Superior Realty Company, Inc. v. Board of Assessors of the City of Quincy (October 25, 2016)

COMMONWEALTH OF MASSACHUSETTS
APPELLATE TAX BOARD
		
SUPERIOR REALTY 	BOARD OF ASSESSORS OF
COMPANY, INC.                 v. 	THE CITY OF QUINCY  	


Docket Nos.: F318811 (FY 13)			Promulgated: 
		   F322924 (FY 14)			October 25, 2016
							  		

	These are appeals filed under the formal procedure pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the Board of Assessors of the City of Quincy (the "assessors" or "appellee") to abate taxes on certain parcels of real estate in the City of Quincy assessed to Superior Realty Company, Inc. (the "appellant") under G.L. c. 59, §§ 11 and 38 for fiscal years 2013 and 2014 (together, the "fiscal years at issue").   
	Commissioner Good heard these appeals.  Chairman Hammond and Commissioners Scharaffa, Rose, and Chmielinski joined her in the decisions 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.


Richard L. Wulsin, Esq. and Rachel Wulsin, Esq., for the appellant.

Peter J. Moran, Chief Assessor, for the appellee.  


	Based on the testimony and documentary evidence entered into the record in these appeals, the Appellate Tax Board (the "Board") made the following findings of fact.  
	On January 1, 2012 and January 1, 2013, the relevant valuation and assessment dates for the fiscal years at issue, the appellant was the assessed owner of two adjacent parcels of land (together, the "subject property") located on Hancock Street in Quincy.  The first parcel, located at 599R Hancock Street, is a 22,147-square-foot parcel of land improved with a two-story, mixed-use commercial building containing approximately 19,000 square feet (the "subject building parcel").  The building on the subject building parcel was built circa 1939, and has a mix of stucco and brick exterior and a flat roof with rubber membrane cover.  Interior finishes include plaster walls and ceramic tiled flooring.  The first floor of the subject building has retail space, while the second floor has office space.  
	For both of the fiscal years at issue, the assessors valued the subject building parcel at $1,685,700, and assessed taxes thereon, at a rate of $30.61 for fiscal year 2013 and $31.23 for fiscal year 2014, in the total amounts of $51,599.28 and $52,644.41, respectively.  The appellant timely paid the taxes without incurring interest.  
	The second parcel, located at 621 Hancock Street, is an approximately 28,000-square-foot parcel of land which serves as the parking lot for the subject building (the "subject parking parcel").  It has no improvements other than asphalt paving and sections of chain link fence, and it provides parking for 62 vehicles.  For both of the fiscal years at issue, the assessors valued the subject parking parcel at $436,100, and assessed taxes thereon, at the rate of $30.61 for fiscal year 2013 and $31.23 for fiscal year 2014, in the total amounts of $13,349.02 and $13,619.40, respectively.  The appellant timely paid the taxes without incurring interest.  
	In accordance with G.L. c. 59, § 59, the appellant timely filed its fiscal year 2013 and 2014 Applications for Abatement with the assessors on or before their respective February first and February third due dates, which the assessors denied.  In accordance with G.L. c. 59, §§ 64 and 65, the appellant seasonably filed its petitions with the Board within three months of the corresponding denials.  Based on the foregoing, the Board found and ruled that it had jurisdiction to hear and decide these appeals. 
The Appellant's Case-in-Chief
	The appellant presented its case-in-chief through the testimony and valuation evidence of its President, James Cifrino.  As of the time of the hearing of these appeals, Mr. Cifrino had been employed by the appellant for over three decades.  He testified that the appellant is a largely family-owned business and it owns and operates numerous commercial properties in the greater Boston area.  The Board found his testimony to be credible. 
	The evidence, including Mr. Cifrino's testimony, showed that on the relevant dates of valuation for the fiscal years at issue, the subject building was occupied by four different tenants.  The following table contains relevant information regarding those leases.  
Tenant	Rental Area (SF)	$/SF	
United States Postal Service (the "USPS")	9,000	16.81	
Wollaston Supreme Liquors	5,600	 8.57	
South Bay Chiropractic	2,400	15.63	
Healing Tree Yoga	2,500	12.60	

