| Matter of Al Turi Landfill, Inc. v Town of Goshen |
| 2012 NY Slip Op 02100 [93 AD3d 786] |
| March 20, 2012 |
| Appellate Division, Second Department |
| In the Matter of Al Turi Landfill, Inc., Respondent, v Townof Goshen et al., Appellants. |
—[*1] Shaw, Perelson, May & Lambert, LLP, Valhalla, N.Y. (Marc E. Sharff of counsel), forappellant Goshen Central School District. Keane & Beane, P.C., White Plains, N.Y. (Edward F. Beane, Judson K. Siebert, Carly S.Grant of counsel), for respondent.
In related tax certiorari proceedings pursuant to RPTL article 7 for the tax years 2000 through2009, the Town of Goshen, the Assessor or Board of Assessors of the Town of Goshen, and theBoard of Assessment Review of the Town of Goshen appeal, and the Goshen Central SchoolDistrict separately appeals (1), as limited by their briefs, from so much of an order of theSupreme Court, Orange County (Ritter, J.), dated May 24, 2010, as denied that branch of themotion of the Town of Goshen, the Assessor or Board of Assessors of the Town of Goshen, andthe Board of Assessment Review of the Town of Goshen which was to dismiss the petitionsrelating to the tax years 2000, 2001, and 2002 pursuant to 22 NYCRR 202.59 and RPTL 718 (2)(d), (2) from a decision of the same court dated October 22, 2010, made after a nonjury trial, (3)from a judgment of the same court dated November 23, 2010, and (4) from an amendedjudgment of the same court dated December 20, 2010, which, upon the decision, inter alia,reduced the real estate tax assessments of all 20 of the petitioner's lots in issue by $22,460,600for the 2000 tax year, $22,607,990 for the 2001 tax year, $22,855,790 for the 2002 tax year,$23,894,300 for the 2003 tax year, $24,405,400 for the 2004 tax year, $19,536,200 for the 2005tax year, $14,550,800 for the 2006 tax year, $3,578,800 for the 2007 tax year, $3,447,000 for the2008 tax year, and $3,312,300 for the 2009 tax year.
Ordered that the appeals from the order, the decision, and the judgment are dismissed,without costs or disbursements; and it is further,
Ordered that the amended judgment is reversed, on the law and the facts, without [*2]costs or disbursements, the matter is remitted to the Supreme Court,Orange County, for a recalculation of the real estate values for tax assessment purposes of thelandfill lots designated as 17.1, 17.2, 20, 21.1, 21.22, 22, 23.1, and 23.3, and the related lotsdesignated as 1.2, 7.2, and 19, in the tax years for which the tax assessments for those lots arechallenged by the petitioner, based upon the appraisal submitted by the appellants Town ofGoshen, the Assessor or Board of Assessors of the Town of Goshen, and the Board ofAssessment Review of the Town of Goshen, and the decision, order, and judgment are vacated.The findings of fact as to the value of lots designated as 1.3, 1.41, 1.42, 1.5, 1.6, 1.7, 18, 23.2,and 75 of the subject property are affirmed.
The appeal by the Goshen Central School District from the order must be dismissed on theground that it is not aggrieved by the order (see CPLR 5511). The appeals by the Town ofGoshen, the Assessor or Board of Assessors of the Town of Goshen, and the Board ofAssessment Review of the Town of Goshen from the order must be dismissed because the rightof direct appeal therefrom terminated with the entry of judgment in the action (see Matter ofAho, 39 NY2d 241, 248 [1976]). The issues raised on the appeal by those appellants fromthe order are brought up for review on the appeal from the amended judgment (see CPLR5501 [a] [1]). The appeals from the decision must be dismissed as no appeal lies from a decision(see Schicchi v J.A. Green Constr. Corp., 100 AD2d 509, 511 [1984]). The appeals fromthe judgment must be dismissed on the ground that it was superseded by the amended judgment.
The petitioner, Al Turi Landfill, Inc. (hereinafter Al Turi), owned more than 200 acres ofproperty in the Town of Goshen, divided into 20 separate lots. These lots were designated as lots1.2, 1.3, 1.41, 1.42, 1.5, 1.6, 1.7, 7.2, 17.1, 17.2, 18, 19, 20, 21.1, 21.22, 22, 23.1, 23.2, 23.3, and75. During the tax years in issue, Al Turi sold six of the lots, to wit, lots 1.42, 1.6, 1.7, 18, 23.2,and 75.
