Barrett v. Town of Warren
Annotate this Case
Barrett v. Town of Warren (2003-545); 179 Vt. 134; 892 A.2d 152
2005 VT 107
[Filed 16-Sep-2005]
[Motion for Reargument Denied 03-Nov-2005]
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, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
to press.
2005 VT 107
No. 2003-545
William S. Barrett Supreme Court
On Appeal from
v. Property Valuation and
Review Division
Town of Warren November Term, 2004
Redford E. Roberts, Appraiser
William S. Barrett, Pro Se, Warren, Plaintiff-Appellee.
Glenn C. Howland of McKee, Giuliani & Cleveland, P.C., Montpelier, for
Defendant-Appellant.
PRESENT: Dooley, Johnson, Skoglund and Reiber, JJ., and
Allen, C.J. (Ret.), Specially Assigned
¶ 1. REIBER, J. The Town of Warren appeals a decision by the
state appraiser reducing the listed value of taxpayer William Barrett's
condominium from its fair market value of $36,000 to $24,000 to reflect a
deduction for "intangible assets" worth $12,000. We reverse.
¶ 2. Taxpayer owns a condominium in the Bridges Condominium
Complex (Bridges), a group of 100 units whose owners are members of the
Bridges Owners' Association, Inc. The town listers entered the condominium
in the Warren grand list for 2002 at a value of $36,000. This value was
based on a town-wide reappraisal, adjusted to reflect the unit's condition
and recent sales of comparable units at the Bridges. Taxpayer appealed to
the Warren Board of Listers, requesting that the listed value be reduced by
$12,877.23 to reflect his share of the Association's intangible assets,
which he argued should not be subject to taxation as real property. The
Board denied the appeal. Taxpayer then appealed to the Warren Board of
Civil Authority (BCA) on substantially the same grounds. 32 V.S.A. § 4404.
The BCA denied taxpayer's appeal, finding that the listers properly relied
on comparable sales in establishing an estimated fair market value for his
property. Taxpayer then appealed to the state appraiser pursuant to 32
V.S.A. § 4461(a). The state appraiser conducted a de novo proceeding to
determine the correct value of the property. 32 V.S.A. § 4467.
¶ 3. The state appraiser lowered the listed value from the
property's fair market value of $36,000 to an "assessment value" of
$24,000. The appraiser's decision to list taxpayer's condominium unit at
less than fair market value was based on a finding that ownership of the
property included an "intangible asset of $12,000 for the subject
property." The appraiser concluded that this amount represented the value
of taxpayer's .88% interest in the assets of the Association, which had a
total value of approximately $1,446,880 as of September 30, 2001, including
over $1,000,000 in cash.
¶ 4. The Town of Warren contends that the state appraiser erred in
setting the "assessment value" of taxpayer's property substantially lower
than its fair market value to reflect a deduction for taxpayer's equity in
the Association. Taxpayer argues that his equity in the Association is an
intangible asset and therefore not subject to property tax, though he
concedes that it contributes to the fair market value of his property. We
reverse because the Town has met its burden of production, while taxpayer
has failed to met his burden of persuasion. The Town complied with the
plain language of 32 V.S.A. § 3481 by listing the value of taxpayer's
property at its fair market value. Taxpayer provided no evidence that the
valuation was arbitrary or unlawful, and his proposed valuation method has
no legal support. The statute does not recognize adjusting the fair market
value by the amount of a taxpayer's interest in a condominium owners
association. The state appraiser's use of a non-statutory deduction from
fair market value violates the statute's plain language. We therefore
reverse.
¶ 5. This Court reviews decisions by the state appraiser to ensure
that they are supported by findings rationally drawn from the evidence and
are based on a correct interpretation of the law. Allen v. Town of West
Windsor, 2004 VT 51, ¶ 4, 177 Vt. 1, 852 A.2d 627. We will not disturb a
fair market value determination unless an error of law exists. Kachadorian
v. Town of Woodstock, 149 Vt. 446, 448-49, 545 A.2d 509, 511 (1988).
