Fox et. al. v. Town of Bridgewater, No. 521-8-12 Wrcv (Teachout, J., Jan. 23, 2014).
[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
accompanying data included in the Vermont trial court opinion database is not guaranteed.]
                                                STATE OF VERMONT

SUPERIOR COURT                                                                                       CIVIL DIVISION
Windsor Unit                                                                                     Docket # 521-8-12 Wrcv


JAMES C. FOX and
MARY JANE FOX

           v.

TOWN OF BRIDGEWATER


                FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER

       This property tax appeal came before the Court for a final hearing on October 25
and 30 and December 5, 2013. A site visit was taken on the first day prior to taking
evidence. Appellant James Fox (“Appellant” or “Mr. Fox”) represented himself. The
Town of Bridgewater (the “Town” or “Bridgewater”) was represented by Attorney
Robert E. Fletcher.

        The Court ruled at the close of Appellant’s evidence that Appellant had produced
sufficient evidence to overcome the presumption of validity of the Town’s valuation of
the property, and proceeded to take evidence from the Town as well as rebuttal evidence
from the Appellant.

        The Appellant challenges the Town’s position that on April 1, 2012 the highest
and best use of this 4-acre parcel of vacant land was as a developable building lot, and
seeks a finding that its highest and best use was as vacant land with limited forestry
value. The values advocated by each party correspond to that party’s position on highest
and best use. Based on the findings of fact and the conclusions of law set forth below,
the Court concludes that the property does not have a sole highest and best use, but has a
mixed highest and best use: it has limited potential as a developable lot, with recreation
and forestry as a more likely use. Based on this determination, and for the reasons set
forth below, the Court sets the fair market value at $30,000 and the equalized value at
$29,400.


                                                       Findings of Fact

        The property consists of 4 acres and is a triangle located at the intersection of
Latham Road and Perkins Road in Bridgewater. It is in a part of Bridgewater that is
characterized by large estate-type properties including neighboring properties owned by
current or former corporate executives of large national companies. It is largely wooded
and is surrounded by other wooded land as well as open land that rises in elevation on the
eastern side. The portion near the intersection of the two roads is relatively flat. A fairly
narrow strip of land along Perkins Road (the east boundary and the hypotenuse of the
triangle) rises at an average grade of 14% in a northerly direction, but west of the narrow
strip the land drops down a bank. On the Latham Road side, the frontage is low and wet,
and a stream runs through the property and under Perkins Road through a culvert.

       Most of the property is at the base of a bowl into which surrounding higher lands
drain. The Vermont Agency of Natural Resources maintains a website with a map
showing the Vermont Significant Wetland Inventory. It shows a large circle of yellow
overlaying a significant majority of the parcel, and the legend identifies the yellow circle
as “Class II Wetland.” Exhibit 7. The wetland designation does not front either Perkins
Road or Latham Road. The Vermont Wetland Rules prescribe a 50’ buffer zone
contiguous to the boundaries of a Class II wetland unless otherwise designated by the
Secretary of ANR. Exhibit 17, Vermont Wetland Rules, effective August 1, 2010 at 10.

        Another page of the Natural Resources Atlas shows hydric soils between the
yellow circle designating wetlands and the intersection of Perkins and Latham Roads.
Exhibit 21. Hydric soils are “soils that are saturated, flooded or ponded long enough
during the growing season to develop anaerobic conditions in the upper part . . . hydric
soils shall be synonymous with the terms saturated soils and seasonally saturated soils as
used in 10 V.S.A. Sec. 902(5).” Id. at 6.

        The ANR website contains disclaimers stating that the information displayed is
approximate and that the data is not survey quality and should not be relied on for precise
location:

       This Vermont Significant Wetland Inventory (VSW) Map should not be relied
       upon to provide precise information regarding the location or configuration of
       significant wetlands. This map is intended only to denote the approximate
       location and configuration of significant wetlands. The actual boundaries of the
       wetlands depicted on this map must be determined in the field by Agency of
       Natural Resources (ANR) staff.

