Opinion
HHBCV136028103S
09-20-2018
Marina VARSHISKY v. TOWN OF GREENWICH
UNPUBLISHED OPINION
OPINION
Sheila A. Huddleston, Judge
In these two tax appeals, brought pursuant to General Statutes § 12-117a, the plaintiff, Marina Varshisky, challenges the valuation placed on two parcels of property by the defendant town of Greenwich (town) in its revaluations of October 1, 2010 and October 1, 2015. In Docket No. CV-13-6028103-S, she challenges the valuations as to her property at 18 Hurlingham Drive, and in Docket No. CV-13-6028104-S, she challenges the valuations as to her adjacent property at 20 Hurlingham Drive. The appeals were consolidated and tried to the court over nine days from April through August 2017. The court viewed the properties with counsel for both parties on September 6, 2017. The parties submitted post-trial briefs on March 23, 2018, and reply briefs on April 23, 2018. Because there was considerable overlapping evidence, the court addresses both appeals in this decision. The court finds that both properties were somewhat overvalued by the town in 2010 and 2015, and the court accordingly finds that the plaintiff was aggrieved.
I
APPLICABLE LEGAL STANDARDS
Certain well settled legal principles govern an appeal under General Statutes § 12-117a. "Section 12-117a ... 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).
It is well established that in a trial to the court, "the trial judge is the sole arbiter of the credibility of the witnesses 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 he 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 three approaches); Abington, LLC v. Avon, 101 Conn.App. 709, 711 n.4, 922 A.2d 1148 (2007).
"The market sales approach is also known as the ‘sales comparison approach’ or the ‘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.
Under the cost approach to valuation, the appraiser estimates the current cost of replacing or reproducing the existing structures, including an entrepreneurial profit, with adjustments for depreciation, and adds the value of the land. See id., 17 n.8; see also Appraisal Institute, The Dictionary of Real Estate Appraisal (6th Ed. 2015), p. 54.
The goal of all the appraisal approaches is to develop an indication of the fair market value of the subject property. "Fair market value" has been defined as "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 often defined as "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).
In these cases, the parties agreed that the current use of each property is the highest and best use. The parties further agreed that the sales comparison approach was generally the most reliable approach to value for residential properties such as these. In the 20 Hurlingham case, the plaintiff’s appraiser also developed a cost approach as a check on his opinion of value; the town’s appraiser did not. In the 18 Hurlingham case, the town’s appraiser developed only a cost approach for the opinion of value as of October 1, 2015.
II
OVERVIEW OF THE PROPERTIES
The plaintiff and her husband, Michael Varshisky, purchased two adjacent parcels of land in the Conyers Farm subdivision of Greenwich in 1996. The parcel at 18 Hurlingham consisted of 10.01 acres. The parcel at 20 Hurlingham consisted of 12.16 acres. Both parcels had frontage on Converse Lake. Indeed, one or two acres of 18 Hurlingham and five acres of 20 Hurlingham were under the lake. The lake covers more than one hundred acres, partly in Connecticut and partly in New York. Boats with gasoline motors are prohibited on the lake. Throughout Conyers Farm, a setback prohibits building within one hundred feet of the lake. Only about 30 percent of the properties in the Conyers Farm subdivision have lake frontage.
The Conyers Farm subdivision of Greenwich is north of the Merritt Parkway and extends from Greenwich across the New York border. The Greenwich portion of Conyers Farm is in an RA-4 zone, which has minimum lot sizes of four acres, but deed restrictions in the Conyers Farm subdivision impose a minimum lot size of ten acres. The Conyers Farm subdivision encompasses some 1,500 acres, much of which is surrounded by stone walls and fencing with security guards stationed at various checkpoints. A polo ground is at the entrance to the Conyers Farm subdivision. Properties within the walled and fenced area of Conyers Farm are described as "inside the gate" and are inaccessible to the general public, offering greater privacy and security. Conyers Farm properties that are not within the walled and fenced area are described as "outside the gate." The plaintiff’s properties are inside the gate.
When the plaintiff and her husband purchased the two properties in 1996, 18 Hurlingham was improved by a stone residence and two garages. The 20 Hurlingham parcel was undeveloped and surrounded by mature trees. The two properties share a common driveway for the first hundred or hundred and fifty feet from Hurlingham Drive, a private road.
The plaintiff and her husband lived at 18 Hurlingham while they built a new house at 20 Hurlingham. The new house was completed in 1998 and they moved into it in 1999; they continued to live there at the time of the trial in 2017. The parcel at 18 Hurlingham was used essentially as a guest amenity after the plaintiff and her family moved to 20 Hurlingham.
In 1998, Michael Varshisky quitclaimed his interest in the properties to the plaintiff. In 2017, the plaintiff assigned her interest in the tax appeals to Michael Varshisky, who testified at trial. The plaintiff did not attend the trial. In this decision, references to "the plaintiff" are to Marina Varshisky, and references to "Varshisky" are to Michael Varshisky.
Counsel for the parties agreed that "in lieu of Ms. Varshisky’s testimony, assignments would not be opposed." No objection was made to Varshisky’s testimony about the subject properties and his opinion of their value. Although as a technical matter Varshisky was a former owner of the properties, he continued to live with the plaintiff at 20 Hurlingham at the time of the trial, and he had been actively involved in the changes to 18 Hurlingham. This is unlike the case of Porter v. Thrane, 98 Conn.App. 336, 342, 908 A.2d 1137 (2006), where the Appellate Court held that a former spouse who had never been an owner of real property and had not lived at that property for years was unqualified to testify as to the value of the property. An objection to Varshisky’s opinions about the value of other properties in Conyers Farm was sustained.
III
20 HURLINGHAM
The property at 20 Hurlingham is improved by the residence built in 1998, which has not been materially altered since its completion. The property sits on a peninsula that extends out into Converse Lake. The property has a substantial lakefront area, a small dock, and access rights to the entire lake.
In Section III, references to "the property" or "subject property" are to the parcel at 20 Hurlingham.
The house on the property, according to the town’s field card, has 17,362 square feet of gross living area, with eighteen rooms, including five bedrooms and 8.3 bathrooms. Varshisky described its architectural style as "Georgian with a little improvisation." The exterior is brick with limestone accents, limestone terraces, and a slate roof. The landscaped grounds include statuary and a raised organic garden surrounded by a stone wall.
The first level of the residence includes a two-story grand entry and living room with tall, wide windows that look out over the property with a view of Converse Lake. The living room has two fireplaces, one at each end. The floor is made of Brazilian cherry. A wide staircase with a custom mahogany railing leads to the second floor.
The residence has a formal two-story dining room with a fireplace. Other rooms include an office and a library with mahogany molding, a billiard room with a mahogany bar, a kitchen, a breakfast room, and a family room. There is an indoor swimming pool and hot tub in a vaulted two-story enclosure with French doors that open out to a limestone terrace.
On the second floor, an interior balcony overlooks the living room and provides access to the five bedrooms. A finished portion of the attic includes a media room with theater seating for at least twelve, an office, and a bathroom.
A lower level in the house includes a gym with French doors that open out onto a limestone terrace, a bathroom with sauna and massage table, a wine cellar, a foyer with an elevator that serves all four levels of the residence, and a large basement area housing mechanical equipment. There is a four-car basement garage under one area of the house and a one-car basement garage under a separate area.
Varshisky testified that he built the house himself, contracting with a young local architect, an engineer, and a management team rather than using a professional builder. He testified that construction costs in Conyers Farm at the time were about four hundred dollars per square foot, but he was able to build the house for about two hundred dollars per square foot by such measures as using brick veneer rather than stone veneer for the exterior and "stock" rather than custom items for interior features such as moldings. His expert appraiser’s report, however, stated that "[c]onstruction features found throughout the dwelling include quality hardwood, ceramic, stone, and/or carpeted floor coverings, solid wood paneling and/or wainscoting, cathedral, vaulted, and/or tray ceilings, custom trim and moldings, custom lighting fixtures (recessed/eyeball), and extensive built-ins." Varshisky indicated that he had built the house for $3.8 million. He testified that the house had not been changed or updated since it was finished in 1998. The house and grounds have been very well maintained.
A
The 2010 Revaluation
The town conducted a town-wide revaluation of all real property in 2010, and the fair market value established as of October 1, 2010, determines the value of the property for the grand lists of 2010 through 2014. In the immediately preceding revaluation in 2005, the town had determined the fair market value of the property to be $17,591,900. In the 2010 revaluation, the town placed a fair market value of $20,460,200 on the property, attributing $5,222,500 to the land and $15,237,700 to the building. The plaintiff did not challenge that valuation in 2011 or 2012. In 2013, she appealed to the board with respect to the 2012 grand list. The board reduced the fair market value of the building to $12,000,000, reducing the total fair market value to $17,222,500. The plaintiff then appealed to this court.
The Plaintiff’s Claims
At trial, Varshisky testified about purchasing the property in 1996. He described it as a great property, an empty lot on the lake, surrounded by mature trees. He described the steps he took in building the house, the experts engaged for the project, and the economies achieved in materials used. He was knowledgeable about other properties in Conyers Farm because he had lived in the community since 1996, had served on the homeowner’s association for Conyers Farm for six years, and had served on the Conyers Farm architectural review board for eight years. He believed that the town had overvalued the subject property because he believed that larger and better properties in Conyers Farm were selling for less than the value the town had placed on the subject property. He deferred to his expert, Scott Kelland, as to the exact value claimed.
