Balise v. Town of Embden

• Court: Superior Court of Maine
• Decided: December 17, 2010
• Docket: SOMap-09-006and10-003
• Status: Unpublished

Opinion

STATE OF MAINE SUPERIOR COURT SOMERSET, ss. CIVIL ACfION Docket No.: 09-AP-006 . 10-AP-003. \ r-c .•IIJI' uC! -_.)O '\' I • j';JiJIO ~ . - rd./17

Brad & Deborah Balise,

Plaintiffs DECISION AND ORDER v.

Town of Embden,

Defendant

This matter is before the Court on Plaintiffs' request for judicial review, pursuant

to Maine Rule of Civil Procedure 80B, of the March 30,2010 decision of the Somerset

County Commissioners ("commissioners"), affirming the Town of Embden's denial of

Plaintiffs' request for an abatement of the Town's assessment of the Plaintiffs' property

for tax year 2009. Plaintiffs' request for judicial review of the denial of their request for

an abatement of their 2008 property taxes is joined in this action.

Factual Background

In 2004, Plaintiffs purchased for $72,000 certain property in the Town of Embden

("Town") with frontage on Hancock Pond. Despite its frontage on Hancock Pond, the

property was mistakenly classified as "rural" until 2008, and had been assessed under the

"rural" classification at $39,000. The Town reclassified the property in 2008 to

recognize its frontage on Hancock Pond, and explained the reclassification in a letter to

the Bernards, Plaintiffs' predecessors in title, to whom the Town had been erroneously

sending the tax bill for the property. In its 2009 assessment of the property, the Town valued the property at $178,900.

Plaintiffs sought an abatement in 2008 from the Town's assessment of their property at

$167,000, contending that their property was overvalued given its unique composition of

mostly wetland terrain, a road right-of-way occupying the driest and most buildable

section of their property, and a statutory and regulatory resource protection setback of

250 feet from Hancock Pond, which is a "great pond" and a local water source entitled to

certain environmental protections. The assessors denied the abatement request. While

the proceedings regarding the 2008 assessment were pending, Plaintiffs requested an

abatement of their 2009 tax bill.

After the assessors denied Plaintiffs' request for an abatement of their 2009 taxes,

Plaintiffs appealed to the county commissioners. Upon consideration of Plaintiffs'

appeal, one commissioner abstained from voting, one voted in favor of abatement, and

the third and final commissioner voted against abatement. In the action seeking judicial

review of the commissioners' decision to deny the 2009 abatement, in accordance with

the parties' agreement, the Court consolidated the actions involving the 2008 and 2009

tax years, and defined the issues on which the Court would entertain evidence at a final

hearing. Consistent with the Court's order, the testimony before the Court was limited to

the testimony of Assessor Rodney Hatch, who presented evidence about the Town's

classification of "wasteland" and the parcels within the Town that were considered to be

within that classification.

Discussion

Plaintiffs' request for judicial review has generated two issues for the Court's

consideration: (1) the Town's authority not to classify Plaintiffs' property as "wasteland," even though the property might satisfy the State definition of "wasteland";

in other words, the Town's authority to define "wasteland" differently from the State for

tax purposes; and (2) the merits of Plaintiffs' challenge to the Town's denial of Plaintiffs'

abatement request.

One issue in this case concerns a town's home rule authority to classify property

for tax purposes differently than it is classified for state tax valuation purposes. Plaintiffs

maintain that their property should at least in part be classified as wasteland because the

property includes wetlands. In support of this contention, Plaintiffs cite the

administrative rule governing the determination of state valuation, 18-125 C.M.R. ch.

201, § I(HH) (1996), which defines "waste" as "any acreage which is unsuitable for

development, agricultural, or silvicultural use; i.e. wetlands and ledge barrens." Plaintiffs

argue that because the state valuation includes such a classification, the local assessors

must consider wetlands as "wasteland," and tax it accordingly. To do otherwise,

Plaintiffs assert, would exceed the assessors' authority.

