Lebovitz v. Town of Scarborough

012 SUPERIOR COURT

STATE OF MAINE

CUMBERLAND, ss. gree CIVIL ACTION

“= DOCKET NO. AP-02-4

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ROBERT LEBOVITZ and

CAROLYN LEBOVITZ

Plaintiffs, DONALD L. GARBRECHT

LAW LIBRARY

Vv. ORDER ON 80B APEAL.: JUN 16 2005

TOWN OF SCARBOROUGH,

Defendant.

Plaintiffs Robert and Carolyn Lebovitz appeal from the July 22, 2002 decision of

the Town of Scarborough Board of Assessment Review (Board), in which the Board

upheld the Town Tax Assessor’s (Assessor’s) valuation of the Plaintiffs’ property.

FACTUAL BACKGROUND

Plaintiffs own unit #12 of the Atlantic House Condominiums in Scarborough.

The Atlantic Place Condominiums are located on coastal property adjacent to

Scarborough Beach. Plaintiffs purchased unit #12 in 1991 for $750,000.'_ For the 2001

tax year, the Assessor assessed Plaintiffs’ property at $707,000. Plaintiff asserts that the

fair market value of the property is $486,700. By unanimous vote, the Board denied

Plaintiffs’ appeal of the Assessor’s valuation.

Atlantic House is comprised of 42 units of five different floor plans (A-E).

Plaintiffs’ unit is an A unit. A units are most similar to D units. Most A units have a full

basement. Plaintiffs’ unit does not; it has only a crawlspace, for which it received a

negative adjustment.

' The Real Estate Transfer Tax form reported to the Town indicates a price of $750,000.

Plaintiffs provided documentation demonstrating that the seller assumed a “buy-down” credit,

resulting in an. effective purchase price of $611,281.

The Plaintiffs’ brief does not clearly identify the legal arguments presented on

appeal. In light of the standard of review, the Plaintiffs’ elusive arguments may be

reduced to three legal contentions: the Assessor’s valuation of the Plaintiffs’ property is

manifestly wrong, because either 1) the judgment of the assessor was irrational, or was

so unreasonable in light of the circumstances that the property was substantially

overvalued and an injustice resulted; 2) the Plaintiff was unjustly discriminated against

in the valuation of his property; or 3) the assessment was illegal because it did not

consider all of the factors identified in 36 M.R.S.A. § 701-A (2002).

The Board argues that all of the “evidence” presented at the hearing was

properly weighed or, if appropriate, excluded by the Assessor and the reasoning and

support for those decisions were presented to the Board. Defendant, therefore

contends that there was sufficient support on the record for the Board’s decision; that

Plaintiffs failed to meet their burden to prove the assessment was manifestly wrong;

that the Board acted properly in not completing an independent valuation of the

ptoperty; and that Plaintiffs’ contention that the Assessor illegally relied upon sales data

from after the statutory date of valuation is not supported by the evidence and is not

sufficient by itself to permit the court to overturn the assessment.

DISCUSSION

A decision of the Board of Assessment Review is reviewed for errors of law,

abuse of discretion, or findings of fact not supported by substantial evidence in the

record. Griffin v. Town of Dedham, 2002 ME 105, 7 6, 799 A.2d 1239. The Board’s

analysis begins with the presumption that the assessor's valuation of the property is

valid. Chase v. Town of Machiasport, 1998 ME 260, ] 13, 721 A.2d 636. See also

Muirgen Properties, Inc. v. Town of Boothbav, 663 A.2d 55, 58 (Me.1995) (discussing

burden and standard of review); Sweet v. City of Auburn, 134 Me. 28, 33, 180 A. 803

(1935) (citing Penobscot Chemical Fibre Co. v. Town of Bradley, 99 Me. 263, 267-69, 59

A. 83 (1904)).

The Plaintiff taxpayer bears the burden of establishing before the Board of

Assessment Review that “the assessed valuation in relation to the just value is

manifestly wrong.” Weekley v. Town of Scarborough, 676 A.2d 932, 934 (Me. 1996).

“[A] taxpayer may not meet his or her burden of proving that the assessor was

manifestly wrong by merely impeaching the Town's assessment. Rather, the taxpayer

must come forward with credible, affirmative evidence of just value.” Town of

Southwest Harbor v. Harwood, 2000 ME 213, { 9, 763 A.2d 115 (quotation omitted); see

also” Yusem v. Town of Raymond, 2001 ME 61, { 13, 769 A.2d 865( “Impeachment of

the assessor's methodology alone is insufficient to meet that burden. The taxpayer

must demonstrate that the property is overrated.”). Only if the Board determines that

Plaintiffs have offered sufficient credible evidence of overvaluation, must the Board

then undertake an independent valuation of the property.” Northeast Empire Ltd.