Absent compelling indication of error, interpretations of statutory
provisions by the agency responsible for their administration will be
sustained on appeal. In re Vt. Health Serv. Corp., 144 Vt. 617, 622-23,
482 A.2d 294, 297 (1984).
¶ 6. The property taxation statute requires the listed value of real
property to be equal to its appraisal value, which in turn must reflect its
estimated fair market value. 32 V.S.A. § 3481(1)-(2). (FN1) In accord
with the plain language of § 3481, we have held that "[t]he touchstone for
property tax valuations is fair market value." Sondergeld v. Town of
Hubbardton, 150 Vt. 565, 567, 556 A.2d 64, 66 (1988); see also Royal Parke
Corp. v. Town of Essex, 145 Vt. 376, 378, 488 A.2d 766, 767-768 (1985)
("[Section 3481] makes fair market value the standard for appraisal.").
Fair market value is "the price which the property will bring in the market
when offered for sale and purchased by another." 32 V.S.A. § 3481(1).
There are several methods of estimating fair market value, one of which is
sales of comparable properties "between a willing buyer and a willing
seller at arms length." Barrett/Canfield, LLC v. City of Rutland, 171 Vt.
196, 199, 762 A.2d 823, 825 (2000). We have characterized the use of such
sales as "the most persuasive method of appraising residential property in
Vermont," Sondergeld, 150 Vt. at 567, 556 A.2d at 66, although other
methods are also acceptable. See Lake Morey Inn Golf Resort v. Town of
Fairlee, 167 Vt. 245, 250, 704 A.2d 785, 788 (1997) (combination of market
data approach and cost approach held consistent with statutory requirements
for determining fair market value); Town of Barnet v. Cent. Vt. Pub. Serv.
Corp., 131 Vt. 578, 580-81, 313 A.2d 392, 393 (1973) (appraisers may use
approaches including reproduction cost, earning power, construction cost
less depreciation, "or the like" to determine fair market value). The fair
market value, arrived at by any of these methods, takes into account all
the elements of the property's availability, "its use, potential or
prospective, and all other elements . . . which combine to give property a
market value." Town of Barnet v. New England Power Co., 130 Vt. 407, 411,
296 A.2d 228, 231 (1972).
¶ 7. The Town had the initial burden of production with respect to
fair market value. Sondergeld, 150 Vt. at 567, 556 A.2d at 66. The Town
met this burden by producing evidence of fair market value based on the
average record sales prices of the Bridges. This is an acceptable
valuation method that taxpayer does not dispute. See id. (concluding that
Town met burden of production by producing evidence of fair market value).
Here, the Town and taxpayer agreed that the fair market value of the
property is $36,000.
¶ 8. Because the Town met its burden of production, taxpayer
retained the burden of persuasion as to contested issues. Id. at 568, 556 A.2d at 66. "The burden of proof is not met by simply impugning the
Board's methods or questioning its understanding of assessment theory or
technique." Id. Instead, "[t]o prevail a taxpayer must show an arbitrary
or unlawful valuation." Id. Taxpayer argues that the Town may not tax his
interest in the Association because it is intangible personalty, and that
he is entitled to a dollar-for-dollar reduction of his share of association
fees from the $36,000. Taxpayer relies on the Association's balance sheets
to support his argument. The balance sheets, however, prove only what his
share was at the time the balance sheet was prepared. The sheets do not
provide any support for his main argument that his interest in the
Association has influenced the fair market value to the extent of $12,000.
Taxpayer's speculation "may or may not state a generally true principle in
Vermont, but it is no substitute for evidence in a specific case." Id.
¶ 9. Nor does taxpayer show an arbitrary or unlawful valuation. In
fact, his theory of valuation has no support in the law. The intangible
personalty taxpayer refers to, as the leading case in California put it,
"cannot be separately taxed as property, [but] may be reflected in the
valuation of real property." Roehm v. Orange County, 196 P.2d 550, 554
(Cal. 1948) (emphasis added); see also Mola Dev. Corp. v. Orange County, 95 Cal. Rptr. 2d 546, 557 (Cal. Ct. App. 2000) (citing Roehm with approval);
American Sheds, Inc. v. County of Los Angeles, 78 Cal. Rptr. 2d 58, 62-63
(Cal. Ct. App. 1998) (citing Roehm and stating that "intangibles associated
with the realty, such as zoning, permits, and licenses, are not real
property and may not be taxed as such. However, insofar as such
intangibles affect the real property's value . . . they may properly
contribute to an assessment of fair market value"). This is all that has
happened here. Were we to adopt taxpayer's position, and require the Town
to sever the value of an interest in the Association from the value of "the
real-estate component" of a condominium unit, it would be difficult to
assign a valuation method that could reliably discern the membership's
value.
