Source: https://www.aptcnet.com/property-tax-resources/national-property-tax-updates/connecticut-property-tax-updates
Timestamp: 2019-04-18 12:45:40+00:00

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In 2004, a developer purchased the beach front Connecticut home of the late actress Katharine Hepburn in the quaint Fenwick borough of Old Saybrook. Discovery of an old discontinued road which ran over part of the property and ended at the waterfront precipitated a claim by the developer under its title insurance policy. Litigation commenced after the title company’s offer of $17,000 was rejected by the developer who claimed its loss was $5 million. Following a jury verdict of $2 million, the title company appealed to the Connecticut Appellate Court.
After much controversy, the broker was qualified as an expert witness on the subject of real estate value. He testified that the “celebrity status of a property ‘can greatly affect its value.’” Based on this idea, the broker maintained that the Hepburn property’s “market value was greater than its value as determined by standard methods of appraisal.” Consequently, the loss to the developer by virtue of the unknown right of way was greater as well.
Interestingly, the title company did not challenge the eligibility of the real estate broker to offer real estate appraisal testimony given his lack of real estate appraisal licensure or training. Perhaps this issue will be addressed by the Connecticut courts in future litigation.
First American Title Insurance Company v. 273 Water Street, LLC, Connecticut Appellate Court, May 5, 2015.
A §1031 Exchange Does Not Occur Under “Duress"
After purchasing a small commercial building in Old Greenwich in 2007, the property owner challenged the Town of Greenwich’s revaluation market value of almost $2,700,000 as of October 1, 2010.
The owner asserted that its need to effectuate a “like kind exchange” under the Internal Revenue Code resulted in an atypical quasi-compulsory transaction which did not reflect market value.
House of Representative Speaker Brendan Sharkey and Senate President Martin Looney have taken the property tax reform bull by the horns in the 2015 Session of Connecticut’s General Assembly.
The two Democratic leaders have submitted proposals to relieve the property tax burden on Connecticut’s hard-pressed cities by instating a regional tax system calling for the sharing of property taxes for new development. In addition, a statewide tax levy on motor vehicles and improvements to the current payment in lieu of taxes (PILOT) rule intended to reimburse towns for taxes and property tax losses are also in the works.
One bite at the apple!
The owner of a New Britain strip shopping center authorized its tenant Wal-Mart to appeal the property assessment. Since the first stop in the Connecticut ad valorem tax appeal process is the local board of assessment appeals, Wal-Mart petitioned the board which reduced the value of the property from $11,173,000 to $9,875,000 on the City's October 1, 2008 Grand List. Not satisfied with this reduction, the property owner itself challenged the assessment the following year. This time, the Board held firm. In response to the owner's appeal to the Superior Court which followed, the City claimed that the prior year's reduction precluded the owner from pursuing any further reduction and sought dismissal of the action. Sitting in the New Britain Superior Court, Judge Trial Referee Arnold W. Aronson agreed with the City.
The Superior Court ruled that "(O)nce Wal-Mart availed itself of the (local) appellate process, it bound the property owner for each successive tax year until the next city-wide revaluation."
The Appellate Court upheld the Superior Court's decision, albeit on a different basis. It referred to a 2009 Public Act which provides that "(w)hen the Board (of Assessment Appeals) increases or decreases the gross assessment of any taxable real property or interests therein, the amount of gross assessment shall be fixed until the (next) revaluation of all real property (in the community)".
Writing for a unanimous court, Judge Bethany J. Alvord ruled that the statutory amendment applied retroactively and made it impossible for a property owner, or anyone else, to challenge the assessment again until the City of New Britain conducted its next revaluation.
The most important lesson to be learned from the Appellate Court's ruling is that a local board decision, even if favorable, but which does not achieve the petitioner's objectives, should be challenged in Superior Court. The second lesson is that when a property owner delegates the responsibility of challenging an assessment to a tenant, strong communication about objectives and case management is in order.
Farmington, New Britain, Norwich, Stamford and Windham pushed legislation through the Connecticut General Assembly which would have allow them to postpone their scheduled 2012 schedule revaluations until 2013. (They last revalued in 2007). In past years, this type of special legislation was routinely approved by the General Assembly and signed by the sitting governor.
