LSP Ass'n v. Town of Gilford
Decision Date | 03 November 1997 |
Docket Number | No. 95–500.,95–500. |
Citation | 702 A.2d 795,142 N.H. 369 |
Court | New Hampshire Supreme Court |
Parties | LSP ASSOCIATION v. TOWN OF GILFORD. LSP DWELLING UNIT OWNERS GROUP v. TOWN OF GILFORD. |
Sulloway & Hollis, Concord (Margaret H. Nelson, on the briefs and orally, and Jennifer Shea Moeckel, on the briefs), for plaintiffs.
Mitchell & Bates, P.A., Laconia (Walter L. Mitchell, on the brief, and Timothy Bates, on the brief and orally), for defendant.
This is an appeal and cross-appeal from a decision of the Superior Court (McHugh , J.) concerning consolidated petitions for tax abatement filed under RSA 76:17 (Supp.1994) (amended 1995) by LSP Association (association) and LSP Dwelling Unit Owners Group (unit owners) for properties located in the Town of Gilford (town) for the tax year beginning April 1, 1993. Due to the parties' resolution of two of the three questions presented on direct appeal, we will confine our review to the association's argument that the superior court erred by increasing its assessment above the amount established by the town. We will also address on cross-appeal the town's argument that the superior court erred in ruling that the site amenity charges assessed against the unit owners were improper. We reverse in part and affirm in part.
The real estate at issue, known as Lake Shore Park, consists of eighty-five acres of land with over 3,300 feet of frontage on Lake Winnipesaukee. There are 310 cottages and mobile homes in the Park. Because this use of the property predated zoning, it is permitted to continue as a preexisting use even though it violates the density requirements established by the town's current zoning ordinance. The association owns all of the land in the Park, which it operates as a "social club" for its members, the unit owners. Although the unit owners hold title to the structures, they are not given a deed to the land on which their units sit nor do they share in the ownership of any of the common amenities in the Park, such as the marina, beach, or tennis courts. If a unit is sold, all that is transferred to the new owner is title to the structure and the unit owner's membership in the association. The parties do not dispute that the association is a recognized legal entity which has its own status as a taxpayer separate and apart from the unit owners.
In 1993, the town underwent a revaluation. The association was notified that the town proposed to assess its property in the amount of $13,900,000, which included $12,550,000 for the land and $1,350,000 for improvements. The town also proposed that each of the 310 unit owners be assessed about $20,000 on the depreciated building values of their cottages or mobile homes, for a combined assessment of $6,201,300. Together these proposed assessments totaled more than $20,100,000.
The unit owners did not dispute the assessments proposed against their structures. The association, however, objected to its proposed assessment on the grounds that (1) market conditions were distressed and (2) the 1986 assessment had been reduced from almost $6,900,000 to $5,400,000 as the result of litigation, where it had remained until the 1993 revaluation. In response to the association's objection, the town reduced the assessment to $5,598,100, which included $5,063,000 for the land and $535,100 for improvements, but then assessed a site amenity charge against each unit owner in the amount of $30,000 in addition to the $20,000 assessed for the depreciated value of each unit. The site amenity assessments totalled $9,300,000 which, when combined with the association's assessment and the depreciated building values of the cottages and mobile homes, resulted in a total assessment of over $21,000,000. The town had not assessed a site amenity charge against any other taxpayer.
Because it is not in dispute, we will assume that the plaintiffs petitioned the town for an abatement of taxes, see RSA 76:16 (Supp.1994) (amended 1995), and the town denied the abatement. Appeals were then filed in the superior court, see RSA 76:17, and the cases were consolidated for trial. The plaintiffs' expert witness and the tax assessor for the town were the only witnesses who testified during the two-day trial. The trial court also took a view of the Park.
There were two issues before the trial court—the tax assessed against the association's land and the site amenity charges assessed against the unit owners. The trial court considered these issues to be intertwined because "the evidence is clear that the decision to reduce the land value was based solely on the decision to add a site amenity charge."
While acknowledging that some type of site amenity assessment was appropriate given the uniqueness of the Park, the trial court concluded that the assessment of a blanket charge against the unit owners was improper for several reasons. First, the trial court found that it was patently unfair to assess the same site amenity charge against all of the units, no matter what the value of each unit or its proximity to the lake. Second, the trial court noted that because the unit owners have no legal title to the land, the imposition of a site amenity assessment against them was "potentially illegal."
The trial court chose to view the actual sales prices of the units as the true measure of the Park's overall value. On average, the actual sales price of each unit was $70,000, a figure which the parties do not dispute. In determining how much of the average sales price was taxable, the court rejected the arguments of the association and the town that, respectively, sixty percent and 100 percent of the average sales price of each unit was taxable, and concluded that a value of $50,000 should be assigned to each unit. The trial court then multiplied the unit value of $50,000 by the number of units in the Park and set the Park's total assessment at $15,500,000. Of that sum, $6,201,000 was assigned as the value of the units based upon the depreciated value of the structures, leaving a balance of $9,299,000, which the trial court assigned as the value of the land.
Finally, the trial court gave little weight to the fact that prior litigation resulted in a lower assessment for the 1986 tax year for the association's property, indicating "that the major reason why the assessment was so low was because of the poor evidence presented by the town in that case to justify a higher assessment." This appeal followed.
We will first address the association's claim that the trial court erred by increasing its assessment for the tax year 1993 above the amount established by the town. This is a question of first impression, and the context in which it is raised is unique. We agree with the association that the trial court lacked authority to increase the association's assessment.
The right to a tax abatement and the powers of the superior court in such proceedings are dictated solely by statute. RSA 76:17 ; see Appeal of Town of Sunapee , 126 N.H. 214, 216, 489 A.2d 153, 155 (1985). The current tax abatement statutes "were based upon the Revised Statutes of 1842 and are remarkably similar to those provisions." 16 P. Loughlin, New Hampshire Practice, Municipal Law and Taxation § 23.01, at 255 (1993); see RSA 76:16 ; RSA 76:16–a (1991) (amended 1995); RSA 76:17. RSA 76:16 provides, in part, that "[s]electmen or assessors, for good cause shown, may abate any tax assessed by them or their predecessors." RSA 76:16, I. If the board of selectmen or assessors neglect or refuse to abate any tax assessed by them or their predecessors, a taxpayer is authorized to seek relief from either the board of tax and land appeals, see RSA 76:16–a, or the superior court, see RSA 76:17. The taxpayer may choose which forum to use, but may not use both. See RSA 71–B:11 (1991).
In determining whether the trial court erred in increasing the assessment above the amount established by the town, we look first to the language of the statutes at issue. Appeal of Town of Newmarket , 140 N.H. 279, 282, 665 A.2d 1088, 1091 (1995). For purposes of taxation, the term "abate" means "to reduce in value." Webster's Third New International Dictionary 2 (unabridged ed.1961). Clearly, the trial court's decision to increase the assessment is contrary to the intended meaning of the term "abate" in the taxation statutes.
Next, our analysis focuses on the phrase "as justice requires." RSA 76:17 authorizes the superior court in an abatement proceeding to "make such order ... as justice requires." This phrase has been held to confer broad discretion and equitable powers upon the superior court to abate taxes. See Tau Chapter v. Durham , 112 N.H. 233, 236, 293 A.2d 592, 593 (1972). The town urges us to interpret this language to allow a superior court to increase an assessment in order to avoid an unjust and disproportionate tax burden from being placed on other taxpayers in the community. The town argues that if...
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