P’ship #2 v. Town of Ashland; 2003 ME 28, | 8, 818 A.2d 1021. “Because the Board

concluded that the [Plaintiffs] failed to meet their burden of proof, we will vacate that

decision only if the evidence compels a contrary conclusion to the exclusion of any

other inference.” Yusem v. Town of Raymond, 2001 ME 61, { 9, 769 A.2d 865;

McCullough v. Town of Sanford, 687 A.2d 629, 631(Me. 1996).

“To meet the initial burden of showing that the assessment was manifestly

wrong, the taxpayer must demonstrate that (1) the judgment of the assessor was

irrational or so unreasonable in light of the circumstances that the property was

* “Tf but only if, the taxpayer meets that burden, the [Board] must engage in ‘an independent

determination of fair market value .. . based on a consideration of all relevant evidence of just

value.’” Id., § 8 (quoting Quoddy Realty Corp. v. City of Eastport, 1998 ME 14, 45,704 A.2d

407).

substantially overvalued and an injustice resulted; (2) there was unjust discrimination;

or (3) the assessment was fraudulent, dishonest, or illegal.” Yusem v. Town of

Raymond, 2001 ME 61, { 9, 769 A.2d 865.

1) Overvaluation Due to Irrational and/or Unreasonable Judgment by the Assessor

Plaintiffs claim that the assessment of their property is unreasonable in light of the

surrounding circumstances: failure to use the income approach to valuation, failure to

consider sales from the mid-1990s that supported a lower valuation, and failure to

account for conditions such as lack of view, Wear, and disrepair.

Based on the evidence, Plaintiffs have “not demonstrated that the evidence

compels a contrary conclusion to the exclusion of any other inference.” McCullough v.

Town of Sanford, 687 A.2d at 631. To the contrary, at the hearing before the Board, the

Assessor thoroughly addressed each of Plaintiffs’ arguments regarding numerous

facets of the valuation process (i.e. method, lack of view, proximity to waterfront, and

incomparability to neighboring single-family residences). R. Tab 1, Tr. at 6-9, 15, 20-21.

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2) ‘Unjust Discrimination

Plaintiffs’ only clear reference to an unjust discrimination claim is found in the last

paragraph of the Reply Brief;* “[t]he Assessor did not value Plaintiffs’ property

uniformly with similar properties ....” Pls.’ Reply at 11. Unjust discrimination was also

mentioned in the minutes at the hearing before the Board. R. Tab 1, Tr. at 14 (Board

Chairperson: “[Y]our task is to prove that you have been unfairly and unjustly assessed

in relationship to your [sic] other properties.”: Lebovitz: “I think my assessment was

unfair.”). “Only if taxpayers can show that the assessors’ system necessarily will result

in unequal apportionment do they not have to show that their property is substantially

overvalued. Wesson v. Town of Bremen, 667 A.2d at 598 (Me. 1995). In the present

case, the record supports the Board’s determination that Plaintiffs failed to put forth

sufficient credible evidence of overvaluation or discriminatory system. Kittery Electric

Light Co. v. Assessor of Town of Kittery, et al., 219 A.2d 728, 739 (Me. 1966) (stating

that there must be evidence of intentional or purposeful "systemic undervaluation" and

that “sporadic differences in valuations do not spell invidious discrimination’)

(quotations omitted).

3) Ilegali

Plaintiffs also argue that the assessment was illegal. Yusem v. Town of

Raymond, 2001 ME 61, J 8n 12, 769 A.2d 865 (“An illegal assessment is generally

understood as one that exceeds the bounds of the taxing entity's authority.”). Plaintiffs

contend that (1) the Assessor did not consider all of the factors identified in 36 M.R.S.A.

§ 701-A*; (2) the Assessor utilized two sales, which closed after the date by which

3 Plaintiffs’ Reply was filed on November 12, 2002, 6 days after the 14-day period for reply

lapsed.

*36 M.R.S.A. § 701-A (2003) reads in relevant part:

§ 701-A. Just value defined

In the assessment of property, assessors in determining just value are to define

this term in a manner that recognizes only that value arising from presently

possible land use alternatives to which the particular parcel of land being valued

may be put. In determining just value, assessors must consider all relevant factors,

including without limitation, the effect upon value of any enforceable restrictions

to which the use of the land may be subjected, current use, physical depreciation,

sales in the secondary market, functional obsolescence and economic obsolescence.

Restrictions include but are not limited to zoning restrictions limiting the use of

land, subdivision restrictions and any recorded contractual provisions limiting the

use of lands. The just value of land is determined to arise from and is attributable

to legally permissible use or uses only.

