Breault v. Town of Jericho

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.

                                No. 88-172


Albert & Janet Breault                       Supreme Court

                                             On Appeal From
     v.                                      Property Valuation &
                                             Review Division
Town of Jericho

                                             February Term, 1989

Wayne W. Potter, Ch.

Kolvoord, Overton & Wilson, Essex Junction, for defendant-appellant


PRESENT:  Allen, C.J., Peck, Gibson, Dooley and Morse, JJ.


     DOOLEY, J.   The Town of Jericho appeals from a decision of the State
Board of Appraisers (Board) reducing the listed value of taxpayers'
residence in Jericho because of "economic obsolescence."  We affirm.
     Taxpayers' property is located on one acre of land on a paved road.
The Town listers had appraised the land at $27,049 and the house at $70,250.
Upon the taxpayers' appeal to the board of civil authority (BCA), the value
of the improvements was increased, bringing the total valuation to $98,700.
Taxpayers appealed to the Board, which at first found an even higher total
valuation than the BCA, but arrived at a final total listed value of $92,900
after reducing its own initial figure by thirteen percent for physical
depreciation and eight percent for "economic obsolescence," (FN1) and then
reducing the product by an additional ten percent, which it found to be the
Town equalization ratio.
     The Town does not contest the  physical depreciation figure or the
equalization ratio.  The only issue on appeal is the Town's objection to the
reduction for "economic obsolescence."  This term refers to loss from the
upper limit of value due to "factors external to the property."  Inter-
national Ass'n of Assessing Officers, Property Assessment Valuation 171
(1977).  The Vermont State Appraisal Manual prepared by the Vermont
Department of Taxes defines it as "[a]ny outside influence that would
adversely affect the value of the subject property,"  such as an "adjacent
gas station, shop or any undesirable type of use."  Division of Property
Valuation and Review, Agency of Administration, Vermont State Appraisal
Manual GI-10 (1980).
     The reduction for economic obsolescence was based on taxpayers'
testimony that their well suffers from salt contamination from the nearby
Town salt shed and that the Town landfill is visible from their property.
The representative of the Town testified that no property in the Town was
adjusted for economic obsolescence because it is a "clean town."  The Board
found that  "the proximity of the subject to both the Town landfill and the
Town salt shed constitutes an impairment in the desirability of the Breault
house because of its location.  Therefore, in the opinion of the Board, this
situation warrants the application of a locational obsolescence factor to
the subject."  The Board went on to note that it had no evidence of the
effect of this factor on the sale price of properties with similar negative
environmental influences.  It concluded, however, that an 8% factor was
appropriate.
     The Town argues first that the finding that the landfill is visible
from taxpayers' property is not supported by the evidence.  The taxpayers
testified that it was visible before the Board, and there was no contrary
evidence.  Where warranted by the evidence, the Board's finding must stand.
Sondergeld v. Town of Hubbardton, 150 Vt. 565, 571, 556 A.2d 64, 68 (1988).
While the Town is correct that the Board did not find that noise or odors
from the landfill reached taxpayers' property, the Board did not purport to
make such finding.
     The Board's choice of the eight percent figure for economic
obsolescence is more problematical.  The Board was faced with a situation
where a recognized adjustment to value was necessary and the Town had failed
totally to make that adjustment.  However, there was no evidence from
comparable properties showing the impact of the locational factors on fair
market value.  Indeed it is unlikely that such evidence would exist since
the locational factors are unique to each property affected.
     Both the Town and the taxpayer offered comparables, and these showed a
range of values for similar properties.  The Town offered evidence of three
comparable properties, sold near the date of listing, in support of its
listed value.  Taxpayers introduced an appraisal report, valuing their
property (house and land) at $80,000 as of approximately one year earlier.
They also submitted evidence of the listed values of three comparable
properties.
     The Board accepted that the location of taxpayers' house devalued it,
approximating that devaluation at eight percent.  The Board also accepted
the comparables offered by the Town and stated:  "This data would support a
value for the subject of $109,700 without the application of a locational
factor; with the application of . . . depreciation, a FMV of $103,200 is
attained."  In support of its method, the Board found:  "The neighborhoods
of these comparables are more desirable than Brown Trace Road [where
taxpayers property is located]."  The listed value obtained by the Board
lies within the range of the evidence and is higher than the listed value of
each of the comparables offered by the taxpayers.
     The evidence presented by both the taxpayers and the Town was abundant
and the Board's evaluation of the competing presentations was fully
explained, unlike the myriad of cases that have come before this Court in
which there has been little or no explanation of why or how the Board
arrived at its decision.  See id. at 570, 556 A.2d  at 67 (surveying cases
where Board's decision was unsupported by adequate findings).  The missing
piece, if there is one, is the absence of evidence of why the locational
factors cause an adjustment of precisely eight per cent, as found by the
Board.
     We do not believe that this missing piece is fatal to the Board's
conclusion.  We have said that once the Board shows that it has considered
the evidence before it and has explained the reasons for its result, its
decision enjoys a presumption of validity.  Id. at 571, 556 A.2d  at 68.  It
is not necessary for an administrative body or a trial court exercising
discretion to explain the precise mathematics that led to a particular
decision involving a sum of money.  See Coty v. Ramsey Assoc., Inc., 149 Vt.
451, 461, 546 A.2d 196, 203 (1988) (where exact computation of tort damages
is difficult, award will stand unless "grossly excessive"); Stamper v.
University Apartments, Inc., 147 Vt. 552, 556, 522 A.2d 227, 229 (1986)
(disability benefits upheld where testimony "reasonably supports" the
percentage of disability).  Once the Board has shown some basis in evidence
for its valuation, the taxpayer bears the burden of demonstrating that the
exercise of discretion was clearly erroneous.  See, e.g., In re Green
Mountain Power Corp., 138 Vt. 213, 215, 414 A.2d 1159, 1161 (1980);
Pantasote Co. v. City of Passaic, 100 N.J. 408, 413, 495 A.2d 1308, 1310
(1985).  If the decision is within the range of rationality, it must be
affirmed.  Department of Taxes v. Tri-State Industrial Laundries, Inc., 138
Vt. 292, 294, 415 A.2d 216, 218 (1980).
     Although we have not had occasion to apply these principles to a case
exactly like this one, there are numerous precedents from other courts on
point.  These decisions affirm property tax valuation conclusions that fall
within the range of the evidence before them, with or without a precise
mathematical breakdown.  For example, in North American Lighting v. Board of
Assessors, 392 Mass. 296, 465 N.E.2d 782 (1984), the taxpayer challenged the
state appellate tax board's determination of the rental income value of the
subject property.  Although the board had rejected the assessors'
methodology and adopted that of the taxpayer, it still considered the
assessors' evidence.  The court disagreed with the taxpayer's claim of
error, stating:
         Here Norelco's [taxpayer's] witness himself presented
         the board with comparable average square foot values
         ranging from a low of $1.06 to a high of $2.09.  The
         board was not required to agree with the conclusion of
         Norelco's witness as to which value in this range was
         appropriate.  The board's decision to adopt $1.90 per
         square foot is a proper exercise of its discretion in
         this area of expertise.  Accordingly, even if we agree
         that the board had to disregard all evidence presented
         by the assessors' witness after rejecting the multi-
         tenant approach to determine the rental value of the
         assessed property, the board's decision is supported by
         the record.

