Opinion
No. CV 03 0567071 S
January 13, 2006
MEMORANDUM OF DECISION RE WHETHER SHORELINE PROPERTIES ILLEGALLY AND UNCONSTITUTIONALLY ASSESSED FOR TAX PURPOSES
This case is an appeal from the action of the Board of Assessment Appeals of the Town of Stonington (hereafter Board of Appeals). Plaintiff Daniel H. Van Winkle is the owner of property in the Town of Stonington identified as 20 Nauyaug, Point Road. His properly, located on Mason's Island south of a guardhouse, consists of 80 acres, with 90 feet of road frontage on Nauyaug Point Road and 141 feet of frontage on Fisher's Island Sound. Plaintiff's house is a one and three-quarter story wood frame single-family building consisting of 4,045 square feet.
The Town determined the fair market value of the plaintiff's property to be $1,814,400 and assessed it on the Grand List of October 1, 2002 at $1,274,100 for the land and the improvements. Pursuant to Connecticut General Statutes Section 12-111, the plaintiff appealed the assessment to the Board of Appeals which reduced the assessment from $1,274,100 to $1,270,100, a difference of $4000. It is from this assessment that the plaintiff brings this appeal, which, as amended, is presented in twelve counts.
The plaintiff has alleged the violation of two Connecticut statutes; namely, Sec. 12-62a(b), and Sec. 12-119; and a violation of the Equal Protection Clause of the Fourteenth Amendment to the Constitution of the United States, as well as a violation of Article I, Section 20 of the Connecticut Constitution.
Statutory Claims A. Connecticut General Statutes Section 12-117a Assessment Valuation (Counts 1-4) CT Page 520
Section 12-117a is sometimes referred to as the "valuation claim." In this regard, the plaintiff claims that the defendants did not properly assess his property for assessment years October 1, 2002 through and including October 1, 2005.
Sec. 12-117a. Appeals from boards of tax review or boards of assessment appeals.
Any person . . . claiming to be aggrieved by the action of the board of tax review or the board of assessment appeals . . . may make application, in the nature of an appeal therefrom . . . to the superior court for the judicial district in which such town or city is situated, which shall be accompanied by a citation to such town or city to appear before said court.
In the First through the Fourth Counts the plaintiff alleges that on an October first date of the year of assessment the Town, pursuant to Connecticut General Statutes Section 12-62a(b), is required to "assess all property for purposes of the local property tax at a uniform rate of seventy per cent of present true and actual value . . ." He further alleges that the Town valued the property on the Grand List of October 1, 2002, in an amount that exceeded that percentage of its true and actual value on the assessment date, and that the valuation was grossly excessive, disproportionate to the value, and unlawful. He also avers that he took an appeal to the Board of Appeals which made a minimal change in the valuation.
The allegations in the First, Second, Third and Fourth Counts articulate plaintiff's challenge to the alleged over-assessment of his property, for which he seeks redress pursuant to Connecticut General Statutes Section 12-117a.
B. Connecticut General Statutes Section 12-119 Illegal Assessment (Counts 5-8)
The plaintiff's claim under Section 12-119 is that his assessment is "manifestly excessive" and "illegal." In Counts Five, Six, Seven and Eight the plaintiff restates the requirement that the Town is required, pursuant to General Statutes Section 12-62a, to assess all property in the town at 70% of its true and actual value, as determined by its fair market value. Furthermore, the plaintiff alleges that in addition to over assessing his property (as alleged in the First through the Fourth Counts), the Town assessed Town properties that are not on or in close proximity to Long Island Sound in such a way that a fair approximation of the average ratio or percent of the true and actual value of the inland properties fell below 70% of their true and actual value.
Sec. 12-119. Remedy when property wrongfully assessed.
When it is claimed . . . that a tax laid on property was computed on an assessment which, under all the circumstances, was manifestly excessive and could not have been arrived at except by disregarding the provisions of the statutes for determining the valuation of such property, the owner thereof . . ., prior to the payment of such tax, may, in addition to the other remedies provided by law, make application for relief to the superior court for the judicial district in which such town or city is situated.
The essence of the plaintiff's claims in counts five through eight is that the defendants violated Connecticut General Statutes Section 12-119 in not assessing all property at 70% of its value and by valuing properties away from the shore at a rate lower than 70%.
