Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Wheelabrator Bridgeport, L.P. v. City of Bridgeport

Supreme Court of Connecticut

February 2, 2016

WHEELABRATOR BRIDGEPORT, L.P.
v.
CITY OF BRIDGEPORT. WHEELABRATOR BRIDGEPORT, L.P., ET AL.
v.
CITY OF BRIDGEPORT

         Argued September 17, 2015

          John B. Daukas, pro hac vice, with whom were Barry C. Hawkins and Michael K. Murray, for the appellants-appellees (plaintiffs).

         Elliott B. Pollack, with whom was Tiffany K. Spinella, for the appellee-appellant (defendant).

          OPINION

          [320 Conn. 336] ZARELLA, J.

          The named plaintiff, Wheelabrator Bridgeport, L.P. (Wheelabrator), operates a waste to energy facility (facility) located on property in the city of Bridgeport (property).[1] In 2009, Wheelabrator appealed from the tax assessment of the defendant, the city of Bridgeport (city), pursuant to General Statutes § § 12-117a, [320 Conn. 337] 12-119 and 22a-270, claiming that the city had overvalued the property, as well as personal property located on the property, on the city's 2007 and 2008 grand lists for purposes of assessing property taxes. In 2011, Wheelabrator, the United States Bank National Association, as corporate owner trustee of the facility, James E. Mogavero, as individual owner trustee of the facility, and Waste To Energy I, LLC (Waste To Energy),[2] as equitable owner of the facility, filed a second appeal from the city's tax assessment, alleging that the city had overvalued the property on the 2010 grand list. Thereafter, the two appeals were consolidated for purposes of trial. The city moved to dismiss both appeals for lack of standing, and the trial court granted the motion to dismiss the first appeal but denied the motion to dismiss the second appeal. The trial court then rendered partial judgment in favor of Wheelabrator in the second appeal and reduced the valuation of the property on the 2010 grand list. Wheelabrator filed the present appeal[3] from the judgments of the trial court, claiming, among other things, that the trial court improperly (1) granted the city's motion to dismiss the first appeal, (2) improperly valued the property in the second appeal, and (3) failed to consider evidence of the city's wrongful conduct in the second appeal. The city cross appealed, claiming that, in the second appeal, the trial court improperly (1) denied its motion to dismiss, (2) admitted the appraisal testimony of Wheelabrator's two expert witnesses, and (3) excluded developer's profit from its valuation of the property based on the cost to [320 Conn. 338] construct the facility. We conclude that the trial court improperly dismissed the first appeal. We also agree with Wheelabrator's two claims regarding the second appeal and reject the city's claims on cross appeal. Accordingly, we reverse the judgment of the trial court dismissing the first appeal, reverse the trial court's valuation of the property in the second appeal, and remand for further proceedings in the first appeal and a new trial in the second appeal.

         The record reveals the following procedural history and facts, some of which were found by the trial court and some of which are undisputed. The facility was built in the 1980s as a collaboration between the Connecticut Resources Recovery Authority (CRRA) and Wheelabrator. The facility burns municipal solid waste to generate electricity, which Wheelabrator sells to United Illuminating Company. In addition to income derived from the sale of electricity, Wheelabrator receives tipping fees from municipalities in exchange for receiving municipal solid waste.

         In order to take advantage of certain tax and bond opportunities that would not have been available if the facility had been owned by a private entity, CRRA took nominal title to the facility and leased it back to Wheelabrator. Pursuant to § 22a-270 (a),[4] the property was [320 Conn. 339] exempt from municipal property taxes until January 1, 2009. The property became taxable on that date pursuant to § 22a-270 (b). On the city's 2007 grand list, the city listed the fair market value of the property as $365,624,993 and the value of Wheelabrator's personal property as $17,253,570. These amounts reflected the value of the real and personal property as of October 1, 2003, the date of the last citywide property valuation.

         The city conducted a citywide revaluation on October 1, 2008. As the result of this revaluation, the city listed [320 Conn. 340] the value of the property on the 2008 grand list as $401,624,570 and the value of Wheelabrator's personal property as $10,559,534. Wheelabrator appealed from the 2007 and 2008 valuations to the Board of Assessment Appeals of the City of Bridgeport (board), claiming that the valuations were excessive.[5] The board denied the appeal. Wheelabrator then appealed from this denial to the trial court pursuant to § § 12-117a,[6] 12-119[7] [320 Conn. 341] and 22a-270 (b). In its complaint, Wheelabrator alleged that, as of December 31, 2008, Waste To Energy was the owner of the property and that Wheelabrator was a lessee that was responsible for paying all property taxes.

