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Town of S.W. Harbor v. Harwood

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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	2000 ME 213
Docket:	Han-00-342
Argued:	November 7, 2000
Decided:	December 14, 2000




	[¶1]  Jean Harwood, the trustee of the Cranberry Point Realty Trust,
appeals from a judgment entered in the Superior Court (Hancock County,
Mead, C.J.), vacating the decision of the Southwest Harbor Board of
Assessment Review in which the Board granted a tax abatement on two
parcels of the trustee's land located on Greenings Island.{1}  The trustee
asserts that the Board's decision to grant the abatement was supported by
substantial evidence in the record.  We agree and vacate the judgment of the
Superior Court.
	[¶2]  On behalf of the Cranberry Point Realty Trust, the trustee owns
two adjacent parcels of land located on the southwest portion of Greenings
Island, which overlooks the shores and mountains of Acadia National Park. 
Greenings Island is located off the coast of the Town of Southwest Harbor
and is considered to be within the Town's geographic limits.  In 1981, the
trustee purchased the first parcel of 9.78 acres, which included the main
house, a boathouse, and a saltwater swimming pool.  In 1995, the trustee
purchased the second, adjoining parcel of 19.3 acres from an abutter.  The
two parcels have been combined for tax assessment purposes. 
	[¶3]  Historically, the properties on Greenings Island have been
difficult to value for tax purposes for several reasons.  There is currently a
total of fourteen parcels of property on Greenings Island.  Many of the
properties are owned by related family members who have spent summers
on the island for generations.  Until recently, properties generally passed
between family members or relatives for nominal value, and arms length
sales to third parties were rare.  According to the Town's assessor, with the
exception of recent sales, there have not been any distinct fair market value
sales on Greenings Island "at least since the turn of the century."  In
addition, other islands in the area that might ordinarily provide comparable
sales information have amenities that Greenings Island does not, including
ferry service and electricity.{2}
	[¶4]  On April 1, 1997, the Town revaluated all the properties on
Greenings Island for purposes of its 1997 tax assessments.  As part of an
update solely for the Greenings Island properties, the Town's assessor
increased, among other things, the common multiplier used to calculate
land values on Greenings Island from .26 to .70, which had the effect of
substantially increasing all assessment values on the island.  The assessed
value of the trust's property increased from $823,300 in 1996 to
$1,389,700 in 1997, both figures representing the assessed values before
credits for land in the state tree growth and open space programs.
	[¶5]  The trustee unsuccessfully sought abatement from the Town
regarding the 1997 assessment and then appealed to the Southwest Harbor
Board of Appeals.  After a hearing, the Board unanimously granted an
abatement in the amount of $240,000, reducing the trust property's
precredit assessment value to $1,149,700.  The Town appealed to the
Superior Court pursuant to 36 M.R.S.A. § 843(1) (Supp. 2000) and M.R.
Civ. P. 80B.  The Superior Court vacated the Board's decision, concluding
that there was no evidence in the record to support the Board's
determination of just value.  This appeal followed.
	[¶6]  Because the Superior Court acted as an intermediate appellate
court, we review directly the Board's decision for abuse of discretion, error
of law, or findings unsupported by substantial evidence in the record. 
Muirgen Props., Inc. v. Town of Boothbay, 663 A.2d 55, 58 (Me. 1995). 
"That the record contains evidence inconsistent with the result, or that
inconsistent conclusions could be drawn from the evidence, does not render
the [Board's] findings invalid if a reasonable mind might accept the relevant
evidence as adequate to support the [Board's] conclusion."  Town of Vienna
v. Kokernak, 612 A.2d 870, 872 (Me. 1992).
	[¶7]  In an abatement proceeding, the Board must undertake its
responsibilities in two parts.  The Board begins its review with the
presumption that the assessor's valuation is valid.  Chase v. Town of
Machiasport, 1998 ME 260, 	¶ 13, 721 A.2d 636, 740.  The taxpayer has
the burden of overcoming that presumption.  City of Waterville v. Waterville
Homes, Inc., 655 A.2d 365, 367 (Me. 1995).  If the taxpayer presents
sufficient evidence to meet his or her burden, and the Board is convinced
that the assessed value was manifestly wrong, then the Board has the
responsibility to undertake its own determination of just value and to grant
"such reasonable abatement as the board thinks proper."  36 M.R.S.A.
§ 843(1); accord City of Biddeford v. Adams, 1999 ME 49, ¶¶ 24-25, 727
A.2d 346, 351-52; Quoddy Realty Corp. v. City of Eastport, 1998 ME 14,
¶ 11, 704 A.2d 407, 410.
	[¶8]  Thus, in an appeal from a Board's grant of tax abatement, we
review the record to determine, first, whether the taxpayer presented
"credible, affirmative evidence" to meet his or her burden of persuading the
Board that the assessor's valuation was "manifestly wrong."{3}  See Chase,
1998 ME 260, ¶ 12, 721 A.2d at 640 (citing Waterville Homes, Inc., 655
A.2d at 367).  If the record confirms that the taxpayer did present such
evidence, we review the Board's independent determination of the "just
value" of the property for findings unsupported by the record, error of law,
or abuse of discretion.  Adams, 1999 ME 49, ¶ 25, 727 A.2d at 351;
Muirgen Props., Inc., 663 A.2d at 59.