C. Claimed Constitutional Violations Equal Protection Clause of the Fourteenth Amendment, United States Constitution Article I, Section 20 of the Connecticut ConstitutionIn the Ninth, Tenth, Eleventh and Twelfth Counts the plaintiff re-alleges the defendants' statutory obligation to assess uniformly town properties at 70 per cent of their true and actual value, and his claim that the defendants violated this standard in the assessment of his property for the Grand List of October 1, 2002, by disproportionately assessing his waterfront property in comparison with realty that is not on or close to the Long Island Sound. The plaintiff alleges that the claimed differential assessments in his shoreline realty compared to realty that is not on or near the Long Island shoreline violates his right to equal protection of the law as guaranteed to him by the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution, as well as by Article I Section 20 of the Connecticut Constitution. The plaintiff also claims that in this regard, the plaintiff alleges that the differential assessment is intentional and not rationally related to any legitimate public interest.
§ 1. Citizenship — Due process of law — Equal protection.
No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life liberty, or property, without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws.
Sec. 20. Equal Protection . . .
No person shall be denied the equal protection of the law . . .
Standard for reviewing Tax Assessment Appeals
An appeal from a decision of the Board of Assessment Appeals is de novo. [T]he ultimate question is the ascertainment of the true and actual value of the applicant's property. Obrien v. Board of Tax Review, 169 Conn. 129, 131. As stated by our Supreme Court in onover v. West Hartford, 242 Conn. 727 (1997),
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 . . .'
(Citations omitted) 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."
(Citation omitted) 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. In this regard whether a property has been overvalued for tax assessment purposes is a question of fact for the trier.' (Citation omitted.) (Emphasis added)
Id. 734-35
Konover, supra, instructs that the trier of fact in the appeal must arrive at his or her conclusion as to values by considering 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. Id. at 735.
If the court determines that the taxpayer has met his burden of proving that the assessment was excessive and that the board of tax review refused to make the proper adjustment then the court is authorized to "proceed to the second step in a § 12-17a appeal and exercise its equitable power to grant such relief as to justice and equity appertains." (Citations omitted.) Id.
Statutory and Constitutional Challenge Plaintiff's Challenges of Appraisal Values Counts 1-4
The plaintiff obtained a retrospective appraisal from Robert H. Silverstein, who stated that in his opinion the estimated market value of the property as of October 1, 2002 was $1,335,000. This figure is based upon the use of the sales comparison approach. The three basic methods for determining the fair value of property are the income approach; the cost approach; and the sales comparison approach. Inasmuch as the income approach considers income generated by the property, such as rental income, the income approach is generally applicable to income-producing properties, and thus would not be applicable here.
Mr. Silverstein's report contains photographs of the subject property showing views of the property as well as views one would have from the property. The report also contains photographs showing views of comparable properties used in Mr. Silverstein's analysis.
Mr. Silverstein chose the following eight properties in the Village of Stonington for use in a sales and cost approach analysis. The comparable properties are listed in the report in this order: 1) 34 Money Point Road (Mason's Island), sold for $1,350,000; 2) 1 Black Duck Road (Mason's Island), sold for $1,300,000; 3) 225 Wamphassuc Road, Wamphassuc Pt., sold for $1,500,000; 4) 207 Masons Island Road (Mason's Island), sold for $1,700,000; 5)1 Osprey Lane (Mason's Island), sold for $1,500,000; 6) 2 Osprey Lane (Mason's Island), sold for $1,275,000; 7)15 Hancox Street, sold for $862,500; and 8) 20 Money Point Road (Mason's Island), sold for $1,060,000.
In the Neighborhood Market Factors section of the report Mr. Silverstein describes Stonington as a "coastal community in southeastern Connecticut." He writes that the subject property "is located in the southern section on Mason's Island, which is a waterfront community located southeast of Mystic Village and is accessed from Route 12 Masons Island Road. The majority of the island is a private waterfront community with a guardhouse at the entrance."
The defendants introduced as an exhibit the retrospective appraisal report of Stephen R. Flanagan. In his report, Mr. Flanagan describes Mason's Island as follows:
an upscale residential, waterfront neighborhood which is an island connected to the mainland by a causeway. The Mason's Island area has numerous inlets and coves along its coastline affording many of its properties not only water view but water frontage. Some of the highest priced properties in Stonington are located in this neighborhood.
