Joan A. Antonino & Charles J. Dimare v. Board of Assessors of the Town of Shutesbury (January 16, 2008)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD


JOAN A. ANTONINO                     BOARD OF ASSESSORS OF
& CHARLES J. DIMARE           v.     THE TOWN OF SHUTESBURY 


Docket No. F278868                   Promulgated: 
							  January 16, 2008

	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 Board of Assessors of the Town of Shutesbury ("assessors" or "appellee") to abate taxes on certain real estate in the Town of Shutesbury owned by and assessed to Joan A. Antonino and Charles J. DiMare ("appellants") under G.L. c. 59, §§ 11 and 38, for fiscal year 2005.
	Commissioner Gorton heard this appeal. With Commissioner Gorton materially participating in the deliberations of this appeal, Chairman Hammond and Commissioners Scharaffa, Egan, Rose, and Mulhern joined in the decision for the appellant.
These findings of fact and report are made on the Appellate Tax Board's ("Board's") own motion under G.L. c. 58A, § 13 and 831 CMR 1.32 and are promulgated simultaneously with its decision.

	Charles J. DiMare, Esq., for the appellants.
	Donna L. MacNicol, Esq., for the appellee.

FINDINGS OF FACT AND REPORT
A. JURISDICTION
	On January 1, 2004, appellants were the assessed owners of a parcel of land approximately 31.52 acres in size, improved with a dwelling located at 34 Sumner Mountain Road in the Town of Shutesbury (the "subject property"). For fiscal year 2005, the assessors valued the subject property at $808,400 and assessed a tax at the rate of $18.20 per $1000 in the total amount of $14,793.72. Appellants timely paid the tax assessed without incurring interest. 
On January 26, 2005, appellants timely filed an application for abatement with the assessors for fiscal year 2005. On April 7, 2005, appellants were granted a partial abatement in the amount of $334.89. The assessed value of the subject property as abated was $790,100.
The appellants timely filed their fiscal year 2005 appeal with the Board on May 31, 2005. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide the appellants' fiscal year 2005 appeal.
B. INTRODUCTION
	At the hearing of the appeal, appellant Charles J. DiMare, an attorney, appeared and testified on behalf of himself and his wife, Ms. Antonino. David Arnold of Vision Appraisal and Assessor Kenneth Holmberg testified for the appellee. Mr. Arnold had conducted the fiscal year 2005 revaluation for the Town of Shutesbury. Moreover, the hearing officer, Commissioner Gorton, conducted a view of the subject property in August, 2003, in connection with a prior appeal. The view occurred proximate in time to the valuation date for the fiscal year at issue in the present appeal, January 1, 2004.  At the trial of the present appeal, the parties incorporated the hearing officer's view in their descriptions of the subject property, and gave no indication of changed conditions between the time of the view and the relevant valuation date.  The parties alluded to the hearing officer's view of the property at the trial of the present appeal in their descriptions of the subject property. Based on the record in this appeal, the hearing officer took the observations he made in the course of viewing the subject property into account in preparing his recommendations to the Board regarding the decision of the instant appeal. 
	The sole issue in this appeal was overvaluation. The Board issued a decision with respect to the value of the subject property for fiscal year 2003. The Board decided the fiscal year 2003 appeal for the appellant, finding that the fair cash value of the subject property was $691,800 as of January 1, 2002. The decision in favor of the appellant for fiscal year 2003 had the effect of shifting the burden of proof onto the appellee. See G.L. c. 58A, § 12A. 
On the basis of the testimony and exhibits introduced at the hearing, relying on the hearing officer as to matters of witness credibility and observations made in the course of his view of the subject property, the Board made the following findings of fact. 
C. PROPERTY DESCRIPTION 
The subject property is situated in a wooded area of Shutesbury, near the Amherst town line. The residence is located in a secluded spot upon a hill, which enjoys a commanding view of the general area and surrounding hills. Access to the subject property is over a private road, which nearby residents are responsible for maintaining. 