Exhibit 18.

        Bridgewater has no zoning, so there are no restrictions on development of the
parcel except for State regulations applicable to the location of septic and water systems,
and wetlands restrictions. Allowed uses in Class II wetlands include activities such as
silviculture, road and utility repair, specified recreational activities, and wildlife
management. (See Exhibit 17, pages 19-21 for a more complete and specific list.)

       The Town assessed the parcel based on a highest and best use of development as a
residential building lot. It values the first two acres of all vacant land in the Town as a
potential residential building lot. The Town presented evidence of value based on this
highest and best use from two witnesses: Lister Thomas Standish, who valued the
property at $63,300, and Kevin Leen of Vision Government Solutions, a company that



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performs mass appraisals for municipal governments, who valued the property at
$61,000.

       The determination of highest and best use was made by the Listers, and was
simply adopted by Mr. Leen and not reevaluated by him when he appraised the parcel.
Thus, the evidence of highest and best use came from Mr. Standish alone. His testimony
was that the first two acres of all vacant land parcels in Bridgewater are presumed to be
developable building lots, and that Appellant in this case has not proved that the parcel is
not developable. The Town’s position is that because Appellant’s evidence shows that a
mounds waste disposal system could be located on the non-wetlands portion of the
property sufficient to serve a 2-bedroom residence, the owner has not shown it is not
developable, and therefore it is valued as a developable building lot.

        He noted that the Listers made an adjustment from the base land value1 for a
homestead, which is $32,000 per acre, by applying a 25% reduction based on the physical
features of the land.2 Another adjustment was applied by multiplying the value by 1.4
based on the desirability of the neighborhood, thereby increasing the value by 40%.
These adjustments, together with another one to more accurately reflect actual sales
values, produced a value of $54,900 for the 2-acre homestead plus $8,400 for the
additional 2 acres for a total value of $63,300. Thus, the Town’s position is that an
adjustment was made to reflect the wetness conditions of the land, but that use of the
parcel as a developable lot is not precluded, and that the wetness characteristics that
affect development have been taken into account. The Town’s evidence did not include a
factual or quantitative basis for either the 25% reduction for property characteristics or
the 1.4 upward adjustment for desirability of neighborhood.

        Mr. Leen’s appraisal opinion of $61,000 was based entirely on the Town’s
identification of the highest and best use as a developable building lot, without
adjustment for any characteristics of the specific parcel. He took land value from the
updated 2012 land schedule, identified three sales of properties he considered comparable
except that all had improvements on them, subtracted the value of the improvements on
each to identify a range from $44,000 to $69,000, and reconciled them at $61,000.

        Appellant introduced no evidence to challenge the Town’s evidence of the fair
market value of the property if highest and best use is determined to be as a developable
building lot. His evidence was that highest and best use is not as a developable building
lot but rather for nondevelopment uses such as forestry or recreation. His expert
appraiser, Sean Sargeant, relied on opinions in two engineering studies that “development
of the site is limited by hydric soils and a wetland and it could not support a standard
septic system to state requirements.” Exhibit 11. Thus, his opinion was based on the
premise that the property could not be developed at all and he valued it on that basis at
$15,000.

1
  Base land values were taken from the land schedule developed in 2007 during a Town-wide reappraisal
and were updated by applying statistical adjustments to arrive at values for 2012.
2
  The Listers’ card, Exhibit D, includes a note from 4/07 that reads “Lot has run-off collection issues.”



                                                     3
Highest and Best Use

        There was considerable evidence presented at the hearing about the characteristics
of the property and their impact on highest and best use. Two pieces of evidence are
particularly important to the determination of highest and best use.

