Case Title: Woolen Mill Assoc. v. City of Winooksi

Citation: 162 Vt. 461, 648 A.2d 860

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1994-08-26T00:00:00Z

Document:
WOOLEN_MILL_ASSOC_V_CITY_OF_WINOOSKI.93-190; 162 Vt. 461; 648 A.2d 860

Filed:  26-Aug_1994

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.  Readers
 are requested to notify the Reporter of Decisions, Vermont Supreme Court, 109
 State Street, Montpelier, Vermont 05609-0801 of any errors in order that
 corrections may be made before this opinion goes to press.


                                   No. 93-190


 Woolen Mill Associates                       Supreme Court

                                              On Appeal from
      v.                                      Property Valuation &
                                                Review Division

 City of Winooski                             June Term, 1994



 Rexford E. Roberts, Chair

 Philip H. Zalinger, Jr., and Donna Russo-Savage of Paterson & Walke, P.C.,
   Montpelier, for plaintiff-appellee

 William M. O'Brien, Winooski, and Karel Brown Ryan, Essex Junction, for
   defendant-appellant


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      DOOLEY, J.   The City of Winooski appeals a decision of the Board of
 Tax Appraisers (the Board) reducing the assessed value of taxpayer's
 property from $5,200,000 to $4,750,374.  We affirm.
      The property consists of four interconnected brick masonry structures,
 once used as a woolen mill, with a total floor area of 247,600 square feet
 situated on a 6.1-acre parcel of land in downtown Winooski, called
 collectively the Woolen Mill.  Taxpayer has renovated the structures into
 163 residential rental units and about 16,000 square feet of commercial
 rental property.

 

      The City assessed the property for the 1991 grand list at $5,200,000,
 based on a report of its appraiser.  The City's expert estimated the fair
 market value of the Woolen Mill using a combination of two recognized
 approaches to valuation, comparable sales and income capitalization.  Using
 the comparable sales approach, the appraiser relied upon the sale of a
 property of similar design located in Manchester, N.H. and, after extensive
 adjustments, arrived at a value for the subject property of $31,170 per unit
 or $5,080,710 for the 163 units combined.
      The City's appraiser also calculated the value via income
 capitalization, using taxpayer's income and expense figures for calendar
 years 1988, 1989, and 1990, and deriving a capitalization rate from the sale
 values of six apartment properties.  Two parts of the calculation are
 relevant to this appeal.  In determining gross income, the City's appraiser
 used a vacancy rate of 3% because it exceeded the actual historic vacancy
 rate.  In determining operating expenses, the appraiser reduced historic
 administrative expenses to reflect more accurately typical management, legal
 and accounting expenses.  Through income capitalization, the appraiser
 reached a fair market value of $5,240,000.  He then reconciled the
 valuations produced by the two methods to reach a fair market value of
 $5,200,000.
      On appeal to the Board, taxpayer argued that income capitalization was
 the best method of determining fair market value, but contested four aspects
 of the appraiser's calculations in using this method.  Specifically, tax-
 payer argued for a vacancy rate of 5%, rather than 3%.  The Board agreed,
 finding that the evidence for the City's lower rate was "not conclusive" and
 that the appraiser had used a 5% vacancy rate in computations with respect

 

 to the Manchester, N.H. property.  Further, taxpayer contested the
 appraiser's reduction of administrative expenses to determine net income
 from which to capitalize.  The Board agreed to an increase in administrative
 expenses.  Once the adjustments were made in the appraiser's calculation,
 the fair market value derived by income capitalization was reduced to
 $4,750,374.  The Board adopted this value, and the City appealed.(FN1)
      The City argues first that taxpayer failed to rebut the presumption of
 validity in favor the City's appraisal, see Rutland Country Club, Inc. v.
 City of Rutland, 140 Vt. 142, 144,