Real Property Taxation

Matter of Merry-Go-Round Inc. v. Assessor of City of Auburn

Court: Court of Appeals of New York
Docket #: 201
Citation: 2014 NY Slip Op 07928
Plaintiff: Merry-Go-Round Playhouse, Inc.
Defendant: Assessor of City of Auburn, et al.

Facts: Plaintiff, a not-for-profit theater company, appealed a decision by the Supreme Court rejecting their request for real property tax exemptions for property owned by the corporation that houses their temporary summer actors. The Supreme Court rejected their tax exemption status, based on the ruling that the use of the apartment buildings to house the employees was not reasonably incidental to the corporation's primary purpose. Plaintiff claims that the living arrangement cultivates a community among the employees, which furthers the mission and purpose of the corporation, and thus, the purpose of the property is reasonably incidental to the corporation's purpose.

Holding:The Appellate Division reversed a lower court decision and Court of Appeals affirmed. The Court of Appeals determined that the corporation was clearly organized for an exempt purpose, and that the primary use of the property was to house the summer actors, despite the nature of their employment being temporary; and done so to further the permitted purpose and thus necessary and reasonably incidental to the primary purpose of the facility. The Court also determined that the limited commercial aspect does not preclude a not-for-profit corporation from receiving the tax exemption.

Submitted: Phillip Sanchez

Precis: Faisal Sheikh


Matter of Aylward v Assessor City of Buffalo

Court: Supreme Court, Erie County
Docket #: Not mentioned
Citation: 2013 NY Slip Op 52253(U)
Plaintiff: Diana Sachs Aylward, et al.
Defendant: Assessor, City of Buffalo and the Board of Assessment Review of the City of Buffalo, County of Erie and State of New York

Facts: The Plaintiffs, owners of twelve parcels of residential property in the City of Buffalo, are commencing a special proceeding to seek a reduction in the assessment value of their property. The Defendant is moving for paper discovery of the property appraisal and requesting an order authorizing the Defendant's appraiser to enter the property to conduct an inspection of all improvements. In the event the Plaintiff refuses the Defendant's appraiser from entering the property, the Defendant is seeking an order precluding petitioners from introducing an appraisal report or the testimony of an appraiser into evidence at the trial of the proceedings.

Holding:The Supreme Court ruled in favor of the Defendant, stating that the challenged assessment was presumed correct and the Plaintiff had the burden to produce substantial evidence, grounded in objective data and sound theory, to overcome the presumption. The Court ruled that the discovery motion of the property appraisal must be considered, according to standards and burdens applicable to tax certiorari proceedings, subject to full disclosure of all matter that is material and necessary, including matter that may not be available in public records. Thus, the Court ordered that the Plaintiff provide the Defendant with paper discovery of the property appraisal that are not otherwise available for public inspection. The Court also reasoned that the evaluation of a property's condition is integral to the preparation of a probative appraisal report in New York, and ordered that the Plaintiff to allow the Defendant's appraiser to enter the property to conduct the scheduled inspections. A refusal by the Plaintiff to do so will result in the Plaintiff being precluded from introducing an appraisal report or the testimony of an appraiser into evidence at trial.

Submitted:Michelle Maratto Itkowitz, Esq ,

Precis: Faisal Sheikh


Matter of Board of Managers of French Oaks Condominium v. Town of Amherst, et al.

Court: New York State Court of Appeals
Citation: 23 NY3d 168 (2014)

Overview: The New York State Court of Appeals took a rare opportunity to clarify the standard of review in a tax certiorari proceeding.

Facts: Petitioner, Board of Managers of French Oaks Condominium ("Board"), owner of a 39-unit development of varying size condominiums, challenged a tax assessment levied against it by the Town of Amherst and the Willliamsville Central School District. The taxes were assessed by the taxing authority at $5,176,000.The Board commenced the action pursuant to Article 7 of the Real Property Tax Law.

