The opinion
MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2016 ME 136
Docket: BCD-15-103
Argued: December 8, 2015
Decided: August 16, 2016
Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, and HJELM, JJ.
DONALD PETRIN et al.
v.
TOWN OF SCARBOROUGH
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
1 The appellants are Donald Petrin, Philip Lebel, Robert and Roberta Mulazzi, Patricia and Luke
Brassard, Robert and Michele Demkowicz, Gerald and Judith Gaudette, Jeffrey Fink, Dave and Robin
Provencher, Albert and Marcia Hunker, Robert and Tookie Clifford, Richard and Judith Mushial,
Robyn Fink, Kathy Tito, Gregory Campbell, Carolyn and Norman Brackett, Glorian and George Yerid,
Joanne and Bill Mahoney, Jack Shapiro, Paul and Louise Houde, Daniel and Lori McKeown, Robert
and Linda Voskian, Irene Shevenell, William and Joann Browning, Richard and Julie Mullen, Vince
and Barbara Bombaci, Thomas Curley, Alyson Bristol, John Haskell, Koni Jaworski, Paul and Priscilla
Reising, Preston Leavitt, Jeffrey and Jennifer Seaver, Diane and Robert Gayton, and Claire Fitzpatric.
The record reveals some confusion about the status of two of the plaintiffs. First, according to
the complaint, plaintiff Koni Jaworski owns Lot 32 on Tax Map U002. The abatement application
associated with that parcel was filed under a different named owner, whose name also appears as
the owner on the tax card for that parcel. That person is not a named plaintiff. Second, the
complaint alleges that plaintiff John Haskell owns Lot 80 on Tax Map U001 and that he sought an
abatement for that parcel. The tax card for that parcel, however, identifies a different person as the
owner. The record indicates that John Haskell applied for an abatement for a different parcel—Lot
138 on Tax Map U002—but that the assessment for that parcel decreased as a result of the
2
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,
2012 partial revaluation that is at issue in this case. These issues do not affect our overall analysis
and are better addressed by the Scarborough Board of Assessment Review on remand.
3
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
2 As Lesperance’s testimony establishes, and the parties appear to agree, a “water-influenced”
property is one that is located in close proximity to—but does not directly border—a body of water.
See generally 4 C.M.R. 18 125 201-1 § 1(AA) (2015) (defining “waterfront property” to include
property “bounded by a body of water or waterway” and property “whose value is measurably
influenced by its access or proximity to the water” (emphasis added)).
4
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
3 Owners of a total of forty-three parcels filed applications with the Board. Of those taxpayers,
the owners of thirty-five parcels pursue their challenges on this appeal.
5
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
6
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
4 The record does not appear to reveal whether Leavitt receives the favorable tax treatment,
available only upon request, that arises from the abutting property program. On remand, the Board
will need to address how our holding affects Leavitt’s standing to challenge that practice. The
uncertainty regarding Leavitt’s particular situation, however, does not affect our overall analysis.
7
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
8
abatement applications. The Taxpayers appealed pursuant to 5 M.R.S.
§ 11008(1) (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).
5 Although the Board’s decision explicitly addressed only the benefit offered to the owners of
contiguous lots, the Board’s general acceptance of the Assessor’s appraisal techniques constitutes at
least an implied finding that the assessment practice applicable to large single lots was proper.
9
[¶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, ¶ 12, 90 A.3d 1131
(quotation marks omitted). Here, the Taxpayers argue only that there was
unjust discrimination in the valuation of their properties.
[¶15] The prohibition against unjust discrimination in property
taxation derives from article IX, section 8 of the Maine Constitution and the
Equal Protection Clause of the Fourteenth Amendment to the United States
Constitution. Ram’s Head, 2003 ME 131, ¶ 9, 834 A.2d 916. Article IX,
section 8 provides that “[a]ll taxes upon real and personal estate, assessed by
authority of this State, shall be apportioned and assessed equally according to
the just value thereof.” To satisfy this requirement, a municipality must
ensure, first, that each property is assessed at “just value,” which is equivalent
