Opinion
CV156055174S
02-07-2018
SOUND CAPITAL PARTNERS, LLC v. BOARD OF ASSESSMENT APPEALS TOWN OF BRANFORD
UNPUBLISHED OPINION
OPINION
Sybil V. Richards, Judge
This is a real estate appeal brought by the plaintiff pursuant to General Statutes § 12-117a from the defendant town of Branford’s assessment of the plaintiff’s real property on the town’s Grand List of October 1, 2014 and the Grand List of October 1, 2015. The defendant’s Board of Assessment Appeals made no changes in the assessments when petitioned by the plaintiff. Afterwards, this appeal followed. The matter was tried to the court on October 10, 2017.
I. Facts
Based upon the credible and relevant evidence presented, including the court’s examination of the full exhibits and observation of the testimony of the parties’ expert witnesses, the court makes the following factual findings. The plaintiff, Sound Capital Partners, LLC, is the owner of the real property known as 16 Flying Point Road, Branford, Connecticut (" subject property" or, alternatively, " property" ). The subject property sits on .45 acres and the main house is described as " a two-story, contemporary style, waterfront, single-family residence that comprises of approximately 2,176+/- square feet of finished above grade living area situated over a full lower level measuring approximately 730+/- square feet of which roughly 480+/- square feet is finished ... [The main house] was constructed [in] 1983 and [has] undergone significant renovation and updating primarily during [years] 2003-2004 at a cost in excess of $440,260. In addition to the main house, there is a detached cottage (formerly a shed) of approximately 780+/- square feet that was completely reconstructed [in] 2004. There are a total of six rooms above grade (including three bedrooms) plus three full baths while the lower level includes an additional room and an additional three-fixture bath. The cottage comprises of a single-story, wood frame structure with an open floor plan with a combination [living room/bedroom/kitchenette] (the kitchenette consists of a sink but no cooking appliance or appliances). As for its waterfront view, it has approximately 83+/- feet of frontage along the northerly side of Long Island Sound and approximately 118+/- feet of frontage along the southerly side of Flying Point Road. It has two docks. One of the two docks is permanent and is constructed of wood and the other, and much larger, one is what is known as a " Jet" dock that [should be removed] in the winter. It is unclear whether the property is FEMA compliant.
Boyle’s report states that the main house is 2,197 square feet. The court agrees with Perrelli that the difference between Perrelli’s estimate of 2,176 square feet and Boyle’s estimate of 2,197 square feet is inconsequential for purposes of valuation in this case.
The parties’ expert witnesses disagree about whether the subject property is FEMA compliant although the town’s field cards reflect that the plaintiff pulled a permit. Notwithstanding the foregoing, there is no evidence that any actual work was performed in order to make the property FEMA compliant.
II. Standard of Judicial Review
The plaintiff brought this tax appeal pursuant to General Statutes § 12-117a. " Section 117a ... 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 § 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 ... 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 ... 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 opinions 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." (Internal quotation marks omitted.) Redding Life Care, LLC v. Redding, 308 Conn. 87, 99-100, 61 A.3d 461 (2013).
For cases tried to the court, " the trial judge is the sole arbiter of the credibility and the weight to be given specific testimony ... The credibility and the weight of expert testimony is judged by the same standard, and the trial court is privileged to adopt whatever testimony [it] reasonably believes to be credible." (Citation omitted; internal quotation marks omitted.) Torres v. Waterbury, 249 Conn. 110, 123, 733 A.2d 817 (1999).
There are three generally recognized approaches to the valuation of real estate; the market sales approach, the cost approach, and the income capitalization approach. See, e.g., United Technologies Corp. v. East Windsor, 262 Conn. 11, 18-20, 807 A.2d 955 (2002) (describing the three approaches); Abington, LLC v. Avon, 101 Conn.App. 709, 711 n.4, 922 A.2d 1148 (2007). In this action, neither the plaintiff’s nor the defendant’s appraiser used the market sales or the income capitalization approach. Instead, both appraisals admitted into evidence are based upon the sales approach.
The court notes that the defendant’s appraiser considered the rental income potential of the cottage whereas the plaintiff’s appraiser did not recognize or take into account the possibility of the cottage being used to generate rental income.
The sales approach, which was used here by both appraisers, " is also known as the ‘sales comparison approach’ or ‘market data approach.’ " United Technologies Corp. v. East Windsor, supra, 262 Conn. 17 n.10. " Under the market sales approach, the subject property’s appraised value is derived from a comparison to recently sold similar properties in the vicinity, with appropriate value adjustments based on the elements of comparison." (Internal quotation marks omitted.) Id.
" Fair market value," by definition, is " the price that a willing buyer would pay a willing seller based on the highest and best possible use of the land assuming, of course, that a market exists for such optimum use." (Internal quotation marks omitted.) United Technologies Corp. v. East Windsor, supra, 262 Conn. 25. A property’s " highest and best use" is " the use that will most likely produce the highest market value, greatest financial return, or the most profit from the use of a particular piece of real estate." (Internal quotation marks omitted.) Metropolitan District v. Burlington, 241 Conn. 382, 390, 696 A.2d 969 (1997). " A property’s highest and best use is commonly accepted by real estate appraisers as the starting point for the analysis of its true and actual value." United Technologies Corp. v. East Windsor, supra, 262 Conn. 25.
