Judge Sides With City On Tax Bills
Owner of Claremont Mills Had Sought Partial Refund
Claremont — The city will not have to repay thousands of dollars in taxes to the owners of two of the renovated mill buildings on Water Street after a judge ruled in the city’s favor Thursday in a closely-watched tax abatement case.
In what could be interpreted as a split ruling, Superior Court Judge Brian Tucker denied the tax abatements for 2009 on the mill district properties but agreed with the fair market values established by the mill owner’s expert witness. Those totals are significantly less than the assessed valuations set by the city.
“Since the plaintiffs did not prove their property was assessed at a greater percentage of fair market value than other property in Claremont generally, their requests for abatements are denied,” Tucker concluded in his 24-page ruling, which comes nearly a year after the case was heard in court last September.
But Tucker agreed with the plaintiffs on the fair market value of the two properties at 21 and 29 Water Street.
“Having accepted the conclusions of the taxpayers’ appraiser, I find that the market value of 21 Water Street is $3,900,000 and the market value of 29 Water Street is $550,000 as of April 1, 2009,” Tucker wrote.
Those are the same values John Illick sought in his abatement, which was denied by the city in 2010 and subsequently appealed to Superior Court.
The Wainshal property at 21 Water St., is home to Red River Computer Co. and the Common Man Inn, and the Peterson building at 29 Water St., is vacant. Illick, who filed for the abatement, owns the Peterson building through his company, Sugar River Mills Redevelopment, and is a partner in the Claremont Mill Redevelopment group, owners of the Wainshal Building.
Illick’s attorney, Matt Cairns of Concord, said Thursday afternoon Tucker’s ruling on the values is good news.
“We are pleased that the court agreed that Claremont has grossly overvalued the properties,” Cairns said.
He further said he will be analyzing the ruling with his client and looking at their options for filing for a reconsideration or appeal.
He said they have 10 days to file for a reconsideration; 30 days for an appeal.
The city assessed 21 Water St. at $12.5 million and 29 Water St. at $2.31 million in 2009 and argued for those values during the trial.
City Manager Guy Santagate, who is on vacation, said Thursday he had not read the complete ruling but did learn of the judge’s decision.
“The tax bill is OK. That is the issue,” Santagate said by phone. “He found there is no inequality in the assessing scheme of the city.”
Santagate said the ruling shows that the city is not overassessing one class of property.
“We feel we have an equitable tax system,” the city manager said. “If there was an unfair tax system in place, he would have found fault with the city.
“We are delighted with the ruling and think it is fair and accurate. It shows there is no unfair assessments.”
As for the judge’s agreement with the plaintiff’s fair market value, Santagate said, “I don’t know how he got to those values. I’m disappointed he did not agree with our values.”
In his ruling, Tucker reviewed testimony on the two methods presented during the court hearing to establish fair market value, agreeing with parts of both but also finding disagreement.
The judge next looked at the issue disproportionality, which was at the heart of his decision. Citing a 1964 court case, also involving the city, Tucker examined whether the plaintiffs met the test of proving that their assessments were not only higher than actual market value but also “that the assessment placed on (their) property was disproportionately higher in relation to its true value than was the case as to other property in the city.”
The city argued in support of that burden of proof, claiming the plaintiffs did not prove “that the valuation was excessive when compared to those of other properties in Claremont,” the ruling states.
Tucker rejected the arguments the plaintiffs made in response. One of those arguments for disproportionality cited adjusted base rates on tax cards for other property in Claremont, the ruling states.
“The limited number of tax cards presented did not prove disproportionality, and the plaintiffs did not explain how the cards showed the valuation was disproportionate to property in the city at large,” Tucker wrote.
Tucker also rejected the argument the plaintiffs made that the city should have had the burden of proving the “absence of disproportionality because there is evidence of arbitrariness of bad faith on its part in setting the assessment.”
“The evidence did not establish fraud, bad faith or arbitrariness on the part of the city or its assessor,” Tucker wrote.
“While the court found certain omissions from the mass appraisal conducted here, there was no suggestion from the evidence that they resulted from any improper motive.”
On the issues of appraisal methods, the plaintiffs used a comparable sales approach while the city, whose assessor at the time was Ed Tinker, relied on a “mass appraisal,” which looks at sales data for all property in the city.
Tucker said he found the analysis of the plaintiff’s private appraiser, Peter Knight, “more comprehensive and compelling.”
“Mr. Knight offered convincing reasons for relying on the specific approach he took on each property,” Tucker wrote.
Specifically, Tucker said Knight’s numbers were established by looking at properties outside of the city “to develop a broader view on what a reasonable buyer would pay for the properties at issue.
“The plaintiff’s expert offered a more complete explanation of his conclusion and of the supporting research,” Tucker wrote.
The judge agreed that mass appraisal is a valid method but said the city omitted in its analysis that the assumed demand for condominiums was not backed up by recent sales in the city — just five in the 18 months prior to his appraisal — and none were of the “high end” variety expected on Water Street. Knight on the other hand “presented a clear rationale for why there was no such demand as of April 1, 2009, and why there would be none in the near future,” Tucker wrote.
Santagate said the city hopes the case does not harm its relationship with Illick or the other investors.
“They are a big deal and a big plus for the city and we are glad they are here,” Santagate said. “We had an honest disagreement and we needed a referee. We don’t want this to get in the way of any future partnerships with them.”
The mill buildings were part of a multi-million dollar rehabilitation project that was completed in spring 2009.
Illick was planning to convert the Peterson building into condominiums but those plans never materialized beyond cleaning the exterior brick, removing asbestos and putting in new windows. The third building in the mix, the former Woven Label building, is now the Common Man Restaurant, but was not part of the abatement.
Current assessed values are $12.64 million at the Wainshal and $2.31 million at the Peterson.
All taxes are current on the properties. In 2012, $434,515 was paid in taxes on the Wainshal building and $79,373 on the Peterson property.
Patrick O’Grady can be reached at email@example.com.