Adams v. Town of Sudbury
| Decision Date | 22 January 2016 |
| Docket Number | No. 14–465.,14–465. |
| Citation | 2016 VT 11,139 A.3d 567 |
| Court | Vermont Supreme Court |
| Parties | John T. ADAMS II v. TOWN OF SUDBURY. |
Peter H. Banse of Banse & Banse, P.C., Americus, GA, for Plaintiff–Appellant.
Cindy Ellen Hill, Middlebury, for Defendant–Appellee.
Present: REIBER, C.J., DOOLEY, SKOGLUND, ROBINSON and EATON, JJ.
¶ 1. This case arises from the often complex struggle that Vermont towns have had with taxing parcels of land that lie in more than one town. It is also the latest episode in a decades-long dispute between taxpayer and the Town of Sudbury. Taxpayer owns three units in a condominium community that lies in both Sudbury and its neighbor, Hubbardton. Taxpayer objects to Sudbury's tax assessment of the portion within its boundaries. He argues that the trial court erred in upholding: (1) the state law through which Sudbury made its tax assessment; (2) Sudbury's valuation of the portion within its boundaries; and (3) Sudbury's method of apportioning the tax burden among the owners of the condominium community. We affirm on all three issues.
¶ 2. The condominium community is known as Wanee Villas and Resorts (Wanee). It is located on the grounds of a former children's camp and consists of twenty-one individually owned units—residential buildings and their footprints—and an expanse of common land. Wanee's ownership and governance are detailed in two documents filed in the Sudbury land records: a 1978 declaration of protective covenants and a 1993 amendment to those covenants. These documents not only assign a percentage of ownership interest in the common land to each unit but also detail that each unit has an easement to access the common land. Moreover, they create a common interest community as defined by 27A V.S.A. § 1–103(7) and a condominium as defined by 27A V.S.A. § 1–103(8).
¶ 3. Wanee encompasses a total of 26.9 acres. The vast majority of this land—including all the privately owned units—lies in Hubbardton. The Sudbury portion consists solely of 1.29 acres of common land but includes 385 feet of prime frontage on Lake Hortonia, which greatly enhances the appeal of Wanee and its individually owned units. Taxpayer personally owns three units and further owns a substantial stake in Wanee Enterprises, which is the successor corporation to the former children's camp and which itself owns eleven units.
¶ 4. In 1996, taxpayer appealed Sudbury's tax assessment of the Sudbury portion of Wanee's land to the state appraiser. Taxpayer and Sudbury stipulated to a valuation of $89,460 for the Sudbury portion, and the state appraiser entered this stipulation on the condition that this valuation would be listed for three years. In 2007, taxpayer again objected to Sudbury's tax assessment of the land, arguing before the town's board of civil authority and, later, the trial court, that Sudbury could not tax the land because all the individually owned units lay within Hubbardton. Taxpayer voluntarily dismissed the case by agreement with Sudbury that it would not tax the units owned by taxpayer, Wanee Enterprises, or taxpayer's mother for the years 2007–2009. Sudbury adhered to this agreement for those three years and then continued to refrain from taxing the land at all as it waited on clarification from the Legislature regarding how to tax common lands belonging to a condominium community whose units lie entirely in another town.
¶ 5. In 2012, the Legislature provided this clarification through an amendment to 27A V.S.A. § 1–105, which now states, in part:
27A V.S.A. § 1–105(a). Sudbury then reappraised the Sudbury portion as part of a town-wide reappraisal that it had begun two years prior and whose results and methods were approved by the Vermont Department of Taxes. Through this reappraisal—which used a systematic, multiple-factor formula derived from land tables, schedules, and adjustments—Sudbury valued the Sudbury portion at $177,445. In response to the recent amendment to § 1–105, Sudbury then levied taxes for the land against the individual unit owners. In doing so, it apportioned the tax burden among the unit owners in accordance with their percentage ownership of Wanee as specified in the 1978 declaration of protective covenants.
¶ 6. In response to this new tax assessment, taxpayer first appealed to Sudbury's appraisers, then to the Sudbury Board of Civil Authority, and then, in November 2013, to the trial court. Taxpayer raised three arguments before the trial court. First, he argued that § 1–105 violates both the Equal Protection principle of the Fourteenth Amendment to the U.S. Constitution and the Proportional Contribution Clause of the Vermont Constitution. Next, he argued that Sudbury's valuation of the land at $177,445 was not supported by the evidence and does not represent the land's fair market value. Finally, he argued that Sudbury must not apportion the tax burden among the unit owners in relation to their percentage interest in Wanee but instead must apportion the burden equally to each unit. After holding a bench trial, the trial court entered its order in November 2014, finding against taxpayer on each of these arguments. The trial court upheld the tax assessment in all respects except for remand to apportion the tax burden among the unit owners in accordance with the 1993 amendments to Wanee's covenants rather than the original 1978 covenants. Taxpayer now bases his appeal on the same three arguments that he raised before the trial court.
¶ 7. We begin with taxpayer's first argument, which is that 27A V.S.A. § 1–105 violates both the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution and the Proportional Contribution Clause of the Vermont Constitution. Specifically, taxpayer contends that the law creates a situation in which properties that have common land in more than one town may be taxed at higher total rates than those with common land in just one town. Indeed, he alleges that an owner in his situation “pays as much as twice.” Taxpayer further contends that this alleged situation violates the principle that any difference in tax burden between similarly situated citizens must have a reasonable and rational basis.
¶ 8. A tax is constitutionally valid if it meets two requirements. First, it must have been established for a reasonable purpose and bear a reasonable relation to that purpose. See Lathrop v. Town of Monkton, 2014 VT 9, ¶ 13, 195 Vt. 564, 91 A.3d 378 (); see also Andrews v. Lathrop, 132 Vt. 256, 259, 315 A.2d 860, 862 (1974) (). Second, it must be fairly applied so that all within a given tax classification are treated alike. See In re Prop. of One Church St., 152 Vt. 260, 268, 565 A.2d 1349, 1353 (1989) ().
¶ 9. These two requirements apply identically to taxpayer's Fourteenth Amendment and Proportional Contribution Clause arguments because we view the constitutional provisions as equivalent in the tax context. See In re Estate of Eddy, 135 Vt. 468, 472, 380 A.2d 530, 534 (1977) (). They also apply to § 1–105 because § 1–105 expressly creates two different tax classifications: one for common elements located entirely in one town and another for common elements located in two towns. Common elements located entirely in one town and for which a declarant has reserved no development rights may not be taxed separately at all. See § 1–105(a)(2) (). The value of this land is simply allocated to Wanee's individual units, which themselves are then taxed. But common elements located in a town other than the town in which the units are located may be taxed. See id. ().
¶ 10. We conclude that § 1–105 is constitutionally valid because it creates a tax regime that is not only reasonable but also results in fair and uniform tax treatment if implemented properly. Towns are prevented from taxing lands that lie outside their boundaries, but they are free to raise funds in accordance with the amount and value of land that lies within their boundaries. And assuming towns value their lands properly, landowners are treated uniformly because they pay like taxes, regardless of whether their lands lie in one town or multiple towns.
¶ 11. Section 1–105 also satisfies a second principle of the Proportional Contribution Clause: Vermont's property tax system must be based on fair market value to ensure that the tax burden is shared proportionately. Barnett v. Town of Wolcott, 2009 VT 32, ¶ 4, ...
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