Petrin v. Town of Scarborough

• Decision Date: 16 August 2016
• Docket Number: Docket: BCD-15-103
• Citation: 2016 ME 136,147 A.3d 842
• Parties: Donald Petrin, et al. v. Town of Scarborough
• Court: Maine Supreme Court

147 A.3d 842

2016 ME 136

Donald Petrin, et al.

v.Town of Scarborough

Docket: BCD-15-103

Supreme Judicial Court of Maine.

Argued: December 8, 2015

Decided: August 16, 2016

Corrected: September 27, 2016

John B. Shumadine, Esq. (orally), Murray, Plumb & Murray, Portland, for appellants Donald Petrin et al.

Robert J. Crawford, Esq., N. Joel Moser, Esq., and Michael A. Hodgins, Esq. (orally), Bernstein Shur, Portland, for appellee Town of Scarborough

Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, and HJELM, JJ.

HJELM

, J.

[¶ 1] In 2012, the Town of Scarborough reassessed the tax valuation of parcels of land located in several areas within the Town, including the Pine Point, Higgins Beach, and Pillsbury Shores neighborhoods. Donald Petrin and other plaintiffs¹ (collectively, the Taxpayers) own parcels of land in those neighborhoods. As a result of the partial revaluation, the municipal assessments of their parcels of land increased. The Taxpayers unsuccessfully sought abatements from the Town Assessor and the Scarborough Board of Assessment Review. The Taxpayers now appeal from a judgment entered in the Business and Consumer Docket (Horton, J. ) concluding that they do not have standing to assert one of their challenges but otherwise affirming the Board's decision.

[¶ 2] We conclude that the Taxpayers have standing to pursue all of their challenges. We also determine that one of the Town's assessment practices is contrary to Maine law and that the Board erred by concluding that the unlawful practice did not result in discriminatory assessments of the Taxpayers' properties. We therefore remand to the Business and Consumer Docket with instructions to remand to the Board for further proceedings.

I. BACKGROUND

[¶ 3] The Town of Scarborough last conducted a town-wide valuation of the approximately 8,500 parcels of land located within the Town in 2005. As the Board found, however, on an ongoing basis the Town Assessor monitors sales of Scarborough property and conducts annual studies to ensure that, based on those sales, real estate assessments comply with applicable legal requirements. In 2012, Town Assessor Paul Lesperance revalued properties in certain neighborhoods based on his ongoing analysis of sales data. This partial revaluation resulted in decreased assessments for 475 properties but increased assessments for 279 properties, including properties owned by the Taxpayers. Specifically, assessments of waterfront properties in Higgins Beach and Pine Point increased by 20% and 25%, respectively, and assessments of interior, water-influenced properties² in Pillsbury Shores increased by 17%.

[¶ 4] In early 2013, the Taxpayers filed separate applications with Lesperance requesting abatements for the 2012 tax year pursuant to 36 M.R.S. § 841(1) (2015)

. In their applications, the Taxpayers alleged that the partial revaluation resulted in unjustly discriminatory assessments of their properties. Lesperance denied the applications, and the Taxpayers appealed to the Scarborough Board of Assessment Review pursuant to 36 M.R.S. § 843(1) (2015).³ After granting the Taxpayers' request to consolidate the appeals, the Board held a hearing on three dates in August through October of 2013.

[¶ 5] The testimony and evidence presented at the hearing focused on two topics: (1) the basis for the 2012 partial revaluation, and (2) assessment practices affecting the Town's valuation of large lots and contiguous lots held in common ownership. Because we conclude that the Board erred in its analysis of municipal valuations of contiguous lots held in common ownership, we focus our outline of the evidence on that point.

[¶ 6] At the hearing before the Board, Lesperance testified about an assessment methodology for valuing lots larger than one acre, and another methodology for valuing adjacent lots held in common ownership. Although during the Board proceedings the parties referenced these practices in an undifferentiated way as the “excess land program,” they are actually two different practices.

[¶ 7] As to the first practice—in effect, a “large lot” program—Lesperance explained that when assessing parcels that are larger than one acre, the Town recognizes the diminishing value of land in “excess” of its base lot. See 4 C.M.R. 18 125 201-1 § 1(D) (2015) (defining “base lot” as “a parcel of land ... which meets municipal guidelines for development”). The base lot is a portion of the overall lot and is assigned a specific value depending on the zoning district in which the lot is located. The area in excess of the base lot is then assigned a diminishing value pursuant to a curve. The effect is that the value assigned to the excess land within a single parcel—that is, the land in excess of the base lot—is less than the value that excess land would have if it were assessed at the same valuation rate used for the base lot. Lesperance testified that the Town applies this valuation method to large parcels that could be divided into smaller lots, in part because lots are not valued based on their development potential.

