Opinion
No. CV-03-0349100 S
December 14, 2004
MEMORANDUM OF DECISION
This tax appeal is taken by Scholastic, Inc. from a decision of the Board of Assessment Appeals of the City of Danbury pursuant to § 12-117a of the General Statutes.
Scholastic, Inc. (hereinafter referred to as "Scholastic") is the owner of property located at 8-24 Old Sherman Turnpike, Danbury, Connecticut.
The Assessor for the City of Danbury revalued all of the real property located within the City of Danbury for the Grand List of October 1, 2002.
The subject property's fair market value was found by the Assessor to be $19,706,714.00 with its assessed value being $13,794,700.00.
Scholastic appealed this finding to the Board of Assessment Appeals claiming to be aggrieved by the action of the Assessor and claiming that the Assessor's valuation was excessive and overvalued.
On March 21, 2003 the Board of Assessment Appeals denied Scholastic's appeal and made no adjustment on the valuation of the property.
This appeal resulted, claiming that $13,794,700.00 was not the percentage of its true and actual value on the date of the assessment, October 1, 2002, but in fact was excessive, disproportionate and unlawful.
At the trial, Scholastic called the Assessor as its first witness. The Assessor testified that fair market value of the property is $19,706,714.00. This valuation was the fair market value found by Vision, which did all of the property revaluation for the City of Danbury for the Grand List of October 1, 2002. The Assessor further testified that the Appraiser hired by the City of Danbury for trial purposes was Cushman Wakefield, Joseph P. Dondiego (hereinafter referred to as "Dondiego"). The Assessor testified that the fair market value found by Dondiego was $16,300,000.00. The Assessor stated that she did not agree with this value, she stated the value was $19,706,714.00.
Scholastic next called two employees of the company to testify as to the nature of the building and all of its inadequacies.
The next witness was the appraiser hired by Scholastic, Michael McGuire (hereinafter referred to as "McGuire"), from The Austin McGuire Company. McGuire testified that the fair market value of the property was $11,600,000.00. McGuire used three methods in reaching his value. He used the Cost Approach method, wherein he found the value to be $11,600,000.00. He also used the Income Approach method, wherein he found the value to be $13,594,674.00 less $2,000,000.00 for deferred maintenance costs, therefore, finding the value under this approach to be $11,600,000.00 (this figure being rounded). Lastly, he used the Sales Comparison Approach, finding the value to be $11,550,000.00. Counsel for the City of Danbury cross-examined McGuire on all three of the approaches he used for finding the fair market value of the property. Questions were raised as to the reliability of the information used by McGuire and the calculations he used in each of the approaches.
The only witness for the City of Danbury was their appraiser, Dondiego. Dondiego used only the Sales Comparison Approach and the Income Approach. Dondiego testified that he did not use the Cost Approach finding it not to be relevant to this particular property. He stated that the building on this property is of such a nature that no one would rebuild it as it is presently constructed and therefore, that using this approach would be of little value to ascertaining the fair market value of this unique property. Dondiego found that the value of the property using the Income Approach was $16,200,000.00 and using the Sales Comparison was $16,400,000.00. Therefore, he found the fair market value of the property to be $16,300,000.00.
All of the witnesses who testified agreed that this property is unique. First, it is an older building which was added on to two times during its lifetime. Second, it is used 50% for office space and 50% for warehouse space. Third, it has loading docks which are located in the back of the building in an awkward arrangement which would never be duplicated if the building were to be rebuilt. Fourth, it is difficult for truck and car traffic to egress and ingress the area of the building. Fifth, the neighborhood is a mixed neighborhood with residential areas and other commercial facilities nearby.
All of the witnesses agreed that the present use of the building is the highest and best use for this property. It is totally owner occupied and its present occupancy rate is close to 100% (there was some evidence presented that its occupancy rate was 80% however, there was some dispute as to this number).
LAW
The first issue this court addressed was in its Memorandum of Decision Regarding the Plaintiff's Motion in Limine dated November 10, 2004. For all the reasons stated therein, this court found that the starting place for the issue of valuation was the revaluation amount found by Vision and the Assessor for the Grand List of October 1, 2002, that being $19,706,714.00.
The City of Danbury was under a statutory obligation to assess and value all of the property within its boundaries. General Statutes § 12-62a(b) requires each municipality to "`assess all property . . . at a uniform rate of seventy per cent of present true and actual value . . .'" Xerox Corp. v. Board of Tax Review, 240 Conn. 192, 204 (1997).
When an appeal is taken from the assessed value, as in this case, "the trial court tries the matter de novo and the ultimate question is the ascertainment of the true and actual value of the [taxpayer's] property." Torres v. Waterbury, 249 Conn. 110, 117-18 (1999), quoting Xerox Corp. v. Board of Tax Review, 240 Conn. 192 (1997). "The law contemplates that a wide discretion is to be accorded to assessors, and unless the action is discriminatory or so unreasonable that property is substantially overvalued and thus injustice and illegality result, their opinion and judgment should control in the determination of value for taxation purposes." Stamford Apartments Co. v. Stamford, 203 Conn. 586, 589 (1987), see also Tyler's Cove Assn., Inc. v. Middlebury, 44 Conn.App. 517, 521-22 (1997) and Carol Management Corp. v. Board of Tax Review, 228 Conn. 23, 36 (1993).