The Board submitted an affidavit from its appraiser that set the valuation of the complex at $4,265,000.The Board's appraiser applied an income capitalization method to establish the market value of the complex. Under this approach, the first step required is to determine the net operating income of the condominiums. The next step is to determine the appropriate capitalization rate. This is commonly referred to as using comparable properties. In computing the net operating income, the appraiser ascertained the gross income and expenses of the comparables. At trial, the appraiser testified that the figures were derived from "forecast financials." There was no explanation as to how the appraiser arrived at his income and expense figures for the comparables.

The Town also offered an appraiser that utilized similar techniques, but actually inspected the interior of each of the 39 units. The Town's appraiser estimated a net operating income slightly above the assessed value and added a tax factor of 2.84%.

At hearing, the fact-finder concluded that Board met its burden of rebutting the presumption of validity of the assessment. The Supreme Court then ordered the Town to amend its tax rolls to reflect the assessment of $4,353,000. The Town appealed to the Appellate Division. A split court (two dissenting) found the Board met its burden and that the Board's appraisal adequately complied with the requirements contained in 22 NYCRR §202.59(g)(2). The Town appealed as of right (two dissenting votes) to the Court of Appeals.

Holding:The Court of Appeals reversed. In a tax certiorari proceeding, a rebuttable presumption of validity attaches to the valuation made by the taxing authority. A taxpayer challenging an assessment bears the initial burden of coming forward with substantial evidence that the property was over-assessed. If the taxpayer meets this burden, the presumption disappears and the Court must weigh the entire record to determine if the petitioner had, by a preponderance of the evidence, demonstrated the property was over-assessed.

The Court of Appeals stated that the regulation (22 NYCRR §202.59(g)(2)) is violated when a party fails to set forth facts, figures and calculations supporting the appraiser's conclusions. Upon review, the Court found the Board's appraiser's report failed to comply with the regulations, in that the appraiser used "forecasted financials" and estimates, and also did not provide sources of income or expenses used in the operating income step of the regulation. Also, the Board's appraiser stated under cross-examination that he had "no confirmable data" to support his income and expense figures. Therefore, the Board did not meet its burden of coming forward with substantial evidence to overcome the presumption of validity of the Town's assessment. The Court overruled the two lower courts and ordered the Town's assessment as valid.

Editor's Note:This case highlights the absolute need to obtain a qualified appraiser when commencing a tax certiorari proceeding.

Submitted: Phil Sanchez, Esq.

Precis: Joel Grossbarth


Matter of ELT Harriman, LLC v. Assessor of Town of Woodbury

Court: Appellate Division Second Department
Citation: ___AD3d ___, 2015 NY Slip Op. 03356 (2nd Dept., 2015) 

Overview: This case presented the first occasion for an appellate court to address whether the newly-enacted three-year moratorium on tax certiorari proceedings under RPTL 727(1) is unconstitutional when applied to a successor property owner.

Facts:These proceedings arise from annual tax assessments upon six parcels of real property totaling approximately 133 acres (hereinafter the “property”), located along Route 17 in the Town of Woodbury, Orange County, NY. The respondents, the Assessor of the Town of Woodbury and the Board of Assessment Review of the Town of Woodbury (hereinafter together the “Town”), rendered an assessed valuation for the property of $6,003,200 for the  years 2006 and 2007. Using the state-mandated equalization rate of 31.74%, the assessed value of the property equates to a fair market value of $19,054,156. However, the valuation did not reflect certain known environmental contamination that negatively affected the property's value. Accordingly, on July 21, 2006, and July 16, 2007, the then-owner of the property (nonparty Rutherford Chemicals, LLC) (hereinafter “Rutherford”), which was in the business of developing and producing chemicals, commenced tax certiorari proceedings challenging the Town's 2006 and 2007 assessments.

On November 30, 2007, Rutherford sold the property to the petitioner, ELT Harriman, LLC (hereinafter “Harriman”), in what was classified as a "negative value transaction," in which Rutherford agreed to pay Harriman the sum of $5,614,061 for remediation expenses that it would incur in rehabilitating the property. While Harriman made no initial investment for obtaining title to the property, and the exchange was classified as a negative value transaction, the Purchase and Sale Agreement protected Rutherford from potentially greater expenses if Harriman outsourced to a third party the remediation efforts it was required to perform. Further, Rutherford and Harriman acknowledged in the Purchase and Sale Agreement that there were pending tax certiorari proceedings regarding the property, and that any tax modifications resulting from the proceedings would not trigger any price adjustment between the contracting parties. The deed transfer and closing of title occurred on December 3, 2007.