Kelland is a certified appraiser and a licensed broker in Connecticut and in New York. He testified that he specializes in "large scale properties," grand in size and complicated to appraise. He further testified that he has appraised many properties in Conyers Farm. He was originally retained by Varshisky to perform valuation services and to advise Varshisky regarding possible consolidation of the properties at 18 and 20 Hurlingham, as well as to advise on property tax issues. He was subsequently retained as an appraiser for this tax appeal. In his appraisal report, however, he certified that he had performed no services, as an appraiser or in any other capacity, regarding the property within the three-year period prior to accepting the appraisal assignment.
In his appraisal report, Kelland opined that the local market for larger custom properties in back country Greenwich had "come to a standstill with excessive supply with limited to no activity" after the market crash of 2008. He nevertheless identified six comparable sales which he adjusted to appraise the value of the property as of October 1, 2010. Four of Kelland’s comparables were in the Conyers Farm subdivision; two were in the Round Hill area, which is in an RA-4 zone with four-acre minimum lot sizes.
For all of his comparisons, Kelland deemed the subject property to have 15,250 square feet of gross living area, excluding from consideration 1,896 square feet of finished lower level space that the town included in gross living area and 216 square feet in a cathedral area above the dining room. He was inconsistent, however, in his treatment of the comparable properties; for some, he included finished lower level space in the gross living area calculations, and for others, he excluded it. He adjusted for differences in gross living area at a rate of $75 per square foot, except when he ignored the difference altogether.
Kelland’s first comparable was 16 Hurlingham Drive, located next door to the plaintiff’s property at 18 Hurlingham. The property at 16 Hurlingham sold for $12,225,000 in July 2009. Kelland deemed the residence at 16 Hurlingham to be superior in quality to the subject property. In 2010, according to the town’s field card, 16 Hurlingham had 9,946 square feet of gross living area, including a finished walkout basement area of 1,500 square feet. In adjusting for differences in gross living area, Kelland used the 9,946-square-foot figure that included the finished lower level, even though he excluded the finished lower level from the gross living area of the subject property. Kelland made a positive adjustment of $398,000 for the difference in gross living area. His net adjusted sale price for 16 Hurlingham was $12,583,000. If he had excluded the finished lower level of 16 Hurlingham as he did for the subject property and valued the resulting difference of 6,804 square feet at $75 per square foot, the adjustment would have been $510,300, and the adjusted sale price for 16 Hurlingham would have been $12,695,000.
Kelland’s second comparable, 65 Upper Cross Road, sold in October 2011 for $16,000,000. The property at 65 Upper Cross is located in Conyers Farm, outside the gate, on a 11.9-acre parcel; the $16,000,000 sale included an adjacent ten-acre parcel, for a total of 21.9 acres. The assessor’s field card indicates that the principal residence on the property has 19,138 square feet of gross living area, including a finished walkout lower level of 4,452 square feet. Kelland excluded the finished lower level from his calculation of gross living area, calculating the gross living area to be 14,686 square feet as compared to the 15,250 square feet he considered for the subject property. He made no adjustment for any difference in gross living area. Kelland deemed 65 Upper Cross to be "vastly superior" to the subject property, noting that it was designed by a renowned architectural firm and built by an award-winning builder. He described 65 Upper Cross as a "Ferrari" in comparison to the subject property, which he described as a "Volkswagen." He made negative adjustments to the sale price for what he considered to be the superior features of 65 Upper Cross, including the greater acreage, the "vastly superior" quality of construction, a newer effective age because of renovations, custom kitchens and baths, exterior amenities including a guest house, and an additional garage bay. His net adjusted sale price for 65 Upper Cross was $12,016,000.
Kelland’s third comparable was 19 Lower Cross Road, a ten-acre property outside the gate in Conyers Farm, improved by an 11,962-square-foot residence, which sold in July 2010 for $11,450,000. Kelland regarded 19 Lower Cross as "vastly superior" to the subject property. Kelland made positive adjustments to the sale price for the subject property’s larger gross living area, better view, and additional garage bays; he made negative adjustments for the comparable’s superior site, superior quality of construction, and superior exterior amenities, including a pool, tennis court, and landscaping, which he likened to Versailles. His net adjusted sale price for this comparable was $11,501,500.
Kelland’s fourth comparable, 24 Conyers Farm Drive, is a 25.5-acre double lot parcel, outside the gate, improved by a 12,312-square-foot residence. It was sold for $18,700,000 in July 2009. Kelland deemed the double lot to be superior to the subject property and considered the home to be superior in quality, built by a noted builder and architect. He made negative adjustments to the sale price for the comparable’s superior site, greater acreage, superior quality of construction, lower effective age, and custom kitchen and baths. He made positive adjustments for the subject property’s greater gross living area and additional garage bays. His net adjusted sale price for this comparable was $13,116,500.
Kelland’s fifth comparable, 440 Round Hill Road, is a 6.31-acre property located outside Conyers Farm. The house on the property has 16,460 square feet of gross living area, including 1,230 square feet in a finished lower level space. It was sold in September 2008 for $11,000,000. Kelland opined that 440 Round Hill was newer and superior in construction to the subject property; it was built by a noted builder in a prime location in the Round Hill neighborhood, an area with many large estates. Kelland did not exclude the finished lower level from the gross living area and made no adjustment for the difference in gross living area. He made positive adjustments for the subject property’s superior location, superior view, and greater acreage. He made negative adjustments for the comparable property’s superior construction, newer age, greater number of bedrooms and baths, additional garage bay, custom kitchen, and exterior amenities. Kelland’s net adjusted sale price for 440 Round Hill was $10,525,000.
Kelland’s sixth comparable was 253 Round Hill Road, located in the Round Hill neighborhood on a 4.83-acre parcel. Kelland testified that it was a "complete custom designed build" by a "noted architect, custom builders," that it was an "exquisite 13,000-square-foot ultra, brand new, ‘take off the wrapper’ custom home." The property sold for $16,500,000 in June 2009, the sale on which Kelland relied, but the assessor’s field card indicates that the property was sold again in June 2010 for $19,000,000. Kelland did not use the sale closest to the October 1, 2010 revaluation date, but relied on the earlier and lower sale from 2009. Kelland made positive adjustments for the subject property’s superior location, acreage, view, and greater gross living area. He made negative adjustments for the comparable’s superior quality of construction, newer age, additional garage bays, custom kitchen and baths, and exterior amenities, for a total adjusted sale price of $13,710,500.
Kelland testified that he gave equal weight to the comparables. Considering all six comparables, he opined that the fair market value of 20 Hurlingham as of October 1, 2010, was $12,500,000.
Kelland also performed an analysis using the cost approach. For that approach, he posited a site value of $3,500,000. He calculated the construction cost as if new at $11,683,075, from which he subtracted 10 percent for physical depreciation and 15 percent for functional depreciation and added $250,000 for the "as is" value of site improvements. His indicated value by the cost approach was $12,512,300. His report nevertheless stated that the sales approach was "considered most indicative of buyers and sellers in the subject marketplace." After reconciling the sales approach and the cost approach, Kelland’s final opinion of value as of October 1, 2010, was $12,500,000.
The Town’s Claims
The town presented the testimony of Christopher Kerin, who has been a real estate appraiser for twenty-eight years. He earned the MAI designation from the Appraisal Institute in the mid-1990s and is licensed as an appraiser and a broker. In addition, he is certified in Connecticut as a supervisor to perform municipal revaluation services. As a principal in Municipal Valuation Services, LLC, Kerin participated in the 2010 revaluation in Greenwich, a fact he disclosed in his appraisal report. Kerin had inspected and extensively photographed the subject property in May 2016. He was not personally familiar, however, with the properties he used as comparable sales; he relied on the town’s field cards, GIS mapping system, other municipal records, and information provided in the listings on the Greenwich Multiple Listing Service for his opinions about the comparable properties.
Like Kelland, Kerin used six comparable sales to arrive at the value of the subject property as of October 1, 2010. Unlike Kelland, Kerin consistently used the gross living area shown on the assessor’s field cards for both the subject property and the comparable sales. Kerin adjusted differences in gross living area at $500 per square foot, in contrast to Kelland’s $75 per square foot.
Kerin’s first comparable, like Kelland’s, was 16 Hurlingham Drive, which had sold in July 2009 for $12,225,000. Kerin disagreed with Kelland’s opinion that 16 Hurlingham was far superior to the subject property. In adjusting 16 Hurlingham to the subject, Kerin made a negative adjustment for the subject’s inferior site because five acres of the subject site are under water, but he made positive adjustments for the subject property’s superior view of Converse Lake, greater number of rooms, greater gross living area and finished basement area (as distinct from the finished lower level included in the gross living area), and elevator amenity. In adjusting the comparable property’s sale price for the difference in gross living area, Kerin used the gross living area as shown on the field cards for both properties- 17,362 square feet for the subject property and 9,946 square feet for the comparable- and valued the difference at $500 per square foot rather than the $75 per square foot figure used by Kelland. Kerin’s net adjusted sale price for the comparable at 16 Hurlingham was $16,550,700, almost $4,000,000 greater than Kelland’s net adjusted sale price for the same comparable.
