Opinion
No. CV07 400 82 68S
December 16, 2008.
MEMORANDUM OF DECISION
SMSP Connecticut, L.L.C., a Michigan limited liability company (hereafter "plaintiff") is the owner of the real property identified as 158 Pinesbridge Road, Beacon Falls, Connecticut (hereafter "subject property").
The subject property consists of 31.26 acres on which is situated a one-story, 170,743 square foot, industrial building. The building was built in 1966 and renovated/expanded in 1991/1992.
The plaintiff claims that the building is 170,492 square feet. The difference of 251 square feet is de minimis.
According to the assessor's records, 7,021 square feet is dedicated to office space, which is air conditioned; 88,482 square feet is dedicated to manufacturing space which is air conditioned; and, 75,240 square feet is dedicated warehousing space which is not air conditioned. The warehouse space is occupied by NEJ, Inc., a tenant. The manufacturing space is occupied by Ideal Products, wholly owned by the plaintiff. Ideal Products fabricates pins, metal stampings and fasteners.
The entire building has adequate appropriate utilities and amenities, including parking. There are well spaced columns within the building and eight overhead dock doors. The 16' ceilings are considered average for a manufacturing facility but substandard for a warehouse/distribution facility. Both appraisers contend that the building is in average condition.
The site has 1/2 mile access to southbound Route 8 and 2-mile access to northbound Route 8. Route 8 is a major north/south limited access highway serving central Connecticut. The site contains water retention ponds, is subject to environmental concerns and also subject to wetlands. Therefore, any expansion is constrained.
The site is located in an Industrial Park District and is legally conforming to zoning requirements.
Both appraisers agree that this is the highest and best use for the subject property.
The Town of Beacon Falls (hereinafter "defendant"), acting through its assessor, determined that the assessed value of the subject property is $3,910,830.00 on the grand list effective October 1, 2006. The assessed value of $3,910,830.00 equates to a fair market value of $5,586,900.00, i.e. 70% x $5,586,900.00 = $3,910,830.00. The plaintiffs disagree with the determination of assessed value by the defendant and challenges such determination by bringing the instant lawsuit pursuant to Connecticut General Statute § 12-117a.
Section 12-117a, which allows taxpayers to appeal the decisions of municipal boards of tax review to the Superior Court, "provide[s] a method by which an owner of property may directly call in question the valuation placed by assessors upon his property . . ." Second Stone Ridge Cooperative Corp. v. Bridgeport, 220 Conn. 335, 339, 597 A.2d 326 (1991); Northeast Datacom, Inc. v. Wallingford, 212 Conn. 639, 650 563 A.2d 688 (1989); see also E. Ingraham Co. v. Bristol, 146 Conn. 403, 408-09, 151 A.2d 700 (1959), cert. denied, 361 U.S. 929, 80 S.Ct. 367, 4 L.Ed.2d 352 (1960); Cooley Chevrolet Co. v. West Haven, 146 Conn. 165, 166, 148 A.2d 327 (1959). In a § 12-117a appeal, the trial court performs a two-step function. "The burden, in the first instance, is upon the plaintiff to show that he has, in fact, been aggrieved by the action of the board in that his property has been overassessed." Gorin's, Inc. v. Board of Tax Review, 178 Conn. 606, 608, 424 A.2d 282 (1979); O'Brien v. Board of Tax Review, 169 Conn. 129, 131, 362 A.2d 914 (1975). In this regard, "[m]ere overvaluation is sufficient to justify redress under [§ 12-117a], and the court is not limited to a review of whether an assessment has been unreasonable or discriminatory or has resulted in substantial overvaluation." Newbury Commons Ltd. Partnership v. Stamford, 226 Conn. 92, 104, 626 A.2d 1292 (1993); O'Brien v. Board of Tax Review, supra, 130-31; see also Hutensky v. Avon, 163 Conn. 433, 436-37, 311 A.2d 92 (1972). "Whether a property has been overvalued for tax assessment purposes is a question of fact for the trier." Newbury Commons Ltd. Partnership v. Stamford, supra, 104. "The trier arrives at his own conclusions as to the value of land 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 general knowledge of the elements going to establish value including his own view of the property." O'Brien v. Board of Tax Review, supra, 136.