         The first is Appellant’s testimony that on August 17, 2012, Alan Quackenbush,
Wetland Specialist from the Water Quality Division of the State of Vermont Agency of
Natural Resources, visited the property with Appellant and Consulting Engineer Blair J.
Enman. Mr. Quackenbush made an informal delineation of the wetland area on the
parcel, including marking it with stakes and surveyor tape, some of which was visible on
the site visit. The second is the results of the investigation and analysis done by Mr.
Enman of the feasibility of locating a waste disposal system on the property for purposes
of development.

        With respect to the informal delineation of wetlands made by Mr. Quackenbush,
there is no question that it was not a formal study and did not produce survey-quality
information that conclusively establishes boundaries of wetlands and buffer zones on
Appellant’s property. It appears to be the Town’s position that because the delineation
was informal the information is not reliable. The Town will not accept the delineation
and the related restrictions they signify as having an effect on highest and best use unless
and until Appellant undertakes to have a formal study completed and submitted. Based
on the testimony of Mr. Fox and Mr. Enman, the cost of such a study is likely to be in the
range of $1,300 to $3,000.

        In this case, the information made available as a result of having a State Wetland
Specialist walk the property and do an informal delineation of its wetlands is relevant,
useful, and reliable information at the level it was provided. While the exact lines of the
informal delineation are not known, there is sufficient evidence for the Court to find that
a significant portion of the Appellant’s property is either wetlands or a related buffer, and
that while this condition does not preclude the possibility of development on a small non-
wetlands portion of the parcel, it has an effect on potential development and thus is an
important factor in determining the highest and best use of the property. The information
was at a sufficient level of accuracy to be relied on by Mr. Enman in doing his study
described below.

       The second important piece of evidence is the testimony and opinion of Mr.
Enman. He is a professional engineer with significant experience in designing waste
water systems and potable water systems. He is not a wetland engineer, but accompanied
Mr. Quackenbush during the informal wetlands delineation in August of 2012 and was
thereby able to acquire first-hand reliable information about the existence and extent of
wetlands on Appellant’s property, which he used in his own work. He has worked with
Mr. Quackenbush over many years and “has never seen him wrong.” He was retained by



                                              4
Appellant to render a professional opinion regarding the capacity of the property for
development for residential purposes. As part of his evaluation, he excavated four test
pits on the property and took field measurements. The Court finds his opinions as an
expert are well-grounded in proven facts and supported by explanations based on his
special knowledge, training, and experience as a professional engineer who focuses on
waste and water systems for land development.3

        His opinions are:

    1. That “the area available for a the [sic] siting of a wastewater system is most
       minimal.
    2. That the property cannot support a wastewater disposal system suitable for more
       than a 2-bedroom single family residence, as it lacks available area for the trench
       length necessary for a 3-bedroom dwelling.
    3. That it cannot support a traditional waste water system because there is not
       sufficient area for a replacement system.
    4. That under current rules that allow for a “mounds” system rather than a traditional
       system, a replacement system is no longer necessary so a mounds system could be
       installed, but the site does not meet the design criteria for a “prescriptive”
       (cookbook) mounds system, so a “performance based mound design” would be
       required.
    5. A performance based mound design “does not provide the safety factor associated
       with the Prescriptive Design. . .In essence, there is no safety factor remaining.
       Any rise in the seasonal water table closer to the ground surface will tend to push
       the effluent mounding at the toe of the mound even closer to ground surface. If
       surfacing occurs, the mound would be labeled as failed. This occurrence cannot
       be ruled out.” Exhibit 5. Moreover, overload of a small system (i.e., for a 2
       bedroom house) is more likely than for a larger dwelling (e.g., 4-5 bedrooms),
       resulting in failure.
    6. If the mound system failed, there is no viable alternative as there is no room for a
       replacement system.
    7. Failure of a prescriptive mound system could result in “a long term pump and
       haul requirement issued by the state. This will have significant impact on the
       future value of the property and any constructed improvements.” Id.
    8. “[T]he property is better left undeveloped as there is no viable alternative in the
       event the mound system fails.” Id.
    9. Even if a permit could be obtained to install a prescriptive mound design, the
       siting of a well requires minimum isolation distances from the wastewater system
       as well as from the wetland and associated buffer, and no analysis has yet been
       done to determine whether there is enough land area available to meet the

