Inn v. Town of Ludlow

• Decision Date: 21 February 2020
• Docket Number: No. 2019-269,2019-269
• Citation: 2020 VT 11
• Court: Vermont Supreme Court
• Parties: Jackson Gore Inn, Adams House v. Town of Ludlow

2020 VT 11

Jackson Gore Inn, Adams House v. Town of Ludlow

No. 2019-269

Supreme Court of Vermont

December Term, 2019

February 21, 2020

NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal revision before publication in the Vermont Reports. Readers are requested to notify the Reporter of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made before this opinion goes to press.

On Appeal from Property Valuation & Review Division

Camilla Roberts, Hearing Officer

Hans G. Huessy of MSK Attorneys, Burlington, for Plaintiff-Appellee.

Stephen S. Ankuda of Parker & Ankuda, P.C., Springfield, for Defendant-Appellant.

PRESENT: Reiber, C.J., Robinson, Eaton and Carroll, JJ., and Wesley, Supr. J. (Ret.), Specially Assigned

¶ 1. CARROLL, J. The Town of Ludlow appeals from a decision by a Property Valuation & Review Division (PVR) hearing officer lowering the fair market value of two quarter-time-share condominium properties, Jackson Gore Inn and Adams House, located at the base of Okemo Ski Resort. On appeal, the Town argues that the time-share owners in Jackson Gore Inn and Adams House failed to overcome the presumption of validity of the Town's appraisal. The Town also argues that hearing officer incorrectly interpreted 32 V.S.A. § 3619(b) and failed to properly weigh the evidence and make factual findings. We affirm.

I. Legal Framework

¶ 2. Before moving to the facts of this particular dispute, we briefly discuss the governing law. Unless otherwise provided by law, every April 1, town listers are required to inventory property located in the town so they can appraise it at fair market value. 32 V.S.A. § 4041, 4044. By June 25, town listers must file a grand list with the town clerk, which contains, among other things, the name of each real property owner and a "brief description of each parcel of taxable real estate." Id. §§ 4151, 4152. Once the list is "lodged" with the clerk, the clerk certifies the list as complete, and the list "become[s] the grand list of such town," except as to any corrections or additions as provided by law. Id. § 4151(c); see Villeneuve v. Town of Underhill, 130 Vt. 446, 452-53, 296 A.2d 192, 196-97 (1972) (explaining that the "grand list was completed, subject to correction or amendment upon appeal, at the time it was lodged in the office of the town clerk").

¶ 3. One of the provided exceptions is for those appealing the listers' appraisal. Any "person aggrieved by the final decision of the listers under [Title 32] . . . may appeal . . . to the board of civil authority" (BCA), 32 V.S.A. § 4404(a), which consists of the "town clerk, selectboard members and justices residing in a town," 24 V.S.A. § 801. The taxpayer or town selectboard may further appeal the BCA's decision to either the Director of the PVR or the superior court of the county in which the property is located. 32 V.S.A. §§ 3007, 4461(a). When an appeal is filed with the Director, a hearing officer is appointed to conduct a de novo hearing to "determine the correct valuation of the property." Id. §§ 4465, 4467.

¶ 4. Determining the correct valuation of the property "is a two-step process." Dewey v. Town of Waitsfield, 2008 VT 41, ¶ 2, 184 Vt. 92, 956 A.2d 508. "First, the fair market value of the property must be determined." Boivin v. Town of Addison, 2010 VT 67, ¶ 7, 188 Vt. 571, 5 A.3d 897 (mem.) (quotation omitted). The "market data approach" and the "income approach" are appropriate "means of determining fair market value." New Eng. Power Co. v. Town of Barnet, 134 Vt. 498, 505, 367 A.2d 1363, 1368 (1976). "In the market approach, the appraiser finds similar properties that have been sold recently, and extrapolates a value for the subject property by comparing it to those recent sales." State Hous. Auth. v. Town of Northfield, 2007VT 63, ¶ 15, 182 Vt. 90, 933 A.2d 700. The income approach, on the other hand, determines "market value by converting the future benefits of property ownership into an expression of present worth." Beach Props., Inc. v. Town of Ferrisburg, 161 Vt. 368, 372, 640 A.2d 50, 52 (1994) (quotation omitted). Second, the fair market value is "equalized"—by using a common level of appraisal that is expressed as a percentage, Dewey, 2008 VT 41, ¶¶ 2, 6 (quotation omitted)—"to insure that the property is listed comparably to corresponding properties in town," Kachadorian v. Town of Woodstock, 144 Vt. 348, 350, 477 A.2d 965, 967 (1984).

