MIDDLEBURY — Addison County Superior Court is being asked to resolve a property assessment grievance filed by the owners of one of the most valuable properties in Middlebury. Town officials said as much as a penny on the local tax rate could be riding on the outcome of the case.
At issue is the Lodge at Otter Creek, a retirement community that features a combination of cottages; independent-living, assisted-living and memory-loss units; and related amenities on 36.2 acres. The development totals 100 units in a main, four-story building and 40 completed cottages. The Lodge is permitted for an additional 40 cottages.
The town assessed the Lodge property at $18.9 million at the beginning of the 2009-2010 tax year. Following a year of improvements to the property, the assessment was boosted to $21 million for the 2010-2011 tax year, according to Town Assessor Bill Benton.
Lodge ownership, headed by Bullrock Corp. founder and CEO Gregg Beldock, appealed the $21 million valuation, citing a shortfall of projected occupancy and income, according to minutes of the June 23, 2011, Middlebury Board of Civil Authority (BCA) meeting.
Listers adjusted the 2010-2011 value by slightly more than $1 million, to $19,950,000, Benton said.
“We felt they had a legitimate argument,” he said.
The Lodge again grieved the town’s assessment this year, arguing — among other things — that the town’s assessment of the property was higher than fair market value.
Beldock also argued that “for purposes of property tax ‘real estate activities and business activities must be kept separate. The value for tax purposes cannot include the value of a business,’” according to BCA minutes.
The town denied the Lodge’s grievance, which the Lodge appealed to the BCA on June 13. The BCA heard the Lodge’s appeal on June 23 and sent an inspection team to the property on July 14. That team ultimately endorsed the town’s assessment of the Lodge, and the BCA then denied the appeal.
“I presented the town’s case, and we said we believed that the appraisal was accurate at the $19,950,000 level,” Benton said.
Lodge officials later delivered an independent appraisal of the property, performed by Mark Brooks of Burlington-based MAI. That 90-page report, which Benton said “appears to be comprehensive and well-founded,” assigns a fair market value of $13,325,000 to the Lodge property.
Brooks took that fair market value and multiplied it by Middlebury’s Common Level of Appraisal formula (84.63 percent), and came up with an equalized value (for assessment purposes) of $11,277,000.
Middlebury officials noted there is an $8,673,000 gulf between the town and Lodge’s valuations of the property, which would translate into a significant impact on the grand list.
That $8,673,000 reduction to the grand list would amount to $72,636 less in municipal tax revenue and $139,375 in potential education property tax revenues, according to Benton.
“It’s over $200,000 each year that they would be saving,” Benton said. “It’s a lot of money.”
Benton confirmed the Lodge — represented by attorney Mark Sperry — has filed for a hearing before Addison County Superior Court, the next step in its appeal process.
Efforts to reach Sperry were unsuccessful as the Addison Independentwent to press.
For their part, town officials have been strategizing on how to present their case in the pending appeal. To that end, the selectboard last month voted to spend up to $7,500 for services to help build the town’s case in the appeal. The town has hired Greenwich, Conn.-based Province Consulting Group to do a critical review of the Lodge’s own appraisal.
Based on that review, the town will decide whether to have Province Consulting Group do its own appraisal of the Lodge property, Benton said.
In the meantime, Superior Court has requested that the Lodge and town consider mediation to resolve the appeal. Both sides are considering potential mediators, Benton said.
Barring successful mediation, the case would go to court and probably not get taken up until next year, according to Benton. The Lodge must pay taxes based on the town’s assessed value until the case is resolved, and if the Lodge’s appraisal is lowered, it would be granted a refund, with interest, Benton said.
Selectman Dean George was chairman of the BCA panel that reviewed the Lodge appeal.
“Superior Court will evaluate the Lodge and the town’s positions and hopefully come up with a decision all can live with,” he said.