COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

23 SOUTH STREET REALTY TRUST, v. BOARD OF ASSESSORS OF

CHARLES E. MONCY, TRUSTEE THE TOWN OF PLYMOUTH

Docket No. F296783 Promulgated:

January 4, 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 a tax on real estate in the Town of Plymouth, owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal year 2008.

Commissioner Rose heard the appeal. Chairman Hammond and Commissioners Scharaffa, Egan and Mulhern joined him in the 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.

Charles E. Moncy, pro se, for the appellant.

Catherine Salmon, assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the evidence and testimony offered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2007, Charles E. Moncy, Trustee, 23 South Street Realty Trust (“appellant”) was the assessed owner of a 0.60-acre parcel of real estate located at 23 South Street in the Town of Plymouth (“subject property”). For fiscal year 2008, the Board of Assessors of the Town of Plymouth (“assessors”) valued the subject property at $738,000 and assessed a tax thereon at the rate of $10.33 per thousand in the amount of $7,737.89.[1] The appellant timely paid the tax due without incurring interest. On January 31, 2008, in accordance with G.L. c. 59, § 59, the appellant filed an Application for Abatement with the assessors, which they denied on April 8, 2008. On June 18, 2008, in accordance with G.L. c. 58A, § 7 and c. 59, §§ 64 and 65, the appellant seasonably filed an appeal with the Board. On this basis, the Board found and ruled that it had jurisdiction over this appeal.

The subject property is improved with a three-story, eight-unit apartment building. Each unit has a total of three rooms, including one bedroom, and also one bathroom. In support of his argument that the subject property was overvalued for fiscal year 2008, the appellant used an income-capitalization analysis based on the subject property’s actual income and expenses for calendar year 2006, as reported to the assessors pursuant to G.L. c. 59, § 38D. The appellant testified that seven of the units are Section 8 apartments with rents ranging from $895 per month to $1020 per month, and that the eighth apartment is rented by the appellant, and occupied by his son, for $780 per month. The total rental income for calendar year 2006 was $87,564. Mr. Moncy deducted operating expenses totaling $57,791, which included $31,140 for “cleaning services” and also a $1,163 management fee paid to his son. Mr. Moncy then applied a vacancy rate deduction calculated at 4% of gross income and also a reserve for replacement deduction calculated at 2% of gross income, to arrive at a net operating income of $23,914.[2]

Finally, Mr. Moncy applied a capitalization rate of 8.5% to arrive at an estimated fair market value of $281,342. The appellant further testified that he would be amenable to “split the difference” between the subject property’s fiscal year 2008 assessed value and his calculated fair market value and “accept” a fair market value of $468,171.

In support of their assessment, the assessors relied on the testimony of Catherine Salmon, the Plymouth Assessor. Ms. Salmon offered into evidence an income-capitalization analysis based on the subject property’s reported income and expense figures for calendar year 2006 and also a listing of market averages. Based on this information, the assessors used a gross income of $84,000, a vacancy factor of 5%, an expense deduction of 15%, and also a reserve for replacement allowance of 2%. Finally, the assessors applied a capitalization rate of 8.5% which resulted in an estimate of value for the subject property of $779,224.

Ms. Salmon also offered into evidence a market analysis of six properties that sold during the period April 2005 through December 2007 with sale prices that ranged from $121,800 per unit to $198,750 per unit. Based on these sales, Ms. Salmon estimated a fair market value of $800,000, or $100,000 per unit. All of these properties however included fewer units than the subject property and most were two-bedroom and three-bedroom units compared to the subject property’s one-bedroom units. The Board therefore found that the assessors chosen properties were not comparable to the subject property and gave little weight to the assessors’ market analysis.

The Board found that the income-capitalization approach was the proper method for valuing the subject property. Although the appellant relied solely on the subject property’s actual reported income, the Board found that it was reflective of the market as demonstrated by the assessors’ evidence. The Board also found that the appellant’s vacancy factor, reserve for replacement and capitalization rate were reflective of the market. The Board further found, however, that the appellant’s operating expenses, which totaled nearly 60% of rental income, were excessive. In particular, the Board found that the more than $30,000 for “cleaning services” and the management fee paid to the appellant’s son were questionable and unreliable. Therefore, the Board found that the appellant grossly understated the subject property’s net-operating income and resulting fair market value.

On this basis, the Board found and ruled that the appellant failed to meet his burden of proving that the subject property was overvalued for fiscal year 2008. Accordingly, the Board issued a decision for the appellee in this appeal.

OPINION

“All property, real and personal, situated within the commonwealth . . . shall be subject to taxation.” G.L. c. 59, § 2. The assessors have a statutory obligation 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 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 taxpayer has the burden of proving that the property has a lower value than that assessed. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). The Board is entitled to presume that the valuation made by the assessors is valid unless the taxpayer proves to the contrary. Id. The taxpayer must demonstrate that the assessed valuation of its property was improper. Foxborough Associates v. Board of Assessors of Foxborough, 385 Mass. 679, 691 (1982) (citing Schlaiker, 365 Mass. at 245). The taxpayer may sustain this burden by introducing evidence of fair cash value, or by proving that the assessors erred in their method of valuation. General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 600 (1984).

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. at 600 (quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983)).

Generally, real estate valuation experts, Massachusetts courts, and this Board rely upon three approaches to ascertain the fair cash value of property: income capitalization; sales comparison; and cost of reproduction. Correia v. New Bedford Redevelopment Authority, 375 Mass. 360, 362 (1978). Regardless of which method is employed to determine fair cash value, the Board must determine the highest price which a hypothetical willing buyer would pay to a hypothetical willing seller in an assumed free and open market. Irving Saunders Trust v. Board of Assessors of Boston, 26 Mass. App. Ct. 838, 845 (1989). The validity of a final estimate of market value depends largely on how well it can be supported by market data. The Appraisal Institute, The Appraisal Of Real Estate 134 (12^th Ed. 2001).

“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), but the income- capitalization method is “frequently applied with respect to income-producing property.” Taunton Redev. Assocs. v. Assessors of Taunton, 393 Mass. 293, 295 (1984). In applying this method, the income stream used must reflect the property’s earning capacity or market rental value. Pepsi-Cola Bottling Co. v. Assessors of Boston, 397 Mass. 447, 451 (1986). Imputing rental income to the subject property based on fair market rentals from comparable properties is evidence of value if, once adjusted, they are indicative of the subject property’s earning capacity. See Correia v. New Bedford Redevelopment Authority, 5 Mass. App. Ct. 289, 293-94 (1977), rev’d on other grounds, 375 Mass. 360 (1978); Library Services, Inc. v. Malden Redevelopment Authority, 9 Mass. App. Ct. 877, 878 (1980) (rescript); AVCO Manufacturing Corporation v. Assessors of Wilmington, ATB Findings of Fact and Reports 1990-142. It is the earning capacity of real estate, rather than its actual income, which is probative of fair market value. Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 64 (1941). In order to prove the fair cash value of property through its earning capacity, one must calculate a gross potential income based on market rents, reduce that amount by vacancy and rent losses, deduct the landlord’s approximate market expenses, and then apply a capitalization rate. See, e.g., Alstores Realty Corp. v. Assessors of Peabody, 391 Mass. 60, 62-71 (1984); General Electric, 393 Mass. at 610.

In the present appeal the appellant relied on an income-capitalization analysis to prove that the subject property was overvalued for the fiscal year at issue. The Board found that although the appellant’s gross rent, vacancy factor, reserve for replacement and capitalization rate appear to be indicative of the market, the appellant substantially overstated the subject property’s operating expenses and therefore grossly understated the subject property’s net-operating income and corresponding fair market value.

“The [b]oard [can] accept such portions of the evidence as appear to have the more convincing weight. The market value of the property [can] not be proved with mathematical certainty and must ultimately rest in the realm of opinion, estimate, and judgment . . . . The [b]oard [can] select the various elements of value as shown by the record and from them form . . . its own independent judgment.” Assessors of Quincy v. Boston Consolidated Gas Company, 309 Mass. 60, 72 (1941). See also, North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984); New Boston Garden Corp. v. Board of Assessors of Boston, 383 Mass. 456, 473 (1981); Jordan Marsh Co. v. Assessors of Malden, 359 Mass. 106, 110 (1971).

Based on the foregoing facts, the Board found that the appellant failed to meet his burden of proving that the subject property was overvalued for fiscal year 2008. Accordingly, the Board entered a decision for the appellee in this appeal.

THE APPELLATE TAX BOARD

By: ___________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ____________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

ANGELO and ALICE ARENA v. COMMISSIONER OF REVENUE

Docket No. C287804 Promulgated:

January 15, 2010

This is an appeal under the formal procedure, pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39 from the refusal of the appellee, Commissioner of Revenue (“Commissioner”), to abate personal income tax for the calendar years 2002, 2003, 2004, and 2005 (“tax years at issue”).

On December 15, 2008, the Appellate Tax Board (“Board”) issued a decision for the appellants. Based on a Supplemental Statement of Agreed Facts submitted by the parties after the Board’s December 15, 2008 Decision, the Board issued a revised decision for the appellants simultaneously with these Findings of Fact and Report.

Commissioner Rose heard this appeal. Chairman Hammond and Commissioners Scharaffa, Egan, and Mulhern joined him in the revised decision for the appellants. 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.

Walter J. Flowers, Esq. for the appellants.

Celine E. Jackson, Esq. and John J. Connors, Jr., Esq. for the appellee.

FINDINGS OF FACT AND REPORT

Based on the testimony and exhibits offered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

At issue in this appeal is whether appellants Angelo and Alice Arena were domiciled in Massachusetts during the tax years at issue and therefore properly subject to Massachusetts personal income tax as residents.

Tax years 2002 and 2003

The appellants timely filed Massachusetts Nonresident/Part Year Resident personal income tax returns for tax years 2002 and 2003. The tax reported and paid on the 2002 return was $33 and the tax reported and paid on the 2003 return was $115. On January 13, 2006, the Commissioner issued to the appellants a Notice of Intent to Assess (“NIA”), proposing to assess $40,037.85 of personal income tax plus interest for the tax years 2002 and 2003 based on her determination that the appellants were domiciled in Massachusetts during both of those tax years.

On February 27, 2006, the Commissioner received a Special Consent Form Extending the Time for Assessment of Taxes signed by the appellants, as well as a request from the appellants for a conference. A conference regarding the NIA was held on April 19, 2006. After the conference, the Commissioner maintained that the appellants were domiciled in Massachusetts for the tax years 2002 and 2003. The Commissioner thus issued to the appellants a Notice of Assessment (“NOA”) on August 29, 2006, in the amount of $42,193.14 in personal income tax for the tax years 2002 and 2003.

The appellants timely filed an abatement application on October 2, 2006. On December 8, 2006, the Commissioner issued a Notice of Abatement Determination denying the appellants’ request for abatement. On February 6, 2007, the appellants seasonably filed their petitions with the Board for tax years 2002 and 2003. On the basis of these facts, the Board found and ruled that it had jurisdiction over the appeals for tax years 2002 and 2003.

Tax years 2004 and 2005

The appellants timely filed, pursuant to an extension of time to file, a Massachusetts Nonresident/Part Year Resident personal income tax return, claiming nonresident status for tax year 2005. The tax reported due on the 2005 return was $14,840.00. On May 13, 2006, the Commissioner issued a notice to the appellants indicating a discrepancy between the Commissioner’s records and the $25,800 refund that the appellants claimed for tax year 2004 and applied as a credit on the 2005 tax return. On May 28, 2006, the Commissioner issued an NOA to the appellants in the amount of $15,079.33 in personal income tax and interest for tax year 2005, based on her determination that the appellants were domiciled in Massachusetts and that the appellants were not entitled to the $25,800 credit.

The appellants timely filed their abatement application for the tax years 2004 and 2005 on December 28, 2007. On January 24, 2008, the Commissioner issued to the appellants a Notice of Abatement Determination denying their request for an abatement. Because the issues relevant to the tax year 2004 and 2005 assessments were the same as those at issue in the tax year 2002 and 2003 appeals, the appellants filed an assented-to Motion to Consolidate all four tax years in this appeal, which the Board allowed on February 19, 2008.

Findings of fact for all tax years at issue

Angelo Arena was born and raised in Lynn, Massachusetts. He attended Lynn public schools and then the Massachusetts Institute of Technology in Cambridge, Massachusetts. After receiving his college degree, Mr. Arena worked for one year at General Electric Company in Lynn. He then attended Columbia University Graduate School of Business in New York City. After graduation, Mr. Arena began working for Federated Department Store in Brooklyn, New York. He then enrolled in the United States Air Force for a two-year, active-service tour of duty. After completing his military service, Mr. Arena resumed his employment with Federated Department Store in California, where he met and married Mrs. Arena, a native of California. During the course of his employment, Mr. Arena and his family moved to Dallas, Chicago and Baltimore.

Alice Arena was raised in California. She attended school in Los Angeles. After graduating from college, Mrs. Arena pursued employment with Broadway Department Store in Los Angeles. After marrying Mr. Arena, Mrs. Arena’s activities focused on raising their five children, maintaining their various homes, and being involved with charitable boards.

The appellants bought their first home in Massachusetts in 1976. Mr. Arena testified that he purchased this home, which was located in Marblehead, “strictly as a summer residence.” Because their first Marblehead home became too small to accommodate the appellants’ five children, the appellants sold this home and purchased their current home in Marblehead in 1981. When Mr. Arena was working and the appellants’ children were young, Mrs. Arena spent the summers in Marblehead with their children. The appellants continued to use the Marblehead home as a summer home after Mr. Arena’s retirement.

The appellants purchased their first home in Florida in 1987. Mr. Arena explained that the appellants were considering “where we would want to retire” in the future, so they purchased a small, two-bedroom condominium to see if they liked the Naples area. Mr. Arena testified that he retired in late 1990 or early 1991. At that time, the appellants were living in Baltimore. Upon Mr. Arena’s retirement, the appellants sold their small Naples condominium, as well as their home in California, and purchased a home in Naples for retirement.

During the tax years at issue, the appellants owned and maintained three residences: (1) a condominium in New York City; (2) a single-family home in Naples, Florida, purchased in 1991 and consisting of 4,800 square feet, with three bedrooms and four bathrooms; and (3) a single-family home in Marblehead, purchased in 1981 and consisting of 6,000 square feet, with four bedrooms and five bathrooms. Mr. Arena testified that the appellants spent approximately three months a year in Massachusetts — from about the end of May or beginning of June until around Labor Day — about a month to six weeks a year in New York, about six and a half months in Florida, and two to four weeks traveling, including visiting their children, who reside in California and Tennessee. Both Mr. and Mrs. Arena testified that they considered their Naples residence to be their “home.”

Mr. Arena further testified that the appellants and their children typically spent the Christmas holiday in Massachusetts. He explained, however, that after the Christmas holiday, the appellants would “shut down” the Marblehead property by turning off the water and the hot water heaters, draining the pipes, and taking precautions against freezing like putting antifreeze in the heating system and wrapping electrical coils. Mr. Arena explained that the appellants began shutting down their Marblehead home for the winter after 1994 when, at a time when the appellants were not occupying the Marblehead home, a flood resulted in a sewage backup. The problem was discovered by the people who would “look after” the home for them while it was unoccupied, but not before it had “caused an awful lot of damage” which “took us a good year or more to even get repaired.” After this incident, the appellants removed the Marblehead home from the town sewer system and began to shut down the home for the winter months. Mr. Arena testified that the shut-down process “basically renders the house uninhabitable. You couldn’t really go there because you couldn’t use a toilet or anything like that.”

Mr. Arena testified that, unlike his Marblehead home, his Naples home was habitable all year round. He explained that, even though the appellants spent their summers in Marblehead, he would spend some time in Florida every month during the tax years at issue, even during the summertime, partly because he had investments in Florida and partly because he was being treated for melanoma by a doctor in Naples and he required quarterly checkups. Mr. Arena explained that Florida was “hurricane prone,” so he used hurricane shutters to safeguard that home during the summer months. However, he explained that when he went to the Naples home during the summer months, he was able to open the home in about a half an hour, simply by opening the shutters, and that the home’s air conditioning systems stayed on all year. Therefore, he concluded that, while he took some precautions, the Naples home remained habitable during the summer.

During the tax years at issue, Mr. Arena’s father resided in Massachusetts and two of the appellants’ daughters attended graduate schools in Massachusetts. The appellants contracted for a cellular phone family plan with a 617 area code during the tax years at issue. The plan included five telephones, one for each of the appellants, one for Mr. Arena’s father, and one for each daughter attending school in Massachusetts. Mr. Arena testified that the appellants entered into the cellular phone contract for a term of three years, primarily so that his father, who was about 90 years old, would have an emergency telephone with him. After the contract expired, the appellants’ children were working in California, so the appellants discontinued those telephones, retained the father’s 617 area code telephone and switched the appellants’ telephone numbers to a Florida area code.

Mr. Arena admitted that he had much of the appellants’ mail sent to the Marblehead home, particularly bank statements and monthly bills. He explained that the appellants often traveled between their three homes or a vacation destination, and his father was retired and “loved something to do, so we gave him a project.” The father would collect and send the mail to the appellants wherever they happened to be.

Mr. Arena was diagnosed with prostate cancer in 2003 and, after researching various treatment techniques, he decided to pursue treatment with a doctor practicing at Dana Farber, Brigham and Women’s Hospital, in Boston, Massachusetts. He explained that he had a procedure performed sometime in March or April, 2004 and following the procedure, he had some follow-up appointments during that summer. Mr. Arena conceded that his health insurance throughout his cancer treatments was Blue Cross and Blue Shield of Massachusetts. As of the hearing, Mr. Arena stated that he visited the doctor annually for follow-up appointments; “I just schedule it so it’s in a time period when I’m here.”

In addition to their residential properties, the appellants have owned various investment properties in Massachusetts as well as in Florida. Financing documents pertaining to investment properties in Marblehead and Lynn list Mr. Arena’s Marblehead address as his home address. The Massachusetts investment properties were primarily residential, while the Florida properties were commercial. Mr. Arena admitted that the residential properties required more management time than the commercial properties, but he explained that he hired a manager to perform these services for him. Mr. Arena testified that the total value of the appellants’ Florida investment properties was roughly three times the total value of their Massachusetts investment properties.

Mr. Arena is also listed as a manager and signatory of two Massachusetts limited liability companies (“LLCs”), Area Realty, which was formed in 1999, and Area Realty Two, which was formed in 2002. Mr. Arena testified that Area Realty was formed for the purpose of buying commercial properties that would be owned by his children and the children of his partner, Eyk Van Otterloo, who resides in Marblehead. Mr. Arena explained that the investment was with his children’s money, and his role was to advise his children to help them make purchases of real estate. He had no equity interest in the company.

After Area Realty had acquired three commercial properties, Mr. Arena discovered an opportunity to purchase two additional commercial properties. Mr. Arena and Mr. Van Otterloo decided to form a second LLC, Area Realty Two, to purchase these properties. The equity of Area Realty Two was also owned by the children of Mr. Arena and Mr. Van Otterloo, but Mr. Arena and Mr. Van Otterloo had loaned money to this LLC to make the purchases. Upon the advice of accountants, Mr. Arena and Mr. Van Otterloo took preferred stock payments as repayment of the loan. Mr. Arena reported these stock payments (which he refers to as “phantom income”) on his Massachusetts income tax return for the tax years at issue.

Mrs. Arena was also engaged in limited business activities in Massachusetts. She explained that in around 1991, about the time of Mr. Arena’s retirement, she obtained her real estate license in Baltimore. Mrs. Arena testified that she was fairly active with her license in Baltimore. At the suggestion of a friend who had her own real estate company in Marblehead, Mrs. Arena then obtained her real estate license in Massachusetts. Mrs. Arena served as a part-time realtor during the summer months in Marblehead. Mrs. Arena testified that she partnered with her friend to sell one multi-million dollar property in Marblehead. On the Internet website containing the listing, Mrs. Arena described herself as a “Marblehead resident for over 25 years” and that she and her husband “served on multiple boards including the House of Seven Gables, the Junior League of Boston and the North Shore Medical Center.” However, Mrs. Arena explained that she made this statement for business purposes, “because it would have been difficult to say that I was a resident of Florida when I was marketing to Massachusetts buyers.” She also explained that she was not actually serving on a board at the time that she made the statement. Mrs. Arena testified that this listing was a one-time advertisement and that, aside from this one multi-million dollar business venture with her friend, she was not significantly involved in any business activity as a broker. Mrs. Arena’s income from this activity was not a substantial source of income for the appellants, and she eventually let her license expire “[b]ecause I just wasn’t working at it anymore.”

Mr. and Mrs. Arena both testified to the various social organizations to which they belonged. First, Mr. Arena testified that during the tax years at issue, he was a member of social clubs in both Florida and Massachusetts. He admitted that he was a member of a yacht club and a golf club in Massachusetts. However, he explained, these memberships were used during the summer months. He testified that he was also a member of “say, three or four clubs in Naples,” including a country club, a yacht club, and a tennis resort club. He testified that he used his memberships at the Naples clubs more frequently than those at his Massachusetts clubs “because I’m there that much more.” The club in which he considered himself the most involved was the Royal Point Siena club in Naples, which he considered an all-inclusive country club, offering a golf course, a swimming pool and tennis courts, as well as many social activities. Mr. Arena also testified that he attended churches in Naples, Marblehead and New York City; “Obviously, depends on where we are.”

Mrs. Arena testified that she was involved in a limited number of social clubs in Massachusetts: “[o]nly when it related to good friends who would say come help do the flowers for the garden club or something of that nature.” She explained that she was on the board for the House of Seven Gables for about a year but that “when it became apparent that I missed most of the meetings,” she resigned so that her spot could be filled by “someone who could spend more time and devote more time . . . instead of me.” She testified that, by contrast, she was “very involved” in a social club in Florida by organizing bridge games and playing on the tennis team. She also testified that she volunteers at a migrant worker facility in Florida, and she entertains often at her Naples home. When asked to compare the importance of social and civic activities in Massachusetts versus Florida, Mrs. Arena responded:

Well, my civic I would say are far more tied to Naples where I really do get involved with some things, and socially I get involved with issues.

Massachusetts, it’s strictly seeing our friends and, you know, having dinner and playing tennis and golf, and that’s primarily it.

Both Mr. and Mrs. Arena testified that they are registered to vote in Florida and that they have never voted in Massachusetts. Mr. Arena has not held a Massachusetts driver’s license since the 1940s, and Mrs. Arena has never held a Massachusetts driver’s license. The appellants had their first will and testament prepared when they were living in Chicago during the 1970s. Mr. Arena testified that the will was since updated to reflect the appellants’ Naples address. The first and third pages of the will were submitted into evidence, and Mr. Arena testified that he had not since changed the declaration of residence which appears at the beginning of the will. The will is held in a safe deposit box in Naples. The appellants had three Massachusetts bank accounts during the tax years at issue, but they did not maintain a safe deposit box in Massachusetts. Upon his retirement, Mr. Arena began drawing Social Security payments, which he has directly deposited to his bank in Florida.

Mr. Arena testified that he owned a boat in Massachusetts and one in Florida. He testified that the Florida boat was a larger boat, intended for cruising, which was complete with sleeping accommodations, while the Massachusetts boat was smaller in capacity and designed primarily for fishing and other small excursions. Mr. Arena also testified that he owned and registered two vehicles in Massachusetts and four vehicles in Florida, which included two so-called “active” cars and two so-called “collectors” cars.

The appellants submitted into evidence their credit card statements for the tax years at issue. According to restaurant charges on those statements, the appellants estimated that they were present in Massachusetts the following number of days:

Tax Year	Approximate number of days in Massachusetts	Percentage of time in Massachusetts
2002	106	29%
2003	81	22%
2004	153	42%
2005	95	26%

As evidenced above, the restaurant charges indicated that the appellants spent the most time in Massachusetts during tax year 2004, the year in which Mr. Arena was being treated for cancer and their daughter was being treated in a Massachusetts hospital.

The appellants filed a Massachusetts Resident income tax return for the tax year ended December 31, 2001. Mr. Arena testified that he had been unaware at the time that he signed the return that it was a resident income tax return, because comparing the returns side-by-side, the resident return looked identical to the nonresident return except for a single line of normal-size type that designated it as a resident return. Mr. Arena testified that the filing of a resident return for that year must have been unintentional on the part of his accountant, because the accountant also prepared for the appellants an intangible property tax return for Florida, which was required only of Florida residents. Mr. Arena further explained that his accountant had prepared his returns since 1965 and that his accountant simply must have “picked up the wrong form in 2001,” indicating that the accountant did not use computer software to prepare the appellants’ 2001 return. The address on the 2001 tax return was the appellants’ Florida address.

The Board found that both Mr. and Mrs. Arena were credible witnesses with respect to all topics covered by their testimonies.

On the basis of these findings, the Board found and ruled that Florida was the center of the appellants’ social, civic and family life during the tax years at issue. While Mr. Arena was a native of Lynn, Massachusetts, and some of his family members, particularly his elderly father, resided in Massachusetts during the tax years at issue, the appellants nevertheless always considered their Marblehead home to be a summer residence. In their opinion, the Marblehead home, which they had purchased back in 1981,[3] was furnished like a summer residence. By contrast, the appellants specifically purchased the Naples home as they were preparing for Mr. Arena’s retirement, and their prized furnishings, which had traveled with them throughout their moves during their married life, went to their Naples home. Moreover, the appellants took active steps to close the Marblehead home for the winter by shutting off utilities, thereby rendering the home uninhabitable. The Board found credible Mr. Arena’s explanation that he took these precautions to prevent another flood during his prolonged absence for the winter months. By contrast, the Naples home, while in a hurricane-prone area, was nonetheless habitable when the appellants were not present there; Mr. Arena could “open” the home in minutes simply by opening hurricane shutters, which he did about every month during the years at issue, including the summer months. Furthermore, Mr. Arena testified that the appellants filed a declaration of homestead on their Naples home, sometime in the early 1990s, further demonstrating their intent to make Naples their home.

The Commissioner pointed to the cell phone plan contracted in Massachusetts and the fact that the appellants directed their mail to their Marblehead residence as determinative of where the appellants considered their home. However, the Board found that the appellants gave credible explanations for these ties to Massachusetts. Under the facts of these appeals, the cell phone plan was a logical convenience, considering that the appellants, although not residents themselves, had two daughters and an aging father living in Massachusetts. With respect to the mail, the appellants, who lead a very active lifestyle of travel, were often not in any one place, including Massachusetts, for long periods of time. The Board found credible Mr. Arena’s explanation of wanting to give his aging father, who would know of his son’s whereabouts, an activity and a sense of purpose.

As for the business activities of the appellants, these were not so steady and involved as to require the appellants’ consistent presence in Massachusetts. Mr. Arena’s Massachusetts investment properties required active management, but he did not manage them himself, instead hiring a manager to take care of this for him. As for his LLC duties, the Board found that Mr. Arena was an advisor to his children, and his activities hardly involved day-to-day active management as would full-time employment within Massachusetts. Mrs. Arena also was not significantly involved in a Massachusetts business; her involvement in selling real estate was sporadic at best.

Furthermore, the appellants’ social, civic and family ties to Florida were stronger than those to Massachusetts. The appellants attended churches and played sports such as tennis and golf wherever they happened to be. However, both Mr. and Mrs. Arena indicated that they were more involved in their social clubs in Naples. Mrs. Arena particularly was involved in organizing bridge games and charitable activities in Naples, yet she resigned from a Massachusetts charitable board because she felt that she was missing too many meetings. Both Mr. and Mrs. Arena held Florida drivers’ licenses and voted in Florida; they have never voted in Massachusetts. Moreover, the appellants filed a homestead exemption on their Naples home and they had their will updated to reflect their Naples home as their permanent residence.

On the basis of all of the findings, the Board found that the appellants intended to make Florida, not Massachusetts, their home for the present and foreseeable future during the tax years at issue. Therefore, to the extent that it is a finding of fact, the Board found that the appellants were domiciled in Florida.

Further, the Board found, on the basis of restaurant charges which, given the appellants’ lifestyle, were reliable indicators of days present in Massachusetts, together with the credible testimony of the appellants, that the appellants spent fewer than 183 days physically present in Massachusetts during each of the tax years at issue. Therefore, as will be explained in the following Opinion, the Board found that the appellants’ physical presence in Massachusetts was insufficient to subject them to tax as residents for purpose of G.L. c. 62, § 1(f).

Accordingly, the Board issued a revised decision for the appellants in this appeal.

OPINION

(1) any natural person domiciled in the commonwealth, or (2) any natural person who is not domiciled in the commonwealth but who maintains a permanent place of abode in the commonwealth and spends in the aggregate more than one hundred eighty-three days of the taxable year in the commonwealth, including days spent partially in and partially out of the commonwealth.

G.L. c. 62, § 1(f). The issue presented in these appeals is whether the appellants were domiciled in Massachusetts or, if not, spent over 183 days in Massachusetts and, therefore, were taxable as residents of Massachusetts.

Domicile is commonly defined as “the place of actual residence with intention to remain permanently or for an indefinite time and without any certain purpose to return to a former place of abode.” Commonwealth v. Davis, 284 Mass. 41, 50 (1933). While domicile may be a difficult concept to define precisely, the hallmark of domicile is that it is “‘the place where a person dwells and which is the center of his domestic, social and civil life.’” Reiersen v. Commissioner of Revenue, 26 Mass. App. Ct. 124, 125 (1988) (quoting Restatement (Second) of Conflict of Laws § 12 (1969)).

The Supreme Judicial Court has recognized that a person may have a residence in one place and a permanent home (i.e., a domicile) in another. See, e.g., Hopkins v. Commissioner of Corps. & Tax’n, 320 Mass. 168, 173 (1946); Horvitz v. Commissioner of Revenue, 51 Mass. App. Ct. 386, 393 (2001). Having more than one residence can lead to factors on more than one side of the “domicil ledger.” See Reiersen v. Commissioner of Revenue, 26 Mass. App. Ct. 124, 127 (1988). Therefore, a determination of domicile depends upon a comprehensive facts-and-circumstances analysis:

“No exact definition can be given of domicile; it depends upon no one fact or combination of circumstances, but from the whole taken together it must be determined in each particular case . . .; and it may often occur, that the evidence of facts tending to establish the domicile in one place, would be entirely conclusive, were it not for the existence of facts and circumstances of a still more conclusive and decisive character, which fix it, beyond question, in another.”

Horvitz v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2002-252, 257, aff’d, 60 Mass. App. Ct. 1103 (2003) (quoting Tax Collector of Lowell v. Hanchett, 240 Mass. 557, 561 (1922)(cite omitted)). While a person may have ties to more than one location, the standard of domicile is that it is “‘the place where a person dwells and which is the center of his domestic, social and civil life.’” Reiersen, 26 Mass. App. Ct. at 125 (emphasis added)(cite omitted).

In the instant appeal, the Commissioner contended that, because the appellants had filed a Massachusetts Resident tax return for tax year 2001, the appellants admitted that they were domiciled in Massachusetts for 2001. The Commissioner then argued that, since the time for amending that tax return has expired, the appellants are precluded from protesting that they were domiciled in Massachusetts for tax year 2001. Therefore, the Commissioner concluded, if the appellants now wish to assert that they were not domiciled in Massachusetts during the tax years at issue, they have the burden of proving that a change of domicile had occurred between 2001 and the tax years at issue. See Horvitz, 51 Mass. App. Ct. at 394.

The Commissioner’s argument is flawed in several respects. First, the information contained on a tax return, while perhaps a factor to consider, is certainly not decisive in determining domicile. See Reiersen, 24 Mass. App. Ct. at 130-31 (finding that, where a resident of the Philippines had used a Massachusetts address on a tax return, “[t]he addresses which appeared on the Reiersens’ tax returns, to which the board gave some weight, are in this case an extremely uncertain guide.”). Secondly, the Board found credible Mr. Arena’s testimony that he unwittingly filed a Massachusetts Resident return for 2001. Facts which established the lack of intent to file a resident return include: the return was prepared by an accountant rather than by Mr. Arena himself; the accountant also filed an intangible property return for Florida, which would only be required of a resident of Florida; the accountant apparently did not use computer software, which would have generated the proper return for Mr. Arena to file; and, when Mr. Arena compared the Resident and Nonresident/Part Year Resident returns side-by-side, they were nearly identical. Because it is unclear whether the return was prepared properly, the Board found that the 2001 return did not conclusively establish anything, including domicile in Massachusetts.

The appellants have owned a home in Marblehead since 1976 and have always treated it to a large extent as a summer home, furnishing it with their less-prized possessions and, with the exception of some time at the Christmas holidays, the appellants tended not to stay there after Labor Day and before Memorial Day.[4] The appellants filed a homestead exemption on their Naples home. While the appellants owned two cars and a boat registered in Massachusetts, they also owned four cars and a larger boat registered in Florida, and both appellants held Florida drivers’ licenses. Both appellants voted in Florida, not Massachusetts, and in fact have never voted in Massachusetts. While the appellants had bank accounts in Massachusetts, they also have an account in Florida, to which they have their social security check automatically deposited, and they also maintained a safe deposit box in Florida, not Massachusetts.

The appellants were active wherever they happened to be; they had friends and were involved in social and activity clubs in both Massachusetts and Florida. However, the Board found that both appellants were more involved in their clubs in Naples, particularly Mrs. Arena, who organized bridge games and participated in charitable endeavors. By contrast, Mrs. Arena was not readily available to the same extent for Massachusetts activities. In fact, Mrs. Arena resigned from the board of the House of Seven Gables because she was not present in Massachusetts to attend the meetings with regularity. Moreover, even while Mr. Arena’s father was living in Marblehead and their two daughters were studying in Massachusetts, the appellants as a couple preferred to spend their time in Naples together. On the basis of the above findings, the Board found and ruled that the center of appellants’ social, civic and family lives was Florida, not Massachusetts, during the tax years at issue.

Furthermore, Mr. Arena’s passive activities with respect to his investment properties and his advisory role in the two LLCs did not require him to spend substantial time in Massachusetts engaging in these activities. Mrs. Arena also did not substantially engage in her Massachusetts real estate activities.

On the basis of the Board’s findings, the Board found and ruled that Massachusetts was not the center of the appellant’s social, family, civic or family life and therefore, the appellants were not domiciled in Massachusetts during the tax years at issue.

Further, based on the appellants’ credit card restaurant charges and other credible evidence of record, the Board also found that, in each of the taxable years at issue, the appellants spent fewer than the requisite 183 days which would establish residency in Massachusetts pursuant to G.L. c. 62, § 1(f). Therefore, the Board found and ruled that the appellants’ physical presence in Massachusetts was insufficient to subject them to tax as residents for purposes of G.L. c. 62, § 1(f).

On the basis of all of the evidence in the instant appeal, the Board thus found and ruled that the appellants were not domiciled in Massachusetts, nor were they otherwise taxable as residents of Massachusetts, during the tax years at issue. Accordingly, the Board issued a revised decision, based primarily on the parties’ Supplemental Statement of Agreed Facts, for the appellants in this appeal and ordered abatements as follows: $20,006, along with associated interest and penalties, for tax year 2002; $14,386, along with associated interest and penalties, for tax year 2003; $11,779 of tax assessed and paid for tax year 2004; and no abatement for tax year 2005.

APPELLATE TAX BOARD

By: _____ ____ Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

RANDOLPH A. COTTER v. COMMISSIONER OF REVENUE

Docket No. C293719 Promulgated:

January 15, 2010

This is an appeal filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39, from the refusal of the Commissioner of Revenue (“Commissioner” or “appellee”) to abate personal income tax assessed to the appellant, Randolph A. Cotter (“Mr. Cotter” or “appellant”) for tax years 2003 and 2004 (“tax years at issue”).

Commissioner Scharaffa heard this appeal. Chairman Hammond and Commissioners Egan, Rose, and Mulhern joined him in a decision for the appellee.

These findings of fact and report are made pursuant to requests by the appellant and appellee under G.L. c. 58A, § 13 and 831 CMR 1.32

Bartholomew P. Molloy, Esq. for the appellant.

Celine E. Jackson, Esq. and Benson V. Solivan, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of a Statement of Agreed Facts and testimony and exhibits offered during the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On April 10, 2004, Mr. Cotter filed a Massachusetts part-year resident income tax return for the tax year 2003, reporting part-year Massachusetts income tax due of $9,678.00. On that return, Mr. Cotter indicated that he was a Massachusetts resident from January 1, 2003 through May 7, 2003. On April 2, 2005, Mr. Cotter filed a Massachusetts non-resident income tax return for all of tax year 2004, reporting no Massachusetts income tax due.

By a Notice of Intention to Assess dated April 30 2006, the Commissioner proposed to assess $13,248.45 and $14,308.05 of personal income tax plus interest for the tax years 2003 and 2004, respectively, based on her determination that Mr. Cotter was domiciled in Massachusetts during the tax years at issue. By a Notice of Assessment dated October 18, 2006, the Commissioner assessed personal income tax in the amount of $13,807.20 and $14,911.49 for the 2003 and 2004 tax years, respectively.[5] On or about November 9, 2006, Mr. Cotter paid the outstanding tax liabilities for the tax years at issue.

Mr. Cotter filed an Application for Abatement for the tax years at issue with the Commissioner on March 14, 2007. On August 22, 2007, the Commissioner issued to Mr. Cotter a Notice of Abatement Determination denying his request for abatement for the tax years at issue. On October 3, 2007, Mr. Cotter timely filed his appeal for the tax years at issue with the Board. Based on the above facts, the Board found that it had jurisdiction to hear and decide this appeal.

At issue in this appeal is whether Mr. Cotter was a Massachusetts resident for purposes of personal income tax for the tax years at issue. Mr. Cotter was a Massachusetts domiciliary for a number of years prior to the tax years at issue. He was raised in Saugus and obtained degrees from Wentworth Institute and Northeastern University in Boston. Subsequently, Mr. Cotter was employed by a number of companies in Massachusetts, except for a ten-year period when he was employed in New York City. He returned to Massachusetts in April, 1979.

1. The appellant’s personal and family connections.

It is undisputed that, prior to the tax years at issue, Mr. Cotter’s primary residence was a single-family home located in Lynnfield, Massachusetts (“Lynnfield property”), which he kept furnished during the tax years at issue. One of Mr. Cotter’s witnesses, Karen Gallagher, a Massachusetts resident, described the Lynnfield property as an upscale home with multiple bedrooms and good landscaping. During the tax years at issue, Mr. Cotter also owned a single-family home in Gloucester, Massachusetts (“Gloucester property”). Mr. Cotter testified that he had owned the Gloucester property since the mid-1990s and used it primarily as a summer beach house.

Mr. Cotter first acquired property in Florida in the mid-1990s, when he purchased a condominium in Fort Lauderdale, Florida (“Unit 238”) for the purpose of visiting during the winter. The two-bedroom unit was located in the middle of its complex with no ocean or lake view. Mr. Cotter testified that during the years that he owned Unit 238, he considered his Lynnfield property to be his primary residence. Mr. Cotter sold Unit 238 at or around the end of 2001. In November, 2001, Mr. Cotter purchased a three-bedroom condominium (“Unit 291”) in the same development. After purchasing Unit 291, Mr. Cotter and his companion, Judy, renovated and refurnished the unit so that it was ready for occupancy by the fall of 2002.

Mr. Cotter testified that it was some time late in 2002 that he formulated his intent to change his domicile from Massachusetts to Florida. In an attempt to accomplish this goal, Mr. Cotter consulted with Attorney Ronald N. Stetler of Pepe & Hazard in Boston. Mr. Cotter stated that a warmer climate and social activities, like fishing, were some of the reasons for his decision to change his domicile. However, Mr. Cotter’s testimony revealed that a fundamental motivation for changing his domicile to Florida was tax relief:

Q. What was the purpose of retaining Mr. Stetler of Pepe & Hazard?

A. I needed a tax attorney, not a civil attorney, because I had a lot of money and I had to make decisions on what I did correctly and I didn’t want to make any mistakes. So, that’s why I hired a tax attorney.

Q. After consulting with Mr. Stetler what, if anything, did you understand were the tax benefits of being domiciled in Florida as opposed to Massachusetts?

A. Multiple. And he listed them up for me.

Number 1, there was no inheritance tax in Florida as there was in Massachusetts.

Number 2, there was no state income tax in Florida as there was in Massachusetts.

If I become a Florida resident, it also gave me the ability to homestead. So the pluses far outweighed the minuses. And that’s when we made the decision to go forward . . . .

Mr. Cotter described the process he undertook to establish his domicile in Florida: “They gave me a check list; these are the things that you have to do because the state watches out for these things. Florida requires these things. And that’s what we did.”

Mr. Cotter detailed his efforts to change his domicile to Florida. He testified that he listed his Lynnfield property for sale around October, 2002. However, Mr. Cotter continued to own the Lynnfield property during the tax years at issue. His explanation was that he listed the Lynnfield property for $999,500 but, because the real estate market was depressed at that time, he did not sell it until 2005.

Mr. Cotter testified that Mr. Stetler also advised him to take a number of actions, including obtaining a Florida driver’s license, registering to vote in Florida, filing Florida Intangible Property Tax Returns, filing a Declaration of Domicile in Florida, and residing outside of Massachusetts for more than 183 days a year. Mr. Cotter testified that he met all of these objectives. Documentation submitted into evidence indicated that Mr. Cotter registered to vote in Florida on May 5, 2003. Mr. Cotter testified that he changed his will to reflect his Florida address, but that he did not execute it until late 2003. The evidence also showed that when Mr. Cotter first obtained a Florida driver’s license in 2003, he applied for and received a seasonal driver’s license; he did not acquire a full-year Florida driver’s license until March 11, 2004 and did not register a vehicle in Florida until he registered his primary vehicle, a Lexus, on April 20, 2004. In the meantime, Mr. Cotter renewed his Massachusetts driver’s license on June 25, 2004, on which he listed his Lynnfield property as his address. Moreover, he owned and maintained multiple automobiles, motorcycles, and a trailer registered in Massachusetts during the tax years at issue. Finally, Mr. Cotter testified that he filed a Declaration of Domicile in Florida on May 5, 2003, but he did not produce a copy of the declaration.

Mr. Cotter joined various organizations in Florida, including the Lago Mar Beach Club, the Florida chapter of the American Offshore Marina, the International Game Fishing Association, and the American Society of Mechanical Engineers. He also received his captain’s license and became a merchant marine officer. However, Mr. Cotter was also a member of the Heron Way Marina in Gloucester, where he participated in boating and fishing activities with his Massachusetts friends during the tax years at issue. Also during the tax years at issue, Mr. Cotter registered a boat in Florida, but he also maintained two boats registered in Massachusetts, in Quincy and in Gloucester.

Mr. Cotter had no family in Florida during the tax years at issue. Mr. Cotter had four children, three of whom lived in Massachusetts and one who lived in Maine. All of Mr. Cotter’s grandchildren resided in Massachusetts, as did his brother. Mr. Cotter testified that he spent the Christmas and Thanksgiving holidays with his family in Massachusetts during the tax years at issue.

Mr. Cotter submitted documentation of his credit card and ATM card transactions in an attempt to establish the number of days he was physically present in Florida during the tax years at issue. At the hearing, Mr. Cotter presented a calendar on which he circled the dates on which he had used his credit card or bank card within Florida. By counting the number of dates circled on the calendar, Mr. Cotter calculated that he was physically present in Florida at least 201 days in 2003 and at least 193 days in 2004.

However, the Board found several inconsistencies between Mr. Cotter’s calendars and the records of his credit card and banking transactions. For example, Mr. Cotter had circled the dates January 25 and 27, 2003 as dates which he could confirm that he was in Florida. However, First USA credit card statements indicate charges in Massachusetts for gas, retail stores, and a parking garage on January 25 through 28. The Board found that the gas and parking garage charges in particular indicated that Mr. Cotter was actually present in Massachusetts instead of Florida on those dates. The Board thus found that Mr. Cotter’s calendars were inconsistent and unreliable and therefore not credible evidence of his physical presence outside of Massachusetts.

At the hearing, Mr. Cotter’s witnesses, called to testify about his ties to Florida, consisted of his son, Randolph, and two friends, all of whom were Massachusetts residents. Randolph testified that he was very close to his father, and that the appellant was very close to his grandchildren, who enjoyed spending time at “Papa’s house” in Gloucester. Frank Armstrong, a friend of the appellant’s, testified that he enjoyed motorcycling with Mr. Cotter in Massachusetts. The appellant had not transferred registration of his motorcycles to Florida.

Mr. Cotter retained his Massachusetts wireless telephone number during the tax years at issue. He also maintained his Sovereign Bank account in Massachusetts and did not change the Massachusetts address on his personal checks. The bank continued to forward his statements to his Lynnfield property. Mr. Cotter also continued to receive a substantial amount of mail at his Lynnfield property during the tax years at issue, including: federal tax Forms 1098 and 1099 from Countrywide Home Mortgage; 2003 and 2004 Tax Reporting Statements from Merrill Lynch; combined tax statements from The Savings Bank, a Massachusetts bank; federal forms 1099 for both tax years at issue from Mony State St. Withholding Fund; a Valley Forge Life Insurance Company payment notice; a National Grange Mutual Insurance Company premium statement for 2003; ITT Industries Investment and Savings Plan statements for both tax years at issues; federal form 1099 from ITT Industries for tax year 2003; mortgage statements from Chase regarding the mortgage of Unit 291 for both tax years at issue; and First USA and Bank One credit card statements for both tax years at issue. When asked why he did not change his mailing address on his accounts, Mr. Cotter responded:

A: . . . . The system said to do all of these things. The system never said, make sure that you change your mailing address.

Q: What system?

A: When I worked with Ron Stetler of Pepe & Hazard. He was very specific of the things I had to do to become a Florida resident.

Furthermore, when Mr. Cotter filed a petition with the Gloucester Board of Appeals regarding his Gloucester property on November 14, 2005, he provided his Lynnfield address as the return address on the petition. Moreover, his vehicle excise bills were sent to him at his Lynnfield property for both tax years at issue, as was his boat excise bill for 2003. Finally, when Mr. Cotter won a sum of money from a Florida casino, he signed a receipt on November 1, 2003, six months after purportedly changing his domicile to Florida, declaring under the pains and penalty of perjury that his address for income tax purposes was his Lynnfield property.

2. The appellant’s Massachusetts business connections.

In 1979, the appellant founded Cotter Corporation, which built custom-process skid systems for biopharmaceutical and biotech companies. Cotter Corporation’s final location was 8 South Side Road in Danvers (the “Danvers property”). The Danvers property was owned by the Cotter Realty Trust, a Massachusetts real estate trust, which the appellant established in 1995 with himself as trustee and, along with his children, a beneficiary. On April 17, 2001, Mr. Cotter sold the assets of Cotter Corporation to ITT Industries, which changed the name of the company to Pure Flo Cotter, Division of ITT Industries (“Pure Flo Cotter”). Mr. Cotter remained the President of Cotter Corporation until November 10, 2004, the date that Cotter Corporation received its final payment from ITT Industries and was officially dissolved.

Pure Flo Cotter continued to operate the business at the Danvers property, which at the time of sale was within the ownership and control of the Cotter Realty Trust. According to a Trustee’s Certificate entered into evidence, the Cotter Realty Trust “remain[ed] in full force and effect” as of July 19, 2004, the date of that certificate’s signing, and the appellant never suggested that the Cotter Realty Trust was dissolved at any time during the tax years at issue. The Board thus found that the Cotter Realty Trust continued to own and operate the Danvers Property, and that Pure Flo Cotter leased the Danvers property from Cotter Realty Trust during the tax years at issue.

As part of the sale, Mr. Cotter signed a four-year non-competition contract and a two-year employment contract to work as a consultant for Pure Flo Cotter. However, Mr. Cotter’s consulting relationship was terminated in October, 2002. Pure Flo Cotter continued to pay Mr. Cotter until April 17, 2003. Mr. Cotter’s sons, Randolph, Jr. (“Randolph”) and Timothy, then formed Cotter Brothers Corporation, a direct competitor of Pure Flo Cotter, in July, 2003. Mr. Cotter testified that he had no business dealings with Cotter Brothers Corporation until after his non-competition contract expired in April, 2005, and that he was not a member of the Cotter Brothers Corporation board of directors until 2007.

As explained above, Pure Flo Cotter continued to lease the Danvers property from the Cotter Realty Trust, of which Mr. Cotter was the trustee during the tax years at issue. Mr. Cotter and Randolph both testified that Mr. Cotter was given a corner office in the back of the building occupied by Cotter Brothers Corporation. Mr. Cotter testified that the corner office was reserved for him because of his work as the trustee of the Cotter Realty Trust, which leased the Danvers property to Pure Flo Cotter during the tax years at issue. Moreover, Mr. Cotter was also the President and Secretary of a Massachusetts corporation during the tax years at issue called Ultra-Pure Stainless, Inc. (“Ultra-Pure Stainless”), organized on October 30, 1991 and with its principal place of business at the Danvers property. The Board thus found that Mr. Cotter had an office and continued to perform business duties at the Danvers property during the tax years at issue.

Mr. Cotter also established a Massachusetts realty trust for his children’s benefit, the Skipper Way Realty Trust, which owned the Gloucester property during the tax years at issue. He also established a charitable trust fund sometime in 2004 in honor of his late sister. The Elizabeth Cotter Trust was originally managed by a charitable foundation in Boston until Mr. Cotter transferred management of the fund to the Broward Foundation in Florida sometime in 2005. Finally, in May, 2003, the appellant established Cotter Consulting Group, a Delaware corporation with its principal place of business at Unit 291. In July, 2003, Mr. Cotter registered Cotter Consulting Group with the Massachusetts Secretary of State as a foreign company registered to do business in Massachusetts. The listed Registered Agent was Attorney Stetler, Mr. Cotter’s attorney from Massachusetts.

3. The Board’s ultimate findings.

The appellant readily admitted that tax savings was a primary motivation for him to change his domicile to Florida and that he received a “check list” from a tax attorney to establish a basis for claiming a change of domicile. While he enjoyed pastimes like going to the beach and fishing, it was undisputed that the core of Mr. Cotter’s family and social life was in Massachusetts during the tax years at issue. Mr. Cotter retained his upscale Lynnfield property, which he kept furnished, and the vast majority of Mr. Cotter’s family, with whom he was very close and with whom he spent much time, remained in Massachusetts during the tax years at issue. Mr. Cotter also enjoyed his pastimes of boating and fishing in Massachusetts through his involvement with the Heron Way Marina social club and his maintenance and use of two boats registered in Massachusetts, as well as his motorcycling in Massachusetts.

The appellant also kept multiple vehicles registered in Massachusetts. The only vehicle he registered in Florida was his Lexus, which he did not register in Florida until April 20, 2004, beyond the 2003 tax year and well into the 2004 tax year. When he first obtained a driver’s license in Florida sometime in early 2003, he applied for and received only a seasonal license; he did not obtain a full-time Florida license until March 11, 2004, and even then he renewed his Massachusetts license on June 25, 2004. While Mr. Cotter testified that he obtained a seasonal license in Florida and renewed his Massachusetts license in error, the Board was not persuaded that Mr. Cotter would take such actions unwittingly, particularly when he did not register any vehicles in Florida until April 20, 2004, and he maintained multiple vehicles in Massachusetts during the tax years at issue. Instead, the Board regarded all of the above factors as establishing that Mr. Cotter’s family and societal ties were stronger in Massachusetts than in Florida during the tax years at issue.

Moreover, Mr. Cotter retained much of his personal financial business in Massachusetts during the tax years at issue. He maintained a Massachusetts checking account, and he never changed his Massachusetts address on that account nor on the checks associated with that account. The appellant also received a substantial amount of mail at his Lynnfield property; he periodically filed change of address forms with the Post Office, but the appellant never changed his address to reflect his “new” domicile on his important financial accounts, including life insurance accounts, the mortgage account for Unit 291, his ITT retirement account, and his First USA credit card account. Therefore, his important Federal Forms 1098 and 1099 were directed to his Lynnfield property. Moreover, on November 1, 2003, after his alleged move to Florida, he made a sworn statement on a gambling winnings tax form, for a casino located in Florida, that his address for income tax purposes was his Lynnfield property.

In addition, Mr. Cotter’s in-state business activities with Skipper Way Realty Trust, Ultra-Pure Stainless, Cotter Consulting, and Cotter Realty Trust, which owned and leased the Danvers property during the tax years at issue, indicated that the appellant’s business network remained strongly rooted in Massachusetts during the tax years at issue. Mr. Cotter also maintained charitable activities in Massachusetts as trustee of the Elizabeth Cotter Trust, which was established in Massachusetts in 2004 and which he managed in Massachusetts until after the tax years at issue. The Board found that all of the above facts established that Mr. Cotter’s business and financial ties were stronger in Massachusetts than in Florida during the tax years at issue.

Therefore, on the basis of the evidence presented in this appeal, the Board found that the appellant’s legal filings in Florida were performed under the direction of his tax attorney and extended no further than what the tax attorney’s “system” dictated. These filings established a mere superficial relationship with Florida. However, the center of Mr. Cotter’s physical, business, social and civic activities remained in Massachusetts during the tax years at issue. Therefore, the Board found that Mr. Cotter demonstrated an intent to retain Massachusetts as his domicile during the tax years at issue.

Because the Board found that Mr. Cotter was domiciled in Massachusetts, it was not required to find that Mr. Cotter spent less than 183 days in Massachusetts. See G.L. c. 62, § 1(f). However, the Board examined Mr. Cotter’s evidence on this point because his physical presence in Massachusetts was a factor to be considered in determining whether Mr. Cotter was domiciled in Massachusetts during the tax years at issue. The Board found that Mr. Cotter’s statements on his own calendars and his testimony at the hearing were inconsistent with his credit card and banking records and thus adversely impacting his credibility and the credibility of the evidence he offered. The Board thus found that Mr. Cotter failed to produce evidence sufficient to establish that he was absent from Massachusetts as often as he claimed and instead indicated that he maintained a strong physical presence in Massachusetts during the tax years at issue.

Accordingly, and for the reasons stated more fully in the Opinion, the Board ruled that Mr. Cotter was a Massachusetts resident during the tax years at issue. The Board, therefore, issued a decision for the appellee in this appeal.

OPINION

G.L. c. 62, § 1(f). The issue presented in this appeal is whether the appellant was domiciled in Massachusetts or, if not, spent over 183 days in Massachusetts and, therefore, is taxable as a resident of Massachusetts.

Domicile is commonly defined as “the place of actual residence with intention to remain permanently or for an indefinite time and without any certain purpose to return to a former place of abode.” Commonwealth v. Davis, 284 Mass. 41, 50 (1933). While domicile may be a difficult concept to define precisely, the hallmark of domicile is that it is “‘the place where a person dwells and which is the center of his domestic, social and civil life.’” Reiersen v. Commissioner of Revenue, 26 Mass. App. Ct. 124, 125 (1988) (citing Restatement (Second) of Conflict of Laws § 12 (1969)).

The Supreme Judicial Court and Massachusetts Appeals Court have recognized that a person may have a residence in one place and a permanent home (i.e., domicile) in another. See, e.g., Hopkins v. Commissioner of Corps. & Tax’n, 320 Mass. 168, 173 (1946); Horvitz v. Commissioner of Revenue, 51 Mass. App. Ct. 386, 393 (2001). Having more than one residence can lead to factors on more than one side of the “domicil[e] ledger.” See Reiersen, 26 Mass. App. Ct. at 127. Therefore, a determination of domicile depends upon a comprehensive facts-and-circumstances analysis:

Horvitz v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2002-252, 257, aff’d, 60 Mass. App. Ct. 1103 (2003) (quoting Tax Collector of Lowell v. Hanchett, 240 Mass. 557, 561 (1922)(citation omitted)); see also Roarke v. Hanchett, 240 Mass. 557, 561 (1922) (finding that proof of domicile “depends upon no one fact or combination of circumstances, but from the whole taken together it must be determined in each particular case.”). While a person may have ties to more than one location, the standard of domicile is that it is “‘the place where a person dwells and which is the center of his domestic, social and civil life.’” Reiersen, 26 Mass. App. Ct. at 125 (citation omitted).

Once a party has established a domicile, the burden of proving a change is upon the party seeking to establish the change. Horvitz, 51 Mass. App. Ct. at 394; Mellon Natl. Bank & Trust Co. v. Commissioner of Corps. & Tax’n, 327 Mass. 631, 638 (1951); Commonwealth v. Bogigian, 265 Mass. 531, 538 (1929). In the present appeal, it is undisputed that Mr. Cotter was a Massachusetts domiciliary for most of his life, including the twenty-three years preceding the tax years at issue. Since Mr. Cotter was the party asserting that he changed his domicile to Florida, Mr. Cotter had the burden of proving that he was no longer domiciled in Massachusetts during the tax years at issue.

Massachusetts follows the common law rule that a person with legal capacity is considered to have changed his or her domicile by satisfying two elements: the establishment of physical residence in a different state and the intent to remain at the new residence permanently or indefinitely. McMahon v. McMahon, 31 Mass. App. Ct. 504, 505 (1991). The interpretation of intent goes beyond merely accepting the taxpayer’s expression of intent and instead requires an analysis of the facts closely connected to the taxpayer’s major life interests, including family relations, business connections, and social and extracurricular activities in order to determine his true intent. See Reiersen, 26 Mass. App. Ct. at 125 (“A change of domicile occurs when a person with capacity to change his domicile is physically present in a place and intends to make that place his home for the time at least; the fact and intent must concur.” (citing Hershkoff v. Board of Registered Voters of Worcester, 366 Mass. 570, 576-577 (1974))). Moreover, while the determination of intent is subjective in nature, if a person’s driving motivation for establishing the new domicile is to reduce a possible tax liability, the claimed domicile will be more closely scrutinized. Davis, 284 Mass. at 50 (“A man cannot elect to make one place his home for the general purpose of life, and another place his home for the general purpose of taxation.”).

The Board first examined the evidence of Mr. Cotter’s physical presence in Massachusetts. While the appellant enjoyed pastimes like going to the beach and fishing in Florida, he also enjoyed those pastimes in Massachusetts through his involvement in the Heron Way Marina social club and his maintenance and use of two boats in Massachusetts. Additionally, he enjoyed motorcycling in Massachusetts, and he never transferred his motorcycles to Florida. The Board also found that the appellant’s testimony and calendars contradicted his credit card and banking transaction records, thus undermining his credibility on the issue of the number of days he spent in Massachusetts. On the basis of all of the evidence, the Board thus found and ruled that the appellant failed to prove that he was physically absent from Massachusetts as often as he claimed, and instead actually indicated that he maintained a strong physical presence in Massachusetts during the tax years at issue.

Mr. Cotter also had strong family ties in Massachusetts, where three of his children and his grandchildren resided and where he spent the Christmas and Thanksgiving holidays, as well as his summers, during the tax years at issue. Mr. Cotter admitted to having no family in Florida. Moreover, Mr. Cotter registered multiple vehicles in Massachusetts and renewed his Massachusetts license during the tax years at issue; by contrast, he did not register a vehicle in Florida until April, 2004, and he did not obtain a permanent Florida driver’s license until March 2004. On the basis of these facts, the Board found and ruled that Mr. Cotter’s family and societal ties to Massachusetts were stronger than those to Florida during the tax years at issue.

Moreover, Mr. Cotter’s maintenance of Massachusetts bank accounts, the fact that he did not change his address on key financial accounts, including his bank accounts, life insurance accounts, and even his mortgage account for Unit 291, and his statement to the Florida casino on November 1, 2003 that his address for income tax purposes was his Lynnfield property, all established that Mr. Cotter’s financial ties to Massachusetts outweighed those to Florida during the tax years at issue. The fact that Mr. Cotter did not change his address on these accounts simply because “the system never said, change your mailing address” established that the appellant was more interested in making a superficial show to establish the appearance of domicile “because I had a lot of money and I had to make decisions on what I did correctly and I didn’t want to make any mistakes,” rather than genuinely changing his domicile to Florida.

Additionally, Mr. Cotter maintained significant business ties to Massachusetts during the tax years at issue through his involvement with Skipper Way Realty Trust, Ultra-Pure Stainless, Cotter Consulting, and Cotter Realty Trust, which owned and leased the Danvers property during the tax years at issue, as well as his charitable activities as trustee of the Elizabeth Cotter Trust. The Board found and ruled that Mr. Cotter’s business ties to Massachusetts were stronger than those to Florida during the tax years at issue.

On the basis of the facts in evidence, the Board thus found and ruled that the appellant’s family, social, personal and business ties established that he had no intent to abandon his Massachusetts domicile and change his domicile to Florida during the tax years at issue. Therefore, the Board found and ruled that the appellant failed to meet his burden of proving that he was not domiciled in Massachusetts during the tax years at issue. Accordingly, the Board issued a decision for the appellee in this appeal.

APPELLATE TAX BOARD

By: _____ __

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

BENJAMIN BIRNIE v. BOARD OF ASSESSORS OF THE TOWN OF STOCKBRIDGE

Docket No. F298541 Promulgated: January 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 real estate tax on certain real estate in the Town of Stockbridge owned by and assessed to Frank Birnie, Trustee of the 1999 Restatement of 1990 Trust Declaration, under G.L. c. 59, §§ 11 and 38, for fiscal year 2008.

Commissioner Mulhern heard this appeal. Chairman Hammond and Commissioners Scharaffa and Rose joined him in a decision for the appellant.

These findings of fact and report are made pursuant to requests by both the appellant and the appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.

Benjamin Birnie, pro se, for the appellant.

Thomas J. Harrington, Esq. and Michael Blay, assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of testimony and exhibits offered at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2007, Frank Birnie, Trustee of the 1999 Restatement of 1990 Trust Declaration (“the trust”), was the assessed owner of a parcel of real estate located at 20 Prospect Hill Road in the Town of Stockbridge (“subject property”). The parcel contains approximately 1.40 acres of land and is improved with a one-story modern/contemporary-style dwelling. The dwelling contains 2,106 square feet of living area, which includes a total of six rooms, including three bedrooms, and also two full bathrooms. The home has central air conditioning and an oil-fired heating system. The subject dwelling also includes a 208-square-foot enclosed porch, a 276-square-foot open porch, a 554-square-foot garage, and a 1,620-square-foot unfinished basement. The exterior of the dwelling is sided with clapboard, and its roof is finished with asphalt shingles. The subject dwelling is in excellent condition.

For fiscal year 2008, the Board of Assessors of Stockbridge (“assessors”) valued the subject property at $825,400 and assessed a tax thereon, at the rate of $6.92 per thousand, in the amount of $5,862.36.[6] On March 8, 2008, Frank Birnie executed a limited power of attorney granting Benjamin Birnie (“appellant”), his son, authority to act on his behalf with respect to the subject property. On March 26, 2008, the Stockbridge Collector of Taxes mailed the second-half fiscal year 2008 tax bills, with a payment due date of May 1, 2008. The tax due was timely paid without incurring interest. On April 7, 2008, in accordance with G.L. c. 59, § 59, the appellant timely filed an Application for Abatement with the assessors. The assessors denied the appellant’s abatement application on May 27, 2008. The appellant seasonably filed his appeal with the Board on August 11, 2008. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear this appeal.

The appellant argued that the subject property was overvalued for fiscal year 2008 because the assessors based the subject assessment on calendar year 2005 sales, which they also used to arrive at the subject property’s fiscal year 2007 assessment. In support of his claim, the appellant offered into evidence the testimony of Michael Blay, assessor for Stockbridge, and also numerous exhibits, including the subject property’s property record card listing both the fiscal year 2007 and 2008 assessments; the assessors’ “Parcel Detail by Style,” which identified the sales used by the assessors to determine the fiscal year 2008 assessments; the assessors’ land curve schedule; and the property record cards for several properties located in Stockbridge.

Mr. Blay testified that to complete the valuation for fiscal year 2008, the assessors had to analyze sales of properties in the town within a given time period to derive the final assessment values, which were submitted to the Massachusetts Department of Revenue (“DOR”) for certification. Mr. Blay further testified that the subject property is categorized as a modern/contemporary-style dwelling and that there were no sales of this style dwelling in calendar year 2006. Therefore, the assessors relied on three sales of modern/contemporary-style properties that sold during calendar year 2005. Mr. Blay further testified that the assessors also used these sales to determine the subject property’s fiscal year 2007 assessment of $744,900, which represented an 8.3% increase above the subject property’s fiscal year 2006 assessment. Mr. Blay conceded that there were no significant improvements made to the subject property during calendar year 2006. However, relying on the same 2005 sales used to determine the subject property’s fiscal year 2007 assessment, the assessors determined that the subject property’s fiscal year 2008 assessed value had increased by an additional 10.8% percent from fiscal year 2007.

The appellant also argued that the subject property was disproportionately assessed for fiscal year 2008. Specifically, the appellant argued that because the first two acres of a parcel of real estate in Stockbridge were assessed at $36,000 per acre, with adjustments for condition and influence, and each additional acre was assessed at $4,500 per acre, the subject property, which includes a relatively small amount of land, was assessed at a much higher per-acre value than other properties in Stockbridge.

In support of his argument, the appellant relied solely on two sales of vacant land which occurred during calendar year 2006. Sale number one, located on Glendale Road, is a 2.86-acre parcel of real estate which sold on March 10, 2006 for $150,000. For fiscal year 2008, this parcel was assessed at $155,200. Sale number two is a 15.75-acre parcel of real estate located at 4 Glendale Road, which sold on July 10, 2006 for $600,000. This property was assessed at $303,300 for fiscal year 2008. Based on these sales, Mr. Birnie contended that the assessors’ underestimated the market value of “excess residual acreage” in Stockbridge and, as a result, the subject property was assessed at a disproportionately higher rate relative to other properties with acreage far in excess of the subject property. Mr. Birnie did not, however, offer any evidence of the subject property’s fair market value nor did he offer any assessment or sales data of comparable properties. The assessors offered no evidence of value but instead rested on their assessment.

Based on the evidence presented and the reasonable inferences drawn therefrom, the Board found that the appellant met his burden of proving that the subject property was overvalued for fiscal year 2008, but failed to prove disproportionate assessment. With respect to the appellant’s claim of overvaluation, the Board found that the underlying data and methodology which the assessors employed to value the subject property for fiscal year 2008 was flawed and unreliable. The record revealed no sales of comparable property in calendar year 2006, and no significant improvements to the subject property. Further, there was no evidence concerning market appreciation between the relevant assessment dates for fiscal year 2007 and fiscal year 2008. Accordingly, the Board found that the fair cash value of the subject property for fiscal year 2008 was its fiscal year 2007 assessed value, $744,900.

With respect to the appellant’s claim of disproportionate assessment, the Board found that the appellant’s sole reliance on two sales of vacant land was insufficient to prove that he was the victim of a deliberate scheme of discriminatory, disproportionate assessment.

Accordingly, the Board found that assessors had overvalued the subject property for fiscal year 2008, but had not disproportionately assessed the subject property. The Board, therefore, decided this appeal for the appellant and granted an abatement in the amount of $573.77.

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).

In an appeal 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, 393 Mass. at 600 (quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983)).

With respect to “exposing flaws or errors in assessors’ method of valuation,” taxpayers do not conclusively establish a right to abatement merely by showing that their land, or a portion of it, is overvalued. “The tax on a parcel of land and the building thereon is one tax . . . although for statistical purposes they may be valued separately.” Assessors of Brookline v. Prudential Insurance Co., 310 Mass. 300, 316-17 (1941). In abatement proceedings, “the question is whether the assessment for the parcel of real estate, including both the land and the structures thereon, is excessive. The component parts, on which that single assessment is laid, are each open to inquiry and revision by the appellate tribunal in reaching the conclusion whether that single assessment is excessive.” Massachusetts General Hospital v. Belmont, 238 Mass. 396, 403 (1921). See also Buckley v. Assessors of Duxbury, Mass. ATB Findings of Fact and Reports 1990-110, 119; Jernegan v. Assessors of Duxbury, Mass. ATB Findings of Fact and Reports 1990-39, 48-49; Everhart v. Assessors of Dalton, Mass. ATB Findings of Fact and Reports 1985-49, 54.

In the present appeal, the appellant argued that the underlying data and methodology which the assessors used to assess the subject property for fiscal year 2008 were significantly flawed and unreliable. The appellant maintained that to the extent calendar year 2005 sales reflected an increase in the subject property’s fair market value, it was properly accounted for in the appellant’s fiscal year 2007 assessment. The Board concurs. The record revealed no sales of comparable property in calendar year 2006, and no significant improvements to the subject property. Further, there was no evidence concerning market appreciation between the relevant assessment dates for fiscal year 2007 and fiscal year 2008. Accordingly, the Board found that the fair cash value of the subject property for fiscal year 2008 was its fiscal year 2007 assessed value, $744,900.

The appellant also alleged that the subject property was disproportionately assessed in fiscal year 2008. A taxpayer is entitled to an abatement for disproportionate tax assessment if the taxpayer can prove “an intentional policy or scheme . . . of valuing properties or classes of property at a lower percentage of fair cash value than that percentage in fact applied to the taxpayer’s own property.” Shoppers’ World, Inc. v. Assessors of Framingham, 348 Mass. 366, 377-78 (1965). A taxpayer seeking to establish disproportionate assessment bears the burden of proving that the assessors employed a “deliberate scheme” of disproportionate and discriminatory assessment whereby they “systematically assessed properties or a class of properties at a lower percentage of fair cash value than the percentage applied to the taxpayer’s property.” Stilson v. Assessors of Gloucester, 385 Mass. 724, 727-28 (1982).

If a taxpayer successfully demonstrates improper assessment of such a number of properties to establish an inference that such a scheme exists, the burden of going forward to disprove such a scheme shifts to the assessors. Shoppers’ World, 348 Mass. at 377. “The ultimate burden of persuasion, of course, will remain upon the taxpayer.” First National Stores, 358 Mass. 554, 562 (1970). Where the taxpayer proves improper assessment of such a number of properties as to justify an inference that a scheme of disproportionate assessments exists, the assessors have the burden of going forward to disprove the existence of such a scheme. Beardsley v. Assessors of Foxborough, 369 Mass. 855, 858 (1976). The number of properties and the pattern of assessments to fair cash value must have sufficient statistical validity, however, to warrant the inference. Id. at 859 n. 6.

In the present appeal, the appellant relied solely on two sales of vacant land to prove that the subject property was disproportionately assessed. The appellant did not, however, offer any evidence that the assessors engaged in a scheme of disproportionate assessment nor any evidence of comparable assessments indicating that the subject property was assessed at a higher percentage of fair cash value. See Smith v. Assessors of Marion, Mass. ATB Findings of Fact and Reports 2005-219, 233 (discussing that a finding of a widespread scheme would require far more data and analysis between classes of property than the minimal assessment information and analysis offered by the appellants). Accordingly, the Board ruled that the appellant failed to meet his burden of proving that a deliberate scheme of disproportionate assessment existed in this appeal.

Based on all the evidence, the Board found that the subject property was overvalued for fiscal year 2008, but that it was not disproportionately assessed. Accordingly, the Board issued a decision for the appellant and granted an abatement in the amount of $573.77.

THE APPELLATE TAX BOARD

By: __________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

BRIDGEWATER STATE v. BOARD OF ASSESSORS OF

COLLEGE FOUNDATION THE TOWN OF BRIDGEWATER

Docket Nos.: F287957-F287962 (07)

F293903-F293905 (08)

F294589-F294591 (08) Promulgated:

February 4, 2010

These appeals, which involve fiscal years 2007 and 2008 (“fiscal years at issue”), concern certain real property located in Bridgewater owned by and assessed to the Bridgewater State College Foundation (“BSCF” or “appellant”). Docket Nos. F287957-F287962, which are fiscal year 2007 appeals, and Docket Nos. F293903-F293905, which are fiscal year 2008 appeals, are appeals under G.L. c. 59, §§ 64 and 65, from the refusal of the assessors to abate the taxes assessed on that real property. Docket Nos. F294589-F294591, which are fiscal year 2008 appeals, are appeals under G.L. c. 59, § 5B, from the determination of the assessors that the real property was not eligible for exemption under G.L. c. 59, § 5, Third (“Clause Third”).

Commissioner Rose heard these appeals. Chairman Hammond and Commissioners Scharaffa, Egan, and Mulhern joined him in the decisions for the appellant.

These findings of fact and report are made at the request of the appellee pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

Richard C. Dailey, Esq. and Amy L. Hanson, Esq. for the appellant.

Mark C. Gildea, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the Statement of Agreed Facts, briefs, and exhibits entered into the record in these appeals[7], the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2006 and January 1, 2007, the relevant assessment dates for the fiscal years at issue, BSCF was the owner of six parcels of land (collectively, the “subject property” or “parcels at issue”) in Bridgewater, all of which were contiguous to the Bridgewater State College (“BSC”) campus. The parcels at issue include 25 Park Terrace, 29 Park Terrace (together, the “Park Terrace parcels”), 180 Summer Street, and also three undeveloped parcels located on Plymouth Street (collectively, the “Plymouth Street parcels”).

25 Park Terrace is known as the Davis Alumni Center. It houses BSCF’s offices and BSC’s Alumni Office. 180 Summer Street houses the BSC political science department. 29 Park Terrace was formerly the residence of BSC’s president, but during the fiscal years at issue, it was not occupied by the college president. During that time, it was used for BSC and BSCF receptions and donor events. The Plymouth Street parcels, which were acquired by BSCF in 1992, were undeveloped. During the fiscal years at issue, they were used for recreational purposes by BSC students and student clubs.

BSCF leased 180 Summer Street and 25 Park Terrace to BSC for five years, beginning July 1, 2003, for a nominal fee of $1.00 per year for each building. No lease agreements for 29 Park Terrace or the Plymouth Street parcels were ever executed. BSC used these parcels for free with BSCF’s permission.

For fiscal year 2007, the parcels at issue were taxed at a rate of $9.60 per thousand. The assessed value and total tax assessed for each of the parcels at issue for fiscal year 2007 is set forth in the following table[8]:

25 Park

Terrace

180 Summer

Street

29 Park

Terrace

Plymouth

Street

(Parcel 1)

Plymouth

Street

(Parcel 2)

Plymouth

Street

(Parcel 3)

Assessed

Value

$773,000

$421,300

$630,700

$97,000

$215,400

$84,400

Total

Tax

$7,569.22

$4,106.17

$6,156.61

$931.20

$2,090.00

$810.24

The appellant timely filed its Forms 3ABC and PC for fiscal year 2007. The appellant timely paid the tax due on each of the parcels and timely filed its Applications for Abatement on November 1, 2006. The assessors denied the Applications for Abatement on January 30, 2007, and the appellant timely filed its petitions with the Board on March 12, 2007.

For fiscal year 2008, the parcels at issue were assessed at a rate of $10.35 per thousand. The assessed value and total tax assessed for each of the parcels at issue for fiscal year 2008 is set forth in the following table:

25 Park

Terrace

180 Summer

Street

29 Park

Terrace

Plymouth

Street

(Parcel 1)

Plymouth

Street

(Parcel 2)

Plymouth

Street

(Parcel 3)

Assessed

Value

$742,200

$404,600

$634,400

$93,600

$208,600

$81,000

Total

Tax

$7,835.41

$4,250.66

$6,566.04

$968.76

$2,159.01

$838.35

For fiscal year 2008, the assessors’ records indicated that the appellant’s fiscal year 2008 Forms 3ABC and PC were filed late. However, the appellant submitted an affidavit of its Director of Foundation Administration, in which she stated that she hand-delivered the fiscal year 2008 Forms 3ABC and PC on or before the due date, as was her customary practice. The assessors presented no evidence to rebut this sworn statement or otherwise dispute its accuracy. Based on the foregoing, the Board found that the appellant timely filed its fiscal year 2008 Forms 3ABC and PC.

For fiscal year 2008, the appellant failed to pay the tax due on all of the parcels at issue. The tax assessed on three of those parcels (Docket Nos. F294589-F294591) was less than $3,000, and thus the failure to timely pay the tax in full was not an impediment to the Board’s jurisdiction to hear those appeals. G.L. c. 59, § 64. The tax due on each of the three remaining parcels (Docket Nos. F293903-F293905) exceeded $3,000. However, because BSCF was aggrieved by the assessors’ determination that its property was not eligible for exemption under Clause Third, it chose to take a direct appeal to the Board under G.L. c. 59, § 5B, obviating the need to timely pay the tax at issue to preserve the Board’s jurisdiction. See Trustees v. Board Assessors of Windsor, Mass. ATB Findings of Fact and Reports 1991-225, 234. Based on the foregoing, the Board found and ruled that it had jurisdiction to hear and decide these appeals.

BSCF is a Massachusetts charitable foundation created in 1984 under G.L. c. 15A, § 37 (“§ 37”).[9] It is
“organized and operated exclusively for the benefit of” BSC. G.L. c. 15A, § 37. BSC is a “public institution of higher learning” created pursuant to G.L. c. 15A, § 5. BSCF’s operating agreement (“operating agreement”) with BSC, dated June 28, 2000, provides that “[BSC] exists to provide education and related services and benefits to the citizens of the Commonwealth; and [BSCF], being a foundation within the meaning of [§ 37], of the General Laws of the Commonwealth, is organized and operated exclusively for the benefit of the College.”

The operating agreement further provides that:

[BSCF] shall hold, manage and invest its moneys and other assets, including any endowment or endowments, in accordance with the Uniform Management of Institutional Funds Law (chapter 180A of the General Laws, as amended from time to time), and, in accordance with such provisions, with the provisions of [§ 37], and with the provisions of this Agreement, it shall expend and apply such moneys and other assets solely for the benefit of [BSC] and not otherwise. (emphasis added).

BSCF is exempt from Federal income taxes under Internal Revenue Code § 501(c)(3). It has no shareholders or capital stock. No part of its income inures to the benefit of anyone associated with the appellant, nor is its income used for anything other than its charitable purposes.

BSCF’s activities include the oversight of BSC’s annual fund, the creation of an endowment for the benefit of BSC, administration of BSC’s scholarship programs and assistance with other activities related to BSC’s educational mission.

The parties did not dispute, and the Board found, that the subject property was owned by BSCF, which was a charitable organization within the meaning of Clause Third. Further, the Board found that BSCF’s sole charitable purpose was to support the advancement of BSC’s educational mission. The assessors’ primary argument was that the subject property was not exempt under Clause Third because it was not “occupied” by a charitable organization; rather, they argued, it was occupied by BSC, which, as a governmental entity, cannot be a charitable organization within the meaning of Clause Third. The assessors also argued that the Plymouth Street parcels, which were acquired by BSCF in 1992, remained unoccupied by BSCF more than two years after their acquisition, and therefore, were not exempt under Clause Third.

On the contrary, the Board found that each of the parcels at issue was occupied by BSCF for its charitable purpose during the fiscal years at issue. With respect to the Plymouth Street parcels, the Board found that they were occupied by BSC students and student groups for recreational purposes. The Board found that this use promoted the “physical training, and the social, moral and aesthetic advancement” of the students of BSC and was consistent with the charitable purpose of BSCF, which was the support of BSC’s educational mission. Emerson v. Trustees of Milton Academy, 185 Mass. 414, 417 (1904). As for the remaining parcels, the evidence established that 25 Park Terrace was occupied in part by BSCF for its offices and in part by BSC’s Alumni Office, while 180 Summer Street housed BSC’s Political Science Department. 29 Park Terrace, the former president’s residence, was used by both BSC and BSCF for fundraising events and receptions. The Board found that each of these uses advanced the charitable educational mission of BSC, which was the sole purpose of BSCF’s organization and operations. Thus, the Board found that the parcels at issue were exempt under Clause Third as they were owned and occupied by a charitable organization in furtherance of its charitable purpose.

Accordingly, the Board issued decisions for the appellant in these appeals, and ordered abatements in the following amounts:

Docket No.	Abatement	Docket No.	Abatement
F287957	$7,569.22	F293903	$6,676.66
F287958	$931.20	F293904	$4,250.66
F287959	$4,106.17	F293905	$7,835.41
F287960	$2,090.00	F294589	$838.35
F287961	$810.24	F294590	$968.76
F287962	$6,156.61	F294591	$2,181.49

OPINION

I. The Subject Property was Exempt Under Clause Third

Clause Third provides an exemption for “real estate owned by or held in trust for a charitable organization and occupied by it or its officers for the purposes for which it is organized or by another charitable organization or organizations or its or their officers for the purposes of such other charitable organization or organizations.” G.L. c. 59, § 5, Third. A taxpayer claiming exemption under Clause Third therefore must demonstrate that the property is owned by a charitable organization and occupied by a charitable organization to further its charitable purpose. See Jewish Geriatric Services, Inc. v. Longmeadow, Mass. ATB Findings of Fact and Reports 2002-337, 351, aff’d, 61 Mass. App. Ct. 73 (2004) (citing Assessors of Hamilton v. Iron Rail Fund of Girls Club of America, 367 Mass. 301, 306 (1975)). For the purposes of Clause Third, a “charitable organization” is “(1) a literary, benevolent, charitable or scientific institution or temperance society incorporated in the commonwealth, and (2) a trust for literary, benevolent, charitable scientific or temperance purposes.” G.L. c. 59, § 5, Third.

In the present appeals, the subject property was owned by BSCF, which is a charitable foundation organized under § 37. The parties did not dispute, and the Board found and ruled, that the subject property was owned by a charitable organization for purposes of Clause Third. The dispute between the parties lies in the occupation of the parcels at issue and the nature of the entity occupying those parcels. First, the assessors contended that the Plymouth Street parcels were not exempt under Clause Third because that clause exempts property purchased by a charitable organization for such organization’s “removal thereto” for only two years from the date of its purchase. The assessors argued that the Plymouth Street parcels, which were acquired by BSCF in 1992, remained unoccupied during the fiscal years at issue and were therefore not exempt. Second, the assessors claimed that none of the parcels at issue was occupied for charitable purposes because they were predominantly occupied not by a charitable organization, but by an instrumentality of the government. The Board disagreed on both counts.

The Plymouth Street Parcels were Occupied for the Purposes of Clause Third During the Fiscal Years at Issue

The assessors argued that the Plymouth Street parcels were not exempt under Clause Third because that clause exempts property “purchased by a charitable organization with the purpose of removal thereto, until such removal, but not for more than two years after such purchase.” G.L. c. 59, § 5, Third. The assessors contended that because the Plymouth Street parcels were purchased by BSCF in 1992, but remained unoccupied as of the fiscal years at issue, they were not exempt under Clause Third.

However, the two-year removal provision is not the only mechanism for exemption in Clause Third. That provision merely contains an additional mechanism for the exemption of property owned by charitable organizations, and states an exception to the general rule of Clause Third, which is that property must be occupied in order to be exempt.

Occupancy for purposes of Clause Third means use for the purpose for which the charity is organized. See Babcock v. Leopold Morse Home for Infirm Hebrews and Orphanage, 225 Mass. 418, 421 (1917); Emerson, 185 Mass. at 415. The decision of a charitable organization concerning how to occupy its property in connection with its charitable mission is entitled to a substantial degree of deference upon judicial review. Emerson, 185 Mass. at 415. Strict necessity is not the guidepost. Id. at 418. Moreover, in the context of educational institutions, a long line of cases demonstrates that the range of uses which has qualified property for exemption is broad.

In Emerson, at issue were three large parcels of land owned by an educational institution, some of which consisted of “low and swampy” or wooded land, and some of which housed athletic fields, among other things. Emerson, 185 Mass. at 417. The evidence in that case showed that “pupils [did] in fact constantly use the unimproved parts of the fields . . . as recreation grounds, walking and roaming over them, playing games that do not require grounds to be improved.” Id. The Court held that the parcels were occupied for the purposes of the exemption, because it was within the charitable purposes of an educational institution to “provide liberally for the physical training, and the social, moral and aesthetic advancement of the pupils who are entrusted to its charge.” Id. at 418.

Similarly, in Wheaton College v. Town of Norton, 232 Mass. 141, 148 (1919), land containing an “unenclosed grove” of pine trees and “a few benches,” which was used by students who wished to “walk, stroll or saunter” therein, was found to be occupied for the purposes of the exemption because it supported the charitable purpose of the college. See also Assessors of Dover v. Dominican Father Province of St. Joseph, 334 Mass. 530, 538 (1956).

In the present appeals, the record established that, much like the property at issue in Emerson and Wheaton College, the Plymouth Street parcels were used for recreational purposes by BSC students and student clubs. The Board found that this use promoted the “physical training, and the social, moral and aesthetic advancement” of the students of BSC, and therefore was a use which furthered the charitable purpose of BSCF. Emerson, 185 Mass. at 417. Accordingly, the Board found and ruled that the Plymouth Street parcels were occupied for the purposes of Clause Third during the fiscal years at issue and were therefore eligible for exemption under the general provisions of Clause Third. The Board therefore rejected the assessors’ argument.

The Subject Property was Occupied by BSCF in Furtherance of its Charitable Purpose

Having determined that each of the parcels at issue was occupied for the purposes of Clause Third, the Board next considered by whom they were occupied and for what purposes. Again, occupancy for the purposes of Clause Third means use for the purpose for which the charity is organized. See Babcock, 225 Mass. at 421 (“Occupancy means . . . appropriation to the immediate uses of the charitable cause for which the owner was organized.”) Further, “‘it is the character of the use to which property is put, and not of the party who uses the property, that settles the question of exemption from taxation.’” Assessors of Boston v. Boston R.B. & L.R. Co., 319 Mass. 378, (1946) (quoting Milford Water Co. v. Hopkinton, 192 Mass. 491, 495-97 (1906)). Thus, the fact that the property at issue may be inhabited or used by individuals or an entity other than a charitable organization does not defeat the claim for exemption, so long as such inhabitation or use is consistent with the purpose of the charitable organization that owns the property.

In M.I.T. Student House, Inc. v. Board of Assessors of Boston, the property at issue was a rooming house inhabited by “needy” students attending the Massachusetts Institute of Technology (“M.I.T.”), but owned by a charitable corporation. M.I.T. Student House, Inc. v. Board of Assessors of Boston, 350 Mass. 539, 539 (1966). Despite the fact that the rooming house was physically inhabited by M.I.T. students, the Court ruled that the property was exempt because it was being used to further the corporation’s charitable purpose. Id. at 541. The resolution of the issue of occupation, therefore, requires a close examination of the purpose of the charitable organization at issue.

The evidence established that BSCF’s sole purpose was to support the educational mission of BSC. There is no doubt that the provision of education is a charitable purpose. It has long been “settled [that] educational institutions of a public charitable nature are within the class of ‘literary, benevolent, charitable and scientific institutions’ which are exempt from taxation under” Clause Third. Assessors of Boston v. Garland School of Home Making, 296 Mass. 378, 392-93 (1937). See also Assessors of Dover, 334 Mass. at 538. Further, as a foundation created under § 37, BSCF was “organized and operated exclusively for the benefit of” BSC, and was required by statute to be “certified by the board of trustees of [BSC] to be operating in a manner consistent with the goals and policies of [BSC].” G.L. c. 15A, § 37. Accordingly, the Board found and ruled that, much like the corporation in M.I.T. Student House, which existed to provide housing for needy M.I.T. students, BSCF’s charitable purpose was to provide for BSC’s institutional needs. There was no evidence in the record indicating that the parcels at issue were used for any purpose other than to further BSC’s charitable educational mission.

The record revealed that the parcels at issue were used: as offices for BSC’s political science department; as BSC’s alumni office; as BSCF’s office; for BSCF and BSC donor events and receptions; for recreational use by BSC students and student clubs; and for possible future development by BSC. Uses similar to these uses have been held to constitute charitable uses. See Trustees v. Board of Assessors of Windsor, Mass. ATB Findings of Fact and Reports 1991-225, 228, 242 (finding that use of “main house” on an expansive farm property for occasional meetings and community social functions was a qualifying use by the charitable organization in question) (citations omitted)). See also Emerson, 185 Mass. at 417. Moreover, the Board found and ruled that each of these uses was consistent with BSCF’s charitable purpose, which was the advancement of BSC’s charitable educational mission.

The argument advanced by the assessors in the present appeals was contrary to the established legal precedent. Under Clause Third “occupation and use . . . [are] determinative of whether particular real estate should be exempt.” Town of Milton v. Ladd, 348 Mass. 762, 765 (1965). Indeed, the Court has employed a “functional analysis” to determine eligibility for a variety of the exemptions granted under G.L. c. 59, § 5. For example, in H-C Health Services, Inc. v. Assessors of S. Hadley, the Court focused on the “‘declared purposes and actual work performed’” by the organization in question in ruling that real property owned by a business corporation, but which was occupied by a nursing facility for the elderly and infirm, qualified for the exemption in Clause Third. H-C Health Services, Inc. v. Assessors of S. Hadley, 42 Mass. App. Ct. 596, 599 (1997) (quoting Assessors of Boston v. Vincent Club, 351 Mass. 10, 12 (1966)). See also Brown, Rudnick Freed & Gesmer v. Assessors of Boston, 389 Mass. 298, 302-03 (1983); Middlesex Retirement System, LLC v. Assessors of Billerica, 453 Mass. 495, 502 (2009). In the present appeals, the assessors did not analyze the occupation of the subject property in the context of the purposes of BSCF, and their conclusion that the subject property was not exempt merely because much of it was being used by BSC was erroneous.

Additionally, the assessors’ argument as to the occupancy of the subject property was flawed because occupancy for purposes of Clause Third has a broader meaning than that suggested by the assessors. In M.I.T. Student House, although the rooming house at issue was physically inhabited by M.I.T. students, the Court stated that “‘[t]he occupation of the property is that of the corporation itself, and not of those to whom it affords a home, just as the occupation of a college dormitory or refectory is that of the institution of learning rather than that of its students.’” M.I.T. Student House, 350 Mass. at 542 (quoting Franklin Square House v. Boston, 188 Mass. 409, 411 (1905)). This interpretation of the term “occupied” gives effect to the intent of the Legislature, as the statutory language suggests that all of the real property of a charitable organization should be exempt as long as it is used to further the organization’s charitable purpose. Using this interpretation of the term “occupied,” the Board found and ruled that the occupation of the subject property was that of BSCF itself, for its charitable purpose. To hold otherwise would be to narrow the scope of the exemption in a way not intended by the Legislature.

Moreover, bearing in mind the legislative intent behind Clause Third, the Board found and ruled that this construction of the term “occupied” is particularly appropriate in the present appeals. It has been held that the reason for the charitable exemption is that charitable organizations ‘“lessen[] the burdens of government’” in that they provide services for which the government would otherwise be responsible. Western Massachusetts Lifecare Corporation v. Board of Assessors of Springfield, 434 Mass. 96, 102 (2001) (quoting Boston Chamber of Commerce v. Assessors of Boston, 315 Mass. 712, 716 (1944)) (other citations omitted). In the present appeals, the subject property was being used directly to support the mission of a governmental institution. To deny the exemption in these appeals would wholly frustrate the purpose of the statute.

Accordingly, the Board found and ruled that the parcels at issue were exempt under Clause Third because they were owned and occupied by BSCF in furtherance of its charitable purpose during the fiscal years at issue.

Conclusion

On the basis of all of the evidence, the Board found and ruled that, during the fiscal years at issue, the subject property was owned by BSCF and occupied by BSCF for its charitable purpose, which was the support and advancement of BSC’s educational mission. The Board therefore found and ruled that the subject property was exempt under Clause Third.

Accordingly, the Board issued decisions for the appellant in these appeals, and ordered abatements in the following amounts:

Docket No.	Abatement	Docket No.	Abatement
F287957	$7,569.22	F293903	$6,676.66
F287958	$931.20	F293904	$4,250.66
F287959	$4,106.17	F293905	$7,835.41
F287960	$2,090.00	F294589	$838.35
F287961	$810.24	F294590	$968.76
F287962	$6,156.61	F294591	$2,181.49

APPELLATE TAX BOARD

By:________________________________

Thomas W. Hammond, Jr., Chairman

A true copy:

Attest: ___________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

TRUSTEES OF BOSTON COLLEGE v. BOARD OF ASSESSORS OF

THE CITY OF BOSTON

Docket Nos. F278832, F278833 Promulgated:

F284965, F288657 February 4, 2010

These are appeals 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 Board of Assessors (“assessors” or “appellee”) of the City of Boston (“City” or “Boston”) to abate taxes on certain real estate located in Boston owned by and assessed to the Trustees of Boston College (“Boston College” or “appellant”) for fiscal years 2005, 2006 and 2007 (“fiscal years at issue”).

Commissioner Rose heard these appeals. Chairman Hammond and Commissioners Scharaffa, Egan and Mulhern joined him in 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.

Neal C. Tully, Esq. for the appellant.

Saul A. Schapiro, Esq. and Laura Caltenco, Esq. for the assessors.

FINDINGS OF FACT AND REPORT

On the basis of the Statement of Agreed Facts and attached documents, and the testimony and exhibits offered into the record in the hearing of these appeals, the Appellate Tax Board (“Board”) made the following findings of fact.

I. Assessments and Jurisdiction

On January 1, 2004, January 1, 2005, and January 1, 2006, the relevant assessment dates for the fiscal years at issue, Boston College was the assessed owner of the three parcels at issue (“subject property” or “parcels at issue”) in these appeals. For fiscal year 2005, the assessors valued Parcel 22-05267-000 (“Commonwealth Avenue parcel”) at $10,168,400, and assessed a tax thereon, at the rate of $32.68 per $1,000, in the total amount of $332,303.31. Also for fiscal year 2005, the assessors valued Parcel 22-04960-001 (“Foster Street parcel”) at $3,002,000, and assessed a tax thereon, at the rate of $32.68 per $1,000, in the total amount of $98,105.36.

Beginning in fiscal year 2006, the Foster Street parcel was combined with another parcel to form a new tax parcel, and the assessors exempted that parcel for fiscal years 2006 and 2007. The Commonwealth Avenue parcel was also reconfigured beginning in fiscal year 2006, and was combined with other parcels to form Parcel 22-05267-010 (“Residence parcel”). For fiscal year 2006, the assessors valued the Residence parcel at $9,598,500, and assessed a tax thereon, at a rate of $30.70 per $1,000, in the total amount of $294,673.95. For fiscal year 2007, the assessors valued the Residence parcel at $10,561,500, and assessed a tax thereon, at a rate of $26.87 per $1,000, in the total amount of $283,787.51.

Boston’s Collector of Taxes sent out the actual tax bills for the fiscal years at issue on the following dates: December 30, 2004 for fiscal year 2005; December 30, 2005 for fiscal year 2006; and December 29, 2006 for fiscal year 2007. Boston College timely paid the assessed taxes, without incurring interest, for each of the parcels at issue for each of the fiscal years at issue.

For fiscal year 2005, Boston College filed its Applications for Abatement with the assessors on January 28, 2005. The abatement applications were deemed denied on April 28, 2005, and Boston College timely filed its petitions with the Board on May 31, 2005.

For fiscal year 2006, Boston College filed its Application for Abatement with the assessors on February 1, 2006. That abatement application was denied on
May 1, 2006, and Boston College timely filed its petition with the Board on June 13, 2006.

For fiscal year 2007, Boston College filed its Application for Abatement on January 31, 2007. That application was denied on February 28, 2007, and Boston College timely filed its petition with the Board on May 17, 2007.

In addition, Boston College timely filed its Forms 3 ABC and Forms PC for each of the fiscal years at issue. Based on the foregoing, the Board found and ruled that it had jurisdiction to hear and decide these appeals.

II. The Merits

A. Introduction

Boston College[10] is a non-profit, educational institution organized in 1863 under the laws of Massachusetts. According to evidence entered into the record, its mission is to “pursue the highest standards of teaching and research” and “to foster a just society . . . by fostering intellectual development and the religious, ethical and personal formation of its students.” At all times relevant to these appeals, Boston College served a student population of approximately 14,500 students, including graduate and undergraduate students, at two different campuses. The main campus is the Chestnut Hill campus, which consists of 117 acres situated partially in Boston and partially in Newton. The main campus features numerous classroom buildings, residence halls, dining facilities, a library, parking facilities, and athletic facilities – including a football stadium – among other improvements. The Newton campus, which consists of approximately 40 acres, is the site of the Law School and also contains undergraduate dormitories, athletic fields, and alumni facilities. The parcels at issue in these appeals lie across Commonwealth Avenue from the main campus, and are part of a large tract of land which was owned by the Archdiocese of Boston (“Archdiocese”) prior to the fiscal years at issue. During the time it was owned by the Archdiocese, the subject property was exempt from tax.

B. Boston College’s Acquisition of the Subject Property

In September of 2003, Boston College commenced a strategic planning initiative, which was meant to assess its strengths and weaknesses as an institution and to identify goals and an overall vision for the college for the coming years. A Phase I report released by the strategic initiative committee some months later identified “a number of weaknesses” relating to space and facilities at the college. Specifically, the Phase I report stated “[m]ore land would open the way for possible new space-intensive academic programs, more conferences and faculty interaction, more student housing, and more space for intramural and intercollegiate athletics programs.”

In December of 2003, the Archdiocese announced its intention to sell its Brighton property, which consisted of approximately 65 acres of land improved with several parking lots, driveways and buildings. Those buildings include an Italianate mansion which had historically been the Archbishop’s residence (“Archbishop’s residence”), a gymnasium, a garage, and several other buildings belonging to the Archdiocese, including a building known as St. Clement’s Hall.

Since 1991, Boston College had leased a portion of St. Clement’s Hall from the Archdiocese for use as administrative offices. The lease included the exclusive use of a 74-vehicle parking lot located directly across from St. Clement’s Hall on Foster Street. Boston College entered into a renewed lease for St. Clement’s Hall in 2001, for a period of 40 years. The terms of the 2001 lease continued the exclusive use of the Foster Street parking lot and also expanded the portion of St. Clement’s Hall available for the college’s use. Throughout both lease terms, the property was treated as exempt by the assessors.

On April 19, 2004, following several months of discussions and negotiations, Boston College and the Archdiocese reached an agreement-in-principle for the sale of the subject property. On June 25, 2004, the transaction was closed, with the Archdiocese conveying to Boston College 43.37 acres of land for $99,400,000. This transaction was the first of several between Boston College and the Archdiocese involving the Archdiocese’s Brighton property. Boston College purchased additional land from the Archdiocese in 2006 and 2007. In all, Boston College acquired a total of nearly 65 acres of land. However, the parcels at issue in these appeals were all conveyed in the initial transaction on June 25, 2004. Those parcels are described in further detail below.

C. The Foster Street Parcel (Fiscal Year 2005)

The Foster Street parcel contains approximately 200,000 square feet. It is located on the easterly side of Foster Street, directly across from St. Clement’s Hall. To the south and east, it abuts residential neighborhoods in Brighton. The vast majority of the Foster Street parcel is heavily forested, undeveloped land. Its only improvement
is a 24,000 square foot parking lot that accommodates approximately 74 vehicles.

Prior to its acquisition by Boston College, the Foster Street parcel was exempt from tax. Although Boston College’s use of the Foster Street parcel did not change, it was taxed by the assessors for fiscal year 2005. Beginning in fiscal year 2006, the assessors combined the Foster Street parcel with a residential lot and exempted the newly configured parcel from tax for fiscal years 2006 and 2007. Therefore the only question before the Board with respect to the Foster Street parcel is whether it was exempt in fiscal year 2005.

D. The Commonwealth Avenue Parcel (Fiscal Year 2005)

The Commonwealth Avenue parcel contains approximately 5.6 acres of land and is located on Commonwealth Avenue, with frontage also on Greycliff Road. The parcel dissects a small portion of the Archbishop’s residence and its improvements also include a driveway leading to the residence. The remainder of the parcel contains undeveloped land, including a large meadow and an apple orchard. It abuts other parcels previously owned by the Archdiocese and residential neighborhoods in Brighton.

E. The Residence Parcel (Fiscal Year 2006 and 2007)

Beginning in fiscal year 2006, the assessors created a new tax parcel – the Residence parcel – by combining the Commonwealth Avenue parcel with other parcels. After reconfiguration, the Residence parcel included all of the Archbishop’s residence, a gymnasium, a garage, the Commonwealth Avenue parcel, and additional land. The Residence parcel also contains a driveway and two parking lots.

F. Boston College’s Campus Planning Process

and Proposed Uses of the Subject Property

Boston College offered the testimony of Patrick Keating, Executive Vice President of Boston College, Peter McKenzie, Financial Vice President and Treasurer of Boston College, and Jeanne Levesque, Director of Government Relations within Boston College’s Office of Governmental and Community Affairs. These three individuals testified mainly about the college’s campus planning process, including the acquisition of the subject property, and its filings and interactions with various governmental agencies and community groups. The Board found their testimony to be credible.

The testimony of Mr. Keating, Mr. McKenzie and Ms. Levesque, along with the stipulated facts and documents, revealed that campus planning at Boston College is a closely monitored, nearly continuous activity. As an educational institution within Boston, Boston College is required by Article 80 of the Boston Zoning Code to file an Institutional Master Plan (“IMP”) with the Boston Redevelopment Authority (“BRA”). The IMP must set out the institution’s use of existing property, planned future use of property and planned acquisition of property for at least a ten-year period. Once an IMP is approved by the BRA, it is submitted for additional approval by the Boston Zoning Commission. The City will not issue a certificate of use or occupancy for a building unless the building/use is consistent with the plans articulated in an IMP. Prior to its acquisition of the subject property, Boston College had last filed an IMP in 2000. The 2000 IMP was to expire in 2005.

In late 2004, following its acquisition of the subject property, Boston College filed an Institutional Master Plan Notification Form (“IMPNF”) with the BRA, seeking to renew and extend its previous IMP. The IMPNF stated that the strategic planning initiative, originally commenced by the college in 2003, would be reconsidered in light of the recent land acquisition in order to “engage in meaningful planning for future physical needs, including the future uses of the [subject property].” The IMPNF identified as potential future uses of the subject property: a School of Theology and Ministry, a multi-disciplinary center for the study of aging, and a center for the study of complex materials. Subsequently, in early 2005, Boston College submitted a revised IMPNF, outlining possible future uses of the subject property which included conference and meeting facilities, graduate student housing, and open space for informal recreation as well as intramural and intercollegiate athletics programs.

In May of 2005, the BRA notified Boston College that it would grant conditional approval of a two-year extension of its IMP to allow the college additional time to formulate plans for the use of the subject property and incorporate those plans into its IMP. The condition was that during the two-year extension period, Boston College must use the subject property only for the temporary/existing uses for which it had already been approved. Those uses included: the use of St. Clement’s Hall, club sports, student and neighborhood recreational uses, parking on the Foster Street parcel, and for overflow parking during home football games. In April of 2006, Boston College sought an extension of its IMP to allow more time for planning the future uses of the subject property and also sought approval from the BRA to use the Archbishop’s residence, in the interim, for meetings and conferences.

In addition to the approval of the BRA and Boston Zoning Commission, the evidence revealed that Boston College’s campus planning process required the approval and involvement of numerous groups. Boston College had a Buildings and Properties Committee, which assisted in the planning of new development at the college. For example, the Buildings and Properties Committee vetted potential architectural firms and reviewed proposals by firms bidding on college projects. Further, major building and planning initiatives required the approval of the college’s Board of Trustees, which was required to approve all expenditures exceeding one million dollars.

Finally, the college regularly engaged in discussions regarding its campus planning with the Allston-Brighton Boston College Community Task Force (“Community Task Force”). The Community Task Force is a group installed by the Mayor of Boston to represent the interests of the Allston-Brighton community. According to Ms. Levesque, the college met on a monthly basis with the Community Task Force to address neighborhood concerns. Ms. Levesque stated that during the period immediately prior to Boston College’s acquisition of the subject property up to the time of the hearing of these appeals, Boston College held over 200 meetings with the Community Task Force in order to receive feedback on the proposed uses of the subject property. According to Ms. Levesque, much of that feedback involved the Community Task Force’s concern about the lack of open space in the community.

Ms. Levesque’s testimony on this point was supported by an August 24, 2005 letter from the Chair of the Community Task Force to Boston College’s Associate Vice President for Government and Community Affairs. In that letter, the Chair urged the college to use the subject property in the following manner: for faculty and administrative offices and practice fields; as a buffer zone to protect the residential character of the abutting properties; and as open, green space.

Additional evidence in the record indicated that, consistent with its representations to the BRA, Boston College continued to examine potential future uses of the subject property throughout the fiscal years at issue. In 2004, Boston College began the search for an architectural firm to assist in the creation of a campus master plan. In June of 2005, Sasaki Associates was chosen to develop the IMP. During the remainder of 2005 and 2006, numerous meetings were held and presentations made for the purpose of developing the IMP. In September of 2006, a final presentation of the proposed master plan was made to Boston College’s Board of Trustees, who approved the plan in principle. An additional firm, Vanasse, Hangen, Brestlin, Inc., was hired to assist Sasaki Associates in the preparation of a new IMP. In 2007, a new IMPNF was filed with the BRA.

Throughout this period, the proposed future uses of the subject property remained fairly consistent, with specific details changing from time to time. For example, the Archbishop’s residence had been targeted for use as a conference and meeting facility which offered dining services, but there was disagreement among the involved parties as to whether that conference center would include overnight accommodations and also as to the type of dining services that would be provided. Also during this time period, reunification with the Weston School of Theology – which was affiliated with Boston College but which had been physically located in Cambridge – was proposed, and plans for its relocation to the subject property continued to evolve during the fiscal years at issue.

G. The Actual Use of the Subject Property During the Fiscal Years at Issue

Following its acquisition of the Foster Street parcel on June 25, 2004, Boston College continued to use the Foster Street parcel to accommodate the parking needs of administrative staff working at St. Clement’s Hall. The rest of the parcel remained in an undeveloped state. Subsequent to fiscal year 2005, Boston College undertook a substantial renovation of St. Clement’s Hall, and in September of 2006, the Information Technology department moved its operations to the north wing of St. Clement’s Hall.

The evidence revealed that the Commonwealth Ave. and Residence parcels were used for a variety of purposes following their acquisition by Boston College. Peter Jednak, the Director of Facility Services for Boston College, testified regarding some of the uses of those parcels. The Board found his testimony to be credible.

Mr. Jednak stated that the area behind the Archbishop’s residence was used to dump excess snow in the winter and also as a staging area for dumpsters during move-in and move-out periods for the college. He stated that the paved areas were used for periodic overflow parking, including during home football games, of which there are between five and seven per year, and also during the college’s commencement exercises in the spring. Further, Mr. Jednak testified that on a daily basis, individuals can be seen using the meadow and open areas for sunbathing, walking, studying, and informal recreational activity such as wiffle ball or frisbee.

Mr. Jednak stated that he has observed the college’s track and rugby teams using the parcels for training purposes. In the wintertime, because of the hilly topography, Mr. Jednak stated that students, and possibly neighborhood residents, used the land for sledding. Mr. Jednak also testified that he frequently observed individuals who he believed to be neighborhood residents walking dogs on the subject property. It was Boston College’s practice to allow neighborhood residents access to the property, and the parties stipulated that neighborhood residents in fact used the subject property for recreational purposes. Mr. Jednak stated that college maintenance crews actively maintained the property, including pruning trees, mowing the grass, removing snow, repairing potholes and performing other maintenance as necessary.

Mr. Jednak’s testimony was supported by the stipulated facts, which highlighted many of the same uses of the property that Mr. Jednak related in his testimony. In addition, the parties stipulated to the fact that Boston College granted parking permits to students with special needs for the 22-space parking lot adjacent to the gymnasium on the Residence parcel. The parties also stipulated to the following uses of the subject property: during fiscal year 2005, the Commonwealth Avenue parcel was used for overflow parking and other purposes during parent’s weekend; during fiscal year 2006, the residence was used for two Board of Trustee’s meetings and for a fundraising event during parent’s weekend; and during fiscal year 2007, the residence was used for four Board of Trustees’ meetings.

H. The Board’s Ultimate Findings of Fact

On the basis of all of the evidence, the Board found and ruled that Boston College was a charitable organization within the meaning of G.L. c. 59, § 5, Clause Third (“Clause Third”), and that it owned the subject property on the relevant dates for the determination of exemption for each of the fiscal years at issue.

The Board found that, as of July 1, 2004, the relevant date for the determination of exemption for fiscal year 2005, Boston College used the Foster Street parcel to accommodate the parking needs of its administrative staff located at St. Clement’s Hall. The Board found that Boston College made the same use of the Foster Street parcel in fiscal year 2005 as it did both before and after that fiscal year, during which time the parcel was exempt from tax. The Board further found that this use facilitated the overall operation of the college, and therefore furthered its charitable purpose.

With respect to the Commonwealth Avenue/Residence parcels,[11] the Board found that, as of July 1, 2004, July 1, 2005, and July 1, 2006, the relevant dates for the determination of exemption for the fiscal years at issue, Boston College used the Commonwealth Avenue/Residence parcels to provide passive recreational opportunities for its students, including walking, jogging, reading, sunbathing, sledding, frisbee and wiffle ball. The parcels were also used by certain student athletic teams for training purposes. The Board found that such uses promoted the “physical training, and the social [and] moral” advancement of Boston College’s students and accordingly, constituted the occupation of the property in furtherance of its charitable purpose. Emerson v. Trustees of Milton Academy, 185 Mass. 414, 418, (1904).

In addition, the Board found that Boston College used the Commonwealth Avenue/Residence parcels to accommodate extraordinary parking needs during several weekends each year, including parent’s weekend, commencement activities, several home football games each season, and for parking for students with special needs. Boston College also used the Archbishop’s residence for Board of Trustees’ meetings and fundraising events. The Board found that each of these uses facilitated the overall operation of Boston College and therefore constituted the occupation of the property for its charitable purpose.

Further, the Board found that, during each of the fiscal years at issue, Boston College used the Foster Street parcel and the Commonwealth Avenue/Residence parcels in order to maintain open, green space and ensure an adequate buffer from the surrounding residential neighborhood. The evidence established that the preservation of open, green space was a priority in Boston College’s campus planning efforts because of its desire to maintain a classic collegiate aesthetic for its campus. The preservation of open, green space in the Allston-Brighton area and the maintenance of an adequate buffer between institutional, private and residential property were also of great importance to the Community Task Force. Each of the parcels at issue was used by Boston College during the fiscal years at issue for these purposes. The Board found that Boston College’s use of the subject property as open, green space promoted the “aesthetic advancement” of the college, and as such, constituted an occupation of the subject property in furtherance of its charitable purpose. Emerson, 185 Mass. at 418. Furthermore, the Board found that Boston College had a legitimate interest in minimizing so-called “town-gown” conflict. The Board found and ruled that Boston College’s use of the subject property as a buffer between institutional and private, residential property was a reasonable means to further that interest, and as such, constituted the use of the subject property for the college’s charitable purpose.

Accordingly, on the basis of these findings of fact, the Board found and ruled that, for each of the fiscal years at issue, the subject property was owned and occupied by a charitable organization in furtherance of its charitable purpose, and as such, was exempt under Clause Third. The Board therefore issued decisions for Boston College in these appeals. For fiscal year 2005, the Board ordered an abatement of $332,303.31 for the Commonwealth Avenue parcel and an abatement of $98,105.36 for the Foster Street parcel. For the Residence parcel, the Board ordered an abatement of $294,673.95 for fiscal year 2006 and an abatement of $283,787.31 for fiscal year 2007.

OPINION

Clause Third provides an exemption for “real estate owned by or held in trust for a charitable organization and occupied by it or its officers for the purposes for which it is organized or by another charitable organization or organizations or its or their officers for the purposes of such other charitable organization or organizations.” G.L. c. 59, § 5, Third. Clause Third also provides an exemption for “real estate purchased by a charitable organization with the purpose of removal thereto, until such removal, but not for more than two years after such purchase.” G.L. c. 59, § 5, Third. Property owned by a charitable organization, therefore, is exempt provided that it is occupied by that, or another, charitable organization to further its charitable purpose. See Jewish Geriatric Services, Inc. v. Longmeadow, Mass. ATB Findings of Fact and Reports 2002-337, 351, aff’d, 61 Mass. App. Ct. 73 (2004) (citing Assessors of Hamilton v. Iron Rail Fund of Girls Club of America, 367 Mass. 301, 306 (1975)). Further, property purchased by a charitable organization for the purposes of “removal thereto” will be exempt, even if unoccupied, for up to two years after its purchase.

Thus, there were two potential bases of exemption for the subject property presented for the Board’s consideration in these appeals: the subject property could qualify for exemption if it were occupied by Boston College for its charitable purpose during the fiscal years at issue; additionally and alternatively, the subject property could qualify for exemption for up to two years following the date of its purchase, even if it were unoccupied, provided that Boston College purchased it for the purpose of “removal thereto.” As discussed further below, the Board found and ruled that the subject property was exempt because it was owned by Boston College, which was a charitable organization, and occupied by Boston College for its charitable purpose. Because the Board found and ruled that the subject property was exempt for this reason, it did not have to reach the issue of whether or when Boston College had removed its operations to the subject property.

Occupancy for the purposes of Clause Third means use for the purpose for which the charity is organized. See Babcock v. Leopold Morse Home for Infirm Hebrews and Orphanage, 225 Mass. 418, 421 (1917); Emerson, 185 Mass. at 417. The decision of a charitable organization concerning how to occupy its property in connection with its charitable mission is entitled to a substantial degree of deference upon judicial review. Emerson, 185 Mass. at 415. (“So long as [it] act[s] in good faith and not unreasonably in determining how to occupy and use the real estate of the corporation, [its] determination cannot be interfered with by the courts.”) Strict necessity is not the guidepost. Id. at 418. In the context of educational institutions, a long line of cases demonstrates that the range of uses which has qualified the property at issue for exemption is broad.

In Emerson, at issue were three large parcels of land owned by an educational institution, some of which consisted of “low and swampy” or wooded land, and some of which contained athletic fields, among other things. Emerson, 185 Mass. at 417. The evidence in that case showed that “pupils [did] in fact constantly use the unimproved parts of the fields . . . as recreation grounds, walking and roaming over them, playing games that do not require grounds to be improved.” Id. The Court held that the parcels were occupied for the purposes of the exemption, because it was within the charitable purposes of an educational institution to “provide liberally for the physical training, and the social, moral and aesthetic advancement of the pupils who are entrusted to its charge.” Id. at 418. See also Assessors of Dover v. Dominican Father Province of St. Joseph, 334 Mass. 530, 538 (1956).

Similarly, in Wheaton College v. Town of Norton, 232 Mass. 141, 146 (1919), a tract of land used by Wheaton College to open a road to provide more direct access to its power house for the efficient “hauling of coal and other heavy articles,” was found by the Court to be occupied for the college’s charitable purpose. In that same case, “ordinary and wild woodland” belonging to the college, which was favored by students for walking, as well as an “unenclosed grove” of land used by “students and townspeople” alike, containing tall pine trees and “a few benches,” were found to be exempt because they promoted the charitable purpose of the college. Id. at 148-49.

In the present appeals, the evidence established that Boston College made a variety of uses of the subject property during the fiscal years at issue. Boston College students used the subject property for informal recreational activity, such as walking, jogging, sledding, sunbathing, reading, frisbee and wiffle ball, while college athletic teams, such as the rugby and track teams, used the subject property for training purposes. The Board found and ruled that these uses promoted the “physical training, and the social [and] moral” advancement of the students of Boston College, and as such, constituted the occupation of the subject property for Boston College’s charitable purpose. Emerson, 185 Mass. at 417.

With respect to the Residence/Commonwealth Avenue parcels, the evidence established that Boston College used the Archbishop’s residence for at least one fundraising event and several Board of Trustees’ meetings during the fiscal years at issue. Uses similar to these uses have been held to constitute charitable uses. See Trustees v. Board of Assessors of Windsor, Mass. ATB Findings of Fact and Reports 1991-225, 228, 242 (finding that use of “main house” on an expansive farm property for occasional meetings and community social functions was a qualifying use by the charitable organization in question) (citations omitted). See also Emerson, 185 Mass. at 417. The Board therefore found and ruled that each of these uses was in furtherance of Boston College’s charitable purpose.

In addition, Boston College used the various parking lots on the subject property throughout the fiscal years at issue. The Foster Street parcel was used to accommodate the daily parking needs of Boston College employees working at St. Clement’s Hall, while the Commonwealth Avenue/Residence parcels were used to accommodate extraordinary parking needs, including overflow parking during commencement activities, parent’s weekend, home football games and for students with special needs. The Board found that these uses facilitated the overall operation of the college and therefore contributed to its charitable educational purpose. See Wheaton College, 232 Mass. at 146.

Finally, Boston College used the subject property to provide a buffer from its residential neighbors in the Allston-Brighton community, and to ensure that its campus would have an adequate amount of open, green space so as to maintain a classic collegiate aesthetic. An educational institution has broad discretion to determine the most advantageous uses of its property and how best to execute its overall educational mission. See Emerson, 185 Mass. at 415. The Board found and ruled that the preservation of open, green space on its campus promoted the “aesthetic advancement” of the college, and therefore, found and ruled that Boston College’s use of the subject property towards that end promoted its charitable purpose. Id. at 418. Similarly, the Board found and ruled that the minimization of so-called “town-gown” conflict was a legitimate institutional goal, and Boston College’s use of the subject property as a buffer zone was a reasonable means of accomplishing that goal. See Massachusetts General Hospital v. Inhabitants of Somerville, 101 Mass. 319, 321 (1869) (ruling that land held by a hospital for the insane “to prevent too near proximity of buildings and use which might be deleterious to the hospital” was used for the taxpayer’s charitable purpose). The Board therefore found and ruled that Boston College’s use of the subject property as a buffer was a use which furthered its charitable purpose.

The assessors advanced several arguments as to why the subject property was not exempt, but the Board found none of them persuasive. The assessors emphasized in particular the fact that, as of the time of the purchase of the subject property and through the fiscal years at issue, Boston College had no certain, fixed plans for the subject property. While this argument was presumably advanced to dispel the notion that Boston College had purchased the property for the purposes of “removal thereto”, the Board found that the property was in fact used by Boston College for its charitable purposes. Accordingly, because the Board did not base its decision on the two-year removal provision of Clause Third, the Board rejected this argument.

The record indicated that Boston College made a variety of uses of the subject property in furtherance of its charitable purpose during the fiscal years at issue, and the Board based its finding that the subject property was exempt on that evidence. The fact that these uses may have been temporary, or that Boston College’s future plans for the subject property continued to evolve during the fiscal years at issue, did not warrant a finding to the contrary.

Additionally, the assessors argued that, to the extent that Boston College made any use of the subject property, such use was trivial and incidental to its charitable purpose, and therefore did not justify an exemption under Clause Third. In support of this argument, the assessors cited Babcock, a case in which the real property at issue was a house owned by a charitable organization which had been used as a home for orphaned children and the elderly. Babcock, 225 Mass. at 421. Prior to the fiscal years at issue in that case, the charitable organization in question transferred its income to another charitable organization, and appears from the record to have ceased active operation. In any event, during the fiscal years at issue, the real property at issue was not being used as a home for orphaned children or the elderly, but instead was being used as a residence for a caretaker and for the storage of furniture. Id. There was some evidence in the record that approximately one Board of Trustees’ meeting was held at the home each year, but other evidence in the record contradicted that fact. Id. In ruling that the property was not exempt, the Court stated:

[O]ccupancy means something more than that which results from simple ownership and possession. It signifies an active appropriation to the immediate uses of the charitable cause for which the owner was organized. The extent of the use, although entitled to consideration, is not decisive. But the nature of the occupation must be such as to contribute immediately to the promotion of the charity and physically to participate in the forwarding of its beneficent objects.

Id. at 421-22.

The facts in Babcock are distinguishable from those of the present appeals. In Babcock, it was virtually impossible for the use of the home at issue to advance the charitable purposes of the organization in question, as that organization had ceased active operation. In the present appeals, Boston College did not cease operation and vacate property it had formerly used in connection with its charitable purpose. Rather, it acquired new property, and used that property to facilitate and expand its charitable educational mission.

Further, the charitable mission of the taxpayer in Babcock involved a more narrow scope of services – the provision of a home for orphaned children and the elderly. In contrast, Boston College is a university which provides graduate and undergraduate education for some 14,500 students. On its two campuses, Boston College has numerous dormitories, classroom buildings, administrative buildings, dining halls, libraries, and athletic and research facilities. Its operations are necessarily more complex than those of the taxpayer in Babcock, and the scope of uses which support its charitable purpose is correspondingly greater. Moreover, in making its ruling, the Babcock court emphasized that “[t]he extent of the use, although entitled to consideration, is not decisive.” Id. at 421-22. The decisive factor is whether the use of the property advances the charitable purpose of the organization. In the present appeals, the Board found and ruled that the uses of the subject property, which included use for parking, Board of Trustees’ meetings, fundraising events, informal recreation, team athletic training, as a buffer from abutting residential properties, and as open, green space for the maintenance of campus aesthetics, were uses which advanced the charitable purpose of Boston College. The Board therefore found the assessors’ arguments to be without merit.

The assessors also argued that the exemption should be denied on public policy grounds, citing the growing number of charitable organizations within Boston and the concomitant diminution to the City’s tax base.[12] Specifically, the assessors stated that “[t]he deterioration and destruction of the tax base for [Boston], by exempting large parcels of land without an accompanying public benefit . . . serves to handicap the City.” Public policy arguments are for the Legislature’s consideration. See Raytheon Company v. Commissioner of Revenue, 455 Mass. 334, 345 (2009),(citing Joslyn v. Chang, 445 Mass. 344, 352 (2005)) (“if there are any inconveniences or hardships growing out of . . . a [court’s statutory] construction, it is for the legislature.”) (other citations omitted). The Board therefore rejected the assessors’ arguments.

CONCLUSION

On the basis of all of the evidence, the Board found and ruled that each of the parcels at issue was owned and occupied by a charitable organization, Boston College, in furtherance of its charitable purpose as of the relevant dates for the determination of exemption for the fiscal years at issue in these appeals.
Accordingly, the Board decided these appeals for Boston College, and, for fiscal year 2005, ordered abatements in the amount of $332,303.31 for the Commonwealth Avenue parcel and $98,105.36 for the Foster Street parcel. For fiscal years 2006 and 2007, the Board ordered abatements of $294,673.95 and $283,787.31, respectively, for the Residence parcel.

APPELLATE TAX BOARD

By: _____ ____

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ______ _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

WESTON PARTNERS REALTY TRUST v. BOARD OF ASSESSORS OF

THE TOWN OF WESTON

Docket Nos. X297803-X297868 (FY 06) F290545-F290610 (FY 07) Promulgated:

February 11, 2010

These are appeals pursuant to G.L. c. 59, §§ 64 and 65, from the refusal of the Board of Assessors of the Town of Weston (“assessors” or “appellee”) to abate taxes on certain real estate owned by and assessed to the Weston Partners Realty Trust (“WPRT” or “appellant”) for fiscal years 2006 and 2007 (“fiscal years at issue”). The fiscal year 2006 appeals were filed under the informal procedure pursuant to G.L. c. 58A, § 7A, and the fiscal year 2007 appeals were filed under the formal procedure. The appeals were subsequently consolidated for hearing.

