Angell Family 2012 Prouts Neck Trust v. Town of Scarborough

• Decision Date: 13 October 2016
• Docket Number: Docket: BCD-15-112
• Citation: 149 A.3d 271,2016 ME 152
• Parties: Angell Family 2012 Prouts Neck Trust et al. v. Town of Scarborough et al. Kenyon C. Bolton III et al. v. Town of Scarborough et al.
• Court: Maine Supreme Court

149 A.3d 271

2016 ME 152

Angell Family 2012 Prouts Neck Trust et al.

v.Town of Scarborough et al.

Kenyon C. Bolton III et al.

v.Town of Scarborough et al.

Docket: BCD-15-112

Supreme Judicial Court of Maine.

Argued: December 8, 2015

Decided: October 13, 2016

William H. Dale, Esq., (orally), and Tudor N. Goldsmith, Esq., Jensen Baird Gardner & Henry, Portland, for appellants Kenyon C. Bolton III et al.

Jonathan A. Block, Esq., and Kris Eimicke, Esq., Pierce Atwood LLP, Portland, for appellants Angell Family 2012 Prouts Neck Trust et al.

Robert J. Crawford, Esq., N. Joel Moser, Esq., and Michael A. Hodgins, Esq., (orally), Bernstein Shur, Portland, for appellee Town of Scarborough et al.

Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, and HJELM, JJ.

HJELM, J.

[¶ 1] In our recent decision in Petrin v. Town of Scarborough , 2016 ME 136, 147 A.3d 842, we considered challenges to increases in municipal property taxes for parcels located in several neighborhoods in the Town of Scarborough. We determined that although the Scarborough Board of Assessment Review did not err by concluding that a partial revaluation conducted by the Town was proper, the Town's practice of undervaluing separate but abutting lots held in common ownership resulted in discriminatory tax treatment. See id. ¶ 45.

[¶ 2] In this separate action, which is based on a separate record, we address similar challenges brought by Kenyon C. Bolton III and other owners of residential waterfront properties¹ located in Prouts Neck, which is an area of Scarborough that was not at issue in Petrin . The plaintiffs (collectively, the Taxpayers) appeal from a judgment entered in the Business and Consumer Docket (Horton, J. ) concluding that they do not have standing to pursue one of their challenges but otherwise affirming the Board's denial of their tax abatement petitions. For reasons similar to those in Petrin , we determine that the Taxpayers in this case have standing to pursue all of their challenges. Additionally, although we affirm the Board's conclusion that the partial revaluation was proper, we conclude that the Board erred by denying the Taxpayers' requests for abatement based on the Town's practice of undervaluing abutting lots, which resulted in discriminatory assessments. We therefore vacate the judgment and remand to the Business and Consumer Docket with instructions to remand to the Board for further proceedings.

I. BACKGROUND

[¶ 3] After holding a hearing, the Board made the following findings of fact, which are based on competent evidence in the record. See Terfloth v. Town of Scarborough , 2014 ME 57, ¶ 10, 90 A.3d 1131.

[¶ 4] Scarborough last conducted a valuation of all properties located in the Town for purposes of municipal tax assessments in 2005. The Town Assessor, however, continually monitors hundreds of sales of Scarborough property and conducts studies to ensure that assessment-to-sales ratios—both in individual neighborhoods and town-wide—are as close as possible to 100%. In 2012, based on an ongoing analysis of sales data, then-Town Assessor Paul Lesperance reassessed parcels of land in certain Scarborough neighborhoods. The partial revaluation resulted in increased assessments for waterfront properties in three areas, including Prouts Neck, and for interior properties in a fourth neighborhood. Each of those neighborhoods constitutes a distinct market that cannot be compared to other areas in the Town.

[¶ 5] For Prouts Neck, the data, which consisted of eight property sales, showed that waterfront properties were selling for significantly more than their assessed values. As a result of the revaluation, assessments of those properties increased by 10-15%. Prouts Neck is a unique neighborhood with amenities, including a golf course, beach club, and yacht club, that enhance the value of properties located there. Lesperance did not increase assessments of waterfront properties in a separate neighborhood, Piper Shores, which is not comparable to Prouts Neck because it is a significant distance from the Prouts Neck amenities and because the parcels there are generally larger.

[¶ 6] In early 2013, the Taxpayers, who separately own seventeen parcels of land in Prouts Neck, each applied for a tax abatement pursuant to 36 M.R.S. § 841(1) (2015).² In their applications, the Taxpayers alleged that the partial revaluation unjustly discriminated against them because it resulted in increased assessments for their properties but not for other similarly situated properties.³ Lesperance denied the applications, and the Taxpayers appealed to the Board. See 36 M.R.S. § 843(1) (2015). By agreement of the parties, the Board consolidated the appeals and held a two-day public hearing in December 2013 and January 2014. The evidence at the hearing focused both on the partial revaluation and an “excess land” policy, which affects the Town's valuation of lots larger than one acre and abutting lots in common ownership.

