Town of Southwest Harbor v. Harwood

• Decision Date: 14 December 2000
• Citation: 2000 ME 213,763 A.2d 115
• Parties: TOWN OF SOUTHWEST HARBOR v. Jean HARWOOD, Trustee, Cranberry Point Realty Trust.
• Court: Maine Supreme Court

763 A.2d 115

2000 ME 213

TOWN OF SOUTHWEST HARBOR v. Jean HARWOOD, Trustee, Cranberry Point Realty Trust.

Supreme Judicial Court of Maine.

Argued November 7, 2000.

Decided December 14, 2000.

John L. Carver (orally), Carver, Kimball & Baiungo, Belfast, for plaintiff.

William H. Dale (orally), Sally J. Daggett, Jensen Baird Gardner & Henry, Portland, for defendant.

Panel: WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and CALKINS, JJ.

SAUFLEY, J.

[¶ 1] Jean Harwood, the trustee of the Cranberry Point Realty Trust, appeals from a judgment entered in the Superior Court (Hancock County, Mead, C.J.), vacating the decision of the Southwest Harbor Board of Assessment Review in which the Board granted a tax abatement on two parcels of the trustee's land located on Greenings Island.¹ The trustee asserts that the Board's decision to grant the abatement was supported by substantial evidence in the record. We agree and vacate the judgment of the Superior Court.

I. BACKGROUND

[¶ 2] On behalf of the Cranberry Point Realty Trust, the trustee owns two adjacent parcels of land located on the southwest portion of Greenings Island, which overlooks the shores and mountains of Acadia National Park. Greenings Island is located off the coast of the Town of Southwest Harbor and is considered to be within the Town's geographic limits. In 1981, the trustee purchased the first parcel of 9.78 acres, which included the main house, a boathouse, and a saltwater swimming pool. In 1995, the trustee purchased the second, adjoining parcel of 19.3 acres from an abutter. The two parcels have been combined for tax assessment purposes.

[¶ 3] Historically, the properties on Greenings Island have been difficult to value for tax purposes for several reasons. There is currently a total of fourteen parcels of property on Greenings Island. Many of the properties are owned by related family members who have spent summers on the island for generations. Until recently, properties generally passed between family members or relatives for nominal value, and arms length sales to third parties were rare. According to the Town's assessor, with the exception of recent sales, there have not been any distinct fair market value sales on Greenings Island "at least since the turn of the century." In addition, other islands in the area that might ordinarily provide comparable sales information have amenities that Greenings Island does not, including ferry service and electricity.²

[¶ 4] On April 1, 1997, the Town revaluated all the properties on Greenings Island for purposes of its 1997 tax assessments. As part of an update solely for the Greenings Island properties, the Town's assessor increased, among other things, the common multiplier used to calculate land values on Greenings Island from .26 to .70, which had the effect of substantially increasing all assessment values on the island. The assessed value of the trust's property increased from $823,300 in 1996 to $1,389,700 in 1997, both figures representing the assessed values before credits for land in the state tree growth and open space programs.

[¶ 5] The trustee unsuccessfully sought abatement from the Town regarding the 1997 assessment and then appealed to the Southwest Harbor Board of Appeals. After a hearing, the Board unanimously granted an abatement in the amount of $240,000, reducing the trust property's precredit assessment value to $1,149,700. The Town appealed to the Superior Court pursuant to 36 M.R.S.A. § 843(1) (Supp. 2000) and M.R. Civ. P. 80B. The Superior Court vacated the Board's decision, concluding that there was no evidence in the record to support the Board's determination of just value. This appeal followed.

II. DISCUSSION

[¶ 6] Because the Superior Court acted as an intermediate appellate court, we review directly the Board's decision for abuse of discretion, error of law, or findings unsupported by substantial evidence in the record. Muirgen Props., Inc. v. Town of Boothbay, 663 A.2d 55, 58 (Me. 1995). "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." Town of Vienna v. Kokernak, 612 A.2d 870, 872 (Me.1992).

[¶ 7] In an abatement proceeding, the Board must undertake its responsibilities in two parts. The Board begins its review with the presumption that the assessor's valuation is valid. Chase v. Town of Machiasport, 1998 ME 260, ¶ 13, 721 A.2d 636, 640. The taxpayer has the burden of overcoming that presumption. City of Waterville v. Waterville Homes, Inc., 655 A.2d 365, 367 (Me.1995). If the taxpayer presents sufficient evidence to meet his or her burden, and the Board is convinced that the assessed value was manifestly wrong, then the Board has the responsibility to undertake its own determination of just value and to grant "such reasonable abatement as the board thinks proper." 36 M.R.S.A. § 843(1); accord City of Biddeford v. Adams, 1999 ME 49, ¶¶ 24-25, 727 A.2d 346, 351-52; Quoddy Realty Corp. v. City of Eastport, 1998 ME 14, ¶ 11, 704 A.2d 407, 410.