	Mr. Cifrino testified regarding the circumstances through which Wollaston Supreme Liquors leased its current space (the "liquor-store space") within the subject building.  He stated that the liquor-store space had previously been owned and operated as a liquor store by a different tenant, who eventually vacated the space.  Sometime thereafter, the appellant attempted to renew the liquor license for the liquor-store space, and it was informed that the liquor license could not be renewed if the space was vacant.  Mr. Cifrino testified that the appellant offered the liquor-store space for lease at $12.00 per square foot, but it did not attract any offers.  Eventually, an individual related to the family that owns and operates the appellant leased the liquor-store space from the appellant.  
When questioned by the assessors as to whether the fact that the liquor-store space was leased by a relative accounted for its lower rent in comparison to the subject building's other rents, Mr. Cifrino stated that the lower rent was more of a reflection of its condition.  He explained that the lessee agreed to lease the liquor-store space on an as-is basis, while in contrast, the appellant had to expend approximately $700,000 to renovate the spaces occupied by the yoga studio and chiropractor.  
While discussing the differing rents within the subject building, Mr. Cifrino stated that, if anything, the space occupied by the USPS was leased at an above-market rate, because that space was configured more as warehouse space than retail and it was used as a distribution center.  He also stated that the USPS lease was set to expire in 2015, and he did not expect it to be renewed.  The subject building's remaining tenants were at-will tenants.  
Although the subject property was fully occupied during the periods relevant to these appeals, Mr. Cifrino testified that this occupancy was an anomaly within the neighborhood, where there was considerable vacancy.  He stated that in preparation for the hearing, he conducted a survey of the neighborhood, which showed that nine out of the 61 business spaces in the subject's immediate neighborhood of Wollaston were vacant, resulting in a neighborhood vacancy rate of 14.75%.  A document showing this data was entered into the record, along with a real estate industry publication by Co-Star, which showed that general retail vacancy rates in the Boston area were between 4 to 5% during the periods relevant to these appeals.  Mr. Cifrino testified that most of the commercial spaces for rent in Wollaston were small and thus not the kind of space to which major, national retailers are attracted.  He stated that most of the businesses in the Wollaston area are smaller, local businesses and therefore there is more turnover and higher vacancy in that area.  
In addition to this information, the appellant also introduced into evidence its actual income and expense information for calendar years 2010 through 2013, including information regarding reimbursements.  The following tables summarize the reimbursement and expense information for calendar years 2011 through 2013.  
Reimbursements:	2011	2012	2013	Average	
					
Common Area Maintenance ("CAM")	$  13,610	 $   8,523	$  11,057	$  11,063	
Real Estate Tax	$  39,088	 $  59,446	$  65,448	$  54,661	
Management Fee	$  21,840	 $  21,843	$  21,777	$  21,820	
Water	$     745	 $   1,249	$   1,207	$   1,067	
Insurance	0	0	0	0	
Other	0	0	0	0	
Total	$  75,283	 $  91,061	$  99,489	$  88,611	

Expenses:	2011	2012	2013	Average	
					
Building 	$  12,684	$  15,520	$  30,036	$  19,413	
Licenses & Fees	$     896	0	0	$     299	
Office, Professional, & Other	$  12,531	$  16,102	$  21,893	$  16,842	
Utilities	$   3,563	$   3,033	$   3,020	$   3,205	
Insurance	$   3,750	$   6,706	$   7,132	$   5,863	
Total 	$  33,424	$  41,361	$  62,081	$  45,622	