The parties' dispute over tax assessments commenced in the early 1990s. All proceedingsrelating to tax assessments for 1999 and earlier were settled by the parties. A landfill on theproperty was closed in October 2002, after Al Turi's application to the New York StateDepartment of Environmental Conservation to expand the landfill was denied, and thatdetermination was confirmed by this Court (see Matter of Al Turi Landfill v New York StateDept. of Envtl. Conservation, 289 AD2d 231 [2001], affd 98 NY2d 758 [2002]).
By notice of motion dated October 19, 2006, the appellants Town of Goshen, the Assessor orBoard of Assessors of the Town of Goshen, and the Board of Assessment Review of the Town ofGoshen (hereinafter collectively the Town) moved, inter alia, to dismiss the petitions relating tothe tax years 2000, 2001, and 2002.
Insofar as relevant on this appeal, the Town asserted that Al Turi failed to serve and file averified statement of income and expenses on the property, or a statement that the property wasnot income-producing, for the tax years 2000, 2001, and 2002, in violation of 22 NYCRR 202.59(b) and (d) (1). The Town contended that such failure mandated the dismissal of thoseproceedings pursuant to RPTL 718 (2) (d).
In opposition, Al Turi noted that its President filed verified grievance forms annually withthe Board of Assessment Review of the Town of Goshen, and annexed as exhibits thereto AlTuri's most recent available tax returns and financial statements referred to as "BAR [Board ofAssessment Review] Information Submissions." Al Turi asserted that the BAR InformationSubmissions complied with 22 NYCRR 202.59 (b). Al Turi characterized lots 17.1, 17.2, 21.1,21.22, 22, and 23.1 as landfill lots with income and expenses, and lots 1.2, 1.3, 1.41, 1.42, 1.5,1.6, 1.7, 7.2, 18, 19, 20, 23.2, 23.3, and 75 as vacant lots with no income or expenses. Withrespect to the 2002 proceedings, Al Turi submitted affidavits pursuant to 22 NYCRR 202.59 (b),with respect to the six landfill lots, which were served upon the attorney for the Town, and filedwith the Clerk of the Supreme Court within four years of the commencement of the proceedingsrelating to those lots.
In the order appealed from dated May 24, 2010, the Supreme Court denied that branch of theTown's motion which was to dismiss the petitions relating to the 2000, 2001, and 2002 tax [*3]years, on the ground that 14 of the lots had no income, andcompliance with 22 NYCRR 202.59 (b) with respect to the six remaining lots should be waivedpursuant to 22 NYCRR 202.1 (b) on the ground that there was no prejudice.
At a nonjury trial, the Town's appraiser claimed that eight of the lots, to wit, lots 17.1, 17.2,20, 21.1, 21.22, 22, 23.1, and 23.3, were landfill lots. The Town's appraiser concluded that theselots constituted specialty property and valued the land using the comparable sales method ofvaluation, and valued the improvements using the reproduction cost less depreciation method ofvaluation. In support of its position, the Town cited improvements on these lots, includinggroundwater monitoring wells to monitor water level and water quality, horizontal collectors andvertical wells to collect methane gas, and a leachate treatment plant, described as state-of-the-art.
The Town's appraiser characterized lots 1.2, 7.2, and 19 as landfill-related lots, and they werevalued based upon the comparable sales method of valuation. The remaining lots, to wit, lots 1.3,1.41, 1.42, 1.5, 1.6, 1.7, 18, 23.2, and 75, were characterized as vacant, and were also valuedbased upon the comparable sales method.
Al Turi's appraiser claimed that 10 of the 20 lots, to wit, lots 1.2, 7.2, 17.1, 17.2, 19, 20, 21.1,21.22, 22, and 23.1, were landfill lots, and that they should be valued based upon thecapitalization of income from market rents and/or royalties which, here, consisted of tipping feesfor storage of an additional 26,000 tons of waste, and income from methane gas collection, aproduct of the landfill. Al-Turi characterized nine of the other lots, to wit, lots 1.3, 1.41, 1.42,1.5, 1.6, 1.7, 18, 23.2, and 75, as vacant, and its appraiser valued those lots using the comparablesales method of valuation. Al-Turi alleged that lot 23.3 was underwater and, thus, had no value.
The Supreme Court concluded that the improvements cited by the Town did not add valueand, therefore, the Town's appraiser's valuation of lots 17.1, 17.2, 20, 21.1, 21.22, 22, 23.1, and23.3 as specialty property, by using reproduction cost less depreciation, was not "economicallyrealistic." The Supreme Court adopted Al Turi's appraiser's valuations.
On appeal, the Town acknowledges that the Assessor overvalued Al Turi's property. Theissues on appeal are whether the proceedings relating to the tax years 2000, 2001, and 2002,should have been dismissed, and the extent to which Al-Turi's property was overvalued by theAssessor.