A.  Evidence that the Assessed Value was Manifestly Wrong

	[¶9]  Southwest Harbor relies on our opinion in Waterville Homes for
its assertion that the Board erred in concluding that the assessor's assigned
value was manifestly wrong.  In Waterville Homes, we held that a taxpayer
may not meet his or her burden of proving that the assessor was manifestly
wrong by merely impeaching the Town's assessment.  Waterville Homes,
Inc., 655 A.2d at 366.  Rather, the taxpayer must come forward with
"credible, affirmative evidence of just value."  Id. at 367.
	[¶10]  In Waterville Homes, the taxpayer presented "astonishingly
meager" evidence, providing only the owner's bald assertions that the
assessed value should be set either at the property's original discounted
purchase price or at a previous year's assessed value, both of which were
explicitly discredited by the Board as unreliable evidence of just value.  Id. at
366.  The Board determined that the owner's original purchase price was
suspect because "it appears not to be an arm's length transaction."  Id. 
Further, the Board refused to give any credibility to the City's previous years'
assessment values because those values had been substantially reduced as "a
result of negotiations between [the owner] and the mayor's office."  Id. 
Notwithstanding the Board's determination that the taxpayer had presented
absolutely no credible evidence of the property's just value, however, the
Board went on to quibble with the assessor's methodology and concluded
that the property should be assessed at the very amount it had already
rejected in the taxpayer's superficial presentation.  Id. at 367.
	[¶11]  The facts here contrast significantly with those before us in
Waterville Homes.  See id. at 365-66.  Here, the trustee came forward with
affirmative evidence, which the Board found credible, to support the claim
that the property's assessment was "manifestly wrong."  See id. at 366-67;
Muirgen Props., Inc., 663 A.2d at 58-59.  Through the trustee's testimony
and that of the trustee's appraiser, the trustee presented the key piece of
evidence upon which the Board relied to make its conclusion-the purchase
price of a comparable piece of property on Greenings Island in an arms
length sale.{4}
	[¶12]  The trustee's appraiser presented a report to the Board that
included specific evidence of recent sales, one of which was the September
1996 purchase by Jarvis Newman of two lots on Greenings Island for a total
of $730,000.  Peter Harwood also testified regarding the Newman sale.{5} 
There was no dispute that the Newman sale was the result of an arms length
transaction.  Nor was there any dispute that just six months later, the Town
assessed the Newman property at $153,200 higher than the purchase price.
	[¶13]  After hearing from the taxpayer, the taxpayer's appraiser, the
Town's appraisers, and the assessor, the Board concluded that Newman's
September 1996 purchase price of $730,000, which was "affirmatively"
presented by the taxpayer, was the "ideal benchmark . . . in terms of value
on Greenings Island."  Having concluded that Newman's purchase price
represented "the cleanest" and "the best piece of evidence" before it, the
Board then determined that the Town's April 1997 assessment value of the
Newman property at $883,200 was approximately 17% higher than its just
value.  Because a uniform assessment system was used for all Greenings
Island properties, the Board concluded that the Town had similarly
overvalued the trust property, and thus, the assessed value of the trust
property was manifestly wrong.
	[¶14]  In so concluding, the Board examined the evidence on the very
basis that we have required.  See Waterville Homes, Inc., 655 A.2d at 367.  It
examined the facts before it to determine whether the taxpayer had
presented evidence "proving that the assessed valuation in relation to the
just value is 'manifestly wrong.'"  Id. (quoting Delta Chemicals, Inc. v.
Inhabitants of Searsport, 438 A.2d 483, 484 (Me. 1981)) (emphasis added). 
The Board accepted as credible the trustee's evidence regarding the arms
length Newman sale, and, having reviewed all other evidence presented
regarding the difficulties of determining the just value of properties on
Greenings Island, it concluded that the Newman sale provided the most
reasonable and credible baseline value for determining the just value of other
property on the island.  The Board was then entitled to use that evidence to
determine that the Town's assessed value in comparison to the likely just
value of the trust property was "manifestly wrong."  See id.
	[¶15]  In sum, the trustee presented evidence that the property was
substantially overvalued by demonstrating that similar property on the island
was overvalued and by showing that a common methodology with the same
multiplier had been used for all island properties.  The trustee presented
sufficient evidence to sustain its burden of overcoming the presumption of
validity.  See Muirgen Props., Inc., 663 A.2d at 58.
B.  The Board's Determination of the Trust Property's Just Value

