Atb 2007-248 Commonwealth of Massachusetts Appellate
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COMMONWEALTH OF MASSACHUSETTS APPELLATE TAX BOARD CHRISTMAS TREE SHOPS BOARD OF ASSESSORS PLAZA, LLC v. OF THE TOWN OF NORTH ATTLEBORO Docket No. F272754 AND CUMBERLAND AVENUE BOARD OF ASSESSORS PLAZA, LLC v. OF THE TOWN OF NORTH ATTLEBORO Docket No. F272755 Promulgated: April 11, 2007 These are appeals filed under the formal procedure pursuant to G.L. c. 58A, § 7 and G.L. c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes on real estate located in the Town of North Attleboro, owned by and assessed to the appellants under G.L. c. 59, §§ 11 and 38, for fiscal year 2004. Commissioner Gorton heard the appeals. He was joined in the decisions for the appellee by former Chairman Foley and Commissioners Scharaffa, Egan and Rose. These findings of fact and report are made pursuant to requests1 by the 1These appeals, involving similar properties owned by related parties, were heard in sequence on the same day by the same Board member. The appellants were represented by the same counsel and offered the testimony of the same expert witness, who relied essentially on the same comparable properties in arriving at his opinions of value in these appeals. Accordingly, the Board responds to the appellants’ requests by issuing a single findings of fact and report which addresses both appeals. ATB 2007-248 appellants under G.L. c. 58A, § 13 and 831 CMR 1.32. Matthew A. Luz, Esq. for the appellants. Robert Bliss, Esq. for the appellee. FINDINGS OF FACT AND REPORT On January 1, 2003 (“the relevant assessment date”), Christmas Tree Shops Plaza, LLC (“Christmas Tree LLC”) was the assessed owner of the land and building located at 1505 South Washington Street, North Attleboro (“Christmas Tree property”). For fiscal year 2004 (“fiscal year at issue”), the North Attleboro Board of Assessors (“assessors”) valued the Christmas Tree property at $12,279,800 and assessed a tax thereon, at the rate of $12.83 per thousand, in the amount of $157,549.83. On December 31, 2003, North Attleboro’s Collector of Taxes sent out the town’s fiscal year 2004 actual real estate tax bills. In accordance with G.L. c. 59, § 57C, Christmas Tree LLC timely paid the tax without incurring interest. On January 27, 2004, Christmas Tree LLC timely filed its application for abatement with the assessors. The application was denied on April 22, 2004. On May 19, 2004, Christmas Tree LLC seasonably filed its petition with the Appellate Tax Board (“Board”). On the relevant assessment date, Cumberland Avenue Plaza, LLC (“Cumberland Avenue LLC”) was the assessed owner ATB 2007-249 of the land and building located at 40 Cumberland Avenue in North Attleboro (“Cumberland Ave. property”). For fiscal year 2004, the assessors valued the Cumberland Ave. property at $9,304,800 and assessed a tax, at the rate of $12.83 per thousand, in the amount of $119,380.58. On December 31, 2003, North Attleboro’s Collector of Taxes sent out the town’s fiscal year 2004 actual real estate tax bills. In accordance with G.L. c. 59, § 57C, Cumberland Avenue LLC timely paid the tax without incurring interest. On January 27, 2004, Cumberland Avenue LLC timely filed its application for abatement with the assessors. The application was denied on April 22, 2004. On May 19, 2004, Cumberland Avenue LLC seasonably filed its petition with the Board. Based on these facts, the Board found that it had jurisdiction over these appeals. The Christmas Tree property is a 12.02-acre parcel of real estate improved with a single story, concrete block structure with a finished building area of 97,027 square feet, a 930 square foot loading platform, and a 1,960 square-foot open, finished porch. Originally built circa 1994 as a department store, the property was substantially renovated in 1999. On October 17, 2000, Christmas Tree LLC purchased the property for a stated consideration of ATB 2007-250 $12,900,000. As of January 1, 2003, the building was divided into three separate rentable retail areas, with the following tenants: Unit Size Tenant Unit 1 16,800 square feet The Guitar Center Unit 2 30,000 square feet MSP Super Stores Unit 3 51,074 square feet Christmas Tree Shops The Cumberland Ave. property is a 9.92-acre parcel of real estate improved with a one-story masonry block building built circa 1999, overlayed with appropriate metal sheeting with a gross building area of 61,185 square feet. The front of the building is substantially plate glass. On October 17, 2000, Cumberland Avenue LLC purchased this property for a stated consideration of $10,600,000. As of January 1, 2003, the building was divided into seven separate rentable spaces, with the following tenants: Unit Size Tenant Unit 1 5,850 square feet Kinkos Unit 2 5,200 square feet Newbury Comics Unit 3 11,700 square feet David’s Bridal Unit 4 5,200 square feet Frameking Express Unit 5 4,700 square