M.T. Associates v. Town of Randolph

• Decision Date: 07 October 2005
• Docket Number: No. 04-259.,04-259.
• Citation: 889 A.2d 740,2005 VT 112
• Court: Vermont Supreme Court
• Parties: M.T. ASSOCIATES v. TOWN OF RANDOLPH.

889 A.2d 740

2005 VT 112

M.T. ASSOCIATES v. TOWN OF RANDOLPH.

No. 04-259.

Supreme Court of Vermont.

October 7, 2005.

John P. Meaker, J.

Allan R. Keyes of Ryan, Smith & Carbine, Ltd., Rutland, for Plaintiff-Appellee.

Richard I. Burstein of Law Offices of Richard I. Burstein, Randolph, for Defendant-Appellant.

Present: REIBER, C.J., DOOLEY, JOHNSON and SKOGLUND, JJ., and ALLEN, C.J. (Ret.), Specially Assigned.

DOOLEY, J.

¶ 1. The Town of Randolph appeals from a superior court decision which found it had violated the state and federal constitution by selectively reassessing taxpayer M.T. Associates' property. The superior court concluded that the Town completed an unconstitutional partial reappraisal and, consequently, reset the value of taxpayer's property at its assessed value for the previous year. We conclude that no unconstitutional reappraisal occurred, and that the Town's decision to correct an error by reappraising only mini-marts was within its power. Therefore, we reverse the superior court and affirm the assessed value of $496,000 as set by the listers.

¶ 2. In 1998, taxpayer purchased property in Randolph and, in 2000, tore down the existing building and constructed a new convenience store with gasoline pumps, commonly called a mini-mart. The listers reassessed the property at $411,300 in light of the new construction. Taxpayer grieved the 2000 assessment on the grounds that the value was higher than that of other mini-marts in town. The Town reviewed the values of other mini-marts, observed that it appeared that all mini-marts were assessed below fair market value, and concluded that taxpayer's property was set disproportionately higher than comparable mini-marts. Consequently, for 2000 the Town temporarily lowered the assessed value of taxpayer's property to $336,300. In a note attached to the grievance decision, the lister stated: "[T]his is a one-year adjustment. We will be looking at all minimart/gas station type properties in Randolph again next year."

¶ 3. In 2001, the listers reviewed the assessments of all five mini-marts in the Town and found that they were assessed at between fifty-three percent and seventy percent of fair market value. To correct what they observed as an underassessment of all these properties, the listers raised all the values. Taxpayer's assessed value increased to $560,000. Taxpayer and three other mini-mart owners either grieved their assessments or presented additional information. Listers then lowered all four values, which reduced the assessed value of taxpayer's property to $496,000.

¶ 4. Of the five reappraised mini-marts, only taxpayer appealed the reassessed value to the board of civil authority. When that proved unsuccessful, taxpayer filed an appeal in superior court. Taxpayer did not contest the Town's determination of the fair market value of its property, nor did it claim that the Town's actions violated state law other than the state constitution. At trial, the parties agreed on a statement of facts, and each submitted testimony from an assessor. The parties agreed that Randolph last reappraised its property in 1994, and in 2001, at the time of the appeal, overall property values in the Town were at 104.36% of fair market value and commercial properties were at 106.12%. The Town concedes that it is not conducting a "rolling reappraisal" — that is, it is not intentionally reappraising a class of property each year to move closer to uniform assessment at fair market value. It has not looked comprehensively at the values of the 156 commercial properties in the Town. It has not reassessed any group of properties other than mini-marts. No townwide reappraisal is scheduled. Generally, the listers reassess a property at fair market value if "there was a new construction or a fire or a building addition to any real property of any category."

¶ 5. The trial court issued an oral order, concluding that the Town's reappraisal of only mini-marts was unconstitutional and consequently that the listed value of taxpayer's property should be reset to the previous year's value. In its written reconsideration decision, the court explained that where the Town reappraised only 3.2% of the commercial properties within the Town, was not selectively reappraising in the context of a "rolling reappraisal," and did not intend to reappraise other commercial properties, the reappraisal scheme violated both Chapter I, Article 9 of the Vermont Constitution and the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution "in bearing unequally on properties within the same class."

¶ 6. We will reverse a trial court's factual findings only if they are clearly erroneous. Williams v. Town of Lyndon, 2005 VT 27, ¶ 10, 178 Vt. ___, 872 A.2d 341 (mem.). Our review of legal issues is nondeferential and plenary. Searles v. Agency of Transp., 171 Vt. 562, 562, 762 A.2d 812, 813 (2000) (mem.).