	[¶16]  We next address the Town's claim that the Board erred in its
determination of the property's just value.  See Quoddy Realty Corp., 1998
ME 14, ¶¶ 7-9, 704 A.2d at 409-10.  Contrary to the Town's assertions, the
record plainly shows how the Board calculated Harwood's property's "just
value."  See Me. Const. art. IX, § 8.  In April 1997, the Town assessed
Newman's property at $883,200, which represented a $153,200 increase
from his September 1996 arms length purchase price of $730,000.  The
amount $153,200 represented approximately a 21% increase from
$730,000 or approximately a 17% decrease from $883,200.  There were no
sales of properties on Greenings Island in that interim six months, nor was
there any other evidence of market fluctuations.  Finding that there was no
credible evidence to indicate "a 21 percent increase in the Newman
property in the 6 months after it sold," the Board concluded that the
Town's assessment method was in error.{6}
	[¶17]  The Board then determined that because a uniform system had
been used to increase the assessment of all Greenings Island properties, the
trust property's assessment value was similarly overvalued.  Thus, reducing
the trust property's erroneous value by the percentage of overvaluation, the
Board subtracted 17% of its value from $1,389,700 to achieve the property's
"just value" at $1,149,700.{7}  In so determining, the Board relied only on the
facts in the record, many of which were presented by the trustee.  Although
the Board did not make a separate determination of the trust property's
value in its corresponding land and house components, as a whole, the
Board's method was neither irrational nor affected by error of law.
	[¶18]  Southwest Harbor contends, nonetheless, that the Board abused
its discretion by refusing to give weight to two post-April 1, 1997,
Greenings Island sales-the 1997 Dinsmore sale and the 1999 Newman
resale-which the Town alleges support the assessor's April 1, 1997,
assessment values.  Contrary to the Town's assertions, the Board, in its
discretion, could have deemed unpersuasive those sales that took place after
the April 1 effective date.  See 36 M.R.S.A. § 502 (Supp. 2000) ("the status
of all taxpayers and of such taxable property must be fixed as of [April 1]").{8}
	[¶19]  Similarly, the Board did not abuse its discretion in rejecting
Southwest Harbor's argument that the 1996 Newman purchase price,
although indisputably arising out of an arms length sale, did not represent
fair market value.  The Town argues that the Board should have given greater
weight to the fact that Newman listed his property for $2 million shortly
after his purchase in 1996.  The Town concedes that the property did not
sell for another three years and did not sell at that price.  Contrary to
Southwest Harbor's argument, the Board acted within the bounds of its
discretion in giving no weight to Newman's hoped for, but never realized,
price.  Newman's asking price, unlike his purchase price, was not reliable
evidence of just value.  See Wesson v. Town of Bremen, 667 A.2d 596, 599
n.5 (Me. 1995) (affirming the Board's conclusion "that the Trustees' data
was flawed because it was based on asking prices, not sale prices of
property").  The arms length sale price of property provides the best
evidence of market value.  Id.; see also McCullough v. Town of Sanford, 687
A.2d 629, 631 (Me. 1996) (holding that "'just value' means market value").
	[¶20]  Finally, we address the Town's contention that because the
Board declined to adopt the ultimate opinion of value presented by the
trust's appraiser, it must necessarily have rejected all of the evidence
presented by the trustee, thereby leaving no "affirmative evidence" from
which it could have determined "just value" different than the one set by
the assessor.  The Town misreads our opinion in Waterville Homes.  There,
the Board concluded "the evidence of value provided by each party lacks
validity."  Waterville Homes, Inc., 655 A.2d at 366.  Here, the Board
accepted some of the evidence presented by the taxpayer, but rejected the
expert's ultimate opinion of value.  
	[¶21]  When a Board is presented with evidence, it may accept parts of
the evidence and reject other parts.  See Gulick v. Bd. of Envtl. Prot., 452
A.2d 1202, 1208 (Me. 1982).  It is not required to engage in an all or
nothing fact-finding.  See, e.g., Kittery Elec. Light Co. v. Assessors of the
Town of Kittery, 219 A.2d 728, 738 (Me. 1966) (concluding that it was not
error for the fact-finder "to agree only in part with the plaintiff's experts"). 
The Board was free to accept facts presented by the trustee and reject the
