Burritt Mut. Sav. Bank of New Britain v. City of New Britain

• Court: Supreme Court of Connecticut
• Writing for the Court: Before DALY; MELLITZ; MURPHY; DALY
• Citation: 154 A.2d 608,146 Conn. 669
• Parties: BURRITT MUTUAL SAVINGS BANK OF NEW BRITAIN v. CITY OF NEW BRITAIN. Supreme Court of Errors of Connecticut
• Decision Date: 31 July 1959

Page 608

154 A.2d 608 146 Conn. 669 BURRITT MUTUAL SAVINGS BANK OF NEW BRITAIN
v.
CITY OF NEW BRITAIN. Supreme Court of Errors of Connecticut. July 31, 1959.

[146 Conn. 670]

Page 609

Valentine J. Sacco, Hartford, with whom were Jerome I. Walsh, Hartford, and, on the brief, George J. Coyle, Corp. Counsel, New Britain, for appellant (defendant).

Harold J. Eisenberg, New Britain, for appellee (plaintiff).

Before [146 Conn. 669] DALY, C. J., and BALDWIN, KING, MURPHY and MELLITZ, JJ., concurring.

[146 Conn. 670] MELLITZ, Associate Justice.

In the city of New Britain the tax assessment date is September 1 in each year. On September 1, 1956, the board of assessors of the city assessed the land of the plaintiff at 267-271 Main Street at $109,720 and the building thereon at $141,300. The plaintiff appealed to the board of tax review, and from the refusal of the board to reduce the assessment it appealed to the Court of Common Pleas. In the course of the trial, the plaintiff withdrew[146 Conn. 671] its appeal so far as it related to the valuation of the building. The trial court reduced the assessment on the land to $78,000, and the defendant has taken this appeal.

The property is in the so-called 100 per cent retail business district of the city. On September 1, 1956, it was used for the conduct of the plaintiff's banking business, but its highest and best use, as found by the court and not disputed by the defendant, was for retail business purposes. Although assessments were required by law to be made at the true and actual value of the property (Rev.1949, § 1738), it was the practice of the assessors to fix assessments at 60 per cent of the value as determined by them. This practice, declared illegal in E. Ingraham Co. v. Town and City of Bristol, 144 Conn. 374, 380, 132 A.2d 563, was validated by the General Assembly at its 1957 session. Public Acts 1957, No. 673, § 1; see Rev.1958, § 12-64. In 1955, the assessors undertook the revaluation of real estate which is required during each period of ten years by what is now § 12-62 of the 1958 Revision. The valuations fixed by the assessors on the list of 1956 were the result of this revaluation. To aid the assessors in the revaluation, the city engaged the services of the J. M. Cleminshaw Company of Cleveland, Ohio, a nationally recognized appraisal company, and to assist in the task a citizens' advisory committee was formed, consisting of persons familiar with property values in the city. The president of the plaintiff was a member of the committee, as was the expert who testified for the plaintiff. As a result of the revaluation, the basic unit valuation of land in the 100 per cent business area was fixed at $4,200 per front foot for a depth of 100 feet. The plaintiff's property has a frontage of approximately 43.5 feet and an average depth of [146 Conn. 672] approximately 90 feet, with an easement over land of others for access to the rear of the building. The application of the basic unit valuation to the plaintiff's property, adjusted slightly downward by the use of a depth table to compensate for the 90-foot depth and for the location, which was a short distance northerly from the heart of the 100 per cent business district,

Page 610

resulted in the assessors' setting the true and actual value of the land at $182,866 and the assessment, being 60 per cent of the valuation, at $109,719.60.

At the trial, the only witness testifying for the defendant was an employee of the Cleminshaw Company who had supervised and directed the revaluation. His experience came from employment with the company for a period of fourteen years in the field of reassessment for municipal taxation purposes and from study of the methods of real estate appraisal. The valuation made by him of the plaintiff's property in the course of the revaluation, together with his methods, findings and opinions in fixing that valuation, was accepted and adopted by the board of assessors. In determining the value of the plaintiff's property, he relied on (1) correlation and comparison of two land sales; (2) residual land value capitalization of all property in the central business district; and (3) the advice and recommendation of the citizens' advisory committee. The plaintiff's expert witness fixed the true and actual value of the land at $108,000. He testified that in arriving at this value he used a land residual method. In his opinion the two sales referred to by the defendant's expert were not sales of comparable property and there were no comparable sales available as aids in determining the value of the plaintiff's property.

[146 Conn. 673] The trial court found that the two land sales to which the defendant's expert referred were of little use in fixing the value of the plaintiff's property and that there had been no sales of comparable real estate for many years prior to September 1, 1956. It found further that since the criteria of comparable sales were unavailable, the present true and actual value of the property was required to be determined largely by the method employed by both experts--capitalization of stabilized not income. Under this method, the value is determined by capitalizing the future net income from a building--devoted to the highest and best use of the land upon which it is situated--at a capitalization rate which provides for both a return on the investment and a recapture or amortization of the investment over the period of the economic life of the building. The value of the land is determined by the land residual method, which involves capitalization of the income regarded as attributable to the land. This is the amount of the income remaining from the gross rental after proper allowances have been made for vacancies, amortization of the investment in the building, payment of all expenses in connection with its operation, including taxes on the building, and earnings to be derived from ownership of the building. The prevailing rate of return on the investment plus an anticipated tax rate is then used to capitalize the remaining income. This method was used by the plaintiff's expert as well as by the defendant's expert.

The ultimate question presented was the ascertainment of the true and actual value of the plaintiff's property. The parties stipulated in open court that the valuation of, and assessment on, the building was correct, so that there remained for determination[146 Conn. 674] only the value of the land. The best test for the determination of value is ordinarily that of market sales. Campbell v. City of New Haven, 101 Conn. 173, 185, 125 A. 650. Here the court found that there had been no sales of comparable real estate for many years, and this finding was not challenged. In the...