Town of Ipswich v. Commissioner of Revenue (April 7, 2008)

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

TOWN OF IPSWICH		  v.		 COMMISSIONER OF REVENUE

Docket No. C288024				 Promulgated:	  									 April 7, 2008


	This is an appeal under the formal procedure pursuant to G.L. c. 58, § 14 and G.L. c. 58A, § 7, from the valuation made by the Commissioner of Revenue ("Commissioner"), under G.L. c. 58, §§ 13-17, of land located in the Town of Ipswich ("Ipswich") that is owned by the Commonwealth of Massachusetts ("Commonwealth").  The purpose of the valuation was to determine the payment in lieu of taxes due to Ipswich by the Commonwealth under G.L. c. 58, § 13.  The Commissioner's valuation was made as of January 1, 2005.
	Chairman Hammond heard the appeal.  Commissioners Scharaffa, Egan, Rose, and Mulhern joined him in a decision for the appellant.  
	These findings of fact and report are made pursuant to a request by both parties under G.L. c. 58A, § 13 and    831 CMR 1.32.  

Richard P. Bowen, Esq., for the appellant.

	Andrew P. O'Meara, Esq. and Mireille T. Eastman, Esq., for the appellee.
  			FINDINGS OF FACT AND REPORT

Pursuant to G. L. c. 58, § 13, the Commissioner of Revenue ("Commissioner") is required to determine the fair cash value of certain state-owned land ("SOL") every four years.  The Commissioner is required to notify the assessors of the cities and town in which SOL is located of his determination not later than June 1 of each year that such a determination is made and also to "hold a public hearing on such valuation on or before June 10 next following and shall include notice of the public hearing in the notification of his determination to the assessors."  G.L. c. 58, § 14.  Once finalized, the Commissioner's valuations are used to determine the Commonwealth's payments to municipalities in which SOL is located. 
On September 17, 2003, the Commissioner's Bureau of Local Assessment ("BLA") notified the assessors' offices of communities with SOL, including the Assessors of Ipswich ("assessors") that, in preparation for the fiscal year 2005 certification process and SOL valuation, communities were required to "reconcile their exempt reimbursable state owned land records with the [BLA's] database."  To complete the reconciliation process, the assessors were directed to:  review the BLA's data listing of SOL and verify the map/lot identification; request a further description of acreage if they were unable to identify a particular site or parcel; provide documentation and reasons for any proposed changes to the BLA's listing; and, sign and return the reconciliation agreement to the BLA.  The deadline for submission of the reconciliation agreement was January 30, 2004.  The memo also informed the assessors that signing the reconciliation agreement would "not preclude [them] from appealing [their] community's 2005 value of state owned land."  
According to the BLA database, Ipswich was entitled to reimbursement for the following parcels:
Site Name	Community Id & Acreage	Total Land Area (acreage)	
Plum Island	Id 16:           60.00 acres 	 60.00 Acres	
			
Salt Marsh Nature Preserve	Parcel I:        18.00 acres	114.95 Acres	
	Parcel J:         2.00 acres		
	Parcel K:         3.25 acres		
	Parcel L:        30.50 acres		
	Parcel M:        14.20 acres		
	Parcel N:        47.00 acres		
Willowdale State Forest	Id 49-7:         28.00 acres           	1968.46 Acres	
	Id 40-43:         5.00 acres		
	Id 28C-0001:   1520.00 acres		
	Id 49-9:        159.00 acres		
	Id 50-1:         20.50 acres		
	Id 36-9:        214.80 acres		
	Id 60-02          2.80 acres		
	Id 49-15 & 16:   28.36 acres		
TOTAL LAND		2143.41 ACRES	
  	   
