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
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                                        2016 VT 11

                                        No. 2014-465

John T. Adams II                                            Supreme Court

                                                            On Appeal from
   v.                                                       Superior Court, Rutland Unit,
                                                            Civil Division

Town of Sudbury                                             June Term, 2015


Cortland Corsones, J.

Peter H. Banse of Banse & Banse, P.C., Americus, Georgia, for Plaintiff-Appellant.

Cindy Ellen Hill, Middlebury, for Defendant-Appellee.


PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.


        ¶ 1.   REIBER, C.J.     This case arises from the often complex struggle that Vermont

towns have had with taxing parcels of land that lie in more than one town. It is also the latest

episode in a decades-long dispute between taxpayer and the Town of Sudbury. Taxpayer owns

three units in a condominium community that lies in both Sudbury and its neighbor, Hubbardton.

Taxpayer objects to Sudbury’s tax assessment of the portion within its boundaries. He argues

that the trial court erred in upholding: (1) the state law through which Sudbury made its tax

assessment; (2) Sudbury’s valuation of the portion within its boundaries; and (3) Sudbury’s

method of apportioning the tax burden among the owners of the condominium community. We

affirm on all three issues.
       ¶ 2.    The condominium community is known as Wanee Villas and Resorts (Wanee). It

is located on the grounds of a former children’s camp and consists of twenty-one individually

owned units—residential buildings and their footprints—and an expanse of common land.

Wanee’s ownership and governance are detailed in two documents filed in the Sudbury land

records: a 1978 declaration of protective covenants and a 1993 amendment to those covenants.

These documents not only assign a percentage of ownership interest in the common land to each

unit but also detail that each unit has an easement to access the common land. Moreover, they

create a common interest community as defined by 27A V.S.A. § 1-103(7) and a condominium

as defined by 27A V.S.A. § 1-103(8).

       ¶ 3.    Wanee encompasses a total of 26.9 acres. The vast majority of this land—

including all the privately owned units—lies in Hubbardton. The Sudbury portion consists solely

of 1.29 acres of common land but includes 385 feet of prime frontage on Lake Hortonia, which

greatly enhances the appeal of Wanee and its individually owned units. Taxpayer personally

owns three units and further owns a substantial stake in Wanee Enterprises, which is the

successor corporation to the former children’s camp and which itself owns eleven units.

       ¶ 4.    In 1996, taxpayer appealed Sudbury’s tax assessment of the Sudbury portion of

Wanee’s land to the state appraiser. Taxpayer and Sudbury stipulated to a valuation of $89,460

for the Sudbury portion, and the state appraiser entered this stipulation on the condition that this

valuation would be listed for three years. In 2007, taxpayer again objected to Sudbury’s tax

assessment of the land, arguing before the town’s Board of Civil Authority and, later, the trial

court, that Sudbury could not tax the land because all the individually owned units lay within

Hubbardton. Taxpayer voluntarily dismissed the case by agreement with Sudbury that it would

not tax the units owned by taxpayer, Wanee Enterprises, or taxpayer’s mother for the years 2007-

2009. Sudbury adhered to this agreement for those three years and then continued to refrain



                                                 2
from taxing the land at all as it waited on clarification from the Legislature regarding how to tax

common lands belonging to a condominium community whose units lie entirely in another town.

       ¶ 5.    In 2012, the Legislature provided this clarification through an amendment to 27A

V.S.A. § 1-105, which now states, in part:

                (a) In a condominium or planned community:

               ...

                (2) if there is any unit owner other than a declarant, each unit
               shall be separately taxed and assessed, and no separate tax or
               assessment may be rendered against any common elements for
               which a declarant has reserved no development rights; provided,
               however, that if a portion of the common elements is located in a
               town other than the town in which the unit is located, the town in
               which the common elements are located may designate that portion
               of the common elements within its boundaries as a parcel for
               property tax assessment purposes and may tax each unit owner at
               an appraisal value pursuant to 32 V.S.A. § 3481.

27A V.S.A. § 1-105(a). Sudbury then reappraised the Sudbury portion as part of a town-wide

reappraisal that it had begun two years prior and whose results and methods were approved by

the Vermont Department of Taxes.          Through this reappraisal—which used a systematic,

multiple-factor formula derived from land tables, schedules, and adjustments—Sudbury valued

the Sudbury portion at $177,445. In response to the recent amendment to § 1-105, Sudbury then

levied taxes for the land against the individual unit owners. In doing so, it apportioned the tax

burden among the unit owners in accordance with their percentage ownership of Wanee as

specified in the 1978 declaration of protective covenants.