Id. Plaintiffs contend that the Assessor did not consider physical depreciation, functional

obsolescence, and economic obsolescence.

On

assessors are directed to assign value, in violation of 36 M.R.S.A. § 502°; and (3) the

Assessor failed to follow the Law Court’s direction in South Portland Assocs., et al. v.

City of South Portland, 550 A.2d 363, 368-69 (Me. 1988) (hereinafter “South Portland

Assocs.”) by not utilizing the income approach in assessing Plaintiffs’ property.

Contrary to Plaintiffs’ claims, the Assessor did consider the factors enumerated

in § 701-A; he did not assign them the same significance and value that the Plaintiffs did.

The assessor stated that “[d]epreciation is calculated based on the year of construction

and the condition of the building.” R. Tab 1, Tr. 18. Plaintiffs sought to apply the IRS

guidelines to depreciation of real estate. Applying that schedule, the values of all

structures built prior to 1970 would be entirely, or almost entirely, depreciated. The

Assessor also testified that obsolescence is considered in the physical depreciation. Id. at

19. He disagreed with Mr. Lebovitz’s assertion that an old stove and a refrigerator on

the “blink” should impact the assessed value. Id. The Assessor considered these factors

as required by law; he concluded, however, that they did not “make any difference.” Id.

at 18-19.

The Plaintiffs’ contention that the Assessor erroneously relied on two sales that

occurred after April 1, 2001 is without merit. First, itis impossible that a transaction that

occurred on June 22, 2002 impacted a valuation that was completed in April 2001 and

for which a tax bill issued in October of 2001. The mention of this sale at the July 2002

hearing may have supported the Assessor's earlier valuation, but it could not have been

relied on in arriving at that valuation. Similarly, the June 2001 sale of Unit 32 for

$725,000 provided support for the assessment of Unit 32 for $722,000 two months prior

° Section 502 states in pertinent part: “The taxable year is from April Ist to April Ist.” 36

M.R.S.A. § 502 (2003).

to its sale. There is no indication on the record that those two sales were relied on by

the Assessor in determining the property’s 2001 just value.®

Finally, Plaintiffs’ contention that the Assessor erred by not using the income

approach is mistaken. South Portland Assocs. is inapposite to the present case and may

not be applied as broadly as Plaintiffs assert. South Portland Associates owned two

apartment complexes consisting of 262 structures and 995 apartments. South Portland

Assocs. 550 A.2d at 365. The city assessor refused to use the income approach on any

property in South Portland. Id. at 365-66. The court held that because these two

properties, unique to the city and to the general area, could not be accurately assessed

based only on the cost and sales approaches, the assessor should have employed the

income method. Id. at 369 (holding that “the objective of all appraisal methods is

precisely the same: the determination of just or market value”). The court did not

require that all three methods be used in all instances. Id. (“There is no legal

requirement that a municipality use the identical appraisal method on all properties.”).

‘In the instant case, Plaintiffs argue that because some owners use their units as ~

an investment and because Plaintiffs’ unit was rented prior to 1991, when they

purchased it, the Assessor should have used the income approach. Plaintiffs have used

their unit as a seasonal home since 1991. As the Assessor correctly noted, “an income

approach does not have to be used ona single-family property. Any appraiser will tell

you that. Any realtor will tell you that. And now a judge is telling you that.” R. Tab 1.

Tr. 21 (referring to the decision by Justice Fritzsche on Plaintiffs’ 1993 appeal). See

Lebovitz v. Town of Scarborough, 92-672 (Me. Super. Ct., Cum. Cty., Jul. 15. 1993)

(Fritzsche, J.).

° The Board was not required to arrive at an independent value because the Plaintiffs failed to

meet their burden. Therefore, argument that the Board relied on erroneous information in

Because the decision of the Board is supported by substantial evidence in the

record, as outlined above, the decision of the Town of Scarborough Board of

Assessment Review is AFFIRMED.

The entry is

The decision of the Town of Scarborough Board of Assessment Review is AFFIRMED.

Dated at Portland, Maine this 3rd day of June, 2003.

Ahlek

Robert E. Crowley

Justice, Superior Court

assessing the property’s value is not reached.

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Varese Chicu LICUNS

County

Action 80B Appeal

ROBERT A. LEBOVITZ

CAROLYN R. LEBOVITZ

TOWN OF SCARBOROUGH

VS.

Plaintiff’s Attorney

Pro Ses

2018 Monongahela Avenue

Pittsburgh PA 15218-2510

412-351-4422

Date of

Entry

7

Defendant’s Attorney

Robert J. Crawford Esq.

P.O. Box 9729

Portland, Maine 04104-5029

207-774-1200