Using the sales comparison approach, Steven Flanagan found that the market value of the plaintiff's property as of October 1, 2002 was $1,850,000. He selected eleven single-family sales of properties in Stonington for use in determining this value. They are 1) 20 Money Point Road, sold for $1,060,000; 2) 2 Osprey Lane, sold for $1,275,000; 3) 3 Heron Road), sold for $1,150,000; 4) 37 Chippechaug Trail, sold for $2,500,000; 5) 34 Money Point Road, sold for $1,350,000; 6) 16 Quarry Road, sold for $2,300,000; 7) 1 Black Duck Road, sold for $1,300,000; 8) 1 Osprey Lane, sold for $1,500,000; 9) 207 Masons Island, sold for $1,700,000; 10) 30 School House, sold for $2,250,000; and 11) 26 Skiff Lane, sold for $880,000.
In addition, Steven Flanigan selected nine water-influenced unimproved land sales; namely, 1) Heron Road (Mason's Island), with 3.3 acres and marsh views [sold for $845,000]; 2) 38 Nauyaug Pt. (Mason's Island) with 0.89 acres and 173 feet on Sound, [sold for $1,380,000]; 3) 40 Nauyaug Pt. (Mason's Island), with 0.57 acres and 97 feet on Sound [sold for $700,000]; 4) 22 Money Pt. (Mason's Island), with 0.94 acres and 140 feet on Sound/Cove [sold for $1,100,000]; 5) 3 Salt Acres kept Road, with 1.74 and 50 feet on Sound [sold for $1,700,000]; 6) 63 Latimer Pt. Road, with 3.94 acres and 453 feet on Sound [sold for $1,190,000]; 7) 95 Latimer Pt. Road, with 2.84 acres and 205 feet on Sound [sold for $1,150,000]; 8) Niles Road (Mason's Island), with 0.50 acres and 200 feet on Mystic River [sold for $610,000]; 9) Niles Road (Mason's Island), with 0.42 acres and 122 feet on Mystic River [sold for $675,000].
Site Comparisons
The defendants ascribe the principal difference between Mr. Silverstein's value of $1,335,000 and Mr. Flanagan's value of $1,850,000 to the divergence of opinion as to the value attributable to the site of the subject property. Mr. Silverstein valued the site at $750,000; whereas Mr. Flanagan valued the site at $1,250,000, a difference of $500,000. The defendants note that the subject property has site improvements of grading, utility connections, a septic system, driveway, and note that it is fully landscaped. It has steps down to the waterfront, a bathhouse, stone jettys, and two docks.
The defendants urge the court to consider the subject lot in comparison with unimproved lots; namely, 38 Nauyaug Point Road, 40 Nauyaug Point Road, 22 Money Point Road, and 22 Niles Road. The court has considered these lots in comparison to the plaintiff's property. The court will comment on 38 Nauyaug Point Road.
The defendants point out that there was one owner of 38 and 40 Nauyaug Point Road; that the two lots are just seven lots from plaintiff's property to the south; that 38 and 40 Nauyaug, as well as the subject property face west. Thirty-eight Nauyaug Point Road is similar to the subject property. It sold seven months after the October 1, 2002 assessment for the price of $1,380,000. The sale was for land only, inasmuch as the building on the properly, a "tear down," was torn down. The defendants further point out 38 Nauyaug Point Road is similar in size and location to the subject property (.8 v. .9 acres), is elevated similar to the subject property, and has similar water access. The defendants further point out that this land sale did not include improvements such as the plaintiff's house, and the other articulated improvements on his property. In this regard it is noted that the plaintiff's appraiser lists $439,983.00 as the new cost value of site improvements for his house, and garage.
The court adopts the finding of value of the subject property articulated by Stephen Flanagan.
Challenges under C.G.S. § 12-119 under the Federal and State Constitutions Counts 5-8 (illegal Assessments) and Counts 9-12 (unconstitutional claims)
The court begins this section of the memorandum of decision with a review of the history of the assessment.
The Assessment: Mass Appraisal
Connecticut General Statutes Section 12-62 requires the assessor or board of assessors of each town to revalue all of the real estate in their respective municipalities for assessment purposes. Such a revaluation is referred to as a mass appraisal.
The Town of Stonington retained a company known as Vision Appraisal Technology to conduct its mass appraisal for assessment purposes for the assessment year of October 1, 2002. Vision Appraisal Technology is a mass appraisal company based in New England. The company is licensed by the Connecticut Office of Policy Management to carry out mass appraisals. It works throughout New England and devotes its time to the mass appraisal process. Stephen Ferreira, the District Manager of Vision Appraisal Technology, was the Project Supervisor of the Stonington mass appraisal.