[¶ 8] In contrast to the practice that affects the assessment of single parcels larger than one acre, Lesperance testified about an “abutting property benefit” that is also available to property owners, but only upon their request. Under that practice, two separate but abutting parcels in common ownership are treated as a single parcel for assessment purposes. Based on the same general principle of diminishing property value that underlies the large lot program, the overall tax assessment for abutting parcels is less than it would be if the parcels were assessed separately. Lesperance testified, as an illustration, that if each parcel is one-half acre and the owner requests the abutting property benefit, the Town values the combined parcels as if they were a one-acre base lot, resulting in a lower overall tax assessment. Lesperance also testified about a specific example where the first of two abutting lots is one acre. He stated that if the second parcel—which he characterized as “excess land”—were assessed separately, “the valuation would be much higher.” In both circumstances, therefore, the abutting property program results—as Lesperance testified—in a “tax savings” to the owner of the abutting lots.

[¶ 9] Lesperance stated that there were twenty or thirty sets of parcels in Scarborough that benefitted from the abutting property program, mostly located in the Prouts Neck neighborhood. The evidence also establishes that with the exception of one of the Taxpayers, Preston Leavitt, who owns at least two abutting parcels, all of the Taxpayers own single parcels.⁴ None of the Taxpayers owns a parcel larger than one acre.

[¶ 10] In a written decision issued in December 2013, the Board denied the Taxpayers' consolidated appeals. The Board found, inter alia, that Lesperance's “appraisal techniques were thorough and well-grounded in expert assessing methodology,” that he “did not use systematic or intentional methods to create a disparity in valuations” or rely on “unfounded or arbitrary” assumptions, and that any errors in the analysis “did not affect the overall equity of the assessments.” The Board further stated that its “primary concern [about the abutting property program] was that the second lot reduction must be requested and that this policy may not be widely known in town.” Nevertheless, the Board “concluded that the actual impact of this policy was minor and did not make the assessments discriminatory.”

[¶ 11] In January 2014, pursuant to 36 M.R.S. § 843(1)

and M.R. Civ. P. 80B, the Taxpayers appealed the Board's decision in a complaint filed in the Superior Court (Cumberland County). On application by the Taxpayers, the case was transferred to the Business and Consumer Docket. In its ensuing judgment, the court concluded that the Taxpayers did not have standing to seek remedial relief based on the methods used by the Town to assess large single parcels and abutting parcels in common ownership because the Town uses those methods uniformly and so the Taxpayers' properties were not treated differently than the properties of other taxpayers. On the merits of the remaining challenges, the court affirmed the Board's decision to deny the abatement applications. The Taxpayers appealed pursuant to 14 M.R.S. § 1851 (2015).

II. DISCUSSION

[¶ 12] The Taxpayers argue that the evidence in the record compelled the Board to find that they bear an unequal share of the Town's overall tax burden because (1) the Town's assessment practices affecting large parcels and abutting parcels in common ownership create a discriminatory effect unfavorable to them,⁵ and (2) the 2012 partial revaluation was based on flawed data and arbitrarily targeted certain waterfront and water-influenced neighborhoods.

[¶ 13] When the trial court acts as an appellate tribunal in reviewing a decision of a municipal Board of Assessment Review,

we review the Board's decision directly for abuse of discretion, errors of law, and sufficient evidence. That the record contains evidence inconsistent with the result, or that inconsistent conclusions could be drawn from the evidence, does not render the Board's findings invalid if a reasonable mind might accept the relevant evidence as adequate to support the Board's conclusion.

Terfloth v. Town of Scarborough , 2014 ME 57, ¶ 10, 90 A.3d 1131

(citation omitted) (quotation marks omitted).

[¶ 14] “A town's tax assessment is presumed to be valid.” Ram's Head Partners, LLC v. Town of Cape Elizabeth , 2003 ME 131, ¶ 9, 834 A.2d 916

. To rebut this presumption, a taxpayer bears an affirmative burden of proving that the assessed value of the property is “manifestly wrong” by demonstrating “(1) that [the] property was substantially overvalued and an injustice resulted from the overvaluation; (2) that there was unjust discrimination in the valuation of the property; or (3) that the assessment was fraudulent, dishonest, or illegal.” Terfloth , 2014 ME 57...