A group of Scarborough taxpayers is challenging abatements awarded by the town’s Board of Assessment Review after the state’s highest court ruled against a little-known but widespread practice of giving property tax breaks to homeowners for adjacent vacant lots that they also own.

The board reached its decision in May and the Town Council voted unanimously Sept. 20 to make payments totaling $463,477 to 52 taxpayers who filed for tax reductions in four fiscal years, from 2012 through 2015, according to the board’s decision.

The payments, which averaged $8,913 per taxpayer, represent about 8 percent of the total assessed value of the taxpayers’ land, excluding buildings and other improvements, plus 7 percent interest. The council authorized Town Manager Tom Hall to make the payments from the town’s undesignated funds.

“These abatements have been processed in accordance with the decision of the Board of Assessment Review,” Hall said in an email.

The taxpayers filed an appeal Sept. 15 in Cumberland County Superior Court, saying the board’s decision was discriminatory, contains numerous legal errors and should be vacated in favor of a nondeferential review. The town has until Sunday to file its answer.

In August 2016, the Maine Supreme Judicial Court found that the town’s practice of randomly undervaluing adjacent lots upon an individual landowner’s request violated the constitutional requirement for equal taxation and state laws that call for each lot to be assessed separately and at just value.

The practice, which was supported by state tax officials, led to assessment reductions ranging from a few thousand dollars on inland parcels to a few million on waterfront properties.

“Maine law does not permit the town to engage in the fiction of treating separate smaller abutting lots as if they were a single larger lot, which results in an assessment that does not reflect just value,” the justices wrote.

As part of the case, the justices reviewed the outcome of a 2014 Superior Court appeal filed by 34 residents of Scarborough’s seaside neighborhoods, who had been denied abatements after being assessed property tax increases that they said were discriminatory and unconstitutional.

The landowners lost their initial claim that the former town assessor discriminated against them when he increased most waterfront land values in 2012. Some of their neighbors, however, were immune to the full impact of the increase because they owned adjacent vacant lots that were considered “excess land” for assessment purposes.

In waterfront neighborhoods, where half-acre lots sold for $2 million to $4 million, depending on the view, having a parcel assessed as “excess land” could save a property owner $30,000 to $60,000 or more in yearly taxes.

The high court’s decision against undervaluing certain adjacent lots called for the town’s Board of Assessment Review to make “appropriate abatements” to the taxpayers who filed for tax reductions.

The board determined that the taxpayers were “entitled to an abatement equal to a share of the total benefit received by” property owners who got tax breaks on adjacent vacant lots during the four-year appeal period.

The town’s assessor at the time testified that the amount of tax revenue lost by undervaluing certain adjacent lots was $395,398. Adding 7 percent interest brought the total abatement amount divided among taxpayers in the case to $463,477.

Kelley Bouchard can be contacted at:

[email protected]

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