Redding Life Care, LLC v. Town of Redding

Decision Date12 March 2013
Docket NumberNo. 18921.,18921.
Citation61 A.3d 461,308 Conn. 87
CourtConnecticut Supreme Court


William S. Fish, Jr., with whom were William H. Champlin III and, on the brief, Heidi Hamilton, Hartford, for the appellant (plaintiff).

Elliott B. Pollack, with whom was Tiffany K. Spinella, Hartford, for the appellee (defendant).



The plaintiff, Redding Life Care, LLC, appeals from the judgment of the trial court denying its appeal from the decision of the board of assessment appeals of the defendant, the town of Redding (town), which upheld the assessor's valuation of the plaintiff's property. The plaintiff claims that the trial court improperly concluded that (1) it failed to establish aggrievement under General Statutes § 12–117a1 because the going concern income capitalization approach applied by the plaintiff's expert to value the property was not a permissible valuation method under Connecticut law, and (2) the town's assessment of the property was not manifestly excessive under General Statutes § 12–1192 despite its reliance on assumptions regarding income that it knew to be untrue and, if corrected, would have reduced the fair market value of the property by more than $30 million. The town responds that the trial court properly concluded that the plaintiff did not establish aggrievement and that the town may use hypothetical conditions in calculating the fair market value of a property. We agree with the town and, accordingly, affirm the judgment of the trial court.

The following relevant facts and procedural history are set forth in the trial court's memorandum of decision. The plaintiff is a for-profit limited liability company that purchased the subject property consisting of 133.62 acres in August, 1998, for the purpose of developing Meadow Ridge, an entry fee continuing care retirement community. Phases I and II of the development were completed in October, 2001, and August, 2007, respectively.

The development is situated on thirty to forty acres in the southerly portion of the property and contains three distinct components. These consist of (1) three separate, four-story, congregate retirement apartment and limited common area buildings containing 338 total entry fee apartments, (2) a one to two-story attached community building, and (3) a one to two-story attached health center, which includes twenty assisted living units and fifty skilled nursing beds. The community facility and the health center are located in one connected building. The three apartment buildings are connected to the community building and to the health center by enclosed walkways. The buildings are surrounded by interior driveways, open, paved parking areas, resident garages and landscaped areas, including three large courtyards. The remaining seventy acres in the northerly portion of the property contain a conservation easement accessible to the public and Meadow Ridge residents by walking trails.

All Meadow Ridge residents must execute a continuing care agreement that sets forth the financial obligations of the resident and the obligations of Meadow Ridge to provide the resident with lifetime care. Under the terms of that agreement, residents of the independent living units must be at least sixty-two years old, must be able to function independently at the time of admission, and must have sufficient financial resources to pay the entrance fee, monthly service fees and other expenses associated with independent living. Pursuant to the residence agreement, all residents also must pay an initial entrance fee and a monthly service fee, which entitle the resident to occupy an independent living unit for life, subject to certain conditions outlined in the agreement. Residents receive a flat 85 percent refund of their entry fee, which is payable on death, voluntary withdrawal or permanent transfer to the assisted living or health center.

Services are provided to residents at no additional cost, including one meal per day, building and grounds maintenance, custodial service, laundry and housekeepingservices, transportation service, all utilities except telephone and cable television, special diet and tray service when approved by a physician, planned activities, parking, use of all common and activity areas, an emergency call system, and facility security. The residence agreement also entitles residents access to assisted living or nursing care at a discount below market rate and equal to the lower of a two bedroom monthly fee or the monthly fee of the previously occupied unit, plus surcharges for extra meals and services. This benefit is unlimited. Monthly service fees are subject to increase at the discretion of the owner upon thirty days notice.

In accordance with the town's statutory obligation; see General Statutes § 12–62(b)(1); 3 the assessor conducted a town wide revaluation of all real estate for the grand list of October 1, 2007,4 and determined that the plaintiff's property had a fair market value of $117,621,000 5 and an assessment value of $82,334,600. The plaintiff challenged the valuation and appealed to the board of assessment appeals (board) pursuant to General Statutes (Rev. to 2007) § 12– 111(a),6 claiming that the property had a fair market value of $89,100,000 and an assessment value of $62,370,000. The board upheld the assessor's valuation, and the plaintiff appealed to the Superior Court pursuant to §§ 12–117a and 12–119. The plaintiff alleged that it was aggrieved by the actions of the board because the assessor's valuation of the property exceeded 70 percent of its true and actual value on the assessment date,7 and, consequently, the valuation was “grossly excessive, disproportionate and unlawful.” The plaintiff thus sought a reductionin the amount of the tax and the assessment on which it had been based.

