Foxboro Associates v. Board of Assessors of Foxborough

• Decision Date: 01 April 1982
• Parties: FOXBORO ASSOCIATES v. BOARD OF ASSESSORS OF FOXBOROUGH.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 890

433 N.E.2d 890

385 Mass. 679

FOXBORO ASSOCIATES v. BOARD OF ASSESSORS OF FOXBOROUGH.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Dec. 10, 1981.

Decided April 1, 1982.

Mark J. Witkin, Boston, for the taxpayer.

John M. Lynch, Brookline, for Bd. of Assessors of Foxborough.

Before HENNESSEY, C. J., and WILKINS, NOLAN, LYNCH and O'CONNOR, JJ.

LYNCH, Justice.

This is an appeal by Foxboro Associates (taxpayer), pursuant to G.L. c. 58A, § 13, from the Appellate Tax Board's (board) determination of the fair cash value ¹ on January 1, 1977, of property in Foxborough owned by the taxpayer and known as the New England Harness Raceway (property). The board of assessors of Foxborough (assessors) denied the taxpayer's application (G.L. c. 59, § 59) for abatement of the real estate tax assessment applicable to the property during fiscal year 1978. On the taxpayer's appeal to the board under the formal procedure (G.L. c. 59, §§ 64 & 65), the board found that the taxpayer's property had been overvalued and ordered a partial abatement. We find no error.

The New England Harness Raceway is the only harness racetrack in Massachusetts. The property consists of 200 acres of land and over ninety buildings. It has been operated as a raceway for approximately thirty years and is licensed and regulated by the State Racing Commission. The taxpayer purchased the property from Bay State Harness Horse Racing and Breeding Association, Inc., on November 30, 1976, and was thus the assessed owner of the property on January 1, 1977, the relevant date for purposes of the challenged tax assessment.

On January 1, 1977, the assessors assessed the property at $3,508,305. The parties stipulated before the board that "the ratio of assessment to full value was 521/2% for fiscal year 1978." When this ratio is recognized, the assessed value translates to a fair cash value of $6,682,486. In its petition to the board, the taxpayer alleged that its property had been both overvalued and disproportionately assessed. The issue of disproportionate assessment was disposed of by the stipulation.

The board held a hearing on the taxpayer's petition (G.L. c. 58A, § 8) and also took a view of the property. The board found that the fair cash value of the property was $6,500,000, resulting in an assessed value of $3,412,500 after application of the stipulated disproportionality ratio. Accordingly, the board ordered a reduction in the assessment of $95,805 and an abatement in the tax of $7,108.70. The assessors have not appealed.

Three witnesses testified on the issue of valuation. The taxpayer's witness, a real estate appraiser, relied on the sale of the property to the taxpayer, and "considered" the income capitalization approach to valuation to reach a fair cash value of $3,354,000 for the property. The assessors relied on the depreciated reproduction cost (DRC) method of calculating real estate value. A licensed civil engineer testified for the assessors on the cost of reproducing the buildings. The assessors' real estate appraiser set a value for the taxpayer's land and added it to the engineer's figure for reproduction cost to arrive at an overall value of $9,593,480 for both the land and buildings.

The taxpayer's principal contention is that the board erred by admitting and relying on the DRC evidence offered by the assessors. This contention is set forth in several subsidiary arguments which we discuss in more detail below. The taxpayer also argues that the board's determination of value was not supported by substantial evidence and that the board "wrongfully rejected" the opinion of the taxpayer's witness on fair cash value.

1. The taxpayer's evidence. It is clear, as argued by the taxpayer, that decisions of the board must be supported by "substantial evidence." We discussed the substantial evidence test at length in New Boston Garden Corp. v. Assessors of Boston, --- Mass. ---, --- - ---, Mass.Adv.Sh. (1981) 1023, 1033-1034, 420 N.E.2d 298. In reviewing a decision of the board under the substantial evidence test, we consider the record as a whole. Id. at ---, Mass.Adv.Sh. at 1033, 420 N.E.2d 298. The board's findings will stand unless "the evidence points to no felt or appreciable probability of the conclusion or points to an overwhelming probability of the contrary." Id., quoting from L. L. Jaffe, Judicial Control of Administrative Action 598 (1965). Because the board's treatment of the evidence introduced by the taxpayer is critical to a resolution of the taxpayer's claims of error, we turn first to an analysis of that evidence.