In late October 2003, the assessors signed and returned the reconciliation agreement with no changes noted.
By letter dated June 1, 2005, the Commissioner notified the assessors of his proposed 2005 fair cash value of SOL eligible for reimbursement of $28,477,100.  The letter did not provide a breakdown, but instead directed the assessors to the BLA website, which showed that the fair cash value was based on the acreage from the 2005 reconciliation agreement signed by the assessors.  The  June 1, 2005 letter stated that communities questioning their proposed SOL values should contact the BLA no later than June 10, 2005 to schedule a hearing.  The letter also stated that should a city or town continue to be aggrieved after the final valuations were posted on the Internet, it had until August 10, 2005 to file an appeal with the Appellate Tax Board ("Board").  
The Commissioner did not hold a public hearing as required by G.L. c. 58, § 14.  The assessors did not request a hearing and they did not file an appeal with the Board on or before August 10, 2005.  Subsequent to the expiration of the filing deadline, the assessors contacted the BLA regarding its 2005 valuation.  The assessors met with the BLA and other Department of Revenue employees to discuss the 2005 valuation figures and amounts.  No resolution was reached.
	Subsequently, on January 3, 2007, Chapter 452 of the Acts and Resolves of 2006 (the "Act") was enacted which authorized Ipswich, notwithstanding the time limitations contained in G.L. c. 58, § 14, to file an appeal with the Board within ninety days "only with respect to the amount of state owned land located within the Town of Ipswich."  On March 30, 2007, within ninety days of the effective date of the Act, the assessors filed an appeal with the Board.   Based on these facts, the Board found that pursuant to the Act, it had limited jurisdiction over this appeal to hear and decide only the amount of SOL in Ipswich.
In its appeal to the Board, the assessors challenged not only the amount of SOL located within Ipswich, but also the Commissioner's assigned per-acre value of certain parcels.  On April 10, 2007, the Commissioner filed a Partial Motion to Dismiss, requesting that the Board dismiss all claims in the assessors' appeal that did not relate to the Commissioner's determination as to the amount of SOL within Ipswich.  By Order dated April 27, 2007, the Board allowed the Commissioner's Partial Motion to Dismiss based on the plain language of the Act, which amended the SOL statute of limitations   Accordingly, the Board held a hearing on June 13, 2007, which was limited to the issue of the amount of acreage in Ipswich eligible for reimbursement under the provisions of G.L. c. 58, § 13.
The assessors presented their case primarily through the testimony of Mr. Frank Ragonese.  Mr. Ragonese was the Chief Assessor for Ipswich at all material times and had held the position for twenty-five years at the time of the hearing.  
The Commissioner presented his case through the testimony of Ms. Marilyn Browne, Chief of the BLA and supervisor of the 2005 valuation process, and also Ms. Brenda Cameron, Deputy Chief of the BLA.  Ms. Browne testified concerning the general operations of the BLA and, more specifically, the SOL valuation process.  She explained that to determine SOL acreage eligible for reimbursement, the BLA primarily relied on information obtained from the Division of Capital Asset Management ("DCAM"), which notified the BLA of any new land acquisitions or dispositions.  After the BLA received notification from DCAM, it requested a copy of the deed from the town and also a copy of the commitment sheet, which showed that the property was taxable at the time the Commonwealth acquired the parcel.
Ms. Browne explained that in 2002, in preparation for the new 2005 SOL valuation, the BLA compiled its historical information into an electronic database.  She further testified that sometime in 2003, the database was sent to the various assessors throughout the Commonwealth requesting that they review the information, make corrections where necessary, and sign and return the reconciliation agreement letter to the BLA.  She further explained that if errors were discovered and brought to the attention of the BLA, BLA staff appraisers, working with the local assessors, would make the necessary changes.  Despite the statutory requirement that the Commissioner hold a public hearing in connection with his proposed valuation of SOL, Ms. Browne testified that only those communities that requested a hearing at the BLA were afforded one.
The Commissioner also offered the testimony of Ms. Brenda Cameron.  Ms. Cameron oversaw the valuation process in all of the communities.  Although the appraisal supervisor who did the valuation fieldwork did not testify at the hearing, Ms. Cameron had complete oversight of the process.  Her testimony was directed to each of the four parcels at issue in this appeal.  
The assessors challenged the Commissioner's omission of four parcels of SOL in Ipswich from the list of SOL eligible for reimbursement. Ipswich had received reimbursement for these four parcels in prior years.  In each case, the assessors argued that the Commissioner was unable to satisfactorily explain the removal of the properties from the reimbursement list.

