May 26, 2006
MEMORANDUM OF DECISION
This is an appeal by plaintiff, the owner of real property located at 44 Mott Avenue in the City of New London, challenging the valuation placed on such property by the tax assessor of the City of New London far the assessment date of October 1, 2003. The appeal is taken pursuant to the provisions of Connecticut General Statutes Section 12-117a.
On October 29, 2004, plaintiff amended the complaint, as provided by Connecticut General Statutes Section 12-117a to reflect the tax assessment for the year October 1, 2004.
The case was previously tried before another judge on May 22, 2005, resulting in a mistrial. On February 6, 2006, the parties filed with the Court a stipulation whereby the trial transcript, the exhibits and post-trial briefs would be submitted to the undersigned. It was agreed in the stipulation that the undersigned judge could review the documents submitted and, after oral argument, decide the case as if the evidence had been presented to him in the first order.
The undersigned has reviewed all of the documents submitted and oral argument was held on May 10, 2006.
On the assessment date, October 1, 2003, the subject property consisted of a lot .11 acres more or less in area upon which had been constructed a two and one-half story, single-family, residential building with about 3,271 square feet of living area. The house with wood shingled exterior walls was constructed in 1912. It had been well maintained and was in good condition.
Located in the R-1 residential zone, the property was in compliance with the zoning regulations as a legal, preexisting, nonconforming use. The property was within an area of New London known as Neptune Park. Most of the houses in the neighborhood were built as summer cottages in the early 1900s and, as in the case of the subject property, converted to all season use. The property is bounded on the south by the waters of Long Island Sound. A concrete wall, or walkway, separates the landscaped portion of the property from the beach. The subject property enjoys an unimpeded view of Long Island Sound and is in one of the most desirable sections of the City.
On the assessment date, October 1, 2003, the assessor valued the subject property at $916,500 and determined that it should be liable for taxation at 70 percent of this value.
The plaintiff appealed this assessment to the board of assessment appeals of the City of New London. By notice dated March 31, 2004, the board informed plaintiff that it declined to reduce such assessment.
Within the time allowed by statute, plaintiff commenced the present appeal from the action of the board of assessment of appeals under the provisions of Connecticut General Statutes Section 12-117a claiming that the valuation placed on the subject property by the assessor was not the true and actual value, but was grossly excessive, disproportionate and unlawful.
"Section 12-117a, which allows taxpayers to appeal 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. In a Section 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 over assessed. In this regard, [m]ere overvaluation is sufficient to justify redress under [Section 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. Whether a property has been overvalued for tax assessment purposes is a question of fact for the trier. 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.
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 Section 12-117a appeal and exercise its equitable power to grant such relief as to justice and equity appertains. 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. If the court finds that the property has been in fact overvalued, it has the power to, and should, correct the valuation." Konover v. West Hartford, 242 Conn. 727, 734-36 (1997) (Citations, internal quotation marks omitted.)
"An appeal pursuant to Section 12-117a is a de novo proceeding in which the ultimate question is the ascertainment of the true and actual value of the taxpayer's property. The [t]axpayer bears the burden of establishing that the assessor has over-assessed its property. Expert testimony is often offered to establish valuation of property." [Internal citations, quotation marks omitted.] Narumanchi v. DeStefano, 89 Conn.App. 807, 809 (2005).
In this case, the court had the benefit of the testimony of two experts in the appraisal field, as well as the property owner.
The property owner, plaintiff William M. Cornish, testified as to the value of his property. As the owner of the property, Mr. Cornish was competent to give his opinion as to the value of the property. Anderson v. Zweigbaum, 150 Conn. 478, 483 (1963). Mr. Cornish did not testify as an expert. He testified as to the great increase in the assessment in a one or two-year period. The increase, however, was not as abrupt as plaintiff states since the previous valuation goes back several years to the prior reevaluation. Mr. Cornish also remarked on a substantial increase in taxes on the property which went from about $7,000 to the $16,000 range. This testimony is not particularly relevant to the value of the property. Taxes are determined by applying a mill rate to the value of the property. Factors which make up the mill rate are completely unrelated to the value of real property.