[¶ 7] In a written decision issued in March 2014, the Board denied the Taxpayers' consolidated appeals. The Board endorsed the Town's practice of assessing a lot in common ownership with a second abutting lot “at a significantly lower rate,” finding that the impact of the “policy was minor and did not make the assessments discriminatory.” With respect to the partial revaluation, the Board found that Lesperance's reliance on the eight property sales in Prouts Neck was reasonable and that the data confirmed that the assessment-to-sales ratio there was “significantly less” than 100%, justifying the increased assessments. The Board further concluded that, in contrast to Prouts Neck, there was an insufficient number of sales in Piper Shores to justify an increase in assessments there and that in any event, the two neighborhoods are not comparable. The Board also noted that Maine Revenue Services (MRS) had reviewed the market data for the waterfront areas affected by the revaluation and had “concluded that the Town's assessment methodology was sound and acceptable.”

[¶ 8] Overall, the Board concluded that Lesperance's “appraisal techniques were thorough and well-grounded in expert assessing methodology” and that the Taxpayers had not met their burden of establishing that the assessments were “manifestly wrong” or discriminatory.

[¶ 9] In two groups, the Taxpayers filed complaints in the Superior Court (Cumberland County) pursuant to M.R. Civ. P. 80B(a) and 36 M.R.S. § 843, appealing the Board's decision denying their requests for tax abatements. The two actions were consolidated and transferred to the Business and Consumer Docket. In February 2015, the court entered a judgment affirming the Board's decision. The court concluded that the Taxpayers did not have standing to challenge the Town's excess land programs and affirmed the Board's decision on the remaining challenges. The Taxpayers appealed to us. See 14 M.R.S. § 1851 (2015).

II. DISCUSSION

[¶ 10] The Taxpayers argue that they have standing to challenge the Town's “excess land” assessment practices and that the evidence in the record compelled the Board to find that those practices have a discriminatory impact that is adverse to their interests. They then argue that they are entitled to abatements because the assessments resulting from the 2012 partial revaluation were based on flawed data and arbitrarily focused on certain waterfront properties.

When considering an appeal from a decision of the Superior Court

in an action seeking review of a tax assessment, we review the Board's decision directly for abuse of discretion, errors of law, and sufficient evidence. 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.

Terfloth , 2014 ME 57, ¶ 10, 90 A.3d 1131 (alterations omitted) (citation omitted) (quotation marks omitted).

[¶ 12] The legal standards we identified in Petrin as applying to municipal property tax assessments also govern our analysis here, and we do not reiterate them in full. We do note, however, that “[a] town's tax assessment is presumed to be valid.” Ram's Head Partners, LLC v. Town of Cape Elizabeth , 2003 ME 131, ¶ 9, 834 A.2d 916. A taxpayer bears the affirmative burden of rebutting that presumption by proving that the assessed value of his or her property is “manifestly wrong” because it was affected by “unjust discrimination.”⁴ Id. (quotation marks omitted); see also Allegheny Pittsburgh Coal Co. v. Cty. Comm'n , 488 U.S. 336, 343, 109 S.Ct. 633, 102 L.Ed.2d 688 (1989) (stating that the Equal Protection Clause of the United States Constitution requires a “rough equality in tax treatment of similarly situated property owners”). This requires the taxpayer to establish “that the assessor's system necessarily results in unequal apportionment.” Ram's Head , 2003 ME 131, ¶ 10, 834 A.2d 916 (quotation marks omitted).

[¶ 13] Because the Board concluded that the Taxpayers failed to meet their burden of proving unjust discrimination, we will vacate the Board's decision “only if the record compels a contrary conclusion to the exclusion of any other inference.” Terfloth , 2014 ME 57, ¶ 13, 90 A.3d 1131 (quotation marks omitted).

[¶ 14] We address the Taxpayers' challenge to the Town's excess land programs before considering their remaining contention that the partial revaluation was improper.

A. The Town's Large Lot and Abutting Property Programs

[¶ 15] As we explained in Petrin and as shown in the present record, the Town engages in two distinct practices that the Board and the Taxpayers describe as the “excess land” program. The first practice concerns the Town's method for valuing single residential lots that are larger than one acre (the “large lot” program), and the second involves the Town's practice of permitting owners of multiple contiguous lots to combine those lots...