On July 1, 2008, Harriman, as the property's new owner, commenced its own tax certiorari proceeding challenging the Town's property tax assessment for 2008 and, thereafter, commenced additional proceedings for tax years 2009 and 2010. The assessed value for the property in 2008, 2009, and 2010 was the same $6,003,200 figure as had existed when Rutherford owned the property in 2006 and 2007.

Harriman did not make any initial application to intervene in the Rutherford proceedings, either as of right or by permission. Litigating separately, the Town settled the Rutherford proceedings, resulting in a consent judgment that was signed by the Supreme Court on May 24, 2012. Under the terms of the consent judgment, the Town reduced the assessed value of the property from $6,003,200 to $2,618,551, representing a reduction in the property's fair market value from $19,054,156 to $8,250,000. Only after the Rutherford proceedings were settled in principle and the consent judgment was awaiting the Court's signature, did Harriman move to intervene in those proceedings. That motion to intervene was denied as untimely.

During the first quarter of 2012, at roughly the same time that the Town was concluding its settlement with Rutherford, Harriman listed the property for sale through McBride Corporate Real Estate, with an asking price of $9,750,000. The asking price was $1,500,000 more than the property's fair market value as calculated from the Town's settlement with Rutherford, though some of the difference may be explained by the progress Harriman had made since its purchase in remediating the property's environmental contamination. In January of 2012, in conjunction with its tax certiorari proceedings, Harriman provided a preliminary appraisal of the property prepared by Beckmann Appraisals, Inc. The Beckmann appraisal proffered by Harriman set the fair market value of the property for 2011 at only $400,000 for the six combined parcels.

Attorneys for Harriman advised the Supreme Court during a conference conducted on April 20, 2012, that although he had been aware of ongoing settlement negotiations between the Town and Rutherford for a year, his repeated efforts to include Harriman in the negotiations "received no response whatever." Harriman's counsel recognized that any settlement between the Town and Rutherford would affect Harriman. The parties do not dispute that the reduced $2,618,551 assessment of the property achieved by Rutherford carried forward to 2008, 2009, and 2010 to the benefit of Harriman. Nevertheless, Harriman maintained that its tax certiorari proceedings for those years remained viable to the extent that the new assessment of the property, albeit reduced, was still excessive in light of Beckmann's $400,000 appraised fair market value.

On May 30, 2012, the Town moved, pursuant to RPTL 727, to dismiss the petitions in the Harriman proceedings. The Town argued that when an assessment is found to be unlawful, unequal, excessive, or misclassified by a final court order or judgment, as with the consent judgment here, "the assessed valuation so determined shall not be changed for such property for the next three succeeding [annual] assessment rolls" (RPTL 727[1]). The Town further argued that any statutory exceptions to the three-year moratorium of RPTL 727 were inapplicable to the Harriman proceedings.

Harriman opposed the motion on various grounds. Harriman argued that the three-year bar to successive assessment reviews applied only to years not already under review, and that its tax certiorari proceedings for 2008, 2009, and 2010 were each commenced prior to the consent judgment between Rutherford and the Town. Harriman also argued that when there is a negotiated settlement of an assessment dispute between a taxing authority and a property owner, RPTL 727 does not impose a three-year moratorium upon subsequent challenges to the same property undertaken by a successor property owner. In reply, the Town pointed out that, given the mandates of RPTL 727, Harriman could have negotiated the impact of the statute in its purchase contract, sought timely intervention in the Rutherford proceedings, or sought consolidation of the Rutherford and Harriman proceedings, but availed itself of none of these remedies.

The Supreme Court granted the Town's motion to dismiss the petitions in the Harriman proceedings.