The subject dwelling was custom constructed for appellants in 1996. The total cost of construction, including the cost of the land, was $536,988.39, according to Mr. DiMare. He stated that appellants were advised at the time by their building contractor, Mr. Bud Kellog, that the house was "overbuilt" in terms of interior materials and custom built-ins. 
The residence is a contemporary-style dwelling and has two stories above a finished basement area. There are a total of 15 rooms, including 3 bedrooms and 4 bathrooms. The house has an effective area of 5634 square feet, including the basement space. The living area, exclusive of the basement, is 4542 square feet. The exterior walls are clapboard. The floors are hardwood and ceramic tile. The house has forced hot air oil heating and central air conditioning. 
The first or basement level includes 3 rooms used as offices, and in addition, a full bathroom and a family room. The second level includes a family room used as a music room, a living room with fireplace, kitchen with pantry and breakfast area, a den, a dining room, and a bathroom. The third level includes a master bedroom suite with a den, walk-in closets, and a full bath with a whirlpool tub and shower. There are two additional bedrooms on the third level along with another full bath.
 The house is constructed of high quality materials and includes such amenities as cherry cabinets and custom built-ins on each level, cathedral ceilings on the third level, and granite countertops in the kitchen and all baths. The residence includes two decks, an open porch, and a patio. The property record card reflects the effective year built as being 2000. The grade level is given as "Very Good +2." 
D. Valuation Evidence
The assessors bore the burden of proof in view of the Board's decision in fiscal year 2003, setting the fair cash value of the property at $691,800. Mr. Arnold of Vision Appraisal testified about the revaluation he had conducted for the Town of Shutesbury for fiscal year 2005. He offered in evidence a sales report reflecting real property transactions for the Town during calendar years 2002 and 2003. He testified that on average the increase in property values in Shutesbury during that period was 25%. The assessors argued that the 16-17% rise in the assessed value of the subject property was justified in light of the overall increase in property values reflected in the revaluation analysis.
The sales report indicates that most homes sold in Shutesbury during calendar years 2002-2003 commanded sales prices of less than $300,000. Of more than 50 sales, only 7 involved prices in excess of $300,000. Only one home sold for more than $500,000 during the two-year period: the property at 45 Round Hills Road, which sold for $525,000 on June 15, 2003. The property record card for 45 Round Hills Road indicates that that residence is a contemporary style dwelling with 3 bedrooms, 2½ bathrooms, a fireplace, a garage, a modern kitchen, and a patio.  The grade is indicated as being "excellent + 15" (superior to the subject). The effective area is 2955 square feet and the effective year built was 1998. The sales report reflects no other transactions which might plausibly be used as comparable sales in valuing the subject property.
Mr. DiMare, acknowledging the lack of comparable sales in Shutesbury, offered the assessed values of four assertedly comparable properties from neighboring Amherst,
as evidence of fair market value. See G.L. c. 58A, § 12B. He introduced four property record cards for these properties, which reveal the following information. The property at 24 Canterbury Lane in Amherst, assessed for $540,300 for fiscal year 2005, includes a Georgian Colonial residence with 5 bedrooms, 3 baths, an unfinished garage, a fireplace, air conditioning, a deck, and 4697 square feet of effective area. The effective year built was 2001, its grade level is indicated to be 160% and the kitchen is described as "modern." 
The property at 492 Flat Hills Road in Amherst is improved with a contemporary style dwelling, which has 4 bedrooms, 3 bathrooms, 2 fireplaces, a finished garage, central air conditioning, a deck, and 4199 square feet of effective area. Its grade level is stated to be 175%, and the kitchen is described as "luxurious." The effective year built was 2002. The 492 Flat Hills Road property was assessed for $453,200 for fiscal year 2005. 
The property at 23 Indian Pipe Lane in Amherst features a Georgian Colonial style residence with 4 bedrooms, 2 baths, an unfinished garage, a fireplace, a hot tub, central air conditioning, a deck and an open porch. The effective area of the dwelling at 23 Indian Pipe Lane is 4076 square feet. The effective year built was 1998. Its grade level is given as 160% while the kitchen style is said to be "modern." The fiscal year 2005 assessed value was $455,600. 