Commissioner Egan heard these appeals. Chairman Hammond and Commissioners Scharaffa and Rose joined her in decisions 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.

Robert E. McLaughlin, Sr., Esq. and Robert E. McLaughlin, Jr., Esq. for the appellant.

Ellen M. Hutchinson, Esq. for the assessors.

FINDINGS OF FACT AND REPORT

I. Introduction and Jurisdiction

On January 1, 2005 and January 1, 2006, the relevant assessment dates for the fiscal years at issue, WPRT was the assessed owner of sixty-six condominium units (“subject property” or “subject condominiums”) located in Weston. The subject condominiums were part of a ninety-nine unit apartment complex constructed in the 1970s. The complex was purchased by the appellant on July 20, 2004 and the units were converted from rental apartments to condominiums, known as the Stonegate Condominiums (“Stonegate Condominiums”).

On December 27, 2005, the Collector of Taxes for Weston mailed the actual fiscal year 2006 tax bills.[13] The appellant timely paid the tax due for each condominium without incurring interest. The appellant filed its Applications for Abatement on January 24, 2006, which were denied by the assessors on March 28, 2006.[14] The appellant timely filed its petitions with the Board on June 27, 2006.

On December 27, 2006, the Collector of Taxes for Weston mailed the actual fiscal year 2007 tax bills. The appellant timely paid the tax due for each condominium without incurring interest.[15] The appellant filed its Applications for Abatement on January 22, 2007, which were deemed denied on April 22, 2007.[16] The appellant timely filed its petitions with the Board on June 15, 2007. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide these appeals.

II. The Appellant’s Purchase and Sales of the Subject Condominiums

The Stonegate Condominium complex is comprised of approximately 28.2 acres of land improved with twenty-two individual buildings. The buildings give the appearance of one and two-story, single-family homes built in the Royal Barry Wills style. The buildings have wooden exteriors. Interior finishes include drywall and ceramic tile and hardwood floors. Each unit has central air conditioning and comes with one deeded, uncovered parking space, but buyers have the option to purchase an additional and/or covered parking space. Some of the units have outdoor patios.

Stonegate Condominiums are available in five different floor plans. “Type A” units are one-bedroom, one-bathroom, Cape-style units; “Type B” units are two-bedroom, two-bathroom, Cape-style units; “Type C” units are two-bedroom, two-bathroom, townhouse-style units; “Type D” units are three-bedroom, two-bathroom, Cape-style units; and “Type E” units are one-bedroom, one-bathroom, one-level units, which are smaller in square footage than the “Type A” one-bedroom units.

WPRT purchased the Stonegate Condominiums on July 20, 2004 for $29 million. It financed this purchase through a $27.1 million mortgage from Merrill Lynch Capital, which was due on July 31, 2007, just over three years later. The mortgage was later amended and the loan amount increased to $31.4 million.

Following its purchase of the Stonegate Condominiums, WPRT entered into an aggressive marketing campaign to sell the units. As part of its marketing campaign, WPRT also promised to make numerous exterior improvements at the Stonegate Condominiums, including new paving, siding, landscaping and other improvements to the common areas of the condominium complex. Potential buyers had the option to buy the units “as is” or to purchase an additional package of interior improvements, including updated kitchen and bathroom finishes.

Curtis Kemeny testified for the appellant at the hearing of these appeals. In 2003, Mr. Kemeny joined the T.H. Niles Real Estate Group, a property management firm which managed the Stonegate Condominiums. In 2004, Mr. Kemeny formed Boston Residential Group, another property management company which assumed all of the management contracts of the T.H. Niles Real Estate Group, including the contract for the subject property.

Mr. Kemeny testified that when WPRT purchased the Stonegate complex, it believed it would be able to sell the subject condominiums within three years, at most. Mr. Kemeny stated that WPRT held a marketing event for the existing tenants of the units at a local community center, featuring brochures and other marketing materials. One such marketing document – a listing sheet of the prices for the various unit models, dated October 7, 2004 – was entered into evidence. That listing sheet recited the following price ranges for each unit type:

Unit Type “As-Is” Price Renovated Price

A $426,000-$429,000 $509,000

B $552,000-$562,500 $635,000-$644,000

C $482,500-$515,000 $585,000-$614,000

D $635,000-$650,000 $749,000

E $360,000-$389,000 $459,000-$464,000

According to Mr. Kemeny, there was substantial interest among the existing tenants of the units and others in the Weston community in purchasing the condominiums. Deeds for twenty of the condominiums were signed and recorded in 2004. Deeds for another thirteen condominiums were signed in 2004, but not recorded until 2005. The remaining sixty-six condominiums in the Stonegate Condominium complex are the subject of these appeals.[17]

Following the initial thirty-three transactions, sales of the Stonegate Condominiums declined. The deed for only one unit was signed in 2005,[18] while 2006 saw only a slight increase in sales activity. Faced with sluggish sales, WPRT took out a construction loan on March 29, 2006, to complete the capital improvements it had undertaken. The loan, from Citizen’s Bank, was in the amount of $19 million.

WPRT also enlisted a new broker, Coldwell Banker, in an effort to spur more sales. According to Mr. Kemeny, the brokers at Coldwell Banker advised WPRT that the units were overpriced, and recommended that they reduce the asking price of each unit. WPRT heeded this advice and reduced the asking prices of the remaining condominiums. For example, of the initial thirty-three sales, fourteen were Type “B” units. The sale prices of those units ranged from $512,000 to $650,000. In contrast, sales deeds recorded in 2007 for Type “B” units reflected sale prices ranging from $400,000 to $530,000. Similarly, of the initial thirty-three sales, three were Type “A” units. The sale prices of those units ranged from $424,000 to $560,000. Sales deeds recorded in 2007 for Type “A” units reflected sale prices ranging from $265,000 to $360,000. As a result of the reduction in prices, sales increased dramatically. Fifty-seven units were sold in 2007.

III. The Date of Sale of the Condominiums at Issue

The sales deeds for the subject condominiums were entered into the record in these appeals. Those deeds – and other evidence entered into the record – revealed a pattern of irregularities surrounding the sales of the condominiums at issue. In some instances, purchase and sale agreements were executed after the signing of the deeds. In numerous instances, the deeds were signed months, and in same cases more than a year, before they were recorded in the Registry of Deeds. Mr. Kemeny testified that, because of the fast pace of the initial sales, he signed deeds in “batches” and returned them to WPRT’s attorney. He also acknowledged that in many instances, the condominiums for which he had signed deeds in 2004 did not close until well after the date the deeds were signed. Mr. Kemeny testified that the delay in closings occurred for a variety of reasons, including that some of the purchasers wanted to wait to close until the work on the common areas had been completed.

A major dispute between the parties was whether the date of signature or the date of recordation of the deeds should be regarded as the date of sale. The assessors used the date of recordation as the date of sale, while the appellant’s expert appraiser, Robert LaPorte, Jr., considered the date of signature of the deeds to be the date of sale, because, in his opinion, that was the date that the parties entered into a binding agreement. Mr. LaPorte considered there to be thirty-three sales in 2004, one in 2005, and fourteen in 2006. Using the recordation date, the assessors, by contrast, considered there to be twenty sales in 2004, thirteen in 2005, and four in 2006. Both parties agreed that, following a reduction in price, fifty-seven units were sold in 2007.

IV. Valuation of the Subject Condominiums

The appellant called three witnesses to testify at the hearing of these appeals. In addition to the testimony of Mr. Kemeny, WPRT called Eric Josephson, the principal assessor for Weston, to testify. However, the appellant relied primarily on the testimony and report of its real estate appraiser, Mr. LaPorte. Based on his education, experience and certifications, the Board qualified Mr. LaPorte as an expert real estate appraiser.

To value the subject condominiums, Mr. LaPorte and the assessors used basically the same valuation methodology. Like the assessors, Mr. LaPorte considered the highest and best use of the subject property to be its continued use as a residential condominium development. Both the assessors and Mr. LaPorte considered the comparable-sales approach to be the most reliable method of valuing the subject property. Also like the assessors, Mr. LaPorte employed a two-step valuation process. First, he selected a representative unit for each of the five types of units available at Stonegate, and used the comparable-sales approach to value each representative unit. Both Mr. LaPorte and the assessors used the initial thirty-three sales of Stonegate Condominiums as comparable sales for the purposes of their comparable-sales analyses. Next, both Mr. LaPorte and the assessors used a mass appraisal methodology to arrive at fair cash values for the remaining condominium units. That is where the similarities ended.

Despite using identical comparable-sales properties and the same basic valuation methodology, Mr. LaPorte and the assessors arrived at markedly different fair cash values because of the adjustments to value that each made. In particular, Mr. LaPorte made considerable adjustments in value to many of the condominiums at issue to account for differences in date of sale, while the assessors did not. This discrepancy was, in part, the result of the difference of opinion between the parties as to the actual dates of sale for each of the condominiums at issue and the comparable-sales properties.

Because of the decrease in sales following the sales of the initial thirty-three units, Mr. LaPorte did not believe that the sales prices of those units were an accurate reflection of the fair cash value of the subject condominiums during the fiscal years at issue. Accordingly, he looked at all sales of Stonegate Condominiums between 2004 and 2006 and calculated median annual sales prices for each unit type.[19] Mr. LaPorte then extrapolated from those median sales prices average annual declines in value for each unit type and used those figures to make adjustments to his comparable-sales properties for market conditions, or in other words, for differences in date of sale.

The assessors did not present a case and instead rested on the assessments.

V. The Board’s Ultimate Findings of Fact

The Board, like the parties, found that the highest and best use of the subject property was its continued use as residential condominiums. The Board also found that the sales-comparison approach was the most reliable method for valuing the subject property.

On the basis of all of the evidence, the Board found that the appellant did not meet its burden of proving that the fair cash values of the subject condominiums were lower than their assessed values. The appellant presented its case-in-chief primarily through the testimony and report of its expert appraiser. During the course of his testimony, Mr. LaPorte admitted that there were many errors in his appraisal report. On several occasions, Mr. LaPorte admitted that he did not know how he calculated certain adjustments that he made to the sales prices of his comparable-sales properties.

Further, the adjustments Mr. LaPorte made to his comparable-sales properties for differences in date of sale were simply untenable. For fiscal year 2006, to calculate his adjustment for date of sale for Type “B” condominiums, Mr. LaPorte first calculated the average annual decline in median sales prices between 2004 and 2006. That average annual decline was $110,000. He then made downward adjustments in that amount for three Type “B” condominiums which sold, in his opinion, in October of 2004. Therefore, although those three Type “B” condominiums had sold, in his opinion, less than two months prior to the relevant assessment date, he made a six-figure downward adjustment to account for the difference in date of sale. Using this same methodology, Mr. LaPorte made downward adjustments in the amount of $80,000 for three Type “A” units which had sold, in his opinion, in October, November, and December of 2004, less than three full months from the relevant date of assessment for fiscal year 2006. The Board found these adjustments to be erroneous for a multitude of reasons.

As an initial matter, the Board did not agree with Mr. LaPorte that the date of the signing of the deed should be considered the date of sale. Although Mr. Kemeny signed many of the deeds in 2004, he testified only that he returned the signed deeds to WPRT’s attorney. Therefore, there was no evidence as to when the deeds were delivered to and accepted by the purchasers. Moreover, Mr. Kemeny testified that the deeds for many of the units were signed but the sales did not close until later for a variety of reasons, including that some of the purchasers wanted to wait until the common area improvements had been completed. Thus, in spite of the fact that the deeds were signed on certain dates, there was no evidence that the grantor intended to effectuate a transfer on those dates, nor was there evidence that the grantees accepted the conveyance of the deeds on those dates. Additional evidence in the record indicated that the sales were not finalized on the date of the signing of the deeds, including the fact that, in some instances, the purchase and sale agreements were executed after the deeds were signed. The Board therefore found that Mr. LaPorte’s adjustments for date of sale were flawed because, among other reasons, they were premised upon incorrect dates of sale.

Furthermore, Mr. LaPorte adjusted for differences in date of sale by first calculating average annual declines in median sales prices for each condominium type. Mr. LaPorte considered the initial thirty-three sales to have taken place in 2004. Because the relevant dates of assessment were January 1, 2005 and January 1, 2006, Mr. LaPorte deducted the average annual decline amount from the sale prices of the comparable properties. However, rather than prorating that figure to reflect the difference between the actual date of sale and the relevant assessment date, Mr. LaPorte simply deducted the average annual decline amount in its entirety from the sale price. In some instances, this approach resulted in adjustments in the range of $80,000 to $110,000 for sales which occurred within weeks of the relevant dates of assessment. The Board found that the market data entered into the record did not support adjustments of that magnitude.

In sum, the Board found that Mr. LaPorte’s valuation contained errors and was unsupported by the evidence. It therefore placed little weight on Mr. LaPorte’s opinions of value.

In contrast, the Board found that there was substantial evidence in the record to support the assessments at issue. The Board noted that, in the months leading up to January 1, 2005, the appellant was able to sell numerous condominiums at prices well in excess of the fiscal year 2006 assessed values. The Board found this to be compelling evidence that the assessed values of the subject condominiums did not exceed their fair cash values for fiscal year 2006.

Further, the Board rejected Mr. LaPorte’s contention that the 2007 sales prices of the subject condominiums were probative evidence of their fair cash values on either January 1, 2005 or January 1, 2006. Indeed, the Board inferred from the circumstances surrounding the brisk sales of the subject condominiums in 2007 that the greatly reduced sales prices were more of a reflection of the tremendous pressure that WPRT was under to sell the condominiums and pay off its loans, rather than a reflection of the fair cash values of the subject condominiums. Mr. Kemeny testified that WPRT had purchased the subject condominiums in July of 2004 with the expectation to sell them over a three-year period, at most. Instead, it was left holding the majority of the condominiums into 2007. WPRT had financed the original purchase of the subject condominiums with a loan that was due in 2007, and further, took out an additional $19 million construction loan. WPRT needed to sell the remaining condominiums to pay those loans. For these reasons, the Board did not find the 2007 sales prices to be persuasive evidence of the fair cash values of the subject condominiums on either January 1, 2005 or January 1, 2006. Because Mr. LaPorte used the 2007 sales data, in part, in forming his opinions of fair cash value for the subject condominiums, and because of the numerous aforementioned errors in his methodology, the Board placed little weight on his opinions of value.

Accordingly, the Board found that the appellant failed to meet its burden of proving that the fair cash values of the subject condominiums were lower than their assessed values for fiscal years 2006 and 2007. It therefore issued decisions for the appellee in these appeals.

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 of each year. G.L. c. 59, §§ 2A and 38. Fair cash value is defined as the price on which a willing seller and a willing buyer in a free and open market will agree if both 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 subject properties had 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[] sustain[s] the burden of proving 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 evidence offered by the appellant consisted mainly of the testimony and appraisal report of its expert appraiser. The Board found and ruled that the appellant’s expert’s sales-comparison analysis was flawed, and it therefore did not provide reliable evidence of the fair cash values of the subject condominiums. On several occasions during the course of his testimony, the appellant’s expert acknowledged errors in his report, and, further, could not explain the basis of the calculations behind some of his adjustments to value. The Board did not find his testimony or appraisal report to be reliable evidence of the fair cash values of the subject condominiums.

In particular, the Board found that Mr. LaPorte’s adjustments for differences in date of sale were not supported by the market data. His adjustments to the sale prices of his comparable properties were based upon average annual declines in median sales prices of each condominium type. However, he did not prorate the annual decline amount to correlate to the actual differences in date of sale. Instead, he deducted the average annual decline amount, in its entirety, from the sale price of the comparable property.

Moreover, the Board found and ruled that Mr. LaPorte’s adjustments for differences in date of sale were premised upon incorrect sale dates. “Delivery of a deed is essential to its validity, and the deed becomes effective only at the time of its delivery . . . Delivery occurs where the grantor intends the deed to effect a present transfer of the property conveyed, and the grantee assents to the conveyance.” Graves v. Hutchinson, 39 Mass. App. Ct. 634, 639-40, (1996) (internal citations omitted). Mr. LaPorte considered the sale date to be the date of signature of the deeds. Although Mr. Kemeny signed many of the deeds in 2004, he testified only that he returned the signed deeds to WPRT’s attorney. Therefore, there was no evidence as to when the deeds were delivered to and accepted by the purchasers. Further, additional evidence in the record indicated that there was no intent to “effect a present transfer of the property” on the deed- signature date. Id. Rather, there was evidence in the record that the sales were not closed on those dates, but instead were delayed for various reasons, including the purchasers’ desire to have the work on the common areas completed before closing on the condominiums. In addition, many of the purchase and sale agreements were executed after the signing of the deeds, which was further evidence that the transactions were not final as of the date of the signing of the deeds. The Board therefore found and ruled that Mr. LaPorte’s adjustments for differences in date of sale were flawed because, among other reasons, they were premised upon incorrect dates of sale.

Based on the evidence presented, the Board found and ruled that the appellant did not meet its burden of proving that the assessed values of the subject condominiums exceeded their fair cash values for the fiscal years at issue. Accordingly, the Board issued decisions for the appellee in these appeals.

APPELLATE TAX BOARD

By: ________________________________

Thomas W. Hammond Jr., Chairman

A true copy,

Attest: ____________________________

Clerk of the Board

APPENDIX A

Fiscal Year 2006

Docket Number	Address	Assessment

X-297803	2 Jericho Rd	$604,700
X-297804	4A Jericho Rd	$332,600
X-297805	4B Jericho Rd	$333,100
X-297806	4C Jericho Rd	$331,100
X-297807	4D Jericho Rd	$331,100
X-297808	14 Jericho Rd	$448,200
X-297809	16 Jericho Rd	$433,500
X-297810	17 Jericho Rd	$507,400
X-297811	18 Jericho Rd	$505,800
X-297812	19 Jericho Rd	$448,000
X-297813	21 Jericho Rd	$448,800
X-297814	23 Jericho Rd	$451,300
X-297815	25 Jericho Rd	$507,400
X-297816	31 Jericho Rd	$446,900
X-297817	33 Jericho Rd	$446,400
X-297818	34 Jericho Rd	$424,100
X-297819	36A Jericho Rd	$332,200
X-297820	36B Jericho Rd	$332,200
X-297821	36C Jericho Rd	$331,500
X-297822	36D Jericho Rd	$330,400
X-297823	41 Jericho Rd	$448,600
X-297824	43 Jericho Rd	$446,600
X-297825	44 Jericho Rd	$447,100
X-297826	46 Jericho Rd	$446,900
X-297827	53A Jericho Rd	$333,700
X-297828	53B Jericho Rd	$332,200
X-297829	56 Jericho Rd	$448,400
X-297830	59 Jericho Rd	$575,400
X-297831	60 Jericho Rd	$576,200
X-297832	61 Jericho Rd	withdrawn
X-297833	63 Jericho Rd	$447,300
X-297834	66 Jericho Rd	$446,600
X-297835	68 Jericho Rd	$446,400
X-297836	70 Jericho Rd	$502,600
X-297837	71 Jericho Rd	$447,300
X-297838	73 Jericho Rd	$456,300
X-297839	74 Jericho Rd	$506,100
X-297840	75 Jericho Rd	$507,900
X-297841	76 Jericho Rd	$451,100
X-297842	78 Jericho Rd	$448,600
X-297843	79 Jericho Rd	$506,100
X-297844	80 Jericho Rd	$447,300
X-297845	81 Jericho Rd	$447,800
X-297846	83 Jericho Rd	$447,800
X-297847	85 Jericho Rd	$508,200
X-297848	86 Jericho Rd	$507,900
X-297849	88 Jericho Rd	$446,600
X-297850	89 Jericho Rd	$501,800
X-297851	90 Jericho Rd	$446,600
X-297852	91 Jericho Rd	$448,200
X-297853	92 Jericho Rd	$505,500
X-297854	93 Jericho Rd	$447,800
X-297855	95 Jericho Rd	$502,100
X-297856	98 Jericho Rd	$446,900
X-297857	99 Jericho Rd	$382,000
X-297858	100 Jericho Rd	$447,300
X-297859	101 Jericho Rd	$447,100
X-297860	103 Jericho Rd	$447,300
X-297861	106 Jericho Rd	$507,600
X-297862	109 Jericho Rd	$505,500
X-297863	110 Jericho Rd	$448,600
X-297864	111 Jericho Rd	$446,600
X-297865	112 Jericho Rd	$446,900
X-297866	113 Jericho Rd	$445,700
X-297867	114 Jericho Rd	withdrawn
X-297868	119 Jericho Rd	$505,000

Fiscal Year 2007

Docket Number	Address	Assessment

F-290545	2 Jericho Rd	withdrawn
F-290546	4A Jericho Rd	$339,700
F-290547	4B Jericho Rd	$340,100
F-290548	4C Jericho Rd	$316,600
F-290549	4D Jericho Rd	withdrawn
F-290550	14 Jericho Rd	$428,100
F-290551	16 Jericho Rd	$465,100
F-290552	17 Jericho Rd	$485,000
F-290553	18 Jericho Rd	$483,500
F-290554	19 Jericho Rd	$481,100
F-290555	21 Jericho Rd	$428,700
F-290556	23 Jericho Rd	$484,700
F-290557	25 Jericho Rd	$485,000
F-290558	31 Jericho Rd	$414,400
F-290559	33 Jericho Rd	$479,500
F-290560	34 Jericho Rd	$438,500
F-290561	36A Jericho Rd	$339,200
F-290562	36B Jericho Rd	$317,600
F-290563	36C Jericho Rd	$317,000
F-290564	36D Jericho Rd	$337,400
F-290565	41 Jericho Rd	$428,500
F-290566	43 Jericho Rd	$567,900
F-290567	44 Jericho Rd	$543,500
F-290568	46 Jericho Rd	$463,600
F-290569	53A Jericho Rd	$319,100
F-290570	53B Jericho Rd	$317,600
F-290571	56 Jericho Rd	$481,600
F-290572	59 Jericho Rd	withdrawn
F-290573	60 Jericho Rd	withdrawn
F-290574	61 Jericho Rd	withdrawn
F-290575	63 Jericho Rd	$543,700
F-290576	66 Jericho Rd	withdrawn
F-290577	68 Jericho Rd	$479,500
F-290578	70 Jericho Rd	$480,500
F-290579	71 Jericho Rd	$427,200
F-290580	73 Jericho Rd	$435,800
F-290581	74 Jericho Rd	$516,700
F-290582	75 Jericho Rd	$485,500
F-290583	76 Jericho Rd	$430,800
F-290584	78 Jericho Rd	$481,800
F-290585	79 Jericho Rd	$516,700
F-290586	80 Jericho Rd	$480,400
F-290587	81 Jericho Rd	$480,900
F-290588	83 Jericho Rd	$480,900
F-290589	85 Jericho Rd	$485,800
F-290590	86 Jericho Rd	$485,500
F-290591	88 Jericho Rd	withdrawn
F-290592	89 Jericho Rd	$512,300
F-290593	90 Jericho Rd	$542,900
F-290594	91 Jericho Rd	$544,800
F-290595	92 Jericho Rd	$483,300
F-290596	93 Jericho Rd	$544,300
F-290597	95 Jericho Rd	$512,600
F-290598	98 Jericho Rd	$426,800
F-290599	99 Jericho Rd	withdrawn
F-290600	100 Jericho Rd	$480,400
F-290601	101 Jericho Rd	$480,200
F-290602	103 Jericho Rd	$480,400
F-290603	106 Jericho Rd	$626,900
F-290604	109 Jericho Rd	$483,300
F-290605	110 Jericho Rd	$545,300
F-290606	111 Jericho Rd	withdrawn
F-290607	112 Jericho Rd	$543,200
F-290608	113 Jericho Rd	withdrawn
F-290609	114 Jericho Rd	withdrawn
F-290610	119 Jericho Rd	$515,600

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

BLACK ROCK GOLF CLUB, LLC v. BOARD OF ASSESSORS OF

THE TOWN OF HINGHAM

Docket Nos. F284357, F288545 Promulgated:

March 1, 2010

These are appeals 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 real estate taxes assessed to the appellant under G.L. c. 59, §§ 11 and 38 by the Town of Hingham for fiscal years 2006 and 2007.

Commissioner Mulhern heard these appeals. Chairman Hammond and Commissioners Scharaffa and Rose joined him 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.

Robert E. Brooks, Esq. for the appellant.

Ellen M. Hutchinson, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

I. Jurisdiction

On January 1, 2005 and January 1, 2006, the appellant, The Black Rock Golf Club, LLC (“Black Rock”), was the assessed owner of Unit One, also known as the golf unit, of the Black Rock Condominiums located at 19 and 25 Clubhouse Drive in the Town of Hingham (“subject property”).

As of January 1, 2005 and January 1, 2006, the Board of Assessors of Hingham (“assessors”) valued the subject property at $20,000,000 and $18,600,000, respectively. The assessors assessed taxes thereon at the rate of $9.20 per $1,000 for fiscal year 2006 and $9.00 per $1,000 for fiscal year 2007, resulting in tax assessments of $184,000, plus a Community Preservation Act (“CPA”) surcharge of $2,760, for fiscal year 2006 and $167,400, plus a CPA surcharge of $2,511, for fiscal year 2007. In accordance with G.L. c. 59, § 57C, the appellant timely paid each fiscal year’s taxes without incurring interest.

On January 30, 2006 and January 31, 2007, in accordance with G.L. c. 59, § 59, the appellant timely filed an Application for Abatement with the assessors for fiscal years 2006 and 2007, respectively. The assessors denied the appellant’s abatement application for fiscal year 2006 on March 6, 2006, and denied the appellant’s abatement application for fiscal year 2007 on February 12, 2007. In accordance with G.L. c. 58A, § 7 and c. 59, §§ 64 and 65, the appellant seasonably appealed these denials by filing Petitions Under Formal Procedure with the Appellate Tax Board (“Board”) on June 5, 2006 for fiscal year 2006, and on May 11, 2007 for fiscal year 2007. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide these appeals.

II. Witnesses

A. Appellant

The appellant presented its case-in-chief through the testimony of three witnesses: Richard Partridge, assessor for the town of Hingham; George McGoldrick, founder and president of Black Rock; and Jeffrey R. Dugas, a licensed real estate appraiser. Mr. Dugas is a Member of the Appraisal Institute (“MAI”) and has appraised over 1,000 golf courses nationwide, include 130 in Massachusetts. He has testified before numerous state courts and boards. Based on his education and experience, the Board qualified Mr. Dugas as a real estate valuation expert. The appellant also introduced several exhibits including Mr. Dugas’ self-contained appraisal report and an article entitled “Private Golf Club Memberships: Real or Personal Property?” written by Laurence A. Hirsh.[20]

B. Assessors

In defense of their assessments, the assessors presented one witness: Emmet T. Logue, whom the Board qualified as a real estate valuation expert. Mr. Logue testified that he had appraised golf courses over the past few years. The assessors also offered into evidence numerous exhibits, including copies of the deeds for four sales of golf courses which occurred during the period December 2005 and August 2007, a listing of the Black Rock construction costs, Black Rock financial statements for the calendar years ended 12/31/2003, 12/31/2004 and 12/31/2006, an appraisal report prepared by Mr. Dugas in September 2004 for purposes of valuing the owner’s interests, and also a copy of the Purchase & Sale Agreement of the members’ interests in Black Rock, dated January 1, 2005.

On the basis of all the evidence, the Board made the following findings of fact.

III. Subject Property Description

Black Rock Condominiums was initially developed by George McGoldrick and James L. Read as a golf and residential community, which was scheduled to contain a total of 138 housing units in addition to an 18-hole private golf course, with various other recreational and social amenities. In 2004, Mr. McGoldrick and Mr. Reed agreed to sell their respective interests in the golf course and the residential development of Black Rock to one another; Mr. McGoldrick purchased Mr. Reed’s interest in the golf course and Mr. Reed purchased Mr. McGoldrick’s interest in the residential development. The golf course, golf club and amenities are currently known as Unit 1 of the Black Rock Condominiums.

Entrance to Black Rock Condominiums is via a guarded security gate on Black Rock Drive, which is accessible off Ward Street, a paved town road that services residential areas along the west side of Hingham. The entire site contains 357.308 acres of land. The subject property includes a championship 18-hole private golf course, a four-level clubhouse, a recreation center, an outdoor pool, and 5 outdoor tennis courts, as well as other site improvements such as parking lots, maintenance buildings, landscaping, and walkways.

The golf course was designed by Brian Silva, a well-known golf course architect. The course was completed and opened for play on July 4, 2002. The golf course measures approximately 6,960 yards from the back tees with a par of 71. The design of the course is known as a core golf course, which is designed with the front nine holes going out from the clubhouse and the back nine holes returning to the clubhouse. The course provides a variety of open and wooded areas, and many holes display the rock and ledge found on the property in the form of sheer cut rock walls, stone walls, and outcroppings. There are several bridges used to cross wetlands. The course features 107 bunkers of various sizes and shapes situated around the greens and strategically placed in fairways.

The golf course irrigation system has 1,700 sprinkler heads and four deep wells that feed into two large holding ponds that can store up to 20 million gallons of water. These two large ponds come into play as water hazards on the course. A practice area and driving range are located across the driveway near the clubhouse. Some of the features include a large practice putting green, short game center and grass tees. The overall quality level of the course and its layout are consistent with a high-end private facility.

Paved roads throughout the site service the golf course, clubhouse and recreation center. The clubhouse is an excellent quality steel and wood-frame structure with two full stories plus a third floor mezzanine, over a partial basement. The total building area, including basement, is 41,827 square feet. The design of the clubhouse is that of an Adirondack lodge structure. The building was completed in 2003 and is in excellent physical condition as of the relevant dates of assessment. The clubhouse was constructed on an embankment so that the first floor is at grade to the rear, and below grade at the front of the building; therefore the main public access to the building is via the second floor formal entry.

The first floor, ground level, contains a pro shop, mens and womens locker rooms, a member services area for golf bag storage, laundry and shoe shining, an employee break room, and mechanical and storage rooms. There are a number of entrances at grade and via stairways from the golf course area. The first floor is accessible to the main level via two stairways and an elevator.

The second floor, which is the main level of the clubhouse, is accessible via the principal entrance which includes a driveway and carport off Clubhouse Drive. This level contains the formal entry foyer, a formal sitting room, a large function room, the Grill Room for member dining, a private conference room, public restrooms and the kitchen. There are fireplaces in both the sitting room and the Grill Room. The total indoor seating capacity is approximately 300 people. There is additional dining space on the large wrap-around terrace which overlooks the golf course.

Flooring in the clubhouse is primarily carpet, with concrete floors in the kitchen and the basement, and vinyl tile in the employee locker rooms and first floor offices. The interior walls are primarily painted gypsum board with cherry woodwork and trim. Ceilings are finished with a mix of acoustic ceiling tile and painted gypsum board. There are cathedral ceilings in the main floor function room and dining room, with painted sheetrock finish in the function room and knotty pine with steel beams in the dining room.

The subject property is also improved with a multi-purpose recreation center, which is a one-story, steel and wood-frame building, also Adirondack in style, with a gross building area of 8,937 square feet. Built in 2002, the recreation center includes an entrance lobby with lounge, juice bar and office, mens and womens shower, locker and washroom areas, a multi-purpose/childcare center, aerobics room, weight room and tennis pro shop. The building is of good to excellent quality construction and is in excellent physical condition. The recreation complex also contains a large heated in-ground pool plus a separate “kiddy” pool, and five outdoor tennis courts. There are multiple entrances including a double door entrance and vestibule at the front of the building, accessible from the Clubhouse Drive parking lot, an entrance from the pool area to the locker rooms and showers, a separate entrance between the tennis pro shop and the outside tennis courts, and a rear entrance to the aerobics room.

The maintenance complex consists of two adjacent buildings containing a total gross building area of approximately 8,500 square feet. These buildings are used to provide a working shop area, a maintenance office, an employee lounge, and equipment storage.

IV. Membership

Black Rock Country Club is a private, members-only club. Membership is a contractual privilege by which designated persons receive a revocable license which allows them to enter onto the country club premises for the purpose of using and enjoying the available facilities. Memberships are “non-equity,” which means that a member cannot sell his or her interest but would receive a share of the proceeds upon sale of the club. There are three categories of memberships: full golf membership, which includes full golf course, clubhouse and recreational complex access; single golf membership, which is full golf access for one person; and recreational and residential memberships,[21] which is access only to the non-golf recreational facilities. Pursuant to the membership bylaws, the club may issue a maximum of 325 full-golf memberships. Beginning in 2004, single-golf memberships were offered, with a cap of 25, which does not count against the 325 full-golf membership maximum.

To become a member, an individual is required to pay an initiation fee, annual dues, and also meet club minimum spending requirements in the dining facilities. Each membership has a refundable and non-refundable initiation fee component. For the fiscal years at issue, the membership type, initiation fee, and refundable and non-refundable portions were as follows:

Membership	FY 2006 Fee	Non-Refund	Refund	FY 2007 Fee	Non-Refund	Refund
Full-Golf	$125,000	$35,000	$90,000	$125,000	$35,000	$90,000
Single-Golf	$125,000	$35,000	$90,000	$125,000	$35,000	$90,000
Recreation	$ 42,000	$10,000	$32,000	$ 42,000	$12,000	$30,000
Resident	$ 35,000	$10,000	$25,000	$ 35,000	$10,000	$25,000

Membership history charts reported a total of 310 members as of January 1, 2005, 281 of whom were golf members and 29 were recreational/residential members, and 343 members as of January 1, 2006, of whom 299 were golf members and 44 were recreational/residential members. Initially, there were 11 “founding” members who paid a fully refundable fee of $100,000. The Club started selling memberships, before local zoning or approvals were granted. During the period of December 1999 through January 2000 the Club sold 73 fully refundable memberships at the initial price of $65,000. Subsequently, during the period February 2000 through April 2002, memberships were sold as follows: 61 memberships at $75,000; 23 memberships at $80,000; 37 memberships at $90,000; 19 memberships at $95,000; 32 memberships at $100,000; and 20 memberships at $115,000.

In May 2002, the initiation fee was increased to its current level of $125,000. The evidence presented suggests that of the total number of golf memberships, only 86 were sold at the current rate of $125,000. The evidence also indicates that during calendar years 2004 and 2006, two memberships were sold at the substantially lower rates of $65,000 and $70,000, the latter of which was non-refundable. Further, it appears that during calendar years 2005 and 2006 some members were not required to pay an initiation fee but rather received their membership as an incentive for the purchase of one of the residential condominiums.

In addition to the initiation fee, all members are required to pay annual dues of $8,295 for full-golf memberships, $6,640 for single-golf memberships, and $5,400 for recreational and residential memberships, as of January 1, 2005, and $8,710, $6,970, and $5,670, respectively, as of January 1, 2006. Also, members were required to meet annual food expenditure minimums of $1,200 for full-golf and recreational memberships and $600 for single-golf memberships for both of the fiscal years at issue.

According to membership documents, the refundable component of the initiation fee was required to be repaid to a resigned member only after three new members had joined the club. During the time period that the member was awaiting the return of his refundable amount, the member was required to pay annual dues and meet club minimum spending requirements in the dining facility, until his fee was refunded, but for no longer than one year from his resignation. No interest accrued on the individual’s refundable deposit amounts and Black Rock was not required to segregate the refundable deposits to assure availability to a resigning member.

V. Appellant’s Case

The appellant’s first witness was Lane Partridge, assessor for Hingham. Mr. Partridge testified that he was personally responsible for setting the values for the subject property for each of the fiscal years at issue. He further testified that at the time there was no set methodology in place for valuing golf courses. Through conversations with various appraisers, including Mr. Logue, Mr. Partridge was directed to the Board’s recent decision in The Willows at Westborough v. Board of Assessors of the Town of Westborough, Mass. ATB Findings of Fact and Reports 2008-469, 506 (“The Willows”) aff’d 441 Mass. 1108 (2004), which involved the valuation of real estate associated with an assisted living facility. In The Willows, residents were required to pay a “one-time entrance fee that [was] 90% refundable (without any interest accruing)” in addition to their monthly service fees. Id. at 2002-475. In that case, the Board agreed with the assessors’ real estate expert, Emmet T. Logue, and also a healthcare industry consultant, Mr. Gregory T. Walsh, that “interest income should be imputed on the 90% refundable portion . . . and included in the income aggregation of the income capitalization methodology” used to value the real estate associated with The Willows. Id. at 2002-513. Based on their determination that the entrance fees in The Willows were similar to the Black Rock initiation fees in the instant appeals, the assessors determined that the methodology used in The Willows was the appropriate method to use to value the subject property for the fiscal years at issue. Mr. Partridge conceded, however, that he was not aware of any professional appraisal articles which gave validation to The Willows concept of valuation for valuing a golf course.

Next, the appellant presented the testimony of its real estate valuation expert, Jeffery Dugas. Mr. Dugas valued the subject property based on its current use as a golf course.[22] To value the subject property, Mr. Dugas considered the cost, sales-comparison and income-capitalization methodologies. He determined that the cost approach was not reliable for valuing the subject property, given the difficulty in estimating economic and functional depreciation associated with the improvements. He noted that the sales-comparison approach is generally considered a reliable method of estimating the market value of a going-concern golf operation, but this approach is not as reliable when valuing only the real estate component as in the present appeal. Therefore, Mr. Dugas valued the subject property using an income approach based on the fair rental value of the golf course. Mr. Dugas testified that, as with most commercial property, the best way to estimate the value of the subject property is to determine the fair market rent that the property would generate. In arriving at his estimate of value, Mr. Dugas relied on the article written by Laurence A. Hirsh, which opined that “membership interests are like stock in a company that owns property. The value of the property is not impacted by the value of the stock, and thus the membership interest would not be included as real property value.” Laurence A. Hirsch, Private Golf Club Memberships: Real or Personal Property?, Journal of Property Tax Assessment & Adnubustratuib, Vol. 4, Issue 3 at 72.

To begin his income capitalization approach, Mr. Dugas first determined the gross revenue for each of the golf course’s four profit centers: golf, merchandise sales, food and beverage, and other. Included in the golf revenue were membership dues, green fees, carts and tournaments.
Mr. Dugas concluded that the actual revenues reported by the appellant for these line items for calendar years 2005 and 2006 were reasonable.

Also included in golf revenue were new member initiation fees. For this line item, however, Mr. Dugas opted to use a higher stabilized amount than that reported by the appellant. To estimate the appropriate value, Mr. Dugas first noted that refunds of so-called refundable initiation fees were “few and far between.” As a result, he determined that the subject property is more appropriately valued assuming a non-refundable membership fee. Based on a review of non-refundable initiation fees of comparable golf courses, Mr. Dugas concluded that non-refundable membership fees are, generally speaking, one-half of refundable fees. Therefore, for purposes of valuing the subject property, he assumed a non-refundable initiation fee of $60,000 based on the actual refundable initiation fee of $125,000. After reviewing historic trends at the golf club, he further assumed an attrition rate of about 5%, or 15 members, per year. He therefore concluded that the club would generate approximately $900,000 ($60,000*15) annually in new membership initiation

fees.[23] With that amount added to the annual membership fees, green fees, carts and tournament fees, Mr. Dugas calculated total golf revenue of $4,628,252 and $4,970,810, for fiscal years 2006 and 2007, respectively.

Actual reported merchandise sales for 2005 and 2006 were $266,015 and $334,223, respectively. Mr. Dugas testified that merchandise sales for a club of this kind generally range from $15 to $20 per round. Black Rock hosted about 19,000 rounds in 2005 and 2006, which equates to merchandise sales that range between $285,000 and $380,000. Because the actual merchandise revenue was market supported, Mr. Dugas relied on Black Rock’s actual merchandise revenue in his analysis.

After reviewing data from several for-profit country clubs with clubhouses that have seating capacities that range from 327 to 990 and have large banquet operations, Mr. Dugas found a correlation between food and beverage sales and seating capacity. Based on these comparables, Mr. Dugas determined that the average food and beverage sales ranged from $5,500 to $7,000, per seat. Further, he determined that the subject property is able to charge a significant premium because of the physical quality of the club and the service and quality of the food served. Therefore, Mr. Dugas estimated food and beverage sales at the club at the higher end of the range. Using $6,500 per seat for the 300 indoor seats at the club, he arrived at an estimate of $1,950,000. Actual food and beverage sales were $2,014,359 and $1,915,882 for 2005 and 2006, respectively. Accordingly, Mr. Dugas determined that the actual food and beverage sales reported by the appellant were indicative of the market and were used in his analysis.

Finally, Mr. Dugas relied on the appellant’s actual income of $281,175 in 2005 and $318,667 in 2006 for the “other” category, which included pool and tennis fees, camps and clinics, babysitting and rentals. Mr. Dugas’ total gross revenue for 2005 and 2006 is as follows:

2005 2006

Golf $4,628,252 $4,970,810

Merchandise $ 266,015 $ 334,233

Food & Beverage $2,014,359 $1,915,882

Other $ 477,055 $ 502,729

Gross Revenue $7,385,681 $7,723,644

Mr. Dugas testified that, generally speaking, golf course rents are based on fixed percentages of the gross revenue generated by the various departments and that the rent payable by the lessee is the real property owner’s net operating income (“NOI”). Therefore, to estimate the subject property’s NOI, Mr. Dugas reviewed several rental comparables in the Northeast region with similar climates, as well as labor and utility costs, as the subject property. Mr. Dugas testified that most of his rental comparables are public golf courses, which generally operate at slightly better profit margins and theoretically “could rent for a higher percentage.” Therefore, he adjusted downward slightly for the subject property because it was a private club. Based on the rental data, Mr. Dugas determined that market rents were approximately 22% of golf revenue, 6% of merchandise sales, 10% of food and beverage, and 5% of other. He applied these percentages to the subject property’s departmental revenues to calculate the subject property’s NOI for 2005 and 2006. The following table summarizes Mr. Dugas’ calculations.

Department Revenue	Percentage Rent	2005 Revenue	2005 Rent Payable	2006 Revenue	2006 Rent Payable
Golf	22.0%	$4,628,252	$1,018,215	$4,970,810	$1,093,578
Merchandise	6.0%	$ 266,015	$ 15,961	$ 334,223	$ 20,053
Food &Beverage	10.0%	$2,014,359	$ 201,436	$1,915,882	$ 191,588
Other	5.0%	$ 477,055	$ 23,853	$ 502,729	$ 25,136
Total		$7,385,681	$1,259,465	$7,723,644	$1,330,356

Finally, Mr. Dugas derived a capitalization rate from a band-of-investment, mortgage-equity analysis. He established his rate by using a 70/30 loan-to-value ratio and an amortization period of twenty years. His mortgage loan rate was 7.0%, resulting in a mortgage constant of 6.51%.

To determine his equity rate, Mr. Dugas reviewed rates published in the spring 2004 PriceWaterhouseCoopers Korpacz Real Estate Investor Survey (“Korpacz Survey”) for going-concern golf properties, which ranged from 4.90% to 21.20%, with an average of 10.98%. According to the spring 2005 Korpacz Survey, the rates for golf properties narrowed slightly to between 5.02% and 17.10%, with an average of 10.77%. Mr. Dugas noted that although the subject property is of generally good quality and is within a major metropolitan market, it is weather dependent and industry figures have been declining since 2001. As a result, he determined that an appropriate equity capitalization rate would be 15.0%, which resulted in an equity component of 0.045. Based on the mortgage and equity components, Mr. Dugas calculated an overall capitalization rate of 11.01%. He further determined that a capitalization rate as applied to real estate rent is typically lower than that which would be applied to a going-concern operating income. For this reason, Mr. Dugas selected a capitalization rate of 10.0% for the subject property. Mr. Dugas then added a tax factor to arrive at his overall capitalization rates of

10.996% for fiscal year 2006 and 10.920% for fiscal year 2006.[24]

Relying on these capitalization rates, Mr. Dugas estimated the value of the subject property using the income-capitalization approach for fiscal year 2006 to be $11,500,000, and for fiscal year 2007 to be $12,200,000.`

To further support his estimate of value using the income-capitalization method, Mr. Dugas also presented a simplified sales-comparison approach that cited five sales of golf courses that occurred during the period December 15, 2005 through August 31, 2007, with sale prices that ranged from $7.25 million to $13.1 million. Four of the five comparables were private clubs located in Massachusetts; the fifth was a semi-private club located in Pennsylvania. Mr. Dugas testified that although three of the sales occurred in 2007, almost two years after the latest date of assessment, the market was soft and stagnant in revenue, rounds and values for the past several years and, therefore, he determined that no adjustment for timing or market conditions was warranted. He did, however, adjust for location and physical condition, and also personal property and business value associated with the sale of a going-concern golf course. Based on his chosen sales, Mr. Dugas determined a “range of value” for the subject property, using the sales-comparison approach, between $10,000,000 and $11,000,000, which, he opined, supported his estimates of value using the income-capitalization approach.

The appellant’s last witness was George McGoldrick, president of Black Rock Country Club. Mr. McGoldrick testified that in January 1999, he and Jim Reed formed a partnership for the development of Black Rock Condominiums. Mr. McGoldrick testified that at that time, there was no available bank financing for golf courses such as the subject property and, therefore, as a means of financing the construction of the golf course and the club amenities, the appellant opted to sell memberships. Initially, there were eleven “Founding” members who each paid $100,000. Subsequently, traditional non-equity memberships were sold ranging in price from $65,000 in December 1999 to $125,000 as of May 2002. Prior to 2002, the full amount of the initiation fee, less an administrative fee, was refundable upon resignation. As of January 1, 2005, the appellant had sold 286 full golf memberships. According to the appellant’s membership sales’ history, only 21 memberships sold for $125,000. The majority of memberships sold for considerably less.

Mr. McGoldrick testified that in their sales’ negotiations, he and Mr. Reed did not impute an interest value attributable to the membership initiation fees. He testified that the membership deposits were “not sitting in a bank” but were used to “build and operate the business.” Therefore, they did not consider those dollars in the transaction.

VI. Assessors’ Case

The assessors’ valuation expert, Mr. Logue, also relied on the income-capitalization approach to estimate the value of the subject property for the fiscal years at issue because of the income-generating characteristics of the property and also the availability of actual revenue and expense data for the subject property for calendar years 2003 through 2006. He did not use the sales-comparison approach due to the limited number of arms’-length sales for golf course properties with similar quality, dues, initiation fees and overall ownership structure. He also excluded the cost approach due to the subject property’s recent construction and excellent condition, and also the fact that the subject property is a condominium unit within a larger development. He determined that allocating the cost of site improvements and the underlying land value for the entire development to the subject property would be speculative and unreliable. Mr. Logue determined that the highest and best use for the subject property was its present use.

To arrive at his estimates of value for the subject property for the fiscal years at issue, Mr. Logue performed a traditional income-capitalization approach and deducted the operating expenses, excluding real estate taxes, from the annual gross revenues and then deducted reserves for replacements of short-lived realty items and furniture, fixtures, and equipment (“FF&E”), as well as a business enterprise/entrepreneurship return to reach his estimates of NOI attributable to the real estate. He capitalized the resulting NOI using an overall rate plus a tax factor to reach his opinion of value of $19,900,000 and $20,900,000 for fiscal years 2006 and 2007, respectively.

In developing his income-capitalization approach, Mr. Logue relied on the income and expense information provided by the appellant for calendar years 2003 through 2006 in order to reconstruct stabilized estimates of income and expenses as of the effective dates of valuation. To calculate his estimates of the subject property’s gross revenue as of the relevant assessment dates, Mr. Logue included amounts for membership dues, food and beverage sales, pro-shop merchandise sales, tournaments, guest fees, lessons and clinics, cart rentals, child care, equipment rental and repair, clubhouse rental, and other miscellaneous income.

Based on the actual number and trend of memberships, Mr. Logue determined that the average food and beverage sales for calendar years 2004 and 2005 was the most realistic stabilized amount for fiscal year 2006. Because pro shop sales fluctuated in a somewhat irregular pattern between $269,000 and $374,000 during calendar years 2003 through 2006, Mr. Logue stabilized pro shop merchandise sales, for both fiscal years at issue, at the average of the four preceding calendar years. He stabilized tournament income for fiscal year 2006 at the average for calendar years 2004, 2005 and 2006. After noting that guest fees for 2003 were $342,000 but by 2006 had declined to $300,000, Mr. Logue concluded that a stabilized annual amount for fiscal year 2006 was the approximate average for calendar years 2004 and 2005. He stabilized income from lessons and clinics, cart rentals, child care, and equipment rental and repair at annual amounts based on the average for calendar years 2004 through 2006. Mr. Logue noted that there was a minimal amount of clubhouse rental income for calendar years 2003 and 2004 because the clubhouse had recently opened, and, therefore, he concluded that the most realistic stabilized clubhouse rental income for his analysis was the average for calendar years 2005 and 2006. Finally, he determined an amount for other/miscellaneous income based on the average annual revenue for calendar years 2004 through 2006.

For fiscal year 2007, he stabilized membership dues and food and beverage revenues at somewhat higher levels than for fiscal year 2006 revenues due to increased membership and greater use of the clubhouse and other facilities. He stabilized guest fees, lessons and clinics, and miscellaneous revenues at slightly lower amounts than for fiscal year 2006 to better reflect the historical trends in these items of revenue, particularly for calendar years 2005 and 2006.

Mr. Logue also included in gross revenue a stabilized income amount attributable to the non-refundable component of the membership initiation fees. Mr. Logue conceded that although the annual non-refundable initiation fee revenue from new members during the time from initial ramp-up to full membership will likely decline as the membership at Black Rock stabilizes and reaches capacity, revenue from this source would continue on an annual basis as a result of turnover from resigned to new members who will pay an initiation fee. Based on the number of memberships for each category as of January 1, 2005, and the applicable membership initiation fees as of the same date, Mr. Logue determined that total non-refundable membership deposits amounted to $ 11,180,000.[25]

Membership Number of Initiation Non-Refundable Total

Type Members Fee Portion Non-Refundable

________________1/1/05 __________1/1/05______________________________________

Full golf 286 $125,000 $35,000 $10,010,000

Single golf 24 $125,000 $35,000 $ 840,000

Recreation 21 $ 42,000 $10,000 $ 210,000

Residential 12 $ 35,000 $10,000 $ 120,000

Total 343 $11,180,000

Mr. Logue then calculated an annual turnover rate of 4.4% for fiscal year 2006, based on membership records which indicated that between 10 and 15 members resign each year. Assuming that the same number of new members join Black Rock each year, Mr. Logue applied his estimated 4.4% annual turnover rate to the total non-refundable deposits of $11,180,000, and estimated the stabilized annual revenue from non-refundable initiation deposits at $491,920 for fiscal year 2006.

For fiscal year 2007, Mr. Logue calculated total non-refundable membership deposits at $11,905,000 as follows:

Membership Number of Initiation Non-Refundable Total

Type Members Fee Portion Non-Refundable

________________1/1/06__________1/1/06______________________________________

Full golf 299 $125,000 $35,000 $10,465,000

Single golf 26 $125,000 $35,000 $ 910,000

Recreation 34 $ 42,000 $10,000 $ 340,000

Residential 19 $ 35,000 $10,000 $ 190,000

Total 378 $11,905,000

Again, assuming that 15 members per year resign, Mr. Logue determined an annual turnover rate of 4.0% for fiscal year 2007. Applied to his total non-refundable deposits, he calculated annual revenue from non-refundable initiation deposits at $476,200 for fiscal year 2007.

The last component of Mr. Logue’s gross revenue was imputed interest on both the non-refundable and refundable portions of the membership deposits. Relying on the total number of club memberships for each category as of the relevant dates of assessment, as detailed supra, and the existing initiation fees of $125,000 for full-golf and single-golf memberships, $42,000 for recreation memberships and $35,000 for residential memberships, Mr. Logue calculated the total value of the initiation deposits at $40,052,000 for fiscal year 2006 and $42,718,000[26] for fiscal year 2007.

Mr. Logue testified that the membership deposits are monies paid to the club which can be used for whatever purposes the club decides and that the imputed interest reflects the non-interest bearing nature of these funds. To account for the appellant’s use of the deposits and to convert the deposit value into an income stream, Mr. Logue attributed what he determined to be a safe rate of interest of 4.23% for fiscal year 2006 and 4.37% for fiscal year 2007 applied to both the refundable and non-refundable membership deposits, to calculate total imputed interest income of $1,694,200 and $1,341,940, for fiscal years 2006 and 2007, respectively.[27] Neither Mr. Logue nor the assessors commented on or introduced evidence attempting to establish a relationship or correlation between the initiation fees and the annual dues.

Next, Mr. Logue deducted stabilized operating expenses, based on a review of the actual expenses reported for calendar years 2003 through 2005, plus a management fee of 3.5%, from the annual gross revenue to reach his estimate of NOI for each of the fiscal years at issue. Relying on the subject property’s projected budgets for calendar years 2004 through 2008, and also the National Golf Market segment of the Korpacz Survey, Mr. Logue determined that an allowance of 3% of total income, excluding imputed interest, would be a realistic allowance for reserve for replacement of short-lived real estate and FF&E.

Finally, Mr. Logue allowed a deduction for entrepreneurship return. He testified that in estimating the value of the Black Rock property for assessment purposes, he is valuing the real estate only and therefore it is appropriate to make a deduction for the business enterprise value. Based on his review of the subject property and also published information, he determined that a deduction of 4% of total gross income, including imputed interest, was realistic.

Mr. Logue reviewed the Korpacz survey, golf supplement, and also prepared a mortgage equity analysis and arrived at a capitalization rate of 9.5%, which is 0.590 less than that used by Mr. Dugas. Adding the appropriate tax factors for fiscal years 2006 and 2007, Mr. Logue arrived at overall capitalization rates of 10.42% and 10.40%, respectively, which he applied to the net real estate income to estimate the value of the subject property for the fiscal years at issue.

A summary of Mr. Logue’s income capitalization methodology is contained in the following table.

	Fiscal Year 2006	Fiscal Year 2007
Revenue
Membership (“Memb.”) Dues	$ 2,705,000	$ 2,990,000
Food and Beverage	$ 1,850,000	$ 1,965,000
Pro Shop Merchandise Sales	$ 330,000	$ 330,000
Tournament Income	$ 392,000	$ 410,000
Guest Fees	$ 330,000	$ 310,000
Lessons and Clinics	$ 196,000	$ 190,000
Cart Rentals	$ 124,000	$ 124,000
Child Care Income	$ 22,000	$ 22,000
Equipment Rental and Repair	$ 6,100	$ 6,100
Clubhouse Rental	$ 73,000	$ 73,000
Other/Misc.	$ 182,000	$ 182,000
Amortization of Non-Refundable Memb. Deposits	$ 491,920	$ 476,200
Imputed Interest on Non-Refundable Memb. Deposits	$ 472,914	$ 520,249
Imputed Interest on Refundable Memb. Deposits	$ 1,221,288	$ 1,346,528[28]
Gross Revenue	$ 8,396,220	$ 8,945,077

Operating Expenses
Food and Beverage	$ 1,700,000	$ 1,990,000
General and Administrative	$ 975,000	$ 1,045,000
Building Maintenance	$ 680,000	$ 665,000
Golf Course Maintenance	$ 870,000	$ 918,000
Golf Operations	$ 520,000	$ 527,000
Fitness, Pool and Tennis	$ 502,000	$ 548,000
Pro Shop	$ 240,000	$ 208,000
Child Care	$ 60,000	$ 50,000
Management* 3.5%	$ 234,571	$ 247,741

Total Operating Expenses	$ 5,781,571	$ 6,198,741

Net Operating Income	$ 2,614,649	$ 2,746,337

Reserves for Replacement* 3.0%	$ 201,061	$ 212,349

Entrepreneurship Return** 4.0%	$ 335,849	$ 357,803

Net Real Estate Income to be Capitalized	$ 2,077,740	$ 2,176,184

Capitalization Rate	9.50%	9.50%
Tax Factor	0.920%	0.900%
Overall Rate	10.420%	10.400%

Indicated Fair Cash Value	$19,939,922	$20,924,850`

Rounded Fair Cash Value	$19,900,000	$20,900,000

*Based on % of gross revenue excluding imputed interest.

**Based on % of total gross revenue.

VII. Board’s Valuation Findings

Both the parties’ real estate valuation experts valued the subject property using an income-capitalization analysis. Their methodologies, however, differed. Mr. Dugas estimated the value of the subject property based on a “market rent” analysis. Applying this methodology, Mr. Dugas first determined the gross income from each of the golf course’s four profit centers and then determined an appropriate percentage representing the appellant’s rent payable, or net operating income, for each category. He then divided the results by the capitalization rates he thought appropriate to yield the estimated market value of the subject property for each of the fiscal years at issue.

In contrast, Mr. Logue valued the subject property by deducting the country club’s operating expenses from its annual gross revenues and then deducting reserves for replacements for FF&E, as well as a business enterprise/entrepreneurship return, to reach his estimates of NOI attributable to the real estate. He then capitalized the resulting NOIs to arrive at his opinion of fair market value for the fiscal years at issue.

Mr. Logue attempted to justify his income-capitalization approach by stating that it was similar to the methodology used by the Board in valuing the real estate associated with a senior congregate housing facility in The Willows. Based on overwhelming evidence, including the testimony of Gregory Walsh, a healthcare consultant, industry-wide entrance fee and monthly service fee payment schedules, and also the owner’s pricing charts, the Board found in The Willows that the amount of monthly service fees and the amount of entrance fees “are directly related to the overall amount charged to a resident for the right or privilege to live there. They are both components of the cost of occupancy at the facility.” The Willows at 505. In the present appeals, however, the record is devoid of any evidence correlating the initiation deposit to a lower annual dues.

Furthermore, in The Willows the Board found, based on extensive evidence, that the entrance deposits were “part and parcel of the monthly service fees.” Id. at 508. The amount of the entrance fees and the monthly service fees were directly, although inversely, related because monthly service fees were higher where entrance fees were lower or non-existent and visa versa. The entrance and service fees were, therefore, directly related to the “earning capacity” of the real estate and appropriate considerations in determining the value of the real estate. See Pepsi-Cola Bottling Co. v. Assessors of Boston, 397 Mass. 447, 451 (1986). In contrast, in the present appeals, the Board did not find any of “The Willows” type correlations between the entrance or initiation fees and the annual dues.

Moreover, assuming arguendo that the Board adopted the methodology used in The Willows in the present appeals, Mr. Logue’s computations were flawed. First, Mr. Logue’s imputed interest income was based on the full amount of the initiation fees, both refundable and non-refundable, whereas in The Willows imputed interest was applied only to the non-refundable portion of the resident deposit. Furthermore, in deriving the imputed income, Mr. Logue applied the initiation fees of $125,000 for full and single golf memberships to the full compliment of club members as of the relevant date of assessment despite the fact that he had not related them to the market and the evidence showed that a majority of members had paid significantly lower initiation fees.

Initially, there were 11 “founding” members who paid a fully refundable fee of $100,000. During the period of December 1999 through January 2000 the Club sold 73 fully refundable memberships at the initial price of $65,000. Further, during the period of February 2000 through April 2002, memberships were sold as follows: 61 memberships at $75,000; 23 memberships at $80,000; 37 memberships at $90,000; 19 memberships at $95,000; 32 memberships at $100,000; and 20 memberships at $115,000. In May 2002, the initiation fee was increased to its current level of $125,000.

The evidence presented, however, suggested that of the total number of golf memberships, only 86 were sold at the current rate of $125,000. Moreover, during calendar years 2004 and 2006, two memberships were sold at the substantially lower rates of $65,000 and $70,000, the latter of which was non-refundable. Further, it appears that during calendar years 2005 and 2006 some members were not required to pay an initiation fee but rather received their membership as an incentive for the purchase of one of the residential condominiums. Therefore, the Board found that Mr. Logue’s calculation of imputed interest income was likely overstated and so inflated his estimates of value as to render them unreliable.

The Board further found, under the circumstances present in these appeals and for the reasons more fully explained in the following Opinion, that Mr. Dugas’ market-rental approach is the more appropriate methodology to value the subject golf course and country club. Employing Mr. Dugas’ market-rental methodology, the Board first determined the gross revenue for each of the golf course’s four profit centers: golf revenue; food and beverage; pro shop sales; and other. Noting the similarities in the parties’ gross revenues, excluding Mr. Logues’ imputed interest income and including Mr. Dugas’ market adjusted new member initiation fees, the Board estimated gross revenue for the four profit centers as follows:

	FY 2006 Revenue	FY 2007 Revenue
Golf Revenue
Dues	$2,860,000	$3,115,000
Guest Fee	$ 320,000	$ 320,000
Cart Rental	$ 128,000	$ 150,000
Tournament Fees	$ 400,000	$ 400,000
New Member Initiation Fees	$ 900,000	$ 900,000
Total Golf Revenue	$4,608,000	$4,885,000
Food/Beverage	$2,000,000	$2,000,000
Merchandise	$ 325,000	$ 325,000
Other	$ 478,100	$ 495,000

Based on the subject property’s increased earning capacity attributable to the country club and recreational facilities, the Board determined that 25%, the higher end of Mr. Dugas’ rental range, was the more appropriate rental rate applicable to the golf revenue. The Board further found that Mr. Dugas’ market rental percentages applicable to food and beverage, merchandise and other income were reasonable and appropriate. Finally, the Board found that based on the subject property’s high quality new construction and also the increased earning capacity attributable to the function and recreation facilities, a capitalization rate of 9.5%, plus the applicable tax factor, was appropriate. A summary of the Board’s market-rental approach is contained in the following table.

	FY 2006 Revenue	FY 2006 NOI	FY 2007 Revenue	FY 2007 NOI
Golf Revenue 25%	$4,608,000	$1,152,000	$4,885,000	$1,221,250
Food/Beverage 10%	$2,000,000	$200,000	$2,000,000	$200,000
Merchandise 6%	$ 325,000	$19,500	$ 325,000	$19,500
Other 5%	$ 478,100	423,905	$ 495,000	$24,750
Total Net Operating Inc.		$1,395,405		$1,465,500

Capitalization Rate		9.5%		9.5%
Tax Factor		0.92%		0.90%
Total Capitalization Rate		10.42%		10.40%
Indicated Fair Market Value		$13,391,603		$14,091,346
Fair Cash Value		$13,390,000		$14,090,000

On the basis of these findings, the Board found that the appellant met its burden of proving that the subject property was overvalued for fiscal years 2006 and 2007. The Board determined that the fair cash value of the subject property was $13,390,000 for fiscal year 2006 and $14,090,000 for fiscal year 2007. Accordingly, the Board decided these appeals for the appellant and granted abatements of $61,724.18 for fiscal year 2006 and $41,198.85 for fiscal year 2007.[29]

OPINION

“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. 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 (12^th ed., 2001). See also Skyline Homes, Inc. v. Commonwealth, 362 Mass. 684, 87 (1972); DiBaise v. Town of Rowley, 33 Mass. App. Ct. 928 (1992). In determining the property’s highest and best use, consideration should be given to the purpose for which the property is adapted. The Appraisal of Real Estate at 315-16; Tennessee Gas Pipeline Co., supra at 235. In the present appeals, both parties’ valuation experts and this Board valued the subject property based on its existing use as a golf course and country club.

Generally, real estate valuation experts, the Massachusetts courts, and this Board rely upon three approaches to determine the fair cash value of property: income-capitalization, sales-comparison, and cost reproduction. See Correia v. New Bedford Redevelopment Authority, 375 Mass. 360, 362 (1978). The courts and the appraising community as well as some state legislatures have adopted varying methods or combination of methods for valuing golf courses for ad valorem tax purposes. While some relatively older cases rely exclusively upon the cost approach, see, e.g., Old Oaks Country Club v. State, 35 AD2d 71, aff’d 30 NY2d 611; Matter of County of Suffolk [Great River], 70 Misc. 2d 232, that method is now usually given weight only in a reconciliation of values derived by other means, see, e.g., Russell L. Wenkstern Trust/Burl Golf Course v. County of Hennepin, 1990 Minn. Tax LEXIS 225, *6-9, or is used to establish a maximum value, see, e.g., Matter of River House-Bronxville v. Gallaway, 79 AD2d 990.

Exclusive use of the sales-comparison or market approach is ordinarily limited to those situations when there either is no data to support the use of income-capitalization methodology, see, e.g., Salem Country Club v. Assessors of Peabody, Mass. ATB Decision Docket No. 166714, etc. (December 8, 1994), or the data underpinning it is so flawed that it renders the values derived from that income approach unreliable. See, e.g., Golf Course Properties, LLC v. Tyrone Township, Michigan Tax Tribunal Docket No. 301974, p. 15 (November 17, 2006). Otherwise, and primarily because golf course properties rarely sell as real estate alone, reliance on the sales-comparison or market approach, like the cost approach, is now usually limited to those instances when it serves as a check on, or in a reconciliation of values derived using, other methodologies. See, e.g., Minnetonka Country Club Association, Inc. v. County of Hennepin, 1990 Minn. Tax LEXIS 203, *13.

Further, some state legislatures and administrative bodies recognize the difficulty in valuing golf courses and have attempted to codify standardized approaches. See, e.g., Neveda Department of Taxation. Golf Course Open-Space Classification and Valuation Manual. 9/11/2006. A.R.S. 42-13152 (Arizona’s uniform assessment measures for golf courses).

In Massachusetts, the preferred method for valuing income-producing property, like a golf course, is the income-capitalization approach. The income-capitalization method “is frequently applied with respect to income-producing property.” Taunton Redev. Assocs. v. Assessors of Taunton, 393 Mass. 293, 295 (1984). Other jurisdictions concur. See e.g. Deschutes County Assessors and Dept. of Revenue v. Broken Top Club, LLC, Oregon Tax Court BV: 15 OTR Advance Sheets 2002 #3; Russell L. Wenkstern Trust/Burl Golf Course v. Country of Hennepin, 1990 Minn. Tax LEXIS 203, *13. The market-rental approach, which Mr. Dugas employed in these appeals, is one of the court-approved income-capitalization methods for valuing the real estate improved with a golf course and country club. See Ardsley Country Club v. Assessor of the Town of Greenburgh, 879 N.Y.S.2d 319, 324 (2009) (citing Mill River Club v. Board of Assessors, 847 N.Y.S.2d 670 (2007)). In Mill River Club, the taxpayer challenged the real property tax assessments of four parcels of real estate which the taxpayer owned and operated as a private golf course and country club. Id. at 672. The New York Appellate Court found that “because most golf courses are run by specialized companies under operating leases, the net income a course’s owner is likely to derive corresponds to the rent a tenant-operator will be willing to pay and that rent, in turn, depends on the revenue the golf course is likely to produce.” Id. at 673. “Once that revenue was estimated, it would be converted into a ‘hypothetical rent,’” based on a “percentage of the revenue derived from each source.” Id. at 674-75. The resulting net-operating income is then capitalized using an appropriate capitalization rate to estimate the subject property’s fair market value. Id. at 673; Ardsley Country Club, 879 N.Y.S.2d at 325.

Under the circumstances present in these appeals, the Board found that Mr. Dugas’ market-rental, income-capitalization analysis was the more appropriate valuation methodology to use to value the subject property. It is an accepted method for valuing real property improved with a golf course (see e.g., Mill River Club, supra, and Ardsley Country Club, supra) and most closely measures the earning capacity of the real property. See, e.g., Marketplace Center II Limited Partnership v. Assessors of Boston, Mass. ATB Findings of Fact and Reports 2000-258, 266; see also Pepsi-Cola, 397 Mass. at 451. The Board further found that with the exception of Mr. Logue’s imputed interest income and Mr. Dugas’ market adjusted initiation deposits, the parties’ revenues attributable to the four profit centers were similar. The Board also found that the capitalization rate used by the assessors’ real estate valuation expert were more appropriate given the earning capacity of the subject property and also the subject property’s excellent quality and construction.

In addition, the Board found that Mr. Logue did not demonstrate that his income-capitalization approach, based on the approach adopted by the Board in The Willows at Westborough v. Board of Assessors of the Town of Westborough, Mass. ATB Findings of Fact and Reports 2008-469, 506 (“The Willows”) aff’d 441 Mass. 1108 (2004), which dealt with real estate associated with a senior congregate housing facility and included imputed interest income for the residents’ entrance fees, was the more appropriate valuation methodology in the present appeals. In The Willows, there was a direct and proven correlation, albeit inverse, between the entrance fee paid and the resident’s monthly service therefore suggesting that the entrance fee was in fact a disguised occupancy payment. In the present appeals, however, the Board found that the record is devoid of any evidence correlating the initiation deposit to a lower annual dues. Moreover, the Board found that Mr. Logue’s estimate of imputed interest was unreliable. In the Board’s view, it is Mr. Dugas’ approach that more closely reflects the earning capacity of the subject property here and is therefore the more appropriate method to determine fair cash value in these appeals. Pepsi-Cola Bottling Co., 397 Mass. at 451 (finding that it is the earning capacity of real estate that is relevant for determining fair cash value under the income approach).

The mere qualification of a person as an expert does not endow his testimony with any magic qualities. Boston Gas Co., 334 Mass. at 579.

The board [is] not required to believe the testimony of any particular witness but it [can] accept such portions of the evidence as appear to have the more convincing weight. The market value of the property [can] not be proved with mathematical certainty and must ultimately rest in the realm of opinion, estimate, and judgment . . . (citations omitted). The board [can] select the various elements of value as shown by the record and from them form . . . its own independent judgment.

Assessors of Quincy, 309 Mass. at 72. See also North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 473 (1981); Jordan Marsh Co. v. Assessors of Malden, 359 Mass. 106, 110 (1971).

The burden of proof is upon the appellant 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). “By holding that the assessment is entitled to a presumption of validity, we are only restating that the taxpayer bears the burden of persuasion of every material fact necessary to prove that its property has been overvalued.” General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 599 (1984). 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.” Id. at 600 (quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983)).

Accordingly, the Board decided these appeals for the appellant and granted abatements of $61,724.18 for fiscal year 2006 and $41,198.85 for fiscal year 2007.[30]

APPELLATE TAX BOARD

By: _________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _____________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

JUDITH C. & ANNE M. v. THE BOARD OF ASSESSORS

PISTORIO OF THE CITY OF BOSTON

Docket Nos. F291785 Promulgated:

F299097 March 10, 2010

These are appeals under the formal procedure, pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, from the refusal of the Board of Assessors of the City of Boston (“assessors” or “appellee”) to abate taxes on certain real estate in Boston owned by and assessed to Judith C. and Anne M. Pistorio (together, “appellants”) under G.L. c. 59, §§ 11 and 38 for fiscal years 2007 and 2009 (“fiscal years at issue”).

Commissioner Egan heard these appeals. Chairman Hammond and Commissioners Scharaffa, Rose, and Mulhern joined her in a decision for the appellee in Docket No. F291785 and in a decision for the appellants in Docket No. F299097.

These findings of fact and report are made at the request of the appellants pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

Judith C. Pistorio and Anne M. Pistorio, pro se, for the appellants.

Nicholas Ariniello, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of testimony and exhibits introduced at the hearing of these appeals, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2006, and January 1, 2008, the relevant dates of assessment for the fiscal years at issue, the appellants were the assessed owners of a 1,002 square-foot parcel of land improved with a four-story, brick apartment building, located at 72 North Margin Street in Boston (“subject property”).

For the fiscal years at issue, the assessors valued the subject property and assessed taxes thereon as follows.

Docket

No.

Fiscal

Year

Assessed Value

Tax

Assessed

F291785

2007

$590,500

$6,489.60

F299097

2009

$597,500

$6,351.43

Boston’s Collector of Taxes mailed the fiscal year 2007 actual tax bills on December 29, 2006. The appellants paid the assessed taxes without incurring interest and timely filed an Application for Abatement on February 1, 2007. The assessors denied that abatement application on March 22, 2007 and gave notice of their denial to the appellants on March 27, 2007. The appellants timely filed their petition with the Board on June 21, 2007.

Boston’s Collector of Taxes mailed the fiscal year 2009 actual tax bills on December 31, 2008. The appellants paid the assessed taxes without incurring interest and timely filed an Application for Abatement on February 2, 2009.[31] The assessors denied the abatement application on February 19, 2009 and gave notice of their denial to the appellants on February 24, 2009. The appellants timely filed their petition with the Board on March 11, 2009. Based on the foregoing, the Board found and ruled that it had jurisdiction to hear and decide these appeals.

The subject property was originally constructed in 1900 and was renovated in 1974. It contains four one-bedroom apartments, which range in size from 450 square feet to 550 square feet. One unit is occupied by Anne M. Pistorio and the other three are rental units. In 2005, the appellants collected rent in the total amount of $35,700. In 2007, the appellants collected rent in the total amount of $36,362.50. The subject property also features a 440 square-foot courtyard to the rear of the property.

Both appellants testified at the hearing of these appeals. They advanced several arguments as to why the subject property was overvalued for the fiscal years at issue. First, the appellants contended that the land component of the subject property was excessive because the lot was not a buildable lot, and also because the subject property’s land valuation was not in line with the valuations of other, nearby properties. The appellants specifically cited the land value of 70 North Margin Street, which they claimed was approximately the same size as the subject property. The appellants testified that the land value of 70 North Margin Street was assessed at $192,500 for fiscal year 2007, while the subject property’s land assessment was $223,100 for fiscal year 2007. However, no property record cards or other relevant assessing documents for 70 North Margin Street were entered into the record.

In addition, the appellants contended that the property directly across the street from the subject property – 51 North Margin Street – was an “eyesore” that detracted from the value of the subject property by virtue of its proximity. Several photographs of 51 North Margin Street were entered into the record. The photographs show that it is a brick building, painted black, with partially boarded-up windows and a dilapidated fire escape.

Further, in May of 2007, a new business – The Dogfather – opened its doors at 51 North Margin Street. The Dogfather provides dog daycare, grooming, walking and other dog-related products and services. According to the appellants, the Dogfather generates a considerable amount of noise and foot traffic – both human and canine – in the area. In their opinion, it has had an adverse impact on the quality of life in the neighborhood, because of the noise and also because dog droppings are frequently left behind. In fact, the appellants testified that because of the additional noise and traffic, they had to decrease their asking rent for one newly renovated unit from $1,700 per month to $1,375 in 2007, and they could not raise the rents for the other two units. The appellants also stated that in 2008, two of the rental units were vacated because of the additional noise and traffic generated by The Dogfather.

The assessors rested on the assessments for both of the fiscal years at issue.

On the basis of all of the evidence, the Board found that, for fiscal year 2007, the appellants failed to demonstrate that the fair cash value of the subject property was less than its assessed value. The appellants’ primary contention with respect to the fiscal year 2007 assessment was that the land component of the subject assessment was too high in relation to other, nearby properties. However, the appellants did not introduce property record cards or other relevant assessing documents to show the actual size or assessed values of any nearby properties. The Board therefore found that the evidence did not support the appellants’ assertion that the land component of the subject assessment was excessive, nor was there any evidence to indicate that the overall assessment exceeded the fair cash value of the subject property. Accordingly, the Board issued a decision for the appellee in Docket No. F291785.

However, the appellants introduced substantial, credible evidence documenting the deleterious effect that the arrival of The Dogfather at 51 North Margin Street had upon the value of the subject property. Photographs entered into the record showed the extremely narrow width of North Margin Street and the close proximity of the buildings on it, as well as the unattractive facade of 51 North Margin Street, which directly faces the subject property. Given the narrowness of North Margin Street and the close proximity of all of the buildings on it, the Board found credible the appellants’ testimony that the increase in traffic, noise, and dog droppings had a negative impact on the quality of life in the neighborhood, and in turn, a negative impact on the rental value of the subject property’s apartment units.

The Board found that the assessors failed to take into consideration the state of the building across the street from the subject property and the increase in noise and traffic on North Margin Street in setting the fiscal year 2009 assessment. The Board therefore accounted for the negative influences on the subject property’s value by adjusting the assessed value downward by approximately ten percent, thereby finding that the fair cash value of the subject property for fiscal year 2009 was $537,500. Accordingly, the Board issued a decision for the appellants in Docket No. F299097, and granted an abatement of $637.80.

OPINION

Assessors are required to assess real estate at its fair cash value as of the first day of January preceding the fiscal year at issue. G.L. c. 59, § 38. Fair cash value is defined as the price upon which a willing buyer and a willing seller will agree if both are fully informed and under no compulsion. Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).

For fiscal year 2007, the appellants contended that the land component of the subject assessment was excessive, especially in comparison to the land assessments for nearby, similar properties. However, the appellants failed to introduce reliable evidence documenting the actual size and/or land assessments of any neighboring properties. The appellants’ “reliance on the assessed values of nearby properties as indicators of the value of the subject property was entitled to less weight because [they] failed to offer substantiating information about the proposed comparable assessments, such as the property record cards.” See Hinds v. Assessors of Manchester-by-the-Sea, Mass. ATB Findings of Fact and Reports 2006-771, 779-80. Further, “reliance on unadjusted assessments of assertedly comparable properties [is] insufficient to justify a value lower than that” assessed. Antonino v. Assessors of Shutesbury, Mass. ATB Findings of Fact and Reports 2008-54, 71.

Moreover, even had the appellants introduced appropriate evidence to show that the land value of the subject assessment was excessive, such evidence alone would not have carried the day. “[A] taxpayer does not conclusively establish a right to an abatement merely by showing that his land is overvalued. ‘The tax on a parcel of land and the building thereon is one tax . . . although for statistical purposes they may be valued separately.’” Hinds, Mass. ATB Findings of Fact and Reports at 2006-778, (quoting Assessors of Brookline v. Prudential Insurance Co., 310 Mass. 300, 317 (1941)). The Board therefore found and ruled that the appellants’ evidence “challenging the value of the land component of the subject assessment” failed to demonstrate “that the overall assessment of the subject property exceeded its fair cash value as of the relevant assessment date.” Hinds, Mass. ATB Findings of Fact and Reports at 2006-779. Accordingly, the Board issued a decision for the appellee in Docket No. F291785.

However, for fiscal year 2009, the Board found and ruled that the appellants introduced ample, credible evidence that the subject property’s fair cash value was less than its assessed value. Specifically, the Board found persuasive the appellants’ testimony and other evidence regarding the property and business located directly across the street from the subject property at 51 North Margin Street. The evidence showed that the unsightly facade of the building at 51 North Margin Street directly faced the subject property. The evidence also established that the 2007 arrival of The Dogfather, a business which provided dog daycare, walking, grooming and other services, resulted in increased noise and foot traffic in the subject property’s immediate neighborhood. The Board further found that given the narrow width of North Margin Street and the close proximity of all of the buildings on it, this increase in noise and foot traffic had a negative impact upon the value of the subject property. The Board found credible the appellants’ testimony that the increase in activity at 51 North Margin Street led to increased vacancies and decreased rental values at the subject property. As it has in similar appeals, the Board

concluded it was appropriate to take into `consideration the detrimental impact from the activities taking place on the adjacent property. Appellant[s’] property was affected by the . . . activities which took place on the abutting land. The Board found that, as a result of those activities, the price at which a willing buyer and seller would agree upon for the sale of the property would be less than the price for that same property in the absence of the described on-going activities.

Nita R. Boyer v. Board of Assessors of the Town of Brookline, Mass. ATB Findings of Fact and Reports 1999-1, 9. Based on the foregoing, the Board determined that a downward adjustment in value of $60,000 was appropriate.

The Board need not specify the exact manner in which it arrived at its valuation. Jordan Marsh v. Assessors of Malden, 359 Mass. 196, 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.” Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 72 (1941). “The credibility of witnesses, the weight of evidence, the inferences to be drawn from the evidence are matters for the Board.” Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977).

The Board applied these principles in reaching its determination that the assessors overvalued the subject property for fiscal year 2009. Accordingly, The Board issued a decision for the appellants in Docket No. F299097 and granted an abatement of $637.80. The Board issued a decision for the appellee in Docket No. F291785.

THE APPELLATE TAX BOARD

By: ____________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _____________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

PHEBE D. HAM v. BOARD OF ASSESSORS OF

THE TOWN OF CONCORD

Docket No. F298270 Promulgated:

March 10, 2010

This is an appeal filed under the informal procedure[32] pursuant to G.L. c. 58A, § 7A and G.L. c. 59, §§ 64 and 65, from the refusal of the Board of Assessors of the Town of Concord (“appellee” or “assessors”), to abate taxes on certain real estate in the Town of Concord, owned by and assessed to Phebe D. Ham (“appellant” or “Ms. Ham”) under G.L. c. 59, §§ 11 and 38 for fiscal year 2008 (“fiscal year at issue”).

Commissioner Egan heard this appeal. Chairman Hammond and Commissioners Scharaffa, Rose and Mulhern joined her in the decision for the appellant.

These findings of fact and report are made pursuant to requests by the appellant and appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.

Phebe D. Ham, pro se, for the appellant.

Kevin D. Batt, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

A. Introduction and Jurisdiction

On the basis of the exhibits and testimony offered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact. On January 1, 2007, the appellant was the owner[33] of a 43,587 square-foot parcel of land, improved with a wood-framed, single-family home, located at 80 Musterfield Road in Concord, Massachusetts (“subject property”). For the fiscal year at issue, the assessors valued the subject property at $992,600 and assessed a tax thereon, at the rate of $10.72 per $1,000, in the total amount of $10,784.20.[34] On February 28, 2008, the Collector of Taxes for Concord mailed out the actual fiscal year 2008 tax bills. The appellant timely paid the tax due without incurring interest. On March 31, 2008,[35] the appellant timely filed an abatement application with the assessors, which they denied on April 10, 2008. On June 30, 2008, the appellant timely filed her appeal with the Board. Based on the foregoing, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

The dwelling on the subject property is a one and one-half story structure built in what is known as the “Acorn style” in 1972. It has a concrete foundation, vertical wood siding, and an asphalt-shingled roof. The house has four rooms, including one bedroom, as well as one bathroom. Interior features include vaulted ceilings, a ceramic-tiled fireplace, and hardwood and linoleum flooring. The house has baseboard, electric heating, an electric hot water tank, and a 200-amp circuit breaker electrical system. There is also an unfinished basement. The total finished living area of the home is approximately 837 square feet.

B. Prior Proceeding Concerning the Fiscal Year 2007 Assessment of the Subject Property

For fiscal year 2007, the fiscal year immediately preceding the fiscal year at issue, the assessors valued the subject property at $725,400. Ms. Ham filed an application for abatement with the assessors contesting the assessed value of the subject property. When that abatement application was denied, she filed an appeal under the informal procedure with the Board. On the basis of the evidence of record in the fiscal year 2007 appeal, the Board found that the fair cash value of the subject property was $597,900, and therefore, issued a decision for the appellant in that appeal.[36]

C. The Assessors’ Case-in-Chief

Because the assessors increased the subject property’s assessment over the value determined by the Board for the preceding fiscal year, the burden of proof shifted to the assessors to show that an increase in value was warranted. See G.L. c. 58A, § 12A. To meet that burden, the assessors called three witnesses to testify on their behalf. Those witnesses were Evelyn Masson, the Assessor for Concord; John Minty, the Building Commissioner for Concord; and John Neas, a certified real estate appraiser. The Board found each of them to be credible. Based on his education and experience, the Board qualified Mr. Neas as an expert residential real estate appraiser. Mr. Neas’ Summary Appraisal Report was also entered into the record.

Ms. Masson testified that the assessors conducted a town-wide revaluation process in setting the fiscal year 2008 assessments. Evidence entered into the record showed that the median value of a single-family residence in Concord increased from $718,550 in fiscal year 2007 to $735,650 in fiscal year 2008. In addition, evidence was entered into the record establishing that the assessed value of the subject property had, in the past, been reduced to account for the parcel’s slightly odd configuration. Ms. Masson testified that the mass appraisal system used by the assessors no longer considered that criteria in setting the value of the subject property, and therefore, the same depreciation factor was not applied to the land value of the subject property for fiscal year 2008.

Mr. Minty, who inspected the subject property and met with Ms. Ham prior to testifying at the hearing of this appeal, testified that the dwelling at 80 Musterfield Road was much smaller than the majority of the homes in the Nashawtuc Hill neighborhood of Concord, where the subject property is located. Mr. Minty testified that, under applicable zoning requirements, the parcel could accommodate a house with over 4,000 square feet of living area, akin to the home on the adjacent lot at 74 Musterfield Road. Mr. Minty substantiated this assertion by introducing a document with a plot plan of the subject property, onto which he superimposed a cut-out of the footprint of the home at 74 Musterfield Road. Mr. Minty also testified that he conducted a similar exercise using footprints of other, larger, homes in the subject’s neighborhood to show that local zoning would allow for the parcel to be developed to accommodate those homes. Accordingly, Mr. Minty concluded that the subject property’s dimensional constraints would not preclude the construction of a home much larger than the home on the subject parcel.

Mr. Neas, who inspected the subject property as part of his appraisal, testified that Nashawtuc Hill is surrounded by three rivers, which limit vehicular access to the neighborhood. Mr. Neas noted that, because of its setting, Nashawtuc Hill enjoys a tranquility and natural beauty, yet is conveniently located close to the town center, commercial shops, and transportation. Mr. Neas opined that Nashawtuc Hill is one of the most desirable neighborhoods in Concord.

Mr. Neas found the highest and best use of the subject property to be its use as a newly constructed, single-family residence, comparable to other, larger residences in the Nawshatuc Hill neighborhood. In valuing the subject property, Mr. Neas considered the three usual approaches to value, but concluded that the sales-comparison analysis was the most appropriate method with which to value the subject property.

Mr. Neas initially selected sales of fourteen different properties for comparison, but ultimately focused on seven sales, all of which took place in Concord between September 15, 2005 and September 14, 2007. The following tables contain the relevant data for those seven sales as well as Mr. Neas’ adjustments thereto:

MR. NEAS’ SALES-COMPARISON PROPERTIES ONE THROUGH FOUR

	Subject Property	118 FairhavenRoad	Adj.($)	24SouthfieldRoad	Adj.($)	236GarfieldRoad	Adj.($)	162Indepen-denceRoad	Adj. ($)
Sale Date	N/A	9/2005		11/2005		8/2007		4/2007
Sale Price ($)	N/A	511,750		530,000		680,000		778,000
Apprec. ($)	N/A		-31,984		-29,150		23,800		11,670
Location	Very Good	Good	255,875	Good	212,000	Good	136,000	Good	155,600
Lot Size(sq. ft.)	43,587	21,020	25,000	14,600	35,000	1.43 acres	-25,000	22,047	25,000
View	Good	Good		Good		Good		Good
Design	Contemp.	Ranch		Cape/Ranch		Contemp.		Ranch
Quality	Good	Good		Good		Good		Good
Year Built	1972	1954		1958		1976		1950
Condition	Average	Good	-25,000	Average		Average		Average
Rooms/BedsBaths	4/1/1	5/2/1		4/2/1		5/3/1.5	-5,000	5/2/2	-10,000
Living Area	1,008[37]	1,110		884		861		1,213	-20,500
Basement	Unfinished	Playroom	-5,000	None	25,000	Finished	-25,000	Unfinished
Heating/Cooling	Electric/None	Hot Water/None		Hot Water/None		Hot Water/None		Hot Air/None
Garage	None	2-car detach.	-20,000
Porch/Patio/Deck	Deck Area	Patio		Screen Porch	-2,500	ScreenPorch	-2,500	Screen Porch	-2,500
Fireplace	Fireplace	Fireplace		Fireplace		Fireplace		Fireplace
Total Adjustment			198,891		240,350		97,300		149,270
Indicated Value ($)		710,641		770,350		777,300		927,270

	Subject Property	63 Revolutionary Road	Adj. ($)	201 IndependenceRoad	Adj. ($)	291MusterfieldRoad	Adj. ($)
Sale Date	N/A	4/2007		5/2006		9/2007
Sale Price ($)	N/A	831,000		875,000		1,575,000
Apprec.($)	N/A		12,465		-26,250		-55,125
Location	Very Good	Good	166,200	Good	175,000	Very Good
Lot Size(sq. ft.)	43,587	20,000	25,000	2.39 acres	-75,000	2.6 acres	-75,000
View	Good	Good		Good		Good
Design	Contemp.	Cape/Ranch		Ranch		Contemp.
Quality	Good	Good		Good		Good
Year Built	1972	1955		1943		1976
Condition	Average	Good	-25,000	Average		Good	-100,000
Rooms/Beds/Baths	4/1/1	6/3/2	-10,000	6/2/2	-10,000	9/3/2.5.5	-20,000
Living Area	1,008	1,390	-38,200	1,653	-64,500	3,493	-248,500
Basement	Unfinished	Playroom	-5,000	None	25,000	2 Finished Rooms	20,000
Heating/Cooling	Electric/None	Hot Water/None		Hot Water/None		Hot Air/Central Air	20,000
Garage	None	2-Car Attached	20,000	1-Car Detached	10,000	2-Car Attached	20,000
Porch/Patio/Deck	Deck	Screen Porch	-2,500	Screen Porch	-2,500	Deck
Fireplace	Fireplace	Two Fireplaces	-$5,000	Fireplace		Two Fireplaces	-$5,000
Total Adjustments			97,965		11,750		-453,375
Indicated Value		928,965		886,750		1,121,625

MR NEAS’SALES-COMPARISON PROPERTIES ONE THROUGH FOUR

Based on his sales-comparison analysis, Mr. Neas’ opinion of the fair cash value for the subject property for fiscal year 2008 was $950,000, or $42,600 less than its assessed value.

D. The Appellant’s Case-in-Chief

Ms. Ham testified on her own behalf at the hearing of this appeal and also offered the testimony of James Doherty, a real estate appraiser, who assisted Ms. Ham in presenting her case.

In addition to the testimony of these two witnesses, Ms. Ham offered several exhibits into evidence at the hearing of this appeal. Those documents included: a Town of Concord Proposed Budget Summary for Fiscal Year 2010; a plot plan of the subject property with building footprint; two documents entitled “FY08 Qualified Sales – Single Family Residences, Concord, MA”; various property record cards for the subject property and other properties in Concord; and, finally, a sales-comparison analysis featuring three properties in addition to the subject property, along with the property record cards and/or MLS sales information for the three sales-comparison properties.

The sales-comparison properties offered by Ms. Ham were all single-family residences in Concord which sold between February and August of 2006, with sale prices ranging from $625,000 to $765,000. However, no adjustments were made to the sale prices of these properties to account for differences with the subject property. For example, although the appellant’s sales-comparison chart acknowledged that the subject property had a superior location to each of the sales-comparison properties, no adjustment was made to account for the difference in location.

Ms. Ham opined that the highest and best use of the subject property was its continued use as a single-family residence. Ms. Ham’s opinion of value for the subject property for fiscal year 2008 was $625,000.

E. The Board’s Ultimate Findings of Fact

On the basis of all of the evidence, the Board found and ruled that the highest and best use of the subject property was its continued use as a single-family residence. Because the fiscal year 2008 assessed value of the subject property exceeded its fair cash value as determined by the Board for fiscal year 2007, the assessors had the burden to show that the increase was warranted in the present appeal. The Board found that the assessors presented substantial, credible evidence to show that the fair cash value of the subject property was in excess of the value determined by the Board for the previous fiscal year.

The Board found Mr. Neas’ testimony and sales-comparison analysis to be highly probative evidence of the subject property’s fair cash value. Mr. Neas selected a number of comparable properties and made appropriate adjustments to account for differences between those properties and the subject property.

Specifically, the Board found Mr. Neas’ analysis of three properties in Concord – 236 Garfield Road, 162 Independence Road, and 63 Revolutionary Road – to be highly persuasive. Those three properties sold for between $680,000 and $831,000 in 2007, and the dwellings on each property were raised for the construction of newer, larger homes. Mr. Neas considered the location of those three properties “good,” while he considered the subject property’s location “very good.” Moreover, the lot size of 162 Independence Road, which sold for $778,000, was nearly half the size of the subject property’s lot. The Board found that the sale prices of these comparable properties provided strong support for the land valuation of the subject property, which was $895,400, and also provided persuasive evidence of the overall fair cash value of the subject property.

Further, the Board found that evidence in the record concerning other properties on Musterfield Road provided strong support for Mr. Neas’ opinion of value. 291 Musterfield Road was purchased for $1,575,000 in 2007. Although the dwelling was not demolished following the purchase, significant renovations and an addition were added to the dwelling thereafter. In addition, although he did not use it in his sales-comparison analysis, Mr. Neas included information in his appraisal report about 191 Musterfield Road. That property sold for $1,775,000 in January of 2007, almost simultaneously with the relevant date of assessment for the fiscal year at issue in this appeal. 191 Musterfield Road was demolished for the construction of a new home with over 10,000 square feet of gross living area.

Finally, the property record card for 74 Musterfield Road, which abuts the subject property, was entered into the record. For fiscal year 2008, the assessed land value of 74 Musterfield Road was $1,126,200 for a lot size of 1.79 acres. This valuation was generally consistent with the subject’s land valuation, which was $895,400 for approximately 43,587 square feet of land. The Board found that this evidence, regarding the property directly adjacent to the subject property, supported both the assessed land value of the subject property, which was $895,400, as well as Mr. Neas’ overall opinion of value for the subject property.

Accordingly, the Board agreed with Mr. Neas’ well-supported opinion of value, and found that the fair cash value of the subject property for fiscal year 2008 was $950,000.

Although the assessors had the burden of proof in the present appeal, the burden of persuasion remained with the appellant. The appellant’s opinion of the subject property’s fair cash value for fiscal year 2008 was $625,000. However, the evidence offered by the appellant failed to successfully rebut the evidence presented by the assessors or otherwise establish that the fair cash value of the subject property was $625,000.

The sales-comparison analysis offered by the appellant made no adjustments to account for differences between the sales-comparison properties and the subject property. In particular, although the appellant acknowledged that the location of the subject property was superior to that of her comparable properties, she made no adjustments to account for this difference. Mr. Neas stated in his report, and the Board found, that the value of real property in Concord was greatly impacted by its location. Moreover, there was substantial, credible evidence that the subject property’s Nawshatuc Hill neighborhood was among the most prestigious locations in Concord. The Board therefore found that the appellant’s failure to account for the subject property’s superior location significantly undermined the reliability of her sales-comparison analysis.

On the basis of all of the evidence, the Board found and ruled that the fair cash value of the subject property for fiscal year 2008 was $950,000. Because the assessed value of the subject property for fiscal year 2008 was $992,600, the Board decided this appeal for the appellant, and ordered an abatement of $463.52.

OPINION

The fair cash value of property may be determined by recent sales of comparable properties in the market. McCabe v. Chelsea, 265 Mass. 494, 496 (1929). Actual sales generally “furnish strong evidence of market value, provided they are arm’s-length transactions and thus fairly represent what a buyer has been willing to pay for the property to a willing seller.” Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 682 (1982); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469 (1981); First National Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971).

In the present appeal, the assessors offered the testimony and report of their expert appraiser, John Neas, which featured an analysis of seven comparable properties that sold in Concord between September 15, 2005 and September 14, 2007. The Board found that Mr. Neas made appropriate adjustments to account for differences between those seven properties and the subject property. The adjusted sales prices of those properties ranged from $710,641 to $1,121,625, and his opinion of value of the subject property, $950,000, was in the middle of that range.

The Board found particularly persuasive evidence regarding the sales of 236 Garfield Road, 162 Independence Road, and 63 Revolutionary Road in Concord. Those properties were sold in 2007 for prices ranging from $680,000 to $831,000, and the dwellings on each property were demolished following the sale for the construction of a newer, larger home. Although the sales prices of these three properties were lower than the assessed value of the subject property for fiscal year 2008, the Board noted that the three properties were located in less desirable neighborhoods than the subject property, and, at least one of those properties had a lot size which was approximately half that of the subject property.

In addition, sales and assessment data regarding several properties located on the same street as the subject property provided strong support for Mr. Neas’ opinion of value. 291 Musterfield Road sold for $1,575,000 in September of 2007. Although it was not demolished following its sale, it underwent a substantial renovation, including a large addition to the dwelling. 191 Musterfield Road sold for $1,775,000 in January of 2007, and was demolished for the construction of a home with over 10,000 square feet of living area. These properties were located on the same street as the subject property and were sold close to the relevant date of assessment. The Board found this data to be probative evidence of the fair cash value of a parcel similar in location to the subject property.

Finally, the property record card for 74 Musterfield Road, which abuts the subject property, was entered into evidence. For fiscal year 2008, the land value of 74 Musterfield Road was $1,126,200 for a lot size of 1.79 acres. The Board found that this valuation was consistent with the subject’s land valuation, which was $895,400 for approximately 43,587 square feet of land. Further, the Board found that this evidence also provided support for Mr. Neas’ valuation of the subject property. Based on the foregoing, the Board adopted Mr. Neas’ well-supported opinion of value and found and ruled that the fair cash value of the subject property for fiscal year 2008 was $950,000.

Notwithstanding the shift in the burden of production in the present appeal, the burden of persuasion on the issue of fair cash value remained on the appellant. See Johnson v. Assessors of Lunenburg, Mass. ATB Findings of Fact and Reports 1992-1, 8; Cressey Dockham, Mass. ATB Findings of Fact and Reports 1989 at 86-87. “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)). The Board found and ruled in the present appeal that the appellant failed to present sufficient evidence of value to rebut the evidence presented by the assessors.

The evidence introduced by the appellant did not support the conclusion that the subject’s land valuation was excessive, nor did it convince the Board that the subject property’s overall fair cash value was less than $950,000. The vast majority of the subject assessment lay in its land value, which was $895,400. The Board found and ruled that there was substantial evidence in the record to support that valuation, particularly the evidence regarding 236 Garfield Road, 162 Independence Road, and 63 Revolutionary Road, as well as the other properties located on the same street as the subject.

In her testimony and documentary submissions in this appeal, Ms. Ham emphasized the modesty of her four-room home. Assessed value, however, is based upon a property’s fair market value, or in other words, the price the property would command if it were put on the market. See generally Boston Gas Co., 334 Mass. at 566. The evidence of recent sales of comparable properties in Concord, including sales of properties on Musterfield Road, established that the fair market value of the subject property was $950,000.

THE APPELLATE TAX BOARD

By: __________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ________________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

WILLOWDALE LLC v. BOARD OF ASSESSORS OF

THE TOWN OF TOPSFIELD

Docket Nos. F288893 (07) Promulgated:

F297036 (08) March 15, 2010

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 Town of Topsfield (“appellee”) to abate taxes assessed on certain property, located in Topsfield, owned by the Commonwealth of Massachusetts and assessed to Willowdale LLC (“Willowdale” or “appellant”) under G.L. c. 59, §§ 2B, for fiscal years 2007 and 2008.

Commissioner Rose heard these appeals and was joined by Chairman Hammond and Commissioners Scharaffa and Egan in decisions for the appellee.[38]

These findings of fact and report are promulgated at the request of the appellant pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

Kevin J. Joyce, Esq. for the appellant.

Richard P. Bowen, Esq. and Jeffrey T. Blake, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

The issue in the present appeals is whether the Topsfield Board of Assessors (“assessors”) properly assessed a real estate tax on certain property owned by the Commonwealth but leased to and operated by a private, for-profit entity. On the basis of an Agreed Statement of Facts and Briefs submitted by the parties, the Appellate Tax Board (“Board”) made the following findings of fact.

In 1994 the Massachusetts State Legislature authorized the Department of Environmental Management (“DEM”) to lease all of the twenty-three historic real properties enumerated in § 44 of c. 85 of the Acts of 1994 (as amended by § 50, c. 15 of the Acts of 1996) (collectively the “Enabling Act”), to any person or organization to ensure that the properties are adequately preserved and maintained for the purpose of providing public access to the historic qualities of the properties for present and future generations. Palmer Mansion, located at 28 Asbury Street in Bradley Palmer State Park, Topsfield (“Palmer Mansion” or “subject property”) is a historic property, which is enumerated in the Enabling Act. Subsequently, the DEM established the historic curator program to further the objectives of the Enabling Act.

On September 24, 1999, pursuant to the authority of the historic curator program, the Department of Conservation and Recreation (“DCR”), the legal successor in interest to the DEM, and Willowdale entered into a lease agreement for Palmer Mansion. The lease agreement provides for a term of fifty years with a right to one extension for an additional term of ten years. The lease agreement limits Willowdale’s legal usage of Palmer Mansion to only “reuse and rehabilitation of the structures and grounds.” The lease agreement further provides that Willowdale’s use of Palmer Mansion shall be “limited to operation of an inn and/or bed and breakfast, operation of a conference center, rooms for functions and/or classes, gift shop and restaurant.” Willowdale did not dispute that it used Palmer Mansion “in connection with a business conducted for profit” for purpose of the relevant taxing statute at issue, G.L. c. 59, § 2B.

Willowdale is required to bear the sole cost for restoring Palmer Mansion in compliance with the historic standards and building plans that have been approved by the Massachusetts Historical Commission and DCR. However, Willowdale is entitled to a credit toward the rental payments due under the lease equal to the value of improvements, maintenance and management services it provides. Further, the lease agreement provides that “in the event real estate taxes or property taxes shall be levied on the Premises or any part therefore for any reason, Lessee agrees to pay such taxes when and as due.”

From September 24, 1999 to August 28, 2007, Willowdale was in the process of rehabilitating Palmer Mansion. Accordingly, during the fiscal year 2007 period of July 1, 2006 through June 30, 2007, Willowdale earned no income from the use of the subject property. Notwithstanding the ongoing renovations, on July 7, 2007, July 12, 2007 and August 25, 2007, Willowdale held wedding events at Palmer Mansion for which it received fees.

On August 28, 2007, the Commonwealth of Massachusetts issued a Certificate of Use and Occupancy for Palmer Mansion. Since that time, the appellant has consistently operated Palmer Mansion for use as a bed-and-breakfast style inn with related uses of conferences, special events, functions and educational workshops.

During fiscal year 2008, Palmer Mansion was the site of numerous weddings and social events. Fees for use of Palmer Mansion ranged from $3,000 to $6,500 for a typical five-hour wedding, and $2,000 to $3,000 for a three-hour block of time for other social events. Business and corporate events were priced individually and there was no charge for community events and public tours. Also, individuals could access other areas of Palmer State Park independently without going through Palmer Mansion. During the fiscal year 2008 period of July 1, 2007 through June 30, 2008, the appellant received $180,000 in gross revenue from fifteen wedding events held at the Palmer Mansion.

For fiscal years 2007 and 2008, the assessors valued the subject property at $1,406,700 and $1,323,500, respectively. The assessors assessed taxes at the rate of $11.57 per $1,000 for fiscal year 2007 and $12.02 per $1,000 for fiscal year 2008, resulting in tax assessments of $16,275.52 for fiscal year 2007 and $15,908.47 for fiscal year 2008. In accordance with G.L. c. 59, § 57C, the appellant timely paid each fiscal year’s taxes without incurring interest.

On January 30, 2007 and January 30, 2008, in accordance with G.L. c. 59, § 59, the appellant timely filed an Application for Abatement with the assessors for fiscal years 2007 and 2008, respectively. The appellant’s fiscal year 2007 abatement application was denied on March 2, 2007, and the appellant’s fiscal year 2008 abatement application was deemed denied on April 30, 2008. In accordance with G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, the appellant seasonably appealed these denials by filing Petitions Under Formal Procedure with the Board on May 29, 2007 for fiscal year 2007 and on June 23, 2008 for fiscal year 2008. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear these appeals.

For the reasons more fully explained in the following Opinion, the Board found that Willowdale was subject to real estate tax under G.L. c. 59, § 2B because the subject property was leased or occupied for other than public purposes and was used in connection with a business conducted for profit and was not used in a manner reasonably necessary to the public purpose of a park. Accordingly, the Board issued decisions for the appellee in these appeals.

OPINION

G.L. c. 59, § 2B provides for the taxation of real estate owned or held in trust for the benefit of the Commonwealth or a city or town, if such property is “used in connection with a business conducted for profit or leased or occupied for other than public purposes.” It is undisputed that Palmer Mansion is used in connection with a business conducted for a profit within the meaning of § 2B.

However, § 2B goes on to provide that, “[t]his section shall not apply to a use, lease or occupancy which is reasonably necessary to the public purpose of a public airport, port facility, Massachusetts Turnpike, transit authority or park, which is available to the use of the general public . . . .” (Emphasis added). The issue in the present appeals is whether the appellant’s use, lease and occupancy of Palmer Mansion is reasonably necessary to the public purpose of a park.

There is “no precise and widely accepted definition of ‘park’.” Cohen v. City of Lynn, 33 Mass. App. Ct. 271, 278 (1992), In general,

the term ‘park’ usually signifies an open or inclosed tract of land set apart for the recreation and enjoyment of the public; or, ‘in the general acceptance of the term, a public park is said to be a tract of land, great or small, dedicated and maintained for the purposes of pleasure, exercise, amusement, or ornament; a place to which the public at large may resort to for recreation, air, and light.’

Salem v. Attorney General, 344 Mass. 626, 630 (1962) (quoting King v. Sheppard, 157 S.W.2d 682, 685 (Tex. Civ. App. 1941) (emphasis added).

In support of its argument that the subject property was exempt from taxation, the appellant cited MCC Management Group, Inc. v. Assessors of New Bedford, Mass. ATB Findings of Fact and Reports 2000-886. In MCC Management, the Board found and ruled that a skating rink, which was located on state-owned land and leased to a for-profit corporation, was a “park” within the meaning of G.L. c. 59, § 2B. MCC Management, Mass. ATB Findings of Fact and Reports at 2000-902.

In MCC Management, the Board found that the Legislature authorized the DEM to appropriate funding for the construction and development of skating rinks which were to be held and administered in accordance with G.L. c. 132A, § 2A as a state park. MCC Management, Mass. ATB Findings of Fact and Reports at 2000-896, 897. Accordingly, the Board found and ruled that the “Massachusetts Legislature intended to include ice skating rinks under the rubric of public parks.” Id. Furthermore, the Board found and ruled that the term “‘park’ . . . must be defined broadly so as to include a wide variety of recreational activities with respect to land,” which “may include indoor recreational facilities” such as, swimming pools, bathhouses, concession stands, and winter sports facilities, among others. MCC Management, Mass. ATB Findings of Fact and Reports at 2000-900, 901 (citations omitted). Ultimately, a “park” is a “pleasure ground set apart for recreation of the public, to promote its health and enjoyment.” Id. (quoting Rivet v. Burdick, 6 N.Y.S.2d 79, 83 (1938)).

The present appeals, however, are distinguishable from MCC Management. First, the Enabling Act does not provide that the subject property is to be held and administered as a state park pursuant to the provisions of G.L. c. 132A, § 2A. Furthermore, Palmer Mansion is leased and occupied by Willowdale to be operated as a bed-and-breakfast style inn with related uses of conferences, special events, functions and educational workshops. It is not occupied or operated for any recreational uses. Accordingly, although Palmer Mansion is located within the Palmer State Park, the Board found that the Palmer Mansion is not itself a park under the meaning of G.L. c. 59, § 2B.

Further, the Board found that the use of Palmer Mansion is not “reasonably necessary to the public purpose of the park.” Pursuant to the lease entered into by Willowdale and DCR, the subject property may be used for the “operation of an inn and/or bed and breakfast, operation of a conference center, rooms for functions and/or classes, gift shop and restaurant.” For each of these uses Willowdale charges a fee which ranges from $3,300-$6,500 for a five-hour block of time and $2,000-$3,000 for a three-hour block of time. Moreover, the Board found that individuals were able to access and use other areas of Palmer State Park without the involvement of Willowdale and its operations at Palmer Mansion. Accordingly, the appellant’s use, lease and occupancy of the Palmer Mansion is not reasonably necessary to the public purpose of Palmer State Park.

“Property owned by a municipality may serve a public purpose even though it is managed or operated by a private, for-profit entity, and even though the private entity charges admission to the facility.” MCC Management, Mass. ATB Findings of Fact and Reports at 2000-903 (citing Miller v. Commissioner of the Department of Environmental Management, 23 Mass. App. Ct. 968, 969-70 (1987). In Miller, the Commonwealth entered into a “limited exclusive use permit” with a private for-profit entity, Snowmass, to “operate a cross country skiing program in the State forest.” Miller, 23 Mass. App. Ct. at 968-969. The Appeals Court found that the “aim is clearly to enhance the use of the trails in the State forest for a legislatively approved recreational purpose” and that a “private entity experienced in making artificial snow and managing cross country skiing facilities is an appropriate party to operate such a facility.” Miller, 23 Mass. App. Ct. at 969-970.

Similarly, in MCC Management, the Board found that the ice skating rink “served the public for recreational purposes.” MCC Management, Mass. ATB Findings of Fact and Reports at 2000-903. Relying on the court’s decision in Miller, the Board found that MCC’s management of the ice skating rink was “necessary to achieve the public purpose of the state-owned property, because MCC was experienced in the operation and management of an ice skating rink. This experience enabled DEM to maintain the Hetland Arena as a state park.” MCC Management, Mass. ATB Findings of Fact and Reports at 2000-904.

The present appeals, however, are distinguishable from both Miller and MCC Management. In the present appeals, the appellant has been granted a lease to operate a bed-and-breakfast style inn and conference center which are not recreational activities for the “‘amusement, pleasure, and entertainment’” of the general public. See MCC Management, Mass. ATB Findings of Fact and Reports 2000-904 (quoting In re Spectrum Arena, Inc., 330 F.Supp. 125, 127 (E.D. Pa. 1971)). Therefore, the Board found that while the subject property is located within a State Park, appellant’s occupancy and use of the subject property was not reasonably necessary to the public purpose of Palmer State Park.

It is well settled that the burden of proof is on the party seeking an abatement. “‘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)). Further, an even greater burden rests on a party claiming an exemption from taxation. “‘Exemption from taxation is a matter of special favor or grace. It will be recognized only where the property falls clearly and unmistakably within the express words of a legislative command.’” New England Legal Foundation v. City of Boston, 423 Mass. 602, 609 (1996) (quoting Massachusetts Medical Soc’y v. Assessors of Boston, 340 Mass. 327, 331 (1960).

Accordingly, the Board found and ruled that the Willowdale was subject to real estate tax under G.L. c. 59, § 2B because the subject property was leased or occupied for other than public purposes and was used in connection with a business conducted for profit and was not used in a manner reasonably necessary to the public purpose of a park and, therefore, decided these appeals for the appellee.

THE APPELLATE TAX BOARD

By: ___________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ____________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

SIDNEY W. & JUDITH H. SWARTZ v. COMMISSIONER OF REVENUE

Docket No. C287671 Promulgated:

April 1, 2010

On March 31, 2009, the Appellate Tax Board (“Board”) issued a decision for the appellee. Based on the Statement of Agreed Facts submitted by the parties,[39] the Board issued a revised decision, granting an abatement of late payment penalties to the appellants, simultaneously with these Findings of Fact and Report.

Commissioner Scharaffa heard this appeal. Chairman Hammond and Commissioners Egan, Rose and Mulhern joined him in the revised decision for the appellants. 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.

Philip S. Olsen, Esq. and Natasha N. Varyani, Esq. for the appellants.

John J. Connors, Jr. Esq. and Christopher Glionna, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

Based on the Statement of Agreed Facts and testimony and exhibits offered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

The appellants timely filed, pursuant to a validly-executed extension, a 2004 Massachusetts Nonresident/Part-Year Resident Income Tax Return, Form 1-NR/PY. The Commissioner issued to the appellants a Notice of Intention to Assess dated April 2, 2006 and a Notice of Assessment dated May 19, 2006, notifying the appellants of an additional assessment in the amount of $826,917, plus interest in the amount of $63,186.54. On June 13, 2006, the appellants filed an abatement application, which the Commissioner denied by a Notice of Abatement Determination dated September 30, 2006. On November 13, 2006, the appellants seasonably filed their appeal with the Board. On the basis of the foregoing, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

The appellants recognized two capital gains during the tax year at issue on the sale of stock in Timberland Company (“Timberland”), one on October 28, 2004 and the other on November 1, 2004. The issue presented in this appeal is whether the appellants had changed their domicile from Massachusetts to Florida prior to October 28, 2004 or prior to November 1, 2004, the dates upon which they recognized the capital gains at issue in this appeal. It is not disputed that the capital gains which the appellants recognized on October 28, 2004 and November 1, 2004 were subject to Massachusetts income tax if the appellants were Massachusetts residents at the time that they recognized the capital gains.

Personal history of appellants

Sidney Swartz was born in Lynn and was raised in Dorchester, Swampscott and Newton. He attended Boston University for one year and subsequently joined the Army as part of the 101^st field artillery unit of the Massachusetts National Guard. Judith Swartz was born in Boston and raised in Newton and West Newton. She graduated from Boston University and married Sidney Swartz in 1958. The couple lived in Cambridge, Brookline and Newton. Around the time of the birth of their youngest of three children, in 1968, the appellants moved to Andover, where they raised their three children. Sidney testified that they chose Andover because it was a convenient commute for him when he was working in Southern New Hampshire. After their children had grown and left home, the appellants decided to sell their home in Andover and buy a home near the ocean.

On July 28, 1987, the appellants purchased a residence in Marblehead, at 33 Bradlee Road, which they continued to own during the tax year at issue. The residence had five bedrooms, five-and-one-half bathrooms, and was located on 1.5 acres of land with a view of the ocean.

The appellants purchased their first Florida residence in 1983, an apartment in Boca Raton, which they subsequently sold. By the tax year at issue, the appellants owned two residences in Florida, one in Delray Beach, which they had purchased in April, 1997, and the other, a condominium, in Boca West, which they had purchased in May, 2001. Judith testified that they purchased the home in Delray Beach — with six bedrooms, five bathrooms, a three-car garage, and a pool – because it was spacious enough to accommodate the appellants’ children and grandchildren when they visited Florida.[40] Sidney testified that the appellants purchased the condominium in Boca West for the included golf privileges at the Boca West Country Club. Judith testified that her twin sister, Joan, and her husband resided at the Boca West condominium during the winter months.

During the tax year at issue, two of the appellants’ children were living in Massachusetts. Their son, Jeffrey Swartz, with his wife and children, lived in Newton, and their daughter, Julie, lived in Boston. The other child, David, also lived in the Northeast, in New York City. Three of Judith’s siblings, Herman, Lawrence, and Audrey, lived in Massachusetts, while her twin sister, Joan lived in neighboring West Hartford, Connecticut. Sidney’s brother, Herman, lived in Boston and also spent time in Boca Raton.

The appellants testified that, during the tax year at issue, on October 13, 2004, they purchased a condominium in Brookline to be closer to their children who lived in Boston and Newton. The deed for the purchase of this home, executed on October 13, 2004, described the appellants as being “of 33 Bradlee Road, Marblehead, Massachusetts.” The appellants testified that they resided at the Brookline home when they were in Massachusetts. The appellants continued to own their Marblehead home during the tax year at issue. Sidney testified that the appellants had put the Marblehead home on the market sometime in 2005, but as of the date of the hearing, June 24, 2008, they continued to own that property.

Judith testified that the appellants have spent time in Florida since the 1980s, vacationing there for several weeks at a time while Sidney was still working, and then spending longer periods of time there after his retirement in 1998. Both of the appellants’ parents had lived in Florida since the late 1960s, and the appellants went to visit their parents on a regular basis. Judith testified that the appellants had been making friends in Florida since they purchased their home in Boca Raton in 2001. According to their Domicile Questionnaire and Judith’s testimony, the appellants have, for the tax year at issue and for at least the prior five years, routinely stayed in Massachusetts from May to October and in Florida from October to May. Judith testified that their cars and jewelry traveled back and forth with them between Massachusetts and Florida and that they had art work in both Florida and Massachusetts.

The appellants filed Declarations of Domicile on October 13, 2004, declaring their Delray Beach home as their principle residence. The appellants signed these Declarations on October 1, 2004 before a Massachusetts notary. The appellants were issued Florida driver’s licenses on December 27, 2004. Sidney registered to vote in Florida on October 14, 2004, while Judith registered in Florida on December 8, 2004. Judith voted in the November, 2004 presidential election by means of an absentee ballot in Marblehead, Massachusetts. The address on file for their 2004 cellular telephone bills was the Delray Beach residence. However, the appellants’ statement from the Boca West Golf club was addressed to their Marblehead home, as were Sidney’s Visa and the couple’s American Express credit card statements. Their Palm Beach County, Florida real estate tax bill for 2004 was also addressed to their Marblehead home. The appellants employed the services of a law firm to prepare estate planning documents which reflected a Florida domicile. However, these documents were executed in Florida on May 27, 2005, after the tax year at issue.

The appellants participated in religious, social and civic activities in both Massachusetts and Florida during the tax year at issue. The appellants were members of a synagogue in Newton as well as a synagogue in Boca Raton. The appellants testified that they have participated in various events and classes at the Florida synagogue since at least 2003. They also participated in a study class at the Florida synagogue for approximately six years. Sidney, an avid golfer, was a member of the Boca West Country Club and the Banyon Country Club in Florida, with full privileges, as well as the Belmont Country Club in Massachusetts, with full privileges. The appellants had friends in both Massachusetts and Florida, and they had doctors in both Massachusetts and Florida. Judith testified that they had also enrolled in continuing education courses for retirees at Florida Atlantic University since around 2001 or 2002, and they had season tickets to the ballet, Kravitz (a variety of concerts and performances) and the Symphony in Florida. However, Judith also purchased a membership to the Museum of Fine Arts in Massachusetts in September, 2004.

Business and charitable activities

Sidney had spent his career with Timberland, the family business. Timberland is a Delaware corporation with its principle office in Stratham, New Hampshire. Sidney had been Chairman of the Board of Directors, President, Chief Executive Officer and a director of Timberland from June, 1986 to June, 1998. He retired in 1998 and his son, Jeffrey, assumed control of Timberland. Sidney remained a director and the Chairman of the Board of Directors. According to Sidney’s testimony, the Board of Directors meetings were held in New Hampshire, Boston and sometimes out of state. During the tax year at issue, Sidney was also the President and a Director of Timberland Retail, Inc. (“Timberland Retail”), a Delaware corporation with its principle office in Stratham, New Hampshire, in the same building as Timberland.

Additionally during the tax year at issue, Sidney was the Resident Agent of Bilsidial Partners, Limited Partnership (“Bilsidial”), a Massachusetts limited partnership with its principle office listed as the appellants’ residence at 33 Bradlee Road, Marblehead. Sidney testified that Bilsidial was a small investment partnership that he started with a friend in order to enable his friend to invest some money with Goldman Sachs. He claimed that, although he was listed as the managing partner for Bilsidial, he did not actually perform any services on behalf of Bilsidial.

Judith’s primary work outside of her home was her volunteer endeavors with Hadassah, a Jewish women’s volunteer organization, which is involved in education and advocacy projects in the United States as well as charitable and volunteer projects in Israel. Judith has been involved in Hadassah since graduating from Boston University, where she became a study group member.
Throughout her membership, Judith rose through the ranks in Massachusetts and New England as the President of the Greater Lawrence Chapter of Hadassah, a member of the New England Regional Board, the fundraising coordinator of the New England Regional Board, the President of the New England Region, and the President of the Northern New England region. After serving as a Region President, Judith was re-elected to continue to serve on the National Board of Hadassah, and by 2004, she had earned tenure and a permanent spot on the National Board of Hadassah. Some time in 1998, Judith became the National Chair of the Society of Major Donors, and since about 2000, she has hosted an annual reunion event in Florida to benefit Hadassah.

Judith testified that she also volunteered in the local community in Florida, particularly in public kindergarten classrooms. She was unclear in her testimony as to the exact time when she volunteered, but she mentioned that, as she became more involved in Hadassah, she reduced her volunteer activities within the school system. Judith also testified that she was involved, through Hadassah, in supporting and educating legislators in Florida, particularly with respect to legislation relating to stem cell research. She testified that she was not as politically involved in Massachusetts. However, as previously mentioned, Judith did not register to vote in Florida until December, 2004, and she voted in the 2004 Presidential Election by absentee ballot in Marblehead, Massachusetts.

Time spent in Massachusetts

As will be explained further in the following Opinion, a Massachusetts resident is defined as a person who is domiciled in the Commonwealth or who maintains a permanent residence and spends more than 183 days in the Commonwealth. G.L. c. 62, § 1(f). Citing their airline records and credit card statements, the appellants contended that they each spent fewer than 183 days in Massachusetts during the tax year at issue. The Commissioner did not challenge their evidence nor dispute their contention. The appeal, therefore, centers upon whether the appellants changed their domicile from Massachusetts to Florida during the tax year at issue.

The Board’s Findings of Fact

On the basis of the above evidence of record, the Board found that the appellants’ lifestyle did not change significantly prior to either dates of sale of Timberland stock at issue. As they had since Sidney’s 1998 retirement, the appellants spent about half the tax year at issue in Florida and were active in social, religious, cultural and volunteer activities there. The appellants had been gradually building ties to the area even before the tax year at issue, beginning in approximately 1998 with Sydney’s retirement. The Board thus found that the appellants’ social and civic ties to Florida were no stronger prior to the two dates of sale than in previous years when they filed Massachusetts Resident income tax returns.

If anything, the biggest changes occurring during the tax year at issue were (1) the appellants’ recognition of significant capital gains from the sale of Timberland stock, and (2) the appellants’ purchase of an additional Massachusetts property, the condominium in Brookline, which the appellants purchased to be closer to their two children and grandchildren who lived in the Boston area. The Board thus found that the appellants’ family ties were stronger in Massachusetts than in Florida prior to the two dates of sale of Timberland stock.

The Board also found that, while the appellants made some modest ministerial changes in an attempt to reflect a change of domicile to Florida – including changing their voter registrations, drivers’ licenses, and estate plan – these changes were not effective until after the dates of sale of the Timberland stock.[41] As of the dates of the stock sales, the appellants still owned their Marblehead home and they used that as the address of record on important documents and files, including, but not limited to, their credit card statements and even their Florida real estate tax bill. Further, the appellants purchased another Massachusetts residence, a condominium in Brookline, approximately two weeks prior to the first sale of the Timberland stock. The Board thus found, on the basis of all of the evidence of record, that Massachusetts continued to be the center of the appellants’ personal, including their financial, lives prior to the two dates of sale of Timberland stock.

As will be explained more fully in the following Opinion, the Board thus found that the appellants did not abandon their Massachusetts domicile as of the dates of the sales of Timberland stock giving rise to the income at issue. Accordingly, the Board denied the abatement of the income tax at issue, but in accordance with the parties’ Statement of Agreed Facts, the Board issued a
revised decision for the appellants in this appeal, abating the late payment penalties which had accrued since the filing of the abatement application.