         Thereafter, the city filed a motion to dismiss the appeal for lack of subject matter jurisdiction on the ground that Wheelabrator lacked standing. Specifically, the city contended, among other things, that Wheelabrator had alleged that Waste To Energy was the owner of the property that Wheelabrator leased when, in fact, CRRA was the owner of the land. Accordingly, the city argued, Wheelabrator " does not have a legally cognizable interest in the subject property from Waste [To Energy]" for purposes of § § 12-117a and 12-119. See General Statutes § 12-117a (" any lessee of real property whose lease has been recorded as provided in section 47-19 and who is bound under the terms of his lease [320 Conn. 342] to pay real property taxes" has right to appeal from board's ruling); General Statutes § 12-119 (" any lessee [of the property] whose lease has been recorded as provided in section 47-19 and who is bound under the terms of his lease to pay real property taxes" has right to appeal from board's ruling). In addition, the city claimed that Wheelabrator lacked standing because a lessee of personal property cannot file an appeal pursuant to § § 12-117a and 12-119. Wheelabrator filed an opposition to the motion, in which it claimed that, as of January 3, 2009, CRRA held record title to the land on which the facility was located, CRRA leased the land to Wheelabrator, which subleased it to the United States Bank National Association and Mogavero, the owner trustees, who, in turn, subleased it back to Wheelabrator. In addition, Wheelabrator alleged that the United States Bank National Association and Mogavero, as owner trustees, had record title to the facility and, on behalf of Waste To Energy, which was the trust beneficiary and equitable owner of the facility, leased the facility to Wheelabrator. Wheelabrator also claimed that its standing to appeal pursuant to § 22a-270 did not depend in any way on the nature of Waste To Energy's interest in the land. Rather, that statute was intended to allow lessees such as Wheelabrator to appeal from the city's tax assessments. Finally, Wheelabrator contended that it had standing under § § 12-117a and 12-119 because it was a lessee of real property whose lease had been recorded in the land records and who was required to pay property taxes, and the statutes were not limited to appeals from real property assessments. The trial court concluded that the issue of Wheelabrator's standing involved factual questions that would be better addressed at the time of trial and denied the city's motion to dismiss.

         On its 2010 grand list, the city again listed the value of the real property as $401,624,570, but it reassessed [320 Conn. 343] the value of Wheelabrator's personal property at $56,873,060. Wheelabrator appealed from this valuation to the board. At a hearing in this second appeal, the chairman of the board asked Wheelabrator if it had an appraisal report for the property. Wheelabrator had prepared a draft appraisal report for use in the first appeal, but, because the report was not yet subject to disclosure in that litigation under the trial court's discovery schedule, and because Wheelabrator believed that the report was privileged and confidential attorney work product, Wheelabrator declined to produce it. The board ultimately denied the second appeal, and Wheelabrator appealed from the board's denial to the trial court pursuant to § § 12-117a, 12-119 and 22a-270 (b). The trial court consolidated the two appeals for trial.

         At the trial of the consolidated appeals, the city contended that the second appeal should be dismissed for lack of standing because (1) Wheelabrator failed to establish either that CRRA owned the land and that Wheelabrator was its lessee or that the United States Bank National Association and Mogavero, the owner trustees, owned the facility and that Wheelabrator was their lessee, (2) a lessee of personal property is not authorized to appeal pursuant to § § 12-117a and 12-119, and (3) Wheelabrator failed to exhaust its administrative remedies because it had refused to provide the draft appraisal report to the board at the hearing on the assessment relating to the 2010 grand list. After trial, the trial court granted the city's motion to dismiss the first appeal on the ground that CRRA, not Waste To Energy, was the owner of the property, and, therefore, Wheelabrator's complaint, " alleging that [Waste To Energy] was the owner and lessor of the subject property, failed to comply with § § 12-117a and 12-119 [which allow] only an owner of property or a lessee of the owner who has agreed to pay the property tax and [320 Conn. 344] whose lease or notice of lease has been recorded [in] the city's land records to appeal from an assessor's valuation." [8] The court further concluded that § 22a-270 did not provide " an alternative path for taking a tax appeal in order to avoid the restrictions contained in § § 12-117a and 12-119" because § 22a-270 " requires the lessee to comply with chapter 203 of the General Statutes . . . which incorporates § § 12-117a and 12-119 . . . ." The court implicitly denied the city's motion to dismiss the second appeal.[9]

         Turning to Wheelabrator's claim in the second appeal that the city had overvalued the property on the 2010 grand list, the trial court concluded that the proper appraisal method was the reproduction cost approach. The court further concluded that, under that approach, the value of the property for purposes of the 2010 grand list and subsequent years was $314,017,430. In addition, the court found that Wheelabrator had presented no evidence that the city had improperly valued Wheelabrator's [320 Conn. 345] personal property at $56,873,060 on the 2010 grand list. The court also noted that " the value of the facility under the cost approach does not include personal property since the cost valuation is not based [on] the valuation of a going concern." Thus, the trial court concluded that the city could impose a separate tax on the personal property. This appeal and cross appeal followed. We address each of the parties' claims in turn. Additional facts and procedural history will be set forth as necessary.