Holding:The Appellate Division affirmed the ruling of the Supreme Court. The Court held that the three-year moratorium served a purpose that is well known to the tax certiorari bar and is easily understood. RPTL Section 727 prevents municipalities from increasing judicially reduced assessments in succeeding years, and likewise prevents property owners from perpetually challenging their tax assessments. This allows all parties to avoid the time and expense of repeated court interventions. The three-year moratorium against successive property tax challenges also provides a measure of financial certainty to school districts that rely upon tax assessments when creating their annual budgets.

A change in a property's ownership is not listed in the statute as an exception to the three-year moratorium of RPTL 727(1). Under the doctrine of expressio unius, the presence of exceptions in RPTL 727(2), without inclusion of a property sale exception among them, must be inferentially construed as the Legislature's intent not to except from the three-year moratorium circumstances where property is sold to a new owner. Logically, the sale of property to a purchaser would not be an appropriate exception to include within the enumerated exceptions of RPTL 727(2), as such an exception might encourage sales to “straw buyers” as a means of circumventing the three-year moratorium of RPTL 727(1) and thereby defeat the purpose of the statute.

Editor's Note:Appellant’s motion for leave to appeal to the Court of Appeals was denied.

Prevailing Attorneys: Tarshis, Catania, Liberth, Mahon & Milligram, PLLC

Precis: Joel Grossbarth


Matter of Torok Trust v. Town Board of Town of Alexandria

Court: Appellate Division Fourth Department
Citation: ___AD3d ___, 2015 NY Slip Op. 02632 (4th Dept., 2015)  

Overview: This case presented the first occasion for an appellate court to address whether the newly-enacted three-year moratorium on tax certiorari proceedings under RPTL 727(1) is unconstitutional when applied to a successor property owner.

Facts: In July 2007, petitioner commenced a tax certiorari proceeding pursuant to Real Property Tax Law, Article 7, seeking to reduce the assessment on its property for 2007. The Alexandria Central School District (“District”), the appellant herein, was served but did not intervene in the proceeding. Petitioner and respondents reached an agreement in December 2008 to reduce the assessment on the property for the 2007 tax year. In a stipulation of settlement and order entered January 2009, the parties agreed that RPTL 727 would apply to the settlement, and provided that, if petitioner had paid any taxes and/or special ad valorem levies prior to the issuance of the order, a tax and/or special ad valorem levy refund, based on the reduced assessment, would be made by the District for the 2007-2008 school tax year. The District issued a refund to petitioner for the 2007-2008 school tax year, but did not issue any refund for the 2008-2009 school tax year. Petitioner moved to compel the District to issue a refund for that school tax year, and the District opposed the motion on the ground that petitioner never commenced a tax certiorari proceeding for the 2008 tax year. Supreme Court granted the petitioner’s motion.

Holding:The Appellate Division affirmed the ruling of the Supreme Court. The District contended that, because petitioner did not commence a tax certiorari proceeding challenging the 2008-2009 assessment, it cannot obtain a refund for any overpayments for that year. The Court held that the petitioner was required to challenge the assessed valuations of her properties while her earlier challenge was pending and, having failed to do so, could not obtain relief by relying on RPTL 727 (1).

Requiring petitioner to commence a tax certiorari proceeding for the 2008-2009 school tax year would go against "the interest in reduced litigation contemplated by the statutory respite period." Accordingly, the Appellate Division concluded that the court properly granted petitioner's motion seeking a refund of tax overpayments it made to the District for the 2008-2009 school tax year.

Prevailing Attorneys: David P. Antonucci, Esq

Precis: Joel Grossbarth


T-Rex Hyde Park Owner, LLC v. Dutchess County Legislature

Court: New York State Supreme Court, Appellate Division, Second Department
Citation: ___AD3d___, 2015 NY Slip Op. 09425 (2nd Dept., 2015)

Facts: Dutchess County administers a countywide water district in accordance with the provisions of New York State County Law Article 5-A. With the assistance of the Dutchess County Water and Wastewater Authority (hereinafter “the DCWWA”), the County adopts annual benefit assessment tax rolls for zones of assessment in the water district.