OPINION

Under G.L. c. 62 § 2, Massachusetts residents are taxed, with certain limitations not relevant here, on all of their income from whatever sources derived. In contrast, Massachusetts taxes non-residents only on income from Massachusetts sources. See G.L. c. 62, § 5A. Accordingly, if the appellants were domiciled in Massachusetts prior to the dates when they recognized the disputed income, the disputed income is subject to tax in Massachusetts regardless of whether the income was from a Massachusetts source. A “resident” for Massachusetts tax purposes is defined as:

(1) any natural person domiciled in the Commonwealth, or (2) any natural person who is not domiciled in the commonwealth but who maintains a permanent place of abode in the commonwealth and spends in the aggregate more than one hundred eighty-three days of the taxable year in the commonwealth, including days spent partially in and partially out of the commonwealth.

G.L. c. 62, § 1(f). The Commissioner does not contest the appellants’ assertion that they spent fewer than 183 days in Massachusetts during the tax year at issue. The issue presented in this appeal, therefore, is whether the appellants were domiciled in Massachusetts at the time of the sales of stock and, therefore, were taxable as residents on the capital gains recognized from the two sales of Timberland stock.

Domicile has been defined as “the place of actual residence with intention to remain permanently or for an indefinite time and without any certain purpose to return to a former place of abode.” McMahon v. McMahon, 31 Mass. App. Ct. 504, 505 (1991). A person’s domicile is primarily a question of fact, but the elements to be considered in locating a domicile present a question of law. Reiersen v. Commissioner of Revenue, 26 Mass. App. Ct. 124, 124-25 (1988). While domicile may be a difficult concept to define precisely, the hallmark of domicile is that it is “‘the place where a person dwells and which is the center of his domestic, social and civil life.’” Id. at 125 (citing Restatement (Second) of Conflict of Laws § 12 (1969)). When a taxpayer has multiple residences, the Board must weigh the evidence and determine where it is that the taxpayer has his “home,” that is, the center of the major facets of the taxpayer’s life. See id. Having more than one residence can lead to factors on more than one side of the “domicil[e] ledger.” Id. at 127. Therefore, a determination of domicile depends upon a comprehensive facts-and-circumstances analysis. See, e.g, Roarke v. Hanchett, 240 Mass. 557, 561 (1922) (finding that proof of domicile “depends upon no one fact or combination of circumstances, but from the whole taken together it must be determined in each particular case.”).

“A change of domicile occurs when a person with capacity to change his domicile is physically present in a place and intends to make that place his home for the time at least; the fact and intent must concur.” Id. (citing Hershkoff v. Board of Registered Voters of Worcester, 366 Mass. 570, 577 (1974)). Moreover, “[i]t is a general rule that the burden of showing a change of domicil is upon the party asserting the change.” Mellon Nat’l Bank & Trust Co. v. Comm’r of Corporations and Taxation, 327 Mass. 631, 638 (1951); Horvitz v. Commissioner of Revenue, 51 Mass. App. Ct. 386, 394 (2001). See also Commonwealth v. Davis, 284 Mass. 41, 49 (1933) (“The burden of proof that his domicil was changed rested on the defendant because he is the one who asserted that such change had taken place.”).

In the instant appeal, the appellants had the means to establish residences for themselves in both Florida and Massachusetts. See Horvitz v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2002-252, 256 (“Because of Horvitz’s considerable financial resources, he was able to create two locations in each of which he carried on important parts of his life.”). However, only one of those locations can be the appellants’ domicile for purposes of taxation. Therefore, the Board must weigh the evidence and determine whether the appellants actually abandoned their Massachusetts domicile in favor of a new domicile in Florida before recognizing gain from the sales of Timberland stock in question.

Massachusetts follows the common law rule that a person with legal capacity is considered to have changed his or her domicile by satisfying two elements: the establishment of physical residence in a different state and the intent to remain at the new residence permanently or indefinitely. McMahon, 31 Mass. App. Ct. at 505. The determination of intent goes beyond merely accepting the taxpayer’s expression of intent and instead requires an analysis of the facts closely connected to the taxpayer’s major life interests, including family and social relations, business connections, and civic and religious activities in order to determine his true intent. See Reiersen, 26 Mass. App. Ct. at 125 (citing Hershkoff v. Board of Registered Voters of Worcester, 366 Mass. 570, 576-577 (1974)). Moreover, while the determination of intent is subjective in nature, if a person’s driving motivation for establishing the new domicile is to reduce a possible tax liability, the claimed domicile will be more closely scrutinized. Davis, 284 Mass. at 50 (“A man cannot elect to make one place his home for the general purpose of life, and another place his home for the general purpose of taxation.”).

In the instant appeal, the Board found substantial evidence of the appellants’ familial ties to Massachusetts. Two of their children lived in Massachusetts, as did all of their grandchildren, as well as almost all of their siblings; their remaining child and sibling lived in neighboring states in the Northeast. In fact, the appellants purchased an additional residence in Massachusetts, the Brookline condominium, to be closer to their children and grandchildren. While each appellant had a sibling who spent considerable time in Florida, the Board found and ruled that, when weighing the evidence, the appellants’ familial ties to Massachusetts were stronger than those to Florida during the time prior to the two dates of sale of Timberland stock.

The Board also found that the appellants’ efforts to reflect a change of domicile to Florida – including changing their voter registrations, drivers’ licenses, and estate plan – were merely ministerial acts which were not even effective until after the sales of the Timberland stock; moreover, the appellants continued to use their Marblehead home as the address of record on important documents and files. The Board thus found and ruled that the appellants’ business and personal financial ties were stronger to Massachusetts than to Florida during the time prior to and including the two dates of sale of Timberland stock.

The appellants filed Massachusetts resident income tax returns prior to the tax year at issue, and they were gradually building social and civic ties to Florida since 1998 when Sidney retired and they began to spend approximately half the year in Florida each year. However, the appellants failed to meet their burden of proving that their social, civic or other ties to Florida were stronger during the tax year at issue than in previous years. The Board thus found and ruled that there was no meaningful change in their activities between those prior tax years and the tax year at issue except for the appellants’ recognition of the significant capital gains and the purchase of another Massachusetts residence.

On the basis of the facts in evidence, the Board thus found and ruled that the appellants’ family, social and personal ties established that they did not have the requisite intent to abandon their Massachusetts domicile and change their domicile to Florida before either of the sales of Timberland stock.

“It is a general rule that the burden of showing a change of domicil is upon the party asserting the change.” Mellon Nat’l Bank, 327 Mass. at 638. In addition, the burden of proof is on the taxpayers to prove that they are entitled to an abatement. See, e.g., William Rodman & Sons, Inc. v. State Tax Commission, 373 Mass. 606, 610 (1977); Stone v. State Tax Commission, 363 Mass. 64, 65-66 (1973); Commissioner of Corp. & Tax. v. Filoon, 310 Mass. 374, 376 (1941); Staples v. Commissioner of Corp. & Tax., 305 Mass. 20, 26 (1940). In the instant appeal, the Board found and ruled that the appellants failed to meet their burden of proving that they had abandoned their Massachusetts domicile in favor of a domicile in Florida prior to either sale of Timberland stock. Therefore, the Board found and ruled that the appellants were Massachusetts residents for tax purposes on the dates that they recognized the income at issue.

Accordingly, the Board did not grant an abatement of the income tax at issue, but in accordance with the parties’ Statement of Agreed Facts, the Board issued a revised decision for the appellants in this appeal, abating only the late pay penalties which had accrued since the filing of the abatement application.

APPELLATE TAX BOARD

By: ______________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ______ _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

MICHAEL F. & JUDITH A. MEE v. COMMISSIONER OF REVENUE

Docket Nos. C287787, C293547 Promulgated:

April 12, 2010

These are appeals filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39, from the refusal of the Commissioner of Revenue (“Commissioner” or “appellee”) to abate personal income taxes assessed to Michael F. Mee and Judith A. Mee (jointly the “appellants”), for tax years 2004 and 2005 (tax years at issue”).

Commissioner Scharaffa heard these appeals. Chairman Hammond and Commissioners Egan, Rose, and Mulhern joined him in decisions for the appellants.

These findings of fact and report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

William E. Halmkin, Esq., David J. Nagle, Esq., Judith G. Edington, Esq. and Jill Tenley Oldak, Esq. for the appellants.

Christopher Glionna, Esq., Celine E. Jackson, Esq., Bensen V. Solivan, Esq. and Mireille T. Eastman, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

Based upon the Agreed Statement of Facts and testimony and exhibits offered into evidence at the hearing of these appeals, the Appellate Tax Board (“Board”) made the following findings of fact.

On June 30, 2005, the appellants filed a joint 2004 Massachusetts Nonresident/Part-Year Resident Tax Return. After an audit, the Commissioner issued a Notice of Intent to Assess dated November 13, 2005 proposing to assess a tax of $151,707 plus interest for the 2004 tax year. By Notice of Assessment dated September 19, 2006, the Commissioner notified the appellants of a deficiency assessment of personal income taxes of $151,707, plus interest, for the 2004 tax year. On November 17, 2006, the appellants timely filed an abatement application, which the Commissioner denied on December 7, 2006. On January 29, 2007, the appellants seasonably filed their appeal with the Board, requesting an abatement of $151,707, plus interest. On the basis of the foregoing, the Board found and ruled that it had jurisdiction over the 2004 appeal.

On July 12, 2006, the appellants filed a joint 2005 Massachusetts Nonresident/Part-Year Resident Tax Return. After an audit, by Notice of Intent to Assess dated January 12, 2007, the Commissioner proposed to assess income tax of $105,193, plus interest and penalty, for tax year 2005. By Notice of Assessment dated February 27, 2007, the Commissioner notified the appellants of a deficiency assessment of personal income taxes of $105,193, plus interest and an unspecified penalty, for the 2005 tax year. On April 23, 2007, the appellants timely filed an abatement application with respect to the February 27, 2007 Notice of Assessment, which the Commissioner denied by two separate Notices of Abatement Determination, one dated July 16, 2007 and the second dated August 12, 2008. The appellants filed their original Petition Under Formal Procedure with respect to tax year 2005 on September 12, 2007, requesting an abatement in the amount of $105,193 plus interest and penalty. On August 18, 2008, the appellants seasonably filed a Consented-To Amended Petition under Formal Procedure requesting an abatement in the amount of $105,193 plus interest and penalty, and an additional amount of $2,055, plus interest and penalty, for the 2005 tax year.[42] On the basis of the foregoing, the Board found and ruled that it had jurisdiction over the 2005 appeal.

The issue in these appeals is whether the appellants were domiciled in Massachusetts during the tax years at issue. Michael and Judith Mee were married individuals who were both born and raised in Massachusetts. Judith grew up in Arlington, Massachusetts and Michael grew up in the Roxbury-Jamaica Plain corridor. However, the appellants had spent much of their adult lives outside of Massachusetts, moving to several locations because of Michael’s work. The appellants returned to Massachusetts and settled in Concord, Massachusetts in 1985, after being out of the state for 20 years.

In 1994, nine years after returning to Massachusetts, Mr. Mee accepted a new position in New York City. The appellants decided that the family would not move to New York City so as not to disrupt the last two years of their daughter’s high school experience. Instead, Mr. Mee took an apartment during the week and returned to the Concord residence on the weekends. Mr. Mee remained with the job in New York City until his retirement in 2003.

On August 28, 1997, after their daughter finished high school, the appellants purchased their first condominium in Jupiter, Florida. The appellants testified that they had been vacationing in Florida since the 1980s, but with the purchase of the condominium, they began to spend more time there, particularly for long weekends and holidays. Less than a year after the purchase, in April and May of 1998, the appellants sold the Jupiter condominium and purchased a larger unit nearby.

The appellants sold their Concord, Massachusetts residence in 1999. Mrs. Mee testified that, with her children grown and out of the house, her friends retired and relocated, and Mr. Mee still working in New York City, she felt too isolated in the wooded area of Concord. Therefore, on January 29, 1999, Mrs. Mee purchased a residence near the ocean in Osterville, Massachusetts. Mrs. Mee testified that the Osterville residence had six levels with stairs between each level. Mrs. Mee also testified that, while the Osterville residence was lovely, it had certain drawbacks, including the small kitchen without air conditioning, the many stairs and levels of the residence, and the laundry room located in the basement. The appellants had made changes to one of the residence’s bathrooms but had not otherwise bothered to renovate the Osterville residence; moreover, the appellants twice passed on the opportunity to purchase a neighboring parcel of land which would have increased their lot size. Mr. Mee explained that the appellants were not willing to make this commitment to Massachusetts and the Osterville residence because of “our feelings and our commitment to Florida, it made no sense to me so we have passed.”

In 2001, Mr. Mee purchased Unit 30-A, a large condominium at 1 Avery Street in Boston at the Ritz Carlton (“Unit 30-A”). Mr. Mee testified that he viewed this purchase as an investment. The appellants did not, however, rent Unit 30-A; instead, they used it as a stopover when traveling between Jupiter and Osterville, or for overnight stays when traveling to Boston, for example, for Fourth of July celebrations.

The appellants purchased their current Florida residence, a large condominium, in May of 2002. Mr. Mee explained the events leading to the purchase of the larger condominium. He testified that after he was passed over for a promotion in 2001, he began to work with the company in an advisory role that would enable him to phase into retirement. With a reduced work schedule and no children residing in Massachusetts, the appellants began to spend more time in Florida, and on June 30, 2003, days before his sixty-first birthday, Mr. Mee retired from his job in New York.

The Florida residence contained about 2,500 square feet of living space. It fronted both the intercoastal waterway and the Atlantic Ocean, with views of both from the balconies positioned beyond three of the four walls of the residence. The residence was located on the eighth floor of the complex and was accessible by two key-operated elevators that open directly into the residence. The residence featured two bedrooms, a den and three full bathrooms, as well as an air-conditioned garage. The appellants made extensive renovations to the Florida residence, including gutting and re-flooring the residence, hiring a professional decorator, and purchasing all new furniture and fixtures. During the tax years at issue, the appellants kept their valuable china and silverware with them in Florida. They stored a Toyota in the garage at the Boston condominium, but maintained their other cars which they owned at various times during the tax years at issue (a Chevrolet Corvette, a Toyota Solaris and a Jaguar) in Florida.

On April 22, 2005, Mr. Mee purchased a second condominium, located at Two Avery Street, Unit 29C, in Boston (“Unit 29C”). Mr. Mee purchased Unit 29C as an investment property and rented it to an individual tenant for between $12,000 and $13,000 a month. Mr. Mee subsequently sold Unit 29C, after the tax years at issue, for a substantial profit.

Mrs. Mee had two sisters, Patricia Bibby and Lillian Marshall. Patricia resided in Melrose, Massachusetts, while Lillian resided in Fort Myers, Florida. Mr. Mee had three living siblings — Paul Mee, who lived in Amelia Island, Florida; David Mead, who lived in Maryland; and a sister who lived in Detroit, Michigan. Mr. Mee testified that he was unsure whether one of his daughters may have resided in Massachusetts during the tax years at issue; he explained that she may have resided in Boston for a short period while en route from New York to Ann Arbor, Michigan. With this possible exception, none of the appellants’ children lived in Massachusetts during the tax years at issue.

The appellants testified as to their social ties to Florida and Massachusetts. Mrs. Mee testified that the appellants were members of the Jupiter Hills Golf Club, located about seven minutes away from their Florida residence. Both Mr. and Mrs. Mee testified that they played golf about four times a week, and they also attended other social events at the club, including Mrs. Mee’s involvement in two marathon bridge clubs about four or five times a week and the appellants’ participation in golf tournaments and dinner functions. The appellants also socialized extensively with friends at the club, attending lunches, dinners and other functions with friends. Mrs. Mee testified that she belonged to a ladies’ group that attended theater outings and other social events. Mrs. Mee also testified that, during the tax years at issue, the appellants attended church services regularly in Florida, at St. Jude’s Church and St. Christopher’s Church.

The appellants both testified that, when in Massachusetts during the tax years at issue, they golfed at Cape Cod National Club, located about thirty-five minutes from their Osterville residence. Mrs. Mee explained that she would have liked to golf four times a week, but because of the distance of the club from their residence, she usually golfed about two or three times a week during her stay in Osterville during the tax years at issue. Mrs. Mee also testified that the appellants did not have a network of friends in Osterville; they instead socialized with friends who visited them at their Osterville residence. Mrs. Mee also testified that the appellants did not attend church services in Osterville.

Other witnesses corroborated the appellants’ testimony regarding their social ties to Florida. Patricia Bibby, Mrs. Mee’s sister, and Ms. Bibby’s friend, Joseph Paglia, both testified that, based on their observations of the appellants when they visited them in Florida during the tax years at issue, the appellants had a large circle of friends with whom they socialized in Florida. Ms. Bibby and Mr. Paglia both recalled parties that they have attended with the appellants and their many friends in Florida. By contrast, both witnesses testified that the appellants did not have such a circle of friends, nor were they socially active, in Osterville. Ms. Bibby also corroborated Mrs. Mee’s testimony that the appellants spent the Thanksgiving holiday at their residence in Florida. Mr. Mee’s brothers, Paul Mee and David Mead, as well as Jack Russell Kelble, a friend of Mr. Mee’s who lived near the appellants in Florida, also testified as to the appellants’ active social lives in Florida.

Paul Mee further testified as to what he believed to be the appellants’ plans for retirement, based on his recollection of conversations with the appellant. Paul Mee explained that, since about 1999, his brother, Michael, had been planning to retire to Florida, because he enjoyed the warmer climate, more conservative social and political demographic, and the availability of year-round outdoor activities, particularly golf. Paul Mee also testified that he has spent the Thanksgiving, Christmas and New Year’s holidays with the appellants in Florida. Paul Mee and David Mead further corroborated the appellants’ and other witnesses’ testimonies that the appellants had a large circle of friends in Florida, as compared to Osterville. Mr. Mead and Mr. Kelble also testified that, based on their recollections of separate conversations with Mr. Mee, the appellants had expressed a desire to retire to Florida, citing their enjoyment of the warmer weather and the more conservative political climate than that of Massachusetts.

Further, credible evidence of record supported the appellants’ argument that their decision to establish a Florida domicile was not driven by tax savings. Mr. Kelble testified that, despite Florida’s lack of a personal income tax, Mr. Mee believed that the overall cost of living in Florida was not less than in Massachusetts:

[Mr. Kelble]: I considered moving to many places and certainly looked at the tax structure to see whether I was going to be paying more or less taxes. I, I concluded very quickly – in fact, Michael – we talked about retirement many times because we were both in similar type of management positions . . . and both on kind of a parallel track to start thinking about retirement around 2000 or so, and planning what we would do for retirement, and I found and he pointed out to me that the cost of living in Florida, although it’s advertised to be low is actually quite high relative to tax structure, sales tax is higher than Massachusetts and about equal with California, and that the property tax is quite high, . . .

(emphasis added).

The appellants obtained healthcare services in both Florida and Massachusetts during the tax years at issue. In Massachusetts, the appellants saw a cardiologist, and Mr. Mee saw an urologist. Mr. Mee testified that Mrs. Mee was diagnosed with breast cancer on two separate occasions, sometime between 2003 and 2005, to the best of his recollection. Because she was in Massachusetts when it was discovered, Mrs. Mee had surgeries performed in Massachusetts. However, Mrs. Mee received her radiation treatments in Florida after her Massachusetts surgeries. Additionally, Mr. Mee testified that Mrs. Mee’s oncologist, orthopedic surgeon and OB/GYN physician were located in Florida, as were Mr. Mee’s general practitioner, dentist, orthopedic surgeon and internist, as well as the dermatologist for both appellants.

The Commissioner contended that the appellants used their Osterville address as the address of record on important filings, particularly several 1099 tax statements and their New York Non-resident and Part-Year Resident return, filed on June 22, 2005. However, Mrs. Mee testified that the mail was forwarded to them in Florida, and that their accountant was the one who had prepared and signed the New York tax documents.

The appellants registered to vote in Palm Beach County on May 11, 2004; on that same day, they applied for the Florida Homestead exemption for their home at 425 Beach Road, Jupiter Island. They voted in the 2004 Presidential Election in Florida. The appellants obtained Florida driver’s licenses on May 14, 2004.

On the basis of the above evidence, the Board made the following findings. The Board found that the appellants were both actively involved with the Jupiter Hills Golf Club, where Mrs. Mee regularly participated in bridge activities and Mr. Mee participated in golf outings and tournaments, and both appellants attended dinner and social functions. The appellants also had an extensive network of friends in Florida with whom they socialized, as testified to by the appellants and corroborated by their several witnesses. All the witnesses agreed that, while they enjoyed golfing at Cape Cod National Club, the appellants lacked a social network in Osterville comparable to that in Florida. The appellants also testified, and the Board found credible, that they were members of two churches and attended church services regularly when in Florida, but they were not members of, nor did they attend, a church during their summer stays in Osterville.

Moreover, the Board found credible the testimonies of Mr. Mead and Mr. Kelble, who, based on their recollections of separate conversations with Mr. Mee prior to the tax years at issue, vouched for the appellants’ desire to retire to Florida, based at least in part on the appellants’ enjoyment of the warmer weather and more conservative political climate. The Board thus found that the appellants’ social ties were stronger in Florida than they were in Massachusetts during the tax years at issue.

The Board also found that, aside from Mrs. Mee’s sister, Ms. Bibby, and the possible exception of one of their daughters — who, if she was in Massachusetts during the tax years at issue, was only there for a brief time while en route to another destination — the appellants lacked strong family ties to Massachusetts during the tax years at issue. On the other hand, the appellants each had a sibling who lived in Florida during the tax years at issue — Mr. Mee’s brother, Paul Mee, and Mrs. Mee’s sister, Lillian Marshall. The Board thus found that the appellants’ family ties to Massachusetts were minimal, while their family ties to Florida were significantly stronger during the tax years at issue.

The Board further found that the appellants’ Florida residence reflected their commitment to the Jupiter area. The Board found that this residence –- with 2,500 square feet of living space and with key-operated elevator access into the main living room — was more spacious and more conducive to retirement-living than the multi-leveled Osterville residence with its many stairs and basement-level laundry room. The Board also found that the appellants actively made a commitment to the Jupiter area by making extensive home renovations, purchasing all new furnishings and moving their valuable possessions, like china, silverware and expensive cars, to the Florida residence. Moreover, the majority of the appellants’ healthcare providers are located in Florida. Even though the appellants did not obtain Florida drivers’ licenses, apply for the Florida Homestead exemption, or register to vote in Florida until May of 2004, the Board found that the appellants produced strong evidence that they had formed the requisite intent to make Florida their domicile before the start of the 2004 tax year.

By contrast, the Board found that the appellants did not make a similar commitment to their Osterville residence, as evidenced particularly by their failure to renovate the residence aside from making updates to one bathroom and twice rejecting an offer to purchase adjoining land that would have increased the lot size of their Osterville residence. Therefore, while the appellants may not have changed their Osterville address on some brokerage and tax accounts, they nonetheless made life-style commitments to their Florida residence. Furthermore, while the appellants owned other Massachusetts properties, namely Unit 30-A and Unit 29C, the appellants rented out Unit 29C and they stayed only sporadically at Unit 30-A. The Board thus found these properties to be more in the nature of investments for the Mees and not reflective of the appellants’ commitment to Massachusetts during the tax years at issue. Moreover, the appellants did not claim a residential property tax exemption for any of their Massachusetts properties during the tax years at issue.[43]

Therefore, for the reasons which will be explained further in the following Opinion, the Board found that the appellants met their burden of proving that they had changed their domicile to Florida before the beginning of the tax years at issue. Accordingly, the Board issued decisions for the appellants granting an abatement in the amount of $151,707 for the 2004 tax year and $105,193 for the 2005 tax year, plus all statutory additions for both tax years.

OPINION

G.L. c. 62, § 1(f). The appellants contend, and the Commissioner does not challenge, that the appellants did not spend more than 183 days in Massachusetts during the tax years at issue. The issue presented in these appeals, therefore, is whether the appellants were domiciled in Massachusetts and, therefore, were taxable as residents during the tax years at issue.

Domicile is commonly defined as “the place of actual residence with intention to remain permanently or for an indefinite time and without any certain purpose to return to a former place of abode.” Commonwealth v. Davis, 284 Mass. 41, 50 (1933). While domicile may be a difficult concept to define precisely, the hallmark of domicile is that it is “‘the place where a person dwells and which is the center of his domestic, social and civil life.’” Reiersen v. Commissioner of Revenue, 26 Mass. App. Ct. 124, 125 (1988) (citing Restatement (Second) of Conflict of Laws § 12 (1969)). In the instant appeals, the appellants do not dispute that their domicile had been Massachusetts for approximately 19 years before the tax years at issue. The appellants contend that they had changed their domicile to Florida before the beginning of the tax years at issue.

Massachusetts follows the common law rule that a person with legal capacity is considered to have changed his or her domicile by satisfying two elements: the establishment of physical residence in a different state and the intent to remain at the new residence permanently or indefinitely. McMahon, 31 Mass. App. Ct. at 505. The determination of intent goes beyond merely accepting the taxpayer’s expression of intent and instead requires an analysis of the facts closely connected to the taxpayer’s major life interests, including family relations, business connections, and social and extracurricular activities in order to determine his true intent. See Reiersen, 26 Mass. App. Ct. at 125 (“A change of domicile occurs when a person with capacity to change his domicile is physically present in a place and intends to make that place his home for the time at least; the fact and intent must concur.” (citing Hershkoff v. Board of Registered Voters of Worcester, 366 Mass. 570, 576-577 (1974)). “It is a general rule that the burden of showing a change of domicil is upon the party asserting the change.” Mellon Nat’l Bank & Trust Co. v. Comm’r of Corporations and Taxation, 327 Mass. 631, 638 (1951); Horvitz v. Commissioner of Revenue, 51 Mass. App. Ct. 386, 394 (2001). See also Commonwealth v. Davis, 284 Mass. 41, 49 (1933) (“The burden of proof that his domicil was changed rested on the defendant because he is the one who asserted that such change had taken place.”).

Moreover, the Supreme Judicial Court and the Massachusetts Appeals Court have recognized that a person may have a residence in one place and a permanent home (i.e., domicile) in another. See, e.g., Hopkins v. Commissioner of Corps. & Tax’n, 320 Mass. 168, 173 (1946); Horvitz v. Commissioner of Revenue, 51 Mass. App. Ct. 386, 393 (2001). Having more than one residence can lead to factors on more than one side of the “domicil[e] ledger.” See Reiersen, 26 Mass. App. Ct. at 127. Therefore, a determination of domicile depends upon a comprehensive facts-and-circumstances analysis:

‘No exact definition can be given of domicile; it depends upon no one fact or combination of circumstances, but from the whole taken together it must be determined in each particular case . . .; and it may often occur, that the evidence of facts tending to establish the domicile in one place, would be entirely conclusive, were it not for the existence of facts and circumstances of a still more conclusive and decisive character, which fix it, beyond question, in another.’

Horvitz v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2002-252, 257, aff’d, 60 Mass. App. Ct. 1103 (2003) (quoting Tax Collector of Lowell v. Hanchett, 240 Mass. 557, 561 (1922)(citation omitted)); see also Roarke v. Hanchett, 240 Mass. 557, 561 (1922) (finding that proof of domicile “depends upon no one fact or combination of circumstances, but from the whole taken together it must be determined in each particular case.”). While a person may have ties to more than one location, the standard of domicile is that it is “‘the place where a person dwells and which is the center of his domestic, social and civil life.’” Reiersen, 26 Mass. App. Ct. at 125 (citation omitted).

In the instant appeals, the appellants had the means to establish residences for themselves in both Florida and Massachusetts. See Horvitz v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2002-252, 256 (“Because of Horvitz’s considerable financial resources, he was able to create two locations in each of which he carried on important parts of his life.”). However, only one of those locations could be the appellants’ domicile. Therefore, the Board must weigh the evidence and determine whether the appellants met their burden of proving that they had changed their domicile to Florida before the beginning of the tax years at issue.

The appellants’ continuing ties to their Massachusetts residence do not automatically foreclose a finding of change of domicile: “such change does not require that a taxpayer divest himself of all remaining links to the former place of abode, or stay away from that place entirely.” Horvitz, Mass. ATB Findings of Fact and Reports at 2002-259 (citing Gordon v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1988-367, 375)). Yet notwithstanding the presence of considerable evidence on both sides of the domicile ledger, certain ties are particularly probative and entitled to greater weight. In particular, strong social ties to a particular location are indicative of a taxpayer’s domicile. See, e.g., Reiersen, 26 Mass. App. Ct. at 130 (“[Reiersen’s] was not a temporary mission. In the Philippines he had found business and social success he had not enjoyed in Worcester. There he had made friends and joined clubs.”).

The Board has previously decided appeals where a taxpayer enjoyed regular, prolonged stays at a Massachusetts summer residence, which the taxpayer retained after moving to Florida. In these situations, the Board has been guided by the principle that “mere absences from home even for somewhat prolonged periods” are not conclusive evidence in the determination of a taxpayer’s domicile. See McMahon, 31 Mass. App. Ct. at 506. For example, like the appellants in the instant appeals, the appellants in Salah v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1997-842, retained their Massachusetts residence, to which they returned every summer for several months at a time. Despite the length and regularity of the taxpayers’ return to Massachusetts, however, the Board focused on facts which established that the center of the taxpayers’ domestic, social and personal life had shifted to Florida, including but not limited to: the taxpayers registered to vote in Florida and correspondingly removed themselves from the voter registry in Massachusetts; the taxpayers received Florida driver’s licenses and surrendered their Massachusetts driver’s licenses; the taxpayer’s Massachusetts business activities were reduced to occasional consultation on isolated matters and his attendance at annual meetings; and the taxpayers’ social ties to Florida, including their memberships in a social club and a church. Id. at 1987-856,857.

In the instant appeals, the Board found and ruled that the testimony of the appellants, as corroborated by their several credible witnesses, established that the appellants’ ties – certainly their social ties and even their family ties – were stronger in Florida than in Massachusetts during the tax years at issue. The Board found credible that the appellants weighed the warmer climate, convenient access to a golf club, and more conservative political culture in their decision to change their domicile to Florida upon Mr. Mee’s retirement. These reasons, and not tax savings, were the predominant motivations for the appellants’ decision to live in Florida; in fact, the Board found credible Mr. Kelble’s testimony that Mr. Mee believed that the overall cost of living in Florida was not less expensive than the cost of living in Massachusetts, even with the Massachusetts income tax. The Board also found and ruled that, even though they did not apply for Florida drivers’ licenses or register to vote in Florida until May of 2004, the appellants had already made the commitment to change their domicile to Florida by, for example, extensively renovating and refurbishing their Florida residence and insuring their more expensive vehicles in Florida, and registering to vote in Florida. See, e.g., Rosenthal v. Commissioner, Mass. ATB Findings of Fact and Reports 1997-859, 872-73 (in finding the appellants met their burden of proving they changed their domicile to Florida, the Board considered that the appellants made a substantial investment in a Florida condominium, surrendered their Massachusetts drivers’ licenses and Massachusetts vehicle registrations to obtain Florida licenses and registrations, registered to vote, and joined several social organizations in Florida). Moreover, the appellants were far more socially active in Florida, attending many golf, bridge, and social events, and attending two different churches. In Massachusetts, the appellants had only casual acquaintances, they attended few social functions and golfed far less frequently, and they did not attend church services during their summer stays.

On the basis of the evidence of record, the Board found and ruled that the appellants had formed the requisite intent to make Florida their home before the beginning of tax year 2004. The Board thus found and ruled that the appellants met their burden of proving that Massachusetts was not the center of their social, family or civic life, and therefore, the appellants were not domiciled in Massachusetts during the tax years at issue. Accordingly, the Board issued decisions for the appellants, granting an abatement in the amount of $151,707 for the 2004 tax year and $105,193 for the 2005 tax year, plus all statutory additions for both tax years.

APPELLATE TAX BOARD

By: _____ ____ Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

ROBERT D. and v. BOARD OF ASSESSORS OF

JUDITH S. KRUMME THE TOWN OF CONCORD

Docket No. F298669 Promulgated:

April 13, 2010

This is an appeal filed under the formal procedure[44] pursuant to G.L. c. 58A, § 7A and G.L. c. 59, §§ 64 and 65, from the refusal of the Board of Assessors of the Town of Concord (“appellee” or “assessors”) to abate taxes on certain real estate in Concord, owned by and assessed to Robert D. and Judith S. Krumme (together, “appellants”) under G.L. c. 59, §§ 11 and 38 for fiscal year 2008 (“fiscal year at issue”).

Commissioner Egan heard this appeal. Chairman Hammond and Commissioners Scharaffa, Rose and Mulhern joined her in the decision for the appellants.

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.

Robert D. Krumme, pro se, for the appellants.

Kevin Batt, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony, the stipulated facts and documents, and the other exhibits entered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2007, the relevant date of assessment for the fiscal year at issue in this appeal, the appellants were the assessed owners of a 3.35-acre parcel of land, improved with a two-story, Colonial-style dwelling, located at 349 Simon Willard Road in Concord, Massachusetts (“subject property”). Originally constructed in 1978, the dwelling on the subject property has a concrete foundation, wood clapboard and brick exterior, and an asphalt shingle roof. It has nine rooms, including four bedrooms, as well as two full bathrooms and one half bathroom, with a total finished living area of 3,375 square feet. Interior features include hardwood, carpet and ceramic tile flooring, granite and formica countertops, and two fireplaces. The basement is unfinished. The subject property also has a screened porch and a four-car garage.

The subject property is located in the Nashawtuc Hill neighborhood of Concord. The evidence revealed that the Nashawtuc Hill neighborhood is one of the most desirable neighborhoods in Concord. Situated on a hill, it is surrounded by three rivers and offers scenic vistas and abundant natural beauty. However, additional evidence entered into the record revealed that the subject property was located towards the back of the hill, and did not enjoy enhanced views.

For the fiscal year at issue, the assessors valued the subject property at $2,145,500 and assessed a tax thereon, at the rate of $10.72 per $1,000, in the total amount of $23,328.68.[45] On February 28, 2008, the Collector of Taxes for Concord mailed out the actual fiscal year 2008 tax bills. The appellants timely paid the tax due without incurring interest. On May 1, 2008, the appellants timely filed an Application for Abatement with the assessors.[46] The abatement application was denied by vote of the assessors on May 15, 2008. The appellants timely filed their appeal with the Board on August 1, 2008. Based on the foregoing, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

A. The Appellants’ Case-in-Chief

The appellants presented their case-in-chief primarily through the testimony of Mr. Krumme and the introduction of their sales-comparison analysis, which featured four sales-comparison properties. The following tables substantially reproduce the appellants’ sales-comparison analysis.[47]

Appellants’ Sales-Comparison Properties One and Two

	Subject Property	306 Musketaquid Road	Adjust.($)	291 Musterfield Road	Adjust.($)
Sale Price ($)	N/A	1,625,000		1,575,000
Sale Date	N/A	5/31/2007		9/14/2007
Proximity to Subject		3 Properties by Walking		2 Properties by Walking
Sale/Time Adjustment		1.25%	20,300	2.38%	37,406
Site (acres)	3.35[48]	2.83		2.60
Neighborhood	Same	Same		Same
Year Built	1978	1985		1976
Design/Style	Colonial	Colonial		Contem/Mod
Construction Quality	Good	Good		Good
Rooms/Baths	9/2.5	10/3.5	-20,000	10/3	-15,000
Living Area (sq. ft.)	3,375	3,002	27,975	3,493	-8,850
Heating/Cooling	FHW/CA	FA/CA		FA/CA
Garage	4	2	15,000	2	15,000
Fireplaces	2	2		2
Pool	None	None		None
Porch/Patio	Screen Porch	Enclosed Porch/Patio	-5,000	Deck/EnclosedPatio	-5,000
Special Improvements		New Kitchen	-30,000	N/A	N/A
Adjusted Sale Price			1,633,275		1,598,556

Appellants’ Sales-Comparison Properties Three and Four

	Subject Property	398 SimonWillard Road	Adjust. ($)	87 ParkLane	Adjust. ($)
Sale Price ($)	N/A	1,616,250		1,549,000
Sale Date	N/A	1/22/2008		6/29/2006
Proximity to Subject		2 Propertiesby Walking		4 Propertiesby Walking
Sale/Time Adjustment		3%	48,488	0
Site (acres)	3.35	2.08		1.04
Neighborhood	Same	Same		Adjacent	154,900
Year Built	1978	1978		1952
Design/Style	Colonial	Contem/Mod		Colonial
Construction Quality	Good	Good		Good
Rooms/Baths	9/2.5	9/4	-15,000	10/3	-15,000
Living Area (sq. ft.)	3,375	3,165		3,930	-41,625
Heating/Cooling	FHW/CA	FA/CA		FHW/CA
Garage	4	2	15,000	2	15,000
Fireplaces	2	3	-5,000	3	-5,000
Pool	None	Pool	-23,700	None
Porch/Patio	ScreenPorch	Deck and Patio	-5,000	Deck and Patio	-5,000
Special Improvements		N/A	N/A	N/A
Adjusted Sale Price			1,631,038		1,652,275

In Mr. Krumme’s opinion, 306 Musketaquid Road was the property most comparable to the subject property. According to Mr. Krumme, both properties were constructed as developer “spec houses” around the same time, and the total gross living areas of both dwellings were similar. Unlike the other sales-comparison properties, 306 Musketaquid Road and the subject property lacked curb appeal, in Mr. Krumme’s opinion, because they could not be seen from a primary access road.

However, Mr. Krumme contended that 306 Musketaquid Road possessed certain advantages over the subject property, including a renovated kitchen and a lot which was more conducive to additional residential expansion. Mr. Krumme’s assertions regarding the subject property’s lot were corroborated by the stipulated facts. The parties stipulated that the subject property had an irregular shape, which Mr. Krumme characterized as a “pork chop” shape. Further, the parties stipulated that the land towards the rear of the subject property was encumbered by utility easements as well as a forty-foot-wide right-of-way reserved by Concord. Based on these stipulated facts, the Board found that 306 Musketaquid had a superior lot to the subject property. However, the Board found that there was not enough detail or evidence in the record to support Mr. Krumme’s assertions about the state of the kitchen at 306 Musketaquid Road in comparison to the subject property’s kitchen.

Based on their sales-comparison analysis, with particular reliance on the sale of 306 Musketaquid Road, the appellants’ opinion of value for the subject property as of January 1, 2007 was $1,625,000.

B. The Assessors’ Case-in-Chief

The assessors presented their case-in-chief primarily through the testimony and Summary Appraisal Report of certified real estate appraiser John H. Neas. Based on his experience, the Board qualified Mr. Neas as an expert residential real estate appraiser.

Mr. Neas considered the highest and best use of the subject property to be its continued use as a single-family residential property. Mr. Neas considered the three usual approaches to value, but ultimately relied on the sales-comparison approach to value the subject property. Mr. Neas used data from seven sales which took place in Concord in 2006 and 2007 in forming his sales-comparison analysis, which is substantially reproduced in the following tables:

Mr. Neas’ Sales-Comparison Properties One through Four

	Subject Property	291Muster-field Road	Adj.($)	306Musketa-quid Road	Adj.($)	383Simon WillardRoad	Adj.($)	1200Monument Street	Adj.($)
Sale Date	N/A	9/2007		5/2007		6/2007		7/2006
Sale Price ($)	N/A	1,575,000		1,625,000		1,825,000		2,092,000
Apprec.($)	N/A		55,125		32,500		36,500		-52,300
Location	NH[49]	NH		NH		NH		Monument Street
Lot Size	3.35acres	2.6acres	35,000	2.83acres	25,000	1.57acres	100,000	2.4acres	50,000
View	Good	Good		Good		Good		Good
Design	Colonial	Contemp.		Colonial		Cape		Colonial
Quality	Good	Good		Good		Good		Good
Year Built	1978	1978		1985		1979		1994
Condition	Good	Good		Good		Good		Good
Rooms/BedsBaths	9/4/2.5	9/3/2.5.5		10/4/3.5	-10,000	12/5/4.5	-20,000	10/4/3.5	-10,000
LivingArea	3,375	3,493		2,964[50]	82,200	5,000	-162,500	5,222	-184,700
Basement	NotFinished	2 FinishedRooms	-20,000	NotFinished		Playroom	-10,000	NotFinished
Heating/Cooling	HW/CA	HA/CA		HA/CA		HW/CA		HA/CA
Garage	4 Car Attached	2 CarAttached	20,000	2 carAttached	20,000	2 CarAttached	20,000	3 carAttached	10,000
Porch/Patio/Deck	ScreenPorch	Deck		Porch		Porch/Deck		Patio
Fireplaces	Two	Two		Two		Two		Two
Total Adjustment			90,125		149,700		-36,000		-187,000
Indicated Value ($)		1,665,125		1,774,700		1,789,000		1,905,000

Mr. Neas’ Sales-Comparison Properties Five through Seven

	Subject Property	168NashawtucRoad	Adj.($)	65AttawanRoad	Adj.($)	350MusketaquidRoad	Adj.($)
Sale Date	N/A	2/2007		12/2006		6/2006
Sale Price ($)	N/A	2,220,000		2,275,000		2,575,000
Apprec.($)	N/A		22,200				-77,250
Location	NH	NH		NH		NH
Lot Size	3.35 acres	40,298sq. feet	125,000	1.48 acres	100,000	41,544Sq. feet	125,000
View	Good	Good		Good		Good
Design	Colonial	Contemporary		Colonial		Contemporary
Quality	Good	Good		Good		Good
Year Built	1978	1974/Renovated		1983/Renovated		1900/Renovated
Condition	Good	Very Good	-200,000	Very Good	-200,000	Very Good	-200,000
Rooms/Beds/Baths	9/4/2.5	8/4/4.5	-20,000	11/4/3.5	-10,000	12/5/4.5	-20,000
Living Area	3,375	3,208		3,200		6,470	-309,500
Basement	Not Finished	Finished	-100,000	Playroom	-10,000	2 FinishedRooms	-50,000
Heating/Cooling	HW/CA	HW/CA		HA/CA		HA/CA
Garage	4 CarAttached	2 CarAttached	20,000	2 CarAttached	20,000	3 CarAttached	10,000
Porch/Patio/Deck	Screen Porch	Porch/Deck/Patio		None		Porch/Patio
Fireplace	Two	Three	-10,000	Two		Two
Total Adjustments			-162,800		-100,000		-521,750
Indicated Value		2,057,200		2,175,000		2,053,250

Based upon his sales-comparison analysis, which yielded indicated values ranging from $1,665,125 to $2,175,000, Mr. Neas concluded that the fair cash value of the subject property as of January 1, 2007 was $2,000,000, which was $145,500 less than its assessed value for the fiscal year at issue.

C. The Board’s Ultimate Findings of Fact

On the basis of all of the evidence, the Board found and ruled that the highest and best use of the subject property was its continued use as a single-family residence. Like the parties, the Board found that the sales-comparison analysis was the most reliable method of valuing the subject property, because of the availability of comparable sales in close proximity to both the subject property and the relevant date of assessment. The Board also found and ruled that the appellants possessed sufficient familiarity with their property, as well as the surrounding properties, to meaningfully express their opinion of value of the subject property.

The Board largely adopted the appellants’ sales-comparison analysis, which it found to be more probative of the fair cash value of the subject property than the analysis conducted by Mr. Neas. Both parties used 306 Musketaquid Road and 291 Musterfield Road as sales-comparison properties, but there was no overlap in the remaining sales-comparison properties. To the extent that they differed from the properties selected by Mr. Neas, the Board found that the properties selected by the appellants were more similar to the subject property in gross living area, year of construction, and other pertinent details. The appellants made net adjustments of less than $25,000 to three of their four sales-comparison properties, while a net adjustment of $103,275 was made to the fourth property. In contrast, Mr. Neas made net adjustments of more than $100,000 to four of his seven sales-comparison properties, and he made a net adjustment of over $500,000 to a fifth property. The Board found that the sales-comparison properties selected by Mr. Neas were less comparable to the subject property than those selected by the appellants, as evidenced by the magnitude of his net adjustments. The Board, therefore, used the same sales-comparison properties as the appellants in conducting its sales-comparison analysis.

Similarly, the Board adopted the appellants’ methodology of adjusting for differences in date of sale. The appellants used a factor of 0.25% per month to account for differences in date of sale, based on an assumed annual decline of 3%. The appellants’ assumption was based on a document created by the assessors stating that there was a “slight decrease in sale prices from 2006 to 2007” in Concord. In contrast, Mr. Neas used a 5% annual decline rate to account for differences in date of sale, which he based on data published by the Federal Reserve Bank of Boston. The Board found that the 3% figure used by the appellants was more specific to and reflective of sales activity in Concord, and therefore, was more reliable than the data used by Mr. Neas.

However, the Board’s sales-comparison analysis departed from that of the appellants in certain respects. According to the appellants, prior to 2002, the assessors considered the subject property as having only 2.13 acres for assessment purposes, rather than its actual 3.35 acres, because of its odd configuration and the various easements towards the rear of the property. Therefore, for the purposes of their sales-comparison analysis, the appellants treated the subject property as having only 2.13 acres. Because 2.13 acres was closer in size to the lots of their sales-comparison properties, the appellants made no adjustments to account for differences in lot size.

In contrast, Mr. Neas made adjustments to account for differences in lot size based on a value of $50,000 per acre, which he arrived at after conducting a paired-sales analysis. The Board found that Mr. Neas’ adjustments for differences in lot size were better supported by the evidence, and therefore, adopted his adjustment factor of $50,000 per acre. In addition, as discussed above, the Board declined to make a positive adjustment in the amount of $30,000 to the sales price of 306 Musketaquid Road to account for what the appellants claimed was an updated kitchen, as there was neither enough detail nor evidence in the record to support such an adjustment.

Based upon these findings of fact, the Board determined that the appellants’ sales-comparison analysis, as modified by the Board, resulted in adjusted-sales prices ranging from $1,631,587 to $1,768,275. Based on this range and on all of the evidence in the record, the Board found that the fair cash value of the subject property as of January 1, 2007 was $1,700,000.

Accordingly, the Board decided this appeal for the appellants and granted an abatement in the amount of $4,847.40.

OPINION

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 taxpayers . . . prove 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)). “[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 in the same geographic area and within a reasonable time of the assessment date generally contain 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).

In the present appeal, the appellants offered substantial, credible evidence showing that the assessed value of the subject property was greater than its fair cash value. Specifically, the appellants offered a highly persuasive sales-comparison analysis showing that the adjusted sales prices of nearby, comparable properties were significantly lower than the assessed value of the subject property. An owner of property is entitled to express his opinion of its value during the relevant time period if he is experienced in dealing with the property, is familiar with its characteristics, and recognizes its proper uses or potential uses. Menici v. Orton Crane & Shovel Co., 285 Mass. 499, 503-504 (1934), and the cases cited therein. Accord Correia v. New Bedford Redevelopment Authority, 5 Mass. App. Ct. 289, 295 (1977), rev’d on other grounds, 375 Mass. 360 (1978). In this appeal, the Board found and ruled that the appellants possessed the requisite familiarity and knowledge about their property, as well as the surrounding properties, to express meaningfully their opinion of its value. The Board found that the appellants’ opinion of the subject property’s value, in conjunction with the other evidence which they introduced, provided persuasive evidence of the subject property’s fair cash value.

Conversely, “the mere qualification of a person as an expert does not endow his testimony with any magic qualities.” Boston Gas Co. v. Assessors of Boston, 334 Mass. at 579. In this appeal, the Board found that the opinion of value formed by Mr. Neas lacked probative force. As evidenced by the comparatively large net adjustments he made to those properties, the Board found that many of the sales-comparison properties used by Mr. Neas were not sufficiently comparable to the subject property to provide reliable evidence of the fair cash value of the subject property.

Although the Board found the appellants’ valuation analysis highly persuasive, it did not adopt their opinion of value of the subject property. Market value is a matter of judgment; the Board must make its decision on evidence presented but need not adopt the valuation of any particular witness. Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60 (1941). In evaluating the evidence before it, the Board may select among the various elements of value and form its own independent judgment of fair cash value. North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984).

In the present appeal, the Board adopted those portions of the appellants’ sales-comparison analysis which it found to be supported by the evidence. However, with respect to adjustments for differences in lot size, the Board found that the data used by Mr. Neas was better supported by the evidence. It therefore adopted Mr. Neas’ $50,000-per- acre adjustment to account for differences in lot size. Further, the Board declined to make an adjustment to 306 Musketaquid Road to account for its supposedly updated kitchen, as the appellants had, because there was not enough detail or evidence in the record to support such an adjustment.

Therefore, the Board formed its own opinion of value of the subject property, and found and ruled that its fair cash value was $1,700,000 for fiscal year 2008. Accordingly, the Board decided this appeal for the appellants, and granted an abatement of $4,847.40.

APPELLATE TAX BOARD

By: _____ ___

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: __

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

145 SUMNER AVENUE, L.P. v. BOARD OF ASSESSORS OF and RUSSELL L. SEELIG THE CITY OF SPRINGFIELD

Docket Nos. F288512-13 Promulgated:

F294152 April 13, 2010

F294218

These are appeals 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 Board of Assessors of the City of Springfield (“assessors” or “appellee”) to abate real estate tax on certain real estate in the City of Springfield, owned by and assessed to Russell L. Seelig and/or 145 Sumner Avenue L.P. (together, “appellants”) under G.L. c. 59, §§ 11 and 38 for fiscal years 2007 and 2008 (“fiscal years at issue”).

Commissioner Rose heard these appeals. Chairman Hammond and Commissioners Scharaffa, Egan and Mulhern joined him in issuing decisions for the appellants.

These findings of fact and report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

Robert M. Finkel, Esq. and Diana Espanola, Esq. for the appellants.

Patricia Bobba Donovan, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the Statement of Agreed Facts and attached documents, testimony, and other exhibits offered into evidence in the hearing of these appeals, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2006 and January 1, 2007, the relevant dates of assessment for the fiscal years at issue, appellant Russell L. Seelig was the assessed owner of a 10,454 square-foot parcel of land located at 290 Sumner Avenue in Springfield. 290 Sumner Avenue was improved with a four-story, brick apartment building containing twenty units, twelve of which were one-bedroom, one-bathroom apartments, and eight of which were two-bedroom, two-bathroom apartments. For fiscal year 2007, the assessors valued 290 Sumner Avenue at $845,200, and assessed a tax thereon, at a rate of $16.04 per $1,000, in the total amount of $13,557.01. For fiscal year 2008, the assessors valued 290 Sumner Avenue at $922,500, and assessed a tax thereon, at a rate of $16.03 per $1,000, in the total amount of $14,787.68.

On January 1, 2006 and January 1, 2007, appellant 145 Sumner Avenue L.P. was the assessed owner of a 26,276 square-foot parcel of land located at 145 Sumner Avenue in Springfield.[51] 145 Sumner Avenue was improved with a four-story, brick apartment building containing forty units, twenty-four of which were one-bedroom, one-bathroom apartments and sixteen of which were two-bedroom, two-bathroom apartments. For fiscal year 2007, the assessors valued 145 Sumner Avenue at $1,690,400 and assessed a tax thereon, at the rate of $16.04 per $1,000, in the total amount of $27,114.02. For fiscal year 2008, the assessors valued 145 Sumner Avenue at $1,844,900 and assessed a tax thereon, at a rate of $16.03 per $1,000, in the total amount of $14,787.68.

The appellants timely paid the taxes due for 290 Sumner Avenue and 145 Sumner Avenue (together, the “subject properties”), for both of the fiscal years at issue, without incurring interest. The appellants timely filed their Applications for Abatement for fiscal year 2007 with the assessors on January 23, 2007. By vote of the assessors, those abatement applications were denied on April 10, 2007, and notice of the denial was given to the appellants on April 13, 2007. The appellants timely filed their petitions with the Board on May 10, 2007.

The appellants timely filed their Applications for Abatement for fiscal year 2008 with the assessors on January 10, 2008. The abatement applications were denied on March 4, 2008. The appellants timely filed their petitions with the Board on April 1, 2008. On the basis of the foregoing, the Board found and ruled that it had jurisdiction to hear and decide these appeals.

In challenging the assessments at issue, the appellants initially raised both overvaluation and disproportionate assessment claims. However, subsequent to the hearing of these appeals, but prior to the Board’s decisions, the parties stipulated to the fair cash value of the subject properties. The fair cash values stipulated to by the parties were lower than the assessed values of the subject properties, and the parties’ stipulation therefore resulted in decisions for the appellants. Following that stipulation, the issue of valuation was no longer before the Board and the only issue remaining for the Board’s consideration was the disproportionate assessment claim.

The Appellants’ Disproportionate Assessment Claim

During the course of pre-trial litigation in these appeals, the appellants sought information in discovery regarding approximately 150 properties in Springfield, each of which, the appellants alleged, hosted cell towers, antennae, or billboards. It was the appellants’ position that the assessors engaged in a deliberate scheme of undervaluing properties hosting such structures (“host properties”), both by improperly using the cost-reproduction methodology rather to value the cell towers, antennae, and billboards, and also by failing to consider income generated by the structures in determining the value of the host properties. The appellants alleged that this practice resulted in discrimination against the appellants, because the subject properties, which were not host properties, were assessed at their full, fair cash value, while approximately 150 host properties in Springfield were not.

The assessors, in turn, filed a Motion in Limine with the Board, asking the Board to issue an Order precluding the introduction of any evidence relating to the sale, valuation, or assessment of cell towers, antennae, or billboards, or of host properties, among other things. It was the assessors’ position that such evidence was wholly irrelevant to the issues before the Board. For reasons discussed more fully in the Opinion below, the Board allowed the assessors’ Motion in Limine, and issued an Order precluding the introduction of evidence or testimony regarding the sale, valuation, or assessment of cell towers, antennae, billboards, or host properties in Springfield, as it related to appellants’ claims of disproportionate assessment. The Board issued this Order based on its finding that the allegations made by the appellants, even if true, would not show that the assessors intentionally and deliberately engaged in a discriminatory scheme of disproportionate assessment. Rather, the Board found and ruled that the appellants’ allegations, if proven, could at best show that the assessors made an error or honest mistake in assessing the host properties. Accordingly, the Board found and ruled that the appellants could not and did not prove that the assessors engaged in an intentional scheme of discrimination in setting the assessments at issue or in assessing any other properties or class of properties in Springfield during the fiscal years at issue.

In accordance with the parties’ stipulated fair cash values, which the Board adopted, the Board decided these appeals for the appellants and ordered abatements in the following amounts:

Property	Fiscal Year	Assessed Value	Fair Cash Value	Over-valuation	Abatement
290 Sumner Avenue	2007	$845,200	$770,000	$75,200	$1,206.21
290 Summer Avenue	2008	$922,500	$820,000	$102,000	$1,643.08
145 Sumner Avenue	2007	$1,690,400	$1,565,000	$125,400	$2,011.42
145 Summer Avenue	2008	$1,844,900	$1,650,000	$194,900	$3,124.25

OPINION

A taxpayer aggrieved by the assessment of his property may appeal to the Board for an abatement of the tax. Taxpayers have two avenues by which to pursue a claim for abatement. First, a taxpayer may challenge the valuation of his property “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)). In addition, “[i]f the taxpayer can demonstrate in an appeal to the board that he has been a victim of a scheme of discriminatory, disproportionate assessment, he ‘may be granted an abatement . . . which will make . . . [his] assessment proportional to other assessments, on a basis which reaches results as close as is practicable to those which would have followed application by the assessors of the proper statutory assessment principles.’” Coomey, 367 Mass. at 838, (quoting Shoppers’ World, Inc. v. Assessors of Framingham, 348 Mass. 366, 377-78 (1965)).

Regardless of the route chosen by the taxpayer, “the board is entitled to ‘presume that the valuation made by the assessors [is] valid unless the taxpayer[] . . . prov[es] the contrary.’” General Electric Co., 393 Mass. at 598, (quoting Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). In appeals before this Board, “[t]he burden of proof is upon the petitioner to make out its right as [a] matter of law to [an] abatement of the tax.’” Schlaiker, 365 Mass. at 245, (quoting Judson Freight Forwarding Co. v. Commonwealth, 242 Mass. 47, 55 (1922)). As with claims of overvaluation, the burden of proof as to existence of a scheme of discriminatory, disproportionate assessment is on the taxpayer. See First National Stores, Inc. v. Board of Assessors of Somerville, 358 Mass. 554, 559 (1971); see also Schlaiker, 365 Mass. at 245.

The appellants originally raised both overvaluation and disproportionate assessment claims with respect to the subject properties for both of the fiscal years at issue. Subsequent to the hearing of these appeals, but prior to the Board’s decisions, the parties stipulated to the fair cash values of the subject properties, and the Board adopted those values. Therefore, the only issue to be determined by the Board was the issue of disproportionate assessment.

In their filings with the Board, the appellants contended that their property was disproportionately assessed because the assessors failed to assess approximately 150 host properties in Springfield at their full, fair cash value. The appellants asserted that the assessors improperly undervalued the cell towers, antennae and billboards by using the cost-reproduction method to value them instead of the income-capitalization and/or sales-comparison approach. Further, the appellants contended that the assessors undervalued the host properties by failing to include the rental income generated by the cell towers, antennae and billboards in calculating the fair cash value of the host properties. The Board found and ruled that, even if these allegations were true, they would not prove that the subject properties were disproportionately assessed. The Board notes that the open-ended and voluminous discovery requested by the appellants would have done nothing to advance a claim of disproportion. The record before the Board indicated that neither the subject apartment buildings nor any apartment buildings in Springfield had billboards, cell towers or antennae. The appellants’ attempts to arbitrarily construct a subclass of commercial property based on a limited cluster of income-producing measures[52], with no adjustments for comparability, could not give rise to a general scheme of disproportionate assessment where the only issue contested was the methodology that was utilized by the assessors.

To make out a claim of disproportionate assessment, the appellants must show that a “statistically significant number” of properties have been valued at lower assessment-to-fair-cash-value ratios than the subject property. Graham v. Assessors of West Tisbury, Mass. ATB Findings of Fact and Reports 2007-321, 391, aff’d, Graham v. Assessors of West Tisbury, 73 Mass. App. Ct. 1107 (2008). The appellants must also show that the assessors engaged in an “intentional widespread scheme of discrimination.” Graham, Mass. ATB Findings of Fact and Reports at 207-405 (quoting Stilson v. Assessors of Gloucester, 385 Mass. 724, 727-28 (1982)). To proceed to trial, the appellants must “make specific allegations . . . as would, if proved, establish . . . the precise nature of the lack of uniformity in assessments which he expects to prove and the circumstances indicating that it was intentionally discriminatory, rather than caused by inadvertence, mistake, or incompetence.” Stone v. City of Springfield, 341 Mass. 246, 249 (1960). “Except upon clear allegation of specific facts showing a widespread scheme of intentional discrimination rather than merely isolated, inadvertent lack of uniformity . . . an inquiry [is] not required of the Appellate Tax Board.” Id. at 251.

The Board found and ruled that the appellants’ allegations, even if true, would not support the finding that a deliberate scheme of disproportionate assessment was undertaken by the assessors. The appellants alleged no facts that would prove that the assessors deliberately and intentionally assessed host properties more favorably than other types of property in Springfield so as to discriminate against those other properties. Moreover, in their filings with the Board, the appellants acknowledged the difficulty of valuing structures such as cell towers, antennae, and billboards, given the lack of a market for them and the concomitant dearth of comparable sales. Industry publications corroborate the difficulties inherent in valuing such structures and the real properties hosting them. See The Reenstierna Associates Report, “Billboards,” Eric Reenstierna Associates, 1998. Given these difficulties, the Board found that, to the extent the appellants could show that the assessors undervalued any cell towers, antennae and billboards in Springfield, or properties hosting them, such valuations were more “‘consistent with honest mistake or oversight on the part of the assessors’ as opposed to a ‘deliberate scheme of disproportionate assessment.’” Gargano v. Board of Assessors of Barnstable, Mass. ATB Findings of Fact and Reports at 2003-22 (quoting Stilson, 385 Mass. at 728).

With respect to their claim that the assessors improperly used the cost-reproduction methodology rather than the income-capitalization or sales-comparison methodology to value the antennae, billboards and cell towers, the Board found and ruled that this allegation, even if true, was insufficient to prove a scheme of disproportionate assessment. The “use of differing valuation methodologies, without substantially more, will not support a finding of disproportionate assessment. Rather, there must be substantial evidence demonstrating that a class or subclass of properties is valued so that it is shouldering more than its fair share of the property tax, irrespective of methodology.” Bell v. Board of Assessors of the City of Boston, Mass. ATB Findings of Fact and Reports 2006-754, 767-68, (citing Stilson, 385 Mass. at 728; Ecker v. Assessors of Chatham, Mass. ATB Findings of Fact and Reports 2003-81, 88-90; Brown v. Assessors of Brookline, Mass. ATB Findings of Fact and Reports 1996-1.)

“Trial judges have broad discretion to control the proceedings before them.” Commonwealth v. Jonathan Stockhammer, 409 Mass. 867, 882 (1991). “The purpose of a motion in limine is to prevent irrelevant, inadmissible or prejudicial matters from being admitted in evidence . . . and in granting such a motion, a judge has discretion similar to that which he has when deciding whether to admit or exclude evidence . . . .” Commonwealth v. Paul Hood, 389 Mass. 581 , 594, (1983) (citations omitted). In the present appeals, the Board found and ruled that the evidence which the appellants sought to admit was irrelevant because it could not support their argument that the subject properties were disproportionately assessed. Moreover, the Board determined that allowing the appellants to conduct factual inquiries involving the valuation of 150 host properties would require a tremendous expenditure of resources for no benefit. The Board therefore allowed the appellee’s Motion in Limine and declined to permit the appellants to introduce evidence relating to their disproportionate assessment claims.

In accordance with the parties’ stipulated fair cash values, the Board decided these appeals for the appellants and ordered abatements in the following amounts:

Property	Fiscal Year	Assessed Value	Fair Cash Value	Over-valuation	Abatement
290 Sumner Avenue	2007	$845,200	$770,000	$75,200	$1,206.21
290 Summer Avenue	2008	$922,500	$820,000	$102,000	$1,643.08
145 Sumner Avenue	2007	$1,690,400	$1,565,000	$125,400	$2,011.42
145 Summer Avenue	2008	$1,844,900	$1,650,000	$194,900	$3,124.25

APPELLATE TAX BOARD

By: ____________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ______ _____ _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

MICHAEL J. MCTYGUE & v. COMMISSIONER OF REVENUE

ANN M. MCTYGUE

Docket No. C287781 Promulgated:

April 20, 2010

This is an appeal filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39, from the refusal of the Commissioner of Revenue (“Commissioner” or “appellee”) to abate personal income tax assessed to Michael J. McTygue (“Mr. McTygue”) and Ann M. McTygue (jointly, “appellants”), for tax years 2002, 2003, 2004, and 2005 (“years at issue”).

Commissioner Scharaffa heard this appeal. Chairman Hammond and Commissioners Egan, Rose, and Mulhern joined him in a decision for the appellee.

These findings of fact and report are made pursuant to requests by the appellants and the appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.

Roger J. Brunelle, Esq., for the appellants.

Celine E. Jackson, Esq. and Sean M. Fontes, Esq., for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of a Statement of Agreed Facts and exhibits offered by the parties, the Appellate Tax Board (“Board”) made the following findings of fact.

As a result of an audit that was initiated during April of 2005, the Commissioner issued a Notice of Intent to Assess personal income tax to the appellants on December 20, 2005 for tax years 2002, 2003 and 2004. The Commissioner subsequently issued a Notice of Assessment dated August 22, 2006, notifying the appellants that she had assessed tax, plus interest, in the amounts of $3,725.19, $6,953.78, and $5,959.88 for the 2002, 2003 and 2004 tax years, respectively. On September 14, 2006, the appellants filed an Application for Abatement for tax years 2002, 2003, and 2004 with the Commissioner. On December 1, 2006, the Commissioner denied the appellants’ abatement application.

On December 23, 2006, the Commissioner issued a Notice of Intent to Assess personal income tax for tax year 2005. By Notice of Assessment dated February 7, 2007, the Commissioner notified the appellants that she had assessed tax, plus interest, in the amount of $15,059.95 for tax year 2005. The appellants filed an abatement application for tax year 2005 with the Commissioner on December 28, 2007, which the Commissioner denied on June 13, 2008.

On January 26, 2007, the appellants timely filed an appeal with the Board relating to tax years 2002, 2003, and 2004. The appellants filed a motion for leave to amend their petition to include tax year 2005, which the Board allowed on August 5, 2008. On the basis of the foregoing, the Board found that it had jurisdiction to hear and decide this appeal.

In 1974, Mr. McTygue, then a Massachusetts resident, founded a construction/real-estate development business, which was organized as a Massachusetts subchapter C corporation called Builders Systems, Inc. (“BSI”). Mr. McTygue was the sole shareholder of BSI, owning all 500 outstanding shares of the corporation.

Having owned and operated BSI in Massachusetts for almost thirty years, Mr. McTygue sold his entire ownership interest in the company to three of his employees (“Buyers”) pursuant to an agreement between Mr. McTygue and the Buyers dated June 28, 2002 (“Agreement”). The Agreement provided that Mr. McTygue would receive $2,500,000 in exchange for his 500 shares, $500,000 of which the Buyers paid in a lump sum at the time of the closing to redeem 100 shares. The $2,000,000 balance, representing payment for the remaining 400 shares, was to be made by the Buyers pursuant to a promissory note also dated June 28, 2002 (“Note”), which provided for payment of principal and accrued interest over a period of ten years. Mr. McTygue maintained a security interest in all of the shares acquired by the Buyers until the Note was paid in full.

On the same day that the Agreement and the Note were executed, Mr. McTygue entered into an employment agreement with BSI (“Employment Agreement”), which explicitly provided that “as a condition to the consummation of the Acquisition, [Mr. McTygue] is to remain employed by the Company.” (emphasis added). Pursuant to the Employment Agreement, Mr. McTygue reported directly to BSI’s Board of Directors and was responsible “for the development and implementation of business plans, business development, providing management advice and developing budgets for the Company’s business.” The Employment Agreement also provided that Mr. McTygue would work for BSI for five years, starting June 28, 2002, with a base annual salary of $50,000, and that Mr. McTygue would receive bonus compensation at a rate of 50% of any bonus compensation paid to the Buyers. Further, Mr. McTygue was eligible to participate, at the company’s expense, in any medical or health plan that may have been provided by the company for its executive employees. He was entitled to sick leave, sick pay and disability benefits, and he was provided with “furnished suitable office and conference facilities with secretarial and drafting help as needed,” as well as a company car. Moreover, Mr. McTygue was granted “full and complete access to the financial books, records, statements and materials” pertaining to BSI until the Note was paid in full.

At issue in this appeal is the taxation of interest on the Note received by Mr. McTygue during the years at issue. For federal tax purposes, the appellants elected to pay tax on the capital gain from the sale of BSI on an installment basis over the term of the Note, pursuant to Internal Revenue Code § 453(b). The appellants included the interest income from the Note as ordinary income on their federal income tax returns for the years at issue.

For Massachusetts purposes, the appellants did not elect installment sale treatment, effectively realizing the capital gain on the sale of BSI stock in the year of sale. However, the appellants owed no Massachusetts tax on the capital gain under then-prevailing law because Mr. McTygue had owned the stock for more than six years at the time of sale. See G.L. c. 62, § 2(b)(3), as amended by St. 1994, c. 195, §§ 10 and 20; see also Peterson v. Commissioner of Revenue, 441 Mass. 420 (2004). For each of the years at issue, the appellants filed Massachusetts Nonresident/Part Year Resident Income Tax Returns as nonresidents,[53] including the income received pursuant to the Employment Agreement in Massachusetts source income, but excluding the interest income from the Note.[54]

On the basis of all of the evidence, the Board made the following additional findings of fact. Pursuant to the Employment Agreement, Mr. McTygue actively participated in the operation of BSI’s business in Massachusetts during the years at issue. Given that the Employment Agreement was executed “as a condition to the consummation of the Acquisition,” the Board also found that the sale of Mr. McTygue’s stock was contingent upon his continued employment with BSI. Moreover, the responsibilities borne by Mr. McTygue under the Employment Agreement, including “development and implementation of business plans, business development, providing management advice and developing budgets for the Company’s business,” were central to the successful operation of BSI’s business. Accordingly, the Board found that BSI’s financial success and ability to fulfill its obligations under the Note were dependent, at least in part, upon Mr. McTygue’s ongoing provision of services to the company.

The Board further found that the interest income at issue was directly and solely traceable to Mr. McTygue’s sale of his 100-percent ownership interest in BSI. Based on the foregoing, and for the reasons more fully explained in the following Opinion, the Board found and ruled that the interest income at issue was derived from or effectively connected with Mr. McTygue’s Massachusetts trade or business and therefore was subject to taxation as gross income from sources within the Commonwealth.

Accordingly, the Board issued a decision for the appellee in this appeal.

OPINION

The issue in the instant appeal is the taxability of interest income which Mr. McTygue received during the years at issue according to the terms of the sale of his ownership interest in his Massachusetts business. The sale was completed while the appellants were domiciled in the Commonwealth, but Mr. McTygue received the interest at issue when the appellants were Florida domiciliaries.

Tax Year 2002

General Laws c. 62, § 5A(a), in effect for tax year 2002, limited the taxation of nonresidents’ income to “items of gross income from sources within the commonwealth.” Section 5A further provided that “[i]tems of gross income from sources within the commonwealth are items of gross income derived from or effectively connected with . . . any trade or business, including any employment carried on by the taxpayer in the commonwealth.”[55] Such income is also known as Massachusetts source income. See 830 CMR 62.5A.1 (2).

On June 28, 2002, Mr. McTygue sold his interest in his Massachusetts business, BSI, to the Buyers. On the same day, Mr. McTygue entered into the Employment Agreement, which by its own terms established that the sale was contingent upon Mr. McTygue’s ongoing employment with the company. More specifically, the Employment Agreement provided that “as a condition to the consummation of the Acquisition, [Mr. McTygue] is to remain employed by the Company.” (emphasis added).

Pursuant to the Employment Agreement, Mr. McTygue would, for a period of five years, receive base compensation, bonuses, and various executive-level benefits. Moreover, in his new role, Mr. McTygue was “responsible for the development and implementation of business plans, business development, providing management advice and developing budgets for the Company’s business.” By their very nature, these duties were central to the operation of BSI’s business and its continued financial success. Mr. McTygue filled this role throughout the years at issue, and as the appellants’ Massachusetts nonresident income tax returns for these years reflect, was compensated for his efforts. In light of these facts, the Board found that Mr. McTygue actively participated in BSI’s business during the years at issue and that BSI’s ability to fulfill its obligations under the Note was dependent, at least in part, on this participation. Accordingly, the Board found and ruled that for tax year 2002, the interest at issue qualified as “gross income from sources within the commonwealth” within the meaning of § 5A because it was “derived from or effectively connected with . . . [a] trade or business” conducted by Mr. McTygue in Massachusetts. The Board thus found and ruled that the income was taxable to the appellants pursuant to § 5A.

The appellants do not dispute that Mr. McTygue remained employed by BSI during the years at issue, nor do they dispute that the interest income paid pursuant to the terms of the Note was part of the proceeds of the sale of BSI. Rather, the appellants contend that the interest income was not sufficiently connected to Mr. McTygue’s ongoing involvement in the business of BSI to qualify as Massachusetts source income within the meaning of § 5A. In support of their position, the appellants cite Department of Revenue Letter Ruling 83-23 and Commissioner of Revenue v. Dupee, 423 Mass. 617, 621 (1996).

In Dupee, the Supreme Judicial Court considered the taxability of a nonresident taxpayer’s capital gain realized from the disposition of his interest in the Boston Celtics. The Court agreed with the Board’s prior holding that the income was not subject to tax in Massachusetts where the taxpayer “‛did not actively, regularly, or continuously participate in any capacity in the activities constituting the regular operations of [the corporation],’ nor did he maintain any offices, employees, or place of business in Massachusetts, or purchase goods or services in connection with a trade or business in Massachusetts.” Dupee, 423 Mass. at 618 (citing Paul R. Dupee, Jr. and Lizbeth Schiff v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1994-103, 107). Similarly, in Letter Ruling 82-23, the Commissioner found that a nonresident’s long-term capital gain realized from the sale of stock in a Massachusetts corporation was not taxable by the Commonwealth where the taxpayer had performed no services for the corporation.

Consistent with Dupee and Letter Ruling 82-23, the Board and the Supreme Judicial Court have, on several occasions, ruled that income generated from the disposition of an interest in, or otherwise received from, a Massachusetts corporation is not includible in the Massachusetts source income of a nonresident if the nonresident did not actively participate in the corporation’s business when the income was received. See Gaston v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1997-332, 352-53 (ruling that gain from a nonresident’s sale of shares in a Massachusetts subchapter S corporation was not Massachusetts source income where the taxpayer did not perform employment services in Massachusetts in connection with ownership of the shares); Gersh v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1997-502, 522-23 (ruling that a nonresident’s income under a non-competition agreement related to the sale of a Massachusetts corporation was not Massachusetts source income where the taxpayer no longer acted as an officer or director of the company and did not perform any other services in Massachusetts for the company); Commissioner of Revenue v. R. Bruce Oliver, 436 Mass. 467 (2002) (affirming the Board’s ruling that a nonresident was not subject to tax on nonqualified pension payments made by his former Massachusetts employer where the taxpayer did not carry on a trade or business in Massachusetts during the years he received the payments).

By contrast, Mr. McTygue founded and built a Massachusetts business, and when he sold that business agreed, as a condition of the sale, to continue to participate in its operation in a strategic role that was central to the company’s ongoing success. The interest income at issue, which comprised part of the proceeds of the sale, was paid to Mr. McTygue while he performed this service. The Board thus found that Mr. McTygue’s continued participation in BSI’s business rendered Letter Ruling 83-23 and Dupee, as well as Gaston, Gersh and Oliver, inapplicable to the instant appeal.

Finally, any argument that the interest income at issue did not bear an adequate connection to Mr. McTygue’s sale of his interest in BSI is simply not supported by the record in this appeal. In Horst v. Commissioner of Revenue, 389 Mass. 177 (1983), a nonresident sold Massachusetts real estate at a gain, receiving as consideration cash and an interest-bearing note. In concluding that “the interest on the note was derived from an interest in ownership in real property within the meaning of § 5A”[56] (Horst, 389 Mass. at 181) and viewing the interest as “income directly and solely traceable to the sale of such property” (id. at 183), the Court stated that:

[t]he taxpayer seeks to divorce his interest income from the category of “such income as is derived from those sources.” He asserts that its intangible nature as interest on a note takes it out of the realm of income taxable to nonresidents. The taxpayer . . . would have the interest viewed as somehow disembodied from the sale transaction. We think that such a view strains the definition of income derived from the ownership of property.

Id. at 182-83.

While the Court in Horst considered whether interest income received in connection with the sale of real property was “derived from” Massachusetts property for purposes of § 5A, the reasoning in Horst is equally applicable to the interest income received in connection with Mr. McTygue’s sale of his Massachusetts business. As in Horst, the appellants’ interest income is “derived from” one of the three sources delineated in § 5A; in this case, a trade or business carried on in Massachusetts.

Accordingly, for all of the forgoing reasons, the Board found and ruled that the interest income which Mr. McTygue received under the note was derived from or effectively connected with a Massachusetts trade or business personally conducted by Mr. McTygue. The Board therefore ruled that the interest income at issue was taxable to the appellants pursuant to § 5A(a) for tax year 2002.

Tax Years 2003 through 2005

Section 5A was amended, effective for tax years beginning on or after January 1, 2003, to expand the definition of Massachusetts source income. Section 5A, as amended, provides in part that:

[i]tems of gross income from sources within the commonwealth are items of gross income derived from or effectively connected with . . . any trade or business, including any employment carried on by the taxpayer in the commonwealth, whether or not the nonresident is actively engaged in a trade or business or employment in the commonwealth in the year in which the income is received. (emphasis added).

Section 5A was further amended to explicitly define “gross income derived from or effectively connected with any trade or business” as follows:

[f]or purposes of this section, gross income derived from or effectively connected with any trade or business, including any employment, carried on by the taxpayer in the commonwealth shall mean . . . the income that results from, is earned by, is credited to, accumulated for or otherwise attributable to either the taxpayer’s trade or business in the commonwealth in any year or part thereof, regardless of the year in which that income is actually received by the taxpayer and regardless of the taxpayer’s residence or domicile in the year it is received. It shall include, but not be limited to, gain from the sale of a business or of an interest in a business, distributive share income, separation, sick or vacation pay, deferred compensation and nonqualified pension income not prevented from state taxation by the laws of the United States and income from a covenant not to compete. (emphasis added).

As a preliminary matter, the Board found and ruled that the amended version of § 5A determined the taxability of the interest income received by the appellants after January 1, 2003. While the sale of Mr. McTygue’s interest in BSI occurred in 2002, prior to the effective date of the amendment to § 5A, applying the statute to interest income recognized in tax years 2003 through 2005 is appropriate and does not constitute retroactivity. See Johnson v. Department of Revenue, 387 Mass. 59, 64 (1982) (citing, inter alia, DuBois v. Director, Div. of Taxation, 4 N.J. Tax 11 (Tax Ct. 1981), aff’d, 470 A.2d 446 (1983) (“The taxable event is receipt of the installments. Since this is a current event, there is no retroactivity.”) (other citations omitted).

Under the version of § 5A effective for tax year 2002, the appellants were taxable on the interest income at issue because, as detailed above, the interest income was derived from or effectively connected with the Massachusetts trade or business Mr. McTygue was conducting at the time he received the income. Although Mr. McTygue would still be taxable on the disputed interest income for the subsequent tax years under this version of § 5A for the same reason, the amendment to § 5A provides further grounds for taxing the income.

First, amended § 5A removes the requirement, developed through case law, that a nonresident individual be actively engaged in a trade or business in Massachusetts in a year in which income is received for that income to be derived from or effectively connected with a trade or business. Further, unlike the prior version of § 5A, which did not define “derived from or effectively connected with any trade or business,” the amended statute incorporates an exceedingly broad definition of the phrase. This definition includes income “that results from, is earned by, is credited to, accumulated for or otherwise attributable to” a trade or business in the Commonwealth and specifically enumerates several sources of taxable income including “gain from the sale of a business or of an interest in a business.”

Rather than attempt to argue that the disputed interest income somehow did not “result from” or was not “otherwise attributable to” Mr. McTygue’s trade or business under amended § 5A, the appellants argue that income resulting from the sale of Mr. McTygue’s BSI stock is not Massachusetts source income because BSI was a subchapter C corporation. The appellants cite for this proposition the Commissioner’s regulation interpreting taxation of the “[s]ale of a business or an interest in business.” 830 CMR 62.5A.1 (3)(c)(8) provides that:

[t]his rule generally applies to the sale of an interest in a sole proprietorship, general partnership, limited liability partnership, a general or limited partner’s interest in a limited partnership (subject to the exception in the following sentence), or an interest in a limited liability company. It generally does not apply to the sale of a limited partner’s interest in a publicly traded limited partnership, or to the sale of shares of stock in a C or S corporation, to the extent that the income from such gain is characterized for federal income tax purposes as capital gains. (emphasis added).

The meaning of “generally,” as it applies to the present appeal can be inferred from the regulation’s illustrative examples, and in particular the example that relates to acquisition and sale of shares in a C corporation. More specifically, example (3)(c)(8.4) depicts a hypothetical investor who is an employee of “NationalCorp,” a C corporation that does business in Massachusetts. The investor, who works in the corporation’s Massachusetts offices, purchased stock of the corporation “as an ordinary investment unrelated in any way to his compensation.” The example concludes that the gain on the investor’s sale of stock is not Massachusetts source income.

From this example, the Board inferred that the Commissioner intended to exclude from Massachusetts source income those items of income which were essentially passive in nature and unrelated to an individual’s employment by or active participation in the entity that was the source of the income. The Board found, therefore, that given the statutory language of § 5A, 830 CMR 62.5A.1(3)(c)(8) could not be read to exclude gains such as those at issue in the present appeal from Massachusetts source income.

The Board is also guided by the familiar principle that tax statutes are to be construed according to their plain meaning. Commissioner of Revenue v. Franchi, 423 Mass. 817, 822 (1996). See also Massachusetts Broken Stone Co. v. Weston, 430 Mass. 637, 640 (2000)(“Where the language of a statute is clear, courts must give effect to its plain and ordinary meaning and the courts need not look beyond the words of the statute itself.”). The plain and unambiguous nature of the statute in question, which includes in Massachusetts source income “gain from the sale of a business or of an interest in a business,” compels the conclusion that the interest income at issue, which was part of the gain realized by Mr. McTygue from his sale of BSI, is subject to taxation under amended § 5A. Further, as previously noted, amended § 5A removes the requirement that a nonresident individual be actively engaged in a trade or business in Massachusetts in a year in which income is received for that income to be effectively connected with a trade or business. Thus, even had the Board found that Mr. McTygue was not so engaged during tax years 2003 through 2005, the income at issue would have been taxable under amended § 5A.

Conclusion

Mr. McTygue actively participated in a Massachusetts trade or business during the years at issue. For tax year 2002, the Board found and ruled that Mr. McTygue actively participated in the business of BSI such that the interest income he received, which comprised part of the proceeds of the sale of BSI, was income derived from or effectively connected with a Massachusetts trade or business and was therefore Massachusetts source income taxable to the appellants pursuant to § 5A.

For tax years 2003 through 2005, the Board found and ruled that § 5A, as amended, determined the taxability of the interest income at issue. For these tax years, the Board further found and ruled that amended § 5A was substantially more inclusive than its predecessor and provided additional bases on which to conclude that the disputed interest income was taxable as income derived from or effectively connected with a Massachusetts trade or business.

Accordingly, the Board issued a decision for the appellee in this appeal.

APPELLATE TAX BOARD

By: ______ _____

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ______ _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

DIANA M. & JAMES L. HENRY, v. BOARD OF ASSESSORS OF

TRUSTEES[57] THE CITY OF NEW BEDFORD

Docket No. F297367 Promulgated:

April 27, 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 Board of Assessors of the City of New Bedford (“assessors” or “appellee”) to abate taxes on certain real estate located in New Bedford owned by and assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2008.

Commissioner Mulhern heard the appeal. Chairman Hammond and Commissioners Scharaffa and Rose joined him in the decision 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.

Diana M. & James L. Henry, Trustees, pro se, for the appellants.

Burton Peltz, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On January 1, 2007, Diana M. and James L. Henry, Trustees, (“appellants”) were the assessed owners of a 18,034 square-foot parcel of real estate improved with a single-family dwelling, located at 78 Orchard Street in the City of New Bedford (“subject property”). For fiscal year 2008, the assessors valued the subject property at $655,400 and assessed a tax thereon, at a rate of $10.55 per thousand, in the amount of $6,914.48, which the appellants paid timely. The appellants timely filed an abatement application with the assessors on January 31, 2008, which the assessors denied on March 27, 2008. On June 27, 2008, the appellants seasonably filed a Petition Under Formal Procedure with the Board. Based on these facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

The subject dwelling was built in approximately 1882. It is a three-story colonial-style structure, which contains a total living area of approximately 6,059 square feet. The exterior of the home is wood shingles and it has an asphalt gable roof. The dwelling is heated by a two-zone, forced-hot-water, gas-heating system, and there is also a two-zone, central air-conditioning system. The dwelling has a total of fourteen rooms, including six bedrooms, and also three full bathrooms and one half bathroom. Other features of the home include eight fireplaces, leaded glass cabinets, hardwood floors, detailed moldings, raised panel wood doors, and also large covered front and rear porches. There is also an undersized two-car detached garage and a 351 square-foot carport. No major repairs are needed. However, some deferred maintenance exists due to water seepage in the basement. Overall the subject dwelling is in average condition.

The subject property is located in an historically significant neighborhood and is within walking distance to local shopping, public schools, and parks, and is within one mile of highway access.

In support of their contention that the subject property was overvalued for the fiscal year at issue, the appellants presented the testimony of James L. Henry and Diana M. Henry, the property owners, and also Arthur C. Larrivee, a certified real estate appraiser. Based on his education, experience and certification, the Board qualified Mr. Larrivee as an expert real estate appraiser. The appellants also offered into evidence the subject property’s property record cards for fiscal year 2001, which listed the finished living area as 5,359 square feet, and fiscal year 2006, which listed the finished living area at 6,319 square feet. The appellants also offered a copy of the Board’s fiscal year 2007 decision involving the subject property, Diana M. & James L. Henry v. Assessors of the City of New Bedford, Mass. ATB Findings of Fact and Reports 2008-1143 (“Henry I”), in which the Board determined that the appellants failed to meet their burden of proving that the subject property was overvalued for fiscal year 2007.

Mr. Larrivee used the sales-comparison methodology to value the subject property. He first inspected both the interior and exterior of the dwelling. He did not, however, measure the subject property’s square footage. Instead, he relied on the fiscal year 2001 property record card, which listed a finished living area of 5,352 square feet. Mr. Larrivee further testified that for fiscal year 2001, there was unfinished attic space of approximately 300 square feet. He deducted the attic space from the 5,352 square feet reported on the fiscal year 2001 property record card to arrive at a finished living area of 5,031 square feet for purposes of his valuation.

In his analysis, Mr. Larrivee primarily relied on three sales of properties that he deemed to be comparable to the subject property, all improved with older, historic, colonial-style dwellings and located within a one-mile radius of the subject property.

Sale number one, located at 114 Hawthorne Street, is a 10,160 square-foot parcel improved with a 110-year-old, colonial-style, single-family dwelling. The dwelling has a total of 16 rooms, including six bedrooms, and also three full bathrooms and one half bathroom, with a total living area of 5,003 square feet. Like the subject property, this property has eight fireplaces and central air conditioning. This property also has a detached three-car garage and a third-floor “in-law” apartment. The property sold for $470,000 on July 22, 2005.

Sale number two, located at 100 Hawthorne Street, is a 11,848 square-foot parcel improved with an historic, Colonial-style, single-family dwelling with a total living area of 6,709 square feet. The dwelling has a total of sixteen rooms including ten bedrooms, as well as four full bathrooms and one half bath. This property has only four fireplaces and no central air conditioning. It does have a partially finished basement and an in-ground swimming pool. The property sold for $450,000 on May 9, 2006.

Sale number three, located at 691 County Street, is a 4,345 square-foot parcel also improved with an historic Colonial-style dwelling, built circa 1893, with a total living area of 4,345 square feet. The dwelling has a total of twelve rooms, including eight bedrooms, as well as four full bathrooms. There are six fireplaces and no central air conditioning. The property sold for $405,000 on October 5, 2006.

Mr. Larrivee testified that the New Bedford real estate market had reached its highest point in the summer of 2006 and that property values then began to decline. He further testified that the older stately dwellings in New Bedford, such as the subject property, did not incur exactly the same market fluctuations as the less expensive properties and that these types of properties tend to increase and decrease at a slower pace compared to other less expensive residential properties. Therefore, Mr. Larrivee determined that no time adjustments were necessary. He did, however, make adjustments to account for differences in lot size, the number of bedrooms and bathrooms, the number of fireplaces, finished basement, overall functional utility and the existence of central air conditioning, a carport, a pool, and an in-law apartment.[58]

Mr. Larrivee’s sales-comparison analysis yielded adjusted sale prices that ranged from $402,000 to $467,000. Based on this analysis, his final opinion of the value of the subject property for fiscal year 2008 was $450,000.

In support of their assessment for fiscal year 2008, the assessors relied on the testimony of Carlos Amado, city appraiser for the City of New Bedford. Mr. Amado offered into evidence a comparable-sales analysis and supporting documentation. The assessors’ comparable-sales analysis included five purportedly comparable properties located within three-quarters of a mile of the subject property. The assessors’ purportedly comparable properties’ lot sizes ranged from 5,785 square feet to 12,796 square feet, with finished living area sizes that ranged from 2,761 square feet to 5,353 square feet. All but one of the comparable properties has less than 40% of the finished living area of the subject property.

The properties sold during the period August 1, 2005 through November 21, 2006, with sale prices that ranged from $412,000 to $520,000. The assessors made adjustments to account for differences in location, age, condition, lot size, finished living area, and special features. The assessors also made time adjustments to account for the dates of the purportedly comparable properties’ sales and the relevant date of assessment for the fiscal year at issue. The assessors based their time adjustments on the argument that the New Bedford real estate market continued to appreciate throughout 2006. In support of their assertion, the assessors offered into evidence a time adjustment report of fourteen properties that sold in 2005 and resold in 2006. Thirteen of the fourteen properties were in the sales-price range of $150,000 to $300,000. Further, three of the properties experienced a decline in sale price and one remained unchanged.

The assessors’ comparable-sales analysis yielded adjusted sale prices that ranged from $343,242 to $628,842. Based on these sales, Mr. Amado’s final opinion of value for the subject property for fiscal year 2008 was $678,600.

Based on all of the evidence, the Board found that the appellants met their burden of proving that the subject property was overvalued for the fiscal year at issue. In so doing, however, the Board found that Mr. Larrivee’s determination of finished living area was erroneous and that his reliance on the subject property’s fiscal year 2001 property record card was unwarranted and inappropriate.

The Board further found that the best evidence of the subject property’s fair market value as of January 1, 2007, was the sale of 100 Hawthorne Street, which occurred approximately six months prior to the assessment date, for $450,000. The Board noted that the property at 100 Hawthorne Street has a smaller lot size than the subject property and that a premium would be paid for the subject property’s larger lot considering the size of the home. Therefore, the Board found that an upward adjustment of $50,000 was warranted.

The Board noted that, in their fiscal year 2007 appeal, the appellants also relied on the sales at 100 Hawthorne Street, as well as 114 Hawthorne Street, to support their claim that the subject property was overvalued for fiscal year 2007. Henry I Mass. ATB Findings of Fact and Reports 2008-1145. However, despite the differences between the subject property and the cited comparables’ lot size, finished living area or the number of rooms, bathrooms, and bedrooms, the appellants made no adjustments to their comparable sales in their fiscal year 2007 appeal. Id. Accordingly, based on the evidence presented in Henry I, the Board found that the appellants failed to meet their burden of proving that the subject property was overvalued for fiscal year 2007.

In contrast, the Board found in the present appeal that the appellants’ real estate expert made adjustments to the sales at 100 Hawthorne Street and 114 Hawthorne Street, which supported a finding that the subject property was overvalued.

With respect to the assessors’ comparable-sales analysis in the present appeal, the Board found that both the lot sizes and finished living areas of the assessors’ purportedly comparable properties were significantly smaller than the subject property and, therefore, lacked comparability. Further, the Board found that the assessors’ time-adjustment report, which cited only properties selling for $335,000 and less, was unreliable.

Based on all of the evidence, the Board found that the subject property was overvalued by $155,400 for the fiscal year at issue. Accordingly, the Board found that the subject property’s fair cash value for fiscal year 2008 was $500,000 and granted an abatement of $1,639.47.

OPINION

Assessors are required to assess real estate at its fair cash value as of the first day of January preceding the fiscal year at issue. G.L. c. 59, §§ 11 and 38. The fair cash value of property is defined as the price upon which a willing buyer and a willing seller would agree if both are fully informed and under no compulsion. Boston Gas. Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).

The burden of proof is upon the taxpayer to make out a right to an abatement. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). The assessment is presumed to be valid unless the taxpayer meets its burden of proving otherwise. Id. A right to an abatement can be proven by either introducing evidence of fair cash value, or by proving that the assessors erred in their method of valuation. General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 600 (1984).

Generally, real estate valuation experts, the Massachusetts courts, and this Board rely upon three approaches to determine the fair cash value of property: income capitalization, sales comparison, and cost reproduction. Correia v. New Bedford Redevelopment 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). In the present appeal, both the appellants and the assessors relied on the sales-comparison method to value the subject property for fiscal year 2008.

The appellants’ expert advanced a comparable-sales analysis in an attempt to prove that the subject property had a lower value than that assessed. Sales of comparable realty in the same geographic area and within a reasonable time of the assessment date generally contain 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, aff’d, Graham v. Assessors of West Tisbury, 73 Mass. App. Ct. 1107 (2008).

“Evidence of the sale prices of ‘reasonably comparable property’ is the next best evidence to the sale of the property in question.” Lupacchino v. Assessors of Southborough, 42 Mass. 205, 216 (2004). Required are “fundamental similarities” between the subject property and the comparison properties. Id. at 216. The appellant bears the burden of “establishing the comparability of . . . properties [used for comparison] to the subject propert[ies].” Fleet Bank of Mass. v. Assessors of Manchester, Mass. ATB Findings of Fact and Reports 1998-546, 554. Accord New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 470 (1981). “Once basic comparability is established, it is then necessary to make adjustments for the differences, looking primarily to the relative quality of the properties, to develop a market indicator of value.” New Boston Garden Corp., 383 Mass. at 470.

Based on all of the evidence, the Board found that the sale at 100 Hawthorne Street, the appellants’ comparable sale number two, was the most comparable to the subject property. The Board further found that a premium would be paid for the larger lot size of the subject property given the size of the existing improvement, therefore requiring an upward adjustment to the sale price of 100 Hawthorne Street. Moreover, the Board found that the assessors failed to establish comparability between their purportedly comparable sales and the subject property.

Based on the foregoing facts and findings, the Board found and ruled that the appellants met their burden of proving that the subject property was overvalued for fiscal year 2008. Accordingly, the Board issued a decision for the appellants in this appeal and granted an abatement in the amount of $1,639.47.

THE APPELLATE TAX BOARD

By: ____________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _________________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

MASSPCSCO

COMMISSIONER OF REVENUE Docket Nos. C278479

C284149

C288621

MASSPCSCO

BOARD OF ASSESSORS

OF THE CITY OF WOBURN Docket Nos. F283510

F293338

MASSPCSCO

BOARD OF ASSESSORS

OF THE CITY OF SPRINGFIELD Docket Nos. F282451

F287119

Promulgated: May 7, 2010

Commissioner Scharaffa heard these appeals. Chairman Hammond and Commissioners Egan, Rose, and Mulhern joined him in the decisions for the appellant in the appellant’s appeals against the Commissioner of Revenue (“Commissioner”) (Docket Nos. C278479 (2005), C284149 (2006), and C288621 (2007)) and the decisions for the appellees in the appellant’s appeals against The Board of Assessors of the City of Springfield (“Springfield Assessors”) (Docket Nos. F282451 (FY 2005) and F287119 (FY 2006)) and in the appellant’s appeals against The Board of Assessors of the City of Woburn (“Woburn Assessors”) (Docket Nos. F283510 (FY 2006) and F293338 (FY 2007)).

The appellant’s appeals against the appellee, Commissioner, were filed under the formal procedure pursuant to G.L. c. 58A, §§ 6 and 7 and G.L. c. 58, § 2, from the refusal of the Commissioner to include the appellant on her annual lists under G.L. c. 63, § 30 of domestic and foreign corporations subject to an excise for 2005 through 2007 (the “Corporations Books”).

The appellant’s appeals against the appellees, Springfield Assessors and Woburn Assessors (collectively, the “Assessors”), were filed under the formal procedure pursuant to G.L. c. 58A, §§ 6 and 7 and G.L. c. 59, §§ 64 and 65, from the refusal of the Assessors to abate taxes on certain personal property in the Cities of Springfield and Woburn, respectively, owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal years 2005 and 2006 with respect to the Springfield appeals and for fiscal years 2006 and 2007 with respect to the Woburn appeals.

These findings of fact and report are made pursuant to requests by the appellant and the appellees, Commissioner and Assessors, under G.L. c. 58A, § 13 and 831 CMR 1.32.

John S. Brown, Esq., Matthew D. Schnall, Esq., Darcy A. Ryding, Esq., and Shu-Yi Oei, Esq. for the appellant.

Kevin M. Daly, Esq. and Daniel Shapiro, Esq. for the appellee Commissioner.

Richard P. Bowen, Esq. and Jeffrey T. Blake, Esq. for the appellee Woburn Assessors.

John M. Lynch, Esq. and Stephen W. DeCourcey, Esq. for the appellee Springfield Assessors.

FINDINGS OF FACT AND REPORT

I. Introduction

This matter involves seven appeals brought by MASSPCSCO,[59] a Delaware statutory trust that leases wireless telephone network equipment to one of its affiliates. By order dated April 11, 2006, the Appellate Tax Board (“Board”) denied a motion to consolidate certain of the appeals. Later, in a series of orders dated October 25, 2007, April 8, 2008, April 17, 2008, and June 24, 2008, the Board ordered these appeals consolidated for purposes of a hearing on all issues other than valuation. Appeals involving MASSFONCO, an affiliate of MASSPCSCO, were severed in the June 24, 2008 order. On August 13, 2008, MASSPCSCO withdrew three petitions involving the Board of Assessors of the City of Newton that had been consolidated with these appeals. On September 10, 2009, the Board scheduled a pretrial conference to establish a date for the completion of the hearing regarding the remaining valuation issues relating to MASSPCSCO’s appeals involving the Board of Assessors of the City of Boston (Docket Nos. F282536 (FY 2005) and F283668 (FY 2006)), which had been consolidated and partly heard with the above-captioned appeals.[60]

The Board conducted a two-day hearing for these appeals, beginning on September 8, 2008. At the hearing, three witnesses testified for MASSPCSCO: Michael Heaton, the Director of Property Tax for Sprint/United Management Company (“SUMC”), the company that, at all relevant times, performed certain management, bookkeeping, and accounting services for various Sprint affiliates including MASSPCSCO; Brian Jurgensmeyer, the Director of Accounting and Operations for SUMC; and Melinda Ordway, a Senior Program Manager and Fiscal Analyst in the Commissioner’s Division of Local Services.

On the basis of the testimony and exhibits introduced at the hearing of these appeals, together with the parties’ extensive and detailed Statement of Agreed Facts with eighty-one attached exhibits, the Board made the following findings of fact.

(A) Issues

The two principal issues in these appeals are: (1) whether MASSPCSCO was a foreign corporation within the meaning of G.L. c. 63, § 30 (“Section 30”) and entitled to be classified as such by the Commissioner for 2005, 2006, and 2007; and (2) whether MASSPCSCO was entitled to the “stock-in-trade” exemption under G.L. c. 59, § 5, cl. 16(2) (“Clause 16(2)”), which would require a full abatement of the tax assessments placed on its personal property by the Assessors. The Board decided that MASSPCSCO was entitled to be so classified as a foreign corporation but was not entitled to the “stock-in-trade” exemption.

(B) Jurisdiction

(1) Commissioner

On April 25, 2005, the Commissioner issued her 2005 Corporations Book pursuant to G.L. c. 58, § 2.[61] On May 18, 2005, in accordance with G.L. c. 58, § 2, MASSPCSCO timely filed its Petition Under Formal Procedure with the Board claiming to be aggrieved by the Commissioner’s failure to include it in her 2005 Corporations Book as a for-profit corporation subject to taxation in Massachusetts.

On May 9, 2006, the Commissioner issued her 2006 Corporations Book. On June 1, 2006, in accordance with G.L. c. 58, § 2, MASSPCSCO timely filed its Petition Under Formal Procedure with the Board claiming to be aggrieved by the Commissioner’s failure to include it in her 2006 Corporations Book as a for-profit corporation subject to taxation in Massachusetts.

On April 23, 2007, the Commissioner issued her 2007 Corporations Book. On May 16, 2007, in accordance with G.L. c. 58, § 2, MASSPCSCO timely filed its Petition Under Formal Procedure with the Board claiming to be aggrieved by the Commissioner’s failure to include it in her 2007 Corporations Book as a for-profit corporation subject to taxation in Massachusetts.

On the basis of these facts, the Board found and ruled that it had jurisdiction over MASSPCSCO’s appeals against the Commissioner.

(2) Springfield Assessors

For fiscal year 2005, MASSPCSCO did not file its form of list with the Springfield Assessors on or before March 1, 2004, but instead filed it on September 27, 2004 in response to a September 8, 2004 request from the City’s Law Department written on behalf of the Springfield Assessors.[62] The Springfield Assessors valued the property, as of January 1, 2004, at $250,500 and assessed personal property taxes thereon, at the rate of $33.36 per thousand, in the amount of $8,356.68. The tax bill was issued on December 31, 2004 and, on March 29, 2005, a payment of $4,286.06 was made on behalf of MASSPCSCO.[63]

On January 26, 2005, in accordance with G.L. c. 59, § 59, MASSPCSCO timely applied to the Springfield Assessors for abatement of the tax. The Springfield Assessors did not act on the abatement application and did not send out notice of their inaction. On July 28, 2005, in accordance with G.L. c. 59, § 65C, MASSPCSCO timely filed a Petition for Late Entry with the Board. By Order dated August 24, 2005, the Board allowed MASSPCSCO’s Petition for Late Entry, and, on September 1, 2005, MASSPCSCO seasonably filed its Petition Under Formal Procedure with the Board.

On the basis of these facts, the Board found and ruled that it had jurisdiction over this appeal.

For fiscal year 2006, in accordance with G.L. c. 59, § 29, a form of list was timely filed with the Springfield Assessors on behalf of MASSPCSCO on February 23, 2005. The Springfield Assessors valued the property, as of January 1, 2005, at $250,500 and assessed personal property taxes thereon, at the rate of $33.03 per thousand, in the amount of $8,271.51. The tax bill was issued on March 31, 2006. Payments had been made previously on behalf of MASSPCSCO in the amount of $2,089.17 on August 1, 2005 and in the amount of $2,089.17 on November 1, 2005.

On April 4, 2006, in accordance with G.L. c. 59, § 59, MASSPCSCO timely applied to the Springfield Assessors for abatement of the tax. The Springfield Assessors denied the request for abatement on July 3, 2006, and, on July 27, 2006, in accordance with G.L. c. 59, §§ 64 and 65, MASSPCSCO seasonably filed its Petition Under Formal Procedure with the Board.

On the basis of these facts, the Board found and ruled that it had jurisdiction over this appeal.

(3) Woburn Assessors

For fiscal year 2006, in accordance with G.L. c. 59, § 29, a form of list was timely filed with the Woburn Assessors on behalf of MASSPCSCO on February 23, 2005. The Woburn Assessors valued the property, as of January 1, 2005, at $15,380,600 and assessed personal property taxes thereon, at the rate of $21.50 per thousand, in the amount of $330,682.90. The tax bill was issued on January 4, 2006 and on May 3, 2006, a payment was made on behalf of MASSPCSCO as follows:[64]

Tax Paid	Interest Paid	Total Paid
$165,341.45	$5,517.40	$170,858.85

On January 30, 2006, in accordance with G.L. c. 59, § 59, MASSPCSCO timely applied to the Woburn Assessors for abatement of the tax. Because the Woburn Assessors did not act on MASSPCSCO’s request for abatement, it was deemed denied three months later. On May 5, 2006, in accordance with G.L. c. 59, §§ 64 and 65, MASSPCSCO seasonably filed its Petition Under Formal Procedure with the Board.

On the basis of these facts, the Board found and ruled that it had jurisdiction over this appeal.

For fiscal year 2007, in accordance with G.L. c. 59, § 29, a form of list was timely filed with the Woburn Assessors on behalf of MASSPCSCO on February 21, 2006. The Woburn Assessors valued the property, as of January 1, 2006, at $9,813,700 and assessed personal property taxes thereon, at the rate of $21.96 per thousand, in the amount of $215,508.85. The tax bill was issued on December 31, 2006 and payments were made on behalf of MASSPCSCO as follows:[65]

Date	Tax Paid
July 21, 2006	$ 52,748.64
October 17, 2006	$ 52,748.64
January 16, 2007	$ 2,257.15

On February 1, 2007, in accordance with G.L. c. 59, § 59, MASSPCSCO timely applied to the Woburn Assessors for abatement of the tax. Because the Woburn Assessors again failed to act on MASSPCSCO’s request for abatement, it also was deemed denied three months later. On July 30, 2007, in accordance with G.L. c. 59, §§ 64 and 65, MASSPCSCO seasonably filed its Petition Under Formal Procedure with the Board.

On the basis of these facts, the Board found and ruled that it had jurisdiction over this appeal.

II. Underlying Facts

(A) The Companies

Sprint Nextel Corporation, formerly known as Sprint Corporation (“Sprint”), was, at all relevant times, a Kansas corporation that was mainly a holding company with its operations principally conducted by its subsidiaries.

Sprint Spectrum Holding Company, L.P., formerly known as MajorCo, L.P. (“Holdings”), and MinorCo, L.P. (“MinorCo”) were, at all relevant times, Delaware limited partnerships. Since November, 1998, all of the partnership interests in Holdings and MinorCo have been owned by direct or indirect subsidiaries of Sprint.

Sprint Spectrum L.P. (“Sprint Spectrum”) was, at all relevant times, a Delaware limited partnership. Holdings was the 99% general partner of Sprint Spectrum and MinorCo was the 1% limited partner of Sprint Spectrum.

Sprint Spectrum Equipment Company L.P. (“EquipmentCo”) was, at all relevant times, a Delaware limited partnership. Substantially all of the partnership interests in EquipmentCo were owned by Sprint Spectrum.

MASSPCSCO was, at all relevant times, a Delaware statutory trust formed on December 19, 2003. One-hundred percent of the beneficial interest in MASSPCSCO was owned by EquipmentCo.

SUMC was, at all relevant times, a Kansas corporation, and was an indirect wholly-owned subsidiary of Sprint.

The relationship among the foregoing entities is summarized in the following diagram and further discussed below.

(B)

Lease

MA leased

PCS Equipment

Contribute

MA leased

PCS Equipment

Sprint Spectrum and Its National Wireless NetworkSprint Spectrum was formed as a Delaware limited partnership on March 28, 1995. Sprint Spectrum was originally named “MajorCo Sub, L.P.”, and changed its name to “Sprint Spectrum L.P.” on February 29, 1996. At all relevant times, the partnership interests in Sprint Spectrum have been held by Holdings, as the 99% general partner and MinorCo, as the 1% limited partner. Holdings and MinorCo, in turn, were formed as partnerships among subsidiaries of four independent companies: Sprint, Telecommunications, Inc. (“TCI”), Comcast Corporation (“Comcast”) and Cox Communications, Inc. (“Cox”). The purpose of the joint venture among Sprint, TCI, Comcast and Cox was to establish Sprint Spectrum as a leading provider of wireless communications products and services in the United States by various means, including acquisition and operation, directly through subsidiaries, of a national wireless communications network (the “Network”). On June 3, 1996, Sprint Spectrum registered with the Secretary of the Commonwealth of Massachusetts (“Secretary”) as a foreign limited partnership.

EquipmmentCo was formed as a Delaware limited partnership on May 15, 1996 to own and lease to Sprint Spectrum certain personal property that would be used in the Network. EquipmentCo registered with the Secretary as a foreign limited partnership on July 19, 1996. In August 1996, Sprint Spectrum, together with an affiliate, Sprint Spectrum Finance Corporation, issued $250,000,000 aggregate principal amount of 11% Senior Notes and $500,000,000 aggregate principal amount of 12½% Senior Discount Notes (collectively, the “Notes”) to fund capital expenditures, including build out of the Network, to fund working capital as required, to fund operating losses and for other partnership purposes. At the time of the issuance of the Notes, Sprint Spectrum and its direct and indirect subsidiaries, including EquipmentCo, had not commenced commercial operations and had no revenue from operations.

Sprint Spectrum also obtained financing from equipment vendors (the “Vendor Financing”). The terms of the Vendor Financing required that all “Personal Property assets” (as defined in the vendors’ commitment letters), which included equipment, be acquired in or transferred to a separate, wholly-owned, single-purpose partnership subsidiary of Sprint Spectrum. That subsidiary was EquipmentCo.

Since August 1996, Sprint Spectrum has been engaged in the business of providing wireless communications services over the Network in the Commonwealth and in other markets across the United States. Using funds that it borrowed, earned, or received as capital contributions, EquipmentCo purchased property to be used in the Network and leased all of its Network property to Sprint Spectrum. The lease payments due from Sprint Spectrum to EquipmentCo under the leases were determined by applying a lease factor to the costs of the various assets leased.

During the second quarter of 1998, Sprint announced that it had entered into a restructuring agreement with TCI, Comcast and Cox to buy out those companies’ interests in Sprint Spectrum (i.e., their partnership interests in Holdings and MinorCo), in exchange for an equity interest in Sprint. The buyout was completed in November, 1998. After the buyout, Sprint loaned approximately $2.9 billion to Sprint Spectrum, and Sprint Spectrum used those funds in part to retire the Vendor Financing.

(C) Taxation of the Network from 1999 through 2002

From 1999 through 2002, Sprint Spectrum filed returns

with the Commissioner pursuant to G.L. c. 59, § 41. In conformity with the Commissioner’s instructions, because it owned no underground conduits, poles, wires or pipes, Sprint Spectrum limited the property reported on the Forms 5941 to machinery used in manufacture, namely, electric generators. The aggregate valuation certified by the Commissioner for the personal property reported by Sprint Spectrum was $330,800 for fiscal year 2000, $330,800 for fiscal year 2001, $1,703,000 for fiscal year 2002, and $1,762,900 for fiscal year 2003. On January 13, 2003, in response to an order of the Board in RCN-BecoCom, LLC v. Commissioner of Revenue, Docket Nos. F253495 & F257397 (order dated August 1, 2002) (RCN-BecoCom Order”),[66] the Commissioner announced that filers of Form 5941 organized as partnerships or limited liability companies that filed federal returns as partners or as disregarded entities would, beginning with the fiscal year 2004 returns due on March 1, 2003, be required to report “all machinery, including switching equipment, used for telephone and telegraph purposes” that it owned.

After Sprint Spectrum filed a fiscal year 2004 Form 5941, on February 28, 2003, reporting all of the machinery and equipment located in the Commonwealth that it leased from EquipmentCo and used in the Network, the Commissioner certified an aggregate taxable value of $172,899,300, nearly a 100-fold increase over the fiscal year 2003 certified value.

(D) The Formation and Operation of MASSPCSCO

As a result of the change in the Commissioner’s interpretation of the Massachusetts property tax law resulting from the RCN-BecoCom Order, Sprint undertook a review of Massachusetts property tax law, and sought advice from outside professionals at Deloitte & Touche LLP (“Deloitte & Touche”). Sprint had previously considered shifting its Massachusetts tangible personal property to certain utility corporations that operate within the Sprint business structure, but Sprint determined that such a restructuring was inadvisable. In a memorandum dated December 10, 2003, Deloitte & Touche advised Sprint to restructure by creating, among other things, MASSPCSCO:

The crux of the restructuring is to place otherwise taxable Massachusetts assets in an entity that is recognized as a corporation for purposes of the relevant property tax exemptions in Massachusetts, while being disregarded for federal income tax purposes so as to avoid the creation of federal income tax issues.

In the memorandum, Deloitte & Touche also recommended that MASSPCSCO “be structured, if possible, to engage in third party transactions”; and that profits be directed to “defend against any assertion of a sham transaction theory” and to “protect against any change in the state’s position that a federally disregarded entity does not have gross income for state tax purposes.” Deloitte & Touche further recommended that leases from MASSPCSCO to Sprint Spectrum be at “arms’ length prices.”

In a follow-up memorandum regarding Sprint’s “Property Tax Restructuring Profile,” Deloitte & Touche summarized the purposes of the restructuring:

For business, legal and tax purposes, Sprint will undergo an internal organizational restructuring strategy that enables the Company to qualify for certain personal property tax exemptions for its switching equipment and other personal property in Massachusetts without requiring the assets to be placed in corporate solution for federal income tax purposes. Specifically, the use of a federally disregarded Delaware Business Trust (“DBT”) for holding Massachusetts assets permits Sprint to take advantage of differences in state and federal entity classification rules, and obtain certain corporate property tax exemptions without federal income tax consequences, and with acceptable state income and sales tax impacts.

Mr. Heaton’s direct testimony also confirmed that MASSPCSCO’s creation was “undertaken with a view toward Massachusetts property taxes.” On cross-examination, he even went so far as to agree with his interrogator that MASSPCSCO’s creation was done solely for tax purposes.

EquipmentCo executed a Trust Agreement forming MASSPCSCO as a Delaware statutory trust and filed a certificate of Trust with the Delaware Secretary of State. All of the beneficial interests in MASSPCSCO were owned, at all relevant times, by EquipmentCo. MASSPCSCO did not file an election to be treated as an association taxable as a corporation for federal tax purposes. MASSPCSCO filed corporate excise tax returns on Forms 355 with the Commissioner which the Commissioner received on the following dates:

Tax Year	Return Received
2003 & 2004	June 6, 2005
2005	September 15, 2006
2006	July 18, 2007

Sprint’s tax compliance group had apparently inadvertently neglected to file an automatic six-month extension for tax years 2003 and 2004. The Commissioner neither audited nor declined to accept any of MASSPCSCO’s corporate excise tax returns, and therefore did not make any adjustment to the amounts of tax reported on them.

By a document executed on December 22, 2003, EquipmentCo transferred all of its tangible personal property located in Massachusetts, including towers, antennas, switches and related software, and other equipment, to MASSPCSCO as a contribution to capital valued at net book cost and without any other consideration. MASSPCSCO then became the owner of that Network property. No sales tax was paid in connection with that transfer. On December 23, 2003, Sprint Spectrum and EquipmentCo executed a Lease Termination Agreement pursuant to which they terminated, as of December 31, 2003, the lease of that property from EquipmentCo. On December 23, 2003, Sprint Spectrum and MASSPCSCO executed a lease agreement. EquipmentCo retained its property located outside Massachusetts and continued to lease that property to Sprint Spectrum.

Since December 2003, MASSPCSCO has performed activities similar to those previously conducted by EquipmentCo with respect to the Network assets located in Massachusetts. MASSPCSCO has held existing assets that are leased to Sprint Spectrum, has had new assets purchased on its behalf using funds that were borrowed, earned, or received as capital contributions and has leased those assets to Sprint Spectrum, and retired obsolete assets.

At all relevant times, Sprint Spectrum paid rent to MASSPCSCO on a monthly basis for the leased property. Mr. Heaton testified that the lease factors were calculated to produce a rate of return of 9%, presumably on the net book cost of the leased property. This same rate of return was used from 1996 through at least 2006 and was applied to all categories of leased property. There was no evidence showing how this rate of return was calculated or determined or demonstrating its relationship to a market rate of return. Contrary to advice from the accounting firm of Ernst & Young, MASSPCSCO did not implement, during the relevant time period, a lease factor schedule which would have assigned different lease factors to different types and categories of property and likely more accurately reflected market values. At all relevant times, sales taxes were collected and paid on a monthly basis on the lease payments made by Sprint Spectrum. For purposes of paying over sales taxes to the Commissioner, SUMC made the payments by checks drawn on a bank account in the name of SUMC. Each of the payments was contemporaneously charged to the account of MASSPCSCO.

At all relevant times, MASSPCSCO had no employees. All functions and services necessary or desirable for the management, administration and operation of MASSPCSCO’s business, as required or requested by MASSPCSCO, were performed by employees of SUMC, under a services agreement dated December 14, 2004. In return for its services, MASSPCSCO reimbursed SUMC by a fixed payment of $2,000 per month for a total of $24,000 per year on revenues between $23,000,000 and $41,700,000 for calendar years 2004 through 2006 and property, plant, and equipment valued at $211,000,000 to $328,000,000 for those same years. MASSPCSCO did not as of January 1, 2005, January 1, 2006 or January 1, 2007, hold any assets other than property leased to Sprint Spectrum.

During calendar years 2004 through 2006, MASSPCSCO did not lease, or seek or attempt to lease, property to any person or entity other than Sprint Spectrum. During calendar years 2004 through 2006, MASSPCSCO did not consider or conduct any regular business activities other than those incident to the purchase, ownership and leasing of Network equipment to Sprint Spectrum. Any repairs to the equipment leased were the responsibility of the lessee, not MASSPCSCO. MASSPCSCO did not purchase the equipment it leased to Sprint Spectrum; instead Sprint Spectrum purchased the equipment and marked the purchase against MASSPCSCO’s account on a common ledger. Sprint Spectrum and MASSPCSCO did not maintain separate bank accounts. The lease payments made by Sprint Spectrum to MASSPCSCO were implemented by ledger entries transferring amounts to MASSPCSCO’s account in Sprint’s books. MASSPCSCO was not compensated for any services it performed for any person or entity. During calendar years 2004 through 2006, MASSPCSCO did not lease or occupy any office space or real estate, except that certain inventory of MASSPCSCO was stored, prior to delivery to Sprint Spectrum sites, in facilities shared with other affiliates of Sprint.

At all relevant times, the administrative trustee of MASSPCSCO was an employee of SUMC and was authorized only to take action as directed by EquipmentCo. EquipmentCo was empowered to remove or appoint any trustee without cause at any time. The nominal trustee, Wilmington Trust Company, was not entitled to exercise any powers under the trust or control over MASSPCSCO; it was appointed for the limited purpose of fulfilling certain requirements under Delaware law.

(E) The Commissioner’s Treatment of MASSPCSCO

Pursuant to G.L. c. 58, § 2, the Commissioner, through the Division of Local Services Municipal Data Management & Technical Assistance Bureau (“Data Management”), prepares an annual list of for-profit corporations known to the Commissioner to be liable for Massachusetts corporate excise, local property, or motor vehicle excise taxes as of January first of each year. The Commissioner “forwards” this annual list to the boards of assessors of the Commonwealth’s cities and towns. The publication is officially known as Massachusetts Domestic and Foreign Corporations Subject to an Excise, but is commonly, and in this Findings of Fact and Report, referred to as the “Corporations Book.”

The information compiled for the Corporations Book derives from two sources, the Commissioner’s internal database of taxpayers qualifying as “active” corporations under chapter 63 and the Secretary’s new corporations database. The Commissioner’s internal database is referred to as MASSTAX and includes all active taxpayers filing as for-profit corporations.[67] The Secretary’s database is a compilation of newly registered corporations doing business in Massachusetts that is communicated to the Commissioner for inclusion in the Corporations Book.

Despite being organized in 2003, MASSPCSCO’s 2003 and 2004 Forms 355, Corporate Excise Returns, were not filed on its behalf by Sprint with the Commissioner until June 6, 2005. Extensions of time to file those returns were not requested, either. Previously, MASSPCSCO had registered with the Secretary as a trust, and the Secretary had classified MASSPCSCO as a trust. Consequently, MASSPCSCO was not among the entities listed in either the Secretary’s new corporations list or the MASSTAX corporations database for 2005. Pursuant to established procedures, the Commissioner compiled her 2005 Corporations Book by supplementing the prior year’s list with: information from a list obtained from the Secretary of new corporation filings; a list of entities that had filed corporate excise tax returns; and applications for manufacturing corporation status. MASSPCSCO was not included in any of those data sources. As a result, the 2005 Corporations Book, which was published on April 25, 2005, did not contain MASSPCSCO among its listing of corporations.

After MASSPCSCO’s June 6, 2005 filings and tax payments, the Commissioner’s MASSTAX database recognized MASSPCSCO as an active foreign corporation in its database. Its listing did not represent, however, a studied determination by the Commissioner as to MASSPCSCO’s proper filing status. The Commissioner left MASSPCSCO out of her 2006 and 2007 Corporations Books, on advice of counsel, because of the pending litigation involving this matter’s 2005 appeals before the Board and the perceived position of local boards of assessors that MASSPCSCO was not entitled to recognition as a for-profit corporation for purposes of local property tax exemptions. Notwithstanding these omissions, the Commissioner issued two letters to local boards of assessors – one prior to and one subsequent to the publication of the 2005 Corporations Book – stating that MASSPCSCO was a foreign corporation, and explaining that its failure to be listed in the Corporations Book resulted from the administrative procedures used in compiling the Corporations Book.

(F) Abatement Amounts at Issue

The parties stipulated that if MASSPCSCO is properly classified as a “foreign corporation” within the meaning of Section 30 and if the personal property that MASSPCSCO leases to its affiliates is “stock in trade” that is exempt under Clause 16(2), then MASSPCSCO is entitled to abatements in the following amounts:

Assessors

Fiscal Year

Abatement Amounts

at Issue

Springfield 2005 $ 8,356.68Springfield 2006 $ 8,271.51Woburn 2006 $ 330,682.90Woburn 2007 $ 215,508.85

III. Board’s Ultimate Findings of Fact

(A) MASSPCSCO Was a Foreign Corporation Within the Meaning of Section 30

Based on all of the evidence and its subsidiary findings above, and as explained more fully in its Opinion below, the Board ultimately found that, at all relevant times, MASSPCSCO was a foreign corporation within the meaning of Section 30 and entitled to be classified as such by the Commissioner for 2005, 2006, and 2007. The Board found that MASSPCSCO’s omission from the Commissioner’s 2005 Corporations Book resulted solely from the fact that MASSPCSCO was not included in any of the data sources that the Commissioner consulted in preparing the Corporations Book. The omission did not reflect a determination by the Commissioner concerning MASSPCSCO’s status as a foreign corporation. The Board found that, at all relevant times, the Commissioner did not, in preparing the annual Corporations Book, make any substantive determinations concerning the status of any entity, except with respect to entities that had applied for classification as manufacturing corporations, which MASSPCSCO did not do.

With respect to MASSPCSCO’s omission from the 2006 and 2007 Corporations Books, the Board found that MASSPCSCO’s omission resulted solely from advice of counsel because of the pendency of this litigation before the Board regarding MASSPCSCO’s prior omission from the 2005 Corporations Book and the perceived position of local boards of assessors that MASSPCSCO was not entitled to recognition as a for-profit corporation for purposes of local property tax exemptions. In omitting MASSPCSCO from the 2006 and 2007 Corporations Books, the Board found that the Commissioner again did not make any substantive determination regarding MASSPCSCO’s status as a foreign corporation and, admittedly, deviated from her usual practice and procedures, which, but for the deviation, would have resulted in MASSPCSCO’s inclusion. Moreover, in letters to boards of assessors, following MASSPCSCO’s omission from her 2005 Corporations Book, the Commissioner referred to MASSPCSCO as a foreign corporation.

The Board found that, at all relevant times, MASSPCSCO satisfied the definition of a foreign corporation contained in Section 30 because it was an association or organization established, organized and chartered under Delaware law; it was organized for the ostensible purpose of owning property and leasing it to an affiliate, a purpose for which corporations could be organized under Chapter 156B and, after July 1, 2004, under Chapter 156D; and it had privileges, powers, rights and immunities not possessed by individuals or partnerships, including perpetual existence, freely transferable shares, centralized management through its administrative trustee and officers, and limited liability on the part of its beneficial owner, even if the owner chose – as permitted under MASSPCSCO’s trust agreement and applicable Delaware law – to participate in the management of MASSPCSCO’s business.

