Williams v. Town of Lyndon
Annotate this Case
Williams v. Town of Lyndon (2003-335); 178 Vt. 507; 872 A.2d 341
2005 VT 27
[Filed 11-Mar-2005]
ENTRY ORDER
2005 VT 27
SUPREME COURT DOCKET NO. 2003-335
NOVEMBER TERM, 2004
Robert Williams and Carol } APPEALED FROM:
Williams, et al. }
}
}
v. } Caledonia Superior Court
}
Town of Lyndon }
} DOCKET NO. 309/327-11-00 Cacv
Trial Judges: Dennis R. Pearson,
Mark J. Keller
In the above-entitled cause, the Clerk will enter:
¶ 1. Plaintiffs, comprised of nineteen separate property owners in
the Town of Lyndon, appeal from a superior court decision affirming their
property tax assessments for the year 2000 based on a reappraisal of
properties located within a specific geographic area of the Town known as
the Broad Street district. Plaintiffs contend: (1) the selective
reassessment violated the Proportional Contribution Clause of the Vermont
Constitution; (2) the trial court erred in failing to make findings
concerning the values of properties outside the district; and (3) the trial
court's finding that several properties were arbitrarily excluded from the
reappraisal requires invalidation of the entire reassessment district. For
the reasons set forth below, we affirm.
¶ 2. The factual and procedural background to this dispute may be
summarized as follows. The Town's last town-wide reappraisal occurred in
1982. Since then, it has re-indexed, or increased the value of all
property, by fifteen percent on two occasions, in 1987 and 1992. Plans for
a new town-wide reappraisal have been frustrated by a lack of sufficient
funds and manpower.
¶ 3. Each year, the Town receives reports from the Tax
Department's Division of Property Valuation indicating the Town's common
level of appraisal, or percentage deviation between the price of properties
sold the previous year and the grand list values assigned to those
properties. The Department also reports the town's coefficient of
dispersion (COD), which measures the degree to which the ratio of listed to
fair market value of individual properties deviates from the median ratio
for the area. When a town's common level of appraisal drops below 80% or
its COD exceeds 20, it is required to conduct a town-wide reappraisal. 32
V.S.A. § 4041a(b).
¶ 4. In 2000, the Town's overall common level of appraisal was
approximately 89%, and its COD was approximately 17, both within the
statutory limits. Data from the past several years revealed, however,
that sales of commercial properties located along a one-mile stretch of
U.S. Route 5 south of Lyndonville village, known locally as Broad Street,
yielded purchase prices vastly in excess of their grand list value. The
common level of appraisal for these properties - approximately 13% - differed
dramatically from that of the Town as a whole. All of the properties in
question are located along a specific stretch of Broad Street between the
Interstate 91 interchange to the south and the second set of railroad
tracks to the north. The trial court found that this area, known as the
Broad Street district, is unique in many respects. Economically, it is an
area in transition, experiencing strip development of large new commercial
establishments. The land is flat and open, suitable for such development,
whereas immediately to the south of the interchange the land becomes more
wooded and hilly, and is residential in character. North of the second
railroad tracks the zoning changes from commercial to residential on the
west side of the street and village commercial on the east. Traffic
patterns reveal three times more traffic traveling north on Route 5 from
the interchange, through the Broad Street area, than traveling south.
Moreover, much of the northbound traffic turns off of Route 5 onto Center
and South streets, just north of the second railroad tracks, to avoid the
downtown traffic. Commercial establishments in the downtown district are
also older and smaller than in the Broad Street area, with more limited
parking space.
¶ 5. Based on this information, the Town determined that
underlying land values for the forty-five commercial properties in the
Broad Street district should be reassessed to closer approximate the
statutory goal of fair market value. See 32 V.S.A. § 3481(1) (defining
appraisal value to mean "the estimated fair market value"). To accomplish
this goal, the Town established a tiered land-valuation system for the
district, starting with a base value of $120,000 per acre for the first two
acres, with adjustments based on factors such as access to Route 5 and
proximity to the I-91 interchange, and $10,000 for each additional acre.
