Title: Lake Morey Inn Golf Resort v. Town of Fairlee

State: vermont

Issuer: Vermont Supreme Court

Document:

Lake Morey Inn Golf Resort v. Town of Fairlee  (96-435); 
167 Vt. 245; 704 A.2d 785

[Filed 7-Nov-1997]

       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. 96-435

Lake Morey Inn Golf Resort,                  Supreme Court
Limited Partnership
                                             On Appeal from
    v.                                       State Board of Appraisers

Town of Fairlee                              April Term, 1997

Rexford E. Roberts, Chair

       Elizabeth A. Glynn of Ryan Smith & Carbine, Ltd., Rutland, for
  plaintiff-appellee.

       David A. Otterman of Otterman and Allen, P.C., Barre, for
  defendant-appellant.

PRESENT:  Amestoy, C.J., Gibson, Dooley, Morse and Johnson, JJ.

       GIBSON, J.  The Town of Fairlee appeals a State Board of Appraisers
  decision that valued a 164-room resort and conference center, owned by the
  Lake Morey Inn Golf Resort, at $3,275,000.  The Town contends that (1) the
  market data approach is the best method to determine the value of the
  property, and the Board erred in rejecting the Town's comparables; (2) the
  Board improperly relied on the cost approach as the sole method to value
  the property; and (3) the Board's decision was not supported by adequate
  findings of fact.  We hold that the method used by the Board to value the
  property was proper and supported by adequate findings of fact; we
  therefore affirm.

       On December 28, 1992, the taxpayer purchased the subject property for
  $5,454,500 from Avery Inns of Vermont, Inc.  The property is located on a
  6.8-acre parcel of land on Lake Morey in the Town of Fairlee.  On April 1,
  1994, the Town assessed the property at a value of $5,525,100, and the
  taxpayer appealed the assessment to the Board of Civil Authority (BCA).

 

  When the BCA upheld the assessment, the taxpayer appealed to the Board of
  Appraisers.(FN1)

       At the Board hearing, both the taxpayer's and the Town's appraisers
  presented evidence regarding the fair market value (FMV) of the property. 
  The taxpayer's appraiser used three different valuation methods to arrive
  at his final figure:  the market data, the income, and the cost approach. 
  The three methods yielded the following values, respectively:  $2,706,000,
  $2,932,000, and $2,798,400.  The appraiser then reconciled the three and
  arrived at a final figure of $2,835,000 for the property, or approximately
  $17,000 per room.

       The Town's appraiser used two methods to value the subject property: 
  the market data and the income approach.  The market data approach produced
  a value of $5,100,000, while the income approach generated a value of
  $4,400,000.  Reconciling these two figures, the Town's appraiser arrived at
  a FMV of $5,000,000, or approximately $30,000 per room.

       The Board, however, found numerous problems with both the Town's and
  the taxpayer's analyses.  The Board determined that the market data
  evidence of both parties was weak and that the Town's analysis had a
  "significant error in reasoning."  In addition, the Board found the income
  approaches of both parties to be weak and flawed.  The Board noted that the
  taxpayer's analysis lacked probative value and that the Town's original
  analysis and its amended discounted-cash-flow analysis, which had been
  submitted prior to the hearing, contained numerous mathematical errors,
  omissions, and flawed assumptions.  Finally, the Board found the taxpayer's
  cost approach to be mathematically flawed.  While the Board noted that the
  original cost value of the property, as calculated by the taxpayer's
  appraiser, was sound, the Board found the appropriate
  physical-and-functional-depreciation factor to be 45%, rather than the
  49.4% used by the taxpayer.

       Because of the errors in both the taxpayer's and Town's methodologies,
  the Board

 

  discounted the parties' analyses.  Instead, the Board conducted its own
  cost-approach analysis and arrived at a value of $3,282,100 for the
  property.  In addition, the Board performed a market data analysis using
  data provided by both the taxpayer and the Town, arriving at a value of
  about $20,000 per room, or a total FMV of $3,280,000.  Based on its review
  of the evidence, the Board determined that the property's value fell within
  a range of $3,250,000 to $3,300,000, and concluded that the FMV of the
  property was $3,275,000.  The Town appealed.

       The Board's decision will be deemed presumptively correct and its
  findings will be conclusive if they are supported by the evidence.  See
  Woolen Mill Assocs. v. City of Winooski, 162 Vt. 461, 464,