Accordingly, the Board found that the MASSPCSCO’s omission from the 2005, 2006, and 2007 Corporations Books was not determinative of, or necessarily germane to, MASSPCSCO’s status as a foreign corporation under Section 30 and that MASSPCSCO met the definition of a foreign corporation under Section 30. The Board, therefore, decided that MASSPCSCO was a foreign corporation within the meaning of Section 30 for the years at issue and was entitled to be classified as such by the Commissioner.

(B) MASSPCSCO Was Not Entitled to the “Stock-in-Trade” Exemption under Clause 16(2)

Based on all of the evidence and its subsidiary findings above, and as explained more fully in its Opinion below, the Board ultimately found that, at all relevant times, MASSPCSCO was not entitled to the “stock-in-trade” exemption under Clause 16(2). The Board found that MASSPCSCO’s activities were not undertaken for the purpose of profit or gain and MASSPCSCO was not operated for a predominantly business purpose. In addition, the Board found that MASSPCSCO’s original transaction with EquipmentCo, transferring Massachusetts property from EquipmentCo to MASSPCSCO, as well as MASSPCSCO’s continuing lessor-lessee relationship with Sprint Spectrum lacked economic substance.

The Board further found that MASSPCSCO was created for the predominant and essentially sole purpose of avoiding taxation in the form of personal property taxes for its personal property located in Massachusetts. MASSPCSCO’s assertions that its organization served to enhance Sprint’s cash flow and its future ability to borrow were without merit. With respect to enhancing cash flow, the Board determined that enhanced cash flow was unlikely, or even fictional, in a scenario where payments were mere ledger adjustments between affiliates. With respect to enhanced borrowing power, the Board determined that it too was unlikely, or even fictional, because during the relevant time period, there was no evidence of any vendor or lender requirements placed on MASSPCSCO, or for that matter on EquipmentCo,[68] or even on Sprint Spectrum, requiring the existence of a separate entity, like MASSPCSCO, to finance the purchase of needed property and equipment. Furthermore, the Board found that MASSPCSCO was not engaged in the ordinary course of the leasing business or engaged in any substantive business at all. Accordingly, the Board found that MASSPCSCO was not entitled to the “stock-in-trade” exemption under Clause 16(2).

OPINION

I. MASSPCSCO Was a Foreign Corporation within the Meaning

of Section 30

Clause 16(2) provides that “[a] foreign corporation . . . as defined in section thirty of chapter sixty-three” is exempt under clause 16(2) on all property other than “real estate, poles, underground conduits, wires and pipes, and machinery used in the conduct of the business.” G.L. c. 59, § 5, cl. 16(2). Numerous cases link the corporate tax terminology used in Clause 16 with the same meaning that has attached to the corresponding terms in applying the taxes imposed by Chapter 63. See, e.g., Bell Atlantic Mobile Corp. v. Commissioner of Revenue, 451 Mass. 280, 285-86 (2008) (“Bell Atlantic Mobile Corp.”) (describing analysis of utility exemption as turning on construction of G.L. c. 63, § 52A); RCN-BecoCom, LLC v. Commissioner of Revenue, 443 Mass. 198, 206 (2005) (“RCN-BecoCom”)(recognizing that entity must be subject to taxation under Chapter 63 in order to qualify for exemption); Assessors of Holyoke v. State Tax Commission, 355 Mass. 223, 225-26 (1969)(resolving question of classification for purposes of clause 16(3) by reference to Chapter 63 definition of “manufacturing corporation”); In re MCI Consolidated Central Valuation Appeals, Mass. ATB Findings of Facts and Reports 2008-255, 358-59 (“MCI”)(applying utility exemption to “foreign corporations subject to annual corporate utility franchise tax under G.L. c. 63, § 52A”), aff’d in pertinent part, 454 Mass. 635 (2009).

During the years at issue, paragraph 2 of Section 30 defined a foreign corporation, subject to certain exclusions not relevant here, as a:

[C]orporation, association or organization established, organized or chartered under laws other than those of the commonwealth, for purposes for which domestic corporations may be organized under chapter 156, chapter 156A, chapter 156B, chapter 156D or section 19F to 19W, inclusive, of chapter 175, or chapter 180 which has privileges, powers, rights or immunities not possessed by individuals or partnerships.

G.L. c. 63, § 30(2), as in effect prior to St. 2008, c. 173, § 38. As described in greater detail below, the Board found and ruled that, at all relevant times, MASSPCSCO satisfied this definition. The Board found that MASSPCSCO was an association or organization established, organized and chartered under Delaware law; it was organized for the ostensible purpose of owning property and leasing it to an affiliate, a purpose for which corporations could be organized under Chapter 156B and, after July 1, 2004, under Chapter 156D; and it had privileges, powers, rights and immunities not possessed by individuals or partnerships, including perpetual existence, freely transferable shares, centralized management through its administrative trustee and officers, and limited liability on the part of its beneficial owner, even if the owner chose – as permitted under MASSPCSCO’s trust agreement and applicable Delaware law – to participate in the management of MASSPCSCO’s business.

Furthermore, and for essentially those same reasons, the Commissioner concluded in Letter Ruling 91-2 that Delaware business trusts formed under 12 Del. C. § 3801, et seq., were properly treated as foreign corporations within the meaning of Section 30. The trusts in Letter Ruling 91-2 were organized to operate mutual funds. The Commissioner concluded that they were associations formed under Delaware law that were “so far clothed with the functions and attributes of a corporation as to come within the just application of principles relating to corporations.” (Citations omitted.)

MASSPCSCO was formed partly in reliance on Letter Ruling 91-2, and for each year at issue, MASSPCSCO filed a corporate excise tax return as a foreign corporation. Despite the late filing of the 2004 return, for which the Board found Sprint’s tax compliance group inadvertently neglected to file an automatic six-month extension, as they had for EquipmentCo’s Massachusetts return, MASSPCSCO fully complied with all of its obligations as a foreign corporation for these purposes. As of the close of the hearing, the Board found that the Commissioner had made no adjustments to MASSPCSCO’s corporate excise tax filings and her records indicated that MASSPCSCO was an eligible filer for the corporate excise.

Finally, and as discussed in greater detail below, the Board found that while MASSPCSCO’s operations were limited to leasing property to a related party, that limitation did not alter MASSPCSCO’s status as a foreign corporation under Section 30. For Section 30 purposes, the Board found that MASSPCSCO’s status should be determined by its governing trust instrument and the terms of the statute, without reference to the business activities that it undertook during the relevant time period.

For all of these reasons, which are discussed in greater particularity below, the Board found and ruled that MASSPCSCO was a foreign corporation within the meaning of Section 30.

(A) MASSPCSCO Was an Association or Organization

Established, Organized or Chartered under Laws

Other Than Those of Massachusetts and Was Not a

Foreign LLC

Both Section 30 and the Commissioner’s corporate excise tax regulations recognize that the term “foreign corporation” includes certain unincorporated associations. The statute refers disjunctively to a “corporation, association or organization established, organized or chartered” under the laws of another jurisdiction. (Emphasis added.) The regulations refer to “a form of organization recognized in Massachusetts as that of a foreign corporation under [Section 30], whether or not the entity is described as a corporation by the state under whose laws the entity is organized.” 830 CMR 63.39.1(2) (emphasis added).

A Delaware statutory trust is by definition an “unincorporated association” that is created by a trust instrument “under which property is or will be held, managed, administered, controlled, invested, reinvested and/or operated . . . by a trustee or trustees or as otherwise provided in the governing instrument for the benefit of such person or persons as are or may become beneficial owners or as otherwise provided in the governing instrument.” 12 Del. C. § 3801(g). In contrast to a Massachusetts business trust, which is a contractual entity recognized as a matter of common law, see Minkin v. Commissioner of Revenue, 425 Mass. 174, 178 (1997), the status of a Delaware statutory trust as a separate legal entity is governed by statute. See, e.g., 12 Del. C. § 3801(g). The statutory trust has no existence as a separate entity until an instrument is filed with the Delaware Secretary of State. 12 Del. C. § 3810(a)(2). As the Commissioner concluded in Letter Ruling 91-2, the Board ruled here that when a statutory trust makes the required filing with the Delaware Secretary of State, it becomes “an association or organization established, organized or chartered under the laws of Delaware.”

On December 19, 2003, EquipmentCo executed a trust agreement for MASSPCSCO conforming to the terms of 12 Del. C. § 3801(g). That same day, MASSPCSCO filed a certificate of trust with the Delaware Secretary of State in compliance with 12 Del. C. § 3801(a)(1). Upon filing of the certificate, MASSPCSCO became an unincorporated association organized under Delaware law. 12 Del. C. § 3801(a)(2). MASSPCSCO was not a “limited liability company” under Delaware law because that term is limited to entities formed under the Delaware Limited Liability Company Act, 6 Del. C. § 18-101, et seq. MASSPCSCO was formed instead under the Delaware Statutory Trust Act, and the Board, therefore, ruled that, at all relevant times, it was a statutory trust under Delaware law, not an LLC.

The Board further ruled that the characterization of MASSPCSCO under Delaware law is conclusive for purposes of its status as a non-LLC under Section 30 because the provisions of Section 30 adopt the definition from the Massachusetts LLC statute, which in turn relies on the name given to an entity under the laws of the state in which the entity was organized. See Section 30(2)(referring to “a foreign limited liability company as defined in section 2 of chapter 156C”); G.L. c. 156C, § 2 (defining a foreign limited liability company as “a limited liability company formed under the laws of any state other than the commonwealth or the laws of any foreign country or other foreign jurisdiction and denominated as such under laws of such state or foreign country or other foreign jurisdiction”)(emphasis added). Because MASSPCSCO was not an LLC under Delaware law, the Board ruled that it was not an LLC for purposes of Section 30.

(B) MASSPCSCO Was Established for the Ostensible Purposes for Which a Corporation May Be Organized under Massachusetts Law

Section 30 limits foreign corporations to those entities organized “for purposes which domestic corporations may be organized” under the general corporate provisions of Massachusetts law, principally, Chapter 156B and, for periods after July 1, 2004, Chapter 156D. That limitation distinguishes corporations subject to the general corporate excise from those subject to special excise or tax regimes, such as financial institutions (G.L. c. 63, § 2) and utilities (G.L. c. 63, § 52A), which are likewise subject to different corporate laws and regulations. The general Massachusetts corporate statutes, Chapter 156B, as in effect prior to July 1, 2004, and Chapter 156D, as in effect beginning July 1, 2004, apply to:

All domestic corporations having capital stock whether established before or after [the effective date of the statute], either by general or special law, for the purpose of carrying on business for profit except corporations organized for the purpose of carrying on the business of a bank, savings bank, co-operative bank, trust company, credit union, surety or indemnity company, or safe deposit company, or for the purpose of carrying on within the commonwealth the business of an insurance company, railroad, electric railroad, street railway or trolley motor company, telegraph or telephone company, gas or electric light, heat or power company, canal, aqueduct or water company, cemetery or crematory company, any other corporation which on October 1, 1965 have or may thereafter have the right to take land within the commonwealth by eminent domain or to exercise franchises in public ways granted by the commonwealth or by any county, city or town, and corporations subject to chapter 157 [agricultural and other cooperatives] and corporations subject to chapter 157A [employee cooperatives].

G.L. c. 156D, § 17.01(1); G.L. c. 156B, § 3 (emphasis added).

Although those statutes contain a long list of types of businesses excluded from statutory coverage, the Board ruled that, at all relevant times, none of the exclusions applied to MASSPCSCO, a professed lessor of wireless communications equipment. The only exclusion that possibly could have applied by its terms was the exclusion for telephone companies. In Bell Atlantic Mobile Corp., however, both the Board and the Supreme Judicial Court determined that a company engaged in the wireless telephone business is not a “telephone company” within the meaning of G.L. c. 59, § 39, G.L. c. 63, § 52A, and G.L. c. 166. Bell Atlantic Mobile Corp., Mass. ATB Findings of Fact and Reports at 2008-184; 451 Mass. at 281, 288. The term “telephone company” should be given the same construction under Chapters 156B and 156D that it has under Chapter 166, because those statutes – together with the statutory regimes regulating other types of utilities and financial institutions – are designed to partition the universe of corporations for regulatory purposes. Cf. Chandler v. County Commissioners, 437 Mass. 430, 436 (2002) (“[a] term appearing in different portions of a statute is to be given one consistent meaning”); Arnold v. Commissioner of Corporations & Taxation, 327 Mass. 694, 700 (1951)(“It is a general rule of statutory construction that ordinarily a term appearing in different portions of a statute is to be given the same meaning.”). Accordingly, even if MASSPCSCO could otherwise be considered a telephone company because of the nature of the equipment that it leased, the Board ruled that that conclusion was foreclosed by Bell Atlantic Mobile Corp.

In determining whether MASSPCSCO was established for purposes for which a domestic corporation might be organized under Chapters 156B and 156D, the Board also found and ruled that, at all relevant times, MASSPCSCO was a for-profit company. MASSPCSCO’s trust agreement provides that it is a for-profit company. Moreover, every Delaware statutory trust is a for-profit company unless the trust instrument specifically provides otherwise, because the statute gives the beneficial owners the right (unless overridden by the trust instrument) to “share in all profits and losses of the statutory trust.” 12 Del C. § 3805(a).

The fact that MASSPCSCO’s business was limited during the years at issue to the leasing of property to an affiliate would not have prevented it from being organized under Chapter 156B or Chapter 156D. In Brown, Rudnick, Freed & Gesmer v. Assessors of Boston, 389 Mass. 298 (1983) (“Brown Rudnick”), the Supreme Judicial Court recognized that a domestic corporation could be organized, under Chapter 156B, for the purpose of leasing property to an affiliate. Id. at 302. The Board found and ruled that, under the circumstances here, it is entirely logical and consonant to apply that proposition to a foreign entity, like MASSPCSCO.

(C) MASSPCSCO Has Corporate Privileges, Powers, Rights and Immunities

The primary issue in determining whether an unincorporated association is a foreign corporation under Section 30 is the question of whether the association “has privileges, powers, rights or immunities not possessed by individuals or partnerships.” The Commissioner has interpreted that phrase as requiring an analysis similar to the federal entity classification regulations in effect prior to 1997 (the “Kintner regulations,” Treas. Reg. § 301.7701-2, as in effect prior to January 1, 1997). See LR 01-7 (Sept. 4, 2001); LR 99-13 (June 24, 1999); LR 97-2 (May 23, 1997); LR 95-8 (July 12, 1995); LR 91-2; see also TIR 97-8 (June 16, 1997)(noting that the replacement of the Kintner regulations by the federal “check-the-box” regulations did not alter the Massachusetts rules for classifying unincorporated business entities other than LLCs). The factors considered in the federal regulations and in the Massachusetts rulings as pointing toward corporate status include: (1) perpetual life (Treas. Reg. § 301.7701-2(a)(1), (d); LR 01-7; LR 97-2; LR 95-8); (2) transferable equity interests (Treas. Reg. § 301.7701-2(a)(1), (e); LR 01-7; LR 97-2; LR 95-8); (3) centralized management (Treas. Reg. § 301.7701-2(a)(1), (c); LR 99-13; LR 95-8); (4) limited liability for debts of the entity on the part of the equity owners who participate in management (Treas. Reg. § 301.7701-2(a)(1), (d); LR 99-13; LR 91-2); (5) the ability to merge or consolidate with corporations and other entities (LR 91-2); and (6) the imposition of conditions on the ability to maintain a derivative action (LR 91-2).

The Board found and ruled that Delaware statutory trusts in general, and MASSPCSCO in particular, have all of those privileges, powers, rights and immunities, and more. As the Commissioner observed in Letter Ruling 91-2,[69] unless the trust provides otherwise: a Delaware statutory trust has perpetual life, and will not terminate or dissolve upon the death, incapacity, dissolution, termination or bankruptcy of a beneficial owner, 12 Del C. § 3808(a)-(b); the beneficial interests in the trust are freely transferable, 12 Del. C. § 3805(d); the trust is managed by the trustees and officers, 12 Del. C. § 3806(a), (i); the beneficial owners are entitled to limited liability whether or not they participate in management, 12 Del. C. §§ 3803(a)-(b), 3806(a), 3808(e); the trust has the power to merge or consolidate with business entities organized under Delaware law or the law of any other jurisdiction, 12 Del. C. § 3815; the trust can sue or be sued in its own name and under the same title principles applicable to corporations, 12 Del. C. § 3804(a); and derivative actions are governed by provisions substantially identical to those governing corporations, 12 Del. C. § 3816. MASSPCSCO’s trust agreement does not eliminate any of those privileges, powers, rights and immunities. Rather, the Board found that the trust agreement specifically confirms the applicability of several of those statutory provisions. The agreement also specifically permits MASSPCSCO’s beneficial owner, EquipmentCo, to participate directly in the management of the trust. Under Massachusetts common law, vesting the owner with that degree of control would cause EquipmentCo to have unlimited liability for MASSPCSCO’s debts, see, e.g., Frost v. Thompson, 219 Mass. 360 (1914)(holding that an association in which the shareholders control the trustees is properly regarded as a partnership in which the shareholders are personally liable to third-party creditors), but under Del C. § 3806(a), EquipmentCo is shielded from such liability.

Accordingly, the Board ruled that, under the Kintner regulations and the Commissioner’s rulings, an entity is classified as a corporation if it possesses a majority of the previously delineated corporate characteristics. The Board therefore found and ruled here that because MASSPCSCO possessed all of these relevant characteristics, it too should be regarded as a corporation under Section 30.

(D) Summary

On this basis, the Board found and ruled that, at all relevant times, MASSPCSCO was a foreign corporation within the meaning of Section 30 and was entitled to be classified as such by the Commissioner because it was an “association . . . established, organized or chartered under laws other than those of the commonwealth, for purposes for which domestic corporations may be organized under chapter 156, chapter 156A, chapter 156B, chapter 156D or section 19F to 19W, inclusive, of chapter 175, or chapter 180 which has privileges, powers, rights or immunities not possessed by individuals or partnerships.” G.L. c. 63, § 30.

II. MASSPCSCO Is Not Entitled to the “Stock-In-Trade”

Exemption under Clause 16(2)

The general rule in Massachusetts is that “all property, real and personal, situated within the Commonwealth, and all personal property of the inhabitants of the Commonwealth wherever situated, unless expressly exempt, shall be subject to taxation.” G.L. c. 59, § 2. General Laws c. 59, § 18, commences with the preamble, “All taxable personal estate within or without the commonwealth shall be assessed to the owner in the town where he is an inhabitant on January first, except as provided in chapter sixty-three and in the following [seven] clauses of this section . . . .” All tangible personal property is taxable under G.L. c. 59, § 18, clause first. RCN-BecoCom, Mass. ATB Findings of Fact and Reports at 2003-410, aff’d, 443 Mass. 198 (2005). General Laws c. 59, § 18, clause first states: “First, All tangible personal property, including that of persons not inhabitants of the commonwealth, except ships and vessels, shall, unless exempted by section five, be taxed to the owner in the town where it is situated on January first.”

MASSPCSCO alleged that, at all relevant times, it was the owner of personal property in Woburn and Springfield, but claimed that it was entitled to an exemption from local property taxes, pursuant to Clause 16(2), because it leased its personal property to an affiliated entity. Thus, MASSPCSCO claimed that its property was “stock in trade” within the meaning of that clause. The following emphasized language of Clause 16(2) exempts from local property tax:

In the case of (a) domestic business corporation or (b) a foreign corporation, both as defined in section thirty of chapter sixty-three, all property owned by such corporation other than the following: – real estate, poles, underground conduits, wires and pipes, and machinery used in the conduct of the business, which term, as used in this clause, shall not be deemed to include stock in trade or any personal property directly used in connection with dry cleaning or laundering processes or in the refrigeration of goods or in the air-conditioning of premises or in any purchasing, selling, accounting or administrative function. (Emphasis added.)

“An exemption is a matter of special favor or grace and to be recognized only where the property falls clearly and unmistakenly within the express words of a legislative command.” Southeastern Sand & Gravel, Inc. v. Commissioner of Revenue, 384 Mass. 794, 796 (1981) (citing Children’s Hospital Medical Center v. Assessors of Boston, 353 Mass. 35, 43 (1967)).

This principal has explicitly been made applicable to claims for exemptions under the stock-in-trade provision of Clause 16(2). “‘[T]he burden of proof is upon the one claiming an exemption from taxation to show clearly and unequivocally that he comes within the terms of the exemption.’” Brown Rudnick, 389 Mass. at 304(quoting Boston Symphony Orchestra, Inc. v. Assessors of Boston, 294 Mass. 248, 257 (1936)). A claim of exemption must fail if the operative facts merely cast doubt on the claim of exemption. Boston Symphony Orchestra, Inc., 294 Mass. at 257. “[T]he proof must be such as leaves the question free from doubt.” Trustees of Boston University v. Assessors of Brookline, 11 Mass. App. Ct. 325, 331 (1981)(citations omitted). Accordingly, the Board ruled that to prevail, MASSPCSCO must prove clearly and unequivocally that, at all relevant times, it came within the terms of the stock-in-trade exemption under Clause 16(2).

(A) MASSPCSCO Failed to Qualify for the Stock-In-Trade Exemption under the Test Established in Brown Rudnick

The leading case dealing with the applicability of the stock-in-trade exemption to non-arm’s-length leasing situations is Brown Rudnick. In Brown Rudnick, the Supreme Judicial Court considered the issue of whether a domestic business corporation organized under G.L. c. 156B, which was wholly owned by a related partnership, for the stated purpose of engaging in the business of leasing personal property, and whose only business activity was leasing personal property to the related partnership, was not a “domestic business corporation” for purposes of the stock-in-trade exemption under Clause 16(2). In holding that the Board correctly ruled that the corporation was not entitled to the exemption, the Court found that the fact that an entity was organized as a “domestic business corporation” within the meaning of Clause 16(2) was not the end of the inquiry. To end the analysis there, the Court found, would “elevate form over substance.” Brown Rudnick, 389 Mass. at 303. Drawing an analogy to the many cases dealing with charitable exemptions under G.L. c. 59, § 5, cl. 3, the Court stated:

We think that a similar inquiry is appropriate here to determine whether a corporation claiming exemption under G.L. c. 59, Section 5, Sixteenth (2), is operated for dominantly business purposes. We think, also, that the definition of business used by the board, “an activity which occupies the time, attention and labor of men for purposes of livelihood, profit or gain” is apt. Whipple v. Commissioner of Corps. & Taxation, 263 Mass. 476, 485-486 (1928).

In other words, the Supreme Judicial Court placed the burden of proof on the taxpayer in Brown Rudnick – just as it is on MASSPCSCO here – to show “clearly and unequivocally” that, at all relevant times, it was “in fact engaged in business.” Brown Rudnick, 389 Mass. at 303, 304 (quoting Boston Symphony Orchestra, 294 Mass. at 257.

The Court ruled that the Board had correctly recognized and applied the reasoning of Higgins v. Smith, 307 U.S. 473 (1940), that “transactions, which do not vary control or change the flow of economic benefits, are to be dismissed from consideration.” Id. at 476. The Court also quoted with approval the language of Judge Learned Hand in National Investors Corp. v. Hoey, 144 F.2d 466 (2d Cir. 1944):

“[T]o be a separate jural person for purposes of taxation, a corporation must engage in some industrial, commercial, or other activity besides avoiding taxation: in other words, that the term ‘corporation’ will be interpreted to mean a corporation which does some ‘business’ in the ordinary meaning; and that escaping taxation is not ‘business’ in the ordinary meaning.”

Id. at 468.

After examining the formation and activities of MASSPCSCO, the Board found and ruled that MASSPCSCO could not meet this Brown Rudnick standard.

(1) MASSPCSCO Was Formed for the Predominant Purpose of Avoiding Massachusetts Personal Property Taxes

MASSPCSCO was formed by Sprint in response to the Board’s and the Supreme Judicial Court’s decisions in RCN-BecoCom, which held, among other things, that limited liability companies classified as telephone companies were not exempt from taxation of their personal property under Clause 16, because Clause 16’s exemption provisions applied only to corporations, not to limited liability companies. Beginning with fiscal year 2004, the Commissioner informed telephone and telegraph filers that partnerships and LLCs filing as partnerships or disregarded entities would be valued by the Commissioner on all poles, wires, underground conduits, wires and pipes situated in the Commonwealth, and all machinery, including switching equipment, used for telephone or telegraph purposes. For LLCs, like Sprint Spectrum, which had previously reported to the Commissioner only generators, this ruling greatly expanded the property deemed reportable to the Commissioner under G.L. c. 59, § 41, for central valuation purposes. In Sprint Spectrum’s case, the Commissioner’s certified central valuation increased from $1,762,900 for fiscal year 2003 to $172,899,300 for fiscal year 2004.

Faced with a one-hundred fold increase in its property taxes in Massachusetts, Sprint consulted Deloitte & Touche for advice on how to mitigate it. Deloitte & Touche issued a memorandum dated December 10, 2003 purporting to describe “a restructuring strategy that can enable Sprint to qualify for certain personal property tax exemptions for its switching and other personal property in Massachusetts. The proposed structure creates eligibility for the exemptions without requiring assets to be placed in corporate solution for federal income tax purposes.” Sprint had previously considered shifting its Massachusetts tangible personal property to certain utility corporations that operate within the Sprint business structure, but Sprint determined that such a restructuring was inadvisable. Deloitte & Touche concluded, based partly on the Commissioner’s LR 91-2, that a “Delaware Business trust,” now known as a Delaware statutory trust, would be recognized as a “corporation” for Massachusetts property tax purposes, but could be disregarded for federal income tax purposes. Deloitte & Touche further concluded that the Delaware business trust would not be taxed on its income for Massachusetts purposes, and that all of the trust’s income would be treated as that of the parent Sprint’s limited partnerships. Deloitte & Touche explained that “[t]his flow-through of income occurs because the Massachusetts definitions of gross income and net income applicable to business corporations tie to the Code” and that “[i]n other situations involving federally disregarded entities that are treated as separate corporate entities for Massachusetts purposes, the [Commissioner] has ruled that, because of [sic] the entities are disregarded for federal income tax purposes and therefore have no federal taxable income, the entity has no taxable income for Massachusetts income tax purposes.” (Footnote and citations omitted).

Subsequent to the Deloitte & Touche memorandum and follow-up memorandum, Sprint formed MASSPCSCO for the admitted purpose of avoiding local property taxes in Massachusetts. However, the Board found that some of the “legitimizing” strategies suggested in the Deloitte & Touche memoranda were not followed by Sprint. For example, MASSPCSCO did not engage in any leasing activities with third parties despite Deloitte & Touche’s recommendation to do so. The Board found that, at all relevant times, MASSPCSCO did not lease, or attempt to lease, any property to any person other than Sprint Spectrum. The Board also found that MASSPCSCO did not conduct any regular business activities other than those incident to the purchase, ownership and leasing of Network equipment to Sprint Spectrum.

Deloitte & Touche also recommended that the leases from MASSPCSCO to Sprint Spectrum be at “arms’ length prices.” The Board found that MASSPCSCO did not produce credible evidence in support of this proposition. Rather, it appeared that the net book values at which the Network equipment was transferred from EquipmentCo to MASSPCSCO, and not market values, likely formed the basis for the rent charged Sprint Spectrum by MASSPCSCO. In addition, MASSPCSCO did not introduce any credible evidence demonstrating that the lease factors that were used to calculate rent were premised on fair market rates. Moreover, it appeared that Sprint Spectrum and MASSPCSCO did not implement the lease factors schedule suggested by their professional advisors. Consequently, there was insufficient evidence in the record to allow the Board to determine if the purported lease payments payable by Sprint Spectrum to MASSPCSCO were consistent with the relevant marketplace.

Recognizing the identity of management and control between MASSPCSCO and Sprint Spectrum and Sprint’s ability to direct profit among its subsidiaries, Deloitte & Touche stated that while MASSPCSCO should recognize a profit “to defend against any assertion of a sham transaction theory, nevertheless we recommend that this profit be kept low to protect against any change in the state’s position that a federally disregarded entity does not have gross income for state tax purposes.” The Board found that this recommendation not only supported the supposition that MASSPCSCO was formed for tax avoidance purposes, but also helped to demonstrate that MASSPCSCO did not operate independently from Sprint or Sprint Spectrum and the notion of “profit,” as it pertained to MASSPCSCO, was illusory.

(2) MASSPCSCO Did Not Operate as a Business

Independent of Sprint Spectrum

At all relevant times, Sprint Spectrum, a subsidiary of Sprint, operated a wireless communications system. Holdings was the 99% general partner and MinorCo was the 1% limited partner of Sprint Spectrum. All of the partnership interests in Holdings and MinorCo were held by direct and indirect subsidiaries of Sprint giving Sprint complete ownership and control over Sprint Spectrum.

This identity of ownership and control was carried forward to MASSPCSCO. All of the beneficial interests in MASSPCSCO were held, at all relevant times, by EquipmentCo. The sole administrative trustee of MASSPCSCO was an employee of SUMC, another wholly-owned Sprint subsidiary. Under the terms of the trust creating MASSPCSCO, the administrative trustee is authorized to take all actions necessary or incidental, in his reasonable discretion, to the conduct of the business of MASSPCSCO, but only as directed by EquipmentCo. Virtually all of the partnership interests in EquipmentCo were owned by Sprint Spectrum. Thus, Sprint Spectrum, the lessee under the lease with MASSPCSCO, completely controlled, through EquipmentCo, MASSPCSCO, the nominal lessor under the lease. EquipmentCo also had the control to appoint or remove MASSPCSCO’s administrative trustee at any time. The “Delaware trustee” of MASSPCSCO, Wilmington Trust Company, was, at all relevant times, a trustee for the sole and limited purpose of fulfilling the requirements of Delaware law and was not entitled to exercise any powers under the trust. Because the formation of MASSPCSCO was not a transaction which varied control or changed the flow of economic benefits between the two entities, the Board found and ruled that it was justified in examining the true nature of the relationship between them and whether the activities of MASSPCSCO were in the nature of a business. See Brown Rudnick, 389 Mass. at 304-305 (citing Higgins v. Smith, 308 U.S. at 476).

(3) MASSPCSCO Did Not Engage in Business within

the Brown Rudnick Test

The Board found that, at all relevant times, MASSPCSCO did not conduct any regular business activities other than those incident to the purchase, ownership and leasing of equipment to Sprint Spectrum. Sprint Spectrum, through its ownership of EquipmentCo, MASSPCSCO’s sole beneficiary, owned and controlled MASSPCSCO.

The Board found that, at all relevant times, neither Sprint Spectrum nor MASSPCSCO maintained separate bank accounts, and any lease payments made by Sprint Spectrum to MASSPCSCO were implemented by ledger entries transferring amounts to MASSPCSCO’s account on Sprint’s books. Sprint, the publically traded parent holding company of Sprint Spectrum, and all other Sprint subsidiaries, issued consolidated financial statements, which included the operations of all of its subsidiaries. Formal financial statements were not prepared in the ordinary course of MASSPCSCO’s business, although informal ones were prepared for purposes of this litigation. Therefore, at the Sprint level, the Board determined that these ledger entries had little economic substance.

The Board further found that, at all relevant times, MASSPCSCO had no employees. All functions and services necessary or desirable for the management, administration and operation of MASSPCSCO’s business were performed by employees of SUMC, another Sprint subsidiary, under a services agreement dated December 14, 2004, almost one year after the formation of MASSPCSCO. In return for its services, MASSPCSCO reimbursed SUMC $2,000 per month for a total of $24,000 per year on revenues between $23,000,000 and $41,700,000 for calendar years 2004 through 2006 and property, plant, and equipment valued at $211,000,000 to $328,000,000 for those same years. There was no credible evidence to establish, and the Board doubted, that this charge approximated fair cash value.

The Board also found that, at all relevant times, MASSPCSCO did not hold any assets other than property leased to Sprint Spectrum, nor did it lease property to anyone other than Sprint Spectrum. It did not even attempt to lease property to any other person or entity. MASSPCSCO was not compensated for any services it performed for any person or entity. MASSPCSCO did not lease or occupy any office space or real estate, except that certain inventory of MASSPCSCO was stored prior to delivery to Sprint Spectrum sites, in facilities shared with other affiliates of Sprint. MASSPCSCO had no dealings with third parties other than those incident to its ownership, maintenance and dealings with respect to its property including the lease of that property to Sprint Spectrum.

Given the identity of interests between MASSPCSCO and Sprint Spectrum, and the fact that MASSPCSCO did not engage in any transactions other than those incident to the non-arm’s-length leases with its ultimate owner, Sprint Spectrum, the Board found and ruled that, at all relevant times, MASSPCSCO did not engage in any real business other than escaping taxation. Accordingly, the Board found and ruled that it failed to show, even by a preponderance of the evidence, that it was “operated for dominantly business purposes.” Brown Rudnick, 389 Mass. at 303.

(4) The Brown Rudnick Test Applies to MASSPCSCO

Even Though It Was a Foreign Corporation and Not a Massachusetts Business Corporation

MASSPCSCO contended that the holding in Brown Rudnick does not apply to foreign corporations as that term is used in Clause 16(2). Nothing in the Court’s reasoning supports this distinction. The Clause 16(2) stock-in-trade exemption applies to (a) “domestic business corporations” and (b) “foreign corporations,” both defined in Section 30. Brown Rudnick dealt with a case in which the entity that was organized to lease property to an affiliate was organized as a domestic corporation. In the present appeals, the entity that was organized to lease property to an affiliate was a Delaware statutory trust. The Board has found that MASSPCSCO, the Delaware statutory trust here, was, at all relevant times, a foreign corporation under Section 30. MASSPCSCO posited that the Brown Rudnick test should be confined to business corporations under Section 30 and not applied to Section 30 foreign corporations.

The definition of foreign corporation in Section 30 refers to corporations, associations and organizations established, organized or chartered under laws other than those of the Commonwealth, for which domestic corporations may be organized under, inter alia, G.L. c. 156B and, after July 1, 2004, under G.L. c. 156D. MASSPCSCO admitted that it was organized for the purpose of owning property and of leasing it to an affiliate, a purpose for which the Board has found and ruled a corporation could be organized under Chapters 156B and Chapter 156D. Chapters 156B and 156D apply to domestic corporations organized for the purpose of carrying on business for profit. Thus, the “for profit” standard of Chapters 156B and 156D have been carried into the definition of foreign corporations. The Board found and ruled that, under the circumstances, it strained credulity to suggest, as MASSPCSCO has, that the Legislature intended to treat a foreign corporation more leniently than a domestic business corporation for purposes of the stock-in-trade exemption.

Moreover, the Supreme Judicial Court’s analysis in Brown Rudnick did not focus merely on the word “business” in the phrase “business corporation.” Like MASSPCSCO, the corporation in Brown Rudnick claimed to have been organized for profit. As the Supreme Judicial Court ruled in Brown Rudnick, the stated purpose of the organization does not end the inquiry. “It still must be shown that the corporation was, in fact, engaged in business.” Brown Rudnick, 389 Mass. at 304. In other words, form does not control over substance.

(5) EquipmentCo’s Purported Business Purposes Cannot Be Imputed to MASSPCSCO

Prior to 2004, Sprint formed EquipmentCo to own and lease back to its affiliates the categories of personal property that are the subject of these appeals. Those property categories included towers, antennas, switches and related software. EquipmentCo was originally created at the request of Sprint’s vendors which, for financing purposes, required that all assets provided to Sprint be held by a separate entity. EquipmentCo’s primary purpose was to satisfy those vendors’ demands.[70] However, as Sprint grew and became an established business with significant assets, and once it retired that initial Vendor Financing, the vendor restriction requiring assets to be held in a separate company was no longer necessary.

By the time that MASSPCSCO was created, there were no longer any vendor restrictions in place. Consequently, the purported business reason for creating a separate entity to hold assets had expired. Accordingly, the Board found and ruled that EquipmentCo’s original “business purpose” could not be imputed to MASSPCSCO, and it did not even maintain any vitality for EquipmentCo. As the Board previously found, there were no other credible reasons, other than property tax avoidance, for MASSPCSCO’s creation. Therefore, the Board further found and ruled that, at all relevant times, MASSPCSCO did not “perform[] any function other than to shelter [Sprint] from personal property liability.” Brown Rudnick, 389 Mass. at 306.

(B) MASSPCSCO Has Failed to Show That It Was Formed for a Substantial Business Purpose or Actually Engaged in Substantial Business Activity and Therefore Was Not a Sham

The sham transaction doctrine focuses on whether a transaction, including a business reorganization that results in tax benefits, has practical economic effects beyond tax avoidance. “[F]or a business reorganization that results in tax advantages to be respected for tax purposes, the taxpayer must demonstrate that the reorganization is ‘real’ or ‘genuine,’ and not just form over substance. Stated otherwise, the entity resulting from the reorganization must be one which is ‘formed for a substantial business purpose or actually engage[s] in substantial business activity.” The Sherwin-Williams Company v. Commissioner of Revenue, 438 Mass. 71, 84 (2002)(“Sherwin-Williams Co.”)(quoting Northern Ind. Pub. Serv. Co. v. Commissioner of Internal Revenue, 115 F.3^rd 506, 511 (7^th Cir. 1997)); see also Bass v. Commissioner of Internal Revenue, 50 TC 595, 600 (1968).

Sherwin-Williams Co. involved a reorganization in which wholly owned subsidiaries entered into genuine obligations with unrelated third parties in furtherance of the subsidiaries’ claimed corporate purposes, and the subsidiaries, among other things, maintained their own bank accounts, hired employees, set their own investment policies, invested assets for their own accounts, and hired and paid professionals. Sherwin-Williams Co., 438 Mass. at 85-87. The Supreme Judicial Court found that the subsidiaries were “viable business entit[ies] engaged in substantive business activity rather than in a ‘bald and mischievous fiction,’” and, therefore, were entitled to be respected for tax purposes. Sherwin-Williams Co., 438 Mass. at 89 (quoting Moline Props. v. Commissioner of Internal Revenue, 319 U.S. 436, 439 (1943)).

In the instant matter, the Board found that MASSPCSCO not only ignored advice from Deloitte & Touche to enter into leasing agreements with third parties, but otherwise failed to operate independently and evidence a legitimate and viable business purpose. Unlike EquipmentCo, MASSPCSCO was not created to facilitate and comply with vendor financing requirements, which had been retired in 1999. Rather, the Board found that the dominant, and essentially sole, reason for its organization was for tax avoidance purposes.

The Board found that, at all relevant times, MASSPCSCO had no employees. All functions and services necessary or desirable for the management, administration and operation of MASSPCSCO’s business, were performed by employees of SUMC, under an apparently non-arm’s length service agreement dated almost a year after MASSPCSCO was organized. MASSPCSCO was required to reimburse SUMC for those services by a fixed payment of only $2,000 per month. Sprint Spectrum and MASSPCSCO did not maintain separate bank accounts. The lease payments made by Sprint Spectrum to MASSPCSCO were implemented by ledger entries transferring amounts to MASSPCSCO’s account in Sprint’s books. MASSPCSCO was not compensated for any services that it performed for any person or entity. MASSPCSCO did not even purchase the equipment it leased to Sprint Spectrum; instead Sprint purchased the equipment and marked the purchase against MASSPCSCO’s account on a common ledger that was maintained by Sprint. No evidence was introduced to substantiate that any interest was charged or paid on this “loan,” or that there was a fixed repayment schedule. Moreover, the Board found that it was unclear from the evidence if MASSPCSCO was ever required to repay the debt. See The TJX Companies, Inc. v. Commissioner of Revenue, 2009 Mass. App. Unpub. LEXIS 168, *12-13 (April 3, 2009)(“TJX Companies”)(upholding the Board’s disallowance of interest payments on loans which the Board determined were not bona fide because, among other reasons, they simply constituted a circular flow of funds without appropriate documentation, interest rates, or repayment schedules).

MASSPCSCO did not hold any assets other than property leased to Sprint Spectrum. MASSPCSCO did not lease property to any person other than Sprint Spectrum. MASSPCSCO did not conduct any regular business activities other than those incident to the purchase, ownership and leasing of Network equipment to Sprint Spectrum. There was no evidence presented at the hearing of these appeals showing that the transactions between Sprint and MASSPCSCO were at market rates or that the leases were arm’s-length transactions. At the time the assets were originally transferred from EquipmentCo to MASSPCSCO, “for simplification purposes, the fixed assets [were] transferred at net book value rather than fair market value through investment and subsidiary accounts.” In addition, the leases between EquipmentCo and MASSPCSCO were signed by Sprint’s Assistant Vice President for State and Local Taxation, as both the lessee and the lessor. The Board further found that there was no credible evidence that the rents or lease factors were at market rates. MASSPCSCO did not even implement the lease factor schedules prepared by Ernst & Young.

Lastly in this regard, the Board found that Sprint assured itself of complete control over MASSPCSCO. At all relevant times, the administrative trustee was an employee of SUMC and was authorized only to act as directed by EquipmentCo, a subsidiary of Sprint. EquipmentCo was empowered to remove the administrative trustee at any time for any reason. The nominal trustee, Wilmington Trust Company, was appointed merely for the sole and limited purpose of fulfilling requirements under Delaware law and was not entitled to exercise any powers under the trust.

In sum, at all relevant times, MASSPCSCO had no employees; did not maintain separate bank accounts; did not independently invest any of its profits; did not do business with any other parties other than what was incidental to its leasing of equipment to its parent; did not attempt to lease any property to third parties; did not maintain any office space or real estate; was unable to exercise any independent control; did not purchase any of its equipment; and was not shown to be dealing with affiliates in an arm’s-length manner or to be responsible for any debt incurred as a result of any purchases of equipment or property on its behalf.

Accordingly, the Board found and ruled that the reorganization of Sprint and, more particularly, EquipmentCo, by creating MASSPCSCO as the repository for property and equipment located in Massachusetts, and the lease agreements between Sprint Spectrum and MASSPCSCO did not “vary control or change the flow of economic benefits between . . . entities.” Brown Rudnick, 389 Mass. at 305. The Board further found and ruled that MASSPCSCO did not perform any corporate function other than to attempt to shelter Sprint from personal property tax liability in Massachusetts. Id. at 306. MASSPCSCO evidenced virtually none of the examples of economic substance or substantive business activity embraced by the Supreme Judicial Court in Sherwin-Williams Co., 438 Mass. at 85-88. Based on the subsidiary findings developed from a review and analysis of the entire record, the Board found and ruled here that MASSPCSCO’s purported business dealings with Sprint Spectrum and its affiliates were without economic substance and that MASSPCSCO was not a viable business entity engaging in substantial business activity. The Board further found and ruled that MASSPCSCO’s acquisition of its equipment and property and its leasing transactions had no “practical economic benefit beyond the creation of tax benefits.” Id. at 85. The Board therefore ruled that the transfer of property and equipment to MASSPCSCO and MASSPCSCO’s subsequent leasing of it to Sprint Spectrum were shams.

(C) The Assessors Properly Assessed MASSPCSCO as the Owner of the Subject Property

MASSPCSCO claimed that if the Board disregarded the transfer of the subject personal property to MASSPCSCO for purposes of eligibility for the Clause 16(2) exemption, then the Board should completely disregard MASSPCSCO for all purposes, including assessment purposes. MASSPCSCO proposed that if the Board were to find that MASSPCSCO was not the owner of the subject personal property for purposes of Clause 16(2), then the Assessors should have assessed the personal property taxes to either EquipmentCo, as the transferor of the subject personal property to MASSPCSCO, or Sprint Spectrum, as the default owner of the subject personal property. The Board noted that, under G.L. c. 59, § 18, Second, the Assessors presumably could have assessed all or some of the subject personal property to Sprint Spectrum, instead of MASSPCSCO, as the “person having possession of the same on January first.”

“While the courts recognize that tax avoidance or reduction is a legitimate goal of business entities, the courts have, nonetheless, invoked a variety of doctrines . . . to disregard the form of a transaction where the facts show that the form of the transaction is artificial and is entered into for the sole purpose of tax avoidance and there is no independent purpose for the transaction.” Falcone v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1996-727, 734-35. The sham transaction doctrine is one such judicially created doctrine for preventing the misuse of the tax code. Horn v. Commissioner of Internal Revenue, 968 F.2d 1229, 1236 (D.C. Cir. 1992).

Massachusetts recognizes the sham transaction doctrine and, accordingly, has given the taxing authorities the ability to disregard, for taxing purposes, transactions that have no economic substance or business purpose other than tax avoidance. Sherwin-Williams Co., 438 Mass. at 79. Furthermore, this doctrine prevents taxpayers from claiming the tax benefits of transactions that, although within the language of the tax code, are not the type of transaction the law intended to favor with the benefit. Syms Corp. v. Commissioner of Revenue, 436 Mass. 505, 510 (2002). MASSPCSCO offered no direct authority for the proposition that a taxing authority is authorized under this doctrine to divest an entity of ownership of property simply because it has been determined that it does not qualify for a statutory exemption.

In its application for abatement and pleadings to this Board, MASSPCSCO admitted that it was the owner of the Network property located in Springfield and Woburn. Pursuant to G.L. c. 59, § 18, the Assessors, relying on filings made by MASSPCSCO or its affiliates, fulfilled their statutory duty and assessed the subject property to MASSPCSCO. The Board found and ruled that MASSPCSCO may not now claim that it was not the owner of the subject property because the Board found and ruled that it was not qualified or eligible for the stock-in-trade exemption under Clause 16(2). The Board’s findings here are focused on MASSPCSCO’s qualifications or eligibility for the exemption under Clause 16(2). The Board did not find or rule that another entity was, at all relevant times, the owner of the subject property for other purposes, such as personal property tax assessments under Section 18. Rather, the Board found and ruled the MASSPCSCO was the owner for personal property assessment purposes. Unlike the situation in TJX Companies, where “the fruits of a sham transaction [were] appropriately [and necessarily] disregarded and reapportioned to the parent,” 2009 Mass. App. Unpub. LEXIS 168 at *14, the Board ruled here that there was no need for “reattribution” of gain or income “to the parent” to properly redress the ill-begotten fruits from the subject sham transaction because disallowance of the exemption was enough, and all that was required, to remedy the tax mischief created by the scheme.

Accordingly, the Board found and ruled that its findings and rulings here that MASSPCSCO did not qualify for the Clause 16(2) exemption did not vitiate or negate MASSPCSCO’s ownership of the property for purposes of property tax assessment and Section 18.

(D) Summary

The Board found and ruled that MASSPCSCO failed to qualify for the stock-in-trade exemption under Clause 16(2) because it did not pass the test established in Brown Rudnick. The Board also found and ruled that MASSPCSCO was formed for the predominant and essentially sole purpose of avoiding Massachusetts personal property taxes; MASSPCSCO did not operate as a business independent from Sprint Spectrum; MASSPCSCO did not engage in business as defined in Brown Rudnick; the Brown Rudnick test applied to MASSPCSCO even though, at all relevant times, it was a foreign corporation and not a domestic business corporation; and EquipmentCo’s original business purpose could not be imputed to MASSPCSCO. The Board also found and ruled that MASSPCSCO failed to show that the subject reorganization and transactions had economic substance or a legitimate business purpose. Finally, the Board found and ruled that MASSPCSCO was properly assessed by the Assessors for the personal property taxes at issue.

III. Conclusion

On this basis, the Board decided that: (1) MASSPCSCO was a foreign corporation within the meaning of Section 30 and entitled to be classified as such by the Commissioner for 2005, 2006, and 2007; but (2) MASSPCSCO was not entitled to the “stock-in-trade” exemption under Clause 16(2).

APPELLATE TAX BOARD

By: ________________________________

Thomas W. Hammond, Jr., Chairman

A true copy

Attest: _________________________

Clerk of the Board

KEVIN A. SPELLMAN v. BOARD OF ASSESSORS OF

THE TOWN OF MARSHFIELD

Docket No. F294260 Promulgated:

April 30, 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 Board of Assessors of the Town of Marshfield (“appellee” or “assessors”), to abate taxes on certain real estate located in Marshfield, owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal year 2008.

Commissioner Egan (“Presiding Commissioner”) heard this appeal and issued a single-member decision for the appellee in accordance with G.L. c. 58A, § 1 and 831 CMR 1.20. 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.

Kevin A. Spellman, pro se, for the appellant.

Elizabeth Bates, assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of testimony and exhibits offered into evidence at the hearing of this appeal, the Presiding Commissioner made the following findings of fact.

On January 1, 2007, Kevin A. Spellman (“appellant”) was an assessed owner of an improved parcel of real estate located at 20 Chickatawbut Avenue in Marshfield (“subject property”). For fiscal year 2008, the assessors valued the subject property at $366,000 and assessed a tax thereon, at a rate of $8.72 per $1,000, in the amount of $3,191.52. Marshfield’s Collector of Taxes mailed the fiscal year 2008 tax bills on December 31, 2007. In accordance with G.L. c. 59, § 57C, the appellant paid the tax due without incurring interest and in accordance with G.L. c. 59, § 59, the appellant timely filed an Application for Abatement on January 22, 2008. Having inspected the subject property on February 12, 2008, the assessors granted a partial abatement in the amount of $67.14 on February 29, 2008, reducing the subject property’s valuation to $358,300. On April 15, 2008, the appellant seasonably filed an appeal with the Appellate Tax Board (“Board”). On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to decide this appeal.

The subject property consists of a 0.138-acre parcel of real estate located approximately 290 feet from Massachusetts Bay and improved with a single-family, ranch-style home containing approximately 640 square feet of finished living area. The dwelling has four rooms, including two bedrooms, as well as one full bathroom.

The appellant, a certified residential real estate appraiser whom the Presiding Commissioner qualified as an expert in residential real estate appraisal, argued that the subject property was overvalued for fiscal year 2008. The appellant testified in support of his argument and offered into evidence his self-prepared appraisal report.

To arrive at his estimate of the subject property’s fair cash value, the appellant performed a comparable-sales analysis incorporating sales of six purportedly comparable properties. The properties’ sale dates ranged from March 31, 2006 to December 1, 2006, and their sale prices from $275,000 to $369,250. Five of the six properties were improved with ranch-style dwellings containing two bedrooms and one bathroom, similar to the subject property. One property, which among the appellant’s chosen comparables was most proximate to the subject property but still more than twice the distance from the beach, featured a five-room Cape-Cod-style dwelling containing two bedrooms and two bathrooms. The appellant made adjustments to his chosen comparables for various factors including living area, condition, time of sale and parcel size. Having taken these factors into consideration, the appellant arrived at adjusted sale prices for the properties ranging from $288,500 to $312,200, and an indicated value for the subject property of $295,000.

Notably, the appellant made an adjustment relating to location for only one of his chosen comparables, notwithstanding that all of the properties were significantly farther from the beach than the subject property. More specifically, the properties whose sale prices were not adjusted for location were situated approximately 500 to 1300 feet from Massachusetts Bay, while the subject property is located less than 300 feet from the Bay.[71] The Presiding Commissioner found that the appellant failed to adequately adjust for the comparables’ greater distance from the water, thereby substantially diminishing the probative value of the appellant’s appraisal.

Elizabeth Bates, assessor for Marshfield, testified on behalf of the assessors and presented a comparable-sales analysis which included three properties that sold between March 14, 2006 and August 28, 2006, at sales prices which ranged from $355,000 to $430,000. The properties were all improved with cottage-style dwellings and were located between 320 and 430 feet from the beach. Having accounted for various differences between the comparable properties and the subject property, the assessors concluded that these sales supported the assessed value of the subject property for fiscal year 2008. The assessors also introduced assessment data for three properties, two of which abut the subject property, and all of which were similar to the subject property in relevant respects. These properties’ assessed values were between $353,700 and $370,900 for fiscal year 2008. The Presiding Commissioner found Ms. Bates’ testimony and the assessors’ comparable-sales analysis credible and, along with the assessed values of the neighboring properties, supportive of the subject property’s 2008 assessed value.

Having concluded that the appellant’s appraisal was not sufficiently probative to establish the fair cash value of the subject property on the relevant assessment date, the Presiding Commissioner found and ruled that the appellant failed to sustain his burden of persuading the Board that the subject property was overvalued for fiscal year 2008. Moreover, the Presiding Commissioner found that the assessors produced credible evidence demonstrating that the subject property was not overvalued. On this basis, the Presiding Commissioner decided this appeal for the assessors.

OPINION

Assessors have a statutory obligation to assess real estate at its fair cash value as of the first day of January of the year preceding the fiscal year at issue. G.L. c. 59 §§ 11 and 38. The definition of fair cash value is the price upon which a willing buyer and a willing seller would agree if both were fully informed and neither was under compulsion. Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).

The burden of proof is upon the taxpayer to make out a right to an abatement as a matter of law. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). An assessment is presumed to be valid unless the taxpayer is able to sustain his or her burden of proving otherwise. Id. The taxpayer may sustain this burden by introducing affirmative evidence of fair cash value, or by proving that the assessors erred in their method of valuation. General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 600 (1984). “The introduction of ample and substantial evidence in this regard may provide adequate support for abatement.” Chouinard v. Assessors of Natick, Mass. ATB Findings of Fact and Reports 1998-299, 307-308 (citing Garvey v. Assessors of West Newbury, Mass. ATB Findings of Fact and Reports 1995-129, 135-36; Swartz v. Assessors of Tisbury, Mass. ATB Findings of Fact and Reports 1993-271, 279-80).

“[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. Assessors of Foxborough, 385 Mass. 679, 682 (1982). Sales of comparable realty in the same geographic area and within a reasonable time of the assessment date generally contain 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). When comparable sales are used, however, allowances must be made for various factors which would otherwise cause disparities in the comparable property’s sale prices. See Pembroke Industrial Park Co., Inc. v. Assessors of Pembroke, Mass. ATB Findings of Fact and Reports 1998-1072, 1082. “Adjustments for differences in the elements of comparison are made to the price of each comparable property . . . . The magnitude of the adjustment made for each element of comparison depends on how much that characteristic of the comparable property differs from the subject property.” THE APPRAISAL INSTITUTE, THE APPRAISAL OF REAL ESTATE 322 (13^th ed., 2008).

In the present appeal, the appellant argued that the subject property was overvalued for fiscal year 2008, and relied upon his appraisal of the property to support this argument. To value the subject property, the appellant performed a comparable-sales analysis citing sales of several purportedly comparable properties and making adjustments to their sale prices to account for differences between the properties and the subject property. The appellant failed, however, to adequately account for the differences in proximity to Massachusetts Bay between his chosen comparables and the subject property. In light of this failure, and mindful of the substantial importance of location to the value of property in close proximity to the Bay, the Presiding Commissioner found and ruled that the appellant’s analysis was not sufficiently probative to establish the subject property’s fair cash value. In contrast, the assessors presented testimony and a comparable-sales analysis, as well as comparably assessed properties, that the Presiding Commissioner found credible and supportive of the contested assessment.

The Presiding Commissioner thus found and ruled that the appellant failed to meet his burden of persuading the Board that the subject property was overvalued for fiscal year 2008 and decided this appeal for the appellee.

APPELLATE TAX BOARD

By:______________________________

Nancy T. Egan, Commissioner

A true copy:

Attest: _________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

JEFFREY J. COHEN, TRUSTEE v. BOARD OF ASSESSORS OF

THE TOWN OF WESTON

Docket Nos. F280819, F284377 Promulgated:

F292415, F294465 May 11, 2010

These are appeals 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, Board of Assessors of the Town of Weston (“assessors”), to abate taxes on certain real estate located in the Town of Weston, owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal years 2005, 2006, 2007 and 2008.

Commissioner Egan heard these appeals. Chairman Hammond and Commissioners Scharaffa, Rose, and Mulhern joined her in decisions for the appellee in Dockets F280819 and F294465 (fiscal years 2005 and 2008, respectively) and in decisions for the appellant in Dockets F284377 and F292415 (fiscal years 2006 and 2007, respectively).

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.

Mark F. Murphy, Esq. for the appellant.

Ellen M. Hutchinson, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits offered into evidence at the hearing of these appeals, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2004, January 1, 2005, January 1, 2006 and January 1, 2007, Jeffrey J. Cohen, Trustee of the Winsor Meadow Realty Trust (“appellant”) was the assessed owner of a certain parcel of real estate located at 50 Winsor Way in the Town of Weston (“subject property”).[72] For fiscal year 2005, the assessors valued the subject property at $5,719,400 and assessed a tax thereon, at the rate of $9.46 per $1,000, in the total amount of $54,105.52. The appellant timely paid the tax in full without incurring interest. On January 10, 2005, the appellant timely applied to the appellee for an abatement, claiming that the subject property was overvalued. The appellee denied the appellant’s request on April 5, 2005. The appellant seasonably filed his petition with the Board on June 27, 2005. Accordingly, the Board found and ruled that it had jurisdiction to hear and decide the appeal for fiscal year 2005.

For fiscal year 2006, the appellee valued the subject property at $6,952,000 and assessed a tax thereon, at the rate of $9.95 per $1,000, in the total amount of $69,172.40. The appellant timely paid the tax in full without incurring interest. On January 26, 2006, the appellant timely applied to the appellee for an abatement, claiming that the subject property was overvalued. The appellee denied the appellant’s request on March 21, 2006. The appellant seasonably filed his petition with the Board on June 6, 2006. Accordingly, the Board found and ruled that it had jurisdiction to hear and decide the appeal for fiscal year 2006.

For fiscal year 2007, the appellee valued the subject property at $6,898,800 and assessed a tax thereon, at the rate of $10.26 per $1,000, in the total amount of $70,781.68. The appellant timely paid the tax in full without incurring interest. On February 1, 2007, the appellant timely applied to the appellee for an abatement, claiming that the subject property was overvalued.

The appellant’s application was deemed denied on May 1, 2007.[73] The appellant seasonably filed his petition with the Board on July 12, 2007. Accordingly, the Board found and ruled that it had jurisdiction to hear and decide the appeal for fiscal year 2007.

For fiscal year 2008, the appellee valued the subject property at $7,033,500 and assessed a tax thereon, at the rate of $10.67 per $1,000, in the total amount of $77,298.87. The appellant timely paid the tax in full without incurring interest. On February 1, 2008, the appellant timely applied to the appellee for an abatement, claiming that the subject property was overvalued. The appellee denied the appellant’s request on March 4, 2008. The appellant seasonably filed his petition with the Board on April 25, 2008. Accordingly, the Board found and ruled that it had jurisdiction to hear and decide the appeal for fiscal year 2008.

The appellant presented his appeal through the testimony of three witnesses: (1) Stephen Ozahowski, whom the Board qualified as an expert in real estate valuation; (2) the appellant; and (3) Eric Josephson, the Principal Assessor for the Town of Weston. The appellee did not call any witnesses but cross-examined each of these witnesses.

The Town of Weston (“Weston”) is a desirable suburban community, located west of Boston, which contains many luxury homes and estate properties. The subject property is located in a neighborhood in Weston that has among the highest property values in the Town and also abuts a golf course. The subject property has excellent access to Routes 16, 9, 20, 27, 30, Interstate 90 (Massachusetts Turnpike) and Interstate 95. The subject property contains 2.23 acres of land.[74]

The appellant purchased the subject property in July, 2001 for $2,000,000. The appellant demolished the older home that was on the subject site and began construction of the home that is currently on the site in September, 2001. The property record cards submitted into evidence indicate that, on the date of purchase, the subject property’s address was 299 Meadowbrook Road. The subject property’s address changed to 50 Winsor Way on April 9, 2003.

After construction was completed in April, 2008, the subject home contained 9,839 square feet of living space. The home is a two-story, modern, Colonial-style home with a stucco-on-wood exterior and a wood-shingle gable/hip roof. The home is heated by forced air and radiant heating and is equipped with a custom HVAC system, which includes central air conditioning. The home also features a central vacuum system. The subject property has public water and a septic system, because there is no public sewer in Weston.

The home has seventeen rooms, including five bedrooms, as well as seven full bathrooms, three half bathrooms and four fireplaces. The master bathroom includes high-end fixtures, marble tile, and a large shower area with a separate whirlpool tub. The main entrance opens to a grand reception hall foyer, with two coat closets and a half bathroom, which leads to a living room with a fireplace, a library with a fireplace, a conservatory, a gallery, a two-story family room with a fireplace, a dining room and a gourmet kitchen with commercial-grade appliances, an adjoining butler’s pantry, and a separate breakfast/informal dining area. Additional rooms on the first floor include the master bedroom suite, which contains a master bedroom with a fireplace and the master bathroom, a laundry room, a mud room, and an exercise room. The first floor has hardwood flooring, with the exception of the master bathroom and two half bathrooms, which have marble tiling. Additionally, the grand reception hall foyer and the conservatory have honed limestone flooring. The ceiling height on the first floor is approximately 10 feet, and the ceilings in the gallery are vaulted.

The second floor hall has a view overlooking the grand reception hall foyer and a door opening to an exterior balcony overlooking the private backyard grounds. The second floor has four bedrooms, each with its own private bathroom and closet; two of the bedrooms have their own separate dressing closet. Additional rooms on the second floor include the second floor laundry room, a half bathroom, a small media room, a sitting room, and a billiards room with a cathedral ceiling. The second floor living space is carpeted.

Eighty percent of the basement is finished; the remainder is a small area for utility and storage. The basement includes a large family room, a recreation room with a wet bar, a walk-in wine cellar, a custom home theater, two full bathrooms, and a sauna. The utility and storage area includes a large walk-in luggage storage closet.

The home includes a 1,102 square-foot patio with an outside fireplace/barbeque, a 56 square-foot porch, a 256 square foot deck, and an attached four-car finished and heated garage. The grounds are professionally landscaped.

The appellant’s real estate valuation witness, Mr. Ozahowski, testified that the subject property is a “luxury” home, and that luxury homes are characterized by many amenities like custom cabinetry, high-end workmanship, commercial-grade appliances, extra rooms like wine cellars and home theaters, and many finishes completed to the taste of the owner. Mr. Ozahowski also testified that as of the first relevant assessment date of these appeals, the subject property’s neighborhood was beginning to change. Older “estate” properties – properties that include large parcels of land and older homes built in the early 1900s – were being sold, and the older homes were being demolished and replaced with much larger luxury homes like the subject home.

The following details the evidence of record concerning the state of construction of the subject home and the evidence of value presented by the witnesses for each fiscal year at issue.

Fiscal year 2005

Mr. Cohen testified to the condition of the home as of June 30, 2004.[75] He explained that, as of the relevant assessment date, the subject home was still under construction. The home was weather-tight, the interior drywall, blueboard and skimcoating had been installed, utilities were mostly installed, and the kitchen and bathroom cabinetry and fixtures were on site. However, many rooms remained incomplete. In particular, the library, the rooms over the garage, and the basement rooms were incomplete. Mr. Cohen also explained that some of the features of the home’s construction were defective and in need of repair, particularly the exterior stucco, many of the interior floors and trim, and the HVAC system.

Mr. Ozahowski performed a comparable-sales analysis.[76] Mr. Ozahowski testified that he selected the properties to include in his analysis by reviewing Multiple Listing Service (“MLS”) data and choosing the highest valued sales in Weston. For fiscal year 2005, Mr. Ozahowski selected five purportedly comparable sales in Weston – 32 Cart Path Road, 41 Skating Pond Road, 445 Concord Road, 18 Stonecroft Circle, and 22 Pelham Road. The closest comparable-sale property was one block away and the farthest was 3.5 miles from the subject property. The comparable-sale properties ranged in size from 2.02 acres to 3.52 acres and were improved with luxury homes ranging in gross living area from 5,165 square feet to 11,274 square feet. After applying his adjustments, the adjusted sale prices for these five sales yielded a range from $4,264,700 to $4,983,700. Mr. Ozahowski did not review the deeds for his comparable-sale properties, relying instead solely upon the MLS listings. However, the sale prices for two of his comparable-sale properties – 41 Skating Pond Road and 445 Concord Road – were incorrectly listed on the MLS listings.

Mr. Ozahowski made a $500,000 adjustment to each of his comparable-sale properties for functional utility, to take into account the incomplete state of the subject home. Mr. Ozahowski based his $500,000 functional utility adjustment on a 2004 an earlier appraisal of the subject property prepared on behalf of Citizens Bank for financing purposes. The Addendum to this appraisal gave a range of $500,000 to $750,000 for the cost to complete the various items listed. Based on the adjusted sale prices of his comparable properties, Mr. Ozahowski testified that the subject property’s value as of the relevant assessment date was $4,500,000, which was about the median of his adjusted sale prices for his comparable-sale properties.

Mr. Josephson, Weston’s assessor, inspected the subject home on June 30, 2004, and using a construction checklist, he determined that the home was 79 percent completed. Mr. Josephson’s report details a comparable-sale analysis using three comparable sales in Weston – 41 Skating Pond Road, 4 Nottingham Lane, and 22 Pelham Road. The comparable-sale properties ranged in size from 2.35 acres to 5.84 acres and were improved with luxury homes ranging in gross living area from 7,512 square feet to 8,947 square feet. The closest comparable-sale property was one block away and the farthest was 2.25 miles from the subject property. Two of his comparable-sale properties – 41 Skating Pond Road and 22 Pelham Road – were also used by Mr. Ozahowski as comparable-sale properties. After applying his adjustments, the adjusted sale prices for Mr. Josephson’s three comparable sales yielded a range from $4,899,900 to $5,960,800. Based upon his comparable-sale analysis and his determination of the home’s completion, Mr. Josephson concluded that the subject property’s assessed value for fiscal year 2005 should be $5,719,400. The property record card on file indicates that the fiscal year 2005 assessment accounted for the fact that the property was about 79 percent completed for fiscal year 2005.

Fiscal year 2006

Mr. Cohen testified to the condition of the subject home as of June 30, 2005.[77] He explained that the subject home was nearing completion, but many items still remained incomplete, and defects in the original construction of the home had become evident. Repairs to the construction, estimated at about $200,000, needed to be completed on the subject home. In particular, the HVAC system was inadequate, moisture was entering the home and creating mold, the walls were cracking even after they were repaired, the floors were defective, cabinets were still not installed, some lighting fixtures still needed installation, trim and stairways were being repaired, and the exterior stucco had been installed incorrectly. Painting inside the home also was not completed. Mr. Cohen testified that the subject home was a “work zone,” with some rooms closed off with plastic sheeting. Mr. Cohen also testified that he and his family vacated the subject home during the summer so that the builders could complete repairs. The family moved back to the subject home in September, 2005.

Mr. Ozahowski performed a comparable-sale analysis for fiscal year 2006.[78] He selected five purportedly comparable properties in Weston – 1 Dogwood Road, 36 Love Lane, 211 Westerly Road, 103 Rolling Lane, and 66 Doublet Hill Road. The closest comparable-sale property was 0.25 miles and the farthest was 2.5 miles from the subject property. The comparable-sale properties ranged in size from 1.44 acres to 4.29 acres and were improved with luxury homes ranging in gross living area from 6,590 square feet to 10,168 square feet. After applying his adjustments, the adjusted sale prices for these five sales yielded a range from $4,468,700 to $6,030,600. For two of his comparable-sale properties, Mr. Ozahowski applied over $1,000,000 in adjustments to the sale prices. Based on the adjusted sale prices of his comparable properties, Mr. Ozahowski concluded that the subject property’s value as of the relevant assessment date was $5,750,000.

Again, Mr. Ozahowski applied a functional utility adjustment to all of his comparable-sale prices, this time in the amount of $200,000, to each of his comparable properties. In his appraisal report, Mr. Ozahowski stated that the appellants were completing a punch list of items that were either not complete or defectively installed in the subject home, including interior painting, trim and moldings, two rooms and one bathroom in the basement which needed to be completed, and the defective exterior stucco. Mr. Ozahowski’s report stated that the owners estimated that $300,000 to $400,000 worth of work would be required to complete the subject home, but that Mr. Ozahowski considered a more reasonable estimate to be $200,000.

The assessors valued the subject property at $6,952,000 for fiscal year 2006. Mr. Josephson’s report details a comparable sales analysis using four purportedly comparable sales in Weston: 148 Highland Street, 103 Rolling Lane, 16 Sanderson Lane, and 4 Willow Road. The closest comparable property was 0.25 miles from the subject property and the farthest comparable property was 2 miles from the comparable property. One of the properties was in the same neighborhood as the subject property and two others were in the immediately adjacent neighborhood. The comparable properties ranged in size from 1.45 acres to 6.33 acres and were improved with luxury homes ranging in gross living area from 6,798 square feet to 11,228 square feet. One of Mr. Josephson’s comparable-sale properties required adjustments of over $1,000,000. After applying his adjustments, Mr. Josephson’s comparable properties ranged in adjusted sale prices from $6,353,000 to $7,465,700.

Mr. Josephson admitted in his testimony that his photographs of the subject property and his descriptions of the subject home’s interior in each of his four reports (one for each fiscal year at issue) were based on his last inspection of the subject property, which occurred on June 30, 2004. The property record card for fiscal year 2006, like the one for fiscal year 2005, stated that, in the opinion of the assessors, the subject property was about 79 percent completed for fiscal year 2005, and that a temporary certificate of occupancy had been issued on September 16, 2004. The Board found that, based on Mr. Josephson’s admission and the lack of relevant information as to the state of construction of the subject home as of the relevant assessment date, the assessors did not inspect the property during the relevant assessment period for fiscal year 2006.

Fiscal year 2007

Mr. Cohen testified that, as of the relevant assessment date, many of the items on the punch list were still not completed. The basement rooms, particularly the home theater and wine cellar, were still not completed. Moreover, the walls were bulging because they were installed improperly, the hardwood floors were still not repaired properly, the trim and molding were still not repaired, and the driveway and landscaping were not complete. The stucco also was still defective.

Mr. Ozahowski performed a comparable-sale analysis for fiscal year 2007.[79] He selected three purportedly comparable properties in Weston – 103 Rolling Lane, 148 Highland Street, and 16 Sanderson Lane. The closest comparable-sale property was 0.5 miles and the farthest was 2.5 miles from the subject property. The comparable properties ranged in size from 1.45 acres to 2.51 acres and were improved with luxury homes ranging in gross living area from 6,798 square feet to 10,168 square feet. After applying his adjustments, the adjusted sale prices for these three sales yielded a range from $5,850,800 to $6,395,600. Based on the adjusted sale prices of his comparable-sale properties, Mr. Ozahowski stated that the subject property’s value as of the relevant assessment date was $6,000,000.

Again, Mr. Ozahowski applied a functional utility adjustment, this time in the amount of $100,000, to each of his comparable properties. In his appraisal report, Mr. Ozahowski noted that, as of the relevant assessment date, interior painting was not complete, two of the four rooms and one of the two bathrooms in the basement were not yet complete, and negotiations were underway to remedy the exterior stucco. Mr. Cohen also testified that much work was performed in the home during the Fall of 2006 and the Winter of 2007, after the relevant assessment date for fiscal year 2007, to complete the home theater and wine cellar. Mr. Ozahowski believed that, as of the relevant assessment date, a reasonable estimate to complete the property was $100,000.

The assessors valued the subject property at $6,898,800. Mr. Josephson’s report details a comparable- sales analysis using four comparable-sale properties in Weston — 140 Meadowbrook Road, 180 Highland Street, 100 Meadowbrook Road, and 103 Rolling Lane – all of which were between 0.125 and 0.25 miles from the subject property. The comparable-sale properties ranged in size from 1.96 acres to 3 acres and were improved with luxury homes ranging in gross living area from 6,562 square feet to 10,168 square feet. Both Mr. Ozahowski and Mr. Josephson selected as a comparable-sale property 103 Rolling Lane, which Mr. Josephson had also selected for the previous fiscal year. After applying his adjustments, Mr. Josephson’s comparable-sale properties ranged in adjusted sale prices from $6,734,000 to $7,821,400.

As described earlier, Mr. Josephson admitted in his testimony that his descriptions of the subject home’s interior in his report were based on his last inspection of the subject property, which occurred on June 30, 2004. The property record card for fiscal year 2007 indicates that, in the opinion of the assessors, the subject property was about 79 percent completed for fiscal year 2005, and that a temporary certificate of occupancy had been issued on September 16, 2004. The Board found that, based on Mr. Josephson’s admission and the lack of relevant information as to the state of construction of the subject home as of the relevant assessment date, the assessors did not inspect the subject property during the assessment period for fiscal year 2007.

Fiscal year 2008

Mr. Cohen testified that the subject’s home theater was completed by the end of January, 2007, and the wine cellar was completed sometime in January or February, 2007.[80] The appellant also presented a punch list, prepared sometime in March, 2007, by the engineering firm of Simpson Gumpertz Heger, Inc., with input from the appellant and his wife, which contained over one thousand items to be completed. Mr. Cohen testified that the builders completed construction of the subject home sometime in April of 2008, and while some of the items on the punch list were still not completed, he and his wife had grown “construction weary” and decided to cease further work to the home.

Mr. Ozahowski prepared a comparable-sales analysis.[81] Mr. Ozahowski’s report cited six purportedly comparable-sale properties in Weston – 5 Winsor Way, 180 Highland Street, 36 Love Lane, 60 Nobscot Road, 451 Wellesley Street, and 38 Winsor Way. The closest comparable-sale property abutted the subject property and the farthest was 3 miles from the subject property. The comparable-sale properties ranged in size from 1.38 acres to 6.28 acres and were improved with luxury homes ranging in gross living area from 5,650 square feet to 17,802 square feet. After applying his adjustments, the adjusted sale prices for these six sales yielded a range from $5,080,500 to $7,235,500. Based on the adjusted sale prices of his comparable-sale properties, Mr. Ozahowski stated that the subject property’s value as of the relevant assessment date was $6,000,000.

Again, as he had for the previous fiscal years, Mr. Ozahowski applied a functional utility adjustment, in the amount of $100,000, to his comparable properties. Mr. Ozahowski’s appraisal indicates that the subject home was “complete and occupied” as of the relevant assessment date. However, the appraisal notes that the exterior stucco was still found to be defective as of January 1, 2007. His appraisal reports that the stucco was remedied during the summer of 2007,[82] at a cost of $150,000.

The assessors valued the subject property at $7,033,500. Mr. Josephson performed a comparable-sale analysis, citing the same four comparable-sale properties which he had cited for fiscal year 2007: 140 Meadowbrook Road, 100 Meadowbrook Road, 180 Highland Street, and 103 Rolling Lane. These properties were all within 0.25 miles of the subject. The comparable properties ranged in size from 1.96 acres to 3 acres and were improved with luxury homes ranging in gross living area from 6,562 square feet to 10,168 square feet. After applying his adjustments, Mr. Josephson’s comparable properties ranged in adjusted sale prices from $6,734,000 to $7,821,400.

The comparable-sale properties which the Board found to be most similar to the subject property was 140 Meadowbrook Road, located only 0.125 miles from the subject property and in the same neighborhood for assessment purposes as the subject property.[83] This property consists of a 1.96-acre parcel of land improved with a Colonial-style home with a gross living area of 9,569 square feet. It contains a total of ten rooms, including five bedrooms, as well as five full bathrooms and three half bathrooms. The comparable property includes a finished basement containing one recreation room, and extra amenities include an attached three-car garage as well as six fireplaces. The comparable property sold on February 4, 2005 for $7,480,000. Mr. Josephson arrived at an adjusted sales price as detailed below:

140 Meadowbrook Road

Adjustments: Appellee’s values

Above grade room count: $100,000

Gross living area: $ 81,000

Rooms below grade: $150,000

Garage size $ 20,000

Fireplaces –$ 9,600

Net adjustment: $341,400

Adjusted sale price: $7,821,400

On the basis of the above facts submitted into evidence, the Board made the following findings of fact for each of the fiscal years at issue.

Fiscal year 2005

The Board was not persuaded by Mr. Ozahowski’s comparable-sales analysis. First, Mr. Ozahowski did not review the deeds for his comparable-sale properties, and two of his comparable-sale properties’ sale prices were incorrectly listed on the MLS upon which he relied for his sales figures. Moreover, the Board found that his $500,000 functional utility adjustment was too high and not supported by the actual state of the subject home as of the relevant assessment date for fiscal year 2005. Mr. Ozahowski admitted that he simply extrapolated the $500,000 figure from a previous appraisal performed for financing purposes by a third-party appraiser who was not present at the hearing of these appeals to explain how he arrived at this adjustment.

By contrast, Mr. Josephson inspected the home on June 30, 2004, and using a construction checklist, he determined that the home was 79 percent completed. The property record card for fiscal year 2005 also indicates that the assessment for fiscal year 2005 accounted for the fact that the subject home was 79 percent completed. The Board found that Mr. Josephson’s method of using a construction checklist was a reliable and accepted means of measuring the degree of completion of the home, and the property record card reflected that the assessors took the degree of completion into account in valuing the home for fiscal year 2005. The Board also found that Mr. Josephson’s comparable-sale properties were sufficiently similar to the subject property to be probative evidence of the subject property’s fair market value.

The Board thus found that the appellant failed to establish that the home’s degree of completion was not taken into account in the subject assessment. Therefore, the Board found that the appellant failed to meet his burden of proving that the subject property’s assessed value was in excess of its fair market value. Accordingly, the Board issued a decision for the appellee for fiscal year 2005.

Fiscal year 2006

The Board was not persuaded by Mr. Ozahowski’s comparable-sales analysis by which he determined a fair market value for the subject property of $5,750,000. Two of Mr. Ozahowski’s comparable-sale properties required over $1,000,000 in adjustments to their sale prices, thus rendering them insufficiently comparable to the subject property to be probative evidence of the subject property’s fair market value. However, the Board found that Mr. Cohen and Mr. Ozahowski documented and proved that defects in the subject home as of the relevant assessment date would cost $200,000 to repair before an owner could sell the subject property on the open market for the prices suggested by Mr. Josephson’s comparable-sales analysis. Further, the assessors failed to inspect the home after June, 2004 and were, therefore, unaware of the state of completion of the home and its defects as of the relevant assessment date for fiscal year 2006. The Board, therefore, found that, because the fiscal year 2006 assessment did not take into account the state of completion or significant defects, the appellant’s $200,000 functional utility deduction to the assessed value of the subject property was warranted. The Board thus deducted $200,000 from the fiscal year 2006 assessment to arrive at a fair cash value for the subject property of $6,752,000 and issued a decision for the appellant abating $2,049.70 in tax for fiscal year 2006.

Fiscal year 2007

The Board was not persuaded by Mr. Ozahowski’s comparable-sales analysis by which he determined a fair market value of $6,000,000. The Board found that two of the sales that Mr. Ozahowski selected – 148 Highland Street and 16 Sanderson Lane – were selected because they were lower in value than other comparable-sale properties in Weston. As revealed by the sale of 103 Rolling Lane, as well as the three other sales selected by Mr. Josephson -– 140 Meadowbrook Road, 180 Highland Street, and 100 Meadowbrook Road, which were located in the same or immediately adjoining neighborhood to the subject property – sales of comparable properties in Weston were higher than Mr. Ozahowski portrayed them to be in his comparable-sale analysis. The Board found that by neglecting to include these comparable-sale properties, which were located in the same or adjoining neighborhood to the subject property, Mr. Ozahowski’s comparable-sale analysis was incomplete, skewed towards the lower end of the range of comparable property sales, and therefore insufficient to provide probative evidence of the subject property’s fair market value. By contrast, the Board found that Mr. Josephson’s comparable-sales analysis was more complete, his sales were in very close proximity to the subject property, and therefore, his analysis was more reliable than Mr. Ozahowski’s comparable-sale analysis. The Board also found that that the subject’s assessed value of $6,925,000 was well within the range of $6,734,000 to $7,821,400, which Mr. Josephson determined in his comparable-sales analysis.

However, the Board found that Mr. Cohen and Mr. Ozahowski documented and proved that defects in the subject home’s stucco as of the relevant assessment date would cost $100,000 to repair before an owner could sell the property on the open market for the prices suggested by Mr. Josephson’s comparable-sales analysis. Further, the assessors failed to inspect the home after June, 2004, and were, therefore, unaware of the state of completion of the home and its defects as of the relevant assessment date for fiscal year 2007. The Board, therefore, found that the fiscal year 2007 assessment did not take into account the state of completion or significant defects. The Board thus found that the appellant’s $100,000 functional utility deduction to the assessed value of the subject property was warranted. Accordingly, the Board valued the subject property at $6,798,800 and issued a decision for the appellant abating $1,056.78 in tax for fiscal year 2007.

Fiscal year 2008

As indicated in Mr. Ozahowski’s appraisal report, the subject home was essentially complete as of the relevant assessment date. The only issue which the appellant supported with documentation was the exterior stucco, which was remedied during the summer of 2007.

The Board found that, at $7,033,500, the subject’s assessed value was well within the range of adjusted sales prices of Mr. Josephson’s comparable-sale properties, which were all located in the same neighborhood or immediately adjoining neighborhood as the subject and all contained new or almost-new luxury homes.[84] The Board also found that 140 Meadowbrook Road, cited by the appellee, was particularly comparable to the subject property. It was located within 0.125 miles of the subject property, in the same neighborhood for assessment purposes, and many of its features were very similar to those of the subject property: a 1.96-acre parcel of land, as compared with the subject’s 2.23-acre parcel of land; a Colonial-style home with a gross living area of 9,569 square feet, as compared with the subject’s Colonial-style home with a gross living area of 9,839 square feet; and the comparable property’s five bedrooms, five full bathrooms and three half bathrooms, as compared with the subject’s five bedrooms, seven full bathrooms and three half bathrooms. The Board also found that Mr. Josephson made appropriate adjustments for differences between the two properties, including number of bathrooms, rooms below grade, and extras like fireplaces and size of the garages. The Board thus found that Mr. Josephson established comparability between his comparable property and the subject property. The Board found that the comparable-sale property’s adjusted value of $7,821,400 supported an assessed value of at least $7,033,500 for the subject property for fiscal year 2008, even considering the defective state of the stucco on the subject home. The Board thus found that the appellant failed to prove that the fair cash value of his property was less than its assessed value for fiscal year 2008. Accordingly, the Board issued a decision for the appellee for fiscal year 2008.

OPINION

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 taxpayers . . . prov[e] 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)).

When comparable sales are used, however, allowances must be made for various factors which would otherwise cause disparities in the comparable property’s 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). Functional utility is an allowance made to account for “an impairment of the functional capacity of a property or building according to current market tastes and standards.” The Appraisal Institute, the appraisal of real estate (13^th ed. 2008) 262. An assessment’s failure to account for functional defects will warrant a reduction in assessed value to account for the costs to cure the defects. See, e.g., Hughes v. Board of Assessors of the City of Quincy, Mass. ATB Findings of Fact and Reports 2005-420, 424-25, 428 (finding that assessment was excessive because the assessors failed to consider documented deficiencies in subject property).

For fiscal years 2006 and 2007, the subject property’s assessed values were within the range of adjusted sale prices in Mr. Josephson’s comparable-sales analyses, which the Board found to be based upon comparable sale properties that were sufficiently similar to the subject property to be probative of the subject property’s fair cash value.

However, Mr. Ozahowski and Mr. Cohen accurately documented that the subject home had several serious defects – particularly the HVAC system, exterior stucco, and interior flooring, stairs and millwork – that substantially reduced the subject property’s fair market value. The Board found and ruled that Mr. Ozahowski considered the state of completion of the subject home, including the many defects in workmanship and utilities, during the relevant assessment periods, and the reasonable costs to cure these defects. By contrast, the Board found that the assessors were not aware of, nor did they take into account, the state of completion of the subject home or its defects in the subject assessments. Therefore, the Board found and ruled that the appellant exposed flaws in the assessors’ method of valuation and introduced affirmative evidence that functional utility adjustments of $200,000 and $100,000 were warranted for fiscal years 2006 and 2007, respectively. Accordingly, the Board found and ruled that the appellant met his burden of proving overvaluation for fiscal years 2006 and 2007.

The Board was not persuaded by Mr. Ozahowski’s functional utility adjustment for fiscal year 2005. Mr. Ozahowski simply adopted an adjustment from a prior financing appraisal, prepared by a third-party appraiser who was not present to explain his adjustment. By contrast, Mr. Josephson inspected the property and used a construction checklist as an accurate measure of the state of completion of the subject home. The property record card documents that the subject assessment reflected the state of completion of the subject home during the relevant assessment period. The Board thus found and ruled that the appellant failed to expose meaningful flaws or errors in the assessors’ valuation. Therefore, the Board found and ruled that the appellant failed to meet his burden of proving overvaluation for fiscal year 2005.

Because the subject home was essentially completed as of the relevant assessment date for fiscal year 2008, the Board did not consider functional utility adjustments. The Board was most persuaded by Mr. Josephson’s analysis of 140 Meadowbrook Road, located within a very close proximity of the subject property. As previously explained, the Board found that Mr. Josephson established comparability between his comparable property and the subject property. On the basis of this comparable sale, the Board found and ruled that the comparable property’s adjusted sale price of $7,821,400 supported an assessed value of at least $7,033,500 for the subject property for fiscal year 2008, even considering the defective state of the stucco on the subject home. The Board, therefore, found and ruled that the appellant failed to meet his burden of proving that the subject property was overvalued for fiscal year 2008.

On the basis of the foregoing, the Board: (1) issued decisions for the appellant for fiscal years 2006 and 2007, reducing the subject assessments by $200,000 and $100,000 and granting abatements in the amounts of $2,049.70 and $1,056.78, respectively; and (2) issued decisions for the appellee for fiscal years 2005 and 2008.

APPELLATE TAX BOARD

By: __________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _______________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

W.A. WILDE COMPANY, INC. v. BOARD OF ASSESSORS OF

THE TOWN OF HOLLISTON

Docket Nos. F293416, F293417 Promulgated:

May 13, 2010

These are appeals 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 Board of Assessors of the Town of Holliston (“appellee” or “assessors”) to abate taxes on real estate located in Holliston, owned by and assessed to Clinton Hill Holliston LLC, TC Equities Holliston LLC, and Cooperative Equities IV Holliston LLC, under G.L. c. 59, §§ 11 and 38, for fiscal year 2007. These appeals were brought by W.A. Wilde Company, Inc. (“appellant”) under G.L. c. 59, § 59, as a tenant paying rent and under an obligation to pay more than one-half of the taxes assessed.

Commissioner Egan heard these appeals. Chairman Hammond and Commissioners Scharaffa and Rose joined her in the decisions for the appellee. Commissioner Mulhern took no part in the deliberations or decisions relating to these matters.

These Findings of Fact and Report are made at the request of the appellant pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

Matthew A. Luz, Esq. for the appellant.

James F. Sullivan, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

Based on oral arguments and exhibits offered at the hearing of these appeals, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2006, the appellant was a lessee in possession of two parcels of real estate located at 200 and 201 Summer Street in Holliston (collectively, the “subject properties”). The subject properties are situated across the street from one another and are improved with buildings used for industrial and office purposes.

For fiscal year 2007, the assessors valued 200 Summer Street at $3,211,800 and 201 Summer Street at $5,012,300 and assessed a tax thereon, at the rate of $13.35 per $1,000, in the amounts of $43,520.69 and $67,917.92, respectively.[85] The assessors mailed the actual tax bills relating to the referenced assessments on or about March 22, 2007. In accordance with G.L. c. 59, § 57C, the appellant paid the taxes due without incurring interest and in accordance with G.L. c. 59, § 59, timely filed Applications for Abatement on March 28, 2007, which were denied by the assessors on June 28, 2007. On August 6, 2007, the appellant seasonably filed Petitions Under Formal Procedure with the Board. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide these appeals.

Prior to the current appeals, the subject properties’ assessed values for fiscal years 2005 and 2006 were contested before the Board, resulting in decisions for the assessors. See W.A. Wilde Co. & Wilde Acres Realty Corp. v. Assessors of the Town of Holliston, Mass. ATB Findings of Fact and Reports 2008-86 (“W.A. Wilde Co. I”). For both fiscal year 2005 and 2006, the assessors had valued 200 Summer Street at $3,162,000 and 201 Summer Street at $4,877,500, and the Board found that the appellants failed to meet their burden of proving that the subject properties had been overvalued. W.A. Wilde Co. I, Mass. ATB Findings of Fact and Reports at 2008-108. The Board made no determination of the properties’ fair cash value in W.A. Wilde Co. I.

In the present appeals, the appellant presented neither witnesses nor evidence to support its assertion that the subject properties were overvalued for fiscal year 2007. Rather, the appellant relied entirely on G.L. c. 58A, § 12A, which provides that if the Board has “determined the fair cash value” of property within the two fiscal years preceding an assessment that exceeds the Board’s determination, “the burden shall be upon the [assessors] to prove that the assessed value was warranted.” Id.

Having noted that assessors are required by statute to value property at its fair cash value for each fiscal year,[86] the appellant argued that “[w]hen the [Board] makes a decision, whether . . . it’s in favor of the appellant or the appellee, the [Board] is determining value. It’s a decision that determines [that] the fair cash value set by the assessors is the fair cash value.” For their part, the assessors, while disagreeing with the appellant’s legal argument, chose not to present evidence in support of the contested assessments.

For the reasons discussed in the following Opinion, the Board found and ruled that G.L. c. 58A, § 12A was not applicable to the current appeals. Thus, having declined to present evidence relating to the fair cash value of the subject properties, the appellant failed to sustain its burden of demonstrating that the properties were overvalued for fiscal year 2007. The Board, therefore, decided these appeals for the appellee.

OPINION

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 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 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 taxpayers . . . prov[e] the contrary.’” General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 598 (1984) (quoting Schlaiker, 363 Mass. at 245).

This allocation of burden is not, however, applicable in all circumstances. For example, G.L. c. 58A, § 12A (“§ 12A”) provides, in pertinent part:

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 if 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 . . . .

The disputed assessments in these appeals fall within the temporal constraints of § 12A, as the fiscal year currently at issue immediately followed those considered by the Board in W.A. Wilde Co. I. See W.A. Wilde Co. I, Mass. ATB Findings of Fact and Reports at 2008-108. Moreover, the subject properties’ fiscal year 2007 assessments exceeded their fiscal year 2005 and 2006 assessments by slightly more than one percent. The dispositive issue, therefore, is whether the Board’s decision in W.A. Wilde Co. I constituted a determination of the fair cash value of the subject properties within the meaning of § 12A, thereby placing a burden on the assessors “to prove that the assessed value [for fiscal year 2007] was warranted.” The Board found and ruled that its decision in W.A. Wilde Co. I did not constitute such a determination.

Assuming that jurisdictional prerequisites have been satisfied, the Board may decide appeals brought by appellants who are aggrieved by the assessors’ valuations of real property. See G.L. c. 58A, § 6; G.L. c. 59, §§ 64 and 65. For each appeal, a decision is issued, and with exceptions not here relevant, either party may request a “findings and report”[87] that describes the facts relating to, and legal basis for, the decision. See G.L. c. 58A, § 13.[88]

For cases in which the appellant prevails and the Board has found that the fair cash value of the property is lower than its assessed value, the Board’s decision specifies the fair cash value of the property, and the consequent abatement due the appellant. See G.L. c. 58A, § 13; G.L. c. 59, §§ 64 and 65; see, e.g., Holyoke Shopping Center, LLC v. Assessors of the City of Holyoke, Mass. ATB Findings of Fact and Reports 2008-1185, 1196; Bodwell Extension, LLC v. Assessors of the Town of Avon, Mass. ATB Findings of Fact and Reports 2007-1257, 1265; Wayland Business Center Holdings, LLC and GRM Properties II, LLC v. Assessors of the Town of Wayland, Mass. ATB Findings of Fact and Reports 2005-557, 590-592. There is no statutory requirement that the Board determine a value in those appeals it decides in favor of assessors, and there is generally no practical need to do so because no abatement is calculated.

In W.A. Wilde Co. I, the Board concluded that the subject properties had not been overvalued and the decision relating to each appeal stated only that it was for the appellee. In the associated Findings of Fact and Report, the Board found only that the properties had not been overvalued. Regardless, and without citing supporting authority, the appellant in the present appeals argued that any decision issued by the Board necessarily constitutes a determination of the fair cash value of property within the meaning of § 12A.

The Board agreed that in those cases in which the appellant prevails and the Board has found the fair cash value of property, a determination of fair cash value has been made, thereby triggering possible application of § 12A. However, when a decision or Finding of Facts and Report states only that property has not been overvalued, there has been no such determination. Rather, the Board, based on all of the evidence before it, has found only that the taxpayer failed to meet its burden of proving that the fair cash value of the property is less than its assessed value.

In sum, the Board found and ruled that a decision for an appellee or a Findings of Fact and Report in which the Board does not provide its own separate calculation of fair cash value but finds only that the appellant failed to meet its burden of proving that its property was overvalued does not constitute an independent determination of the fair cash value of the property within the meaning of § 12A. In turn, the Board found and ruled that § 12A is not applicable to the present appeals.

Having concluded that § 12A does not apply to these appeals, the Board further found and ruled that by not presenting evidence relating to the fair cash value of the subject properties, the appellant failed to sustain its burden of demonstrating that the properties were overvalued for fiscal year 2007. On this basis, the Board decided these appeals for the appellee.

THE APPELLATE TAX BOARD

By:___________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ____________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

ROBERT JAMES CORKERY, TRUSTEE v. BOARD OF ASSSESSORS OF

OF THE R&M REALTY TRUST[89] THE TOWN OF CANTON

Docket Nos. F288608, F288609 Promulgated:

F294040, F294041 May 18, 2010

These are appeals under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, from the refusal of the appellee to abate taxes on real estate located in the Town of Canton owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal years 2007 and 2008.

Commissioner Rose (“Presiding Commissioner”) heard the appeals and issued single-member decisions, under G.L. c. 58A, § 1A and 831 CMR 1.20, for the appellee in docket numbers 288609 and 294041, and revised single-member decisions, under G.L. c. 58A, § 1A and 831 CMR 1.20, for the appellant in docket numbers 288608 and 294040, which are promulgated simultaneously herewith. The revised decisions correct minor computational errors contained in the original decisions.

These findings of fact and report are made pursuant to requests by the appellant under G.L. c. 58A, § 13 and 831 CMR 1.32.

Nicholas R. Corkery, Esq. for the appellant.

John Wieliczki, Assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On January 1, 2006 and January 1, 2007, Robert James Corkery, Trustee of The R&M Realty Trust (“appellant”) was the assessed owner of two contiguous parcels of real estate located at 20 Industrial Drive (“Industrial Drive property”) and 868 Turnpike Street (“Turnpike Street property”) in the Town of Canton (collectively “subject properties”). When viewed together, the subject properties form the approximate shape of a mirror-imaged or reversed “L.” For fiscal year 2007, the Board of Assessors of Canton (“assessors”) valued the Industrial Drive property at $475,000 and assessed a tax thereon, at a rate of $17.94 per $1,000, in the amount of $8,521.50. The assessors valued the Turnpike Street property at $385,900 and assessed a tax thereon, at a rate of $17.94 per $1,000, in the amount $6,923.05. After December 31, 2006, Canton’s Collector of Taxes sent out the town’s actual real estate tax bills. In accordance with G.L. c. 59, § 57C, the appellant timely paid the taxes assessed on the subject properties without incurring interest.[90]

On or about April 17, 2007, in accordance with G.L. c. 59, § 59, the appellant filed Applications for Abatement with the assessors,[91] which they denied on May 7, 2007. On or about May 15, 2007, in accordance with G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, the appellant seasonably appealed the assessors’ denials of the abatement applications by filing Petitions Under Formal Procedure with the Appellate Tax Board (“Board”). On this basis, the Presiding Commissioner found and ruled that the Board had jurisdiction over these two fiscal year 2007 appeals.

For fiscal year 2008, the assessors valued the Industrial Drive property at $475,000 and assessed a tax thereon, at a rate of $18.40 per $1,000, in the amount of $8,740.00. The assessors valued the Turnpike Street property at $385,900 and assessed a tax thereon, at a rate of $18.40 per $1,000, in the amount $7,100.56. On or about December 31, 2007, Canton’s Collector of Taxes sent out the town’s actual real estate tax bills. In accordance with G.L. c. 59, § 57C, the appellant timely paid the taxes assessed on the subject properties without incurring interest.

On or about January 7, 2008, in accordance with G.L. c. 59, § 59, the appellant filed Applications for Abatement with the assessors, which they denied on February 12, 2008. On or about March 4, 2008, in accordance with G.L. c. 58A, § 7 and c. 59, §§ 64 and 65, the appellant seasonably appealed the assessors’ denials of the abatement applications by filing Petitions Under Formal Procedure with the Board. On this basis, the Presiding Commissioner found and ruled that the Board had jurisdiction over these two fiscal year 2008 appeals.

The Industrial Drive property is composed of a 2.100-acre site improved with a 3,045-square-foot, two-bay garage, and a 240-square-foot shed. This property also contains 600 linear feet of six-foot-high chain-link fencing. The garage has a poured concrete foundation, and its siding and roof are made of metal-sheeting. Its interior is unfinished and without any plumbing or heating. All utilities are available to the site. For fiscal years 2007 and 2008, the assessors valued the Industrial Drive property’s land at $301,200 and its improvements at $173,800, for a total assessment of $475,000. The assessors’ total improvement assessment included the value of an antenna tower purportedly located on this property. The assessors separately valued each of the improvements as follows: garage – $44,300; fence – $2,500; shed – $32,600; and antenna tower – $94,400.

The Turnpike Street property is composed of a 2.020-acre site improved with a 1,288-square-foot, single-story general office building, some paving, a sign, a 185-foot-high antenna tower, and several small utility buildings. The general office building has a full concrete basement, metal and brick exterior siding, and metal and composite roofing surfaces. The interior walls are sheetrock, and the floors are concrete, carpet or tile. This building has plumbing, heating, and bathrooms. The antenna tower is secured to a poured concrete pad, on which two small buildings that house mechanical equipment, as well as a transformer, a generator, and some other related fixtures are affixed. For fiscal years 2007 and 2008, the assessors valued the Turnpike Street property’s land at $231,200 and its improvements at $154,700, for a total assessment of $385,900. The assessors separately valued each of the improvements as follows: general office building – $62,000; paving – $4,500; utility buildings – $16,900; sign – $1,200; and antenna tower – $70,100.

In challenging the assessments, the appellant argued that the assessors had not adequately considered drainage problems on the subject properties and had erroneously assessed an antenna tower to the Industrial Drive property. In support of his contentions, the appellant submitted a survey of the subject properties, a site grading plan for a neighboring Turnpike Street property, and several photographs depicting water accumulation on the subject properties. The appellant did not offer any estimates for remedying the subject properties’ drainage problems or attempt to quantify the effect of the drainage problems on the value of the subject properties. Further, the appellant did not introduce any substantive evidence attempting to demonstrate comparability between the neighboring Turnpike Street property and the subject properties.

The assessors contended that they had considered drainage problems associated with the subject properties in setting their assessments for the fiscal years at issue, but agreed with the appellant that they had erroneously included the value of an antenna tower in the Industrial Drive property’s assessment.

After considering all of the evidence, the Presiding Commissioner found that the appellant failed to sufficiently show any diminution in the subject properties’ values associated with the drainage problems. The Presiding Commissioner found that the absence of any bills or estimates for redressing this issue and the appellant’s inability to quantify any effect from the drainage problems on the subject properties’ values proved fatal to the appellant’s contention regarding the drainage problems. The Presiding Commissioner also found that the site drainage plan for a neighboring Turnpike Street property, without having established some degree of comparability to the subject properties, had little probative value. The Presiding Commissioner did find, however, that the appellant had adequately demonstrated through both his testimony and his documentary evidence that the assessors had erroneously assessed an antenna tower on the Industrial Drive property. After hearing the appellant’s presentation in this regard, the assessors agreed with him. Accordingly, the Presiding Commissioner found that the Industrial Drive property was over-assessed by the $94,400 value that the assessors had ascribed to the phantom antenna tower.

On this basis, the Presiding Commissioner found that the appellant failed to meet its burden of proving that the Turnpike Street property was overvalued for fiscal years 2007 and 2008 but did adequately show that the Industrial Drive property was overvalued by $94,400 for fiscal years 2007 and 2008. This latter finding resulted in a $94,400 reduction in the Industrial Drive property’s $475,000 assessment for fiscal years 2007 and 2008, thereby lowering its value to $380,600 for both fiscal years. As a result, the Presiding Commissioner granted tax abatements, at rates of $17.94 and $18.40 per $1,000, for fiscal years 2007 and 2008, respectively, in the amounts of $1,693.54 for fiscal year 2007 and $1,736.96 for fiscal year 2008. Accordingly, the Presiding Commissioner decided docket numbers F288609 and F294041, which pertain to the Turnpike Street property, for the appellee and docket numbers F288608 and F294040, which pertain to the Industrial Drive property, for the appellant.

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 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).

In the Industrial Drive property appeals, the Presiding Commissioner found that the appellant met his burden of demonstrating that the Industrial Drive property was overvalued for fiscal years 2007 and 2008 by showing that the assessors had erroneously included the $94,400 value of an antenna tower in their assessment.

The Presiding Commissioner further found that the appellant failed to sufficiently show any diminution in the subject properties’ values associated with the drainage issues. The Presiding Commissioner found that the absence of any bills or estimates for redressing this problem and the appellant’s inability to quantify the drainage issues effect on the subject properties’ values were fatal to this contention. See, e.g., Abuzahra v. Assessors of Rowley, Mass. ATB Findings of Fact and Reports 2008-1514, 1522 (ruling that “the appellants failed to meet their burden of showing that the subject property was overvalued . . . because they failed to quantify the effects of wetlands or topographical issues on the value of their lots.” (citation omitted)). The Presiding Commissioner also found that the site drainage plan for a neighboring Turnpike Street property, for which the appellant failed to show comparability, had little probative value. Accordingly, the Presiding Commissioner found and ruled that the appellant failed to meet his burden of proving that the Turnpike Street property was overvalued or that the Industrial Drive property was further overvalued.

“The board [is] not required to believe the testimony of any particular witness but [may] accept such portions of the evidence as appear to have the more convincing weight. Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 72 (1941). “The credibility of witnesses, the weight of 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 market value of the property c[an] not be proved with mathematical certainty and must ultimately rest in the realm of opinion, estimate, and judgment . . . . The board [may] select the various elements of value as shown by the record and from them form . . . its own independent judgment.” Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 72 (1941) (citations omitted). See also North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 473 (1981); Jordan Marsh Co. v. Assessors of Malden, 359 Mass. 106, 110 (1971). Based on the evidence presented in this appeal, the Presiding Commissioner selected the most credible and probative evidence and exercised his independent judgment in finding and ruling that the Industrial Drive property was overvalued by the assessors for the two fiscal years at issue, but the Turnpike Street property was not.

On this basis, the Presiding Commissioner found and ruled that the fair cash value of the Industrial Drive property for fiscal years 2007 and 2008 was $380,600, and he, therefore, decided those appeals for the appellant and granted abatements in the amount of $1,693.54 and $1,736.96 for fiscal years 2007 and 2008, respectively.

On this basis, the Presiding Commissioner also decided the Turnpike Street property appeals for the appellee.

APPELLATE TAX BOARD

By: ____

James D. Rose, Commissioner

A true copy,

Attest: _______

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

CENTER FOR HUMAN v. BOARD OF ASSESSORS OF

DEVELOPMENT, INC. THE CITY OF SPRINGFIELD

Docket No. F293247 Promulgated:

May 20, 2010

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 City of Springfield (“assessors” or “appellee”) to abate real estate taxes on certain real estate located in Springfield, owned by and assessed to the appellant, Center for Human Development, Inc., (“CHD” or “appellant”) under G.L. c. 59, §§ 11 and 38 for fiscal year 2007 (“fiscal year at issue”).

Commissioner Scharaffa heard this appeal. Chairman Hammond and Commissioners Egan, Rose and Mulhern joined him in the decision 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.

Robert A. Gelinas, Esq. and Daniel J. Finnegan, Esq. for the appellant.

Patricia Bobba Donovan, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits offered into evidence in the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact. As of July 1, 2006, the relevant date for the determination of exemption for the fiscal year at issue, the appellant was the assessed owner of a 2.65-acre parcel of land improved with a 34,290 square-foot building and an asphalt parking lot, located at 50 Warehouse Street in Springfield (“subject property”). For the fiscal year at issue, the assessors valued the subject property at $824,700, and assessed a tax thereon, at a rate of $31.91 per $1,000, in the total amount of $26,316.18.

On February 24, 2006, in accordance with G.L. c. 59, § 5, Clause Third (“Clause Third”), the appellant timely filed with the assessors its Form 3ABC for the fiscal year at issue, with a copy of its Form PC attached. On December 31, 2006, the Collector of Taxes for Springfield mailed the fiscal year 2007 actual tax bills. The appellant timely paid the taxes due without incurring interest. On January 31, 2007, the appellant timely filed an Application for Abatement with the assessors, which was deemed denied on April 30, 2007.[92] The appellant timely filed its petition with the Board on July 27, 2007. Based on the foregoing facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

The issue presented in this appeal was whether the subject property was exempt from tax under Clause Third. At all times relevant to this appeal, the subject property was owned by CHD. The parties did not dispute, and the Board found, that CHD was a charitable organization. CHD was a non-profit corporation, organized under Chapter 180 of the General Laws in 1972.[93] According to its articles of organization, CHD was formed for the purpose of

[t]he establishment of group residences to provide for the welfare and ‘in the community’ development of persons in need of supportive services; the establishment of educational facilities with power to award diplomas or certificates of accomplishment; the development of training programs for the staffs of the above mentioned and closely related facilities and the development of such other programs as shall be deemed appropriate by the Board of Directors.

As of the time of the hearing of this appeal, CHD was providing social services to approximately 4,000 children, adults and families through approximately 45 different programs in Massachusetts and Connecticut. CHD’s services included clinical and outreach therapeutic services, crisis assessment and stabilization, shelter and supported housing, substance abuse counseling, day treatment and vocational rehabilitative services. The population served by CHD consisted of individuals with histories of mental illness, substance abuse, and trauma.

In conjunction with its goal of providing vocational rehabilitation, CHD developed a curriculum which used furniture-making as a modality to deliver therapeutic and vocational rehabilitative services to persons with severe mental disabilities. In 1983, using that curriculum, CHD launched a program known as Riverbend Furniture (“Riverbend”). Marketing materials entered into evidence stated that the mission of the Riverbend program was “to provide meaningful work to individuals with mental illnesses by training them to produce high quality furniture.”

James Goodwin, the President of CHD, and Audrey Lee Highbee, the Director of Riverbend and Vice President for Mental Health Services for CHD, testified at the hearing of this appeal. The Board found their testimony to be credible. Mr. Goodwin and Ms. Highbee described the day-to-day operations of the Riverbend program, as well as its typical clientele and overall mission.

At the time of its inception, Riverbend served primarily people who had formerly resided at Northampton State Hospital. As Mr. Goodwin testified, these individuals had severe mental illnesses and it was optimal from a clinical perspective to keep them busy and occupied during the day. They began by building simple items, such as birdhouses or paper towel dispensers, but CHD soon recognized that they could benefit by taking on more complex projects, including furniture building. The program was successful, and therefore, it grew and expanded to four separate locations, two of which were focused on woodworking and two of which were focused on upholstery. In 2006, in an effort to streamline its operations and reduce expenses, CHD purchased the subject property, and consolidated all of the Riverbend operations at that location.

During the fiscal year at issue, CHD provided services to 75 individuals at Riverbend, all of whom were referred by the Massachusetts Department of Mental Health (“DMH”). CHD ran the Riverbend program in conjunction with DMH, and DMH contributed $622,436 to Riverbend’s budget, which was approximately 36% of the total budget. Many of the clients served at Riverbend lived in group residential homes or in their own apartments with support services provided by DMH or other non-profit agencies. The diagnoses of Riverbend clients included bi-polar disorder, schizophrenia, and post-traumatic stress disorder, among others. Each client had an individual service plan (“ISP”) coordinated by DMH which involved a spectrum of social services, and the Riverbend program provided the vocational rehabilitation component of each client’s ISP.

CHD employed staff to supervise clients at the Riverbend program. CHD employees working at Riverbend typically possessed knowledge of carpentry or furniture making, but some also had human services and psychology backgrounds. They received training in psycho-social rehabilitative skills, including special training about mental illness, medications for mental illness, and effective methodologies for supervising individuals with mental illness. Staff were required to make a vocational assessment of each client and develop vocational treatment plans to compliment the treatment plans received by each client in other support programs.

Clients at Riverbend worked in small teams. Typically, there were four to six clients per team, supervised by one Riverbend staff member. Clients worked approximately five hours each day, with a lunch break and other breaks as needed. Activities performed by clients at Riverbend included milling, machine work, assembly, finishing, and upholstery work. Ms. Highbee, who is a nurse by training and has worked at CHD for nearly 30 years, testified to the therapeutic benefits received by clients treated at Riverbend. Ms. Highbee testified that the sense of pride and accomplishment that the clients achieved while working on projects was extremely beneficial to their mental health and stability. Moreover, Ms. Highbee testified that the mental focus required to work on projects helped to reduce clients’ stress and overall symptoms.

Substance abuse counselors, social workers, and occupational therapists also frequented Riverbend. Duties assigned to clients were modified in the event that they were experiencing a flare in symptoms. Almost all of the clients required psychotropic and other medications. Although CHD staff working at Riverbend were trained in dispensing medications, clients typically took their medications at home or at another of the therapy programs which they attended. CHD provided transportation to and from Riverbend for its clients.

Riverbend clients were paid modest wages for their efforts. The wages were determined under Department of Labor standards and based on prevailing industry wages, which were then prorated to correspond to each person’s functional capacity. Because of their reduced functional capacities, the majority of Riverbend clients were paid less than minimum wage. Ms. Highbee testified that many of the clients used their wages to patronize area businesses during lunch break. According to Ms. Highbee, the receipt of the wages greatly boosted the self-esteem of clients as well as their ability to function independently in the community, which was one of CHD’s principal goals.

Because of their mental disabilities, many of the clients served at Riverbend received various forms of government assistance, including social security benefits, housing subsidies, fuel assistance, and/or food stamps. The wages received by the clients were used to offset these various other benefit payments. During the fiscal year at issue, wages paid to Riverbend clients offset a total of $18,657 of social security payments.

Clients at Riverbend produced office and lounge furniture, as well as dormitory dressers and beds. The furniture produced at Riverbend was primarily sold to other non-profit organizations or large institutions. Marketing materials introduced into evidence described Riverbend furniture as “quality products with a social purpose.”

In fiscal year 2007, Riverbend produced 7,000 pieces of furniture and had a total sales revenue of $956,000. However, even with the contributions made by DMH, Riverbend had an operating loss of $121,480. As explained by Mr. Goodwin, operating inefficiencies were the necessary result of the fact that the Riverbend program was focused on the delivery of therapeutic vocational training rather than the production of furniture. In fact, Mr. Goodwin testified that Riverbend used outdated tools and methods to produce its furniture, rather than the more advanced technology currently used at for-profit furniture businesses. Riverbend used such tools and methods because they facilitated the delivery of therapeutic benefits. The use of these more primitive methods not only taught Riverbend clients useful manual skills, but also required increased focus, which, in turn, was beneficial to the mental health of the clients. The evidence established that 75 clients were engaged in furniture-making at Riverbend in fiscal year 2007, yet Riverbend generated under $1,000,000 in sales revenue in that same period, a staff-to-sales volume ratio which Mr. Goodwin testified would be untenable in the for-profit world. Further, Ms. Highbee testified that Riverbend did not lay off or otherwise reduce the number of clients participating in the Riverbend program in the event of a downturn in furniture sales. As Mr. Goodwin stated, CHD was “in the mental health business, not in the furniture business.”

Based on these subsidiary findings, the Board made the following, ultimate findings of fact. The Board found that at all times relevant to this appeal, the subject property was owned by CHD, which was a charitable organization. The Board found that during the fiscal year at issue, CHD occupied the subject property by housing Riverbend, its vocational rehabilitation program, there. The Board found that this use of the subject property furthered CHD’s charitable purposes. The Board therefore found and ruled that that subject property was exempt under Clause Third for the fiscal year at issue, and, accordingly, issued a decision for the appellant in this appeal and granted a full abatement in the amount of $26,316.18.

OPINION

In the present appeal, the parties did not dispute that the subject property was owned by CHD, or that CHD was a charitable corporation within the meaning of Clause Third. The only dispute between the parties was whether CHD occupied the subject property for charitable purposes. Occupancy for purposes of Clause Third means use for the purpose for which the charity is organized. Babcock v. Leopold Morse Home for Infirm Hebrews and Orphanage, 225 Mass. 418, 421 (1917). (“Occupancy means . . . appropriation to the immediate uses of the charitable cause for which the owner was organized.”)

CHD’s charitable mission was the provision of social services to individuals with histories of mental illness, substance abuse, and trauma. CHD provided clinical and outreach therapeutic services, crisis assessment and stabilization, shelter and supported housing, substance abuse counseling, day treatment and vocational rehabilitative services to over 4,000 individuals through approximately 45 different programs. The Board found and ruled that Riverbend was but one of CHD’s many programs, and the use of the subject property to house Riverbend constituted the occupation of the subject property for CHD’s charitable purposes.

The assessors contended that the subject property was used purely for the production of furniture, which was a commercial, not charitable, activity. This argument was plainly contradicted by the evidence, which established that Riverbend was operated not as a commercial venture, but as a therapeutic vocational program.

Riverbend furniture was produced exclusively by individuals referred by DMH, each of whom had an ISP managed by DMH. No clients worked full-time, and the vast majority were paid considerably less than minimum wage. During the course of the working day, Riverbend clients were closely supervised by CHD staff. In addition, clients interacted with substance abuse counselors, social workers, and occupational therapists while at Riverbend. Duties assigned to clients were modified in the event that they were experiencing a flare in symptoms. CHD provided transportation to and from Riverbend for its clients. The tools and methods used at Riverbend to produce furniture were not geared towards the efficient or maximum production of furniture, but instead towards teaching vocational skills and providing other therapeutic benefits to Riverbend’s clients, such as increased concentration and self-esteem. In fact, Ms. Highbee testified that Riverbend did not lay off or otherwise reduce the number of clients participating in the Riverbend program in the event of a downturn in furniture sales. Despite the fact that a significant portion of its budget was provided by DMH, Riverbend operated at a loss. In sum, the Board found that Riverbend had none of the hallmarks of a commercial operation, but was clearly and unequivocally a vehicle for the delivery of CHD’s charitable services.

The cases cited by the assessors in support of their argument are distinguishable from the present appeal. In The Salvation Army v. Dept. of Revenue, the taxpayer was a charitable organization which operated adult rehabilitation centers (“ARCs”) and thrift stores. The Salvation Army v. Dept. of Revenue, 170 Ill. App. 3d 336 (1988). The issue in that case was whether the real estate at which the thrift stores were operated was exempt under a provision similar to Clause Third. The thrift stores employed some of the individuals receiving services at the ARCs, and their employment at the stores was regarded as vocational rehabilitation. Id. at 341. Nevertheless, the Court held that the real estate was not exempt, because it found that the primary purpose of the retail stores was to generate income to fund the ARCs, and the other charitable activities carried out at the stores, including the provision of rehabilitative opportunities, were incidental to the main purpose of generating revenue. Id. at 344.

In the present appeal, the Board found and ruled that the inverse was true. The primary purpose of the Riverbend program was the provision of vocational rehabilitation to its clients, and the generation of income through furniture sales was incidental to this primary purpose. “The distinction is between activities primarily commercial in character carried on to obtain revenue to be used for charitable purposes and activities carried on to accomplish directly the charitable purposes of the corporation, incidentally yielding income.” McKay v. Morgan Memorial Co-Op Industries and Stores, 272 Mass. 121, 124 (1930). See also Hairenek Association, Inc. v. City of Boston, 313 Mass. 274, 279-80 (1943); Harvard Student Agencies, Inc. v. Assessors of Cambridge, Mass. ATB Findings of Fact and Reports 2000-925, 933. The activities carried on at Riverbend directly accomplished the charitable purposes of CHD and were not merely a means of generating income to fund CHD’s charitable operations. The Board thus found and ruled that these activities constituted an “appropriation to the immediate uses of the charitable cause for which [CHD] was organized.” Babcock, 225 Mass. at 421.

CONCLUSION

The Board found and ruled that the subject property was owned by a charitable organization and occupied by that organization for its charitable purposes during the fiscal year at issue. The Board therefore found and ruled that the subject property was exempt under Clause Third, and, accordingly, issued a decision for the appellant in this appeal and granted a full abatement in the amount of $26,316.18.

THE APPELLATE TAX BOARD

By: ___________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ____________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

JOSEPH J. DELLA PORTA, ET AL v. BOARD OF ASSESSORS OF

THE TOWN OF SWAMPSCOTT

Docket No. F300655 Promulgated:

May 26, 2010

This is an appeal originally filed under the informal procedure[94] pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the appellee, Board of Assessors of the Town of Swampscott (“assessors” or “appellee”), to abate taxes on certain real estate located in the Town of Swampscott, owned by and assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2009 (“fiscal year at issue”).

Commissioner Rose heard this appeal. Chairman Hammond and Commissioners Scharaffa, Egan and Mulhern joined him in a decision for the appellee.

These findings of fact and report are made pursuant to requests by the appellants and the appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.

Joseph J. Della Porta, pro se, for the appellants.

Donna Champagne O’Keefe, Assistant Assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits offered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2008, Joseph J. and Gladys A. Della Porta (“appellants”) were the assessed owners of a waterfront parcel of real estate located at 165 Puritan Road in Swampscott (“subject property”). For the fiscal year at issue, the assessors valued the subject property at $1,517,300 and assessed a tax thereon, at the rate of $14.34 per $1,000, in the total amount of $21,758.08. On December 30, 2008, the Collector of Taxes for Swampscott mailed the actual fiscal year 2009 tax bills. In accordance with G.L. c. 59, § 57C, the appellants timely paid the taxes due without incurring interest. On January 12, 2009, in accordance with G.L. c. 59, § 59, the appellants timely filed their Application for Abatement with the assessors, which the assessors denied on March 31, 2009. In accordance with G.L. c. 59, §§ 64 and 65, the appellants seasonably filed their appeal with the Board on April 16, 2009. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

Puritan Road is a public, paved road which provides access to two of the area’s public beaches on the Atlantic Ocean, Eiseman’s Beach, and Whale’s or New Ocean House Beach (hereinafter referred to as “Whale’s Beach”). The subject property is adjacent to Whale’s Beach. At the hearing of this appeal, the evidence submitted established that the appellants originally owned a large portion of beachfront property, but by means of a Settlement Agreement and Consent Order dated January 11, 1988, they made a gift of the majority of the land to the Town and retained a small portion for themselves. The subject property thus has access to its own small, private beach, located between two areas of ledge, marked by “private” signs and cordoned off with rope.

According to the property record card, the subject property consists of a 21,700-square-foot parcel of land improved with a single-family, Colonial-style home, which was built around 1975, with a primarily aluminum exterior and an asphalt roof cover. The subject home contains 2,457 square feet of finished living space with a total of seven rooms, including three bedrooms, as well as two full bathrooms and one half bathroom. The property record card on file with the assessors lists the subject home as in “very good” condition.

The appellants contend that the property record card’s 21,700-square-foot measurement of the subject property’s parcel includes tidal property beyond the seawall. They contend that the land above the seawall is only 8,944 square feet, and therefore, the subject assessment includes a tax on tidal property beyond the seawall. They further contend that no other properties with water frontage on Puritan Road were taxed on their tidal property beyond the seawall.

The appellants presented their case-in-chief through the testimony of Mr. Della Porta and the submission of numerous documents, including deeds for neighboring oceanfront properties along Puritan Road, the Settlement Agreement and Consent Order, a map of several properties along Puritan Road, and photographs of the subject property and subject beach. The appellants offered no evidence of comparable sales, comparable assessments or other affirmative valuation evidence.

The assessors presented their case-in-chief through the testimony of Donna Champagne O’Keefe, Assistant Assessor. Ms. O’Keefe offered a sales-comparison analysis of eight waterfront properties, which she deemed comparable to the subject property. The properties sold during the period May, 2006 through February, 2009, and ranged in size from 9,230 square feet to 91,420 square feet, with gross living areas that ranged from 2,627 square feet to 7,606 square feet. Ms. O’Keefe adjusted two of the sales for the timing of the sale. The adjusted sale prices yielded from her comparable sales ranged from $1,191,700 to $3,212,000. Ms. O’Keefe contended that these sales supported the subject property’s assessment of $1,517,300 for the fiscal year at issue.

Based on the evidence presented, the Board found that the appellants failed to meet their burden of proving that the subject property was overvalued for the fiscal year at issue. The Board found that the appellants failed to offer sufficient documentary evidence to support their claim that the subject assessment included the value of tidal property beyond the seawall. The Board further found that the appellants failed to offer relevant comparable sales, assessment, or any other affirmative evidence indicating that the subject property’s fair market value as of January 1, 2008 was less than the subject assessment.

Accordingly, the Board issued a decision for the appellee in this appeal.

OPINION

Assessors are required to assess all real property at its full and fair cash value. G.L. c. 59, § 38; Coomey v. Assessors of Sandwich, 367 Mass. 836, 837 (1975). 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 (1954).

The assessment is presumed valid unless the taxpayer sustains the burden of proving otherwise. Schlaiker v. Board of Assessors of Great Barrington, 356 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 his property was improper. See Foxboro Associates v. Board of Assessors of Foxborough, 385 Mass. 679, 691 (1982).

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)).

In the present appeal, the appellants argued that the subject assessment improperly included the value of land beyond the seawall. The appellants did not, however, provide sufficient documentary evidence to support their claim. Further, the appellants did not produce any comparable sales, assessment, or other affirmative evidence indicating that the subject property’s fair cash value as of January 1, 2008 was less than the subject assessment.

Based on the evidence presented, the Board found and ruled that the appellants failed to meet their burden of proving that the subject property was overvalued for the fiscal year at issue. Accordingly, the Board issued a decision for the appellee.

APPELLATE TAX BOARD

By: _____ ___

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: __

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

CATHLEEN L. MANNING v. BOARD OF ASSESSORS OF

THE TOWN OF WESTBOROUGH

Docket No. F300422 Promulgated:

May 27, 2010

This is an appeal originally filed under the informal procedure[95] pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes on real estate located in the Town of Westborough, owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal year 2009 (“fiscal year at issue”).

Commissioner Rose (“Presiding Commissioner”) heard the appeal and, in accordance with G.L. c. 58A, § 1A, 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.

Cathleen L. Manning, pro se, for the appellant.

Linda B. Swadel, Chief Assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the exhibits and testimony offered into evidence during the hearing of this appeal, the Presiding Commissioner made the following findings of fact.

