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Angell Family 2012 Prouts Neck Trust v. Town of Scarborough

Supreme Court of Maine

October 13, 2016

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.

          Argued: December 8, 2015

         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.

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

          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 Towns practice of undervaluing 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 properties[1] 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 Boards 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 Boards conclusion that the partial revaluation was proper, we conclude that the Board erred by denying the Taxpayers requests for abatement based on the Towns practice of undervaluing abutting lots, which resulted in discriminatory assessments. 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 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 Towns 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 Towns 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 Lesperances 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 Towns assessment methodology was sound and acceptable."

         [¶8] Overall, the Board concluded that Lesperances "appraisal techniques were thorough and well-grounded in expert assessing 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 Boards 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 Boards decision. The court concluded that the Taxpayers did not have standing to challenge the Towns excess land ...


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