You are here: / Real Property Tax Law

Reassessment of Improved Property Was Not an Unconstitutional Selective Assessment

Reversing Supreme Court, the Second Department determined the reassessment of petitioner’s property after the construction of improvements on the property was not an unconstitutional selective assessment:

Contrary to the determination of the Supreme Court, the petitioner failed to establish that there was an unconstitutional selective reassessment of the subject property. “It is well settled that a system of selective reassessment that has no rational basis in law violates the equal protection provisions of the Constitutions of the United States and the State of New York. Nevertheless, reassessment upon improvement is not illegal in and of itself . . . [n]or is the use of the purchase price or the current market value to reach a tax assessment in and of itself unconstitutional so long as the implicit policy is applied even-handedly to all similarly situated property” (Matter of Leone Props., LLC v Board of Assessors for Town of Cornwall, 81 AD3d 649, 650-651 [internal quotation marks omitted]). Here, the assessor testified at trial that whenever a new house is constructed on property, she visits the property and estimates the market value of the property, while considering comparable sales of improved property, land sales, and the construction costs of typical homes. The petitioner failed to submit any evidence demonstrating that the City assessed newly constructed property at a higher percentage of market value than existing property … . Matter of Carroll v Assessor of City of Rye NY, 2014 NY Slip Op 08837, 2nd Dept 12-17-14

 

,

Declaratory Judgment Action Was Actually Seeking to Open a Default Judgment in a Tax Foreclosure Proceeding—30-Day Statute of Limitations in the Tax Law Applied

The Third Department determined that a proceeding seeking a declaratory judgment was actually seeking to open a default judgment in a tax foreclosure proceeding, subject to a 30-day statute of limitations.  The action was dismissed as untimely:

A tax debtor’s motion to reopen a default judgment of tax foreclosure ‘may not be brought more than one month after entry of the judgment'” … . Although the complaint seeks a judgment declaring that the foreclosure is a nullity and does not expressly seek an order vacating the default judgment, it is apparent that the relief that plaintiff now seeks is analogous to that which is demanded in an application to reopen a judgment entered on default and it is, therefore, subject to the timing requirements of RPTL 1131. As the action was commenced more than one month after the default judgment of foreclosure was entered and plaintiff has not demonstrated “either a reasonable excuse for his default or a meritorious defense,” dismissal of the complaint was warranted … . Goodfriend v Village of Jeffersonville, 2014 NY Slip Op 08279, 3rd Dept 11-26-14

 

,

Incidents of Ownership Awarded Hospital-Services-Tenant in Lease Entitled Tenant to Exemption from Real Property Tax

The Third Department determined that the tenant of a building used for hospital services was entitled to an exemption from real property tax because the tenant assumed many incidents of ownership.  The town argued that the tenant was not entitled to any exemption because it was not the true owner of the building:

As relevant here, RPTL 420-a mandates that “[r]eal property owned by a corporation or association organized or conducted exclusively for . . . hospital . . . purposes, and used exclusively for carrying out thereupon one or more of such purposes . . . shall be exempt from taxation” (RPTL 420-a [1] [a] [emphasis added]). Land and buildings are separately defined as taxable forms of real property (see RPTL 102 [12] [a], [b]), and a landlord and tenant may agree to their separate ownership … . The mere labeling of a tenant as “owner,” however, is not conclusive for real property taxation purposes … . Rather, the question of ownership turns on whether the lease agreement confers incidents of ownership upon the tenant or whether the landlord retains such dominion and control over the property that it must be deemed the beneficial owner for tax purposes … .

Here, the lease expressly vests title to all improvements on the property in petitioner as owner and grants petitioner significant incidents of ownership. For example, petitioner is entitled to claim depreciation on the improvements and is insured to the full extent of its interest in the building. In the event of substantial destruction of the improvements, petitioner has the right to determine whether to rebuild and, in the event of condemnation proceedings, petitioner is to receive the value of its present interest in the improvements. Petitioner also has the sole right to contest any tax assessment of the property, obtain a mortgage on the improvements, which it has done, and remove the improvements at the end of the lease term. Title to the improvements and the right to remove them vest in the landlord only in the event that petitioner abandons them at the termination of the lease. Finally, it is undisputed that the landlord does not retain any control over petitioner’s operation of its improvements as a health care facility. Matter of United Health Servs Hosps Inc v Assessor of the Town of Vestal, 2014 NY Slip Op 08275, 3rd Dept 11-26-14

 

Apartment Buildings Used to House Actors and Staff of a Youth and Summer Theater Entitled to Exemption from Real Property Tax Under Real Property Tax Law (RPTL 420-a)—Property Used to Further “Educational, Moral and Mental Improvement”

The Court of Appeals, in a full-fledged opinion by Judge Lippman, affirmed the appellate division’s finding that two apartment buildings used to house the actors and staff of a not-for-profit theater corporation (Merry-Go-Round Playhouse) were entitled to (real estate) tax-exempt status. The fact that admission is charged for performances did not warrant denial of  the exemption:

Under the Real Property Tax Law, “[r]eal property owned by a corporation or association organized or conducted exclusively for religious, charitable, hospital, educational, or moral or mental improvement of men, women or children purposes . . . and used exclusively for carrying out thereupon one or more of such purposes . . . shall be exempt from taxation as provided in this section” (RPTL 420-a [1] [a]). The burden of establishing that the property is entitled to a tax exemption rests with the taxpayer … .