Pursuant to RPTL 718 (2) (d), a note of issue in a tax certiorari proceeding must be filed"within four years from the date of the commencement of the proceeding . . . exceptwhere the parties otherwise stipulate or a court or judge otherwise orders on good cause shownwithin such four-year period." In the instant case, the notes of issue for the proceedings relatingto the 2000, 2001, and 2002 tax years were served and filed within four years of thecommencement of the proceedings relating to those tax years. The appellants contend that thosenotes of issue should have been stricken because Al Turi failed to comply with 22 NYCRR202.59 (b), which provides, in pertinent part: "(b) Statement of income and expenses.Before the note of issue and certificate of readiness may be filed, the petitioner shall have servedon the respondent, in triplicate, a statement that the property is not income-producing, or a copyof a verified or certified statement of the income and expenses on the property for each tax yearunder review . . . an owner-occupied business property shall be consideredincome-producing as determined by the amount reasonably allocable for rent, but the petitioner isnot required to make an estimate of rental income." 22 NYCRR 202.59 (d) (1) provides: "A noteof issue and certificate of readiness shall not be filed unless [*4]all disclosure proceedings have been completed and the statementof income and expenses has been served and filed."
Failure to serve and file a statement of income and expenses pursuant to 22 NYCRR 202.59(b) is a ground for striking a note of issue and, if the note of issue is stricken more than four yearsafter the proceeding was commenced, such is also a ground to dismiss the proceeding pursuant toRPTL 718 (2) (d) (see Matter ofEastgate Corporate Park, LLC v Assessor, Bd. of Assessment Review of Town of Goshen,54 AD3d 1036 [2008]; Matter ofRose Mount Vernon Corp. v Assessor of City of Mount Vernon, 15 AD3d 585 [2005];Matter of Pyramid Crossgates Co. v Board of Assessors of Town of Guilderland, 302AD2d 826, 828 [2003]). However, a failure to comply with 22 NYCRR 202.59 (b) prior to filingthe notes of issue is not always a fatal defect (see Matter of Eastern Hous. Assoc. v City Assessor of City ofWatertown, 12 AD3d 1035, 1036 [2004]; Matter of Syms Corp. v Assessor of Town of Clarence, 5 AD3d984 [2004]), especially in a case where the property is not income producing (see Matter of Ardsley Country Club vAssessor of Town of Greenburgh, 24 Misc 3d 1118 [2009], citing Matter of WhitePlains Props. Corp. v Tax Assessor of City of White Plains, 58 AD2d 653, 654 [1977];see also Matter of Atlantic Ref. & Mktg. Corp. v Assessor of City of Ithaca, 246 AD2d875 [1998]).
A significant factor to consider is whether the municipality has suffered prejudice (seeMatter of Midway Shopping Ctr. v Town of Greenburgh, 11 Misc 3d 1071[A], 2006 NY SlipOp 50501[U] [2006]; Matter of Rose Mount Vernon Corp. v Assessor of City of MountVernon, 1 Misc 3d 906[A], 2003 NY Slip Op 51530[U] [2003], affd 15 AD3d 585[2005]). In the instant case, the appellants do not claim prejudice and, in any event, were notprejudiced because (1) they received the information when Al Turi sought BAR review, (2) thislitigation was ongoing since the 1990s, and the parties were in communication with each other asto their estimates of value throughout those years, and (3) income is not relevant to the methodadvocated by the appellants for calculating the value of the property. Further, simultaneouslywith contending that the proceedings should have been dismissed for failure to complete thediscovery necessary for trial, the Town argued that Al Turi was obligated pursuant to astipulation between the parties to discontinue the proceeding relating to the 2000 tax year.Therefore, the appellants were not seeking a prompt trial of this dispute and, as late as 2006 whenthe motion to dismiss was made, there were issues outstanding which precluded a prompt trial.
Since the Town's appraised value for the tax years in issue—2000, 2001, and2002—in most instances, was significantly less than the value determined by the Assessor,and the Town acknowledges that the Assessor overvalued the property, the interests of justicewere served by an adjudication of the proceedings on the merits (see 22 NYCRR 202.1[b]). We further note, with respect to the statements of income and expenses which were servedand filed, that 22 NYCRR 202.59 (d) (1) does not define the term "filing" as filing with theCounty Clerk, and there is no requirement that a statement of income and expenses be filed withthe County Clerk (cf. Matter of Mendon Ponds Neighborhood Assn. v Dehm, 98 NY2d745 [2002]; 22 NYCRR 202.59 [g] [1] [i]). Further, there was no requirement that the statementof income and expenses be served upon the Town directly. Service upon the attorney for theTown was sufficient (see CPLR 2103 [b]). Accordingly, the Supreme Court properlydenied that branch of the appellants' motion which was to dismiss the petitions relating to the taxyears 2000, 2001, and 2002, for failure to comply with 22 NYCRR 202.59 (b).
