590 Realty Co., Ltd. v. City of Keene

• Decision Date: 02 April 1982
• Docket Number: No. 81-015,81-015
• Citation: 122 N.H. 284,444 A.2d 535
• Parties: 590 REALTY CO., LTD. v. CITY OF KEENE.
• Court: New Hampshire Supreme Court

Page 535

444 A.2d 535

122 N.H. 284

590 REALTY CO., LTD. v. CITY OF KEENE.

No. 81-015.

Supreme Court of New Hampshire.

April 2, 1982.

Faulkner, Plaut, Hanna, Zimmerman & Freund, Keene (George R. Hanna, Keene, on the brief and orally), for plaintiff.

Wadleigh, Starr, Peters, Dunn & Kohls, Manchester (Theodore Wadleigh, Manchester, on the brief and orally), for the City of Keene.

DOUGLAS, Justice.

The issue in this tax abatement case, RSA 76:17 (Supp.1981), is whether the master erred in excluding the value of certain features of the plaintiff's medical clinic from the building's fair market value.

The plaintiff, a limited partnership, built and owns property housing the Keene Clinic. The structure, located adjacent to the Cheshire County Hospital, was designed as a clinic.

The City of Keene assessed the property as a clinic, including in its fair market value the building's many specialized features. The plaintiff disputed this assessment and petitioned the superior court for abatement of real estate taxes for the years 1973 through 1979. The Superior Court (Pappagianis, J.), approving the Master's (Mayland H. Morse, Jr., Esq.) recommendation, entered a decree in the plaintiff's favor, abating its taxes, because the taxpayer had demonstrated by a preponderance of the evidence that its taxes were disproportionately higher than those of other property owners within the taxing district. See Stevens v. Lebanon, 122 N.H. 29, 440 A.2d 451 (1982). The City of Keene appealed. Because we conclude that the master committed an error of law, see New England Power Co. v. Littleton, 114 N.H. 594, 599, 326 A.2d 698, 701 (1974), we reverse.

Under RSA 75:1 (Supp.1981), all taxable property shall be appraised "at its full and true value." See Milford Props., Inc. v. Town of Milford, 119 N.H. 165, 168, 400 A.2d 41, 43 (1979). Property is to be valued at its "best and highest use." See Blue Mountain Forest Ass'n v. Town of Croydon, 119 N.H. 202, 203, 400 A.2d 55, 56 (1979); New England Power Co. v. Littleton, 114 N.H. at 597-98, 326 A.2d at 700. The parties have agreed that the highest and best use of the property is as a clinic. As this case illustrates, however, the search for fair market value is not an easy one, and is akin to "a snipe hunt carried on at midnight on a moonless landscape." Fusegni v. Portsmouth Housing Auth., 114 N.H. 207, 211, 317 A.2d 580, 583 (1974) (citation omitted).

In this case, the parties agreed to compute fair market value as reproduction cost less depreciation, see Stevens v. Lebanon, 122 N.H. at ---, 440 A.2d at 453, a method of valuation which we have recognized as valid. Paras v. Portsmouth, 115 N.H. 63, 67, 335 A.2d 304, 308 (1975). The parties, however, do not agree how reproduction cost should be computed. The plaintiff believes the "special purpose items" which make the building a clinic should be excluded from the reproduction cost figure, but the city asserts they should be included.

The master adopted the plaintiff's theory. He reasoned that because certain specialized features of the building were "obsolete" and "non-saleable," the property was not saleable as a clinic and therefore should have been assessed at a lower value. Nothing in our case law indicates that property should be assessed at a value lower than its highest and best use simply because its design and equipment are not the most modern available. Excluding the special features of the plaintiff's building would transform the property into something other than a clinic. The city's expert put it this way: "if these items ... were not in this building, it would not be a clinic, so you would not be appraising a clinic, you'd be appraising something else."

When property is appraised, all factors relevant to its value should be considered, Paras v. Portsmouth, 115 N.H. at 67-68, 335 A.2d at 308, including special architectural features and equipment. Although it may be difficult to estimate, the special features and equipment have some market value. "[T]o hold there is no market value ... would mean that valuable property...