$1,113.32	
48 Clubhouse Circle	10-20-41	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-42	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-43	0.23	$ 72,200	$1,113.32	


Fiscal Year 2014 - Docket No. F323363


Address	
Parcel	
Acreage	Assessed Value	Tax @ $15.42 per $1,000	
					
0 Clubhouse Circle	10-20-02	0.23	$ 72,200	$1,113.32	
221 Clubhouse Circle	10-20-03	0.23	$153,600	$2,368.51	
0 Clubhouse Circle	10-20-05	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-06	0.29	$ 72,800	$1,122.58	
197 Clubhouse Circle	10-20-08	0.24	$196,200	$3,025.40	
177 Clubhouse Circle	10-20-11	0.28	$ 80,100	$1,235.14	
0 Clubhouse Circle	10-20-12	0.23	$ 72,200	$1,113.32	
0 Clubhouse Circle	10-20-18	0.23	$ 72,200	$1,113.32	

	For both fiscal years at issue, in accordance with      G.L. c. 59, § 57C, the appellant timely paid the taxes due without incurring interest.  For fiscal years 2013 and 2014, in accordance with G.L. c. 59, § 59, the appellant timely filed abatement applications on February 1, 2013 and January 30, 2014, respectively.  The assessors denied the fiscal-year 2013 appeals on April 16, 2013 and the fiscal-year 2014 appeals on March 11, 2014.  The appellant seasonably filed its fiscal-year 2013 and 2014 appeals with this Board on July 12, 2013 and June 11, 2014, respectively. 
	In support of its request for abatements, the appellant argued that the subject parcels' assessments should approximate their pro-rata share of the sale prices contained in the two deeds which transferred them to the Turner Family Trust and Berry Hill, LLC, reduced further by their pro-rata share of the cost to complete the subdivision's infrastructure.  The first deed transferred nine of the subject parcels for $220,227.45, and the second deed transferred twenty-four of the subject parcels for $587,272.55 for an average of approximately $24,470 per parcel.  In a letter dated May 11, 2012 and addressed to the Raynham Planning Board, an engineering firm estimated the cost to complete the subdivision's infrastructure at $712,056. 
	The assessors' primary argument was that the sale prices on the two deeds which transferred the subject parcels to Turner Family Trust and Berry Hill, LLC were not indicative of the subject parcels' fair market prices because the transactions were bank and wholesale bulk sales.  Moreover, after unsuccessfully marketing the subject parcels for bulk sale for over a year, the banks' holding company sold them in bulk for approximately one-half of the original asking price.  In addition, the sales and permitting information introduced by the assessors revealed that during the relevant time period, vacant parcels in Raynham that were similar to the subject parcels, as well as parcels within the subdivision itself, were selling at retail for approximately $100,000.  The assessors grounded their assessments on the subject parcels on that $100,000 value reduced by approximately $25,000 per parcel to account for the cost to complete the subdivision's infrastructure, which already had a roadway with drainage and a virtually complete base course.  The vast majority of the remaining work on the subdivision was for a top course, as well as sidewalks, landscaping, and clean-up.    
	Based on all the evidence, the Board found that the sales of the subject parcels in bulk to the Turner Family Trust and Berry Hill, LLC were not representative of retail or even wholesale market transactions.  The seller holding company had been established by the banks which had foreclosed on the subdivision's prior owner and it was, therefore, not a typical seller operating under no compulsion.  The appellant failed to offer any evidence to contradict or dispute this assertion.  The Board, therefore, found that the sale prices were not representative of a market composed of knowledgeable sellers and buyers operating without compulsion or undue influence.  
	Moreover, the Board found that at all relevant times, there was a roadway within the subdivision with a completed base course.  Accordingly, the collective purchases of nine and twenty-four parcels were bulk purchases of the subject parcels, and these two purchases were therefore not representative of the fair market values of the subject parcels because they could have been sold at retail to individual purchasers.  It appeared to the Board that the banks were simply trying to unload the subject parcels as expeditiously as possible by offering them for sale in bulk at a reduced rate.
	In addition, the Board found that the assessors affirmatively demonstrated that vacant parcels in Raynham similar to the subject parcels and even those in the subdivision itself were selling for approximately $100,000 in 2012, 2013, and 2014.  The Board further found that assuming infrastructure costs of about $25,000 per parcel, based on the engineering letter in evidence, and commensurately reducing the $100,000 value per parcel to $75,000, supported the assessments.
	On this basis, the Board found and ruled that the appellant failed to meet its burden of proving that the assessments on the subject parcels were excessive.  The Board further found and ruled that the evidence introduced by the assessors supported the assessments.  Accordingly, the Board decided these appeals for the appellee.