to “market value,” Weekley v. Town of Scarborough, 676 A.2d 932, 934
10
(Me. 1996) (quotation marks omitted), and, second, that the tax burden is
“apportioned and assessed equally” in order to prevent unjust discrimination
between or among taxpayers, Me. Const. art. IX, § 8; see also Terfloth,
2014 ME 57, ¶ 11, 90 A.3d 1131. To achieve an equitable distribution of the
overall tax burden, assessors must apply a “relatively uniform rate” to all
“comparable propert[ies] in the district.” Terfloth, 2014 ME 57, ¶ 11,
90 A.3d 1131 (quotation marks omitted).
[¶16] Here, to prevail on their claim of unjust discrimination, the
Taxpayers had the burden of proving to the Board “that the assessor’s system
necessarily results in unequal apportionment.” Ram’s Head, 2003 ME 131,
¶ 10, 834 A.2d 916 (quotation marks omitted). Because the Board concluded
that the Taxpayers failed to meet that burden, we will vacate the Board’s
decision “only if the record compels a contrary conclusion to the exclusion of
any other inference.” Terfloth, 2014 ME 57, ¶ 13, 90 A.3d 1131 (quotation
marks omitted).
[¶17] We first consider the Taxpayers’ claim of unjust discrimination
based on the Town’s assessment practices affecting commonly-owned
contiguous lots (the “abutting property” program), which implicates the
11
question of standing. We then address the Taxpayers’ remaining challenges,
which are directed at the large lot program and the 2012 partial revaluation.
A. Abutting Property Program
[¶18] The Taxpayers argue that the court erred by concluding that they
lack standing to challenge the abutting property program. They go on to
contend that on the merits, the Board erred by concluding that the practice is
constitutional and not unjustly discriminatory. For the reasons set out below,
we conclude that the Taxpayers have standing and that the program
necessarily results in an unequal apportionment of the municipal tax burden,
which operates to the Taxpayers’ detriment.
1. Standing
[¶19] The Taxpayers assert that because their properties did not
receive the favorable tax treatment granted to owners of abutting parcels who
requested the benefit, they have suffered a particularized injury and thus have
standing to challenge that practice. Conversely, the Town argues that the
Taxpayers do not have standing because they have not suffered any harm that
is different from the harm experienced by all other taxpayers in Scarborough.
Whether a party has standing is a question of law that we review de novo.
Friends of Lincoln Lakes v. Town of Lincoln, 2010 ME 78, ¶ 8, 2 A.3d 284.
12
[¶20] When a taxpayer seeks remedial relief from a municipality’s use
of a practice that allegedly results in an unlawful assessment, the taxpayer is
“required to show special or particularized injury: injury different from that
incurred by every other taxpayer.” Lehigh v. Pittston Co., 456 A.2d 355, 358
(Me. 1983). In contrast, a request for preventative relief, such as an injunction,
requires no such showing. See Buck v. Town of Yarmouth, 402 A.2d 860,
861-62 (Me. 1979). Here, the Taxpayers do not seek to enjoin the Town from
favoring the owners of large or contiguous lots. Rather, they seek only
remedial relief for the Town’s past use of practices that affected their
2012 property tax assessments. Accordingly, the Taxpayers must
demonstrate a particularized injury.
[¶21] The Taxpayers meet this requirement because the abutting
property program does not affect all properties in the same way. The
challenged practice results in differing tax treatment for two types of parcels:
parcels that are given a discounted assessed value, with a resulting tax benefit
to the owners of those parcels; and parcels that are assessed at full value,
which deprives those parcels’ owners of the lower assessment. To qualify for
the discounted assessment rate, a parcel must abut another parcel in common
ownership. For purposes of municipal tax assessments, an abutting parcel
13
therefore is assessed at a different—and lower—rate than other comparable
parcels. Because the Taxpayers own properties that do not receive the
comparatively favorable tax treatment that is conferred on abutting parcels,
the Taxpayers have a “particular right to be pursued or protected,” Buck,
402 A.2d at 861 (quotation marks omitted)—that is, their right to have their
properties taxed equitably in relation to the abutting properties, see Ram’s
Head, 2003 ME 131, ¶ 10, 834 A.2d 916; Knight v. Thomas, 93 Me. 494, 500,
45 A. 499 (1900) (stating that a taxpayer has standing, based on a “personal
interest,” to challenge a municipal tax assessment that results in an unequal
allocation of the tax burden). The Taxpayers have demonstrated a
particularized injury and as a matter of law have standing to challenge the
abutting property program.6
[¶22] We now address the merits of the Taxpayers’ challenge to the
Town’s assessment of commonly-owned abutting parcels.