As previously noted, the taxpayer's expert witness set the fair cash value of the property, including both land and buildings, at $3,354,000. In arriving at this figure he placed "great weight" on the price of $3,600,000 recited in a deed to the taxpayer dated November, 1976, of a large parcel including the subject property. This deed was given as part of the sale to the taxpayer of the entire raceway business for a total price of $9,650,000. The witness rejected the DRC method of valuation because of the age of the buildings and while he gave "some weight" to the income capitalization method of calculating value, "the weightiest approach" in his mind "was the price paid for the property by the present owners."

The board found that the price of $3,600,000 appearing on the deed was "unilaterally determined by the seller" and that there was no agreement between the parties to the sale as to what portion of the total purchase price was allocable to the real estate. As a consequence, the board was "not persuaded that the $3,600,000 of consideration recited on the deed was the actual purchase price of the real estate." For this reason the board gave no weight to the expert's opinion of value based on this sale.

It is true, as the taxpayer argues, that actual sales of property usually furnish strong evidence of market value, provided they are arm's-length transactions and thus fairly represent what a buyer has been willing to pay for the property to a willing seller. New Boston Garden Corp. v. Assessors of Boston, --- Mass. ---, ---, Mass.Adv.Sh. (1981) 1023, 1036, 420 N.E.2d 298. First Nat'l Stores, Inc. v. Assessors of Somerville, 358 Mass. 554, 560, 265 N.E.2d 848 (1971). We have never said, however, that the sale price recited in the deed provides conclusive evidence of fair cash value. See Tremont & Suffolk Mills v. Lowell, 271 Mass. 1, 15, 170 N.E. 819 (1930). In this case, the board was amply justified in disregarding the estimate of value offered by the taxpayer based on this sale. No witness for the taxpayer offered any explanation of the source of the figure of $3,600,000 which appears on the deed to the taxpayer. The taxpayer's expert witness testified that he was not aware how the price on the deed was determined and had made no independent investigation to determine whether the sale was a true arm's-length transaction. The board's finding that the $3,600,000 figure had been "unilaterally determined by the seller," and was not the product of any agreement of the parties, is based squarely on testimony given by one of the taxpayer's partners. Even in its brief in this court the taxpayer offers no logical reason for us to conclude that this figure represents fair market value. The taxpayer made no effort to show the value of the other assets sold in the transaction. Nor did it seek to demonstrate the objective reasonableness of the $3,600,000 figure by any other method.

In these circumstances, the board had objectively adequate reasons for disregarding the opinion of value offered by the taxpayer as evidence "substantially lacking in probative force." New Boston Garden Corp., supra, --- Mass. at ---, Mass.Adv.Sh. at 1035, 420 N.E.2d 298. "The board was not required to accept the opinion expressed, or the valuation principles used, by (the taxpayer's) expert witness." Assessors of Nahant v. Costin, 356 Mass. 726, 727, 252 N.E.2d 215 (1969). See also Assessors of Lynnfield v. New England Oyster House, Inc., 362 Mass. 696, 700, 290 N.E.2d 520 (1972).

The taxpayer's expert testified that he gave "some weight" to the income capitalization method of valuation. The board gave no weight to this approach because it found that he did not in fact rely on it to reach his estimate of the value of the taxpayer's property. This finding is supported by this witness's testimony that he believed the recent sale of the property would yield a more accurate indication of value than the capitalization of income method. He stated that he considered income data but did not use it in reaching his opinion. He indicated that the income capitalization method would produce a very low figure (apparently $1,600,000) which he believed did not accurately reflect the value of the taxpayer's property. There is therefore no indication that the income capitalization method played any role in the $3,354,000 figure given by the taxpayer's expert as the value of the property.

The taxpayer objects to some statements in the board's report which are critical of the income and expense figures introduced in its behalf. Since its expert never reached an opinion of value based on income capitalization principles, the taxpayer was not prejudiced by any error in the board's understanding of these figures.

There is no basis for the taxpayer's further claim that the board "rejected" or "ignored" the evidence introduced through its expert. The taxpayer's evidence of value was admitted and given full consideration by the board. Moreover, the board gave some weight to the opinion of the value of the land offered by the taxpayer in reaching its own determination of fair cash value.

In an appeal to the board from the denial of a tax abatement, the taxpayer bears the burden of proof on the issue of overvaluation. Schlaiker v. Assessors of Great Barrington, 365 Mass. 243, 245, 310 N.E.2d 602 (1974). Until the taxpayer sustains his...