DocketNumber: No. CV00-0339372S
Citation Numbers: 2001 Conn. Super. Ct. 3132-ad
Judges: WHITE, JUDGE.
Filed Date: 2/23/2001
Status: Non-Precedential
Modified Date: 4/17/2021
The following facts are undisputed. The plaintiff, Union Carbide Corporation, is the lessee of the property under a sale-leaseback arrangement, finalized in December, 1986, in which the plaintiff sold the property and subsequently leased the property from the purchaser. Under the terms of the lease, the plaintiff is required to pay property taxes assessed by the defendant, the City of Danbury. On October 1, 1999, the defendant revalued and assessed all taxable property located in the city. The plaintiff's property was revalued at $232 million and assessed at 70 percent of the value at $162,490,000.
The defendant hired Leary Counseling and Valuation, Inc. (Leary) to appraise the value of the plaintiff's property. In assessing the property, the defendant adopted the recommended value determined by Leary. Because the property was an income producing property, Leary used an income capitalization approach in its appraisal. Leary determined that the fee simple value range of the property under the income approach was $145 million to $150 million. Leary added a range of $81 million to $87 million, consisting of excess contract rent, to the fee simple value CT Page 3132-ae range.1 Leary used the combination of the fee simple value range and the excess contract rent in determining a property value range of $231 million to $232 million. The assessor of Danbury adopted a value of $232 million for the property, based on Leary's appraisal.
The plaintiff appealed the decision of the assessor to the Danbury Board of Assessment Appeals. The plaintiff claimed that the assessor improperly determined the true value of the property. The value of the property was not reduced by the board of assessment appeals, and the decision of the assessor was upheld. The plaintiff subsequently filed this appeal with the court.
The plaintiff now moves for summary judgment on the ground that the defendant taxed excess contract rent as a part of the property, and as a matter of law, excess contract rent is not properly taxable as real property. The effect of granting the plaintiff's motion would be a reduction of $87 million in the revaluation of the property, due to the removal of the excess contract rent from the value. In its support of its motion, the plaintiff asserts that the sole issue before the court is not whether the defendant correctly determined the excess contract rent, but whether the defendant had a right to value excess rent at all. (Plaintiff's Memorandum, p. 8.)
"Practice Book . . . § 17-49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. . . . In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party. . . . The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact. . . ." (Citations omitted.) Miles v. Foley,
In support of its motion for summary judgment, the plaintiff argues that Leary first determined the value of the property to be $145 million to $150 million, and subsequently added the excess contract rent to the fee simple value. The plaintiff's principal argument is that the defendant does not have the authority under General Statutes §
General Statutes §
"Appraisers distinguish between contract rent and market rent in analyzing income [capitalization]. Market rent is used to value a fee simple estate." Appraisal Institute, The Appraisal of Real Estate (10th Ed. 1992) p. 420.3 According to the plaintiff, Leary, in its income capitalization approach, first determined the fee simple value of the estate using the market rent. (Plaintiff's Memorandum, Exhibit 1, Attachment 1.) Leary then added the capitalized value of the excess rent to the calculated fee simple value. (Plaintiff's Memorandum, Exhibit 1, Attachment 1.) The plaintiff misconstrues the reasoning for the separate calculations of capitalization of the market rent and the excess contract rent. "[D]ue to the higher risk associated with the receipt of excess rent, it is often calculated separately and capitalized at a higher [capitalization] rate." The Appraisal of Real Estate, supra, p. 435.
An assessor is required to consider the actual rental income as well as the market income when appraising a property under the income capitalization approach. General Statutes §
In conclusion, the court finds that as a matter of law the defendant had a right to value the excess contract rent in the valuation of the plaintiff's property. Section
White, J.