         I

         We first address Wheelabrator's claim that the trial court improperly granted the city's motion to dismiss the first appeal. We agree with Wheelabrator.

         The following facts and procedural history are relevant to our resolution of this issue. As we indicated, the trial court concluded that Wheelabrator lacked standing to bring the first appeal because it alleged in its complaint that Waste To Energy owned the property as of December 31, 2008, and Wheelabrator was its lessee with responsibility to pay all property taxes when, in fact, CRRA was the owner of the land. Accordingly, the trial court concluded that Wheelabrator lacked standing to appeal pursuant to § § 12-117a and 12-119 because it had failed to plead or to establish that the requirements of those statutes relating to lessees of property had been met. The court further concluded that § 22a-270 (b) did not provide an independent route for Wheelabrator to establish standing because that statute required Wheelabrator to comply with chapter 203 of the General Statutes, including the requirements of § § 12-117a and 12-119 relating to lessees. Wheelabrator contends, to the contrary, that § 22a-270 (b), standing alone, confers standing on it to appeal from the city's tax assessment. In addition, Wheelabrator contends that, because it was CRRA's lessee, because [320 Conn. 346] its leases with CRRA were recorded in the land records, and because it was required under the terms of its leases to pay all property taxes, it had independent standing to appeal pursuant to § § 12-117a and 12-119.

         We begin our analysis with the standard of review. " If a party is found to lack standing, the court is without subject matter jurisdiction to determine the cause. . . . A determination regarding a trial court's subject matter jurisdiction is a question of law. When . . . the trial court draws conclusions of law, our review is plenary and we must decide whether its conclusions are legally and logically correct and find support in the facts that appear in the record." (Internal quotation marks omitted.) Burton v. Dominion Nuclear Connecticut, Inc., 300 Conn. 542, 550, 23 A.3d 1176 (2011).

         Because it is dispositive, we first address Wheelabrator's claim that it had standing to appeal pursuant to § 22a-270 (b). That statute provides in relevant part: " Notwithstanding the provisions of subsection (a) of this section, real and personal property owned by the authority may be assessed and taxed against a lessee pursuant to chapter 203 by the municipality in which such property is located if such property is leased as of July 1, 2007, to a lessee or operator by the authority pursuant to an initial site lease entered into between the authority and a lessee on or before December 31, 1985. . . . The lessee shall be liable for taxes assessed pursuant to this subsection and shall have the right to appeal the amount it is assessed in the tax year such property first becomes taxable hereunder in the same manner as a purchaser of formerly tax-exempt property under section 12-81a,[10] with the same effect as if a conveyance to a nonexempt purchaser had been placed on the land records on the date the property first ceases [320 Conn. 347] to be exempt pursuant to this section. . . ." (Footnote added.) General Statutes § 22a-270 (b).

         We conclude that this language clearly and unambiguously confers standing on Wheelabrator to appeal from a property tax assessment. First, the city does not dispute that Wheelabrator is a " lessee" as that term is used in § 22a-270 (b). Rather, the city's primary argument is that, contrary to the allegation in Wheelabrator's complaint in the first appeal, Waste To Energy never was the record title holder or record lessor of the property. Nothing in the language of § 22a-270 (b), however, suggests that an entity that indisputably is a " lessee" under the statute cannot appeal from a tax assessment unless it pleads and establishes the identity of the lessor of the property. To the contrary, the statute provides that a " lessee" has a right to appeal " in the same manner as a purchaser of formerly tax-exempt property under section 12-81a, with the same effect as if a conveyance to a nonexempt purchaser had been placed on the land records on the date the property first ceases to be exempt pursuant to this section." General Statutes § 22a-270 (b). Thus, for purposes of an appeal pursuant to § 22a-270 (b), a lessee is deemed to be the owner of the subject property, and property owners clearly have standing to appeal from property tax assessments. Accordingly, we cannot perceive why an entity that is admitted to be a lessee for purposes of § 22a-270 (b) should be required to plead or prove any additional element to establish standing to appeal from a property tax assessment pursuant to that statute.[11]

