Presumption of Validity of Town’s Property Tax Assessment Not Rebutted by Objective Data

The Court of Appeals, in a full-fledged opinion by Judge Graffeo, reversed the 4th Department’s determination that the Board of Managers of a condominium had rebutted the presumption of validity which attached to the Town’s property tax assessment. The Board’s appraisal was not based upon objective data which substantiated the calculations:

In an RPTL article 7 tax certiorari proceeding, “a rebuttable presumption of validity attaches to the valuation of property made by the taxing authority” … . Consequently, a taxpayer challenging the accuracy of an assessment bears the initial burden of coming forward with substantial evidence that the property was overvalued by the assessor. In the context of tax assessment cases, we have explained that the substantial evidence standard requires the taxpayer to “demonstrate the existence of a valid and credible dispute regarding valuation” … . If the taxpayer satisfies this threshold burden, the presumption disappears and the court “must weigh the entire record, including evidence of claimed deficiencies in the assessment, to determine whether petitioner has established by a preponderance of the evidence that its property has been overvalued” … . But where a taxpayer fails to rebut the presumption, the municipality’s assessor has no obligation to go “forward with proof of the correctness of [its] valuation,” and the petition is to be dismissed … .

…[T]he appraiser did not provide the sources of the income or expense figures related to each comparable (…[“Data on each property’s sale price, income, expenses, financing terms, and market conditions at the time of sale are needed.”]).

More importantly, the hearing testimony of the Board’s appraiser revealed that he had little to no confirmable data to support the income and expense numbers he employed to derive the capitalization rate. During his direct examination, the appraiser asserted that he relied on “very good” and “very strong” data that came from “certified sources.” On cross-examination, however, he conceded that he had no certified expense or income information and instead had relied on “forecasted economic indicators” with respect to the apartment buildings. In fact, he could identify only two documents in the record that provided any “limited historic operating expenses,” and this information was for only two comparables and did not correlate to the numbers used in the appraisal report. He admitted that he had no documents supporting his analysis as to the other two comparable properties. When pressed, he proffered that the relevant figures were based on his “personal exposure” to the complexes, i.e., his own unverifiable knowledge. But as the Appellate Division dissenters aptly recognized, “[a]n appraiser cannot simply list financial figures of comparable properties in his or her appraisal report that are derived from alleged personal knowledge; he or she must subsequently ‘prove’ those figures to be facts at trial” … . Simply put, the record before us affords no basis to check or test whether the net operating incomes for these four properties — and the capitalization rates adduced from them — were valid, or even in the ballpark. Matter of Board of Mgrs of French Oaks Condominium v Town of Amherst, 2014 NY Slip Op 02971, CtApp 5-1-14