Stephen Ferreira testified in court as to how under his leadership Vision Appraisal Technology conducted the mass appraisal. He also introduced his "Report Prepared in Support of the October 1, 2002 Stonington Revaluation." (Exhibit 15.) The report includes an articulation of the bases for the mandated revaluation; the steps undertaken during the evaluation process; required standards submitted to the Office of Policy and Management; and, among other items, an analysis of disparate assessment issues.
The report describes the data collection process which required a data collector to make a minimum of at least one visit to all improved parcels in the town and a measurement of the exterior of all buildings on each parcel. It also describes the sales analysis; namely, the studying of sales of properties in order to create the valuation tables that comprise the model for use in the assessment process. In addition, it describes how the sales ratio, median ratio and the coefficient of dispersion are used in the mass appraisal process.
The report explains the process by which owners of property are notified of their new assessments and of their opportunity to have the new assessments reviewed prior to being finalized at the administrative level. Finally, the report states that the results are certified; meaning, that the proposed values are reported to the Office of Policy and Management.
The defendants introduced into evidence Exhibit 25, the letter from the Connecticut Office of Policy and Management, addressed to the Assessor of the Town of Stonington, attesting that the October 1, 2002, mass appraisal for the town conforms to the state standards for mass appraisals. A review of those standards follows.
The Statutory-Regulatory Standards
As stated earlier, Connecticut General Statutes Section 12-62a(b) provides that "[e]ach municipality shall assess all property for purposes of the local property tax at a uniform rate of 70 per cent of present true and actual value . . ." The Regulations of Connecticut State Agencies state, inter alia, that "[t]he assessments resulting from the revaluation shall be deemed sufficient, provided the following criteria are met:
(1) the overall level of assessment for all property classes shall be within plus or minus ten percent of the required seventy percent assessment ratio, as measured by the overall median ratio in Section 12-62i-3(b)(1)
(2) the level of assessment for each property class with fifteen or more market sales shall be within plus or minus five percent of the median overall level of assessment for each property class, and
(3) the coefficient of dispersion for each property class with fifteen or more market sales shall be equal to or less than fifteen percent for all property, equal to or less than fifteen percent for residential property, equal to or less than twenty percent for commercial property, and equal to or less than twenty percent for vacant land,
(4) the price related differential for all properties and for each property class for which there are 15 or more market sales shall be within 0.98 and 1.03, and
(5) the unsold property test result shall be between 0.95 and 1.05.Regulations of Connecticut State Agencies, Section 12-62i-3(b)(1)
Plaintiff' Challenges
Connecticut General Statutes Section 12-119 provides relief to taxpayers who can prove that an assessment was "manifestly excessive" as a result of the assessors violating statutory directives in arriving at the assessment. As to the constitutional challenges, the plaintiff claims that by assessing shoreline properties at a higher rate than inland Properties the defendants have placed a higher burden on owners of shoreline properties in violation of their right to equal protection, as guaranteed by the 14th Amendment to the United States Constitution, and by Article I, Section 20 of the Connecticut Constitution.
To prove their claims the plaintiff enlisted the support of Christopher Miner, an appraiser who prepared a study of sales ratios in Stonington, effective October 1, 2002. He described the purpose of the study as testing "the hypothesis that the Assessment ratios in the Town of Stonington cause waterfront properties to be unfairly assessed." In the study Assessment Ratios is defined as Assessment divided by Fair Market Value.
Prior to undertaking his study Christopher Miner by email on March 21, 2005 expressed his concern over his then finding that "both Waterfront (as defined by the town) and Single Family assessment ratios converge on 65%, not 70%." (Exhibit 27). In another email (Exhibit 28) Christopher Miner informs plaintiff's counsel that the 65% convergence "could be a bad thing. The data demonstrates that the Town's data converges on the same percentage for waterfront and other single family properties. This is opposed to what your complaint alleges."
Christopher Miner then devised his study using a five-year time span.
Two Classes of Property: Waterfront Non-waterfront
During his trial testimony Christopher Miner explained that since there were not enough sales of single-family properties prior to October 1, 2002, to factor into his analysis of sales of waterfront single-family houses compared with non-waterfront single-family houses in Stonington he used sales data from June 1, 2001 to October 1, 2004; that is to say, sales of properties 2 1/2 years before and 2 1/2 years after the revaluation date of October 1, 2002. Christopher Miner testified that he is not certified to do mass appraisals, and that this is the first time he has performed a mass appraisal/ratio/analysis. He also testified that his analysis is novel; and that he did not rely on peer-reviewed journals in establishing his subclasses of waterfront and non-waterfront houses.
One of the findings in his study is that
if a waterfront house and an inland house had the same values, the waterfront house would be assessed 10% more than the inland house.