At trial, the plaintiff's appraiser, Michael G. Boehm, explained the methodology he had used to determine the fair market value of the property. On February 23, 2011, the trial court denied the appeal pursuant to § 12–117a, explaining that it was unable to find that the plaintiff was aggrieved based on the evidence presented. The court also found no evidentiary support for the plaintiff's claim that the assessment was manifestly excessive under § 12–119. It thus rendered judgment for the town.

The plaintiff appealed,8 and the town filed a motion for articulation seeking clarification from the trial court as to whether it was the assessor's duty to value the unencumbered fee simple interest and whether the non-interest bearing refundable portion of the plaintiff's entry fees “should be considered in valuing the ... property, and, if so, how.” In response to the first question, the court stated that the issue on appeal to this court was whether the plaintiff had proven that it was aggrieved by the valuation and that the assessor's duty was not a factor in its decision. In response to the second question, the court stated that, [s]ince the court found that the plaintiff was not aggrieved by the assessor's valuation, as the court did not find credible the plaintiff's use of the going concern approach to value its real estate, the discussion of noninterest bearing refundable entry fees is not relevant to the issue raised in the plaintiff's appeal.” The court added in a footnote that the appeal had been taken by the plaintiff and centered on “the court's rejection of the use of the going concern approach to valuing its real estate.”

After the briefs were filed and following oral argument, this court sought an articulation as to “whether [the trial court] rejected Boehm's testimony because [the court] found him not to be credible, or because [the court] rejected Boehm's use of the going concern approach as a method for [the valuation] of real property.” The trial court responded on October 31, 2012, as follows: [T]he trial court rejected Boehm's testimony because the trial court found his testimony not to be credible.”


The plaintiff first claims that the trial court improperly concluded that the going concern income capitalization approach applied by Boehm is not recognized or permitted under Connecticut law and thus may not be used to determine the fair market value of real estate and whether the plaintiff is aggrieved under § 12–117a. In response, the town argues that the trial court did not reject the going concern income capitalization approach as a matter of law but, rather, because the plaintiff had failed to provide adequate, credible evidence to meet its burden of demonstrating overvaluation. We agree with the town.

The following review of the trial court's memorandum of decision is relevant to our resolution of this claim. After setting out the facts, the trial court explained the method Boehm had used to value the plaintiff's property. The court noted that Boehm “undertook to value the subject real estate ... by first estimating the going concern value” of Meadow Ridge. The court explained that [t]he going concern value in this case consists of the real estate, the personal property and the intangibles” and that [i]ntangible personal property, for tax purposes, has been defined as property which is not itself intrinsicallyvaluable, but which derives its chief value from that which it represents.” (Internal quotation marks omitted.) The court also noted that “Boehm considered only the income approach to value the subject [property] as a going concern. [He] neither considered the market sales approach nor the cost approach, although the costs of land acquisition and construction were recently incurred....” 9

Following this explanation, the trial court proceeded to analyze the plaintiff's appeal. Significantly, the trial court opened the analysis portion of its decision by noting that both “Boehm, as well as the [town's] appraiser ......

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    • Connecticut Supreme Court
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    ...going to establish value including [its] own view of the property." (Internal quotation marks omitted.) Redding Life Care, LLC v. Redding , 308 Conn. 87, 99–100, 61 A.3d 461 (2013). "Only after the court determines that the taxpayer has met his burden of proving that the assessor's valuatio......
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    ...account in performing such calculations or that its failure to do so constitutes reversible error. See Redding Life Care, LLC v. Redding , 308 Conn. 87, 106–11, 61 A.3d 461 (2013) (permitting—but not requiring—the trial court to consider a hypothetical entry fee escrow account in its valuat......
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    ...of law." (Citations omitted; emphasis omitted; footnote omitted; internal quotation marks omitted.) Redding Life Care, LLC v. Redding , 308 Conn. 87, 100–102, 61 A.3d 461 (2013).AThe plaintiff first claims that the trial court did not properly apply § 12-63b (b)7 in valuing the subject prop......
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1 books & journal articles
  • 2013 Connecticut Tax Law Developments
    • United States
    • Connecticut Bar Association Connecticut Bar Journal No. 88, 2014
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