Here, it is clear that petitioner is organized exclusively for an exempt purpose, in that it is intended to promote appreciation for the arts/musical theater, thereby providing education to the community and advancing the moral or mental improvement of area residents. The summer stock theater does not have the same educational component as the youth theater, but is similarly geared toward promoting the arts. In addition, although the summer stock theater charges admission, that bare fact cannot nullify petitioner’s tax exempt purpose. We have previously observed that “[a] ‘commercial patina’ alone is not enough to defeat tax-exempt status” … . Merry-Go-Round asserts without contradiction that the theater generally either breaks even or operates at a loss. There is no indication that petitioner is organized for the purpose of making a profit and this limited commercial aspect does not preclude it from receiving a tax exemption.

“The test of entitlement to tax exemption under the used exclusively clause of the statute is whether the particular use is reasonably incidental to the primary or major purpose of the facility. Put differently, the determination of whether the property is used exclusively for the statutory purposes depends upon whether its primary use is in furtherance of the permitted purposes” … . …

…[T]he primary use of the apartment buildings is in furtherance of Merry-Go-Round’s primary purpose. Petitioner established that the housing is used to attract talent that would otherwise look to other theaters for employment, that the living arrangement fosters a sense of community and that the staff spends a significant portion of its off-hours in furtherance of theater-related pursuits. In addition …the record shows that petitioner would have difficulty recruiting qualified staff if it did not provide the housing, which would undermine its primary purpose. Although we have not previously addressed the provision of tax exempt housing in relation to an arts organization, the statute does not elevate one exempt purpose over another. Under these circumstances, the use of the property to provide staff housing is reasonably incidental to petitioner’s primary purpose of encouraging appreciation of the arts through theater. Matter of Merry-Go-Round Playhouse Inc v Assessor of City of Auburn, 2014 NY Slip Op 07928, CtApp 11-18-14

 

 

,

Fact that Property Has a Use “Auxiliary or Incidental to the Main Exempt Purpose” Does Not Defeat the Real Property Tax Exemption Under RPTL 420-a

The Court of Appeals, in finding the property owned by a not-for-profit religious corporation exempt from real estate tax, determined that the “exclusive use” clause of Real Property Tax Law (RPTL) 420-a should be interpreted broadly:

Under [RPTL 420-a], real property owned by a corporation that is “organized and conducted exclusively” for charitable and/or religious purposes, if “used exclusively” for such purposes, “shall be exempt from taxation” (RPTL 420-a [1] [a]). We have defined the term “exclusively” as used in this context “to connote ‘principal’ or ‘primary,’ such that purposes and uses merely ‘auxiliary or incidental to the main and exempt purpose’ and use will not defeat the exemption'” … . Matter of Maetreum of Cybele, Magna Mater Inc v McCoy, 2014 NY Slip Op 07929, CtApp 11-18-14

 

,

Failure to Strictly Comply with Notice Rules of the Real Property Tax Law Required Dismissal of the Challenge to the Tax Assessment/Criteria for Review of Competing Expert Evidence of Valuation Explained

The Third Department determined that proceedings challenging three yearly tax assessments were properly dismissed. Failure to comply with the notice requirements of the Real Property Tax Law (RPTL) was the basis for the dismissal one of the actions and the court explained the relevant law.  The court also explained its review powers re: competing expert evidence of valuation:

Supreme Court properly dismissed the 2010 proceeding for failure to comply with RPTL 708 (3). It is undisputed that petitioner failed to serve a copy of the 2010 notice of petition and petition upon the superintendent of SCCSD [South Colonie Central School District], the school district within which the subject property is located, within 10 days of service of the petition upon the Assessor, as required by RPTL 708 (3). Failure to strictly comply with the statute’s notice requirements “shall result in the dismissal of the petition, unless excused for good cause shown” (RPTL 708 [3]). No such showing has been made here. Petitioner was aware that SCCSD was the proper school district, having previously served SCCSD with the 2008 petition and engaged in litigation with it in connection with that proceeding, and “[t]he mistake or omission of . . . petitioner’s attorney does not constitute ‘good cause shown’ within the meaning of RPTL 708 (3) to excuse . . . petitioner’s failure to comply” … . Nor may noncompliance with the statute be excused on the ground that SCCSD has not been prejudiced thereby … . * * *

At trial [re: the 2008 and 2009 tax assessments], petitioner offered the expert appraisal reports and testimony of a certified real estate appraiser, who utilized the sales comparison methodology to value the property at $1.3 million for the 2008 tax year and $1.4 million for the 2009 tax year. This evidence was sufficient to rebut the presumption of validity and establish a credible dispute between the parties regarding valuation … . Supreme Court was then required to “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” … . “Our review of such a determination must necessarily defer to Supreme Court in its resolution of any credibility issues that have been generated by the conflicting expert opinions[,] and is limited to whether the court’s determination of the fair market value of the subject property is supported by or against the weight of the evidence” … . Highbridge Dec BR LLC v Assessor of the Town of Niskayuna, 2014 NY Slip Op 07216, 3rd Dept 10-23-14