Kerin’s second comparable, like Kelland’s, was 65 Upper Cross Road, which sold in October 2011, for $16,000,000 after 1,279 days on the market. Kerin disagreed with Kelland’s opinion that 65 Upper Cross Road was "vastly superior" to the subject property. He made negative adjustments for the subject’s inferior site (12.16 acres as compared to 21.9 acres), smaller gross living area, fewer garage bays, and lack of a guest house. Kerin made positive adjustments for the subject’s superior lake view, superior finished basement area, additional fireplace, and superior enclosed pool area and elevator, as compared to the pool, tennis court, and greenhouse at 65 Upper Cross. Kerin’s net adjusted sale price for 65 Upper Cross was $14,550,200, some $2,500,000 higher than Kelland’s net adjusted sale price for this comparable.
Kerin’s appraisal reports for 20 Hurlingham state that there is a four-car garage on that property. The field cards for 20 Hurlingham show one four-car basement garage and a second, separate one-car basement garage, for a total of five garage bays. Kerin adjusted for garages at $20,000 per garage bay. Because he appears to have overlooked the separate one-car garage at the subject property, all of his adjustments for garage bays are off by $20,000.
Kerin’s third comparable was 435 Round Hill Road, a comparable sale in the Round Hill area of Greenwich that was not used by Kerin. The property at 435 Round Hill consisted of a four-acre lot, improved by a four-year-old house of 11,068 square feet. The property was sold in November 2009 in an off-market sale for $20,000,000. Kerin made negative adjustments to reflect the comparable property’s superior condition, more extensive finished basement, and additional fireplaces. He made positive adjustments to reflect the subject property’s superior location, greater lot size, greater gross living area, and superior amenities. Kerin’s net adjusted sale price for this comparable was $23,271,700.
Kerin’s fourth comparable, 19 Lower Cross Road, was the same property as Kelland’s third comparable. This comparable, located outside the gate but within Conyers Farm, sold in July 2010 for $11,450,000. Kerin made negative adjustments for the comparable property’s superior site, greater finished basement area, and additional fireplace. Kerin made positive adjustments for the subject property’s superior view of Converse Lake, greater number of rooms, greater gross living area, additional garage bay; and superior amenities, including its enclosed pool and its elevator. Kerin’s net adjusted sale price for the comparable at 19 Lower Cross was $15,780,000, nearly $4,300,000 higher than Kelland’s net adjusted price of $11,501,500.
Kerin’s fifth comparable was 1030 Lake Avenue, which was sold in an off-market sale in May 2011 for $9,200,000. The 1030 Lake Avenue property was not a Conyers Farm property. It was located on a 4.94-acre parcel in a residential neighborhood. It was improved by a house of 11,595 square feet of gross living area. Kerin made positive adjustments for the subject property’s superior location in Conyers Farm, superior site, superior view, superior quality of construction, greater number of rooms, greater finished basement area, and superior amenities, including its indoor pool and elevator. Kerin made a negative adjustment for an additional garage bay at the comparable property. His net adjusted sale price for this comparable was $16,476,200.
Kerin’s sixth comparable was a property located at 80 Lower Cross Road, which is not in Conyers Farm. This comparable was a four-acre parcel improved by a house of 11,258 square feet, which sold in March 2011 for $14,000,000 after 420 days on the market. This house was only two years old as of the effective date of the appraisal and was in excellent condition. Kerin made positive adjustments for the subject property’s superior location, superior site, superior view, greater square footage, additional fireplace, and indoor pool. He made a negative adjustment for the comparable’s superior condition. Kerin’s net adjusted sale price for his sixth comparable was $18,550,500.
Kerin gave equal weight to all of the comparable sales as adjusted. Considering those comparables, he arrived at an indicated fair market value of $17,400,000 for the subject property as of October 1, 2010. He did not use the cost approach to estimate the value of the property.
Analysis
The evidence at trial demonstrated the challenge in determining the fair market value of a mansion in a pastoral setting. There are relatively few comparable properties in the first place, and each such property has unique features both with respect to the land- topography, lake access or views, wetlands, and so on- and with respect to improvements. In this case, the plaintiff’s appraiser and the town’s appraiser used three of the same properties for their sales comparison approach for 2010, but their diverging adjustments resulted in adjusted sales prices and in final opinions of value that were millions of dollars apart.
One difference in the opinions of value resulted from a difference in the parties’ treatment of the basement areas of the subject property and the comparable properties considered. The plaintiff contends that any area of the property that is below grade should not be included in gross living area. The town, however, includes "lower level" areas in the gross living area. The town defines "lower level" as any portion of a property that is on the same plane as the basement but has walkout access to the outdoors on at least one side and is finished in a manner commensurate with the upper levels. It does not include in gross living area any basement area that does not have direct access to the outdoors, even if it is finished in a manner commensurate with the upper levels. As the town’s assessor, Lauren Elliott, explained, the town assigns value to both lower level areas and finished basement areas, but it assigns a greater value per square foot to the lower level areas than to the finished basement areas. She noted that in properties like the subject, the lower level and finished basement areas contain such features as gyms and wine cellars that are of the highest quality; such features do add value to the property and should be considered by the assessor. In the case of the subject property, the town determined that the subject property has 17,632 square feet of gross living area, including the lower level gym which has French doors opening out onto a terrace. The plaintiff’s appraiser, however, deemed the house to have only 15,250 square feet of gross living area, excluding the lower level gym. The difference in gross living areas was significant in the adjustments that each appraiser made to comparable properties.
Kelland’s testimony that federal standards for "gross living area" exclude below-grade areas is supported by a leading treatise, which indicates that the definition of "gross living area" used by federal agencies to measure one-unit residential properties is the "[t]otal area of finished, above-grade residential space; calculated by measuring the outside perimeter of the structure and includes only finished, habitable, above-grade living space." The Appraisal Institute, Appraisal of Real Estate, 14th Ed. 2015, p. 225. The same definition, however, continues with a parenthetical note: "(Finished basements and attic areas are not generally included in total gross living area. Local practices, however, may differ)." Id.
Kerin testified that whether finished lower level areas are included or excluded from gross living area is less important than consistency in the application of the standard used. He explained, as did Elliott, that the town consistently included lower level space in gross living area where the lower level space was a walkout and was finished in a manner commensurate with the quality of the upper levels. He chose to follow the designation of gross living area stated in the assessor’s field cards for the sake of consistency across the properties considered.
The court concludes that Kerin’s inclusion of finished lower level space as gross living area is not inappropriate. Kerin consistently followed the assessor’s local practice of including such space when it met the criteria of having walkout access and a level of finish commensurate with the upper levels. Kelland, on the other hand, always excluded the finished lower level from the subject property’s gross living area but sometimes failed to exclude finished lower levels from the comparables. He admitted that the inconsistency in treatment was an error.
A second difference in opinion was that Kelland, the plaintiff’s appraiser, considered the house to be "superadequate" and "functionally obsolescent" because of its size. "Superadequacy" is defined as [a]n excess in the capacity or quality of a structure or structural component; determined by market standards." Appraisal Institute, The Dictionary of Real Estate Appraisal (6th Ed. 2015), p. 226. "Functional obsolescence" is defined as "[t]he impairment of functional capacity of improvements according to market tastes and standards." Id., p. 97. Kelland opined that there was an excessive supply of large estate properties in the immediate vicinity of the subject property and that sales of such properties had come to a standstill following the market crash of 2008. He opined that large estate properties exceeding 9,000 square feet of gross living area have a significant diminishing return for the additional square footage. In considering comparables of more than 9,000 square feet, Kelland adjusted for differences in square footage at $75 per square foot.
Kerin disagreed, opining that differences in square footage between the comparables and the subject property should be adjusted at a rate of $500 per square foot. He agreed that there is some diminution in the value per square foot as the size of a dwelling increases beyond what he described as the "base property," but opined that the value decreased from $800 or $1,000 per square foot to $500 per square foot. Kerin disputed Kelland’s claim that no one wants homes over 9,000 square feet, testifying that homes in excess of 9,000 square feet were still being built and that the residence at 16 Hurlingham was being expanded to be nearly equal in size to 20 Hurlingham.
Kelland’s testimony that nobody wants houses over 9,000 square feet was not credible, and his valuation of differences in square footage at $75 per square foot was implausibly low. Kerin’s testimony credibly recognized a diminution in value per square foot as square footage increased, and his valuation of $500 per square foot for differences in square footage is more credible than Kelland’s low value. A third difference in opinion concerned the quality of the subject property. Kelland considered the subject property to be a "Volkswagen" in comparison to the "Ferraris" used as comparables. That is, Kelland characterized the house as markedly inferior in design and quality of construction to the comparables he used. He described it as a "Georgian box" that would not be attractive to most buyers. He generally claimed that the comparable properties were "vastly superior" because they were designed by noted architects, built by noted builders, and used more expensive, custom-made materials. The town’s appraiser and the town’s assessor, however, regarded the property as one of the finest in Greenwich, with exquisite features.
