Newsletter05.2018

Spring 2018

In this Spring 2018 Issue:

Appraiser’s Methodology Criticized

In what was a fairly garden variety type of appeal from the partial taking of a gasoline station, the Superior Court which heard the case was extremely dissatisfied with the property owner’s appraiser who appears to have deviated from accepted appraisal practices.

While the subject was located in Waterbury, the appraiser relied on allegedly comparable sales of gasoline station sites more than 30 miles distant.

Faced with consequential damages to the odd triangular shaped parcel which created circulation problems for cars even before the taking, the appraiser chose rectangular parcels with which to compare his subject.

He created a new method which he called a “weighted average” characterized by the court as “a discretionary amount solely selected by (the appraiser) to create a new damages (calculation)....”

After detailing several other discrepancies, the Court criticized the appraiser for exercising “an unfettered discretion to manipulate the appraisal without an accepted appraisal method.”

Not surprisingly, the owner’s appeal was denied.

(Commissioner of Transportation v. 2073 N. Main – Waterbury, LLC, Docket No. CV145016609S, June 15, 2016)

Elliott B. Pollack works with appraisers in his tax and valuation practice and can be reach at ebpollack@pullcom.com or at 860-424-4340.

Litchfield Courthouse Building Update

In the last issue of Topics, we commented on the uncertain fate of the Litchfield Court House which, after the abandonment of judicial functions there by the State of Connecticut, might return to private owners after over 200 years based on a condition in the deed.  According to the Winter edition of Connecticut Explored, the building has been sold to a local land trust which is seeking to install municipal uses in the former courthouse building.  Fortunately, as the magazine observes, “a happy ending is in sight for the iconic Litchfield Court House.”

Of course, by virtue of the new plan for the property, its assessment and taxes will not be concerns.

A Tale of Two Connecticuts

The March 12, 2018 issue of Hartford Business Journal (HBJ) provided dramatic data about individual home sales throughout Connecticut with comparative information for the Greater Hartford area.  If observers of Connecticut’s real estate markets are not already aware that property value metrics differ dramatically across the state, readers of HBJ would be fortified in learning that the most expensive Hartford area home sale in 2017 was that of an Avon property which transacted for $2,500,000.  The lowest nine sales of the 23 reported in Greater Hartford were $1 million or lower.

By contrast, of the highest 29 home sales prices throughout the state reported for 2017, every single one was in Fairfield County and of a Greenwich property with the exception of one sale each in Darien and Westport.  The highest reported sale in this cohort was $25 million with the lowest, also a Greenwich property, at $6.65 million!

In other words, the lowest reported residential sales price in southwestern Connecticut was more than $4 million higher than the highest Hartford area transaction.

Readers of PTVT will not be surprised to learn that commercial property values/sale prices in these disparate regions of tiny Connecticut share many of the same valuation characteristics. 

Bank Branches Going the Way of the Dodo?

More than 1,700 U.S. branch banking offices closed in the year ending June 30 2017. This retreat from the brick and mortar market is depicted by the Wall Street Journal as “the biggest decline on record.”

The editors of Property Tax & Valuation Topics advise our readers that when litigating the value of an existing occupied branch bank, it may be worthwhile to take a close look at the current highest and best use. Frequently, the rents paid by bank-occupied branches cannot be realized when the building seeks a new tenant.

Flood-Prone Property and Valuation

Richard and Connie Norton acquired four parcels for potential residential development which were located in a 100 year flood plain under then applicable Federal Emergency Management Agency (“FEMA”) mapping. Shortly thereafter, the local planning commission approved a subdivision on contiguous property which required the construction of an elevated sidewalk.  Due to its placement and construction, the sidewalk allegedly created flooding problems for the Nortons.  They filed an inverse condemnation action against the municipality.  Property damage resulting from municipally sanctioned development on contiguous property presents a classic opportunity for an inverse condemnation claim.  That is to say, while the city did not physically take an inch of the Nortons’ property, the city caused it to lose value.

The municipality contended that while the sidewalk may have resulted in the pooling of water on the Nortons’ property, its FEMA classification did not change and the majority of the flooding would not impact development potential.

A summary judgment motion throwing the case out of court was overturned by the Nebraska Court of Appeals because the trial court had ignored the sworn affidavit of a real estate appraiser that the sidewalk and other improvements on the adjacent subdivision had essentially wiped out the value of the Nortons’ property.

          Norton v. City of Hickman, (July 25, 2017), 2017 WL3142518

Laura Cardillo can reply to any questions about the Norton case at 860-424-4309 or lcardillo@pullcom.com.

Connecticut Industrial City Expects Tax Base Growth

The February 1 Hartford Courant reports that the City of New Britain, known for its former industrial prowess as the Hardware City, is slated to experience more than a 6 percent growth in its tax base as a result of the city-wide revaluation effective October 1, 2017.  Much of the increase, Don Stacom reports, is “as a result of the revaluation . . .  which drove up assessments . . . particularly on mid-sized and large apartment buildings.”

It may be a bit too early to count these chickens because a number of multifamily property owners will be appealing their new assessments as a result of the significant increases ordered by the assessor.  The same phenomenon is playing out across many of Connecticut’s other municipalities where multifamily properties have been purchased at unit prices far in excess of values tagged by the local assessor as of the previous revaluation.  The problem with the recent increases is that with real estate tax bumps of sometimes as much as 100 percent, the properties are no longer worth what the new buyers, who are frequently from out of town, thought they were worth prior to the revaluation.

Members of Pullman & Comley’s Property Tax and Valuation Department have filed a number of assessment appeals involving multifamily properties in other communities which reflect much of the same development. 

Further information about these issues can be obtained from any member of the Property Tax and Valuation Department.

Samnard Rule Affirmed

 In 2013, the Appellate Court reminded property valuation practitioners of General Statutes Section 12-111 which provides, “when a Board of Assessment Appeals increases or decreases a value, the result becomes the new value until the next revaluation.”  The decision in Samnard Associates v. New Britain underscores the reality that a local BAA sometimes plays a pivotal role in determining the ad valorem assessment of a real estate parcel if it in fact acts on an appeal. (Frequently, the members of Pullman & Comley’s Property Tax and Valuation Department find that local BAAs would rather summarily reject an appeal of a commercial value over $1 million or refuse to hear it at all.) 

In a residential tax appeal, a Torrington property owner claimed that his value was excessive when compared to those of his neighbors.  The Torrington BAA reduced his value slightly.  The following year, he applied to the BAA again for a new reduction.  After the BAA’s denial, he appealed to the Superior Court.

On a motion to dismiss filed by the city, Judge James M. Bentivegna applied the Samnard rule which resulted in the dismissal of the appeal. 

Readers are cautioned to scrutinize BAA results carefully and to remember that even a minor adjustment which is not submitted to the Superior Court for further review can become an albatross around an owner’s neck for the remainder of a revaluation cycle. 

Royals v. City of Torrington. Docket Number CV-16-5008124, Superior Court, Judicial District of Litchfield. 2017 WL 6884115

Gregory F. Servodidio can answer questions about the Royals decision at 860-424-4332 or gservodidio@pullcom.com.

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