OPINION
The assessors are required to assess real estate at its fair cash value as of the first day of January preceding the start of the fiscal 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 v. Assessors of Boston, 334 Mass. 549, 566 (1956).  
The appellants have 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 [an] abatement of the tax.̓"  Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974)(quoting Judson Freight Forwarding 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, 365 Mass. at 245).  
"Prior to valuing the subject property, its highest and best use must be ascertained, which has been defined as the use for which the property would bring the most."  Tennessee Gas Pipeline Co. v. Assessors of Agawam, Mass. ATB Findings of Fact and Reports 2000-859, 875 (citing Conness v. Commonwealth, 184 Mass. 541, 542-43 (1903); Irving Saunders Trust v. Assessors of Boston, 26 Mass. App. Ct. 838, 843 (1989)(and the cases cited therein)).  In determining fair market value, all uses to which the property was or could reasonably be adapted on the relevant assessment date should be considered.  Newton Girl Scout Council, Inc. v. Massachusetts Turnpike Authority, 335 Mass. 189, 193 (1956).  If a property is particularly well-suited for a certain use that is not prohibited, then that use may be reflected in an estimate of fair market value.  Colonial Acres v. North Reading, 3 Mass. App. Ct. 384, 386 (1975).  According to the authoritative valuation treatise, Appraisal Institute, The Appraisal of Real Estate (13th ed. 2008), highest and best use is defined as "[t]he reasonably probable and legal use of vacant land . . . that is physically possible, appropriately supported, and financially feasible and that results in the highest value."  Id. at 277-78.    
In the present appeals, the Board found and ruled that, for ad valorem tax purposes, the subject parcels' highest and best use was as individual residential building lots sold at retail to multiple purchasers and not as a bulk sale of lots to a single, wholesale purchaser, which is consistent with its findings and rulings in other recent appeals that involved similar subdivisions in similar states of completion.  See GLW Kids LLC v. Assessors of Carlisle, Mass. ATB Findings of Fact and Reports 2016-53, 71-73, 79-81; Autumn Gates Estate LLC v. Assessors of Millbury, Mass. ATB Findings of Fact and Reports 2013-822, 849-50; GD Fox Meadow, LLC v. Assessors of Westwood, Mass. ATB Findings of Fact and Reports 2011-501, 515; Cnossen v. Assessors of Uxbridge, Mass. ATB Findings of Fact and Reports, 2002-675, 686.  
Moreover, the Board found and ruled that even if it were to find, arguendo, that the subject parcels' highest and best use was as a wholesale bulk sale, the only evidence of that value - the sale prices associated with the two bulk sales - was discredited because the seller, the banks' holding company, was under compulsion to sell and, as a result, the sale prices did not reflect the fair market value of even a wholesale bulk sale of the subject parcels.  Morrissey v. Assessors of Easton, Mass. ATB Findings of Fact and Reports, 2014-13, 23 ("[B]ank sales are 'inherently suspect,' because by their nature, there is a suggestion that they do not represent an agreement between a willing buyer and a willing seller in a free and open market without compulsion.").  See Haynes v. Assessors of Middleton, Mass. ATB Findings of Fact and Reports 2011-143, 185 (ruling that "a sale by a bank which acquired the property by foreclosure or a deed in lieu of foreclosure also carries an indicia of compulsion")(citing DSM Realty, Inc. v. Assessors of Andover, 391 Mass. 1014 (1984) and G.F. Springfield Management v. Assessors of West Springfield, Mass. ATB Findings of Facts and Reports 2000-228, 242, 251).  See also Westwood Group, Inc. v. Assessors of Revere, 391 Mass. 1012, 1013 (1984) ("‛duress, fraud, or imperative need for immediate cash at any cost' preclude a free market")(quoting Epstein v. Boston Housing Authority, 317 Mass. 297, 300 (1944)).  Moreover, the appellant here failed to offer any evidence demonstrating an absence of compulsion.  See DSM Realty, Inc., 391 Mass. at 1014 ("a proponent of evidence of such sale must show circumstances rebutting the suggestion of compulsion").  Accordingly, the Board found and ruled that the appellant failed to meet its burden of persuasion in this regard.