Cover Letter of Study page 1
In contesting Christopher Miner's study the defendants call upon this court not to validate the "waterfront and non-waterfront" subclasses. The defendants argue that the judiciary should not establish classes of property, in part because the legislative branch has created the only property classes that should be recognized in this case. They point to Section 12-62— 1-1(15) of the Regulations of Connecticut State Agencies which states the following:
"Property class" means any one of the following three major classifications of real property: (A) residential; (B) commercial including apartments, industrial and public utility; and (C) vacant land.
Id.
The court agrees with the defendants, and will not create additional classes of property. John Ryan was called as a witness for the defendants. He is a certified general appraiser, licensed in Connecticut, Massachusetts, Vermont, New Hampshire, and New York. John Ryan testified that 75% of his work is in mass appraisals. In his testimony and his written report John Ryan approves of the assessment carried out by the Town of Stonington, and he criticized the study and analysis prepared by Christopher Miner. He found Christopher Miner's study deficient in the following ways, among others: 1) the absence of a discussion of appropriate sample size; 2) the use of improper statistical methods, namely the mean and the coefficient of variation instead of the median; 3) the use of excluded properties, and 4) the use of a five-year time-frame.
In his report John Ryan states in part that "[r]evaluation programs in Connecticut as well as other jurisdictions throughout the world are typically completed on or near the date of valuation. In instances where adequate samples are available, sales that occur during a time frame significantly subsequent to the valuation date are recognized as unusable by Connecticut state regulations as well as all professional appraisal and mass appraisal standards . . . it is irrefutable that a sample of sales drawn from a four-year period is not only unnecessary but in fact misleading when analyzing assessment performance in this jurisdictions." Ryan Report, page 4. On page 8 of his report John Ryan writes of Miner's report
[s]ince the report includes no empirical evidence to support the assumption of normality and given that all the statistics employed throughout the report assume normalcy, there is no foundation upon which draw any useful conclusions. Therefore, any statements in the report based on the statistics in the report are simply meaningless
John Ryan concludes his report on Miner's report by stating that "[t]he State of Connecticut and generally recognized professional appraisal standards of practice set forth detailed performance standards and minimum thresholds. The town has met or exceeded all of these tests and there simply is no empirical evidence presented in this [Miner] report that suggests that the conclusions drawn from these tests are invalid."
Assessment at 70 Per Cent
As stated earlier Connecticut General Statutes Section CT Page 530 12-62a(b) requires that municipalities assess property at seventy per cent of true and actual value. Section 12-62i-3(b)(1) requires that the assessment be "within plus or minus ten percent of the required seventy percent assessment ratio . . ."
The defendants point out that the evidence shows that all properties in the Town were assessed at 67% of fair market value, and that the true and actual value was 96% of fair market value. (Ratio Testing Method-Exhibit 19, p. 3.) Sixty-seven percent divided by 96% equals 70%.
Decision re claimed violation of C.G.S. § 12-119
The court finds that the property assessed in the Town, including the plaintiff's property, was valued at 70% in accordance with state law.
Accordingly, the court finds that the assessment of the plaintiff's property was neither excessive nor illegal, and that the assessment does not violate Connecticut General Statutes Section 12-119.
Claimed violation of the Equal Protection Clauses of Federal and State Constitutions
As stated earlier, the plaintiff claims in the Ninth, Tenth, Eleventh and Twelfth Counts that the defendants' failure to uniformly assess his and other town properties at a uniform 70% of true and actual value, and the defendants' use of differential assessments for his shoreline realty compared to realty that is not on or near the Long Island shoreline violate his right to equal protection of the law as guaranteed to him by the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution, and by Article I, Section 20 of the Constitution of the State of Connecticut.
The Equal Protection Clause guarantees that government treat similarly situated persons equally. It prohibits government from discriminating against individuals on a non-rational basis. See Hordlinger v. Hahn, 505 U.S. 1 (1992) (approving California tax re-assessment initiative). The court finds that there is no evidence in this case which would support a claim of a violation of the Equal Protection Clause of either the federal or state constitution. As found earlier, the Town properly carried out its obligation under Connecticut General Statutes Section 12-62a, and the statistical infirmity of the Miner report does not show otherwise.
Conclusion
Inasmuch as the plaintiff has not met his burden of proving "that he has, in fact, been aggrieved by the action of the board [of Appeals] in that his property has been over assessed," Konover v. West Hartford, supra, his appeal should be, and hereby is dismissed.