       ¶ 6.    In response to this new tax assessment, taxpayer first appealed to Sudbury’s

appraisers, then to the Sudbury Board of Civil Authority, and then, in November 2013, to the

trial court. Taxpayer raised three arguments before the trial court. First, he argued that § 1-105

violates both the Equal Protection principle of the Fourteenth Amendment to the U.S.

Constitution and the Proportional Contribution Clause of the Vermont Constitution. Next, he


                                                3
argued that Sudbury’s valuation of the land at $177,445 was not supported by the evidence and

does not represent the land’s fair market value. Finally, he argued that Sudbury must not

apportion the tax burden among the unit owners in relation to their percentage interest in Wanee

but instead must apportion the burden equally to each unit. After holding a bench trial, the trial

court entered its order in November 2014, finding against taxpayer on each of these arguments.

The trial court upheld the tax assessment in all respects except for remand to apportion the tax

burden among the unit owners in accordance with the 1993 amendments to Wanee’s covenants

rather than the original 1978 covenants. Taxpayer now bases his appeal on the same three

arguments that he raised before the trial court.

                            I. Constitutionality of 27A V.S.A. § 1-105

       ¶ 7.    We begin with taxpayer’s first argument, which is that 27A V.S.A. § 1-105

violates both the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution

and the Proportional Contribution Clause of the Vermont Constitution. Specifically, taxpayer

contends that the law creates a situation in which properties that have common land in more than

one town may be taxed at higher total rates than those with common land in just one town.

Indeed, he alleges that an owner in his situation “pays as much as twice.” Taxpayer further

contends that this alleged situation violates the principle that any difference in tax burden

between similarly situated citizens must have a reasonable and rational basis.

       ¶ 8.    A tax is constitutionally valid if it meets two requirements. First, it must have

been established for a reasonable purpose and bear a reasonable relation to that purpose. See

Lathrop v. Town of Monkton, 2014 VT 9 ¶ 13, 195 Vt. 564, 91 A.3d 378, 382 (“[A] legislative

classification must bear a reasonable relation to the purpose for which it is established”

(quotation omitted)); see also Andrews v. Lathrop, 132 Vt. 256, 259, 315 A.2d 860, 862 (1974)

(“[I]f any reasonable policy or purpose for the legislative classification may be conceived of, the

enactment will be upheld.”). Second, it must be fairly applied so that all within a given tax

                                                   4
classification are treated alike. See In re Prop. of One Church St. Burlington, 152 Vt. 260, 268,

565 A.2d 1349, 1353 (1989) (“Once fair classifications have been established, taxpayers within a

given classification must be treated alike.”).

       ¶ 9.    These two requirements apply identically to taxpayer’s Fourteenth Amendment

and Proportional Contribution Clause arguments because we view the constitutional provisions

as equivalent in the tax context. See In re Eddy, 135 Vt. 468, 472, 380 A.2d 530, 534 (1977)

(“[A]s far as [tax] classifications are concerned, our proportional contribution clause is the

practical equivalent of the equal protection clause of the Fourteenth Amendment to the United

States Constitution.”).   They also apply to § 1-105 because § 1-105 expressly creates two

different tax classifications: one for common elements located entirely in one town and another

for common elements located in two towns. Common elements located entirely in one town and

for which a declarant has reserved no development rights may not be taxed separately at all. See

§ 1-105(a)(2) (describing that, generally, “no separate tax or assessment may be rendered against

any common elements for which a declarant has reserved no development rights”). The value of

this land is simply allocated to Wanee’s individual units, which themselves are then taxed. But

common elements located in a town other than the town in which the units are located may be

taxed. See id. (“ . . . [P]rovided, however, that if a portion of the common elements is located in

a town other than the town in which the unit is located,” former may tax that portion).

       ¶ 10.   We conclude that § 1-105 is constitutionally valid because it creates a tax regime

that is not only reasonable but also results in fair and uniform tax treatment if implemented

properly. Towns are prevented from taxing lands that lie outside their boundaries, but they are

free to raise funds in accordance with the amount and value of land that lies within their

boundaries. And assuming towns value their lands properly, landowners are treated uniformly

because they pay like taxes, regardless of whether their lands lie in one town or multiple towns.