" In § 12-117a tax appeals, 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 ... At the de novo proceeding, the taxpayer bears the burden of establishing that the assessor over-assessed its property ... Once the taxpayer has demonstrated aggrievement by proving that its property was over-assessed, the trial court [will] then undertake a further inquiry to determine the amount of reassessment that would be just ... The trier of fact must arrive at [its] own conclusions at 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 [its] own general knowledge of the elements going to establish value ..." (Citations omitted.) Cadlerock Properties Joint Venture, L.P. v. Ashford, 98 Conn.App. 556, 560, 909 A.2d 964 (2006).
" If the trial court finds that the taxpayer has failed to meet his burden of proof 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." Ireland v. Wethersfield, 242 Conn. 550, 557-58, 698 A.2d 888 (1997). " If, however, the trial court 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." Id. at 558, 698 A.2d 888.
" No one method of valuation is controlling ... and the [court] may select the one most appropriate in the case before [it]." (Citations omitted; internal quotation marks omitted.) Abington, LLC v. Avon, 101 Conn.App. 709, 715, 922 A.2d 1148 (2007). " [T]he court’s ultimate goal is to establish the true and actual value of the subject property and ... it is a question of fact for the trier as to whether the method used for valuation appears in reason and logic to accomplish a just result ... [No] particular method must be utilized [and valuation principles shall not] serve to limit the court’s discretion to choose the method that it believes will result in the fairest approximation of the subject property’s value." (Citations omitted; internal quotation marks omitted.) Id., 716-17, 922 A.2d 1148.
III. Discussion
Prior to the commencement of the trial and later during the proceedings, the parties agreed to several stipulations that were put on the record. First, the parties stipulated as to the values (of the subject property) for the following tax years listed below at 100% of full value on the following Grand Lists:
October 1, 2014 = $1,735,900
October 1, 2015 = $2,043,600
Second, the parties stipulated that all of the exhibits offered by each party could come in as a full exhibit. Third, the parties stipulated their respective appraisers were qualified to testify as an expert witness.
The plaintiff’s witness was Thomas Boyle, its appraiser. He inspected the subject property in July of 2015. Following the inspection, he prepared a retrospective analysis of the property’s October 1, 2014 fair market valuation using the sales approach. According to Boyle, the fair market valuation of the subject property is $1,600,000. He compared the subject property to a total of three properties; one property that is located at 11 Prospect Hill Road in Branford (" 1st comparable" ) as well as two properties that are located in the nearby town of Guilford, Connecticut at 55 Little Harbor Road (" 2nd comparable" ) and 69 (a.k.a. 71) Andrews Road (" 3rd comparable" ) (collectively referred to as the " comparison property/properties" ). He described the subject property in great detail but acknowledged that he placed an emphasis on the 1st comparable as it was the only property out of the three comparison properties, applying the methodology of the sales approach, that was the most similar to the subject property in relation to multiple criteria such as time, location, site size, size of the home and amenities. According to Boyle, the 1st comparable is located practically across the street from the subject property and is about 3 minutes away. It was last sold on July 28, 2014. It was completely remodeled, too, but the subject property’s renovation was more high end. He also noted that, unlike the subject property, the 1st comparable has no cottage but has a two-car garage instead of a one-car garage. In his appraisal report, Boyle made $63,000 in adjustments to the 1st comparable and this resulted in an adjusted sales price of $1,588,900 for the 1st comparable.
The source of much of the court’s description of the subject property is derived from the defendant’s appraisal report.
Perrilli commented that its asking price was $1,747,000 and it sold 5 months later for $1,525,000.
The court observes that Boyle’s adjusted sales price for the 2nd and 3rd comparables was $1,346,860 and $1,660,020, respectively.
The defendant’s witness was its appraiser, Joseph F. Perrelli. He performed an inspection of the subject property and ascribed a fair market value in the amount of $1,850,000 (which is $250,000 higher than Boyle’s valuation). He, too, selected 11 Prospect Hill Road, Branford, Connecticut (referred to herein as the " 1st comparable" ) as one of the three comparable properties he used in his appraisal analysis. And he, likewise, gave more weight to the 1st comparable because of its similarities to the subject property. Perrelli pointed out other features of the subject property in his report and during his testimony. According to Perrelli, the subject property has a three-stop elevator (which services each floor), a second floor balcony overlooking the lower level, a whole house generator and a dock that is about 250+/- linear feet wide. He emphasized that the seasonal Jet dock should be considered a contributory accessory to the subject property given its expanse. He also opined that the cottage could generate rental income during the summer months.
