Argued: October 23, 2019
Hamblett & Kerrigan, P.A., of Nashua (Kevin P. Rauseo and
Andrew J. Piela on the brief, and Mr. Rauseo orally), for the
Mitchell Municipal Group, P.A., of Laconia (Walter L.
Mitchell and Laura Spector-Morgan on the brief, and Ms.
Spector-Morgan orally), for the defendant.
plaintiff, Ventas Realty Limited Partnership (Ventas),
appeals an order of the Superior Court (Howard, J.)
denying its request for an abatement of the real estate taxes
it paid the defendant, the City of Dover (City), for the 2014
tax year. We affirm.
trial court found, or the record establishes, the following
facts. The subject real estate consists of a 5.15-acre site
containing a skilled nursing facility serving both short-term
and long-term patients, two garages, and a parking lot. At
issue is the City's April 1, 2014 assessment of the real
estate at a value of $4, 308, 500. Ventas alleges that it
timely applied to the City for an abatement of its 2014
taxes. The City presumably denied or failed to act upon the
request, and Ventas, thereafter, petitioned the superior
court for an abatement pursuant to RSA 76:17 (Supp. 2018),
alleging that the City had unlawfully taxed the property in
excess of its fair market value.
trial court held a two-day bench trial at which the
parties' experts testified. Ventas's expert was
Raymond A. Dennehy, III, president of Health Care Valuation
Advisors, Inc. The City's expert was Melanie Kosich, a
former nursing home administrator and director of Tellatin,
an entity affiliated with Integra Healthcare Services. The
parties stipulated that in 2014, the City used an
equalization ratio of 95.1%.
experts opined that the property's highest and best use
is as a skilled nursing facility. The experts also agreed
that the most reliable method for determining the
property's fair market value is the income capitalization
method, although the City's expert also completed
analyses under the sales comparison and cost approaches. Both
experts examined the same comparable properties and they also
used similar definitions of "fair market value." In
his May 2016 report, Dennehy concluded that the
property's fair market value as of April 1, 2014, at its
highest and best use as a skilled nursing facility, was $1,
700, 000. In her October 2017 report, Kosich opined that the
property's fair market value as of April 1, 2014, at its
highest and best use as a skilled nursing facility, was $4,
main difference between the approaches of the two experts is
that Kosich used both market projections and the
property's actual income and expenses from 2012, 2013,
and 2014 to forecast the property's future net income,
while Dennehy did not. Dennehy used the property's actual
income and expenses for the 11 months before the April 1,
2014 valuation date, without any market-based adjustments.
their different approaches, the experts gave similar
estimates of the property's projected gross income for
tax year 2014: Kosich's estimate was $10, 063, 865, and
Dennehy's estimate was $10, 147, 068. Both experts also
used similar capitalization rates: Kosich used a 13.5%
capitalization rate, and Dennehy used a 12.6% capitalization
rate. At trial, Ventas stipulated to Kosich's
experts differed greatly in their estimates of the
property's projected gross operating expenses for tax
year 2014. Dennehy relied upon the property's actual
operating expenses for the 11 months before the April 1, 2014
valuation date, opining that the expenses for those months,
annualized to represent a full year, "provide[d] the
most reliable indication of the subject's stabilized
operating expenses." He calculated the property's
gross operating expenses to be $9, 936, 601. Dennehy observed
that the subject property's operating expenses are higher
per patient day than in comparable properties, but opined
that "this reflects the lower occupancy at the subject
than the comparables, which results in higher expenses per
contrast, after examining the expenses of comparable
facilities and applying an inflation factor based upon market
trends, Kosich assigned values to the different categories of
operating expenses. For example, as to nursing expenses,
Kosich used the property's actual nursing expenses in
2013 and 2014 for each category of nursing professional and
compared those expenses with the 2013 nursing expenses of
five comparable properties. She took into account the ratio
of total revenue that nursing typically represents for a
skilled nursing facility (30% to 45%) and applied an
inflation rate to nursing expenses based upon market trends.
Based upon those figures, she assigned a value to the
property's forecasted nursing expenses that fell within
its actual 2013 and 2014 expenses and the average expenses of
the comparable properties. She conducted a similar analysis
for other categories of operating expenses. Ultimately,
Kosich estimated the property's total forecasted
operating expenses to be $9, 016, 402.
trial court concluded that "Dennehy's approach . . .
does not accurately reflect the overall value of the property
based on forecasted net income the property would have
generated on the open market in 2014," and, thus,
decided that Ventas had not "sufficiently proved the
property's fair market value under the income
capitalization approach." Accordingly, the trial court
ruled that Ventas failed to meet its burden of proof to
obtain an abatement for tax year 2014. This appeal followed.
succeed on its tax abatement claim, Ventas had the burden of
proving by a preponderance of the evidence that it paid more
than its proportional share of taxes for tax year 2014.
See Porter v. Town of Sanbornton, 150 N.H. 363, 367
(2003). "To carry the burden of proving
disproportionality, the taxpayer must establish that the
taxpayer's property is assessed at a higher percentage of
fair market value than the percentage at which property ...