          [320 Conn. 348] We also reject the city's claim that a lessee of personal property does not have standing to appeal from the tax assessment of that property pursuant to § 22a-270 (b). Section 22a-270 (b) expressly provides that " real and personal property owned by the authority may be assessed and taxed against a lessee" and that the lessee " shall have the right to appeal the amount it is assessed . . . in the same manner as a purchaser of formerly tax-exempt property under section 12-81a . . . ." [12] Thus, for purposes of an appeal from a tax assessment on personal property pursuant to § 22a-270 (b), the lessee of the property is deemed to be its owner. Accordingly, we conclude that Wheelabrator had standing to bring the first appeal pursuant to § 22a-270 (b), and, therefore, the trial court improperly granted the city's motion to dismiss that appeal.[13]

         II

         We next address Wheelabrator's claim that the trial court improperly determined the value of the property in the second appeal. Specifically, Wheelabrator contends that the trial court improperly rejected the discounted cash flow approach to valuing the property as a matter of law. We agree with Wheelabrator.

         The record reveals the following additional facts and procedural history that are relevant to our resolution [320 Conn. 349] of this claim. At trial, one of Wheelabrator's expert witnesses, Alexander L. Hazen, testified that there are three primary methods of appraising property, namely, " the cost approach, [the] income approach, and [the] sales comparison approach, also known as the market data approach." When asked what was the most appropriate approach for waste energy facilities, Hazen responded that " [t]he primary reliance would be on the income approach to value." Hazen explained that a purchaser's " willingness to pay more or less for a facility is going to be based on the income flow that he anticipates into the future." Hazen also explained that, in applying the income approach to the appraisal of the property at issue in the present case, he had reviewed Wheelabrator's financial information and had projected income streams from sales of electricity and tipping fees for the useful life of the facility. Hazen then converted the value of that future income stream to present value to arrive at the value of the facility, a methodology that is known as the discounted cash flow approach. Hazen concluded that, under this approach, the fair market value of the property as of October 1, 2008, was $199,300,000.

         Although Hazen and Joseph Kettell, another expert who testified for Wheelabrator, believed that the discounted cash flow approach was the best approach for appraising the property, they also made calculations pursuant to the replacement cost approach. Hazen testified that they applied this approach " as a check against other approaches to make sure that you're not way off in left field someplace." Hazen and Kettell opined that the replacement cost of the facility as of the revaluation date of October 1, 2008, was $211,300,000. Reconciling this value with the $199,300,000 value based on the discounted cash flow approach, Wheelabrator's experts ultimately concluded that, as of October 1, 2008, the fair market value of the property was $201,700,000. [320 Conn. 350] Excluding tax exempt pollution control equipment valued at $10,857,310, the taxable value was $190,842,690.

         The city's expert witness, Mark Pomykacz, also testified that he had relied primarily on the income approach to appraising the property and that he had relied on the cost approach only " [i]n a secondary fashion." Pomykacz testified on cross-examination that he had relied primarily on the income approach because that " is the method that the market participants put the most weight on." Similarly, in his written opinion, he stated that " in a deregulated market, the income approach should be utilized and given the greatest weight among the three approaches to value for electric generation facilities," and that " the income approach provides the strongest indication of market value for the [f]acility, as of the valuation dates." He explained that there are two main income approaches, namely, direct capitalization[14] and the discounted cash flow analysis, and that he had used both of them to determine the value of the property. Pomykacz concluded that, as of October 1, 2008, the value of the property under the direct capitalization approach was $398,456,411 and its value under the discounted cash flow approach was $376,184,993, rounded down to $376,180,000.

         Pomykacz also testified, however, that the cost approach to property appraisal is " especially informative" for special purpose properties and highly engineered facilities, such as the subject property. He testified that there are two distinct cost approaches, namely, the replacement cost approach and the reproduction [320 Conn. 351] cost approach.[15] He further testified that he had been able to find market data that allowed him to apply both cost approaches to the subject property " meaningfully and reliably" but that " these conclusions were given less weight than the income approach conclusions." Pomykacz concluded that, as of October 1, 2008, the value of the property under the reproduction cost approach was $362,027,000 and the value under the replacement cost approach was $402,753,000. After reconciling the various approaches, giving special weight to the discounted cash flow approach and subtracting the value of exempt pollution control equipment and nontaxable and tax exempt property, Pomykacz ultimately concluded that the taxable value of the property as of October 1, 2008, was $357,500,000.

