William Smith v. Board of Assessors of the Town of North Reading (September 15, 2010)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD



WILLIAM SMITH 		       v.	    BOARD OF ASSESSORS OF 
						    THE TOWN OF NORTH READING

Docket No. F299328			    Promulgated:
						    September 15, 2010


	This is an appeal 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 Town of North Reading, assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.
	Commissioner Egan ("Presiding Commissioner") heard the appeal and, in accordance with G.L. c. 58A, § 1A and 831 CMR 1.20, issued a single-member decision for the appellee. 
	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. 
		
	William Smith, pro se, for the appellant.
	Faye Ingraham, assessor, for the appellee.
FINDINGS OF FACT AND REPORT
On the basis of the exhibits and testimony offered into evidence during the hearing of these appeals, the Presiding Commissioner made the following findings of fact.  
On January 1, 2008, the appellant was the assessed owner of a parcel of real estate located at 81 Burroughs Road in the Town of North Reading ("subject property").  For fiscal year 2009, the Board of Assessors of the Town of North Reading ("assessors") valued the subject property at $344,700 and assessed a tax thereon, at the rate of $12.04 per thousand, in the total amount of $4,150.19.  On January 12, 2009, the appellants timely filed an abatement application with the assessors, which they denied on February 2, 2009.  On April 9, 2009, the appellant seasonably filed his appeal with the Appellate Tax Board ("Board").  On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction over the instant appeal.
The subject property, located in a residential area of North Reading that encompasses Martins Pond, consists of a 0.37-acre parcel of land improved with a single-family, cottage-style home with a view of the surrounding woodlands.  The subject home was built in approximately 1930 and contains 1,007 square feet of gross living area comprised of five rooms above grade, including one bedroom, as well as one full bathroom.  The basement of the subject home contains an additional 525 square feet of finished living area and includes an additional bedroom as well as one full bathroom.  The subject home has forced hot water heating fueled by oil.  Other features of the subject home include a small deck and a wood stove and fireplace.  The property record card on file with the assessors grades the subject property's construction as "A" and its condition as "average."   
The appellant presented his case through his testimony and the appraisal report and testimony of Thomas E. Brown, a certified real estate appraiser, whom the Board qualified as an expert witness in the field of real estate valuation.
The appellant first presented photocopied pictures from the North Reading Transcript newspaper dated May 25, 2006 depicting the flooding of Burroughs Road.  The appellant presented no evidence indicating that similar flooding had reoccurred at Burroughs Road since May of 2006.
The appellant next presented his own comparable-sales analysis using three purportedly comparable properties located in North Reading: 4 Oak Avenue; 9 Kingston Street; and 12 Belleflower Road.  One of these properties, 12 Belleflower Road, was located in the same neighborhood code "3" as the subject property, but the other two properties were located in neighborhood code "1."  The comparable properties ranged in size from 0.16 acres to 0.29 acres and were improved with homes ranging in size from 726 square feet to 936 square feet above-grade gross living area.  The comparable properties' sales prices ranged from $175,000 to $209,000, a range which he claimed demonstrated that the subject assessment was too high.  The appellant provided no adjustments to compensate for differences between his comparables and the subject property.  Moreover, two of these properties, 4 Oak Avenue and 12 Belleflower Road, were transferred by foreclosure sales.   
Next, the appellant's expert, Mr. Brown, testified and presented his appraisal report of the subject property.  Mr. Brown's report included a comparable-sales analysis using four purportedly comparable properties in North Reading which sold during 2007: 7 Oakhurst Terrace; 13 Burroughs Road; 25 Poplar Terrace; and 13 Elma Road.  These purportedly comparable properties were all located within half a mile of the subject property.  One of the comparable-sale properties, 25 Poplar Terrace, was located on the waterfront, while another comparable property, 7 Oakhurst Terrace, had a pond view as opposed to the subject property's woodlands view.  The comparable-sale properties ranged in size from 0.09 acres to 0.28 acres and were improved with homes ranging in size from 715 square feet to 812 square feet of above-grade gross living area.  After applying his adjustments, Mr. Brown's comparable-sale properties ranged in adjusted sale prices from $236,740 to $278,900.  Based on his comparable-sales analysis, Mr. Brown settled upon $255,000 as the fair cash value for the subject property.
Mr. Brown also developed a cost approach, but he considered the comparable-sales approach to be the more reliable approach for valuing the subject property.  Mr. Brown's cost-approach analysis yielded a fair cash value of $254,673, and he used this value as a check on his comparable-sales approach.  Mr. Brown's final opinion of value for the subject property was $255,000 as of the relevant assessment date.
Assessor Faye Ingraham testified in defense of the assessment.  First, Ms. Ingraham explained that the appellant had brought a petition to the Board for the previous fiscal year, when the subject property had been assessed for $349,500.  The Presiding Commissioner issued a decision for the appellee in that appeal.  At $344,700, the current year's assessment is two percent lower than the prior year's assessment.  Ms. Ingraham also explained that the flooding conditions depicted in the appellant's exhibit had not occurred since May of 2006, and therefore, were not present as of the relevant assessment date or the prior fiscal year's assessment date.  Moreover, Ms. Ingraham testified that the building permit on file with the Town indicated that the subject home's interior had been remodeled as of the relevant assessment period, and that its kitchen and bathroom had been remodeled only five years before.  The Presiding Commissioner found Ms. Ingraham's testimony to be credible. 
Next, Ms. Ingraham contended that the sale of 7 Oakhurst Terrace in 2007 for $312,500 actually supported the subject property's assessment in 2009.  She pointed out that this comparable is located within the same neighborhood as the subject property and is in the same condition and of the same construction grade as the subject, but its lot size and living area are considerably smaller.  These differences, she concluded, supported the subject assessment of $344,700.  The appellant's expert, Mr. Brown, had adjusted this comparable sale by $20,000 to compensate for its purportedly "superior" condition and by another $5,000 for functional utility, but Ms. Ingraham found that these adjustments were not warranted. 
On the basis of the evidence presented in this appeal, the Presiding Commissioner found that the appellant's comparable-sales analysis was materially flawed. The appellant's comparable-sales analysis employed three purportedly comparable properties, two of which were in different neighborhoods from that of the subject, and they were all appreciably smaller than the subject property in terms of lot size and gross-living area of the homes.  However, the appellant made no adjustments to compensate for these or any other differences between his comparable properties and the subject property.  Moreover, two of the comparable sales were at foreclosure - including 12 Belleflower Road, which was the only comparable property located within the subject's neighborhood - and the appellant failed to introduce further evidence concerning the circumstances of these sales; accordingly, the Board found that these sales did not provide reliable or persuasive evidence of value in this appeal.  
With respect to Mr. Smith's comparable-sales analysis, the Presiding Commissioner found that the sale of 7 Oakhurst Terrace for $312,500, less than three months before the relevant assessment date, actually supported the subject assessment.  This property is in the same neighborhood as the subject property (only 0.05 miles from the subject), and its lot and home are smaller than those of the subject property.  Moreover, the Presiding Commissioner found no reason to consider an 812-square-foot bungalow to merit the deductions for "superior" condition and functional utility, particularly when the subject home, including the kitchen and bathroom, had been remodeled within five years of the relevant assessment date.  
Therefore, for these reasons, the Presiding Commissioner ultimately found that the appellant failed to meet his burden of proving that the subject assessment exceeded the fair cash value of the subject property.  Accordingly, the Presiding Commissioner issued a decision in favor of the appellee.  