feet Unique Dental Care Unit 6 5,200 square feet South of the Mall Unit 7 21,450 square feet Bernie’s Audio Video Basic construction of both the Christmas Tree property and the Cumberland Ave. property (collectively “subject properties”) includes concrete foundation and concrete block and stucco exterior walls. The interior finishes include resilient tile and carpeted floors, painted ATB 2007-251 sheetrock walls, suspended tile, and exposed I-beam ceilings. Each property has a separate electrical service for each of their respective tenants, heat is forced hot air by gas, and there is central air conditioning. Both subject properties have large, custom-designed signage appropriate for their respective tenants, and large, well lit parking areas which accommodate 441 vehicles for the Christmas Tree property and 240 vehicles for the Cumberland Ave. property. Overall, the properties are in average condition. Both the Christmas Tree property and the Cumberland Ave. property are located approximately one-half mile from the Emerald Square Regional Mall, in a commercial-zoned area with other strip-mall properties. Located directly on Route 1 south, the entranceway to the Christmas Tree property is marked by a large clock tower. The property is also accessible from Cumberland Avenue. Located directly across from the Christmas Tree property, on Cumberland Avenue, is the Cumberland Ave. property at issue in these appeals. There is a traffic light at the intersection of Route 1 and Cumberland Avenue which improves travelers’ access to both properties. In support of their claims that the subject properties were overvalued for fiscal year 2004, Christmas Tree LLC ATB 2007-252 and Cumberland Avenue LLC (collectively “the appellants”) presented the testimony and appraisal reports of Roger J. Marquis, a certified real estate appraiser. Based on his education and experience, the Board qualified Mr. Marquis as an expert witness in the field of real estate valuation. To value the appellants’ properties, Mr. Marquis used both the sales comparison and the income capitalization approaches, but relied more heavily on the values derived from his sales comparison analyses. Mr. Marquis asserted that the highest and best uses of the subject properties were their current uses. In his sales comparison analyses for the subject properties, Mr. Marquis relied on the same four sales of purportedly comparable properties located in Taunton, Brockton and Stoughton. Comparable sales number one, number two, and number three were each improved with a single-story strip-mall type shopping center, built in the mid-1970s, with gross building areas of 129,532 square feet, 73,280 square feet, and 116,971 square feet, respectively. Comparable sale number four was improved with a two-story retail structure, built circa 1954, with a gross building area of 144,042 square feet. The sales of these properties occurred in February 2003, March 2003, September 2001, and December 2002, with per-square-foot ATB 2007-253 sale prices of $51.29, $50.33, $63.47, and $68.23, respectively. According to Mr. Marquis’ appraisal reports, he adjusted the comparables’ per-square-foot sales prices to account for differences in location, age, condition, and excess land area, in comparison to the subject properties, to arrive at a per-square-foot value of $60. He did not, however, provide an explanation as to how he derived his adjustments. Applied to the subject properties’ gross building areas, Mr. Marquis estimated the subject properties’ fair market values, using the sales comparison approach, as follows: Christmas Tree Shops (97,027 sf @ $60/sf) $5,822,000 Cumberland Avenue (59,800 sf @ $60/sf) $3,588,000 In determining the subject properties’ fair market values using the income capitalization approach, Mr. Marquis first estimated the subject properties’ gross potential incomes. According to Mr. Marquis, he conducted a survey of area rentals for similar properties, which showed a rental rate range of $12.50 to $25.00 per square foot. Compared to the market rents surveyed, Mr. Marquis concluded that the subject properties’ actual rents were reflective of the market. He then allowed for vacancy and collection loss of 30% for the Christmas Tree ATB 2007-254 property, and 8% for the Cumberland Ave. property, to calculate the subject properties’ effective gross incomes. Next, Mr. Marquis deducted operating expenses for the following categories: maintenance and reserves; legal and audit; management and miscellaneous; and non-recovered common area maintenance expense (“CAM”) due to vacancy. He did not provide explanation of how he derived any of his operating expense figures. Lastly, relying on the capitalization rates reported in his comparable sales number one and number four, 11.28 percent and 10 percent, respectively, Mr. Marquis concluded that a capitalization rate of eleven percent was appropriate to use in the present appeals.