The appellant's opinion of value for the subject property for both of the fiscal years at issue was $1.5 million.  That figure was arrived at, according to Mr. Cifrino, using an income-capitalization approach which incorporated, for the most part, the subject property's actual income and expense figures along with a 14.75% vacancy rate and a base capitalization rate of 9.0%.  The appellant's allocation of that total amount was $1.2 million for the subject building parcel and $300,000 for the subject parking parcel; an 80-20 split.  
In addition to its opinion of value, the appellant added in closing that a nearby 30,000-square-foot movie theater, also located on Hancock Street, sold for $600,000 during 2012 and it remained completely vacant as of the time of the hearing. No other details regarding that property or its sale were offered.  
The Assessors' Case-in-Chief
	The assessors presented their case-in-chief through various documentary submissions as well as the testimony of assessor Peter Moran.  Mr. Moran made numerous observations about the subject property, including that the rent for the liquor-store space was significantly lower than the other rents in the subject building.  In his opinion, that rent did not reflect market rent, and a more realistic market rent for the majority of the liquor-store space was $14.00 per square foot, but with a small amount of space set aside as storage or warehouse space at approximately $9.00 per square foot.
	Additionally, Mr. Moran stated that the subject parking parcel, which offered 62 parking spaces, contained more spaces than needed to accommodate the parking needs for the subject building, and that many of those spaces could have been rented out for additional income.  
Among the documentary submissions offered by the assessors were two property record cards for nearby commercial properties that had recently sold.  The first property record card was for a building which housed a McDonald's restaurant on the first floor and office space on the upper floors.  That property sold on August 7, 2013 for $2,000,000.  The second property record card was for a separate parcel which served as the parking lot for the building housing the McDonald's.  The property record card for that property shows that the parcel was smaller than the subject parking parcel, but was assessed for $457,100 for the fiscal years at issue.  
When questioned on cross-examination regarding these properties, however, Mr. Moran conceded that they were superior to the subject property in almost every respect.  Mr. Moran acknowledged that the McDonald's building was newer, larger, and in better condition than the subject building and it was also more favorably located, adjacent to an MBTA stop.  
In addition to these property record cards, the assessors entered into evidence two "pro-forma" valuation analyses for the subject building parcel, which employed an income-capitalization approach.  One of the analyses featured the subject building's actual income and expense figures, its actual vacancy rate of zero, and a capitalization rate of 11.7%.  Using those figures, the assessors determined a value of $1,650,000 for the subject building parcel for fiscal year 2013 and $2,137,214 for fiscal year 2014.  
The assessors' second valuation analysis contained what they considered to be market rents, vacancy rates, and expenses rather than the subject building's actual figures.  In particular, Mr. Moran noted that the rent for the liquor-store space was significantly lower than the other rents in the subject building, and, in his opinion, did not reflect market rent.  He stated that a more realistic rent for the majority of the liquor-store space was $14.00 per square foot, but with a small amount of space set aside as storage or warehouse space at approximately $9.00 per square foot.  Besides this alteration, the assessors made minor or no adjustments to the subject building's other rents in their market-based approach.  They used a vacancy and management expense of 5%, which they stated reflected the market for similar properties, and they allowed 15% for other expenses based on reported expenses from similar properties.  They again used a capitalization rate of 11.7%.  Using these figures, the assessors arrived at a value for the subject building parcel of $1,879,743 for fiscal year 2013 and $2,181,504 for fiscal year 2014.  The assessors believed that these estimates, along with the other evidence entered into the record, supported the assessments for the subject property for both of the fiscal years at issue.  
The Board's Conclusions
On the basis of all of the evidence, the Board found and ruled that the appellant met its burden of demonstrating that the subject property was overvalued for the fiscal years at issue. In reaching this conclusion, the Board initially determined that the highest and best use of the subject property was its continued use as an integrated retail/office building with a complementary parking lot.  In determining the subject property's highest and best use, the Board rejected the assessors' assertion that the size and potential utilization of the subject parking parcel was excessive relative to the parking demands of the subject building, and spaces could have been rented out to generate additional income.  The Board found this assertion to be speculative at best, as the parking needs of the subject building were and are highly dependent on the nature of the tenants therein.  Accordingly, the Board rejected the assessors' argument and concluded that the subject property's highest and best use was its existing use.  