On January 1, 2008, Cathleen L. Manning was the assessed owner of a condominium unit located at 6 Ashley Way in Westborough (“subject property”). For fiscal year 2009, the Board of Assessors of the Town Westborough (“assessors”) valued the subject property at $413,700 and assessed a tax, at the rate of $15.50 per thousand, in the total amount of $6,412.35, which the appellant paid without incurring interest. On January 12, 2009, the appellant timely filed an abatement application with the assessors. The assessors denied the abatement application on January 27, 2009. On April 16, 2009, the appellant seasonably filed her 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 this appeal.

The subject property is a one-unit condominium building built in 2000 with vinyl siding and an asphalt gable-style roof. The subject property has forced hot air gas heating and central air conditioning. The subject property contains 1,874 square feet of living space with six rooms, including two bedrooms, as well as two full bathrooms. Other features of the condominium include an unfinished basement, a 315-square-foot garage, an 89-square-foot open porch, and a 130-square-foot screened-in porch. The property record card on file with the appellee lists the subject property as being in “very good” condition.

The appellant presented her case through her testimony; she did not submit any documentary evidence. The appellant claimed that the subject property was overvalued and the subject assessment was disproportionate to thirty-five purportedly similar units in her condominium development. The appellant’s abatement application listed three of these purportedly comparable properties and their assessments for the fiscal year as follows:

8 Lenox	$396,800
3 Essex	$410,400
6 Shaker	$379,900

Based on this information, the appellant contended that the subject property should have been assessed at $375,000 to $380,000 for the fiscal year at issue. However, the appellant did not present the property record cards or any other information for her three comparables, nor did she offer any adjustments to her comparables to account for any differences between the comparables and the subject property. The appellant also did not offer any evidence of recent comparable sales.

Linda Swadel, Chief Assessor, testified on behalf of the appellee. She also offered evidence, including a comparable-sales analysis of three condominium units which had sold during 2007, together with their property record cards. The comparable properties were 6 Shaker Way, 8 Shaker Way, and 3 Essex Way; two of these, 6 Shaker Way and 3 Essex Way, were comparables used by the appellant. The comparables were all in close proximity to the subject, located within the same condominium complex, and the room counts for each comparable were the same as the subject property – six rooms, including two bedrooms, as well as two full bathrooms. Ms. Swadel made adjustments to her comparables for quality of construction, condition, differences in square footage of living space, size of basement, and size of garage. After adjustments, her three comparables yielded a range of adjusted sale price from $419,900 to $422,500.

On the basis of the evidence presented, the Presiding Commissioner found that the appellant failed to present evidence sufficient to meet her burden of proving that the subject assessment was too high or disproportionate. The appellant listed three purportedly comparable properties, but she failed to present a comparable-sale or comparable-assessment analysis which provided adjustments to the comparables. By contrast, Ms. Swadel provided an analysis which made adjustments to her comparables’ sales prices to account for the differences between the comparables and the subject, which the Presiding Commissioner found to be credible and appropriate. The Presiding Commissioner thus found that the appellant failed to meet her burden of proving that the subject property was overvalued. Moreover, the Presiding Commissioner found that the subject assessment was within the range of the adjusted sale prices of the three comparable-sale properties within the same condominium complex, which had sold less than a year before the relevant assessment date, and which the Presiding Commissioner found to be comparable to the subject based on the information provided by Ms. Swadel.

The appellant also argued that the subject property was disproportionately assessed. However, the appellant’s analysis did not contain any evidence or implication that a widespread scheme of intentional disproportionate assessment existed in Westborough or that the assessors were discriminating against her or her property in any way. The Presiding Commissioner thus found that the appellant failed to meet her burden of proving that the assessors were engaged in an intentional widespread scheme of disproportionate assessment and that they were discriminating against the appellant in their assessment of her property.

Accordingly, the Presiding Commissioner issued a decision for the appellee in this appeal.

OPINION

The assessment is presumed valid unless the taxpayer sustains the 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 her 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)).

Sales of comparable realty in the same geographic area and within a reasonable time of the assessment date generally contain 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, Graham v. Assessors of West Tisbury, 73 Mass. App. Ct. 1107 (2008). Evidence of comparable assessments may also be used to determine a property’s fair cash value. “At any hearing relative to the assessed fair cash valuation . . . of property, evidence as to the fair cash valuation . . . at which assessors have assessed other property of a comparable nature . . . shall be admissible.” G.L. c. 58A, § 12B. The properties used in a comparable-assessment analysis must be comparable to the subject property in order to be probative of the fair cash value. See Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 703 (1972). The appellant bears the burden of “establishing the comparability of . . . properties [used for comparison] to the subject property.” Fleet Bank of Mass. v. Assessors of Manchester, Mass. ATB Findings of Fact and Reports 1998-546, 1998-554. Accord New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 470 (1981). “Once basic comparability is established, it is then necessary to make adjustments for the differences, looking primarily to the relative quality of the properties, to develop a market indicator of value.” New Boston Garden Corp., 383 Mass. at 470.

In the instant appeal, the appellant offered three comparable properties — condominium units located within the same complex as the subject property. However, the appellant failed to make any adjustments for differences between her comparable properties and the subject property. The Board thus found and ruled that the appellant failed to provide meaningful evidence of value. By contrast, Ms. Swadel’s comparable-sales analysis, which compared the subject property to three condominium units in the same complex, provided adjustments to account for key differences which would affect a property’s value, including quality of construction, age and condition of the unit, and gross living area. The subject assessment was within the range of the comparable properties’ adjusted sales prices. The Presiding Commissioner thus found and ruled that the appellant failed to meet her burden of proving that the subject property was overvalued for the fiscal year at issue.

Accordingly, the Presiding Commissioner issued a decision for the appellee in this appeal.

APPELLATE TAX BOARD

By: ______________________________

James D. Rose, Commissioner

A true copy,

Attest: _______________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

ERNEST OPANASETS v. BOARD OF ASSESSORS OF

THE TOWN OF PLYMOUTH

Docket No. F291889 Promulgated:

May 27, 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, Board of Assessors of the Town of Plymouth (“assessors” or “appellee”), to abate taxes on certain real estate located in the Town of Plymouth, owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal year 2007 (“fiscal year at issue”).

Commissioner Mulhern heard this appeal. Chairman Hammond and Commissioners Scharaffa, Egan and Rose joined him in a 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.

Ernest Opanasets, pro se, for the appellant.

Cathy Salmon, Assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits offered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2006, Ernest Opanasets (“appellant”) was the assessed owner of a waterfront parcel of real estate located at 137 West Long Pond Road in Plymouth (“subject property”). For the fiscal year at issue, the assessors valued the subject property at $618,600 and assessed a tax thereon, at the rate of $9.71 per $1,000, in the total amount of $6,096.71. On December 29, 2006, the Collector of Taxes for Plymouth mailed out the actual fiscal year 2007 tax bills. The appellant timely paid the taxes due without incurring interest. On January 29, 2007, in accordance with G.L. c. 59, § 59, the appellant timely filed his Application for Abatement with the assessors, which they denied on April 3, 2007. In accordance with G.L. c. 59, §§ 64 and 65, the appellant seasonably filed his appeal with the Board on June 25, 2007. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

The subject property, which is located on Long Pond, consists of a 2.60-acre parcel of land improved with a Colonial-style, multi-family home built circa 1920 with nine rooms and an attached one-car garage. The appellant purchased the subject property in an arm’s-length transaction in July, 2004 for $735,000.

The total assessment for the fiscal year at issue was $618,600. The appellant had previously appealed his fiscal year 2006 assessment of $643,600. On February 12, 2007, the Board issued a single-member decision in favor of the appellee.

The assessment for the fiscal year at issue is comprised of a land value of $447,100 and a building value of $171,500. The appellant contended that the land portion of the subject was too high and disproportionately assessed. To prove his case, the appellant presented spreadsheets of what he considered to be twelve comparable Long Pond waterfront properties and their assessments for the fiscal year at issue as well as for fiscal years 2005 and 2000. He also submitted spreadsheets listing the land-component assessments of his comparables from fiscal year 2007 back to fiscal year 1995. From this data, the appellant pointed out that the range of land-component assessments was much broader in fiscal year 2007, and that the more narrow range of land-component assessments from fiscal year 2000 was more in keeping with the actual fair market value of the land portion of the comparable properties and the subject property. From the land-component assessments which he presented, the appellant determined that the subject property’s land should be valued at $342,100.

To further his argument, the appellant presented a witness, Glen Bacevicious, a real estate appraiser. Mr. Bacevicious presented a series of Multiple Listing Service (“MLS”) listings of vacant parcels sold in Plymouth between June 11, 2003 and November 30, 2004. The sales ranged in value from $97,900 to $605,000; most of the sales were in the mid-$200,000 range. Based on his evidence, Mr. Bacevicious’ opinion of the fair market value of the subject land was $350,000.

On cross-examination by Cathy Salmon, the Assessor for Plymouth, Mr. Bacevicious conceded that the subject property sold in an arm’s-length transaction, about eighteen months prior to the relevant assessment date, for $735,000. He also conceded that his comparables were located in inferior locations, on smaller ponds, compared to the subject property. Ms. Salmon then asked Mr. Bacevicious for his analysis for formulating his opinion of value for the subject’s fair market land value. Mr. Bacevicious responded that he could not produce this analysis. Finally, Ms. Salmon asked Mr. Bacevicious for his opinion of the total fair market value of the subject property. Mr. Bacevicious stated that he did not have an opinion, as he had been instructed to appraise only the land component of the subject property.

On the basis of the evidence presented, the Board found that the appellant’s focus on the land values of his comparable properties failed to address whether the overall assessment of the subject property was excessive. The Board further found that the sale of the subject property — in an arm’s-length transaction, about eighteen months prior to the relevant assessment date –- was the most persuasive indicator of the subject property’s total fair market value. The Board found that the sale price of $735,000 in July, 2004 supported the subject property’s overall assessment of $618,600 for the fiscal year at issue. The Board, therefore, found that the appellant failed to meet his burden of proving that the subject property was overvalued for the fiscal year at issue.

The appellant also argued that the subject property was disproportionately assessed. However, he offered scant evidence to support this assertion. Of the thousands of residential properties in Plymouth, the appellant only “analyzed” the land values of twelve properties along Long Pond plus the subject. His analysis did not contain any evidence or implication that a widespread scheme of intentional disproportionate assessment existed in Plymouth. Therefore, the Board found that the appellant failed to meet his burden of proving that the assessors were engaged in an intentional widespread scheme of disproportionate assessment.

Accordingly, the Board issued a decision for the appellee in this appeal.

OPINION

The assessment is presumed valid unless the taxpayer sustains the 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)).

In the present appeal, the appellant asserted that the land component of the subject property was overvalued in comparison to the land-component valuations of neighboring parcels. However, a taxpayer does not establish the right to an abatement merely by showing that either the land or a building is overvalued; he must demonstrate that the overall assessment overstated the fair cash value of the subject property. See Anderson v. Assessors of Barnstable, Mass. ATB Findings of Fact and Reports 1999-596, 601. “The tax on a parcel of land and the building thereon is one tax . . . although for statistical purposes they may be valued separately.” Assessors of Brookline v. Prudential Insurance Co., 310 Mass. 300, 317 (1941). “In abatement proceedings, ‘the question is whether the assessment for the parcel of real estate, including both the land and the structures thereon, is excessive. The component parts, on which that single assessment is laid, are each open to inquiry and revision by the appellate tribunal in reaching the conclusion whether the single assessment is excessive.’” Anderson, Mass. ATB Findings of Fact and Reports at 1999-601-02 (quoting Massachusetts General Hospital v. Belmont, 238 Mass. 396, 403 (1921)). The Board found and ruled that the appellant’s evidence, which focused only on the land portion of the subject assessment, was insufficient to show that the overall assessment of the subject property exceeded its fair cash value.

Moreover, the Board found the sale of the subject property, within eighteen months of the assessment date, to be persuasive evidence of the subject property’s fair cash value. “[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, 385 Mass. at 682. Actual sales of the subject are “very strong evidence of fair market value, for they represent what a buyer has been willing to pay to a seller for [the] particular property [under appeal].” New Boston Garden Corp. v. Board of Assessors of Boston, 383 Mass. 456, 469 (1981) (quoting First Nat’l Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971)). In this appeal, the Board found and ruled that the sale of the subject property within eighteen months of the assessment date was reasonably proximate to the assessment date, and that the sale price of $735,000 supported the assessment of $618,600.

Based on this evidence, the Board found and ruled that the appellant failed to meet his burden of proving that the subject property was overvalued for the fiscal year at issue.

The appellant also raised a claim of disproportionate assessment. “In order to obtain relief on the basis of disproportionate assessment, a taxpayer must show that there is an ‘intentional policy or scheme of valuing properties or classes of properties at a lower percentage of fair cash value than the taxpayer’s property.’” Brown v. Assessors of Brookline, 43 Mass. App. Ct. 327, 332 (1997)(quoting Shoppers’ World, Inc. v. Assessors of Framingham, 348 Mass. 366, 377 (1965)). If the taxpayer can demonstrate in an appeal to the Board that he has been the victim of a scheme of discriminatory, disproportionate assessment, he “may be granted an abatement . . . which will make . . . his assessment proportional to other assessments, on a basis which reaches results as close as is practicable to those which would have followed application by the assessors of the proper statutory principles.” Coomey v. Assessors of Sandwich, 367 Mass. 836, 838 (1975) (quoting Shoppers’ World, 348 Mass. at 377-78).

In the present appeal, the appellant failed to introduce sufficient evidence to show that a policy or scheme of discriminatory, disproportionate assessment was employed by the assessors against any class of properties in Plymouth. The Board found and ruled that the evidence was virtually nonexistent to demonstrate, or even suggest, that the assessors engaged in an “intentional widespread scheme of discrimination.” Stilson v. Assessors of Gloucester, 385 Mass. 724, 727-28 (1982). Accordingly, the Board found and ruled that the appellant failed to meet his burden of proving that a deliberate scheme of disproportionate assessment existed in Plymouth for the fiscal year at issue.

In sum, the Board found and ruled that the appellant failed to show that the assessors’ methodology was faulty, that the assessment over-valued his property, or that a deliberate scheme of disproportionate assessment existed in Plymouth in fiscal year 2007. Accordingly, the Board decided this appeal for the appellee.

APPELLATE TAX BOARD

By: _________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

DOROTHY C. CORNETTA v. BOARD OF ASSESSORS OF

THE TOWN OF TOPSFIELD

Docket No. F299411 Promulgated:

June 11, 2010

This is an appeal filed under the formal procedure pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes on real estate located in the Town of Topsfield, owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.

Commissioner Mulhern heard the appeal and, together with Chairman Hammond and Commissioners Scharaffa and Egan, issued a decision 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.

Dorothy C. Cornetta, pro se, for the appellant.

Eldon Goodhue, assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the exhibits and testimony offered into evidence during the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2008, Dorothy C. Cornetta (the “appellant”) was the assessed owner of a parcel of real estate improved with a single-family dwelling located at 50 Brookside Road in the Town of Topsfield (“subject property”). For fiscal year 2009, the Board of Assessors of Topsfield (“assessors”) valued the subject property at $613,600 and assessed a tax, at the rate of $12.88 per thousand, in the total amount of $7,903.17, which the appellant paid without incurring interest. On January 6, 2009, the appellant timely filed an abatement application with the assessors. The assessors denied the abatement application on April 1, 2009. On April 13, 2009, the appellant seasonably filed an appeal, under the formal procedure, with the Board. On the basis of these facts, the Board found and ruled that it had jurisdiction over this appeal.

The subject property is a 0.95-acre parcel of land, located in the Town of Topsfield, improved with a single-family, wood-frame, two-story, Colonial-style dwelling, built in 1975, with clapboard shingles and an asphalt, gambrel-style roof. The subject home contains 2,972 square feet of living area and has a total of nine rooms, including four bedrooms, as well as two full bathrooms and one half bathroom. The subject home also features central air conditioning, an attached two-car garage, a deck, and a fireplace.

The appellant presented her case through her own testimony and the submission of several documents. She contended that the subject property was overvalued for the following reasons: (1) real estate values in Topsfield were significantly depressed during the fiscal year at issue because of the national economic downturn; (2) the town’s water-delivery system to the subject property was faulty, thus compromising the delivery of clean water to the subject property; and (3) wetland conditions in the rear of the subject property negatively affected the subject property’s fair market value.

To support her contention that real estate values in Topsfield were depressed, the appellant cited three valuation sources that listed Essex County statistics for calendar year 2008. First, the Warren Group found that a 10.6% decline in Essex County property values had occurred between 2007 and 2008. Second, according to the S&P Case-Shiller Index, there was an 18% decline in property values for Essex County during 2008. Third, the on-line Trulia Report listed a 29.3% decline in valuations for Topsfield properties during 2008.

The appellant also presented a sales-comparison analysis, citing five examples of purportedly comparable properties that sold between March 16, 2007 and June 15, 2009. The sales-comparison data submitted by the appellant is reproduced in the following table:

Address	Valuation by Zillow[96]	Sale Date	Sale Price	% Value Decrease[97]	Living Space (sf)	BR/BA[98]
42 Averill St.	$477,000	6/15/07	$436,000	8.6	2,271	4/2.5
18 Candlewood Dr.	$624,000	3/16/07	$568,000	6.1	3,300	4/3.5
25 Brookside Rd.	$542,000	3/26/09	$514,000	5.2	nv[99]	4/nv
8 Meetinghouse	$477,500	6/18/08	$325,000	32	1,755	4/1.5
39 Averill St.	$544,000	5/30/08	$486,000	11	2,080	4/3

To support her contention that the water system to the subject property was faulty, the appellant explained in her testimony that public water to the subject property is contaminated by particulates and rust. To obtain clean water, appellant installed two filtration systems in the subject property, an electronic system and a “wet system”; the appellant and any subsequent property owner is responsible for the cost of the electronic system, and the Town supplies filtering materials for the “wet system.” Moreover, she explained that the water department must periodically enter the subject home, disconnect the water meter and “flush” the water line, a process which lasts between one to three days. The appellant submitted a photocopy of a photograph depicting the water filtration system located within the subject home. She also explained that the filtration system present at the subject property was not guaranteed to resolve the water issue in the absence of more elaborate repairs by the Town, and that the faulty water-delivery system would thus have to be disclosed to a potential buyer of the subject property.

Finally, to support her contention that the wetland conditions had negatively affected the fair market value of the subject property, the appellant testified that the Topsfield Conservation Commission forbids tree trimming in areas which abut wetlands, like the rear of the subject property. She explained that the inability to trim the trees has caused the wetland area to grow. The appellant submitted a photocopy of a picture of the rear of the subject property that depicted thick vegetation.

In defense of the subject assessment, the Assessor, Eldon Goodhue, presented a comparable-sales analysis using five purportedly comparable properties. One of the properties, 18 Candlewood Drive, was also a comparable-sale property used by the appellant. The five comparable-sale properties were all in the same neighborhood as the subject property, they were all improved with Colonial homes of reportedly “average” condition, with living spaces between 2,378 to 2,972 square feet, and they all sold during 2007 or 2008. After applying his adjustments for time, building differences and land size, Mr. Goodhue arrived at adjusted sale prices between $591,100 and $676,700. The subject assessment of $613,600 was towards the lower end of this range.

Mr. Goodhue acknowledged that the subject property was impacted by a faulty water-delivery system. Mr. Goodhue did not contend that any of his five purportedly comparable properties were likewise affected by a faulty water-delivery system. Mr. Goodhue also confirmed that Topsfield has an abundance of wetland property.

The Board ultimately found that the appellant’s evidence with respect to the economic downturn – including the Warren Group, Trulia Report and S&P/Case-Shiller Index statistics – was too broad and not specific to the fair cash value of the subject property. For reasons explained further in the Opinion, the Board found that arm’s-length comparable sales are more probative of a subject property’s fair cash value than general, regional statistics. The appellant did offer a comparable-sales analysis with five properties; however, she failed to show the comparability of her purportedly comparable properties and the subject property in key respects, including the specific neighborhood where her comparable properties were located and their conditions in comparison to the subject property. Furthermore, she failed to make adjustments for differences between the comparable properties and the subject property.

The Board also found that the appellee, by contrast, presented five sales of properties which Mr. Goodhue demonstrated to be sufficiently comparable to the subject property, and his analysis applied appropriate adjustments to these properties. Therefore, the Board found that his range of adjusted sale prices was probative evidence of the subject property’s fair market value for the fiscal year at issue.

However, the Board found that the appellant met her burden of proving that other factors, particularly the faulty water-delivery system and the overgrowth of wetlands to the rear of the subject property, negatively impacted the fair market value of the subject property. The Board found that the appellant’s testimony was credible and well substantiated, and Mr. Goodhue acknowledged the presence of these issues. Considering the range of values offered by Mr. Goodhue and the existence of the water and wetland issues, the Board found that the fair cash value of the subject property was $582,900, approximately a five-percent reduction in the assessed value for the fiscal year at issue.

Accordingly, the Board issued a decision for the appellant ordering an abatement of $395.42.

OPINION

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). Generally, real estate valuation experts and the Massachusetts courts rely upon three approaches to determine fair cash value of property: income capitalization, sales comparison, and cost reproduction. Correia v. New Bedford Redevelopment, 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).

The Board has repeatedly found that sales of comparable realty in the same geographic area and within a reasonable time of the assessment date generally contain probative evidence for determining the value of the property at issue. E.g., 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). The statistical data offered by the appellant in this appeal did not provide crucial factors for determining the comparability of individual properties to the subject property, such as the specific neighborhood where a purportedly comparable property is located, its gross living area, number of bathrooms, and its condition. In the instant appeal, the Board found that the appellant’s generalized statistical data from the Warren Group, the Trulia Report and the S&P/Case-Shiller Index was not sufficiently probative of the fair cash value of the subject property. The Board was thus not persuaded by the appellant’s statistical evidence.

The appellant did provide a comparable-sales analysis using five purportedly comparable properties. To be persuasive evidence of fair cash value, however, comparable-sales analyses must make allowances 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). In this appeal, the appellant’s analysis failed to provide sufficient information with respect to key similarities and differences between the purportedly comparable properties and the subject property, such as location and condition. Moreover, the appellant failed to provide any adjustments for differences between her comparable properties and the subject property.

In contrast, the appellee provided a comparable-sales analysis using five properties which were shown to be within the same neighborhood as the subject and included homes of comparable styles, size and condition. The appellee further adjusted the comparables to account for key differences, thus yielding a range of adjusted sale prices which the Board found and ruled to be probative of the subject property’s fair market value. The subject assessment was at the lower end of this range. The Board thus found and ruled that the appellee’s comparable-sales analysis was probative evidence of the subject property’s fair market value.

However, an assessment’s failure to account for a property’s defects will warrant a reduction in assessed value to account for the impact on fair cash value of those defects. See, e.g., Hughes v. Board of Assessors of the City of Quincy, Mass. ATB Findings of Fact and Reports 2005-420, 424-5, 428 (finding an assessment to be excessive where the assessors had failed to consider documented deficiencies in the subject property). In the present appeal, the Board found credible the appellant’s evidence with respect to defects present at the subject property, specifically the faulty water-delivery system and the overgrowth of protected wetlands to the rear of the subject property. The Board found and ruled that the appellee erred by not considering these factors in the subject assessment.

The fair cash value of property cannot be proved with “mathematical certainty and must ultimately rest in the realm of opinion, estimate, and judgment.” Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 72 (1941). In evaluating the evidence before it, the Board may select among the various elements of value and form its own independent judgment of fair cash value. General Electric Co., 393 Mass. at 605; North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984). “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). After considering the credibility of the appellant’s evidence with respect to the faulty water-delivery system and the overgrowth of wetlands abutting the rear of the subject property, and the effects of these factors on the value of the subject property as of the relevant assessment date, the Board found and ruled that the subject assessment should be reduced by approximately five percent, or $30,700.

Accordingly, the Board decided this appeal for the appellant and ordered an abatement of $395.42.

APPELLATE TAX BOARD

By: ____________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ______ _____ _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

BURGER KING STORE #4, INC. v. BOARD OF ASSESSORS OF

THE CITY OF MARLBOROUGH

Docket No. F298291 Promulgated:

June 14, 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 certain personal property in the City of Marlborough owned by and assessed to Burger King Store #4, Inc. (“Burger King Store #4” or “appellant”) under G.L. c. 59, §§ 2 and 18, for fiscal year 2008. This appeal is being prosecuted by Burger King Store #4 as the lessee of the subject personal property.

Commissioner Rose (“Presiding Commissioner”) heard the appeal and, in accordance with G.L. c. 58A, § 1 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.

Alfred L. Morin, pro se, for the appellant.

Anthony R. Trodella, assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the exhibits and testimony offered into evidence during the hearing of this appeal, the Presiding Commissioner made the following findings of fact.

On January 1, 2007, the appellant, Burger King Store #4 was the assessed owner of personal property consisting of machinery and equipment (the “subject personal property”) situated in Marlborough. For fiscal year 2008, the Board of Assessors of the City of Marlborough (“assessors”) valued the subject personal property at $28,830. As detailed in the table below, the assessed values were derived by applying a depreciation deduction to the replacement cost of each item:

Property Details	Year New	Depreciation	Item Cost	Qty	Replacement Cost	Total Fair Market Value
Broiler	1996	55%	$10,300	1	$10,300	$ 5,670
Bun Warmer	1996	55%	$ 950	1	$ 950	$ 520
Warming Cabinet	1996	55%	$ 650	1	$ 650	$ 360
CO2 System	1996	55%	$ 6,700	1	$ 6,700	$ 3,690
Exhaust Hood	1996	55%	$ 90	16	$ 1,440	$ 790
Friolator Station	1996	55%	$ 8,800	1	$ 8,800	$ 4,840
Warmer (fry)	1996	55%	$ 3,100	1	$ 3,100	$ 1,710
Warmer (franchise)	1996	55%	$ 1,550	2	$ 3,100	$ 1,710
Ansul (avg)	1996	55%	$ 2,200	1	$ 2,200	$ 1,210
Microwave (commercial)	1996	55%	$ 800	4	$ 3,200	$ 1,760
Ice Maker (large)	1996	55%	$ 4,100	1	$ 4,100	$ 2,260
Coffee Machine	2000	75%	$ 950	1	$ 950	$ 710
Product Holding Unit	2003	90%	$ 1,100	3	$ 3,300	$ 2,970
Grand Total						$28,830

Based on the above fair market values, the appellee assessed a tax, at the rate of $24.58 per thousand, in the total amount of $708.64, which the appellant timely paid.

On January 31, 2008, the appellant timely filed an abatement application with the assessors. The assessors denied the abatement application on March 28, 2008. On June 26, 2008, the appellant seasonably filed an appeal, under the formal procedure, with the Appellate Tax Board (“Board”). On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction over this appeal.

At the hearing of this appeal, Alfred L. Morin, the owner of Burger King Store #4, testified on behalf of the appellant. His contention was that the subject personal property had been overvalued by about $21,080. He claimed that the appraisals furnished to the appellee by its valuation company were not supported by the market for like machinery and equipment. To support his contention, Mr. Morin submitted several computer print-out copies of postings from various websites, including Craigslist (http://www.Craigslist.com), ebay (http://www.ebay.com), and Live Auctioneers (http://www.Liveauctioneers.com) – advertising equipment and machinery which he claimed to be comparable to the subject personal property. He testified that he was able to find listings for property comparable to only three items of the subject personal property. His evidence is summarized in the following chart:

Subject Equipment	Advertising Details of Purportedly Comparable Equipment	Compar-able’s Asking Price	Compar-able’s Sale Price	TP’s Adjust-ments
Neico 980 Gas Broiler	“Neico Broiler”; “Used for broiling burgers and toasting bread in good condition”	$500	n/v	None
	“Nice Neico Automatic Broiler Model 200E”; “208 volt”	$250	n/v	None
	“Neico gas broiler. Good shape.”	$500	n/v	None
	“I have a Neico Chain Broiler for sale. It is approx. 15-20 yrs old. It works”; “It was used in a Dairy Queen, but I’ve seen the same type in a Burger King. It has 8 burners, 4 on top and 4 on the bottom. It also has a bun toaster on the bottom.”	$500	n/v	None
	“Neico Hamburger Conveyor Broiler Gas”; “complete with stand on casters”; broiler appears to be missing a cover		$200	None
Frymaster 250/350(5-tub fryer)	“Frymaster 3 Tub Deep Fryer”; “used”; “set up for natural gas but can be converted to propane”	$300	n/v[100]	$500(for 5-tub)

	“Real nice Frymaster triple deep fat fryer, Model MJH250BLCSC, Natural gas. Tested and it is in good working condition. Carefully used, well kept, and clean inside and out. Comes with 2 baskets, all the 3 wells have filters.”	Current bid – $600.01	n/v	$1,000 (for 5-tub)
	“Frymaster Triple bank frying system w/ attached filter system. Electronicly [sic] controled [sic] timers for each of the three fryers in the bank. We have never used and we purchased them from a restaurant open less than a year – Practicly [sic] new!”	$999.00	n/v[101]	$1655 (for 5-tub)
Hoshizaki B-990 SD Ice Maker	“Hoshizaki KM-630MRE commercial ice maker. makes 1000 lbs of ice a day. takes 4 lbs. 2 oz. of refrigeration (already charged and running). AC supply voltage 200-230/60/1 (3 wire with neutral for 115v). compressor 208-230v; 6 RLA; 311 RA. Pump 120v 5 FLA 10w. fan remote 120v 3A max. max fuse 15 amps; Manitawac water filter. Ice scoop and self bagger 2 cases of bags works great”	$850.00	n/v[102]	None

Mr. Morin also contended that the assessed value for the subject personal property was skewed because the depreciation deductions used by the appellee’s valuation company did not comport with those applied by the Internal Revenue Service (“IRS”), which assume a shorter class life for property used in distributive trades and services.

Finally, Mr. Morin cited examples of dispositions of purportedly comparable personal property from other Burger King franchises which had closed. His original petition to the Board included a copy of an electronic mail message, which he had received from a former Burger King franchise owner who sold equipment from a purportedly similar Burger King in April, 2008. The former franchise owner simply stated that the closing of that Burger King store “cost us $8,500,” which “was in kind as far as labor and disposing of miscellaneous equipment.”

At the hearing, Mr. Morin introduced into evidence a letter from a fellow Burger King franchise owner who had acquired equipment from another purportedly comparable Burger King restaurant located at an airport (“Airport Burger King”), which had closed in January, 2008. According to the letter, the franchise owner received the equipment from the demised franchise at no cost, as part of a bargain to relieve the demised franchise owner of the expense of removing the equipment from the premises. The letter continues:

If [the former owner] had offered us the option of removing only the equipment we wanted: the Neico broiler, Duke PHU’s, Taylor shake machine, main prep board, microwaves, ice maker, Douwe Egbert coffee machine, CO2 and soda system, Frymaster fry pots and fry station, and bun toasters, we would have offered him a total of $4,000 to $6,000 for these items.

No further documentation identifying any item’s exact make, model, or year purchased was submitted into evidence.

Anthony Trodella, Chairman of the appellee, testified in support of the subject personal property assessment. Mr. Trodella explained that, by presenting evidence of sales of equipment from closed stores, the appellant was equating market value with salvage value. Mr. Trodella then submitted as evidence a written explanation, which he explained had been provided by the appellee’s valuation company, which states in pertinent part:

Depreciation for the purposes of valuing personal property should not be confused with depreciation for IRS purposes, due to the fact that the personal property retains value as long as it is in service. . . . Personal property should bear normal and reasonable depreciation, but never fully depreciated as long as it is in use. Generally the minimum fair utility value should be around 30% condition, the converse of 70% depreciation.

The written explanation also states that the definition of “market value” as applied by the International Association of Assessing Officers (“IAAO”) is “the price that dealers in the goods are willing to receive and purchasers are willing to pay when goods are bought and sold in the ordinary course of trade.” Mr. Trodella contended that when property is sold from a demised franchise, it is not “in the ordinary course of trade,” but instead for salvage value. Mr. Trodella emphasized to the Board that the valuation company’s procedures are approved and certified by the Massachusetts Department of Revenue (“DOR”).

On the basis of the evidence presented, the Presiding Commissioner found that the appellant failed to present reliable evidence of the overvaluation of the subject property. First, Mr. Morin presented evidence relating to only three items of the subject personal property; he presented insufficient information as to any other personal property items. Moreover, the evidence that he submitted lacked adequate detail to be probative of the items’ fair market value. Many of the website listings which Mr. Morin submitted did not disclose pertinent information like the make and model of the listed item, its age, and its condition. When the listing did disclose the model numbers, they did not match, and Mr. Morin failed to explain whether the purportedly comparable items were, in fact, comparable to the subject personal property. Furthermore, Mr. Morin’s evidence consisted primarily of asking prices; he failed to demonstrate that any but one of his website sales were actually consummated. The copies of electronic mail messages that he submitted were even vaguer with respect to the identification of specific items of personal property being disposed – for example, $8,500 for “labor and disposing of miscellaneous equipment” — as well as their ages and conditions. The disposition of personal property from the Airport Burger King was admittedly not even a sale.

Therefore, the Presiding Commissioner found that the appellant failed to meet its burden of proving that the subject personal property had a fair market value less than the subject assessment. Accordingly, the Presiding Commissioner issued a decision for the appellee in this appeal.

OPINION

“All property, real and personal, situated within the commonwealth . . . shall be subject to taxation.” G.L. c. 59, § 2. “‛The burden of proof is upon the petitioner to make out his 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 [B]oard is entitled to ‘presume that the valuation made by the assessors [is] valid unless the taxpayers . . . prov[e] the contrary.’” General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 598 (1984) (quoting Schlaiker, 365 Mass. at 245).

On the basis of all of the evidence, the Presiding Commissioner found that the appellant failed to proffer sufficient evidence comparing the purportedly comparable property to the subject personal property. Mr. Morin presented purportedly comparable property for only three items of the subject personal property. Of those three items, he failed to demonstrate sufficient similarity in make, model, age, and quality. Moreover, he presented mostly advertising posts or electronic mail messages pertaining to dispositions of equipment from closed Burger King franchises, as opposed to consummated arm’s-length sales. The Presiding Commissioner thus found and ruled that his analysis was insufficient to rebut the presumably valid assessment.

The Board has previously granted abatements of personal property assessments when the taxpayer has presented evidence of actual sales of property shown to be comparable to the subject personal property. See, e.g., Kabat v. Board of Assessors of Cummington, Mass. ATB Findings of Fact and Reports 2008-397 (granting abatement of real estate tax levied on a trailer assessed for $31,500, which the taxpayers had purchased for $8,000, where taxpayers present sufficient evidence of the market value for comparable trailers). By contrast, the appellant in the instant appeal failed to present adequate evidence of sales of personal property comparable to the subject personal property.

On this basis, the Presiding Commissioner found and ruled that the appellant failed to meet its burden of proving that the assessed value of the subject personal property for the fiscal year at issue exceeded its fair cash value. Accordingly, the Presiding Commissioner issued a decision for the appellee in this appeal.

APPELLATE TAX BOARD

By: ________________________________

James D. Rose, Commissioner

A true copy,

Attest: ______________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

BILLY J. SMITH a/k/a v. BOARD OF ASSESSORS OF

B.J. SMITH THE CITY OF BOSTON

Docket Nos. F292473, 292474 Promulgated:

June 14, 2010

These are appeals filed under the formal procedure pursuant to G.L. c. 58A, § 7 and c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes on real estate located in the City of Boston, assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal year 2007.

Commissioner Rose (“Presiding Commissioner”) heard these appeals and, in accordance with G.L. c. 58A, § 1A, issued single-member decisions 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.

Billy J. Smith, pro se, for the appellant.

Nicholas P. Ariniello, Esq. 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, 2006, the appellant was the assessed owner of two parcels of real estate located at 51 Savin Street and 53 Savin Street in the City of Boston. For fiscal year 2007, the Board of Assessors of the City of Boston (“assessors”) valued 51 Savin Street at $92,800 and valued 53 Savin Street at $25,100, and assessed taxes, at the rate of $10.99 per thousand, in the total amounts of $1,019.87 for 51 Savin Street and $275.85 for 53 Savin Street. On February 1, 2007, the appellant timely filed with the assessors an abatement application for each parcel. No payments of tax have been made for either parcel.[103] The assessors denied the abatement application for 53 Savin Street on March 9, 2007 and, in accordance with G.L. c. 59, § 59, the application for 51 Savin Street was deemed denied on May 1, 2007. On July 13, 2007, the appellant filed with the Appellate Tax Board (“Board”) an appeal for each parcel. On the basis of these facts, the Presiding Commissioner ruled that the Board had jurisdiction over the appeal for 51 Savin Street (Docket F292473). However, the petition for 53 Savin Street (Docket F292474) was not filed timely with the Board. Accordingly, the Presiding Commissioner issued a decision for the appellee in Docket No. F292474 because the Board lacked jurisdiction.

The property, located at 51 Savin Street in Boston, consists of a 5,428-square-foot parcel of land with no improvements (“subject property”). On October 19, 2004, the appellant transferred ownership of the subject property, together with 53 Savin Street, to Urban Ministries of Boston, Inc., for total consideration of $10.00. However, through an oversight by the City of Boston, the transfer of title was not made part of the City of Boston’s official assessing records. The appellant thus remained the assessed owner of the subject property for the fiscal year at issue.[104]

In his abatement application filed with the appellee, the appellant claimed that the subject property was statutorily exempt from taxes under G.L. c. 59, § 5, Clause Eleventh (house of worship), and under G.L. c. 59, § 5, Clause Third (property of a literary, benevolent, charitable, scientific, or temperance organization). However, in his appeal to the Board, the appellant contended that the subject property was overvalued because it was a “vacant nonbuildable lot.” At the hearing, the appellant contended simply that the subject property was nonbuildable. He offered no evidence of value, and he presented no exhibits or witnesses other than himself.

On the basis of the evidence presented at the hearing, and as will be further explained in the Opinion, the Presiding Commissioner found that the appellant failed to meet his burden of proving that the subject property was overvalued for the fiscal year at issue. Accordingly, the Presiding Commissioner issued a decision for the appellee in Docket No. F292473.

OPINION

G.L. c. 59, §§ 64 and 65 provide that a taxpayer may file an appeal with the Board “within three months after the date of the assessors’ decision on an application for abatement.” The appellee denied the appellant’s abatement application filed with respect to 53 Savin Street on March 9, 2007. The appellant did not file his petition to the Board until July 13, 2007, which was more than three months after the appellee denied the abatement application. Therefore, the Presiding Commissioner found and ruled that it lacked jurisdiction over Docket No. F292474.

The Board has only that jurisdiction conferred on it by statute. Stilson v. Assessors of Gloucester, 385 Mass. 724, 732 (1982). “Since the remedy of abatement is created by statute, the board lacks jurisdiction over the subject matter of proceedings that are commenced at a later time or prosecuted in a different manner from that prescribed by statute.” Nature Church v. Assessors of Belchertown, 384 Mass. 811, 812 (1981) (citing Assessors of Boston v. Suffolk Law School, 295 Mass. 489, 495 (1936). Adherence to the statutory prerequisites is essential “to prosecution of appeal from refusals to abate taxes.” New Bedford Gas & Edison Light Co. v. Assessors of Dartmouth, 368 Mass. 745, 747 (1975). “[A] statutory prerequisite to jurisdiction cannot be waived by any act of the assessors.” Assessors of Boston v. Suffolk Law School, 295 Mass. at 494; Old Colony R. Co. v. Assessors of Quincy, 305 Mass. 509, 511-12 (1940). Like the assessors, the Board also cannot waive jurisdictional requirements. Id. Accordingly, the time limit provided for filing the petition is jurisdictional and a failure to comply with it must result in dismissal of the appeal. Doherty v. Assessors of Northborough, Mass. ATB Findings of Fact and Reports 1990-372, 373 (citing Cheney v. Inhabitants of Dover, 205 Mass. 501 (1910); Assessors of Boston v. Suffolk Law School, 295 Mass. 489 (1936)); see also Berkshire Gas Co. v. Assessors of Williamstown, 361 Mass. 873 (1972).

In the instant appeal, the appellant offered no evidence of overvaluation. Although he claimed that the subject property was an unbuildable lot, he offered no evidence to show that the subject assessment exceeded the fair cash value of the subject property. Therefore, the Presiding Commissioner found and ruled that the appellant failed to meet his burden of proving that the valuation made by the assessors exceeded the subject property’s fair cash value.

Accordingly, the Presiding Commissioner issued a decision for the appellee in Docket No. F292474, because the Board lacked jurisdiction, and for the appellee in Docket No. F292473, because the appellant failed to meet his burden of proving a fair cash value less than the subject assessment.

APPELLATE TAX BOARD

By: ____________

James D. Rose, Commissioner

A true copy,

Attest: ______ _____ _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

SHAWN K. & CYNTHIA M. AHEARN v. BOARD OF ASSESSORS OF

THE TOWN OF WESTMINSTER

Docket No. F299057 Promulgated:

June 25, 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 Board of Assessors of the Town of Westminster (“assessors”), to abate taxes on certain real estate located in the Town of Westminster, owned by and assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.

Commissioner Rose (“Presiding Commissioner”) heard this appeal and issued a single-member decision for the assessors in accordance with G.L. c. 58A, § 1 and 831 CMR 1.20. These Findings of Fact and Report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

Sean K. Ahearn, pro se, for the appellants.[105]

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits offered into evidence at the hearing of this appeal, the Presiding Commissioner made the following findings of fact.

On January 1, 2008, Shawn K. and Cynthia M. Ahearn (“appellants”) were the assessed owners of an improved parcel of real estate located at 8 Leominster Street in Westminster (“subject property”). For fiscal year 2009, the assessors valued the subject property at $408,800 and assessed a tax thereon, at a rate of $13.00 per $1,000, in the amount of $5,314.40. In accordance with G.L. c. 59, § 57C, the appellants paid the tax due without incurring interest, and in accordance with G.L. c. 59, § 59, the appellants timely filed an Application for Abatement with the assessors. The assessors granted a partial abatement on February 10, 2009, in the amount of $369.20, having reduced the subject property’s assessed value to $380,400. On February 23, 2009, the appellants seasonably filed an appeal with the Appellate Tax Board (“Board”). On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to decide this appeal.

The subject property consists of a 0.34-acre parcel of real estate improved with a single-family, antique Colonial-style home containing 3,204 square feet of finished living area.[106] The dwelling consists of eight rooms, including five bedrooms as well as two full bathrooms.

The appellants argued that the subject property was overvalued for fiscal year 2009. In support of their argument, the appellants submitted limited data regarding sales of thirteen properties, five of which sold during 2007 and eight of which sold during 2008. In addition, three of the thirteen properties are located outside Westminster. Although the data included each property’s address, sale price, and living area, crucial information was lacking. Specifically, the appellants presented no evidence relating to the desirability of each property’s location, the style or condition of the dwellings situated on the purportedly comparable properties, or the physical attributes of each parcel. Lacking this information, the Presiding Commissioner could not determine if the properties were comparable to the subject property, much less consider adjustments to account for differences between the properties and the subject property. Consequently, the Presiding Commissioner found that the sales data presented by the appellants were not sufficiently probative to establish the subject property’s fair cash value.

The appellants also submitted property record cards for purportedly comparable properties to support their assertion that the subject property’s assessed value was excessive relative to these properties’ assessed values. The Presiding Commissioner found, however, that this evidence supported rather than undermined the value placed upon the subject property by the assessors. In particular, of the cited properties, the Presiding Commissioner found that the property at 6 Leominster Street, the assessed value of which was $331,100 for fiscal year 2009, was most comparable to the subject property. Like the subject property, the dwelling at 6 Leominster Street is an antique Colonial-style home. Its living area is 2780 square feet, approximately thirteen percent smaller than the dwelling on the subject property. The property record card for 6 Leominster Street also indicates that the parcel size is 0.23-acres, approximately one-third smaller than the subject property’s parcel. Finally, the dwelling on the subject property was in slightly better condition than the dwelling at 6 Leominster Street.

In sum, the property at 6 Leominster Street was somewhat smaller than the subject property, its dwelling was in poorer condition, and its 2009 assessed value was approximately thirteen percent lower than the subject property’s assessed value. The Presiding Commissioner found that the difference between the properties’ assessed values was wholly consistent with the differences between the properties themselves, and therefore the assessment data relating to 6 Leominster Street supported the assessed value of the subject property. Moreover, the Presiding Commissioner found that the balance of the properties for which the appellants submitted property record cards were sufficiently distinct in style, size and condition relative to the subject property to render comparison with the subject property less probative than comparison with 6 Leominster Street.

Having considered all of the evidence, the Presiding Commissioner found that the sales-comparison data presented by the appellants were not adequate to establish the fair cash value of the subject property, and the comparable-assessment evidence supported the subject property’s assessed value. The Presiding Commissioner therefore found that the appellants failed to meet their burden of demonstrating that the subject property’s assessed value exceeded its fair cash value for fiscal year 2009. On this basis, the Presiding Commissioner issued a decision for the assessors in this appeal.

OPINION

Assessors have a statutory obligation to assess real estate at its fair cash value as of the first day of January of the year preceding the fiscal year at issue. G.L. c. 59, §§ 11 and 38. The definition of fair cash value is the price upon which a willing buyer and a willing seller would agree if both were fully informed and neither was under compulsion. Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).

The burden of proof is upon the taxpayer to make out a right to an abatement as a matter of law. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). The assessment is presumed to be valid unless the taxpayer is able to sustain his or her burden of proving otherwise. Id. The taxpayer may sustain this burden by introducing affirmative evidence of fair cash value, or by proving that the assessors erred in their method of valuation. General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 600 (1984).

“[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. Assessors of Foxborough, 385 Mass. 679, 682 (1982). Sales of comparable realty in the same geographic area and within a reasonable time of the assessment date generally contain 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). When comparable sales are used, however, allowances must be made for various factors which would otherwise cause disparities in the comparable property’s sale prices. See Pembroke Industrial Park Co., Inc. v. Assessors of Pembroke, Mass. ATB Findings of Fact and Reports 1998-1072, 1082. “Adjustments for differences in the elements of comparison are made to the price of each comparable property . . . . The magnitude of the adjustment made for each element of comparison depends on how much that characteristic of the comparable property differs from the subject property.” APPRAISAL INSTITUTE, THE APPRAISAL OF REAL ESTATE, 322 (13^th ed., 2008).

In the present matter, the appellants submitted certain data relating to sales of purportedly comparable properties in support of their assertion that the subject property’s assessed value exceeded its fair cash value. This data, however, was not sufficient to establish the subject property’s fair cash value. In particular, the appellants did not present evidence of the desirability of each property’s location, the style or condition of the dwellings situated on the purportedly comparable properties, or the physical attributes of each parcel. Absent this information, the Presiding Commissioner could not determine if the properties were comparable to the subject property. Neither could adjustments be made to account for differences between the properties and the subject property. Consequently, the Presiding Commissioner found that the comparable-sales data presented by the appellants were not sufficiently probative to constitute affirmative evidence of the subject property’s fair cash value.

The Presiding Commissioner allowed into evidence various property record cards for purportedly comparable properties, which the appellants had submitted to bolster their argument that the subject property’s assessed value was excessive. The Presiding Commissioner found, however, that this comparable-assessment evidence supported the value placed upon the subject property by the assessors. More specifically, the property at 6 Leominster Street, the assessed value of which was approximately thirteen percent lower than the subject property’s assessed value, and which the Presiding Commissioner found most comparable to the subject property among the properties submitted for consideration, was smaller than the subject property, and its dwelling was in poorer condition. Having considered these facts, the Presiding Commissioner found that the difference between the properties’ assessed values was consistent with and justified by the differences between the properties. In turn, the Presiding Commissioner found that the assessment data relating to 6 Leominster Street supported the assessed value of the subject property. Moreover, the Presiding Commissioner found that that the assessment data for 6 Leominster Street was more probative than the data relating to other properties for which the appellants submitted property record cards.

On the basis of the evidence presented, the Presiding Commissioner found that the appellants did not provide sufficient evidence to support their claim that the subject property was overvalued. As discussed, supra, the appellants’ comparable-sales evidence lacked crucial data, and their comparable-assessment submissions supported rather than undermined the contested assessment. The Presiding Commissioner thus found and ruled that the appellants failed to meet their burden of demonstrating that the subject property’s assessed value exceeded its fair cash value for fiscal year 2009.

On the basis of the foregoing, the Presiding Commissioner issued a decision for the assessors in this appeal.

APPELLATE TAX BOARD

By: _______________________________

James D. Rose, Commissioner

A true copy:

Attest: __________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

JENNIFER & ALAN DEANE v. BOARD OF ASSESSORS OF THE TOWN OF WESTBOROUGH

Docket No. F300424 Promulgated

June 25, 2010

This is an appeal filed under the informal procedure[107] pursuant to G.L. c. 58A, § 7A and G.L. c. 59, §§ 64 and 65, from the refusal of the Board of Assessors of the Town of Westborough (“appellee” or “assessors”) to abate taxes on certain real estate in Westborough, owned by and assessed to Jennifer and Alan Deane, (together, “appellants”) under G.L. c. 59, §§ 11 and 38 for fiscal year 2009 (“fiscal year at issue”).

Commissioner Egan heard this appeal. Chairman Hammond and Commissioners Scharaffa, Rose, and Mulhern joined her in a decision for the appellants.

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.

Alan Deane, pro se, for the appellants.

Gregory Franks, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits offered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2008, the relevant date of assessment for the fiscal year at issue, the appellants were the assessed owners of a 1.156-acre parcel of land, improved with a two-story, Colonial-style dwelling (“subject dwelling”), located at 14 Olde Hickory Path in Westborough, Massachusetts (“subject property”). Constructed in 2000, the subject dwelling has a concrete foundation, wood clapboard and brick exterior, and an asphalt shingle roof. It has thirteen rooms, including four bedrooms, as well as five full bathrooms and two half-bathrooms. The dwelling has a total finished living area of 5,223 square feet. Interior features include hardwood and carpet flooring and four fireplaces. The subject dwelling also has a three-car attached garage, a full, unfinished basement, and a screened porch and patio area.

For the fiscal year at issue, the assessors assessed the subject property at $1,808,000, and assessed a tax thereon, at a rate of $15.50 per thousand, in the total amount of $28,024.00. Westborough’s Collector of Taxes mailed the actual tax bills for fiscal year 2009 on December 18, 2008. The appellants timely paid the taxes due without incurring interest. The appellants timely filed an Application for Abatement with the assessors on January 6, 2009. The Application for Abatement was denied in part and allowed in part by vote of the assessors on January 27, 2009. The assessors partially abated the assessment because they determined that the original assessment was premised upon an incorrect measurement of the subject dwelling’s total gross living area. The assessed value was reduced to $1,720,500. The appellants timely filed an appeal with the Board on April 22, 2009. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

A. The Appellants’ Case-in-Chief

The appellants presented their case-in-chief through the testimony of Alan Deane, whom the Board found to be credible. The appellants also introduced into evidence numerous documents – including property record cards – with information regarding the assessments of several properties in the same neighborhood as the subject property. The following chart substantially reproduces the chart presented by the appellants containing data from eight other properties located on Olde Hickory Path.

Address	Acres	Year Built	SFLA	Full Bath	Half Bath	Bedrooms	Assessed Value ($)
Subject Property	1.156	2000	5,223	5	2	4	1,720,500
8	1.18	2005	5,262	4	2	4	1,634,300
10	1.18	2004	6,317	4	1	4	1,768,800
11	1.15	2000	5,080	4	2	4	1,100,100
12	1.2	2003	5,218	2	2	4	1,538,300
16	1.15	2002	6,953	4	2	4	1,910,000
17	1.6	2002	6,244	4	2	4	1,718,700
18	1.9	2004	5,325	6	1	6	1,692,400
20	1.7	2001	5,291	4	2	4	1,705,300

As evidenced in the above chart, despite being older and smaller in total finished living area than most of the comparable properties, the subject property had one of the highest assessments. Mr. Deane testified that all of the homes on Olde Hickory Path were constructed by the same builder. Mr. Deane further testified that the homes that were constructed first, including the subject property, were not of the same quality as the properties that were constructed later, and that he had to replace decks and balconies at the subject property because of the poor construction.

The appellants also introduced into evidence a document entitled “Town of Westborough: Current vs. Previous Assessment Detail Report by Location” (“Assessment Detail Report”). The Assessment Detail Report showed the fiscal year 2009 assessed value and previous assessed value for approximately twenty properties located on Olde Hickory Path. The subject property was one of only three properties on Olde Hickory Path whose assessment increased in fiscal year 2009. Further, the Assessment Detail Report showed current and previous assessments for properties on other streets in the same neighborhood as the subject property. The overall trend in the neighborhood was for a decrease in assessed value.

B. The Assessors’ Case-in-Chief

The assessors presented their case-in-chief through the testimony of assessor Linda Swadel and the submission of a comparative analysis involving five single-family homes located in the subject property’s neighborhood. The following chart substantially reproduces the comparative analysis offered by the assessors.[108]

	Subject Property	18 Olde Hickory	Adjust.($)	5 Whispering Pine	Adjust.($)	16 Olde Hickory	Adjust.($)
Proximity	N/A	Same Street		Same Subdivision		Same Street
Sale Price ($)	N/A	1,900,000		1,075,000		N/A
Sale Price ($/Sq. Ft.)	N/A	396,000		233.90		N/A
Assessment ($)	1,720,500	1,692,400		1,033,600		1,910,000
Assessment ($/Sq. Ft.)	355.92	352.73		224.89		315.60
Sale Date	N/A	8/29/07		9/7/07		N/A
Location	Excellent	Excellent		Excellent		Excellent
Lot Size (acres)	1.156	1.295	-2,100	2.64 acres	-22,300	1.153
Style	Colonial	Colonial		Colonial		Colonial
Construct. Quality	AA- Superb	AA- Superb		A- Very Good	660,600	AA- Superb
Age/Condition	9 Yrs./ Very Good	5 Yrs./Excellent	-25,800	8 Yrs./VeryGood	-22,500	8 Yrs./Excellent	-12,700
Room Count	13/4/5 full/2 half	11/6/6.5	-2,800	13/5/4	21,700	11/4/4 full/2 half	9,100
SFLA	4834	4798	2,700	4596	17,600	6052	-90,100
Attic Sq. Ft./% Fin.	486/80%	527sf/100%	-3,400	568/0%	7,100	901/100%	-15,600
Basement	Full Unfin.	Full Unfin.	-2,800[109]	Full Unfin.		Full Unfin.
Garage	3 Car Attach.	3 CarAttach.		3 CarAttach.		3 Car Attach.
Fireplaces	4	2	18,200	1	27,300	4
Decks/Porch	SP/Deck/OFPPatio	2 small decks	7,000	Deck/Enc.FP	-3,700	Lg. Enc. FP/Patio	-4,100
Total Adjust.			-9,000		685,800		-113,400
Adjust. Assessment			1,683,400		1,719,400		1,796,600
Adjust. Sale Price			1,891,000		1,760,800

	Subject Property	21 Olde Hickory	Adjust.($)	5 Olde Hickory	Adjust.($)
Proximity	N/A	Same Street		Same Street
Sale Price ($)	N/A	N/A		N/A
Sale Price ($/Sq. Ft.)	N/A	N/A		N/A
Assessment	1,720,500	1,863,600		1,732,500
Assessment ($/Sq. Ft.)	355.92	309.47		381.02
Sale Date	N/A	N/A		N/A
Location	Excellent	Excellent		Excellent
Lot Size	1.156	2.45	-19,500	1.879	-10,900
Style	Colonial	Colonial	-13,700	Colonial
Construction Quality	AA- Superb	AA – Superb		AA – Superb
Age/Condition	9 Yrs./ Very Good	8 Yrs./Excellent		4 Yrs./Very Good	-24,200
Room Count	13/4/5 full/2 half	13/5/5 full/2 half		11/4/6 full/2 half	-9,100
SFLA	4834	6022	-87,900	4547	21,200
Attic	486/80%	674/60%	-2,100	453/100%	-1,200
Basement	Full Unfin.	Full Unfin.		Full Unfin.
Garage	3 Car Attach.	3 CarAttach.		3 CarAttach.
Fireplaces	4	3	9,100	2	18,200
Decks/Porches	SP/Deck/OFPPatio	OFP/Deck	1,200	OFP	5,000
Total Adjust.			-112,900		-1,000
Adjust. Assessment			1,750,700		1,731,500
Adjust. Sale Price

For the purposes of their analysis, the assessors considered 18 Olde Hickory Path to be the most comparable to the subject property, because of its close proximity to the subject property and the fact that it sold during 2007, close to the relevant assessment date. Based on the adjusted assessments and/or sales prices of the comparable properties derived through their analysis, the assessors’ opinion of value for the subject property was $1,720,500, its assessed value as abated.

C. The Board’s Ultimate Findings

On the basis of all of the evidence, the Board found that the appellants met their burden of proving that the assessed value of the subject property, as abated, exceeded its fair cash value. The appellants presented evidence showing that the overall trend in the subject property’s neighborhood was for a decrease in assessed value from the previous fiscal year. However, the subject assessment represented an increase from the previous fiscal year. There was no evidence in the record to explain why the subject property would have been an exception to this trend, nor evidence to support a finding that the value of the subject property increased from its value for the previous fiscal year.

The evidence showed that, despite being older than and in inferior condition to most of the homes on the same street, the subject property had one of the higher assessments. Only two properties on Olde Hickory Path were assessed for more than the subject property. The dwellings at both of those properties, 10 Olde Hickory Path and 16 Olde Hickory Path, were newer and substantially larger in living area than the subject property. The only other property constructed in 2000, like the subject property, was 11 Olde Hickory Path, which was assessed for $620,400 less than the subject property. The Board found this discrepancy to be persuasive evidence that the subject property was overvalued for the fiscal year at issue.

The Board agreed with the assessors that 18 Olde Hickory Path was the property most comparable to the subject property. However, 18 Olde Hickory Path was newer and in better condition than the subject property and also had a slightly larger lot size. 18 Olde Hickory Path sold for $1,900,000 in 2007, and its assessed value for the fiscal year at issue was $1,692,400. Based on all of the evidence, with particular reliance on 18 Olde Hickory Path, the Board found that the fair cash value of the subject property was $1,685,000.

Accordingly, the Board issued a decision for the appellants in this appeal and granted an abatement of $550.25.

OPINION

Assessors are required to assess real estate at its fair cash value as of the first day of January preceding the fiscal year at issue. G.L. c. 59, § 38. The fair cash value of a property is defined as the price upon which a willing buyer and a willing seller would agree if both were fully informed and under no compulsion. Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).

The burden of proof is upon the taxpayer to make out a right to an abatement. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). The assessment is considered to be valid unless the taxpayer meets its burden and proves otherwise. Id. 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)).

In the present appeal, the appellants introduced persuasive evidence that the subject property’s assessed value was greater than its fair cash value. The evidence showed that the assessed values of most properties in the subject property’s neighborhood declined from the previous fiscal year, while the subject assessment represented an increase from the previous fiscal year. There was no evidence in the record to explain why the subject property would have been an exception to this trend, nor was there evidence to support a finding that the value of the subject property increased from its value for the previous fiscal year.

Furthermore, evidence regarding numerous comparable properties in the subject property’s immediate neighborhood was entered into the record. These properties were similar in style to the subject property and were constructed by the same builder. However, the subject property was one of the first homes built in the development, and the evidence showed that it was older than, and in inferior quality to, most of the other homes in the neighborhood. The subject property also had a smaller lot size and less total finished living area than many of the comparable properties. Nevertheless, the subject assessment was among the highest on Olde Hickory Path. The Board found this discrepancy to be persuasive evidence that the subject property was overvalued for the fiscal year at issue and found and ruled that the appellants met their burden of proving that the subject property was overvalued.

In evaluating the evidence before it, the Board selected among the various elements of value and formed its own independent judgment of fair cash value. General Electric Co., 393 Mass. at 605; North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984). 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.” Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 72 (1941).

Because of its location and other similarities, the Board found that 18 Olde Hickory Path was the property most comparable to the subject property. However, 18 Olde Hickory Path was newer and in better condition than the subject property. 18 Olde Hickory Path sold for $1,900,000 in 2007; for the fiscal year at issue, its assessed value was $1,692,400. Based on all of the evidence, with particular reliance on 18 Olde Hickory, the Board found and ruled that the fair cash value of the subject property for the fiscal year at issue was $1,685,000. Accordingly, the Board issued a decision for the appellants in this appeal and granted an abatement of $550.25.

APPELLATE TAX BOARD

By: __________ ___ __

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest:

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

ELIZABETH T. GORDON v. BOARD OF ASSESSORS OF THE TOWN OF UPTON

Docket No. F299396 Promulgated

June 28, 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 Board of Assessors of the Town of Upton (“appellee” or “assessors”) to abate taxes on certain real estate in Upton, owned by and assessed to Elizabeth T. Gordon (“Ms. Gordon” or “appellant”) under G.L. c. 59, §§ 11 and 38 for fiscal year 2009 (“fiscal year at issue”).

Commissioner Egan (“Presiding Commissioner”) heard this appeal and issued a single-member decision for the appellee in accordance with G.L. c. 58A, § 1 and 831 CMR 1.20.

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.

Elizabeth T. Gordon, pro se, for the appellant.

Charles Marsden, Assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits entered into evidence in the hearing of this appeal, the Presiding Commissioner made the following findings of fact. On January 1, 2008, the relevant date of assessment for the fiscal year at issue, the appellant was the assessed owner of two parcels of land located in Upton (together, the “subject parcels”).[110] The first parcel, designated as map 001 lot 002 in the assessors’ records, consists of 8.59 acres of unimproved land (“parcel A”). The second parcel, designated as map 001 lot 003 in the assessors’ records, consists of 53.8 acres of unimproved land (“parcel B”). The subject parcels are wooded with some wetlands. The subject parcels are accessible only from Fay Mountain Road, which is not a public road. Town services, such as paving, plowing, and sewer, are not provided on Fay Mountain Road. At their rear boundaries, the subject parcels come to a steep ledge, where they abut the Massachusetts Turnpike.

For the fiscal year at issue, the assessors valued parcel A at $88,700 and assessed a tax thereon, at the rate of $12.43 per $1,000, in the total amount of $1,102.54. For the fiscal year at issue, the assessors valued parcel B at $320,200 and assessed a tax thereon, at the rate of $12.43 per $1,000, in the total amount of $4,062.20.[111] On December 31, 2008, Upton’s Collector of Taxes mailed the actual fiscal year 2009 tax bills. The appellant timely paid the tax due without incurring interest. On January 29, 2009, the appellant timely filed an Application for Abatement with the assessors, which they denied on March 3, 2009. The appellant seasonably filed her petition with the Appellate Tax Board (“Board”) on April 13, 2009. On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide this appeal.

In her case-in-chief, the appellant presented her testimony and a number of documents and exhibits, including her own written narratives, several maps and photographs, deeds, and data from supposedly comparable properties. Ms. Gordon’s written narratives included information regarding three abutting or nearby parcels on Fay Mountain Road owned by Joseph and Judith Meichelbeck, (“Meichelbeck property”), and Raymond and Susan Nydam (“Nydam property”). Ms. Gordon asserted that the Meichelbeck and Nydam properties were comparable to the subject parcels, and that the subject parcels were overvalued in comparison to those properties. However, Ms. Gordon did not offer the property record cards, or any other relevant assessing document, showing the size, assessed value, or any other particulars about the Meichelbeck and Nydam properties.

In presenting their case-in-chief, the assessors presented various jurisdictional documents, a land value chart showing land values in Upton, and the testimony of Mr. Marsden, which the Presiding Commissioner found to be credible. Mr. Marsden testified that the Meichelbeck and Nydam properties, as well as many other parcels near the subject parcels, were classified as recreational land under G.L. c. 61B (“chapter 61B”).[112] Chapter 61B allows taxpayers who own “land not less than five acres in area [that is] retained in substantially a natural, wild, or open condition or in a landscaped or pasture condition or in a managed forest condition” to apply to the assessors to have the land classified as recreational land. Under chapter 61B, the assessed value of land classified as “recreational land shall [not] exceed twenty-five per cent of its fair cash value as determined pursuant to chapter fifty-nine.” The Presiding Commissioner therefore found that the record did not support a finding that the Meichelbeck and Nydam properties were comparable to the subject property, both because there was insufficient evidence to establish their basic comparability and because they were classified as recreational land, while the subject parcels were not.

Mr. Marsden further testified that the valuation of the subject parcels was consistent with Upton’s fiscal year 2009 land assessment tables. For excess land, the assessment table specified that the first five acres were to be valued at $12,000 per acre, the next twenty acres were to be valued at $8,000 per acre, and any additional acreage was to be valued at $4,000 per acre. The property record cards for the subject parcels indicated that their values were consistent with Upton’s excess land values for the fiscal year at issue, with the exception that there appeared to be a reduction of 25% to the value of the first five acres of parcel B, such that they were valued at $45,000, rather than $60,000. Accordingly, the Presiding Commissioner found that the subject parcels were valued as excess land, rather than residential property or property with road frontage, for the fiscal year at issue.

Based on the foregoing, the Presiding Commissioner found that the record did not support a finding that the assessed values of the subject parcels exceeded their fair cash values for the fiscal year at issue. The appellant attempted to establish the overvaluation of the subject parcels by comparing them to the Meichelbeck and Nydam properties. However, the Presiding Commissioner found that those properties were not comparable to the subject parcels, and therefore, did not establish a basis for proving that the subject parcels were overvalued. The appellant offered additional evidence, including maps and pictures. The Presiding Commissioner found that the record in its totality, however, did little more than establish that the subject parcels were unimproved excess land, which is how they were valued by the assessors, in accordance with Upton’s excess land assessment table. Accordingly, the Presiding Commissioner found and ruled that the appellant failed to meet her burden of proving that the subject parcels were overvalued for the fiscal year at issue and issued a decision for the appellee in this appeal.

OPINION

The burden of proof is upon the taxpayer to make out a right to an abatement. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). The assessment is considered to be valid unless the taxpayer meets its burden and proves otherwise. Id. A right to an abatement can be proven by either introducing affirmative evidence of fair cash value or by proving that the assessors erred in their method of valuation. General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 600 (1984).

Properties whose assessed values are relied upon must be comparable to the subject property in order to be probative of fair cash value. Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 703 (1972). In the present appeal, the appellant relied upon a comparison of the subject parcels with the Meichelbeck and Nydam properties. The Presiding Commissioner found that the appellant failed to establish basic comparability between the subject properties and those properties, which the evidence showed were classified under Chapter 61B, while the subject parcels were not. The assessed values of those properties therefore did not provide reliable evidence of the fair cash values of the subject parcels.

Similarly, the additional evidence offered by the appellant failed to demonstrate that the assessed values of the subject parcels exceeded their fair cash values. The record showed that the subject parcels were wooded land, some portions of which were wetlands. The evidence showed that the subject parcels were valued as excess land by the assessors, in accordance with Upton’s excess land valuation tables. The evidence simply did not support a finding that the assessors erred in assessing the subject parcels or that the subject parcels’ assessed values were greater than their fair cash values.

Accordingly, the Presiding Commissioner found and ruled that the appellant failed to meet her burden of proving her right to an abatement, and issued a decision for the appellee in this appeal.

APPELLATE TAX BOARD

By: _____ ___

Nancy T. Egan, Commissioner

A true copy,

Attest: __

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

ANTHONY P. SNIGIER v. BOARD OF ASSESSORS OF THE CITY OF BROCKTON

Docket No. F299523 Promulgated

June 28, 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 Board of Assessors of the City of Brockton (“appellee” or “assessors”) to abate taxes on certain real estate in Brockton, owned by and assessed to Anthony P. Snigier (“Mr. Snigier” or “appellant”) under G.L. c. 59, §§ 11 and 38 for fiscal year 2009 (“fiscal year at issue”).

Commissioner Egan (“Presiding Commissioner”) heard this appeal and issued a single-member decision for the appellee in accordance with G.L. c. 58A, § 1 and 831 CMR 1.20.

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.

Anthony P. Snigier, pro se, for the appellant.

Philip Nessralla, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits entered into the record in this appeal, the Presiding Commissioner made the following findings of fact. On January 1, 2008, the relevant date of assessment for the fiscal year at issue, the appellant was the assessed owner of a 0.316-acre parcel of land improved with a 5,690 square-foot building and a 9,000 square-foot asphalt parking lot, located at 772 North Main Street in Brockton (“subject property”).[113] The subject building was constructed in 1983 and has a brick and steel exterior. It primarily consists of a six-bay garage which houses the appellant’s automotive repair business. In addition to the garage area, the subject building also has finished areas consisting of three offices, three bathrooms, an employee break room and a customer waiting area. The paved parking lot can accommodate approximately 50 cars.

For the fiscal year at issue, the assessors valued the subject property at $408,500, and assessed a tax thereon, at a rate of $22.84 per thousand, in the total amount of $9,330.14. The appellant timely paid the taxes due without incurring interest. On January 23, 2008, the appellant filed an Application for Abatement with the assessors, which was denied by vote of the assessors on January 30, 2008. The appellant timely filed this appeal with the Appellate Tax Board (“Board”) on April 23, 2009. Based on the foregoing, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide this appeal.

A deed entered into evidence indicated that Mr. Snigier purchased the subject property in December of 2006 for $450,000. However, Mr. Snigier testified that he purchased the subject property under duress, as he had only thirty days to find a location for his business. Mr. Snigier also testified that, for fiscal year 2008, the assessors initially assessed the subject property for $440,800, but that the assessment was later abated, by agreement of the parties, to $350,000.

In addition to his testimony, Mr. Snigier offered a comparative analysis of five commercial properties in Brockton, as well as the property record cards for each of his selected comparable properties. The comparative analysis offered by Mr. Snigier is substantially reproduced in the following chart.

Address	Assessed ValueFY08 ($)	Assessed ValueFY09 ($)	Change ($)
772 NorthMain St.	350,000	408,500	58,500
501 NorthMain St.	384,800	356,000	-28,200
312 NorthMontello St.	342,000	314,300	-27,700
33 MontelloStreet	293,500	272,000	-21,500
210 NorthCary St.	358,600	329,600	-27,000
225 NorthMontello St.	395,000	363,000	-32,000

The five properties selected for comparison by Mr. Snigier were all classified as automotive repair facilities for assessment purposes, with the exception of 33 Montello Street, which was classified as warehouse space. However, the property record card for 33 Montello Street showed a building with three garage bays which appeared to house a car wash or automotive repair business. Mr. Snigier concluded from his analysis that properties comparable to the subject property saw a decrease in their assessment of approximately seven percent between fiscal year 2008 and 2009. Based on this analysis, Mr. Snigier opined that the fair cash value of the subject property for the fiscal year at issue was $325,500, which was seven percent less than its assessed value, as abated, of $350,000 for the preceding fiscal year.

The assessors presented their case through the testimony of assessor Paul Sullivan and through the introduction of various documents. Among the exhibits offered by the assessors were two Multiple Listing Service (“MLS”) listings offering the subject property and the automotive business located thereon for sale. One MLS listing, dated June 16, 2008, recited an asking price of $875,000. According to the listing, the original asking price had been $975,000, but was reduced to $875,000 after the property had been on the market for 94 days. Included in the sale price were the automotive business, the subject real property, and certain other personal property, such as tools and equipment. The other MLS listing, dated January 18, 2009, recited an asking price of $689,900.

In addition, Mr. Sullivan testified that, on average, commercial properties in Brockton increased in assessed value by five percent between fiscal years 2008 and 2009. Mr. Sullivan stated that the assessors used income and expense data to determine the assessed value of the subject property for the fiscal year at issue. The Presiding Commissioner found his testimony to be credible.

On the basis of all of the evidence, the Presiding Commissioner found and ruled that the appellant did not meet his burden of proving that the assessed value of the subject property was greater than its fair cash value. The appellant purchased the subject property for $450,000 in December of 2006, just thirteen months before the relevant date of assessment. The Presiding Commissioner found that the actual sale of the subject property, reasonably close to the relevant date of assessment, provided reliable evidence of its fair cash value for the fiscal year at issue.

The appellant asserted that he purchased the subject property under duress and, therefore, the actual sale price did not reflect an arm’s-length transaction. However, there was nothing in the record besides the appellant’s testimony indicating that he purchased the subject property under duress, and the Presiding Commissioner found that the appellant’s bare assertion was insufficient to establish that the sale price did not reflect the subject property’s fair cash value at the time.

Moreover, the Presiding Commissioner found that even if Mr. Snigier had established that he purchased the subject property under duress, that fact in and of itself would not prove that the subject property was overvalued for the fiscal year at issue. The appellant purchased the subject property for $450,000 in December of 2006. Even assuming arguendo that the appellant paid more than fair cash value when he purchased the subject property, the subject assessment – $408,500 – was still considerably less than the purchase price paid by the appellant. Further, Mr. Snigier’s opinion of value for the subject property for the fiscal year at issue was $325,000, or $125,000 less than what he paid for the subject property in December of 2006. The Presiding Commissioner found that the record did not support the conclusion that the subject property’s fair cash value just thirteen months later was nearly twenty-eight percent less than the purchase price paid by the appellant.

Based on the foregoing, the Presiding Commissioner found and ruled that the appellant failed to meet his burden of proving that the assessed value of the subject property exceeded its fair cash value for the fiscal year at issue.[114] Accordingly, the Presiding Commissioner issued a decision for the appellee in this appeal.

OPINION

Assessors are required to assess real estate at its fair cash value as of the first day of January preceding the fiscal year at issue. G.L. c. 59, § 38. The fair cash value of a property is defined as the price upon which a willing buyer and a willing seller would agree if both are fully informed and under no compulsion. Boston Gas Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).

The burden of proof is upon the taxpayer to make out a right to an abatement. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). The assessment is considered to be valid unless the taxpayer meets its burden and proves otherwise. Id. A right to an abatement can be proven by either introducing evidence of fair cash value, or by proving that the assessors erred in their method of valuation. General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 600 (1984).

In the present appeal, the Presiding Commissioner found and ruled that the appellant failed to prove that the assessed value of the subject property exceeded its fair cash value. The appellant introduced a chart showing the assessed values of five comparable commercial properties in Brockton. Although evidence of the assessed values of comparable properties is probative, evidence of actual sales generally furnishes the most reliable evidence of fair cash value. Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 682 (1982); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469 (1981); First National Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971). The Presiding Commissioner found and ruled that the actual sale price of the subject property in December of 2006 provided the most reliable evidence of its fair cash value. Although the appellant testified that he purchased the subject property under duress, there was no other support for this assertion in the record. Moreover, even assuming arguendo that the appellant paid more than fair cash value for the subject property, the subject assessment – $408,500 – was still considerably less than the $450,000 purchase price paid by the appellant. The evidence presented by the appellant simply did not establish that the assessed value of the subject property was greater than its fair cash value for the fiscal year at issue.

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

MARY R. UPTON v. BOARD OF ASSESSORS OF THE TOWN OF WAYLAND

Docket Nos. F294419, F299715 Promulgated:

July 9, 2010

These are appeals 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 Board of Assessors of the Town of Wayland (“assessors” or “appellee”) to abate taxes on certain real estate located in Wayland, owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal years 2008 and 2009.

Commissioner Mulhern heard the appeals. Chairman Hammond and Commissioners Scharaffa and Rose joined him in the decision for the appellee in docket number F294419 and the decision for the appellant in docket number F299715.

These findings of fact and report are made pursuant to requests by both the appellant and the appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.

Mary R. Upton, pro se, for the appellant.

Mark J. Lanza, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

Based on the testimony and exhibits offered into evidence in these appeals, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2007 and January 1, 2008, Mary R. Upton (“appellant”) was the assessed owner of a waterfront parcel of real estate improved with a single-family dwelling located at 23B Bayfield Road in the Town of Wayland (“subject property”). For fiscal years 2008 and 2009, the assessors valued the subject property at $1,119,300 and $931,000, respectively. The assessors assessed taxes at the rate of $14.98 per $1,000 for fiscal year 2008 and $16.37 per $1,000 for fiscal year 2009, resulting in tax assessments of $16,996.15 for fiscal year 2008 and $15,446.17 for fiscal year 2009.[115] In accordance with G.L. c. 59, § 57C, the appellant timely paid each fiscal year’s taxes without incurring interest.

On December 27, 2007 and February 2, 2009, in accordance with G.L. c. 59, § 59, the appellant timely filed an Application for Abatement with the assessors for fiscal years 2008 and 2009, respectively. On March 25, 2008, the assessors granted the appellant a partial abatement for fiscal year 2008 and lowered the subject property’s assessed value by $241,100 to $878,200. The appellant’s fiscal year 2009 abatement application was deemed denied on May 2, 2009.[116] The appellant seasonably filed her appeals with the Appellate Tax Board (“Board”) on April 10, 2008 for fiscal year 2008 and on May 1, 2009 for fiscal year 2009. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide these appeals.[117]

The subject property is a 2.7-acre, triangle-shaped parcel of real estate, which is improved with a single-family, ranch-style dwelling built over a concrete slab. The subject dwelling, which was built in 1957, has a wood shingle exterior and an asphalt gable roof. The dwelling contains a total living area of approximately 1,810 square feet with a total of six rooms, including three bedrooms, as well as three full bathrooms. Other amenities include one fireplace, a one-story barn, a two-car attached garage, an open porch, and a 720-square foot wood deck located to the rear of the dwelling overlooking Dudley Pond.

The subject property has approximately 213 feet of frontage on Dudley Pond on one side of the triangle-shaped lot. Located on another side of the subject property is the Massachusetts Water Resource Authority (“MWRA”) Aqueduct and located on the third side of the parcel are five residential properties. The subject property has no street frontage and therefore is a nonconforming parcel; access to the subject property is via a driveway easement crossing an abutter’s land. There is a ten-foot right-of-way granted to 23 Bayfield Road to access Dudley Pond. The Dudley Pond area of the subject property is densely settled with a mix of cottage-style dwellings and some larger, more recently renovated dwellings.

The appellant offered into evidence two valuation analyses for fiscal years 2008 and 2009. In her valuation analyses, the appellant included numerous documents, including the subject property’s property record cards for the fiscal years at issue, various town maps, a discussion of the Wayland assessors’ land-pricing schedule, the appellant’s interpretation of the assessors’ land schedule in comparison to the subject property, a listing of all properties that sold in Wayland in calendar years 2006 and 2007, a comparison of the assessment increases for properties in the Dudley Pond area from fiscal year 2008 to fiscal year 2009, and a listing of sales and assessments of purportedly comparable ranch-style properties located in Wayland.

The appellant’s primary argument was that the assessors’ land-valuation schedule used to develop the assessed land values in the Dudley Pond area was flawed. The appellant argued that as a result of the flawed land schedule, the subject property, which is a nonconforming lot with no frontage, was overvalued. The appellant maintained that there were insufficient arm’s-length sales in the Dudley Pond area during calendar years 2006 and 2007 to support the premium attributable to the land value assessments of Dudley Pond area properties for the fiscal years at issue. The appellant further maintained that there were no waterfront land sales in the Dudley Pond area during calendar year 2007 to support the assessors’ upward trend from fiscal year 2008 to fiscal year 2009.

Lastly, the appellant argued that the subject dwelling was overvalued compared to other ranch-style dwellings located in Wayland. The appellant did not, however, establish comparability between the subject property and her cited comparables nor did she make any adjustments to account for any differences between the chosen comparables and the subject property. Based on her calculations, the appellant arrived at an opinion of value for the subject property of $655,000 for fiscal year 2008 and $613,295 for fiscal year 2009.

Jason Brodie, a member of the assessors, was asked by the hearing officer if there had been any sales on Dudley Pond during the fiscal years at issue. Mr. Brodie testified that he did not know and that he was not involved in the valuation of the subject property. The hearing officer also asked if sales in the Dudley Pond area were flat during calendar year 2007, in comparison to calendar year 2006. Mr. Brodie again testified that he did not know the answer to the question and that he was not involved in the valuation of the subject property. The assessors then rested on the presumed validity of their assessments.

On the basis of all of the evidence, the Board found that, for fiscal year 2008, the appellant failed to demonstrate that the fair cash value of the subject property was less than its assessed value, as abated. The Board found that the appellant failed to establish comparability between her cited comparable assessments and sales and, moreover, failed to make any adjustments for differences that existed between the purportedly comparable properties and the subject property. Accordingly, the Board issued a decision for the appellee in Docket No. F294419.

However, with respect to fiscal year 2009, the Board found that the subject property’s assessment was excessive. The Board found that the evidence presented did not support a finding that real estate prices for waterfront property in Wayland similar to the subject property increased during calendar year 2007. The Board found, on the basis of the record in this appeal, that the real estate market for waterfront properties similar to the subject property remained stable in calendar year 2007 and that the subject property’s fiscal year 2008 assessment, as abated, of $878,200, best reflected the subject property’s fair market value as of January 1, 2008. Accordingly, the Board issued a decision for the appellant in Docket No. F299715, and granted an abatement of $878.96.

OPINION

Assessors are required to assess real estate at its fair cash value as of the first day of January preceding the fiscal year at issue. G.L. c. 59, §§ 11 and 38. The fair cash value of property is defined as the price upon which a willing buyer and a willing seller would agree if both were fully informed and under no compulsion. Boston Gas. Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).

Actual sales of the subject “are very strong evidence of fair market value, for they represent what a buyer has been willing to pay to a seller for [the] particular property [under appeal].” New Boston Garden Corp. v. Board of Assessors of Boston, 383 Mass. 456, 469 (1981) (quoting First Nat’l Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971)). “Evidence of the sale prices of ‘reasonably comparable property’ is the next best evidence to the sale of the property in question.” Lattuca v. Robsham, 442 Mass. 205, 216 (2004). Required are “fundamental similarities” between the subject property and the comparison properties. Id. at 216. The appellant bears the burden of “establishing the comparability of . . . properties [used for comparison] to the subject propert[ies].” Fleet Bank of Mass. v. Assessors of Manchester, Mass. ATB Findings of Fact and Reports 1998-546, 554. Accord New Boston Garden Corp. v. Assessors of Boston, 383 Mass. at 470. “Once basic comparability is established, it is then necessary to make adjustments for the differences, looking primarily to the relative quality of the properties, to develop a market indicator of value.” New Boston Garden Corp., 383 Mass. at 470.

In the present appeals, the appellant offered into evidence valuation analyses which included a listing of property sales in Wayland during fiscal years 2006 and 2007 and also a listing of the fiscal years 2008 and 2009 assessment of numerous properties located in the Dudley Pond area and throughout Wayland. The appellant did not, however, establish comparability between the cited properties and the subject property nor did she make any adjustments to account for differences between the purportedly comparable properties and the subject property. See Antonino v. Assessors of Shutesbury, Mass. ATB Findings of Fact and Reports 2008-54, 71 (“[R]eliance on unadjusted assessments of assertedly comparable properties . . . was insufficient to justify a value lower than that assessed.”). Therefore, the Board found and ruled that the appellant failed to prove that the subject property’s fair cash value exceeded its fiscal year 2008 assessment, as abated. Accordingly, the Board issued a decision for the appellee in Docket No. F294419.

However, the Board further found and ruled that the subject property’s fiscal year 2009 assessment was excessive. The Board found that the evidence presented did not support a finding that real estate prices for waterfront properties in Wayland similar to the subject property increased between January 1, 2007 and January 1, 2008. Moreover, the Board found, on the basis of the evidence of record in this appeal, that the real estate market for waterfront property similar to the subject property remained stable in calendar year 2007 and that the $878,200 as-abated assessment of the subject property for fiscal year 2008 best reflected the subject property’s fair market value as of January 1, 2008. Accordingly, the Board issued a decision for the appellant in Docket No. F299715, and granted an abatement of $878.96.

The Board applied these principles in reaching its determination that the assessors overvalued the subject property for fiscal year 2009. Accordingly, the Board issued a decision for the appellant in Docket No. F299715, and granted abatement in the amount of $878.96.

APPELLATE TAX BOARD

By: ____________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _________________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

STEIN B. JACOBSEN v. BOARD OF ASSESSORS OF

THE TOWN OF CONCORD

Docket No. F298614 Promulgated:

July 9, 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 Concord, owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal year 2008.

Commissioner Egan heard this appeal. Commissioners Scharaffa, Rose, and Mulhern joined her in the decision for the appellant.

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.

Stein B. Jacobsen, pro se, for the appellant.

Nina L. Pickering Cook, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On January 1, 2007, Stein B. Jacobsen was the assessed owner of a parcel of real estate improved with a single-family home located at 531 Monument Street in the Town of Concord. For fiscal year 2008, the Board of Assessors of Concord (“assessors”) valued the subject property at $1,014,400, and assessed a tax thereon, at the rate of $10.72 per thousand, in the amount of 10,874.37.[118] Concord’s Collector of Taxes mailed the town’s actual tax bills on February 28, 2008. On or before May 1, 2008, in accordance with G.L. c. 59, § 57C, the appellant timely paid the tax due on the actual tax bill without incurring interest.[119] On April 30, 2008, in accordance with G.L. c. 59, § 59, the appellant timely filed an Application for Abatement with the assessors,[120] which they denied on May 22, 2008. On August 22, 2008, in accordance with G.L. c. 59, §§ 64 and 65, the appellant seasonably filed his appeal with the Appellate Tax Board (“Board”). On this basis, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

In challenging the subject property’s fiscal year 2008 assessment of $1,014,400, the appellant relied on the testimony of his spouse, Joana Vizgirda, and a self-prepared valuation report that contained data pertaining to the subject property, as well as comparable-sales, “value-trend,” and regression analyses, plus a letter from the sales associate who sold the subject property to the appellant, which explains several “limiting factors affecting the fair market value of [the subject property].” In defense of the assessment, the assessors primarily relied on the testimony of, and the appraisal report and valuation analysis prepared by, their real estate valuation expert, Jonathan Avery. Based on this evidence and reasonable inferences drawn therefrom, the Board made the following findings of fact.

The subject property consists of a 2.42-acre parcel of land improved with a 2,353-square-foot,[121] contemporary, split-level, single-family residence, which the appellant classified as a “deck house.” The parcel is identified as Parcel 1454 on assessor’s Map H-6 and is located on the corner of Monument Street and Red Coat Lane. The subject property is situated in a residentially zoned area along Monument Street just north of Concord’s central business district and approximately 300 yards north of the Minuteman National Historical Park. The one-half mile area beyond the national park includes the subject property and two other like-age, contemporary structures situated among a wide variety of antique properties. Contemporary homes similar to the subject are more frequently found in other areas of Concord, primarily in the Annursnac Hill area and in sections of West Concord near the Sudbury town line. An entry driveway and athletic fields associated with the Fenn School, a private, independent day school for boys in grades four through nine, are located across the street from the subject property.

The subject property’s 2.42-acre, rectangular-shaped lot is slightly higher in the front along Monument Street. It slopes gradually down to wetlands in the rear, which comprise over fifty percent of the lot. The wetlands area is lightly wooded and includes typical wetlands vegetation and an intermittent stream. The uplands portion of the lot along Monument Street is primarily open with some shade trees and a stone wall along Monument Street.

The basement floor of the contemporary structure is at ground level on the front portion of the lot and a few feet above the wetlands. The front and south side of the lot have been backfilled to provide a small yard area around the structure. The driveway, however, is at ground level to access the garage under the first floor. The basement has a walk out exit to a large patio at ground level. Landscaping and foundation plantings are basic. The wood retaining wall and steps from the front walk down to the driveway are in a state of decay. The site has town water and a private septic system and is not located in a flood zone.

The subject property’s contemporary-style residential structure has vertical cedar exterior siding and double-pane casement-style windows. The main floor of the interior contains 1,769-square-feet of living space,[122] which consists of seven rooms, including 3 bedrooms, as well as two full bathrooms. The flooring is primarily maple with a parquet floor in the family room. The flooring for the master bathroom was recently replaced. The kitchen has vinyl flooring, and the main bathroom has a ceramic floor. The living room, which opens to the large, ten by twenty-four foot, wood deck, contains a floor-to-ceiling brick fireplace. The kitchen has Formica counters and wood-veneer cabinets with basic appliances.

The 600-square-foot garage is under the bedrooms and accessed from the driveway off of Red Coat Lane. The remaining portion of the basement is approximately seventy percent finished. This 584-square-foot finished area includes a family room with a fireplace, an office area, and a one-half bathroom. The family room has a walk-out exit to a large, twenty by twenty-five foot, patio with a storage shed on the north side. Utilities include a 100-amp fused electrical system, forced hot water heating system with two zones, a separate hot water heater, and central air conditioning.

Overall, the property is of average quality with several areas of deferred maintenance, including: areas of woodpecker damage on the exterior; several failing glazed windows; some unstained portions of siding; a decaying exterior shed; steps and retaining wall deterioration; and a deck in need of repair and refinishing. The estimated cost to cure these items of deferred maintenance ranges from $10,000 to $20,000. In addition, the subject property has an underground oil tank, which might have to be removed in order to sell the property. However, no definitive sales evidence was submitted in this regard.

In an effort to prove that the subject property was overvalued and should have been valued in “the low $800,000’s” for fiscal year 2008, the appellant, through his self-prepared valuation report and the testimony of his spouse, Ms. Vizgirda, first analyzed four properties in Concord, which he considered comparable to the subject property. These properties sold from May, 2006 to January, 2007 for sale prices ranging from $640,000 to $875,000. Two of the properties were contemporary-style homes, similar to the subject property, while the other two properties consisted of Colonial-style and ranch-style homes. With the exception of the ranch, which was considerably smaller than the subject property, the other three properties’ living and effective areas were reasonably comparable to the subject property’s. The two contemporary homes were located several miles away from the subject property and had significantly smaller lot sizes, while the Colonial- and ranch-style properties were located significantly closer to the subject property and had similar-sized lots. None of these properties had extensive wetlands like the subject property, and they were not exposed to the same amount of vehicular traffic that the near-by private school created for the subject property. After adjusting the sale price of the ranch for its differing building style and the sale prices of all of the properties for locational but no other differences with the subject property, the appellant and his spouse derived adjusted sale prices for these properties ranging from $679,774 to $846,800. The appellant then averaged the adjusted sale prices and calculated an indicated value for the subject property of $778,628 using this methodology.

The appellant and his spouse developed his “location adjustment factor” for each of these properties by comparing the sale prices of three properties from what he deemed to be the subject property’s neighborhood to the sale prices of three supposedly similar properties from what he deemed to be his comparable properties’ neighborhood. The appellant did not institute any adjustments to the sale prices to account for differences between properties from what he considered to be the subject property’s neighborhood and properties from his comparable properties’ neighborhoods. The appellant simply claimed that these properties, which he compared to one another for purposes of devising his location adjustment factor, were similar enough.

A summary of the appellant’s comparable-sales analysis is contained in the following table.

	Subject Property	57 Whits End Rd.	44 Jennie Dugan Rd.	47 Old Bedford Rd.	201 Inde-pendence Rd.

Living Area (SF)	1771	1773	1814	2160	1653
Eff. Area (SF)*	2404	2537	2482	2440	1963
Style	Contemp.	Contemp.	Contemp.	Colonial	Ranch
Acreage	2.42	1.35	1.34	2.47	2.39
Br/Ba**	3/2.5	3/3	4/2	4/2.5	2/2
Year (Yr.) Built	1968	1971	1963	1996	1943
Eff. Yr. Built	1983	1990	1986	1996	1982
Miles from Town Ctr.	1.2	3.3	3.7	1.5	1.2
Wetlands	Extensive	None	Under 30%	Under 5%	None
House Siting	Near Road	Sheltered	Near Road	Sheltered	Near Road
Traffic	Commuter	Local	Local	Minor	Local
View	School	Woods	Woods	Fields	Woods
Sale Date	11/01/1988	11/02/2006	01/12/2007	10/25/2006	05/01/2006
Sale Price ($)	450,000	640,000	730,000	781,350	875,000
Bldg. Adj. ($)***	NA	None	None	None	883,614
Location Adj. Factor	NA	1.28	1.16	0.87	0.87
Adj. Sale Price ($)	NA	819,200	846,800	679,774	768,744
FY08 Assessment ($)	1,014,400	633,500	647,200	782,100	939,500
FY09 Assessment ($)	1,188,300	583,000	654,000	700,500	873,200

* Effective Area

** Bedrooms/Bathrooms

*** Building Adjustment

In addition to his comparable-sales analysis, the appellant and his spouse also determined a value for the subject property for fiscal year 2008 using a “repeat sale data analysis” along with “the Case-Schiller method” to adjust for changes in the residential real estate market. According to the appellant, the Case-Schiller Home Price Indices measure the residential housing market in a given metropolitan area and track changes in the value of the residential real estate. For this analysis, the appellant chose yet another purportedly comparable property located at 64 Deacon Haynes Road. This property was purchased in September, 1986 for $375,000, while the subject property was purchased more than two years later in November, 1988 for $450,000. Relying on Case-Schiller Indices, the appellant adjusted the purchase price of the Deacon Haynes Road property to $401,610 to reflect its purported value at the time the appellant purchased the subject property. Based on the subject property’s purchase price of $450,000 and the Deacon Haynes Road property’s time (or market) adjusted value of $401,610, the appellant calculated that the market value of the subject property was 12% higher than the market value of the Deacon Haynes Road property. Accordingly, when the Deacon Haynes Road property sold for $730,000 in August 2007, the appellant determined that the subject property’s market value was 12% higher than that, or $818,000.

The appellant and his spouse next performed a regression analysis using seven 2006 sales of residential property on or just off of Monument Street. According to this data and his analysis, the effective area of the houses on these properties showed a “high degree of correlation” to their sale prices. The appellant‘s correlation coefficient was 0.92. With one exception, however, all of these properties had significantly larger effective living areas than the subject property –- double, triple, or even quadruple the area — and even the lone exception was still approximately one-third larger. This method generated a value for the subject property of $829,137.

Finally, the appellant introduced without objection a May, 2009 letter from the listing agent who was involved with the sale of the subject property when the appellant purchased it in 1988, which described “several limiting factors affecting the fair market value of [the subject property].” These factors include: the diminished usability of the lot because of the wide-spread presence of wetlands; the proximity of the subject property to the Fenn School and the attendant increase in traffic and noise as well as the adverse view; the location of a flight path above properties in the area; the minimal setback of the subject property’s house from the street; and the condition and outmoded design of the house. Because of these limiting factors, the agent wrote that, as of the date of her letter, May, 2009, the subject property would “sell in the $800,000 range.”

After reconciling the various values suggested for the subject property by these four methods, the appellant and his spouse estimated that the subject property’s fair cash value, as of January 1, 2007, was $808,600.

Relying on a sales-comparison approach, the assessors’ real estate valuation expert, Mr. Avery, valued the subject property, as of January 1, 2007, at $1,000,000. Mr. Avery initially observed that Concord is an attractive community in which to live and real estate located in Concord commands a higher value than similar properties located in the immediate surrounding communities. Real estate values in Concord are significantly affected by neighborhood locations with the properties closest to the town center generally commanding higher values. Monument Street, Nashawtuc Hill, and some areas along Elm Street command the highest values. The housing market in Concord was quite stable on January 1, 2007 with average prices being maintained throughout 2005 and 2006.

In his valuation methodology, Mr. Avery first determined that the subject property’s current use as a single-family residential property was its highest and best use. He next determined that the sales-comparison approach was the best method to use to value the subject property for the fiscal year at issue. He did not develop a cost approach because of the age of the property, the limited reliability of depreciation estimates, and the requirement of a professional cost analyst. He did not apply an income capitalization approach because the subject property was not an income-producing property.

In applying his sales-comparison methodology, Mr. Avery examined forty sales in Concord between January 2006 and April 2007. Of these sales, he determined that five had “good similarity” to the subject property. These sales ranged in price from $865,000 to $1,150,000. Their living areas ranged from 1,653 square feet to 2,672 square feet and all of their primary living areas were on one floor, like the subject property. Even though his comparable-sale properties had “good similarity” to the subject property, they also had notable differences with it. In his sales-comparison analysis, Mr. Avery adjusted for these differences and derived indicated values for the subject property, upon which he based his estimate of the subject property’s fair cash value for fiscal year 2008.

Mr. Avery testified that Comparable Sale 1, 155 Monument Street, which sold in November, 2006 for $1,150,000, is located in a desirable area of Concord situated between the national park and the downtown area. He considered this location to be superior to the subject property’s situs. He further observed that Comparable Sale 1’s house is in better condition than the subject property’s home, and it contains an additional bathroom, as well as superior exterior amenities. Mr. Avery also noted that Comparable Sale 1 has a superior view, but the subject property has a larger lot, a finished basement, and an additional fireplace. After applying adjustments to compensate for these factors, Mr. Avery determined an adjusted sale price for this comparable property and an indicated value for the subject property of $1,002,450.

Mr. Avery testified that Comparable Sale 2, 88 Indian Pipe Lane, which sold in July, 2006 for $1,100,000, is located in a desirable and quiet neighborhood in West Concord adjacent to conservation land, which provides this property with a buffer and a favorable view. Comparable Sale 2’s house is superior in quality and construction compared to the subject property’s home, and it contains an additional one-half bathroom, an additional garage bay, a two-bay carport, and an in-ground pool, spa, and fence. Although this comparable sale property’s lot is smaller than the subject property’s parcel, it is all uplands and therefore has good utility. After applying adjustments, Mr. Avery determined an adjusted sale price for this comparable property and an indicated value for the subject property of $988,800.

Mr. Avery testified that Comparable Sale 3, 91 Rollingwood Lane, which sold in March, 2006 for $999,000, is, like Comparable Sale 2, located in West Concord. Comparable Sale 3, however, is situated in the far southern part of Concord, which is inferior to the subject property’s location. He considered this comparable sale property’s house to be in superior condition to the subject property’s home, and noted that it has an additional bathroom and fireplace, as well as a superior finished basement. Mr. Avery further observed that Comparable Sale 3 has one fewer bedroom than the subject property’s home, has inferior amenities, and lacks central air conditioning. After applying adjustments, Mr. Avery determined an adjusted sale price for this comparable property and an indicated value for the subject property of $1,000,850.

The following table summarizes Mr. Avery’s sales-comparison analysis pertaining to Comparable Sales 1, 2, and 3.

	Subject	Sale 1	Sale 2	Sale 3
Data & Adjustments (Adjust.)	531 Monument Street	155 Monument Street	88 Indian Pipe Lane	91 Rollingwood Lane

Proximity to Subj. (Miles)	N/A	0.71 S	3.95 SW	2.91 SW
Sales Price ($)	N/A	1,150,000	1,100,000	999,000
Sale Date/Time	N/A	11/22/2006	07/17/2006	03/01/2006
Site (Acres)	2.42 – Wet	0.33	1.33	2.78
View	Neighborhood	Superior	Superior	Superior
Design & Appeal	Contemporary	Antique Ranch	Contemporary	Contemporary
Construct. Quality	Average	Similar	Similar	Similar
Age (Years)	40	92	36	46
Rooms/Bedrooms/Baths	7/3/2.5	8/3/3.0	7/3/3.0	7/2/3.5
Living Area (SF)^*	1,769	2,470	2,643	2,672
Basement	Finished	Unfinished	Finished	Finished
Functional Utility	Adequate	Adequate	Adequate	Adequate
Heating/Cooling	FHW/CC	FHA/CC	HWBB/CAC	HWBB/None
Energy Efficiency	Standard	Standard	Standard	Standard
Garage/Carport	2 Under	2 Attached	3 Under/2	2 Attached
Porch/Patio/Deck	0/1/1	1/1/1	1/0/1	0/1/0^**
Fireplaces	2	1	2	3
Fence, Pool, Spa	None	None	All 3	None
Adjustments: Superior (-) ($) Inferior (+)
Sale Date/Time	01/01/2007	No adjust.	No adjust.	No adjust.
Location	Residential	-50,000	+100,000	+150,000
Site	2.42 – Wet	+15,000	No adjust.	-15,000
View	Neighborhood	-15,000	-30,000	-30,000
Condition	Average	-65,000	-115,000	-65,000
Rooms/Bedrooms/Baths	7/3/2.5	-2,500	-2,500	+5,000
Living Area (SF)^*	1,769	-35,050	-43,700	-45,150
Basement	Finished	+10,000	No adjust.	-5,000
Heating/Cooling	FWH/CAC	No adjust.	No adjust.	+7,500
Energy Efficiency	Standard	No adjust.	No adjust.	No adjust.
Garage/Carport	2 Under	No adjust.	-10,000	No adjust.
Porch/Patio/Deck	0/1/1	-7,500	No adjust.	+2,000
Fireplaces	2
Fence, Pool, Spa	None	No adjust.	-10,000	No adjust.
Net Adjust. ($)	N/A	-147,000	-111,200	+1,850

Adjust. Sales Price ($)	N/A	1,002,450	988,800	1,000,850

* Above grade

** Also has a greenhouse

Mr. Avery testified that Comparable Sale 4,[123] 201 Independence Road, which sold in May, 2006 for $875,000, is located in an older neighborhood, just off of Lexington Road east of the downtown, which is superior to the West Concord neighborhoods, but not as desirable as along Monument Street, where the subject property is located. He further observed that this comparable sale property’s house is similar in quality and construction to the subject property’s home, but it has one fewer bedroom, one fewer one-half bathroom, one fewer fireplace, an unfinished, as opposed to a finished, basement, no central air-conditioning, and only a single-car garage. Mr. Avery also noted that Comparable Sale 4’s view of its neighborhood is superior to the subject property’s but its parcel has a similar utility to the subject property’s because of its steep slope in the backyard. After applying adjustments, Mr. Avery determined an adjusted sale price for this comparable property and an indicated value for the subject property of $988,300.

Mr. Avery testified that Comparable Sale 5, 125 Hugh Cargill Road, which sold in June, 2006 for $865,000, is in a neighborhood just off of Lowell Road, which has become an increasingly popular neighborhood, but not as desirable as the subject property’s Monument Street location. He further observed that this comparable sale property has a similarly sized lot to the subject property’s parcel, but its parcel has greater utility. Mr. Avery found that Comparable Sale 5’s woodlands and neighborhood views are superior to the subject property’s neighborhood view. He also noted that this comparable sale property’s house has one fewer one-half bathroom and one fewer fireplace than the subject property’s home, and it also has no central air-conditioning, inferior energy efficiency, inferior exterior amenities, and an unfinished, as opposed to a finished, basement. After applying adjustments, Mr. Avery determined an adjusted sale price for this comparable property and an indicated value for the subject property of $1,011,350.

The following table summarizes Mr. Avery’s sales-comparison analysis pertaining to Comparable Sales 4 and 5.

	Subject	Sale 4	Sale 5
Data & Adjustments (Adjust.)	531 Monument Street	201 Independence Road	125 Hugh Cargill Road

Proximity to Subj. (Miles)	N/A	1.22 SE	0.99 NW
Sales Price ($)	N/A	875,000	865,000
Sale Date/Time	N/A	05/01/2006	06/20/2006
Site (Acres)	2.42 – Wet	2.38 – Steep	2.5
View	Neighborhood	Superior	Superior
Design & Appeal	Contemporary	Cape	Cape
Construct. Quality	Average	Similar	Similar
Age (Years)	40	65	54
Rooms/Bedrooms/Baths	7/3/2.5	6/2/2.0	7/4/2.0
Living Area (SF)^*	1,769	1,653	1,892
Basement	Finished	Unfinished	Unfinished
Functional Utility	Adequate	Adequate	Adequate
Heating/Cooling	FHW/CC	HWBB/None	ELBB/None
Energy Efficiency	Standard	Standard	Inferior
Garage/Carport	2 Under	1 Detached	2 Attached
Porch/Patio/Deck	0/1/1	Porch	Porch
Fireplaces	2	1	1
Fence, Pool, Spa	None	None	None
Adjustments: Superior (-) ($) Inferior (+)
Sale Date/Time	01/01/2007	No adjust.	No adjust.
Location	Residential	+100,000	+100,000
Site	2.42 – Wet	No adjust.	-15,000
View	Neighborhood	-15,000	-7,500
Condition	Average	-15,000	+50,000
Rooms/Bedrooms/Baths	7/3/2.5	+12,500	-7,500
Living Area (SF)^*	1,769	+5,800	-6,150
Basement	Finished	+10,000	+10,000
Heating/Cooling	FWH/CAC	+7,500	+7,500
Energy Efficiency	Standard	No adjust.	+7,500
Garage/Carport	2 Under	+5,000	No adjust.
Porch/Patio/Deck	0/1/1	No adjust.	+5,000
Fireplaces	2	+2,500	+2,500
Fence, Pool, Spa	None	No adjust.	No adjust.
Net Adjust. ($)	N/A	+113,300	+146,350

Adjust. Sales Price ($)	N/A	988,300	1,011,350

* Above grade

Based on his sales-comparison analysis, which produced adjusted sales prices and indicated values ranging from $988,300 to $1,011,350, and his decision in his reconciliation to give the most weight to Comparable Sales 1, 2, and 3 and the least weight to Comparable Sale 5, Mr. Avery estimated that the subject property’s fair cash value was $1,000,000 as of January 1, 2007, the relevant assessment date, or $14,400 less than its assessment.

After considering all of the evidence, the Board found that each of the appellant’s valuation methods contained substantial flaws which seriously undermined the accuracy of the values derived from them. First, with respect to the appellant’s comparable-sales analysis, the Board found that none of his five purportedly comparable properties selected for comparison with the subject property was from the subject property’s Monument Street neighborhood and two of these properties were of a totally different building style. In addition, the Board found that another two of the appellant’s purportedly comparable properties were situated substantially farther from the town center than the subject property and those same two properties had significantly smaller parcels. The Board also found that most of these properties contained different numbers of bedrooms or bathrooms than the subject property had and the appellant neglected to adjust for these differences. The appellant also failed to compare and adjust for other characteristics of the purportedly comparable properties that differed from those of the subject property, including important features such as: building amenities; garages; construction quality; functional utility; and utility systems. The Board further found that with one minor exception, the appellant only applied a locational adjustment thereby neglecting to account for these readily observable differences between the purportedly comparable properties and the subject property.

Moreover, the Board found that the appellant did not demonstrate that the locational adjustments or factors which he applied were reasonable and precise. The appellant developed his “location adjustment factor” for each of his purportedly comparable properties by comparing the sale prices of three properties from what he deemed to be the subject property’s neighborhood to the sale prices of three supposedly similar properties located in what he deemed to be his purportedly comparable properties’ neighborhood. The Board found that the appellant’s failure to apply adjustments to these sale prices to account for differences between properties from the subject property’s neighborhood and properties from his purportedly comparable properties’ neighborhood rendered this mathematical exercise imprecise and unpersuasive.

Therefore, for all of these reasons, the Board found that the appellant’s comparable-sales analysis was seriously flawed and, as a result, did not provide the Board with reliable and accurate estimates of the subject property’s fair cash value for fiscal year 2008.

Second, the Board found that the appellant’s “repeat sale data analysis” was flawed. In this analysis, the appellant valued the subject property by applying the appreciation of one purportedly comparable property between 1988 and 2007 to the subject property’s purchase price in 1988. The Board found, however, that this purportedly comparable property differed from the subject property in several material respects, including its lot size, condition, and various unique features, and it was not located in the subject property’s neighborhood. The appellant failed to establish comparability and to show that appreciation among Concord neighborhoods for this time period was equivalent. The Board also found that the appellant relied on insufficient data to support his appreciation conclusion. “An adjustment derived from a single pair of sales is not necessarily indicative, just as a single sale does not necessarily reflect market value.” Appraisal Institute, The Appraisal of Real Estate 317 (13^th ed. 2008). “When few [] pairings are available, the appraiser should use other analytical procedures or secondary data.” Ibid. The Board further found that, under the circumstances present in this appeal, the appellant’s “repeat sale data analysis” appeared to be a more appropriate technique for mass appraisal purposes and for generating generalizations about property in an area, than for an accurate estimate of the fair cash value for a specific property in a particular location. For these and other reasons, the Board found that the appellant’s “repeat sale data analysis” was seriously flawed for the purpose to which the appellant applied it and, as a result, did not provide the Board with reliable and accurate estimates of the subject property’s fair cash value for fiscal year 2008.

Third, the Board found that the appellant’s regression analysis, like his two previous analyses, was also seriously flawed. For this approach, the appellant used seven 2006 sales of residential property on or just off of Monument Street. With one exception, however, all of these properties had much larger effective areas than the subject property –- double, triple, or even quadruple the subject property’s area — and even the lone exception was still approximately one-third larger. The Board found that the appellant’s regression analysis did not incorporate enough data about homes equivalent to or smaller in size than the subject property, and was, therefore, unreliable for the purpose to which the appellant applied it. In addition and under the circumstances present in this appeal, the Board found that this technique, which in this instance produced a correlation coefficient of 0.92, is more appropriately used for mass appraisal purposes and for generating generalizations about property within an area, and not for an accurate estimate of the fair cash value for a specific property. “Regression modeling is often the logical choice for tax assessment when the alternative is to appraise each property individually and resource constraints prohibit doing so.” The Appraisal of Real Estate at 612. For these and other reasons, the Board found that the appellant’s regression analysis was flawed and, as a result, did not provide the Board with a reliable and accurate enough estimate of the subject property’s fair cash value for fiscal year 2008.

Fourth, the appellant submitted a letter from a real estate agent describing “several limiting factors affecting the fair cash value of [the subject property],” which would restrain its sale price to an amount in “the $800,000 range” as of May, 2009. The Board found that the realtor’s opinion was for a date almost 2-1/2 years beyond the fiscal year 2008 assessment date of January 1, 2007, and without evidence of the market conditions for that time period, was unreliable. In addition, the Board found that the realtor did not provide any supporting data or information to substantiate her conclusions and because she did not testify, the Board was not able to gauge her credibility. For these and other reasons, the Board found that the real estate agent’s letter submitted by the appellant did not provide the Board with reliable or credible information pertaining to the subject property’s fair cash value for fiscal year 2008.

The Board also found that the sales-comparison analysis submitted by the assessors’ real estate valuation expert, Mr. Avery, was reliable and credible. The Board found that his selection of comparables and his emphasis on the indicated values derived from his first three comparable sales were reasonable under the circumstances. The Board also found that these three properties were the most comparable to the subject property and that the items that Mr. Avery considered for adjustment and the adjustments that he applied for these items were reasonable, as well. The Board further found that his $1,000,000 estimate of the subject property’s fair cash value for fiscal year 2008 was credible and well-substantiated and it adequately considered the condition of the subject property as of January 1, 2007.

Based on these findings, the Board ultimately found that the subject property was overvalued for fiscal year 2008 and its fair cash value as of the January 1, 2007 assessment date was $1,000,000. Accordingly, the Board decided this appeal for the appellant and granted a tax abatement in the amount of $156.69, which includes the CPA tax.

OPINION

In the present appeal, the appellant tried to demonstrate that the subject property was overvalued for fiscal year 2008 by offering the testimony of his spouse and a self-prepared valuation report that contained information pertaining to the subject property, as well as comparable-sales, “value-trend” or “repeat sale data,” and regression analyses. He also submitted into evidence, without objection, a letter from the sales associate who sold the subject property to the appellant, which discusses several “limiting factors affecting the fair market value of [the subject property].”

With respect to the appellant’s “value trend” or “repeat sale data” analysis, which attempted to value the subject property as of January 1, 2007 by applying the appreciation attributable to a purportedly comparable property, located in a different neighborhood, to the subject property’s purchase price in 1988, the Board found that this method was flawed because, among other reasons, the appellant failed to show comparability between the two properties and also failed to demonstrate that appreciation between the two Concord neighborhoods for the relevant time period was equivalent. The Board further found that the appellant relied on insufficient data in attempting to prove this point. Additionally, the Board found that, under the circumstances present in this appeal, this particular approach for valuing property is more appropriately used for mass appraisal purposes and for generating generalizations about property in a given area as opposed to developing an accurate estimate of the fair cash value for a specific property in a particular area. Accordingly, the Board found and ruled that this method did not provide the Board with a reliable and accurate estimate of the subject property’s fair cash value for fiscal year 2008.

With respect to the appellant’s regression analysis, the Board found that it too was flawed because, among other reasons, it did not incorporate enough data about homes equivalent in size to or smaller than the subject property’s. In addition, there was insufficient evidence to equate the value conclusions drawn by the appellant using this method to the subject property. The Board also found that, like the previous method, this technique is more appropriately used for mass appraisal purposes and for drawing generalizations about property within an area, but not for developing an accurate estimate of the fair cash value of a specific property. Accordingly, the Board found and ruled that the appellant’s regression analysis did not provide the Board with reliable and accurate enough estimates of the subject property’s fair cash value for fiscal year 2008.

With respect to the realtor’s letter discussing “several limiting factors affecting the fair cash value of [the subject property],” which would restrain its sale price to an amount in “the $800,000 range” as of May, 2009, the Board found that the realtor’s opinion was for a date almost 2-1/2 years beyond the fiscal year 2008 assessment date of January 1, 2007, and without evidence of market conditions for that time period, was unreliable. Moreover, the Board found that the realtor did not provide any supporting data or information to substantiate her conclusions and because she did not testify, the Board was not able to gauge her credibility. For these reasons, among others, the Board found and ruled that the information and opinions contained in the real estate agent’s letter submitted into evidence by the appellant did not provide the Board with reliable or credible information pertaining to the subject property’s fair cash value for fiscal year 2008.

With respect to the appellant’s comparable-sales analysis, the Board recognized that actual sales generally “furnish strong evidence of market value, provided they are arm’s-length transactions and thus fairly represent what a buyer has been willing to pay for the property to a willing seller.” Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 682 (1982); see also New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469 (1981); First National Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971). Sales of comparable realty in the same geographic area and within a reasonable time of the assessment date may contain relevant data and information for determining the value of the property at issue. See McCabe v. Chelsea, 265 Mass. 494, 496 (1929). “A major premise of the sales comparison approach is that an opinion of the market value of a property can be supported by studying the market’s reaction to comparable and competitive properties.” Appraisal Institute, The Appraisal of Real estate 297 (13^th ed., 2008).

The Board found that the appellant’s comparable-sales analysis neglected to adequately compare and adjust for many of his purportedly comparable properties’ characteristics and features that differed from those of the subject property. The Board found that with one minor exception, the appellant only applied a locational adjustment and failed to account for other readily observable differences between his purportedly comparable properties and the subject property. Moreover, the Board found that the appellant similarly developed his “location adjustment factors” without accounting for differences between the properties that he used, thereby rendering his mathematical exercise imprecise. For these, as well as other reasons, the Board found and ruled that the appellant’s comparable-sales analysis was seriously flawed and, as a result, did not provide the Board with reliable and accurate estimates of the subject property’s fair cash value for fiscal year 2008.

On the other hand, the sales-comparison analysis introduced by the assessors’ real estate valuation expert contained reasonably comparable properties to which he applied appropriate adjustments to account for their differences with the subject property resulting in indicated values that supported a fair cash value of $1,000,000. See, e.g., Graham v. Assessors of West Tisbury, Mass. ATB Findings of Fact and Reports 2007-321, 401 (recognizing that comparable-sales information is often the best available means for proving a property’s fair cash value), aff’d, 73 Mass. App. Ct. 1107 (2008).

“The board [is] not required to believe the testimony of any particular witness but [may] accept such portions of the evidence as appear to have the more convincing weight.” Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 72 (1941). “The credibility of witnesses, the weight of 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). Based on the evidence presented in this appeal, the Board selected the most credible and probative evidence in finding and ruling that the assessors had overvalued the subject property and also in finding and ruling that the assessors’ real estate valuation expert had appropriately supported his $1,000,000 fair cash value estimate for the subject property for fiscal year 2008 with credible comparable-sales data.

On this basis, the Board decided these appeals for the appellant and granted a tax abatement in the amount of $156.60, including the CPA tax.

APPELLATE TAX BOARD

By: ____ ______

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _________________________

Clerk of the Board

Accordingly, the Presiding Commissioner found and ruled that the appellant failed to meet his burden of proving that he was entitled to an abatement. The Presiding Commissioner therefore issued a decision for the appellee.

APPELLATE TAX BOARD

By: ___________________________

Nancy T. Egan, Commissioner

A true copy,

Attest: ________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

KIMBERLY & MICHAEL COOK v. BOARD OF ASSESSORS OF

THE TOWN OF WAYLAND

Docket Nos. F296785, F299228 Promulgated:

July 15, 2010

These are appeals 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 Board of Assessors of the Town of Wayland (“assessors” or “appellee”) to abate taxes on certain real estate located in Wayland owned by and assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal years 2008 and 2009.

Commissioner Mulhern heard the appeals. Chairman Hammond and Commissioners Scharaffa, Egan and Rose joined him in the decision for the appellee in docket number F296785 and the decision for the appellants in docket number F299228.

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.

Ellen M. Hutchinson, Esq. for the appellants.

Mark J. Lanza, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

Based on the testimony and exhibits offered into evidence in these appeals, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2007 and January 1, 2008, the appellants were the assessed owners of 73,310 square feet of land located at 12 Ellie Lane, improved with a two-story, Colonial-style dwelling (“subject property”). The subject dwelling has a total of ten rooms, including five bedrooms and also five full bathrooms and one half bathroom, with a total finished living area of 5,774 square feet. The exterior is clapboard and it has a slate gambrel roof. The home is heated by an oil-fired, forced hot-air system, and there is also a central air-conditioning system. Additional features of the home include vaulted ceilings, one fireplace, a 980-square-foot attached garage, a finished lower level, a brick patio, and also an unfinished attic. The appellants purchased the subject property on May 28, 2006 for $2,387,000.

The subject property is situated in a two-lot subdivision located on Ellie Lane, a private way connected to Lincoln Road in the northern section of Wayland, near the Wayland/Lexington town line. The subdivision plan was approved by the Town of Wayland on November 19, 2004 (“Subdivision Approval”) and was filed with the Town Clerk at that time. Pursuant to the Subdivision Approval, a number of restrictive covenants apply to the Ellie Lane Subdivision, including the “duty of each owner in the subdivision to share, jointly and severally, the costs for maintenance and snow plowing of Ellie Lane and the maintenance and repair of drainage systems located beneath the Ellie Land properties.” The covenants also impose on the owners of the Ellie Lane properties a “general obligation to keep the road in a ‘good safe and passable condition.’” Further, the deed for the sale of the subject property states that the appellants are granted the “right and easement to pass and repass over and use Ellie Lane, a private way, as shown on said [subdivision] plan.”

For fiscal years 2008 and 2009, the assessors valued the subject property at $2,255,900 and $2,345,800, respectively. The assessors assessed taxes at the rate of $14.98 per $1,000 for fiscal year 2008 and $16.37 per $1,000 for fiscal year 2009, resulting in tax assessments of $33,793.38 for fiscal year 2008 and $38,400.75 for fiscal year 2009. In accordance with G.L. c. 59, § 57C, the appellants timely paid each fiscal year’s taxes without incurring interest.

On January 24, 2008 and February 2, 2009, in accordance with G.L. c. 59, § 59, the appellants timely filed an Application for Abatement with the assessors for fiscal years 2008 and 2009, respectively. On March 24, 2008, the assessors granted the appellants a partial abatement for fiscal year 2008 and lowered the subject property’s assessed value by $7,500 to $2,248,400. The appellants’ fiscal year 2009 abatement application was deemed denied on May 2, 2009.[124] The appellants seasonably filed their appeals with the Board on June 18, 2008 for fiscal year 2008 and on March 24, 2009 for fiscal year 2009. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide these appeals.[125]

The appellants presented their case primarily through the testimony of appellant Kimberly Cook. The appellants also offered into evidence numerous exhibits, including the subject property’s original and amended property record cards for fiscal years 2008 and 2009, a copy of the deed of sale for the subject property, a sales-comparison analysis for each of the fiscal years at issue, and also a comparable-assessment analysis for both fiscal years 2008 and 2009.

The appellants challenged both the fiscal year 2008 and fiscal year 2009 assessments on several grounds. First, the appellants argued that they were not aware of the subject property’s restrictive covenants contained in the Subdivision Approval and therefore their purchase of the subject property was not an arms-length transaction. They further argued that such restrictions have a negative impact on the subject property’s fair cash value, which was not taken into account by the assessors.

The appellants also argued that the assessors made various mistakes and errors in their assessment methodology. First, the appellants contended that the assessors overstated the subject property’s land area. The appellants argued that, according to the subject property’s deed, they own only 62,597 square feet of land and not the 73,310 square feet listed on the subject property’s property record card. They maintained that the assessors’ error resulted in an overstatement of land area by 9,713 square feet and an overvaluation of the subject property. The appellants also argued that the assessors’ assessment methodology was flawed as evidenced by the conflicting data listed on the various property record cards produced for fiscal years 2008 and 2009. For example, a property record card dated 6/04/2007 listed the subject property as having an asphalt roof, no patio or fireplaces, and a finished half story with a living area of 893 square feet. The property was assigned a grade of “A”. The property record card dated 1/29/2008, listed the subject property as having a slate roof, a 400 square foot patio, two fireplaces, and a 536 square-foot finished attic. This property record card had various handwritten notes suggesting that the subject property had a gas heating system, central vacuum system and only one fireplace. Neither of these property record cards reported cathedral or vaulted ceilings.

During calendar year 2008 there were four additional property record cards issued with differences including, differing roof covers, number of fireplaces, finished attic area, and cathedral ceilings. During this time, the subject property’s overall grade varied from “X-” to “A+”.

The appellants also offered into evidence comparable-sales analyses for the fiscal years at issue. For fiscal year 2008, the appellants cited five Colonial-style properties that ranged in lot size from 55,322 square feet to 130,680 square feet, with finished living areas that ranged from 5,144 square feet to 6,461 square feet. These properties sold between March 6, 2006 and August 2, 2006, with sale prices that ranged from $1,775,000 to $2,025,000. After adjustments for location, neighborhood, lot size, living area, home features and condition, privacy, encumbrances and restrictions, the appellants calculated adjusted sale prices that ranged from $1,501,250 to $1,671,041.95.

For fiscal year 2009, the appellants also cited five Colonial-style properties that ranged in lot size from 61,113 square feet to 87,619 square feet, with finished living areas that ranged from 4,650 square feet to 6,500 square feet. These properties sold between June 1, 2007 and June 10, 2008, with sale prices that ranged from $1,472,000 to $1,999,000. After making adjustments for factors such as location, neighborhood, lot size, living area, home features and condition, privacy, encumbrances and restrictions, the appellants calculated adjusted sale prices that ranged from $1,450,935 to $1,577,345.

Finally, the appellants offered a comparable-assessment analysis of ten Colonial-style properties located in Wayland with finished living areas that ranged in size from 5,144 square feet to 6,157 square feet. As with their comparable-sales analyses, the appellants made adjustments for factors such as location, neighborhood, lot size, living area, home features and condition, privacy, encumbrances and restrictions. After making the necessary adjustments, the appellants’ adjusted assessed values ranged from $1,218,091 to $1,629,602 for fiscal year 2008, and ranged from $1,415,948 to $1,591,981 for fiscal year 2009.

