The opinion
MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2016 ME 152
Docket: BCD-15-112
Argued: December 8, 2015
Decided: October 13, 2016
Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, and HJELM, JJ.
ANGELL FAMILY 2012 PROUTS NECK TRUST et al.
v.
TOWN OF SCARBOROUGH et al.
******
KENYON C. BOLTON III et al.
v.
TOWN OF SCARBOROUGH et al.
HJELM, J.
[¶1] In our recent decision in Petrin v. Town of Scarborough,
2016 ME 136, --- A.3d ---, we considered challenges to increases in municipal
property taxes for parcels located in several neighborhoods in the Town of
Scarborough. We determined that although the Scarborough Board of
Assessment Review did not err by concluding that a partial revaluation
conducted by the Town was proper, the Town’s practice of undervaluing
2
separate but abutting lots held in common ownership resulted in
discriminatory tax treatment. See id. ¶ 45.
[¶2] In this separate action, which is based on a separate record, we
address similar challenges brought by Kenyon C. Bolton III and other owners
of residential waterfront properties1 located in Prouts Neck, which is an area
of Scarborough that was not at issue in Petrin. The plaintiffs (collectively, the
Taxpayers) appeal from a judgment entered in the Business and Consumer
Docket (Horton, J.) concluding that they do not have standing to pursue one of
their challenges but otherwise affirming the Board’s denial of their tax
abatement petitions. For reasons similar to those in Petrin, we determine that
the Taxpayers in this case have standing to pursue all of their challenges.
Additionally, although we affirm the Board’s conclusion that the partial
revaluation was proper, we conclude that the Board erred by denying the
Taxpayers’ requests for abatement based on the Town’s practice of
undervaluing abutting lots, which resulted in discriminatory assessments.
1 The appellants are Kenyon C. Bolton III; Bolton Juniper Ledge Trust; Matford Holding, Inc.;
Eileen D. Gillespie Trust; Edward P. Maynard Trust; Martha F. Hallward; Nan T. McEvoy 1997 GRAT;
Boyle Trust and Investment Company; Frank A. and Sarah Olson; CPC Maine, LLC; Angell Family
2012 Prouts Neck Trust; JG Bartol Trust FBO Anne Butterfield; JB Bartol FBO T.C. Bartol; CBS
Family Trust FBO Anne Butterfield; CBS Family Trust FBO T.C. Bartol; Mandalay Realty LLC;
30 Saccarappa LLC; Lee T. Sprague; J. Hunter Walton Jr. 1979 Family Trust; and 26 Jocelyn Road
Nominee Trust.
3
We therefore vacate the judgment and remand to the Business and Consumer
Docket with instructions to remand to the Board for further proceedings.
I. BACKGROUND
[¶3] After holding a hearing, the Board made the following findings of
fact, which are based on competent evidence in the record. See Terfloth v.
Town of Scarborough, 2014 ME 57, ¶ 10, 90 A.3d 1131.
[¶4] Scarborough last conducted a valuation of all properties located in
the Town for purposes of municipal tax assessments in 2005. The Town
Assessor, however, continually monitors hundreds of sales of Scarborough
property and conducts studies to ensure that assessment-to-sales ratios—
both in individual neighborhoods and town-wide—are as close as possible to
100%. In 2012, based on an ongoing analysis of sales data, then-Town
Assessor Paul Lesperance reassessed parcels of land in certain Scarborough
neighborhoods. The partial revaluation resulted in increased assessments for
waterfront properties in three areas, including Prouts Neck, and for interior
properties in a fourth neighborhood. Each of those neighborhoods constitutes
a distinct market that cannot be compared to other areas in the Town.
[¶5] For Prouts Neck, the data, which consisted of eight property sales,
showed that waterfront properties were selling for significantly more than
4
their assessed values. As a result of the revaluation, assessments of those
properties increased by 10-15%. Prouts Neck is a unique neighborhood with
amenities, including a golf course, beach club, and yacht club, that enhance the
value of properties located there. Lesperance did not increase assessments of
waterfront properties in a separate neighborhood, Piper Shores, which is not
comparable to Prouts Neck because it is a significant distance from the Prouts
Neck amenities and because the parcels there are generally larger.
