The Connecticut communities of Ansonia, Berlin, Bristol, Cromwell, Danbury, East Windsor, Farmington, Glastonbury, Naugatuck, New Britain, Orange, Ridgefield, Simsbury, South Windsor, Stamford, Waterbury, Waterford and Windham (Willimantic) are conducting general real estate revaluations as of their October 1, 2012 Grand Lists. Owners of commercial real estate in these municipalities can expect to receive a new valuation notice from the revaluation company assigned to the task or the local assessor’s office later this year. It is important to review the new value and all other aspects of this notice promptly in order to take advantage of the informal conference with the revaluation company that is typically made available. Appointments for these conferences must be made shortly after receipt of the notice.
Members of the Property Valuation Department of Pullman & Comley can be helpful in addressing your revaluation assessment. (Please note that there are a number of smaller communities also conducting revaluations this year that are not mentioned here.)
Stamford Windustrial Company brought a tax appeal to challenge the value of the property it leased at 54 Sunnyside Avenue in Stamford. It claimed that it was obliged to pay real estate taxes on the property, but did not assert that its lease or a notice of its lease was recorded on the Stamford Land Records and, in fact, none was recorded.
The applicable appeal statute confers upon the lessee of real estate the ability to appeal its ad valorem assessment if its lease or a notice of lease is recorded. Pouncing on the company’s failure to record its lease, the City of Stamford moved to dismiss the appeal. Judge Trial Referee David Tobin agreed.
In a careful review of the legislative history that led up to the creation of the right of a real property lessee to appeal an ad valorem assessment, Judge Tobin concluded that the General Assembly clearly meant to extend that option only to lessees with recorded leases or notices. “In the absence of broader language, it is clear that the legislature intended to leave the holding of (a Supreme Court decision which had ruled that lessees have no tax appeal rights at all) intact with respect to unrecorded leases.”
There are other Superior Court rulings which do not enforce the recording requirement as stringently. In particular, a decision by Judge Trial Referee Arnold W. Aronson several years ago concluded that knowledge by the town of the lessee’s status – as lessee – and its payment of real estate taxes could be asserted to blunt the exclusionary impact of the statute discussed by Judge Tobin. To the extent there is a conflict over this issue in various trial court decisions, resolution must await further examination by either the Appellate Court or the Supreme Court.
However, in light of the Appellate Court’s decision in Megin v. Town of New Milford several years ago, it is abundantly clear that no one other than the record title owner or the lessee of a record title holder has the right to institute a real estate tax appeal.
Stamford Windustrial Co. v. City of Stamford, Docket No. CV‑116009771 (July 5, 2012).
Property in Woodbury comprising two parcels was purchased for a total of $2.55 million in November 2007; the purchase prices for both parcels were established in contracts entered into in late 2003 and 2004 – frothy times in the real estate market. Prior to the closing of the purchases, development approvals were obtained for more than 40,000 square feet of retail store space on the site but a specific application to create a Dunkin Donuts store was denied sometime after the October 1, 2008, Woodbury revaluation. The plaintiff’s property was initially valued at slightly more than $2.8 million. An appeal to the Woodbury Board of Assessment Appeals resulted in a reduction to slightly less than $2.4 million.
Both parties’ appraisers relied on the market approach. But that was the only common thread. With the plaintiff’s appraiser estimate of value at $710,000 and the Town’s appraiser essentially echoing the BAA‑reduced market value, the court determined that “the most influential sale” for its purposes was in fact the November 2007 acquisition by the plaintiff of the parcels in question. The court based its conclusion on the fact that while the sale contracts pertain to raw vacant land, the plaintiff had been successful in obtaining development permits and financing prior to the revaluation date. As a result, the plaintiff had failed to meet his burden of proof. “(The plaintiff’s appraiser’s) opinion of value for the subject property of $710,000, when the plaintiff purchased the subject property for $2.55 million, less than one year from the date of revaluation, is not credible.”
Reading between the lines a bit, it appears that these properties were purchased just as the real estate market hit its peak and that by the time of the revaluation, slightly less than a year later, the ability to move forward with the development likely was affected by the horrible economic circumstances obtaining as of October 1, 2008. If this was the case, the court was not presented with sufficient evidence to reach that conclusion and the plaintiff was unfairly saddled with its purchase price as the basis for its assessment.
Eyre, LLC v. Town of Woodbury, Superior Court, Judicial District of New Britain, Docket No. CV-09-4027964, May 16, 2012.
Gregory F. Servodidio spent two weeks in India during August. It is reliably reported that he limited his stay there to touring the country and did not litigate any property valuation cases in the Indian courts.
The Property Valuation Attorneys of Pullman & Comley, together with the firm’s Real Estate, Energy and Environmental practices, will be hosting “Unlocking Real Estate Value in Today's Marketplace" on October 24, 2012 at the Connecticut Science Center. This afternoon seminar will provide practical perspectives on realizing your property’s potential and capitalizing on the opportunities available in the current economic and regulatory environments. For more information please contact firstname.lastname@example.org.
On November 15, Laura Bellotti Cardillo will address members and guests of the Association of Long Term Care Financial Managers on real estate and personal property tax saving strategies. For further information on this program at the Rocky Hill Sheraton, please visit www.altcfm.org.
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