REDDING LIFE CARE, LLC v. TOWN OF REDDING, SC 18921

Judicial District of New Britain

     Property; Taxation; Whether the "Going Concern" Income Capitalization Method Should be Recognized as an Accepted Method for Determining the Fair Market Value of Real Estate.  The plaintiff owns and operates Meadow Ridge, a 338 unit continuing care retirement community.  On October 1, 2007, the town of Redding conducted a town-wide real property revaluation and the town's assessor determined that the fair market value of the plaintiff's property was $117,621,000.  The town's board of assessment appeals upheld that valuation.  The plaintiff appealed the board's decision to the trial court pursuant to General Statutes § 12-117a, claiming that the assessment was excessive and that the fair market value of its property was $89,100,000.  This figure was based on an appraisal conducted by the plaintiff's appraiser, Michael Boehm, utilizing the "going concern" income capitalization method.  Under this method, Boehm had to first determine the "going concern value"—the market value of all the tangible and intangible assets of an established and operating business if sold in aggregate.  Boehm calculated that value to be $108,225,000.  Boehm then theorized that Meadow Ridge's going concern value consisted of three parts: the value of the real estate, the value of the personal property, and the value of the business.  He arrived at a fair market value of $89,100,000 for the real estate by subtracting the values of the personal property and the business from the going concern value.  The trial court rejected Boehm's valuation method and dismissed the appeal, finding that the plaintiff was not aggrieved as it had not proved that its property was wrongly assessed.  The court found that, because the going concern valuation method values the business as a whole, rather than the real estate separately, it was not a credible method of appraising real estate.  Additionally, it noted that it could not find any authority accepting the going concern valuation method as an acceptable appraisal method for valuing the real estate portion of a business.  Alternatively, the court concluded that the formula used by Boehm for determining Meadow Ridge's business value was simplistic and, therefore, it would not credit his business value finding.  On appeal, the plaintiff claims, among other things, that the trial court, in denying its § 12-117a claim, improperly concluded that the going concern income capitalization method is not recognized or permitted under Connecticut law for valuing real estate.