Since this case was decided after a nonjury trial, "the power of this Court is as broad as thatof the trial court, and we may render a judgment we find warranted by the facts, bearing in mindthat in a close case, the trial judge had the advantage of seeing the witnesses" (Marini v Lombardo, 79 AD3d932, 933 [2010]; see Northern Westchester Professional Park Assoc. v Town ofBedford, 60 NY2d 492, 499 [1983]; O'Brien v Dalessandro, 43 AD3d 1123 [2007]). In a tax certiorariproceeding challenging a real estate tax assessment, "a property valuation by the tax assessor ispresumptively valid," which " 'obviates any necessity, on the part of the assessors, of goingforward with proof of the correctness of their valuation' " (Matter of FMC Corp. [PeroxygenChems. Div.] v Unmack, 92 NY2d 179, 187 [1998], quoting People ex rel. WallingtonApts. v Miller, 288 NY 31, 33 [1942]). Once the "petitioner challenging the assessmentcomes forward with 'substantial evidence' to the contrary, the presumption disappears"(Matter of FMC Corp. [Peroxygen Chems. Div.] v Unmack, 92 NY2d at 187, quotingPeople ex rel. Wallington Apts. v Miller, 288 NY at 33[*5]; Matter of Carriage House Motor Inn v City of Watertown,136 AD2d 895, 895 [1988], affd 72 NY2d 990 [1988]), and the issue before the court iswhether the petitioner established by a preponderance of the evidence that the property wasovervalued (see Matter of Garden City Plaza Assoc. v Mayor of Inc. Vil. of Garden City,302 AD2d 384, 385 [2003]). The Town acknowledges in its brief that "the record as a wholesupported a finding of overvaluation," and its own appraiser concluded that the assessedvaluations on many of the lots were too high. That conclusion alone rebutted the presumptionthat the assessments were valid (see Farash v Smith, 59 NY2d 952, 955 [1983];Matter of Bialystock & Bloom v Gleason, 290 AD2d 607, 609 [2002]).
The appellants' primary objection to the valuation of the property was Al Turi's use of thecapitalization of income method to value lots 1.2, 7.2, 17.1, 17.2, 19, 20, 21.1, 21.22, 22, and23.1. The appellants claim that the capitalization of income method should not have been used inthis case, because any income derived from the landfill was from Al Turi's business, and notfrom the land itself.
"Assessments shall in no case exceed full value" (NY Const, art XVI, § 2), defined aswhat a seller under no compulsion to sell and a buyer under no compulsion to buy would agreewas the subject property's price (see Matter of Commerce Holding Corp. v Board ofAssessors of Town of Babylon, 88 NY2d 724, 729 [1996]; Matter of Allied Corp. vTown of Camillus, 80 NY2d 351, 356 [1992]). In Matter of Allied Corp. v Town ofCamillus, relied upon by the appellants, the Court of Appeals noted that the best evidence ofvalue was a recent sale "between a seller under no compulsion to sell and a buyer under nocompulsion to buy," but in the absence of such evidence, "the courts have traditionally valuedproperty by one of three methods: comparable sales, capitalization of income or reproductioncost less depreciation" (80 NY2d at 356).
"Evidence of comparable sales is generally the preferred measure of a property's value forassessment, but where there is insufficient relevant data, value may be determined by othermethods" (Matter of Allied Corp. v Town of Camillus, 80 NY2d at 356). Under suchcircumstances, the reproduction cost less depreciation method may be used if the property maybe deemed a specialty property (id.). Specialty properties are those which have been"uniquely adapted to the business conducted upon [them] or use made of [them] andcannot be converted to other uses without the expenditure of substantial sums of money"(Matter of Great Atl. & Pac. Tea Co. v Kiernan, 42 NY2d 236, 240 [1977]; seeMatter of Allied Corp. v Town of Camillus, 80 NY2d at 356).