         The trial court ultimately concluded that " the reproduction cost approach is the only credible approach to use in this case in order to arrive at a [fair market value] of the subject property as of October 1, 2008." Although the court acknowledged that both Wheelabrator's experts and Pomykacz had testified that the discounted cash flow approach was an appropriate method to value the property, the court concluded that this approach " lack[ed] credibility" because, among other reasons, (1) " if the [discounted cash flow]/going concern income approach[16] process were credible, then two experienced [320 Conn. 352] and knowledgable appraisers who are given the same basic facts and who use the same income approach would not be over $200,000,000 apart in their valuation of the subject property" ; [17] (footnote added); (2) " [t]he appraisers employed the going concern approach rather than directly valuing the real and personal property [that] are the subject of the [two] appeals," [18] and (3) the appraisers' respective valuations of the nontaxable intangible assets were far apart.[19] In [320 Conn. 353] addition, the trial court took note of the court's observation in Tamburelli Properties Assn. v. Cresskill, 15 N.J.Tax. 629 (1996), aff'd, 308 N.J.Super. 326, 705 A.2d 1270 (App. Div. 1998), that " the courts have not always discussed the discounted cash flow analysis . . . as a method for arriving at true market value for real estate in the most positive terms. . . . The [discounted cash flow] method, as applied to tax valuation proceedings, is an amalgam of interdependent, attenuated assumptions of limited probative value. Whatever may be its utility in other contexts, its use in [this context] can only be described as an exercise in financial haruspication." [20] (Internal quotation marks omitted.) Id., 643.

         After rejecting the other valuation approaches for various reasons,[21] the trial court concluded that " [t]he reproduction cost approach has credibility for purposes of valuing the subject." The trial court then used Pomykacz' historical cost figure of $241,949,000, which excluded developer's profit of 15 percent that Pomykacz had included in his calculations, multiplied this figure by Pomykacz' " trend factor" of 2.08 percent, and applied Pomykacz' 38 percent depreciation factor to arrive at a value of $312,017,430. Because the reproduction cost approach did not include the value of the land, the court then added the stipulated land value of $2,000,000, for a total taxable value of $314,017,430 as of [320 Conn. 354] October 1, 2008.[22] Accordingly, the trial court concluded that, to the extent that the second appeal challenged the city's valuation of the real property on the 2010 grand list as $401,624,570, the appeal was sustained. Because Wheelabrator had presented no credible evidence that the city had improperly determined that the value of its personal property was $56,873,060, however, the trial court denied Wheelabrator's appeal from that valuation. The court rendered judgment in the second appeal for Wheelabrator accordingly.

         After Wheelabrator filed the present appeal from the judgments of the trial court, this court ordered the trial court to articulate whether it had rejected the discounted cash flow approach as a method for valuing the subject property as a matter of law, or because it found the testimony of the parties' experts not credible with respect to that approach. The trial court stated that it " did not reject the [discounted cash flow] approach as a method for valuing the subject property as a matter of law" but had " rejected the testimony of the parties' experts because it found this testimony not to be credible with respect to this approach."

         Wheelabrator claims on appeal that, notwithstanding the trial court's contention to the contrary in its articulation, the court improperly rejected the discounted cash flow approach to valuing the property as a matter of law. We agree.

         Resolving the issue of whether the trial court improperly rejected the discounted cash flow approach to valuing the property as a matter of law requires us to answer two questions. First, we must determine whether the trial court, in fact, rejected the approach as a matter of law. See, e.g., Redding Life Care, LLC v. Redding, 308 Conn. 87, 102, 61 A.3d 461 (2013) (" the starting [320 Conn. 355] point in any tax appeal taken from the Superior Court . . . is a determination as to whether the trial court reached its decision through [1] the exercise of its discretion in crediting evidence and expert witness testimony, or [2] as a matter of law" ). Second, if we conclude that the trial court reached its determination as a matter of law, we must decide whether that determination was proper. The first question requires us to interpret the judgment of the trial court, which, itself, is a question of law. See Ottiano v. Shetucket Plumbing Supply Co., 61 Conn.App. 648, 651-52, 767 A.2d 128 (2001). " As an issue of law, [t]he interpretation of a judgment may involve the circumstances surrounding the making of the judgment. . . . The determinative factor is the intention of the court as gathered from all parts of the judgment . . . . Effect must be given to that which is clearly implied as well as to that which is expressed. . . . The construction of a judgment is a question of law for the court. . . . As a general rule, judgments are to be construed in the same fashion as other written instruments. . . . The determinative factor is the intention of the court as gathered from all parts of the judgment. . . . The judgment should admit of a consistent construction as a whole. . . . To determine the meaning of a judgment, we must ascertain the intent of the court from the language used and, if necessary, the surrounding circumstances." (Citations omitted; internal quotation marks omitted.) Id., 652.

