Franks v. Town of Essex, Rockingham Area Community Land Trust v. Town of Rockingham
87 A.3d 418
Vt.2013Background
- Two consolidated appeals (Franks v. Town of Essex; Rockingham Area Community Land Trust v. Town of Rockingham) concern how to value nonrental residential property encumbered by statutory housing-subsidy covenants for property-tax purposes.
- Statute (32 V.S.A. § 3481) requires listers to include “a consideration of a decrease in value in nonrental residential property due to a housing subsidy covenant.” Covenants commonly limit resale price, purchaser income, and vest enforcement rights in a nonprofit or VHCB.
- In Franks, homeowner Gillian Franks bought a unit with CHTrust grants and a resale covenant limiting seller’s proceeds; town assessed at unrestricted-market levels; the state appraiser upheld the assessor’s valuation finding no market evidence of diminution.
- In Rockingham, the land trust’s lessee Margaret bought a covenant-restricted house; the state appraiser concluded the statute required an automatic reduction and lowered assessed value to prior-year level without explaining the calculation; town appealed.
- The central legal question: whether § 3481 mandates an automatic, across-the-board reduction in assessed value for any parcel subject to a qualifying covenant, or instead requires individualized consideration of how the specific covenant affects fair market value.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 3481 requires an automatic reduction in assessed value for any nonrental residential property subject to a housing-subsidy covenant | Taxpayers: statutory language mandates an automatic or mandatory partial exemption/decrease whenever a qualifying covenant exists | Towns/municipalities: statute requires listers to "consider" any decrease but to determine on a case-by-case basis whether the covenant actually reduces fair market value | Court: No automatic reduction; statute requires individualized consideration of a covenant’s effect on fair market value |
| Proper interpretive weight of PVR memorandum recommending a valuation methodology based on the buyer’s net purchase price | Franks: state appraiser should have deferred to PVR memo methodology | Town: PVR memo is guidance; assessors may use other methods if supported by evidence | Court: PVR memo is guidance only; no deference compels adoption; state appraiser did not abuse discretion by declining to apply it in Franks |
| Burden/evidence needed to reduce assessed value based on a covenant | Taxpayer (Rockingham/Franks): mere existence of covenant should reduce taxable value or evidence of reduction unnecessary | Town: market/comparable-sales evidence required to show covenant affects fair market value; assessor’s valuation presumed valid absent adequate rebuttal | Court: taxpayer must produce admissible evidence to show covenant reduced fair market value; state appraiser cannot pick an arbitrary figure without evidentiary support (Rockingham reversed/remanded) |
| Whether assessor in Franks properly considered covenant and arrived at a supported listed value | Franks: assessor treated property as unrestricted and failed to account for restrictive covenant; state appraiser erred | Town: assessor considered covenant and found no market evidence of diminution; comparable-sale evidence supported valuation | Court: Affirmed state appraiser in Franks — findings rationally drawn from evidence that covenant did not affect fair market value in that case |
Key Cases Cited
- Barrett v. Town of Warren, 892 A.2d 152 (Vt. 2005) (property taxation requires listed value equal to appraisal value reflecting estimated fair market value)
- Lake Morey Inn Golf Resort, Ltd. P’ship v. Town of Fairlee, 704 A.2d 785 (Vt. 1997) (deference to state appraiser where findings supported by record)
- Allen v. Town of West Windsor, 852 A.2d 627 (Vt. 2004) (upholding valuation if rationally drawn from evidence)
- Kruse v. Town of Westford, 488 A.2d 770 (Vt. 1985) (taxpayer bears burden to show appraisal does not reflect fair market value)
- Zurn v. City of St. Albans, 980 A.2d 795 (Vt. 2009) (appellate review affirms state appraiser if findings rationally drawn and law correctly applied)
- Congdon v. Taggart Bros., Inc., 571 A.2d 656 (Vt. 1989) (Legislature’s omission of specific procedure is meaningful when it knows how to mandate one)
- Townsend v. Town of Middlebury, 365 A.2d 515 (Vt. 1976) (restrictions affecting use/alienability must be considered; value determined by what buyer would pay for property subject to restrictions)
- Prowitz v. Ridgefield Park Vill., 568 A.2d 114 (N.J. Super. Ct. App. Div. 1989) (deed resale restrictions affect taxable value; remediation requires assessing effect rather than automatic formula)