[¶6] In early 2013, the Taxpayers, who separately own seventeen
parcels of land in Prouts Neck, each applied for a tax abatement pursuant to
36 M.R.S. § 841(1) (2015).2 In their applications, the Taxpayers alleged that
the partial revaluation unjustly discriminated against them because it resulted
in increased assessments for their properties but not for other similarly
situated properties.3 Lesperance denied the applications, and the Taxpayers
appealed to the Board. See 36 M.R.S. § 843(1) (2015). By agreement of the
parties, the Board consolidated the appeals and held a two-day public hearing
in December 2013 and January 2014. The evidence at the hearing focused
both on the partial revaluation and an “excess land” policy, which affects the
2 Owners of a total of twenty parcels filed abatement applications and appealed to the Board
after Lesperance denied them. Of those taxpayers, the owners of seventeen parcels pursue their
challenges here.
3 The Taxpayers also alleged that their properties were substantially overvalued. On this
appeal, the Taxpayers pursue only their challenge based on unjust discrimination. See infra n.4.
5
Town’s valuation of lots larger than one acre and abutting lots in common
ownership.
[¶7] In a written decision issued in March 2014, the Board denied the
Taxpayers’ consolidated appeals. The Board endorsed the Town’s practice of
assessing a lot in common ownership with a second abutting lot “at a
significantly lower rate,” finding that the impact of the “policy was minor and
did not make the assessments discriminatory.” With respect to the partial
revaluation, the Board found that Lesperance’s reliance on the eight property
sales in Prouts Neck was reasonable and that the data confirmed that the
assessment-to-sales ratio there was “significantly less” than 100%, justifying
the increased assessments. The Board further concluded that, in contrast to
Prouts Neck, there was an insufficient number of sales in Piper Shores to
justify an increase in assessments there and that in any event, the two
neighborhoods are not comparable. The Board also noted that Maine Revenue
Services (MRS) had reviewed the market data for the waterfront areas
affected by the revaluation and had “concluded that the Town’s assessment
methodology was sound and acceptable.”
[¶8] Overall, the Board concluded that Lesperance’s “appraisal
techniques were thorough and well-grounded in expert assessing
6
methodology” and that the Taxpayers had not met their burden of establishing
that the assessments were “manifestly wrong” or discriminatory.
[¶9] In two groups, the Taxpayers filed complaints in the Superior
Court (Cumberland County) pursuant to M.R. Civ. P. 80B(a) and 36 M.R.S.
§ 843, appealing the Board’s decision denying their requests for tax
abatements. The two actions were consolidated and transferred to the
Business and Consumer Docket. In February 2015, the court entered a
judgment affirming the Board’s decision. The court concluded that the
Taxpayers did not have standing to challenge the Town’s excess land
programs and affirmed the Board’s decision on the remaining challenges. The
Taxpayers appealed to us. See 14 M.R.S. § 1851 (2015).
II. DISCUSSION
[¶10] The Taxpayers argue that they have standing to challenge the
Town’s “excess land” assessment practices and that the evidence in the record
compelled the Board to find that those practices have a discriminatory impact
that is adverse to their interests. They then argue that they are entitled to
abatements because the assessments resulting from the 2012 partial
revaluation were based on flawed data and arbitrarily focused on certain
waterfront properties.
7
[¶11] When considering an appeal from a decision of the Superior
Court
in an action seeking review of a tax assessment, 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, 2014 ME 57, ¶ 10, 90 A.3d 1131 (alterations omitted) (citation
omitted) (quotation marks omitted).
[¶12] The legal standards we identified in Petrin as applying to
municipal property tax assessments also govern our analysis here, and we do
not reiterate them in full. We do note, however, that “[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. A taxpayer bears the
affirmative burden of rebutting that presumption by proving that the assessed
value of his or her property is “manifestly wrong” because it was affected by
“unjust discrimination.”4 Id. (quotation marks omitted); see also Allegheny
Pittsburgh Coal Co. v. Cty. Comm’n, 488 U.S. 336, 343 (1989) (stating that the
4 A taxpayer may also seek to prove that an assessment is “manifestly wrong” by demonstrating
that the property was substantially overvalued or that the assessment was affected by fraud,
dishonesty, or illegality. Terfloth v. Town of Scarborough, 2014 ME 57, ¶ 12, 90 A.3d 1131. In this
action, the Taxpayers do not assert such challenges.
8
Equal Protection Clause of the United States Constitution requires a “rough
equality in tax treatment of similarly situated property owners”). This
requires the taxpayer to establish “that the assessor’s system necessarily
results in unequal apportionment.” Ram’s Head, 2003 ME 131, ¶ 10, 834 A.2d
916 (quotation marks omitted).
[¶13] Because the Board concluded that the Taxpayers failed to meet
their burden of proving unjust discrimination, 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).