         We conclude for the following reasons that the trial court rejected the discounted cash flow approach[23] to [320 Conn. 356] the valuation of the property as a matter of law. First, the court strongly suggested that it believed that problems with the use of the approach itself, rather than flaws in the experts' specific calculations, were responsible for the disparate valuations. Indeed, the court characterized both Kettell and Pomykacz as " two experienced and knowledgeable appraisers . . . ." Second, and more to the point, the court's statement that the appraisers had employed a " going concern approach rather than directly valuing the real and personal property" clearly suggests that the court believed that a going concern approach, which the court believed was synonymous with a discounted cash flow approach, was inherently improper and fundamentally incompatible with a property valuation for tax assessment purposes, at least for a property, such as a waste to energy facility, that had no rental market. See footnote 18 of this opinion. Third, the court noted with approval another court's disparagement of the discounted cash flow method as haruspication. See text accompanying footnote 20 of this opinion. Fourth, the trial court never explained why it concluded that the testimony of both Kettell and Pomykacz that the discounted cash flow approach was the best approach to the property valuation at issue in the present case was not credible. In other words, the court never explained what it was about the property that led the court to conclude that it was particularly unsuited to valuation under the discounted cash flow approach, despite the testimony by the parties' expert witnesses that it was the most appropriate method for valuing this property.[24] Cf. Redding Life Care, LLC v. [320 Conn. 357] Redding, supra, 308 Conn. 103 (concluding that trial court had not rejected going concern approach as method for valuation as matter of law when " the trial court's disagreement with the plaintiff's valuation turned on the flaws in [the appraiser's] calculations and formula, not on the method itself" ). In the absence of any such explanation, we can conclude only that the court determined that the approach was inappropriate in the present case because it believed that it is generally an inappropriate method for valuing property for tax assessment purposes, at least when the property does not have a rental market. Finally, it is significant that, during trial, the trial court had expressed doubts about the general propriety of employing the discounted cash flow approach to valuing property for property tax assessment purposes. See footnote 18 of this opinion. The court's reference at that time to the pending appeal from its decision in Redding Life Care, LLC, supports the conclusion that the court was not concerned with specific flaws in the appraisers' calculations but with the method itself.[25]

          [320 Conn. 358] We are mindful that the trial court stated in its articulation that it had found the testimony of the parties' experts " not to be credible with respect to this approach." It is clear to us, however, that the trial court rejected the credibility of their testimony that the discounted cash flow approach was a proper method for valuing the property for tax assessment purposes, not that it had rejected the credibility of their actual calculations pursuant to that approach. To be sure, the trial court in its memorandum of decision did criticize several of Kettell's specific calculations. For the reasons that we have explained, however, we cannot conclude that those perceived flaws formed the basis of the trial court's rejection of the discounted cash flow approach. Indeed, although the trial court found that some of Pomykacz' calculations under the reproduction cost approach lacked credibility, the court ultimately based its valuation on that approach. We conclude, therefore, that the trial court rejected the discounted cash flow approach to valuation for property tax assessment purposes--at least as applied to properties that do not have a rental market--as a matter of law.[26]

          [320 Conn. 360] We next consider whether this determination was proper. " [W]hen a tax appeal . . . raises a claim that challenges the propriety of a particular appraisal method in light of a generally applicable rule of law, our review of the trial court's determination whether to apply the rule is plenary." (Internal quotation marks omitted.) Redding Life Care, LLC v. Redding, supra, 308 Conn. 101.

         In Redding Life Care, LLC, we concluded that " [t]here may be cases in which it is proper to value real estate by first valuing the going concern associated with the property, based on an income capitalization approach, and other cases in which it is not." Id., 96 n.9. Although we did not directly address the issues of whether the specific discounted cash flow approach to valuing a going concern could be employed for property tax assessment purposes in an appropriate case or whether the general income approach may be employed to appraise property that does not have a rental market, we can perceive no reason why those approaches should be categorically barred. Indeed, in the present case, expert witnesses for both sides, whom the trial court characterized as " experienced and knowledgeable," testified that the income approach, and, more specifically, the discounted cash flow approach, was the best method for valuing the property, because that is the method that market participants would use to determine the price that they would pay for the property. We conclude, therefore, that the trial court improperly rejected the discounted cash flow approach to valuing the property for tax assessment purposes as a matter of law.