In early 2012, the Plaintiff purchased an undeveloped parcel of approximately 339 acres, located in the County. Soon thereafter, the Plaintiff paid outstanding water district benefit assessments on the property for the years 2010 and 2011, and then paid the assessment for the year 2012. On September 15, 2012, the DCWWA notified the Plaintiffs that the tentative benefit assessment roll for the year 2013 included an assessment of $134,342.17 on its property. The Plaintiffs timely filed a grievance objecting to the tentative assessment and appeared at a grievance hearing before the Board of Benefit Assessment Review (hereinafter “BBAR”). The BBAR denied the grievance at the hearing, and the tentative assessment for the Plaintiff's property was included in the final assessment roll for 2013, adopted by the County Legislature prior to December 31, 2012.

In December 2012, the Plaintiff commenced this hybrid action for a judgment, declaring that the water district special assessment it had just challenged in the administrative procedure was unlawful, unconstitutional, and invalid, and asked for a refund of all special assessments previously paid. The County Legislature and the County moved for summary judgment, dismissing the complaint/petition, noting that the Plaintiff had unsuccessfully grieved the special assessment for 2013. The County argued that the Plaintiff's claims regarding the special assessments for 2012 and prior years were barred for failure to exhaust administrative remedies, and time-barred under the four-month statute of limitations applicable to CPLR Article 78 proceedings. The Plaintiff cross-moved for leave to amend the complaint to correctly identify the year of the special assessment at issue as "2013," rather than "2012." The Supreme Court denied the Plaintiff's cross-motion and granted the County's motion on the grounds of failure to exhaust administrative remedies and expiration of the four-month statute of limitations. Plaintiff appealed.

Holding:The Appellate Division reversed the ruling of the Supreme Court. A petition to review a tax assessment may be amended if the change corrects a defect in form rather than adding a matter of substance, because the taxpayer's right to review should not be defeated by technicalities. The law regarding real property assessment proceedings is remedial in character and should be liberally construed to the end that the taxpayer's right to have his assessment reviewed should not be defeated by a technicality. In reviewing the pleading requirements in real property assessment proceedings, the Court of Appeals has outlined a two-pronged inquiry: (1) whether the respondent received adequate notice of the commencement of the proceedings, and (2) whether any substantial right of the entity would be prejudiced by disregarding the defect or irregularity.

Here, the defect in misidentifying the year of the special assessment at issue was technical and not jurisdictional. The complaint and its attached exhibits gave the County adequate notice of the actual assessment at issue, and the County failed to prove that a substantial right would be prejudiced by disregarding the defect. Accordingly, the Supreme Court should have granted the Plaintiff's cross-motion for leave to amend the complaint and determined the County's motion for summary judgment as addressed to the amended complaint.

With respect to Defendant’s motion for summary judgment dismissing the first, third, fourth, fifth, sixth, and eighth causes of action, the County relied on the fact that special assessments are presumed to be valid, regular and legal and . . . the burden of rebutting the presumption falls upon the landowner. A determination by a board with respect to the amount of benefit conferred on properties by improvements involves the exercise of the legislative power, which will not be interfered with unless it is shown to be so arbitrary or palpably unjust as to amount to a confiscation of property. The County's motion papers failed to establish, prima facie, that the factual allegations in the complaint, as amplified by the exhibits attached thereto, were insufficient to overcome the presumption of validity. Accordingly, those branches of the County's motion for summary judgment should have been denied, regardless of the sufficiency of the opposing papers.

Prevailing Attorneys: John Holden Adams, Esq., Corbally Gatland and Rappleyea, LLP

Precis: Joel Grossbarth


Matter of Hampshire Recreation, LLC v. Board of Assessors of Village of Mamaroneck

Court: New York State Supreme Court, Appellate Division, Second Department
Citation: ___AD3d___, 2016 NY Slip Op. 01847 (2nd Dept., 2016)

Facts:In these tax certiorari proceedings, the subject property is a golf course and country club located within both the Town and Village of Mamaroneck. The property consists of approximately 117 acres located within the Town, of which approximately 110.5 acres are also located within the Village. The entire property is zoned for single-family residential use. It is improved with an 18-hole golf course, a clubhouse, and separate golf and tennis shops.