The Board further concluded that an income-capitalization approach, which was used by both parties in the present appeals, was the most reliable methodology for determining the income-producing subject property's fair cash value.  In addition, the Board found that the best approach for individually valuing the two parcels which comprise the subject property was to determine a single overall value for the subject property, treating the subject building parcel and subject parking parcel as one economic unit, and then to allocate that single value between the two parcels.  The Board concluded that this approach was the most reliable because the subject property was used as a single economic unit, and the income and expense information offered by the parties did not separately apportion the income and expenses between the two parcels. 
The Board found that the subject property's actual rents reflected fair market rents, with the exception of the liquor-store and the USPS spaces.  The Board credited Mr. Cifrino's testimony that the USPS space was more in the nature of warehouse than retail space, and thus its current rent of $16.81 per square foot exceeded fair market rent.  In making this finding, the Board noted that even the assessors considered $9.00 per square foot to be fair market rent for warehouse space, as that was the estimate that they used for the warehouse portion of the liquor-store space. 
 In addition, the Board rejected Mr. Moran's suggestion that the liquor-store space was rented at a significantly below-market rate because it was rented to a related individual.  The Board credited Mr. Cifrino's testimony that the appellant marketed the liquor store space at $12.00 per square foot but was unable to rent it for that amount. The Board also credited Mr. Cifrino's testimony that the current rent was more of a reflection of the as-is nature of the space, in contrast to the expensive renovations undertaken at the appellant's expense for the subject building's other spaces. 
Accordingly, the Board adopted a rent of $9.00 per square foot for the relatively large USPS warehouse space and $10.00 for the significantly smaller liquor-store space, which despite its as-is condition was nonetheless superior to warehouse space as a whole and supported a viable retail business.  For the other spaces, the Board used the subject property's actual rents, with upward adjustments for rounding.  
Because the leases at the subject property were triple-net leases, the Board found that it was appropriate to add reimbursements for items such as common-area maintenance, real estate taxes, management fees, and water.  Several years' worth of the subject property's reported reimbursements were entered into the record, and the Board considered them to be reliable with the exception of the management fee. The record indicated that the information reported for that category, both as a reimbursement and as an expense, was overstated as it included amounts relating to other properties which were owned by the appellant.  Therefore, for that category, the Board used the assessors' suggested amount of 5%, both for reimbursement and as an expense, which was consistent with industry norms for that category.  Expenses (but not reimbursements) for real estate taxes were also excluded from the income stream and were instead included as a factor in the capitalization rate, as is appropriate when valuing property for purposes of ad-valorem taxation.  The Board otherwise used the average of the subject property's reported reimbursements for calendar years 2011 through 2013 and added that averaged amount to its net-operating income.  
In determining an appropriate vacancy rate, the Board rejected the appellant's suggested rate of 14.75% for a number of reasons.  As an initial matter, the neighborhood survey conducted by Mr. Cifrino was contemporaneous to the time of the hearing of these appeals, rather than the relevant dates of valuation, and it was therefore of little utility.  Further, although Mr. Cifrino's testimony regarding the generally higher vacancy and turnover rates within the subject property's neighborhood of Wollaston was credible and supported by the fact that three out of the subject building's four units housed at-will tenants, the subject building's 100% occupancy rate could not be ignored.  The Board therefore adopted the 5% vacancy rate suggested by the assessors, which was more consistent with both the market data entered into the record and the subject building's operating history.  
The Board next determined appropriate expense figures for its income-capitalization approach.  Several years' worth of the subject property's operating income and expenses were entered into the record, and the Board found that those figures provided reliable indications of market operating expenses, with the exception of the management fee.  The Board also found that the assessors' suggested 15% operating-expense and 5% management-fee deductions were market based.  After considering the assessors' recommended 15% operating-expense deduction and the average of the appellant's reported expenses for calendar years 2011 through 2013, the Board adopted an operating-expense deduction of $43,500, and for the reasons stated above, a 5% management expense.     
Finally, the parties did not differ greatly on their capitalization rates, nor did they offer much in the way of explanation for their selected rate.  The appellant used a base capitalization rate of 9.0%, while the assessors used a capitalization rate of 11.7%, which presumably was a loaded rate that included a tax factor.  The Board concluded that a base rate of 9.0% was appropriate, to which it added a tax factor.   The Board's income-capitalization approach for both of the fiscal years at issue is reproduced below.