         Wheelabrator contends that, if we find that the trial court improperly rejected the discounted cash flow approach to the valuation of the property for tax assessment purposes as a matter of law, this court should [320 Conn. 361] adopt the value that Wheelabrator's expert witnesses placed on the property, or, alternatively, we should remand the case to the trial court and direct that court to apply the discounted cash flow approach to the valuation of the property. We conclude that neither of these remedies is appropriate. Specifically, we cannot adopt the valuation of Wheelabrator's experts because doing so would require us to find facts and make credibility determinations, which are not within the province of an appellate court. Similarly, because we have concluded only that the trial court improperly determined that the discounted cash flow approach cannot be employed in the present case as a matter of law, not that it must be employed as a matter of law, it would be inappropriate for us to direct the trial court to apply the discounted cash flow approach on remand.[27] Accordingly, we conclude that the case must be remanded to the trial court for a new trial at which the court may exercise its discretion to determine the credibility of the expert witnesses regarding the appropriate valuation method, as well as the credibility of their specific calculations. We note, however, that the city does not challenge on appeal the trial court's determination that the property was overvalued on the 2010 grand list. See Sibley v. Middlefield, 143 Conn. 100, 105, 120 A.2d 77 (1956) (" The court performs a double function on an appeal from a board of tax review. First, it must determine the judicial question [of] whether the appellant has been aggrieved by such action on the part of the board as will result in the payment of an unjust and, therefore, a practically illegal tax. [Second], if that question is answered in the affirmative, the court must proceed to exercise its broad discretionary power to grant relief." ). [320 Conn. 362] Accordingly, although we conclude that the trial court improperly valued the property, to the extent that the trial court concluded that Wheelabrator was subjected to an unlawful tax as a result of the valuation on the 2010 grand list, we uphold that conclusion and affirm that portion of the judgment of the trial court in the second appeal.

         III

         We next address Wheelabrator's claim that the trial court's valuation of the real and personal property on appeal effectively permitted the city to impose a double tax on the value of the personal property.[28] Specifically, Wheelabrator contends that the trial court incorrectly determined that Pomykacz' appraisal pursuant to the reproduction cost approach--on which the trial court had based its valuation--did not include the value of the personal property and, therefore, that the city could impose a separate tax on the assessed value of the personal property. We conclude that, in light of our remand for a new trial, there is no need for this court to decide whether the trial court's valuation based on Pomykacz' appraisal included the personal property, but the trial court on remand must determine whether the experts' appraisals of the property include the value of the personal property and allocate the taxes on the real and personal property accordingly.

         The following facts and procedural history are relevant to our resolution of this claim. At trial, Wheelabrator contended that, because the personal property and the real property were subject to the same tax rate, it could combine the two types of property into a single asset for appraisal purposes. It further contended that, if the court disagreed with this contention, the court [320 Conn. 363] could subtract its experts' valuation of the personal property at $54,546,583 from the total combined value of $201,700,000 to reach a real property value of $147,153,417.

         Pomykacz testified that he believed that the total value of Wheelabrator's taxable property as of October 1, 2008, was $357,500,000 and that he was not asked to value the real and personal property separately. In addition, he stated in his written report that " [t]he overall value . . . considering the three general appraisal approaches [i.e., the cost approach, income approach and comparable sales approach] includes real property, personal property, intangibles, and taxable and nontaxable property." Although it appears that Pomykacz deducted the value of working capital and business intangibles from the overall value to determine the total taxable value of the property in his written report, it does not appear that he deducted the value of personal property.

         The trial court concluded that Pomykacz' valuation pursuant to the reproduction cost approach did not include the value of personal property because " the cost valuation is not based [on] the valuation of a going concern." The court further concluded that Wheelabrator had not presented any evidence that would undermine the city's valuation of the personal property at $56,873,060 on the 2010 grand list. Accordingly, the court concluded that the city could impose a separate tax on the personal property based on that value and rejected Wheelabrator's appeal from that valuation.

         Whether the city's valuation of the real property on the 2010 grand list included the value of the personal property is a question of fact subject to review for clear error. See, e.g., Newbury Commons Ltd. Partnership v. Stamford, 226 Conn. 92, 103, 626 A.2d 1292 (1993) (" [w]hether a property has been overvalued for tax assessment purposes is a question of fact for the trier" ). [320 Conn. 364] " A finding of fact is clearly erroneous when there is no evidence in the record to support it . . . or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." (Internal quotation marks omitted.) State v. Maurice M., 303 Conn. 18, 51, 31 A.3d 1063 (2011).