Finally, Mr. DiMare offered the property record card for 19 Indian Pipe Lane in Amherst, which is improved with a contemporary style residence with an effective area of 5212 square feet. The fiscal year 2005 assessed value was $474,900. The residence has 5 bedrooms and 5 baths, 3 fireplaces, an unfinished garage, central air-conditioning, and both an open and a screened porch. The kitchen style is "modern" while the grade level is given at 160%. The effective year built was 2003.
Mr. DiMare failed to offer adjustments to the assessed values of the Amherst comparable properties he relied upon, to account for differences in such factors as location, effective area, dwelling style, grade level, and amenities. While the comparison properties possess similarities to the subject dwelling, the differences in location and area influences in particular mean that adjustments are needed before values can be extrapolated. See generally THE APPRAISAL OF REAL ESTATE 338, 458-59. (12th ed. 2001). Accordingly, the Board found and ruled that the unadjusted assessed values of the Amherst properties will not independently support a finding of value for the subject. 
However, the sales report offered by the assessors and the assessments of the assertedly comparable Amherst properties that appellants offered do raise serious questions about whether an assessed value of $790,100 reflects the fair market value of the subject property as of January 1, 2004. While the Amherst properties and 45 Round Hill Road property in Shutesbury feature relatively new and above-grade dwellings with spacious interiors and desirable amenities, the assessed values and sales price respectively are substantially below the assessed value of the subject property. The assessed value at issue appears to have no frame of reference either in relevant sales data or comparable assessments. 
Furthermore, the hearing officer's observations made during his August, 2003 view supported a finding that the subject property is "superadequate" for Shutesbury. The home is oversized, well-appointed, and custom-built to meet the unique needs of the two co-owners. Included are many luxury adornments such as the cherry cabinets and spacious master bedroom suite with a den and a whirlpool bath. The effective area of 5634 square feet includes three rooms used by Mr. DiMare and Ms. Antonino for the conduct of their law practices. It is doubtful that such a large, customized property could fetch approximately $800,000 in a residential real estate market where most sales involve properties priced at less than $300,000, and only one sale over a two-year period involved a price in excess of $500,000. Luxury homes in nearby Amherst were assessed for values under $550,000, suggesting that the additional space and amenities offered by the subject property would not support a substantially higher fair market value.
E. CONCLUSION
The Board, relying on the hearing officer as to matters of witness credibility and his knowledge of observations concerning the subject premises, found that the assessors failed to carry their burden of proof by showing that there was a general increase in property values townwide in connection with the fiscal year 2005 revaluation. The subject property appeared on the basis of the evidence to be a unique residential property in Town of Shutesbury and superadequate in view of its size, customized amenities, and interior materials. No other properties were sold for amounts approaching the assessed value at issue during the two years for which sales report data were available. The Board finds that, given its unique and superadequate character, the subject property cannot be presumed to have risen in market value in line with the increase in assessed values generally. 	Evidence specific to the market value of the subject property itself would be required in order to justify the increase over the fair market value as found by the Board for fiscal year 2003.
 The assessors having failed to carry their burden of proof to support an increase in valuation, the Board adhered to the fair cash value as found in the decision for fiscal year 2003. The Board abated the assessed value of $790,100 to $691,800 in conformity with the fiscal year 2003 decision, and decided this appeal for the appellant. An abatement of $1798.89 in taxes was ordered. 