Kelland gave this description of the property to explain why he believed it was "superadequate" and "functionally obsolete": "[T]his is a 16- 15 thousand plus or minus square foot Georgian box, that was built as an entertainment house. It is- you walk into 35-foot ceilings. It doesn’t even have grand rooms, family rooms, kitchens, it’s a staff kitchen. It is made for somebody who has professional staff full-time in a very formal house. It’s nowhere near today’s standards of what you would see as just a straight box. Indoor pool, lower level gym, wine cellar. So it’s only unique characteristic to it is just sort of an old classic brick Georgian. It’s not a brick house; it’s a brick veneer house, so it’s much less expensive. So it’s a framed house with a brick veneer. So that’s a- the functional obsolescence is its size. Nobody wants it. It’s not functionally laid out for where a family or somebody be a logical buyer of it. It’s also functionally obsolete due to the fact it’s got the shared driveway, that I don’t want you in my 10 million dollar house, having to share a driveway if you sold off the other parcel. It’s- you would- nobody would allow it, you wouldn’t want it and that’s why he bought them both that way."
In his testimony, Kelland argued that the town’s value as of October 1, 2010, was improperly manipulated by the assignment of an "S6+" rating for the "quality class/grade" of the property. He testified that the S6+ rating was assigned to only thirty-two properties in Greenwich in the 2010 revaluation and was used to compensate for inadequacies in the computer model used in the 2010 revaluation.
Elliott, the town’s assessor, disagreed that the quality of construction grade was an inappropriate manipulation of the valuation. She explained that the town’s assessment model has to be able to establish values for one-story, three-bedroom ranch houses as well as 17,000-square-foot mansions, and the quality of construction grade is one of the measures used to account for the differences in such dwellings. She testified that most of the homes in Conyers Farm are over nine or ten thousand square feet in size and are exquisite in construction, warranting the increase in value resulting from the application of the quality of construction grades.
Although Elliott credibly defended the use of grading factors for quality of construction, she also acknowledged that the 2010 revaluation was the only revaluation in which the town had used the S6+ factor. She testified that in the 2015 revaluation, using a different computer assisted mass appraisal (CAMA) model, application of the S6+ grade resulted in "too much value on the structure itself." The 2015 CAMA model eliminated the S6+ grade.
In weighing the credibility of the witnesses, the court notes that the testimony of each of the witnesses had strengths and weaknesses. The plaintiff’s expert, Kelland, was unquestionably familiar with and knowledgeable about the subject property and most, if not all, of the properties he used as comparable sales. The court nevertheless did not find him to be a credible or coherent witness. His testimony substantially exaggerated the differences between the subject property and the comparables. Varshisky himself rejected Kelland’s description of the subject property as a "Volkswagen," acknowledging that the subject property is "very nice." Kelland characterized the subject property as a "Georgian box" and testified that "nobody wants it" because of its size. Kerin testified, to the contrary, that houses of comparable size are still being built in Greenwich. Kelland disparaged the lake view of the subject property, claiming that the lake view was largely obscured by trees as a result of the setback prohibiting development within 100 feet of the lake. The evidence, however, included photographs taken from the house on the subject property in May, when the trees had leafed out, and the lake was clearly visible through the trees. Moreover, the court viewed the property in early September, when the trees were still in full leaf, and is not persuaded that the lake view is obscured. The property sits on a peninsula on the lake and has a panoramic view of the lake. As Varshisky testified, he was initially drawn to purchase the property because of the mature trees and the beautiful lake view.
Nor was Kelland’s attack on the revaluation methodology and the use of the S6+ quality grade persuasive. He did not coherently explain why it would be improper to assign different classifications to account for differences in the quality of construction. Elliott’s testimony, explaining the need to establish values for one-story, three-bedroom ranches as well as 17,000-square-foot mansions, was reasonable and credible. As to the application of the construction quality grade, Kelland asserted that the S6+ grade was applied arbitrarily to thirty-two properties, including the subject, but was not applied to some properties which he believed to be "vastly superior" in quality to the subject. He failed to persuade the court that the subject property could not reasonably be considered one of the thirty-two finest residential properties in Greenwich.
Although Kerin’s testimony about the subject property was generally more credible, and certainly more coherent, than Kelland’s, the persuasive value of Kerin’s testimony was limited by his relative lack of direct personal knowledge of the comparable properties. Kerin was unquestionably an experienced appraiser. He had been inside many properties in Conyers Farm over the years and had appraised as many as thirty properties in Conyers Farm in the past. He had extensively inspected and photographed the subject property. He nevertheless had not inspected the comparable properties, and his comparisons were based on his review of public records, including the assessor’s field cards and topographic and GIS information, and descriptions and photographs in the real estate listings for the properties. He was unable to recognize a photograph of one of the comparables he had used, indicating his relative lack of familiarity with that property.
The plaintiff contends that Kerin’s appraisal is unreliable because Kerin’s firm conducted the 2010 revaluation. As at least one other court has done, this court rejects the claim that Kerin’s appraisal is merely an effort to justify the values assigned in the 2010 revaluation. See Edelstone Capital Ltd. v. Greenwich, Superior Court, judicial district of Fairfield at Stamford, Docket No. CV-15-6025420S (December 6, 2016, Mottolese, J.T.R.). In addition to the certifications in the appraisal and in the revaluation manual that contradict this claim, which were in evidence in this case and which were similar to those discussed in Edelstone Capital, the appraisal itself does not support the claim. In the 2010 mass revaluation conducted by Kerin’s firm, the fair market value of the subject property was determined to be $20,460,200. In his appraisal, Kerin determined that the fair market value of the property as of October 1, 2010, was $17,400,000. Had he merely been attempting to justify the valuation established during the 2010 revaluation, it seems likely that his appraisal would have been closer to the 2010 valuation than to the subsequent reduced value granted by the board.
The court nevertheless concludes that Kerin’s appraisal, while generally more credible than Kelland’s, is not completely persuasive. Kerin does not adequately acknowledge the effect of the financial crisis of 2008 on the real estate market in 2010. In his appraisal report concerning the 2010 value of the property, he admitted that "demand and prices of homes in Greenwich and Fairfield County have declined through 2008 as a result of the national credit crisis," but he nevertheless concluded that "current sale prices have stabilized." However, his appraisal of the subject property as of October 1, 2015, was $800,000 lower than his appraisal of its value as of October 1, 2010, a difference not entirely explained by depreciation. Moreover, he projected that six to nine months would be a reasonable exposure time for sale of the subject property. His comparables, however, were on the market for a range from 247 days to 1,527 days. These facts undermine his conclusion that the market had stabilized in 2010 after the decline of 2008.
In addition, Kerin did not adequately address certain features of the subject property that negatively affect its value. One of these is the shared driveway with 18 Hurlingham. While not an issue as long as both 18 Hurlingham and 20 Hurlingham are owned by the same party, the shared entrance to the properties would not be desirable if the properties were to be sold separately. In questioning Varshisky about the shared driveway, the town’s counsel elicited evidence that both 18 and 20 Hurlingham have frontage on Hurlingham Drive and suggested that separate driveways could be constructed on the properties if the parcels were sold separately. Varshisky did not agree. He testified that before his purchase of the properties in 1996, a prior owner had made an agreement with the owner of 16 Hurlingham to give 16 Hurlingham access to Converse Lake. According to Varshisky, who was generally credible, that agreement effectively prevents the construction of separate driveways for 18 and 20 Hurlingham.
A second feature negatively affecting the value of the property is the kitchen, which is relatively small in relation to the size of the house. Kelland described it as a "staff" kitchen, intended to be used by a kitchen staff to prepare meals for entertaining. Kerin acknowledged that the kitchen is on the small side and is not joined by a large family space, as more recent design trends would require. The kitchen has not been updated or expanded since the house was built.
The court does not find the opinion of value offered by either appraiser to be wholly persuasive. Considering all the evidence and the arguments of counsel, the court concludes that while the plaintiff’s opinion of value is far too low, the town’s value, as determined by the board, is higher than the weight of the evidence supports. The court finds the fair market value of 20 Hurlingham as of October 1, 2010, to be $15,500,000. This value applies to the grand lists of October 1, 2012, October 1, 2013, and October 1, 2014.
B
The 2015 Revaluation
While the appeal of the October 1, 2012 grand list value was pending, the town conducted a town-wide revaluation effective as of October 1, 2015. The town determined that the fair market value of 20 Hurlingham as of October 1, 2015, was $17,735,900, which was $513,400 higher than the value established by the board as of the October 1, 2012 grand list. The plaintiff appealed to the board of assessment appeals, which declined to reduce the value. The plaintiff subsequently amended its appeal to include a challenge to the town’s value as of October 1, 2015. The value established as of October 1, 2015, will apply to the ensuing grand lists until the next revaluation in the absence of material changes to the property.