OPINION
The assessors are required to assess real estate at its fair cash value.  G.L. c. 59, § 38.  Fair cash value 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).  
The assessment is presumed valid unless the taxpayer sustains his burden of proving otherwise.  Schlaiker v. Board of Assessors of Great Barrington, 365 Mass. 243, 245 (1974).  Accordingly, the burden of proof is upon the appellant to make out his right as a matter of law to an abatement of the tax.  Id.  The appellant must show that the assessed valuation of the property was improper.  See Foxboro Associates v. Board of Assessors of Foxborough, 385 Mass. 679, 691 (1982).  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. 591, 600 (1984) (quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983)).
The appellant advanced his own comparable-sale analysis and that of his real estate valuation expert, each using several purportedly comparable properties.  "[S]ales of property usually 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. Board of Assessors of Foxborough, 385 Mass. 679, 682 (1982).  Sales of comparable realty should be within the same geographic area and within a reasonable time of the assessment date to be probative evidence for determining the value of the property at issue.  Graham  v. Assessors of West Tisbury, Mass. ATB Findings of Fact and Reports 2008-321, 400 (citing McCabe v. Chelsea, 265 Mass. 494, 496 (1929)), aff'd, 73 Mass. App. Ct. 1107 (2008).  Moreover, when comparable sales are used, allowances must be made for various factors which would otherwise cause disparities in the comparable properties' sale prices.  See Pembroke Industrial Park Co., Inc. v. Assessors of Pembroke, Mass. ATB Findings of Fact and Reports 1998-1072, 1082 (and the cases cited therein).  
Here, the appellant's comparable-sales analysis was materially flawed.  Two of the appellant's comparable-sales properties were located in a different neighborhood than the subject, and the appellant failed to provide any adjustments to compensate for the location and other differences including lot size and gross living area.  
Moreover, evidence of sales may be considered "only if they are free and not under compulsion."  Congregation of the Mission of St. Vincent dePaul v. Commonwealth, 336 Mass. 357, 360 (1957) (other citation omitted).  Two of appellant's comparable sale properties were sold at foreclosure, and the appellant failed to introduce further evidence concerning the circumstances of the sales; the Presiding Commissioner thus found and ruled that the sale prices of these properties were not reliable or persuasive evidence of the subject property's fair cash value in this appeal.  See DSM Realty, Inc. v. Assessors of Andover, 391 Mass. 1014 (1984) ("A foreclosure sale inherently suggests a compulsion to sell; a proponent of evidence of such sale must show circumstances rebutting the suggestion of compulsion."); see also Finigan v. Board of Assessors of Belmont, Mass. ATB Findings of Fact and Reports 2004-533, 544 and Waters v. Board of Assessors of Wayland, Mass. ATB Findings of Fact and Reports 2001-460, 469.    
The comparable-sales analysis proffered by the appellant's expert used comparable-sale properties that were more similar to the subject property, including 7 Oakhurst Terrace.  However, the Presiding Commissioner was not persuaded by Mr. Brown's adjustments to these comparable sales, particularly those to 7 Oakhurst Terrace for "superior" condition and functional utility, because this comparable-sale property was appreciably smaller than the subject property in terms of lot size and gross living area.  The Presiding Commissioner instead agreed with Ms. Ingraham that the sale of 7 Oakhurst Terrace for $312,500, less than three months before the relevant assessment date, actually supported the subject assessment.
On the basis of all of the evidence submitted at the hearing of this appeal, and the conclusions drawn from that evidence, the Presiding Commissioner found and ruled that the appellant failed to meet his burden of proving that the subject assessment exceeded its fair cash value.  Accordingly, the Presiding Commissioner issued a decision for the appellee in this appeal.

					  APPELLATE TAX BOARD

					                     By: ___________________________
						 Nancy T. Egan, Commissioner

A true copy:             

Attest: undefinedundefinedundefinedundefinedundefinedundefinedundefinedundefinedundefinedundefinedundefinedundefined_____________________
	    Clerk of the Board

ATB 2010-836