trustee's expert's opinion, just as it was free to accept facts presented by
the Town and reject the Town's expert's opinion.  
	[¶22]  Given the unique nature of the property at issue, the Board
acted within the bounds of its discretion when it used Newman's arms
length sale as its baseline for values of similar property on the island.  No
fewer than four opinions of just value, each with multiple subopinions and
different methodologies, were offered regarding the different ways of
calculating the fair market value of the trust property.  Faced with
conflicting opinions, the Board was entitled to make credibility
determinations and undertake its own independent assessment of just value. 
See McTeague v. Dep't of Transp., 2000 ME 183, ¶¶ 7, 9, --- A.2d ----, ----;
Quoddy Realty Corp., 1998 ME 14, ¶ 7, 704 A.2d at 409.  Although it was
limited to using the evidence before it, the Board was not limited to the
methodologies suggested by the various witnesses.
	[¶23]  Because the Board's decision was supported by substantial
evidence in the record, we must vacate the Superior Court's judgment,
which vacated the decision of the Board.
	The entry is:
Judgment of the Superior Court vacated. 
Remanded to the Superior Court with
instructions to affirm the decision of the Board
of Assessment Review.
Attorney for plaintiff: John L. Carver, Esq., (orally) Carver, Kimball & Baiungo 10 Church Street Belfast, ME 04915 Attorneys for defendant: William H. Dale, Esq., (orally) Sally J. Daggett, Esq. Jensen Baird Gardner & Henry P O Box 4510 Portland, ME 04112
FOOTNOTES******************************** {1} . At the commencement of this action, Peter Harwood held title to the property as the trustee of Cranberry Point Realty Trust. Mr. Harwood died during the pendency of the appeal, and his widow, Jean Harwood, has succeeded him as trustee and has been substituted as the proper party. {2} . The trust property, like most other properties on Greenings Island, lacks electricity and is used only for seasonal purposes. {3} . To show that the assessment was manifestly wrong, the taxpayer must have demonstrated that (i) the judgment of the assessor was irrational or so unreasonable in light of the circumstances that the property was substantially overvalued and an injustice resulted, (ii) there was unjust discrimination, or (iii) the assessment was fraudulent, dishonest, or illegal. Muirgen Props., Inc. v. Town of Boothbay, 663 A.2d 55, 58 (Me. 1995) (citing Town of Vienna v. Kokernak, 612 A.2d 870, 872 (Me. 1992)). {4} . Specifically, the trustee offered the following evidence in support of his claim: a.The assessor used the two 1995 and 1996 Greenings Island purchases, in part, to establish a common assessment methodology that assessed the values for all Greenings Island properties in April 1997. b.The Town assessed Newman's property at $883,200 on April 1, 1997, just six months after Newman's admittedly fair market purchase price at $730,000. c.During those six months, there were no other sales of Greenings Island properties to indicate that the market price had changed. d.Newman's property, at the assessed value of $883,200, represented a 17% overvaluation from its fair market value at $730,000. {5} . The Board had recently completed a hearing regarding an abatement request from a neighboring landowner, Peter Forbes. Because it had received extensive testimony in that matter regarding the makeup of Greenings Island, the 1997 revision of the Greenings Island tax assessments, and the assessor's methodology, the Board asked the parties in the Cranberry Point Realty Trust matter to be as brief as possible in presenting evidence. {6} . The record also reflects the Board's general concern with the assessor's valuation method, along with the assessor's response that understanding the process would take something of a "leap of faith." {7} . In essence, the Board used nothing more than a straight-line proportional analysis. Using Newman's purchase price as the baseline value for comparison, solving for the trust property's just value requires solving for the "X" in the following equation:

Town's Assessed Value $883,200 $1,389,700
---------------------------- = ------------ = ---------------
Just Value $730,000 X

X = 1,149,700 ="just value" of the trust property. {8} . On this precise point, the Board stated [A]s of the date of the assessment, 4/1/97, the best data available in that immediate neighborhood suggested that the property was overvalued; and a subsequent sale 21 months after the fact, to me, is grounds for reassessment 21 months after the fact, but not April 1, 1997. Board Deliberations (Statements of Chairman Geary).