| Matter of Village Sq. of Penna, Inc. v Board of AssessmentReview of the Town of Colonie |
| 2014 NY Slip Op 09080 [123 AD3d 1402] |
| December 31, 2014 |
| Appellate Division, Third Department |
[*1]
| In the Matter of Village Square of Penna, Inc.,Respondent, v Board of Assessment Review of the Town of Colonie et al.,Appellants. (And Another Related Proceeding.) |
The Vincelette Law Firm, Albany (Daniel G. Vincelette of counsel), forappellants.
Goldman Attorneys, PLLC, Albany (Paul J. Goldman of counsel), forrespondent.
Lahtinen, J. Appeals (1) from an order of the Supreme Court (O'Connor, J.), enteredSeptember 13, 2013 in Albany County, which, among other things, granted petitioner'sapplications, in two proceedings pursuant to RPTL article 7, to reduce the 2010 and 2011tax assessments on certain real property owned by petitioner, (2) from the judgmententered thereon, and (3) from an order of said court, entered May 5, 2014 in AlbanyCounty, which, among other things, granted petitioner's cross motion to amend thepetitions in the tax assessment proceedings.
Petitioner is the owner of three parcels of real property in the Town of Colonie,Albany County, the largest of which is approximately 7.6 acres (hereinafter the subjectproperty) and is improved by a hotel known as The Desmond. In 2010 and 2011, thesubject property had an assessed value of $16,000,000 (reflecting full market values of$23,880,597 and $23,703,703, respectively).[FN*] Petitioner commenced these RPTLarticle 7 proceedings seeking a reduction for 2010 to an assessed value of $10,050,000(market value $15,000,000) and for 2011 to an assessed value of $8,375,000 (marketvalue $12,407,407). Respondent North Colonie Central School District intervened andSupreme Court consolidated the proceedings for trial.
At the ensuing nonjury trial, petitioner's appraiser, Erich Baum, testified that he used,[*2]among other things, the income capitalizationapproach to establish the value of the subject property, relying primarily on the actualfinancial performance and history of the hotel. He placed the full market value of thesubject property at $13,300,000 (assessed value $8,911,000) for the 2010 tax year, and$12,109,000 (assessed value $8,173,575) for the 2011 tax year. Christopher Harland,respondents' appraiser, also concluded that the income capitalization approach was thebetter method; however, relying more heavily on market expectations and performancerather than the actual performance of the hotel, he assigned a higher fair market value of$26,200,000 (assessed value $17,554,000) for tax year 2010 and $26,000,000 (assessedvalue $17,550,000) for tax year 2011. Supreme Court found the testimony and appraisalof petitioner's expert to be more persuasive and adopted petitioner's valuation for bothyears.
Respondents thereafter moved to modify the ensuing judgment, contending that itwas error to reduce the assessment of the subject property below the value that petitionerhad sought in its applications for review by respondent Board of Assessment Review ofthe Town of Colonie or in its ensuing RPTL article 7 petitions. Petitioner cross-moved toamend the petitions nunc pro tunc to conform to the proof adduced at trial. SupremeCourt granted petitioner's cross motion and denied respondents' motion. Respondentsappeal from the order and judgment reducing petitioner's assessments, as well as from theorder denying their motion to modify the judgment.
It is undisputed that petitioner met its initial burden to rebut the presumptive validityof the tax assessments and, accordingly, Supreme Court was required to "weigh the entirerecord, including evidence of claimed deficiencies in the assessment, to determinewhether petitioner has established by a preponderance of the evidence that its propertyhas been overvalued" (Matter of FMC Corp. [Peroxygen Chems. Div.] vUnmack, 92 NY2d 179, 188 [1998]; see Matter of Gibson v Gleason, 20 AD3d 623, 626 [2005],lv denied 5 NY3d 713 [2005]). "Where, as here, conflicting expert evidence ispresented, we defer to the trial court's resolution of credibility issues, and consider'whether the court's determination of the fair market value of the subject property issupported by or against the weight of the evidence' " (Matter of Lowe's Home Ctrs., Inc.v Board of Assessment Review and/or Dept. of Assessment Review of TompkinsCounty, 106 AD3d 1306, 1307 [2013], quoting Matter of Northern Pines MHP,LLC v Board of Assessment Review of the Town of Milton, 72 AD3d 1314,1316 [2010]). Under settled law with respect to income-producing property, "actualincome is the best indicator of value" (Matter of Conifer Baldwinsville Assoc. vTown of Van Buren, 115 AD2d 325, 325 [1985], affd 68 NY2d 783 [1986];see Matter of Mutual of Am.Life Ins. Co. v Tax Commn., 68 AD3d 586, 594 [2009]; Matter of NorthCountry Hous. v Board of Assessment Review for Vil. of Potsdam, 298 AD2d 667,668-669 [2002]).