3
 His firm has more than 30 years of experience and offers services including “studies, design, and
permitting services for Land Use Planning & Land Development, Environmental Permitting, Stormwater
Management Systems, Wastewater Disposal Systems, Water Supply Systems, Engineering Surveys, Act
250 Permitting, Municipal and State Permitting, Phase I Environmental Site Assessments, Hydraulic
Pumping Systems, and Expert Witness Services & Testimony.” Exhibit 1.



                                                 5
       requirements necessary to install a well; Mr. Enman pointed out on an exhibit a
       very small area that was the only place available for both a house and well.
   10. Even if a permit could be obtained to install a prescriptive mound design, there
       are problems with respect to locating a house site. “There is no area available for
       the siting of the house uphill or downhill of the proposed wastewater disposal
       system.” Id. “The area available for a dwelling diminishes further to the south.”
       Id. There is only a very small area that could be eligible for a house site, if the lot
       can accommodate one at all. There would be a “much higher hurdle” if the house
       must be located within the wetland buffer.

In short, his opinion is that while it is conceptually possible to obtain a wastewater permit
for a performance mound design, any dwelling would be limited to 2 bedrooms; it is not
yet clear whether there is room for or permission could be obtained for a well and house
in addition to the mound system; and there are significant environmental risks associated
with installing a prescriptive mound system on the property because of the possibility that
it would fail and trigger wetlands violations and enforcement consequences. Mr. Enman’s
testimony, which is credible and is found as fact by the Court, is that a mounds system
would cost $25,000-30,000, and a well would likely cost $5,000-9,000. His opinion is
that the available usable land is too small to accommodate all three necessary
components for a developed lot: a waste water disposal system, a well, and a dwelling.

        These opinions constitute highly significant information affecting the highest and
best use of the property. While it remains a possibility that someone could buy the parcel
for development purposes, any buyer would have to invest considerable funds into first
determining whether the land could be developed: the cost of a formal study to delineate
the boundaries of the wetlands and buffers, the cost of determining whether a well could
be sited on the property, and the cost of determining whether and where a dwelling could
be sited on the land. Even then, the buyer would be severely limited as to where to site a
structure, and would be limited to a structure with only 2 bedrooms.

        Thus, while it is not definitive that the property cannot be developed, the facts
show that the costs and limitations associated with development are very significant—so
significant that they render the development potential low. Why would a potential buyer
looking to build a residence in Bridgewater—even one who only wanted 2 bedrooms--
choose this property, with all its extra costs and risks, over a site that did not entail such
significant development costs and potential environmental risks? It does not have
compensating amenities, such as a splendid view. It is hard to imagine that being in a
neighborhood where corporate executive have estates would be sufficient to overcome
the effect of a cost-benefit analysis that shows high investment costs versus the risks of
not being able to obtain legal permission at all and/or the risk of a wastewater failure and
related environmental enforcement liability.

       For these reasons, the facts do not support a sole highest and best use
determination of residential development. At the same time, the facts do not support a
finding that the property cannot qualify for a wastewater permit of any kind and therefore
has no development potential at all and therefore its highest and best use is only for



                                              6
recreation and limited forestry. Mr. Sargeant testified credibly that in determining
highest and best use in conjunction with valuing property, it is necessary to consider what
uses are 1) legally permissible, 2) physically possible, 3) maximally profitable, and 4)
financially feasible. While residential development on this lot may be legally
permissible, there are legitimate doubts about that because it is not clear that required
legal isolation distances for a well and house can be met even if a wastewater permit can
be obtained, and money would have to be spent to make that determination. While it is
physically possible for development to occur, the significant costs in determining the
legal permissibility, with no guarantee of success, cast doubt on whether development
represents the maximum profitable use of the property. Similarly, the unknown but
significant (if it were to occur) risk of environmental pollution and cleanup costs from a
failure of a mounds system make the financial feasibility of development low.