OPINION
The assessors have a statutory and constitutional obligation to assess all real property at its full and fair cash value.  Part II, c. 1, § 1, art. 4, of the Constitution of the Commonwealth; art. 10 of the Declaration of Rights; G.L. c. 59, §§ 38, 52.  See Coomey v. Assessors of Sandwich, 367 Mass. 836, 837 (1975) (citations omitted).  Fair cash value means fair market value, which is defined as the price on which a willing seller and a willing buyer 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).
	While the burden of proving overvaluation typically lies with the taxpayer, see 45 Rice Street Realty Trust v. Bd. of Assessors of Cambridge, Mass. ATB Findings of Fact and Report 2007-1269, 2007-1321, the rule is otherwise where a finding of fair cash value has been made by the Appellate Tax Board in either of the two fiscal years immediately prior to the fiscal year at issue. G.L. c. 58A, § 12A provides as follows:
If the owner of a parcel of real estate files an appeal of the assessed value of said parcel with the board for either of the next two fiscal years after a fiscal year for which the board has determined the fair cash value of said parcel and the assessed value is greater than the fair cash value as determined by the board, the burden shall be upon the appellee to prove that the assessed value was warranted….

Given that the fair market value was found to be $691,800 for fiscal year 2003, and the fiscal year 2005 assessed value, as abated, is $790,100, G.L. c. 58A, § 12A places the burden on the assessors to prove that the nearly $100,000 increase in value was warranted in this case. While the burden of persuasion remains with the appellant, "the statute requires the appellee to produce evidence to 'satisfy the board that the increased valuation was warranted.'" Cressey Dockham & Co. v. Bd. of Assessors of Andover, Mass. ATB Findings of Fact and Report 1989-72, 1989-87 (Citation omitted.)
	The assessors relied on Madejczyk v. Bd. of Assessors of Boston, Mass. ATB Findings of Fact and Report 1986-424, 1986-427 to argue that the overall increase in assessed values in connection with the fiscal year 2005 revaluation justifies the higher assessed value of the subject property. In Madejczyk, it was held that "the appellee has sustained its burden of showing that an increase over the board's previous determination of value of $32,000 for FY 1983 was warranted on the basis of the evidence presented that there was a general increase in property values in the area during that 3-year period." Mass. ATB Findings of Fact and Report at 1986-427.
	 Madejczyk will not avail the assessors in this appeal. First, the assessor's evidence apparently related to an increase in assessed values throughout Shutesbury. They did not prepare an analysis illustrating an increase in sales prices over baseline levels from previous periods. While assessed values may serve as proxies for fair market value for purposes of making comparisons, see G.L. c. 58A, § 12B, it is insufficient to justify an increase in the value of the subject property merely by showing that everyone's assessed values were going up. Market comparisons from year to year are the best evidence of rising property values; trends in assessed values, without more, are too removed from the marketplace to justify the higher assessed value. 
	Second, and more fundamentally, the trends in property values in Shutesbury generally are not probative of the fair market value of the subject property. The Board found that the subject property was unique and superadequate on the basis of all the evidence presented, relying on the hearing officer's observations as to matters of witness credibility and his view of the property. The customized features peculiar to the owner's preferences such as the master bedroom suite, the cherry cabinetry, and the substantial office space on the lower level make it precarious to attempt conclusions about the value of the subject property by generalizing from all other Shutesbury properties without regard to comparability factors. The subject property appears to be superadequate even in comparison to luxury properties nearby in Amherst, a desirable residential community. There is no evidence on the record of any property in Shutesbury or Amherst with a fair market value of $691,800, much less a value approaching the fiscal year 2005 assessed value of $790,100. Cf. Evelyn J. Maher, Trustee of North Country Realty Trust v. Bd. of Assessors of Quincy, Mass. ATB Findings of Fact and Report 2007-1022, 2007-1033 (Superadequacy found "because the subject property was greatly superior to other properties in the relevant market.")
	As the Board has held, 
[c]onsideration of superadequacy is particularly appropriate when valuing high-end residential properties that, like the subject property, were built to the particular specifications of an owner; an individual who has a residence built for his or her occupancy, with special amenities reflecting the owner's particular wants and desires, will often be motivated by considerations other than whether the expense of those amenities add a value commensurate with their costs. 