The parties generally agreed that the property was not altered in any material way between 2010 and 2015. It was five years older, obviously, but it was maintained in excellent condition. Any material change in its value, then, reasonably may be attributed to changes in the market. Both Kelland and Kerin provided appraisal reports and testimony regarding the value of the property as of October 1, 2015. They had three comparable sales in common; Kelland adjusted each of those three sales downward, while Kerin adjusted each of them upward, with the result that their net adjusted sale prices for the three comparables that they had in common differed by more than five million dollars per property. Each had other comparable sales as well. Kelland concluded that the fair market value of the property as of October 1, 2015, was $10,800,000. Kerin concluded that the fair market value of the property as October 1, 2015, was $16,600,000. Because the evidence at trial does not support the town’s value of $17,735,900, the court finds that the plaintiff is aggrieved. It turns now to the comparables presented by each appraiser and other claims asserted by the plaintiff.
The Plaintiff’s Claims
Kelland presented seven comparable sales in his attempt to establish the value as of October 1, 2015. The first was 16 Hurlingham Drive, the property adjacent to the plaintiff’s property at 18 Hurlingham that both appraisers had also used for the 2010 value. The property at 16 Hurlingham had been sold in 2009 for $12,225,000. It was sold again in February 2014 for $11,840,000 or $11,900,000. Kelland made a negative adjustment of ten percent for the time of sale, indicating an opinion that the market declined by ten percent between the sale in February 2014 and the appraisal’s effective date of October 1, 2015. He made the same error in adjusting for gross living area as discussed with regard to his appraisal for the 2010 revaluation, excluding finished lower level space from the subject property’s gross living area square footage but including similarly finished lower level space in the comparable property’s gross living area square footage. In addition to the adjustments he had made with regard to the 2009 sale, Kelland made a negative adjustment of $150,000 for the comparable’s "superior kitchen/baths." His net adjusted sale price for this comparable was $10,864,000.
The assessor’s field card (Exhibit 64) lists the February 2014 sale price as $11,840,000, but a real estate listing service report (Exhibit 63) lists the February 2014 sale price as $11,900,000. Kelland used the lower number in his appraisal report; Kerin used the higher number in his appraisal report. This is the reverse of their usual practice in this case: Kelland tended to rely on real estate listings and asserted that field cards often have errors; Kerin tended to rely on the field cards and other public records.
Kelland’s second comparable, 105 Conyers Farm Drive, was sold in October 2014 for $13,150,000. This property consisted of 21.91 acres, some of which were wetlands. The property was improved by a 16,963-square-foot residence, including 1,419 square feet of finished lower level. Kelland did not exclude the finished lower level from the comparable property’s gross living area but did exclude the finished lower level from the subject property’s gross living area. Kelland made a six percent negative adjustment for the time of sale and additional negative adjustments for the comparable property’s superior site and custom shingles, greater size, custom kitchen and baths, and superior exterior amenities. He admitted, however, that the owners who had acquired the property in 2014 had decided to tear it down and replace it. He denied that the property was purchased as a "teardown" or effectively a land sale, claiming that he knew the buyers and they did not purchase it with the intent of tearing it down. Kelland’s net adjusted sale price for this comparable was $10,561,000.
Kelland’s third comparable was 19 Lower Cross Road, which had been one of the comparables in his appraisal report effective as of October 1, 2010. This property had been sold in 2010 for $11,450,000; it was resold in June 2014 for $15,850,000. Kelland claimed that some eight million dollars had been spent on renovations between the 2010 and 2014 sales. There is evidence in the town’s field card that some renovations were done in 2010 and 2011. However, given Kelland’s tendency to exaggerate, the court did not find his unsupported testimony as to the cost of the renovations to be credible. Kelland made a negative adjustment of eight percent for the time of sale and additional negative adjustments for the comparable’s superior site, quality of construction, condition, newer effective age as a result of the renovations, custom kitchen and baths, and other amenities. He made positive adjustments for the subject property’s superior view, additional square footage, and additional garage bays. His net adjusted sale price for this comparable was $10,793,500.
Kelland’s fourth comparable, 44 Conyers Farm Drive, is a 14.49-acre parcel improved by a 10,169-square-foot residence. It was sold in October 2013 for $13,400,000. Kelland made a negative adjustment of ten percent for the date of sale, assuming a ten percent decline in the market between October 2013 and October 2015. He made negative adjustments for the comparable property’s superior location, larger site, and superior exterior amenities. He made positive adjustments for the subject property’s larger size, greater number of rooms, additional garage bay, and finished basement. His net adjusted sale price for this comparable was $10,818,000.
Kelland’s fifth comparable, 75 Conyers Farm Drive, is a 14.83-acre parcel improved by a 16,386-square-foot residence. It was sold in March 2016 for $8,838,000. Kelland selected this property as a "white elephant," deeming it very comparable to the subject property based on its size and age. He admitted that the subject property has a superior view and superior topography. He made positive adjustments for those factors and for the subject’s finished basement, which he largely offset with negative adjustments for the comparable property’s larger size (based on Kelland’s exclusion of the lower level area in the subject property) and superior amenities. He admitted that there had been problems with the construction of the residence and that there had been litigation related to it. His net adjusted sale price for this comparable was $9,084,900.
Kelland’s sixth comparable, 53 Lower Cross Road, is located on a 15.95-acre parcel in Conyers Farm but outside the gate. This parcel is improved by an 11,475-square-foot residence. It was sold in August 2015 for $7,550,000. Kelland testified that he chose this comparable to show the low end of the range for a recent sale in Conyers Farm. He admitted that the comparable was in an inferior location and was inferior in construction and in topography to the subject property. His net adjusted sale price for the comparable was $9,193,000.
Kelland’s seventh and final comparable, 1109 Lake Avenue, is a ten-acre parcel outside the gate in Conyers Farm, improved by a 9,645-square-foot residence. It was sold in January 2012 for $9,250,000. Kelland made a fifteen percent negative adjustment for the time of sale, which was offset by a fifteen percent positive adjustment for the subject property’s superior location. Kelland made negative adjustments for the newer age of the comparable, the greater number of rooms in the comparable, custom kitchen and baths in the comparable, and superior amenities. He made positive adjustments for the additional square footage in the subject property. His net adjusted sale price for this comparable was $8,828,000. He admitted, however, that it was a dated sale of a smaller scale property in an inferior location.
In addition to presenting these comparables, Kelland testified as to his opinion that the assessor had engaged in "sales chasing," improperly adjusting the output of the computer-assisted mass appraisal (CAMA) model by manually overriding values produced by that model to more closely match recent sales. The plaintiff’s counsel also questioned the assessor, Lauren Elliott, in an attempt to elicit admissions with respect to manual overrides and sales chasing.
The Town’s Claims
Kerin analyzed five comparable sales, three of which- 16 Hurlingham, 105 Conyers Farm, and 19 Lower Cross- were also used by Kelland. In each case, Kerin adjusted the sale price upward.
As to 16 Hurlingham, which was sold in July 2009 for $12,225,000 and in February 2014 for $11,840,000 or $11,900,000, Kerin’s adjustments as to the 2014 sale were identical to those he had made regarding the 2009 sale. Unlike Kelland, he did not make a negative adjustment for the time of sale, deeming the market to have stabilized by 2014. His net adjusted sale price for this comparable was $16,225,700, which was more than $5,300,000 higher than Kelland’s net adjusted sale price for the 2014 sale.
Kerin’s second comparable, 19 Lower Cross Road, had been sold in July 2010 for $11,450,000, and it was sold again in June 2014 for $15,850,000. Kerin’s adjustments to the 2014 sale price were the same as his adjustments for the 2010 sale price, with one exception: he made a negative adjustment of $3.17 million for the superior condition of the comparable, which had undergone renovations in 2011. His net adjusted sale price for the 2014 sale of 19 Lower Cross was $17,010,000, which was more than $6,200,000 higher than Kelland’s net adjusted price of $10,793,500 for the same sale.
Kerin’s third comparable for 2015 was 105 Conyers Farm Drive, a 21.91-acre property improved by a 16,963-square-foot residence. It was sold in June 2014 for $13,150,000. Kerin made positive adjustments for the subject property’s superior lake view, greater number of bathrooms, slightly larger size, finished lower level and finished basement, additional garage bay, and superior amenities. He made negative adjustments for the comparable property’s superior exterior amenities, including a porch, balcony and pool house. His net adjusted sale price for 105 Conyers Farm Drive was $15,597,200, which was more than $5,000,000 higher than Kelland’s net adjusted price of $10,561,000 for the same sale.
Kerin’s fourth comparable, 11 Langhorne Lane, was not in Conyers Farm. It was an 8.79-acre parcel improved by a residence of 16,454 square feet, and it was sold in April 2014 for $17,000,000. Kerin made positive adjustments for the subject property’s superior location and view as well as for its slightly larger size and its amenities, including the enclosed pool and elevator. His net adjusted sale price for this comparable was $17,925,500.
Kerin’s fifth comparable, 217 Taconic Road, also was not in Conyers Farm. It was an 11.15-acre property improved by a 13,474-square-foot residence. It was sold in August 2014 for $13,000,000. Kerin made positive adjustments to the sale price for the subject property’s superior location, superior acreage, greater size and number of rooms, greater finished lower level and basement areas, and greater amenities. He made negative adjustments for the comparable property’s greater number of garage bays, fireplaces, and guest house. His appraisal did not reflect the fact, which he admitted on cross examination, that 217 Taconic Road was a "horse property," with stables and paddocks. His net adjusted sale price for this comparable was $16,379,000.