In support of their assessment, the assessors primarily relied on the testimony of Susan Ruffo, town assessor. Ms. Ruffo explained that although the appellants’ primary site is only 62,597 square feet, as evidenced by the deed of sale, the deed also states that the appellants own the land to the “easterly center line of Ellie Lane.” The assessors determined that this portion of land was 9,713 square feet. In total, Ms. Ruffo testified, the appellants own 72,310 square feet of land.

Ms. Ruffo also explained that the inconsistencies apparent on some of the subject property’s property record cards were attributable to the various vendors’ conducting exterior views of the home and also to the fact that the assessors were denied entry to the dwelling on several occasions and were not granted access until February 19, 2008. However, she testified that the final assessments for both fiscal years 2008 and 2009 reflected all changes and corrections which the assessors made after inspecting the subject property. Finally, Ms. Ruffo testified that the Wayland real estate market for properties such as the subject property peaked in the last quarter of 2006.

The town counsel also offered into evidence a copy of the subject property deed which refers to the subdivision plan and questioned Ms. Cook about whether she had reviewed the referenced subdivision plan prior to the purchase of the subject property. Ms. Cook, however, refused to give a direct response. Town counsel also presented a copy of the Subdivision Approval and asked Ms. Cook if she had reviewed the subdivision covenants prior to the purchase of the subject property. Again, Ms. Cook refused to give a direct response.

Finally, the assessors offered into evidence the Superior Court’s Decision regarding an emergency joint motion in the case of Michael R. Cook and Kimberly Cook, Trustees of the 12 Ellie Lane Realty Trust v. Town of Wayland Planning Board, et al., MICV2008-01696-B (December 31, 2008). In its decision, the Court found and ruled that the appellants had at least “constructive knowledge” of the existing covenants and restrictions placed on 12 Ellie Lane at the time of purchase. Further, with respect to the driveway maintenance covenant, the court found that the appellants had “some actual notice of their snow removal obligations before they purchased their property.”

On the basis of all of the evidence, the Board found that, for fiscal year 2008, the appellants failed to demonstrate that the fair cash value of the subject property was less than its assessed value, as abated. First, the Board found that the appellants’ assertion that the assessors overstated the land area on the property record card was erroneous. As evidenced by the deed, the appellants own not only the primary lot of 62,597 square feet but also own an additional portion of land, namely “to the easterly centerline of Ellie Lane,” pursuant to the Subdivision Approval. The Board further found that the assessors’ calculation of 9,713 square feet attributable to this additional area was credible. Also, the Board found that the appellants’ failed to prove that they had no knowledge of the existing covenants and liabilities imposed on the subject property at the time of sale and, therefore, no additional reduction in value was warranted.

Moreover, after reviewing the appellants’ comparable-sales analysis and the appellants’ purchase of the subject property in May 2006 for $2,387,000, the Board found that the appellants’ evidence failed to prove that the subject property’s fiscal year 2008 assessment, as abated, of $2,248,400, exceeded its fair cash value. Accordingly, the Board issued a decision for the appellee in Docket No. F296785.

However, the Board found that the appellants’ fiscal year 2009 assessment was excessive. Ms. Ruffo conceded that the real estate market in Wayland for properties similar to the subject property peaked in 2006 and began to decline in 2007. However, the fiscal year 2009 assessment on the subject property exceeded the fiscal year 2008 assessment by nearly $100,000. The Board found, based on the assessors’ concession that market conditions for properties similarly to the subject property were declining between the relevant assessment dates for the fiscal years at issue, as well the comparable sales evidence of record, that the subject property was overvalued for fiscal year 2009.

On the basis of the comparable sales evidence of record and the evidence of a declining market for properties similar to the subject property, the Board found that the fair cash value of the subject property for fiscal year 2009 was $2,100,000. Accordingly, the Board issued a decision for the appellants in Docket No. F299228 and granted an abatement of $3,253.33.[126]

OPINION

For fiscal year 2008, the appellants argued that the assessors made numerous errors on the property record card, including the total stated land area. However, based on a review of the deed of the subject property and also the assessors’ testimony, the Board found that the total land area of 72,310 square feet reported on the property record card and the characteristics contained on the more recent property record card upon which the assessors relied in setting the adjustments were accurate. The appellants also argued that at the time of purchase they were unaware of the covenants and easements imposed on the subject property and that, therefore, the sale was not an arm’s-length transaction and the sale price did not accurately reflect the subject property’s fair cash value. The Board found, however, that Ms. Cook’s testimony concerning this issue was evasive and not credible. In addition, the deed for the subject property deed, which lists Ellie Lane as a private way and references the subdivision plan and the Superior Court decision further undercuts the appellants’ argument that they were not aware of the covenants on 12 Ellie Lane. Accordingly, the Board found that the sale price of $2,387,000 was the best evidence of valuation for fiscal year 2008. Moreover, the Board found that the appellants’ fiscal year 2008 comparable-sales analysis supported the subject property’s assessment for fiscal year 2008. Accordingly, the Board issued a decision for the appellee in Docket No. F296785.

However, for fiscal year 2009, the Board found that the evidence of record supported a finding that the subject property was overvalued. First, Ms. Ruffo testified that the real estate market in Wayland for properties similar to the subject property peaked in late 2006 and began to decline in 2007. Further, the Board found that the appellants’ comparable sales data supported Ms. Ruffo’s testimony concerning a declining market and the appellants’ claim that the subject property was overvalued for fiscal year 2009. Relying on the evidence of record concerning a declining market for properties similar to the subject property and comparable sales data with appropriate adjustments, the Board found that the fair cash value of the subject property for fiscal year 2009 was $2,100,000.

The Board applied these principles in reaching its determination that the assessors overvalued the subject property in the amount of $195,800 for fiscal year 2009. Accordingly, the Board issued a decision for the appellants in Docket No. F299228, and granted an abatement in the amount of $3,253.33.

THE APPELLATE TAX BOARD

By: ____________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _________________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

JOHN & ANN IACOBUCCI v. BOARD OF ASSESSORS OF

THE TOWN OF AMESBURY

Docket No. F303539 Promulgated:

July 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, Board of Assessors of the Town of Amesbury (“assessors”), to abate taxes on certain real estate located in the Town of Amesbury, owned by and assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.

Commissioner Mulhern heard the appeal. Chairman Hammond and Commissioners Scharaffa, Egan, and Rose joined him in a decision for the appellants.

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.

John Iacobucci, pro se, for the appellants.

Mary Marino, Assessor, Catherine Zolano, Assistant Assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits offered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2008, the relevant date of assessment for the fiscal year at issue, John & Ann Iacobucci (“appellants”) were the assessed owners of a parcel of real estate located at 5 Hillside Avenue in the Town of Amesbury (“subject property”). The parcel contains approximately 30,696 square feet of land and is improved with a Federalist-style, single-family dwelling built circa 1900. The dwelling contains about 3,762 square feet of finished living area. There are a total of nine rooms, including four bedrooms, as well as two full bathrooms and one half bathroom. Additional features include lead windows, custom woodwork, nine-foot ceilings, a butler pantry, five fireplaces, four porches (both covered and uncovered) a two-car detached garage, a carport, and a partially finished attic. The exterior of the dwelling is clapboard, and it has a slate roof with a mix of gable and hip styles. According to the property record card entered into evidence, the subject property is in “good plus” condition.

The subject site is a corner lot, which is irregular in shape, slightly above average in size and has driveway access on Estes Street. The subject property is located on Route 150 near Amesbury center in a neighborhood improved with older Victorian and Colonial-style dwellings of similar size.

For fiscal year 2009, the assessors valued the subject property at $562,400 and assessed taxes thereon, at the rate of $16.53 per thousand, in the amount of $9,296.47. On December 30, 2008, Amesbury’s Collector of Taxes sent out the town’s actual real estate tax bills for fiscal year 2009. In accordance with G.L. c. 59, § 57C, the appellants paid the tax due without incurring interest. On February 2, 2009, in accordance with G.L. c. 59, § 59, the appellants timely filed their Application for Abatement with the assessors, which the assessors denied on April 9, 2009. The appellants seasonably filed an appeal with the Board, which the Board received on July 10, 2009 in an envelope that was postmarked July 8, 2009.[127] On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

The appellants presented their case through the testimony of Mr. and Mrs. Iacobucci, owners of the subject property, and Donald L. Frigoletto, whom the Board qualified as a real estate valuation expert. Mr. Frigoletto used a comparable-sales analysis to value the subject property. Specifically, he relied on four sales of what he considered to be comparable, single-family residential properties located in Amesbury.

Mr. Frigoletto’s comparable-sale properties ranged in lot size from 0.16 acres to 4.8 acres and were improved with homes with finished living areas that ranged from 2,155 square feet to 3,707 square feet. All sales occurred during 2007 with sale prices that ranged from $410,000 to $575,000. Comparable sales number one, number two and number four are antique Colonial- and Victorian-style homes that offer appeal similar to that of the subject property and are located on the same street as the subject property. Comparable sale number three is a newer Colonial-style home, built in 2002, and is sited on a significantly larger lot, 4.8 acres, in a superior neighborhood. This home, however, had the most comparable finished living area.

Mr. Frigoletto made adjustments to his comparable sales. First, he applied a timing adjustment of 1.5% per month to all sales to account for the declining market values in the area. He also made adjustments for differences in lot size, living area, number of bathrooms, the lack of a carport, the number of porches and also the number of fireplaces, central air-conditioning, and overall condition. After applying his adjustments, Mr. Frigoletto’s comparable properties’ adjusted-sale prices ranged from $485,825 to $505,750.

Arriving at his final estimate of value, Mr. Frigoletto testified that he placed the most weight on comparable sales number one, number two and number four. After adjustments, the adjusted-sale prices for these properties ranged from $493,890 to $505,750. Based on his comparable-sales analysis, Mr. Frigoletto concluded that the fair market value of the subject property was $500,000. The assessors presented no affirmative evidence of value but instead rested on the presumed validity of their assessment.

On the basis of all the evidence, the Board found that the appellants met their burden of proving that the subject property was overvalued for the fiscal year at issue. The Board found that Mr. Frigoletto’s comparable-sales analysis was credible and that his adjustments were reasonable. The Board agreed with Mr. Frigoletto that comparable-sale number three was the least comparable given its age, lot size, superior location and overall condition, and it gave little weight to this sale. Relying on the adjusted sale prices of comparable-sales number one, number two and number four, the Board found that the subject property’s fair market value for the fiscal year at issue was $500,000.

Based on all of the evidence, the Board found that the subject property was overvalued by $62,400 for the fiscal year at issue and, accordingly, granted an abatement of $1,031.47.

OPINION

On the basis of all of the evidence, the Board found that the appellants’ comparable-sales analysis supported the appellants’ claim that the subject property was overvalued for fiscal year 2009. The Board principally relied on the adjusted sale prices of Mr. Frigoletto’s comparable sales number one, number two and number four to find that the subject property’s fair market value for fiscal year 2009 was $500,000. Accordingly, the Board found that the assessors overvalued the subject property for fiscal year 2009 and issued a decision for the appellants granting an abatement in the amount of $1,031.47.

APPELLATE TAX BOARD

By: ______ _______

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: __________ _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

WARREN G. ELLIS, TRUSTEE v. BOARD OF ASSESSORS OF

WARREN G. ELLIS REALTY THE TOWN OF NORWELL

TRUST

Docket No. F301346 Promulgated:

July 23, 2010

This is an appeal under the formal procedure,[128] pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, from the refusal of the Board of Assessors of the Town of Norwell (“assessors” or “appellee”) to abate taxes on certain real estate in Norwell, owned by and assessed to Warren G. Ellis, Trustee of the Warren G. Ellis Realty Trust (“appellant”) under G.L. c. 59, §§ 11 and 38, for fiscal year 2009 (“fiscal year at issue”).

Commissioner Rose (“Presiding Commissioner”) heard the appeal and issued a single-member decision for the appellant in accordance with G.L. c. 58A, § 1A and 831 CMR 1.20. 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.

Warren G. Ellis, pro se, for the appellant.

Barbara Gingras, Assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On January 1, 2008, the appellant was the assessed owner of a 1.01-acre parcel of land improved with a one-story, ranch-style dwelling located at 156 Pleasant Street in Norwell (“subject property”). For the fiscal year at issue, the assessors valued the subject property at $418,800 and assessed a tax thereon, at the rate of $11.75 per thousand, in the total amount of $5,033.28.[129] The appellant timely paid the tax due without incurring interest. The appellant timely filed an Application for Abatement with the assessors on January 29, 2009. The assessors denied the Application for Abatement on March 30, 2009. The appellant timely filed an appeal with the Appellate Tax Board (“Board”) on May 27, 2009. On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide this appeal.

The dwelling on the subject property has three bedrooms, one bathroom, and a total finished area of 1,065 square feet. The dwelling has a wood-shingle and clapboard-sided exterior. Interior finishes include drywall and pine-paneled walls and wood and carpeted flooring. The subject property also has an unfinished basement and a twelve-foot-by-twelve-foot wood deck.

Mr. Ellis, who testified at the hearing of this appeal, stated that the subject property has a serious flooding problem which negatively impacted its fair cash value. He stated that he uses four separate pumps to facilitate drainage and photographs of those pumps were introduced into evidence. He further stated that the Federal Emergency Management Agency has reviewed the subject property and suggested that it needs to be raised three feet to prevent flooding. The Presiding Commissioner found Mr. Ellis’s testimony to be credible.

Mr. Ellis, who was formerly an assessor and a licensed real estate broker, also presented a sales-comparison analysis involving three properties in Norwell. Property record cards and photographs of these three properties were included in his sales-comparison analysis. The appellant’s first comparable sale property was 264 Winter Street, which is a 1.01-acre parcel of land improved with a one-story, three-bedroom ranch-style home.[130] Comparable sale number one has a wood-shingle and clapboard-sided exterior. Interior finishes include drywall and carpeted flooring. Comparable sale number one also has an enclosed porch and an unfinished basement. It has a total finished living area of 1,005 square feet. Comparable sale number one sold for $355,000 in 2007 and its assessed value for the fiscal year at issue was $355,000. The land value component of that assessment was $331,600.

The appellant’s second comparable sale was 39 John Adams Drive, which is a 0.51-acre parcel of land improved with a one-story, three-bedroom ranch-style dwelling. It has a vinyl-sided exterior and the interior finishes include carpeted flooring and drywall. Comparable sale number two has 1,360 square feet of finished living area. It also has an open porch and a wood deck. It sold for $328,000 in 2007 and had an assessed value of $326,100 for the fiscal year at issue. The land value component of that assessment was $247,000.

The appellant’s final comparable sale was 236 Bowker Street, which is a 0.72-acre parcel of land improved with a one-story, three-bedroom ranch-style home.[131] It has a wood-shingle and clapboard-sided exterior. Interior finishes include plastered walls and hardwood floors. Comparable sale number three has 926 square feet of finished living area. It also has an enclosed porch. Comparable sale number three sold in 2007 for $313,000. Its assessed value was $333,000 for the fiscal year at issue. The land value component of that assessment was $285,700.

Mr. Ellis made adjustments to the sale prices of these three properties to account for various differences with the subject property, including differences in lot size, room count, functional utility, porches, decks, sheds, fireplaces, and heating systems. His adjusted range of value for the comparable properties was $320,900 to $355,600. Based on this range, Mr. Ellis opined that the fair cash value of the subject property for the fiscal year at issue was $351,200.

In presenting their case, the assessors submitted a sales-comparison analysis along with property record cards and various jurisdictional documents. The assessors’ first comparable sale property was 51 John Adams Drive, which is 0.51-acre parcel of land improved with a one-story, three-bedroom ranch-style home. Comparable sale number one has a clapboard-sided exterior and interior finishes include drywall and hardwood floors. It has a total finished living area of 960 square feet. Comparable sale number one sold for $367,000 in 2007 and its assessed value for the fiscal year at issue was $326,200. The land value component of that assessment was $247,000.

The assessors’ second comparable sale property was 39 John Adams Drive, which was also used as a comparable property by the appellant. The relevant features of that property are discussed above.

The assessors’ third comparable sale was 89 Hall Drive, which is a 0.5-acre parcel of land improved with a one-story, three-bedroom raised ranch-style dwelling. It has a wood-shingle and clapboard-sided exterior and interior finishes include drywall and hardwood floors. It has a total finished living area of 1,540 square feet. Comparable sale number three sold in 2007 for $422,500 and its assessed value for the fiscal year at issue was $348,100. The land value component of that assessment was $259,400.

The assessors made adjustments to the sale prices of their comparable properties to account for differences with the subject property in lot size, building value, outbuildings and extra building features. The assessors’ sales-comparison analysis yielded adjusted sale prices ranging from $420,700 to $493,700.

The assessors also introduced information regarding two properties located in the same neighborhood as the subject property. 132 Pleasant Street is a one-acre parcel of land improved with a single-family, raised ranch-style dwelling containing three-bedrooms and two bathrooms. For the fiscal year at issue, the assessors valued the land component at $348,100 and placed its overall assessed value at $453,300. 273 Wildcat Lane, which abuts 132 Pleasant Street and is less than 250 feet from the subject property, is a one-acre parcel of land. The owners of 132 Pleasant Street purchased 273 Wildcat Lane for $450,000 on January 11, 2008 and, subsequently, applied for a demolition permit. The assessors therefore considered this sale to be a land sale.

In addition, the Presiding Commissioner took judicial notice of the Board’s findings in the appellant’s fiscal year 2007 appeal. For fiscal year 2007, the Board found that the fair cash value of the subject property was $400,000. The assessed value of the subject property for the fiscal year at issue was $418,800. Accordingly, in the present appeal, the assessors had the burden of proving that the increase in fair cash value was warranted, pursuant to G.L. c. 58A, § 12A.[132]

On the basis of all of the evidence, the Presiding Commissioner found that the assessors did not prove that the increase in fair cash value was warranted. In fact, the evidence showed that the fair cash value of the subject property had decreased since the fiscal year 2007 appeal.

As an initial matter, the Presiding Commissioner found credible the appellant’s statements regarding the subject property’s flooding problem, which were supported by photographs of the numerous pumps required to alleviate the flooding. There was no indication in the record that the assessors accounted for this issue in valuing the subject property.

In addition, the Presiding Commissioner found that the land value component of the subject property for the fiscal year at issue was excessive, and resulted in the overvaluation of the subject property. The subject property’s 1.01 acres were valued at $381,300 by the assessors. However, 132 Pleasant Street and 264 Winter Street were also one-acre parcels, and their land values were $348,100 and $331,600, respectively. The Presiding Commissioner found that the assessed land values of 132 Pleasant Street and 264 Winter Street provided reliable evidence that the assessed land value of the subject property was excessive.

The Presiding Commissioner did not find the evidence offered by the assessors with respect to the land value to be reliable. The assessors introduced evidence regarding the sale of 273 Wildcat Lane. That property was a one-acre parcel of land which sold for $450,000 in January of 2007. However, it was purchased by an abutting property owner. A sale to an abutter is often not useful as a comparable sale because the property may have a special value to the purchaser. Accordingly, in the absence of supporting evidence to indicate that the price paid by the purchaser of 273 Wildcat Lane was not influenced by motivations unique to the purchaser, the Presiding Commissioner found that the sale price of 273 Wildcat Lane was not probative evidence of the subject property’s land value.

Further, the comparable sales data entered into the record provided persuasive evidence that the assessed value of the subject property exceeded its fair cash value. Both the appellant and the assessors used 39 John Adams Drive in their sales-comparison analyses. 39 John Adams Drive is a 0.51-acre parcel of land improved with a 1,360-square foot ranch-style dwelling. It sold for $328,000 in September of 2007. Likewise, 264 Winter Street is a 1.01-acre parcel of land improved with a 1,005-square foot ranch-style dwelling. It sold in September of 2007 for $355,000. The Presiding Commissioner found that the actual sale prices of these comparable properties in such close proximity to the relevant date of assessment provided highly probative evidence of the fair cash value of the subject property.

Moreover, the Presiding Commissioner found the appellant’s sales-comparison analysis to be more reliable than the assessors’ sales-comparison analysis. The appellant made adjustments for a greater variety of differences and his adjustments were more detailed and precise than the adjustments made by the assessors. The Presiding Commissioner therefore gave greater weight to the fair cash values derived by the appellant.

On the basis of all of the evidence, the Presiding Commissioner found that the fair cash value of the subject property for the fiscal year at issue was $383,000. The Presiding Commissioner therefore decided this appeal for the appellant and granted an abatement of $433.27.[133]

OPINION

The burden of proof is typically upon the taxpayer to make out its right to an abatement. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). However, when the Board has made a finding of value for a particular fiscal year, if the assessment exceeds the Board’s finding for either of the two subsequent fiscal years, the burden shall be upon the assessors to show that the increase in the Board’s finding of fair cash value was warranted. G.L. c. 58A, § 12A.

In the present appeal, the assessors failed to persuade the Presiding Commissioner that an increase in the Board’s finding of fair cash value for the subject property for fiscal year 2007 was warranted. In fact, there was ample evidence in the record that the fair cash value of the subject property had decreased during the intervening period.

In abatement proceedings, “the question is whether the assessment for the parcel of real estate, including both the land and the structures thereon, is excessive. The component parts, on which that single assessment is laid, are each open to inquiry and revision by the appellate tribunal in reaching the conclusion whether that single assessment is excessive.” Massachusetts General Hospital v. Assessors of Belmont, 238 Mass. 396, 403 (1921). See also Guernsey v. Assessors of Williamstown, Mass. ATB Findings of Fact and Reports 2006-158, 168; Buckley v. Assessors of Duxbury, Mass. ATB Findings of Fact and Reports 1990-110, 119. In the present appeal, the Presiding Commissioner found and ruled that the excessive value attributed to the land component of the subject property’s assessment resulted in the assessors commensurately attaching excessive value to the overall assessment. The subject property’s 1.01-acre parcel was valued at $381,300. However, 132 Pleasant Street, a property on the same street as the subject which had a one-acre parcel of land, had an assessed land value of $348,100, while 264 Winter Street, which also had a 1.01-acre parcel of land, had an assessed land value of $331,600. Evidence of comparable assessments may be used to determine a property’s fair cash value, but the assessed properties must be comparable to the subject property in order to be probative of the fair cash value. See Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 703 (1972); see also G.L. c. 58A, § 12B. The Presiding Commissioner found these two properties were sufficiently similar to the subject property so that their land value assessments provided a persuasive indication that the subject property’s assessed land value was excessive.

Further, the Presiding Commissioner found that the evidence offered by the assessors did not provide a reliable indication of the land value of the subject property. In support of their case, the assessors offered evidence regarding the sale of 273 Wildcat Lane, which was a one-acre parcel of land improved with a raised ranch-style dwelling. 273 Wildcat Lane abuts 132 Pleasant Street and is just 250 feet away from the subject property. The owners of 132 Pleasant Street purchased 273 Wildcat Lane for $450,000 on January 11, 2008 and, subsequently, applied for a demolition permit. The assessors therefore considered this sale to be a land sale, and argued that the sale price supported the land value component of the subject property’s assessment.

Though “[s]ales of property usually furnish strong evidence of market value,” in order to be reliable, “they [must be] arm’s-length transactions and thus fairly represent what a buyer has been willing to pay for the property to a willing seller.” Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 682 (1982). Sales of property to abutting property owners are inherently suspect, and, without additional supporting evidence, will not be considered probative evidence of fair cash value.

In order to be a reliable indicator of value, a sale price paid by an abutter requires evidence concerning the circumstances surrounding the sale to ensure that the purchase price was neither artificially inflated by “considerations unique to the purchaser” nor reduced below fair market value because the property was not sufficiently “exposed to the market.”

WB&T Mortgage Company, Inc. v. Assessors of Boston, Mass. ATB Findings of Fact and Reports 2006-379, 416 (quoting Bainbridge v. Assessors of Chilmark, Mass. ATB Findings of Fact and Reports 2003-93, 101.) It was undisputed that 273 Wildcat Lane was purchased by an abutting property owner, yet the record was devoid of details regarding the circumstances surrounding the sale or other evidence to support the conclusion that it was an arm’s-length transaction. Therefore, the Presiding Commissioner found that the sale of 273 Wildcat Lane did not provide reliable evidence of the land value of the subject property.

In addition, the Presiding Commissioner found and ruled that the appellant’s sales-comparison analysis provided more persuasive evidence of the fair cash value of the subject property than the assessors’ sales-comparison analysis. The appellant adjusted for a greater variety of differences and his adjustments were more detailed and precise. The Presiding Commissioner therefore placed more weight on the appellant’s sales-comparison analysis.

The burden of proof in the present appeal was on the assessors to show that an increase over the $400,000 fair cash value determined by the Board for fiscal year 2007 was warranted. G.L. c. 58A, 12A. For the reasons detailed above, the Presiding Commissioner found and ruled that the assessors did not meet that burden.

Although the Presiding Commissioner found the appellant’s sales-comparison analysis to be persuasive, he did not adopt the appellant’s opinion of fair cash value. Instead, in evaluating the evidence in the record, the Presiding Commissioner selected from among the various elements of value and formed an independent judgment of fair cash value. General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 605 (1984); North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984). The Presiding Commissioner need not specify the exact manner in which he arrived at his 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.” Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 72 (1941).

On the basis of all of the evidence, the Presiding Commissioner found and ruled that the fair cash value of the subject property for the fiscal year at issue was $383,000. Accordingly, the Presiding Commissioner decided this appeal for the appellant and granted an abatement of $433.27.

APPELLATE TAX BOARD

By: ______________________________

James D. Rose, Commissioner

A true copy,

Attest: _______________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

DENISE MINER HART v. BOARD OF ASSESSORS OF

THE TOWN OF PLAINVILLE

Docket No. F299045 Promulgated:

July 28, 2010

This is an appeal under the formal procedure pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the Board of Assessors of the Town of Plainville (“appellee” or “assessors”) to abate real estate taxes assessed to Denise Miner Hart (“appellant”) under G.L. c. 59, §§ 11 and 38 for fiscal year 2009.

Commissioner Egan (“Presiding Commissioner”) heard this appeal, and, in accordance with G.L. c. 58A, § 1A and 831 CMR 1.20, issued a single-member decision 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 8.31 CMR 1.32.

Denise Miner Hart, pro se, for the appellant.

Richard Bowen, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On January 1, 2008, the appellant was the assessed owner of a parcel of real estate located at 79 Washington Street in the Town of Plainville (“subject property”). At all relevant times, the subject property contained approximately 26,421 square feet of land and was improved with a 1,360 square-foot, 2-story, conventional-style, single-family home and a multi-use commercial garage and office building.

For fiscal year 2009, the assessors valued the subject property at $488,000 and assessed a tax thereon, at the rate of $11.89 per thousand, in the amount of $5,802.33.[134] In accordance with G.L. c. 59, § 57, the appellant timely paid the tax without incurring interest. On or about December 2, 2008, in accordance with G.L. c. 59, § 59, the appellant timely filed her abatement application with the assessors,[135] which they denied on February 23, 2009. On February 5, 2009, in accordance with G.L. c. 59, §§ 64 and 65, the appellant seasonably filed her petition with the Appellate Tax Board (“Board”).[136] On this basis, the Presiding Commissioner found that the Board had jurisdiction over this appeal.

Because the assessors increased the subject property’s assessment by $105,400, to $488,000, over the $382,600 value determined by the Board in the appellant’s 2007 fiscal year appeal,[137] the Presiding Commissioner found that the burden of going forward shifted to the assessors to show that an increase in value was warranted for fiscal year 2009. See G.L. c. 58A, § 12A.[138] The appellant did not appeal the subject property’s fiscal year 2008 assessment of $445,600.

The assessors’ only witness was Mary Jo LaFreniere, Plainville’s Principal Assessor. Ms. LaFreniere testified and the subject property’s property record card revealed that the subject property’s assessment was composed of four components: a $256,500 valuation for the land; a $87,100 valuation for the house; a $4,900 valuation for the pavement, an out building and a sign; and a $139,500 valuation for the multi-use commercial garage and office building. Ms. LaFreniere described the house on the subject property as a wood-sided, older, conventional-style home with a Gambrel roof, in average condition. The house, which was built in 1910, contains one one-half and one full bathroom plus seven other rooms, including three bedrooms. The house also has an enclosed finished porch, an unfinished basement, a new roof, and a fossil-fuel forced hot-water heating system.

The 2,448-square-foot, two-story garage and office building consists of three bays in the 1,440-square-foot first level and office space in the 1,008-square-foot upper level. The garage bays have concrete floors and primarily masonry walls, while the offices have carpeted flooring and painted sheetrock walls. This building has electric baseboard heat. Its exterior is finished with vinyl siding along with asphalt singles covering its gables and hip roof. This building is in average overall condition.

In her testimony at the hearing of the present appeal, Ms. LaFreniere tried to address the issues raised by the appellant in her fiscal year 2007 appeal, which had led to the Board’s $72,600 reduction in that fiscal year’s assessment from $455,200 to $382,600. First, she testified that the assessors visited the subject property on numerous occasions before the January 1, 2008 assessment date and determined that the subject property was no longer adversely affected by drainage issues from a neighboring property, which led to the unnatural pooling of water on the subject property. The remedial measures that the owner of the neighboring property had instituted to mitigate these problems were apparently working.

Second, Ms. LaFreniere introduced evidence showing that the presence of a cell tower was not nearly as close to the subject property as the Board, based on the appellant’s unrebutted testimony in the prior appeal, had previously found. Based on this newly submitted evidence, the Presiding Commissioner discovered that the tower was more than three times further away than suggested in the prior appeal and, consequently, was not a meaningful nuisance or deterrent to potential lessees of the subject property. Other evidence supported both this proposition and the mitigation of drainage problems including leases, which revealed that the house on the subject property was rented for $1,250 per month plus utilities and the commercial garage and office property was rented for $1,450 per month plus utilities.

Third, Ms. LaFreniere testified and demonstrated to the Presiding Commissioner that the assessors had accounted for a right-of-way and the possibility of some continued water drainage-related issues in the fiscal year 2009 assessment by reducing the subject property’s scheduled land valuation. Fourth, Ms. LaFreniere noted that even though the subject property does not have a sewer hook-up, several other properties in the area do not have one either, and, at any rate, the subject property has more than enough land to accommodate a leaching field. Finally, the assessors’ evidence indicated that the value of commercial and residential property located in Plainville did not increase from fiscal year 2008 to fiscal year 2009.

The appellant and owner of the subject property, Denise Miner Hart, testified after the assessors rested. For her presentation, she introduced the same maps, photographs, and information, which formed the basis of her fiscal year 2007 appeal. She did not present any recent or timely photographs, maps, or other demonstrative evidence depicting or showing that the prior water drainage and pooling issues were continuing as of January 1, 2008 or that the cell tower was located closer than the assessors’ evidence now revealed.

On the basis of all of the evidence, the Presiding Commissioner found that the assessors met their initial burden of overcoming the Board’s finding of value for the preceding 2007 fiscal year and demonstrated that at least part of the increase in the assessed value of the subject property was warranted for fiscal year 2009. The Presiding Commissioner also found that the appellant failed to successfully rebut the vast majority of the assessors’ showing. In reaching these two ultimate findings, the Presiding Commissioner found that the water drainage issues had been successfully mitigated by the owner of the neighboring property, and, as a result, the pooling of water on the subject property had been substantially eliminated. The Presiding Commissioner further found that the cell tower was located a substantial enough distance away from the subject property to minimize any adverse effects on the subject property’s value. The Presiding Commissioner also found that the significant rents received for both the residential and commercial buildings located on the subject property further supported these previous findings. In addition, the Presiding Commissioner found that the reduction in the subject property’s scheduled land value adequately addressed the presence of a right-of-way on the subject property.

Moreover, the Presiding Commissioner found that the appellant’s evidence was largely composed of stale reintroductions of submissions from her fiscal year 2007 appeal, which were not appropriately updated for fiscal year 2009, and were successfully refuted by the assessors’ evidence in this appeal. Finally, the Presiding Commissioner found that neither the residential nor the commercial property values in Plainville had increased from fiscal year 2008 to fiscal year 2009. On this basis, the Presiding Commissioner found that the fair cash value of the subject property for fiscal year 2009 was equivalent to its $445,600 assessed value for fiscal year 2008. The Presiding Commissioner, therefore, decided this appeal for the appellant and granted a tax abatement in the amount of $504.14.

OPINION

The assessors are required to assess real estate at its fair cash value. G.L. c. 59, § 38; Coomey v. Assessors of Sandwich, 367 Mass. 836, 837 (1975). 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).

If, however, within the two preceding fiscal years, the Board has determined the fair cash value of the subject property and the assessment at issue exceeds the Board’s prior determination, then “the burden shall be upon the [assessors] to prove that the assessed value was warranted.” G.L. c. 58A, § 12A. The Presiding Commissioner took judicial notice of the Board’s fiscal year 2007 decision and finding of value and ruled in this appeal that the burden of going forward to justify the increase in the assessment from a previous fiscal year was on the assessors. See, generally, Beal v. Assessors of Boston, 389 Mass. 648 (1983); see also Cressey Dockham & Co., Inc. v. Assessors of Andover, Mass. ATB Findings of Fact and Reports 1989-72, 86-87 (“Once a prior determination of the Board of the fair cash value of the same property [for one of the prior two fiscal years] has been placed in evidence . . . the statute requires the [assessors] to produce evidence to ‘satisfy the Board that the increased valuation was warranted.’” (citation omitted)) ; Ellis v. Assessors of Northborough, Mass. ATB Findings of Fact and Reports 1983-522, 524, 526-28. Notwithstanding this shift in the burden of production, the burden of persuasion on the issue of fair cash value remains on the appellant. See Johnson v. Assessors of Lunenburg, Mass. ATB Findings of Fact and Reports 1992-1, 8; Cressey Dockham & Co. Inc., Mass. ATB Findings of Fact and Reports at 1989-86-87.

In the present appeal, the Presiding Commissioner found that the assessors offered credible evidence that the water drainage issues had been successfully mitigated by the owner of the neighboring property, and, as a result, the pooling of water on the subject property had been substantially eliminated. The Presiding Commissioner also found that the assessors showed that the cell tower was located a substantial enough distance away from the subject property to minimize any adverse effect on the subject property’s value. The substantial rents received for both the residential and commercial buildings located on the subject property provided additional support for these findings. In addition, the Presiding Commissioner found that the assessors demonstrated that the reduction in the subject property’s scheduled land value adequately addressed the presence of a right-of-way on the subject property.

In contrast to the well-documented and supported evidence submitted by the assessors, the Presiding Commissioner found that the appellant’s evidence was largely composed of stale reintroductions of submissions from her fiscal year 2007 appeal, which were not appropriately updated for fiscal year 2009, and were successfully refuted by the assessors’ evidence in this appeal. The Presiding Commissioner did find, however, that the evidence established that neither the residential nor the commercial property values in Plainville increased from fiscal year 2008 to fiscal year 2009.

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)). The Presiding Commissioner found and ruled here that while the evidence supported an increase in its finding of the subject property’s value for fiscal year 2007, it also supported an abatement of the fiscal year 2009 assessment. After considering their evidence, the Presiding Commissioner found and ruled that the assessors successfully showed that an increase in the subject property’s value from the Board’s determination for fiscal year 2007 was warranted for fiscal year 2009. On the basis of all of the evidence, the Presiding Commissioner found and ruled that the fair cash value of the subject property for fiscal year 2009 was equivalent to its $445,600 assessed value for fiscal year 2008.

“The board [is] not required to believe the testimony of any particular witness but it [can] accept such portions of the evidence as appear to have the more convincing weight. Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 72 (1941). “The credibility of witnesses, the weight of 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 market value of the property c[an] not be proved with mathematical certainty and must ultimately rest in the realm of opinion, estimate, and judgment . . . . The board c[an] select the various elements of value as shown by the record and from them form . . . its own independent judgment.” Boston Consolidated Gas Co., 309 Mass. at 72 (citations omitted). See also North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 473 (1981); Jordan Marsh Co. v. Assessors of Malden, 359 Mass. 106, 110 (1971).

On this basis, the Presiding Commissioner found and ruled that the assessors carried their burden of production in this appeal, however, the appellant still carried her burden of persuasion. The Presiding Commissioner found that the assessors’ evidence justified an increase in the value determined by the Board for fiscal year 2007, but the evidence also supported a reduction in the fiscal year 2009 assessment.

The Presiding Commissioner, therefore, decided this appeal for the appellant and granted a tax abatement in the amount of $504.14.

APPELLATE TAX BOARD

By: ______ _______________

Nancy T. Egan, Commissioner

A true copy,

Attest: ____ ___

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

MARILYN P. RILEY v. BOARD OF ASSESSORS OF THE TOWN OF LYNNFIELD

Docket No. F300691 Promulgated:

August 3, 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 certain real estate located in the Town of Lynnfield, owned by and assessed to the appellant under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.

Commissioner Mulhern heard the appeal. Chairman Hammond and Commissioners Scharaffa and Rose joined him in a 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.

Marilyn P. and Richard Riley, pro se, for the appellant.[139]

Beverly Hanson, Assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the exhibits and testimony offered into evidence during the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

In November 2007, Marilyn P. Riley (“appellant”) entered into a contract to purchase a condominium located at 900 Lynnfield Street, Unit #1, in Lynnfield (“subject property”). The appellant purchased the subject property on February 1, 2008 for $649,900. For fiscal year 2009, the Board of Assessors of Lynnfield (“assessors”) valued the subject property at $616,300 and assessed a tax thereon, at the rate of $11.22 per thousand, in the total amount of $7,278.51. The tax was timely paid without incurring interest. On January 30, 2009, in accordance with G.L. c. 59, § 59, the appellant timely applied for abatement in writing to the appellee.[140] The assessors denied the appellant’s abatement application on February 11, 2009. The appellant seasonably filed an appeal with the Board,
which was postmarked May 11, 2009.[141] On the basis of the foregoing facts, the Board found and ruled that it had jurisdiction to hear and decide the present appeal.

The subject property is a two-story, end-unit townhouse constructed in 2006 and located in Heritage Woods, an adult community. The subject property contains 1,969 square feet of living space with six rooms, including two bedrooms, and also two full bathrooms and one half bathroom. Other amenities include a 1,100 square-foot finished basement, a wood deck, a two-car attached garage, and central air conditioning. The property record card on file with the assessors lists the subject property as being in “B+” condition.

The appellant and her husband, Richard Riley, live in the subject property. Mr. Riley testified that at the start of development Heritage Woods was advertised as an “over 60” community. Recently, however, the developer lowered the age of residency to 55, which, according to Mr. Riley, negatively impacted the value of the subject property. Mr. Riley did not, however, offer any evidence to support his claim. Mr. Riley also argued that since the residents of Heritage Woods pay for their own street plowing and trash collection, and have no children in the public school system, the subject property should have been assessed at a lower value.

Beverly Hanson, Lynnfield’s Assessor and a certified real estate appraiser, testified on behalf of the appellee. Ms. Hanson offered a comparable-sales analysis of three condominium units which sold during 2007. The comparable properties were all end-unit townhouses located within the same condominium complex, with the same number of bedrooms and bathrooms and nearly identical finished living areas as the subject property. All three properties sold for the same amount as the subject property, $649,900.

On the basis of all of the evidence, the Board found that the appellant did not provide credible evidence to support her assertion that the subject property was overvalued. The appellant relied solely on an unquantified claim that the subject property was negatively impacted by the reduced age requirement for townhouse purchasers. The appellant did not offer any affirmative evidence of value such as comparable sales or assessments. In contrast, the assessors offered into evidence a comparable-sales analysis which, together with the sale price which the appellant paid for the subject property just one month after the relevant assessment date, supports their assessment. Accordingly, the Board found and ruled that the appellant did not meet her burden of proving that the subject property was overvalued for fiscal year 2009 and issued a decision for the appellee in this appeal.

OPINION

The appellant has the burden of proving that the subject 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[] sustain[s] the burden of proving the contrary.’” General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 598 (1984) (quoting Schlaiker, 365 Mass. at 245).

Based on the evidence presented, the Board found and ruled that the appellant presented no credible, persuasive evidence of overvaluation. Instead, the appellant relied solely on the testimony of Mr. Riley that the lowered age of residency from 60 to 55 negatively impacted the fair market value of the subject property. The appellant further argued that because residents of Heritage Woods pay for their own plowing and trash collection, and because property owners have no children in the public school system, the subject property was overvalued. The appellant did not, however, offer any supporting valuation or other evidence.

Accordingly, the Board found and ruled that the appellant failed to meet her burden of proving that the subject property was overvalued for fiscal year 2009 and issued a decision for the appellee in this appeal.

APPELLATE TAX BOARD

By: _________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ____________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

STEVEN BYRNE v. BOARD OF ASSESSORS OF

THE TOWN OF NORWELL

Docket No. F301345 Promulgated:

August 3, 2010

This is an appeal under the formal procedure pursuant to G.L. c. 58A, § 7[142] and G.L. c. 59, §§ 64 and 65 from the refusal of the appellee Board of Assessors of the Town of Norwell (“assessors” or “appellee”) to abate taxes on real estate located in Norwell, owned by and assessed to the appellant, Steven Byrne, (“appellant”) under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.

Commissioner Rose (“Presiding Commissioner”) heard this appeal and issued a single-member decision for the appellant in accordance with G.L. c. 58A, § 1A and 831 CMR 1.20.

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.

Steven Byrne, pro se, for the appellant.

Barbara Gingras, Assistant Assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the exhibits and testimony offered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2008, the appellant was the assessed owner of a parcel of real estate located at 143 Pleasant Street in Norwell, Massachusetts (“subject property”). For fiscal year 2009, the assessors valued the subject property at $467,400 and assessed taxes thereon, at the rate of $11.75 per $1,000, in the amount of $5,491.95, plus a Community Preservation Act assessment of $129.61. The tax was timely paid without incurring interest. The appellant filed an abatement application with the assessors on January 30, 2009, which the assessors denied on February 23, 2009. On May 19, 2009, the appellant seasonably filed his appeal with the Board. On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction over this appeal.

The appellant presented his case through his own testimony and the submission of a written statement that he prepared, as well as numerous photographs of the subject property.

The subject property consists of a 1.84-acre parcel of land improved with a single-family, Colonial-style dwelling, built in approximately 1845. The dwelling originally contained ten rooms, including four bedrooms, and also one full bathroom and one half-bathroom. According to the property record card for the subject property, the total living area is 2,622 square feet. Also located on the property is a barn with an attached well house.

According to the appellant’s testimony, the subject property was in need of substantial repair and renovation when he purchased it in 1994. Consequently, the appellant had “gutted” substantial areas of the house as part of the renovation process, but continues to live in only a small area of the house while gradually conducting the renovations himself. The appellant testified that the subject property was overvalued because much of the living area was actually unfinished and/or uninhabitable due to the renovations and deteriorated condition of the house.

The appellant also testified that the barn has structural issues and that he has applied for a demolition permit to raze the structure. As of the relevant valuation date, however, the structure still existed. Further, the appellant claimed that the roof of the dwelling requires significant repair, the flashing for the chimneys is deteriorated and leaking, the dwelling’s clapboards and trim need replacement, and the electrical and plumbing systems needed to be replaced. The appellant offered into evidence numerous photographs depicting the subject property’s deteriorated condition.

The appellant included in his written narrative two purportedly comparable sales and one comparable assessment. Comparable sale number one is located at 39 Oak Street. This property consists of a 21,780 square foot parcel improved with a circa 1910 Colonial-style dwelling with a finished living area of 1,799 square feet. The property has fire damage, which dates back to 1974, and needs a new septic system. This property sold on May 11, 2007 for $225,000

Comparable sale number two is located at 119 High Street. This property consists of a 1.1-acre parcel improved with a circa 1900 Colonial-style dwelling with a finished living area of 1,534 square feet. Mr. Byrne testified that this property’s overall condition closely resembles the subject property. This property sold on March 7, 2007 for $279,900.

Lastly, Mr. Byrne offered into evidence the property record card for 393 River Street, which is a 1.02-acre parcel improved with an antique, Colonial-style dwelling built in the early nineteenth century with a finished living area of 2,627 square feet. For fiscal year 2009, this property was assessed at $580,900, with the primary site assessed at $331,700, $57,100 less than the subject property. As evidenced by the property record cards for the subject property and 393 River Street, the assessors applied a 15% upward adjustment to the land value of the subject property. However, Mr. Byrne testified that the subject property is located on a well traveled road, which at times is used as a “cut-through” to the Hanover Mall, and that River Street is a nicer street with many antique homes. Therefore, he argued, the subject property’s land value should not have been adjusted upward compared to 393 River Street.

In support of their assessment, the assessors offered into evidence the testimony of Barbara Gingras, as well as sales data from three purportedly comparable properties that sold during 2007. The three properties ranged in size from 1.04 to 1.50 acres, and all were improved with antique homes similar to the subject property. After adjustments for differences in lot size, condition, total number of rooms and bathrooms, and total living area, the assessors’ comparable properties’ adjusted sale prices ranged in value from $481,000 to $800,600.

On the basis of all of the evidence, the Presiding Commissioner found that the appellant met his burden of proving that the subject property was overvalued as of the relevant assessment date. The Presiding Commissioner found that the appellant’s testimony that the subject property was located on a heavily traveled street often used as a cut-through to the Hanover Mall was credible. With respect to the appellant’s comparable-sales data, however, the Presiding Commissioner found that the appellant failed to establish comparability between the subject property and his purported comparable properties and that he failed to make adjustments for differences between the subject property and the purportedly comparable properties. However, the Presiding Commissioner did find that the assessors’ upward adjustment of 15% to the subject property’s primary site assessment, in comparison to the appellant’s comparable assessment property and also the assessors’ comparable-sales properties, was excessive. Finally, the Presiding Commissioner found that the assessors’ comparable-sales analysis, with adjusted sale prices that ranged from $481,000 to $800,000, failed to account for location differences and the condition of the subject property as of the date of assessment and was, therefore, unreliable. Further, the assessors’ very broad range of value estimates, made through their adjustment of the sales, made their final estimate of value unreliable.

For these reasons, and as discussed further in the Opinion below, the Presiding Commissioner found that the appellant met his burden of proving that the subject property was overvalued for fiscal year 2009. Based on all the evidence, the Presiding Commissioner found that the fair market value of the subject property was $435,000 and, accordingly, granted an abatement in the amount of $392.12.

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 appellant has the burden of proving that the property has a lower value than that assessed. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974).

Generally, there are two ways in which a taxpayer can meet its burden of proof in a property tax appeal. “‘The 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 (1989) (quoting Donlon v. Assessors of Holliston, 389 Mass. 848, 855 (1983)). In the present appeal, the Presiding Commissioner found that the appellant’s testimony that the subject property was on a heavily traveled street often used as a cut-through to the Hanover Mall was credible. The Presiding Commissioner further found that the assessors’ upward adjustment of 15% for superior location was unwarranted.

Based on the foregoing, the Presiding Commissioner found and ruled that the appellant met his burden of proving that the fair cash value of the subject property was less than its assessed value and should be reduced to $435,000. Accordingly, the Presiding Commissioner issued a decision for the appellant and granted an abatement in the amount of $392.12.

APPELLATE TAX BOARD

By: _______________________________

James D. Rose, Commissioner

A true copy,

Attest: ____________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

JOHN & LESLIE WILSON, v. BOARD OF ASSESSORS OF

TRUSTEES OF THE 155 IRVING THE TOWN OF BARNSTABLE

AVENUE REALTY TRUST

Docket Nos.: F278361, F287613 Promulgated:

F297599, F302176 August 12, 2010

These are appeals 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 Board of Assessors of the Town of Barnstable (“appellee” or “assessors”) to abate taxes on certain real estate in Barnstable, owned by and assessed to John and Leslie Wilson, Trustees of the 155 Irving Avenue Realty Trust, (together, “appellants”) under G.L. c. 59, §§ 11 and 38 for fiscal years 2005, 2006, 2008, and 2009 (“fiscal years at issue”).

Commissioner Egan heard these appeals. Chairman Hammond and Commissioners Scharaffa, Rose, and Mulhern joined her in decisions for the appellants.

These findings of fact and report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

David R. Sullivan, Esq. and Darah Schofield, Esq. for the appellants.

Jeffrey Rudziak, Assessor, for the appellee.

FINDINGS OF FACT AND REPORT

A. Introduction and Jurisdiction

On the basis of the testimony and exhibits offered into the record in the hearing of these appeals, and on the basis of the view taken by the Appellate Tax Board (“Board”) of the real property at issue, the Board made the following findings of fact. On January 1, 2004, January 1, 2005, January 1, 2007, and January 1, 2008, the relevant dates of assessment for the fiscal years at issue, the appellants were the assessed owners of a 3.02-acre parcel of land, improved with two dwellings, located at 151 Irving Avenue in Hyannisport (“subject property”).

The first dwelling (“main house”) is a Colonial-style mansion constructed in 1914 which contains 7,948 square feet of gross living area. The main house has a white clapboard exterior. It is divided into three sections, with two wings converging into a central section. Tall pillars and an open front porch comprise the exterior of the central section. The main house has 18 total rooms, including seven bedrooms. It also has seven full bathrooms and one half bathroom. Interior finishes include carpeted and hardwood flooring, with ceramic tile flooring in the bathrooms. Walls are plaster with painted crown moldings. Additional interior features include built-in bookcases and two fireplaces. The main house also has an enclosed porch, a wood deck, a patio, and an in-ground pool.

The second dwelling (“guest house”) is a Cape Cod-style home constructed in 1955 which contains 4,220 square feet of living area. It is a classic Cape Cod-style house, with a natural wood-shingled exterior and dormered windows emerging from a gabled roof. The guest house has a total of eight rooms, including four bedrooms. It has three full bathrooms and one half bathroom. The guest house also has a fireplace, a patio and an attached, two-car garage.

The subject property is an oceanfront property. It is located adjacent to the Kennedy compound on Hyannis Harbor, and enjoys direct ocean views and beach access.[143] The subject property also abuts the Hyannisport Golf Club.

The appellants purchased the subject property for $6,000,000 in 2000. The valuation of the subject property, tax rate, and total tax assessments for each of the fiscal years at issue are summarized in the following table.

Fiscal Year	Valuation($)	Tax Rate ($/1000)	Total Tax Assessed[144]($)
2005	8,377,700	6.05	64,939.74
2006	8,972,500	6.31	72,760.70
2008	8,435,500	6.58	70,077.08
2009	7,964,500[145]	6.90	70,780.51

The relevant jurisdictional information for each of the fiscal years at issue is set forth in the following table.

Fiscal Year	Actual Tax Bill Mailed	Abatement App. Filed	Abatement App. Denied	Petition Filed
2005	10/22/04	11/22/04	2/15/05	5/13/05
2006	3/17/06	4/28/06	7/25/06	10/24/06
2008	12/31/07	1/31/08	4/8/08	7/7/08
2009	12/31/08	1/30/09	4/28/09	6/15/09

Based on the foregoing, the Board found and ruled that it had jurisdiction to hear and decide these appeals.

B. The Appellants’ Case-in-Chief

The appellants presented two grounds for abatement in these appeals. First, the appellants argued that the subject property was overvalued for the fiscal years at issue. Second, the appellants contended that they were entitled to an abatement because the subject property was disproportionately assessed.

The appellants presented the valuation component of their case-in-chief through the testimony of John Wilson and through the testimony and appraisal report of certified real estate appraiser James K. Saben. Mr. Saben opined that the highest and best use of the subject property was its continued use as a single-family residential property with guest house. To form his opinion of the subject property’s fair cash value, Mr. Saben considered the three usual approaches to value. He declined to use the cost approach because of the age of the subject property. Similarly, he rejected the income-capitalization approach because homes in the same price range and type of neighborhood as the subject property are typically purchased for personal use, not to produce income. Mr. Saben therefore relied upon the sales-comparison approach to form his opinion of value.

Mr. Saben conducted four separate sales-comparison analyses, determining the subject property’s fair cash value as of January 1, 2005, January 1, 2006, January 1, 2007, and January 1, 2008. The Board notes that Mr. Saben apparently erred as to the relevant assessment dates; although his assessment dates correspond to three out of the four years at issue, one of his dates, January 1, 2006, is not at issue in this appeal and one of the relevant assessment dates, January 1, 2004, is not covered by a report.

For his sales-comparison analysis as of January 1, 2005, Mr. Saben selected three waterfront properties located on Cape Cod. Two of the properties are oceanfront properties while the third is a bayfront property. The sale prices of these three properties ranged from $3,900,000 to $5,200,000. After making adjustments to account for differences with the subject property, Mr. Saben’s adjusted sale prices for these three properties ranged from $5,965,250 to $6,386,000.

For his sales-comparison analysis as of January 1, 2006, Mr. Saben selected four waterfront properties located on Cape Cod. Two of the properties are oceanfront properties and two are bayfront properties. The sale prices of these four properties ranged from $3,600,000 to $6,150,000. After making adjustments to account for differences with the subject property, Mr. Saben’s adjusted sale prices for these properties ranged from $5,626,200 to $6,591,200.

For his sales-comparison analysis as of January 1, 2007, Mr. Saben again selected four waterfront properties located on Cape Cod. Three of the properties are oceanfront properties while one is a bayfront property. The sale prices of these four properties ranged from $5,400,000 to $7,250,000. After making adjustments to account for differences with the subject property, Mr. Saben’s adjusted sale prices for these properties ranged from $6,599,100 to $7,116,750.

Finally, for his sales-comparison analysis as of January 1, 2008, Mr. Saben selected six waterfront properties located on Cape Cod. Four of the properties are oceanfront properties, one is a bayfront property, and one is located on a river. The sale prices of these six properties ranged from $5,400,000 to $7,250,000. After making adjustments to account for differences with the subject property, Mr. Saben’s adjusted sale prices for these six properties ranged from $6,362,300 to $7,215,150.

Based on his sales-comparison analyses, Mr. Saben’s opinion of value for the subject property was: $6,000,000 as of January 1, 2005; $6,200,000 as of January 1, 2006; $6,800,000 as of January 1, 2007; and $6,500,000 as of January 1, 2008.

In support of their disproportionate assessment argument, the appellants introduced a line graph depicting the increase in assessed value of the subject property, as compared to the assessed values of its ten closest neighboring properties, over the time period spanning from 1973 through 2007. The chart showed that the assessed value of the subject property has increased at a marginally higher pace than the ten closest neighboring properties. No information about the ten neighboring properties was entered into the record.

In addition, Mr. Wilson stated that the subject property lacked privacy because of its location next door to the Kennedy compound, which tends to attract attention. Mr. Wilson opined that this lack of privacy negatively impacted the value of the subject property. Mr. Wilson also stated that nearly one and a half acres of the subject property were covered with sand dunes, and he believed that this portion of the subject property should be valued as residual land.

The Assessors’ Case-in-Chief

The assessors presented their case-in-chief through the testimony of Jeffrey Rudziak, the Director of Assessing for Barnstable, and the submission of numerous exhibits. Among those exhibits were two sales-comparison analyses. The first analysis (“land valuation analysis”) was conducted to highlight the land values of waterfront property on Cape Cod. The land valuation analysis featured six properties on Cape Cod, which sold between 2002 and 2007. Following the sale of each of the properties, the dwellings on the properties were demolished for the construction of a new home. The six properties have an average lot size of 2.8 acres, as compared to the subject’s 3.02 acres, and an average sale price of $5,076,667. Each of the properties is a waterfront property; however, they are located on the bay, rather than, like the subject property, on the ocean. According to the analysis submitted by the assessors, oceanfront properties sold, on average, for approximately ten percent more than properties located on the bay.

The second analysis was a sales-comparison analysis involving fifteen waterfront properties on Cape Cod which sold between 2003 and 2008. That analysis is substantially reproduced in the following chart:

Address	Style	Year Built	Acres	Living Area (sq. ft.)	Location	Sale	Sale Price ($)
38 Sand Point	Conventional	1928	0.81	7,502	Bay	9/12/03	6,900,000
165 Ocean View	Conventional	1951	1.44	9,007	Bay	7/1/03	6,600,000
21 Wianno Head Rd.	Ranch	1935	1.44	2,280	Bay	7/2/04	5,200,000
459 Sea View Rd.	Colonial	1907	1.76	4,545	Ocean	11/15/04	5,502,000
1071 Old Post Rd.	Colonial	1997	7.54	6,217	Bay	6/15/06	6,500,000
99 Island Ave.	Colonial	1965	1.18	4,367	Ocean	12/19/06	6,495,000
33 Maywood Ave.	Colonial	1929	1.43	3,264	Ocean	12/27/06	5,895,000
149 Island Ave.	Colonial	1912	4.25	3,379	Ocean	5/1/07	7,250,000
11 Cove Lane	Colonial	1960	1.94	8,577	Bay	6/28/07	8,125,000
119 Island Ave.	Modern/Cont.	1992	0.78	4,294	Ocean	8/8/07	6,625,000
285 Seapuit Rd.	Cape Cod	1990	2.85	4,966	Bay	9/5/07	6,075,000
233 Seapuit River Rd.	Colonial	1930	1.7	5,416	Ocean	10/31/07	9,000,000
347 Sea View Ave.	Modern/Cont.	1973	2.0	4,032	Ocean	1/11/08	7,300,000
134 Great Bay Rd.	Cape Cod	2002	1.23	8,394	Bay	6/3/08	7,600,000
83 Oyster Way	Cape Cod	1998	2.0	5,116	Bay	10/31/08	7,450,000

According to the assessors’ sales-comparison analysis, the average land value of comparable oceanfront properties was $6,124,350, while the average land value of comparable bayfront properties was $5,285,450. The land value component of the subject property’s assessments for the fiscal years at issue ranged from $5.6 million to $5.7 million.

In addition, Mr. Rudziak testified that in 2008, the assessors conducted a site visit of the subject property, after which they relisted all of the improvements on the subject property. The assessors conceded at the hearing of these appeals that, as a result of the updated information gathered during the site visit, they determined that the subject property’s assessed value for each of the fiscal years at issue did not accurately reflect its fair cash value. The assessors determined anew the fair cash value for the subject property for each of the fiscal years at issue, and those values, along with the assessed values, appear in the following table.

Fiscal Year	Assessed Value ($)	Fair Cash Value as Determined by the Assessors in 2008 ($)
2005	8,377,700	7,130,600
2006	8,972,500	7,130,600
2008	8,435,500	7,065,600
2009	7,964,400	7,087,400

Accordingly, the assessors’ opinion of value for the subject property for the fiscal years at issue was $7,130,600 for fiscal years 2005 and 2006, $7,065,600 for fiscal year 2008, and $7,087,400 for fiscal year 2009.

D. The Board’s Findings of Value

The Board found that the highest and best use of the subject property was its continued use as a residential property. The Board also found that the sales-comparison approach was the most reliable method to value the subject property because of its age and the fact that it is a single-family, residential property, and therefore less likely to be an income-producing property.

On the basis of all of the evidence, the Board found that the assessed value of the subject property for each of the fiscal years at issue exceeded its fair cash value. The Board therefore issued decisions for the appellants in these appeals. However, the Board did not find the valuation analyses offered by the appellants’ expert witness to be reliable evidence of the subject property’s fair cash value and it therefore did not adopt his opinions of value.

Mr. Saben’s appraisal reports contained numerous errors, beginning with his use of incorrect dates of assessment. In several instances, the data used by Mr. Saben in his analyses conflicted with the information reflected on the property record cards offered into evidence. For example, Mr. Saben listed the main house on the subject property as having ten total rooms, while the property record card states that it has eighteen.

Mr. Saben used 459 Sea View Avenue in Osterville as a comparable property for three out of his four sales-comparison analyses. The property record card for that property states that it has ten rooms, including six bedrooms, with a total living area of 4,545 square feet. The property record card also states that the home has five full bathrooms and one half bathroom. Mr. Saben, by contrast, listed 459 Sea View Avenue as having twelve rooms, three full bathrooms and two half bathrooms, with a total living area of 4,940 square feet.

Similarly, Mr. Saben used 119 Island Avenue in Hyannisport as a comparable property for his sales-comparison analysis as of January 1, 2008. Like the subject property, 119 Island Avenue has a main house and a guest house. The property record card for 119 Island Avenue lists the main house as having 2,998 square feet of living area, and the guest house as having 1,296 square feet of living area, for a combined total living area of 4,294 square feet. In his analysis, Mr. Saben listed 119 Island Avenue as having 5,276 square feet of living area.

In addition to these errors, the Board found several flaws in the adjustments used by Mr. Saben in his sales-comparison analyses. For example, in his sales-comparison analysis as of January 1, 2005, Mr. Saben made a positive adjustment of $260,000 to the sale price of 21 Wianno Head Road in Osterville because it is located on the bay, rather than the ocean. However, Mr. Saben made no adjustments to account for the difference between oceanfront and bayfront properties in any of his subsequent sales-comparison analyses. The Board found Mr. Saben’s failure to account for the difference between oceanfront and bayfront properties undermined the reliability of his analyses, as there was ample evidence showing that oceanfront properties consistently sold for a significant amount more than bayfront properties.

Additionally, most of Mr. Saben’s chosen sales-comparison properties do not have a guest house, unlike the subject property. Mr. Saben made a positive adjustment of $200,000 to the sale prices of properties that do not have a guest house to account for this difference. The Board found that this adjustment was insufficient, particularly in light of the fact that the guest house at the subject property is a 4,220 square-foot home with four bedrooms, three full bathrooms, one half bathroom, and a two-car garage.

Moreover, some of the sales-comparison properties have docks, but no guest house. In these instances, Mr. Saben made no adjustment to account for the lack of a guest house because he apparently considered the value of a guest house and a dock to be equivalent. There was no evidence in the record to support the conclusion that a dock and a guest house should be valued equally. The Board found Mr. Saben’s interchangeable use of dock and guest house for valuation purposes further undermined the reliability of his analyses.

In some instances, Mr. Saben’s opinions of value seemed to ignore the uncontroverted evidence. For example, the appellants paid $6,000,000 for the subject property in 2000. Further, they took out building permits for $185,000 in 2003. Despite his acknowledgement that property values increased between 2000 and 2004, Mr. Saben’s opinion of value as of January 1, 2005 was $6,000,000. The Board found that Mr. Saben’s opinion of value did not take into account appreciation in the market or the improvements that the appellants made to the subject property, and therefore, it was neither credible nor supported by the record.

With respect to the appellants’ disproportionate assessment argument, the Board found that the appellants failed to introduce sufficient evidence to make out a claim of disproportionate assessment. To prevail on a claim of disproportionate assessment, taxpayers must show that the assessors engaged in an intentional and widespread scheme whereby they valued a class of properties more favorably than the property in question. In support of their disproportionate assessment claim, the appellants offered only a line graph comparing the assessed value of the subject property to the assessed values of its ten closest neighboring properties. The appellants did not even allege, let alone prove, that the assessors engaged in a deliberate scheme of assessing other properties at lower assessment-to-fair-cash ratios. They did not specifically identify the ten neighboring properties, nor did they offer any information about them apart from the increase in assessed values over time. The Board therefore found that the appellants introduced insufficient evidence to establish disproportionate assessment in these appeals.

In contrast, the assessors presented ample, credible evidence supporting their opinions of value. The assessors’ sales-comparison analysis featured fifteen sales of properties located in the vicinity of the subject property. Most of these fifteen properties are smaller in gross living area and lot size than the subject property, and eight of them are bayfront, rather than oceanfront, properties. These sales occurred between July of 2003 and October of 2008 and the sale prices ranged from $5,200,000 to $9,000,000. The assessors’ opinions of value – $7,130,600 for fiscal years 2005 and 2006, $7,065,600 for fiscal year 2008, and $7,087,400 for fiscal year 2009 – fell squarely in the middle of this range, despite the fact that the subject property enjoyed several advantages over most of the sales-comparison properties. The Board found the assessors’ sales-comparison analysis to be reliable evidence that the opinions of fair cash value which were offered by the assessors at the hearing of these appeals were accurate representations of the subject property’s fair cash value for each of the fiscal years at issue.

Similarly, the Board found the land valuation analysis presented by the assessors to be a persuasive indicator that the assessors’ opinions of fair cash value did not exceed the subject property’s actual fair cash value for the fiscal years at issue. The assessors’ land valuation analysis featured six properties with improvements, which were demolished following these properties’ sale for the construction of a new home. The sales of these six bayfront properties occurred between April of 2002 and November of 2007 and the average sale price was $5,076,667. These six properties are located on the bay, rather than the ocean, and the evidence showed that oceanfront properties sold, on average, for approximately ten percent more than properties located on the bay. For the fiscal years at issue, the land component of the subject property’s assessment ranged from $5.6 to $5.7 million, or approximately ten percent more than the average sale price of the six comparison properties. Moreover, four out of six of the properties are smaller in acreage than the subject property. Based on these facts, the Board found that the market data provided strong support for the land valuation component of the subject property’s assessment for the fiscal years at issue.

Further, the Board found that the assessors’ land valuation analysis provided additional support for the assessors’ overall opinions of value for the subject property. The land component of the subject property’s assessment ranged from $5.6 to $5.7 million for the fiscal years at issue. The assessors’ opinions of value for the subject property ranged from $7.0 to $7.1 million, or approximately $1.5 million more than the land value. The market data entered into the record in these appeals provided ample support for the conclusion that two homes with a combined gross living area of 12,168 square feet, and which together had a total of 11 bedrooms, ten full bathrooms, and two half bathrooms, contributed at least $1.5 million to the value of the subject property.

Based on the foregoing, the Board found that the evidence offered by the assessors provided the most reliable indication of the subject property’s fair cash value. The Board therefore adopted the assessors’ opinions of fair cash value and found that the fair cash value of the subject property was $7,130,600 for fiscal years 2005 and 2006, $7,065,600 for fiscal year 2008, and $7,087,400 for fiscal year 2009. Because the assessors’ opinions of fair cash value were less than the assessed values of the subject property, the Board decided these appeals for the appellants and granted abatements in the following amounts: $9,666.89 for fiscal year 2005, $14,936.52 for fiscal year 2006, $11,380.31 for fiscal year 2008, and $7,794.79 for fiscal year 2009.

OPINION

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 fair cash value of property may often best be determined by recent sales of comparable properties in the market. See Correia, 375 Mass. at 362; McCabe v. Chelsea, 265 Mass. 494, 496 (1929). Actual sales generally “furnish strong evidence of market value, provided they are arm’s-length transactions and thus fairly represent what a buyer has been willing to pay for the property to a willing seller.” Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 682 (1982); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469 (1981); First National Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971).

In the present appeals, given the subject property’s age and single-family, residential character, the Board found and ruled that the cost-reproduction and income-capitalization approaches were not reliable methods to determine its fair cash value. The Board found and ruled that the sales-comparison approach was the best method to determine the fair cash value of the subject property.

On the basis of all of the evidence, the Board found and ruled that the fair cash value of the subject property was lower than its assessed value for each of the fiscal years at issue. However, the Board found that the evidence offered by the appellants did not provide a reliable indication of the fair cash value of the subject property, and therefore, did not adopt their opinions of value.

As detailed in the Board’s findings above, the appraisal reports offered by the appellants’ appraiser contained numerous errors and inconsistencies. In his sales-comparison analysis as of January 1, 2005, Mr. Saben made an adjustment of $260,000 to the sale price of a comparable property to account for its location on the bay, which is inferior to the subject property’s oceanfront location. However, in his sales-comparison analyses, he made no adjustment to the sale prices of other bayfront properties to account for this difference. The Board found that Mr. Saben’s failure to make similar adjustments for bayfront properties across the board was not only inconsistent, but constituted serious error, as there was ample, credible evidence showing that oceanfront properties consistently sold for more than otherwise comparable bayfront properties.

Similarly, many of Mr. Saben’s adjustments were contradicted by the market data entered into the record. Most of the sales-comparison properties lacked guest houses. To account for this difference from the subject property, Mr. Saben made an adjustment of only $200,000 to the sale prices of the comparison properties. Given the facts that the subject property’s guest house is as large as most of the comparison properties used by both parties and those properties each sold for millions of dollars, the Board found that Mr. Saben’s adjustment was wholly insufficient. Moreover, for comparable properties that have docks but not guest houses, Mr. Saben made no adjustment because he evidently considered the value of a guest house and dock to be equal. There was simply no evidence to support the finding that a dock and guest house should be valued equally. The Board found and ruled that Mr. Saben’s adjustments were not supported by the market data or other evidence, and therefore, lacked probative force.

Taxpayers may also establish their right to an abatement by proving disproportionate assessment. Coomey, 367 Mass. at 838 (citing Shoppers’ World, Inc. v. Assessors of Framingham, 348 Mass. 366, 377-78 (1965)). To prevail in a claim of disproportionate assessment, taxpayers must show that the assessors engaged in an “intentional widespread scheme of discrimination.” Stilson v. Assessors of Gloucester, 385 Mass. 724, 727-28 (1982). To demonstrate this widespread scheme, taxpayers must present evidence concerning a statistically significant number of properties in the vicinity of the property at issue. See Beardsley v. Assessors of Foxborough, 369 Mass. 855, 859 n.6 (1976). In the present appeals, the appellants claimed disproportionate assessment, however, they failed to offer a cogent, detailed, or organized presentation supporting their claim. The appellants offered no evidence showing intent on the part of the assessors to discriminate against their property or any other real estate, residential or otherwise, in Barnstable. The appellants also failed to introduce the necessary comparison of assessment-to-market-value ratios to demonstrate disproportionate assessment. Graham v. Assessors of West Tisbury, Mass. ATB Findings of Fact and Reports 2007-321, 391, aff’d, 73 Mass. App. Ct. 1107 (2008). The Board therefore found and ruled that the appellants did not prove their claim of disproportionate assessment.

In contrast, the assessors presented substantial, credible evidence to support their opinions of value. The two analyses offered by the assessors provided ample support for the land value component of the subject property’s assessment and for their opinions of value in general. “The board [is] not required to believe the testimony of any particular witness but it [can] accept such portions of the evidence as appear to have the more convincing weight. Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 72 (1941). “The credibility of witnesses, the weight of 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 market value of a property c[an] not be proved with mathematical certainty and must ultimately rest in the realm of opinion, estimate, and judgment . . . . The board [c]an select from among the various elements of value as shown by the record and from them form . . . its own independent judgment.” Boston Consolidated Gas Co. 309 Mass. at 72 (citations omitted). See also North American Philips Lighting Corp. v. Assessors of Lynn, 392 Mass. 296, 300 (1984); New Boston Garden Corp., 383 Mass. at 473; Jordan Marsh Co. v. Assessors of Malden, 359 Mass. 106, 110 (1971). Therefore, the Board found and ruled that the fair cash values of the subject property were the values offered by the assessors, which were: $7,130,600 for fiscal years 2005 and 2006, $7,065,600 for fiscal year 2008, and $7,087,400 for fiscal year 2009.

Accordingly, the Board decided these appeals for the appellants and granted abatements in the following amounts: $9,666.89 for fiscal year 2005, $14,936.52 for fiscal year 2006, $11,380.31 for fiscal year 2008, and $7,794.79 for fiscal year 2009.

APPELLATE TAX BOARD

By: ______________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ______ _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

MARY A. & BURKE T. BARRETT v. BOARD OF ASSESSORS OF

THE TOWN OF FRANKLIN

Docket Nos. F299419 Promulgated:

August 23, 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 Board of Assessors of the Town of Franklin (“assessors” or “appellee”) to abate taxes on certain real estate located in Franklin owned by and assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.

Chairman Hammond heard the appeal. Commissioners Scharaffa, Egan, Rose, and Mulhern joined him in the decision for the appellant.

These findings of fact and report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

Burke T. Barrett, pro se, for the appellants.

Kevin Doyle, assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the exhibits and testimony offered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2008, the relevant date of assessment for the fiscal year at issue in this appeal, the appellants were the owners of a 30,250 square-foot parcel of land, improved with a wood-framed, single-family home, located at 41 High Ridge Circle in Franklin, in a neighborhood identified by the assessors as neighborhood 22 (“subject property”). The subject dwelling, built in 1998, has a concrete foundation, a wood clapboard and stucco exterior, and an asphalt-shingled hip roof. The dwelling contains a total of eleven rooms, including five bedrooms, and also three full bathrooms and one half-bathroom, with a total living area of 4,528 square feet. Other amenities include a fireplace, central air conditioning, a wood deck, an enclosed porch, a whirlpool/Jacuzzi, an in-ground pool, and a multi-car attached garage.

For the fiscal year at issue, the assessors valued the subject property at $950,200 and assessed a tax thereon, at the rate of $11.17 per $1,000, in the total amount of $10,613.73. On December 30, 2009, the Collector of Taxes for Franklin mailed out the actual fiscal year 2009 tax bills. The appellants timely paid the tax due without incurring interest. On February 2, 2009, in accordance with G.L. c. 59, § 59, the appellants timely filed an Application for Abatement with the assessors, which they denied on March 11, 2009. On March 30, 2009, in accordance with G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65, the appellants seasonably filed an appeal with the Board. On this basis, the Board found and ruled that it had jurisdiction over this appeal.

The appellants’ primary argument in support of their claim that the subject property was overvalued for fiscal year 2009 was the sale of 20 Cranberry Road, located four houses away from the subject property, which the appellants argued was similar to the subject property in style, size and location. 20 Cranberry Road consists of a 36,901 square-foot lot improved with a Colonial-style dwelling with a finished living area of 4,061 square feet. The property sold on June 22, 2007 for $850,000. The appellants added the assessed value of the subject property’s extra features, $17,400, to arrive at their opinion of the subject property’s fair market value of $868,000. The property record cards for the subject property and the appellants’ comparable sale property showed that the assessors considered 20 Cranberry Road to be located in neighborhood 20, while they determined that the subject property, despite being only four houses away, should be in neighborhood 22. The appellants offered no other evidence of value.

Kevin Doyle, the assessor for Franklin, testified on behalf of the assessors. The assessors also offered into evidence the requisite jurisdictional documentation, a map of Franklin, the subject property’s property record card, and a sales-comparison report. In their sales-comparison report, the assessors cited six properties located in Franklin that they deemed comparable to the subject property and sold during calendar year 2007. The properties ranged in size from 0.609 acres to 0.984 acres with finished living areas that ranged from 3,856 square feet to 4,664 square feet. The properties’ sale prices ranged from $795,600 to $969,900.

Comparable sale number one, which is located at 13 Dutchess Road was the only property offered by the assessors that, like the subject property, was located in neighborhood 22. This property sold for $969,000 on January 22, 2007. Although the lot sizes and finished living areas are relatively similar, comparable sale number one was new construction at the time of its purchase. With respect to the assessors’ remaining comparable sales, all but one were relatively new construction and none was located in the same neighborhood as the subject property. The assessors failed to explain why they did not consider the sale of nearby 20 Cranberry Road, which sold just six months prior to the relevant date of assessment.

On the basis of the evidence presented, the Board found that the appellants’ met their burden of proving that the subject property was overvalued for the fiscal year at issue. In reaching its decision, the Board found that the best evidence of the subject property’s fair market value as of January 1, 2008, was the June 22, 2007 sale of 20 Cranberry Road. The Board noted that the property at 20 Cranberry Road has a slightly smaller finished living area than the subject property. Therefore, the Board found that an upward adjustment was warranted. The Board found that the assessors’ decision to put the subject property and 20 Cranberry Road in different neighborhoods for assessment purposes did not justify the magnitude of difference between the $850,000 sale price of 20 Cranberry Road and the $950,200 assessed value of the subject property.

With respect to the assessors’ comparable-sales analysis, the Board found that although the lot sizes and finished living areas of the assessors’ purportedly comparable properties were, generally speaking, similar in size, all but one of the comparable properties were located in different neighborhoods and all but one of the comparable properties were relatively new construction, and, therefore, lacked basic comparability. Moreover, the Board found that the assessors’ failure to include in their comparable-sales analysis the sale of 20 Cranberry Road, which is located just 4 houses away from the subject property and which sold only six months prior to the relevant assessment date, was a significant omission that undercut the credibility of their analysis.

Based on all of the evidence, the Board found that the subject property’s fair cash value for fiscal year 2009 was $920,200. Accordingly, the Board found that the subject property was overvalued by $30,000 for the fiscal year at issue and granted an abatement of $335.10.

OPINION

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 taxpayers . . . prove 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)). “[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 in the same geographic area and within a reasonable time of the assessment date generally contain 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).

The Board found that the appellants submitted credible affirmative evidence showing that the subject property was overvalued while the assessors failed to establish comparability between their purportedly comparable sales and the subject property and also failed to consider the sale of a nearby property within six months of the relevant assessment date. Based on all of the evidence, the Board found that the sale at 20 Cranberry Road, upon which the appellants primarily based their claim of overvaluation, was the most persuasive evidence of value. The Board further found, however, that it was necessary to adjust the sale price of 20 Cranberry Road upward to account for the subject property’s larger finished living area.

“In reaching its opinion of fair cash value in this appeal, the board was not required to believe the testimony of any particular witness or to adopt any particular method of valuation . . . . Rather, the board could accept those portions of the evidence that the board determined had more convincing weight.” Foxboro Associates, 385 Mass. at 683; New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 473, 469 (1981); Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 701-02 (1972).

The Board need not specify the exact manner in which it arrived at its valuation. Jordan Marsh v. Assessors of Malden, 359 Mass. 196, 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.” Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 72 (1941). “The credibility of witnesses, the weight of evidence, the inferences to be drawn from the evidence are matters for the board.” Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977).

Based on the foregoing, the Board found and ruled that the appellants met their burden of proving that the subject property was overvalued for fiscal year 2009. Accordingly, the Board issued a decision for the appellants in this appeal and granted and abatement in the amount of $335.10.

APPELLATE TAX BOARD

By: ____________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

THOMAS E. BREW, JR. v. COMMISSIONER OF REVENUE

Docket No. C293965 Promulgated:

August 24, 2010

This is an appeal filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39, from the refusal of the Commissioner of Revenue (“Commissioner” or “appellee”) to abate personal income taxes, penalties, and interest assessed against Thomas E. Brew, Jr. (“appellant” or “Mr. Brew”) for the tax years ending December 31, 2002, December 31, 2003 and December 31, 2004 (“tax years at issue”).

Commissioner Scharaffa heard this appeal. Chairman Hammond and Commissioners Egan, Rose, and Mulhern joined him in a decision for the appellee. These findings of fact and report are made pursuant to requests by the appellant and appellee under G.L. c. 58A, § 13 and 831 CMR 1.32.

Paul J. Dee, Jr., Esq. for the appellant.

Julie A. Flynn, Esq. and Celine E. Jackson, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

In April of 2005, the Commissioner commenced an audit of the appellant, who had not filed Massachusetts income tax returns for the tax years at issue. On September 19, 2005, the appellant filed non-resident Massachusetts income tax returns for the tax years at issue. On April 24, 2006, the Commissioner issued a Notice of Intent to Assess (“NIA”) to the appellant, proposing the assessment of additional taxes in the amount of $36,516 for tax year 2002, $53,546 for tax year 2003, and $54,818 for tax year 2004, along with penalties and interest. The Commissioner issued a Notice of Assessment, dated August 14, 2007, assessing the taxes proposed on the NIA along with penalties and interest. The appellant timely filed Applications for Abatement with the Commissioner on October 11, 2007, which the Commissioner denied by Notice of Abatement Determination dated January 7, 2008. The appellant timely filed his appeal with the Appellate Tax Board (“Board”) on February 14, 2008. Based on the foregoing facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

The issue in this appeal is whether the appellant was domiciled in Massachusetts during the tax years at issue.[146] A hearing was held before the Board on September 16, 2009 at which the appellant and his wife, Frances Brew, each testified. Also testifying for the appellant were his supervisor and friend, Thomas Churbuck, and his longtime friend, Ronald Mycock. In addition to the testimony, numerous exhibits were entered into evidence by both parties. On the basis of all of the testimony and exhibits entered into the record, the Board made the following findings of fact.

A. The Appellant’s Personal and Vocational History

Mr. Brew was born and raised in St. Louis, Missouri, where he lived until shortly after his graduation from high school. Mr. Brew moved to Massachusetts in 1960 to attend Boston University from which he graduated in 1964. He received a law degree from Boston University Law School in 1967.

Following his graduation from law school, Mr. Brew worked at a management consulting firm and two different law firms until 1973, when he obtained a position at the Office of Chief Counsel of the Internal Revenue Service (“IRS”) in Washington, DC. In 1976, he transferred to the IRS Regional Counsel’s office in Boston, Massachusetts.

In 1978, Mr. Brew and his wife, Frances, were married in Massachusetts. Their daughter, Haley, was born in 1979 and their son, Brian, was born in 1984. In 1985, Mr. Brew and his wife bought a home in Newton, Massachusetts (“Newton home”). The Newton home had six bedrooms and four and one-half bathrooms. Its assessed value for fiscal year 2003 was $1,278,800. Mr. and Mrs. Brew sold the Newton home in 2006.

During the 1990s, Mr. and Mrs. Brew also purchased a home in Cotuit (“Cotuit home”), which is on Cape Cod. The Cotuit home had three bedrooms, one and one-half bathrooms and was set on one and one-half acres of land. Its assessed value for fiscal year 2003 was $301,700. Mr. Brew testified that they used this home as a weekend, summer and vacation residence.

Mr. Brew left the IRS in 1978 and, along with his business partner, David Ferrari, opened a business consulting firm which was named Argus Management (“Argus”) and was located in Natick, Massachusetts. According to Mr. Brew, Argus specialized in assisting corporate clients with crisis management, interim management, and workout situations. Mr. Brew’s primary duties while at Argus involved serving in interim executive positions at those corporations. This work required Mr. Brew to travel out-of-state extensively. Mr. Brew left Argus in 1994 to work for a company called Kurzweil, which was located in Waltham, Massachusetts.

In 1998, Mr. Brew accepted an offer to become temporary Chief Executive Officer (“CEO”) at McCleid Steel Company (“McCleid”) in St. Lois, Missouri. Mr. Brew worked at McCleid until 2000. However, the Brew family did not move to St. Louis. During that time period, Mr. Brew lived in a rented apartment in St. Louis during the week and, with few exceptions, returned home on weekends to be with his family at their Newton home.

In December of 2000, the appellant was contacted by Thomas Churbuck, the founder, President and CEO of Power Systems Manufacturing, LLC (“PSM”). PSM was a Jupiter, Florida engineering company that manufactured industrial gas turbine parts. Mr. Churbuck recruited Mr. Brew to become the Chief Operating Officer (“COO”) at PSM and Vice-President of Calpine Corporation, a related corporation.

According to his testimony, the appellant discussed the job offer with his family. According to both Mr. and Mrs. Brew, he told his family that he wanted to take the position in Florida, but did not want to continue commuting home regularly, as he had when he worked in St. Louis. Mr. Brew testified that he informed his family that he envisioned a more permanent relocation, but if they objected, he would not take the job. According to Mr. and Mrs. Brew’s testimony, his family did not object, and Mr. Brew accepted the position. However, because Brian was a sophomore in high school at that time, and they did not wish to disrupt his education, Brian and Mrs. Brew remained living in the Newton home.

Various documents relating to Mr. Brew’s acceptance of this position were introduced into evidence. Exhibit GG is a document dated January 25, 2001, entitled “Offer Proposal,” (“Employment Offer”) in which the terms of Mr. Brew’s Employment Offer were detailed. There is a specific notation on the Employment Offer stating “Tom will not relocate until his child graduates high school in June 2003. He would like to postpone relocation until then. ‘Payback forgiveness’ clock would commence in 6/03 and continue for 18 months.” Mr. Brew negotiated for additional time to take advantage of the relocation package, which traditionally extended for a year. It is further noted on the Employment Offer that Mr. Brew would receive up to $10,000 per year for “home visit expenses.” An employment contract was signed by Mr. Churbuck and Mr. Brew, among others, on February 1, 2001. The employment contract provided for reimbursement of “airfare expenses for home visits to Massachusetts.” Mr. Brew earned several hundred thousand dollars in income through his work at PSM in each of the tax years at issue.

Prior to 2001, Mr. and Mrs. Brew owned three condominiums as investment properties in Boca Raton, Florida. They sold two of those condominiums during the tax years at issue. Upon commencing employment at PSM in 2001, Mr. Brew moved into the third condominium. However, he did not move furniture or other belongings from either of his Massachusetts residences to Florida. Rather, he furnished the condominium with hand-me-downs and plastic furniture. The assessed value of the condominium in which Mr. Brew lived was $168,770 in 2002, $195,816 in 2003, and $222,534 in 2004.

According to Mr. Brew’s testimony and his personal calendars, which were entered into the record, he returned to Massachusetts from Florida approximately every other weekend during the tax years at issue. He typically arrived in Massachusetts late on Friday evenings and flew back to Florida early on Monday mornings.

B. The Appellant’s Familial and Social Connections

It was undisputed that during the tax years at issue, Frances Brew remained domiciled in Massachusetts. She spent the majority of her time in Massachusetts, occasionally traveling to Florida to visit her husband. The family dog resided with her in Massachusetts.

Brian attended high school in 2002 and 2003. In September of 2003, Brian started college but returned to the Newton home during breaks from college throughout 2004.

Haley attended graduate school in Massachusetts from 2002 through 2004. Mrs. Brew testified that Haley lived at the Newton home in 2003 for five months while attending graduate school. With the assistance of her parents, Haley purchased a home in Cotuit, close to Mr. and Mrs. Brew’s residence.

Mr. Brew described himself as a family man who enjoyed a close relationship with his family. Mr. Brew regularly attended his son’s soccer and lacrosse games during the tax years at issue when he returned to Massachusetts. Mr. Brew and Brian also enjoyed gardening at the Newton home. Although they lived apart much of the time, Mr. and Mrs. Brew by all accounts enjoyed a close and loving marriage and frequently socialized with their extended family and their large circle of friends.

Both Mr. and Mrs. Brew testified that, despite his employment in Florida, Mr. Brew celebrated most of the major holidays with his family in Massachusetts during the tax years at issue. The evidence showed that Mr. Brew spent New Years, Easter, Memorial Day, Fourth of July, Labor Day, Thanksgiving, and the week of Christmas in Massachusetts in 2002; New Years, Easter, Memorial Day, Fourth of July, Thanksgiving and the week of Christmas in Massachusetts in 2003; and Easter, Memorial Day, Fourth of July, Labor Day and Thanksgiving in Massachusetts in 2004.

In addition to his wife and children, Mr. Brew had four brothers. His mother was also living during the tax years at issue, but his father was deceased. Prior to 2001, Mr. Brew’s mother and two of his brothers had moved to Florida, and they continued to reside there during the tax years at issue. Mr. Brew testified that he socialized with his mother and brothers in Florida and also in Massachusetts. Another brother, Jim, lived in Westwood, Massachusetts. Mr. Brew testified that he had a good relationship with Jim and that he saw him frequently in Massachusetts during the tax years at issue.

Prior to 2001, Mr. Brew’s mother had purchased twelve funeral plots in Florida. She gave two to each of her five sons. Mr. Brew’s father was buried in Florida. Mr. Brew’s mother also owned a home in Cotuit, next door to the appellant’s home, and Mr. Brew testified that he saw her frequently during the tax years at issue in Massachusetts as well. Mr. Brew also testified that his brothers vacationed with their families in Cotuit in the summer during the tax years at issue.

Mrs. Brew’s mother and brother also lived in Massachusetts. Mrs. Brew testified that they frequently attended functions at each other’s homes in Massachusetts during the tax years at issue.

In addition to their immediate and extended family, Mr. and Mrs. Brew had a large circle of close friends with whom they socialized at both their Newton and Cotuit homes. Richard Mycock was a close friend of Mr. Brew from law school. Richard’s brother, Ronald Mycock, who testified at the hearing of this appeal, was also a longtime close friend of the appellant. Both Richard and Ronald Mycock lived in Massachusetts during the tax years at issue. Mr. Brew testified that Richard Mycock originally introduced Mr. Brew to the town of Cotuit in the 1960s. Richard Mycock owned a home across the street from Mr. Brew in Cotuit and Ronald Mycock owned a home three hundred yards away from Mr. Brew’s home in Cotuit. They frequently had Friday night dinners during the summer months at Mr. Brew’s Cotuit home.

Other close friends of the appellant were Mr. Goldberg and Mr. Teubor, neighbors of his from Newton. Mr. Teubor was also a neighbor of Mr. Brew in Cotuit. His house was just one hundred yards away from Mr. Brew’s home in Cotuit. Mr. Brew testified that he socialized with Mr. Teubor and Mr. Goldberg during the tax years at issue in Cotuit and Newton. Mr. Churbuck, Mr. Brew’s supervisor and friend, also owned a home in Cotuit, and the evidence showed that they socialized in Cotuit as well as in Florida.

It was evident from the record that Mr. and Mrs. Brew enjoyed entertaining and there was considerable testimony about their various annual parties. Mr. Brew testified that annual Super Bowl parties at his Newton home were a longstanding tradition, and another annual tradition was a Fourth of July clambake at the Cotuit home. As many as 60 people regularly attended the latter.

Mr. Brew and Mr. Churbuck testified that they also socialized in Florida, and Mr. Brew testified that he socialized with other work acquaintances, friends, and family while in Florida. Mr. Brew testified that he had always discussed with friends that he would eventually end up in Florida, as some of his other friends and family had. Mrs. Brew stated that it was a “no brainer” that they would end up in Florida, and similarly, Mr. Mycock stated that they had discussed their mutual aspirations to reside in Florida some day. However, it was undisputed that during the tax years at issue and as of the date of the hearing of this appeal, Mr. Mycock and Mrs. Brew were domiciled in Massachusetts.

Mrs. Brew testified that she traveled to Florida a few times to look for a house that she and Mr. Brew would eventually reside in together. However, they did not purchase such a house during the years at issue.[147]

C. The Appellant’s Personal Possessions, Registrations, Accounts and Business Investments

Mr. Brew maintained four bank accounts in Massachusetts and two bank accounts in Florida during the tax years at issue.[148] However, the bank account statements entered into evidence showed that the Florida bank accounts had only minimal activity and balances during the tax years at issue. One of the Florida bank accounts was set up only to receive rental payments from the investment properties that Mr. Brew had owned in Florida but sold during the tax years at issue. The Massachusetts bank accounts had substantial balances and saw more frequent transactions. Notably, monthly deposits of substantial sums of money were deposited into the Massachusetts accounts. Given the Florida accounts’ minimal activity and balances, and Mr. Brew’s considerable salary at PSM, the Board inferred that the deposits into the Massachusetts bank accounts included the deposit of the income earned by Mr. Brew in Florida. Mr. Brew also maintained a safe deposit box in Massachusetts but did not have one in Florida.

Mr. Brew did not complete a change of address form with the U.S. Postal Service, nor did he have any mail forwarded to Florida. During the years at issue, all of Mr. Brew’s utility bills, insurance documents and his primary credit card statements were mailed to his Newton home. Real estate tax bills and bank account statements – including the tax bill for his Florida property and bank account statements from his Florida bank accounts – were mailed to the Newton home. The following items also list the Newton home as Mr. Brew’s address: Mr. Brew’s 2002 and 2004 1099s from Argus Management Corporation; Mr. Brew’s 2002 1099 from I.B. Goodman; and Programmed Test Resources Corporation’s 2004 SK-1.

Mr. Brew owned a boat which he kept in Massachusetts during the tax years at issue. He renewed the registration for the boat in Massachusetts in 2004. He did not own or keep a boat in Florida.

Mr. Brew and his wife jointly owned a 2000 Lexis and a 2003 Audi which they kept and used in Massachusetts. Both vehicles were registered in Massachusetts during the tax years at issue. Mr. Brew owned a 1993 Lexis, which he registered in Florida on November, 13, 2001. Mr. Brew also obtained a Florida driver’s license and registered to vote in Florida in 2001. He voted in Florida at all times thereafter. He also filed a Florida Intangible Tax Return for each of the tax years at issue.

During the tax years at issue, Mr. Brew engaged in business transactions with various real estate trusts located in Massachusetts. He made loans to Massachusetts-based real estate trusts and collected interest on these loans.

D. Events of 2003

As stated in the Employment Offer from PSM, Mr. Brew’s relocation benefit options were set to expire in June of 2003. In a letter from Thomas Churbuck, dated March 6, 2003, PSM offered Mr. Brew additional travel reimbursement for “home visits to Massachusetts” in lieu of a $175,000 relocation package. In the letter, PSM offered to reimburse Mr. Brew up to $18,000 for home visits in 2003, 2004, and 2005, with the stipulation that he “irrevocably waive [the] right to any relocation benefits previously offered.” Mr. Brew accepted the offer on March 7, 2003.

Also in 2003, Mr. and Mrs. Brew met with an architect to discuss the construction of a new home in Cotuit. To that end, in 2004, they had several meetings with builders to discuss plans. The construction of their new house began in October of 2005 and was completed in 2006. The house had five bedrooms, five full bathrooms and one half bathroom, hardwood floors, a deck, a garage, a screen porch and a finished area – presumably an entertainment room in the basement – that Mrs. Brew described as a “man cave”.

In addition, on the advice of Ronald Mycock, the appellant loaned money to his wife Frances and another individual to purchase an investment property located in Cotuit in 2003. Mr. Mycock was the manager of this property and remitted interest on the loan to Mr. Brew at his Newton home.

E. The Appellant Did Not Change His Domicile From Massachusetts to Florida Prior to or During The

Tax Years at Issue

The record established that, during the course of his career, Mr. Brew worked for many different companies in many different places, yet there was no dispute that, prior to 2002, he was domiciled in Massachusetts. Based on all of the evidence, the Board found that nothing changed materially when he began to work in Florida in 2001, and therefore, it found that Mr. Brew did not change his domicile from Massachusetts to Florida prior to or during the tax years at issue.

The fact that Mr. Brew did not change his domicile to Florida during or prior to 2002 was evidenced by various documents relating to Mr. Brew’s employment at PSM, among other items in the record. It was clearly stated in the Employment Offer that Mr. Brew did not wish to relocate until at least 2003, when his son graduated from high school. To that end, he did not accept a typical relocation package which included moving expenses. He instead negotiated for and received reimbursements for “home visit expenses.”

Consistent with the statements of intent expressed on the Employment Offer, the Board found that Mr. Brew did not change his domicile to Florida after accepting employment with PSM. Rather, the Board found that he continued to commute home to Massachusetts at least every other weekend, much as he had when he worked in Missouri and elsewhere. Mr. Brew planned to, and did, return to Massachusetts regularly to be with his family and friends. The Board therefore found that when Mr. Brew departed from Massachusetts to Florida, he did so with a certain purpose to return to Massachusetts, and that his stays in Florida amounted to absences from home rather than the establishment of a new domicile.

The Board did not find Mr. Brew’s testimony regarding his domicile credible. Although he professed an intent to make a permanent move to Florida in 2001, his actions contradicted his stated intent. For example, the Board found that the style of living maintained by Mr. Brew in Florida was not consistent with his stated intent to make it his permanent or primary home. Mr. Brew did not move his furniture or belongings from Massachusetts to Florida. He simply furnished his condominium with hand-me-down and plastic furniture. This modestly-furnished condominium stood in contrast to the sizeable home Mr. Brew maintained in Newton during the tax years at issue and the even larger home he began plans to build in Cotuit. Mr. Brew owned three cars. Two of them were garaged in Massachusetts, while the oldest one – a 1993 Lexis – was registered in Florida. Although he testified that he enjoyed boating and fishing, he did not maintain a boat in Florida. The evidence indicated that Mr. Brew was a man of considerable financial means who could afford to establish a comfortable residence and lifestyle in Florida, yet the record showed that he did not. The Board found these facts to be a persuasive indication that Mr. Brew did not make genuine efforts to establish a new domicile in Florida during the tax years at issue.

Moreover, an examination of Mr. Brew’s other actions revealed his strong and continuing ties to Massachusetts. Mr. Brew did not change his address with the U.S. Postal Service or otherwise arrange to have his mail forwarded to Florida. All of his important mail, including bills, bank account statements, credit card statements, tax documents, and insurance documents continued to be mailed to his Newton home. Although he had two bank accounts in Florida, those accounts were used infrequently and had comparatively small balances, while the several Massachusetts bank accounts that he maintained were used frequently and handled large sums of money, including the deposit of the income earned from his job in Florida. Even the property tax bills and bank account statements from his Florida property and bank accounts were mailed to his Newton home.

The record established that Mr. Brew did not abandon his Massachusetts domicile. If he abandoned anything, it appears to have been his plan to relocate to Florida after his son graduated from high school in 2003. In March of 2003, Mr. Brew permanently waived his right to receive a relocation package worth $175,000 from PSM, and instead, opted to continue to be reimbursed up to $18,000 per year for “home visits to Massachusetts” for 2003, 2004, and 2005. The Board found the fact that Mr. Brew opted to reject a relocation benefit worth $175,000 in favor of travel reimbursements totaling a maximum of $54,000 to be a strong indication that he did not intend to relocate to Florida.

Mr. Brew conceded in his testimony that Massachusetts remained the center of his immediate family’s life during the tax year at issue. As of the first year at issue in this appeal, Mr. Brew had been married to his wife for 24 years. By all accounts they had a close and loving marriage. The evidence also showed that he was actively engaged in the lives of his two children. He participated in activities with Brian such as fishing and gardening, and also attended Brian’s sporting events; he assisted Haley in purchasing a home close to his home in Cotuit. It was apparent from the record that Mr. Brew’s family life was his top priority, as evidenced by the fact that he refused to even consider relocating until after Brian completed high school and by the fact that he continued to return to Massachusetts on a frequent and regular basis to be with his family.

Accordingly, the Board found that Mr. Brew’s ties to his immediate family were entitled to the greatest weight in determining his place of domicile. Placing considerable weight on this factor, along with the other evidence in the record, the Board concluded that Mr. Brew remained domiciled in Massachusetts.

In addition to his family, Mr. Brew had a large circle of close friends in Massachusetts, including neighbors and others with whom he had been friends for decades. A half-dozen of Mr. Brew’s friends and family, including his mother, had homes in close proximity to his Cotuit home, and the testimony established that there were frequent get-togethers at that house, including Friday night dinners and annual clambakes attended by as many as 60 guests. Mr. Brew’s brothers routinely vacationed in Cotuit with their families during the tax years at issue. Further, Mr. Brew continued to host annual Super Bowl parties at his Newton home, and he had many close friends in the Newton area. Mr. Brew celebrated nearly all of the major holidays in Massachusetts during the tax years at issue. Mr. Brew’s mother-in-law and brother-in-law also lived in Massachusetts and Mrs. Brew testified that they frequently socialized with her family in Massachusetts during the tax years at issue.

Although he testified that he socialized with family and friends in Florida during the tax years at issue, based on the record, the Board found that the majority of Mr. Brew’s social activities, including the celebration of holidays and other annual traditions, took place in Massachusetts during the tax years at issue.

Finally, the record indicated that recreational activities enjoyed by Mr. Brew included gardening, fishing, and entertaining. He gardened exclusively at his Newton home, and, although he fished in both Massachusetts and Florida, his boat remained in Massachusetts at all times. As discussed at length above, the majority of the entertaining and socializing done by Mr. Brew took place in Massachusetts. The Board found the fact that the majority of Mr. Brew’s family, social, and recreational activities took place in Massachusetts to be persuasive evidence that he remained domiciled in Massachusetts.

The evidence of record did not persuade the Board that Mr. Brew decreased his ties to Massachusetts and increased his ties to Florida. In fact, the opposite was true. Mr. Brew had long owned three condominiums as investment properties in Florida. During the tax years at issue, he sold two of those units. In contrast, Mr. Brew loaned money to his wife to assist her in purchasing an investment property in Cotuit, and in addition, Mr. and Mrs. Brew undertook plans to dramatically expand their own home in Cotuit. While he did accept employment in Florida, this did not represent a decrease in his ties to Massachusetts. Mr. Brew’s employment immediately prior to accepting the position at PSM was not in Massachusetts, it was in Missouri. Mr. Brew did not dispute that he was domiciled in Massachusetts while he worked in Missouri, and likewise, the Board found that he was domiciled in Massachusetts while he worked in Florida.

Although certain of his family members lived in Florida, Mr. Brew’s wife and children, his brother Jim, his brother-in-law, and his mother-in-law all lived in Massachusetts. Further, his mother also owned a home in Cotuit and spent her summers there. While it is true that Mr. Brew’s two brothers and mother lived in Florida, they had lived there prior to 2002, a time during which Mr. Brew did not dispute that he was a Massachusetts domiciliary and during which he filed Massachusetts resident income tax returns. The Board therefore did not find the fact that Mr. Brew’s two brothers and mother lived in Florida to be
persuasive evidence that he changed his domicile to Florida.[149]

Similarly, the Board did not find the facts that Mr. Brew changed his voter registration to Florida and obtained a Florida driver’s license to be persuasive evidence that he changed his domicile to Florida. As an initial matter, Mr. Brew changed his voter registration and obtained a Florida driver’s license in 2001, immediately upon beginning his employment at PSM, despite the fact that his employment documents clearly indicated that he would not relocate to Florida until at least 2003. Moreover, the Board found that these acts were not entitled to as much weight as Mr. Brew’s more substantive and on-going activities, such as receiving all of his mail, maintaining most of his money and material possessions, and celebrating major holidays and longstanding annual traditions in Massachusetts. Accordingly, on balance, the Board did not find the facts that Mr. Brew changed his voter registration and obtained a Florida driver’s license to be persuasive evidence that he changed his domicile to Florida.

In conclusion, and based on all of the evidence, although Mr. Brew’s employment at PSM required him to leave Massachusetts and work in Florida, the Board found that he left Massachusetts with the certain purpose to return on a regular and frequent basis. He returned regularly to Massachusetts because it remained the center of his family and social life. Therefore, the Board found that Mr. Brew did not abandon his Massachusetts domicile and establish a new one in Florida prior to or during the tax years at issue. Accordingly, the Board decided this appeal for the appellee.

OPINION

Under G.L. c. 62 § 2, Massachusetts residents are taxed, with certain limitations not relevant here, on all of their income from whatever sources derived. In contrast, Massachusetts taxes non-residents only on income from Massachusetts sources. See G.L. c. 62, § 5A. Accordingly, if the appellant was a Massachusetts resident during the tax years at issue, the disputed income is subject to tax in Massachusetts regardless of whether the income was from a Massachusetts source. A “resident” for Massachusetts tax purposes is defined as:

G.L. c. 62, § 1(f). The Commissioner does not contest the appellant’s assertion that he spent fewer than 183 days in Massachusetts in each of the tax years at issue. The issue presented in this appeal, therefore, is whether the appellant was domiciled in Massachusetts during the tax years at issue.

Domicile is commonly defined as “the place of actual residence with intention to remain permanently or for an indefinite time and without any certain purpose to return to a former place of abode.” Commonwealth v. Davis, 284 Mass. 41, 50 (1933). While domicile may be a difficult concept to define precisely, the hallmark of domicile is that it is “‘the place where a person dwells and which is the center of his domestic, social and civil life.’” Reiersen v. Commissioner of Revenue, 26 Mass. App. Ct. 124, 125 (1988) (citing Restatement (Second) of Conflict of Laws § 12 (1969)).

Massachusetts courts have recognized that a person may have a residence in one place and a permanent home, i.e., domicile, in another. See, e.g., Hopkins v. Commissioner of Corps. & Tax’n, 320 Mass. 168, 173 (1946); Horvitz v. Commissioner of Revenue, 51 Mass. App. Ct. 386, 393 (2001). Having more than one residence can lead to factors on more than one side of the “domicil[e] ledger.” Reiersen, 26 Mass. App. Ct. at 127. Therefore, a determination of domicile depends upon a comprehensive facts-and-circumstances analysis. See, e.g, Roarke v. Hanchett, 240 Mass. 557, 561 (1922) (finding that proof of domicile “depends upon no one fact or combination of circumstances, but from the whole taken together it must be determined in each particular case.”). “The credibility of witnesses, the weight of the evidence, and the inferences to be drawn from the evidence are matters for the board.” Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977).

The appellant in this appeal had the financial means to maintain residences in both Florida and Massachusetts. The record in this appeal, then, presented factors on “both sides of the domicil[e] ledger,” Reiersen, 26 Mass. App. Ct. at 127, and the Board considered and weighed the evidence on each side of that “ledger.”

Beginning with the Florida side of the “ledger,” during the tax years at issue, Mr. Brew’s full-time job was in Florida. He maintained a condominium in Florida. He registered a car in Florida, obtained a Florida driver’s license, and registered to vote and voted in Florida. Mr. Brew’s mother and two of his brothers also lived in Florida, and he socialized with them there, as well as other friends and work acquaintances. Mr. Brew also had two Florida bank accounts and filed Florida Intangible Tax Returns.

On the Massachusetts side of the “ledger” were Mr. Brew’s Newton home and his Cotuit home, his wife and children, his dog, his brother Jim, his in-laws, and most of his close friends. Id. In addition, Mr. Brew’s mother lived in Cotuit during the summer months, and his other brothers regularly vacationed there during the summer. Mr. Brew maintained two cars and a boat in Massachusetts. He also maintained four bank accounts in Massachusetts which handled the bulk of his financial transactions. Mr. Brew also made business investments in Massachusetts during the tax years at issue, by loaning money to various real estate investment trusts and to his wife, so that she could invest in a rental property in Cotuit.

After considering and weighing the evidence on both sides of the “domicil[e] ledger,” the Board found and ruled that the preponderance of the evidence clearly lay on the Massachusetts side of the “ledger.” Id. In weighing the evidence, the Board placed the greatest weight on Mr. Brew’s ties to his wife and children because the Board found that Mr. Brew’s family was his top priority. Mr. Brew conceded in his testimony that Massachusetts remained the center of his immediate family’s life during the tax years at issue, and the evidence supported the same conclusion. Having concluded that the dominant concerns in Mr. Brew’s life were his wife and children, and that his connection to them was the factor entitled to the most weight, the Board found that the facts of the present appeal were much like those in Horvitz, where the taxpayer, because of his considerable wealth, was able to maintain residences and carry on portions of his life in both Florida and Massachusetts. Horvitz, 51 Mass. App. Ct. at 396. Mr. Horvitz’s children were located in Massachusetts and the Board found that Mr. Horvitz was domiciled in Massachusetts because his ties to his children exerted the “strongest pull of any single factor” relevant to the determination of domicile. Horvitz v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2002-252, 260, aff’d, 60 Mass. App. Ct. 1103 (2003), further review denied, 441 Mass. 1102 (2004).[150] Likewise, the Board found and ruled that Mr. Brew’s domicile remained in Massachusetts, where his family and family homes were located.[151]

The Board found the evidence on the Florida side of the “ledger” to be less than convincing. Reiersen, 26 Mass. App. Ct. at 127. That evidence included Mr. Brew’s stated intent to make Florida his place of domicile. While intent is an important consideration in determining the place of domicile, a taxpayer’s mere expression of intent is not sufficient to establish domicile. “‘[T]he fact and intent must concur.’” Hershkoff v. Board of Registered Voters of Worcester, 366 Mass. 570, 576-77 (1974) (quoting Opinion of the Justices, 5 Met. 587, 589 (1843)). See also McMahon v. McMahon, 31 Mass. App. Ct. 504, 505 (1991). In the present appeal, the Board found and ruled that Mr. Brew’s stated intent to change his domicile to Florida upon beginning work at PSM was not supported by the objective facts. Mr. Brew’s stated intentions were plainly contradicted by the documents relating to his employment at PSM, which stated that he would not relocate to Florida until at least 2003, when his son graduated from high school. Until that time, he would be reimbursed for “home visit expenses” incurred in traveling to Massachusetts, which he did approximately every other weekend. In 2003, Mr. Brew permanently waived his right to a relocation package, and instead agreed to continue receiving reimbursements for “home visits to Massachusetts” through 2005. Consistent with the expressions of intent as reflected on the employment-related documents, Mr. Brew planned to, and did, return to Massachusetts on a frequent and regular basis. The Board therefore found and ruled that Mr. Brew left for Florida with a “certain purpose to return to [his] former place of abode.” Davis, 284 Mass. at 50. The Board found and ruled that Mr. Brew’s stays in Florida were more akin to “mere absences from home” rather than the establishment of a new domicile. McMahon, 31 Mass. App. Ct. at 506.

Other evidence on the Florida side of the “ledger” included the facts that Mr. Brew obtained a voter registration and driver’s license in Florida in 2001. Reiersen, 26 Mass. App. Ct. at 127. However, the Board found that these acts were not entitled to as much weight as Mr. Brew’s on-going activities, which included the continued receipt of all of his bills and important mail in Massachusetts, including bills relating to his Florida property; the frequent and continued use of his Massachusetts bank accounts, including the deposit of the income earned from his job in Florida; the celebration of almost all major holidays in Massachusetts and the continuation of his traditional Super Bowl parties and Fourth of July clambakes in Massachusetts. See Swartz v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports, 2010-252, 263-4 (finding that modest ministerial acts such as changing driver’s license and voter registration were not persuasive evidence that taxpayers had changed their domicile to Florida in light of substantial evidence to the contrary).

In addition, Mr. Brew continued to engage in most of the recreational activities that he enjoyed, including fishing, gardening, and entertaining, in Massachusetts rather than in Florida. Although he testified that he fished and socialized in Florida, he also fished in Massachusetts, and his boat remained in Massachusetts. Gardening was an activity that he engaged in only in Massachusetts, and the bulk of his entertaining took place in Massachusetts also. For example, Mr. Brew did not testify to any annual parties held or long-standing traditions observed in Florida.

During the tax years at issue, Mr. Brew did not enjoy the same standard of living in Florida that he maintained in Massachusetts. Mr. Brew’s most valuable possessions did not travel with him to Florida. He maintained a safe deposit box in Massachusetts, but not in Florida. His boat remained in Massachusetts, not in Florida. His residence in Florida was furnished with hand-me-down and plastic furniture rather than possessions from his Newton or Cotuit homes. The car used by Mr. Brew in Florida was the oldest of the three cars that he owned. The record showed that Mr. Brew was a man of considerable financial means who could have maintained a comfortable lifestyle in Florida, as he had in Massachusetts, but it appeared from the record that he did not. In sum, the lifestyle maintained by Mr. Brew in Florida did not persuade the Board that he made genuine efforts to abandon his domicile in Massachusetts and establish a new one in Florida. Though Mr. Brew may have hoped and planned to move permanently to Florida someday, the Board found and ruled that he did not realize those plans prior to or during the tax years at issue.

Once established, domicile is “presumed to continue until a new one is acquired.” Davis, 284 Mass. at 49. “It is a general rule that the burden of showing a change of domicil[e] is upon the party asserting the change.” Mellon Nat’l Bank & Trust Co. v. Comm’r of Corporations and Taxation, 327 Mass. 631, 638 (1951); Horvitz, 51 Mass. App. Ct. at 394. It was undisputed that for many years prior to the tax years at issue in this appeal, Mr. Brew was domiciled in Massachusetts. The burden was therefore upon the appellant to prove that he abandoned his Massachusetts domicile and established a new one in Florida. On the basis of all of the evidence, the Board found and ruled that he did not meet his burden of proof. Accordingly, the Board issued a decision for the appellee in this appeal.

APPELLATE TAX BOARD

By: _____ _____ ________ Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

JOSEPH ANDREOZZI & v. BOARD OF ASSESSORS OF

OTHERS THE TOWN OF SEEKONK

Docket No. F304619 Promulgated:

September 10, 2010

This is an appeal originally filed under the informal procedure[152] pursuant to G.L. c. 58A, § 7A and c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes on certain real estate located in the Town of Seekonk, owned by and assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.

Commissioner Rose (“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 appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

Joseph Andreozzi, pro se, for the appellants.

Theodora Gabriel, assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the exhibits and testimony offered into evidence during the hearing of this appeal, the Presiding Commissioner made the following findings of fact.

On January 1, 2008, the appellants were the assessed owners of a parcel of real estate located at 24 Erimlinda Street in the Town of Seekonk (“subject property”). For fiscal year 2009, the Board of Assessors of Seekonk (“assessors”) valued the subject property at $115,700 and assessed a tax thereon, at the rate of $9.64 per thousand, in the total amount of $1,115.35. The appellants paid the tax without incurring interest.[153] On Monday, February 2, 2009,[154] the appellants timely applied for abatement in writing to the asessors, which they denied on March 25, 2009. On June 22, 2009, the appellants seasonably appealed to 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 consists of a vacant, unimproved lot located at the cul de sac of Erimlinda Street, in an area zoned for residential use. It is rectangular in shape and contains 10,000 square feet of land. The subject property is serviced by electricity but not by water or sewer. The subject property was previously used for the operation of a metal scrap and salvage business known as Seekonk Salvage Company.[155] At the time of the appeal, the subject property was being leased for the storage of commercial trucks.

The appellants contended that the subject property was overvalued. Mr. Andreozzi presented the appraisal report and testimony of James A. Houle, a certified general appraiser, whom the Presiding Commissioner qualified as an expert in the area of real estate valuation. According to Mr. Houle, the highest and best use of the subject property would be as a single-family residence. However, Mr. Houle cited impediments to developing the subject property to meet its highest and best use. First, he maintained that the subject property was encroached in the rear by wetlands, which Mr. Houle estimated would reduce the buildable area of the subject lot by about 20-25%. Second, the subject property had no water delivery system in place. Access to the public water supply would require the excavation of Erimlinda Street. However, the appellants offered into evidence a letter from the Seekonk Public Works Department explaining that, because Erimlinda Street had been recently paved in July, 2009, no excavating of the road would be permitted before August, 2014, per Seekonk by-law. The alternative, Mr. Houle offered, would be to dig a well, but in Mr. Houle’s opinion, the subject property’s reduced buildable-lot size likely would not accommodate the construction of a septic system and a well with the required distances between each. Mr. Houle further opined that a septic system and a house could not be accommodated on the property unless the house were very small, and that such a substandard structure would bring down the value of the entire lot.

Mr. Houle further opined that the market for vacant lots has been dwindling every year since 2005, because properties with “existing houses are selling for amounts far lower than the lowest cost to build new.” He also claimed that the subject property was not in a premium location in Seekonk. He thus concluded that “[a]ll the steps necessary to build on this lot, and the danger that approvals may not ever be obtained, make this lot very undesirable in the market.”

Mr. Houle next offered a comparable-sales analysis using all sales of vacant lots in Seekonk and all sales of single-family residences within one mile of the subject property. His generalized findings with respect to sales of vacant land during calendar year 2008 are reproduced in the following table.

2008 vacant land sales	Average selling price	$/sf low	$/sf high
8 sales	$163,750	$2.60	$5.26

At 10,000 square feet for the subject property, Mr. Houle’s findings would generate fair market values within the range of $26,000 to $52,600 for the subject property for the fiscal year at issue.

Mr. Houle then claimed that “a better indicator” of value would be using sales of single-family residences and then applying a ratio of average land value to total improvement value, with land value representing 30% of the sale price. With respect to calendar year 2008, Mr. Houle proffered that the average selling price of a single-family residence within one mile of the subject property was $285,000, and 30% of this was $85,500. Mr. Houle next applied “applicable discounts” to this figure for the wetlands, water connection and septic issues. He opined that the water connection would cost a minimum of $15,000, the septic design would cost $3,000, and the wetlands would further reduce the value of the subject property by about 10%. He then factored an additional 10% discount to reflect the subject property’s reduced “overall appeal” caused by all of these factors. Applying these discounts to the $85,500 value yielded a final indicator of value for fiscal year 2009 of $50,400, which he rounded to $50,500. Mr. Houle’s final opinion of value for the subject property was thus $50,500.

Theodora Gabriel, Assessor, testified on behalf of the appellee. Ms. Gabriel contended that the subject assessment already accounted for the various impediments to building upon the subject property. She submitted the fiscal year 2009 property record card and a computer printout of the fiscal year 2009 tax bill for the subject property, which both indicated that the subject property was being valued as class 131 “potentially developable.” Ms. Gabriel also demonstrated that the subject property was not subject to a wetlands buffer zone. She presented as evidence the application which Mr. Andreozzi had submitted to the Seekonk Conservation Commission, requesting permission to erect a shed on the subject property. The application indicated that the subject property “is not an area subject to protection under the act.” Pursuant to this application, Mr. Andreozzi was granted a building permit to construct a 20-by-21-foot shed on the subject property on July 10, 2008.

Ms. Gabriel next offered a comparable-sales analysis using six purportedly comparable properties. The purportedly comparable properties were recently developed and each contained a single-family residence. Their sales had occurred during calendar year 2007, before the properties were developed. The comparable properties ranged in size from 22,500 square feet to 32,200 square feet and ranged in sale price from $165,000 to $235,000. Ms. Gabriel contended that the comparable properties demonstrated that the subject assessment adequately accounted for the impediments to developing the subject property.

On the basis of these findings, the Presiding Commissioner found that the appellants presented insufficient evidence to demonstrate that the subject property was overvalued. In particular, the Presiding Commissioner was not persuaded by the testimony of Mr. Houle regarding the specific impediments to building on the subject property, because, as will be described further in the following Opinion, Mr. Houle was not a licensed engineer, architect or contractor, and thus lacked the expertise to present a persuasive opinion as to these conditions or their cost effect on the subject property’s value. Moreover Mr. Houle’s comparable-sales analysis lacked specificity with respect to features of the comparable properties which he used. The analysis was thus vague and lacked persuasive weight. Further, the Presiding Commissioner found that the evidence which the assessors presented was credible and supported the subject assessment. The Presiding Commissioner thus ultimately found that the appellants failed to meet their burden of proving that the subject property was overvalued for fiscal year 2009. Accordingly, the Presiding Commissioner issued a decision for the appellee in the instant appeal.

OPINION

The appellants have the burden of proving that the subject 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[] sustain[s] the burden of proving the contrary.’” General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 598 (1984) (quoting Schlaiker, 365 Mass. at 245).

In appeals before the 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 appeal, the appellants presented the testimony and appraisal report of Mr. Houle, which cited purported impediments to developing the subject property, particularly the presence of wetlands and water and septic connection issues. Mr. Houle next estimated costs associated with developing the subject property with these impediments. However, “[t]he Courts and this Board have found and ruled consistently that only qualified engineers, architects, or contractors should present cost estimates in most circumstances.” Cnossen v. Board of Assessors of Uxbridge, Mass. ATB Findings of Fact and Reports 2002-675, 690 (citing Tiger v. Mystic River Bridge Authority, 329 Mass. 514, 519 (1952) and Maryland Cup Corp. v. Assessors of Wilmington, Mass. ATB Findings of Fact and Reports 1988-169). Mr. Houle was not a licensed engineer, architect, or contractor. The Presiding Commissioner thus found and ruled that Mr. Houle was not competent to offer costs or applicable discounts to the subject property’s fair market value for impediments to development caused by the presence of wetlands or the construction of water delivery and septic systems. See Cnossen, Mass. ATB Findings of Fact and Reports at 2002-690 (finding that the witnesses’ lack of qualifications substantially diminished the probative value of their testimony relating to the reproduction-cost approach); see also Mason v. Board of Assessors of Winchester, Mass. ATB Findings of Fact and Reports 2004-110, 143.

Furthermore, the Presiding Commissioner was not persuaded by Mr. Houle’s comparable-sales analysis, which was merely a generic summary of sale prices from sales of unidentified vacant lots in Seekonk and sales of unidentified single-family residences within one mile of the subject property, without any specifications or adjustments for features which would affect a property’s fair market price, including size, location and condition. The Presiding Commissioner found and ruled that, without evidence of the comparability of the comparable-sale properties with the subject and appropriate adjustments for differences, the comparable-sales analysis was devoid of persuasive value.

The Board is guided by the principle that “‘evidence of a party having the burden of proof may not be disbelieved without an explicit and objectively adequate reason.’” New Boston Garden v. Assessors of Boston, 383 Mass. 456, 473 (1981) (quoting L.L. Jaffe, Judicial Control of Administrative Action 607 (1968)). However, the Board has also ruled that the mere qualification of a person as an expert does not endow his testimony with any magic
qualities (Boston Gas Co. v. Assessors of Boston, 334 Mass. at 579), particularly where the expert speaks to issues beyond his realm of expertise. See, e.g., Khan and Zasky, Trustees v. Assessors of Brookline, Mass. ATB Findings of Fact and Reports 2004-403, 435-6 (finding that, because the assessors’ real estate valuation expert lacked the expertise to estimate certain development costs, his approach to valuing the property based on those costs lacked merit). In the instant appeal, the Presiding Commissioner found objective reasons for disregarding the value that the appellants’ valuation expert derived for the subject property for the fiscal year at issue, namely, Mr. Houle’s lack of expertise for offering costs and discounts for any issues affecting the potential for the subject property’s development and the generic nature of his comparable-sales analysis. The Presiding Commissioner thus ruled that Mr. Houle’s opinion of value lacked adequate foundation or persuasive value. Further, the Presiding Commissioner ruled that the assessors’ evidence was credible and supported the subject assessment.

Accordingly, the Presiding Commissioner found and ruled that the appellants failed to meet their burden of proving a fair market value lower than that assessed and decided this appeal for the appellee.

APPELLATE TAX BOARD

By: ______________________________

James D. Rose, Commissioner

A true copy,

Attest: ________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

JOHN A. & CAROLE F. v. BOARD OF ASSESSORS OF

WHITTEMORE THE TOWN OF BELMONT

Docket No. F303055 Promulgated:

September 13, 2010

This is an appeal originally filed under the informal procedure[156] pursuant to G.L. c. 58A, § 7A 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 Belmont, assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.

Chairman Hammond heard the appeal. Commissioners Scharaffa, Egan, Rose and Mulhern joined him in a decision for the appellants.

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.

John A. Whittemore, pro se, for the appellants.

Paul R. Mordarski, Esq. 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 Board made the following findings of fact.

On January 1, 2008, the appellants were the assessed owners of a parcel of real estate located at 64 Summit Road in the Town of Belmont (“subject property”). For fiscal year 2009, the Board of Assessors of the Town of Belmont (“assessors”) valued the subject property at $1,311,000, and assessed a tax thereon, at the rate of $11.89 per thousand, in the total amount of $15,587.79. The appellants timely paid the tax due without incurring interest. On January 30, 2009, the appellants timely filed an abatement application with the assessors, which the assessors denied on April 28, 2009. On June 12, 2009, the appellants seasonably filed their appeal with the Appellate Tax Board (“Board”). On the basis of these facts, the Board found and ruled that it had jurisdiction over the instant appeal.