[¶ 8] Thus, in an appeal from a Board's grant of tax abatement, we review the record to determine, first, whether the taxpayer presented "credible, affirmative evidence" to meet his or her burden of persuading the Board that the assessor's valuation was "manifestly wrong."³See Chase, 1998 ME 260, ¶ 12,721 A.2d at 640 (citing Waterville Homes, Inc.,655 A.2d at 367). If the record confirms that the taxpayer did present such evidence, we review the Board's independent determination of the "just value" of the property for findings unsupported by the record, error of law, or abuse of discretion. Adams, 1999 ME 49, ¶ 25,727 A.2d at 351; Muirgen Props., Inc.,663 A.2d at 59.

A. Evidence that the Assessed Value was Manifestly Wrong

[¶ 9] Southwest Harbor relies on our opinion in Waterville Homes for its assertion that the Board erred in concluding that the assessor's assigned value was manifestly wrong. In Waterville Homes, we held that a taxpayer may not meet his or her burden of proving that the assessor was manifestly wrong by merely impeaching the Town's assessment. Waterville Homes, Inc., 655 A.2d at 366. Rather, the taxpayer must come forward with "credible, affirmative evidence of just value." Id. at 367.

[¶ 10] In Waterville Homes, the taxpayer presented "astonishingly meager" evidence, providing only the owner's bald assertions that the assessed value should be set either at the property's original discounted purchase price or at a previous year's assessed value, both of which were explicitly discredited by the Board as unreliable evidence of just value. Id. at 366. The Board determined that the owner's original purchase price was suspect because "it appears not to be an arm's length transaction." Id. Further, the Board refused to give any credibility to the City's previous years' assessment values because those values had been substantially reduced as "a result of negotiations between [the owner] and the mayor's office." Id. Notwithstanding the Board's determination that the taxpayer had presented absolutely no credible evidence of the property's just value, however, the Board went on to quibble with the assessor's methodology and concluded that the property should be assessed at the very amount it had already rejected in the taxpayer's superficial presentation. Id. at 367.

[¶ 11] The facts here contrast significantly with those before us in Waterville Homes. See id. at 365-66. Here, the trustee came forward with affirmative evidence, which the Board found credible, to support the claim that the property's assessment was "manifestly wrong." See id. at 366-67; Muirgen Props., Inc., 663 A.2d at 58-59. Through the trustee's testimony and that of the trustee's appraiser, the trustee presented the key piece of evidence upon which the Board relied to make its conclusion—the purchase price of a comparable piece of property on Greenings Island in an arms length sale.⁴

[¶ 12] The trustee's appraiser presented a report to the Board that included specific evidence of recent sales, one of which was the September 1996 purchase by Jarvis Newman of two lots on Greenings Island for a total of $730,000. Peter Harwood also testified regarding the Newman sale.⁵ There was no dispute that the Newman sale was the result of an arms length transaction. Nor was there any dispute that just six months later, the Town assessed the Newman property at $153,200 higher than the purchase price.

[¶ 13] After hearing from the taxpayer, the taxpayer's appraiser, the Town's appraisers, and the assessor, the Board concluded that Newman's September 1996 purchase price of $730,000, which was "affirmatively" presented by the taxpayer, was the "ideal benchmark ... in terms of value on Greenings Island." Having concluded that Newman's purchase price represented "the cleanest" and "the best piece of evidence" before it, the Board then determined that the Town's April 1997 assessment value of the Newman property at $883,200 was approximately 17% higher than its just value. Because a uniform assessment system was used for all Greenings Island properties, the Board concluded that the Town had similarly overvalued the trust property, and thus, the assessed value of the trust property was manifestly wrong.

[¶ 14] In so concluding, the Board examined the evidence on the very basis that we have required. See Waterville Homes, Inc., 655 A.2d at 367. It examined the facts before it to determine whether the taxpayer had presented evidence "proving that the assessed valuation in relation to the just value is `manifestly wrong.'" Id. (quoting Delta Chemicals, Inc. v. Inhabitants of Searsport, 438 A.2d 483, 484 (Me. 1981)) (emphasis added). The Board accepted as credible the trustee's evidence regarding the arms length...