The court is aware that the sales date of the 1st comparable was on October 15, 2014, which is 14 days after the October 1, 2014 Grand List year, but neither party raised any issues about this particular fact. The court finds that, due to the close proximity to the first Grand List year assessment that is being contested by the plaintiff, and other factors that are unique to the subject property, as the court points out in this decision, it was reasonable for the appraisers to consider a comparable property that was sold after the October 1, 2014 Grand List year.
During cross examination, each party attempted to showcase and/or challenge the discrepancies, errors and mistakes that were purportedly or actually made in the other party’s appraisal report in relation to the assumptions that were used in the other’s appraisal analysis and choice of comparable properties. As an illustration, Boyle did not make any adjustments to the subject property’s outbuilding (the cottage) for rental income yet Perrilli did in his report. Perrilli ascribed rental income to the cottage but Boyle did not give it a value or assumed it could produce rental income.
Yet, ultimately, both appraisers agreed that 11 Prospect Hill Road, the 1st comparable, was the best comparable property and acknowledged that they relied heavily on the 1st comparable in developing their valuations. Both appraisers also agreed that there is a very limited market of prospective buyers who are seeking a relatively small, contemporary waterfront property in the Stony Creek section of Branford in particular, Branford itself generally or the surrounding towns and that the uniqueness of the subject property made it exceedingly difficult to find comparable properties. In addition, they shared the same opinion that potential buyers consider modern houses to be the least appealing. And they also opined that two hurricanes and the economic crash in 2009 between years 2003 and 2014 depressed the market for waterfront properties in Branford. In view of these considerations, and after examining all of the exhibits and recalling the testimonies of the appraisers, the court agrees and will concentrate on juxtaposing the two properties in order to adjudicate this action. Thus, the court’s starting point is the major similarities between the two properties that are shown in the reports. Both are waterfront properties located in the Stony Creek section of Branford, but the subject property’s view of the Long Island Sound (" Sound" ) is absolutely breathtaking. Spanning approximately 330 linear feet of frontage on the Northern and Western sides on the Sound, compared to 85 feet for that of the 1st comparable property, it is stunning. The court agrees with Perrelli’s opinion that this is the preeminent selling point for the subject parcel. While both properties were renovated, the subject property was extensively renovated more recently (from 2003-2004) and looks more attractive and almost " like new" in its appearance. Each of the two properties has a permanent dock but one of the two docks on the subject property is roughly 202 linear feet wide (about 2,500 square feet). The 1st comparable lacks an elevator and the subject property has a three-stop elevator.
Applying the applicable law to the facts found by the court, the court turns its attention to the two-part test that is controlling. Prior to doing so, however, the court makes certain additional findings of fact. There is no dispute that the plaintiff timely filed the instant matter in accordance with General Statutes § 12-117a after it unsuccessfully applied to the defendant’s Board of Assessment Appeals for a reduction in both the October 1, 2014 and 2015 Grand List years. The court held a trial de novo pursuant to said section of the statutes on October 10, 2017. The question presented to the court for resolution is the determination of the true and actual value of the subject property. The court heard testimony from the parties’ expert witnesses (their appraisers) and admitted exhibits into evidence. The statute mandates that the plaintiff bears the burden of proof in demonstrating aggrievement. The court, having been presented with testimonial and documentary evidence at the October 10, 2017 de novo trial, finds that the plaintiff has shown the court, by a fair preponderance of the credible and relevant evidence presented, that the assessor overassessed the subject property. Next, in light of making such a finding in favor of the plaintiff, the court turns its attention to the next prong of the test. In consideration of all of the evidence found credible and relevant by the court, the court concludes that, although each appraiser was equally qualified in rendering an expert opinion about the valuation of the subject property and exhibited a high level of knowledge about the subject property, the town of Branford, the surrounding properties and the real estate market in those areas, the court finds that there were flaws in each expert’s valuation. Notwithstanding the foregoing, the court finds that the greatest weakness was in Perrilli’s report in relation to the rental income he assumed for the subject property’s cottage when, admittedly, he lacked any knowledge about whether the cottage would be leased legally under the defendant’s zoning laws. The court is unpersuaded by his antedoctal attestation about widespread summer rentals without a demonstrable or proper basis for his premise. The court also finds his calculation of potential summer rental income at the cottage to be equally unconvincing as it was based on his own independent research on Airbnb’s website using unknown and unidentified variables that may or may not be included in the cottage’s features and amenities. In addition, for the same reasons, the court rejects his adjustment for the subject property’s three-stop elevator.
The court, having satisfied the second part of its inquiry, and based on the relevant and credible evidence presented, its observation of the credibility of the witnesses and taking into account its own general knowledge of the elements going to establish value, finds that the plaintiff is aggrieved by the defendant’s valuation of the subject property and that its true and actual fair market value is $1,735,900 as of the October 1, 2014 and the October 1, 2015 Grand Lists.
The sales price for the 1st comparable was $1,525,000. The other comparable properties mentioned in his report are located in Branford at 97 Linden Avenue and 16 Juniper Point Road, which had a sales price of $1,660,000 (with a sales date of June 20, 2013) and $1,225,000 (with a sales date of July 31, 2014), respectively.