 

, ,

Denial of Property Tax Refunds by Director of Tax Commission Was Not Final—Article 78 Claims Not Ripe for Judicial Review

The Second Department determined the Article 78 proceedings seeking property tax refunds were not ripe for judicial review because the denial of the refunds by the Director of the county Tax Commission was not final:

…[T]he Supreme Court properly determined that his claims seeking CPLR article 78 relief relating to his tax refund applications were not ripe for judicial review. Administrative determinations may only be challenged via CPLR article 78 review after the determination is final (see CPLR 7801[1]). “For a challenge to administrative action to be ripe, the administrative action sought to be reviewed must be final, and the anticipated harm caused by the action must be direct and immediate” … . Moreover, a matter is not ripe where the claimed harm may be prevented or significantly ameliorated by further administrative action … . Here, the issuance of written recommendations by the Executive Director of the Westchester County Tax Commission was not a final approval or denial of the appellant’s tax refund applications (see RPTL 5565])… . Matter of Greenberg v Assessor of Town of Scarsdale, 2014 NY Slip Op 07160, 2nd Dept 10-22-14

 

, ,

City Estopped from Denying Property Owner the Opportunity to Seek Discretionary Relief Re: the Payment and Acceptance of Tax Arrears—City’s Actions Misled Property Owner

The Second Department determined the equitable estoppel doctrine could properly be applied to a municipality in this case. A city employee had allowed the petitioner (Emporium) to enter an installment agreement to pay back real property taxes at a time when the property had already been foreclosed and transferred.  The Second Department determined Emporium was entitled to a hearing to determine whether the city is equitably estopped from denying Emporium the opportunity to seek discretionary relief re: the payment and acceptance of tax arrears:

With respect to Emporium’s equitable estoppel claim, “[a]lthough estoppel should not be invoked against governmental entities in the absence of exceptional circumstances, we have not hesitated to do so where a municipality’s misleading nonfeasance would otherwise result in a manifest injustice” … . “To establish estoppel, the misconduct of the public agency must have induced justifiable reliance by a party who then changed his position to his detriment” … . * * *

The City respondents’ failure to contact Emporium once it determined that the installment agreements would not be honored constitutes misleading conduct … . Moreover, the City respondents maintained their silence during a period of time when action could have made a difference to Emporium … . Matter of Emporium Mgt Corp v City of New York, 2014 NY Slip Op 07157, 2nd Dept 10-22-14

 

,

Failure to Comply with Statutory Notice Requirements Required Dismissal of Action Seeking Review of Real Property Tax Assessments—Such a Dismissal is On the Merits

The Second Department determined dismissal of the proceeding questioning the assessment of a parcel of land was properly dismissed because the petitioner failed to comply with the notice requirements of Real Property Tax Law (RPTL) 708(3).  The court noted that such a dismissal is on the merits:

Contrary to the Supreme Court’s determination, the City had standing to seek dismissal of the proceedings based on the petitioner’s failure to give notice of the proceedings to the Superintendent of the District pursuant to RPTL 708(3) … .

As the petitioner correctly concedes on appeal, it failed to give notice of the proceedings to the Superintendent of the District pursuant to RPTL 708(3), and lacked good cause for its failure. * * *

Since a dismissal pursuant to RPTL 708(3) operates as a dismissal upon the merits, the relief afforded by CPLR 205(a) is unavailable … . Matter of Westchester Joint Water Works v Assessor of City of Rye, 2014 NY Slip Op 06208, 2nd Dept 9-17-14

 

Action Based Upon Misclassification of Property Must Be Brought Under Article 7 of the Real Property Tax Law

In determining that an action based on the allegation property had been misclassified must be brought under article 7 of the Real Property Tax Law (RPTL), the Second Department explained when a plenary action challenging property tax can and cannot be maintained:

In general, the proper method for challenging excessive or unlawful real property tax assessments is by the commencement of a tax certiorari proceeding pursuant to RPTL article 7 … . Such a proceeding, which must be commenced within 30 days after the filing of the final assessment roll, can challenge an assessment as being excessive, unequal, or unlawful, or as resulting from the property being misclassified (see RPTL 702[2]; 706[1]).

The procedures of RPTL article 7 need not be followed, and a plenary action may be commenced collaterally attacking the assessment where the challenge is that the taxing authority has exceeded its power, such as by effectively withdrawing a previously recognized exemption … . A collateral attack may also be mounted where the challenge is based upon “the method employed in the assessment involving several properties rather than the overvaluation or undervaluation of specific properties” … .

Here, all of the allegations regarding the assessment stem from the Board’s determination that the subject property should be classified as “Class two” property on the 2007/2008 tax roll … . As the Supreme Court properly pointed out, a challenge to this alleged misclassification had to be asserted in a proceeding pursuant to RPTL article 7 … . Tricarico v County of Nassau, 2014 NY Slip Op 05857, 2nd Dept 8-20-14

 

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2025 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy