Case Title: Beach Properties, Inc. v. Town of Ferrisburg

Citation: 161 Vt. 368, 640 A.2d 50

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1994-02-28T00:00:00Z

Document:
BEACH_PROPERTIES_V_TOWN_OF_FERRISBURG.92-478; 161 Vt. 368; 640 A.2d 50

[Filed 28-Feb-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. 92-478


 Beach Properties, Inc.                       Supreme Court

                                              On Appeal from
      v.                                      Property Valuation
                                                and Review Division

 Town of Ferrisburg                           June Term, 1993



 Wayne W. Potter, Chair

 Patricia E. Dilley of Downs Rachlin & Martin, Burlington, for plaintiff-
   appellee

 Donald R. Powers of Powers, English & Carroll, Ltd., Middlebury, for
 defendant-appellant



 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.



      JOHNSON, J.     The Town of Ferrisburg appeals from a decision of the
 State Board of Appraisers that reversed the decision of the Ferrisburg
 Board of Civil Authority and declared that the taxpayer's property should
 be listed in the 1991 grand list for $3,850,000, rather than $4,806,000.  We
 reverse.
      The subject property is the Basin Harbor Club, a summer resort and
 convention center on 584.3 acres of land along the easterly shore of Lake
 Champlain.  The property has 136 guest cottages and rooms, restaurants, a
 developed waterfront, airport runway, tennis courts, swimming pool, 18-hole

 

 golf course, conference and banquet facilities, as well as other
 recreational facilities.  It has approximately 4,000 feet of shoreline on
 Lake Champlain and about 10,000 feet of frontage on public highways in the
 area.
      The taxpayer, Beach Properties, Inc., is wholly owned by members of the
 Beach family, who have owned and operated the property as the Basin Harbor
 Club since 1886.  In 1990, Robert H. Beach, Jr. and Ann P. Beach Morris, who
 are managers of the property and employees and stockholders of the
 corporation, became its sole owners by acquiring all of the stock of the
 corporation then owned by other family members.  The purchase price for the
 acquired stock was derived from a theoretical sale price for the entire
 property.
      To determine the property's value, the Town relied on a combination of
 the cost approach and market sales comparison approach.  The cost approach
 adjusted for time, location, physical characteristics and depreciation, to
 determine the contributory value of buildings and improvements.  The market
 sales comparison approach developed a schedule of land values and Lake
 Champlain shore frontage values derived from actual sales data.  The Town
 also contended that its valuation of $4,806,000 was confirmed by a
 consideration of potential and prospective uses of the property.
 Specifically, the Town argued that the property's existing waterfront
 cottages could be sold to individual owners through various forms of
 ownership without affecting the core resort's viability as a commercial
 enterprise.
      In response to the Town's assessment, the taxpayer had the property
 appraised.  The taxpayer's appraisal supported a property value of

 

 $3,850,000, which reflected a value of the Basin Harbor Club of $4,600,000
 minus $750,000 for furnishings, fixtures and equipment.  The appraiser
 arrived at this value by using an income capitalization analysis, derived
 from the net income for a single year, 1990, the sale price of the intra-
 family stock transfer, and a market sales comparison analysis, using two
 out-of-state resort sales as comparables.
      The Board of Appraisers found for the taxpayer, concluding that the
 intra-family sale price of the stock and the income capitalization method
 provided the most compelling indication of the 1991 fair market value.  The
 Town appealed, claiming the Board of Appraisers erred by making findings
 that were so devoid of evidentiary support as to be clearly erroneous.
                                     I.
      In the present case, all issues were hotly contested.  Serious
 questions were raised by the Town about the validity of the methodology used
 in the taxpayer's appraisal report and the lack of any indicia of
 reliability about the income figures that were at the heart of the
 taxpayer's analysis.  The taxpayer, in turn, questioned the Town's cost
 approach on the ground that the Town did not adequately assess depreciation
 of the buildings.  The taxpayer also took issue with the speculative nature
 of the Town's proposed scheme for division of the property.
      Before addressing the Town's substantive attack on the evidence, we
 briefly review the role of the Board of Appraisers in contested hearings.
 Appeals to the Board of Appraisers are hearings de novo, 32 V.S.A. { 4467,
 and the Board is required to make findings of fact supporting its ultimate
 determination.  Manganelli v. Town of Proctor, 144 Vt. 451, 453,