Mr. Cornish testified that the value established by his appraiser was correct and that, in his opinion, on October 1, 2003, the property was worth "$650, maybe even $700,000."
William D. Henry, of Associated Appraisal Service, testified for the plaintiff. Mr. Henry gave his opinion that on the assessment date of October 1, 2003, the market value of the subject property was $682,000.
The defendant City called as its appraiser Robert H. Silverstein, MAI, SRA. Mr. Silverstein gave as his opinion that on the assessment date in question, the market value of the property was $920,000.
There are three generally recognized methods of appraising the fair market value of real property; the cost approach, the income approach and the sales comparison approach. The income approach did not appear to be relevant and was not used by the appraisers. Both appraisers properly relied upon the sales comparison approach. Mr. Henry also used the cost approach to arrive at a value of $690,735. Considering the age of the property, and other factors, it does not appear that the cost approach would be reasonable to use in this situation. The appraisers relied primarily on the sales comparison approach and the court will rely on this approach as the best method of arriving at the fair market value of the property on the date in question.
The highest and best use is commonly accepted by real estate appraisers as the starting point for the analysis of the true and actual value of property regardless of the method of valuation. Commissioner of Transportation v. Bakery Place, 83 Conn.App. 343, 350 (2004). Both appraisers agreed that the present residential use of the property constituted the highest and best use.
In arriving at their valuation of the subject property, both appraisers relied principally on three comparable sales. These properties at 410, 821 and 670 Pequot Avenue in New London were all located at approximately one mile distant from the subject property. Although the properties were located fairly close to the subject property and was somewhat similar in location, the comparable sales evaluations by the appraisers resulted in substantial differences in their valuations.
One of the factors which caused the difference in valuation was that plaintiff's appraiser, Mr. Henry, did not use a factor based upon appreciation in value in his analysis.
Both appraisers were in agreement that real property values in the area had been increasing. Mr. Silverstein, defendant's appraiser, testified that there were numerous sales in New London to support a 10 percent to 12 percent time adjustment. In his cost approach analysis, Mr. Henry determined that there was a 9 percent increase in the value of land, yet he did not use this factor in making adjustments to his comparable sales.
Perhaps the most significant factor in the valuation of real property, particularly residential property, is location. The property in question was located in one of the most desirable areas of the City. It was waterfront property with an unimpeded view of Long Island Sound. The property also benefited from a small beach along its southern boundary. One reason for the variances in market value reached by the appraisers was the different adjustment factors applied by them to the comparable properties based upon the factor of location.
The first comparable sale considered by plaintiff's appraiser in his analysis of comparable sales involved property at 410 Pequot Avenue. This property was located about one mile from the subject property. It consisted of a residence built on 1920 on a .22-acre lot which sold on February 19, 2003 for $575,000. Applying adjustments, principally for air conditioning, built-in garage and a large deck, Mr. Henry arrived at an adjusted sales price of $590,000.
Defendant's appraiser considered the same property and arrived at an adjusted sales price of $906,800. The principal factor in this appraiser's calculations was a $200,000 adjustment for location and $50,000 for the difference in the view. Mr. Henry made no adjustment for location, but added $50,000 for the view difference. Both properties were considered as waterfront location, but the Pequot Avenue property fronts on the Thames River, not Long Island Sound. Unlike the subject property with its unimpeded view of open water, the Pequot Avenue property looks out on the Thames River and the industrial uses in Groton. There are commercial uses in close proximity to this Pequot Avenue property. Pequot Avenue is a much longer street than Mott Avenue and will have much more traffic particularly in the summer. The location adjustment used by Mr. Silverstein is appropriate, but appears to be unreasonably high when the $50,000 adjustment for view is considered. An adjustment of $150,000 is more appropriate for this factor.
