Important Property Valuation Legal Developments: 2008-2009 Presented by: Elliott B. Pollack November 11, 2009 © 2009 PULLMAN & COMLEY, LLC

IRS Appraiser Penalties – A New Challenge for the Profession 2006 Pension Protection Act Penalties for substantial or gross over‑valuation Use in connection with a tax return or refund the claim 10% of improper underpayment of tax attributable to appraisal misstatement © 2009 PULLMAN & COMLEY, LLC

Valuation of Residential Community 19 individual residential properties in private vacation community Parking lot, tennis court and lake shoreline owned by home owners' association Homeowners' use and enjoyment easements available exclusively to them No independent market value to common areas © 2009 PULLMAN & COMLEY, LLC

Valuation of Residential Community (continued) Market value had been "effectively transferred to the lot owners" Individual property assessments should reflect value enhancement from exclusive common area easements Breezy Knoll Association, Inc. v. Town of Morris, 286 Conn. 766 (2008) © 2009 PULLMAN & COMLEY, LLC

Assemblage Valuation – Tax Three separate contiguous assessment parcels Is there a reasonable probability that the parcels can be used and developed together for a "prospective integrated use ?” Proper to combine the three parcels to determine their individual values Sakon v. Town of Glastonbury, 111 Conn. App. 242 (2008) © 2009 PULLMAN & COMLEY, LLC

Open Space Assessment Griswold Airport purchased for large scale residential development Existing open space classification No change in use even though zoning changed -- and value increased sharply Open space classification remains until new use is "physically implemented" Griswold Airport, Inc. v. Town of Madison, 298 Conn. 723 (2008) © 2009 PULLMAN & COMLEY, LLC

"Major" Personal Property Appeal Lawyer subleases office space with right to use minimal office equipment No personal property declaration filed Bridgeport assessor completes declaration for him and adds 25% penalty! Assessor's "value" of $11,719 reduced to $60, the depreciated value of the attorney's telephone, printer and fax machine Vaccaro v. City of Bridgeport, Superior Court, Fairfield Judicial District (2008) © 2009 PULLMAN & COMLEY, LLC

Aftermath of Equity Office's Stamford Property Coup 10 parcels Sold for $850 million/deeds recorded August 2, 2007 October 1, 2007 revaluation Two count complaint: overvaluation and "manifestly excessive" valuation City: How could value be "manifestly excessive" if virtually identical to sale price two months earlier? © 2009 PULLMAN & COMLEY, LLC

Aftermath of Equity Office's Stamford Property Coup (continued) Owner: Bulk sale/"values" allocated by parties Is the purchase price, by itself, sufficient to establish the fair market value of the property – especially when Stamford has not indicated how it arrived at its value? Did assessor use incorrect valuation method? Irrelevant! More than just a potential valuation error must be shown by the property owner Definition of "manifestly excessive" © 2009 PULLMAN & COMLEY, LLC

Aftermath of Equity Office's Stamford Property Coup (continued) Should claim be dismissed for this reason before trial? Plaintiff provided no evidence that valuation "was so wide of the mark as to be clearly or obviously excessive" Is use of sale price alone as basis for revaluation illegal? The "84 Century Limited Partnership" statute © 2009 PULLMAN & COMLEY, LLC

Aftermath of Equity Office's Stamford Property Coup (continued) Applies only to mid-cycle changes – not to revaluation years City can conduct sequential revaluations unless some "nefarious" behavior is shown One Stamford Plaza Owner, LLC v. City of Stamford, Stamford Superior Court (2009) © 2009 PULLMAN & COMLEY, LLC

October 1, 2009 Revaluations 22 communities (impact of depressed market conditions on new values?) Few large communities on the list Bloomfield Branford Brooklyn Canterbury Coventry Mansfield Morris New Fairfield Old Lyme Pomfret Somers Sprague Stratford Thompson Tolland Woodbridge © 2009 PULLMAN & COMLEY, LLC

Pilot Program 2009 Public Act 236 Single municipality New classifications: Land exclusive of buildings Buildings and land Different tax rate for the two categories – higher tax rate to apply to land only Approval mechanisms City of New London © 2009 PULLMAN & COMLEY, LLC

Changes in Assessment Law Boards of Assessment Appeals may now refuse to hear appeals of any property with assessment of $1+million – formerly $500,000 Income and expense reports may be demanded by assessors for any rental property whether or not community is conducting a revaluation Definition of rental property? Right to audit © 2009 PULLMAN & COMLEY, LLC

Bridgeport Hartford Stamford White Plains Elliott B. Pollack, Esq. Pullman & Comley, LLC 90 State House Square Hartford, Connecticut 06103 (860) 424-4340 ebpollack@pullcom.com Bridgeport Hartford Stamford White Plains www.pullcom.com © 2009 PULLMAN & COMLEY, LLC