Board's Income-Capitalization Methodology 
For Fiscal Years 2013 & 2014



INCOME                         Size(SF)       Rate/SF       Total

USPS Space                      9,000         $ 9.00       $81,000
Liquor Store Space              5,600         $10.00       $56,000
Chiropractor Office             2,400         $16.00       $38,400
Yoga Studio                     2,500         $13.00       $32,500
                                                          $207,900
Plus Reimbursements:                                      $ 77,159  
Potential Gross Income ("PGI"):                           $285,059                                                       

Vacancy @ 5%                                             ($ 14,253)		
 	
Effective Gross Income ("EGI"):                           $270,806 	
	
EXPENSES
	
  Management Fee - 5.0% of EGI                           ($ 13,540)
  Operating Expenses                                     ($ 43,500)
  
Total Expenses:                                          ($ 57,040) 	
  	
Net-Operating Income:                                     $213,766  	

Fiscal Year 2013
	
Base Capitalization Rate:      9.00
Tax Factor:                    3.06 
Overall Capitalization Rate:  12.06

Indicated Fair Cash Value ("FCV"):                      $1,772,521 	
Fiscal Year 2014

Base Capitalization Rate:      9.00
Tax Factor:                    3.12           
Overall Capitalization Rate:  12.12

Indicated FCV:                                          $1,763,746	
	
The Board allocated the indicated fair cash values for the subject property on a 79-to-21 percent basis based on the proportionality of the subject building's and the subject parking parcel's respective assessed values.  The following tables summarize the Board's approach in this regard.

Fiscal Year 2013

Parcel	Total Value	Allocation	Indicated FCV Value	Rounded Value	
   Building	$1,772,521	79%	$1,400,291	$1,400,000	
   Parking	$1,772,521	21%	$  372,229	$  370,000	

Fiscal Year 2014

Parcel	Total Value	Allocation	Indicated FCV Value	Rounded Value	
Building	$1,763,746	79%	$1,393,359	$1,395,000	
Parking	$1,763,746	21%	$  370,387	$  370,000	

	On this basis, the Board decided these appeals for the appellant and granted abatements, which included the appropriate portion of the CPA surcharge: (1) for fiscal year 2013 in the amounts of $8,832.73 for the subject building parcel and $2,043.56 for the subject parking parcel; and (2) for fiscal year 2014 in the amounts of $9,169.34 for the subject building parcel and $2,084.94 for the subject parking parcel.  