1. Bradley State Park.  
The first contested parcel is a 5.8-acre parcel located in Bradley State Park.  In support of its claim that the Commissioner erroneously and without justification excluded this parcel, the assessors offered into evidence a copy of the deed for the parcel and also Ipswich's commitment sheet showing that the parcel was taxable prior to the transfer.  The assessors also offered into evidence a copy of the 1990 State Owned Property Record prepared by DCAM, which listed the parcel, Map 60, Lot 7, at 5.8 acres.  According to Mr. Ragonese, this document was given to the assessors by the Commissioner, as was done for each parcel of SOL in Ipswich, and was kept by the assessors as part of their historical files.  Once provided with copies of the deed and commitment sheet at the hearing, the Commissioner conceded that the 5.8 acre parcel in Bradley State Park qualified for reimbursement.  
Based on the property's deed, the 1990 State Owned Property Record, and the Commissioner's concession that, pursuant to his own methodology of verifying SOL, the parcel qualified for reimbursement, the Board found that the contested 5.8-acre parcel in Bradley State Park was eligible for reimbursement.

2. Plum Island
The assessors also challenged the Commissioner's omission of a portion of a large parcel of real estate located on Plum Island, identified as Map 16, Parcel 2.  This 73.24-acre parcel was transferred to the Commonwealth on December 29, 1964.  At the time of transfer, certain portions of this parcel were owned by either the United States government or Ipswich and, therefore, did not qualify for reimbursement.  According to Mr. Ragonese, the Ipswich's town engineer determined that the combined acreage of the lots which did not qualify for reimbursement totaled 2.81 acres.  Therefore, the assessors argued that the total amount of reimbursable land on Plum Island was 70.43 acres, which represented the total of 73.24 acres minus the 2.81 acres that did not qualify for reimbursement.  
In addition to a copy of the 1964 deed, the assessors also offered into evidence a 1985 "Site Data" sheet prepared by the Commissioner and given to the assessors.  This document lists the Plum Island Parcel at 73.24 acres.  Mr. Ragonese testified that this acreage was used by the Commissioner in prior years to determine reimbursement.  For the 2005 valuation, however, the Commissioner determined that only 60 acres of this parcel were eligible for reimbursement.  According to Mr. Ragonese, the only explanation he was given for the reduction was that there was a 13-acre portion that was owned by the Federal government.  A BLA interoffice memo dated September 15, 2003, however, identified the subject property as having a total of 103 acres.  The memo explained that because two parcels, totaling 42.1 acres, were not eligible for reimbursement because they were transferred from tax-exempt sources, a total of 60.9 acres were eligible for reimbursement.  
Ms. Cameron presented a different rationale and testified that the reduction in acreage was the result of a 2000 settlement agreement between the assessors and the Commissioner which reduced the size of reimbursable land to 60 acres.  The 2005 valuation, she suggested, was simply a continuation of this agreed-upon acreage. The Commissioner, however, did not offer any contemporaneous written documentation or other substantiating evidence to support this claim.  
In the alternative, Ms. Cameron testified that the total reimbursable acreage should have been approximately 30 acres.  She conceded that the Plum Island parcel was historically listed at approximately 73 acres but suggested that this was due to a clerical error.  When questioned about the 1985 Site Data sheet which confirmed the 73.24-acre listing, Ms. Cameron suggested that the appraiser's further calculations indicated that approximately 41 acres did not qualify for reimbursement, bringing the total reimbursable land to only 32 acres.  The Commissioner did not offer the appraiser as a witness at the hearing of this appeal.
On the basis of the assessors' testimony and exhibits, the Board found that at the time of transfer, the subject property contained a total of 73.24 acres and that the combined acreage of the lots that did not qualify for reimbursement was 2.81 acres.  The Board further found that the Commissioner's explanations for his change in parcel acreage were contradictory and lacking in appropriate supporting documentation.  Accordingly, the Board found on this record that, as documented by the assessors, a total of 70.43 acres on Plum Island were eligible for reimbursement.