Giving equal weight to all of the comparable sales he considered, Kerin concluded that 20 Hurlingham had a fair market value of $16,600,000 as of October 1, 2015. This represented a decline in value of $800,000 from his opinion of its fair market value as of October 1, 2010.
Analysis
The plaintiff’s challenge to the town’s valuation of the property is based both on Kelland’s analysis of seven comparable sales and his claim that the assessor’s office engaged in "sales chasing." His claim of sales chasing was not well articulated. It consisted of inferences he drew from the values established for certain properties in the 2015 revaluation. The plaintiff contends that Kelland’s testimony and Elliott’s testimony on cross examination "clearly" establish that in the 2015 revaluation process the assessor’s office improperly manipulated the valuation of specific properties to bring them close to prices at which they were listed or sold. The court disagrees and declines to draw the inferences that the plaintiff advances.
Elliott has served as the assessor in Greenwich since June 2012 and supervised the 2015 revaluation. She has nearly thirty years of experience in valuing properties, including high-value residential properties in Connecticut. She is familiar with the Conyers Farm subdivision. She has been in the subject property as well as many other properties in back country Greenwich generally and Conyers Farm more specifically. As a witness, she was professional, knowledgeable, and credible. She explained the circumstances surrounding adjustments that were made to the values for various properties cited by Kelland or by the plaintiff’s counsel. Some involved adjustments that were made across an entire group of properties. For instance, because Conyers Farm properties have a ten-acre minimum lot size, excess acreage over ten acres generally cannot be subdivided, as could be done in other subdivisions in the RA-4 zone. The assessor determined that it was appropriate to discount the value of such excess acreage and made that adjustment to all relevant properties in Conyers Farm. In other instances, the assessor recognized factors that warranted adjustments to individual properties. In one case, for instance, the assessor reduced a valuation on a property in recognition of its functional obsolescence, which included construction flaws and an atypical design.
The plaintiff also claims that the assessor improperly based valuations on listing prices. The assessor testified to the contrary. She acknowledged that her office considers real estate listings as they gather information about property values, and that a listing at a price considerably lower than the value the town had determined for a particular property might prompt them to consider whether something about the property warranted consideration of a reduction in the town’s value. But the assessor testified that listing prices were not the basis of the town’s valuation; they were simply one of many factors considered by the town in the revaluation process. The court finds that the assessor’s testimony was credible and finds that the plaintiff did not prove that the town engaged in sales chasing.
Turning to the comparables, the court is not persuaded by either of the appraisers’ opinions of value. Kelland’s adjustments included unsupported time of sale reductions for sales that occurred before 2015. More specifically, he made a fifteen percent reduction for a sale in January 2012, ten percent reductions for sales in October 2013 and February 2014, an eight percent reduction for a sale in June 2014, and a six percent reduction for a sale in October 2014. While there was evidence that the market declined for some time after the financial crisis of 2008, Kelland did not explain how he reached the conclusion that the market declined by his specified percentages over the period from January 2012 through October 1, 2015. Other aspects of Kelland’s appraisal were subject to the same criticisms as his appraisal of the October 1, 2010 value.
Kerin, on the other hand, was not sufficiently familiar with some of the properties he used as comparables. His failure to address the differences in elements of value for the horse property, for instance, is significant. His appraisal report for the 2015 valuation contained the same shortcomings as his 2010 valuation in that he did not give sufficient consideration to the negative aspects of the subject property, including the shared driveway and the size and layout of the kitchen.
Kelland and Kerin both determined that the value of the property as of October 1, 2015, was lower than its value as of October 1, 2010. Kelland’s opinion was that it had decreased in value by $1,700,000, or slightly more than thirteen percent; Kerin’s opinion was that it had decreased in value by $800,000, or slightly more than three percent. The court concludes that some decrease from the value found as of October 1, 2010, is appropriate to reflect a market decline that continued for some time past the 2010 revaluation date. Based on the credible evidence in the entire record, the court finds that the fair market value of 20 Hurlingham Drive, as of October 1, 2015, was $14,500,000. This valuation shall remain in effect for each successive grand list until the next revaluation in the absence of a material change in the condition of the property that would warrant an adjustment under the tax statutes.
IV
18 HURLINGHAM
The property at 18 Hurlingham consists of 10.01 acres. One or two acres of the property are under Converse Lake. It has a more limited lakefront area than 20 Hurlingham, and Varshisky testified that it is subject to a 220-foot setback from the lake, imposed by local wetlands and zoning officials to preserve the wetlands and the mature trees. In 1996, it was improved by a residence that Kelland described alternately as a "lake cottage" or a "guest cottage," as well as a two-car detached garage and a second two-car garage with a loft apartment above it. It had an outdoor pool; the plaintiff added a tennis court while living there in the 1990s.
In Section IV, references to "the property" or "subject property" are to 18 Hurlingham.
Kelland processed the property at eight acres, noting that "it was reported" that approximately two acres are under water. Kerin reported that one acre of the property is under water. The evidence presented is insufficient to resolve the discrepancy.
The size of the residence as of October 1, 2010 is in dispute. The residence was originally built in 1989. When it was built, it had only two bedrooms. A renovation in 1992 enclosed a porch, making it part of the main residence. At some point two small bedrooms and a bathroom were added in a loft area. The plaintiff lived at 18 Hurlingham from 1996 to 1999. After the plaintiff moved to 20 Hurlingham in 1999, a problem with a leaking roof at 18 Hurlingham led her to remove the two bedrooms and the bathroom in the loft. The demolition of the loft bedrooms and bathroom was done before 2010. The field cards used in both parties’ expert appraisal reports indicate that as of October 1, 2010, the residence was 5,014 square feet, of which 3,710 square feet was the finished main level and 1,304 square feet was a finished lower level. At that time the residence had two bedrooms and two and a half bathrooms.
Elliott testified, however, that she believed that the field card had been erroneously amended in 2014 and that older field cards had correctly identified the size as 6,800 square feet, including the main level and the finished lower level. There was considerable- and considerably confusing- testimony about the exact location and size of finished interior areas, most of which had been demolished by the time of trial. Kelland agreed that the sketch on the field card used by both experts was incorrect because it failed to incorporate the porch area (711 square feet) that had been enclosed and made part of the main residence in 1992. Having carefully reviewed all of the evidence on this issue, the court concludes that the most likely size of the residence as of October 1, 2010 was 4,676 square feet in the first floor, including a small finished loft area, and a finished lower level space of 1,296 square feet, for a total gross living area (following the town’s practice of including finished lower level space) of 5,972 square feet.
A
The 2010 Revaluation and Subsequent Adjustments
In the 2010 revaluation, the town determined the fair market value of the property to be $7,215,400. In 2013, the plaintiff appealed to the board, which reduced the quality of construction grade from S2 to S1. This change resulted in a reduction of the fair market value to $7,011,500, effective as of the October 1, 2012 grand list. The plaintiff appealed the board’s decision to this court pursuant to General Statutes § 12-117a. While the appeal was pending, the plaintiff asserted to the town that it had incorrectly calculated the square footage. Elliott viewed the property and an appraiser in her office reviewed plans submitted by Kelland in support of this claim. The town thereafter adjusted the square footage shown on the field card from 6,800 to 5,014, which reduced the value to $6,471,400 as of the grand list of October 1, 2014. As discussed above, however, Elliott subsequently concluded that the adjustment had been incorrect and did not issue a certificate of correction to adjust the earlier years in the revaluation period.
The Plaintiff’s Claims
Kelland’s appraisal report described the subject property as "a dated guest cottage of alternative circular contemporary design." It was not a typical Conyers Farm residence. In 2010, the residence was a stone one-story structure with a slate roof. It had two bedrooms, a large living room with a cathedral ceiling, a semicircular kitchen, and a formal dining room, as well as a finished lower level and unfinished basement and attic areas. The quality of finish was not as high as that of 20 Hurlingham. Kelland testified that he was unable to find comparable sales within Conyers Farm. In his sales analysis, he used two sales in the Round Hill area and one on North Street, abutting a reservoir.
Kelland’s first comparable was 384 Round Hill Road, a 6.6-acre parcel that was sold in January 2009 for $3,400,000. This comparable was improved by a three-bedroom residence that he considered to be of superior quality and design to the subject property. He acknowledged that the location, site, and view of the subject property were superior to the comparable and that the comparable was on a public road with traffic, unlike the more secluded private road on which the subject was located. His net adjusted price for this comparable was $3,635,000.
Kelland’s second comparable, 404 Round Hill Road, was in the same neighborhood as his first comparable but in a quieter location. It was a 6.15-acre property improved by a five-bedroom residence of 4,959 square feet. Kelland described it as a mini-French chateau. It was sold in October 2010 for $5,000,000. Kelland considered the comparable to be substantially superior to the subject in terms of condition, design, and functional utility, but considered the comparable to be a smaller property in an inferior neighborhood with an inferior view. His net adjusted sale price for this comparable was $3,624,000.