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 prior to each fiscal year.  G.L. c. 59, §§ 2A, 38, 52.  See Coomey v. Assessors of Sandwich, 367 Mass. 836, 837 (1975)(citations omitted).  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 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 board is entitled to 'presume that the valuation made by the assessors [is] valid unless the taxpayer[] . . . prov[es] the contrary.'" General Electric Co. v. Assessors of Lynn, 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., 393 Mass. at 600 (quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983)).  In the present appeals, the appellant introduced affirmative evidence of value to demonstrate that the subject property was overvalued for the fiscal years at issue. 
"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 the property's highest and best use, consideration should be given to the purpose for which the property is adapted.  See Leen v. Assessors of Boston, 345 Mass. 494, 504 (1963); Boston Gas Co., 334 Mass. at 566.  A property's highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive. Appraisal Institute, The Appraisal Of Real Estate 305-308 (12th ed., 2001); see also Skyline Homes, Inc. v. Commonwealth, 362 Mass. 684, 687 (1972);  DiBaise v. Town of Rowley, 33 Mass. App. Ct. 928 (1992).  Property cannot be valued on the basis of hypothetical or future uses that are remote or speculative.  See Skyline Homes, Inc., 362 Mass. at 687; Tigar v. Mystic River Bridge Authority, 329 Mass. 514, 518 (1952); Salem Country Club, Inc. v. Peabody Redevelopment Authority, 21 Mass. App. Ct. 433, 435 (1986).  
In the present appeals, the assessors suggested that the number of parking spaces in the subject parking parcel was excessive for the parking demands of the subject building and a meaningful number of spaces could have been rented out to generate additional income.  The Board, however, rejected that assertion because it was speculative and lacked support in the record.  Instead, the Board found and ruled that the subject property's current use as an integrated office/retail building serviced by a complementary parking lot was its highest and best use.  See, e.g., Vernon Hill Development Realty, LLC v. Assessors of Worcester, Mass. ATB Findings of Fact and Reports 2016-183, 194, 202.  
Real estate valuation experts, the Massachusetts courts, and this Board rely primarily upon three approaches to determine a property's fair cash value: income-capitalization, sales comparison, and depreciated reproduction or replacement cost.  Correia v. New Bedford Redevelopment Authority, 375 Mass. 360, 362 (1978).  "The Board is not required to adopt any particular method of valuation."  Pepsi-Cola Bottling Co. v. Assessors of Boston, 397 Mass. 447, 449 (1986).  When reliable sales data are not available and when the subject is income-producing property, the use of the income-capitalization approach is appropriate. Assessors of Weymouth v. Tammy Brook Co., 368 Mass. 807, 881 (1975); Assessors of Lynnfield v. New England Oyster House, 362 Mass. 696, 701-702 (1972); Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 67 (1941).  In the present appeals, both parties used the income-capitalization approach in valuing the subject property, and the Board found and ruled that that approach was the most reliable method with which to value the subject property.  
Under the income-capitalization approach, valuation is determined by dividing net-operating income by a capitalization rate.  See Assessors of Brookline v. Buehler, 396 Mass. 520, 522-23 (1986).  Net-operating income is obtained by subtracting expenses from gross income.  Id. at 523.  The income stream used in the income-capitalization method must reflect the property's earning capacity or economic rental value.  Pepsi-Cola Bottling Co., 397 Mass. at 451.  Although it is a property's earning capacity, and not its actual rental income, that is most probative, a property's actual leases may provide a reliable indication of market rent.  See, e.g., Porter Square Equity Partners 2, LLC v. Assessors of Cambridge, Mass. ATB Findings of Fact and Reports 2016-207, 251.  After accounting for vacancy and rent losses, the net-operating income is obtained by deducting the landlord's appropriate expenses which should mirror the market.  General Electric Co., 393 Mass. at 610.
In the present appeals, the Board concluded that the subject building's actual rents furnished reliable indications of market rent, with the exception of the USPS space and, to a lesser extent, the liquor-store space.  The record indicated that the USPS space was used as a distribution center and was configured more as warehouse space, rather than retail or office space.  The Board slightly increased the actual rent applied to the liquor-store space to better reflect its superiority to warehouse space and its use as viable retail space, while still recognizing its as-is condition.  The Board therefore found and ruled that fair market rents of $9.00 per square foot for the USPS space, which was the amount suggested by the assessors as market rent for warehouse space, and $10.00 for the liquor-store space were appropriate. 
For expenses, the Board relied on both the assessors' recommended percentage and the appellant's actual figures which were similar but greater than the 15% suggested by the assessors.  The Board, however, adopted the assessors' recommended management fee of 5%, rather than the appellant's actual figures, for both its reimbursements and expenses, because the assessors' recommendation comported with industry standards while the appellant's management reimbursements and costs reflected expenses associated with more properties than just the subject property.  The Board found and ruled that its expenses approximated market expenses.   
The capitalization rate selected should consider the return necessary to attract investment capital.  Taunton Redevelopment Assoc. v. Assessors of Taunton, 393 Mass. 293, 295 (1984).  The "tax factor" is a percentage added to the capitalization rate "to reflect the tax which will be payable on the assessed valuation produced by the [capitalization] formula."  Assessors of Lynn v. Shop-Lease Co., 364 Mass. 569, 573 (1974).  It is appropriate to add a tax factor to the capitalization rate in most multiple tenancy scenarios where there are reimbursements for real estate taxes included in the landlord's income and the landlord pays the real estate taxes.  See Taunton Redevelopment Assoc., 393 Mass. at 295-96. Instead of using the appellant's real estate tax expenditures as an expense, the Board, here, more properly included them as a tax factor in its capitalization rate, the base rate of which reflected both parties' recommendation and what the Board found and ruled to be the return necessary to attract investment.    
In reaching its opinion of fair cash value in these appeals, the Board was not required to believe the testimony of any particular witness or to adopt any particular method of valuation that an expert witness suggested.  Rather, the Board could, and did, accept those portions of the evidence that the Board determined had 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, 473 (1981); New England Oyster House, Inc., 362 Mass. at 702.  In sum, while the Board credited much of Mr. Cifrino's testimony regarding the rents, reimbursements, and expenses, it adopted as more reflective of the market the 5% rates suggested by the assessors for both vacancy and management fees and used a tax factor for real estate tax expenditures. 
The Board allocated the indicated fair cash values for the subject property on a 79-to-21 percent basis based on the proportionality of the subject building's and the subject parking parcel's respective assessed values.  See, e.g., Vernon Hill Development Realty, LLC, Mass. ATB Findings of Fact and Reports at 2016-194, 2016-202.  
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."  Boston Consolidated Gas Co., 309 Mass. at 72.  "The credibility of witnesses, the weight of the evidence, and 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 essential requirement is that the Board exercise judgment."  New Boston Garden Corp., 383 Mass. at 473.
The Board found and ruled here that the appellant met its burden of proving that the subject property was overvalued for both fiscal years at issue in these appeals, and the Board therefore decided these appeals for the appellant.  After allocating the subject property's indicated values for each fiscal year to the subject building parcel and the subject parking parcel based on their proportionate share of the subject property's total assessment for the corresponding fiscal year and then rounding, the Board granted abatements as depicted in the below tables.
 Fiscal Year 2013
	Docket No. F318812
Building Parcel	Docket No. F318811
Parking Parcel	
			