3. Willowdale State Forest  
The third parcel at issue is a 43-acre parcel, identified as Map 49, Parcel 14, located in the Willowdale State Forest. Approximately 15.82 acres of this site were conveyed to the Commonwealth by the Children's Summer School, a tax-exempt entity; therefore, these 15.82 acres were not eligible for reimbursement.  Mr. Ragonese testified that, in prior years the Commissioner had included the remaining 27.18 acres in Ipswich's list of SOL eligible for reimbursement.  In 2005, however, the Commissioner removed the 27.18-acre parcel in its entirety.
In support of its claim that it was entitled to reimbursement for this parcel, the assessors offered into evidence two documents:  the Commonwealth's self-prepared 1990 State Owned Property Record which listed the subject parcel at 43 acres; and a September 13, 2003 interoffice memorandum between BLA employees which indicated that the subject property had a total of 43 acres.  Based on these documents, the assessors argued that 27.18 acres were eligible for reimbursement.  
At the hearing, the Commissioner argued that the subject parcel was comprised entirely of the 15.82 acres that were ineligible for reimbursement because they were conveyed to the Commonwealth by a tax-exempt entity.  Ms. Cameron acknowledged that in prior years, the subject parcel had been listed for reimbursement, but maintained that the Commissioner determined in his 2005 valuation that the parcel was no larger than the 15.82 acres conveyed by the tax-exempt school.  Once again, the Commissioner failed to offer credible evidence to support his determination.
Based on the evidence presented, the Board found that the subject property is, in total, a 43-acre parcel, of which 15.82 acres were transferred from a tax-exempt source.  Accordingly, the Board found that the remaining 27.18 acres in Willowdale State Park were eligible for reimbursement.

	4. Salt Marsh Preserve
The last contested parcel is a 2-acre parcel of real estate conveyed to the Commonwealth by Lillian Herrick in 1981.  The assessors offered into evidence a copy of the 1981 deed.  Ms. Cameron suggested that the primary reason for not including this parcel in the list of reimbursable SOL was simply that the BLA had not been provided a copy of the deed during the 2005 reconciliation process.
The Board found that the 2-acre parcel in Salt Marsh Preserve was eligible for reimbursement. 
 	 
	5.  Conclusion
Based on the evidence presented in this appeal, the Board found that the following parcels were eligible for reimbursement:  (1) 5.8 acres in Bradley State Park; (2) 70.43 acres in the Plum Island State Park; (3) 27.18 acres in the Willowdale State Forest; and, (4) 2 acres in the Salt Marsh Preserve.
The Board found that the Commissioner failed to comply with the plain words of the statute by not providing a public hearing as required by G.L. c. 59, § 14 and by failing to include reimbursable land.  The Board further found that the Commissioner's State Owned Land Records, property deeds, and BLA internal memos, supported the assessors' claims of reimbursable SOL.  Accordingly, the Board found and ruled that the assessors met their burden of proving that the Commissioner failed to comply with G.L. c. 58, § 13 by failing to include certain parcels of SOL as eligible for reimbursement.
For these reasons, the Board issued a decision for the appellant in this appeal.

OPINION
	Pursuant to G.L. c. 58, § 13, "the Commissioner shall . . . determine as of January first the fair cash value as hereinafter provided of all land in every town owned by the commonwealth" for payments in lieu of taxes in accordance with G.L. c. 58, §§ 13-17.  
The Commissioner, not later than June 1 of each year in which he makes such a determination, shall notify the assessors of each city or town where the commonwealth owns, or the county commissioners hold, land for the purposes stated in this section, of his determination of the value of such land in such city or town.