AGGRIEVEMENT
The first issue the court must address is whether or not Scholastic was aggrieved by the decision of the Board of Assessment Appeals, that is, whether the value placed upon the property by the Assessor was excessive.
"[T]he taxpayer . . . bears the burden of establishing an overassessment and of persuading the trial court of the true and actual value of his property for assessment purposes . . . If the trial court finds that the taxpayer has failed to meet his burden, because, for example, the court finds unpersuasive the method of valuation espoused by the taxpayer's appraiser, the trial court may render judgment for the town on that basis alone . . . If, however, the trial finds that the taxpayer, in light of the persuasiveness, for example, of his appraiser, has demonstrated an overvaluation of his property, the trial court must then undertake a further inquiry to determine the amount of the reassessment that would be just . . . It is in the context of such cases, namely, cases in which the taxpayer has met his initial burden of proving overvaluation, that [the Supreme Court has] noted the trial court's discretionary authority to find value and [has] declined to assign presumptive validity to the town's assessment figures." Ireland v. Wethersfield, 242 Conn. 550, 557-58 . . . (1997). Also see O'Brien v. Board of Tax Review, 169 Conn. 129 (1975).
"Because a tax appeal is heard de novo, a trial court judge is privileged to adopt whatever testimony he reasonably believes to be credible . . . This principle applies not only to the trial court's determination of the true and actual value of taxable property, but also to its determination of whether the plaintiff has satisfied the burden of establishing overvaluation." (Internal quotation marks omitted.) Aetna Life Insurance Co. v. Middletown, 77 Conn.App. 21, 28-29 (2003).
In determining whether Scholastic had met its burden of showing an overvaluation of the subject property, the court considered all the evidence presented both during the plaintiff's case in chief and during the entire trial, including the valuation of the City's Appraiser, Dondiego, which was presented during the plaintiff's case in chief as well as during the defendant's case. The court finds that Scholastic met its burden of establishing that the assessed value of the property of $19,706,714.00 was excessive through (1) the testimony of the Assessor who stated that their expert found the value to be far under the $19,706,714.00 value and (2) by referring to the City of Danbury Exhibit A (Dondiego's report) during their case in chief.
VALUATION OF THE PROPERTY
Therefore, having found aggrievement, the court then turned to the question of what is the appropriate fair market value of this property.
"Once the taxpayer has demonstrated aggrievement by proving that the property was overassessed, the trial court [will] then undertake a further inquiry to determine the amount of the reassessment that would be just." United Technologies Corp. v. East Windsor, 262 Conn. 11, 23 (2002), see also Ireland v. Wethersfield, 242 Conn. 550, 558 (1997). "The trier of fact must arrive at [its] own conclusions as to the value of the [taxpayer's property] by weighing the opinion of the appraisers, the claims of the parties in light of all the circumstances in evidence bearing on value, and his own knowledge of the elements going to establish value . . ." Xerox Corp. v. Board of Tax Review, 240 Conn. 192, 204 (1997).
"Because a tax appeal is heard de novo, a trial court judge is privileged to adopt whatever testimony he reasonably believes to be credible." Leonard v. Commissioner of Revenue Services, 264 Conn. 286, 302 (2003). See also Newbury Commons Ltd. Partnership v. Stamford, 226 Conn. 92, 99 (1993).
The following general comments have been made in tax appeal cases: "The goal of property valuation is to determine the present true and actual value of the subject property . . . The process of valuation at best is a matter of approximation." First Bethel Associates v. Bethel, 231 Conn. 731, 738, (1995). "The present true and actual value of . . . property shall be . . . the fair market value thereof . . ." General Statutes § 12-63(a). "Fair market value is defined as the value that would be fixed in fair negotiations between a desirous buyer and a willing seller, neither under any undue compulsion to make a deal." Carol Management Corp. v. Board of Tax Review, 228 Conn. 23, 34, (1993). "[U]nder the general rule of property valuation, fair [market] value, of necessity, regardless of the method of valuation, takes into account the highest and best value of the land." Metropolitan District v. Burlington, 241 Conn. 382, 390 (1997).
After reviewing the testimony and reports of both appraisers and analyzing the calculations each used to arrive at their values, this court finds that the methodology and comparable properties used by Dondiego were more credible than that of McGuire. The court arrives at this conclusion particularly in regards to the comparable sales property that Dondiego used as opposed to those used by McGuire. This subject property is approximately 300,000 square feet. McGuire used properties that were 121,474 square feet, 112,520 square feet 114,885 square feet and 198,504 square feet and 217,171 square feet. While Dondiego used properties which were 120,000 square feet 184,701 square feet 284,657 square feet and 452,414 square feet. Neither of the appraisers used any of the same properties in their comparisons. The court finds that the properties used by Dondiego and his calculations in regards to them were more credible. McGuire's methods for calculating deferred maintenance was also found by this court not to be credible, therefore, his Income Approach is also found to be less credible than Dondiego's approach.
Therefore, this court finds that the fair market value of the subject property is $16,300,000.00. Judgment shall enter accordingly, without costs to either party.
FRANKEL, J.