6 The Taxpayers also argue that the court erred by concluding that they lack standing to
challenge the other arm of the excess land program—the large lot program—which affects the
Town’s valuation of lots larger than one acre. For the same reasons that establish the Taxpayers’
standing to challenge the abutting property program, the Taxpayers have standing to challenge the
large lot program, because it results in an overall lower assessment rate applicable to large lots,
compared to the overall rate that applies to smaller lots.
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2. Unjust Discrimination
[¶23] The Taxpayers argue that the abutting property program is
unconstitutional on its face and that the Board erred by concluding that it did
not have a discriminatory effect adverse to their interests. This argument
requires us to determine whether the Taxpayers have demonstrated that the
Board was compelled to conclude that the program necessarily resulted in a
discriminatory apportionment of the municipal tax burden. See Ram’s Head,
2003 ME 131, ¶ 10, 834 A.2d 916. We conclude that the Taxpayers have met
that burden.
[¶24] The prohibition against discriminatory tax assessments, which is
rooted in the constitutional principle of equal protection, “protects the
individual from state action which selects him out for discriminatory
treatment by subjecting him to taxes not imposed on others of the same class.”
Hillsborough v. Cromwell, 326 U.S. 620, 623 (1946). The taxing authority is
therefore constitutionally required to achieve “a rough equality in tax
treatment of similarly situated property owners,” thereby treating those
property owners “evenhandedly.” Allegheny Pittsburgh Coal Co. v. Cty.
Comm’n, 488 U.S. 336, 343, 345 (1989), quoted in Ram’s Head, 2003 ME 131,
¶ 10, 834 A.2d 916. Although a municipality is entitled to create various
15
classes of property and impose different tax burdens on those respective
classes, “those divisions and burdens [must be] reasonable,” based on the
character of the properties or on policy. Allegheny, 488 U.S. at 344.
[¶25] In Ram’s Head, we recognized that “[m]ost property tax
discrimination cases involve a defined methodology that results in unequal
treatment” of properties within the same class. 2003 ME 131, ¶ 13,
834 A.2d 916; see also Allegheny, 488 U.S. at 345 (holding that a state may not
engage in “intentional systematic undervaluation” of property (quotation
marks omitted)). Additionally, we held that to demonstrate a discriminatory
effect of a challenged assessment practice, taxpayers need not present
evidence of the actual value of the parcels that allegedly receive favorable
treatment. Ram’s Head, 2003 ME 131, ¶ 12, 834 A.2d 916. Rather, taxpayers
may establish discrimination with proof that parcels owned by other
taxpayers “are assessed at drastically lower valuations; that there are no
distinctions between the [two sets of] properties that justify the disparity; and
that any rationale offered by the Town for the lower valuation[s] is unfounded
or arbitrary.” Id.
[¶26] Here, the Town uses a valuation methodology by which the
assessor intentionally and systematically discounts the assessed value of
16
abutting lots in common ownership for the sole reason that there is a common
boundary between the two. Lesperance’s testimony establishes that the
abutting property program is an outgrowth of the way the Town assesses a
single parcel that is larger than one acre so that the value of the parcel that
exceeds the base lot carries less value than the base lot itself. As we discuss
below, see infra ¶ 36, the Board was entitled to conclude that when applied to
single lots, the assessment practice was proper. With the abutting property
program, however, the Town treats separate but abutting lots as if they were a
single parcel, resulting in an artificially low overall assessment. The Town’s
application of the large-lot assessment methodology to abutting parcels is
necessarily untenable because it violates Maine law in two ways.