Assessed Value	$1,685,700 	$436,100	
Fair Cash Value	$1,400,000 	$370,000	
Over-valuation	$  285,700	$66,100	
Commercial Tax Rate	$30.61/$1,000	$30.61/$1,000	
Tax Abatement*	$8,832.73	$2,043.56	
*Includes appropriate amount of the CPA surcharge.

 Fiscal Year 2014
	Docket No. F322925
Building Parcel	Docket No. F322924
Parking Parcel	
			
Assessed Value	$1,685,700 	$436,100	
Fair Cash Value	$1,395,000 	$370,000	
Over-valuation	$  290,700	$66,100	
Commercial Tax Rate	$31.23/$1,000	$31.23/$1,000	
Tax Abatement*	$9,169.34	$2,084.94	
*Includes appropriate amount of the CPA surcharge.


                                APPELLATE TAX BOARD

                	   	   


   By: ________________________________
						  Thomas W. Hammond, Jr., Chairman
A true copy,


Attest: _________________________
		Clerk of the Board

 There was also a 1% Community Preservation Act ("CPA") surcharge increasing the appellant's payments to $52,115.27 for fiscal year 2013 and $53,170.86 for fiscal year 2014.
 There was also a 1% CPA surcharge increasing the appellant's payments to $13,482.51 for fiscal year 2013 and $13,755.60 for fiscal year 2015.  
 The Board selected these years as the most relevant for the valuation and assessment dates at issue.  The Board rounded the detailed expense data submitted by the appellant and, for reasons explained infra, did not include in its table the expenses reported for management and real estate taxes.  
 For example, as demonstrated on cross-examination by counsel for the appellant, the yoga studio which is currently a tenant has comparatively few employees, but offers classes that attract as many as two dozen customers at a time.  

ATB 2016-436