G.L. c. 58, § 14.  Furthermore, the commissioner "shall hold a public hearing on such valuation on or before June 10 next following and shall include notice of the public hearing in the notification of his determination to the assessors."  Id.
In Board of Assessors of Sandwich v. Commissioner of Revenue, 393 Mass. 580 (1984) ("Sandwich I"), the Supreme Judicial Court held that the Board's scope of review of the Commissioner's valuations under G.L. c. 58, § 13 is narrower than taxpayer appeals of property tax assessments.  Unlike the typical property tax appeal to this Board, where the Board "hears testimony from all parties and forms an independent judgment of value based on all the evidence received," the court held that under § 13, the Board "should perform a more traditional appellate function."  Id. at 586.  In Sandwich I, the court held that the Board's role is restricted to "determin[ing] whether the method used by the Commissioner is reasonably designed to achieve the statute's objectives, and whether the method was properly implemented in the particular case."  Id. at 588.  Further, "[i]n determining whether the Commissioner complied with the statute, the board's task is not to substitute its own judgment as to the most appropriate method of valuation."  Id.  
The objective of § 13, to reimburse municipalities with SOL for lost tax revenues, does not require the Commissioner to develop a methodology by which fair cash values are precisely determined; rather, § 13 is intended to "provide [] towns with only an approximate reimbursement of lost taxes."  Id.  Accordingly, § 13 provides that the Commissioner's determination of value "shall be in such detail as to lots, subdivisions or acreage as the Commissioner may deem necessary," underscoring that, under § 13, "full and fair cash values . . . can only be approximated."  Id. at 587 (quoting Macioci v. Commissioner of Revenue, 386 Mass. 752, 761 (1982)).  Further, "in the context of a Statewide valuation program, in light of the limited resources of the Commissioner, it may be necessary to 'conced[e] perfection in result, in favor of a process which is orderly, expeditious, and reliable.'"  Id. at 588 (quoting Newton v. Commissioner of Revenue, 384 Mass. 115, 122 (1981)).  
Because the court recognized that § 13 is meant to provide municipalities with an approximate reimbursement of lost taxes by an expeditious, albeit imperfect, procedure, the court specified that "the board should determine whether the Commissioner has adopted a procedure which   (1) can be applied equally to each town where there are eligible State owned lands and (2) will produce values reasonably approximate to fair cash value."  Id.  "If the procedure adopted by the Commissioner is not arbitrary or capricious, it should be upheld" by the Board.  Id.  If the procedure is upheld, the Board must then determine if the Commissioner properly applied his methodology to Ipswich.  Id. at 588-89.  
The burden of proof is upon the appellant to show that the Commissioner's valuation methodology was arbitrary and capricious and/or that the Commissioner did not properly apply the methodology to the eligible state-owned land in Ipswich.  Commissioner of Revenue v. Board of Assessors of Sandwich, 405 Mass. 307, 312 (1989) ("Sandwich II"); see Sandwich I, 393 Mass. at 588; Schlaiker v. Board of Assessors of Great Barrington, 365 Mass. 243, 245 (1974).  The venerable and "fundamental rule as to burden of proof is, that whenever the existence of any fact is necessary in order that a party may make out [its] case . . . , the burden is on such party to show the existence of such fact."  Willet v. Rich, 142 Mass. 356, 357 (1886); Town of Boylston v. Commissioner of Revenue and others, Mass. ATB Findings of Fact and Reports 2004-278, 313.  
While not directly impacting the methodology employed by the Commissioner with respect to Ipswich, the Board found and ruled that contrary to the plain language of  G.L. c. 58, § 14, the Commissioner did not hold a public hearing.  Further, in determining the amount of SOL pursuant to the Act, the Board found and ruled that the Commissioner omitted four parcels of land from the reimbursable SOL.  Pursuant to § 13, the Commissioner is required to value all SOL within the Commonwealth every four years.  On the basis of the evidence of record, particularly Ms. Browne's testimony, the Board found that the BLA relied on historical data and documentation provided by DCAM and cities and towns to determine SOL acreage eligible for reimbursement.  The Board found that the BLA failed to explain its determinations, particularly in light of DOR's own historical data, which supported the assessors' acreage totals.  
At the hearing of this appeal, when presented with copies of the deed, commitment sheet and his own State Owned Property Record, the Commissioner conceded that the Bradley State Park parcel qualified for reimbursement.  Further, the Commissioner's State-Owned Property Record, Site Data sheet and BLA interoffice memos, all listed the Plum Island and Willowdale State Forest parcels at the same acreage suggested by the assessors and as used in prior years.  Despite this documentation, the Commissioner used different acreages without a credible explanation.  Moreover, when presented with a copy of the deed for the Salt Marsh parcel at the hearing, the Commissioner noted that this 2-acre parcel was eligible for reimbursement.
The Board, therefore, ruled that Ipswich met its burden of proving that the Commissioner failed to comply with § 13 by omitting the four parcels at issue from SOL eligible for reimbursement. 
On this basis, the Board decided this appeal for the appellant.
					    APPELLATE TAX BOARD


				 By: ________________________________
				             Thomas W. Hammond, Jr. Chairman

A true copy,
Attest:					_______
 		   Clerk of the Board

 The increase in size from the 1985 "site data" listing was said to be due to accretion.

3


ATB 2008-424