The four criteria for determining whether the property is specialty property, to be valuedbased upon the reproduction cost less depreciation, are: "(a) the improvement must be unique andmust be specially built for the specific purpose for which it is designed; (b) there must be aspecial use for which the improvement is designed and the improvement must be so speciallyused; (c) there must be no market for the type of property and no sales of property for such use;and (d) the improvement must be an appropriate improvement at the time of the taking orassessment and its use must be economically feasible and reasonably expected to be replaced"(Matter of Allied Corp. v Town of Camillus, 80 NY2d at 357). When the Assessor claimsthat the property is a specialty property, the petitioner bears the burden of establishing by apreponderance of the evidence that the property does "not fit within the defining characteristicsof specialty property" (Matter of Niagara Mohawk Power Corp. v Assessor of Town ofGeddes, 92 NY2d 192, 199 [1998]). In this case, Al Turi failed to meet that burden.
The property in issue in Matter of Allied Corp. v Town of Camillus (80 NY2d at354) consisted of wastebeds surrounded by a buffer zone. In that case, the Court of Appeals heldthat a closed landfill should be valued as a specialty property, using reproduction cost lessdepreciation, on the ground that "there was ongoing use of the improvements and noascertainable market" (id. at 360). The owner's claim that the facility was "100%functionally depreciated," since the wastebeds were full, was rejected by the Court, on the ground"that the wastebeds' primary purpose is retaining waste after receiving it and holding ituntil the solidification process has run its course" (id. at 358).
As in the instant case, the special purpose of the improvements on the property in [*6]Matter of Allied Corp. v Town of Camillus was to foster theongoing process of waste containment during the storage and solidification process. Ascertainingthe date when the solidification process was complete and the property could be used for anotherpurpose was not relevant, as the relevant issue in a tax certiorari case is the value on thevaluation date (id. at 357-358).
The reproduction cost less depreciation method should be used in valuing specialty property(see Matter of Consolidated Edison Co.of N.Y., Inc. v City of New York, 8 NY3d 591 [2007]) since, by definition, there is nomarket for the property (see Matter of Niagara Mohawk Power Corp. v Assessor of Town ofGeddes, 92 NY2d 192, 197 [1998]). In the instant case, the Supreme Court concluded thatthe reproduction cost less depreciation method employed by the Town was "fundamentallyflawed" because there was no market for the subject property, which was the very basis for usingthe reproduction cost less depreciation method.
Al Turi did not establish by a preponderance of the evidence that the lots which the Townvalued as specialty property were adaptable to other uses. Rather, it contended that those lotswere not adaptable to other uses. Since the improvements on Al Turi's property were notadaptable to "general industrial use," the Town properly characterized the property as specialtyproperty (Matter of Great Atl. & Pac. Tea Co. v Kiernan, 42 NY2d at 240). Further, invaluing the land component of the landfill lots, the Town's appraiser properly adjusted the valuesignificantly downward based upon environmental contamination (see Matter of CommerceHolding Corp. v Board of Assessors of Town of Babylon, 88 NY2d 724 [1996]).
Al Turi's appraiser concluded that the improvements on the landfill lots had no value,essentially because they were fully depreciated. An improvement with a substantial future usefullife is not fully depreciated simply because it does not generate income. In the instant case, manyof the improvements, including the leachate treatment plant, characterized as state-of-the-art, didnot generate income, but their value should have been taken into account in characterizing theproperty as specialty property (see generally Matter of Tenneco, Inc.-Tennessee Gas PipelineDiv. v Town of Cazenovia, 104 AD2d 511, 513 [1984]).
In view of the foregoing, Al Turi failed to demonstrate that lots 1.2, 7.2, 17.1, 17.2, 19, 20,21.1, 21.22, 22, 23.1, and 23.3 did not fit within the definition of specialty property (seeMatter of Niagara Mohawk Power Corp. v Assessor of Town of Geddes, 92 NY2d at 199).Accordingly, we conclude that those lots should have been valued pursuant to the Town'sappraisal. The Town's appraiser divided those lots into landfill lots, to wit, lots 17.1, 17.2, 20,21.1, 21.22, 22, 23.1, and 23.3, whose improvements were valued using the reproduction costless depreciation method, and landfill-related lots, to wit, lots 1.2, 7.2, and 19, which were valuedby the comparable sales method, on the ground that the landfill-related lots could be usedimmediately for industrial development.
The parties agreed that the remaining lots, to wit, lots 1.3, 1.41, 1.42, 1.5, l.6, 1.7, 18, 23.2,and 75, were vacant, and should be valued by examining comparable sales. Since the value of thevacant lots was properly determined based upon the comparable sales method, and the SupremeCourt's findings as to value were within the range of the expert testimony, the findings of factwith respect to the value of those lots are affirmed (see e.g. Matter of Brickman Estate at the Point, Inc. v Board ofAssessors, 85 AD3d 783 [2011]).
The parties' remaining contentions either are without merit or need not be addressed in lightof our determination. Balkin, J.P., Belen, Hall and Miller, JJ., concur.