Kelland’s third comparable, 714 North Street, was a 3.08-acre parcel that was sold in June 2009 for $3,000,000. Kelland testified that he used this comparable as an effective land sale because it was a complete teardown and approvals had been issued to build new. He acknowledged that it was an inferior parcel, both in location and size. Its "lake amenity" was actually a reservoir, and no boating was permitted. His net adjusted sale price for this comparable was $3,840,000.
With respect to 18 Hurlingham, Kelland’s adjustments for differences in gross living area were based on $125 per square foot. His site adjustments were based on $100,000 per acre; he deemed the property to be eight acres because it was reported to him that two acres were under water. His final opinion of value for 18 Hurlingham as of October 1, 2010, was $3,800,000, which was $100,000 less than the amount that the plaintiff paid for the property in 1996.
The Town’s Claims
Kerin was at a distinct disadvantage in appraising 18 Hurlingham as of October 1, 2010 because he inspected the property on May 17, 2016, after demolition of much of the residence, the pool, and the tennis court. The photographs in his appraisal report for the October 1, 2010 valuation were taken on May 17, 2016, when construction of the entertainment barn was well under way but not complete. They provide little information about the status of the property as of the effective date of the revaluation in 2010.
Kerin identified six comparable sales for the 2010 valuation. His first comparable, 429 Taconic Road, was sold in October 2009 for $7,000,000. It was a 12.87-acre property improved by a residence of 8,046 square feet, comprising ten bedrooms and 7.3 bathrooms. He made positive adjustments totaling $2,150,000 for the subject property’s superior location, lake view, and garage apartment. He made negative adjustments totaling $2,049,600 for the comparable’s superior site, size, number of bedrooms, fourteen-car garage, and other amenities. His net adjusted sale price for this comparable was $7,100,400.
Kerin’s second comparable, 404 Round Hill Road, was sold for $5,000,000 in December 2010. It was 6.15-acre parcel improved by a residence of 4,959 square feet, which had five bedrooms and 6.1 bathrooms. Kerin made positive adjustments totaling $2,422,400 for the subject property’s superior location, lot size, lake view, finished lower level, pool and tennis court, and garage apartment. He made negative adjustments totaling $125,000 for the comparable’s additional bathrooms and fireplaces. His net adjusted sale price for this comparable was $7,297,400.
Kerin’s third comparable, 5 Conyers Farm Drive, was a 12.77-acre parcel improved by a six-bedroom residence of 8,397 square feet. It was sold in March 2010 for $6,900,000. Kerin made positive adjustments totaling $1,300,000 for the subject property’s superior view, tennis court, and garage apartment. He made negative adjustments of $1,959,900 for the comparable property’s greater acreage, greater square footage and number of bedrooms, greater number of garage bays and fireplaces. His net adjusted sale price for this comparable was $6,240,100.
Kerin’s fourth comparable was the property next door at 16 Hurlingham, which had been sold for $12,225,000 in July 2009. He deemed the property at 16 Hurlingham approximately equal in size, location, and view to the subject property. He made negative adjustments totaling $4,574,600 for the subject property’s inferior construction quality, smaller gross living area, fewer rooms, and fewer fireplaces. He also deemed the subject property’s garage apartment to be inferior to the enclosed pool amenity at the comparable property. He made positive adjustments totaling $152,400 for the subject property’s more extensive finished lower level and exterior amenities, including the tennis court. His net adjusted sale price for this comparable was $7,802,800.
Kerin’s fifth comparable was 5 Partridge Hollow Road, a 4.51-acre property that was sold in May 2011 for $4,995,000. It was improved by a five-bedroom residence of 4,822 square feet. Kerin made positive adjustments totaling $3,210,000 for the subject property’s superior location, lot size, lake view, gross living area, finished lower level, pool, and garage apartment. He made negative adjustments totaling $820,000 for the subject property’s inferior construction quality, number of rooms, and fewer garage bays. His net adjusted sale price for this comparable was $7,385,000.
Kerin’s sixth and final comparable was 351 Round Hill Road, a two-acre parcel that was sold in June 2009 for $4,950,000. This comparable was improved by a six-bedroom residence of 7,044 square feet. Kerin made positive adjustments totaling $3,220,000 for the subject property’s superior neighborhood, lot size, lake view, additional garage bay, pool, and garage apartment. He made negative adjustments totaling $1,379,000 for the subject’s inferior condition, size, number of rooms, finished basement, and number of fireplaces and porches. His net adjusted sale price for this comparable was $6,791,000.
In making his adjustments for differences in gross living area, Kerin adjusted at a rate of $300 per square foot, rather than the $500 per square foot he used in comparing 20 Hurlingham to comparable properties. He testified that he used the lower price per square foot because the quality of construction at 18 Hurlingham was not as high as that at 20 Hurlingham. His final opinion of value for 18 Hurlingham, as of October 1, 2010, was $7,100,000.
Analysis
The parties’ appraisers generally agreed that the two-bedroom residence at 18 Hurlingham as of October 1, 2010, was an underimprovement. As Kerin conceded on cross examination, he could not readily recall any property with a residence of 5,000 square feet but only two bedrooms that had sold for $3,000,000, $5,000,000, or $7,000,000, yet he did not consider it necessary to make any adjustment for functional obsolescence when comparing 18 Hurlingham with houses that had from five to ten bedrooms and similar or greater gross living areas. He said that a large part of the value of the property was in the land. Even assuming that is so, the value Kerin placed on the property as of October 1, 2010, is clearly too high. The properties Kerin used as comparables were not truly comparable. Only his second and fifth comparables- 404 Round Hill Road and 5 Partridge Hollow Road- were close to the same size, in terms of gross living area, as the subject property. Both of those comparables had five bedrooms and at least five bathrooms. Although Kerin testified that he adjusted for such differences, his report does not support his testimony. His "summary of sales comparison approach" identifies adjustments for differences in gross living area, bathrooms (adjusted at $25,000 per full bathroom), garages, finished square footage in basements, swimming pools, tennis courts, bath houses, elevators, and other amenities, but does not include a specific adjustment for differences in the number of bedrooms. As a result, differences in the number of bedrooms would appear only in the adjustment for gross living area. This understates the functional difference in the properties. For example, 404 Round Hill Road was a 4,959-square-foot residence with five bedrooms and 6.1 bathrooms, as compared to the subject’s 5,014-square-foot residence with two bedrooms and 3.1 bathrooms. Kerin’s adjustment for 404 Round Hill on the line for "room count" is $75,000- which adjusts for the three fewer bathrooms at the subject, but does not adjust for the three fewer bedrooms. Kerin made no adjustment for the difference in gross living area. Yet there is clearly a difference in value between a two-bedroom residence and a five-bedroom residence, even if their total gross living area is approximately the same.
Kelland’s opinion of value, while closer to the mark, is too low. He valued 18 Hurlingham as "an effective land sale with existing vertical improvements adding limited value." This too readily dismisses any substantial value for the residence in 2010. His final opinion of value- $3,800,000- is $100,000 less than the sum the plaintiff paid for the property in 1996. Although the demolition of the two small loft bedrooms before 2010 did reduce the functional utility of the residence, and consequently its value, the court is not persuaded that its remaining value was as inconsequential as Kelland opines.
"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 ..." Breezy Knoll Association, Inc. v. Morris, 286 Conn. 766, 775-76, 946 A.2d 215 (2008). In this case, the court has considered the opinions of the appraisers, the claims of the parties in light of all the circumstances bearing on value, and its own general knowledge of the elements going to establish value. In this case, elements that affect the value of the property include but are not limited to its high-value lakefront location in Conyers Farm and the atypical character of the contemporary two-bedroom residence on the property. The court finds that the fair market value of the subject property, as of October 1, 2010, was $4,800,000. That value shall be applied to the grand lists of October 1, 2012, October 1, 2013, and October 1, 2014.
The 2015 Revaluation
*20 In 2015, the plaintiff demolished most of the existing residence at 18 Hurlingham with the intention of replacing it with- in Varshisky’s words- a "giant barn" for entertainment purposes. The plaintiff also demolished the pool and tennis court amenities on the property. Varshisky testified that the existing house was "unmanageable" and he could not recoup money by putting another residence there because of the shared driveway with 20 Hurlingham. He believed that there would ultimately be more value in keeping 18 and 20 Hurlingham together.
Both Varshisky and Kelland testified that town zoning regulations required each parcel to have a residence in order to build any other structures on it. Kerin agreed that this was true. Varshisky testified that when the original residence at 18 Hurlingham was demolished, the loft apartment over the two-car garage became the main residence on the property for zoning purposes.
By the time of the revaluation of October 1, 2015, most of the original residence had been demolished, along with the pool and tennis court. A semicircular portion of the original residence was retained to be incorporated into the barn at a later stage. No material changes were made to the garage apartment. Construction of the barn was not completed until early in 2017.
As of the October 1, 2015 revaluation, the town established a fair market value of $5,216,400 for 18 Hurlingham, attributing $2,138,600 to the land and $3,077,800 to the improvements. The plaintiff appealed this value to the board of assessment appeals, which denied relief.
