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In First Bethel Associates v. Town of Bethel, the Supreme Court of Connecticut upheld a lower court's adoption of an income capitalization method of calculating a shopping center's tax assessments and rejected alternative methods offered by the parties.
In October 1988, the assessor for the town of Bethel, using a comparable sales method, a cost method, and an income capitalization method, determined that the fair market value of the strip shopping center owned by the Associates was more than $2.8 million. This resulted in an assessment of slightly more than $2 million. At the same time, an expert for the Associates, using only the income capitalization method, found that the fair market value of the property was $1.1 million. When the town's board of tax review affirmed the assessment, the Associates appealed. The trial court then reduced the assessment, and the town appealed.
The Supreme Court of Connecticut rejected the comparable sales calculation because the town's assessor had used properties that were not actually comparable to the property. The court also declined to use the cost method because the town's assessor attributed an age to the premises which was less than its actual age. In adopting the income capitalization method, the court, in effect, found a middle ground between the calculations proffered by the parties.
Although each party used the income capitalization method, the court found neither result was adequate, and formulated its own version. Specifically, the town's expert used the income capitalization method by relying on fair market rents derived from rental information supplied by other owners. The court found this to be excessive. On the other hand, the court said that the Associates' results, using only actual rent income, were too low. Thus, the court arrived at the prevailing figure by using both actual and market rent numbers.
First Bethel Associates v. Town of Bethel, 231 Conn. 731, 651 A.2d 1279 (1995).