¶ 10. The difficulty of taxpayer's approach is evident in the state
appraiser's decision. The appraiser valued taxpayer's ownership interest
in the Association by simply calculating his .88% share of the
Association's total equity, failing to account for the fact that the
Association membership imposes liabilities on taxpayer and any successor in
interest, such as the obligation to pay monthly fees. Taxpayer considers
these fees excessive and concedes that they probably detract from the fair
market value of the unit. Nothing indicates that the appraiser's valuation
method arrives at an accurate value for the interest in question. Even
were the method accurate, such an adjustment is not recognized by § 3481.
¶ 11. All of the elements, tangible and intangible, that combine to
give real property fair market value are subject to property tax. 32
V.S.A. § 3481(1). For example, long-term leases appurtenant to real estate
are subject to property tax, insofar as they affect the fair market value
of real property. City & County of Denver v. Bd. of Assessment Appeals,
848 P.2d 355, 362 (Colo. 1993); see also Ry. Exp. Agency, Inc. v. Virginia,
358 U.S. 434, 442 (1959) ("No one denies the right of the state, when
assessing tangible property, to . . . give effect to the intangible factors
which affect real values."). The key inquiry is whether those intangible
factors are so "intimately intertwined" with the real property that the
property would not function without them. See In re Town of Plymouth, 479 A.2d 1388, 1390 (N.H. 1984) (holding that ski passes, furnishings, and
prepaid cleaning charges, not appurtenant to the condominium, "are not
specialized intrinsic features which make the condominium in question
function as a condominium"); see also Appleby v. Nolte, 682 So. 2d 1140,
1141-42 (Fla. Dist. Ct. App. 1996) (holding that country-club memberships,
held by some residents and some non-residents, and which were not
prerequisites of residence, were not subject to property tax because they
were personal property).
¶ 12. Taxpayer's membership in the Association, as he concedes,
would necessarily be conveyed to any purchaser of his condominium unit.
The membership is a prerequisite of ownership at the Bridges, and is
necessary to make the condominium function as a condominium. In all of
these respects it is "intimately intertwined" with ownership of a unit. In
fact, it is more than that; it is a quality of ownership of a unit in this
complex, unique to owners of such units. Funds are drawn from the
Association accounts for "common expenses" necessary to maintain the
condominium common areas. Those funds are not accessible for personal or
individually-determined uses according to the Association's governing
documents, which incorporate by reference the Vermont Condominium Ownership
Act. 27 V.S.A. §§ 1301-1329. Accordingly, the interest in the Association
is transferable only along with ownership of a unit.
¶ 13. Taxpayer's interest in the Association is therefore
substantially different from the country-club memberships in Appleby and
the ski passes and furnishings in Town of Plymouth. The disputed property
in those cases was not appurtenant to real property, nor did it constitute
"intrinsic features which make the condominium function as a condominium,"
Town of Plymouth, 479 A.2d at 1390. The Association membership, in
contrast, is an intrinsic feature of the condominium unit that permits the
condominium complex to function as a whole. For example, the entire
complex is benefitted by regular upkeep of the common areas, and a cash
reserve is necessary to discharge such obligations. The ownership interest
in the Association positively influences the price a buyer is willing to
pay for a unit in the Bridges. Therefore, the value of that interest may
properly be taken into account when determining the real property's fair
market value.
¶ 14. There are limited situations in which the state appraiser
may, consistent with the statute, disregard a sale and turn to other
evidence of fair market value. These situations arise when "some evidence
undermines the bona fide nature of the sale" by showing that either the
buyer or seller was compelled to participate, or that the sale was not at
arms length. Barrett/Canfield, 171 Vt. at 199, 762 A.2d at 825; see also
Beach Props., Inc. v. Town of Ferrisburgh, 161 Vt. 368, 375-76, 640 A.2d 50, 54 (1994) (sale between family members does not reflect fair market
value); Vt. Nat'l Bank v. Leninski, 166 Vt. 577, 579, 687 A.2d 890, 892
(1996) (mem.) (price paid at auction following foreclosure does not
reliably indicate fair market value). Taxpayer has produced no evidence to
indicate that the sales relied upon by the listers and the BCA were not
bona fide. To the contrary, they were precisely the sort of arms-length
sales by which "a market value is perforce established for appraisal
purposes." Royal Parke, 145 Vt. at 379, 488 A.2d at 768. Indeed, both the
appraiser and taxpayer concede that those sales established the fair market
value of the property.