Hampshire Country Club, Inc., which owned the subject property, commenced a proceeding pursuant to Real Property Tax Law, Article 7 to review the Village's tax assessment for the tax year 2010. On June 9, 2010, the property was sold to Hampshire Recreation, LLC, for $12,100,000 in accordance with a contract of sale that attributed $12 million of the purchase price to the real property. Hampshire Recreation, LLC, thereafter commenced four separate proceedings pursuant to RPTL Article 7 to review both the Village's tax assessments and the Town's tax assessments for the tax years 2011 and 2012.

The proceedings were consolidated for trial, at which the petitioners' expert submitted an appraisal valuing the property as a golf course by relying primarily on the income capitalization method. The expert determined valuations of $4.8 million in 2010, and $4.7 million in 2011 and 2012, with that portion of the property located in the Village valued at $200,000 less than those values for each year. The Town and the Village did not submit an appraisal, relying instead on the June 2010 sales price as the best indicator of value. After trial, the Supreme Court determined that the recent sales price was the best indicator of value, which, in effect, denied the petition to review the Village assessment for the tax year 2012, and granted the remaining petitions to the extent of directing the Town and the Village to reduce the subject assessments to reflect a property valuation of $12 million, to correct the assessment rolls accordingly, and to refund any overpayment of taxes. A judgment and amended judgment were entered accordingly. The petitioners appeal.

Holding:The Appellate Division modified the order of the Supreme Court.

A property valuation by the tax assessor is presumptively valid. However, where a petitioner demonstrates the existence of a valid and credible dispute regarding valuation, the presumption is rebutted. Once the petitioner meets its initial burden and rebutted the presumption of validity that attaches to the assessment, a court must weigh the entire record to determine whether the petitioner has established by a preponderance of the evidence that its property has been overvalued.

Here, the Supreme Court properly determined that the petitioners had rebutted the presumption of validity of the subject assessments by submitting an appraisal based on "sound theory and objective data". However, the Supreme Court erred in determining that the petitioners had only established overvaluation to the extent that the assessments were based upon property valuations over the $12 million recent sales price.

The purchase price set in the course of an arm's length transaction of recent vintage, if not explained away as abnormal in any fashion, is evidence of the highest rank to determine the true value of the property at that time. However, improved property must be assessed based on its current condition and use. "Property is assessed for tax purposes according to its condition on the taxable status date, without regard to future potentialities or possibilities and may not be assessed on the basis of some use contemplated in the future." Accordingly, in the context of a tax certiorari proceeding involving improved land, a recent sales price that was based upon speculation for future development, rather than continuation of the property's current use, is not a proper indicator of value.

Here, the evidence at trial established that the subject property was purchased for future residential development that had not yet occurred, and the sales price was based upon this residential development potential. Accordingly, the Supreme Court's adoption of the recent sales price as the valuation of the property for assessment purposes was in error.

In valuing the property, the petitioners' appraiser relied primarily on the income capitalization method, which is a proper methodology for valuing a golf course. However, due to certain issues with the appraisal involving the appraiser's conceded use of an improper tax load factor and certain insufficient explanations for changes made from an earlier appraisal he did of the property, the Court determined that the petitioners met their burden of establishing that the property was overvalued to the extent indicated.

Prevailing Attorneys: Herman Katz Cangemi & Clyne, LLP

Precis: Joel Grossbarth


YCA Corp. v. Greenspan

Court: New York State Supreme Court, Appellate Term, Second Department
Citation: ___ AD3d ___ , 2016 Slip Op. 50047 (App. Term, Sec. Dept., 2016)

Facts: Plaintiff YCA Corp. commenced this commercial claims action to recover the balance due under a tax reduction representation agreement. On September 8, 2011, the parties entered into an agreement pursuant to which Defendant authorized Plaintiff to file a real property tax grievance for the 2013/2014 tax year for property located in Oyster Bay Cove, New York. Under the agreement, Defendant agreed to pay Plaintiff a fee "equal to 50% of the first year tax reduction that is applicable to my property, payable within 30 days of the notification of tax reduction." On August 14, 2013, after a Small Claims Assessment Review  hearing, at which Plaintiff appeared on Defendant's behalf, the hearing officer found that there was an excessive assessment and reduced the assessed value of the property by $528, or from $5,128 to $4,600. The reduction of the assessed value resulted in a reduction of Defendant's 2013/2014 school taxes and 2014 general taxes, for a total tax year savings of $5,886.38. Plaintiff's January 8, 2014 bill to Defendant, for $2,943.19, was based on one-half of Defendant's total tax year savings as a result of the assessment reduction. Defendant failed to pay Plaintiff the amount due, and Plaintiff commenced this action. As Defendant failed to answer or appear, an inquest was held, and, in a judgment entered June 17, 2014, Plaintiff was awarded the principal sum of $2,300. Plaintiff appealed on the ground of inadequacy.

