Note: Decisions of a three-justice panel are not to be considered as precedent before any tribunal.



                                           ENTRY ORDER

                           SUPREME COURT DOCKET NO. 2013-443

                                          JUNE TERM, 2014

 Michael Cornish                                       }    APPEALED FROM:
                                                       }
                                                       }    Property Valuation and Review
    v.                                                 }    Division
                                                       }
 Town of Brookline                                     }    DOCKET NO. PVR 2012-24


                          In the above-entitled cause, the Clerk will enter:

       Taxpayer appeals the decision of the state property tax hearing officer listing his
residential property at $2,085,902 for the year 2012. We reverse and remand.

       The subject property’s principal structure is a premium custom-built log cabin containing
6370 square feet of above-grade living space, a 4526-square-foot basement that includes 2884
square feet of finished living space, and over 3000 square feet of exterior decks. The subject
property also includes four other structures located on 267 acres, most of which are in the
Vermont Current Use Program. Construction of the residence commenced in 2005 and was
mostly completed by 2007. The property was assessed at just under $2 million from 2007 to
2008 and just over $3.5 million from 2009 to 2011.

        The Town of Brookline assessed the property for the year 2012 at $3,555,887. The Town
used land sales and the Computer Assisted Mass Assessment (CAMA) program to apply a
reproduction cost approach to valuing the property. In response to taxpayer’s grievance, the
town listers reduced the fair market value of the property to $2,188,512. For the most part, the
Town arrived at the lower assessment by inserting into its calculation a percentage reduction for
physical, functional, and economic depreciation related to age, condition, functionality, and
location. Notwithstanding the significant reduction in value, taxpayer then appealed to the Board
of Civil Authority (BCA), which increased the fair market value of the property back up to
$3,509,700. Taxpayer then appealed to the state hearing officer, who found the listers’
determination of $2,188,512 to be the most persuasive evidence of fair market value. After
calculating an excluded reduction, the hearing officer placed the subject property on the Town’s
grand list at $2,085,902.

        Taxpayer’s two principal arguments on appeal are: (1) the Town’s manipulation of
quality level input data to increase the fair market value of his property violated the proportional
contribution clause set forth in Chapter I, Article 9 of the Vermont Constitution; and (2) the
Town’s violations rendered every stage of the proceedings constitutionally infirm, thereby
justifying the extraordinary remedy of this Court striking the manipulated data and entering a
new number supported by the evidence—not only for the contested year but for every year that
the manipulated data was part of the calculation of the assessment of the subject property.
        Taxpayer’s first argument arises from the Town’s insertion of a quality factor of 10 for
his residence, when no other residential property in the town had a higher rating than 4.5. He
asserts that the Town intentionally manipulated that quality factor to arrive at its preconceived
notion of what the assessed value of the house should be. He compares this case to Allen v.
Town of West Windsor, 2004 VT 51, ¶ 5, 177 Vt. 1, where the record before the state appraiser
established that the town listers manipulated quality-level inputs in its computer program to
arrive at appraised values matching the prices paid for recently sold properties. Because the
upward adjustment to the quality-level input was not applied uniformly to all town properties in
that case—but rather only to recently sold properties—the owners of recently sold property were
paying a disproportionate amount of property taxes. Id. Accordingly, we affirmed the state
appraiser’s decision to reduce the assessed value of the five grieving taxpayers’ properties. Id.
¶ 10; see M.T. Assocs. v. Town of Randolph, 2005 VT 112, ¶¶ 12, 17, 179 Vt. 81 (stating that
taxpayers claiming violation of proportional contribution clause have burden of showing absence
of any rational basis for government’s differing treatment of similarly situated taxpayers).

        As we stated in Allen, “[t]he overriding goal is to ensure that, whatever the fair market
value of a property might be, its listed value corresponds with the listed value of comparable
properties so that no taxpayer pays more than his or her fair share of the property tax burden.”
2004 VT 51, ¶ 9. In contrast to Allen, however, taxpayer in this case has not demonstrated that
his property is assessed at more than its fair market value or higher than other town properties
relative to fair market value. In other words, taxpayer has not shown that he is paying a
disproportionate amount of the town tax burden. Cf. id. ¶ 10 (stating that evidence supported
state appraiser’s determination that there was disparity between listed value of recently sold
properties and comparable properties that had not been recently sold). Rather, he has
demonstrated only that his residence was the only one in the town to be given a quality rating of
10, a rating significantly higher than any other property in the town.