[¶27] First, this practice violates the statutory requirement that each
parcel of real estate must be assessed separately. See 36 M.R.S. § 708 (2015)
(stating that for each tax year, the assessor “shall estimate and record
separately the land value, exclusive of buildings, of each parcel of real estate”
(emphasis added)). We have explained that in implementing this
requirement, “tax assessors have a reasonable degree of discretion in
determining where individual parcels exist,” considering all of the
circumstances. City of Augusta v. Allen, 438 A.2d 472, 476-77 (Me. 1981). The
17
measure of discretion, however, does not mitigate a municipality’s obligation
under the law to treat “separate and distinct real estates belong[ing] to the
same owner . . . as distinct subjects of taxation . . . [that] must be separately
valued and assessed.” McCarty v. Greenlawn Cemetery Ass’n, 158 Me. 388,
393-94, 185 A.2d 127 (1962) (quotation marks omitted). This requirement
satisfies section 708 and preserves a taxpayer’s right to redeem each lot
separately. See id. at 393-94. The Town’s practice of undervaluing abutting
lots therefore violates the requirement, established in Maine law, of separate
assessments.7
[¶28] Second, the abutting property program violates the constitutional
requirement that real estate be assessed at just value. See Me. Const. art. IX,
§ 8. As Lesperance explained, when a property owner asks the Town to apply
the abutting property program, the owner receives a “tax savings.” This point
7 As the Town correctly notes, an assessor is authorized to combine contiguous lots for purposes
of assessment, but only when three conditions exist. Specifically, 36 M.R.S. § 701-A (2015) provides
that
[f]or the purpose of establishing the valuation of unimproved acreage in excess of an
improved house lot, contiguous parcels . . . may be valued as one parcel when: each
parcel is 5 or more acres; the owner gives written consent to the assessor to value
the parcels as one parcel; and the owner certifies that the parcels are not held for
sale and are not subdivision lots.
(Emphasis added.) Therefore, by its plain terms, section 701-A applies only when, inter alia, “each
parcel is 5 or more acres.” Id. The provision therefore does not allow the Town to apply its
abutting lot program when either parcel is smaller than five acres.
18
is demonstrated by the evidence presented to the Board of examples where
commonly-owned abutting lots are undervalued. In one of those examples,
Lesperance assessed a one-acre parcel at nearly $1.8 million, and an abutting
1.27-acre parcel at only $12,700, even though that abutting parcel was
“buildable” and could be developed. Lesperance testified that these separate
parcels were “treated as one parcel for assessment purposes”; that the owner
was “benefiting” from that treatment; and that if the abutting lot were
assessed separately, “the valuation would be much higher.” Lesperance’s
testimony therefore allows no conclusion other than that the abutting parcel
was given a discounted assessed value solely because of the abutting property
program and not because of any feature or quality of the parcel affecting its
just value. Maine law does not permit the Town to engage in the fiction of
treating separate smaller abutting lots as if they were a single larger lot, which
results in an assessment that does not reflect just value.
[¶29] Because each parcel of real estate must be assessed separately
and according to just value, regardless of whether the parcel abuts another
parcel in common ownership, the Town’s rationale for the abutting property
program is not reasonable, see Allegheny, 488 U.S. at 344, and cannot serve as
the basis for the Town’s assessments.
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[¶30] Having concluded that the Town failed to present a rationale for
the abutting property program that is reasonable and consistent with Maine
law, we turn to the dispositive question of whether the Board was compelled
to find that the practice necessarily results in unequal tax treatment.
[¶31] Lesperance testified that there are twenty to thirty taxpayers
who receive favorable tax treatment in the form of a “tax savings” as a result
of the abutting property program. This necessarily means that those who do
not own abutting lots are subjected to taxes that are not imposed on owners
of lots that happen to be abutting. This contravenes the Taxpayers’ rights of
equal protection. See Hillsborough, 326 U.S. at 623; Ram’s Head, 2003 ME 131,
¶ 10, 834 A.2d 916 (stating that the “constitutional requirement is the
seasonable attainment of a rough equality in tax treatment of similarly
situated property owners” (quotation marks omitted)).
[¶32] Arguing—as the Board found—that the undervaluation of the
abutting lots does not result in a discriminatory apportionment of the
municipal tax burden, the Town points to evidence of the relatively small
number of taxpayers who receive favorable tax treatment under the abutting
property program, relative to the 8,500 parcels located in Scarborough with a
total assessed valuation of approximately $3.5 billion. The Town’s position,
20
however, rests on the incorrect notion that the proper remedy for unjust
discrimination is an upward revision of the taxes for the properties that
received favorable treatment in 2012. Instead, as is established in a
longstanding constitutional doctrine, “abatement is the proper remedy for
unjust discrimination.” Ram’s Head, 2003 ME 131, ¶ 15, 834 A.2d 916
(emphasis added) (collecting cases). Therefore, regardless of what future
effect a proper assessment of abutting properties may have on the
apportionment of tax burden among all of the Town’s property owners, the
evidence compelled the Board to conclude that the Taxpayers’ properties
were assessed in a systematically discriminatory manner and that the
Taxpayers are entitled to an abatement for the 2012 tax year. We must
therefore remand this matter to the Business and Consumer Docket with
instructions to remand to the Board for further proceedings to address the
inequality in tax treatment affecting the Taxpayers because of the abutting
property program.
B. Taxpayers’ Remaining Challenges
[¶33] Although we remand this matter for the Board to address the
unlawfully discriminatory effect of the Town’s abutting property program, we
21
address the Taxpayers’ remaining challenges so that the nature and scope of
the municipal proceedings on remand are clear.
[¶34] In their remaining arguments, the Taxpayers contend that, as
with the abutting property program, the Town’s assessments of single lots
that are larger than one acre result in unequal apportionment, and that the
2012 partial revaluation improperly targeted their properties. We address
these arguments in turn, ultimately finding each to be unpersuasive.
1. Large Lot Program
[¶35] The Taxpayers contend that the Town has used an unfairly
discriminatory valuation practice by assessing portions of larger single lots at
a rate that is lower than the rate applied to the “base” portion of the lots.
[¶36] So long as an assessment “represents a fair and just
determination of value” for the parcel “as a whole,” no constitutional harm has
occurred. Roberts v. Town of Southwest Harbor, 2004 ME 132, ¶ 4,
861 A.2d 617 (quotation marks omitted) (holding that a taxpayer failed to
satisfy his burden of proving unjust discrimination when his argument
“focused only on a component of his assessed value . . . and not on the total
assessed value”). Here, Lesperance’s testimony entitled the Board to find that
in assessing the fair market value of a single parcel that consists of a base lot
22
and additional unimproved land, that additional land contributes in
diminishing degrees to the overall market value of the parcel.
Notwithstanding a conflicting view expressed by the Taxpayers’ expert, the
Board was entitled to find that the Town’s assessment of an individual parcel
larger than one acre “represents a fair and just determination of value” when
considering the parcel “as a whole.” See id. (quotation marks omitted).
Therefore, the Board was not compelled to conclude that the large lot
program is unjustly discriminatory.
2. Partial Revaluation
[¶37] The Taxpayers next argue that the evidence compelled the Board
to find that the 2012 partial revaluation failed to equalize the apportionment
of taxes within the Town because there was insufficient evidence to show that
the assessment-to-sales ratios in the targeted waterfront and
water-influenced neighborhoods were significantly different from those in
other residential areas.8
8 The Taxpayers also argue that because Lesperance increased the valuations for their
waterfront properties in Higgins Beach and Pine Point, but did not impose the same valuation
increases on other waterfront properties in those neighborhoods, the Taxpayers’ properties were
unfairly targeted for unequal treatment. This argument is not persuasive. As Lesperance testified,
he focused only on the specific markets where there were meaningful sales data demonstrating a
divergence between the assessment-to-sales ratios in those markets and the residential average,
and accordingly excluded riverfront areas within Higgins Beach and Pine Point where pricing
trends did not indicate a disparity. Lesperance also explained that he excluded a limited number of
23
[¶38] As we have previously held, although “[t]ownwide revaluations
are perhaps the best method of maintaining equal apportionment of the tax
burden[,] . . . assessors are not precluded from” adjusting assessments for
selected properties “between townwide revaluations” if such adjustments will
achieve greater equality. Moser v. Town of Phippsburg, 553 A.2d 1249, 1250
(Me. 1989). Further, an assessor need not attain absolute equality when
revaluing properties; rather, only “rough equality” is required. Id. (quotation
marks omitted).
