Roque Island Gardner Homestead Corporation v. Town of Jonesport

MAINE SUPREME JUDICIAL COURT Reporter of Decisions

Decision: 2017 ME 152

Docket: Was-16-240

Argued: February 6, 2017

Decided: July 11, 2017

Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.

ROQUE ISLAND GARDNER HOMESTEAD CORPORATION

v.

TOWN OF JONESPORT

HJELM, J.

[¶1] Roque Island Gardner Homestead Corporation (“RIHC”) appeals

from a judgment entered in the Superior Court (Washington County, Stokes, J.)

affirming the Town of Jonesport Board of Appeals’s denial of RIHC’s request

for a municipal tax abatement for 2014. RIHC argues that evidence presented

to the Board compels the conclusion that the Town’s valuation of its property

was unjustly discriminatory because the assessment rate for island

structures—such as those on its land, Roque Island—is higher than for

structures located on the mainland. Because the record does not compel the

conclusion that the rate differentiation is unjustly discriminatory, we affirm

the judgment.

2

I. BACKGROUND

[¶2] The Board of Appeals held a two-day hearing on RIHC’s application

for an abatement of its 2014 municipal property tax.1 At the hearing, the

Board was presented with the following evidence.

[¶3] RIHC, a nonprofit entity organized under Maine law, owns the

entirety of Roque Island, which is located in the Town of Jonesport. The

property consists of 1,242 acres of land, with five houses and numerous

outbuildings. Roque Island is a homestead that has been owned by the same

family since the early 1800s.

[¶4] In 2010, the Town hired a certified private assessor and evaluator

to conduct a revaluation of all properties in the Town. The private assessor

used “TRIO,” which is State-approved assessment software, to develop

property valuation formulae. The TRIO formulae, which are differentiated by

neighborhood, calculate separate land and building values for a given parcel.

Those values are combined to determine a total assessed value for the

property.

1

As provided by statute, in February 2015, RIHC submitted its abatement application to the

municipal assessor. See 36 M.R.S. § 841(1) (2016). The municipal assessor did not take action on

the abatement application within sixty days of its filing because, as she later explained to the Board,

she had not completed her investigation into the matter within that period. The application was

thereby deemed denied, see 36 M.R.S. § 842 (2016), and RIHC pursued its application before the

Board, see 36 M.R.S. § 843(1) (2016).

3

[¶5] The calculations are a function of the character of the

neighborhood where the property is located, so that, for example, the land

values of shorefront property on the mainland are subject to a multiplier to

reflect the greater market value of waterfront real estate. In contrast, land

values for island properties are calculated at a lower rate because those

parcels are not benefitted by certain services that mainland properties

receive. Conversely, building values on islands are subject to an “economic

obsolescence factor” of 200%—resulting in a greater assessed value than a

comparable mainland structure would have—because of the additional cost of

building on an island.2

[¶6] The Town assessor testified that the 200% multiplier is used to

determine the assessed value of island structures due to higher construction

costs on islands, which results from the expense of transporting materials and

workers—something she had confirmed through communications with

building contractors, who reported that they double their regular charges for

island construction. The assessor further testified that she had learned from

other municipal assessors that although other municipalities might not use an

2

The economic obsolescence factor for most, if not all, mainland properties in Jonesport is

100%, meaning that it has no effect on mainland building values. Although the phrase

“obsolescence factor” implies a reduction in value, as applied here it has the effect of increasing the

assessed value.

4

economic obsolescence rate as Jonesport does, they employ other valuation

techniques that result in higher assessments for island structures.3

[¶7] Due to an oversight by the Town assessor’s office, the economic

obsolescence factor originating with the 2010 revaluation was not fully

applied to the assessment of the structures on Roque Island until the 2014 tax

year. When the Town then applied the factor to the Roque Island property, its

total valuation increased by 52% from the previous tax year. RIHC sought an

abatement from the resulting property tax increase, and when that application

was constructively denied, it appealed to the Board. See supra n.1.