The subject property consists of a single-family condominium unit containing 2,789 square feet of gross living area. It is comprised of seven rooms, including three bedrooms, as well as four full bathrooms and one half bathroom. The subject property also includes: a full partially-finished basement (not included within the 2,789 square feet of gross living area), which contains two additional rooms and one of the full bathrooms; an attached two-car garage; an open-framed porch; and a wood deck. Amenities include granite countertops and back splash and solid natural wood cabinets in the kitchen and central air conditioning throughout the unit. The property record card for the subject property on file with the appellee lists the subject property as in “AA/Superlative” condition. The subject property is located within a 15-acre, 59-unit condominium community owned by the Woodlands at Belmont Hill, LLC (“the Woodlands”). The land upon which the condominium complex is situated was acquired by the Woodlands on March 8, 2005, and it was subsequently developed into a condominium complex. The appellants purchased the subject property from the Woodlands on August 31, 2006 for $1,390,000.

The appellants presented their case-in-chief through the testimony of appellant John Whittemore. He also submitted a spreadsheet created with information obtained by the real estate publication, Banker and Tradesman. Mr. Whittemore contended that when the appellants purchased the subject property in mid-2006, the real estate market was at its height, but that its fair market value has since declined by at least 30% of its original sale value. Mr. Whittemore’s spreadsheet included two sales of purportedly comparable condominium units within the Woodlands, which sold during fiscal year 2009 for less than their original sale price. The first comparable, 4 Candleberry Lane, contained 3,025 square feet of living area and was comprised of 7 rooms, including three bedrooms, as well as three full bathrooms and one half bathroom. This comparable property, which had previously sold for $1,395,000 in May, 2007, sold for $1,050,000 on December 19, 2008, reflecting a decrease of almost 25% from its original sale price in 2007. The second comparable, 39 Summit Road, contained 3,014 square feet of living area. In his abatement request to the assessors, Mr. Whittemore referred to this comparable property as “the exact same unit as ours.” This comparable property, which had previously sold for $1,389,492 on January 17, 2007, sold for $990,000 on April 15, 2009, reflecting a decrease of about 28% from its original sale price in 2007. On the basis of his research, Mr. Whittemore contended that the fair cash value of the subject property was between $950,000 to $1,000,000 for the fiscal year at issue.

The assessors presented their defense of the assessment through the testimony of Richard Simmons, Assessor for Belmont. Mr. Simmons also prepared an appraisal report, which included a comparable-sales analysis using the sale of the subject and two sales of purportedly comparable properties from the Woodlands. Mr. Simmons first contended that the sale of the subject on August 31, 2006 for $1,390,000 was persuasive evidence that its fair cash value was at least equal to its assessed value of $1,311,000 for fiscal year 2009. Mr. Simmons next presented his two purportedly comparable sales from within the Woodlands. The first, 8 Bayberry Lane, contained 2,789 square feet of living area and was comprised of seven rooms, including three bedrooms, as well as three full bathrooms and one half bathroom. This comparable property sold for $1,355,000 on October 17, 2007. Mr. Simmons provided upward adjustments totaling $31,700 for the subject property’s extra bathroom and extra fixtures, which yielded an adjusted sales price of $1,386,700. The second comparable, 8 Candleberry Lane, contained 3,014 square feet of living area and was comprised of seven rooms, including three bedrooms, as well as four full bathrooms and one half bathroom. It also included two fireplaces. This comparable property sold for $1,375,000 on June 1, 2007. Mr. Simmons provided a downward adjustment of $4,000 for the comparable property’s additional fireplace, which yielded an adjusted sales price of $1,371,100.

On the basis of all of the evidence submitted, the Board found that the evidence submitted was sufficient to prove that each of the condominium units within the Woodlands was substantially similar to the subject property and provided probative evidence of its fair market value. The Board further found that the appellants’ two comparable sales affirmatively demonstrated a significant downward turn in the market for substantially similar condominium units within the Woodlands after the appellants’ purchase of the subject in mid-2006. The appellee’s comparables were sold during 2007, before the relevant assessment date, and therefore did not fully reflect the demonstrated decrease in the real estate market as of the relevant assessment date. However, the Board further found that, because the appellant’s two sales occurred close to one year (4 Candleberry Lane) and over fifteen months (39 Summit Road) after the relevant assessment date, these comparable sales overstated the decrease in the market that existed on the relevant assessment date.

On the basis of all of the evidence of record, the Board found and ruled that the appellants met their burden of proving a fair market value for the subject property which was less than its fiscal year 2009 assessment. On the basis of its findings detailed above, the Board found that the fair cash value for the subject property for fiscal year 2009 was $1,200,000. Accordingly, the Board issued a decision for the appellants granting abatement of $1,319.79 for the 2009 fiscal year.

OPINION

Assessors are required to assess real estate at its fair cash value as of the first day of January preceding the fiscal year at issue. G.L. c. 59, §§ 11 and 38. The fair cash value of property is defined as the price upon which a willing buyer and a willing seller would agree if both are fully informed and under no compulsion. Boston Gas. Co. v. Assessors of Boston, 334 Mass. 549, 566 (1956).

The burden of proof is upon the taxpayers to make out a right to an abatement. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974). The assessment is presumed to be valid unless the taxpayers meet their burden of proving otherwise. Id. A right to an abatement can be proven by either introducing evidence of fair cash value, or by proving that the assessors erred in their method of valuation. General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 600 (1984).

Generally, real estate valuation experts, Massachusetts courts, and this Board rely upon three approaches to determine the fair cash value of property: income capitalization, sales comparison, and cost reproduction. Correia v. New Bedford Redevelopment 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).

Actual sales of the subject “‛are very strong evidence of fair market value, for they represent what a buyer has been willing to pay to a seller for [the] particular property [under appeal].’” New Boston Garden Corp. v. Board of Assessors of Boston, 383 Mass. 456, 469 (1981) (quoting First Nat’l Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560 (1971)). Moreover, whether a particular sale of the subject has occurred during an appropriate time period is a question of fact for the board to determine. See Ramacorti v. Boston Redevelopment Authority, 341 Mass. 377, 380 (1960), Brush Hill Development, Inc. v. Commonwealth, 338 Mass. 359, 367 (1959). In the instant appeal, the Board found that, by citing sales of substantially similar condominium units within the Woodlands, the appellants adequately demonstrated that the real estate market for substantially similar condominium units had declined between their purchase of the subject property in 2006 and the relevant assessment date for fiscal year 2009. Therefore, under the facts of this appeal, the appellants’ purchase price for the subject property was not the best evidence of its fair market value for fiscal year 2009.

“Evidence of the sale prices of ‘reasonably comparable property’ is the next best evidence to the sale of the property in question.” Lattuca v. Robsham, 442 Mass. 205, 216 (2004). Required are “fundamental similarities” between the subject property and the comparison properties. Id. at 216. The appellants bear the burden of “establishing the comparability of . . . properties [used for comparison] to the subject propert[ies].” Fleet Bank of Mass. v. Assessors of Manchester, Mass. ATB Findings of Fact and Reports 1998-546, 554. “Once basic comparability is established, it is then necessary to make adjustments for the differences, looking primarily to the relative quality of the properties, to develop a market indicator of value.” New Boston Garden Corp., 383 Mass. at 470. One of the key adjustments required for comparability is for time; an appropriate time adjustment will consider market trends and thus render a comparable property more equivalent to the subject on the relevant assessment date. See, e.g., Franco v. Board of Assessors of Holyoke, Mass. ATB Findings of Fact and Reports 2008-885, 891 (disregarding appellant’s evidence of a comparable property “sold 13 months after the valuation date for fiscal year 2007, [where] appellant offered no evidence of the intervening market conditions and made no adjustment for time”).

In the instant appeal, the Board found that the appellants’ comparable sales supported Mr. Whittemore’s testimony concerning a declining market between mid-2006 and the relevant assessment date for substantially similar condominium units, thus ultimately supporting the appellants’ claim that the subject property was overvalued for fiscal year 2009. However, as detailed in the Findings section above, the Board also found that the appellants’ comparable sales occurred on dates that were well beyond the relevant assessment date; therefore, although they indicated a downward trend in the market, the sales prices did not accurately reflect market value at the time of the relevant assessment date. Relying on the evidence of the declining real estate market for substantially similar condominium units within the Woodlands, but adjusting the appellants’ data to better reflect the market conditions on the relevant assessment date, the Board ultimately found and ruled that the fair cash value of the subject property for fiscal year 2009 was $1,200,000.

“In reaching its opinion of fair cash value in this appeal, the Board was not required to believe the testimony of any particular witness or to adopt any particular method of valuation . . . . Rather, the Board could accept those portions of the evidence that the Board determined had more convincing weight.” Foxboro Associates v. Board of Assessors of Foxborough, 385 Mass. 679, 683 (1982); New Boston Garden Corp., 383 Mass. at 473; Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 701-02 (1972). The Board need not specify the exact manner in which it arrived at its valuation. Jordan Marsh v. Assessors of Malden, 359 Mass. 196, 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.” Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 72 (1941). “The credibility of witnesses, the weight of evidence, the inferences to be drawn from the evidence are matters for the Board.” Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977).

The Board applied the above principles in reaching its determination that the assessors overvalued the subject property in the amount of $111,000 for fiscal year 2009. Accordingly, the Board issued a decision for the appellants granting abatement of $1,319.79.

THE APPELLATE TAX BOARD

By: ____________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ______________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

THOMAS & CYNTHIA v. BOARD OF ASSESSORS OF

CORRADO THE TOWN OF SHARON

Docket No. F299389 Promulgated:

September 14, 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 Sharon, owned by and assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.

Commissioner Egan heard the appeal. Chairman Hammond and Commissioners Scharaffa, Rose and Mulhern joined her in a decision for the appellee.

These findings of fact and report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

Thomas Corrado, pro se, for the appellants.

Mark Mazur, assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the exhibits and testimony offered into evidence during the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2008, the appellants were the assessed owners of a parcel of real estate located at 6 Mink Trap Lane in the Town of Sharon (“subject property”). For fiscal year 2009, the Board of Assessors of the Town of Sharon (“assessors”) valued the subject property at $597,200, and assessed a tax thereon, at the rate of $17.72 per thousand, in the total amount of $10,582.38. The appellants timely paid the tax assessed. On December 8, 2008, the appellants timely filed an abatement application with the assessors. On February 17, 2009, the assessors granted a partial reduction in assessed value to $564,800, resulting in an abatement of $574.87. On April 8, 2009, the appellants seasonably filed their appeal with the Board. On the basis of these facts, the Board found and ruled that it had jurisdiction over the instant appeal.

The subject property consists of a 2.3-acre parcel of land improved with a single-family, Colonial-style home built in 1986 and containing 2,658 square feet of gross living area. The subject home is comprised of eight rooms, including three bedrooms, as well as two full bathrooms and one half bathroom. The exterior of the subject home is shiplap siding with a gable hip roof. The first floor of the subject home has hardwood flooring and the second floor is carpeted. The subject home’s hot-water heating system is fueled by gas. Other amenities of the subject home include central air conditioning, a fireplace, a 225-square-foot finished basement, a finished enclosed porch, a finished two-car garage, a finished open porch, and a wooden deck. The subject property also includes a shed.

The original property record card for the subject property reveals that the assessors rated the subject property at a grade 8 for “excellent +10.” After the appellants appealed the subject assessment, the assessors reduced the subject’s rating to a grade 7 “excellent.” The lesser grade resulted in a reduction in value of $32,400 to $564,800, which produced a real estate tax abatement of $574.87.

The appellants presented their case through the testimony of appellant Thomas Corrado. Mr. Corrado contended that the subject property was overvalued based on a comparison with the assessments and sales of two purportedly comparable properties – 121 Furnace Street and 125 Furnace Street. According to Mr. Corrado, the two comparable properties and the subject property were all built by the same builder. With respect to the comparable properties’ assessments, Mr. Corrado focused on the land portion of the assessment, with the subject property at 2,658 square feet, 121 Furnace Street at 2,464 square feet, and 125 Furnace Street at 2,699 square feet. Mr. Corrado pointed out that the three properties were all assigned the same land values in 1996, but by the fiscal year at issue, the land value of the subject has increased by over $40,000 over the land values of these comparables. Next, Mr. Corrado pointed to the 2007 sale prices of these purportedly comparable properties, noting that 121 Furnace Street sold for $505,000 and 125 Furnace Street sold for $415,000. Based on Mr. Corrado’s comparable assessments and comparable sales, the appellants’ opinion of value for the subject property was $510,000.

Mark Mazur, Assessor for Sharon, testified in defense of the subject assessment. He explained that the subject home’s grade was reduced from an 8 to a 7 after comparison with the home at 121 Furnace Street, one of the appellants’ comparables, which they had cited in their abatement application. Mr. Mazur also explained that the assessors had already applied two discounts to the land value of the subject property for fiscal year 2009: (1) a ten-percent discount for an easement for a “paper street” that runs along the property for 280 feet and cuts through the rear of the property for 130 feet; and (2) a seventy-five-percent discount on the value of the excess land for the topography and the easement. These reductions totaled $30,600, resulting in a total land value for fiscal year 2009 of $230,100.

Finally, Mr. Mazur pointed out key differences between the subject property and the appellants’ comparables at 121 Furnace Street and 125 Furnace Street. First, the comparable properties are located in a neighborhood which is inferior to that of the subject property, particularly because Furnace Street is a cut-through street. Second, the comparable properties each contain a large area of wetlands and power lines also run through their parcels. Finally, the sale of 125 Furnace Street on October 30, 2007 was a foreclosure sale, and the appellants offered no evidence to support a finding that the price paid represented fair market value.

On the basis of the evidence submitted at the hearing, the Board found that the appellants’ comparable-sales analysis and comparable-assessments analysis both failed to establish that the subject property was overvalued for the fiscal year at issue. First, the appellants’ comparable-assessments analysis focused solely on the land portions of the comparable assessments. However, as will be explained in the following Opinion, the Board found that the appellants’ land-value analysis did not provide credible, persuasive evidence that the total assessment, including land and building values, exceeded the subject property’s fair cash value.

With respect to the comparable-sales analysis, the Board found that the differences between the appellants’ purportedly comparable properties and the subject – particularly with respect to their location in a less desirable neighborhood on a cut-through street and the presence of wetlands and power lines – greatly compromised their comparability with the subject property. Moreover, the appellants did not apply any adjustments to the sale prices of these properties to compensate for these differences. Finally, because the sale of 125 Furnace Street was by foreclosure and the appellants failed to introduce further evidence concerning the circumstances of the sale, the Board found that the sale did not provide reliable or persuasive evidence of value in this appeal.

Based on these findings, as will be explained more fully in the following Opinion, the Board thus found that the appellants failed to meet their burden of proving that the assessed value of the subject property, as abated, exceeded its fair cash value for the fiscal year at issue. Accordingly, the Board issued a decision for the appellee.

OPINION

The assessment is presumed valid unless the taxpayers sustain their 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 appellants to make out their right as a matter of law to an abatement of the tax. Id. The appellants 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)).

In the present appeal, the appellants first asserted that the land component of the subject property was overvalued in comparison to the land-component valuations of two purportedly comparable parcels located at 121 Furnace Street and 125 Furnace Street. However, a taxpayer does not establish a right to an abatement merely by showing that either the land or a building is overvalued; “‘the question is whether the assessment for the parcel of real estate, including both the land and the structures thereon, is excessive. The component parts, on which that single assessment is laid, are each open to inquiry and revision by the appellate tribunal in reaching the conclusion whether the single assessment is excessive.’” Anderson v. Assessors of Barnstable, Mass. ATB Findings of Fact and Reports 1999-596, 601-02 (quoting Massachusetts General Hospital v. Belmont, 238 Mass. 396, 403 (1921)). Here, the Board found and ruled that the appellants’ land-valuation evidence failed to account for any other components of the total subject assessment in comparison with the comparables’ total assessments and therefore was insufficient to show that the overall assessment of the subject property exceeded its fair cash value.

The appellants next employed a comparable-sale analysis using 121 Furnace Street and 125 Furnace Street. “[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).

The Board found that the comparable properties’ location in a less desirable neighborhood on a cut-through street and the presence of considerable wetlands and power lines within their parcels greatly compromised these properties’ comparability with the subject property. Moreover, the appellants further erred by failing to apply any adjustments to the sale prices of these properties or their assessed values to compensate for these differences.

Finally, 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). The Board found that, because the sale of 125 Furnace Street was by foreclosure and the appellants failed to introduce further evidence concerning the circumstances of the sale, the sale price of 125 Furnace Street was not reliable or persuasive evidence of the fair cash value of the subject property for purposes of 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.

On the basis of all of the evidence submitted at the hearing of this appeal, and the conclusions drawn from that evidence, the Board found and ruled that the appellants failed to meet their burden of proving that the subject assessment, as abated, exceeded its fair cash value. Accordingly, the Board issued a decision for the appellee in this appeal.

APPELLATE TAX BOARD

By: _________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ______ _____

Clerk of the Board

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 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: _____________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

BRIAN J. & GAIL M. TAYLOR v. BOARD OF ASSESSORS OF

THE TOWN OF MARSHFIELD

Docket No. F302696 Promulgated:

September 22, 2010

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 Marshfield (“assessors” or “appellee”) to abate taxes on real estate located in Marshfield, owned by and assessed to the appellants, Brian J. & Gail M. Taylor (“appellants”) under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.

Commissioner Mulhern heard this appeal. Chairman Hammond and Commissioners Scharaffa, Egan, and Rose joined him in a 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.

Brian Taylor, pro se, for the appellants.

Elizabeth Bates, assessor/appraiser, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the exhibits and testimony offered into evidence, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2008, the appellants were the assessed owners of a parcel of real estate located at 938 Summer Street in Marshfield, Massachusetts (“subject property”). For fiscal year 2009, the assessors valued the subject property at $2,272,900 and assessed taxes thereon, at the rate of $9.99 per $1,000, in the amount of $22,706.27. Of the subject property’s total assessment, the assessors attributed $1,308,200 to the land and $947,000 to the building. On December 29, 2008, the Marshfield Collector of Taxes mailed the town’s actual fiscal year 2009 tax bills. In accordance with G.L. c. 59, § 57C, the appellants timely paid the tax assessed on the subject property without incurring interest. On February 2, 2009[157], in accordance with G.L. c. 59, § 59, the appellants timely filed their Application for Abatement with the assessors, which they denied on March 23, 2009. On June 22, 2009, the appellants seasonably filed their appeal with the Board. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

The subject property consists of an 11-acre parcel of land improved with a two-story, Colonial-style, single-family residence constructed in 1994. According to its property record card, the dwelling contains twelve rooms, including five bedrooms, and also three full bathrooms and two half bathrooms. The dwelling also has a partially finished basement, both open and enclosed porches, and a rear patio. The subject property’s property record card describes the interior finishes of the dwelling as excellent. The exterior of the dwelling is clapboard, and it has a gable-style, wood-shingle roof. The subject property is also improved with an in-ground pool, an 800-square-foot pool house/cottage, and also a 1,863-square-foot greenhouse. The total finished living area, including the dwelling and detached pool house/cottage is 6,352 square feet. The assessors describe the subject property as an “estate” setting.

The subject parcel, which is primarily rectangular in shape, is located in North Marshfield along the North River. The area has been described as eclectic, improved with similar newer, “estate-type” residences, as well as much older homes dating back to the 17^th century. The subject parcel has approximately four hundred feet of frontage on North River, which is a navigable waterway that leads to the Atlantic Ocean. According to the property record card, the parcel also includes approximately 3.9 acres of marsh lands. The subject property is in a neighborhood identified as RFO – Riverfront Very Good (“RFO”). As evidenced by the property record card, the subject property land values were assessed at $18.43 per square foot for the first acre (43,560 square feet * $18.43 = $802,810.80); $80,281.08 per acre for excess acreage (6.1 acres * $80,281.08= $489,714.59) and $4,014.05 per acre for acreage identified as marsh land (3.9 acres * $4,014.05 = $15,654.80), resulting in a total land assessment of $1,308,200.

The appellants argued that the subject property was overvalued because the assessors had placed too high a value on the land portion of the assessment. To support their case, the appellants primarily relied on the land assessments of eleven purportedly comparable properties located within two miles of the subject property, including the abutters of the subject property to the east and the west. The properties ranged in size from 3.91 acres to 14.8 acres and all were riverfront properties with frontage that ranged from 120 feet to 530 feet. The land assessments for the appellants’ purportedly comparable properties ranged from $479,100 to $1,488,200. Mr. Taylor argued that the properties cited in his spreadsheet offered locations and site characteristics comparable to the subject property, yet the land assessments of a majority of the properties were less than the subject property’s land assessment. The appellants further argued that the land value assessments of his purportedly comparable properties indicated inconsistencies in the town’s overall land values.

Finally, the appellants offered into evidence the property listing sheets and property record cards for several properties in Marshfield that have been listed for sale since 2007. Included was the sale of 1233 Union Street, which is a 10.17-acre parcel of real estate improved with a 7,147-square-foot, single-family dwelling, also located in the RFO neighborhood. This property sold on November 24, 2009 for $2,337,000. Based on all the evidence submitted, the appellants argued that the subject property should be assessed at $1,871,500, the subject property’s fiscal year 2006 assessed value.

In support of their assessment, the assessors offered the testimony of Elizabeth Bates, the town’s assessor/appraiser. Ms. Bates testified that there were no sales of similar-type properties in 2008. However, the assessors offered into evidence the sale of two properties located in the RFO neighborhood which occurred approximately eighteen months prior to and eighteen months after the relevant assessment date. Sale number one, located at 1277 Union Street, consists of a 9.9-acre parcel improved with a single-family dwelling with a finished living area of 4,111 square feet. This property sold on June 30, 2006 for $2,600,000. Sale number two, located at 1243 Union Street, consist of a 9.8-acre parcel improved with a single-family dwelling with a finished living area of 3,215 square feet. This property sold on June 26, 2009 for $1,250,000.

The assessors also offered into evidence the property record cards of four properties that they deemed to be comparable to the subject property. Three of the four properties were located solely in the RFO neighborhood and ranged in size from 12.52 to 13.50 acres, with finished living areas that ranged from 4,771 square feet to 9,098 square feet. The land value assessments ranged from $1,464,000 to $1,636,100 with the total assessed values ranging from $2,175,600 to $3,439,800. The assessors’ final comparable assessment was a 17.07-acre parcel improved with two residential structures with a total finished living area of 11,035 square feet. This parcel was partially located in the MR1 neighborhood, identified as Main Road Very Good, and partially located in the RFO neighborhood. The property’s fiscal year 2009 land assessment was $1,921,000 and the total assessed value was $4,037,200. Ms. Bates further testified that the properties situated in the RFO district are among the best sites in town offering water views and direct access to the North River.

Based on the evidence presented, the Board found that the appellants’ assessment comparison did not support their claim that the land component and the overall assessment of the subject property were excessive. First, as evidenced by the purportedly comparable properties’ property record cards, a majority of the properties were located in neighborhoods designated as riverfront good, compared to the subject property which was located in the riverfront very good neighborhood. Second, in their land assessment comparison, the appellants failed to provide any information regarding the comparable properties’ improvements and also failed to make any adjustments for differences that existed between the subject property and the purported comparables, including adjustments for land size, living area, and location. Finally, as evidenced by both the appellants’ land assessment comparison and the property record cards, the appellants’ purported comparable properties that were located in the RFO neighborhood were all assessed at the same per-acre values as the subject property.

On the basis of all of the evidence, the Board found that the appellants did not meet their burden of proving that the subject property was overvalued for the fiscal year at issue. The Board found that the appellants’ focus on the land values of their purportedly comparable properties failed to address whether the overall assessment of the subject property was excessive. Moreover, as evidenced by the property record cards for the appellants’ purportedly comparable properties, all properties located within the RFO neighborhood were valued at the same per-acre land values, with any differences properly resulting from the amount of acreage in each of the three land-type categories.

For these reasons, and as discussed further in the Opinion below, the Board found that the appellants did not meet their burden of proving that the subject property was overvalued for fiscal year 2009 and, accordingly, issued a decision for the appellee.

OPINION

The appellants have the burden of proving that the property has a lower value than that assessed. “‘The burden of proof is upon the petitioner to make out its right as [a] matter of law to [an] abatement of the tax.’” Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974) (quoting Judson Freight Forwarding 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 taxpayers . . . prove the contrary.’” General Electric Co. v. Assessors of Lynn, 393 Mass. 591, 598 (1984) (quoting Schlaiker, 365 Mass. at 245).

At any hearing relative to the assessed fair cash valuation . . . of property, evidence as to the fair cash valuation . . . at which assessors have assessed other property of a comparable nature . . . shall be admissible.” G.L. c. 58A, § 12B. “The admissibility under G.L. c. 58A, § 12B, of evidence of assessments imposed on other property claimed to be comparable in nature to the subject property is largely a matter within the discretion of the board.” Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 703 (1972). The properties used in a comparable-assessment analysis must be comparable to the subject property in order to be probative of the fair cash value. See id.

“The appellant bears the burden of ‘establishing the comparability of . . . properties [used for comparison] to the subject propert[ies].’” Wood v. Assessors of Fall River, Mass. ATB Findings of Fact and Report 2008-213, 225. (Citation omitted.) “Once basic comparability is established, it is then necessary to make adjustments for the differences, looking primarily to the relative quality of the properties, to develop a market indicator of value.” New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 470 (1981).

In the present appeal, the appellants relied on the land assessments of eleven purportedly comparable properties. The appellants did not, however, make any adjustments for differences between the subject property and the purported comparable properties, including the different neighborhood classifications. See Antonino v. Assessors of Shutesbury, Mass. ATB Findings of Fact and Reports 2008-54, 71 (finding that reliance on unadjusted assessments of assertedly comparable properties was insufficient to justify a value lower than that assessed).

Moreover, a taxpayer does not conclusively establish a right to abatement merely by showing that his land is overvalued. “The tax on a parcel of land and the building thereon is one tax . . . although for statistical purposes they may be valued separately.” Assessors of Brookline v. Prudential Insurance Co., 310 Mass. 300, 317 (1941). In abatement proceedings, “the question is whether the assessment for the parcel of real estate, including both the land and the structures thereon, is excessive. The component parts, on which that single assessment is laid, are each open to inquiry and revision by the appellate tribunal in reaching the conclusion whether that single assessment is excessive.” Massachusetts General Hospital v. Belmont, 238 Mass. 396, 403 (1921); see also Chater v. Assessors of Dighton, Mass. ATB Findings of Fact and Reports 2009-372, 380; Buckley v. Assessors of Duxbury, Mass. ATB Findings of Fact and Reports 1990-110, 119.

In the present appeal, the appellant challenged the value of the land component of the subject assessment. The Board found that the land assessment for the subject property was consistent with the land assessments for other similarly-sized properties located in the same neighborhood as the subject property. The Board further found that the appellants’ evidence challenging the land value assessment failed to prove that the fair cash value of the subject property exceeded its overall assessment for the relevant assessment date. See Pistorio v. Assessors of Boston, Mass. ATB Findings of Fact and Reports 2010-206, 214-15.

Based on the evidence presented, the Board found and ruled that the appellants failed to meet their burden of proving that the subject property’s land or overall assessment was overvalued. On this basis, the Board decided this appeal for the appellee.

APPELLATE TAX BOARD

By: _________________________________

Thomas W. Hammond, Jr., Chairman

A true Copy:

Attest: _____________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

PAUL B.COCCHI d/b/a v. BOARD OF ASSESSORS OF

HICK-O-ROCK FARM THE TOWN OF LUDLOW

Docket No. F301789

PAUL B. COCCHI v. BOARD OF ASSESSORS OF

THE TOWN OF LUDLOW

Docket No. F301790

Promulgated:

September 28, 2010

These are appeals under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes on certain personal and real property in the Town of Ludlow owned by and assessed to the appellant, under G.L. c. 59, §§ 11 and 18, for fiscal year 2009 (“fiscal year at issue”).

Commissioner Rose (“Presiding Commissioner”) heard these appeals, and, in accordance with G.L. c. 58A, § 1A and 831 CMR 1.20, issued single-member decisions 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.

Paul B. Cocchi, pro se, for the appellant.

David J. Martel, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

I. Docket Number F301789

On January 1, 2008, appellant Paul B. Cocchi d/b/a Hick-o-Rock Farm (“Mr. Cocchi” or “appellant”) owned certain personal property located at 312 Miller Street in Ludlow (“subject personal property”). In accordance with G.L. c. 59, § 29, the appellant timely filed a Form of List for fiscal year 2009 listing the subject personal property. The Board of Assessors of Ludlow (“assessors” or “appellee”) valued the subject property at $22,720 and assessed a tax thereon, at the rate of $14.96 per $1,000, in the amount of $324.44. The appellant paid the tax due on February 2, 2009.[158] The appellant timely filed an Application for Abatement with the assessors on February 2, 2009. On March 10, 2009, the assessors denied the appellant’s Application for Abatement and on June 10, 2009, the appellant seasonably appealed the denial to the
Appellate Tax Board (“Board”).[159] On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide this appeal.

The subject personal property consisted of a backhoe. The appellant asserted that the value of the backhoe was approximately $7,800, rather than its assessed value of $22,720, and further argued that, under G.L. c. 59, § 8A, (“§ 8A”) the backhoe was subject to an excise tax at the rate of $5.00 per $1,000, not a personal property tax at the rate of $14.96 per $1,000.[160]

The Board has dealt with the assessment of the appellant’s backhoe in previous appeals. See Paul Cocchi d/b/a Hickory Rock Farm v. Assessors of Ludlow, Mass. ATB Findings of Fact and Reports 2006-680 (“Cocchi I”). Cocchi I involved, among other things, the valuation of the appellant’s backhoe for fiscal year 2004. The Board found in that appeal that the fair cash value of the backhoe was $38,637. The Board reached its finding of value in Cocchi I by taking the $53,000 purchase price of the backhoe and applying a 10% annual depreciation factor.[161] More recently, in Paul Cocchi d/b/a Hick-o-Rock Farm v. Assessors of Ludlow, Mass. ATB Findings of Fact and Reports 2007-1379 (“Cocchi II”), which involved the valuation of the appellant’s backhoe for fiscal year 2005, the Board applied the same depreciation factor to its finding of value for the backhoe in Cocchi I and found that the value of the appellant’s backhoe for fiscal year 2005 was $34,773. The Board took judicial notice of its findings in Cocchi I and Cocchi II in the present appeal.

As he did in Cocchi I and Cocchi II, the appellant asserted in the present appeal that because he was engaged in farming at Hick-o-Rock Farm, the backhoe should be valued and taxed under § 8A at $5.00 per thousand dollars of value, instead of G.L. c. 59, § 38 (“§ 38”), under which property is taxed at the town’s applicable property tax rate of $14.96 per thousand dollars of value. The Presiding Commissioner found in this appeal, as the Board did in previous appeals, that the appellant failed to prove that he was “engaged principally in agriculture” (emphasis added) as required by § 8A, because the appellant did not introduce sufficient evidence of the extent to which he was engaged in agriculture.

Mr. Cocchi did not provide a detailed account of the amount of time or resources that he committed to agriculture as compared to other business activities. Both Cocchi I and Cocchi II involved the taxation of equipment used by Mr. Cocchi in connection with his tree business, “Paul’s Tree Service.” Paul Cocchi d/b/a Hickory Rock Farm, Mass. ATB Findings of Fact and Reports 2006-680 at 687; Paul Cocchi d/b/a Hick-o-Rock Farm, Mass. ATB Findings of Fact and Reports 2007-1379 at 1385. In those appeals, the Board found and ruled that Mr. Cocchi was a “tree surgeon.” There was uncontroverted testimony in the present appeal that Mr. Cocchi continued to operate his tree business during the fiscal year at issue. Mr. Cocchi did not even claim, let alone prove, that he devoted the majority of his time to Hick-o-Rock Farm rather than his tree business. The only evidence offered by Mr. Cocchi in support of his argument was a series of checks, totaling just over $2,000, made out to “Hick-o-Rock Farm” for the purchase of cord wood. Given the amount of money involved, the Presiding Commissioner found that the checks did not lend themselves to the inference that farming was Mr. Cocchi’s principal pursuit. Mr. Cocchi failed in the present appeal to prove that agriculture, as opposed to his tree business or other ventures, was his principal pursuit, as required by § 8A. The Presiding Commissioner found that Mr. Cocchi failed to establish that his backhoe was entitled to be taxed under the provisions of § 8A, and therefore, found that it was proper for the assessors to value and tax the backhoe under § 38.

Regarding the valuation of the backhoe, the appellant alleged that its fair cash value was approximately $7,800. However, he offered no evidence to support, or even to explain, how he arrived at that valuation. On the basis of all of the evidence, and in accordance with the depreciation factors used by the Board in Cocchi I and Cocchi II, the Presiding Commissioner found that the fair cash value of the backhoe was $22,814.57, which was more than its assessed value of $22,720. Accordingly, the Presiding Commissioner found that the appellant failed to establish his right to an abatement, and issued a decision for the appellee in Docket Number F301789.

II. Docket No. F301790

On January 1, 2008, the appellant was the assessed owner of a 6.55-acre parcel of land improved with a single-family Cape Cod-style dwelling located at 312 Miller Street in Ludlow (“subject real property”). For the fiscal year at issue, the assessors valued the subject real property at $205,600 and assessed a tax thereon, at the rate of $14.28 per thousand, in the total amount of $2,935.97. The appellant timely paid the tax due without incurring interest. The appellant timely filed an Application for Abatement with the assessors on February 2, 2009. The Application for Abatement was denied by vote of the assessors on March 10, 2009. The appellant timely filed an appeal with the Board on June 10, 2009.[162] On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide this appeal.

The Cape-Cod-style dwelling situated on the subject real property contains 1,420 square feet of finished living area, including four bedrooms. The exterior of the dwelling is brick with an asphalt-shingled, gabled roof. Interior finishes include hardwood floors and plaster walls. The dwelling also has an 80-square-foot porch, a 216-square-foot patio, a 270-square-foot wood deck, and a detached two-car garage.

The appellant contended that the subject real property was overvalued because water run-off from a nearby subdivision built in 1997 has caused much of the subject real property to become wetland. The appellant introduced pictures, maps, and various items of correspondence in support of this assertion. Among those items of correspondence is a letter from an environmental consultant who had been retained by the appellant to perform an evaluation of the subject real property. Also among the items of correspondence is a letter dated March 15, 2005 from Dwane Coffey, District Conservationist, which states that the National Wetlands Inventory Forested Wetlands map showed no wetlands on the subject real property.

The appellant also contended that the assessed value of the subject real property exceeded its fair cash value because of the deterioration of the dwelling, including a cracked foundation, damaged chimney, and rotted wood on the porch and deck. Photographs of the porch, deck and chimney were introduced into evidence by the appellant. Mr. Cocchi’s opinion of fair cash value for the subject real property was $150,000.

In support of the assessment, the assessors introduced a sales-comparison analysis of three properties in Ludlow. The three comparable-sales properties all featured single-family Cape-Cod-style dwellings, like the dwelling on the subject real property. The dwellings on the three comparable-sales properties were constructed around the same time as the dwelling on the subject real property.

The assessors’ comparable number one was 55 Lehigh Street, which is 1.61 miles from the subject real property. It consists of an 8,184-square-foot lot improved with a Cape-Cod-style dwelling which has 1,322 square feet of finished living space, including two bedrooms. Comparable number one also features a 120-square-foot patio, a 126-square-foot enclosed porch, an unfinished basement and a detached one-car garage. Comparable number one sold on September 4, 2007 for $200,000.

The assessors’ comparable number two was 37 Lakeview Avenue, which is 1.88 miles from the subject real property. Comparable number two consists of a 5,000-square-foot lot improved with a Cape-Cod-style dwelling which has 1,170 square feet of finished living area, including four bedrooms. It also has a partially-finished basement, a 160-square-foot enclosed porch, and a one-car detached garage. Comparable number two sold on March 5, 2007 for $195,000.

The assessors’ comparable number three was 84 Yale Street, which is 1.78 miles from the subject real property. Comparable number three consists of a 10,000-square-foot lot improved with a Cape-Cod-style dwelling which has 1,154 square feet of finished living area, including three bedrooms. It also has an unfinished basement, a 156-square-foot open porch, and a two-car detached garage. Comparable number three sold on July 27, 2007 for $181,000.

The Presiding Commissioner found that the assessors’ sales-comparison analysis involved properties substantially similar to the subject real property. All three properties were improved with Cape-Cod-style dwellings similar in size and age to the dwelling on the subject real property. They were each located less than two miles from the subject real property and each sold in reasonably close proximity to the relevant date of assessment. The Presiding Commissioner therefore found that the assessors’ sales-comparison analysis provided probative and reliable evidence of the fair cash value of the subject real property.

The assessors’ three comparable-sales properties sold for between $181,000 and $200,000, slightly less than the assessed value of the subject real property, which was $205,600. However, the subject real property had a vastly larger lot than the three comparable-sales properties, and the Presiding Commissioner found that this fact warranted a higher fair cash value. The Presiding Commissioner therefore found that the assessors’ sales-comparison analysis provided reliable evidence that the assessed value of the subject real property did not exceed its fair cash value.

In contrast, the evidence offered by the appellant failed to establish that the fair cash value of the subject real property was less than its assessed value. The appellant’s primary contention was that the subject real property was overvalued because of the presence of wetlands. However, the Presiding Commissioner found that the evidence was inconclusive as to whether there are wetlands on the subject real property. Moreover, it appears from the record that the assessors accounted for that possibility in valuing the subject real property. The assessors valued all but one of the subject real property’s 6.55 acres as rear or excess acreage and made an additional 25% reduction to the value of the 5.55 excess acres, valuing those acres in the total amount of only $13,070. The Presiding Commissioner found that, to the extent the subject real property suffered from water drainage issues, the assessors accounted for this fact in setting the assessment.

Similarly, although the appellant introduced photographs showing the deterioration of the dwelling’s porch, deck, and chimney, he failed to detail the impact of the condition of the dwelling on its fair cash value or to prove that the assessors did not take the condition of the dwelling into consideration in valuing the subject real property. The property record cards entered into evidence for the assessors’ three comparable-sales properties showed that the dwellings on those properties were constructed during the same time period as the dwelling on the subject real property and they were given condition factors similar to the condition factors used by the assessors for the subject real property. The appellant failed to persuade the Presiding Commissioner that the assessors did not adequately account for the condition of the subject real property in valuing it, nor did he otherwise prove that its fair cash value was less than its assessed value.

In conclusion, the Presiding Commissioner found that the appellant failed to establish his right to an abatement, and, accordingly, the Presiding Commissioner issued a decision for the appellee in Docket No. F301790.

OPINION

I. Taxation of the Subject Personal Property

Generally, assessors are required to assess real and personal property subject to taxation at its fair cash value and apply the applicable tax rate for their municipality to determine the tax due and payable on such property. G.L. c. 59, § 38. However, G.L. c. 59, § 8A provides an exception to the general rule of § 38 for the taxation of “farm machinery and equipment” used by any person “engaged principally in agriculture.” Section 8A provides that such machinery and equipment shall be assessed at the rate of “five dollars per one thousand dollars of valuation, as determined by the commissioner of revenue.”

The appellant asserted that his backhoe should be valued and taxed under the more favorable provisions of § 8A, instead of § 38, because it was used at Hick-o-Rock Farm. The Presiding Commissioner found and ruled, however, that the appellant did not introduce sufficient evidence to support a finding that he was “engaged principally in agriculture,” as required by § 8A (emphasis added). There was uncontroverted evidence that, in addition to Hick-o-Rock Farm, Mr. Cocchi runs a business called Paul’s Tree Service. In the present appeal, Mr. Cocchi did not introduce sufficient evidence to establish that his principal pursuit was farming, rather than his tree business or other ventures. The appellant introduced a series of checks made out to Hick-o-Rock Farm for the purchase of cord wood. However, the checks totaled approximately $2,000, a sum of money which did not persuade the Presiding Commissioner that Mr. Cocchi was “engaged principally in agriculture.” G.L. c. 59, § 8A. Accordingly, the Presiding Commissioner found and ruled that the appellant did not establish the appropriateness of valuing and taxing the backhoe under § 8A, and, therefore, concluded that it was proper for the assessors to value and tax it under § 38.

With respect to the valuation of the backhoe, the appellant asserted that its fair cash value was $7,800. However, he offered no evidence to support that value. Based on the evidence presented, and in accordance with the methodology used by the Board to value the backhoe in Cocchi I and Cocchi II, the Presiding Commissioner found that the fair cash value of the backhoe was $22,814.57, which was more than its assessed value of $22,720. The appellant therefore failed to demonstrate that the fair cash value of the backhoe was less than its assessed value, and accordingly, failed to prove his right to an abatement. The Presiding Commissioner therefore issued a decision for the appellee in Docket No. F301789.

II. Valuation of the Subject Real Property

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)). Sales of comparable realty in the same geographic area and within a reasonable time of the assessment date often contain 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, Graham, 73 Mass. App. Ct. 1107 (2008). The evidence introduced by the appellant with respect to the valuation of the subject real property included documents, photographs and his own testimony regarding the existence of possible wetlands on the subject real property as well as damage to the dwelling’s exterior, including its porch, deck and chimney. The Presiding Commissioner found and ruled that this evidence regarding the subject real property’s condition did not constitute “affirmative evidence of value,” nor was it evidence which revealed “flaws or errors” in the assessors’ method of valuation. General Electric Co., 393 Mass. at 600.

The appellant contended that the fair cash value of the subject real property was negatively impacted by the existence of wetlands on the subject real property. The assessors valued as excess or rear acreage all but one of the subject real property’s 6.55 acres. They further reduced the value of the excess 5.55 acres by 25%, valuing them in the total amount of $13,070. The record was inconclusive as to whether there are wetlands on the subject real property; moreover, to the extent there are such wetlands, there was no evidence suggesting that the assessors did not take this issue into consideration in valuing the subject real property. Accordingly, the Presiding Commissioner did not find the appellant’s argument to be persuasive.

Further, there was no evidence indicating that the assessors failed to take into consideration the condition of the dwelling when valuing the subject real property. The subject real property was valued commensurately with other, similar properties in close proximity to it, as evidenced by the assessors’ sales-comparison analysis involving three other properties in Ludlow. The assessors’ comparable-sales properties were Cape-Cod-style dwellings similar in style, size and age to the dwelling on the subject real property. The three comparable-sales properties sold reasonably close in time to the relevant date of assessment for between $181,000 and $200,000, slightly less than the assessed value of the subject real property, which was $205,600. However, the subject real property has a much larger lot size than the comparables, which the Presiding Commissioner found warranted its higher valuation.

In conclusion, the Presiding Commissioner found and ruled that the evidence offered by the appellant did not demonstrate that the fair cash value of the subject real property was less than its assessed value. The Presiding Commissioner further found and ruled that the assessors’ sales-comparison analysis provided reliable evidence that the assessed value of the subject property did not exceed its fair cash value. Based on the foregoing, the Presiding Commissioner found and ruled that the appellant failed to meet his burden of establishing his right to an abatement. Accordingly, the Presiding Commissioner issued a decision for the appellee in Docket No. F301790.

CONCLUSION

On the basis of all of the evidence, the Presiding Commissioner found and ruled that the appellant failed to meet his burden of proving his right to an abatement, and accordingly, issued decisions for the appellee in these appeals.

THE APPELLATE TAX BOARD

By: ___________________________________

James D. Rose, Commissioner

A true copy,

Attest: _________________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

MAURA A. LAREAU and v. BOARD OF ASSESSORS OF

GREGORY J. LAREAU THE TOWN OF NORWELL

Docket No. F303162 Promulgated:

October 8,

2010

This is an appeal under the formal procedure, pursuant to G.L. c. 59, §§ 64 and 65, from the refusal of the Board of Assessors of the Town of Norwell (“appellee” or “assessors”) to abate taxes on certain real estate in Norwell, owned by and assessed to Maura A. Lareau and Gregory J. Lareau (“appellants”) under G.L. c. 59, §§ 11 and 38, for fiscal year 2009.

Commissioner Rose heard this appeal. He was joined in the decision for the appellee by Chairman Hammond and Commissioners Scharaffa and Egan.

These findings of fact and report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

Maura A. Lareau, pro se, for the appellants.

Barbara Gingras, assistant assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On January 1, 2008, the appellants were the assessed owners of a parcel of real estate located at 35 Stony Brook Lane in Norwell (“subject property”). The parcel contains approximately 6.57 acres of land and is improved with a single-family home. For fiscal year 2009, the assessors valued the property at $1,209,400 and assessed a tax thereon, at the rate of $11.75 per thousand, in the amount of $14,210.45, plus a Community Preservation Act charge in the amount of $391.06. The assessors valued the land and building components of the property at $738,200 and $471,200, respectively.

At the hearing of this appeal, the appellants argued that their property was overvalued primarily because the assessors had placed too high a value on the land portion of their assessment and had assessed the subject property at a significantly higher value than similarly situated “water-view” properties and at an equivalent value to “waterfront” properties with docks.[163] The appellants attempted to prove their contentions through the testimony of appellant Maura Lareau and the introduction of an exhibit entitled the “Commissioner’s Packet,” which contained: a thirteen-page narrative; information downloaded from a realtor’s website regarding a neighboring property; a copy of a letter sent to the assessors by the appellants in furtherance of settling this matter; a copy of the appellants’ abatement application with attachments; “parcel summary” print-outs downloaded from the website of the assessors’ mass appraisal firm, Vision Appraisal, regarding seven nearby properties; several visual images downloaded from “Google Maps” depicting the subject property’s neighborhood; and a copy of an assessors’ map. The assessors presented their case-in-chief through the testimony of their Assistant Assessor, Barbara Gingras, and her comparable-sales analysis, which included copies of property record cards with photographs, deeds, and several maps. The assessors also provided the Board with the relevant jurisdictional documents and information. On the basis of this evidence, the Appellate Tax Board (“Board”) made the following findings of fact.

On December 31, 2008, Norwell’s Collector of Taxes sent out the town’s actual real estate tax notices for fiscal year 2009. In accordance with G.L. c. 59, § 57C, the appellants paid the tax without incurring interest. On January 26, 2009, in accordance with G.L. c. 59, § 59, the appellants timely filed their abatement application with the assessors. On Monday, April 27, 2009, the assessors granted the appellants a partial abatement by reducing the subject property’s assessed value, by $57,900, to $1,151,500 and concomitantly abating the tax in the amount of $680.33.[164] Not satisfied with this reduction, the appellants, on June 30, 2009, in accordance with G.L. c. 59, §§ 64 and 65, seasonably filed their petition with the Board. On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

The subject dwelling is a conventional-style, two-story, 2,906-square-foot, single-family residence with a water view. It contains six rooms, including an above-average kitchen, an open-concept main living area with a cathedral ceiling and fireplace, and three bedrooms plus two other fireplaces. The residence also has one one-half and two full modern bathrooms, including one with a whirlpool tub. The residence’s interior walls are primarily painted or papered drywall or sheetrock, and the floors are hardwood. The residence has an oil-fired forced hot water heating system. It also has central air conditioning.

The exterior of the residence has wood clapboard and shingle siding, and the roof has asphalt shingles. A 912-square-foot garage is attached to the house, as is 568-square feet of decking. The residence also contains a 768-square-foot unfinished attic and a 1,152-square-foot crawl space. In addition, a storage shed is located on the subject property. The residence is in excellent overall condition.

The 6.57-acre parcel is composed of a 43,560-square-foot or one-acre main site plus 5.57 acres of excess land, a portion of which is wetland. The parcel contains considerable frontage along that segment of Stony Brook which flows into the North River, and it has a water view. The subject property does not have a dock or pier. After abatement, the assessors valued the subject property’s main site at $696,100, its excess acreage at $44,200, and its improvements at $411,200, for a total assessed value of $1,151,500, which is also below the fiscal year 2008 assessment of $1,188,700. The appellants purchased the subject property in 1999 for $790,000 and in 2001 completed an approximately $300,000 renovation and addition.

To prove that their land was overvalued, thereby rendering the subject property’s overall assessment excessive, the appellants primarily relied on their comparison of seven nearby properties’ land and overall assessments to the subject property’s land and overall assessments. These seven properties are composed of both, what the appellants term as, “water-view” and “waterfront” properties. The properties that the appellants labeled water view are 20, 32, and 36 Stony Brook Lane, and the properties labeled waterfront are 64, 78, 88, and 96 Stony Brook Lane. The appellants’ land- and overall-assessment presentation consisted of “parcel summary” print-outs downloaded from Vision Appraisal’s website, several visual images downloaded from Google, a copy of a portion of the assessors’ map which contains the subject property and the seven nearby properties, and a narrative with some analysis. The appellants did not submit into evidence property record cards or photographs for these properties or any tables or charts comparing the important characteristics of the purportedly comparable properties to those of the subject property with reasonable adjustments for differences.

With respect to the appellants’ presentation, the Board found that while the parcel summary print-outs and the Google images and assessors’ maps contained some basic and summary information about the nearby properties, they did not convey near the detail of information ordinarily contained in property record cards and photographs, which would have likely allowed the Board to better analyze the assertions of overvaluation raised by the appellants. The parcel summary print-outs and the Google images and assessors’ map did not allow the Board to comprehensively and properly compare the nearby properties’ characteristics and their related assessments to the subject property’s because the print-outs, images, and maps do not contain the quantum and detail of information necessary to make such comparisons, to consider the application of appropriate adjustments, or to adequately substantiate the appellants’ assertions. Had the appellants submitted tables, charts, or summaries comparing the subject property’s and the nearby properties’ important characteristics with each other along with reasonable recommendations for appropriate adjustments to their related assessments, the Board would have been better able to fully grasp and analyze relevant data regarding these properties. For these reasons, the Board found that the appellants’ presentation was too vague and general. Accordingly, the Board found that the appellants’ presentation did not demonstrate or establish a basis to conclude that the subject property’s land or overall assessment was excessive.

The Board also found that the assessors’ three comparable-sale properties, located in Norwell at 78 Stony Brook Lane, 48 Satuit Meadow Lane, and 16 Laurelwood Drive, were not sufficiently similar to the subject property to meaningfully assist in determining the fair cash value of the subject property for the fiscal year at issue. The quantitative adjustments suggested by the assessors to account for these properties’ differences with the subject property averaged approximately 50% of each of their sale prices. The Board found that the necessity for such large gross adjustments strongly suggested that these purportedly comparable properties were simply not comparable to the subject property. Accordingly, the Board found that the assessors’ comparable-sales analysis was of little value for determining the fair cash value of the subject property for the fiscal year at issue.

Based on these findings, and after considering all of the evidence, the Board ultimately found that the appellants failed to meet their burden of proving that the subject property was overvalued for the fiscal year at issue. The Board, therefore, decided this appeal for the appellee.

OPINION

The appellants have the burden of proving that the property has a lower value than that assessed. “‘The burden of proof is upon the petitioner to make out its right as [a] matter of law to [an] abatement of the tax.’” Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974) (quoting Judson Freight Forwarding 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 taxpayers . . . prov[e] 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 appeal, the appellants focused primarily on perceived errors in the assessors’ separate valuation of the land component associated with the subject property.

A taxpayer, however, does not conclusively establish a right to abatement merely by showing that his land is overvalued. “The tax on a parcel of land and the building thereon is one tax . . . although for statistical purposes they may be valued separately.” Assessors of Brookline v. Prudential Insurance Co., 310 Mass. 300, 317 (1941). In abatement proceedings, “the question is whether the assessment for the parcel of real estate, including both the land and the structures thereon, is excessive. The component parts, on which that single assessment is laid, are each open to inquiry and revision by the appellate tribunal in reaching the conclusion whether that single assessment is excessive.” Massachusetts General Hospital v. Belmont, 238 Mass. 396, 403 (1921). See also Duquette v. Hinsdale, Mass. ATB Findings of Fact and Reports 2008-1494, 1502-03 (citing Guernsey v. Assessors of Williamstown, Mass. ATB Findings of Fact and Reports 2006-158, 168; Buckley v. Assessors of Duxbury, Mass. ATB Findings of Fact and Reports 1990-110, 119; Jernegan v. Assessors of Duxbury, Mass. ATB Findings of Fact and Reports 1990-39, 48-9; Everhart v. Assessors of Dalton, Mass. ATB Findings of Fact and Reports 1985-49, 54).

The appellants in this appeal attempted to prove that the subject property was overvalued by comparing land and overall assessments of nearby properties to the subject property’s land and overall assessment.

General Laws c. 58A, § 12B provides in pertinent part that “at any hearing relative to the assessed fair cash valuation or classification of property, evidence as to fair cash valuation or classification of property at which assessors have assessed other property of a comparable nature or class shall be admissible.” The introduction of such evidence may provide adequate support for either the granting or denial of an abatement. Chouinard v. Assessors of Natick, Mass. ATB Findings of Fact and Reports 1998-299, 307-308 (citing Garvey v. Assessors of West Newbury, Mass. ATB Findings of Fact and Reports 1995-129, 135-36; Swartz v. Assessors of Tisbury, Mass. ATB Findings of Fact and Reports 1993-271, 279-80); see also Turner v. Assessors of Natick, Mass. ATB Findings of Fact and Reports 1998-309, 317-18. Purportedly comparable properties used in a comparable-assessment analysis must be adjusted, just like those used in a comparable-sales analysis, for differences with the subject property. See Graham v. Assessors of West Tisbury, Mass. ATB Findings of Fact and Reports 2007-321, 402 (“The assessments in a comparable assessment analysis, like the sale prices in a comparable sales analysis, must also be adjusted to account for differences with the subject.”), aff’d, 73 Mass. App. Ct. 1107 (2008); Lupacchino v. Assessors of Southborough, Mass. ATB Findings of Fact and Reports 2008-1253, 1269 (“[W]ithout appropriate adjustments, . . . the assessed values of [comparable] properties [do] not provide reliable indicator[s] of the subject’s fair cash value.”).

In the present appeal, the Board found that while the parcel summary print-outs, Google images, and assessors’ maps contained some basic and summary information about the nearby properties, they did not convey near the detail of information ordinarily contained in property record cards and photographs, which would have likely allowed the Board to better analyze the assertions of overvaluation raised by the appellants. The parcel summary print-outs, the Google images, and assessors’ map did not allow the Board to comprehensively and properly compare the nearby properties’ characteristics and related assessments to the subject property’s because the print-outs, images, and maps did not contain the quantum and detail of information necessary to make such comparisons, to consider the application of appropriate adjustments, or to adequately substantiate the appellants’ assertions. Had the appellants submitted tables, charts, or summaries comparing the subject property’s and the nearby properties’ important characteristics with each other along with reasonable recommendations for appropriate adjustments to their related assessments, the Board would have been better able to fully grasp and analyze relevant data regarding these properties. For these reasons, the Board found that the appellants’ presentation was too vague and general. Accordingly, the Board found and ruled that the appellants’ presentation did not demonstrate or establish a basis to conclude that the subject property’s land or overall assessment was overvalued.

Furthermore, the Board ruled that “[i]n order to obtain relief on the basis of disproportionate assessment, a taxpayer must show that there is an ‘intentional policy or scheme of valuing properties or classes of properties at a lower percentage of fair cash value than the taxpayer’s property.’” Brown v. Assessors of Brookline, 43 Mass. App. Ct. 327, 332 (1997) (quoting Shopper’s World, Inc. v. Assessors of Framingham, 348 Mass. 366, 377 (1965)). If a taxpayer successfully demonstrates improper assessment of such a number of properties to establish an inference that such a scheme exists, the burden of going forward to disprove such a scheme shifts to the assessors. Shopper’s World, 348 Mass. at 377. “The ultimate burden of persuasion, of course, will remain upon the taxpayer.” First National Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 562 (1971).

In the present appeal, the Board found that the appellants did not present evidence supporting an intentional scheme of disproportionate assessment. Moreover, the Board found that the appellants did not produce evidence that could even raise an inference of a scheme of disproportionate assessment. Even though the appellants alleged disproportionate assessment, they really introduced only evidence of overvaluation. Accordingly, the Board found and ruled that the appellants failed to prove that the assessors engaged in an “intentional widespread scheme of discrimination.” Stillson v. Assessors of Gloucester, 385 Mass. 724, 727-28 (1982).

Actual sales generally “furnish strong evidence of market value, provided they are arm’s-length transactions and thus fairly represent what a buyer has been willing to pay for the property to a willing seller.” Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 682 (1982); New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 469 (1981); First National Stores, Inc., 358 Mass. at 560. Sales of comparable realty in the same geographic area and within a reasonable time of the assessment date contain credible data and information for determining the value of the property at issue. See McCabe v. Chelsea, 265 Mass. 494, 496 (1929). “A major premise of the sales comparison approach is that an opinion of the market value of a property can be supported by studying the market’s reaction to comparable and competitive properties.” Appraisal Institute, The Appraisal of Real estate 297 (13^th ed., 2008).

When comparable sales are used, however, allowance must be made for various factors which would otherwise cause disparities in the comparable prices. See Pembroke Industrial Park Co., Inc. v. Assessors of Pembroke, Mass. ATB Findings of Fact and Reports 1998-1072, 1082. “Adjustments for differences in the elements of comparison are made to the price of each comparable property . . . . The magnitude of the adjustment made for each element of comparison depends on how much that characteristic of the comparable property differs from the subject property.” The Appraisal of real estate at 322. If the amount of gross adjustments applied to each purportedly comparable property is substantial, the logical conclusion is that these properties are simply not comparable to the subject property. See The May Dept. Store Co. v. Assessors of Newton, Mass. ATB Findings of Fact and Reports 2009-153, 191 (“[T]he Board questioned the comparability of some of [the real estate valuation expert’s] purportedly comparable properties to the subject property because of the amount of the gross adjustments that [he] made to them.”); The Trustee of the Charles Cotesworth Pinckney Trust v. Assessors of West Tisbury, Mass. ATB Findings of Fact and Reports 2007-621, 630-31 (noting that significant adjustments “raise serious questions regarding initial comparability”); see also The Appraisal of real estate at 312-13.

In this appeal, the Board found that the assessors’ three comparable-sale properties were not sufficiently similar to the subject property to meaningfully assist in determining the fair cash value of the subject property for the fiscal year at issue. The quantitative adjustments suggested by the assessors to account for these properties’ differences with the subject property averaged approximately 50% of each of their sale prices. The Board found that the necessity for such large gross adjustments strongly suggested that these purportedly comparable properties were simply not comparable to the subject property. Accordingly, the Board found and ruled that the assessors’ comparable-sales analysis was of little value for determining the fair cash value of the subject property for the fiscal year at issue.

“The [B]oard [is] not required to believe the testimony of any particular witness but [may] accept such portions of the evidence as appear to have the more convincing weight.” Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 72 (1941). “The credibility of witnesses, the weight of evidence, and inferences to be drawn from the evidence are matters for the [B]oard.” Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977).

After evaluating all of the evidence, the Board found and ruled that the appellants failed to meet their burden of proving that the subject property’s land or overall assessment was excessive.

On this basis, the Board decided this appeal for the appellee.

APPELLATE TAX BOARD

By: ____

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest:

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

BELL ATLANTIC MOBILE OF v. ASSESSORS OF BOSTON

MASSACHUSETTS CORPORATION, LTD. ASSESSORS OF NEWTON

D/B/A VERIZON WIRELESS ASSESSORS OF SPRINGFIELD

ASSESSORS OF WESTBOROUGH

Docket Nos. F292338, F292343, Promulgated:

F292344, F288248 October 14, 2010

These are appeals 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 Boards of Assessors of the cities of Boston, Newton, Springfield, and the town of Westborough (“assessors”) to abate taxes on certain personal property owned by and assessed to appellant for fiscal year 2007.

Commissioner Scharaffa heard these appeals and was joined by Chairman Hammond and Commissioners Egan, Rose, and Mulhern in the decision for the assessors.

These findings of fact and report are made on the Board’s own motion pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

Kathleen King Parker, Esq. for Bell Atlantic Mobile.

Anthony M. Ambriano, Esq. for the Boston Assessors.

Richard G. Chmielinski, Esq. for the Newton Assessors.

Patricia Bobba Donovan, Esq. for the Springfield Assessors.

Kenneth W. Gurge, Esq. for the Westborough Assessors.

FINDINGS OF FACT AND REPORT

The issue in these appeals is whether Bell Atlantic Mobile of Massachusetts Corporation, Ltd., d/b/a Verizon Wireless (“Bell Atlantic Mobile”), a provider of wireless cellular communications services, is entitled to the corporate utility exemption under G.L. c. 59, § 5, cl. 16(1)(d). This issue was fully tried, argued and briefed by the parties in a prior appeal involving fiscal year 2004. See Bell Atlantic Mobile v. Commissioner of Revenue, et al, Mass. ATB Findings of Fact and Reports 2007-121, aff’d, 451 Mass. 280 (2008) (“Bell Atlantic Mobile I”). However, as explained below, the Board’s denial of the corporate utility exemption to Bell Atlantic Mobile has not been the subject of appellate review.

Bell Atlantic I involved appeals brought under two different statutes: (1) G.L. c. 59, § 39 concerning the Commissioner of Revenue’s central valuation of certain personal property owned by Bell Atlantic Mobile (“§ 39 appeals”); and (2) G.L. c. 59. § 64 and 65 (“§ 65 appeals”) in which Bell Atlantic Mobile sought abatement of taxes paid to 220 cities and towns on its machinery[165] on the ground that its machinery was entitled to the corporate utility exemption under G.L. c. 59, § 5, cl. 16(1)(d) and was overvalued.

In Bell Atlantic Mobile I, the Board consolidated the § 39 appeals and the § 65 appeals. The Board then bifurcated the hearing of all consolidated appeals to first address all issues other than valuation: specifically, whether Bell Atlantic Mobile was a “telephone company” whose “machinery, poles, wires and underground conduits, wires and pipes” should have been centrally valued by the Commissioner under § 39 and whether Bell Atlantic Mobile was entitled to the corporate utility exemption under clause 16(1)(d). On May 15, 2006, the Board issued a Decision in the § 39 appeals for the 220 appellee cities and towns and the appellant City of Newton in which the Board determined that Bell Atlantic Mobile was not a telephone company subject to central valuation under § 39 and that, because the Board determined that § 39 did not apply to Bell Atlantic Mobile, the Commissioner did not have the authority to allow or deny the property tax exemption claimed by Bell Atlantic Mobile.

Consistent with its May 15, 2006 Decision in the § 39 appeals, the Board also issued on that same day an Order in the § 65 appeals, ruling that Bell Atlantic Mobile: 1) was not subject to central valuation under § 39; 2) was not entitled to the corporate utility exemption under clause 16(1)(d); and 3) was taxable on all personal property owned by it on January 1, 2003 in each of the appellee cities and towns.

The Board stayed further action on the § 65 appeals to allow the parties to seek appellate review of the Board’s determination that Bell Atlantic Mobile was not subject to central valuation under § 39. The Board determined that final appellate resolution of this issue prior to a hearing on valuation was necessary because the determination of the proper parties and the valuation and tax assessment parameters in any further Board proceedings were affected by whether Bell Atlantic Mobile was subject to § 39.

The Supreme Judicial Court’s affirmance of the Board in Bell Atlantic Mobile I concerned only the § 39 appeals and not the § 65 appeals. See 451 Mass. at 285, n. 11 (“The board’s conclusion that Bell Atlantic Mobile is not a telephone company under G.L. c. 59, § 39, disposed of the § 39 appeals . . . . The board did decide, in the context of the § 65 appeals, that Bell Atlantic Mobile was not entitled to the [corporate utility] exemption. Those appeals, however, are not before us.”).

After the Supreme Judicial Court’s decision in Bell Atlantic Mobile I, the Board scheduled a hearing on the § 65 appeals. However, Bell Atlantic Mobile withdrew its § 65 appeals for fiscal year 2004 prior to the scheduled hearing. Bell Atlantic Mobile also withdrew its § 65 appeals for fiscal years 2005 and 2006 prior to a hearing.

For purposes of the present § 65 appeals for fiscal year 2007, the parties stipulated that the fair cash value of Bell Atlantic Mobile’s personal property at issue was its assessed value for fiscal year 2007. Accordingly, there was no issue of valuation before the Board, and the only issue to be decided in these appeals was whether Bell Atlantic Mobile was entitled to the corporate utility exemption. For purposes of the present appeals, the parties also stipulated that, because the exemption issue was “fully tried, argued and briefed by the parties in [Bell Atlantic Mobile I] . . . the Board may adopt the record of trial of [Bell Atlantic Mobile I], including the arguments and briefs” in its determination of the exemption issue.

For the reasons detailed in the following Opinion, the Board ruled that Bell Atlantic Mobile was not entitled to the corporate utility exemption and was taxable under G.L. c. 59, § 18 on all personal property owned by it on January 1, 2006, the relevant assessment date for fiscal year 2007, and located in each of the cities and the town which are the appellees in these appeals.

OPINION

Under G.L. c. 59, § 5, cl. 16(1)(d), a foreign corporation subject to taxation under certain enumerated sections of G.L. c. 63, including § 52A,[166] is exempt from property tax on all of its property other than “real estate, poles, underground conduits, wires and pipes, and machinery used in manufacture or in supplying or distributing water.” In contrast, under G.L. c. 59, cl. 16(2), business corporations are taxable on “machinery used in the conduct of the business.”

Accordingly, if Bell Atlantic Mobile was taxable under § 52A and therefore entitled to the exemption under clause 16(1)(d), the only personal property it owned that would be subject to property tax would be its “machinery used in manufacture” – that is, its electrical generating equipment. However, if it was not taxable under § 52A and was therefore not entitled to the exemption under clause 16(1)(d), all of its machinery and equipment, including its antennae, transmitters, receivers, amplifiers, and switching equipment, would be subject to local tax.

A. G.L. c. 63, § 52A

Section 52A provides that every “utility corporation” doing business in the commonwealth must pay an annual tax on its corporate franchise. A “utility corporation” is defined in § 52A(1)(a) to mean:

(i) every incorporated electric company and gas company subject to chapter one hundred and sixty-four; (ii) every incorporated water company and aqueduct company subject to chapter one hundred and sixty-five; (iii) every incorporated telephone and telegraph company subject to chapter one hundred and sixty-six; (iv) every incorporated railroad and railway company subject to chapter one hundred and sixty; and every corporation qualified under section one hundred and thirty-one A of said chapter one hundred and sixty to acquire, own and operate terminal facilities for steam, electric or other types of railroad; (v) every incorporated street railway subject to chapter one hundred and sixty-one; (vi) every incorporated electric railroad subject to chapter one hundred and sixty-two; (vii) every incorporated trackless trolley company subject to chapter one hundred and sixty-three; (viii) every domestic or foreign pipe line corporation engaged in the transportation or sale of natural gas within the commonwealth; and (ix) every foreign corporation which is not subject to the above chapters but which does an electric, gas, water, aqueduct, telephone, telegraph, railroad, railway, street railway, electric railroad, trackless trolley or bus business within the commonwealth and has, prior to January first, nineteen hundred and fifty-two been subject to taxation under sections fifty-three to sixty, inclusive.[167]

(emphasis added). A review of the public utility corporations enumerated in § 52A reveals a common characteristic: an extensive physically interconnected distribution infrastructure, composed of wires, pipes, conduits or tracks strung over or laid in or under public ways or private property.

Unlike the physical interconnectivity of the distribution networks employed by the § 52A utilities, the network of cell sites and switching stations of Commercial Mobile Radio Service (“CMRS”) providers such as Bell Atlantic Mobile are “connected” by radio signals, with a minimal amount of wiring connecting the switching station to the land lines of local telephone companies.[168] Accordingly, Bell Atlantic Mobile’s lack of a significant physical distribution infrastructure suggests that it is not a utility corporation for purposes of § 52A.

A utility’s extensive infrastructure and other economic, operational, and technical characteristics of its business make it unlikely, if not practically impossible, for a second provider to enter the utility’s business, resulting in a “natural monopoly” for the utility, in the absence of governmental intervention requiring access to the utilities infrastructure by other providers. See, e.g., 47 USC § 251 (requiring telecommunication carriers to allow other telecommunication carriers to interconnect with their infrastructure). For example, a gas company will incur a large initial capital outlay to purchase pipes, dig up streets, install pipes and other necessary distribution equipment, and connect to homes. It will also need to secure easements and government permits to install and access its distribution system. It would make little practical or economic sense for a competitor to enter the market and essentially dig up the same streets and private property to lay a set of pipes parallel to the utility’s pipes and attempt to gain market share from the utility’s customers.

As a result, the government typically allows utilities like those listed in § 52A to operate as monopolies, in return for which the government regulates many aspects of the utility, including: its ability to enter a market and construct and maintain its infrastructure; the rates it can charge its customers; and requiring access to its infrastructure by other providers. See generally James C. Bonbright, et al., Principles of Public Utility Rates, at 17-25 (2d ed. 1988); 47 USC § 251. Government regulation of utilities is evidenced by the fact that the definition of each utility mentioned in § 52A includes the statute by which that utility is regulated.

The specific definitional reference in § 52A to the regulatory authority by which each utility is governed indicates that entities providing services similar to those offered by the utility, but not subject to the same regulatory statute, are not § 52A utilities. For example, under § 52A(a)(1), electric and gas companies subject to chapter 164 are defined as utilities. Although both electricity and gas are used for home heating, that does not mean that companies selling other home-heating fuels, such as oil, coal, or wood, that have no extensive distribution infrastructure and are not regulated under § 164, would qualify as utilities for purposes of § 52A.

Similarly, there are a number of functional substitutes for rail and trolley transportation that do not have embedded physical infrastructures and are not subject to the regulatory statutes referenced in § 52A, including buses, taxis, trucks, airplanes, and boats. However, it is only the enumerated trains and trolleys, regulated under specific sections of the General Laws, which constitute utilities taxable under § 52A.

In an analogous situation, satellite television providers offer a service arguably similar to cable television providers: multi-channel and pay-per-view television programming. While cable television providers have a physical distribution infrastructure similar to wired telephone companies, satellite television providers use waves transmitted through the air, transmitters and receivers to distribute their service. The Board is aware of no instance where satellite television providers have been held to be subject to the rate and entry regulation of cable television providers under G.L. c. 166A.

The specific section at issue in these appeals, § 52A(1)(a)(iii), requires that a telephone company be “subject to chapter one hundred and sixty-six.” Accordingly, chapter 166 must be analyzed to determine whether Bell Atlantic Mobile was subject to its provisions and therefore taxable as a utility corporation under § 52A and entitled to the personal property tax exemption under clause 16(1)(d).

B. G.L. c. 166

Like G.L. c. 59, § 39 and G.L. c. 63, § 52A(1)(a)(iii), G.L. c. 166 contains no definition of the term “telephone company.” G.L. c. 166, § 11, does define the term “company” to include “every person, partnership, association and corporation engaged in the business of transmission of intelligence by electricity.” This definition provides only that all telephone and telegraph companies, regardless of the company’s form of organization, must file the annual return required under § 11, but sheds no light on what constitutes a telephone company. Further, the evidence in these appeals established that cellular handsets do not transmit intelligence by electricity; the electricity used to power the handset does not leave the phone and the “intelligence” is transmitted by radio waves. Accordingly, G.L. c. 166 must be examined to determine whether CMRS providers are subject to its provisions.

Much of chapter 166 has nothing to do with CMRS providers in general or Bell Atlantic Mobile in particular. The first sentence of the first section of chapter 166 states that a telegraph or telephone company “shall not commence the construction of its line” until certain stock subscription and filing requirements are met. G.L. c. 166, § 1. See also G.L. c. 166, §§ 2-10 (relating to certain financial requirements referenced in § 1); § 15D (relating to excavation of underground wires or cables); §§ 16-20 (relating to the provision of telegraph services); §§ 21-42B (relating to poles and wires). Bell Atlantic Mobile has no line to construct, underground wires or cables to excavate, telegraph services to provide, or poles or wires.

In affirming the Board in Bell Atlantic Mobile I, the Supreme Judicial Court also recognized that:

the majority of the provisions of G.L. c. 166 are simply inapplicable to a CMRS provider, and Bell Atlantic Mobile’s assertion it might hypothetically be ‘subject to’ G.L. c. 166 in some way is too speculative to be convincing. Therefore, the language of the corporate utility exemption statutes reinforces the conclusion that Bell Atlantic Mobile is not a telephone company.

Bell Atlantic Mobile I, 451 Mass. at 286-87.

Bell Atlantic Mobile also relies on the annual return requirement under G.L. c. 166, § 11 as principal support for its argument that it is “subject to” chapter 166. Section 11 provides in pertinent part:

Every telephone or telegraph company doing business in the commonwealth shall annually, on or before March thirty-first or such subsequent date as the department of telecommunications and energy, for good cause shown in any case, may fix, file with said department a report of its doings for the year ending December thirty-first preceding, which report shall be in such detail as the department prescribes, and shall be called the “Annual Return.”

It is not disputed that prior to 1994, the Department of Public Utilities (“DPU”), the predecessor to the Department of Telecommunications and Energy (“DTE”) referenced in § 11, required CMRS providers to file an annual return. There is also no dispute that prior to 1994, G.L. c. 159, §§ 12-12D, not Chapter 166, authorized DPU to regulate the rates charged by CMRS providers and required that CMRS providers obtain a certificate of public necessity from DPU prior to offering service in Massachusetts.

On August 10, 1993, the federal Omnibus Budget Reconciliation Act of 1993 was signed into law, amending the Communications Act of 1934 by preempting state and local regulation of commercial and private mobile radio services. In pertinent part, the amendment stated:

No state or local government shall have any authority to regulate the entry of or the rates charged by any commercial mobile service or any private mobile service, except that this paragraph shall not prohibit a State from regulating the other terms and conditions of commercial mobile services.

47 USC 332(c)(3). The amendment allowed states to petition the FCC for authority to regulate the rates of CMRS providers if the state could demonstrate that market conditions failed to protect subscribers from unjust, unreasonable, or discriminatory rates or the CMRS is a replacement for a substantial portion of the land line services within the state.

In response to the federal amendment, DPU issued DPU Order 94-73. After conducting an investigation and reviewing written comments from interested parties,[169] the DPU determined that:

Market forces in the state are adequate to protect the public from unjust and unreasonable wireless service rates or from rates that are unjustly or unreasonably discriminatory. Also we find that wireless service in Massachusetts is not a replacement for land-line telephone exchange service for a substantial portion of the land-line exchange service within the Commonwealth. Therefore, the Department shall not petition the FCC for authority to continue rate regulation of [CMRS providers] in Massachusetts.

DPU Order 94-73 at 13. On the basis of its findings and conclusions, the DPU ordered that:

As of August 10, 1994, the Department will no longer regulate the rates of [CMRS providers] in Massachusetts . . . and will no longer regulate the entry of [CMRS providers] into the market. We have found that market forces in the state are adequate to protect the public from unjust and unreasonable wireless service rates; these market forces also make it unnecessary for the Department to regulate other terms and conditions of [CMRS] in Massachusetts. Therefore, as of August 10, 1994, the Department will not regulate other terms and conditions of [CMRS] in Massachusetts.

DPU Order 94-73 at 14. In addition to determining that it would no longer regulate rates or entry of CMRS providers, the DPU also repealed its regulations at 220 CMR 35 et seq., promulgated pursuant to G.L. c. 159, § 12B, that governed the procedures by which DPU regulated CMRS providers. DPU Order 94-73 at 15-16.

There is no evidence that Bell Atlantic Mobile filed an annual return with DPU or DTE in any year since 1993. Bell Atlantic Mobile failed to produce such a return at the hearing of these appeals, during discovery despite this Board’s Order allowing Newton’s Motion to Compel Further Discovery, or through its own witnesses. Further, although G.L. c. 166, § 12 provides for penalties for failure to file the annual return required under § 11, there is no evidence that DPU or DTE took any enforcement action against Bell Atlantic Mobile or any CMRS providers for failure to file a return. In contrast, DTE initiated enforcement actions in 2003 against some forty land-line telecommunications companies for failure to file their annual returns; neither Bell Atlantic Mobile nor any CMRS provider was among those forty.

The fact that between 1988 and 1993 DPU sent Bell Atlantic Mobile’s predecessors form returns and an undated and unsigned cover letter or “friendly reminder” that referenced the annual return requirement under chapter 166, and provided excerpts of both G.L. c. 166 and G.L. c. 159, does not establish that CMRS providers were subject to G.L. c. 166, § 11. At most, all this proves is that prior to the federal amendment and DPU Order 94-73, someone at DPU sent forms and a cover letter referencing § 11 to CMRS providers; it proves nothing about whether Bell Atlantic Mobile was at any time subject to Chapter 166. Further, the evidence of record established that the letter and forms were sent out as an administrative or ministerial function and did not constitute a binding determination that CMRS providers were subject to the reporting requirements of § 11 or any other provision of G.L. c. 166. Administrative “missteps” do not constitute an authoritative or persuasive interpretation of a relevant statute. See BankBoston Corporation v. Commissioner of Revenue, 68 Mass. App. Ct. 156, 164 (2007) (ruling that Commissioner not bound by language in tax forms and instructions).

Accordingly, on the basis of the foregoing, the Board ruled that at no time relevant to these appeals was Bell Atlantic Mobile subject to the annual reporting requirement of G.L. c. 166, § 11 and related §§ 12 and 12A. In addition, Bell Atlantic Mobile has not shown that it was subject at any time to any provision of Chapter 166, which in context clearly refers and relates to wired telephone and telegraph companies. For example, G.L. c. 166, §§ 1-10 concern the financial structure and integrity of a telephone and telegraph company, issues which are important to DPU/DTE in the case of an entity that has a franchise to operate a natural monopoly in an area, but not in the case of a competitive provider where the financial failure of an entity is not a public concern. In addition, there is no evidence to show that DPU ever sought to regulate or enforce the provisions of §§ 1-10 against a CMRS provider.

Further, if CMRS providers were telephone and telegraph companies subject to chapter 166, DPU/DTE would have been obligated to impose utility assessments on CMRS providers pursuant to G.L. c. 25, § 18. Section 18 authorizes the DPU/DTE to assess:

against each electric, gas, cable television, telephone and telegraph company under the jurisdictional control of the department and each generation company and supplier licensed by the department to do business in the commonwealth, based upon the intrastate operating revenues subject to the jurisdiction of the department of each of said companies derived from sales within the commonwealth of electric, gas, cable television, telephone and telegraph service, respectively, as shown in the annual report of each of said companies to the department.

Bell Atlantic Mobile was not included in the DPU/DTE utility assessment base for the relevant tax year because it did not file an annual return. There is no evidence that DPU/DTE pursued Bell Atlantic Mobile or any other CMRS provider for failure to file an annual return or that it attempted to calculate Bell Atlantic Mobile’s utility assessment by some alternative means. The most reasonable inference from the failure of DPU/DTE to enforce the return filing and utility assessment obligations is that DPU/DTE concluded that Bell Atlantic Mobile and other CMRS providers were not public utilities.

CMRS providers do not fit legally or technologically within the statutory rubric of Chapter 166, which applies to entities distinctly different from competitive telecommunications providers without a physically interconnected infrastructure distribution system. Like the other chapters referenced in § 52A, Chapter 166 is focused on the obligations of a traditional public utility, including: the construction and operation of its physical distribution system (e.g., §§ 21, 22, 22C through 22N, 25 through 27, 36-37, 39-40); its obligation to serve customers “without discrimination” throughout its franchise area (§§ 13, 14); and detailed financial oversight (§§ 1-10). Rather, CMRS providers are more appropriately, and are in fact explicitly, governed by the statutory obligations imposed on all common carriers under G.L. c. 159.

C. G.L. c. 159

DPU/DTE is also charged with regulating common carriers under G.L. c. 159, § 12, which includes regulating “the transmission of intelligence within the commonwealth by electricity, by means of telephone lines or telegraph lines or any other method or system of communication.” G.L. c. 159, § 12(d) (emphasis added). It is not disputed that Bell Atlantic Mobile, as a provider of wireless cellular telecommunications services, constitutes a common carrier under G.L. c. 159, § 12(d).

In addition to its general supervisory authority over common carriers, DPU/DTE is specifically authorized to regulate mobile radio telephone utility companies under G.L. c. 159, §§ 12A-12D. A radio utility is defined in § 12A as “any person or organization which owns, controls, operates, or manages a mobile radio telephone utility system, except a land-line telephone utility or land-line telegraph utility regulated by” the FCC. Section 12A goes on to define a mobile radio telephone utility as:

any facility within the commonwealth which provides mobile radio telephone service, including one-way mobile radio telephone service, on a for-hire basis to the public, whether or not such mobile radio telephone service is provided on frequencies allocated to the Domestic Public Land Mobile Radio Services and whether or not such facility is interconnected with a public land-line telephone exchange network.

Although the definition includes pagers, there is nothing to suggest that § 12A is limited to pagers; such a reading would render the rest of the provision superfluous. See, e.g., Globe Newspapers Company v. Commissioner of Education, 439 Mass. 124, 129 (2003) (“In interpreting statutes, none of the words of a statute is to be regarded as superfluous”). If pagers were the only mobile radio telephone service that constituted a mobile radio telephone utility, the Legislature could clearly have so limited the definition. See, e.g., Commissioner of Revenue v. Cargill, Inc., 429 Mass. 79, 82 (1999).

Sections 12A through 12D were added to the General Laws by Chapter 936 of the Acts of 1973, entitled “An Act Placing the Massachusetts Mobile Radio Telephone Utility Companies Under the Jurisdiction of the Department of Public Utilities.” The 1973 legislation specifically differentiates between land-line telephone company utilities and mobile radio telephone service providers. For example, § 12A defines a “radio utility” as “any person or organization which owns, controls, operates or manages a mobile radio telephone utility system, except a land-line telephone utility or land-line telegraph utility regulated by the United States Federal Communications Commission.” (emphasis added).

Further, the regulation of mobile radio telephone utility systems under the 1973 legislation was made expressly inapplicable to any telephone and telegraph utility already regulated by the DPU. See § 12D (“The provisions of sections twelve A to twelve C, inclusive, are not applicable to any telephone or telegraph utility regulated by the department or to the facilities, systems or services of such utilities.”). Such telephone and telegraph utilities included New England Telephone Company (“NET”), the major land-line telephone company in Massachusetts at the time the 1973 legislation was enacted. See Wolf v. Department of Public Utilities, 407 Mass. 363, 368 (1990).

In Wolf, the Court clearly distinguished between “telephone utilities” under the 1973 amendment, which it equated with land-line telephone companies, and the mobile radio telephone service providers which the amendment sought to bring within the regulatory authority of the DPU: “Wolf correctly notes that telephone utilities such as NET are excluded from the application of § 12B, see G.L. c. 159, § 12D, and that telephone utilities are excluded from the definition of “radio utility” in both G.L. c. 159, § 12A, and the transfer regulation, 220 Code Mass. Regs. § 35.02.” Wolf, 407 Mass. at 368-69 (emphasis added). The “telephone utilities” excluded from the definition of “radio utility” under § 12A are “land-line” telephone or telegraph utilities.

Moreover, DPU/DTE uniformly cites chapter 159, and not 166, as the source of its regulatory authority in its decisions and regulations concerning CMRS providers. In DPU Order 94-73 discussed above, which terminated state rate and entry regulation of CMRS providers based on the 1993 federal act preempting such regulation, the DPU states clearly that “G.L. c. 159, §§ 12, 12A-12D, provides the Department jurisdiction over [CMRS] in Massachusetts.” See also DPU Order 93-98 (deciding that CMRS providers “still would be required to file an annual return with the Department pursuant to General Laws Chapter 159, Section 32.”).

In DPU Order 95-59-B, the DPU explicitly refers to Chapter 159, not Chapter 166, in describing its residual regulatory authority over CMRS providers after federal preemption. “Rather, the Budget Reconciliation Act did not completely preempt state regulation of CMRS carriers, and the Commonwealth retains meaningful authority under G.L. c. 159 to regulate CMRS carriers.” DPU Order 95-59-B at 2. In all DPU decisions entered into evidence by the parties, DPU explicitly refers to Chapter 159, not Chapter 166, as the statutory authority for its regulatory power over CMRS providers.

Similarly, Chapter 159 is the enabling statute by which DPU derives its authority to promulgate regulations governing CMRS providers. G.L. c. 159, § 12B provides that DPU “shall issue rules and regulations governing the issuance of certificates.” Similarly, G.L. c. 159, § 12C provides that the DPU “may establish rules and regulations necessary to carry out the provisions of this section.” Each and every one of the regulations found in 220 CMR § 35.00 et seq. specifically refers to G.L. c. 159, § 12B under the heading “Regulatory Authority.” None of the regulations found at 220 CMR § 35.00 et seq. reference Chapter 166.

The DPU decisions and the regulations promulgated by DPU recognize that Chapter 159 is the source of DPU’s regulatory authority over CMRS providers. As the agency charged with regulating CMRS providers, DPU’s interpretation of their own regulatory authority is entitled to weight. See Greater Media, Inc. v. Department of Public Utilities, 415 Mass. 409, 414 (1993).

Bell Atlantic Mobile argued that the Board should give weight to the determination of the Department of Revenue, embodied in an April 9, 1999 letter from the Department’s General Counsel to representatives of the wireless industry and an April 13, 1999 internal memorandum, and implemented by the Department since that time, that CMRS providers may “reasonably be viewed” as utility corporations subject to Chapter 166 and therefore entitled to the utility exemption.[170] The 1999 determination, however, represented a change of direction by the Department, which in previous communications with the wireless industry had indicated that based on “changes in both federal and Massachusetts regulation,” wireless providers were “not currently subject to Chapter 166.” In addition, internal memoranda dated August 21, 1997 (“SAM 97-13”) and November 13, 1998 (“SAM 98-17”) analyzed the relevant statutes and determined that CMRS providers: were not subject to Chapter 166; were not “utility corporations” under G.L. c. 63, § 52A; and, did not qualify for the utility exemption under G.L. c. 59, § 5, cl. 16(1)(d).

It is clear that the Department’s April, 1999 determination that CMRS providers were entitled to the utility exemption was a policy decision to extend the property tax exemption to CMRS providers. Unlike the previous internal memoranda, which thoroughly analyzed the relevant statutory provisions to conclude that CMRS providers were not subject to Chapter 166, both the April 9, 1999 letter and the April 13, 1999 internal memorandum view the issue of whether CMRS providers were regulated under Chapter 159 or Chapter 166 as “not entirely clear” and concluded that it was “reasonable” to view CMRS providers as being subject to Chapter 166.

Departmental pronouncements based on policy determinations rather than statutory analysis are not entitled to weight. See Bloomingdale’s Inc. v. Commissioner of Revenue Mass. ATB Findings of Fact and Reports 2003-163, 189, aff’d, 63 Mass. App. Ct. 1100 (2005). In addition, regulation of CMRS providers is not an area in which primary statutory interpretation is left to the Department of Revenue. Administrative interpretations of the agency charged with interpreting a statute, if reasonable and adopted contemporaneously with the enactment or amendment of that statute, are accorded weight in interpreting that statute. Lowell Gas Co. v. Commissioner of Corps. & Tax’n, 377 Mass. 255, 262 (1979); Ace Heating Service, Inc. v. State Tax Comm’n, 371 Mass. 254, 256 (1976); Assessors of Holyoke v. State Tax Comm’n, 355 Mass. 223, 243-44 (1960). It is DPU/DTE, not the Department of Revenue, which is charged with interpreting the statutes regulating telecommunications companies; therefore, DPU/DTE’s interpretation, and not that of the Department of Revenue, is to be given weight.

Finally, administrative interpretations which are not consistent with the underlying statute are not accorded weight. See Bell Atlantic I, 451 Mass. at 289, n. 14 (affirming Board’s rejection of the Commissioner of Revenue’s prior administrative determination that Bell Atlantic Mobile was a telephone company and ruling that the Board “correctly gave no weight to the Commissioner’s prior position, concluding that it was inconsistent with the underlying statutes.”); Massachusetts Hospital Association, Inc. v. Department of Medical Security, 412 Mass. 340, 346 (1992) (“an incorrect interpretation of a statute . . . is not entitled to deference”); Bloomingdale’s, Mass. ATB Findings of Fact and Reports at 2003-196-97 (ruling that Commissioner’s incorrect interpretation of statutory exemption was not entitled to deference); First National Bank of Boston, et al v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1993-181, 220-21 (rejecting Commissioner’s ruling interpreting bank excise because interpretation was contrary to governing statute).

For all of the foregoing reasons, the Board ruled that CMRS providers are regulated as common carriers, i.e. mobile radio telephone utilities, under Chapter 159, and not as telephone company utilities under Chapter 166. Because Bell Atlantic Mobile is not subject to Chapter 166 and not taxable under G.L. c. 63, § 52A, it is not entitled to the corporate utility exemption under G.L. c. 59, § 5, cl. 16(1)(d); rather, it is taxable under G.L. c. 59, cl. 16(2) on its “machinery used in the conduct of the business,” which includes the antennae, transmitters, receivers, amplifiers, and switching equipment at issue in these appeals. Accordingly, the Board issued decisions for the appellees in these appeals.

APPELLATE TAX BOARD

By: ___________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ______________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

CHARLES & MARGARET ZIERING v. BOARD OF ASSESSORS OF

THE TOWN OF CONCORD

Docket No. F298606 Promulgated:

October 22, 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, Board of Assessors of the Town of Concord (“assessors” or “appellee”), to abate taxes on certain real estate located in the Town of Concord, owned by and assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2008.

Commissioner Egan heard this appeal. Chairman Hammond and Commissioners Scharaffa, Rose, and Mulhern joined her in a revised decision for the appellants.

These findings of fact and report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32. The revised decision is promulgated simultaneously herewith.

David J. Martel, Esq. for the appellants.

Kevin D. Batt, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits offered into evidence at the hearing of these appeals, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2007, the appellants were the assessed owners of a certain parcel of real estate located at 263 Simon Willard Road in Concord (“subject property”). For the fiscal year at issue, the assessors valued the subject property at $4,491,200 and assessed a tax thereon, at the rate of $10.72 per $1,000, in the total amount of $48,851.76.[171] The appellants timely paid the tax in full without incurring interest. On April 17, 2008, the appellants timely applied to the appellee for an abatement, claiming that the subject property was overvalued. The appellee denied the appellants’ request on May 22, 2008. The appellants seasonably filed their petition with the Board on August 20, 2008. Accordingly, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

Concord is a desirable suburban community. The subject property is in the Nashawtuc Hill neighborhood, which is one of the premier neighborhoods in Concord. Nashawtuc Hill is surrounded on three sides by rivers, and vehicular access is limited by a few entry points into the neighborhood. As a result of this limited access, the neighborhood is quiet and private, yet it is also located within a short distance of the village area of Concord, so the neighborhood also offers the convenience of access to retail establishments and commuter rail service to Boston. The Nashawtuc Hill neighborhood includes historic estates developed in the nineteenth century, scenic vistas, a sledding hill, and open space.

The subject property consists of a 4.573-acre parcel of real estate, which is actually comprised of two contiguous parcels – a 2.61-acre lot improved with the subject home, which the appellants purchased in 1994 for $1,100,000 (“improved lot”), and a 1.96-acre vacant lot, which the appellants purchased in 1995 for $500,000 (“extra lot”). The appellants combined these two parcels by means of a recorded deed in 2003.[172] The improved lot and the extra lot are thus assessed to the appellants as one lot.

The subject property is improved with a two-and-one-half-story, wood-frame, Colonial-style home that was originally built in 1911 but was substantially renovated in 1997. According to the property record card on file with the assessors, the subject home contains 5,932 square feet of above-grade living space and has thirteen rooms above grade, including five bedrooms, as well as four full bathrooms and one half bathroom. As part of the 1997 renovation, the kitchen was updated with maple flooring, granite countertops, a commercial-grade stove, and two commercial-grade dishwashers. In addition to the formal dining and living rooms, the subject home includes a library with a built-in bookcase and fireplace, and a family room with a vaulted ceiling, cherry paneling, cherry, walnut and maple flooring, a fireplace, and a spiral stairway to a second level balcony area. The attic is also finished, yielding 454 square feet of living space, which includes one of the five bedrooms and an office, as well as one of the four full bathrooms and one fireplace.[173] The subject home also includes a partial basement with an additional 2,745 square feet of finished area below grade, which includes two additional rooms – a mahogany-paneled in-home theater and a recreation room – as well as a wine cellar.[174] Other amenities include air conditioning in a portion of the subject home, radiant in-floor heating in all living areas, eight fireplaces total, and a detached two-and-one-half-car garage, which includes a second-floor storage area with one of the eight fireplaces. Finally, the subject property also includes porches, a patio, and an in-ground Gunite pool with granite surround and stone walls, and a pool house containing slightly less than 800 square feet with a vaulted ceiling, wood finish walls and ceiling, granite floor, radiant heating and a full bathroom.[175]

The appellants argue that the subject assessment exceeds the fair cash value of the subject property. They contend that the total fair market value of the subject property is $3,665,000, which includes an opinion of value of $3,100,000 for the 2.61-acre improved lot and $565,000 for the 1.96-acre extra lot. The appellants presented their case through the testimony of Charles Ziering, an owner of the subject property, and James Marchant, whom the Board qualified as a real estate valuation expert.

Mr. Ziering testified that, on December 26, 2006, the appellants made a so-called “grant of restriction” in favor of a neighbor who lives across the street from the extra lot. The grant of restriction bound the appellants not to “build or locate any buildings or structure (other than fences)” on the extra lot for a ten-year period, which expires in January, 2017. The appellants received no monetary consideration for the grant of restriction. The extra lot conforms in all respects to the requirements of the Concord Zoning By-law for a single-family structure. Mr. Ziering explained that his motive for granting the restriction was to maintain the extra lot as a buffer area to protect the appellants’ privacy.

Mr. Ziering testified that on November 30, 2007, the appellee sent him a letter explaining their opinion that the grant of restriction had no impact on the subject assessment. Mr. Ziering contended that, because the 10-year restriction rendered the extra lot unbuildable, there would be no market for the extra lot and therefore, the extra lot should have been assessed as surplus land.

Next, Mr. Marchant testified to the value of the subject property. Mr. Marchant completed separate appraisal reports to value the 2.61-acre improved lot and the 1.96-acre extra lot. To value the improved lot, Mr. Marchant performed a comparable-sales analysis using eight purportedly comparable properties in Concord.[176] Seven of the properties were within 1.24 miles of the subject property and the eighth property was 3.02 miles away. Three of the comparable-sales properties were located in the same neighborhood as the subject property, while an additional three comparable-sales properties were situated on Monument Street, which is located about one mile away from the subject property. The comparable-sales properties ranged in size from 0.49 acres to 4.59 acres and were improved with homes ranging in gross living area from 3,386 square feet to 7,283 square feet. Mr. Marchant used 5,478 square feet as the measurement for the living space contained within the subject home; he did not consider the 454-square-foot area of the finished attic, nor its two rooms and one full bathroom, in his room and bathroom counts.

Mr. Marchant applied adjustments to his comparable-sales’ prices. He did not make adjustments for time of sale, because the comparable sales occurred between 2005 and 2007, during which time, in Mr. Marchant’s opinion, the market values in Concord were relatively stable. Some of Mr. Marchant’s adjustments included a $50 per square foot adjustment for differences in living area, and a $20,000 adjustment for the finished basement. He also adjusted $10,000 for the full bathrooms and $5,000 for half bathrooms, $2,000 per fireplace, and $15,000 for the in-ground pool and poolhouse. After applying his adjustments, Mr. Marchant’s comparable properties’ adjusted-sale prices ranged from $2,659,900 to $3,353,600. Based on his comparable-sales analysis, Mr. Marchant concluded that the fair market value of the 2.61-acre improved lot was $3,100,000 for the fiscal year at issue, which fell towards the mid-range of the adjusted-sale prices derived from his comparable-sales analysis.

Mr. Marchant next completed a “Restricted Use Report of an Appraisal of an Unimproved Residential Lot” for the extra lot. In his report, Mr. Marchant stated that the highest and best use of the extra lot was as a vacant residential site suitable for development. Using the same comparable-sales analysis for the improved lot, Mr. Marchant estimated the value of the extra lot, without the grant of restriction, to be $1,100,000. Mr. Marchant then accounted for the 10-year restriction on development. Based upon historical data and analysis of what he anticipated in the future, Mr. Marchant estimated the extra lot’s appreciation over the 10-year period, and estimated that the market value of the extra lot would be $1,553,720 by Year 10, at which point it would no longer be encumbered. Mr. Marchant then discounted back to the effective valuation date by applying a discount rate of 9.0 percent and adding the real estate tax rate for the fiscal year at issue ($10.72 per thousand) to compensate for the tax burden on the subject property throughout the 10-year holding period, which yielded a total discount rate of 10.7 percent. Applying this discount rate to the estimated value of the extra lot in Year 10, Mr. Marchant determined a present value of $565,826 for the extra lot as encumbered by the 10-year grant of restriction. Adding $565,826 to Mr. Marchant’s fair market value of $3,100,000 for the 2.61-acre improved lot yielded an opinion of fair market value of $3,665,826 for the total 4.573-acre subject property.

The appellee presented its case-in-chief through its witness, John Neas, whom the Board qualified as an expert in real estate valuation. Like Mr. Marchant, Mr. Neas considered the values of the improved lot and the extra lot separately. To value the improved lot, Mr. Neas performed a comparable-sales analysis using seven purportedly comparable properties. Five of these comparable-sales properties were also used in Mr. Marchant’s comparable-sales analysis – 350 Musketaquid Road, 444 Monument Street, 116 Monument Street, 295 Musterfield Road, and 214 Monument Street. The comparable-sales properties on Musketaquid Road and Musterfield Road are located in the same neighborhood as the subject property, while the properties on Monument Street are located in a different but, in the opinions of both Mr. Neas and Mr. Marchant, equally prestigious neighborhood in Concord.

Mr. Neas’ adjustments differed from those of Mr. Marchant, particularly his adjustment of $200 per square foot, versus Mr. Marchant’s adjustment of $50 per square foot, for difference in living space; the experts also differed in their adjustment for number of fireplaces, with Mr. Neas adding an additional $10,000 for each fireplace versus Mr. Marchant’s adjustment of $2,000 for each fireplace. Mr. Neas also added a higher $150,000 adjustment for the subject property’s pool and poolhouse, while Mr. Marchant testified that, based on his data, a pool and pool house are very often not selling points, since many buyers are not attracted to such amenities, so their presence actually narrows the scope of potential buyers. Finally, Mr. Neas adjusted by a 5% rate of appreciation for differences in time of sale between the subject and his comparables. After adjustments, Mr. Neas’ comparable sales yielded a range of $2,800,000 to $3,600,000. Mr. Neas chose a final value of the subject property, without the extra lot, of $3,500,000, which was at the higher end of his range of adjusted-sale values.

To value the 1.96-acre extra lot, Mr. Neas considered two alternative approaches: (1) ignoring the grant of restriction as not a material encumbrance, and (2) treating the grant of restriction as a material encumbrance. Under the first approach, Mr. Neas considered sales of fourteen residential lots in Concord, ranging in size from 20,000 square feet (about 0.46 acres) to 4.674 acres and in price from $335,000 to $1,825,000, which occurred during 2006 and 2007. He then selected five lots, which he deemed to be more similar to the subject extra lot; these sales yielded sales prices ranging from $740,000 to $1,225,000. Mr. Neas then performed paired-sales analyses to make adjustments for location and lot size. Mr. Neas concluded that the value of the extra lot, without considering the encumbrance, should be $1,000,000. Adding $1,000,000 to the $3,500,000 value for the 2.61-acre improved lot yielded a total value of $4,500,000 for the subject property.

Under the second approach of considering the extra lot’s encumbrance, Mr. Neas calculated the extra lot at a “discounted rate,” but he claimed that the encumbered extra lot brought a value of “enhancement” to the 2.61-acre improved lot. To support this contention, Mr. Neas presented three examples of paired sales. Mr. Neas’ first example compared the properties known as Lot 1 Pope Road, with 2.44 acres, which sold for $545,000 in April, 2007, and Lot A/A1 Pope Road, with 3.7 acres, which sold for $622,500 in May, 2007. Mr. Neas’ second example compared Lot 3A Powder Mill Road, with 2.0454 acres, which sold for $650,000 in October, 2006, and Lot 1 Macone Farm Lane, with 2.97 acres, which sold for $740,000 in January, 2006. Finally, Mr. Neas’ third example compared 168 Nashawtuc Road, with twelve rooms, including five bedrooms as well as four full bathrooms and one half bathroom, which sold for $2,220,000 in March, 2007, and 1643 Monument Street, a newer home which borders Estabrook Woods, with twelve rooms, including five bedrooms as well as three full bathrooms and one half bathroom, which sold for $2,479,000 in September, 2005. Mr. Neas contended that, based on his comparisons, the grant of restriction on the extra lot results in a 10% increase to the $3,500,000 value of the improved lot, for an “enhancement value” of $350,000. He added this to the values of the 2.61-acre improved lot and a discounted $550,000 value for the 1.96-acre extra lot for a total value of $4,400,000 for the 4.573-acre subject property.

Mr. Marchant contended that Mr. Neas’ three paired-sales-analysis examples did not support Mr. Neas’ claim that the differences in selling prices could be accounted for by the presence of adjacent open space. Instead, Mr. Marchant contended that other factors, like location and the quality of the home at 1643 Monument Street, actually accounted for the differences in sales prices without considering the possible impact of any abutting vacant land.

On the basis of all of the evidence, the Board made the following ultimate findings of fact. With respect to the valuation of the improved lot, the Board found Mr. Marchant’s first six comparable-sales properties, five of which Mr. Neas also used, to be the most comparable to the subject property. The Board found that, overall, Mr. Marchant’s adjustments were more persuasive than Mr. Neas’ adjustments; however, the Board found that some of Mr. Marchant’s adjustments were not appropriate. The Board instead applied the following adjustments to these comparable-sales properties: $100 per square foot for differences in living area; $50 per square foot for the poolhouse; and $10,000 for the pool. With these adjustments, Mr. Marchant’s comparable-sales properties yielded adjusted sales prices ranging from $2,686,300 to $3,632,048. On the basis of all of the evidence of record, the Board determined that the fair cash value of the 2.61-acre improved lot was $3,300,000.

With respect to the extra lot, the Board found that Mr. Marchant’s method of discounting the fair cash value of the lot to compensate for the grant of restriction was erroneous. As Mr. Ziering candidly testified, his motive for granting the restriction was to protect the privacy of his improved lot. The Board found that the grant of restriction on the extra lot was gratuitous and benefited the appellants. Therefore, as will be further explained in the following Opinion, the Board found that the privately imposed grant of restriction has no effect on the extra lot’s fair cash value for tax purposes. The Board instead adopted Mr. Neas’ credible analysis by which he valued the extra lot without consideration of the grant of restriction and his opinion of $1,000,000 as the fair cash value for the extra lot.

On the basis of its findings, the Board thus found that the fair cash value of the entire 4.57-acre subject property was $4,300,000. Because this value is less than the assessed value of the subject property for the fiscal year at issue, the Board issued a revised decision for the appellants abating $2,080.40 of tax.[177]

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 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 taxpayers . . . prov[e] 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)).

Generally, real estate valuation experts and the Massachusetts courts rely upon three approaches to determine the fair cash value of property: income capitalization, sales comparison, and cost reproduction. Correia v. New Bedford Redevelopment, 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).

On the basis of all of the evidence, the Board found that Mr. Marchant’s first six comparable-sales properties, five of which Mr. Neas also used, were the most comparable to the subject property. The Board found that, overall, Mr. Marchant’s adjustments were more persuasive than Mr. Neas’ adjustments. However, the Board found that some of Mr. Marchant’s adjustments were not appropriate, namely, the adjustments for differences in square-foot living space and the adjustment for the subject property’s pool and poolhouse. The Board rejected Mr. Marchant’s adjustments for these and instead applied adjustments of $100 per square foot for differences in living area, $50 per square foot for the poolhouse, and $10,000 for the pool. On the basis of these adjustments, the Board found that the fair cash value for the 2.61-acre improved lot was $3,300,000.

With respect to the extra lot, the Board was not persuaded by Mr. Marchant’s valuation method, which was based on the premise that the grant of restriction should reduce the property’s fair cash value. In making its ruling on this matter, the Board was guided by the long-standing principle that real estate is assessed on its fee-simple value; that is, “its value as a unit and not upon the interest therein of the person assessed.” Paine v. Assessors of Weston, 297 Mass. 173, 174 (1937). For example, in determining fair cash value, assessors are not required to reduce the fee-simple value of real property to account for below-market leases. Donovan v. City of Haverhill, 247 Mass. 69, 72 (1923) (“We do not think a determination of the fair cash valuation of real estate requires the assessors to make such a deduction [for the surrender value of a below-market lease].”). See also, Sisk v. Assessors of Essex, 426 Mass. 651, 654 (1998) (“[W]e have previously rejected a taxpayers’ argument that a lease constituted an encumbrance that diminished the property’s value for tax assessment purposes.”)(citing Donovan, 247 Mass. at 71); accord Pepsi-Cola Bottling Co., 397 Mass. at 450.

The Supreme Judicial Court has recognized the difference, for tax valuation purposes, between privately imposed restrictions “intended for the personal benefit of [the grantor],” Lodge v. Swampscott, 216 Mass. 260, 263 (1913), and those that are governmentally imposed. In general, the former are “merely contractual” and thus “cannot affect the method of taxing the real estate.” Crocker-McElwain Co. v. Assessors of Holyoke, 296 Mass. 338, 350 (1937) (citing Hamilton Manuf. Co. v. Lowell, 274 Mass. 477, 480-81 (1931)). By contrast, “[i]f property is known to be subject to . . . a governmentally-imposed restriction affecting . . . its earning power, that fact should be considered in any determination of its fair cash value.” Boston Edison Co. v. Assessors of Watertown, 387 Mass. 298, 304, (1982). Examples of governmentally imposed restrictions which assessors may rightly consider in determining fair cash value include: income from leases subject to rent-control restrictions (Community Dev. Co. v. Assessors of Gardner, 377 Mass. 351, 354-55 (1979)); a utility company’s governmentally imposed income restrictions (Montaup Electric Co. v. Board of Assessors of Whitman, 390 Mass. 847, 852 (1984)); and the separate valuation of property subject to a coastal wetlands restriction under G.L. c. 130, § 105, an inland wetlands restriction under G.L. c. 131, § 40A, or a conservation restriction under G.L. c. 184, § 31. See also, Mashpee Wampanoag Indian Tribal Council, Inc. v. Assessors of Mashpee, 379 Mass. 420, 422 (1980) (“[R]estrictions on the use of property may reduce its value below that which would be appropriate in the absence of such restrictions.”) (citing Lodge, 216 Mass. at 263); see also Parkinson v. Board of Assessors of Medfield, 398 Mass. 112, 116 (1986)).

Under the facts of the instant appeal, the appellants gratuitously granted a restriction to their neighbor, which benefited the appellants by securing privacy for their home, a privacy which they already enjoyed by virtue of their ownership of the extra lot. Whatever agreements or other arrangements which may have been made between the appellants and their neighbor concerning the restriction have no bearing on the valuation of the extra lot for tax purposes. See Paine, 297 Mass. at 177 (quoting Milligan v. Drury, 130 Mass. 428, 430 (1881)) (“In making an assessment the ‘assessors were not obliged to inquire into the private contracts between the parties.’”). On this record, the appellants failed to establish that their granting of the restriction at issue in this appeal had an adverse impact on their use and enjoyment of the subject property. The Board therefore found and ruled that the grant of restriction had no bearing on the fair cash value of the subject property for real estate tax purposes. To rule otherwise would allow appellants to artificially depress the value of their property by creating an illusory restriction which has no effect on their use and enjoyment of the subject property, a result in conflict with the above-cited authorities. The Board thus rejected Mr. Marchant’s analysis and instead adopted Mr. Neas’ credible analysis whereby he disregarded the grant of restriction and determined that $1,000,000 was the fair cash value of the extra lot.

On the basis of its findings, the Board calculated a total value of $4,300,000 for the entire 4.57-acre subject property. Accordingly, the Board issued a revised decision in favor of the appellant abating the real estate taxes on the subject property in the total amount of $2,080.40.[178]

APPELLATE TAX BOARD

By: ______ ______ ______

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ______ _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

DAVID W. & KELLY HOLT v. BOARD OF ASSESSORS OF THE

TOWN OF WEST SPRINGFIELD

Docket Nos. F303946 Promulgated:

F305537 October 25, 2010

These are appeals 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, Board of Assessors of the Town of West Springfield (“assessors” or “appellee”), to abate taxes on certain real estate in the Town of West Springfield, owned by and assessed to David W. Holt and Kelly Holt (“appellants”) under G.L. c. 59, §§ 11 and 38, for fiscal years 2009 and 2010.

Commissioner Mulhern (“Presiding Commissioner”) heard these appeals and, in accordance with G.L. c. 58A, § 1 and 831 CMR 1.20, issues, simultaneously with the promulgation of this Findings of Fact and Report, a revised single-member decision for the appellants for fiscal year 2009 (docket number F303946). The revised single-member decision eliminates the community preservation act (“CPA”) tax abatement amount from the total abatement amount contained in the original single-member decision because the assessors did not assess a CPA tax in fiscal year 2009, but only in fiscal year 2010.

For fiscal year 2010 (docket number 305537), the Presiding Commissioner previously issued, in accordance with G.L. c. 58A, § 1 and 831 CMR 1.20, a single-member decision for the appellee.

This Findings of Fact and Report is made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

David W. Holt, pro se, for the appellants.

Christopher Keefe, assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits offered into evidence at the hearing of this appeal, the Presiding Commissioner made the following findings of fact.

On January 1, 2008 and January 1, 2009, the appellants were the assessed owners of a 1.07-acre parcel of real estate, improved with a residential dwelling that is located at 178 Rogers Avenue, in West Springfield (“subject property”). For fiscal year 2009, the assessors valued the subject property at $419,400 and assessed the appellants a tax thereon, at the rate of $14.66 per $1,000, in the amount of $6,148.40. The West Springfield Collector of Taxes mailed the fiscal year 2009 tax bills on December 26, 2008. In accordance with G.L. c. 59, § 57C, the appellants paid the tax due without incurring interest. On Monday, February 2, 2009, in accordance with G.L. c. 59, § 59, the appellants timely filed an abatement application with the assessors seeking a $79,400 reduction in the subject property’s assessed value to $340,000.[179] On April 29, 2009, the assessors granted the appellants a partial abatement, reducing the assessed value of the subject property by $19,400 to $400,000 and the tax by $284.40 to $5,864.00. Wanting more, the appellants seasonably filed a Petition Under Formal Procedure with the Appellate Tax Board (“Board”) on July 21, 2009. On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide the appellants’ 2009 appeal.

For fiscal year 2010, the assessors valued the subject property at $369,700 and assessed the appellants a tax thereon, at the rate of $16.00 per $1,000, in the amount of $5,915.20, plus a community preservation act (“CPA”) tax, in the amount of $59.15. The West Springfield Collector of Taxes mailed the fiscal year 2010 tax bills on December 29, 2009. In accordance with G.L. c. 59, § 57C, the appellants paid the tax due without incurring interest. On January 28, 2010, in accordance with G.L. c. 59, § 59, the appellants timely filed an abatement application with the assessors seeking a $49,700 reduction in the subject property’s assessed value to $320,000. On March 29, 2010, the assessors denied the appellants’ request for abatement, and the appellants then seasonably filed a petition with the Board on April 22, 2010. On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide the appellants’ 2010 appeal.

The subject property consists of an approximately 46,609-square-foot parcel, which is improved with a single-family, one-and-one-half-story, Cape Cod-style home that contains approximately 3,883 square feet of living area. The dwelling was built circa 1950, and it has four bedrooms and three full bathrooms as well as one one-half bathroom. There is also a 214-square-foot enclosed porch attached to the back of the home and a 34-square-foot open porch at the front. The 914-square-foot basement is unfinished as is the 576-square-foot garage. There is also a small utility shed located on the parcel.

The interior of the dwelling has plaster walls and a mix of hardwood flooring and carpeting. The exterior is finished primarily in brick. The dwelling is heated by a forced hot water system fueled by natural gas. The subject property is in average overall condition.

At the hearing of these appeals, the appellants maintained that the subject property was overvalued. To prove overvaluation, the appellants primarily relied on four purportedly comparable sales and two purportedly comparable assessments. The appellants did not provide the Presiding Commissioner with property record cards for any of these properties or any other credible documentation to verify their descriptions. The appellants also failed to provide the Presiding Commissioner with copies of the relevant deeds to verify the sales.

The appellants stated that the first sale occurred on February 16, 2007 and was for $310,000. The parcel is 39,204 square feet in size and is improved with a 2,500-square-foot, three bedroom ranch-style dwelling. The appellants identified the address of this sale property as 35 Forest Glen in West Springfield.

The second sale property is located at 832 Dewey Street in West Springfield, and the appellants claimed that its parcel size is approximately 1.13 acres. They further asserted that it is improved with a 3,263-square-foot, twelve-room, Cape Cod-style dwelling that has five bedrooms as well as three full bathrooms. The appellants alleged that it sold for $362,500 sometime in 2007, but they failed to provide the Presiding Commissioner with the actual sale date.

The third and fourth sale properties, 199 Rogers Avenue and 143 Rogers Avenue, respectively, are both located on the same street as the subject property in West Springfield. The appellants maintained that the 199 Rogers Avenue property sold for $306,000 on February 23, 2010, and the 143 Rogers Avenue property sold for $305,000 on July 30, 2008. The appellants stated that the 199 Rogers Avenue property is situated on a 68,825-square-foot lot and is improved with a circa 1959, one-story, 3,310-square-foot dwelling with three bedrooms, two full bathrooms and one one-half bathroom. They also stated that the 143 Rogers Avenue property is situated on a 26,504-square-foot lot and is improved with an older, two-story, 2,300-square-foot dwelling with four bedrooms and two full bathrooms.

The appellants also compared the fiscal year 2009 and 2010 assessments on their 178 Rogers Avenue property to the same fiscal year assessments on their third and fourth sale properties, 199 Rogers Avenue and 143 Rogers Avenue, respectively. The appellants maintained that the 199 and 143 Rogers Avenue properties were assessed for $394,400 and $320,000, respectively, in fiscal year 2009, and for $377,300 and $293,200, respectively, in fiscal year 2010, while the subject property was assessed for $400,000 in fiscal year 2009 and $369,700 in fiscal year 2010. The appellants believed that, even without any findings of comparability or adjustments, the other Rogers Avenue properties’ assessments supported abatement of the subject property’s assessments.

In support of their assessment and in response to the appellants’ claim of overvaluation, the assessors introduced a comparable-sales analysis of three properties in West Springfield that included property record cards with photographs. The comparable properties are located at: 832 Dewey Street (Comp. One); 48 Rogers Street (Comp. Two); and 601 Birnie Avenue (Comp. Three). The sales occurred in 2006 and 2007 and ranged in price from $355,000 to $379,000. After applying certain adjustments to these properties to account for their individual differences with the subject property, the assessors calculated indicated values for their comparable-sale properties, which ranged from $386,400 to $435,100, leading to an estimated fair cash value for the subject property of $401,000. A summary of the assessors’ comparable-sales analysis is contained in the table below.

Factors	Subject Property	Comp One 832 Dewey	Adjusts ($)	Comp Two 48 Rogers	Adjusts ($)	Comp Three 601 Birnie	Adjusts ($)

Sale Price ($)	As of	362,500		355,000		379,000
Sale Date	01/01/08	12/17/07		03/24/06		08/31/07
Neighborhood	Six	Five	9,000	Six		Five	9,000
Lot Size (Acre)	1.07	1.14		0.42	3,300	0.46	3,100
Style	Cape	Cape		Colonial		Colonial
Quality	Average	Average		Average		Average
Age (Circa)	1950	1945		1915		1960
Condition	Average	Average		Average		Good	-19,000
Living Area (SF)	3,883	3,263	33,500	3,460	22,800	3,076	43,600
Bathrooms	3.5	2.5	4,000	1	10,000	2.5	4,000
Lower Level (SF)	672	1,240	-15,300	None	18,100	None	18,100
Garage	Two	Three	– 2,000	Two		Two
Heat/Air Cond.	FHW/None	FHW/None		Steam/None		FHW/None
Fireplace	Two	One	1,600	One	1,600	One	1,600
Enclosed Porch (SF)	214	181		76		No	4,600
Open Porch (SF)	No	No		No		384	– 2,100
Deck (SF)	No	180	– 1,100	456	– 2,800	No
Patio (SF)	No	444	– 2,800	No		No
Pool	No	Above Ground	– 1,000	Inground	– 5,800	Inground	– 5,800
Outbuilding	Shed	Three Sheds	– 2,000	Large Shed	– 1,000	Two Sheds	– 1,000
Net Adjustments	N/A		23,900		46,200		56,100
Indicated Value	$401,000	$386,400		$401,200		$435,100

After considering the appellants’ presentation, the Presiding Commissioner found that it did not contain or provide credible evidence to support their claim that the subject property was overvalued for the fiscal years at issue. The appellants did not submit into evidence property record cards, deeds or other reliable evidence to substantiate their contentions regarding their comparable-sale and comparable-assessment properties. Without this evidence, the Presiding Commissioner was not able to confirm sale dates and important property characteristics. In addition, the Presiding Commissioner found that the appellants’ evidence did not provide him with the underlying information that might enable him to apply appropriate adjustments to sale prices and assessment values accounting for differences between the subject property and the comparable-sale and comparable-assessment properties, thereby enabling him to determine a value for the subject property for the fiscal years at issue.

With respect to the assessors’ comparable-sales analysis, the Presiding Commissioner found that the first comparable sale, 832 Dewey Street, was the most comparable one to the subject property. It is the same style, age, quality, and condition as the subject property, and its lot size and finished living area are reasonably equivalent. In addition, this comparable property had sold on December 17, 2007 for $362,500, just two weeks prior to the January 1, 2008 assessment date for fiscal year 2009. The Presiding Commissioner further found, however, that the assessors had applied excessive adjustments to this property and therefore found that its adjusted value was closer to its sale price of $362,500 than to the assessors’ suggested indicated value of $386,400. The Presiding Commissioner also noted that the assessors had reduced the subject property’s assessment to $369,700 for fiscal year 2010 without maintaining that the value of real estate similar to the subject property declined in value from fiscal year 2009 to fiscal year 2010. Based on these findings, the Presiding Commissioner ultimately found that the fair cash value of the subject property for both fiscal year 2009 and 2010 was equal to its fiscal year 2010 assessment of $369,700.

Accordingly, in his revised single-member decision, promulgated simultaneously with this Findings of Fact and Report, the Presiding Commissioner decides the fiscal year 2009 appeal for the appellant, reduces the fiscal year 2009 assessment, as previously adjusted by the assessors, from $400,000 to $369,700, and abates $444.20 in real estate tax. The Presiding Commissioner decided the fiscal year 2010 appeal for the appellee.

OPINION

The appellants have the burden of proving that the property has a lower value than that assessed. “‘The burden of proof is upon the petitioner to make out its right as [a] matter of law to [an] abatement of the tax.’” Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245 (1974) (quoting Judson Freight Forwarding 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 taxpayers . . . prov[e] 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)). The appellants in these appeals attempted to prove that the subject property was overvalued by introducing the assessments and sale prices of certain properties and comparing them to the subject property’s assessments for fiscal years 2009 and 2010. The assessors attempted to defend their assessments by introducing a comparable-sales analysis.

General Laws c. 58A, § 12B provides in pertinent part that “at any hearing relative to the assessed fair cash valuation or classification of property, evidence as to fair cash valuation or classification of property at which assessors have assessed other property of a comparable nature or class shall be admissible.” The introduction of such evidence may provide adequate support for either the granting or denial of an abatement. Chouinard v. Assessors of Natick, Mass. ATB Findings of Fact and Reports 1998-299, 307-308 (citing Garvey v. Assessors of West Newbury, Mass. ATB Findings of Fact and Reports 1995-129, 135-36; Swartz v. Assessors of Tisbury, Mass. ATB Findings of Fact and Reports 1993-271, 279-80); see also Turner v. Assessors of Natick, Mass. ATB Findings of Fact and Reports 1998-309, 317-18. Purportedly comparable properties used in a comparable-assessment analysis must be adjusted, just like those used in a comparable-sales analysis, for differences with the subject property. See Graham v. Assessors of West Tisbury, Mass. ATB Findings of Fact and Reports 2007-321, 402 (“The assessments in a comparable assessment analysis, like the sale prices in a comparable sales analysis, must also be adjusted to account for differences with the subject.”), aff’d, 73 Mass. App. Ct. 1107 (2008); Lupacchino v. Assessors of Southborough, Mass. ATB Findings of Fact and Reports 2008-1253, 1269 (“[W]ithout appropriate adjustments, . . . the assessed values of [comparable] properties [do] not provide reliable indicator[s] of the subject’s fair cash value.”).

In the present appeals, the Presiding Commissioner found and ruled that the appellants’ presentation did not contain or provide credible evidence to support their claim that the subject property was overvalued for the fiscal years at issue. The appellants did not submit into evidence property record cards, deeds or other reliable evidence to substantiate their contentions regarding their comparable-assessment and comparable-sale properties. Without this evidence, the Presiding Commissioner was not able to confirm sale dates and important property characteristics. See Lareau v. Assessors of Norwell, Mass. ATB Findings of Fact and Reports 2010- 879, 890-91 (ruling that the appellants’ failure to submit property record cards and other fundamental evidence containing corroborating and detailed information about their purportedly comparable properties compromised the appellants’ ability to prove that their property was overvalued). In addition, the Presiding Commissioner found that the appellants’ evidence did not provide him with the underlying information that might enable him to apply appropriate adjustments to assessment values and sale prices accounting for differences between the subject property and their purportedly comparable-assessment and comparable-sale properties, thereby enabling him to determine a value for the subject property for the fiscal years at issue.

With respect to the assessors’ comparable-sales analysis, the Presiding Commissioner found that the first comparable sale, 832 Dewey Street, was the most comparable one to the subject property. It is the same style, age, quality, and condition as the subject property, and its lot size and finished living area are reasonably equivalent. In addition, this comparable property had sold on December 17, 2007 for $362,500, just two weeks prior to the January 1, 2008 assessment date for fiscal year 2009. The Presiding Commissioner further found, however, that the assessors had applied excessive adjustments to this property and therefore found that its adjusted value was closer to its sale price of $362,500 than to the assessors’ suggested indicated value of $386,400. The Presiding Commissioner also noted that the assessors had reduced the subject property’s assessment to $369,700 for fiscal year 2010 without maintaining that the value of real estate similar to the subject property declined in value from fiscal year 2009 to fiscal year 2010. Based on these findings, the Presiding Commissioner ultimately found and ruled that the fair cash value of the subject property for both fiscal year 2009 and 2010 was equal to its fiscal year 2010 assessment of $369,700.