Only after the court determines that the taxpayer has met his burden of proving that the assessor's valuation was excessive and that the refusal of the board of tax review to alter the assessment was improper, however, may the court then proceed to the second step in a § 12-117a appeal and exercise its equitable power to "grant such relief as to justice and equity appertains . . ." See Gorin's, Inc. v. Board of Tax Review, supra, 178 Conn. 608, O'Brien v. Board of Tax Review, supra, 169 Conn. 131, see also Newbury Commons Ltd. Partnership v. Stamford, supra, 226 Conn. 104; Hutensky v. Avon, supra, 163 Conn. 436-37; Hartford Hospital v. Board of Tax Review, 158 Conn. 138, 148, 256 A.2d 234 (1969); National Folding Box Co. v. New Haven, 146 Conn. 578, 585, 153 A.2d 420 (1959); Underwood Typewriter Co. v. Hartford, 99 Conn. 329, 332-33, 122 A. 91 (1923); Ives v. Goshen, 65 Conn. 456, 459-60, 32 A. 932 (1895). "If a taxpayer is found to be aggrieved by the decision of the board of tax review, the court tries the matter de novo and the ultimate question is the ascertainment of the true and actual value of the applicant's property." O'Brien v. Board of Tax Review, supra, 131. "If the court finds that the property has been in fact overvalued, it has the power to, and should, correct the valuation." Hutensky v. Avon, supra, 437.
Section 12-117a provides a remedy only for an aggrieved taxpayer seeking to reduce his tax assessment. It provides no remedy for a municipality claiming to have undervalued a taxpayer's property. See F.W. Woolworth Co. v. Greenwich, 44 Conn.App. 494, 497-98, 690 A.2d 405 (1997).
Konover v. Town of West Hartford, 242 Conn. 727 at 734 (1997).
It is well established, however, that "[i]t is the [trier of fact's] exclusive province to weigh the conflicting evidence, determine the credibility of witnesses and determine whether to accept some, all or none of a witness' testimony . . ." (Internal quotation marks omitted.) Lydall v. Ruschmeyer, 282 Conn. 209, 236 n. 20, 919 A.2d 421 (2007).
The plaintiff presented Timothy B. Mitchell (hereinafter "Mitchell") as an expert regarding the fair market value of the subject property.
"Market value is defined as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeable, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and passing of title from seller to buyer under conditions whereby:
a. The buyer and seller are typically motivated;
b. Both parties are well informed or well advised and each acts in which he considers his own best interest;
c. A reasonable time is allowed for exposure in the open market;
d. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and
e. The price represents the normal consideration for property sold, unaffected by special or creative consideration or financing, or sale concessions granted by anyone associated with the sale."
Page 2, Mitchell appraisal; page 1, Nocera appraisal.
The defendant presented Robert J. Nocera (hereinafter "Nocera") as an expert regarding the fair market value (see fn. 2) of the subject property. Both Mitchell and Nocera prepared written appraisals of the subject property which were admitted into evidence.
Mitchell opined using the sales comparison approach and the income capitalization approach to value that the fair market value of the subject property was $4,400,000.00 effective October 1, 2006.
"Sales Comparison Approach" defined as follows: "The sale comparison approach utilizes sales of comparable properties, adjusted for differences, to indicate a value for the subject. Valuation is typically accomplished using physical units of comparison such as price per square foot, price per unit, price per floor, etc., or economic units of comparison such as gross rent multiplier. Adjustments are applied to the physical units of comparison derived from the comparable sale. The unit of comparison chosen for the subject is then used to yield a total value. Economic units of comparison are not adjusted, but rather analyzed as to relevant differences, with the final estimate derived based on the general comparisons."
Page 36, Mitchell appraisal.