Baum employed the income capitalization method to ascertain the present value ofthe property by calculating the return that investors would expect to get on theirinvestment if they purchased this property, primarily utilizing the hotel's actual, historicalincome, occupancy rate and expenses—rather than placing reliance uponcompetitor hotels or market expectations. He explained that the hotel is a uniquefull-service hotel which, unlike its competitors, is not affiliated with a national franchiseand derived a much greater percentage of its revenue from food and beverage sales; heaccordingly opined that the actual performance of the hotel was the most importantindicator of its expected profit and, thus, its present market value. From 2005 through2010, despite good management and reduction of expenses, petitioner's actual cash flowper unit and revenue suffered a significant decline for several reasons, including newmodern competition, lack of franchise or brand affiliation, the economic downturn andthe condition of the hotel. It was not error for Supreme Court to credit, in valuing thisproperty, Baum's [*3]substantiated opinion that projectedhigher market revenues—which petitioner's hotel never actuallyachieved—were not economically feasible or attainable for this property.Likewise, the court rationally rejected Harland's testimony and appraisal to the extent thatit projected revenue far in excess of that historically attained by the hotel rather thanrelying on actual income figures.
Respondents' contention that Supreme Court failed to properly consider thesubstantial mortgage on the property is unavailing. "While a court in determining fairmarket value may consider evidence of loans advanced on property during or near aparticular tax status date when reviewing an assessment proceeding, such evidencestanding alone is not entitled to [the] 'greatest weight' because the reasons behind theterms and amount of the loan may be uncertain and unrelated to market values"(Farash v Smith, 59 NY2d 952, 955 [1983] [citations omitted]; see Matter of John Jay Coll. ofCriminal Justice of the City Univ. of N.Y., 74 AD3d 460, 461 [2010], lvdismissed and denied 16 NY3d 889 [2011]; Matter of Lia v Town ofNiskayuna, 300 AD2d 876, 877 [2002]; Matter of River House Co. v Assessor ofCity of Binghamton, 56 AD2d 980, 980 [1977], lv denied 42 NY2d 811[1977]). The mortgage was collateralized by land, buildings, furniture and equipment,with a limited personal guarantee, and, under the prevailing circumstances, did notnecessarily fairly reflect the value of the property.
We next turn to respondents' appeal from the May 2014 order, which, among otherthings, denied respondents' motion to modify the judgment to the extent that it valued theproperty below the amount requested in the RPTL article 7 petitions. Petitioner sought inits applications for Board review and its RPTL article 7 petitions to reduce the assessedvalue to $10,050,000 for 2010 and $8,375,000 for 2011. Supreme Court reduced theassessed values below those amounts to $8,911,000 for 2010 and $8,173,575 for 2011.We have previously stated that, "in areas outside New York City, RPTL 720 (1) (b)prohibits tax reductions beyond those requested in the petitions" (Matter of NorthCountry Hous. v Board of Assessment Review for Vil. of Potsdam, 298 AD2d at669). Two other Departments have similarly interpreted such statute (see Matter of Central Hudson Gas& Elec. Corp. v Assessor of Town of Newburgh, 73 AD3d 1046,1050-1051 [2d Dept 2010], lv dismissed 15 NY3d 865 [2010]; Matter of Radisson CommunityAssn. v Long, 3 AD3d 135, 138-140 [4th Dept 2003], lv dismissed 4NY3d 870 [2005]), as well as trial courts (see e.g. Orange & Rockland Utils., Inc. v Assessor of Town ofHaverstraw, 7 Misc 3d 1017[A], 2005 NY Slip Op 50653[U] [Sup Ct, RocklandCounty 2005]). The relevant statutory language was amended in response to the holdingin W.T. Grant Co. v Srogi (52 NY2d 496 [1981]), which had departed from thelong-standing rule that relief beyond that requested in the petition could not be granted.The 1995 statutory amendment restored the original rule and the policy it reflected,which provided municipalities facing tax certiorari litigation a better measure for fiscalplanning with a discernible range of expectant revenue as well as potential tax refundliability (see Assembly Sponsor's Mem of Support, Bill Jacket, L 1995, ch 693;see also W.T. Grant Co. v Srogi, 52 NY2d at 521 [dissenting opinion]). We areunpersuaded by petitioner's argument that it should be permitted to essentially evisceratethis statutory provision via a motion to amend its pleadings made after there has been atrial and decision on the merits of the petitions.
Peters, P.J., Garry, Rose and Lynch, JJ., concur. Ordered that the order enteredSeptember 13, 2013 and the judgment entered thereon are modified, on the law, withoutcosts, by changing the reduced assessment amount for 2010 from $8,911,000 to$10,050,000, and for 2011 from $8,173,575 to $8,375,000, and, as so [*4]modified, affirmed. Ordered that the order entered May 5,2014 is reversed, on the law, without costs, petitioner's cross motion denied, respondents'motion granted and the judgment is modified as set forth herein.
Footnote *:The equalization ratewas 67% for 2010 and 67.5% for 2011.