[¶39] The evidence, viewed as a whole, supports the Board’s conclusion
that the partial revaluation improved the equity of the Town’s assessments.
Lesperance testified that in 2011, the average assessment-to-sales ratio in
residential areas of the Town was close to 100%. That ratio is also set out in
waterfront properties in Higgins Beach from the revaluation because they possessed physical
characteristics that made them unsuitable for development.
In addition to challenging the partial revaluation, the Taxpayers make a broader argument that
the Town’s assessments of residential properties are consistently closer to market value than its
assessments of waterfront and water-influenced properties, demonstrating an inequitable
distribution of the Town’s overall tax burden. Our review, however, is limited to the effect of the
Town’s assessment practices on the Taxpayers’ properties. We therefore do not consider the effect
of those practices on waterfront and water-influenced properties generally. Moreover, as discussed
infra ¶¶ 39-44, the evidence was sufficient to support the Board’s conclusion that the Assessor’s
methodologies resulted in assessments that were both closer to fair market value and more
equitable relative to the average assessment-to-sales ratio for residential properties in the Town.
24
the portions of the annual State Valuation Reports9 prepared by Maine
Revenue Services (MRS)10 that address municipal tax assessments in
Scarborough in the 2011 tax year. In contrast, the Board received evidence
that for the specific waterfront and water-influenced markets that Lesperance
reassessed in 2012, the assessment-to-sales ratios were significantly below
that standard.11 Lesperance stated that the valuation increases resulting from
the 2012 partial revaluation directly addressed those disparities, improving
the assessment ratios for the targeted areas in Higgins Beach, Pine Point, and
Pillsbury Shores so that they were closer to 100%, and bringing them in line
with the residential average. The post-valuation assessment ratios were also
well within statutory “minimum assessing standards” that are designed to
achieve just and equitable property tax assessments, 36 M.R.S. §§ 326-327
9 The “State Valuation” is “the annual list of the equalized and adjusted value of all taxable
property in each municipality as of April 1, two years prior.” 4 C.M.R. 18 125 201-1 § 1(W) (2015).
The MRS conducts the valuations to determine whether municipalities are in compliance with the
minimum assessing standards and constitutional requirements. See 36 M.R.S. § 305(1) (2015)
(stating that the MRS must annually file a “valuation” with the Secretary of State certifying that “the
equalized just value of all real and personal property in each municipality” is “uniformly assessed”
and “based on 100% of the current market value”); see also 36 M.R.S. §§ 329, 383(1) (2015).
10 “Maine Revenue Services,” which is the term used in the record on this appeal, is referred to
in some statutes as the “Bureau of Revenue Services.” See 36 M.R.S. § 111(1-B) (2015).
11 As the Taxpayers correctly assert, the State Valuation Reports introduced in evidence show
little divergence between assessment-to-sales ratios in the overall “residential” and “waterfront”
categories. As Lesperance explained in his testimony, however, the “waterfront” category in those
reports includes all waterfront and water-influenced properties in the Town. Conversely,
Lesperance’s post-valuation sales ratio studies focus only on particular waterfront and
water-influenced markets, and demonstrate that, on average, sales prices in those discrete areas
significantly exceeded assessments.
25
(2015), which require municipalities to maintain town-wide
assessment-to-sales ratios of 70% to 110%, id. § 327(1).
[¶40] Lesperance also stated that he reduced assessments in other
neighborhoods where the sales data established a trend of lower sales prices.
The 2012 revaluation therefore targeted locations that constitute “separate
markets” and adjusted the assessments there in order to equalize
assessment-to-sales ratios throughout the Town.
[¶41] Post-valuation studies also examined the “quality ratings” of the
revalued properties. A “quality rating” measures the variance between
particular sales prices and the average assessment-to-sales ratio. A lower
quality rating indicates a lower divergence and therefore a more equitable
assessment. Municipalities are required to maintain quality ratings of no
more than 20. 36 M.R.S. § 327(2). As a result of the revaluation, the quality
rating for two of the three neighborhoods improved, decreasing from 14 to 11
for Pine Point, and from 9 to 7 for Pillsbury Shores. In the third neighborhood,
Higgins Beach, the quality rating remained at 6. Additionally, MRS’s
independent audit of the 2012 partial revaluation, see 36 M.R.S. § 384 (2015),
further confirmed that the revaluation resulted in “a decisive improvement in
26
[the] equity and assessment levels” of the targeted properties in comparison
to properties in other parts of Town.