Id. at 300, 465 N.E.2d  at 786 (emphasis added).  See also Foxboro
Associates v. Board of Assessors of Foxborough, 385 Mass. 679, 689, 433 N.E.2d 890, 897 (1981) (in the absence of specific evidence of the degree of
deterioration of the property or the appropriate adjustment factor for
obsolescence, factor chosen by board was within its discretion).  In Federal
Reserve Bank of Minneapolis v. County of Hennepin, 372 N.W.2d 699 (Minn.
1985), the taxpayer placed obsolescence at $20,000,000, while the assessor's
figure was $11,000,000.  The court affirmed the tax court's decision, which
found a market value different from that of either party but did not detail
its calculations, stating:
         Apparently, the relator's expert regards the unique
         design and quality materials, such as the granite used
         in the office tower and plaza, as "superadequacies"
         which add to the cost of reproduction while adding
         nothing to market value.  The tax court found the
         assessor's allowance for obsolescence, a matter of
         peculiarly subjective judgment, the more persuasive.  We
         cannot say the tax court's acceptance of the assessor's
         position on obsolescence was clearly erroneous.  Nor
         does the tax court's declination to adopt the exact
         market values proposed by either of the expert
         appraisers constitute error.  The value opinions of
         experts are merely advisory -- evidence to be considered
         with the other evidence in the case -- and the finder of
         fact is not concluded by them.

Id. at 701-02 (emphasis added).
     In choosing an economic obsolescence factor, the Board acted within its
expertise, the range of the evidence, and the discretion we must accord to
it.
     Affirmed.

                                        FOR THE COURT:




                                        Associate Justice




FN1.    The actual figures show that the Board applied depreciation factors
that are a smaller percentage of the fair market value than the percentage
figures specified by the Board.  It appears that the discrepancy can be
explained if we apply the percentage depreciation figures solely to the
value of the house.  Thus, it is possible that the adjustment was actually
too small and the value should be lower.  However, any mistake benefited the
Town and is harmless to the Town's appeal.