¶ 15. Because the Town has met its burden of production and taxpayer
has failed to show an arbitrary or unlawful valuation, we reverse the state
appraiser's decision setting taxpayer's property in the Warren Grand List
at less than its fair market value because it is contrary to the plain
language of 32 V.S.A. § 3481 and § 4467.
Reversed.
FOR THE COURT:
_______________________________________
Associate Justice
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Dissenting
¶ 16. DOOLEY, J., dissenting. The majority has reversed an overly
simplistic decision of the state appraiser that is unfair to the Town and
substituted an overly simplistic decision that is unfair to taxpayer. The
right answer lies between the two extremes and ensures that all the real
property at the Bridges, whether owned by the condominium owners or the
Bridges Owners Association, Inc., is taxed once and at fair market value,
and that no personal property, however owned, is taxed at all. The
majority's decision causes double taxation and ensures that personal
property of significant value will be taxed as real property, increasing
the amount collected by the Town above what the law allows. Because of
that unfair result, I dissent from the majority opinion and result.
Although I would reverse the appraiser's decision, I would remand for a
proper determination of listed value.
¶ 17. We must start with the acknowledgment that this is an unusual
case. The Bridges includes 100 condominium units. If taxpayer's unit is
of average value at $36,000, the whole complex is worth around $3.6 million
dollars. According to its balance sheet, the Association is worth almost
$2 million. None of that value includes the common areas or facilities,
which are owned in common by the unit owners. According to the majority
decision, the value of the Association is reflected in the assessed
valuation of all the units. Under that theory, a unit owner's interest in
the Association could be more valuable than his interest in the unit and
common areas and facilities. Because of these unusual facts, I do not
believe that it could ever be considered a fair approximation of reality
that the value of an owner's interest in the Association is somehow buried
in his unit values. In slang terms we are dealing with a large tail
wagging a smaller dog.
¶ 18. The central thesis of the majority's decision is its statement
in ¶ 4:
The Town complied with the plain language of 32 V.S.A. § 3481 by
listing the value of taxpayer's property at its fair market value.
Taxpayer provided no evidence that the valuation was arbitrary or
unlawful, and his proposed valuation method has no legal support.
The statute does not recognize adjusting the fair market value by
the amount of a taxpayer's interest in a condominium owners
association. The state appraiser's use of a non-statutory
deduction from fair market value violates the statute's plain
language.
By this statement, the majority accepts the Town's argument that this is a
dispute about the value of property. In fact, the statement is wrong; this
is a dispute about what property the Town can value and tax. When the
correct issue is addressed, the answer is different and more complex than
the majority acknowledges.
¶ 19. Although the specific facts of this case are sketchy, the key
facts are reasonably clear. Taxpayer owns a condominium unit, along with
an undivided interest in the common areas and facilities. 27 V.S.A. §
1306(a); Fox v. Kings Grant Maintenance Assoc., Inc., 770 A.2d 707, 713
(N.J. 2001) ("[W]hen an individual purchases a condominium unit, he or she
simultaneously acquires a proportionate undivided interest in the
community's common elements."). Both the unit and the interest in the
common areas and facilities are real property. 27 V.S.A. § 1304.
¶ 20. In addition, taxpayer owns an interest in the Association, the
incorporated condominium association. Exactly how this interest is
manifested-for example, by a share of stock or a membership certificate-is
not shown by the record. Although neither the record nor the law so
states, I think the majority is correct that taxpayer's "membership in the
Association . . . would necessarily be conveyed to any purchaser of his
condominium unit" and "membership is a prerequisite of ownership at the
Bridges." The Association manages the 100 condominiums in the complex.
Some of the units are owned by the Association, and it conducts a
condominium rental business on behalf of itself and unit owners. It
receives income from annual assessments on unit owners and from its rental
business. At the time of the property tax valuation by the Town, the
Association had a "membership equity" of approximately $2,000,000, of which
most of the assets were cash.
