Happy ending (for town) in tax dispute with SNET

NORTH CANAAN — The town has won a lawsuit involving a tax assessment appeal in a case that upheld the way North Canaan assigns value to properties.

Had Southern New England Telephone Co. (SNET) succeeded in getting a reduction in the assessed value of its Main Street building, which houses switching equipment, its tax bill from the 2007 grand list could have been reduced by thousands of dollars, retroactive to that year.

The loss would have had a significant impact on the town’s revenues.

Beyond the fiscal implications, the case also serves to show how difficult and subjective property valuations can be, and offers a behind-the scenes glimpse of what goes on in a town assessor’s office.

North Canaan Assessor Tony Barber said there is almost always at least one pending lawsuit. The town averages one to two per year. The cases take months to resolve.

North Canaan is not unusual in the number of lawsuits it faces. And property owners, especially large businesses, are using tax appeals more often now as a means of saving money in a tough economy.

In assessing taxable property, the goal is to achieve as much equity as possible, despite all the variables that can make valuation subjective. Assessments are based on market value. That value is calculated based on  what comparable properties have sold for recently. It is also adjusted for things such as condition, location and zoning.

It is not always clear cut, as in the case of what is now the AT&T building on Main Street. Built in 1950, the only change since that time has been a conversion from mechanical to digital switches.

It is a sturdy building made of concrete block with steel support beams and a brick exterior. Although its use is probably best described as industrial, it is an unobtrusive presence, a stately two-story building with mullioned windows. It blends in with the white clapboard public library next door and with surrounding professional-service buildings.

Cases of disputed assessments often begin with an informal discussion with the assessor. An application to the local Board of Assessment Appeals may follow. If the appeal is denied, the next step is to go to Superior Court, where a judge decides after a review of the case.

Among the information provided to Judge John Pickard were appraisals done for the town and SNET. Appraisers used several different approaches, each weighted for relevance, using the average as the final number.

The town’s appraiser, Bruce Hunter, came up with a market value for the building as of Oct. 1, 2007, of $800,000.

The SNET appraiser, Arnold Grant, calculated the value at $340,000.

The market value on record for tax purposes is $576,240. Taxes are paid on 70 percent of that — in this case, $8,470 per year. The tax total is based on the town’s mill rate.

In his decision, Pickard summed up Grant’s numerous approaches to validating his reasons for a huge appraisal reduction.

From “excessive functional obsolescence� to comparisons to other industrial buildings that have sold in other parts of the states, Pickard described himself as “unconvinced.� While the current use was deemed its “highest and best use,� Pickard said Grant’s underlying error was in comparing the unique building to typical industrial buildings.

The case was dismissed based on SNET’s failure to prove an excessive valuation.

“Towns do fight to protect the taxpayers,� Barber said. “That’s what it’s all about. It’s the taxpayers’ money.