[¶14] We address the Taxpayers’ challenge to the Town’s excess land
programs before considering their remaining contention that the partial
revaluation was improper.
A. The Town’s Large Lot and Abutting Property Programs
[¶15] As we explained in Petrin and as shown in the present record, the
Town engages in two distinct practices that the Board and the Taxpayers
describe as the “excess land” program. The first practice concerns the Town’s
method for valuing single residential lots that are larger than one acre
(the “large lot” program), and the second involves the Town’s practice of
9
permitting owners of multiple contiguous lots to combine those lots for
assessment purposes (the “abutting property” program).
[¶16] As Lesperance testified, under the large lot program, the first acre
of a larger single parcel is valued at one rate, and the remainder is assessed at
a lower rate, because the portion of the parcel in excess of the one-acre “home
site” contributes proportionally less—and sometimes even nothing—to the
lot’s overall value. The abutting property program, on the other hand, allows
a taxpayer who owns multiple abutting lots to elect to have the separate lots
assessed as a single unit. Based on the same principle that results in a
reduced valuation of a single lot, the abutting property program results in a
lower overall valuation of the two lots than if they were assessed
independently of each other.
[¶17] Focusing on the abutting property program, the court concluded
that because that valuation practice is applied throughout the Town, the
Taxpayers have not demonstrated the “particularized injury” necessary to
support standing to seek remedial relief. As we explained in Petrin, however,
taxpayers whose properties do not qualify for the large lot or abutting
property programs do have standing to challenge those programs because
they do not benefit from the favorable tax treatment that the Town gives to
10
owners of qualifying lots. 2016 ME 136, ¶ 21 & n.6, --- A.3d ---. None of the
Taxpayers owns property that qualifies for the abutting property program,
and they have standing to challenge that practice. Further, because at least
some of the Taxpayers’ properties at issue here are smaller than one acre, we
reach the merits of the Taxpayers’ challenge to the large lot program.
1. Abutting Property Program
[¶18] The Taxpayers first challenge the abutting property program,
which results in a cumulative lower assessment of abutting, commonly-owned
parcels than if the parcels were assessed separately. As Lesperance testified
before the Board, when this methodology is used, the taxpayer gets a “major
benefit” and a “break.”
[¶19] Pursuant to Maine law, an individual parcel of real estate must be
assessed separately according to just value. See Me. Const. art. IX, § 8
(“All taxes upon real and personal estate, assessed by authority of this State,
shall be apportioned and assessed equally according to the just value thereof.”
(emphasis added)); 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)). For the same
reasons we explained in Petrin, the Town’s abutting property program
11
violates the requirement, established in Maine law, that each parcel be
assessed separately according to its just value. 2016 ME 136,
¶¶ 27-28, --- A.3d ---.5
[¶20] Further, on this record, the Board was compelled to conclude that
the abutting property program resulted in an unequal apportionment of the
tax burden. See Ram’s Head, 2003 ME 131, ¶ 10, 834 A.2d 916. The Taxpayers
have made this showing through Lesperance’s testimony that other taxpayers
receive a “major benefit” and a “break” 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 . . . [and] contravenes the Taxpayers’ rights of equal protection.”
Petrin, 2016 ME 136, ¶ 31, --- A.3d ---. Additionally, the Taxpayers presented
evidence of specific examples where an owner of a qualifying parcel pays less
property taxes than does an owner of a comparable, non-qualifying parcel.
[¶21] Because the abutting property program “subject[s] [the
Taxpayers] to taxes not imposed on others of the same class,” Hillsborough v.
Cromwell, 326 U.S. 620, 623 (1946), it necessarily results in an unequal
5 Pursuant to 36 M.R.S. § 701-A (2015), a municipality is authorized to combine contiguous lots
for purposes of tax assessments but only under specified circumstances, including a minimum lot
size of five acres. This statute is inapplicable here.
12
apportionment of the tax burden, and the Taxpayers are entitled to an
abatement for the 2012 tax year, see Petrin, 2016 ME 136, ¶ 32, --- A.3d ---.
2. Large Lot Program
[¶22] The Taxpayers also contend that the evidence in the record
compelled the Board to find that the large lot program—which applies to the
valuation of a single parcel that is larger than one acre—is unjustly
discriminatory.
