Case Title: Town of Killington v. Dept. of Taxes

Citation: 176 Vt. 70, 2003 VT 88, 838 A.2d 91

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2003-10-24T00:00:00Z

Document:
Town of Killington v. Dept. of Taxes (2002-433); 176 Vt. 70; 838 A.2d 91

2003 VT 88

[Filed 24-Oct-2003]

       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.

                                 2003 VT 88

                                No. 2002-433

  Town of Killington	                         Supreme Court

                                                 On Appeal from
       v.	                                 Rutland Superior Court

  Department of Taxes	                         March Term, 2003

  William D. Cohen, J.

  Mark L. Sperry, Kevin E. Brown, and F. Rendol Barlow of Langrock Sperry &
    Wool, LLP, Burlington, for Plaintiff-Appellee.

  William H. Sorrell, Attorney General, and Charles L. Merriman, Special
    Assistant Attorney General, Montpelier, for Defendant-Appellant.

  Robert S. DiPalma of Paul, Frank & Collins, Burlington, for
    Appellees/Cross-Appellants Adams, Brown, Josselyn, Kilburn and Woodward.

  Brian P. Monaghan, Montpelier, for Amicus Curiae Vermont League of Cities
    and Towns.

  PRESENT:  Amestoy, C.J., Johnson and Skoglund, JJ., and Allen, C.J. (Ret.)
            and Gibson, J. (Ret.), Specially Assigned

        
       ¶  1.  SKOGLUND, J.   The State of Vermont appeals a superior court
  decision striking down as "arbitrary and capricious" the methodology it
  used to determine the Town of Killington's statewide school property tax
  under the Equal Educational Opportunity Act (Act 60), and ordering the
  Commissioner of Taxes to recalculate the Act 60 tax for Killington. 
  Appellee Town of Killington cross-appeals the court's limited remedy,
  arguing that the court should have ordered the State to redetermine the
  1997 education property tax for all Vermont municipalities. We conclude the
  trial court erred in invalidating the State procedure, and therefore
  reverse.

       ¶  2.  Act 60 created a statewide property tax assessed not upon
  individual landowners, but against each Vermont municipality, calculated as
  1% of the aggregate fair market value of the town's realty.  32 V.S.A. §
  5401(6). Because of the disparate appraisal levels and practices in Vermont
  municipalities,  Act 60 requires the Commissioner of Taxes to standardize,
  or equalize, the aggregate fair market value of each municipality's grand
  list every year.  Id. § 5405(a).  The Act provides that the determination
  of equalized fair market value "shall be based upon such methods, as in the
  judgment of the commissioner, and in view of the resources available for
  that purpose, shall be appropriate to support that determination." Id. §
  5405(d). A municipality's statewide education property tax liability is the
  product of the statewide property tax rate multiplied by the municipality's
  equalized grand list. Id. § 5402(b). 
   
       ¶  3.  Killington set its 1997 education grand list value at
  $397,492,895.  After applying the State's equalization procedures, the
  Director of Property Valuation and Review certified Killington's equalized
  education grand list value as $410,103,965.  Id. § 5406(b).  Killington
  petitioned for a redetermination under 32 V.S.A. § 5408, which resulted in
  a reduction of value to $403,980,885.  Killington then appealed the
  redetermination to the Valuation Appeal Board (VAB).  In its decision, the
  VAB criticized the State's methodology in some categories of property
  valuation and questioned the credibility of Killington's grand list
  valuation in general.  The VAB ordered Killington to undertake a complete
  reappraisal of all properties in the town and ordered the State to
  redetermine Killington's equalized value upon completion of the townwide
  reappraisal.  The VAB ruled that, in the event Killington did not complete
  a townwide reappraisal within ninety days, Killington's redetermined
  equalized value would be affirmed. 

       ¶  4.  Killington appealed the VAB's decision to the superior court
  under § 5408(d), which provides that the court "shall hear the matter de
  novo."  Following an evidentiary hearing, the court ruled in favor of
  Killington.   Notably, the court did not find that the State's estimate of
  Killington's equalized education grand list value, which differed from
  Killington's grand list value by only 1.6%,  was inaccurate or excessive. 
  Indeed, the trial court reached no conclusion as to Killington's 1997
  equalized education grand list value.  Rather, the court concluded that the
  methodologies used by the State in the 1997 equalization study were
  arbitrary and capricious and that their application constituted an abuse of
  discretion.  Accordingly, the court ordered the State to redetermine
  Killington's 1997 aggregate fair market value "using statistically
  appropriate methodologies," but declined Killington's request to order a
  redetermination of all Vermont municipalities.  The court also dismissed
  five individual intervenors for failure to exhaust administrative remedies. 
  The State's appeal and Killington's and intervenors' separate cross-appeals
  followed. (FN1)
    
                                     I.
   
       ¶  5.  It is critical at the outset of our discussion to identify
  the correct standard of review.  Killington notes that the Act authorizes
  the trial court to hear its appeal from the VAB "de novo," 32 V.S.A. §
  5408(d), which signifies that the court shall conduct a new evidentiary
  hearing and make its own independent findings.  State v. Madison, 163 Vt.
  360, 369,