In a surprising and refreshing change of course, Governor Dannel P. Malloy vetoed the legislation on June 6. In doing so, he stated "that delaying regularly scheduled revaluations for just these communities, and not for other communities that are similarly situated, is unfair...." Noting that the purpose of a revaluation is to make sure that all properties, "whether ... residential, commercial or industrial" are fairly and equitably valued, the Governor stated that "[d]elaying revaluations on regularly scheduled intervals may distort this system by continuing to use outdated and inaccurate property values in the calculation" of tax bills.
The Governor recalled that "in 2001, the General Assembly voted to take over the finances of the city of Waterbury, at least in part because it had not conducted a revaluation in over 20 years. Waterbury's experience demonstrates that prolonging the revaluation period only exacerbates fiscal problems and delays that which is inevitable."
We have not heard this kind of straight talking, reality testing commentary from Connecticut's political leadership for a very long time.
Abraham Breuer wished to refinance certain properties in Vernon, Connecticut mortgaged to A. Edward Ducharme. After informing Ducharme, Breuer requested that he release the Vernon mortgages in return for new mortgages on property in Highland Falls, New York.
Breuer sent Ducharme an "appraisal" which, according to Judge Trial Referee Joseph J. Purtill's decision, "included photographs purporting to show the (New York) property ... and other properties listed as comparable sales all indicating that the (New York) property would be sufficient in value to provide security."
In reliance on the false appraisal, Ducharme released his mortgages on the Vernon properties. As a result of these unscrupulous activities, a substantial default judgment, attorney's fees and punitive damages were awarded against Breuer.
While the fraud was evident, it is surprising that Ducharme failed to independently confirm the value of the proposed replacement real estate security and simply relied on the phony "appraisal" furnished by his debtor. Aside from being amazed at Ducharme's naïveté, the obvious lesson here is that lenders commission their appraisals; they do not and should never allow the borrower to obtain this crucial expert input.
Banks are legally required to order their appraisals directly from a panel of experts deemed reliable and honest; private investors should do the same. Ducharme v. Breuer, Superior Court, Judicial District of New London, Docket No. CV-09-5010093 (January 12, 2010).
The taking of a former Volkswagen auto dealership and repair facility consisting of approximately 2.5 acres with a gross building area of slightly more than 19,000 square feet generated a confluence of appraisal opinion perhaps not seen since the last solar eclipse.
An opinion not otherwise notable for establishing new law (it was not necessary) or in parsing a difficult fact pattern addressed the property owner's appeal of the Connecticut Commissioner of Transportation's award of $2,129,000. Happily for the appellant, the Commissioner's appraisal was "updated" to $2,786,000.
The second appraiser who testified at trial for the State of Connecticut valued the property at the time of taking at $2,750,000. The property owner's appraiser put forth a market value of $2,785,000. All appraisers used methodologies other than the sales approach.
As Judge Trial Referee Samuel Freed observed, "In most cases of this sort, the court is charged with taking into account the divergent opinions expressed by the witnesses of the claims advanced by the parties. . . . What is quite noteworthy in this case is the lack of diversity in the opinions advanced by the experts presented by the parties." Essentially, the court observed, the appraisers' conclusion was "unanimous".
State of Connecticut v. Auto Corner, LLC, Docket No. CV 0740 32622, March 31, 2006.
Enrico Vaccaro carries on a solo legal practice in Bridgeport in a building where he shares office space with two other attorneys. His arrangement with these attorneys includes access to and use of the office furniture and office equipment located there. He owns but a fax machine, printer and a telephone.
Attorney Vaccaro did not file a personal property declaration with the Bridgeport assessor for two assessment years, apparently overlooking his ownership of the aforementioned items. The Bridgeport deputy assessor, reasoning that Attorney Vaccaro "must have owned office furniture and equipment in the year(s) in question...." acted under the relevant statue to complete a declaration for him. The deputy assessor made informed guesstimates about how much personal property Mr. Vaccaroo would likely have therein located. To make matters worse, the deputy assessor added a 25%penalty due to Mr. Vaccaro's failure to file a declaration.
Understandably perturbed by the deputy assessor's attribution to him of property he did not own, together with a concomitant tax, Mr. Vaccaro challenged the assessor's actions in court.