        Neither of the highest and best uses advocated by the parties—residential
development or vacant forestry land--is supported by the evidence or analysis as a sole
highest and best use. The Court finds that the property has some residential development
potential but it is low; however, the property is not limited to use as vacant land for
recreation and forestry as its sole highest and best use because there is some level of
development potential. The Court finds that the highest and best use is a mix of some
potential for residential development and vacant land for recreation and forestry, with the
development potential being less than 50%--most likely in the range of 30-45%.

Fair Market Value

        The highest and best use determination drives the determination of fair market
value. Here the Court is hampered because neither party introduced evidence based on
the highest and best determination that the Court has made. The evidence is that if the
highest and best use is solely residential development, the fair market value is $61,000-
63,300; if the property cannot be developed, its value is $15,000. The Court rejects both
of these extremes based on its determination of mixed highest and best use, yet it has the
obligation to determine fair market value based on the evidence.

       While it is difficult to determine an exact figure for fair market value under these
circumstances, it is possible to establish a value that fairly and reasonably represents fair
market value for purposes of equitable assessment for tax purposes in relation to other
properties in the Town. Analysis of evidence suggests different approaches to establish a
reasonable range.

       The first is to start with the evidence that if the highest and best use were
residential development alone, with a value of approximately $63,300, and this is reduced
to 50% of full development potential value, then the value would be $31,650. The Town
may argue that it has already taken a 25% reduction for property characteristics so that
under this approach the Appellant would be given the advantage of both the 25%
reduction for property characteristics and a 50% reduction for a highest and best use
determination that reflects those property characteristics, but this is not unfair since the




                                              7
most likely percentage for development potential is 30-45%, not 50%. Thus, the
$31,650 is probably on the high side.

        Moreover, Mr. Leen’s opinion of $61,000 did not take into account any reduction
for property characteristics. Calculation of 30-45% of his figure results in a range of
$18,300 to $27,450.

       Another is to start with the Listers’ land value of $32,000 per acre for 2 acres and
$8,000 for the additional 2 acres and take the .09 reduction to reflect actual sale prices
and then take a 50% reduction attributable to the mixed highest and best use, rather than
the 25% reduction that the Listers applied, but decline to apply the premium for
neighborhood value that the Listers applied. The reason for this is that it would be
understandable to apply that premium to a parcel that met the characteristics of the
properties that create the high value: large estate properties with significant acreage and
amenities and the capacity to construct improvements suitable to a large estate and
associate with neighbors with common interests. Those values would not apply to this
property. Because of the site and bedroom limitations, the property could not be
developed in the same manner as neighboring estate properties; thus it is questionable
whether a premium has any relevance to this property, even if it were quantitatively
supported by evidence, which it was not. This calculation produces the following:
$72,000 less .09 reduction - $65,520 times .5 = $32,760. This is most likely high
because the reduction is 50%, which is lower than is warranted by a 30-45% level of
development potential.

        If a reduction is taken reflecting the 30-45% of development potential, the range
is $19,656 ($65,520 times .3 = $19,656) to $29,484 ($65,520 times .45 = $29,484).

       Taking all of these approaches into account, the Court determines that a
reasonable fair market value for the property is $30,000. This is admittedly inexact, but
represents what analysis of the available evidence produces as a fair and reasonable
determination of the fair market value of this property.

Equalization Ratio

       The “common level of appraisal” or CLA for Bridgewater as determined by the
Vermont Department of Taxes, Division of Property Valuation and Review for 2012 was
98%. Appellant introduced evidence of a raw computation of assessed value compared
with sales prices of all properties in Bridgewater from 2009 through 2012, but this
evidence did not distinguish between types of properties or show that it was statistically
representative of comparable properties and was not sufficient to overcome Appellant’s
burden of persuasion on this point. The CLA of 98% applied to the fair market value of
$30,000 produces an equalized value for assessment purposes of $29,400.




