Property tax: Town cannot tax property as if legally subdivided, merely because of line on survey.

Hoiska v. Town of East Montpelier, 2014 VT 80 (18-Jul-2014)

ROBINSON, J. Taxpayer appeals from the Vermont State Appraiser’s valuation of her property in the Town of East Montpelier. She argues that the appraisal incorrectly treats her property as comprising two contiguous lots under common ownership, and accordingly assigns a higher value to the property than if it were a single developable lot. In particular, taxpayer takes issue with the state appraiser’s legal conclusion that she legally subdivided the land in 1978 by procuring a survey that includes a line dividing the lot into two parcels. We agree that the state appraiser’s findings do not support the legal conclusion that taxpayer effectively subdivided her property in 1978, and reverse.

In the absence of a transcript, we accept the court’s findings See V.R.A.P. 10(b)(1); see also In re S.B.L., 150 Vt. 294, 297-98, 553 A.2d 1078, 1081 (1988) (failure to order transcript waives any challenge to sufficiency of court’s findings).

From 1974 to 1982, the Town’s zoning and subdivision regulations both provided that subdivision approval was required only for subdivisions with three or more lots. In 1982, the Town adopted new zoning regulations that required subdivision approval for two or more lots. In 1986, taxpayer recorded a survey of her property with a 1977 certification date and a 1978 revision date. The map included a line subdividing the property into two lots. Taxpayer never applied for or obtained subdivision approval.

In determining the highest and best use of property, a town may assess a parcel as including multiple house sites where the owner has subdivided the property into separate lots. See Lathrop v. Town of Monkton, 2014 VT 9, ¶ 10, ___ Vt. ___, 91 A.3d 378. In Lathrop we held that a town’s valuation of a parcel as if it included two house sites was reasonable where the parcel had been subdivided by permit because the permit provided evidence that subdivision was financially feasible and would result in the highest and best use of the land. Id. ¶ 14. Here, the Town is casting a wider net than Monkton did in the Lathrop case, as Monkton limited its assessment for multiple house sites to properties for which the owner had obtained a subdivision permit.

We accept the state appraiser’s finding that 1977 neither the Town’s zoning regulations nor the subdivision regulations required any approval for the subdivision of property into less than three lots. The legal question, then, is whether under those circumstances the completion of a survey that includes a subdivision line, without more, automatically effects a subdivision. We conclude that it does not.

The intention to subdivide can be manifested in many ways, including by recording the survey reflecting the subdivision, building on one or both subdivided lots, conveying one or both subdivided lots, offering to sell one or more subdivided lots, or otherwise expressing an intention to prospectively treat the lots as separate. However, the mere preparation of a survey reflecting two lots, by itself, is not enough. Even in the absence of specific town requirements for subdivisions of property, a survey alone, unaccompanied by any evidence manifesting an intent by the owner to actually subdivide along the lines reflected in the survey, does not effectuate a subdivision.

We conclude that the state appraiser erred as a matter of law in concluding that taxpayer had effectively subdivided her property in 1978 solely on the basis of the existence of an unrecorded survey reflecting two lots as of that time.

Reversed and remanded for a determination of taxpayer’s 2011 assessment viewing taxpayer’s property as a single property rather than two contiguous lots.



ARKNote:  Is development value taxable only if the owner has obtained necessary permits?

A town may increase assessed value when the owner has a subdivision permit, or when the property is already legally subdivided.  But is taxation of development value prohibited whenever a necessary permit has not been obtained?

Hoiska frames the issue as whether the property was already subdivided before 1982. If so, no permit was required, and it could be valued as two lots. If not, the Court seems to assume it could not be valued at its development value because it now needs a permit.

But is this so? Lots of property has value because of available uses that will require future permits. Residences in business zone are torn down and converted to business use. Is the tax delayed until the actual permits are obtained?

Lathop held it is reasonable to assign a higher market value to property with a necessary permit than to a property that does not need a permit to be subdivided. This was because the existence of a permit is strong evidence of the feasibility of the project and the highest and best use. The Court noted, however, that a town may increase the value of an undeveloped parcel to reflect development value even in the absence of a permit. Lathrop v. Town of Monkton, 2014 VT 9, ¶ 16. 

It is only a short step from this to say that a town can value an undeveloped parcel at its development value in the absence of a necessary permits, if the project is feasible and permits are obtainable. 

There is no discussion of the point in Hoiska, but it suggests a town may not assess a parcel as including multiple house sites unless the owner has legally subdivided the property into separate lots.