[¶8] On that appeal, RIHC contended that the 200% economic

obsolescence factor for island buildings constituted unlawful discrimination

and sought an abatement of $1,305,150 from the 2014 building valuation

assessment of $2,609,846, which would result in a property tax reduction of

nearly $20,000. After deliberations during the public hearing, which was held

in July and September 2016, and in a written decision, the Board denied

RIHC’s abatement application. The Board concluded that once the

2010 revaluation formulae were applied to the Roque Island property for the

The Town assessor testified, for example, that for island properties, the Town of

3

Southwest Harbor uses a “special neighborhood” designation to “arrive at the same idea” as the

200% multiplier; and in the City of Portland, instead of “a factor of two,” the assessors apply “higher

building grades and quality of construction and condition” to achieve a similar result.

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2014 tax year, RIHC’s “buildings were now being taxed consistently with other

buildings on islands.” The Board further found that although “there are no

comparable islands in Jonesport” to Roque Island,4 “other [t]owns in Maine

assess buildings on islands at a significantly higher rate than buildings on the

mainland.”

[¶9] After the Board denied RIHC’s motion for reconsideration, RIHC

appealed to the Superior Court, see 30-A M.R.S. § 2691(3)(G) (2016); 36 M.R.S.

§ 843(1) (2016); M.R. Civ. P. 80B, which affirmed the Board’s denial of the

abatement appeal. RIHC timely appealed to us. See M.R. App. P. 2(b)(3);

M.R. Civ. P. 80B(n).

II. DISCUSSION

[¶10] RIHC argues that the Board erred in its decision denying an

abatement because the Town’s assessment of its buildings, calculated using

the 200% economic obsolescence multiplier, is unjustly discriminatory and

resulted in an unfair apportionment of the municipal tax burden.

[¶11] When the Superior Court has acted in its appellate capacity to

review a decision of a municipal board of appeals, “we review the Board’s

4

During discussion at the hearing, one of the Board members stated that the structures on the

other developed islands were camps and that only one had electricity from a source that was not

portable.

6

decision directly for abuse of discretion, errors of law, and sufficient

evidence.” Petrin v. Town of Scarborough, 2016 ME 136, ¶ 13, 147 A.3d 842

(quotation marks omitted); see also M.R. Civ. P. 80B. Because the Board

concluded that RIHC failed to meet its burden to prove that an abatement was

merited, “we will vacate the Board’s decision only if the record compels a

contrary conclusion to the exclusion of any other inference.” Petrin,

2016 ME 136, ¶ 16, 147 A.3d 842 (quotation marks omitted). “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 (alterations omitted) (quotation marks

omitted).

[¶12] “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

overcome this presumption, the taxpayer bears the burden of proving that the

assessment is “manifestly wrong” by demonstrating that (1) the “property

was substantially overvalued and an injustice resulted from the

overvaluation”; (2) “there was unjust discrimination in the valuation of the

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property”; or (3) “the assessment was fraudulent, dishonest, or illegal.”

Petrin, 2016 ME 136, ¶ 14, 147 A.3d 842 (quotation marks omitted). Here,

RIHC challenges the assessment solely on the basis of unjust discrimination.

[¶13] The prohibition against unjust discrimination derives from the

Maine Constitution, which 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,” Me. Const. art. IX, § 8, and the

federal Equal Protection Clause, U.S. Const. amend. XIV, § 1. “To achieve an

equitable distribution of the overall tax burden, assessors must apply a

relatively uniform rate to all comparable properties in the district.”

Petrin, 2016 ME 136, ¶ 15, 147 A.3d 842 (alteration omitted) (quotation

marks omitted). Unjust discrimination occurs where “similarly situated

properties” are taxed unequally, and is typically demonstrated through

evidence of a practice that amounts to intentional “underassessment or

overassessment of one set” of like properties. Delogu v. City of Portland,

2004 ME 18, ¶ 12, 843 A.2d 33; see Ram’s Head, 2003 ME 131, ¶ 11,

834 A.2d 916.

[¶14] In its effort to prove an unjustly discriminatory valuation, RIHC

has invoked the analytical model we approved in Ram’s Head, wherein a

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taxpayer may present evidence 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 valuations is unfounded or

arbitrary.’” Petrin, 2016 ME 136, ¶ 25, 147 A.3d 842 (alterations omitted)

(quoting Ram’s Head, 2003 ME 131, ¶ 12, 834 A.2d 916). RIHC asserts that its

structures are taxed at a higher rate than similarly situated structures on

mainland properties and that, as an owner of island structures, it

consequently bears a disproportionate share of the municipal tax burden.