According to the Town, although a town map that includes a wetlands

classification is being developed, there is at the present time no local tax assessment

classification for wetlands. The record before the Court, incl uding the testimony of

Assessor Hatch, demonstrates that in 2005, the Town determined that the "wasteland"

classification was to be reserved for parcels in tree growth areas that were unsuitable for

tree growth. In response to Plaintiffs' argument, therefore, the Town advised Plaintiffs

that if they wished to pursue a "wasteland" classification for any portion of their

property, they should ask a forester to evaluate the fitness of the property for tree growth. The Town thus maintains that in accordance with its home rule authority, it is not bound

by the State's definition of "wasteland."

"Home rule is granted to municipalities by the Maine Constitution and by statute.

ME. CaNST. art. VIII, pt. 2, § 1; 30-A M.R.S. § 3001." E. Perry Iron & Metal Co., Inc.

v. City of Portland, 2008 ME 10, ~ 14,941 A.2d 457,462. "The home rule statute states

that it is to be liberally construed to effect its purposes, that there is a presumption in

favor of home rule, and that preemption is not to be implied unless local action would

frustrate the purposes of state law." Id. "Only where the municipal ordinance prevents

the efficient accomplishment of a defined state purpose should a municipality's home

rule power be restricted, otherwise municipalities are free to act to promote the well­

being of their citizens." Id. (quoting School Comm. v. Town of York, 626 A.2d 935,938

n.8 (Me. 1993); 30-A M.R.S. § 3001(3)) (brackets omitted).

'There is a rebuttable presumption that action taken pursuant to the home rule

statute is a valid exercise of authority." Id. at ~ 24, 941 A.2d at 464. "IMlunicipal and

state enactments may peacefully co-exist within any given subject area unless a conflict

arises, in which event the state statute will contro!." School Comm., 626 A.2d at 944

(quoting Report of the Joint Standing Committee on Local and County Government on

the Revision of Title 30, at 12 (Dec. 1986)). Here, Plaintiffs have not presented any

persuasive evidence to rebut the presumption of validity enjoyed by the Town's

"wasteland" classification. That is, Plaintiffs have not produced evidence that the

Town's "wasteland" classification would frustrate state taxation purposes. Indeed, the

state statutory scheme allows local assessors significant discretion in determining their

methods of assessment. "Although the Legislature has established 'minimum assessing standards' with which the assessors must comply, 36 M.R.S.A. § 327, it has stopped short

of setting forth in the statutes the different methods which local assessors may utilize to

achieve such results. 36 M.R.S.A. § 326." Shawmut Inn v. Kennebunkport, 428 A.2d

384, 389-90 (Me. 1981); see also Clifford H. Goodall and Seth A. Goodall, Property

Tax: A Primer and a Modest Proposal for Maine, 57 Me. L. Rev. 585, 590, 593-94

(2005) (noting that Maine state government receives no revenue from municipal

collection of property taxes, and that no statewide assessment criteria exist). Because the

state has not expressly legislated in this area, there is no statutory purpose that is

frustrated by the Town's assessment procedures, and they are well within the

municipality's home rule authority. Cf. School Comm., 626 A.2d at 942 (noting the

appellant's failure to articulate how local action frustrated statutory purpose).

The Court next considers the merit of Plaintiffs' challenge to the commissioners'

decision to deny their request for an abatement. Article IX, Section 8 of the Maine

Constitution provides, "All taxes upon real and personal estate ... shall be apportioned

and assessed equally according to the just value thereof." Me. Const. art. IX, § 8.

"Accordingly, any assessment must include two distinct factual findings: first, the

property must be assessed at its fair market value, see Quoddy Realty Corp. v. City of

Eastport, 1998 ME 14, ~ 9,704 A.2d 407,409, and second, the assessed value must be

equitable, that is, the property must be assessed at a relatively uniform rate with

comparable property in the district. See generally McBreairty v. Commissioner of Admin.