       Taxpayer argued before the state hearing officer that his property was assessed higher
than other comparable properties in the area. The Town challenged taxpayer’s comparable
properties—as well as taxpayer’s evidence valuing his property at approximately $1.5 million—
and offered comparable properties of its own. Both sides presented expert testimony regarding
the propriety of assigning a quality value of 10 to taxpayer’s residence. After finding no
evidence of sales to support the property’s fair market value, the hearing officer stated, in
relevant part, as follows:

              The site inspection indicated a property that was in fact unique in
              Brookline, but beyond being a large log structure, did not have any
              quality items in the construction that were much different than in
              most well built houses in the area. The size of the house at over
              6000 sq. ft. above grade and with finish in the basement functions
              on three levels and is clearly an over improvement for the area.

               The lister value of $2,188,512 . . .[,] the most conclusive evidence
              of the market value[,] was [established] by utilizing land sales and
              the Marshall/Swift Cost Manual with applied depreciation. . . .
              [T]he listers testified they relied on the reproduction cost approach
              for an estimate fair market value.



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                 The use of a quality grade of 10 by the BCA to establish a value
               is not supported by any findings of fact on the part of the BCA.
               The BCA actually stated that they denied the appeal under the
               grounds [that taxpayer] did not provide enough evidence of market
               value yet they set an assessed value of $3,509,700 without offering
               any market data to indicate how they arrived at the assessed value.
               Therefore, in conclusion, I find the listers testimony setting market
               and assessed value of the [subject] property at $2,188,500 to be the
               most conclusive . . . as of April 1, 2012.

        We conclude that the matter must be remanded for further consideration because,
although the state hearing officer found no support for the BCA’s use of a quality rating of 10 for
taxpayer’s residence, that rating remained part of the listers’ calculation of assessed value that
was accepted by the hearing officer. The listers’ significant reduction in the assessed value of
the subject property following taxpayer’s grievance was achieved by applying depreciation
factors that had not been previously inserted into the assessment calculation—not by changing
the quality rating of the residence.

        Taxpayer would have this Court insert a quality rating of 4.5—the highest number
applied to other well-constructed residences in the town—in place of the 10 rating given to the
subject property, and then order that his property be assessed based on the ensuing calculation.
We decline to do so. As noted, taxpayer has not demonstrated that the $2,188,512 assessment is
disproportionately high relative to other town properties. On remand, the hearing officer must
address the inconsistency noted above and reconsider his decision. The ultimate goal remains to
assess taxpayer’s property proportionately to other town properties relative to fair market value.
Insofar as the hearing officer’s review of the Town’s assessment is de novo, we agree with
taxpayer that, in determining the fair market value of the subject property, the hearing officer
may consider comparable sales that occurred after the listers initially assessed the property.

        Taxpayer also argues that we should apply any reduced assessment retroactively because
of the conflict of interest that contaminated the proceedings. Taxpayer refers to the Town’s
principal witness before the state hearing officer, who: (1) had done appraisal work in connection
with bank loans that taxpayer received to build his home; (2) had been a town lister involved in
establishing the lister card for the subject property, but was not a town lister in 2012 when
taxpayer grieved his assessment; and (3) provided evidence and presented argument to the BCA
concerning the subject property while a member of the BCA. We conclude that taxpayer has
waived this argument. See Garilli v. Town of Waitsfield, 2008 VT 91, ¶ 7, 184 Vt. 594 (mem.)
(refusing to address town’s constitutional due process arguments because they were not raised in
proceedings before state appraiser). During the second day of the hearing before the state
hearing officer, taxpayer’s attorney began to question the Town’s principal witness regarding his
alleged impartiality at the BCA hearing. When the hearing officer asked the attorney if he was
“raising the issue of a conflict,” the attorney responded “well, no,” but “the first hurdle is to
overcome a presumption of validity. . . . [I]f you’re telling me that that presumption is in the rear
view mirror, then I will certainly move on.” The hearing officer responded that he had already
decided that taxpayer had overcome the presumption of the validity of the Town’s assessment,
and taxpayer’s attorney stated: “Okay.”

       Under these circumstances, taxpayer cannot now claim a conflict of interest on appeal to
this Court. The state hearing officer’s review of the BCA’s decision is de novo, and the hearing
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officer stated that taxpayer had overcome any presumption of validity as to the Town’s
assessment of the subject property. Moreover, we do not agree that this is an extreme case where
de novo review is insufficient because systematic or structural errors undermine confidence in
the proceedings. See In re JLD Properties of St. Albans, LLC, 2011 VT 87, ¶¶ 9-12, 190 Vt. 259
(“In contrast to errors of a ‘structural’ nature, due process violations resulting from an individual
decisionmaker’s personal bias have often been held to be subject to cure on de novo review.”).

       Reversed and remanded.



                                                 BY THE COURT:


                                                 _______________________________________
                                                 Paul L. Reiber, Chief Justice

                                                 _______________________________________
                                                 Marilyn S. Skoglund, Associate Justice

                                                 _______________________________________
                                                 Geoffrey W. Crawford, Associate Justice




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