[¶23] As we explained in Petrin, “[s]o long as an assessment represents
a fair and just determination of value for the parcel as a whole, no
constitutional harm has occurred.” Id. ¶ 36 (quotation marks omitted). The
Board was entitled to find, based on Lesperance’s testimony, that the large lot
program results in assessments that reflect just value and that the Taxpayers
therefore did not meet their burden of proving that the program is unjustly
discriminatory.6
B. The 2012 Partial Revaluation
[¶24] The Taxpayers next challenge the 2012 partial revaluation,
asserting that the evidence compelled the Board to find that it resulted in
6 As in Petrin, the Board’s decision in this case explicitly addressed only the abutting property
program. The Board’s general finding that Lesperance “did not use systematic or intentional
methods to create a disparity in valuations,” however, constitutes at least an implied finding that
the large lot valuation methodology was proper.
13
inequitable assessments of certain waterfront properties in Prouts Neck
because Lesperance (1) failed to present a legitimate justification for targeting
that area, and (2) improperly determined that assessments of waterfront
properties in Piper Shores should not be increased.7
[¶25] As we reiterated in Petrin, “although townwide 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.” Id. ¶ 38 (alterations omitted) (quotation marks omitted).
Revaluations “need not attain absolute equality . . . ; rather, only rough
equality is required.” Id. (quotation marks omitted); see also Allegheny,
488 U.S. at 343 (“[T]he constitutional requirement is the seasonable
attainment of a rough equality in tax treatment of similarly situated property
owners.”).
7 The Taxpayers also complain, in a footnote, that the Board was compelled to find that
Lesperance arbitrarily failed to increase assessments for four waterfront properties in Prouts Neck,
and therefore discriminated against the Taxpayers. This argument is not persuasive because the
Board was entitled to find, based on Lesperance’s testimony, that the assessments for these
properties did not establish unjust discrimination. See Kittery Elec. Light Co. v. Assessors of the Town
of Kittery, 219 A.2d 728, 740 (Me. 1966) (stating that “[s]poradic differences in valuations do not
spell invidious discrimination, intentional or constructive”).
14
1. Justification for Increased Assessments
[¶26] The Taxpayers argue that Lesperance increased assessments of
certain waterfront properties in Prouts Neck based solely on his
determination that the economic downturn of 2008 did not affect that area,
which, they argue, is not supported by the evidence. Contrary to their
contention, however, Lesperance’s decision to revalue Prouts Neck properties
was legitimately grounded in his ongoing analysis of sales data and was not
based solely on his opinion about the effect of the recession.
[¶27] As Lesperance testified, at the time of the revaluation, the
assessments of residential properties in most areas of the Town were close to
100% of their market value. In contrast, market data—consisting of eight
property sales—revealed that on average, since 2005, waterfront properties
in Prouts Neck had been selling for significantly more than their assessed
values. Lesperance therefore increased the assessments of Prouts Neck
waterfront properties to bring the average assessment-to-sales ratio there
closer to 100%. A post-valuation study conducted by Lesperance confirmed
that the revaluation achieved the intended effect: the average assessment
ratio in the Prouts Neck waterfront increased from 83% before the
revaluation to 93% afterwards. Additionally, the Director of the Property Tax
15
Division for MRS testified that MRS had reviewed the market data for the
waterfront areas affected by the revaluation and had concluded that the
revaluation improved the equity of the Town’s assessments.
[¶28] The Taxpayers argue that for two reasons the eight property
sales on which Lesperance relied do not adequately support his decision to
increase assessments in Prouts Neck. First, they argue that four of the sales
do not provide reliable evidence of current fair market value because they
occurred before the 2008 recession. Contrary to their contention, however,
the evidence supports the Board’s conclusion that waterfront property values
in Prouts Neck “remained strong between the years 2006-2011,” and that
therefore it was proper for Lesperance to rely on pre-2008 sales data.
[¶29] Second, the Taxpayers argue that three of the four remaining
sales failed to reflect fair market value because they were not arm’s length
transactions. As we have previously explained, municipalities have a
constitutional obligation to assess real estate at “just value,” Me. Const. art. IX,
§ 8, which is equivalent to “market value,” Weekley v. Town of Scarborough,
676 A.2d 932, 934 (Me. 1996). “Market value” is the “price a willing buyer
would pay a willing seller at a fair public sale.” Frank v. Assessors of
Skowhegan, 329 A.2d 167, 173 (Me. 1974), superseded by statute on other
16
grounds by P.L. 1977, ch. 694, § 694 (effective July 1, 1978); see also Shawmut
Inn v. Town of Kennebunkport, 428 A.2d 384, 395 (Me. 1981) (stating that in
determining market value, “[t]he weight to be given to the sale
price . . . depends upon the petitioner’s ability to show that the sale price was
indicative of the price a willing buyer would pay in a free and open market”).