& Fin. Servs., 663 A.2d 50,54 (Me. 1995) (discussing constitutional obligation to assess

property within a district at a uniform rate)." Chase v. Town of Machiasport, 1998 ME

260, ~ 11,721 A.2d 636, 640. "When a taxpayer appeals from a Town's denial of an abatement, the

Commissioners begin their review of the assessment with the presumption that the

assessor's valuation of the property is valid." Yusem v. Town of Raymond, 2001 ME 61,

~ 8,769 A.2d 865, 869-70. "To overcome that presumption, the taxpayer seeking an

abatement from the Commissioners has the initial burden of presenting credible,

affirmative evidence to meet his or her burden of persuading the Commissioners that the

assessor's valuation was manifestly wrong." Id., 769 A.2d at 870 (quotations and

brackets omitted). "An assessment is manifestly wrong if: (1) the property was

substantially overvalued and injustice resulted; or if the assessment involved (2) unjust

discrimination; or (3) fraud, dishonesty or illegality." UAH-Hydro Kennebec, L.P. v.

Town of Winslow, 2007 ME 36, ~ 9, 921 A.2d 146, 149. "In order for the Board to

determine if the assessor substantially overvalued the property, the taxpayer has to

present credible evidence of its value." Ne. Empire Ltd. P'ship #2 v. Town of Ashland,

2003 ME 28, ~ 7, 818 A.2d 1021, 1024. "[Elven if a Board does not accept the value

proffered by a taxpayer, if that suggested value and the basis for the value are credible

evidence of the overval uation of the subject property, the Board's responsi bili ty to

undertake an independent determination of val ue is triggered." Id. at ~ 8, 818 A.2d at

1024; see also Quoddy Realty Corp., 1998 ME 14, ~ 7,704 A.2d at 409 ("By withholding

their independent determination of just value, the Commissioners failed to discharge their

statutory responsibilities. 36 M.R.S.A. § 844(1)."); South Portland Assocs. v. City of

South Portland, 550 A.2d 363,366 (Me. 1988) ("Since the Board itself did not make any

independent determination of the fair market value on the basis of an income analysis and

all other relevant evidence, it had no basis for its ultimate finding that the assessed value of this property is not so unreasonable as to result in an injustice.") (quotation omitted).

Once the commissioners' obligation to undertake an independent analysis of fair value is

triggered, the commissioners are prohibited from deferring to the assessors'

determination of value. Town of Vienna v. Kokernak, 612 A.2d 870, 873 (Me. 1992)

("We have previously recognized that [36 M.R.S. § 844], governing tax assessment

appeals to the county commissioners, requires that the commissioners give no deference

to the decision of the tax assessors.") (footnote omitted).

At the hearing below, Plaintiffs presented testimony from Mr. Bernard, the

property's owner until 2004, who had tried unsuccessfully to sell the property for ten

years prior to the Plaintiffs' purchase. Mr. Bernard was thus in a unique position to offer

evidence of the property's market value. See City of Waterville v. Waterville Homes,

Inc., 655 A.2d 365,367 n.l (Me. 1995) ("We do not suggest that a petitioner seeking a

tax abatement must provide affirmative evidence of just value through the use of expert

witnesses. We recognize the well-established principle that a property owner is entitled to

offer an opinion on the value of the property for which an abatement is sought.").

Plaintiffs also offered evidence of the 2004 arms' -length sale price ($72,000);

assessments of other property in the Town, including a parcel on Hancock Pond, with a

wasteland classification; aerial satellite photos of the property indicating boundary lines,

roads, wetlands, and the conservation area surrounding Hancock Pond; and photographs

taken while standing on the property revealing it to be more like a swamp than dry or

useable waterfront property.

Assessor Rodney Hatch described the method of assessing the Plaintiffs' property

as follows: insofar as the land was on Hancock Pond but was not buildable because of resource protection restrictions, the assessors, rather than creating a new schedule,

applied the existing schedule governing valuation of the less costly Sandy and Fahi

waterfront property rather than the more costly Hancock Pond property schedule. He

testified that this method was used for all properties within resource protection on

Hancock Pond, without regard to the parcels' individual qualities, as most towns use the

mass appraisal method rather than viewing each shorefront property. The evidence

before the commissioners and before the Court established that the Town valued the

properties according to this mass valuation system and not based upon the subject

property's individual characteristics.

"Application of the substantial evidence standard of review requires the reviewing

court to 'search the entire record to determine whether on the basis of all the testimony

and exhibits before the agency it could fairly and reasonably find the facts as it did.'"