Judge Trial Referee Arnold W. Aronson recognized that Mr. Vaccaro was obligated to file personal property declarations although Judge Aronson held that he not have to list any property owned by the attorneys from whom he leased the office space. Judge Aronson based his ruling on the fact that there was "no evidence that (Mr. Vaccaro) entered into a written contract to lease the office equipment from the other attorneys." The "intermittent" use of the office equipment as opposed to an ongoing lease, absolved Mr. Vaccaro from any obligation to declare it to the assessor. Moreover, the other attorneys in the office had filed appropriate declarations with the assessor.
Reviewing all the information, the Superior Court reduced Mr. Vaccaro's personal property assessment from $11,719 to $60, the depreciated value of the telephone, printer, and fax machine.
Vaccaro v. City of Bridgeport, Superior Court, Judicial District of Fairfield, Docket No. CV-074021160 (December 10, 2008).
Breezy Knoll is a private vacation community located on a lake in the rural town of Morris comprised of 19 individual residential properties.
The Association own parcels used as a parking lot and tennis court and a 10 foot strip located along the shoreline of the lake. The three parcels are affected by easements in favor of the Breezy Knoll residents which assure them exclusive access to these areas; the Association must maintain them for the benefit of its members.
After substantial ad valorem assessments of these properties were upheld at trial, the Connecticut Supreme Court ruled that because of the easements and restrictions placed on the three parcels by the Association, they had no intrinsic market value and the benefits they create for the individual lot owners should be added to the value of the lot owners' properties for property tax purposes. Since the "Association's members are not likely to consent to release these easements and restrictions – a necessary prerequisite to marketability", the Supreme Court held that the properties should have been valued at nominal amounts only.
Agreeing that the three properties owned by the Association were valuable if the easement and restrictions were not considered, in the unanimous opinion by Chief Justice Chase Rogers, the Supreme Court ruled that the market value of the properties had "effectively" . . . been transferred to (the lot owners) who are entitled to enjoy them . . . namely, the individual owners within Breezy Knoll who constitute the Association's membership.
"In other words", the Chief Justice ruled, "the assessments of the individual properties owned by the Association's members should reflect the enhancement to the value of their properties attributable to the easements and restrictions."
Breezy Knoll Association, Inc. v. Town of Morris, 286 Conn. 766 (May 13, 2008).
With no authoritative legal decisions to guide taxpayers, it has been unclear whether personal property declarations, which are to be filed every year with local assessors by owners owning assessable personable property, must be submitted to the assessor's office on November 1 or whether mailing, faxing or an email PDF is sufficient. While the applicable statute imposes a penalty for failure to file the personal property rendition by November 1 each year, many assessor's offices accept facsimiles and original renditions in envelopes postmarked by November 1, whenever received.
A Bridgeport taxpayer mailed its rendition on October 31; it arrived in the Bridgeport Assessor's office on November 3. The Assessor imposed the statutory 25 percent penalty.
Since the statute is silent about mailing and uses the word "file", Judge Trial Referee Edward Stodolink ruled that a postmark on or before the filing date was insufficient; the practices of other assessors could not help the taxpayer here.
SBC Internet Services, Inc. v. City of Bridgeport (and companion cases); Superior Court judicial district of Fairfield at Bridgeport (February 15, 2008).
Last January, Superior Court Judge Robert G. Gilligan had occasion to address the appeal of a property owner seeking to overturn the Waterbury assessor's imposition of the statutory 25% penalty for failing to file a personal property declaration in a timely fashion.
Also of importance to owners of nonexempt personal property required to file annual declarations, the Court ruled that a request for the 45 day extension must be submitted to the assessor before the initial time limit for filing the declaration (November 1 in each year) expires.
Interestingly, here the property owner, while filing a late request, to solve its problem sought an extension equal only to the difference between the time elapsed from the initial due date of the declaration and the 45-day period (December 15). This creative approach was rejected by the court.
The editors of Property Valuation Topics find that most assessors are cooperative and understanding when taxpayers cannot complete their personal property declarations on time. Judge Gilligan's ruling points out that the necessity, however, for seeking an extension properly, and for furnishing good cause in the request before the passage of the basic filing date.
Eylet Crafters, Inc. v. Waterbury, Superior Court, Judicial District of Waterbury, January 25, 2007.

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