Holding:The Appellate Term modified the District Court’s ruling and increased Plaintiff’s award.

The Appellate Term required that the award to Plaintiff be increased. Plaintiff demonstrated that it had obtained a reduction in the assessed value of Defendant's property, resulting in a total tax year savings of $5,886.38. Since the agreement provided that Plaintiff's fee would be based upon "50% of the first year tax reduction," Plaintiff was entitled to recover the principal sum of $2,943.19.

Accordingly, the judgment was modified by increasing the amount of the award in favor of Plaintiff to the principal sum of $2,943.19.

Precis: Joel Grossbarth


Matter of Glens Falls City School District v. City of Glens Falls, et al.

Court: New York State Supreme Court, Appellate Division, Third Department
Citation: ___ AD3d ___ , 2016 Slip Op. 00089 (3rd Dept., 2016).

Facts: Respondent City of Glens Falls is divided into two school districts — Petitioner Glens Falls City School District (hereinafter “Petitioner School District”) and Respondent Glens Falls Common School District. Respondent Finch Paper LLC owns two adjacent parcels of real property over which certain buildings and structures span. Parcel 1 is located within Petitioner School District's taxing district, and Parcel 2 is located within the taxing district of the Glens Falls Common School District. In 2005, Respondent City of Glens Falls Assessor conducted a citywide revaluation and assessment. On July 1, 2012, the Assessor filed the final tax roll for the City and listed the value of Parcel 1 as $7,550,000, and the value of Parcel 2 as $25,149,700. Thereafter, Petitioners commenced this combined CPLR Article 78 proceeding and declaratory judgment action challenging the valuation and allocation of the assessed value of Parcels 1 and 2. Respondents moved to dismiss the petition/complaint. Supreme Court granted Respondents' motions to dismiss on the basis of timeliness. Petitioners appealed, and Respondents cross-appealed.

Holding:The Appellate Term affirmed the Supreme Court’s ruling.

A challenge to a property assessment alleging illegality, overvaluation or inequality with respect to assessments must be brought pursuant to Real Property Tax Law, Article 7. However, a CPLR Article 78 proceeding is appropriate where a petitioner raises a challenge as to the taxing authority's jurisdiction, the method utilized in the assessment or the legality of the tax itself.

As to the methodology exception, a CPLR Article 78 proceeding is proper only if the challenge is directed at "a policy or practice" governing assessments, rather than discrete valuation determinations. Mere allegations that the attack is on a methodology rather than on individual determinations are insufficient to relieve a petitioner of its obligation to pursue relief pursuant to RPTL Article 7.

Even granting Petitioners' allegations a liberal construction and giving them the benefit of every reasonable inference, Petitioners failed to challenge any assessment methodology. While Petitioners factually allege that discrete determinations regarding the assessments of Parcels 1 and 2 were erroneous, they failed to identify a particular methodological approach — that is, any rule applied as a policy or practice in assessments generally — that they allege was improper. Given this failure to identify and challenge any methodological approach to the assessments, dismissal of the petition was required. Further considering that Petitioners' declaratory judgment cause of action — seeking a declaration of a specific assessment valuation of the relevant parcels — was entirely dependent on the success of their CPLR Article 78 challenge to the lawfulness of the existing assessment, that cause of action does not survive Petitioners' failure to state a methodological challenge. This determination renders the issues of the timeliness of the petition and Petitioners' standing academic.

Prevailing Attorneys: Newell & Klingebiel, LLP

Precis: Joel Grossbarth


Kathleen Costigan et al. v. Village of Garden City