Opinion
14-P-795
08-10-2015
NINA WALKER & others v. TOWN OF ESSEX.
NOTICE: Summary decisions issued by the Appeals Court pursuant to its rule 1:28, as amended by 73 Mass. App. Ct. 1001 (2009), are primarily directed to the parties and, therefore, may not fully address the facts of the case or the panel's decisional rationale. Moreover, such decisions are not circulated to the entire court and, therefore, represent only the views of the panel that decided the case. A summary decision pursuant to rule 1:28 issued after February 25, 2008, may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent. See Chace v. Curran, 71 Mass. App. Ct. 258, 260 n.4 (2008).
MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
A certified class of plaintiff leaseholders challenged the town of Essex's (town's) assessment of the fair market value for them to rent their land on Conomo Point, as well as the town's failure to include in their leases a right of first refusal to purchase the land. A Superior Court judge ruled in favor of the town, and the plaintiffs appealed. Largely for the reasons that the trial judge set forth in his detailed memorandum and order, we affirm.
The facts underlying this appeal are set forth in detail in an opinion published this same day. Touher v. Essex, ante (2015).
A. Fair market value. "An Act Authorizing the Lease of Certain Property at Conomo Point in the town of Essex," St. 2011, c. 17 (Conomo Point Act), authorized the town to adopt a by-law under which it would offer bridge leases to the plaintiffs "at fair market value," without the need to comply with the competitive bidding requirements of G. L. c. 30B, § 16. St. 2011, c. 17, § 1. The legislation required only that the by-law "ensure that such leases shall be undertaken in accordance with an open, fair and competitive process, using sound business practices and principles of fair dealing." Ibid. It also permitted the town to bestow "a certain level of preference for current [lessees] of the property." Ibid.
The 2011 legislation used the word "leases," not "lessees." In 2012, substantially similar legislation was adopted, with the only difference being substitution of the word "lessees" for the word "leases." St. 2012, c. 104, § 1.
The town duly enacted a by-law authorizing bridge leases to be offered to the current leaseholders, upon terms and conditions to be determined by the town, including "a requirement that the lessee will pay at least the fair market rental value as determined in accordance with this Bylaw." To determine fair market value, the by-law directed the town to engage "the services of a Massachusetts Certified General Appraiser with an MAI designation from the Appraisal Institute." Accordingly, the town issued a request for proposals and awarded the appraisal contract to Mark Tyburski, who carried both an MAI and a Senior Residential Appraiser designation.
Based on Tyburski's report, which used the "rate of return" method and a five percent capitalization rate, and a competing valuation from the plaintiffs' expert, John Gray Petersen, who suggested a 1.5% capitalization rate, the town arrived at rental rates for the bridge leases based on a 2.25 percent rate of return for 2012, three percent for 2013, and 3.75 percent for 2014. The trial judge concluded "that the 2013 bridge leases represent a fair market value for rental rates on Conomo Point." We agree.
As an initial matter, the judge determined that his role in reviewing the town's methodology and conclusions was "not to substitute the Court's own judgment as to the assessed value," but rather, borrowing the standard set forth in Assessors of Sandwich v. Commissioner of Rev., 393 Mass. 580, 588 (1984), to determine whether the town's actions were "reasonably designed to achieve the statute's objectives, and whether that method was properly implemented in the particular case." The plaintiffs take issue with that standard, but they offer no alternative, other than to assert that the judge was required to determine whether or not the rents were at "fair market value."
Fair market value is defined as "the highest price which a hypothetical willing buyer would pay to a hypothetical willing seller in an assumed free and open market." Correia v. New Bedford Redev. Authy., 375 Mass. 360, 361 (1978), quoting from Epstein v. Boston Hous. Authy., 317 Mass. 297, 299 (1944). Its determination "is inherently inexact." WB&T Mort. Co. v. Assessors of Boston, 451 Mass. 716, 726 (2008). Although the Conomo Point Act required the leases to be given "at fair market value," it deferred to the town to determine how this would be accomplished.
We agree with the trial judge that his role was not to make de novo determinations of value. But see Blakeley v. Assessors of Boston, 391 Mass. 473, 476-477 (1984) (appellate tax board reviews local assessors' denial of an abatement de novo). The judge properly viewed his role as ensuring that the town's procedure was reasonably selected and applied. We further agree with his conclusion that it was.
The use of the rate of return or capitalization method is generally accepted. See Correia v. New Bedford Redev. Authy., supra at 362, 365-355; Analogic Corp. v. Assessors of Peabody, 45 Mass. App. Ct. 605, 610 (1998). Moreover, in adopting this approach, the town "was also free to reject underlying computations made in support of that method and substitute its own or other computations having basis in the record." Analogic Corp. v. Assessors of Peabody, supra at 613.
Although the town was not bound to comply with G. L. c. 30B, § 16(b), inserted by St. 1989, c. 687, § 3, governmental bodies determining sales and rental rates under the statute are directed to use "procedures customarily accepted by the appraising professions as valid," as the town did here.
The plaintiffs assert that the town's choice of capitalization rate had no basis in the record because the town did not use either Tyburski's or Petersen's computation, but instead compromised by phasing in increasing rates of return. As the plaintiffs are fully aware, the town made this decision for their benefit, and the Conomo Point Act authorized the town to recognize "a certain level of preference" for the current lessees. We agree with the trial judge's conclusion that "[t]his argument falls particularly flat."
B. Right of first refusal. Finally, the plaintiffs argue that the town by-law required the town to include in the bridge leases a provision giving them the right of first refusal to purchase the land beneath their residences should the town elect to sell it. We agree with the trial judge that the by-law does not require such a provision.
The by-law in existence before passage of the Conomo Point Act established the authority and duties of the town's Conomo Point Commission. The commissioners are assigned "full control" of a number of responsibilities, including the "moving or razing of all buildings other than dwelling houses," the "[p]arking of motor vehicles on all non-leased land except streets," and the power to "[i]ncorporate in the leases" a right of first refusal. The commissioners exercised this power to include rights of first refusal in the Pingree leases. See note 2.
The by-law passed in response to the Conomo Point Act stated that if the commissioners decided to sell any of the property at Conomo Point, with the approval of the town meeting, "the Commissioners may offer Bridge Lease lessees a reasonable opportunity to accept the terms and conditions established by the Commissioners to purchase the property." The bridge leases do not include rights of first refusal, and nothing in either by-law requires them to.
Of course, even though the town decided not to include rights of first refusal in the bridge leases, it does not necessarily follow that the town will not offer the plaintiffs a reasonable opportunity to purchase the land in the event it decides to sell (provided that such a procedure complies with G. L. c. 30B, or that the town obtains an exemption through additional special legislation).
Judgment affirmed.
Order denying motion for new trial or amendment of judgment affirmed.
By the Court (Kantrowitz, Blake & Massing, JJ.),
The panelists are listed in order of seniority. --------
Clerk Entered: August 10, 2015.