                                                 5
       ¶ 11.   Section 1-105 also satisfies a second principle of the Proportional Contribution

Clause: Vermont’s property tax system must be based on fair market value to ensure that the tax

burden is shared proportionately. Barnett v. Town of Wolcott, 2009 VT 32, ¶ 4, 185 Vt. 627,

970 A.2d 1281 (mem.) (“The goal of property-tax appraisal is to ensure that no property owner

pays more than his or her fair share of the tax burden; this is accomplished by listing all

properties at fair market value.”); see also 32 VSA § 3481 (“The estimated fair market value of a

property is the price which the property will bring in the market when offered for sale and

purchased by another.”). This principle is reflected in our recent holding that when a contiguous

piece of land lies in two or more towns, each of those towns may value and tax the portion within

its boundaries so long as the combined valuation of each portion does not exceed the actual fair

market value of the entire piece of land. See Vanderminden v. Town of Wells, 2013 VT 49,

¶ 20, 194 Vt. 96, 75 A.3d 598 (“The fair market value must be divided between the towns . . . the

sum of the values attributable to the part of the parcel in each town cannot exceed the fair market

value of the whole parcel.”) (citation omitted). Section 1-105 reflects this holding and the

broader fair market value principle because it leaves towns free to consider not only the qualities

of that portion that lies within their boundaries but also the fair market value of the entire

contiguous piece of land. Id. ¶ 21(“[T]he correct valuation for property . . . includes both the fair

market value of the property overall and of the portion in the town involved in the appeal.”).

       ¶ 12.   Having concluded that § 1-105 is constitutionally valid, we further note that

taxpayer offers no evidence to bolster his assertion that his particular property is valued or taxed

at a rate higher than it would be if it were entirely located within just one town. Indeed, his own

testimony was that he valued each of his units at $25,000 when considering their lakefront

access, but at only $15,000 when not considering their lakefront access. Meanwhile, the trial

court specifically found that Hubbardton assessed taxpayer’s units at just $12,800 each, “a clear

indication that they are not assessing them as having lakefront access.” It also found that “the

                                                 6
property is not ‘double taxed’ as lakefront property.” This case is therefore unlike those in

which towns have maximized the taxable value of the separate portions of land such that, when

combined, they exceeded the actual fair market value of the land. See Vanderminden, 2013 VT

49 (rejecting town’s valuation of lakefront portion of property because it used model that placed

primary value on lakefront, while neighboring town in which house was located used model that

placed primary value on land immediately surrounding houses); see also Devon Energy Prod.,

L.P. v. Hockley Cnty. Appraisal Dist., 178 S.W.3d 879, 882-83 (Tex. Ct. App. 2005) (rejecting

combined valuation of land by two towns amounting to 134-percent of land’s actual fair market

value because “appraisal districts assessing property crossing county lines are entitled to ‘share it

fairly but don’t take a slice of [the other’s] pie.’ ” (citing Pink Floyd, Money (Capitol Records

1973))).

       ¶ 13.   Here, taxpayer did not meet his burden of establishing that the combined

valuations by Sudbury and Hubbardton exceeded the fair market value of Wanee. Notably, it is

true that § 1-105 does not contain language that on its own prevents two towns from valuing

portions of land such that the valuations combined exceed the fair market value of the total

property, as occurred in Vanderminden and Devon. But the Proportional Contribution Clause of

the Vermont Constitution, and the Equal Protection Clause of the U.S. Constitution require that

the statute be applied in a way that does not subject taxpayer to taxation based on a total

valuation in excess of the fair market value of the taxpayer’s property simply because the

property straddles town lines.

                                 II. Valuation of the Sudbury Portion

       ¶ 14.   We next address taxpayer’s second argument, which is that the trial court’s

conclusion that the fair market value of the Sudbury portion was $177,445 is not supported by

the evidence. Here, taxpayer objects to Sudbury’s method of calculating the land’s value and tax

burden through the use of land tables, schedules, and adjustments that take into account multiple

                                                  7
factors affecting the value of the land. Notably, the formula includes an “easement” adjustment

to reflect that the land is merely a small portion of a much larger parcel. Taxpayer argues that

this adjustment is insufficient and that that this formula should not be applied to the land because

it was developed to value stand-alone parcels, not portions of land that belong to larger parcels.

