| Matter of OCG L.P. v Board of Assessment Review of the Town ofOwego |
| 2010 NY Slip Op 08835 [79 AD3d 1224] |
| December 2, 2010 |
| Appellate Division, Third Department |
| In the Matter of OCG Limited Partnership, Appellant, v Board ofAssessment Review of the Town of Owego, Respondent. (Proceeding No. 1.) In the Matter of OCGLimited Partnership, Appellant, v Town of Owego et al., Respondents. (Proceeding No.2.) |
—[*1] Hancock & Estabrook, L.L.P., Syracuse (Janet D. Callahan of counsel), forrespondents.
Stein, J. Appeal from an order of the Supreme Court (Tait, J.), entered August 24, 2009 in TiogaCounty, which dismissed petitioner's applications, in two proceedings pursuant to RPTL article 7, toreduce the 2004 and 2005 tax assessments on certain real property owned by petitioner.
Petitioner is the owner of a parcel of land in the Village of Owego, Tioga County, on [*2]which he built a 22-unit housing project for low income families, whichwas completed in 2004. Petitioner contested the assessments by respondent Board of AssessmentReview of the Town of Owego of the property's taxable value of $815,800 for the 2004 and 2005 taxyears. After each of the assessments were affirmed, petitioner commenced these proceedings pursuantto RPTL article 7 to review them.
Appraisals of the property were thereafter conducted and exchanged by the parties. At a hearingon petitioner's applications, respondents objected to the admission of petitioner's appraisal and soughtdismissal of the petitions. After adjourning the proceedings to allow time for written submissions by theparties,[FN1]Supreme Court issued a decision and order sustaining respondents' objection and dismissing thepetitions on the basis that petitioner's appraisal was not admissible. Petitioner now appeals and wereverse.
In order to overcome the presumption of validity of an assessment arrived at by a municipality's taxassessor, a petitioner is required to come forward with "substantial evidence" that the assessment iserroneous (Matter of FMC Corp. [Peroxygen Chems. Div.] v Unmack, 92 NY2d 179, 187[1998]). "The substantial evidence standard is a minimal standard. It requires less than clear andconvincing evidence, and less than proof by a preponderance of the evidence, overwhelming evidenceor evidence beyond a reasonable doubt" (id. at 188 [internal quotation marks and citationsomitted]). The burden of rebutting the presumption may be met by submission of " 'a detailedcompetent appraisal, based on standard, accepted appraisal techniques and prepared by a qualifiedappraiser, demonstrat[ing] the existence of a genuine dispute concerning valuation' " (Matter of United Parcel Serv. v Assessor ofTown of Colonie, 42 AD3d 835, 837 [2007], quoting Matter of Friar Tuck Inn of Catskills v Town of Catskill, 2 AD3d 1089,1090 [2003]). Such appraisal report must "contain a statement of the method of appraisal relied on andthe conclusions as to value reached by the expert, together with the facts, figures and calculations bywhich the conclusions were reached" (22 NYCRR 202.59 [g] [2]). Once the presumption of validitythat attaches to the assessment has been rebutted, the court must weigh the entire record to determinewhether the petitioner has proven by a preponderance of the evidence that the property has beenovervalued (see Matter of Wolf Lake v Board of Assessors for Town of Thompson, 271AD2d 925, 925 [2000]).
Here, petitioner submitted the appraisal report of its expert, David Sprague, an accredited businessaccountant, who appraised the property—as did respondents' expert—using thecapitalization of income method. Unlike respondents' expert, Sprague elected to use the approach setforth in RPTL 581-a, which takes into account the amount of government-required reserves asexpenses associated with the property. At trial, Sprague testified about his background in accountingand tax work and his professional experience with using the capitalization of income method to valuereal estate, among other things. When petitioner sought to introduce Sprague's appraisal report intoevidence, Sprague testified—on voir dire by respondents' counsel—that he did not knowwhat the applicable valuation dates (see RPTL 301) or taxable status dates (see RPTL302) were. Respondents then objected to the admission of Sprague's report into evidence on thegrounds that Sprague was not a qualified appraiser and that his report failed to set forth the applicabletaxable status and valuation dates. Respondents also argued that petitioner failed to serve a verified orcertified statement of income and expenses and [*3]that Sprague'sreport did not contain sufficient data to support the conclusions reached in accordance with 22NYCRR 202.59 (b) and (g) (2), respectively.