¶ 21. Two types of property are central to this case. (FN2) The
first type of property is the unit owner's interest in his unit and the
common area and facilities, which is by law real property. 27 V.S.A. §
1304. The second type of property is the unit owner's interest in the
condominium association. That ownership interest, however it is physically
represented, is not real property, but is instead personal property. See
Magoon v. Bd. of Civil Authority of Johnson, 140 Vt. 612, 614, 442 A.2d 1276, 1276-77 (1982) ("Real estate within the meaning of the tax law is
land with its fixtures and accessories measurable and capable of
description by metes and bounds."). Indeed, if we look at the assets of
the condominium association, most of those assets are personal property.
¶ 22. The two types of property are significant. As a general rule,
under the Vermont property tax system real property is taxable and personal
property is not. (FN3) See Knollwood Bldg. Condos. v. Town of Rutland, 166
Vt. 529, 536, 699 A.2d 31, 36 (1997). Thus, a condominium unit and its
associated common areas and facilities are taxable, while a share of stock
or a membership certificate is not. Indeed, apart from its status as
personal property, another strong reason exists as to why the physical
manifestation of corporate ownership is not taxable. The assets of the
corporation, to the extent those assets are taxable, are taxable to the
corporation. Thus, a corporation will pay real property taxes on real
property it owns. To also tax the stock owner on that same property would
result in double property taxation.
¶ 23. The state appraiser's decision was that the value of
taxpayer's real property interest plus his interest in the Association was
$36,000. He derived this figure from recent sales of units at The
Bridges-sales that necessarily included interests in the Association. He
held, however, that over $12,000 of the total fair market value represented
the interest in the Association, an item of personal property. See J.
Eckert, Property Appraisal and Assessment Administration 138 (1990) ("[T]he
value of the personal property must be estimated and subtracted from the
sale price to determine the price paid for the real property alone."); see
also In re Town of Plymouth, 479 A.2d 1388, 1390 (N.H. 1984) (deducting
value of ski passes, furnishings and prepaid cleaning charges from real
property value of condominium); People ex rel. Hotel Paramount Corp. v.
Chambers, 83 N.E.2d 839, 840 (N.Y. 1949) (excluding comparative sale where
sale price included not only real property, but "worth of such additional
elements as management, good will, hotel furniture and furnishings,
inventory of food and beverages and the usual hotel services"). Thus, the
appraiser reasoned that taxpayer's taxable portion-the value of the unit
and common area and facilities alone-was $24,000.
¶ 24. Thus, I return to my point about the misconstrued issue in
this case; this case is not about whether property was assessed at less
than fair market value. While one can criticize the state appraiser's
decision, the fault in the assessment is not that the state appraiser
assessed taxable real property at less than fair market value or that he
violated 32 V.S.A. § 3481(1), as the majority finds in ¶ ¶ 3 through 6 of
its opinion and thereafter. The state appraiser decided that some of the
property in issue is nontaxable. The proper questions on appeal,
therefore, are whether he is right that some of the property is nontaxable
and, if so, whether he has found the correct amount.
¶ 25. The majority answers that all the property is taxable and it
is all real property-that is, that the only property to be valued is the
unit and the common areas and facilities associated with the unit. In the
majority's view, the interest in the Association is accounted for "when
determining the real property's fair market value." The majority bases
this determination on its conclusion that the real property and the
interest in the Association are intertwined. Under the majority's
analysis, because the two must be sold together with one combined value,
and because it is up to the state appraiser and this Court to determine how
to allocate that value, we have the power to allocate all value to the real
property.
¶ 26. We also have the obligation to reach a fair result. As I said
above, in this unusual case, the majority's result is very unfair to
taxpayer. The majority's position could be that all of the assets of the
Association are taxable to the unit owners as real property. The result is
a conversion of at least $1.4 million in personal property into real
property so it can be taxed to all the unit owners. According to its
balance sheet, the Association also holds real property assets of at least
$300,000. The Association will pay the Town property taxes on these
assets. The unit owners will also indirectly pay property taxes on these
assets because the value of their condominium units will be inflated by the
value of the Association's assets. Under the majority's result the Town
receives a large property tax windfall.