¶ 7. On appeal, the Town argues that its reappraisal of mini-marts was appropriate to keep assessed values near fair market value between reappraisals of all property within the Town. Taxpayer, in response, urges us to adopt the rationale of the superior court. It asserts that the Town violated the Proportional Contribution Clause of the Vermont Constitution by selectively reappraising only mini-marts and not all commercial properties. That clause states that every member of society "is bound to contribute the member's proportion towards the expence of [society's] protection." Vt. Const. ch. I, art. 9.

¶ 8. We begin with a discussion of the statutory appraisal scheme because under the constitutional arguments lies a dispute about how a town should approach its listing responsibilities. Under our statutory scheme, listers are required to appraise property at fair market value. See 32 V.S.A. §§ 3431, 3481(1)-(2). As we have observed in other decisions, however, universal appraisal at fair market value is not achievable in most years. Thus, the Legislature has provided that towns must conduct a complete reappraisal if the percentage of deviation between the aggregate price of all properties sold in a year and their aggregate listed value falls below eighty percent or if the coefficient of dispersion of this deviation is above twenty. Id. §§ 4041a(b), 5401(3). The deviation percentage measures the ratio of listed values to actual sale prices and indicates whether properties have appreciated or depreciated. The coefficient of dispersion "measures the degree to which the ratio of listed to fair market value of individual properties deviates from the median ratio for the area." Williams, 2005 VT 27, ¶ 3, 872 A.2d 341; see also 32 V.S.A. § 5401(1). Beyond these specific mandates, towns may reappraise as long as the result is fair and equitable, with the overall goal to value properties at 100% of market value.

¶ 9. The stipulated facts indicate that the listers generally use a recent activity approach, reassessing properties only when an event occurs — like construction of a new building — that has a substantial impact on fair market value. Under this approach, the appraisals of other properties remain in place until a new general reappraisal. Taxpayer's expert witness, the assessor for the City of Rutland, testified that a different approach was proper. The witness testified that the Town should assess property at its value as of the last general reappraisal. Thus, he testified that the listers should have assessed taxpayer's property at the value it would have had in 1994 if the new construction had occurred in that year. He further testified that the listers did exactly that in 2000, after taxpayer's grievance, when the listers lowered the initial assessment of taxpayer's mini-mart to a value comparable to other mini-marts.

¶ 10. Although the validity of the approach urged by taxpayer was not directly before us, we criticized it extensively in Knollwood Building Condominiums v. Town of Rutland, 166 Vt. 529, 532, 540, 543-45, 699 A.2d 31, 34, 39, 41-42 (1997). We find it difficult to square this approach with the statutory command that listers appraise at current fair market value. Here, taxpayer's approach would be used to create an artificial value for a building that did not exist on the date for which it would be appraised. Overall, taxpayer's approach produces different property tax rates for different classes of property without statutory authority for such a system. See id. at 543-44, 699 A.2d at 41.

¶ 11. Thus, we do not believe that the Town was in any sense required in 2000 to lower the appraisal of taxpayer's mini-mart to make it comparable to that of other mini-marts. Indeed, that action was not consistent with its general approach to assessing new construction. Thus, we see no reason why, under Vermont statutory law, the listers could not correct their deviation from their listing practices by raising taxpayer's assessment to fair market value.

¶ 12. This leads us to the constitutional question. The superior court found the Town's assessment inconsistent with Chapter I, Article 9, the Proportional Contribution Clause, of the Vermont Constitution. In the tax context, this provision places no greater restrictions on government action than the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. Alexander v. Town of Barton, 152 Vt. 148, 157, 565 A.2d 1294, 1299 (1989). Therefore, we review the Town's action under a rational basis test; "governmental action is unconstitutional only if it treats similar persons differently for arbitrary and capricious reasons." Williams, 2005 VT 27, ¶ 7, 872 A.2d 341. We will uphold the classification if we can conceive of any reasonable policy or purpose for it. Hoffer v. Dep't of Taxes, 2004 VT 86, ¶ 10, 177 Vt. 537, 861 A.2d 1085 (mem.). Taxpayer bears the burden of demonstrating that a town's method was unconstitutional. Williams, 2005 VT 27, ¶ 7, 872 A.2d 341.

¶ 13. To comply with...