"Income Capitalization Approach" defined as follows: "The income capitalization approach reflects the subject's income-producing capabilities. This approach is based on the assumption that the value is created by the expectation of benefits to be derived in the future. Specifically estimated is the amount an investor would be willing to pay to receive an income stream plus reversion value from a property over a period of time. The two common valuation techniques associated with the income capitalization approach are direct capitalization and the discounted case flow (DCF) analysis."
Page 36, Mitchell appraisal.
Mitchell's opinion was based on his analysis, interpretation and adjustment of five comparable sales to arrive at a fair market value of $4,300,000. Mitchell's opinion was also based on his analysis and interpretation of six comparable rentals to arrive at a fair market value of $4,500,000.00.
"Comparable, adj. — Admitting of comparison with another or other. Similar or equivalent. Comparison, n. — The act of comparing or the process of being compared. A statement or estimate of similarities and differences. The qualities of being similar or equivalent." The American Heritage College Edition — Third Edition 1993.
Mitchell's final reconciled fair market value of the subject property of $4,500,000.00 is a product of both the income capitalization approach but primarily the sale comparison approach. Included among Mitchell's five comparable sales was that real property identified as 170 Pinesbridge Road, Beacon Falls, Connecticut.
The defendant's expert real estate appraiser opined that the fair market value of the subject property was $6,000,000.00 effective October 1, 2006.
Nocera used both the sales comparison approach and the income capitalization approach to arrive at this conclusion. Nocera's opinion using the income capitalization approach was based on his analysis and interpretation of six comparable rentals to arrive at a fair market value range of $5,905,000.00 to $6,202,000.00.
Nocera's opinion using the sales comparison approach was based on his analysis, interpretation and adjustment of six comparable sales to arrive at a fair market value of $5,976,000.00. Nocera's final reconciled fair market value of $6,000,000.00 is a product of both the income capitalization approach and sales comparison approach.
Included among Nocera's six comparable sales was that real property identified as 170 Pinesbridge Road, Beacon Falls, Connecticut.
The real property identified as 170 Pinesbridge Road, Beacon Falls, Connecticut (hereafter "comparable property") is common to both the Mitchell and Nocera appraisals.
There are many similarities between the subject property and the comparable property. Both buildings are of the same construction, i.e., concrete block, concrete floor, flat roof, 16-18' ceilings. Furthermore, both buildings can be utilized for either light manufacturing and/or warehousing. Both buildings have the similar utilities, amenities, and adequate parking and partially air conditioned. Both sites have virtually the same access to Route 8.
There are only two significant dissimilarities between the subject property and the comparable property: site size and building size.
The subject property is 31 acres and the comparable property is 10 acres. Nocera suggests an adjustment of 5% regarding the difference in acreage. However, the subject property, as previously recited, is subject to wetlands, environmental concerns, water retention ponds and well monitoring constraints, very much limiting, if any, expansion. Therefore, the court finds any adjustment due to a difference in acreage is unwarranted.
The most significant dissimilarity between the subject property and the comparable property is the building area. The building on the subject property is 170,000 square feet versus 110,000 square feet on the comparable property. Both appraisers agree that smaller big buildings tend to sell for more on a square foot basis. Nocera suggests an adjustment due to the building size of — 10%, whereas Mitchell suggests an adjustment of — $3% due to building size. This court subscribes to the Mitchell adjustment.
The court finds that comparable property known as 170 Pinesbridge Road, Beacon Falls, Connecticut is singularly and exclusively the most appropriate comparable to calculate the fair market value of the subject property known as 158 Pinesbridge Road, Beacon Falls, Connecticut.
The court finds an adjusted square foot value of $26.43. Therefore, the court finds the fair market value of the subject property known as 158 Pinesbridge Road, Beacon Falls, Connecticut is $4,500,000.00 ($26.43 x 170,743 = $4,512,737.40 rounded to $4,500,000.00).
The court also finds that the plaintiff is aggrieved in that its real property has been overassessed, therefore, the plaintiff's appeal is sustained.