                                             8
                                    Conclusions of Law

         The fair market value of a property reflects its “highest and best use.” Scott
Const., Inc. v. City of Newport Board of Civil Authority, 165 Vt. 232, 235 (1996). In
determining a property’s highest and best use, appraisers must consider its “potential and
prospective” uses. 32 V.S.A. § 3481(1). “The highest and best use of property has
generally been construed to refer to ‘the value of the property for its most profitable,
likely, and legal use.’ D. Stockford, Property Tax Assessment of Conservation
Easements, 17 B.C.Envtl.Aff.L.Rev. 823, 827 (1990).” Scott, 165 Vt. at 235. Because
appraisers must project how a property could be used in the future, the highest-and-best-
use analysis depends on market and legal assumptions. See Zurn v. City of St. Albans,
2009 VT 85, ¶ 9, 186 Vt. 575.

       “When a taxpayer grieves [a tax] assessment to the state appraiser, there is a
presumption that the town’s assessment is valid.” Vanderminden v. Town of Wells, 2013
VT 49, ¶ 8, 75 A.3d 598. “This is a bursting bubble presumption; if the taxpayer presents
any evidence that his property was appraised above fair market value, then the
presumption disappears, and ‘it is up to the town to introduce evidence that justifies its
appraisal.’” Id. (quoting Adams v. Town of West Haven, 147 Vt. 618, 620 (1987)).
The Court previously ruled that Appellant’s evidence was sufficient to overcome the
presumption of validity that otherwise attaches to the Town’s valuation. Therefore, the
Town had the responsibility to present evidence in support of its value. The burden of
persuasion remained with Appellant throughout the hearing, and never shifted to the
Town. Kruse v. Town of Westford, 145 Vt. 368, 371–73 (1985). It became the
responsibility of the Court to make a de novo determination of both highest and best use
and the fair market value of the property. 32 V.S.A. § 4467. The goal is to ensure that
property owners pay their fair share of the tax burden based on the potential of their
property. Zurn, 2009 VT 85, ¶ 9.

        The fair market value of a property is defined as “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.” 32 V.S.A. § 3481(1). “Common sense
and practical everyday business experience are [tax appraisers’] best guides” for
determining a property’s fair market value. Potter v. Town of Clarendon, 118 Vt. 278,
281 (1954).

        As the Findings of Fact show, Appellant met the burden of persuasion on the
issue of highest and best use: Appellant showed that the Town’s determination that the
highest and best use was solely as a development lot was not supported by the evidence.
Therefore, the Court has addressed the issue de novo and made its own determination of
highest and best use as of April 1, 2012 based on the evidence, specifically the property
had a mixed highest and best use: to the extent of 30-45%, there was development
potential as a residential lot, but the remaining 55-70% was as undeveloped land for




                                              9
recreational and forestry use. This represents the application of “common sense and
everyday business experience” to the specific facts of this property.

       Based on the determination of a mixed highest and best use in the proportions
determined, the Court analyzed the evidence presented and determined that a
preponderance of the evidence supported a determination that the fair market value of the
property as of April 1, 2012 was $30,000.

       Appellant did not overcome the presumption of validity with respect to the
Town’s equalization ratio, and the Court applied the Town’s ratio to determine that the
equalized value of the property for the 2012 assessment was $29,400.

       Pursuant to 32 V.S.A. § 4468, the fair market value for the property for 2012,
2013, and 2014 is $30,000, subject to other terms of that statute that may affect the 2014
value.

                                         ORDER

      The fair value for Appellants’ property for the tax years 2012, 2013, and 2014 is
$30,000. The equalized value for the 2012 assessment is $29,400.

       Dated at Woodstock, Vermont this _____ day of January, 2014.


                                                     ____________________________
                                                     Hon. Mary Miles Teachout
                                                     Superior Court Judge




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