¶ 27. The majority has four reasons why it imposes this unfair
result: (1) Section 3481 requires it; (2) Association funds are not
available to unit owners; (3) taxpayer's interest in the Association cannot
be valued; and (4) taxpayer failed to meet his burden of persuasion after
the Town met its burden of production. Because the majority has reiterated
that the appraiser's decision violates § 3481, I will reiterate that it
does not. Section 3481(1), a definition section, simply states that
appraised value is equal to fair market value. (FN4) If the property to be
appraised were only the condominium unit and its associated common areas
and facilities, the majority would be correct. But the property to be
valued here is the condominium unit, the associated common areas and
facilities, and the unit's interest in the Association. The majority
states that the Association interest is "intimately intertwined" with the
ownership of the unit without acknowledging that this reality is a
two-edged sword. Ante, ¶ 12. The majority concentrates on this close
relationship to value the two interests together, but the edge the majority
ignores is that one interest is an item of personal property, the value of
which must be accounted for. Nothing in § 3481 tells us to assign a value
of zero to the interest in the Association and all the value to the real
property. The majority has done that for its own reasons unconnected to §
3481.
¶ 28. Second, the majority's position that the Association's funds
are not available to the unit owners is wrong as a matter of law. (FN5) It
is important to understand that the Association's funds come from two
sources. One source is the business activities of the Association in
renting units, including units it owns. Nothing in the law prevents a
corporation from distributing profits to its shareholders; that is the
purpose of the corporation. Even if the Association's only purpose were to
maintain the common areas and facilities, as the majority appears to
believe, its availability position would be wrong. Nothing in the statute
or the condominium declaration in this case prohibits the Association from
distributing assessment funds back to its members. Indeed, the condominium
law authorizes that "[a]nnually" common profits be distributed among the
unit owners, 27 V.S.A. § 1310, and broadly defines "common profits" to
include all "income, rents, profits and revenues," id. § 1302(8).
Certainly the assessments the Association receives from the unit owners are
"income" and "revenues."
¶ 29. Third, the majority's conclusion that taxpayer's interest in
the Association cannot be valued does not comport with our decisions in
other areas of the law. See Ante ¶ 10. I agree that the valuation is
more complex than the state appraiser realized, but this does not mean that
valuation is impossible. We have recognized the difficulty of valuing
closely held corporations, which resemble the Association in that interests
that are not freely bought and sold on the open market. Goodrich v.
Goodrich, 158 Vt. 587, 590, 613 A.2d 203, 205 (1992) (recognizing that
valuation of close corporations is difficult and depends on the facts of
the case). This difficulty does not mean impossibility, however, and
courts have devised ways of ascertaining the value of these entities. See,
e.g., Van Schaack v. Van Schaack Holdings, Ltd., 856 P.2d 15, 23 (Colo. Ct.
App. 1992) (considering market value, net asset value, and reasonable
future use to determine plaintiff's interest in a close corporation); Greek
Peak Inc. v. Armstrong, 697 N.Y.S.2d 375, 377 (App. Div. 1999) (including a
discount for unmarketability in valuing shares of close corporations).
¶ 30. The state appraiser's valuation is overly simplistic because
it ignores the fact that taxpayer cannot sell the interest in the
Association apart from the condominium unit and cannot immediately access
even taxpayer's share of the liquid assets. The appraiser must consider
these factors in reaching a value for the Association interest. Moreover,
the appraiser's focus on "intangible" property understates the extent to
which the Association's assets affect the unit owner's value. On remand,
I would give taxpayer and the Town the opportunity to offer evidence going
to these questions.
¶ 31. Finally, the majority states an alternative ground for
rejecting the appraiser's decision-that taxpayer failed to provide "any
support for his main argument that his interest in the Association has
influenced the fair market value to the extent of $12,000." I question
whether this is a true alternative holding, because the rest of the opinion
makes clear that no evidence taxpayer could provide could meet his burden
of persuasion where, as a matter of law, the interest in the Association is
taxed through the value of the condominium.
