Town Attorney Grills Landowner as Tax Hearing Grows Longer

By IAN FEIN

During a tense two and a half days of cross-examination, West
Tisbury resident William W. Graham revealed in a legal hearing last week
that a private real estate appraiser valued one of his property parcels
at a substantially higher price than town assessors.

An appraisal conducted in 2002 for estate tax purposes valued his
50-acre parcel at Mohu off Lambert's Cove Road at approximately
$23 million.

The town assessment that year was $18.8 million. Mr. Graham, who is
challenging his property tax assessments for that and other parcels,
proposed a revised assessment of $7.1 million two weeks ago.

"This property has extensive frontage on the north shore and
James Pond; it had four buildings and was valued by [appraiser Paul]
O'Leary at $23 million," said attorney Ellen Hutchinson, who
is representing the West Tisbury assessors. "An abutting five-acre
property sold for $11 million that year, and you believe your 50-acre
property ought to be valued at $7 million?" she asked.

"Yes," Mr. Graham replied. "I do."

The remarks came during the seventh week of a complex hearing at the
Massachusetts Appellate Tax Board in Boston. Tax board employees said
the Graham case is now the longest residential property tax appeal
hearing in the history of the commonwealth.

In an exchange with the appellate tax board chairman earlier in the
week, Mr. Graham outlined why his proposed assessment may differ from
the real estate appraisal. He is challenging the town assessors'
methods for determining land values and property taxes, Mr. Graham said,
so he wanted to use their system to produce revised assessments that
would be comparable with others in town.

"We're looking at a system that in my mind was at least
substantially broken. So I wanted to find proposals that would, given
what is there, fit with the surrounding properties in West
Tisbury," Mr. Graham testified. "I tried to do the best I
could with the system that's there. I tried to come up with values
that were fair and consistent - if that's possible."

Tax board chairman Anne Foley, who is presiding over the case, asked
Mr. Graham a number of pointed questions: why, for example, had Mr.
Graham failed to provide the board with the private appraisal of his
properties. "Because I'm being judged by a standard
different than everyone else in West Tisbury. If I'm at market
[value], then they're not. And if they are, then I'm
not," Mr. Graham replied.

"I understand that it's unusual [not to provide an
appraisal]; my lawyer told me that. But it was important to me that I
stand or fall on what they [assessors] said fair market value is for
other lots in West Tisbury," Mr. Graham said.

Chairman Foley asked Mr. Graham a series of questions about
subsequent eight-figure sales that occurred in the Paul's Point
area between 1999 and 2000. She asked him three times whether the sales
validated the assessors' methods.

Mr. Graham said they did not. He said he believes the purchasers
overpaid for waterfront property, and referred to another abutting
waterfront lot that has been on the market for more than three years,
and still has not sold.

He said that three of the recent waterfront purchases - a
12-acre parcel for $10.4 million, an eight-acre parcel for $15.25
million and a seven-acre parcel for $11.8 million - are linked to
the family of publishing company heir Dirk Ziff, and therefore are not
representative of the true real estate market.

"I know from published sources that Mr. Ziff and his brothers
are among the richest people in the country and can clearly pay what
they want to pay," Mr. Graham testified. "I don't
pretend I'm not a wealthy man - I am - but it's
a different league."

Ms. Hutchinson asked Mr. Graham whether the former owners were under
any compulsion to sell their property. "Other than a big pot of
money?" Mr. Graham said. "I think if you put a high enough
price on something, somebody might say they were compelled to
sell."

Mr. Graham has testified for seven full days and will return to the
stand on July 26 when the hearing resumes after a two-week recess.

Chairman Foley is also expected at that time to rule on a motion
filed by Ms. Hutchinson to dismiss Mr. Graham's appeals of
property tax assessments for two properties in fiscal year 2003.

Ms. Hutchinson argued that the tax board has no jurisdiction over
those two appeals because of errors on the corresponding abatement
applications. Mr. Graham signed the applications as a trustee of the
blind trust that owned the properties, though it now appears he did not
officially hold such a position.

Mr. Graham testified he did not know why the blind trust was used in
the first place, and that he was acting in good faith when he signed the
abatement applications as a trustee. "I understood that I was for
all intents and purposes the owner of the property, starting with the
negotiation of its purchase," Mr. Graham said. "And
I'm quite sure I didn't give it away."

Mr. Graham's attorneys and Chairman Foley questioned the
timing of the motion, which came halfway through the seventeenth day of
the hearing. Ms. Hutchinson said legal documents related to the trust
were not provided to her during pretrial discovery. She argued the
foundation for her dismissal motion requires questioning Mr. Graham on
the stand.

"Why did you not file a motion to compel?" Chairman
Foley asked.

"This is a huge case, and that was one of the things that fell
through the cracks," Ms. Hutchinson said.

"This is a rather large one to let slide by," Chairman
Foley said. "Respectfully, I think it could have been brought up
the first day of the hearing."

Attorneys on both sides will submit briefs on the motion next week,
and Chairman Foley may ask to hear arguments before making a decision
the following week.

Also pending before the board is a decision whether to admit into
evidence the last will and testament of Mr. Graham's mother, the
late Katharine Graham. Mr. Graham obtained five of his seven adjoining
property parcels from his mother - some through the will, some by
other means.

Mr. Graham and his attorneys argued that the will is not relevant to
the case.

"The prejudice to my client outweighs any benefit to the
town's case," said attorney Richard Wulsin, who is
representing Mr. Graham. "He hasn't disagreed with the
information in any of the documents. There doesn't seem to be a
good reason for admitting it."

Chairman Foley told Ms. Hutchinson that she too did not understand
what the town wanted to show through the will that was not already
reflected in Mr. Graham's testimony. Chairman Foley and Mr. Wulsin
offered a compromise that would admit relevant passages of the will into
the record. But Ms. Hutchinson rejected the offer.

"It was requested by my client [West Tisbury assessors] that
these documents should come in. I believe the entire package is
admissible," Ms. Hutchinson said.

"Well, I don't think you've convinced the board
enough to allow them in," Chairman Foley declared.