West Tisbury Assessors Return to Tax Board
by IAN FEIN
The sense of deja vu was unmistakable at the Massachusetts Appellate Tax Board in Boston this week.
West Tisbury assessors and their attorney were back before the tax board on Tuesday to defend the values they had placed on north shore properties near Paul's Point.
But instead of the previous high-profile appeal filed by resident William W. Graham - who challenged the town's methods in calculating a $51 million assessment for his 235 acres - the case this week centered on a smaller property next to Mr. Graham's that recently changed hands.
After advertising their eight-acre property on the open market for more than four years, Dr. Timothy and Ellen Guiney this summer sold their West Tisbury cottage and home to a neighbor for $7.5 million. The Guineys are challenging their fiscal year 2005 assessments, in which the town valued the property at more than $10 million, and have also filed a subsequent appeal of their 2006 taxes.
"As Your Honor can see, there's a significant difference between the sale price and the assessment," attorney William Carroll, who is Mrs. Guiney's brother, told the tax board chairman on Tuesday. "Our case is straightforward, from our perspective, in that the sale is the best proof of the fair cash value of the property."
But assessors' attorney Ellen Hutchinson questioned whether the sale to a neighbor represented market value, and argued that the transaction was too far from the January 2004 assessment date to determine whether the assessors were right or wrong.
"That sale, as you well know, is two and a half years after the assessment date," Ms. Hutchinson said. "We believe that is too far out in time to be relevant for an estimate of fair market value."
The attorneys did not finish arguments during a full day of testimony on Tuesday, and the hearing was continued until today, when the town is expected to finish its defense.
However long the Guiney case runs, it is unlikely to match the Graham hearing, which, with 36 days of testimony spread out over four months in the summer of 2005, grew to become the longest residential property tax appeal in the history of the commonwealth. The case gripped the town of West Tisbury, attracted attention from state officials and assessors, and also had a lasting impact on the tax board, a quasi-judicial state agency that hears and decides tax appeals. Tax board chairman Anne Foley was forced out by colleagues after presiding over the controversial Graham case, and her replacement, chairman Thomas W. Hammonds Jr., heard the Guiney arguments this week.
The tax board this summer ruled in favor of the assessors in the Graham matter, although the findings of facts that lie behind the decision have yet to be issued. Once that happens, Mr. Graham has vowed to take his case to the Massachusetts Appeals Court. Meanwhile, three days after the tax board issued its decision in the Graham case, the Guiney property next to Mr. Graham sold at a price $2.5 million below its assessed value.
Ostensibly, the Guiney case should have no legal effect on the pending Graham appeal. A Guiney decision is not expected until spring at the earliest, and the tax board is expected to release its findings of fact from the Graham ruling sometime next month. But it was clear on Tuesday that tax board officials and town assessors are aware of the obvious overlap between the two cases, and the possible conflicts that could arise from contradictory decisions.
The facts in the cases are largely the same, and a key question centers on how assessors should compare the Guiney and Graham parcels to other nearby waterfront properties that sold in recent years for eight-figure sums. Town assessors used those prices to justify steep increases in values throughout the Paul's Point area, while attorneys for Mr. Graham and the Guineys argued that the sales are not comparable.
Edgartown appraiser Rita Spence, who town assessors hired as an expert for the Guiney case, testified on Tuesday that the Paul's Point neighborhood was one of the most exclusive on the Vineyard; she appraised the Guiney property accordingly at $8.9 million.
But Island real estate agents Robert and Patti Kendall, who brokered two other Paul's Point sales of more than $11 million each and tried unsuccessfully to sell the Guiney property for more than four years, testified that the Guiney property failed to fetch as much as other properties in the neighborhood because it had less beach frontage and the home was set much further back from the shore.
"The others that sold would be considered unique, triple-A, first-tier waterfront," Mr. Kendall testified on Tuesday. "When you're showing [the other properties to buyers], you get people's mouths to drop open. When you show them [the Guiney house] back here, the reaction is totally different."
Like the Graham case, the Guiney case this week also questioned the market relevance of purchases by three brothers of the Ziff family, who in recent years bought five contiguous parcels around Paul's Point for a collective $56 million. Mr. Kendall testified that one Ziff brother paid more than $1 million above the asking price of a parcel he had brokered. During cross-examination Dr. Guiney also characterized the Ziff purchases as non-comparabale.
"I don't think they had anything to do with the market," said Dr. Guiney, a well-known cardiologist who divides his time between Martha's Vineyard and Massachusetts General Hospitals. "It was a bunch of guys with boatloads of money willing to pay whatever they wanted to pay."
Although the Graham and Guiney appeals both challenge town assessments, the legal arguments in the two cases are entirely different.
The Guiney tax appeal rests on a single factor: the actual sale price of their property.
By contrast Mr. Graham, absent market data, explored the methods and conduct of town assessors and their third-party consultant during the 2002 townwide revaluation. Attorneys for Mr. Graham claimed that assessors undermined the integrity of their valuation system by intentionally manipulating property data, including one change to a waterfront parcel near Paul's Point that tripled other property values in the area.
The Guineys in their case did not probe assessors' methods, but they did point to the dramatic change in property values as a turning point in their land ownership. After the 2002 revaluation, the Guiney assessment more than tripled, from $2.2 million to $7.9 million, and their property taxes more than doubled, from $16,000 to $37,000. By 2005 assessors had raised the value again to $11.2 million, and the corresponding tax bill had climbed to more than $50,000.
Dr. Guiney testified this week that the 2002 revaluation forced them to sell their West Tisbury home because they could no longer transfer the property to their children in a manner where they could afford the taxes. The Guineys placed the north shore property on the open market in February 2002, and in the fall of 2003 bought a home in the Chilmark section of Seven Gates Farm.
Ms. Hutchinson in her cross-examinations this week questioned whether the circumstances of the Guiney sale - namely, that the Guineys were eager to sell the property and that it went to a neighbor - disqualified it from market consideration. She also suggested that the Guineys turned down previous offers closer to $9 million, but Dr. Guiney testified that he received no formal signed offers for the property until May 2006, when he reached an agreement with his purchasing neighbor after an afternoon of negotiations.
Even though the sale took place more than two years after the assessment date, the Guineys argued that the sale represents the best evidence of value because the property was continuously and actively marketed for more than four years with no other serious offers. The property at one point was listed by seven different brokers and was shown in Island publications as well as larger markets such as the New York Times, Wall Street Journal and International Herald Tribune.
Ms. Hutchinson used the advertisements to challenge the credibility of Mr. and Mrs. Kendall, who marketed the property as premier oceanfront but testified that was not top tier. The Kendalls explained that they use advertisements to attract potential customers, and Dr. Guiney in his testimony made light of the alleged contradiction.
"By the way," Dr. Guiney said as an aside to the tax board chairman. "They're not under oath when they write those ads."