	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 Auth., 375 Mass. 360, 362 (1978).  However, "[t]he [B]oard is not required to adopt any particular method of valuation." Pepsi-Cola Bottling Co. v. Assessors of Boston, 397 Mass. 447, 449 (1986).  
Actual sales of the subject property generally "furnish strong evidence of market value, provided they are arm's-length transactions and thus fairly represent what a buyer has been willing to pay for the property to a willing seller."  Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 682 (1982); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469 (1981); First National Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971). 
For buildable but as yet unimproved lots within an existing subdivision, the Board found and ruled that a comparable-sales approach is an appropriate method for estimating their value.  Appraisal Institute, the Appraisal of Real Estate 300 (13th ed. 2008) ("The sales comparison approach is applicable to all types of real property interests when there are sufficient recent, reliable transactions to indicate value patterns or trends in the market.").  The Board has consistently employed the comparable-sale approach when valuing parcels ready for sale within a subdivision.  See Cnossen v. Assessors of Uxbridge, Mass. ATB Findings of Fact and Reports at 2002-686, GD Fox Meadow, LLC v. Assessors of Westwood, Mass. ATB Findings of Fact and Reports at 2001-519-521; Autumn Gates Estates, LLC v. Assessors of Millbury, Mass. ATB Findings of Fact and Reports at 2013-853-55; GLW Kids LLC v. Assessors of Carlisle, Mass. ATB Findings of Fact and Reports at 2016-81-84.  Accordingly, the Board found and ruled that a sales-comparison analysis was the appropriate methodology to use to value the subject parcels here.
Sales of comparable realty in the same geographic area and within a reasonable time of the assessment date contain credible data and information for determining the value of the property at issue.  McCabe v. Chelsea, 265 Mass. 494, 496 (1929).  The Board found and ruled here that the sales of similar lots in Raynham during the relevant time period and, chiefly, the timely sales of other lots within the subdivision which contained the subject parcels were most relevant for determining the fair cash value of the subject parcels, particularly after applying a pro-rata deduction for the cost of completing the subdivision's infrastructure.  The Board found and ruled that these adjusted values supported the assessments on the subject parcels for the fiscal years at issue.  
	In making its various findings and rulings in these appeals, the Board was not required to believe the testimony of any particular witness or to adopt any particular method of valuation suggested.  Rather, the Board could accept those portions of the evidence that the Board determined had more convincing weight. Foxboro Associates, 385 Mass. at 682; New Boston Garden Corp., 383 Mass. at 469.  "The credibility of witnesses, the weight of evidence, the inferences to be drawn from the evidence are matters for the Board."  Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977).


The Board applied these principles in reaching its ultimate finding and ruling that the appellant failed to prove that the subject parcels were overvalued for ad valorem tax purposes for the fiscal years at issue. On this basis, the Board decided these appeals for the appellee.

				  THE APPELLATE TAX BOARD



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


A true copy,



Attest: _____________________________
     Clerk of the Board

 The appellant has also been variously referenced in the pleadings or evidence as "Raynham Real Estate Holdings Co.," "Raynham Real Estate Holding Co.," "Raynham Real Estate Holdings, Inc.," and "Raynham Real Estate Holding Co., LLC." 
 This amount does not include the district tax.
 This amount does not include the district tax.
 This amount does not include the district tax.
 This amount does not include the district tax.
 For fiscal year 2014, in accordance with G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, the appellant's petition was deemed filed on June 11, 2014, the date it was mailed, although it was received by the Board on June 12, 2014.

ATB 2016-495