Instead—without proposing an alternative method—taxpayer contends that the land should be

ascribed a lower value because it cannot be independently developed, accessed, or sold apart

from the larger parcel.

       ¶ 15.   We have long recognized that Vermont towns have discretion to use different

appraisal methods to value property according to fair market value. See City of Barre v. Town

of Orange, 138 Vt. 484, 486, 417 A.2d 939, 941 (1980) (“[M]any different methods exist for

determining fair market value.”). However, as a logical extension of our previous observation of

the Proportional Contribution Clause, towns’ appraisal methods must reflect fair market value,

and this can be accomplished only by taking into consideration all elements that combine to give

value to a property. See also Bookstaver v. Town of Westminster, 131 Vt. 133, 137, 300 A.2d

891, 893 (1973) (noting that “[t]here is no one or controlling factor.”). Sudbury heeds our

holdings concerning the importance of fair market value and multiple-factor assessments. Its

method begins with a general land schedule provided by the State of Vermont and based on

actual sales in the town over the previous three years. It then makes adjustments based on

factors including terrain, accessibility, septic systems, and quality of structures.       Notably,

Sudbury’s assessment system has been accurate over the years; the trial court found that its

assessed values are very comparable to actual sales.

       ¶ 16.   In the specific case of Wanee’s assessment, the trial court found the following

facts. Sudbury started with a schedule that was based on a finding that the average fair market

value for a lot on Lake Hortonia is $1000 per linear foot of lake frontage. Applying this

schedule to Wanee’s total lake frontage, it determined that the property’s value before

                                                 8
adjustments was $385,000. To this base value, Sudbury assigned factors of: (1) 0.80 for land

quality because the beach front was overgrown; (2) 1.02 for depth factor because the parcel is

slightly deeper than the average lot; (3) 0.70 for amount of lake frontage, which is above average

in Wanee’s case, and the per-foot value of frontage decreases as the amount of frontage

increases; and (4) 0.80 because the parcel has an easement on it for the community owners and

cannot be developed. After accounting for these factors—a multiplication of each factor against

the base value—and then adding $1500 to account for two dilapidated structures, Sudbury

arrived at a final assessed value of $177,445.

       ¶ 17.   The trial court found that the system used by Sudbury to value taxpayer’s land

was accurate, and this finding was supported by the evidence. First, the starting schedule was

based on actual sales data. Second, the adjustment factors for properties such as land quality,

depth, and lake frontage reflect those elements that we have previously recognized as giving

property a market value. Bookstaver, 131 Vt. at 136-37, 300 A.2d at 893 (“The fair market value

of property is the price which the property will bring in the market when offered for sale and

purchased by another, taking into consideration all the elements of the availability of the

property, its use both potential and prospective, any functional deficiencies, and all other

elements such as age and condition which combine to give property a market value.”). Finally,

we find that the town uses proper bases for determining the degree of adjustment for each factor.

The depth factor and lake frontage adjustments are based on numerical charts and the easement

adjustment is equal to the easement adjustments for other properties. For the land quality factor,

the use of judgment to consider multiple features of the land is reasonable in light of the

difficulty of assessing land quality. Moreover, the estimated land values have closely matched

historical sale prices. We therefore conclude that Sudbury’s appraisal method conforms to the

Proportional Contribution Clause’s fair market value requirement. It is unlike those systems that

we have struck down as being unreasonable or too simplistic. See Bloomer v. Town of Danby,

                                                 9
135 Vt. 56, 57, 370 A.2d 194, 195 (1977) (striking town’s formula for determining land value,

which solely contemplated total acreage and did not adjust for location, type of land,

accessibility, or sale of comparable property); Town of Barnet v. New England Power Co., 130

Vt. 407, 413, 296 A.2d 228, 232 (1972) (holding that it was error to restrict appraised fair market

value to no greater than net book value).

       ¶ 18.   We further note that this same analysis applies to taxpayer’s argument that

Sudbury’s formula should not be applied at all to the land because it was developed to value

stand-alone parcels, not portions of land that belong to larger parcels. On this point, taxpayer

argues that the Sudbury portion is worth almost nothing because it cannot be sold on its own.

