Royal Parke Corp. v. Town of Essex

• Decision Date: 01 February 1985
• Docket Number: No. 82-376,82-376
• Citation: 488 A.2d 766,145 Vt. 376
• Parties: ROYAL PARKE CORPORATION v. TOWN OF ESSEX.
• Court: Vermont Supreme Court

Page 766

488 A.2d 766

145 Vt. 376

ROYAL PARKE CORPORATION v. TOWN OF ESSEX.

No. 82-376.

Supreme Court of Vermont.

Feb. 1, 1985.

Vincent A. Paradis, Essex Junction, for plaintiff-appellant.

Perry & Schmucker, South Burlington, for defendant-appellee.

Before HILL, UNDERWOOD, PECK and GIBSON, JJ., and BARNEY, C.J. (Ret.), Specially Assigned.

BARNEY, Chief Justice (Ret.), Specially Assigned.

This is an appeal from a property reappraisal for local tax assessment purposes. The Royal Parke Corporation, the plaintiff taxpayer, is challenging the decision of the State Board of Appraisers affirming the valuation of the taxpayer's property by the Essex Town Board of Civil Authority.

The property involved was originally operated as an apartment complex of seventy-two units from July 1978 to June 19, 1980, by the present owners of the bulk of the remaining units. At that time the taxpayer converted the premises to condominium units by filing a declaration as required by 27 V.S.A. § 1303. Title 27 V.S.A. § 1311(6) requires the declaration to set out the value of each unit, including the percentage of undivided interest in common areas and their value, in order that each unit may be separately assessed for tax purposes, with separate tax bills for the owners of each unit. 27 V.S.A. § 1322. All this was done.

The declaration put the value of the units at either $39,200 or $39,900. At the time of the hearing, two units had been sold outright at the $39,900 figure and seven more were under contract of sale at the same price.

At the time of the change from apartment complex to condominium the property remained physically unaltered. Some surveying expense and other costs relating to drafting and filing the condominium declaration were incurred, but there is no evidence of any other expense.

There was a change in the tax assessment. The seventy-two unit apartment complex was assessed at a total figure which amounted to a taxable assessment of $14,049.11 per unit. With the change to condominium status, the reappraisal set the per unit assessment at $18,100. As might be expected, this change in assessment provoked the appeal.

In order to clearly understand the final figures arrived at in Essex, something must be said about that town's assessment procedures. State law requires listers to appraise property at fair market value. 32 V.S.A. §§ 3431, 3481. In Essex, the listed value of the property is a different value than appraised value. The means of arriving at this differential will be part of the concern of this opinion, but, first, the issue of the proper determination of fair market value as raised by the taxpayer must be dealt with.

The taxpayer asserts that the conversion to condominiums without physical change in the property was not such a value-altering event as to justify a change in assessment. Starting with the proposition that fair market value is the required objective of the statute, the taxpayer's position cannot be sustained.

The taxing statute, 32 V.S.A. § 3481, makes fair market value the standard for appraisal. Since it is usually a value estimated in the absence of actual, relatively concurrent, sale, of necessity many elements must go into the valuation to permit the value to closely approximate the potential return to the seller and cost to the buyer in free and open sale. When, however, fair market value can be established by the operation of bona fide sale transactions themselves, a market value is perforce established for appraisal purposes. There is then no need to consider factors useful in trying to estimate market value. So long as the sales evidence proves a transaction between a willing buyer and willing seller at arms length, entered into in good faith, and not to "rig" a value, the tax statute is not concerned about the reasons either buyer or seller attributed the agreed value to the property.

Moreover, the concern shown in this case for fitting the change into some valuation formula illustrates the weakness of such formulas generally, and supports this Court's general disapproval of such devices. Bloomer v. Town of Danby, 135 Vt. 56, 57-58, 370 A.2d 194, 195 (1977). Fortunately, in this case, it was the formula that was manipulated while the market value was...