SCARBOROUGH — Settling a dispute that dates back to 2012, the Maine Supreme Judicial Court ruled Aug. 16 that the town’s decision to give tax breaks to beachfront property owners who own adjacent lots of lesser value is unlawful.
In a 29-page decision, the state’s highest court found that former assessor Paul Lesperance was correct when he revalued some beachfront properties in 2012 to ensure that property sales and real estate assessments complied with legal requirements.
But the court found that his decision not to assess each lot separately, but instead to consider the extra lots “excess land,” resulting in thousands of dollars in tax breaks for some property owners, was “untenable” and illegal.
As a result, 34 plaintiffs will seek abatements in the coming months, according to their attorney, John Shumadine of the Portland law firm Murry, Plumb & Murray.
“The excess land issue is discriminatory,” Shumadine said Thursday, “and we’re very pleased the court sees that.”
Despite the court’s decision that the methodology used to give the tax breaks was unlawful, it found that Lesperance’s overall method of assessment, which reflected the market rate value, was not incorrect.
In the cases of some of the plaintiffs, the methodology of considering a second abutting lot as “excess land” led to substantial increases of up to 25 percent in the value of their waterfront property.
Owners of land that included adjacent lots were unfairly given tax breaks upon request, simply because “overall tax assessment for abutting parcels is less than it would be if the parcels were assessed separately,” according to the decision.
In one example, a 1-acre parcel was assessed by Lesperance at nearly $1.8 million, while an abutting 1.3-acre parcel was valued at $12,700, saving the property owner thousands of dollars in taxes.
Most of the properties that benefited from tax savings are in the Prouts Neck neighborhood. Plaintiffs in the case live in the Higgins Beach, Pine Point and Pillsbury Shores neighborhoods.
The 34 plaintiffs filed for tax abatements in 2013, claiming that Lesperance’s valuation was “unjustly discriminatory,” according to the Aug. 16 decision. After Lesperance denied the requests, the plaintiffs appealed to the Scarborough Board of Assessment Review, where their claims were also rejected.
In January 2014, some of the property owners appealed in Cumberland County Superior Court; the court also sided with the board’s decision not to grant abatements.
But the Law Court found the appellants were being discriminated against because the tax break “necessarily results in an unequal apportionment of the municipal tax burden, which operates to the Taxpayers’ detriment,” according to the decision.
In addition, the court found that the way Scarborough has assessed abutting, contiguous lots as one lot violates state law in two key ways: the requirement that each lot must be assessed separately, and the fact that “real estate must be assessed at ‘just value.'”
Don Petrin, lead plaintiff in the case, said, “For me, it was always about the ethics, or in this case, the lack thereof.”
“Everyone is painfully aware that just because something is legal doesn’t make it right,” he said in an email Tuesday. “Ethically, any reasonable person would have deemed it wrong if their property was targeted and assessed in this manner.”
“From a legal perspective, we lost one battle but not the war,” Petrin said.