II. Facts

¶ 5. This tax dispute revolves around a two-phase condominium project located at the base of Okemo Ski Resort in Ludlow, Vermont. The first phase, known as the Jackson Gore Inn, was completed in 2004 and contains 117 condominium units of varying size that are owned in quarter-time-share interests. In other words, four separate time-share interests own a single unit, meaning the 117 units are owned in 468 quarter shares. The first floor of the Jackson Gore Inn is under separate ownership from the time-share interests and consists of "ski area related services," such as a hotel desk area, lounge, and restaurant. The second phase, known as the Adams House, was completed in 2006 and contains 39 condominium units that are also owned in quarter-time-share interests. Each quarter-time-share owner in both condominiums purchases a right to occupy a specific unit over the course of a three-month period that changes every four years.

¶ 6. On April 1, 2018, the Ludlow Board of Listers appraised the Jackson Gore Inn and Adams House properties at $41,770,800 and $11,564,600, respectively.¹ The quarter-time-share-interest owners at both properties grieved the assessed values, arguing that their "properties [were] assessed in excess of their fair market values." In response, the listers conducted "an extensive sales study" to determine the appropriate value for the properties and reduced the Jackson GoreInn appraisal to $31,779,600. With regard to Adams House, however, the listers explained that they were leaving the property as appraised because only five units had sold in Adams House since April 2017 so there were not enough sales to support a change. The time-share owners appealed the listers' decision for both properties to the Ludlow BCA, and the BCA affirmed.

¶ 7. The time-share owners appealed the BCA's decision on both properties to the Director of the PVR. Pursuant to 32 V.S.A. § 4467, a hearing officer conducted a de novo hearing on May 30, 2019 to determine the correct valuation of the properties. Both the Town and time-share owners presented expert testimony. First, the time-share owners called Michael Bailey, a "Vermont Certified General Appraiser," who testified that using the market approach, he appraised the Jackson Gore Inn and Adams House properties at $25,273,100 and $8,471,200, respectively. Mr. Bailey testified that these values included the "common elements to the project," e.g., the halls and elevators, pool,² and storage areas, which "are owned in full by the individual quarter-share owners." But Mr. Bailey did not include the "commercial" elements—such as the restaurant, bars, retails shops, and real estate office located on the first floor of the Jackson Gore Inn—that are listed separately in the grand list and are not part of this appeal."

¶ 8. Mr. Bailey explained that he reached these conclusions by grouping together units of the same size, room count, and view. He then used sales of individual quarter-time-share interests in each group, multiplied by four to represent an entire unit, to calculate a value for each group of units. Finally, Mr. Bailey added each group together to reach a cumulative appraisal for the whole project. In using comparative sales data, Mr. Bailey emphasized that because "[t]heoverall trend in [value of] th[e] project is downward," he "put in a great deal of effort into making sure" he was using a stable sales period. He explained that he identified a stable market period from "January 2017 to the present," where he found forty-five sales of quarter-time-share interests in the Jackson Gore Inn and eight sales in Adams House.³

¶ 9. The Town's appraisal consultant, William Krajeski, owner of New England Municipal Consultants, testified that using a two-step analysis, he valued the Jackson Gore Inn and Adams House properties at $32,179,000 and $11,885,000. First, using a similar market approach to Mr. Bailey, Mr. Krajeski grouped units into categories and then used comparative sales to establish the value for each group of units. Mr. Krajeski concluded, however, that sales after April 1, 2018 should not be considered because they did not "accurately reflect" the value as of April 1 as the market was still declining. Using the market approach, Mr. Krajeski determined that the individual units in Jackson Gore Inn and Adams House properties were worth $31,230,000 and $11,534,000.

¶ 10. Mr. Krajeski then explained that, using an income approach, he added a value for the common areas because 32 V.S.A. § 3619 directs him to value the individual units as well as the project's common areas.⁴ He explained that trying to value the "halls, pools, all the[] different sorts [of] amenities" was "a difficult task" and he could not prove "the cost on a pool or cost of a corridor or whatever." However, Mr. Krajeski testified that the condominium project includes Okemo Limited Liability Company's contract to manage the complex and there is a value to the association owners for the fees they pay into this contract. He elaborated: "[If] Okemo LimitedLiability were to turn around and say we don't want to manage the project any more . . . . [t]hey are going to sell the contract. . . . There is a value to it much as there would be a lease to a building or anything else." Analyzing homeowners-association fees, Mr. Krajeski determined that Okemo makes $1.3 million annually on the contract, which h...