But this ignores the trial court’s finding that the Sudbury portion certainly added value to the

whole when viewed as part of a larger property. It also ignores our long-standing precedent that

contiguous lands should be treated as one under appropriate circumstances. We outlined those

circumstances in Neun v. Town of Roxbury, 150 Vt. 242, 244, 552 A.2d 408, 410 (1988):

                All relevant factors must be considered in determining whether or
               not property should be assessed as a single parcel, including
               whether the property was conveyed in one deed, the character of
               the land and the purposes for which it is used, whether separately
               deeded tracts are contiguous, and whether the property currently
               functions as one tract for the owner.

We have since reaffirmed those circumstances in several cases concerning the tax treatment of

lands lying in more than one town.          See Vanderminden, 2013 VT 49, ¶ 12 (holding that

taxpayer’s land should be treated as one parcel because “[i]t is covered in one deed, used for one

common purpose, and functions as a single tract.”); Bullis v. Town of Grand Isle, 151 Vt. 503,

504, 561 A.2d 1359, 1360 (1989) (affirming that parcels of land that are between a quarter of a

mile and one mile apart should not be treated as contiguous for tax purposes). We see no reason

to diverge from this precedent. Moreover, we find that the Sudbury and Hubbardton portions

together function as one tract; the Sudbury portion enhances the whole by providing the units


                                                 10
with lakefront access. We therefore conclude that it is proper to value Wanee’s Sudbury portion

as part of the whole parcel. The evidence supports the trial court’s conclusion about its fair

market value.

                                   III. Taxation of the Ownership Interests

        ¶ 19.   We finally address taxpayer’s third argument, which is that the trial court erred by

upholding Sudbury’s apportionment of the tax burden among the unit owners in relation to their

percentage interest in Wanee. He contends that this method is unreasonable and therefore

violates both the Fourteenth Amendment and the Proportional Contribution Clause. He further

contends that this method does not reflect the actual value that the common property adds to each

unit and therefore violates the principal that property tax appraisal value should be proportionate

to fair market value. In place of this method for apportioning the tax burden, taxpayer proposes

that the tax burden arising from the common property in Sudbury should fall equally on each

unit.

        ¶ 20.   We disagree. Sudbury’s method of apportioning the tax burden according to

ownership interest rather than equally to each unit is reasonable because it takes into account the

benefits and burdens of condominium ownership.           It comports with the fair market value

principle of the Proportional Contribution Clause for the same reason; it reflects the actual value

that the common property adds to each unit. Under Vermont law, common expenses in a

condominium are charged according to the unit owners’ interests in the common area. See 27

V.S.A. § 1310 (“[T]he common expenses shall be charged to[] the apartment or site owners

according to the percentage of the undivided interest in the common areas and facilities.”). This

burden is balanced by the actual benefit of having an ownership interest. Upon termination of

the condominium, the unit owners gain an interest in the property owned in common according

to their previous ownership interest of the condominium. See 27 V.S.A. § 1316 (“[T]he property

shall be considered to be owned in common by the apartment or site owners. The undivided

                                                 11
interest in the property owned in common which shall appertain to each apartment or site owner

shall be the percentage of undivided interest previously owned by the owner in the common

areas and facilities.”). Tax is a common expense, so it is reasonable for Sudbury to allocate this

burden across the different units according to percentage of ownership interest. It is therefore

consistent with the Fourteenth Amendment and the Proportional Contribution Clause.

       ¶ 21.   This allocation also reflects the historical and prevalent practice in Vermont. In

our state, the common area of a condominium community is not taxed as if it is completely

independent of the units that own easements to it. Rather, it is allocated to the individually

owned units that comprise the condominium, and then those units are taxed. This principle is

explained in 27 V.S.A. § 1322, which reads, in part:

                Each apartment or site and its percentage of undivided interest in
               the common areas and facilities shall be considered to be a parcel
               and shall be subject to separate assessment and taxation by each
               assessing unit and special district for all types of taxes authorized
               by law . . . . Neither the building, the property nor any of the
               common areas and facilities shall be deemed to be a parcel.

27 V.S.A. § 1322. This practice is well established in our state, and condominium owners like

those in Wanee have advance notice of it. We further note that, despite taxpayer’s argument to

the contrary, Sudbury’s method comports with § 1322. The statute prohibits taxing common

areas as a separate parcel only if those common areas lie in the same town as the community’s

units. It does not prohibit taxing common areas that lie in a wholly separate town from the units.

Here, none of Wanee’s units lie within Sudbury, so Sudbury may tax the portion of common area

lying within its boundaries.

       Affirmed.

                                               FOR THE COURT:



                                               Chief Justice


                                                12