“The [B]oard [is] not required to believe the testimony of any particular witness but [may] accept such portions of the evidence as appear to have the more convincing weight. Assessors of Quincy v. Boston Consol. Gas Co., 309 Mass. 60, 72 (1941). “The credibility of witnesses, the weight of evidence, and inferences to be drawn from the evidence are matters for the [B]oard.” Cummington School of the Arts, Inc. v. Assessors of Cummington, 373 Mass. 597, 605 (1977).

Accordingly and after evaluating all of the evidence, in his revised single-member decision, the Presiding Commissioner decides the fiscal year 2009 appeal for the appellants, reduces the fiscal year 2009 assessment, as previously adjusted by the assessors, from $400,000 to $369,700, and abates $444.20 in real estate tax. The Presiding Commissioner decided the fiscal year 2010 appeal for the appellee.

APPELLATE TAX BOARD

By: ____

Thomas J. Mulhern, Commissioner

A true copy,

Attest:

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

BERMONT PELLETIER, v. BOARD OF ASSESSORS OF

TRUSTEE OF THE PELLETIER THE TOWN OF OXFORD

REALTY TRUST

Docket No. F303020 Promulgated:

October 26, 2010

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 Board of Assessors of the Town of Oxford (“assessors” or “appellee”) to abate taxes on certain real estate in Oxford, owned by and assessed to Bermont Pelletier, Trustee of the Pelletier Realty Trust, (“appellant”) under G.L. c. 59, §§ 11 and 38, for fiscal year 2009 (“fiscal year at issue”).

Commissioner Mulhern (“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.

Bermont Pelletier, pro se, for the appellant.

Christopher Pupka, assessor, for the appellee.

FINDINGS OF FACT AND REPORT

On January 1, 2008, the appellant was the assessed owner of a three-acre parcel of land improved with a single-family, Cape Cod-style dwelling located at 43 Conlin Road in Oxford (“subject property”). For the fiscal year at issue, the assessors valued the subject property at $353,900 and assessed a tax thereon, at the rate of $10.76 per thousand, in the total amount of $3,807.96. The appellant timely paid the tax due without incurring interest. The appellant timely filed an Application for Abatement with the assessors on February 27, 2009. The Application for Abatement was deemed denied on May 27, 2009. The appellant timely filed an appeal with the Appellate Tax Board (“Board”) on June 24, 2009. On the basis of these facts, the Presiding Commissioner found and ruled that the Board had jurisdiction to hear and decide this appeal.

The dwelling on the subject property has a total finished living area of 1,960 square feet, including four bedrooms. It has a wood exterior with an asphalt-shingled, gable roof and a concrete foundation. The dwelling has an unfinished basement, an enclosed porch, and a seven-by-thirteen-foot open porch. It also features a two-car garage and an in-ground swimming pool.

The appellant offered several exhibits into evidence in an attempt to demonstrate that the assessed value of the subject property exceeded its fair cash value. The appellant’s exhibit number one consisted of information from the Multiple Listing Service (“MLS”) database regarding six properties in Oxford which sold between May 30, 2008 and November 28, 2008. The sales prices of the six properties ranged from $200,000 to $271,000.

Appellant’s exhibit number two consisted of a letter addressed to the appellant from a local realtor. The letter, dated February 18, 2009, stated her opinion that he “should be able to argue for a reduction in assessed value” of the subject property. Attached to the letter was information from the MLS database regarding five properties in Oxford which sold between March 3, 2008 and November 14, 2008. The sales prices of those five properties ranged from $245,000 to $275,000. Appellant’s exhibit number two also contained correspondence from another local realtor addressed to the appellant and entitled “Home Market Evaluation.” In that correspondence dated February 23, 2009, the realtor estimated that the range of market value for the subject property was between $250,000 and $265,000. The realtor expressly denied that the “Home Market Evaluation” was an appraisal. Finally, appellant’s exhibit number two contained documents from two internet sites, Eppraisal.com and Bankofamerica.com. Those documents, which were dated February 19, 2009, provided estimates of the market value of the subject property. The Eppraisal.com document listed a range of value for the subject property from $215,798 to $291,963, while the Bankofamerica.com document listed an estimate of $251,559. The appellant’s opinion of the subject property’s fair cash value for the fiscal year at issue was $250,000.

The assessors offered only jurisdictional documents into evidence and rested on the assessment.

On the basis of all the evidence, the Presiding Commissioner found that the appellant failed to meet his burden of proving that the fair cash value of the subject property was less than its assessed value. Though the appellant offered evidence regarding the sales of numerous properties in Oxford, the purportedly comparable properties relied upon by the appellant were diverse in age, size and style; they varied greatly from one another and from the subject property. The appellant did not establish basic comparability between the subject property and his comparison properties, nor did he make any adjustments to account for differences between the subject property and his comparison properties. The Presiding Commissioner found that the sales prices of the comparison properties were not reliable evidence of the fair cash value of the subject property because the appellant failed to establish basic comparability between the comparison properties and the subject property and failed to make adjustments to account for differences with the subject property.

Further, the Presiding Commissioner found that the other estimates of value presented by the appellant, including a realtor’s opinion of value for the subject property, dated February 23, 2009, and two estimates of value obtained from on-line sources on February 19, 2009, were too remote in time from the relevant date of assessment to provide a reliable indication of the subject property’s fair cash value on that date.[180] The Presiding Commissioner therefore placed no weight on this evidence.

On the basis of the evidence presented, the Presiding Commissioner found and ruled that the appellant failed to establish that the fair cash value of the subject property as of the assessment date for the fiscal year at issue was less than its assessed value. Accordingly, the Presiding Commissioner issued a decision for the appellee in this appeal.

OPINION

The assessment is presumed valid unless the taxpayer sustains the 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 value of the property exceeded its fair cash value. 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)).

Sales of comparable realty in the same geographic area and within a reasonable time of the assessment date generally contain 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). The properties used in a comparable-sales analysis must be comparable to the subject property in order to be probative of the fair cash value. See Anne B. Sroka v. Assessors of Monson, Mass. ATB Findings of Fact and Reports 2009-835, 846 (citing Lattuca v. Robsham, 442 Mass. 205, 216 (2004)). The appellant bears the burden of “establishing the comparability of . . . properties [used for comparison] to the subject property.” Fleet Bank of Mass. v. Assessors of Manchester, Mass. ATB Findings of Fact and Reports 1998-546, 554. Accord New Boston Garden Corp. v. Assessors of Boston, 383 Mass. 456, 470 (1981). “Once basic comparability is established, it is then necessary to make adjustments for the differences, looking primarily to the relative quality of the properties, to develop a market indicator of value.” Id. Here, the appellant introduced sales data from a number of properties in Oxford. However, those properties were diverse in age, size and style, and differed from one another as well as the subject property. The appellant made no adjustments to the sales prices of his comparison properties to account for differences between those properties and the subject property, but instead relied upon the sales prices of the purportedly comparable properties to form his opinion of value for the subject property. The Presiding Commissioner found and ruled that the appellant failed to establish basic comparability between the subject property and his comparison properties and, further, failed to make any adjustments to account for differences between the subject property and his comparison properties. For these reasons, the Presiding Commissioner placed no weight on the appellant’s opinion of value insofar as it relied upon the sales data from his purportedly comparable properties.

Similarly, the estimates and opinions of value gathered by the appellant from on-line sources and a local realtor in February of 2009 were too remote in time from the relevant date of assessment to provide probative evidence of the subject property’s fair cash value on that date. The Presiding Commissioner therefore placed no weight on this evidence.

On the basis of all of the evidence, the Presiding Commissioner found and ruled that the appellant failed to prove that the fair cash value of the subject property was less than its assessed value. The Presiding Commissioner therefore found and ruled that the appellant did not establish his right to an abatement, and, accordingly, issued a decision for the appellee in this appeal.

APPELLATE TAX BOARD

By: _________________________________

Thomas J. Mulhern, Commissioner

A true copy,

Attest: _______________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

FRED M. DELLORFANO v. COMMISSIONER OF REVENUE

Docket No. C293862 Promulgated:

October 27, 2010

This is an appeal filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39, from the refusal of the appellee, the Commissioner of Revenue (“Commissioner”), to abate withholding taxes assessed against the appellant, Fred M. Dellorfano (“Mr. Dellorfano” or “appellant”), for the tax period beginning on October 1, 2002 through and including the tax period ending on November 30, 2003 (“tax periods at issue”).

Commissioner Scharaffa heard this appeal and was joined by Chairman Hammond and Commissioners Egan, Rose, and Mulhern in a 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.

Fred M. Dellorfano, pro se, for the appellant.

Kevin M. Daly, Esq., Anne P. Hristov, Esq. and Julie A. Flynn, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the testimony and exhibits entered into evidence at the hearing of this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On August 17, 2004, the Commissioner issued to the appellant a Notice of Proposed Determination of Personal Liability and Deemed Assessment for unpaid withholding taxes of RTG TeleCom, Inc. (“RTG”), a Massachusetts domestic corporation, for the tax periods at issue. Subsequently, on April 27, 2005, the Commissioner issued to the appellant a Notice of Determination of Personal Liability and Deemed Assessment for unpaid withholding taxes in the amount of $21,932.40, together with interest and penalties. On June 20, 2005, the appellant timely filed with the Commissioner a Form CA-6, Application for Abatement, to appeal his assessment as a responsible person. The Commissioner notified the appellant of her denial of this application by Notice of Abatement Determination dated October 12, 2007. On December 6, 2007, the appellant seasonably filed a petition with the Board to contest the Commissioner’s assessment. On the basis of the forgoing facts, the Board found that it had jurisdiction to hear and decide this appeal.

The appellant testified to the events leading to the formation of RTG. The appellant holds a law degree and an LL.M. degree in taxation, and he previously worked as a tax counsel within a certified public accounting firm. While pursuing an M.B.A. degree at Suffolk University, the appellant met Peter Gianonatti, a fellow student who told the appellant that he was interested in purchasing a business. At the time, the appellant was employed by Response Electric, an electrical company based in Massachusetts. The appellant arranged a meeting between the three shareholders of Response Electric, Mr. Gianonatti and Mr. Gianonatti’s colleague, Doug Muir. In pursuing the possibility of purchasing Response Electric, Mr. Gianonatti requested that a certified public accountant (“CPA”) review the books of the company. The appellant engaged his former colleague, Frederick Ciampa, CPA, with whom he used to work at the certified public accounting firm, to review the books of Response Electric.

Over the course of negotiations, Mr. Muir backed out of the deal, and Mr. Gianonatti decided that Response Electric was too large a company for his interests. However, Mr. Gianonatti expressed interest in purchasing a smaller telecommunications division within Response Electric, and he asked the appellant to partner with him in this venture. The appellant arranged a financing plan through his colleague, Winn Coffman, and he engaged another colleague, Attorney Lawrence Litwak, to serve as the new company’s incorporator.

As a result of the appellant’s efforts, RTG, a Massachusetts corporation, was formed on October 12, 2001, with Mr. Gianonatti serving as Treasurer, the appellant’s brother, Frank J. Dellorfano, serving as Clerk, and Pranati Kapadia, whom the appellant met in September, 2001 through a mutual friend, serving as President. Serving as directors of RTG were Frank J. Dellorfano, Mr. Coffman, Ms. Kapadia, and Mr. Gianonatti. The appellant testified that, when Mr. Coffman rescinded his financing, the appellant arranged for his brother, Frank J. Dellorfano, to provide the necessary capital. On November 7, 2001, the appellant, in his capacity as Executive Vice President of RTG, signed a Security Agreement with his brother. Frank J. Dellorfano thus became a 50-percent shareholder of RTG and, on November 9, 2001, he filed a Certificate of Change of Directors or Officers with the Secretary of the Commonwealth to remove Mr. Coffman as a director of RTG. The appellant subsequently married Ms. Kapadia on September 1, 2002.

The appellant and his relatives together owned a majority (89%) of RTG’s shares — Frank J. Dellorfano was a 50% shareholder, Ms. Kapadia was an 11% shareholder, and the Isola Capri Trust, a family trust in which the appellant was a life beneficiary and his children were the remainder beneficiaries, was a 28% shareholder. In June of 2002, a tax-free exchange was made to transfer the stock of RTG for stock of RTG/ISI TeleCom, Inc. (“RTG/ISI”), which became the holding company of RTG and another subsidiary, ISI Internetworking Solutions, Inc. (“ISI”). The tax-free exchange resulted in the same ownership structure of RTG/ISI that had existed for RTG, with the appellant and his family owning 89% of RTG/ISI, and RTG/ISI owning 100% of the stock of both RTG and ISI.

Mr. Ciampa was engaged to serve as the outside CPA for RTG to perform its audits, and Attorney Litwak served as corporate counsel. At the hearing, Mr. Ciampa testified that it was his colleague, the appellant, who hired him. Mr. Ciampa also testified that he was approached by the Board of Directors of RTG to recommend a Controller for RTG, and that he recommended a colleague, William Gardner. Mr. Ciampa further explained that it was Mr. Dellorfano to whom he presented Mr. Gardner for hiring consideration. Although not listed in the Articles of Organization, the appellant was named as RTG’s Executive Vice President on several financial documents, particularly the aforementioned Security Agreement with Frank J. Dellorfano and two separate Promissory Notes executed in December, 2002, as well as other documents, including the minutes from the First Meeting of the Board of Directors. The appellant, Ms. Kapadia and Mr. Gardner each had singular check-signing authority on RTG’s two checking accounts maintained at Eastern Bank. The appellant signed numerous payroll and operating checks during the periods at issue. Moreover, the appellant testified that, while Ms. Kapadia was “brilliant,” she was rendered nearly blind and deaf as a result of a brain tumor. According to the appellant, he thus became the President’s “eyes and ears” in their endeavors to grow the business of RTG.

RTG’s sole client was Verizon Services Group (“Verizon”). The relationship with Verizon was secured by a contract signed by the appellant as Vice President on January 31, 2003. One of the employees of RTG, Ed Pagan, subsequently made an arrangement with Verizon to take Verizon’s business away from RTG sometime in June, 2003. Mr. Pagan also employed several RTG employees who had been working on that contract. The loss of its sole client and its key employees led to the demise of RTG. It was the appellant who signed the Business Discontinuation Form on behalf of RTG.

The Board heard the testimony of Mr. Gardner, who served as Controller of RTG during the tax periods at issue. Mr. Gardner stated that it was the appellant who had hired him and that the appellant had made other hiring decisions as well, including the hiring of the appellant’s son (“Fred III”) as Mr. Gardner’s assistant after the discovery of the unpaid federal taxes and the hiring of the appellant’s sister, who performed some contract work for RTG. Copies of electronic mail messages offered into evidence revealed that Fred III took charge of making tax payments and that he informed the appellant and Mr. Gardner when tax deposits and withholding payments were being made. When the appellant, during his cross-examination of Mr. Gardner, attempted to classify the hiring of Fred III as Mr. Gardner’s decision, Mr. Gardner replied, “I don’t feel that’s accurate. It’s your son.”

Mr. Gardner also explained that the appellant directed him as to which items to pay, including pay raises. Mr. Gardner explained that he regularly communicated to the appellant the cash flow projections for RTG, which included RTG’s withholding tax liabilities. He explained that on a weekly basis he submitted to the appellant documents such as financial statements, contracts and billings and that he gave him “[b]asically a synopsis of everything that was happening at any given point in time.” Mr. Gardner also testified that Fred III met with the appellant daily to review cash flows and that Fred III compiled reports of RTG’s finances, which were circulated to the appellant.

Mr. Gardner testified that he became frustrated with the appellant’s control over the company’s finances and with being “kept out of the loop of what’s going on financially” with RTG. Mr. Gardner cited as examples payments to the appellant’s brother, Frank, on the loan to RTG at the expense of other outstanding liabilities, including taxes. Mr. Gardner was also frustrated by the appellant’s decision to ignore the health insurance bills that benefited RTG employees while ensuring that the health insurance premiums for the appellant’s brother, who was not employed by RTG, were paid. In a letter he wrote to the Internal Revenue Service (“IRS”) to protest his assessment as a responsible person for unpaid federal taxes, Mr. Gardner explained that:

The board of directors, Fred Jr.[181], and Fred III had total and exclusive control of all cash disbursed on a daily basis (exhibit B-H). My lack of control of cash disbursed can further be illustrated by the fact that my family’s health insurance was cancelled on August 31, 2003 which has resulted in thousands of dollars of medical bills to me as my wife [ ] has diabetes and numerous other health issues. You can be sure that if I had any control, I would under no circumstances fail to pay our company health insurance premium.

Mr. Gardner further testified that he performed duties for RTG and ISI, and as far as he was concerned, “[i]t was the same organization” and he had received instructions on which bills to pay and which checks to hold for both companies from the appellant. Mr. Ciampa also testified that RTG/ISI, RTG and ISI were accounted for as one organization for both financial statement and tax purposes. The appellant routinely circulated money from one company to the other to cover any shortfalls. The appellee submitted into evidence over thirty ISI checks, which the appellant had signed and were payable to RTG. The appellant also admitted that he had assigned several of ISI’s accounts receivables to Danvers Savings Bank in order to generate cash, which he then transferred to RTG’s accounts as needed. The appellant also signed contracts on behalf of RTG’s parent company, RTG/ISI, including a service contract on May 29, 2003 and a subcontractor agreement on July 28, 2003. Mr. Gardner also testified that he performed duties for each of the companies, and that he considered the companies to be one organization controlled by one boss – the appellant.

Mr. Gardner’s employment with RTG was terminated around November, 2003. The circumstances surrounding Mr. Gardner’s departure were not made clear at the hearing; the parties refer to the departure as a “layoff” resulting from RTG’s financial struggles. Evidence submitted does establish that the appellant signed Mr. Gardner’s last payroll check and that the appellant directed Mr. Gardner in writing not to cash his check until adequate funds were deposited in RTG’s payroll account to cover payroll checks. At around this time, the appellant, together with Ms. Kapadia, applied for a personal loan to sustain RTG through its difficulties. The appellant also sought the advice of his colleague, Mr. Ciampa, in hiring a bookkeeper after the departure of Mr. Gardner.

The Board heard the testimony of Renee Jacavanco, who served as the bookkeeper for RTG/ISI, RTG and ISI after the departure of Mr. Gardner. Ms. Jacavanco corroborated the testimony of both Mr. Gardner and Mr. Ciampa that the entities RTG/ISI, RTG and ISI all operated out of the same office and shared the same employees. Ms. Jacavanco testified several times, on both direct and cross examination, that the companies’ finances were so intertwined that she often would not know which company’s finances were being utilized to pay bills. Ms. Jacavanco also testified that, while she was working for the companies, ISI was bringing in money from its contracts. The appellee submitted into evidence an invoice from ISI to BR+A Consulting Engineers, Inc., which was signed by the appellant as Executive Vice President. During his testimony, the appellant admitted that “ISI was operating and operating fairly successfully” during the third quarter of 2003, when RTG’s business began to suffer after losing its contract with Verizon.

Ms. Jacavanco testified that the appellant hired her and supervised her duties. One of Ms. Jacavanco’s first duties was to void several payroll checks and rework withholding tax returns. She stated that this duty had been delegated to her by the appellant, who handed her the envelope containing the payroll checks and Massachusetts Department of Revenue withholding tax returns. Ms. Jacavanco also testified that she soon became frustrated working for the companies, because when she recommended payment of what she deemed to be more important liabilities, particularly tax liabilities, the appellant directed her to pay other liabilities instead, such as lease payments for the appellant’s vehicle and payments for credit card accounts personally guaranteed by the appellant. Ms. Jacavanco ended her employment with the companies after only a few months.

The appellee offered into evidence an Application for Employer Identification Number for RTG/ISI, which the appellant had signed on June 25, 2002. Mr. Ciampa also testified to the appellant’s role when auditors from a CPA firm discovered RTG’s unpaid federal and state withholding taxes in December of 2002. According to Mr. Ciampa, RTG had a history of withholding tax delinquencies: “pretty much everybody was in shock because we had just gone through an era of a problem and it was starting up all over again.” Mr. Ciampa testified that he immediately notified the appellant about the discovery of the unpaid taxes and that the appellant accompanied him to the IRS office to discuss a payment plan. On October 10, 2003, the appellant also faxed a note to an IRS Revenue Officer regarding the status of payments pursuant to a payment agreement which RTG had executed with the IRS. The appellant also signed the 2002 Massachusetts Form 355C Combined Corporate Excise Return for ISI on September 15, 2003 in his capacity as Vice President. Attached to this return was the 2002 federal Form 1120 U.S. Corporation Income Tax Return for RTG/ISI that showed the consolidation of RTG/ISI, RTG and ISI.

On the basis of the above evidence, the Board found that the appellant was instrumental in the founding of RTG, having engaged a colleague to serve as its CPA, another colleague to serve as incorporator, and his brother to provide the financing. The appellant, together with his relatives, also owned 89% of the stock of RTG through their ownership interest in the parent company, RTG/ISI. The three named officers and directors of RTG – Ms. Kapadia, Frank Dellorfano and Mr. Gianonatti – were the appellant’s wife, brother, and colleague, respectively. Although he tried to shield himself from liability by not being listed in the Articles of Organization, the appellant was nonetheless cited as RTG’s Executive Vice President on key business documents, particularly on the contract with Verizon and on the minutes from the First Meeting of the Board of Directors, a meeting which he presided over in that capacity. The appellant also had hiring and firing power over essential employees who handled RTG’s finances, as evidenced by his hiring and supervision of Mr. Gardner and Ms. Jacavanco, according to their credible testimony, as well as the hiring of his son, Fred III, as Mr. Gardner’s assistant. On the basis of these findings, the Board found that the appellant had and exercised significant control over the business operations of RTG.

More importantly, the Board gave particular weight to evidence related to the appellant’s involvement in the financial affairs of RTG. The appellant was acutely involved in the finances of RTG. It was the appellant who signed the Security Agreement and the Promissory Notes with Frank J. Dellorfano; he also applied for a personal loan to cover the expenses of RTG during its financial difficulties. As Mr. Gardner testified and numerous electronic mail communications offered into evidence revealed, the appellant was updated on a daily basis as to the cash situation of RTG. He also had check-signing authority on RTG’s checking accounts, and he signed numerous payroll and operating checks during the periods at issue. Further, Mr. Ciampa testified, and the Board so found, that he immediately notified the appellant about the discovery of unpaid withholding taxes and that it was the appellant who accompanied him to the IRS to negotiate a payment plan and who continued to correspond and oversee payments pursuant to the IRS payment agreement. On the basis of these findings, the Board found that the appellant was fully aware of RTG’s tax obligations and liabilities at issue in this appeal and that he had authority and control over whether these liabilities would be paid.

The Board also found it significant that the entities RTG, ISI and RTG/ISI operated as one consolidated, intertwined unit, with the appellant as the controlling force. Tax returns entered into evidence reveal that the three entities were consolidated for tax purposes, while all three witnesses – Ms. Jacavanco, Mr. Garnder and Mr. Ciampa – testified that the three entities operated out of the same office, shared the same employees, and their finances were so intertwined that the bookkeeper had difficulty determining which company’s finances were being utilized to pay bills. The appellant’s control over the companies was illustrated by his involvement in signing contracts on behalf of RTG’s parent company, RTG/ISI, including a service contract on May 29, 2003 and a subcontractor agreement on July 28, 2003. The appellant routinely circulated money from one company to the other to cover any shortfalls, as evidenced by the appellant signing checks and assigning accounts receivables belonging to ISI to Danvers Savings Bank in order to generate cash, which he then had transferred to RTG’s payroll account. Invoices and credible testimony demonstrated that ISI was operating successfully during the periods at issue. On the basis of these findings, the Board found that the appellant possessed and exercised significant control over the disbursement of funds for not only RTG but also ISI and RTG/ISI.

The Board thus found that the appellant had knowledge of the unpaid taxes at issue and the authority to pay those tax liabilities. However, the evidence showed that the appellant directed Mr. Gardner and Ms. Jacavanco to pay other liabilities instead, including credit cards which the appellant had personally guaranteed, lease payments for the appellant’s vehicle, and health insurance premiums for the appellant’s brother. He had the power to decide which bills were paid, and he chose to pay other bills rather than the taxes at issue. For these reasons, and as will be explained in the Opinion, the Board ultimately found that the appellant was a person responsible for the unpaid withholding taxes of RTG during the tax periods at issue. Accordingly, the Board issued a decision for the appellee in this appeal.

OPINION

The question presented in this appeal is whether the appellant was a person responsible for the unpaid withholding tax liabilities of RTG, together with the related interest and penalties, for the tax periods at issue.[182] The withholding tax is commonly referred to as a trustee tax, because it is a tax which a person or entity withholds from its employees and is obligated to remit to the Commonwealth. See G.L. c. 62B, § 2.

Responsible person liability in Massachusetts is governed by G.L. c. 62C, § 31A, which provides that:

[i]f a person fails to pay to the commissioner any required tax of a corporation or partnership and such person is personally and individually liable therefor to the commonwealth under . . . section sixteen of chapter sixty-four H, . . . the commissioner shall so notify such person in writing . . . . After the expiration of thirty days from the date of such notification, such person shall be personally and individually liable for the tax . . . .

(emphasis added). G.L. c. 62B, § 5, applying specifically to withholding taxes, provides as follows:

Every employer who fails to withhold or pay to the commissioner any sums required by this chapter to be withheld or paid shall be personally and individually liable therefore to the commonwealth. The term “employer” . . . includes an officer or employee of a corporation, or a member or employee of a partnership or limited liability company, who as such officer, employee or member is under a duty to withhold and pay over taxes in accordance with this section . . . .

The Commissioner has promulgated a regulation which describes a “responsible person” as “any person who is or was under a duty to pay over taxes imposed on a corporation or partnership by M.G.L. chs. 62B, 64G, 64H, and 64I.” 830 CMR 62C.31A.1(2). The regulation defines “duty to pay over taxes” as “an obligation to remit taxes that arises from a person’s position, function, or responsibility undertaken on behalf of a corporation.” Id. Determination of who is a responsible person is made on a case-by-case basis after analyzing the “facts and circumstances of the individual case.” 830 CMR 62C.31A.1(4).

In Brown v. Commissioner of Revenue, 424 Mass. 42 (1997), the Supreme Judicial Court ruled that, absent express authority pursuant to the terms of an individual’s employment, no ready legal formula identified circumstances giving rise to an obligation to remit taxes on behalf of a corporation. Id. at 44. In upholding the Board’s consideration of federal cases on this issue, the Court in Brown noted a “close parallel between the State and Federal statutes concerning the duty to pay over.” Id. Citing relevant federal cases with approval, the Court observed that “the issue to pay over [taxes] turns on whether the facts demonstrate that the person assessed had the authority to have the taxes paid.” Id. (citing United States v. Rem, 38 F.3d 634, 642 (2^nd Cir. 1994); Purcell v. United States, 1 F.3d 932, 937 (9^th Cir. 1993); Barnett v. IRS, 988 F.2d 1449, 1454-55 (5^th Cir.), cert. denied, 510 U.S. 990 (1993); and O’Connor v. United States, 956 F.2d 48, 50-51 (4^th Cir. 1991)).

Factors drawn from federal case law which have guided the Board in making responsible person determinations include:

(1) the contents of the corporate by-laws; (2) the authority of the individual in question to sign checks; (3) the identity of the individuals who signed the tax returns; (4) the payment of other creditors, besides the taxing authority; (5) the identity of the officers, directors, and principal stockholders of the corporation; (6) the identity of the individual who hires and fires employees; and, most importantly, (7) the identity of the individual with significant control over the corporation’s financial affairs.
Mandell v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1994-1, 11-12 (citing Datlof v. U.S., 252 F.Supp. 11, aff’d, 370 F.2d 655 (3^rd Cir. 1966), cert. denied, 387 U.S. 906 (1967), and Hochstein v. U.S., 900 F.2d 543 (2^nd Cir. 1990)).

The factor most probative of a duty to pay over taxes is “significant control over disbursement of the company’s funds.” Gadoury v. United States, 77 F.3d 460 (1^st Cir. 1996). If a taxpayer has significant authority over the expenditure of funds and the payment of bills, courts have ruled that he is responsible for the failure to withhold or pay over the tax, regardless of his official title or whether he is as an officer within the company. Godfrey v. United States, 748 F.2d 1568, 1575 (Fed. Cir. 1984); Maggy v. United States, 560 F.2d 1372 (9^th Cir. 1977). For example, in Mandell, the Board found the appellant, who was not a corporate officer, director, or shareholder of the corporation, was nonetheless a responsible person. The taxpayer in that appeal handled the corporate finances, wrote virtually all of the checks, paid the corporation’s bills, had discretion over which bills were paid, and was aware of the company’s sales tax liability. Mandell, Mass. ATB Findings of Fact and Reports at 1994-13. Essentially, the taxpayer “acted as and in fact was the key financial person in the corporation.” Id. at 12. See also Slodov v. United States, 436 U.S. 238 (1978); Monday v. United States, 421 F.2d 1210, 1218 (7^th Cir.), cert. denied, 400 U.S. 831 (1970) (“[A] responsible person is anyone with the power and responsibility within the corporate structure for seeing that the withheld taxes are remitted.”); Rem, 38 F.3d at 642.

In the instant appeal, the Board found numerous examples of the appellant exerting control over the organization and operational functions of RTG. As detailed in the Findings, the appellant was instrumental in the founding of RTG by engaging his own colleagues to serve as CPA and incorporator, securing the financing and presiding over its first Board of Directors meeting. The three named officers and directors of RTG were the appellant’s wife, brother, and colleague, and the appellant and his relatives together owned 89% of the stock of RTG through their ownership interests in RTG/ISI, the parent corporation which wholly owned RTG. The fact that he was not named as an officer or director in the Articles of Organization was not, under the facts of this appeal, determinative of the appellant’s authority and control over RTG’s daily functions, where he was named as the Executive Vice President on several key corporate documents and, according to credible testimony, he wielded hiring, firing and supervisory authority over essential employees, particularly Mr. Gardner, Fred III as Mr. Gardner’s assistant, the appellant’s sister, and Ms. Jacavanco who paid the corporate bills. The Board thus found and ruled that the appellant had and exercised significant control over the operations of RTG.

More importantly, the Board found ample evidence establishing the appellant’s control over RTG’s finances during the tax periods at issue. The Board found that the appellant held and exercised check-signing authority and that he was informed on a regular, if not daily, basis as to the financial status of RTG by several sources, including Fred III. The appellant even took steps to alleviate the finances of RTG, including transferring money from ISI to RTG and applying for a personal loan on behalf of RTG. The Board also found that the appellant, who holds an LL.M. degree in taxation and had previously worked as a tax counsel for a certified public accounting firm, was informed of the liabilities, and that he negotiated and oversaw RTG’s payment plan with the IRS. The Board thus found and ruled that the appellant was aware of RTG’s tax liabilities and that he held the requisite authority to effect their payment.

On the basis of these findings, the Board found and ruled that, during the tax periods at issue, the appellant held and exercised significant control over the disbursement of RTG’s funds sufficient to render him a person responsible for the payment of the liabilities at issue. This authority over the corporate finances extended to the other related entities, ISI and RTG/ISI, which the Board found operated on a consolidated basis with RTG for tax and operational purposes, with the appellant at the helm. However, when it was suggested to him that he pay RTG’s tax liabilities, the appellant instead directed the payment of other RTG liabilities, including credit cards personally guaranteed by the appellant and health insurance premiums for his brother. The Board thus found and ruled that the appellant, who had the authority to direct payment of the tax liabilities at issue, deliberately chose to pay RTG’s other non-tax liabilities instead.

It is important to point out that control over the relevant operations of the corporation need not be exclusive, so long as the taxpayer’s control is significant. Gephart v. United States, 818 F.2d 469, 473 (6^th Cir. 1987); Caterino v. United States, 794 F.2d 1, 5 (1^st Cir. 1986). See also, United States v. Kim, 111 F.3d 1351, 1362 (7^th Cir. 1997) (quoting Thomas v. United States, 41 F.3d 1109, 1114 (7^th Cir. 1994) (“[A]ll that is required is that the individual ‘could have impeded the flow of business to the extent necessary to prevent the corporation from squandering the taxes it withheld from its employees.’”)). Responsible person status essentially “encompasses all those connected closely enough with the business to prevent the default from occurring.” Bowler v. United States, 956 F.2d 723, 738 (7^th Cir. 1992) (citing Adams v. United States, 504 F.2d 73, 76 (7^th Cir. 1974)).

In the instant appeal, the appellant contended that he was not a person responsible for RTG’s tax liabilities because another individual, Mr. Gardner, held the official title and duties of Controller during the tax periods at issue. However, as the above cases make clear, the taxpayer need not have exclusive control over the relevant operations of the corporation. Responsible person liability encompasses all within the company who could have effected payment of the liabilities but did not. Thus, whether or not Mr. Gardner was also a person responsible for the payment of RTG’s tax liability is not dispositive for purposes of the appellant’s appeal. Moreover, while he portrayed himself as involved solely with business development of RTG, the credible evidence offered reveals that the appellant’s authority extended into operational and, more importantly, financial matters, particularly those involving the tax liabilities at issue in this appeal. In fact, the appellant wielded hiring and supervisory authority over Mr. Gardner and even hired his own son to keep watch over Mr. Gardner after the withholding liabilities were first discovered. Therefore, while he was not listed in the corporate by-laws, the appellant’s actual authority nonetheless was readily apparent from the manner in which he exerted control over RTG’s operations and finances. See Mandell, Mass. ATB Findings of Fact and Reports at 1994-11-12.

On the basis of its findings, the Board found and ruled that the appellant was a person responsible for RTG’s tax liabilities at issue. Accordingly, the Board issued a decision for the appellee in this appeal.

APPELLATE TAX BOARD

By: ______ _______

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ______ _____

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

KENNETH DOTSON v. COMISSIONER OF REVENUE

Docket No. C276419 Promulgated:

October 29, 2010

These revised Findings of Fact and Report are promulgated simultaneously with the Appellate Tax Board’s (“Board”) reinstated decision on remand, pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32. This appeal was originally filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39 from the refusal of the Commissioner of Revenue (“Commissioner” or “appellee”), to abate personal income taxes assessed to Kenneth Dotson (“Mr. Dotson” or “appellant”) for the tax year ended December 31, 1999.

Commissioner Rose heard the appeal and was joined in the original decision for the appellee by Chairman Hammond and Commissioners Scharaffa, Egan, and Mulhern. The appellant appealed the Board’s original decision to the Massachusetts Appeals Court (“Appeals Court”). The Appeals Court vacated the Board’s decision and remanded the case to the Board “for redetermination, on the basis of the record evidence, and in light of the facts already found, of whether the [Commissioner] has proven a change in the [appellant’s] domicile by a preponderance of the evidence.” Dotson v. Commissioner of Revenue, Mass. App. Ct. No. 09-P-1563, Memorandum and Order under Rule 1:28 (July 9, 2010).

Commissioner Rose is joined in the reinstated decision on remand for the appellee by Chairman Hammond and Commissioners Scharaffa, Egan, and Mulhern.

J. Thomas Price, Esq. and William A. Hazel, Esq., for the appellant.

Celine E. Jackson, Esq., John DeLosa, Esq., Laura S. Kershner, Esq., and Kevin M. Daly, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

At issue in this appeal are personal income taxes assessed in connection with $5,317,145.35 in income received by the appellant in 1999 (“tax year at issue”). In its original Findings of Fact and Report, the Board found and ruled that Mr. Dotson changed his domicile from Florida to Massachusetts in 1998, when he moved to Massachusetts to begin a new job, and, among other things, purchased a condominium in Boston in which he resided during the remainder of his time in Massachusetts. See Dotson v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2009-568, 579-80. Because the Board found and ruled that Mr. Dotson was domiciled in Massachusetts when he received the disputed income, it found and ruled that he was liable for the taxes at issue. The Appeals Court concluded that the Board “employed an erroneous legal standard” in making its findings and vacated the Board’s original decision. Dotson, Mass. App. Ct. No. 09-P-1563 at *2. It was undisputed that Mr. Dotson had been domiciled in Florida for some time prior to his arrival in Massachusetts, and Mr. Dotson contended in this appeal that he did not change his domicile to Massachusetts at any time.[183] Accordingly, the burden of proving that he acquired a Massachusetts domicile was on the Commissioner. Commonwealth v. Davis, 284 Mass. 41, 49 (1933). The Appeals Court directed the Board to consider “on the basis of the record evidence, and in light of the facts already found . . . whether the [Commissioner] has proven a change in the [appellant’s] domicile by a preponderance of the evidence.” Dotson, Mass. App. Ct. No. 09-P-1563 at *3.

Domicile is commonly defined as “the place of actual residence with intention to remain permanently or for an indefinite time and without any certain purpose to return to a former place of abode.” McMahon v. McMahon, 31 Mass. App. Ct. 504, 505 (1991). In its original Findings of Fact and Report, the Board found that, in 1998, Mr. Dotson came to Massachusetts with an intention to remain for an indefinite period of time and that he acquired a Massachusetts residence. Dotson, Mass. ATB Findings of Fact and Reports at 2009-576. The Appeals Court did not disturb these findings, but directed the Board to make specific, additional findings as to whether Mr. Dotson “took residence in Massachusetts ‘without any certain purpose to return’ to Florida.” Dotson, Mass. App. Ct. No. 09-P-1563 at *2, (quoting McMahon, 31 Mass. App. Ct. at 505). Consistent with this mandate, the Board took a fresh look at the record evidence, in light of the facts already found.

Though the circumstances surrounding Mr. Dotson’s arrival in Massachusetts were discussed in detail in the Board’s original Findings of Fact and Report, those circumstances factor heavily in the issue presented for the Board’s consideration on remand, and are therefore repeated for context. The following paragraphs are excerpted directly from the Board’s original Findings of Fact and Report, at Dotson, Mass. ATB Findings of Fact and Reports at 2009-571-74:

______________________

Mr. Dotson, who testified at the hearing of this appeal, stated that he was born in Centerville, Tennessee, where he lived throughout his childhood and teenage years. Mr. Dotson testified that he left Tennessee to attend the University of Mississippi, where he earned both an undergraduate and a graduate degree. After receiving his master’s degree in 1983, Mr. Dotson worked briefly in Memphis, Tennessee before moving to Ft. Lauderdale, Florida in 1985 for another job opportunity. In 1986, Mr. Dotson left Florida and moved to Connecticut for yet another job opportunity. He remained there until 1990, when he returned to Florida.

In 1994, while in Florida, Mr. Dotson began a business venture with a local entrepreneur. That venture ultimately became Sportsline.com, a very successful business that was later acquired by CBS. What began as a small company grew into a public company, which employed approximately 400 people by 1998. Mr. Dotson testified that he preferred a small, start-up company environment to that of a large public company, so he began to look for new employment opportunities.

Sometime in late 1997 or early 1998, Mr. Dotson was contacted by a Cambridge, Massachusetts company, Sage Enterprises, Inc., d/b/a PlanetAll (“PlanetAll”), which was a technology company in the process of developing a web-based product to allow users to synchronize their contact information and calendars. In June of 1998, PlanetAll offered Mr. Dotson the position of Senior Vice President, Marketing & Business Development. The offer was formalized in a letter dated July 1, 1998 and accepted by Mr. Dotson on July 2, 1998. He was scheduled to commence employment with the company in Massachusetts in August of 1998.

During July of 1998, while Mr. Dotson was still in Florida, he learned that Amazon.com, Inc. (“Amazon.com”) had engaged in discussions to buy PlanetAll. Mr. Dotson testified that he was not interested in working for Amazon.com for a number of reasons, including that he had no interest in moving to Seattle, Washington, where Amazon.com was based. Mr. Dotson also testified that he was not interested in going through the acquisition process with another company because his experiences with corporate acquisitions in the past had been negative.

Mr. Dotson testified that this change of events caused him to reconsider his decision to join PlanetAll, and he informed the company in late July that he was no longer interested in coming to work for them. Shortly thereafter, Mr. Dotson received a telephone call from Jeff Bezos, the founder of Amazon.com. According to Mr. Dotson, he expressed to Mr. Bezos his concerns regarding Amazon.com’s potential acquisition of PlanetAll and his reluctance to move to Seattle. Mr. Dotson testified that Mr. Bezos then guaranteed him that if PlanetAll were acquired by Amazon.com and moved to Seattle, the stock options given to Mr. Dotson as a part of his employment offer would immediately vest, allowing Mr. Dotson to cash in and resign his employment. Based on this promise, Mr. Dotson once again agreed to join PlanetAll and his employment agreement was finalized on August 3, 1998. At or around this time, he resigned his employment with Sportsline.com.

Mr. Dotson travelled from Florida to Boston on August 16, 1998 and commenced work at PlanetAll the next day. In preparation for his move to Massachusetts, Mr. Dotson placed certain personal items in storage in a warehouse space in Florida, which belonged to his friend, Peri Proctor, who also testified at the hearing of this appeal. Mr. Dotson had rented an apartment in Boca Raton, Florida during the time he was working at Sportsline.com but that rental terminated in September of 1998, nearly simultaneously with his move to Boston. Much of Mr. Proctor’s testimony concerned the circumstances surrounding the termination of Mr. Dotson’s lease. Both Mr. Proctor and Mr. Dotson testified that they believed that Mr. Dotson’s landlord did not renew the lease because of complaints from neighbors about the noise made by Mr. Dotson’s dogs. After the termination of his lease, Mr. Dotson did not maintain a residence in Florida. Mr. Dotson owned two cars, one of which he brought to Massachusetts and another which he left in Florida.

Mr. Dotson arranged for the short-term rental of a furnished apartment in a building located at 345 Commonwealth Avenue in Boston. He lived at that address from August 16, 1998 through September 7, 1998. However, because that building did not allow pets, Mr. Dotson quickly looked for another apartment. Mr. Dotson had left his [dogs] behind in Florida and planned to retrieve them when he returned to Florida for Labor Day weekend. Mr. Dotson therefore secured another short-term, furnished rental apartment, located at 335 Beacon Street, and rented that apartment from September 7, 1998 through October 5, 1998.

Ultimately, Mr. Dotson decided to buy, rather than rent, a home in the Boston area. He began looking at real estate in early August of 1998, and put down a deposit on a condominium located at 447 Marlborough Street in Boston on August 9, 1998, during a weekend visit to Boston. Mr. Dotson finalized the purchase of that condominium on September 21, 1998, and moved in immediately. The purchase price was $480,000.

__________________________

After reviewing these facts, and the record in its entirety, the Board finds that Mr. Dotson had no “certain purpose to return” to Florida when he arrived in Massachusetts in 1998. McMahon, 31 Mass. App. Ct. at 505. The appellant placed much significance on the fact that he came to Massachusetts only after receiving a promise from Mr. Bezos that if Amazon.com acquired and moved PlanetAll to Seattle, his stock options would vest immediately, allowing him a lucrative and expedient way to resign his employment.[184] However, this fact does not equate with, nor compel, the finding that, should the acquisition and move of PlanetAll come to pass, Mr. Dotson would necessarily move back to Florida.

First, the evidence shows, at most, that Mr. Dotson had made an informed judgment that Amazon.com could move PlanetAll to Seattle, but nothing in the record indicates the time frame in which such a move would occur. If anything, the magnitude of the financial incentive which Mr. Bezos offered to the appellant in the event PlanetAll was moved to Seattle suggested that, at the time the appellant moved to Boston, the relocation of PlanetAll was unlikely to occur in the short-term.

Second, and more importantly, Mr. Dotson’s beliefs regarding PlanetAll’s ultimate destination have no bearing on the certainty of his return to Florida. The evidence shows that Mr. Dotson was certain of only one thing: he would not be following PlanetAll to Seattle. The Board finds that, following the possible departure of PlanetAll to Seattle, Mr. Dotson could just as readily have remained in Massachusetts or moved to a state other than Florida to pursue new employment opportunities. In fact, the record indicates that Mr. Dotson moved to various states for various educational and career opportunities several times in his life. Mr. Dotson was born and raised in Tennessee. He left Tennessee to attend the University of Mississippi. After graduating, Mr. Dotson returned to and worked briefly in Tennessee, before moving to Florida in 1985 for another job opportunity. In 1986, Mr. Dotson left Florida and moved to Connecticut for yet another job opportunity. He remained there until 1990, when he returned to Florida, where he lived until coming to Massachusetts in 1998. The record shows that Mr. Dotson moved to Florida in March of 1999, but moved to Illinois for a job opportunity some months later. Further, Mr. Dotson’s family ties and civic affiliations were not in Florida, but elsewhere.[185] The Board therefore finds that Mr. Dotson’s beliefs about PlanetAll’s ultimate destination are not indicative that he had a “certain purpose to return” to Florida, McMahon, 31 Mass. App. Ct. at 505, nor are they persuasive evidence of his place of domicile.

The evidence reveals that Mr. Dotson came to Massachusetts after accepting a position as Senior Vice President, Marketing & Business Development at PlanetAll. Upon arriving in Massachusetts, Mr. Dotson lived in two short-term, furnished rental apartments while waiting to close on his Marlborough Street condominium. He lived in the first apartment from August 16, 1998 through September 7, 1998. Because dogs were not allowed at that rental apartment, Mr. Dotson quickly secured a second rental apartment that did allow pets. Mr. Dotson resided in the second rental apartment from September 7, 1998 until September 22, 1998, the day after the closing on his condominium at 447 Marlborough Street in Boston. He had begun the process of buying that condominium when, during a trip to Boston in early August of 1998, he signed a purchase agreement for the condominium. Mr. Dotson hired a moving company to bring some of his furniture and personal belongings to Massachusetts, but placed certain furniture and personal belongings in storage space in Florida belonging to his friend. He brought one of his two cars to Massachusetts, but left the other car in Florida. Mr. Dotson testified that he left the car in Florida parked at the airport so that he could use it when he visited Florida. In connection with his move to Massachusetts, Mr. Dotson opened a Massachusetts bank account, obtained a post office box in Massachusetts and received mail at his condominium in Boston, joined a gym in Massachusetts, obtained Massachusetts telephone service, including a landline and cell phone service, and subscribed to such
local publications as The Boston Globe and Boston Magazine.[186]

Based on these facts, the Board now concludes that Mr. Dotson took many of the typical actions taken by individuals who are making a permanent or indefinite move. Those actions included acquiring a new job and residence, moving his furniture and personal belongings, arranging for local telephone service and mail delivery, joining a gym, and subscribing to local publications. At or around the same time, Mr. Dotson resigned his employment in Florida and ceased leasing an apartment there. Based upon all of these facts, and the record in its entirety, the Board finds that the actions taken by Mr. Dotson do not evidence a “certain purpose to return” to Florida, McMahon, 31 Mass. App. Ct. at 505, as they were more consistent with a permanent or indefinite move rather than a temporary visit.

The Board is not persuaded by the fact that Mr. Dotson did not change his Florida driver’s license or voter registration to Massachusetts in 1998. The Board finds his voter registration and driver’s license to be less persuasive indicators of Mr. Dotson’s domicile than his “physical [and] business . . . activities,” Reiersen v. Commissioner of Revenue, 26 Mass. App. Ct. 124, 131 (1998), which had shifted to Massachusetts. Similarly, the Board is not persuaded by the fact that Mr. Dotson left a car in Florida. As Mr. Dotson testified, he often left the car at the airport so that he could use it when he visited Florida, which he did several times while he lived in Massachusetts. The Board finds that this action indicated an intent to visit Florida, but not an intent to live there.[187] Accordingly, the Board ascertains from the record no “certain purpose” on Mr. Dotson’s part to return Florida at the time he moved to Massachusetts in 1998. McMahon, 31 Mass. App. Ct. at 505.

In sum, the Board finds that Mr. Dotson was an individual who moved from state to state several times in his life to pursue educational and career opportunities. Although he had family and friends in various locations, the Board finds that the factors most probative of Mr. Dotson’s place of domicile at all times relevant to this appeal were his “physical [and] business . . . activities,” specifically, his job and his residence. Reiersen, 26 Mass. App. Ct. at 131. Although he had been domiciled in Florida – where his job and his residence were before he came to Massachusetts – based on the actions taken by Mr. Dotson in 1998, the Board finds that Mr. Dotson abandoned his Florida domicile and established a new domicile in Massachusetts when he acquired a new job and residence in Massachusetts. The Board finds that Mr. Dotson came to Massachusetts in 1998 with an intention to remain “for an indefinite time” and without a “certain purpose to return” to Florida. See McMahon, 31 Mass. App. Ct. at 505.

Accordingly, after considering the record evidence, in light of the facts already found, the Board now finds and rules that the Commissioner met her burden of proving that Mr. Dotson acquired a Massachusetts domicile in 1998. The Board therefore reinstates its decision for the appellee in this appeal.

OPINION

The issue in the present appeal involves the appellant’s domicile. Domicile is commonly defined as “the place of actual residence with intention to remain permanently or for an indefinite time and without any certain purpose to return to a former place of abode.” McMahon, 31 Mass. App. Ct. at 505. In its original Findings of Fact and Report, the Board found and ruled that Mr. Dotson’s lack of an actual residence in Florida during the relevant time period precluded him from retaining a Florida domicile. See Dotson, Mass. ATB Findings of Fact and Reports at 2009-580. The Appeals Court ruled that this determination was error and remanded the case so that the Board could determine whether Mr. Dotson had a “certain purpose to return” to Florida. Dotson, Mass. App. Ct. No. 09-P-1563 at *2-3 (citing McMahon, 31 Mass. App. Ct. at 505). Accordingly, the Board revisited the record evidence to discern whether Mr. Dotson had a “certain purpose to return” to Florida when he moved to Massachusetts in 1998. McMahon, 31 Mass. App. Ct. at 505.

An inquiry into Mr. Dotson’s purpose when he came to Massachusetts must focus on the circumstances leading up to his arrival in Massachusetts and the actions taken by him at that time. “Intent must be determined as to each step of the attempted change in domicile as taken; hindsight is to be regarded with suspicion. Overt acts are significant as they are related to the particular time.” Hudspeth v. Department of Revenue, 4 OTR 296, 301 (Oregon Tax Court 1971). The overt actions taken by Mr. Dotson included accepting employment as Senior Vice President, Marketing & Business Development at PlanetAll, making an offer to purchase a condominium in Boston in early August of 1998, hiring a moving company to transport certain personal belongings and furniture to Boston, securing two short-term rental apartments in Boston, commencing employment at PlanetAll, and finalizing the purchase of his condominium in Boston in September of 1998. In connection with this move, Mr. Dotson opened a Massachusetts bank account, obtained a post office box in Massachusetts and received mail at his condominium in Boston, joined a gym in Massachusetts, obtained Massachusetts telephone service, including a landline and cell phone service, and subscribed to such local publications as The Boston Globe and Boston Magazine. Mr. Dotson brought one of the two cars he owned to Massachusetts, as well as his dogs. During the same time period, Mr. Dotson resigned his employment in Florida and ceased leasing a rental apartment in Florida. The Board finds and rules that the overt actions taken by Mr. Dotson were consistent with a permanent or indefinite move, not a temporary visit, and that the facts evidence no “certain purpose to return” to Florida on Mr. Dotson’s part. McMahon, 31 Mass. Ct. at 505.

The fact that Mr. Dotson left a car in Florida, maintained some of his connections to Florida, and planned to and did in fact visit Florida does not dissuade the Board from reaching this conclusion. A long line of cases has established that a taxpayer can maintain connections to and return to visit a former place of abode but still be said to have acquired a new domicile. “A person may abandon a domicile even though he continues to maintain . . . connections there.” Horvitz, 60 Mass. App. Ct. 1103 at *1 (holding that taxpayer had changed his domicile from Florida to Massachusetts despite the fact that he maintained a residence and extensive connections in and regularly returned to Florida). See also Reiersen, 26 Mass. App. Ct. at 126, 131 (holding that taxpayer had changed his domicile from Massachusetts to the Philippines despite maintaining a residence in Massachusetts and making two trips to Massachusetts each year). The Board finds and rules that Mr. Dotson’s “continuing ties to Florida [do] not foreclose a finding of change of domicile: such change does not require that a taxpayer divest himself of all remaining links to the former place of abode or to stay away from that place entirely.” Horvitz, Mass. ATB Findings of Fact and Reports at 2002-259, (citing Gordon, Mass. ATB Findings of Fact and Reports at 1988-374-5), aff’d 60 Mass. App. Ct. 1103 at *1.

Similarly, the fact that Mr. Dotson had not changed his Florida voter registration or driver’s license does not persuade the Board that he had a “certain purpose to return” to Florida, McMahon, 31 Mass. App. Ct. at 505, or that he did not establish a new domicile in Massachusetts. To effectuate a change in domicile, it is not necessary that all of the steps or actions typically taken in a connection with a move be “entirely accomplished.” Estate of Palmer v. Commissioner of Revenue, 56 Mass. App. Ct. 1110, at *5 (2002). Rather, it may be sufficient, depending upon the facts and circumstances, that a number of such steps have been “commenced.” Id. In the present appeal, the Board finds and rules that Mr. Dotson had taken many of the typical actions taken by individuals relocating to a new home. These actions indicate to the Board that he intended for his move to Massachusetts to be permanent or indefinite, rather than a temporary visit. Moreover, the Board finds and rules that Mr. Dotson’s driver’s license and voter registration were less persuasive indicators of his place of domicile than his “physical [and] business . . . activities,” which had shifted to Massachusetts. Reiersen, 26 Mass. App. Ct. at 131.

For the reasons discussed in the Findings of Fact above, in making the determination that Mr. Dotson had no “certain purpose to return” to Florida, McMahon, 31 Mass. App. Ct. at 505, the Board places no weight on the fact that PlanetAll did move to Seattle, as Mr. Dotson suspected it would, because the Board finds that Mr. Dotson’s beliefs about PlanetAll’s likely destination were neither indicative of a “certain purpose to return” to Florida or persuasive evidence of Mr. Dotson’s place of domicile. The Board finds that the magnitude of the financial incentive which Mr. Bezos offered to the appellant in the event PlanetAll moved – over $5.3 million in income — suggested that PlanetAll’s move was not imminent at the time that Mr. Dotson moved to Boston. Nor is the Board persuaded by the fact that Mr. Dotson ultimately returned to live in Florida, as he professed that he intended to do all along.

While it is true that a [taxpayer’s] declarations of intention on the question of domicile are given great weight by the court . . . the court which hears a collateral attack has the benefit of hindsight, and the self-serving declarations of the [taxpayer] are not viewed in a vacuum. Rather the circumstances surrounding his departure and the actions taken . . . are the primary factors to be considered.

Sorrentino v. Mierzwa, 25 NY 2d 59, 65 (1969).

Further, cognizant of the Appeals Court’s remand order, the Board does not place undue weight on Mr. Dotson’s lack of a Florida residence; rather, the Board considers his lack of a Florida residence as only one of many factors to be weighed in making its determination. Mr. Dotson’s actions, taken together as a whole, indicate to the Board that he intended his move to Massachusetts to be a permanent or indefinite relocation rather than a temporary visit. Based on the circumstances surrounding Mr. Dotson’s arrival in Massachusetts, and the actions taken by him at that time, the Board finds and rules that Mr. Dotson had no “certain purpose to return” to Florida when he moved to Massachusetts in 1998. McMahon, 31 Mass. App. Ct. at 505.

The Board recognizes that “‘domicil[e] once acquired is presumed to continue until a new one is acquired.’” Commonwealth v. Bogigian, 265 Mass. 531, 538 (1929) (quoting Sullivan v. Ashfield, 227 Mass. 24, 26 (1917)). Likewise, the Board is aware that the Commissioner had the burden of proving that Mr. Dotson changed his domicile. After weighing and considering all of the evidence, the Board concludes, as it did in its original Findings of Fact and Report, that Mr. Dotson changed his domicile from Florida to Massachusetts in 1998.

The hallmark of domicile is that it is “‘the place where a person dwells and which is the center of his domestic, social and civil life.’” Reiersen, 26 Mass. App. Ct. at 125 (citations omitted).

No exact definition can be given of domicile; it depends on no one fact or combination of circumstances, but from the whole taken together it must be determined in each particular case . . . ; and it may often occur, that the evidence of acts tending to establish the domicile in one place, would be entirely conclusive, were it not for the existence of facts and circumstances of a still more conclusive and decisive character, which fix it, beyond question, in another.

Tax Collector of Lowell v. Hanchett, 240 Mass. 557, 561 (1922) (citations omitted). When a taxpayer has factors on more than one side of the “domicil[e] ledger,” the Board “must weigh the evidence and determine where it is that the taxpayer has his ‘home,’ that is, the center of the major facets of the taxpayer’s life.” Swartz v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 2010-252, 266 (citations omitted). “The weight to be assigned to particular factors and combinations of factors, together with the credibility of the testimonial evidence, are committed to the fact finder’s resolution.” Horvitz, Mass. ATB Findings of Fact and Reports at 2002-257, (citing Hanchett, 240 Mass. at 561), aff’d 60 Mass. App. Ct. 1103 at *1.

While family ties to a putative domicile are often quite significant, Horvitz, Mass. ATB Findings of Fact and Reports at 2002-259, (citing Shea v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1997-64, 82, aff’d, 44 Mass. App. Ct. 1116 (1998); Belmonte v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports, 1988-247, 252; Hopkins v. Comm’r of Corporations and Taxation, 320 Mass. 168, 172 (1946); Mellon Nat’l Bank & Trust Co. v. Comm’r of Corporations and Taxation, 327 Mass. 631, 638 (1951)), Mr. Dotson had family ties to neither Florida nor Massachusetts. His relatives lived in other states, such as Alabama, Arizona, Arkansas, Tennessee and Texas. Club memberships and affiliations may also be entitled to substantial weight in determining domicile. See Rosenthal v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1997-859, 865-66; Noble v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1998-835, 843. While Mr. Dotson testified that he was affiliated with a church, that church was in Tennessee, not Massachusetts or Florida. Both Mr. Dotson and Mr. Proctor testified that Mr. Dotson’s primary hobby was reading, which is a relatively solitary activity.[188] In sum, the Board finds that many of the factors that are often given substantial weight in making a determination of domicile are “extremely uncertain guide[s]” in Mr. Dotson’s case. Reiersen, 26 Mass. App. Ct. at 131.

In contrast, the record is clear on the import of Mr. Dotson’s career in his life. The record shows that Mr. Dotson moved from one state to another numerous times to pursue educational and job opportunities, ultimately becoming a successful executive. Based on the record evidence, the Board determines that the major facets of Mr. Dotson’s life, during the period relevant to this appeal, were his “physical [and] business . . . activities,” such as his residence and job. Id. There is no dispute that in 1998, Massachusetts became the location of Mr. Dotson’s job and the “place where [he] dwell[ed].” Reiersen, 26 Mass. App. Ct. at 125. By September of 1998, Mr. Dotson’s residence and job were in Massachusetts, not in Florida.

In conclusion, on the basis of all of the evidence, placing considerable weight on the circumstances surrounding Mr. Dotson’s arrival in Massachusetts in 1998 and the actions taken by him at that time, the Board finds and rules that Mr. Dotson came to Massachusetts with an “intention to remain . . . for an indefinite time” and that he had no “certain purpose to return” to Florida. McMahon, 31 Mass. App. Ct. at 505. The Board further finds and rules that Mr. Dotson acquired an “actual residence” in Massachusetts and that it became the locus of his “physical [and] business . . . activities,” the location in which he carried out the major facets of his life. McMahon, 31 Mass. App. Ct. at 505; Reiersen, 26 Mass. App. Ct. at 125 (citations omitted); see also Swartz, Mass. ATB Findings of Fact and Reports at 2010-266. Accordingly, the Board finds and rules that the Commissioner met her burden of proving that Mr. Dotson acquired a Massachusetts domicile in 1998, and reinstates its decision for the appellee in this appeal.[189]

APPELLATE TAX BOARD

By: __________ ___ __

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest:

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

JOHN J. & CAROL A. CASEY v. COMMISSIONER OF REVENUE

Docket No. C297610 Promulgated:

December 7, 2010

This is an appeal filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 62C, § 39, from the refusal of the Commissioner of Revenue (“Commissioner” or “appellee”) to abate personal income taxes, penalties, and interest assessed against John J. and Carol A. Casey (“appellants” or “Mr. and Mrs. Casey”) for the tax years ending December 31, 2002 and December 31, 2003 (“tax years at issue”).

Chairman Hammond heard the appellee’s Motion to Dismiss for lack of jurisdiction. He was joined in the decision for the appellee by Commissioners Scharaffa, Egan, Rose and Mulhern.

These findings of fact and report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

William E. Halmkin, Esq. and Judith G. Edington, Esq. for the appellants.

Diane M. McCarron, Esq. for the appellee.

FINDINGS OF FACT AND REPORT

On the basis of the uncontroverted facts contained in the pleadings, motions, affidavits and other documents filed with the Appellate Tax Board (“Board”) in this appeal, the Board made the following findings of fact. The appellants filed Massachusetts non-resident income tax returns for both of the tax years at issue. Following an audit of the appellants’ tax returns, the Commissioner determined that the appellants were domiciled in Massachusetts during the tax years at issue, and therefore, all of their income was Massachusetts taxable income. Accordingly, the Commissioner issued to the appellants a Notice of Intent to Assess (“NIA”) dated April 12, 2006, expressing the Commissioner’s intent to assess additional tax in the amount of $31,296 for tax year 2002, along with interest, and additional tax in the amount of $13,057 for tax year 2003, along with interest and penalties. On May 31, 2006, the Commissioner issued a Notice of Assessment to the appellants, assessing the additional tax proposed on the NIA, along with penalties and interest, for the tax years at issue.

On November 2, 2006, the appellants filed an Application for Abatement with the Commissioner, contesting the Commissioner’s assessment (“Application for Abatement I”). A review of Application for Abatement I revealed that the following supporting documentation was appended to the application: the appellants’ completed Domicile Questionnaire; a copy of Mr. Casey’s Florida driver’s license and Florida voter identification card; a letter dated March 4, 2002 from St. Edward Church in Palm Beach, Florida, which welcomed Mr. and Mrs. Casey to the parish; and a five-page spreadsheet, presumably detailing credit card expenditures made by Mr. Casey, organized by date, location, and amount of expenditure. The spreadsheet covered the time period beginning January 8, 2002 and ending December 31, 2002.

In Application for Abatement I, the appellants did not request a statutory hearing under G.L. c. 62C, § 37, but did request settlement consideration. After several attempts to gather additional information from the appellants failed, the Department of Revenue’s (“DOR”) Office of Appeals issued a letter, dated October 24, 2007, informing the appellants that their request for settlement had been denied. The letter stated that the request for settlement consideration had been denied because, among other reasons, the appellants “failed to provide the documentation requested by the Audit Division” and also because their Application for Abatement “contained no attachment explaining [their] position, nor did [it] present an offer for settlement consideration.” Further, the letter stated that the “Appeals Officer assigned to [the] case requested information from [appellants’] representative on two separate occasions; however, this information [was not] provided.” The letter also stated that the appellants’ case was being “returned to the Customer Service Bureau for their determination on [appellants’] abatement request.” It further informed the appellants that “[t]his letter does not constitute a Notice of Denial; the Customer Service Bureau will issue such a Notice. If you continue to disagree with the assessments, then you may file a petition with the Appellate Tax Board within 60 days of the date of such Notice of Denial.”

By Notice of Abatement Determination dated November 5, 2007 (“Notice I”) the Commissioner denied Application for Abatement I. Notice I stated “[a]fter careful review of the issues raised in your request for an abatement, [DOR] has determined that the tax in dispute has been properly assessed.” As indicated previously in the October 24, 2007 letter from the Office of Appeals, Notice I informed the appellants that they could appeal the abatement denial to the Board within sixty days of the date of Notice I.

Notwithstanding the information provided in the October 24, 2007 letter and Notice I, the appellants did not file an appeal with the Board by January 4, 2008, the sixtieth day following the date of Notice I. Instead, on or about March 31, 2008, the appellants filed a second Application for Abatement (“Application for Abatement II”). Application for Abatement II requested an abatement for the same tax years on the same grounds stated in Application for Abatement I, and included the same documentation that had been included in Application for Abatement I, along with a brief statement setting forth their argument as to why Florida had become their domicile.[190]

By letter dated May 1, 2008, the Commissioner informed the appellants that she had no authority to act on Application for Abatement II because it raised a claim for abatement on the same grounds raised in Application for Abatement I, which had been denied by Notice I. By Notice of Abatement Determination dated May 7, 2008 (“Notice II”), the Commissioner informed the appellants that Application for Abatement II was denied. Specifically, Notice II stated “[a]fter review of the issues raised in your request for an abatement, [DOR] has determined that these issues have already been considered in a prior claim[] and pursuant to Massachusetts General Laws Chapter 62C, Section 37, you may not challenge an item of tax that has already been challenged in a previous claim.” On Monday, July 7, 2008, the appellants filed a Petition Under Formal Procedure with the Board.

Based on these subsidiary findings, the Board made the following, ultimate findings of fact. The Board found that Notice I constituted a denial based on the merits of the claims raised in Application for Abatement I, rather than a denial based on lack of substantiation. Pursuant to G.L. c. 62C, § 39, the appellants had sixty days following Notice I to file an appeal with the Board. Notice I was dated November 5, 2007, and accordingly, the appellants had until January 4, 2008 to file their appeal. The appellants did not file a petition with the Board until July 7, 2008. The Board therefore found that the appellants’ failure to timely file their appeal deprived the Board of jurisdiction over this appeal. Accordingly, the Board allowed the Commissioner’s Motion to Dismiss for lack of jurisdiction and entered a decision for the appellee in this appeal.

OPINION

“Any person aggrieved by the refusal of the commissioner to abate or to refund any tax, in whole or in part . . . may appeal therefrom, within 60 days after the date of notice of the decision of the commissioner or within 6 months after the time when the application for abatement is deemed to be denied,” by filing an appeal with the Board. G.L. c. 62C, § 39. “The Board has consistently held that it has no jurisdiction to consider an appeal filed later than prescribed by statute.” Watjus Electric, Inc. v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1993-139, 142 (citing Perry v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1990-262, 263-64). Neither the courts nor the Board has the authority to create an exception to the time limit prescribed by G.L. c. 62C § 39. Sears Roebuck & Co. v. State Tax Commission, 370 Mass. 127, 130 (1976). In the present appeal, it was undisputed that the Commissioner denied Application for Abatement I on November 5, 2007, which gave the appellants sixty days, or until January 4, 2008, to file their appeal with the Board. The appellants did not file an appeal with the Board within that time period; their petition was filed with the Board on July 7, 2008. “Since the remedy for abatement is created by statute, the Board . . . has no jurisdiction to entertain proceedings for relief by abatement begun at a later time or prosecuted in a different manner than is prescribed by the statute.” Assessors of Boston v. Suffolk Law School, 295 Mass. 489, 492 (1936). Because the appellants did not file their petition within the time period prescribed by G.L. c. 62C, § 39, the Board found and ruled that it had no jurisdiction to hear this appeal.

The appellants’ arguments to the contrary were premised upon the language of G.L. c. 62C, § 37 (“§ 37”), and the circumstances surrounding the Commissioner’s denial of Application for Abatement I. Section 37 provides, in relevant part:

The applicant shall, at the time of filing its abatement application, include and attach to it all supporting information, documents, explanations, arguments and authorities that will reasonably enable the commissioner to determine whether the applicant is entitled to the abatement requested. The applicant shall not be considered to have submitted a completed written abatement application until the date on which all such information reasonably requested from the applicant and reasonably necessary for a decision has been furnished to the commissioner. If the commissioner has made a written request to the applicant for additional information, not then contained in the taxpayer’s pending abatement application, and the applicant fails to provide such information within 30 days after such request, or within any extended period allowed by the commissioner, that application shall be considered incomplete and shall be denied without prejudice to its timely renewal. The commissioner shall give such applicant written notice that the denial is based upon the lack of sufficient information to grant the taxpayer’s abatement application. (emphasis added).

The appellants argued that, because Application for Abatement I was denied due to the appellants’ failure to submit additional documentation supporting their claim for abatement, as requested by the Commissioner, the appropriate recourse was not to file an appeal with the Board, but to submit a new abatement application with documentation supporting their claim. The Board disagreed.

The appellants’ argument was incorrect as a matter of fact because Application for Abatement I was denied on the merits of the claim, not for lack of substantiation. The language of § 37 expressly requires the Commissioner to give notice to the taxpayer that the abatement denial is based upon a lack of sufficient information. Notice I contained no such statement. Instead, Notice I plainly stated “[a]fter careful review of the issues raised in your request for an abatement, [DOR] has determined that the tax in dispute has been properly assessed.” Furthermore, nowhere in Notice I did the Commissioner request further information of the appellants or invite them to submit another Application for Abatement. Instead, Notice I advised the appellants of their right to appeal to the Board.

The issue raised by the appellants in Application for Abatement I involved their domicile. A review of Application for Abatement I revealed that the following supporting documentation was appended to the application: the appellants’ completed Domicile Questionnaire; a copy of Mr. Casey’s Florida driver’s license and Florida voter identification card; a letter dated March 4, 2002 from St. Edward Church in Palm Beach, Florida, which welcomed Mr. and Mrs. Casey to the parish; and a five-page spreadsheet, presumably detailing credit card expenditures made by Mr. Casey, organized by date, location, and amount of expenditure. The spreadsheet covered the time period beginning January 8, 2002 and ending December 31, 2002. Application for Abatement I was not devoid of any detail or substance upon which a determination on the merits could be based. Rather, the Board found that it contained sufficient information upon which the Commissioner could make a determination on the merits. Contrary to the appellants’ claim that Application for Abatement I was denied due to lack of substantiation, the Board found and ruled that Notice I constituted a denial based on the merits of the claims raised by the appellants in Application for Abatement I. Accordingly, the provisions of § 37 relating to “incomplete” applications for abatement were not applicable in the present appeal. The Board notes that if the abatement application had been denied for lack of completeness, the appellants could have either filed an appeal with the Board within sixty days of the date of the notice of denial for a de novo review of their abatement claim or, alternatively, they could have renewed their abatement application with the Commissioner if the time period under § 37 for filing an abatement application had not yet expired.

Pursuant to G.L. c. 62C, § 39, following the Commissioner’s denial of Application for Abatement I on November 5, 2007, the appellants had sixty days, or until January 4, 2008, to timely file an appeal with the Board. The appellants did not file an appeal with the Board until July 7, 2008, and the Board found and ruled that they did not file their appeal within the time period required by G.L. c. 62C, § 39 and the Board therefore found and ruled that it had no jurisdiction to hear and decide this appeal. Accordingly, the Board allowed the Commissioner’s Motion to Dismiss for lack of jurisdiction and entered a decision for the appellee in this appeal.

APPELLATE TAX BOARD

By: ___________________________________

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: ____________________________

Clerk of the Board

COMMONWEALTH OF MASSACHUSETTS

APPELLATE TAX BOARD

SOPHIA Z. & SUSAN J. GORDON v. BOARD OF ASSESSORS OF

THE CITY OF NEWTON

Docket No. F288619 Promulgated:

December 8, 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 Board of Assessors of the City of Newton (“assessors” or “appellee”) to abate taxes on certain real estate located in Newton owned by and assessed to Sophia Z. & Susan J. Gordon (“appellants”) under G.L. c. 59, §§ 11 and 38, for fiscal year 2007 (“fiscal year at issue”).

Commissioner Mulhern heard the appeal. Chairman Hammond and Commissioners Scharaffa, Egan and Rose joined him in the decision for the appellants.

These findings of fact and report are made pursuant to a request by the appellants under G.L. c. 58A, § 13 and 831 CMR 1.32.

Stephen F. Gordon, Esq., for the appellants.

James Shaughnessy, assistant assessor, for the appellee.

FINDINGS OF FACT AND REPORT

Based on the testimony and exhibits offered into evidence in this appeal, the Appellate Tax Board (“Board”) made the following findings of fact.

On January 1, 2006, the relevant date of assessment for the fiscal year at issue, Sophia Gordon and Susan Gordon (“appellants”) were the assessed owners of a 15,360- square-foot parcel of land improved with a single-family, ranch-style dwelling located at 1450 Commonwealth Avenue in Newton (“subject property”). For the fiscal year at issue, the assessors valued the subject property at $958,700 and assessed taxes thereon, at the rate of $9.33 per $1,000, in the total amount of $9,034.12.[191] In accordance with G.L. c. 59, § 57C, the appellants paid the tax due without incurring interest. On January 28, 2007, the appellants filed an Application for Abatement with the assessors. On February 21, 2007, the assessors granted a partial abatement, reducing the assessed value of the subject property from $958,700 to $890,100. After the abatement, the total tax on the subject property was reduced from $9,034.12 to $8,387.68. The appellants seasonably filed an appeal with the Board, which the Board received on May 22, 2007 in an envelope that was postmarked May 21, 2007.[192] On the basis of these facts, the Board found and ruled that it had jurisdiction to hear and decide this appeal.

The subject property is situated on a corner lot, at the intersection of Commonwealth Avenue and Dartmouth Street in Newton. The dwelling on the subject property was built in 1950 and contains 2,225 square feet of finished living area. The dwelling’s exterior is brick veneer with a slate roof cover. There are a total of six rooms, including two bedrooms, along with two bathrooms. The dwelling has a gas-fueled, hot-water baseboard heating system, and there is also a central air conditioning system. Additional features of the dwelling include two fireplaces, a two-car garage and an enclosed porch.

The appellants presented their case through documentary submissions and the testimony of Stephen Gordon, the son of appellant Sophia Gordon.[193] The appellants’ evidence primarily consisted of an analysis comparing the assessed value of the subject property to the assessed values of a half-dozen nearby properties located on Commonwealth Avenue in Newton that the appellant deemed similar to the subject property. The appellants’ comparison properties ranged in lot size from 15,420 square feet to 45,980 square feet, with dwellings ranging in size from 2,028 square feet of finished living area to 2,778 square feet of finished living area. The fiscal year 2007 assessed values of the appellants’ comparison properties ranged from $766,000 to $1,926,000. The appellants argued that their comparative analysis showed that the subject property was overvalued for the fiscal year at issue.

Further, the appellants claimed that the value of the subject property was negatively impacted by virtue of its location adjacent to a busy commercial enterprise. The parcel abutting the subject property is home to The Teddy Bear Club, a daycare center which the appellants claimed generated a significant amount of traffic and noise in the immediate vicinity, thereby negatively impacting the fair cash value of the subject property.

The appellants also reported that on April 3, 2008, the subject property was sold in an arm’s-length transaction for $815,000. The dwelling on the subject property was subsequently razed for the construction of a substantially larger home. Based on their evidence, the appellants’ opinion of value for the subject property for the fiscal year at issue was $700,000.

After considering the appellants’ evidence, the assessors revised their opinion of value for the subject property for the fiscal year at issue. The assessors conceded during the hearing of this appeal that the appellants’ evidence demonstrated that the fair cash value of the subject property for the fiscal year at issue was $775,000.

The Board found that the comparative analysis offered by the appellants supported a finding that the assessed value of the subject property, as abated, exceeded its fair cash value. The appellants’ comparison properties ranged in lot size from 15,420 square feet to 45,980 square feet, with dwellings ranging in size from 2,028 square feet of finished living area to 2,778 square feet of finished living area; their assessed values for the fiscal year at issue ranged form $766,000 to $1,926,000. The Board found that the subject property was more comparable to the properties at the lower end of that range, with a lot size of 15,360 square feet and a dwelling featuring 2,225 square feet of finished living area. However, nothing in the record supported the conclusion that the fair cash value of the subject property was less than the lowest assessed value of all of the properties contained in the appellants’ comparative analysis. The Board found that the evidence supported the assessors’ revised opinion of value, which was $775,000, but not the appellants’ opinion of value, which was $700,000.

The appellants also introduced evidence of the sale price of the subject property, which sold in an arm’s-length transaction on April 3, 2008. However, the Board found that the sale of the subject property on that date – over two years after the January 1, 2006 assessment date — was too remote in time to provide a reliable indication of the fair cash value of the subject property on the relevant assessment date. The Board therefore did not rely on the sale price of the subject property in determining its fair cash value for the fiscal year at issue.

The Board also rejected the appellants claim that the traffic and noise generated by The Teddy Bear Club, a daycare center which abutted the subject property, negatively impacted the subject property’s fair cash value. The appellants failed to provide sufficient detail or information on this point, and further, did not quantify the alleged negative impact on the subject property’s fair cash value. The Board therefore placed no weight on this evidence.

Accordingly, the Board determined that the fair cash value of the subject property for the fiscal year at issue was $775,000. The Board therefore issued a decision for the appellants in this appeal and granted an abatement of $1,084.62.

OPINION

G.L. c. 58A, § 12B provides in pertinent part that “at any hearing relative to the assessed fair cash valuation or classification of property, evidence as to fair cash valuation or classification of property at which assessors have assessed other property of a comparable nature or class shall be admissible.” “The introduction of such evidence may provide adequate support for either the granting or denial of an abatement.” John Alden Sands, et al. v. Assessors of Bourne, Mass. ATB Findings of Fact and Reports 2007-1098, 1106-07, (citing Chouinard v. Assessors of Natick, Mass. ATB Findings of Fact and Reports 1998-299, 307-08.) (other citations omitted). Properties whose assessed values are relied upon must be comparable to the subject property in order to be probative of fair cash value. Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 703 (1972). In the present appeal, the appellants offered a comparative analysis of the assessed value of the subject property with the assessed values of several other properties located nearby on Commonwealth Avenue. The Board found that the appellants’ comparative analysis demonstrated that the assessed value of the subject property, as abated, exceeded its fair cash value. The assessed values of the comparison properties ranged from $766,000 to $1,926,000, and the Board found that the subject property was most comparable to the properties at the lower end of that range. However, the Board found that the appellants’ comparative analysis did not support the appellants’ opinion of value, which was $700,000. Rather, the Board found that it supported the assessors’ revised opinion of the subject property’s fair cash value, which was $775,000.

Further, the appellants introduced evidence of the sale of the subject property, which sold in an arm’s-length transaction on April 3, 2008 for $815,000 “[A]ctual sales of property generally furnish strong evidence of market value, provided they are arm’s-length transactions.” Foxboro Associates v. Assessors of Foxborough, 385 Mass. 679, 682 (1982). However, the sales must be within a “reasonable time of the assessment date [to provide] credible data and information for determining the value of the property at issue.” Giard v. Assessors of Colrain, Mass. ATB Findings of Fact and Reports 2009-115, 123 (citing McCabe v. Chelsea, 265 Mass. 494, 496 (1929)). Here, the Board found and ruled that the sale of the subject property was too remote in time from the relevant date of assessment to provide reliable evidence of the fair cash value of the subject property on that date. Accordingly, it placed no weight on this evidence.

Lastly, though the appellants claimed that the traffic and noise generated by The Teddy Bear Club, a daycare center which abutted the subject property, negatively impacted the subject property’s fair cash value, they failed to provide sufficient detail or information on this point, and further, did not quantify the alleged negative impact on the subject property’s fair cash value. The Board therefore placed no weight on this evidence. Contrast Judith C. & Anne M. Pistorio v. Assessors of Boston, Mass. ATB Findings of Fact and Reports 2010-206, 212 (finding that appellants introduced substantial evidence demonstrating a decrease in their property’s fair cash value caused by its proximity to a busy dog daycare business).

On the basis of all of the evidence, the Board found and ruled that the fair cash value of the subject property for the fiscal year at issue was $775,000. Accordingly, the Board found that the appellants met their burden of proving that the subject property was overvalued for fiscal year 2007. The Board therefore issued a decision for the appellants in this appeal and granted an abatement in the amount of $1,084.62.

APPELLATE TAX BOARD

By: ______ _______

Thomas W. Hammond, Jr., Chairman

A true copy,

Attest: __________ _____

Clerk of the Board

[1] This amount includes a $114.35 assessment under the Community Preservation Act.

[2] Applying Mr. Moncy’s vacancy, expenses and reserve for replacements actually results in a net-operating income of $29,518.

[3] As explained earlier, the appellants purchased their first Marblehead summer home in 1976.

[4] The appellants cite Technical Information Release (“TIR”) 95-7 for the proposition that a “permanent place of abode” does not include “a dwelling place that is not winterized;” TIR 95-7 does not define “winterized.” The Commissioner contends that there is a significant difference between a home that is not winterized versus a home which is made uninhabitable by shutting off utilities. However, the Board did not rely upon TIR 95-7, because there was ample evidence establishing that the center of appellants’ family, social and civic life was in Florida, not Massachusetts. Therefore, the Board need not decide here whether the Marblehead home was “winterized” for purposes of TIR 95-7.

[5] On June 21, 2006, the Commissioner received a duly executed Special Consent Form Extending the Time for Assessment of Taxes, signed by the appellant.

[6] This amount includes a $150.59 assessment under the Community Preservation Act.

[7] The parties agreed to waive the hearing and instead submitted these appeals on documentary submissions.

[8] Where applicable, the amounts assessed include a Community Preservation Act Tax.

[9] G.L. c. 15A, § 37 provides in relevant part:

(a) As used in this section, the following words shall have the following meanings unless the context clearly requires otherwise:

“Foundation”, an organization which is (a) either (i) a corporation within the meaning of clause (c) of section two of chapter one hundred and eighty and subject to the provisions of said chapter one hundred and eighty, except as herein provided, or (ii) a public charitable trust constituted and operating as such and subject to the requirements of law governing such trusts, except as herein provided; (b) organized and operated exclusively for the benefit of an institution of public higher education; and (c) certified by the board of trustees of the institution which it supports to be operating in a manner consistent with the goals and policies of the institution.

“Institution”, a public college or university in the commonwealth.

[10] Though these appeals are brought by the Trustees of Boston College, the Board will use the term “Boston College” to mean both the appellant and the institution.

[11] For ease of reference, and because the evidence established that they were used in essentially the same manner, the Board will, like the parties, discuss the use of the Commonwealth Avenue/Residence parcels as if they were one parcel throughout the fiscal years at issue.

[12] The Board notes that the subject property had been exempt in the hands of the Archdiocese for decades and the record bore no evidence of further erosion to City’s tax base following its transfer to Boston College.

[13] The assessed values for each of the subject condominiums for both of the fiscal years at issue are set forth in attached Appendix A.

[14] The assessors granted an abatement for one condominium unit, 2 Jericho Road, reducing its fiscal year 2006 assessed value of $604,700 by $27,500 to $577,200.

[15] The fiscal year 2007 taxes for one condominium, 66 Jericho Road, were paid late. The petition for that condominium was withdrawn and its valuation was not at issue for fiscal year 2007.

[16] The Board noted that the denial letter states that the abatement applications were deemed denied on April 23, 2007. However, per operation of G.L. c. 59, § 64 and G.L. c. 58A, § 6, abatement applications are deemed denied after “the expiration of three months from the date of filing,” which, in this case, was April 22, 2007. The appellant’s petitions were timely filed on June 15, 2007, and therefore, this error did not affect the Board’s jurisdiction in these appeals.

[17] Although 66 petitions were initially filed, several were subsequently withdrawn. Those withdrawals are noted on attached Appendix A.

[18] The deed for that unit was not recorded until 2006.

[19] For fiscal year 2007, Mr. LaPorte also calculated the median 2007 sales prices of the subject condominiums and factored that median figure into his adjustments for date of sale of the subject condominiums. These adjustments were generally positive adjustments to value, because the market, in Mr. LaPorte’s opinion, continued to decline through 2007, whereas the relevant assessment date was January 1, 2006.

[20] Laurence A. Hirsh is president of Golf Property Analysts, a golf property appraisal, consulting, and brokerage firm. Mr. Hirsh has performed appraisal and consulting assignments on more than 2,000 golf properties. He is a MAI, has taught on the education faculty of the Professional Golfers’ Association of America (PGA), and was a founder and the first president of the Society of Golf Appraisers (SGA).

[21] Residential memberships are offered at a lower price than recreational memberships to those persons who own condominiums at Black Rock Condominiums.

[22] Both parties valued the subject property as a golf course/country club. No other potential uses were suggested. Therefore, although Mr. Dugas did not include a highest and best use analysis in his appraisal report, his valuation analysis was based on a highest and best use as a golf course/country club, and the Board found, based on all the evidence, that the subject property’s highest and best use was its then-current use as a golf course/country club.

[23] Although he did not explicitly state it, Mr. Dugas apparently assumed that as members left, new members joined so that if an average of 15 members per year left the club, an average of 15 new members joined the club.

[24] In his calculations, Mr. Dugas erroneously used the fiscal years 2005 and 2006 tax factors instead of the fiscal years 2006 and 2007 tax factors for the fiscal years at issue. However, because the Board did not adopt Mr. Dugas’ overall capitalization rates in arriving at its opinion of value for the subject property, this error has no impact on the Board’s decision.

[25] Mr. Logue’s calculations were based on the number of memberships as provided to him by Peter McEchearn, chief financial officer of Black Rock Country Club, in August 2005. These numbers, however, are higher than those reported in the appellant’s answers to interrogatories, which were introduced into evidence, and also reported by the appellant’s real estate valuation expert. Based on the 2005 annual dues for each category and the total membership dues revenue reported in the appellant’s statements of operations, Mr. Logue determined that the numbers reported by Mr. McEchearn were more reliable.

[26] In his calculation for imputed interest on refundable membership deposits, Mr. Logue applied the wrong initiation fees to the recreational and residential categories. Correction of his calculations would result in an additional imputed interest income of $4,588, but would ultimately have no effect on his final estimate of fair market value.

[27] See fn. 4.

[28] At the hearing of these appeals, Mr. Logue made adjustments to his income-capitalization pro forma. These adjustments, however, did not alter his final estimate of value.

[29] The abatement amounts include a 1.5% CPA Tax.

[30] The abatement amounts include a 1.5% CPA tax.

[31] According to G.L. c. 59, § 57C, the applicable payment section for this appeal, the last day for paying the third quarter actual real estate tax is February 1^st. However, in 2009, February 1^st fell on a Sunday. When the last day of a filing period falls on a Saturday, Sunday, or holiday, the payment due date is extended by operation of law to the following business day. G.L. c. 4, § 9.

[32] The appellant originally filed a petition under the informal procedure with the Board. Subsequently, on July 21, 2008, the assessors elected to transfer this appeal to the formal docket. Pursuant to G.L. c. 58A, § 7, the assessors, “within 30 days of the date of service of the [petition], may elect to have the appeal heard under the formal procedure.”

[33] Ms. Ham is the Trustee of the Phebe D. Ham Revocable Trust, which is the record owner of the subject property.

[34] This amount includes a Community Preservation Act Tax.

[35] Per G.L. c. 59, §§ 59 and 57C, when assessors have mailed the actual tax bills after December 31st, taxpayers have until the later of May 1^st or 30 days from the date of mailing to file an abatement application. The appellant’s abatement application was therefore timely filed on March 31, 2008.

[36] The Board took judicial notice in the present appeal of its decision and finding of value in the fiscal year 2007 appeal.

[37] There was a slight discrepancy between the subject property’s gross living area as reported by Mr. Neas and as recorded on the property record card. The Board found that the property record card was the most reliable evidence of the gross living area of the subject property, and therefore found that it had 837 square feet.

[38] Docket Numbers F297036 (Fiscal Year 2008) and F288893 (Fiscal Year 2007) are appeals of the assessment of the same property and were tried together at the Board. However, due to a clerical error, the Board’s decision in F288893 was not issued together with its decision in F297036. Therefore, the Board’s decision in F288893 is issued simultaneously with these Findings.

[39] The Statement of Agreed Facts listed late payment penalties in the amount of $64,176.42. The parties agreed in the Statement of Agreed Facts that the late payment penalties should be abated, regardless of the Board’s decision in this appeal, based upon G.L. c. 62C, § 32(e), which provides that “no tax imposed by Chapters 62 . . . shall be required to be paid” while a taxpayer is contesting the tax.

[40] The appellants also purchased two adjacent lots, which provided their residence with a total of 300 feet of ocean frontage.

[41] While Sidney changed his voter registration on October 14, 2004, Judith did not change hers until December 8; moreover, she voted in the 2004 Presidential election by absentee ballot in Marblehead. Both appellants received Florida drivers’ licenses on December 27, 2004.

[42] On October 2, 2006, the Department of Revenue (“DOR”) issued a consolidated bill based on a 2005 tax liability of $2,055. On December 13, 2006, the appellants filed an abatement application with respect to the October 2, 2006 consolidated bill. In their Consented-to Amended Petition, the appellants claimed that the October 2, 2006 consolidated bill in the amount of $2,055 represented a tax on nonqualified pension income, which they contended was nontaxable pursuant to 4 U.S.C. Section 114(b)(1)(I)(i). The appellants did not raise the issue of the $2,055 consolidated tax bill at the hearing of these appeals or in their post-hearing submissions. Therefore, the Board did not consider or rule on this issue.

[43] G.L. c. 59, § 5C provides a residential exemption, which “shall be applied only to the principal residence of a taxpayer.”

[44] The appellants originally filed an appeal under the informal procedure. On September 2, 2008, the assessors elected to transfer this appeal to the formal docket. Pursuant to G.L. c. 58A, § 7, the assessors, “within 30 days of the date of service of the [petition], may elect to have the appeal heard under the formal procedure.”

[45] This amount includes a Community Preservation Act Tax.

[46] Per G.L. c. 59, §§ 59 and 57C, when assessors have mailed the actual tax bills after December 31st, taxpayers have until the later of May 1^st or 30 days from the date of mailing to file an abatement application. The appellants’ abatement application was therefore timely filed on May 1, 2008.

[47] The Board noted that there appeared to be minor mathematical errors in the appellants’ calculation of the sale/time adjustment.

[48] As discussed further below, for the purposes of their analysis, the appellants considered the subject property as having 2.13 acres rather than its actual 3.35 acres. According to the appellants, prior to 2002, the assessors treated the subject property as having only 2.13 acres because of its odd configuration and the various easements towards the rear of the subject property.

[49] Nashawtuc Hill in Concord has been abbreviated as “NH.”

[50] Though both parties used 306 Musketaquid Road in Concord in their sales-comparison analyses, there was a slight discrepancy in the gross living area reported by each party. Because it was supported by other documentary evidence entered into the record, the Board adopted the gross living area reported by the appellants, which was 3,002 square feet.

[51] Russell L. Seelig was the general partner of 145 Sumner Avenue L.P.

[52] For example, the appellants did not request discovery or make any arguments concerning the valuation of buildings with vending machines, parking lots, or any other ancillary income-producing improvements.

[53] Consistent with their claimed nonresident filing status for the years at issue, the appellants asserted that they had changed their domiciles from Massachusetts to Florida as of January 1, 2002. During the course of her audit of the appellants and until sometime after the filing of their appeal with the Board, the Commissioner disagreed, maintaining that the appellants remained domiciled in the Commonwealth throughout the years at issue. Prior to the hearing of this appeal, the appellants and the Commissioner executed a “partial settlement agreement” reflecting their agreement that the appellants remained domiciled in Massachusetts until September 11, 2002, when they became Florida domiciliaries.

[54] The parties agreed that the income received by Mr. McTygue pursuant to the Employment Agreement qualified as Massachusetts source income and was subject to tax.

[55] As discussed, infra, § 5A was amended effective for tax years beginning on or after January 1, 2003.

[56] The version of § 5A in effect for the tax years at issue in Horst, like the version applicable to the appellants’ appeal for tax year 2002, taxed nonresidents on income “derived from or effectively connected with (1) any trade or business, including any employment carried on by the taxpayer in the commonwealth; (2) the participation in any lottery or wagering transaction within the commonwealth; or (3) the ownership of any interest in real or tangible personal property in the commonwealth.”

[57] The record indicates that both Diana and James are trustees; however, the name of the trust was not provided.

[58] In the text of his appraisal report, Mr. Larrivee stated that he allowed a functional obsolescence deduction of 30% to account for the subject property’s “super adequacy of extras.” No such adjustment, however, was taken in his calculations.

[59] The “PCS” in MASSPCSCO is an acronym for personal communication services.

[60] MASSPCSCO, the Springfield Assessors, and the Woburn Assessors agreed and stipulated that if MASSPCSCO is not entitled to the “stock-in-trade” exemption under G.L. c. 59, § 5, cl. 16(2), “decisions should be entered in those matters in favor of the Assessors.” In other words, unlike the appeals involving Boston, there were no potential valuation issues in the appeals involving Springfield and Woburn.

[61] G.L. c. 58, § 2 provides in pertinent part:

The commissioner shall annually, on or before April first of each year, forward to each board of assessors a list of all corporations known to him to be liable on January first of said year to taxation under chapters fifty-nine, sixty A, and sixty-three. . . .

Any person aggrieved by any classification made by the commissioner under any provision of chapters fifty-nine and sixty-three or by any action taken by the commissioner under this section may, on or before April thirtieth of said year or the thirtieth day after such list is sent out by the commissioner, whichever is later, file an application with the appellate tax board on a form approved by it, stating therein the classification claimed.

[62] Following “seasonable notice” issued by assessors, G.L. c. 59, § 29 requires non-residents and foreign corporation, among others, to bring into the assessors “a true list of all their personal estate in that town not exempt from taxation.” “The seasonable filing of a list . . . is a condition precedent to the right to secure an abatement unless the taxpayer shows a reasonable excuse for delay.” Dexter v. City of Beverly, 249 Mass. 167, 169 (1924). The Springfield Assessors did not contest the timeliness of MASSPCSCO’s filing, and the Board inferred and found from the actions of the parties and MASSPCSCO’s reliance on advice from tax professionals and counsel not to file “a true list” because its personal property was exempt that reasonable or good cause for delay existed. On this basis, the Board determined that the form of list was timely filed on September 27, 2004 in response to the Springfield Assessors’ request.

[63] In contrast to real estate tax appeals, “a person aggrieved by the refusal of assessors to abate a tax on personal property” must pay only one-half of the tax to preserve [the] right of appeal.” G.L. c. 59, § 64. Moreover, for jurisdictional purposes, there is no provision requiring that the tax due on personal property be paid “without the incurring of any interest charges,” as is the case for most real estate tax appeals. G.L. c. 59, § 64.

[64] See footnote 5, supra.

[65] See footnote 5, supra.

[66] The Board determined, among other things, that RCN-BecoCom, as an LLC, was not entitled to the corporate exemption under G.L. c. 59, § 5, clause 16(1).

[67] An “active” taxpayer is one that has filed a return or paid a corporate excise within the last five years.

[68] EquipmentCo’s Vendor Financing and the vendors’ concomitant financing requirement of a separate, wholly-owned, single-purpose subsidiary of Sprint Spectrum to hold all Personal Property assets, which was EquipmentCo’s purported business purpose, were retired in 1999.

[69] The citations below refer to the current provisions of the Delaware Statutory Trust Act, which are materially the same as the provisions reviewed in Letter Ruling 91-2.

[70] It was not necessary for the adjudication of these appeals for the Board to determine whether the financing requirements of EquipmentCo’s vendors constituted a business reason or purpose for the creation of EquipmentCo. For purposes of these appeals, the Board simply assumed that it was.

[71] Inexplicably, the sole property to which the appellant applied an adjustment reflecting an inferior location because it was “further from the beach,” was not the farthest from the beach among the comparable properties.

[72] The address of the subject property, before the fiscal years at issue, was 299 Meadowbrook Road.

[73] The notice of abatement determination states that the abatement application was deemed denied on May 2, 2007. However, an abatement application is deemed denied “[w]henever a board of assessors, before whom an application in writing for the abatement of a tax is pending, fails to act upon said application . . . prior to the expiration of three months from the date of filing of such application.” G.L. c. 58A, § 6. Three months from February 1, 2007 is May 1, 2007. The appellant nonetheless filed his fiscal year 2007 petition timely, because he filed within three months of May 1, 2007. See id.

[74] The appellant also owns a contiguous parcel of land which contains 0.02 acres. The two parcels effectively operate as one parcel. The second parcel is not part of this appeal.

[75] Pursuant to G.L. c. 59, § 2A, “buildings and other things erected on or affixed to land during the period beginning on January second and ending on June thirtieth of the fiscal year preceding that to which the tax relates shall be deemed part of such real property as of January first,” if a city or town so elects. It is not contested that Weston adopted § 2A and, therefore, the subject assessment may include construction progress as of June 30 for each of the fiscal years at issue in these appeals.

[76] Mr. Ozahowski also performed a cost analysis. However, he testified that he relied almost entirely on his comparable sales analysis and used the cost approach primarily as a check on his comparable sales analysis.

[77] See note 4, supra.

[78] See note 5, supra.

[79] See note 5, supra.

[80] See note 4, supra.

[81] See note 5, supra.

[82] While Mr. Ozahowski’s report notes that the stucco was “removed and re-applied,” Mr. Cohen testified that the removal of the stucco would have been too invasive a project, so the appellants instead opted to apply a plastic stucco that had an ability to stretch. At any rate, the Board found that the stucco needed to be remedied as of the relevant assessment date.

[83] As noted previously in footnote 1, the prior address of the subject property, before the fiscal years at issue, was 299 Meadowbrook Road.

[84] The oldest home Mr. Josephson cited was at 103 Rolling Lane, which was 3 years old.

[85] These sums include a Community Preservation Act surcharge equal to 1.5% of the tax assessed.

[86] See G.L. c. 59, §§ 2A and 38.

[87] The “findings and report” is generally referred to by the Board as a “Findings of Fact and Report.”

[88] In certain instances the Board may, on its own motion, issue a decision and Findings of Fact and Report simultaneously, without a request by either party.

[89] In some pleadings and documents, these appeals are captioned as the R&M Realty Trust without any reference to the trustee.

[90] General Laws c. 59, § 57C provides, in pertinent part, that: “In the event the actual tax bills are not mailed by December thirty-first, then upon the establishment of the tax rate there shall be a single actual bill due and payable on May first, or thirty days after the date of mailing, whichever is later.”

[91] General Laws c. 59, § 59, provides, in pertinent part, that:

A person upon whom a tax has been assessed . . . , if aggrieved by such tax, may, . . . on or before the last day for payment, without incurring interest in accordance with the provisions of . . . section fifty-seven C, of the first installment of the actual tax bill issued upon the establishment of the tax rate for the fiscal year to which the tax relates, apply in writing to the assessors . . . for an abatement thereof.

[92] Pursuant to G.L. c. 58A, § 6, an application for abatement is deemed denied when a board of assessors fails to act on the application within three months of its filing. Three months “means three calendar months.” G.L. c. 4, § 7, Nineteenth; see also Berkshire Gas Company v. Assessors of Williamstown, 361 Mass. 873 (1972). Therefore, the appellant’s application for abatement was deemed denied on April 30, 2007. See also The Merry Hill Corp., Inc. v. Assessors of Concord, Mass. ATB Findings of Fact and Reports 2007-1232, 1233 (ruling that a calendar month means “‘the time from any day of such a month to the corresponding day (if any; if not to the last day) of the next month.’”) (citation omitted).

[93] The corporation was organized under the name of Center for Study of Institutional Alternatives, Inc., but later changed its name to Center for Human Development.

[94] Within thirty days of the service of the appeal, the Town of Swampscott, in accordance with G.L. c. 58A, § 7A, elected to have the appeal heard under the formal procedure.

[95] Within thirty days of the service of the appeal, the Board of Assessors of the Town of Westborough, in accordance with G.L. c. 58A, § 7A, elected to have the appeal heard under the formal procedure.

[96] The valuation which appellant cited from Zillow’s website (http://www.zillow.com) contained no valuation date or explanation as to the basis of the value. Further, the valuation constituted inadmissible hearsay, with no opportunity for cross-examination by the assessors. Accordingly, the Board gave no weight to this data.

[97] See note 1, supra.

[98] “BR” refers to bedrooms; “BA” refers to bathrooms.

[99] No value given.

[100] As of the time that Mr. Morin printed this posting from ebay, no bids had been placed for this item.

[101] See note 1, supra.

[102] See note 1, supra.

[103] The failure to pay the tax assessed does not deprive the Appellate Tax Board of jurisdiction, because the tax assessed for fiscal year 2007 is less than $3,000 for each parcel at issue. See G.L. c. 59, §§ 64, 65.

[104] The Board previously issued an Order on July 28, 2009 ruling that the appellant had standing to prosecute the appeal as the “person upon whom a tax has been assessed” in accordance with G.L. c. 59, § 59.

[105] No representative appeared on behalf of the assessors.

[106] In a self-prepared submission, the appellants list the dwelling on the subject property as having 2,948 square feet of living area. The property record card for the subject property, also submitted by the appellants, indicated that the dwelling contains 3,204 feet of living area. During the hearing of the appeal, the appellants made no effort to account for this disparity. Given the specificity with which the property record card delineates living area, and the absence of testimony or documentary evidence to support an assertion of less living area, the Presiding Commissioner accepted the property record card as accurately reflecting the dwelling’s living area.

[107] The appellants originally filed this appeal under the informal procedure, pursuant to G.L. c. 58A, § 7A (“§ 7A”). On May 18, 2009, the assessors timely elected to transfer this appeal to the formal docket. Pursuant to § 7A, the assessors, “within 30 days of the date of service of the [informal appeal], may elect to have the appeal heard under the formal procedure.”

[108] Though the appellants used many of the same comparable properties as the assessors, there was a difference in the living area reported by the parties for the comparable homes and the subject property. The appellants used the total square feet of finished living area for purposes of their analysis. The assessors reduced the square feet of finished living area for each property to account for the large, open foyer areas. The figures used by the assessors for square feet of living area, therefore, were lower than the figures used by the appellants.

[109] The Board notes that the downward adjustment of $2,800 made by the assessors appears to be an error because both the subject property and 18 Olde Hickory had full, unfinished basements.

[110] Ms. Gordon is the Trustee of the Elizabeth T. Gordon Revocable Living Trust, which is the record owner of the parcels at issue.

[111] This amount includes a Community Preservation Act Tax.

[112] Mr. Marsden further testified that, in previous discussions with Ms. Gordon, the assessors suggested that she apply to have the subject parcels classified as recreational land, but she declined to do so.

[113] The subject property was legally owned by the A&M Nominee Trust, of which Mr. Snigier and his wife, Mary, were the trustees.

[114] Although there was testimony that the parties resolved litigation involving the assessed value of the subject property for fiscal year 2008 by agreeing to an abated value of $350,000, there was no evidence in the record as to the basis for that settlement or valuation. The Presiding Commissioner’s determination in this appeal is based solely on evidence introduced into the record in the present appeal.

[115] These amounts include a Community Preservation Act Tax.

[116] The assessors issued a notice of abatement denial on May 6, 2009, stating that the appellant’s abatement application was deemed denied on May 5, 2009. However, pursuant to G.L. c. 58A, § 6 and G.L. c. 59, § 64, an application for abatement is deemed denied three months from its filing if the assessors have taken no action on the application. In the present appeal, the appellant’s fiscal year 2009 abatement application was filed on February 2, 2009 and, therefore, was deemed denied on May 2, 2009.

[117] The facts of this appeal establish that the appellant filed her fiscal year 2009 Petition with the Board prior to the deemed denial date of her abatement application. The appellant’s premature filing does not, however, deprive the Board of jurisdiction over the 2009 appeal. See Becton, Dickinson and Company v. State Tax Commission, 374 Mass. 230, 234 (1978) (holding that prematurity in filing the application was not a matter fatal to jurisdiction).

[118] This amount does not include the additional $147.04 assessment under the town’s Community Preservation Act (“CPA”), which brought the total tax to $11,021.41.

[119] General Laws c. 59, § 57C provides, in pertinent part, that: “In the event the actual tax bills are not mailed by December thirty-first, then upon the establishment of the tax rate there shall be a single actual bill due and payable on May first, or thirty days after the date of mailing, whichever is later.”

[120] General Laws c. 59, § 59, provides, in pertinent part, that:

[121] In his abatement application and at the hearing, the appellant estimated the subject improvement’s gross living area at 2,417 and 2,404 square feet, respectively. His spouse concurred with this latter estimate during her presentation. They did not, however, substantiate or explain the difference between their estimates. The assessors’ real estate valuation expert based his estimate of the subject improvement’s gross living area of 2,353 square feet on his own inspection and measurements, as well as floor plans filed with the town’s Building Department and the assessors’ records. The Board adopted the gross area suggested by the assessors’ real estate valuation expert because he based it on his actual measurements and those submitted to town officials by or on behalf of the appellant.

[122] The appellant estimated the living space on the subject improvement’s main floor at 1,771 square feet. The Board, for reasons previously articulated, adopted the measurement of the assessors’ real estate valuation expert, but considered this two-square-foot discrepancy to be de minimis.

[123] The appellant also used this property in his comparable-sales analysis, but described some of its features differently than Mr. Avery did. To the extent that the descriptions differ, the Board adopted Mr. Avery’s because he inspected at least the outside of the property and provided the Board with photographs substantiating his depiction.

[124] The assessors issued a notice of abatement denial on May 6, 2009, stating that the appellants’ abatement application was deemed denied on May 5, 2009. However, pursuant to G.L. c. 58A, § 6 and G.L. c. 59, § 64, an application for abatement is deemed denied three months from its filing if the assessors have taken no action on the application. In the present appeal, the appellants’ fiscal year 2009 abatement application was filed on February 2, 2009 and, therefore, was deemed denied on May 2, 2009.

[125] The facts of this appeal establish that the appellants filed their fiscal year 2009 Petition with the Board prior to the deemed denial date of their abatement application. Appellants’ premature filing does not, however, deprive the Board of jurisdiction over the 2009 appeal. See Becton, Dickinson and Company v. State Tax Commission, 374 Mass. 230, 234 (1978) (holding that prematurity in filing the application was not a matter fatal to jurisdiction).

[126] The Board’s original Decision abated only real estate tax and did not include an abatement of Community Preservation Act surcharge (“CPA”). Accordingly, on its own motion, the Board issued a Revised Decision which included a CPA abatement and tax abatement based on the Board’s determination of fair cash value.

[127] Where as here, the Board receives a petition after the three-month due date, the date of postmark is deemed to be the date of filing. See G.L. c. 58A, § 7 and G. L. c. 59, §§ 64 and 65. Accordingly, the filing date of the petition is deemed to be July 8, 2009, and the appellants’ appeal is timely.

[128] Within thirty days of the service of the informal appeal, in accordance with G.L. c. 58A, §7A, the assessors elected to have the appeal heard under the formal procedure.

[129] This amount includes a surcharge under the Community Preservation Act (“CPA”) in the amount of $112.38.

[130] In his sales-comparison analysis, the appellant states that 264 Winter Street has two bedrooms while the property record card lists it as having three bedrooms. Because the Presiding Commissioner found the property record card to be more reliable, the Presiding Commissioner found that 264 Winter Street has three bedrooms.

[131] In his sales-comparison analysis, the appellant states that 236 Bowker Street has two bedrooms while the property card lists it as having three bedrooms. Because the Presiding Commissioner found the property record card to be more reliable, the Presiding Commissioner found that 236 Bowker Street has three bedrooms.

[132] G.L. c. 58A, § 12A, provides in pertinent part that:

[133] This amount includes a CPA surcharge.

[134] The Board calculated the tax to be $5,802.32.

[135] G.L. c. 59, § 59 requires that applications for abatement be filed: “on or before the last day for payment, without incurring interest in accordance with the provisions of chapter fifty-seven or section fifty-seven C, of the first installment of the actual tax bill issued upon the establishment of the tax rate for the fiscal year to which the tax relates.” That date for purposes of this appeal was December 15, 2008.

[136] Even though the appellant’s petition was filed prior to the date of a decision on her abatement application or the date of its deemed denial, the Board, nonetheless, found that her petition was seasonable because the Supreme Judicial Court held in Becton, Dickinson & Co. v. State Tax Commission, 374 Mass. 230, 234 (1978), that prematurity in filing an appeal is not fatal to the Board’s jurisdiction. See also Coldwater Seafood Corp. v. Assessors of Everett, 23 Mass. App. Ct. 1102 (1986). The Courts and this Board have applied this concept consistently to petitions filed prematurely. See, e.g., Daniels v. Assessors of Everett, Mass. ATB Findings of Fact and Reports 1990-50, 66; Field Corner Plate Glass Co. v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1994-186, 196; Iacaboni v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1996-424, 426; Gaston v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 332, 335-36 fn. 4; Healthtrax Intern. v. Assessors of Hanover, Mass. ATB Findings of Fact and Reports 2001-366, 389.

[137] The Board took judicial notice in the present appeal of its decision and finding of value in the fiscal year 2007 appeal.

[138] General Laws c. 58A, § 12A provides, in pertinent part:

[139] The appellant and her husband, Richard Riley, appeared at the hearing. Mr. Riley presented the case and testified on behalf of the appellant.

[140] Although the appellant did not own the subject property on January 1, 2008, she is deemed to be a “person upon whom a tax has been assessed” and, therefore, has standing to appeal the subject assessment. G.L. c. 59, § 59 (“a person who acquires title to real estate after January first in any year, shall for the purposes of this section be treated as a person upon whom a tax has been assessed.”)

[141] Where as here, the Board receives a petition after the three-month due date, the date of postmark is deemed to be the date of filing. See G.L. c. 58A, § 7 and G. L. c. 59, §§ 64 and 65. Accordingly, the filing date of the petition is deemed to be May 11, 2009, and the appellant’s appeal is timely.

[142] The appellant initially filed his appeal under the informal procedure pursuant to G.L. c. 58A, § 7A. In accordance with G.L. c. 58A, § 7A, the assessors timely elected to transfer the appeal to the formal procedure pursuant to G.L. c. 58A, § 7.

[143] During its view of the subject property, the Board observed that a jetty protrudes from the subject property’s beach into the water.

[144] These amounts also include a Community Preservation Act Tax and a District Tax.

[145] For fiscal year 2009, the assessors initially valued the subject property at $8,664,000. In response to the appellants’ Application for Abatement, the assessors reduced the valuation to $7,964,500 and granted a partial abatement of tax in the amount of $6,216.46.

[146] The parties agreed that regardless of the determination of domicile, Mr. Brew is liable for $5,182.13 in tax, interest and penalties assessed in connection with Massachusetts-source income earned during the tax years at issue.

[147] Mr. and Mrs. Brew purchased a new home in Florida in 2005.

[148] The evidence showed that some of the Massachusetts bank accounts were jointly owned with Mrs. Brew.

[149] Likewise, the Board did not find the fact that Mr. Brew had two burial plots in Florida to be persuasive evidence that he had changed his domicile to Florida. The evidence showed that the burial plots were gifts bestowed upon Mr. Brew by his mother, who gave two plots to each of her five sons, regardless of where they lived. The Board did not find the actions of Mr. Brew’s mother to be probative evidence of Mr. Brew’s intentions in 2002, 2003 or 2004.

[150] In fact, the Board found that Mr. Brew’s familial ties to Massachusetts were even more compelling than Mr. Horvitz’s, for Mr. Horvitz had been separated from his wife, who lived in Massachusetts, while Mr. and Mrs. Brew remained married during the tax years at issue. Mr. Brew’s familial connections therefore included both wife and children, while Mr. Horvitz’s had included just his children. Horvitz, 51 Mass. App. Ct. at 388.

[151] Although there are cases in which Courts have ruled that a taxpayer maintained a domicile in a location other than where the taxpayer’s wife and children resided, the facts of this appeal are distinguishable from those cases. In Reiersen, 26 Mass. App. Ct. at 130, and Scagel v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1990-311, 315, it was undisputed that the taxpayers, though legally married, were estranged from their wives and/or children and carried on largely separate lives. As discussed at length above, Mr. and Mrs. Brew were not estranged and appeared to have a loving and close marriage and family life. The place of residence of Mr. Brew’s wife and children was therefore an important consideration in determining his place of domicile.

[152] The appellee, in accordance with G.L. c. 58A, § 7A, elected to have the appeal transferred to the formal procedure.

[153] Because the tax is not “more than $3,000,” timely payment is not a prerequisite for jurisdictional purposes. G.L. c. 59, § 64.

[154] G.L. c. 59, § 59 requires that applications for abatement be filed: “on or before the last day for payment, without incurring interest in accordance with the provisions of chapter fifty-seven or section fifty-seven C, of the first installment of the actual tax bill issued upon the establishment of the tax rate for the fiscal year to which the tax relates.” According to G.L. c. 59, § 57C, the applicable payment section for this appeal, the last day for payment is February 1^st. However, in 2009, February 1^st fell on a Sunday. When the last day of a filing period falls on a Sunday or legal holiday, the filing is still considered timely if it is made on the following business day. See G.L. c. 4, § 9. Accordingly, the Presiding Commissioner found that the appellants timely filed their abatement application on Monday, February 2, 2009.

[155] The appellant entered into evidence a Superior Court decision dated May 2, 1990, which allowed the parking and storage of trucks on the subject property, but disallowed any further crushing of automobiles and storing of crushed automobiles or automobile parts.

[156] Within thirty days of service of the Statement Under Informal Procedure, the assessors elected to transfer the proceedings to the formal procedure. See G.L. c. 58A, § 7A.

[157] When the last day of a filing period falls on a Saturday, Sunday, or legal holiday, the filing is still considered timely if it is made on the following business day. See G.L. c. 4, § 9; CFM Buckley/North, LLC v. Assessors of Greenfield, Mass. ATB Findings of Fact and Reports 2007-220, 223, n. 2. Accordingly, the Board found and ruled that the appellants timely filed their fiscal year 2009 Application for Abatement on Monday, February 2, 2009.

[158] The Board notes that although the tax was due on February 2, 2009 and the appellant paid the tax on that date, the assessors nevertheless charged an additional $7.95 of interest to the appellant. Regardless of whether interest was in fact owed, the appellant’s payment of the tax on his personal property prior to filing this appeal preserves the Board’s jurisdiction, notwithstanding the incurring of interest. See G.L. 59, § 64 (requiring payment of at least one-half of the tax on personal property prior to filing an appeal).

[159] The petition was received by the Board via mail on June 11, 2009. However, because the envelope was postmarked by the United States Postal Service on June 10, 2009, the appellant’s appeal was deemed filed on that date, and, therefore, it was timely filed. See G.L. c. 58A, § 7 and G.L. c. 59, § 64.

[160] G.L. c. 59, § 8A provides, in pertinent part:

Any person . . . engaged principally in agriculture, who owns farm machinery and equipment . . . shall annually, on or before March first, make a return on oath to the assessors of the town where such machinery or equipment . . . are located, setting forth the make, age, model, if any, and purchase price of such machinery and equipment . . . . If the assessors are satisfied of the truth of the return they shall assess such machinery and equipment . . . at the rate of five dollars per one thousand dollars of valuation, as determined by the commissioner of revenue, of such machinery and equipment . . . and such persons shall be otherwise exempt from taxation on these classes of property under this chapter.

[161] The appellant purchased the backhoe in 1999.

[162] See footnote two.

[163] While the appellants also couched their case in terms of “disproportion,” they essentially argued only overvaluation. Their proof did not come close to establishing a widespread intentional scheme of disproportionate assessment perpetrated by the assessors. See Brown v. Assessors of Brookline, 43 Mass. App. Ct. 327, 332 (1997) and the discussion of disproportionate assessment in the following Opinion section of these findings.

[164] In accordance with G.L. c. 59, §§ 64 and 65, the assessors had three months to act on the appellants’ abatement application before it was deemed denied. However, where the last day for action falls on a Saturday, Sunday, or legal holiday, the time within which to act is extended until the next business day, which in this appeal was Monday, April 27, 2009, the day when the assessors acted here. See G.L. c. 4, § 9; See also CFM Buckley/North, LLC v. Assessors of Greenfield, Mass. ATB Findings of Fact and Reports 2007-220, 223, n. 2; Barrett v. Assessors of Needham, Mass. ATB Findings of Fact and Reports 2004-614, 615, n. 2.

[165] The personal property at issue in Bell Atlantic Mobile I and in the present appeals is machinery used in the conduct of Bell Atlantic Mobile’s business including antennae, analogue and digital computer components, amplifiers, switching equipment, generators and power equipment. See Bell Atlantic Mobile I, Mass. ATB Findings of Fact and Reports at 2007-130.

[166] Bell Atlantic Mobile relies solely on § 52A, which governs the taxation of utility corporations including telephone and telegraph companies, to support its argument that it qualifies for the exemption under G.L. c. 59, § 5, cl. 16(1)(d).

[167] Bell Atlantic Mobile, organized nearly half a century after 1952, makes no argument that it is a utility corporation under § 52A(1)(ix).

[168] This minimal amount of wiring is apparently owned by the land-line phone companies, given Bell Atlantic Mobile’s position that its only personal property subject to tax is its electrical generating equipment.

[169] Thirteen CMRS providers provided written comments to the DPU, giving some indication of the level of competition among CMRS providers. DPU Order 94-73, at 2-3.

[170] The Commissioner’s denial of the corporate utility exemption in these appeals is based on Bell Atlantic Mobile’s status as an LLC, not because it is a CMRS provider.

[171] This amount includes a Community Preservation Act assessment of $706.10.

[172] The appellants transferred both the improved lot and the extra lot to themselves for consideration of one dollar by means of a deed recorded on December 22, 2003 at the Middlesex South District Registry of Deeds.

[173] The 454 square feet of living space in the attic is included in the 5,932 square foot gross living area calculation, and the attic bedroom is included in the total room count.

[174] The 2,745 square feet of below-grade living space in the basement is not included in the 5,932 square foot gross living area calculation, and the two basement rooms are not included in the total room count.

[175] The full bathroom in the poolhouse is not included in the bathroom count for the subject home.

[176] Mr. Marchant also developed a cost approach to valuing the subject property, but he believed that the comparable-sales approach to value is the most reliable indicator of value for the subject property, and therefore, he used the cost approach as a check on the value which he obtained through the comparable-sales approach.

[177] This amount includes a pro rata portion of the Community Preservation Act assessment in the amount of $30.74.

[178] See supra, note 7.

[179] Pursuant to G.L. c. 59, §§ 57C and 59, the appellants had until February 1, 2009 to file their fiscal year 2009 abatement application. However, when, as here, the last day for filing the application falls on a Saturday, Sunday, or holiday, the deadline is extended by operation of law to the next business day. G.L. c. 4, § 9. See also CFM Buckley/North, LLC v. Assessors of Greenfield, Mass. ATB Findings of Fact and Reports 2007-220, 223, n. 2; Barrett v. Assessors of Needham, Mass. ATB Findings of Fact and Reports 2004-614, 615, n. 2. Accordingly, the Presiding Commissioner found that the appellants’ action in filing their abatement application on Monday, February 2, 2009 was timely.

[180] The Presiding Commissioner noted that, aside from remoteness in time, the opinions of the realtor and on-line sources were unsupported and not subject to cross-examination by the assessors, further diminishing the evidentiary weight of the opinions.

[181] “Fred Jr.” refers to the appellant.

[182] Amounts for which the Commissioner may determine that the person responsible is individually and personally liable include any interest and penalties imposed. Berenson v. Commissioner of Revenue, 413 Mass. 831, 832 (1992).

[183] In his initial appeal before the Board, the appellant advanced the alternative argument that even if he had changed his domicile to Massachusetts, he changed it back to Florida before he received the disputed income. The appellant appears to have abandoned his alternative argument as he did not raise it before the Appeals Court. In any event, the Appeals Court directed the Board to consider on remand only whether the Commissioner “has proven a change in the [appellant’s] domicile by a preponderance of the evidence.” Dotson, Mass. App. Ct. No. 09-P-1563 at *3, and the Board therefore considers only that issue.

[184] Mr. Dotson exercised his stock options and received $5,317,145.35, which is the income in dispute in this appeal.

[185] Mr. Dotson testified that his relatives lived in Alabama, Arizona, Arkansas, Tennessee and Texas. Mr. Dotson testified that he had a lifelong affiliation with a church in Tennessee, but did not testify that he had an affiliation with a church, or any other social or civic organization, in Florida.

[186] Both Mr. Dotson and Mr. Proctor testified that reading was Mr. Dotson’s primary hobby. This testimony was supported by documents introduced into the record, which reflect payments for various publications.

[187] As discussed more fully in the Opinion below, the “certain purpose to return to a former place of abode” referred to in the common definition of domicile means a purpose to return to live in, rather than merely visit, that place. See Gordon v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1988-367, 374-75; Reiersen, 26 Mass. App. Ct. at 131; Horvitz v. Commissioner of Revenue, 60 Mass. App. Ct. 1103, *1, (2003), further review denied, 441 Mass. 1102 (2004).

[188] While Mr. Dotson testified that he joined a gym in Massachusetts, there is no evidence that he held memberships in any clubs or organizations in Florida.

[189] Following the Appeals Court’s remand order, the Commissioner filed with the Board a Motion to Clarify the Issues to be Addressed on Remand, in which the Commissioner asked the Board to consider a second argument made by the Commissioner in the initial appeal, namely that the appellant was liable for the taxes at issue on the additional ground that the disputed income was Massachusetts-source income. Because the Board’s conclusion that the appellant was domiciled in Massachusetts rendered the Commissioner’s Motion moot, the Board denied the Commissioner’s Motion.

[190] Counsel for the appellants filed an affidavit in connection with their opposition to the Commissioner’s Motion to Dismiss. The affidavit asserted, among other things, that a DOR employee informed the appellants that it was permissible to file a second abatement application in lieu of appealing to the Board. Even if the employee made such a statement and the appellants relied on it, their reliance was misplaced. “‘[O]ne relies at his peril on representations by a government official concerning legal requirements . . . [p]articularly where misstatements about the effect of applicable rules and regulations relied upon are oral, reliance on them may not be regarded as reasonable.’” First National Bank of Boston v. Commissioner of Revenue, Mass. ATB Findings of Fact and Reports 1993-181, 228, (quoting Harrington v. Fall River Housing Authority, 27 Mass. App. Ct. 301, 309-310 (1989)). See also Sidell v. Commissioner of Internal Revenue, 225 F.3d 103, 111 (1^st Cir. 2000) (“The tax code is an intricate web and demands clear rules so that it may be administered with as little uncertainty as possible. To achieve this goal, the [government] must speak with a single voice, that is, through formal statements of policy such as regulations or revenue rulings. Accordingly, statements by individual [government] employees cannot bind the [government].”)(citations omitted). The Board therefore placed no weight on the statement attributed to the DOR employee, because it would have had no impact upon the Board’s jurisdiction or its authority to grant an abatement in this appeal. See Commissioner of Revenue v. Marr Scaffolding Co., Inc., 414 Mass. 489, 494-95 (1993).

[191] This amount also included a Community Preservation Act tax.

[192] Where, as here, the Board receives a petition after the three-month due date, the date of postmark is deemed to be the date of filing. G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 & 65. Accordingly, the Board found and ruled here that the filing date of the petition was deemed to be May 21, 2007 and the appellants’ appeal was timely.

[193] Sophia Gordon was deceased as of the date of the hearing of this appeal.