The prior land schedule, which continued to apply to the 115 commercial
properties not within the Broad Street district, was generally $10,000 for
the first acre, with gradual decreases for each additional acre. The Town
applied the reassessment to all properties within the district with
frontage on Route 5 except for three small adjoining lots containing
residences, citing their small size, residential character, and a recent
sale for $35,000 of one of the lots, well below assessed value. The Town
excluded all lots without frontage on Route 5 except for two properties,
the Wayside Furniture Store and the Murphy/Bean property, which were
reassessed based on their close alignment with two other commercial
establishments on Route 5 and their proximity to the interstate.
¶ 6. Plaintiffs, nineteen property owners within the district,
unsuccessfully appealed their 2000 listed values to the Board of Civil
Authority, and thereafter filed this lawsuit challenging the reassessment
in the superior court. Based on a limited set of stipulated facts, the
court initially ruled that the reassessment of properties within a specific
area of the Town did not per se violate the Proportional Contribution
Clause of the Vermont Constitution. Following an evidentiary hearing, the
court issued a second decision, finding that the Broad Street district is
an area distinct from other portions of the Town and that its unique
character showed that the selective reassessment had a rational basis and
was not arbitrary or discriminatory. The court further concluded that the
exclusion of the three small residential lots adjacent to Route 5 was not
rationally supported, and that the exclusion of two other lots without
Route 5 frontage, the Northern Lumber property and a fabric shop, was
unsupported in light of the inclusion of the Wayside and Murphy/Bean lots.
The court invited the parties to submit memoranda addressing the effect of
its finding that certain exclusions from the reassessment were irrational,
and issued a subsequent amended decision concluding that the exclusions
were not so significant as to undermine the rationality of the district as
a whole or to invalidate the reassessment. Plaintiffs' subsequent motion
to alter or amend the judgment was denied. This appeal followed.
¶ 7. Plaintiffs renew their claim, raised and rejected below, that
the selective reassessment of properties within the Broad Street district
violates chapter I, article 9 of the Vermont Constitution, the Proportional
Contribution Clause, Vt. Const. ch. I, art. 9, which requires that each
member of society "contribute the member's proportion towards the expence
of" government. As we have explained, the clause "imposes no greater
restriction on governmental action than the Equal Protection Clause of the
Fourteenth Amendment to the United States Constitution." USGen New
England, Inc. v. Town of Rockingham, 2003 VT 102, ¶15, 176 Vt. 104, 838 A.2d 927. Thus, we have held that "the test of validity of governmental
action under the clause is 'the rational basis test used for federal equal
protection analysis.' " Id. (quoting Alexander v. Town of Barton, 152 Vt.
148, 157, 565 A.2d 1294, 1299 (1989)). Under this test, governmental
action is unconstitutional only if it treats similar persons differently
for arbitrary and capricious reasons. Alexander, 152 Vt. at 157, 565 A.2d
at 1299. The burden of demonstrating unconstitutionality rests upon the
contesting taxpayer. In re Estate of Eddy, 135 Vt. 468, 473, 380 A.2d 530,
534 (1977).
¶ 8. Like the court below, we find that our decision in Alexander
is largely controlling here. The taxpayer challenge there was to a
"rolling reappraisal" method of assessment in which the town would reassess
every two years only that class of property determined by the Tax
Department to have the lowest ratio of listed value to fair market value;
the specific class of property at issue in Alexander was vacation
properties. 152 Vt. at 149-50, 565 A.2d at 1295. The taxpayers argued
that the partial reassessment scheme violated the Proportional Contribution
Clause, but we rejected the claim, concluding that the town's actions had a
rational basis and served a legitimate purpose - "keeping appraisals as
current as possible within the resources available by attacking the worst
underassessment problem areas." Id. at 157-58, 565 A.2d at 1299.