         We cannot conclude that the trial court's finding in the present case that the valuation of the personal property on the 2010 grand list at $56,873,060 was not excessive was clearly erroneous. Indeed, Wheelabrator does not seriously contend that it was. The fact that the city properly valued the personal property on the 2010 grand list does not mean, however, that Pomykacz' appraisal of the property pursuant to the reproduction cost approach did not include the value of that personal property, and the city has pointed to no evidence that would support the trial court's finding to that effect. Nevertheless, because we have concluded that this case must be remanded to the trial court for a new trial on the value of the property, there is no need for us to decide whether the trial court's finding that Pomykacz' appraisal pursuant to the reproduction cost approach did not include the value of personal property was clearly erroneous.[29] Rather, we conclude that the court [320 Conn. 365] on remand must carefully consider whether the appraisers' valuations pursuant to the various approaches include the value of personal property, and, if it finds that they do, the court either should deduct the value of the personal property from the overall value and order the city to tax the real and personal property separately, or should limit the city to taxing the overall value of the property.

         IV

         Because it is likely to arise on remand, we next address Wheelabrator's claim that the trial court improperly excluded evidence of the city's wrongful conduct and discounted evidence of wrongful conduct that Wheelabrator did present. Wheelabrator contends that the trial court should have considered evidence that the city wrongfully (1) fabricated its valuation of the property, (2) assessed taxes on tax exempt pollution control equipment, (3) imposed an interest penalty, (4) imposed a double tax on personal property, and (5) punished Wheelabrator for refusing to produce its experts' appraisal report at the hearing before the board in the administrative appeal from the assessment on the 2010 grand list. We conclude that, on remand, the trial court may properly consider evidence that the city engaged in wrongdoing for the purpose of determining whether Wheelabrator is entitled to interest on overpayments to the city.

         The following additional facts are relevant to our resolution of this issue. In support of Wheelabrator's claim that the city fabricated its valuation of the property, Wheelabrator's plant manager, Vincent P. Langone, Jr., testified at trial that, after the legislature enacted § 22a-270 (b) in 2007; see Public Acts 2007, No. 07-255, § 3; he met with city officials to discuss Wheelabrator's potential property tax liability. John M. Fabrizi, the then mayor of Bridgeport, initially indicated that he believed [320 Conn. 366] that the figure would be between $10 and $13 million. At a later meeting, the city's comptroller, Michael Feeney, told Langone that he could not provide a precise figure because the city's fiscal budgets were not yet established but that he believed that the annual property tax would be in the range of $7 to $10 million. Langone told Feeney that, on the basis of third-party appraisals that Wheelabrator had obtained, he believed that annual property taxes would be less than $5 million.

         Wheelabrator also attempted to present evidence that, when the city revalued the property in 2008, the city's tax assessor, William O'Brien, was aware that CRRA had obtained an appraisal that put the value of the property at $225 million. The trial court sustained the city's objection to the admission of the appraisal on relevance grounds, but it allowed O'Brien to testify as to whether he was aware of the appraisal at the time of the revaluation. O'Brien testified that he did not know whether he was aware of the appraisal.

         In addition, Wheelabrator attempted to present evidence regarding the city's normal procedure for valuing commercial property for tax assessment purposes. That evidence would have shown that the city had hired an appraiser, Vision Government Solutions, Inc. (Vision), to value the city's taxable properties for purposes of the 2008 revaluation. The city provided Vision with field cards for each property. At that point, a Vision employee would go into the field, inspect the property and make any necessary changes on the card. Normally, the various values shown on the card will add up to the total appraised value. The city objected to this evidence on the ground that it was irrelevant with respect to how the revaluation was conducted and contended that the sole issue was whether Wheelabrator could establish that the fair market value of the property was less than the city's valuation. Wheelabrator contended that it was entitled to put on evidence that the city had wrongfully [320 Conn. 367] failed to assess the property based on its " true and present value." The trial court sustained the city's objections, stating that " [t]he assessor is really not on trial. This whole issue that the court sees is the question of what's the fair market value of the subject property on the date of valuation." Although the trial court allowed Wheelabrator to submit evidence that the numbers on the field card for the subject property for the 2008 revaluation did not add up to the total appraised parcel value of $401,624,570,[30] it sustained the city's objection to the admission of evidence showing that the city had told Vision that it would handle the valuation of the property and that the reason the figures on the field card for the property did not add up was because someone had overridden the computer system that generated the various amounts shown on the field cards. Wheelabrator contends that all of this evidence was relevant to show that the city fabricated the $401,624,570 valuation so that it could charge Wheelabrator $13 million per year in taxes and thereby cover its annual budget deficit.

         In support of its claim that the city improperly had denied Wheelabrator's claim for an exemption for pollution control equipment valued at $10,559,534, Wheelabrator presented evidence that, in October, 2008, it filed a form seeking a tax exemption for certain pollution control equipment. The city denied the exemption and taxed Wheelabrator for the equipment for two years. Although the city ultimately acknowledged ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.