Defendant's appraiser used a time adjustment of $23,000. While a time adjustment is appropriate, the figure arrived at by Mr. Silverstein appears to be excessive considering the proximity to the assessment date. A more appropriate adjustment would be $4,000.
The proper adjusted value of the 410 Pequot Avenue property would then be $852,800.
The second comparable sale considered by Mr. Henry was property at 670 Pequot Avenue located approximately one mile from the subject property. It was a Cape Cod type residence constructed in 1957 on a .41 acre lot with an in-ground pool. This property sold on March 31, 2001 for $1,100,000. Mr. Henry's adjusted sales price for the property was $796,000.
Defendant's appraiser also considered this property at 670 Pequot Avenue as a comparable sale. After making adjustments, he concluded that the adjusted sale price was $936,700. In arriving at this figure, Mr. Silverstein considered that the house was larger and newer and in better condition than the subject property. He also considered the location and view on the river rather than on Long Island Sound. The appraiser also considered the location of the house on the lot in close proximity to a busy street. This property sold on March 21, 2001. Mr. Silverstein used a factor of 15 percent to reflect the increase in market value to the assessment date and arrived at an adjustment of $165,000. The 15 percent used was near the high range of percentages used to reflect increases in property values in the area. Since this was a less desirable location than the subject property, a lower rate would be more appropriate. Mr. Henry indicated a 9 percent increase in his valuation of land. It is considered that a 10 percent increase would be more appropriate for this property.
Applying this lesser rate would result in an adjustment of $110,000. The other adjustments used by Mr. Silverstein appear to be reasonable. With the change indicated, the adjusted sale price would be $881,700.
The third sale considered by plaintiff's appraiser involved property at 821 Pequot Avenue which was about one-half mile from the subject property. This property sold on February 27, 2003 for $699,900. The .27-acre lot was improved by a residence constructed in 2002 and it enjoyed a water view. Mr. Henry concluded that the adjusted sales price of the property was $660,000.
Mr. Silverstein also considered this property. He included an upward adjustment of $25,000 to reflect the increase of value. This appears to be excessive when a proximity to the assessment date is considered. A more appropriate figure would be $5,000. Unlike plaintiff's two prior comparable sales, this is not waterfront property. It is located across the street from the river and has an obstructed view of the river. Mr. Silverstein made an adjustment of $100,000 based upon this factor, which was added to the $250,000 adjustment for the location. This appears to be excessive and should be reduced by $50,000.
Mr. Silverstein arrived at an adjusted comparable sale of $916,500 for this property. Using Mr. Silverstein's figures, but with the correction indicated, the adjusted sales price of this property is found to be $846,500.
Plaintiff's appraiser considered additional comparable sales including property across the street from the subject property. This property at 49 Mott Street was in a much lower range of value than the subject property being smaller with an extremely limited water view. Two other properties at 32 Mott Avenue and 40 Mott Avenue were also considered. On both of these properties, the buildings were razed shortly after the sale and new dwellings constructed. Defendant's appraiser also considered two additional properties, one at 76 Mott Avenue and the other at 416 Pequot Avenue.
The appraisers made adjustments to the sales of these additional properties which tended to confirm their valuation of the subject property.
The appraisers appeared to have relied principally on the three comparable sales of properties located at 410, 670 and 821 Pequot Avenue. These sales are the best evidence of the value of the subject property and are sufficient to allow the Court to make the findings required for a determination of this case.
The tax assessor has determined the fair market value of the subject property on the assessment date of October 1, 2003 to be $916,500. Based upon the evidence determined and from an evaluation of the comparable sales, it is found that the fair market value of the subject property on the assessment date was $869,500. It is found that the subject property was overvalued by $47,000 and that the plaintiff taxpayer is aggrieved by the decision of the Board of Assessment Appeals. Judgment may enter for the plaintiff without cost to either party. The assessor is ordered to adjust the assessed value of the subject property to reflect a fair market value of $869,500 on the grand lists beginning October 1, 2003.