[¶30] Here, the Board accepted the testimony of one of the Taxpayers’
experts that several sales in Prouts Neck were “private,” but rejected the
expert’s conclusion that the sales were not arm’s length transactions. The
Board reasoned that the witness “did not present credible evidence that any
private sales were entered into unwillingly or [were] the result of undue
pressure.” Although these sales lacked one of the characteristics of an arm’s
length transaction, the evidence does not establish that the prices were not
“typical of [those] arrived at in the open market where willing buyers and
sellers meet on equal terms.” Arnold v. Me. State Highway Comm’n, 283 A.2d
655, 659 (Me. 1971). The Board was therefore not required to conclude that
the resulting sale prices were not reflective of fair market value.
[¶31] Because the Board was entitled to find that Lesperance’s reliance
on the eight waterfront property sales in Prouts Neck was reasonable, and
because those sales showed that the assessment-to-sales ratio there was less
17
than in other residential areas, the Board was not compelled to conclude that
Lesperance lacked a legitimate basis for increasing assessments of the
Taxpayers’ properties.
2. Piper Shores Properties
[¶32] The Taxpayers next contend that the evidence compels the
conclusion that Lesperance’s decision to increase assessments of waterfront
properties in Prouts Neck, but not of comparable properties in Piper Shores,
constitutes unjust discrimination. The basis for this argument is evidence of
the sale of one Piper Shores parcel for a price that was approximately
15% above its assessed value, which Lesperance excluded from his
calculations.
[¶33] Municipalities have a constitutional obligation to achieve “a
rough equality in tax treatment of similarly situated property owners.”
Allegheny, 488 U.S. at 343 (emphasis added). As the Board found based on
competent evidence, however, the waterfront properties in Piper Shores are
not similarly situated to those in Prouts Neck. The Piper Shores properties
18
are generally larger8 and are located a significant distance from the Prouts
Neck amenities.9
[¶34] Additionally, the new Town Assessor testified that the single
Piper Shores sale was “questionable” and was not a reliable indicator of
market value, because it was enrolled in a tax program that limited the use of
the parcel and that disqualified the property from being included in the
annual sales ratio studies submitted to MRS. Both assessors testified that,
moreover, a single sale was an insufficient basis for revaluing the Piper Shores
neighborhood, and Lesperance stated that the sale was transacted after the
April 1, 2012, cutoff date that he had adopted for the revaluation.
[¶35] Based on this cumulative evidence, the Board was not compelled
to conclude that the Town unjustly discriminated against the Taxpayers in
favor of landowners in Piper Shores. See Terfloth, 2014 ME 57, ¶ 13, 90 A.3d
1131.
8 The Board was presented with evidence that Piper Shores encompasses twenty large,
waterfront parcels along approximately two miles of coastline, while Prouts Neck includes fifty-one
waterfront parcels along a coastline that is roughly the same length.
9 The Taxpayers argue that there is no evidence in the record to support the Board’s finding that
the amenities in Prouts Neck—including a golf course, beach club, and yacht club—“enhance the
values of the properties located there.” Contrary to their contention, however, one of the
Taxpayers’ own experts wrote in an appraisal document that was admitted in evidence that “Prouts
Neck is a unique market” with a beach club, yacht club, and country club, and that values of certain
waterfront properties there “still appear[ed] to be strong” even following the economic downturn
of 2008.
19
III. CONCLUSION
[¶36] The Board did not err by concluding that the Taxpayers failed to
meet their burden of proving that the 2012 partial revaluation was unjustly
discriminatory. As in Petrin, however, the evidence here “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.” 2016 ME 136,
¶ 45, --- A.3d --- (quotation marks omitted). 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.
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.
20
On the briefs:
William H. Dale, Esq., and Tudor N. Goldsmith, Esq., Jensen
Baird Gardner & Henry, Portland, for appellants Kenyon C.
Bolton III et al.
Jonathan A. Block, Esq., and Kris Eimicke, Esq., Pierce
Atwood LLP, Portland, for appellants Angell Family 2012
Prouts Neck Trust et al.
Robert J. Crawford, Esq., and N. Joel Moser, Esq., Bernstein
Shur, Portland, for appellee Town of Scarborough et al.
At oral argument:
William H. Dale, Esq., for appellants Kenyon C. Bolton III et
al. and Angell Family 2012 Prouts Neck Trust et al.
Michael A. Hodgins, Esq., Bernstein Shur, Portland, for
appellee Town of Scarborough et al.
Business and Consumer Docket docket number CV-2014-59
FOR CLERK REFERENCE ONLY