[¶42] The Taxpayers argue that the Board erred by relying on
Lesperance’s post-valuation studies as evidence that the revaluation
improved the equity of the Town’s assessments, because those studies include
sales that took place before the economic downturn of 2008. They contend
that when there is a significant change in the market, such as a recession, it is
improper for an assessor to consider sales that took place before that event.
Contrary to their contention, however, the Board received competent
evidence to support its implicit findings that the 2008 recession did not have a
significant adverse impact on waterfront property values in Scarborough and
that therefore the inclusion of pre-2008 data in Lesperance’s studies was
proper. Although the Taxpayers presented testimony from an appraiser who
offered a contrary opinion regarding the effect of the 2008 recession, the
Board was not compelled to accept that view. See Adelman v. Town of Baldwin,
2000 ME 91, ¶ 14, 750 A.2d 577 (explaining that a municipal board is entitled
to make credibility determinations and find facts based on its assessment of
the evidence).
27
[¶43] Additionally, contrary to the Taxpayers’ contention, Lesperance’s
reliance on sales occurring since the last town-wide revaluation is consistent
with our analysis in Opinion of the Justices, 2004 ME 54, 850 A.2d 1145. In
that case, we considered the constitutionality of proposed legislation that
would have created two different bases for tax value purposes depending on
the date of acquisition. Id. ¶ 13. We concluded that the proposed bill “[ran]
afoul of the [constitutional] requirement that a valid property tax must be
based on [current] market value,” because some properties would be taxed
based entirely on an assessment from eight years earlier. Id. ¶ 16; see also
Me. Const. art. IX, § 8. Here, Lesperance did not arbitrarily adopt assessed
values from a prior tax year as the exclusive basis for the revaluation. Rather,
he considered a mix of sales occurring between the last town-wide
revaluation and the beginning of the 2012 tax year. He explained that by
considering sales from a range of years he was able to confirm a market trend,
thereby improving the accuracy of his assessments. The Board was entitled
to conclude that this assessment methodology was proper and resulted in a
reasonable approximation of the 2012 market value for the properties. See
Opinion of the Justices, 2004 ME 54, ¶ 16 & n.7, 850 A.2d 1145 (citing Shawmut
Inn v. Town of Kennebunkport, 428 A.2d 384, 390 (Me. 1981)) (noting that
28
local assessors have “flexibility” to choose an appropriate methodology to
determine market value).
[¶44] We therefore conclude that, contrary to the Taxpayers’
contentions, the Board did not err by determining that the Assessor
reasonably increased assessments for targeted waterfront and
water-influenced properties in Higgins Beach, Pine Point, and Pillsbury Shores
in 2012, and that Lesperance’s use of market data was not flawed.
III. CONCLUSION
[¶45] Although the Board did not err in denying the Taxpayers’
abatement applications based on several of their contentions, the evidence
compels the conclusion that the Town’s method of assessing separate but
abutting parcels held in common ownership resulted in unequal
apportionment because that methodology necessarily deprives the Taxpayers
“of a rough equality in tax treatment of similarly situated property owners.”
Allegheny, 488 U.S. at 343. We therefore remand this action to the Business
and Consumer Docket with instructions to remand to the Board for a
determination of the appropriate abatements.
29
The entry is:
Judgment vacated. Remanded to the Business
and Consumer Docket with instructions to
remand to the Scarborough Board of
Assessment Review for further proceedings
consistent with this opinion.
On the briefs:
John B. Shumadine, Esq., Murray, Plumb & Murray, Portland,
for appellants Donald Petrin et al.
Robert J. Crawford, Esq., and N. Joel Moser, Esq., Bernstein
Shur, Portland, for appellee Town of Scarborough
At oral argument:
John B. Shumadine, Esq., for appellants Donald Petrin et al.
Michael A. Hodgins, Esq., Bernstein Shur, Augusta, for
appellee Town of Scarborough
Business and Consumer Docket docket number AP-2014-03
FOR CLERK REFERENCE ONLY