¶ 9. Although here the Town chose to focus on a discrete
geographic area experiencing rapid commercial growth and a concomitant
appreciation in value rather than a discrete class of property, the
principle permitting a town to "attack[] the worst underassessment problem
areas" through selective reassessment applies with equal force. Id.; see
also Riha Farms, Inc. v. County of Sarpy, 322 N.W.2d 797, 801 (Neb. 1982)
(taxing authorities are not "required to reassess all classes of property
at the same time"); Regent Care Ctr., Inc. v. Hackensack City, 828 A.2d 332, 334 (N.J. Super. Ct. App. Div. 2003) (city's reassessment of select
group of commercial properties that had "dramatically increased in value"
under "assessment maintenance program" was not arbitrary or
discriminatory). Plaintiffs assert that Alexander is critically
distinguishable in two respects, but the claim is unpersuasive. First,
plaintiffs note that the reappraisal in Alexander was conducted pursuant to
a "rolling" or cyclical reassessment scheme, suggesting that it was upheld
only because it was part of a larger comprehensive reappraisal effort. Our
decision did not, however, turn on this basis. Indeed, we recognized that
"[w]hile the plan adopted by the Town may never reappraise all property, it
is aimed at the property with the greatest discrepancy between fair market
value and listed value," and we found it reasonable on that basis alone.
152 Vt. at 160, 565 A.2d at 1301.
¶ 10. Second, while plaintiffs concede the "theoretical"
possibility of a discrete geographical reassessment, they argue that the
Broad Street district is not "truly discrete and isolated" from other areas
of the Town for purposes of applying differential tax treatment. The
court's factual findings, however, must be upheld unless clearly erroneous.
Creed v. Clogston, 2004 VT 34, ¶ 18, 15 Vt. L. Wk. 138, 852 A.2d 577.
Plaintiffs have not demonstrated that the court clearly erred in finding
the district to be a distinct geographic and commercial area of strip
development experiencing a dramatic appreciation in property value, with a
resulting ratio of grand list to fair market value of only 13% as compared
to the Town's overall ratio of 89%. Although plaintiffs introduced some
evidence that properties north and south of the district had also
appreciated in value, there was no evidence that sales outside the district
systematically demonstrated the same dramatic level of underassessment, and
the court was not obligated to make findings on the absence of such
evidence. Although there was, as plaintiffs note, evidence that one
half-acre property in the downtown commercial district had sold in 1994 for
$125,000, the evidence also showed, and the court reasonably found, that
the price was unusually high because it was the last open lot in the
village district. We thus discern no basis to disturb the court's findings
and conclusions concerning the distinctive nature of the Broad Street
district or the reasonableness of the district reassessment.
¶ 11. Plaintiffs also contend the trial court erred in failing to
invalidate the reassessment district based on its finding that the Town's
decision to exclude several properties from the reappraisal lacked a
rational basis. The United States Supreme Court has instructed, however,
that "[i]n the area of economics and social welfare, a State does not
violate the Equal Protection Clause merely because the classifications made
by its laws are imperfect." Dandridge v. Williams, 397 U.S. 471, 485
(1970); accord Bd of Ret.v. Murgia, 427 U.S. 307, 316 (1976). Thus, "[e]ven
if the classification involved here is to some extent both underinclusive
and overinclusive, and hence the line drawn . . . [is] imperfect, it is
nevertheless the rule that in a case like this perfection is by no means
required." Vance v. Bradley, 440 U.S. 93, 108 (1979) (quotations omitted).
Applying these principles, it is clear that despite the trial court's
finding that the reassessment was somewhat underinclusive (in that it
excluded certain properties which the court found logically should have
been included), it properly declined to invalidate the overall reassessment
of the Broad Street district on that basis.
Affirmed.
BY THE COURT:
_______________________________________
John A. Dooley, Associate Justice
_______________________________________
Denise R. Johnson, Associate Justice
_______________________________________
Marilyn S. Skoglund, Associate Justice
_______________________________________
Paul L. Reiber, Associate Justice
_______________________________________
Frederic W. Allen, Chief Justice (Ret.),
Specially Assigned
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