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.