¶ 32. Even if this were a true alternative holding, I would disagree
with it. As the majority recognizes, our cases require the Town to
initially produce evidence of fair market value. Sondergeld v. Town of
Hubbardton, 150 Vt. 565, 567, 556 A.2d 64, 66 (1988). The Town failed to
meet this burden because the value of all the comparables it put forward as
evidence covered both taxable real property and untaxable personal
property. Thus, the value of taxpayer's property that it presented
included both taxable and untaxable property. By refusing to recognize,
acknowledge, and deal with this situation, the Town never offered any
evidence of the fair market value of the real property only.
¶ 33. I have a similar view of the majority's statement that
"[t]axpayer provided no evidence that the valuation was arbitrary or
unlawful." By statute, taxpayer, as owner of the property, may testify to
the value of his property. See 12 V.S.A. § 1604. He testified that the
combined value of the condominium and the interest in the Association was
affected by the value of his interest in the Association, such that the
value of the real property alone was less than its sale value, because the
sale would include the interest in the Association. Taxpayer offered proof
that the valuation was arbitrary or unlawful.
¶ 34. Although I would remand for a new hearing because we should
be announcing a new standard for cases like this, I do not agree that the
appraiser lacks evidence to make a decision on this record. The state
appraiser is an administrative agency. We held in Breault v. Town of
Jericho, 155 Vt. 565, 567-68, 586 A.2d 1153, 1155 (1991), that the
appraiser could make an adjustment to fair market value for "economic
obsolescence" of the property as long as the adjustment was within the
range of the evidence, and even though there was no specific evidence
supporting the extent of the adjustment. Based on Breault, we upheld
similar adjustments for vacancy rates and administrative expenses to a
valuation based on income capitalization in Woolen Mill Assoc. v. City of
Winooski, 162 Vt. 461, 464, 648 A.2d 860, 863 (1994). As in Breault, the
range of the evidence is between no adjustment, as claimed by the Town, and
a large adjustment, as claimed by taxpayer. The appraiser has the
discretion to choose between the extremes considering the factors discussed
above.
¶ 35. I am sure that for the vast majority of condominium
developments in this state, the issues in this tax appeal are irrelevant.
In those cases, the condominium association will only manage the common
areas and facilities and will roughly spend its assessment income on an
annual basis. It will not own real property, and its value will be small
in comparison to the value of the common areas and facilities and the
units. The majority has constructed a rule for those cases and applied it
to this very different case, where the facts and circumstances require a
different result. The majority's one-size-fits-all approach produces an
unjust result in this case, and I cannot join it.
¶ 36. I am authorized to state that Chief Justice Allen (Ret.) joins
in this dissent.
_______________________________________
Associate Justice
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Footnotes
FN1. 32 V.S.A. § 3481(2) requires that the listed value of property be
equal to 100% of its appraisal value, but we have acknowledged that precise
equivalence is not necessary so long as all properties in a given town are
listed at the same percentage of appraisal value. Allen, 2004 VT 51, at ¶
2. Section 3481(1) also permits a "use value appraisal" and, therefore, a
listed value below fair market value for properties enrolled in the current
use program, 32 V.S.A. §§ 3751-3763, which taxpayer's condominium is not.
FN2. In somewhat of a misdirection, taxpayer set up two types of
property-tangible and intangible-and argues about the Town's treatment of
the latter. Whatever is the intended distinction, it is not one contained
in property law. Indeed, as reflected in the state appraiser and majority
decisions, the property types set up by taxpayer lead to more confusion
than clarity in this case.
FN3. By local option, a town can impose a tax on certain business personal
property. See 32 V.S.A. § 3849. The testimony of the representative of
the Town was that the Town taxes only real property.
FN4. In the concluding paragraph and in numerous places before that
paragraph, the majority states that the appraiser's decision is contrary to
the "plain language" of § 3481. It even adds in the concluding paragraph
that the decision is contrary to the plain language of § 4467. The
substance of the former section is to require assessment at fair market
value, a point about which there is no disagreement. How you get from that
language to the conclusion in this case is the exact point of disagreement.
Labeling this a "plain language" case is unhelpful, avoiding the issues
before us rather than confronting them.
FN5. The majority opinion says that this requirement of unavailability can
be found in "the Association's governing documents," which incorporate the
condominium law. The only "governing document" in the record is the
declaration of the Bridges condominium and it contains no mention of the
subject. Other than 27 V.S.A. § 1310, which is discussed in the text and
authorizes distributions to the membership, the condominium act does not
discuss the subject.
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