[¶15] “[O]nly similarly situated properties must receive approximately

equivalent tax treatment . . . .” Town of Bristol Taxpayers’ Ass’n v. Bd. of

Selectmen/Assessors for Bristol, 2008 ME 159, ¶ 11, 957 A.2d 977. Unjust

discrimination does not exist where “properties [are] treated differently from

properties in other areas of Town that [are] not similar to their own.” Id. ¶ 12;

see also Angell Family 2012 Prouts Neck Tr. v. Town of Scarborough,

2016 ME 152, ¶¶ 32-33, 149 A.3d 271. Here, the Town assessor explained to

the Board that islands are considered “a separate neighborhood.” The

structures on all developed islands in Jonesport are subject to the same 200%

economic obsolescence factor that is applied to the valuation of buildings on

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Roque Island. Therefore, the Roque Island property was treated like other,

similarly situated properties.

[¶16] Further, the Board was not compelled to conclude that island

structures are similarly situated to those on mainland property, to which the

multiplier is not applied. See Angell Family, 2016 ME 152, ¶ 13, 149 A.3d 271.

Although Jonesport’s island land valuations are reduced because those parcels

receive fewer municipal services than their mainland counterparts, the

assessment of island structures is higher because of greater building costs.5

The Town assessor told the Board that several contractors advised her that

they generally charge double for island construction projects compared to

what they charge on the mainland. Additionally, the Town assessor told the

Board that according to RIHC’s own property manager, it “had done [its] own

cement because [it] wasn’t going to hire one of these boats at $4,000 a day to

bring the truck out, or to ferry several trucks back and forth.” Given the

5

At the abatement hearing, the assessor stated that the increased assessment of island

structures is generally offset by the reduced land assessment for island property. RIHC has made

clear that it is not challenging the land assessment methodology, which actually is favorable to an

island property taxpayer. This has led the Town to argue that RIHC’s challenge is improper because

it is directed toward only one component of the overall valuation. See Roberts v. Town of

Southwest Harbor, 2004 ME 132, ¶ 4, 861 A.2d 617 (stating that a taxpayer “must demonstrate that

his property, as a whole, has been valued differently than other comparable properties” (emphasis

added)). Because the evidence did not compel the Board to conclude that there was unjust

discrimination in the first place, we do not address this alternative argument advanced by the

Town.

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evidence presented during the abatement hearing, the Board was not

compelled to find that island structures are “similarly situated” to mainland

structures.

[¶17] Finally, the rationale offered by the Town for the lower

valuations assigned to mainland properties is not arbitrary or unfounded. See

Petrin, 2016 ME 136, ¶ 25, 147 A.3d 842. The certified private assessor hired

by the Town to develop the 2010 revaluation applied the 200% multiplier to

island buildings based on the higher cost of construction on an island. His

calculations were based on a sales study and consultations with building

contractors. Given this evidence, the Town was entitled to consider the

greater cost of constructing a building on an island in its valuation of the

buildings on Roque Island.

[¶18] Because the evidence did not compel the Board to find that the

Roque Island property was assessed differently than other similarly situated

properties, the Board did not err by denying RIHC’s abatement application.

The entry is:

Judgment affirmed.

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John B. Shumadine, Esq. (orally), and Peter L. Murray, Esq., Murray, Plumb &

Murray, Portland, for appellant Roque Island Gardner Homestead

Corporation

Erik M. Stumpfel, Esq., and Jonathan P. Hunter, Esq. (orally), Rudman

Winchell, Bangor, for appellee Town of Jonesport

Washington County Superior Court docket number AP-2015-04

FOR CLERK REFERENCE ONLY