Initially, although Supreme Court did not address the issue of Sprague's qualifications, we note thatexpert witnesses who are not real estate appraisers are not categorically excluded from offering theiropinion on property valuations (see Matter of City of Troy v Town of Pittstown, 306 AD2d718, 719 [2003], lv denied 1 NY3d 505 [2003]). In fact, experts who are not appraisers maybe preferable for certain appraisal methods (see generally Matter of Tennessee Gas Pipeline Co. vTown of Sharon Bd. of Assessors, 298 AD2d 758, 759 [2002], lv denied 99 NY2d 506[2003]). Here, considering the valuation method used by Sprague, we decline to find that he is not aqualified expert.
Additionally, it is undisputed that the income capitalization method is an accepted approach tovaluation of an income-producing property, such as the one at issue here (see Matter of John P.Burke Apts. v Swan, 137 AD2d 321, 325 [1988]). The fact that some aspects of Sprague'svaluation methodology may be subject to question goes to the weight to be accorded the appraisal andnot to "the threshold issue of whether petitioner produced substantial evidence to rebut the presumptionof validity" (Matter of Myron Hunt/ShakerLoudon Assoc. v Board of Assessment Review for Town of Colonie, 6 AD3d 953, 955[2004]).
We are also unpersuaded that admission of Sprague's report is precluded by petitioner's failure toprovide respondents with a verified or certified statement of income and expenses prior to the filing ofthe note of issue or by the existence of questions about Sprague's application of the information uponwhich he relied. Petitioner's appraisal contained a description of its underlying calculations and a tableof figures used in the valuation. Annexed to the report was a "Report on Financial Statements" datedJanuary 2006, which was prepared by another accounting firm and provided a detailed accounting ofpetitioner's revenues and expenses during the tax years in question. Petitioner provided respondentswith such information well in advance of trial so as to allow them to prepare for cross-examination(see Matter of Golub Corporation/Price Chopper Operating Co. v Assessor of Town ofQueensbury, 282 AD2d 962, 963 [2001]; compare Matter of Pyramid Crossgates Co. vBoard of Assessors of Town of Guilderland, 302 AD2d 826, 828 [2003], lv denied 100NY2d 504 [2003]).[FN2]Accordingly, we conclude that petitioner's appraisal is sufficiently supported by underlying data to beadmissible.
Nor is it fatal that Sprague's report does not make specific reference to the applicable valuationdates. Respondents have not identified any statute or regulation that definitively requires such explicitreference in the report. Moreover, inasmuch as the income capitalization method of appraisal is basedon a consideration of profits derived from a property over a period of time, rather than the sale price ona particular date (see generally 41 Kew Gardens Rd. Assoc. v Tyburski, 70 NY2d 325, 331[1987]; Matter of Merrick Holding Corp. v Board of Assessors of [*4]County of Nassau, 45 NY2d 538, 542-543 [1978]), it is possiblethat, if permitted to testify fully, petitioner's expert will adequately relate his determination of value to theapplicable valuation and taxable status dates. Thus, petitioner should be given an opportunity to curesuch deficiency in Sprague's report through his testimony (see Matter of Regency Realty Assoc., LLC v Board of Assessment Review of theTown of Malta, 75 AD3d 950, 952 [2010]; Matter of Gibson v Gleason, 20 AD3d 623, 625 [2005], lvdenied 5 NY3d 713 [2005]).
Based upon the foregoing, we are of the view that petitioner's appraisal meets the minimalstandards for admissibility and demonstrates the existence of a genuine dispute regarding valuation.Therefore, the matter should proceed to trial where such appraisal may be further explained and anydeficiencies explored so that Supreme Court may give it the appropriate weight (see Matter ofAmes Dept. Stores v Assessor of Town of Greenport, 276 AD2d 890, 892 [2000]).
The parties' remaining contentions have been considered and are either academic or unpersuasive.
Rose, J.P., Lahtinen, McCarthy and Garry, JJ., concur. Ordered that the order is reversed, on thelaw, without costs, and matter remitted to the Supreme Court for further proceedings not inconsistentwith this Court's decision.
Footnote 1: We note that such submissions arenot contained within the record on appeal.
Footnote 2: We also note that respondents didnot move to strike the note of issue in order to compel service of a verified or certified statement,instead waiting until the trial itself to object to its absence. Furthermore, in our view, respondents havedemonstrated no actual prejudice based on petitioner's lack of technical compliance with the applicableregulation.