The Plaintiff’s Claims
Kelland performed an appraisal of 18 Hurlingham as of October 1, 2015, using a sales comparison approach. At the outset, he determined that approximately 70 percent of the square footage of the original residence, along with the pool and tennis court, had been demolished by October 1, 2015. Approximately 30 percent of the original residence’s square footage remained but had been gutted. Also remaining on the property was the two-car garage with the loft apartment, which had approximately 1,062 square feet of gross living area, and a separate two-car garage. Kelland treated the property as an effective land sale with vertical improvements that contributed little value. He used two sales as comparables to develop the value of the land. The first, 10 Hurlingham Drive, was sold in November 2012 for $4,700,000. It was on a 13.36-acre lot that Kelland deemed inferior, improved by a dwelling of 8,988 square feet, built in 1990. The dwelling was being "gut renovated" and expanded. Considering that the dwelling on the comparable was superior to the subject, Kelland derived an extracted lot value in the range of $2,300,000 to $2,500,000. He opined that the improvements remaining at 18 Hurlingham as of October 1, 2015 contributed $400,000 to the property’s value. Based on this comparable, Kelland derived a market value range of $2.7 million to $2.9 million for 18 Hurlingham.
Kelland’s second comparable was 2 Cowdray Park (also known as 11 Hurlingham Drive). His report states that this comparable was sold in a foreclosure sale in September 2015 for $3,800,000. The comparable property consisted of 13.34 acres, improved by a 8,966-square-foot main dwelling, a 3,726-square-foot guest house, a twenty-stall horse barn, with groom quarters and paddocks, and pool, tennis, and paddle amenities. The property was in disrepair. Kelland opined that this sale supported his final opinion of value of $2,800,000 for 18 Hurlingham as of October 1, 2015.
Kelland opined that the functional obsolescence of 18 Hurlingham as of October 1, 2015, would never be curable. Using a garage apartment of 1,062 square feet as the main residence on a ten-acre lot in Conyers Farm was clearly an underimprovement. The planned entertainment barn, on the other hand, was a superadequate feature.
The Town’s Claims
Kerin inspected the property on May 17, 2016, after the main residence had been demolished and the construction on the barn was underway. His appraisal report described the state of the property in relevant part as follows: "The interior of the main house was being renovated and a large barn addition was under construction. There were no alterations being made to the apartment/garage ... Based on a physical inspection of the subject property and information on file in the Greenwich Town Hall, it is estimated that the main house was being renovated as of the October 1, 2015 valuation date, and that the improvements were approximately 45% complete. The footings of the large barn addition were poured, but the framing had not yet begun." Based on these assumptions, he used a cost approach to develop his opinion of value.
Kerin identified three effective land sales of properties that he considered to be comparable to develop the value of the land for his cost approach. One of these, 70 Lower Cross Road, was a ten-acre parcel, improved by an 8,046-square-foot dwelling, that was sold for $2,725,000 in April 2015. Kerin made positive adjustments for the subject property’s superior location, view, and acreage and a negative adjustment for the dwelling on the comparable property. His net adjusted price for this comparable was $3,300,000. He also used two parcels at 40 and 42 Aiken Road in Greenwich. The 4.16-acre parcel at 42 Aiken Road was sold in July 2014 for $3,625,000. Kerin made positive adjustments for the subject property’s superior location and size; he made negative adjustments for the subject property’s wetlands and inferior topography. His net adjusted sale price for 42 Aiken Road was $4,175,000. The 4.9-acre parcel at 40 Aiken Road was sold in October 2015 for $2,000,000. Kerin made positive adjustments for the subject property’s superior location, size, and position, and a negative adjustment for the subject property’s wetlands area. His net adjusted sale price for 40 Aiken Road was $3,450,000. Considering all three of these comparables, he concluded that the value of the land at 18 Hurlingham was $3,600,000.
Kerin then performed an analysis of the cost of constructing the improvements that were on 18 Hurlingham as of October 1, 2015. His computations were based in part on the assessor’s field card, which still listed the gross living area of the main house as 5,014 square feet and the unfinished basement area as 3,710 square feet. Kerin estimated the cost of the main house shell to be $2,507,000, the cost of the basement to be $185,500, and estimated that the main house shell was 45 percent complete as of October 1, 2015. He further estimated the costs of construction for the garage apartment, the garage, and building amenities, then applied depreciation to the garage apartment structure. He concluded that the structures on the property contributed $1,881,929 in value. His final opinion of value, as of October 1, 2015, was $5,480,000, including the land and the vertical improvements.
At trial, however, he admitted that he had subsequently learned that the remaining portion of the original main house was not 5,014 square feet, as the assessor’s field card had indicated when Kerin developed his appraisal report, but 2,426 square feet. He testified that this information indicated that his original conclusion of value was too high, and he reduced his final opinion of value to $4,900,000.
Analysis
The plaintiff’s opinion of value was based on the comparisons to the sales of 10 Hurlingham and 2 Cowdray Park (also known as 11 Hurlingham). The property at 2 Cowdray Park was not a good comparable. In the first place, it was a bank sale after foreclosure. In the second place, there was a cell tower immediately in front of the entrance to the residence; this was a significant external factor detracting from the value of the property. Kelland’s testimony that the cell tower was not a negative influence on value was not credible. Finally, the comparable property had considerably more extensive improvements.
On the other hand, Kerin’s appraisal was based on the erroneous assumption that the construction underway when he inspected the property was a renovation of the main residence with the addition of a barn. This was not the case. A portion of the original structure- primarily including the curved stone wall that had been part of the kitchen- was retained to be incorporated into the barn, but the original house was not to be used as a house after the renovation and new construction. Kerin attempted to correct his error in his testimony, when he acknowledged that he used the wrong square footage for his cost calculation, but his last-minute correction was not persuasive. He was, of course, at a considerable disadvantage because he inspected the property months after the revaluation date, making it difficult to determine exactly what had been the status of the property on the revaluation date. Nevertheless, his appraisal was based on mistaken assumptions, and the court concludes that, even as corrected, Kerin’s appraisal overvalues the property as of October 1, 2015.
The property at 18 Hurlingham was not as diminished in value as Kelland opined nor as valuable as Kerin opined. Its location in Conyers Farm, its lakefront and lake view, and its size render it more valuable than Kelland acknowledged. But the parcel was not without negative attributes, including its shared driveway, 220-foot setback from the lake, and the rocky nature of much of the terrain, which limited the available building space. More significantly, however, the transformation of the original main residence into an entertainment barn and the characterization of a 1,062-square-foot garage apartment as the new main residence caused a functional obsolescence that Kerin did not take into account. Considering all the credible evidence, and considering the court’s own general knowledge of elements that contribute to value, the court finds that the fair market value of the property at 18 Hurlingham as of October 1, 2015, was $3,500,000.
The parties did not present sufficient evidence for the court to determine the value as of October 1, 2016. It is clear that construction of the barn was further along than on October 1, 2015. Late in the trial, the town introduced a field card (Exhibit KK) that indicates that the expansion and alteration pursuant to a building permit were "100 percent complete," but the card does not indicate any value for the barn, and it treats the garage apartment as the principal improvement. It indicates a value of $4,692,300 for the total fair market value of 18 Hurlingham as of October 1, 2016. The court does not find the field card to be an accurate indicator of the value as of October 1, 2016. In the absence of credible evidence establishing the value of the improvements as of October 1, 2016, the value as of October 1, 2015, which is $3,500,000, will be carried forward to the grand list of October 1, 2016. The parties did not present any evidence as to the value of the new construction that was in place as of October 1, 2017. The court therefore makes no findings about the fair market value of 18 Hurlingham as of October 1, 2017, or ensuing years.
V
CONCLUSION
Docket No. CV-13-6028104-S (20 Hurlingham)
The fair market value of the property at 20 Hurlingham Drive, Greenwich, Connecticut, was $15,500,000 as of October 1, 2012, based on its value on the revaluation date of October 1, 2010. The fair market value of $15,500,000 shall be used for the grand lists of October 1, 2012, October 1, 2013, and October 1, 2014.
The fair market value of 20 Hurlingham Drive, Greenwich, Connecticut, was $14,500,000 as of October 1, 2015. The fair market value of $14,500,000 shall be used for the grand lists of October 1, 2015, October 1, 2016, and each succeeding grand list until the next revaluation, absent any material change in the condition of the property that would warrant adjustment pursuant to the tax statutes.
Judgment may enter for the plaintiff in accordance with this decision. No costs shall be taxed to either party in this case.
Docket No. CV-13-6028103-S (18 Hurlingham)
The fair market value of the property at 18 Hurlingham Drive, Greenwich, Connecticut, was $4,800,000 as of the grand list of October 1, 2012, based on its value as of the revaluation date of October 1, 2010. The fair market value of $4,800,000 shall be used for the grand lists of October 1, 2012, October 1, 2013, and October 1, 2014.
The fair market value of the property at 18 Hurlingham Drive, Greenwich, Connecticut, was $3,500,000 as of October 1, 2015. The fair market value of $3,500,000 shall be used for the grand lists of October 1, 2015, and October 1, 2016.
Judgment may enter for the plaintiff in accordance with this decision. No costs shall be taxed to either party.