Vienna v. Kokernak, 612 A.2d at 872 (quoting Winship v. Brewer School Comm., 390

A.2d 1089, 1093 (Me. 1978» (ellipsis omitted). Even viewed through this deferential

lens, the record reveals that the denial of the abatement is based upon a consideration of

only one of the two required prongs of analysis. While the evidence of record could

support a finding that the property was "assessed at a relatively uniform rate with

comparable property in the district," see Chase, 1998 ME 260, ~ 11,721 A.2d at 640, the

evidence cannot support a finding that the assessment was based upon the fair market

value of the Balise property, which is the other constitutional and statutory requirement.

See id.

"In our State the tax assessors are under both a constitutional and statutory

obligation to determine the 'just value' of taxable property." Shawmut Inn, 428 A.2d at 389 (citing Me. Const., art. IX, § 8, 36 M.R.S.A. § 201); see also S. Portland Assocs.,

550 A .2d at 369 ("the objective of all appraisal methods is precisely the same: the

determination of just or market value."). "'Just value' is the equivalent of 'market

value.'" Shawmut Inn, 428 A.2d at 389 (quoting Sweet, Inc. v. City of Auburn, 134 Me.

28,31, 180 A. 803,804 (1935); Frank v. Assessors of Skowhegan, 329 A.2d 167, 173

(Me. 1974». "The arms length sale price of property provides the best evidence of

market value." Town of Southwest Harbor v. Harwood, 2000 ME 213, ~ 19,763 A.2d

115, 120. '''Market value' generally means the price that a 'willing buyer would pay a

willing seller at a fair public sale.''' Yusem, 2001 ME 61, ~ 13 n.l1, 769 A.2d at 872

(quoting Frank, 329 A.2d at 173). The legislature has also defined "just value" for the

purposes of tax assessment:

In the assessment of property, assessors in determining just val ue 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 including the effect on value of designation of land as significant wildlife habitat under Title 38, section 480-BB, 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. 36 M.R.S. § 701-A (2009).1

A review of the record relevant to the just value of Plaintiffs' property reveals that

Plaintiffs presented credi ble evidence to support their contention that their property was

I The Court cites the statute as a reflection of the factors that merit consideration in a proper assessment of

just value, rather than as a basis for overturning the commissioners' decision-although failure to consider these factors may provide an independent basis upon which to invalidate the commissioners' decision. See Pepperman v. Town of Rangeley, 1999 ME 157, jJ' 3 n.l, 739 A.2d 851 ,852. substantially over valued. Specifically, in addition to the 2004 purchase price, the

evidence established that the property's waterfront, rather than solid terrain bordering

Hancock Pond, is a three-foot-wide strip of land that is separated from the main parcel by

a bog area where water ranges from six to twelve inches deep and vegetation grows

freely. The property has no buildings and would likely not support any. There are no

utilities and no cell phone coverage. Forty percent of the parcel is wetland. The driest

and most buildable portion of the land is reserved for two acres of right-of-way. The road

nearest to the parcel is a private road and there is no road access to the property itself; the

waterfront swath must be accessed from a neighboring parcel over which the petitioners

have no legal right to pass. Not insignificantly, the record contains no evidence of

comparable property. In fact, Plaintiff Brad Balise explained that he had been unable to

locate comparable properties for sales data because no other properties have the same

unique characteristics.

In short, because the Town's approach did not consider the individual qualities of

Plaintiffs' property, which, if considered, likely would have resulted in a substantially

lower valuation of Plaintiffs' property, the Town's approach was not in accordance with

the legislative mandates of 36 M.R.S. § 70 I-A and the constitutional requirements of

assessing property at its just or market value. Given the record before it, the

commissioners should have undertaken an independent valuation of Plaintiffs' property.

See Ne. Empire Ltd. P'ship #2, 2003 ME 28, ~ 8, 818 A.2d at 1024. Because the

commissioners did not conduct an independent valuation, the Court remands the case to

the commissioners for an independent determination of the property's value for tax years

2008 and 2009, and for an abatement of the difference between the assessed value and the just value, after considering the property's individual characteristics and the factors set

forth in 36 M.R.S. § 701-A.

Pursuant to M.R. Civ. P. 79(a), the Clerk shall incorporate this Decision and

Order into the docket by reference.

Dated: 11-/17/1 () ~

stice, Maine Superior Court