Id. Superadequacy "is a type of functional obsolescence caused by something in the subject property that 'exceeds market requirements but does not contribute to value an amount equal to its cost.'" Harbor Dreams, LLC v. Bd. of Assessors of Hingham, Mass. ATB Findings of Fact and Report 2004-56, 2004-96 (citation omitted.)
	The superadequacy of a property has been held to foreclose reliance on the cost approach to value, as in Maher and Harbor Dreams. Superadequacy also complicates sales comparisons, because substantial differences in square footage, grade, or amenities must usually be accounted for, yet adjustments cannot be made on a one-for-one basis. See generally Maher, Mass. ATB Findings of Fact and Report at 2007-1034. See also Boch v. Bd. of Assessors of Edgartown, Mass. ATB Findings of Fact and Report 1996-641. 
Since superadequate properties differ from surrounding properties, even luxury properties in the general area, it is perilous to make assumptions about the increase in the value of such a property based on trends in the relevant marketplace in general. Accordingly, the Board rules that general increases in property values in the relevant marketplace are not probative of the fair market value of the subject property. 
Even as the assessors failed to prove that the assessed value of $790,100 was correct, Mr. DiMare's reliance on unadjusted assessments of assertedly comparable properties from Amherst was insufficient to justify a value lower than that found by the Board for fiscal year 2003. Cf. Kunz v. Bd. of Assessors of Middleton, Mass. ATB Findings of Fact and Report 2006-211, 2006-223-224. The fair cash value of property cannot be proven with "mathematical certainty and must ultimately rest in the realm of opinion, estimate and judgment."  Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 72 (1941).  "The credibility of witnesses, the weight of the evidence, and inferences to be drawn from evidence are matters for the board."  Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597. 605 (1977). Moreover, "the board is entitled to, and did, give weight to the view of the subject property … in determining the fair cash value of the real estate." Twin Hills Realty, Inc. v. Bd. of Assessors of Longmeadow, Mass ATB Findings of Fact and Report 1986-197, citing Inhabitants of Westport v. County Commissioners of Bristol, 246 Mass. 556, 563 (1923). Accord Graham v. Bd. of Assessors of West Tisbury, Mass. ATB Findings of Fact and Report 2007-321, 2007-407.
The Town having failed to meet its burden of proving that the increase in assessed value was warranted, the Board upheld its prior determination of the fair cash value of the subject property of $691,800 for fiscal year 2005. See G.L. c. 58A, § 12A. 
  Accordingly, the Board issued a decision for the appellant.  An abatement was ordered in the amount of $1798.89.

				   	           THE APPELLATE TAX BOARD



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


A true copy,
 
Attest: ______________________________
  	       Clerk of the Board 

   On September 11, 2006, Commissioner Gorton was sworn as a temporary member of the Appellate Tax Board pursuant to G.L. c. 58A, § 1, his status as a member of the Board having terminated on that date with the appointment and qualification of his successor. See G.L. c. 30, § 8. This appointment was renewed for an additional year commencing September 11, 2007. Commissioner Gorton's material participation in the deliberation of these appeals included, inter alia, drafting and distributing proposed Findings and giving a detailed report on the evidence and his observations as to witness credibility. He also made oral presentations of his recommendations to the Board members. 
  Mr. DiMare introduced photographic evidence reflecting minor deferred maintenance issues at the subject property, which reinforced the absence of additional enhancements during the period of time between the view and the relevant valuation date.
  Although the record is not entirely clear on this point, the percentage increase appears to relate to assessed values since the previous revaluation cycle.
 The sales report indicates that there were ten sales of vacant land in 2002-03, with an average sales price of $45,000. No information as to the size of these lots appears in the sales report.
 As the Board observed in Mayflower Emerald Square, LLC v. Bd. of Assessors of North Attleborough, Mass. ATB Findings of Fact and Report 2007-421, 2007-530, n.38, "[m]ost commonly evidence of comparable assessments pertains to properties within the same municipality as a subject property." However, where comparable properties are lacking in the subject town, similar properties from other towns may be considered. See id. 
 Moreover, to the extent the assessors were relying on an increase in assessed values as opposed to an increase in sales prices over previous periods, the rate of appreciation in property values lacks probative force. 

ATB 2008-54