| Matter of Lowe's Home Ctrs., Inc. v Board of AssessmentReview and/or Dept. of Assessment Review of Tompkins County |
| 2013 NY Slip Op 03532 [106 AD3d 1306] |
| May 16, 2013 |
| Appellate Division, Third Department |
| In the Matter of Lowe's Home Centers, Inc., Appellant, vBoard of Assessment Review and/or Department of Assessment Review of TompkinsCounty, Respondent. (And Another Related Proceeding.) |
—[*1] Schlather, Stumbar, Parks & Salk, LLP, Ithaca (L. Richard Stumbar of counsel), forrespondent.
Lahtinen, J. Appeal from an order of the Supreme Court (Mulvey, J.), enteredOctober 27, 2011 in Tompkins County, which dismissed petitioner's applications, in twoproceedings pursuant to RPTL article 7, to reduce the 2008 and 2009 tax assessments oncertain real property leased by petitioner.
Petitioner operates a Lowe's Home Center on 14.85 acres that it leases in the City ofIthaca, Tompkins County. The property includes a 134,574 square-foot buildingconstructed in 2004, as well as an attached 27,200 square-foot garden center. Petitionerchallenged in two proceedings respondent's $7,444,000 valuation of the property for thetax years 2008 and 2009. Petitioner's appraiser (James Szakacs) used comparable sales,income capitalization and reproduction cost methods to value the property at $6,500,000for both years. Respondent's appraisers (David Schwaner and Jeffrey James) arrived atvalues of $11,430,000 for 2008 and $11,420,000 for 2009 using income capitalizationand reproduction cost methods.[*2]
Following a nonjury trial, Supreme Court initiallydetermined that petitioner had submitted sufficient proof to rebut the presumed validityof the tax assessor's valuation. It then found that petitioner's comparable sales analysiswas not reliable under the circumstances, and it determined that the credible evidencesupported respondent's income capitalization analysis rather than petitioner's analysis.The court, among other things, concluded that petitioner had thus failed to establish by apreponderance of the evidence that its property had been overvalued. The petitions weredismissed and this appeal ensued.
Petitioner contends that Supreme Court erred in rejecting its comparable salesanalysis. A recent arm's length sale of the subject property is the best evidence of value;however, absent that, the traditional valuation methods are comparable sales, incomecapitalization and reproduction costs (see Matter of FMC Corp. [Peroxygen Chems.Div.] v Unmack, 92 NY2d 179, 189 [1998]; Matter of Saratoga Harness Racingv Williams, 91 NY2d 639, 643 [1998]). "Evidence of comparable sales is generallythe preferred measure of a property's value for assessment, but where there is insufficientrelevant data, value may be determined by other methods" (Matter of Allied Corp. vTown of Camillus, 80 NY2d 351, 356 [1992] [citation omitted]; see Matter ofMerrick Holding Corp. v Board of Assessors of County of Nassau, 45 NY2d 538,542 [1978]). Where, as here, conflicting expert evidence is presented, we defer to thetrial court's resolution of credibility issues, and consider "whether the court'sdetermination of the fair market value of the subject property is supported by or againstthe weight of the evidence" (Matter of Northern Pines MHP, LLC v Board of AssessmentReview of the Town of Milton, 72 AD3d 1314, 1316 [2010] [internal quotationmarks and citations omitted]; see Matter of Rite Aid of N.Y. No. 4928 v Assessor ofTown of Colonie, 58 AD3d 963, 966 [2009], lv denied 12 NY3d 709[2009]).
There was no evidence of a recent sale of the subject property. Szakacs, in hiscomparable sales analysis, included six sales that he used, with adjustments, to determinevalue. However, cross-examination, as well as proof presented by respondent, revealedsignificant potential problems that Szakacs had not identified or adjusted for in each ofthe comparable sales that he used. For example, there was evidence that one sale wasessentially a land sale because the intent of the purchaser was to demolish the inferiorbuilding located on the property. Problems with Szakacs' other sales included allegedlysignificantly inaccurate measurements regarding the size of buildings, not properlyclassifying property that was inferior or in a poor location, and failing to factor forsubstantial reconfiguration work that was needed on a purchased building. AlthoughSzakacs disputed many of these purported shortcomings, this created credibilityquestions for Supreme Court. That court resolved the key credibility questions on theissue of comparable sales in favor of respondent and determined that the proof failed toestablish that the comparable sales method was a reliable indicator of the property'svalue. Deferring to those credibility determinations, the record supports Supreme Court'sdetermination.
Petitioner also argues that Supreme Court erred in not crediting its incomecapitalization analysis. Both appraisers looked to leases that they believed werecomparable to determine market rents which, with relevant adjustments, were capitalizedto determine the property's current value. Each side effectively indicated weaknesses inthe other party's comparable leases. For example, petitioner included leases that weremore than 10 years old, which Schwaner criticized as not reflecting recent higherconstruction costs. Petitioner pointed out that two of the leases used by respondent werefor considerably smaller space, but Schwaner claimed that he had made an adequateadjustment to reflect such fact. While petitioner also contended that one of the [*3]leases used by respondent was not a proper reflection of themarket because it was allegedly a build-to-suit lease, Supreme Court found petitioner'sproof in such regard unpersuasive. The court further accepted the vacancy andcapitalization rates used by respondent. Conflicting evidence was presented on keyaspects of the income capitalization method, and Supreme Court credited respondent'sproof. We decline to disturb Supreme Court's credibility determinations and, in light ofthose determinations, its decision is amply supported by the weight of the evidence(see Matter of Rite Aid of N.Y. No. 4928 v Assessor of Town of Colonie, 58AD3d at 966; Matter of EckerdCorp. v Semon, 35 AD3d 931, 934-935 [2006]).
Although Schwaner acknowledged viewing petitioner's property and store withoutprior notice and when no representative of petitioner was accompanying him, he testifiedthat he limited himself on such occasion to only those portions of the property that wereopen to the public. Petitioner's contention that this walk-through inspection violated its4th Amendment rights and, therefore, that no weight should have been given torespondent's appraisal is without merit. The 4th Amendment is not implicated by entryonto the public portion of a commercial establishment that is held open by the owner tothe general public and entered during normal business hours (see e.g. Katz v UnitedStates, 389 US 347, 351 [1967]; People v Saglimbeni, 95 AD2d 141, 143[1983], appeal dismissed 62 NY2d 798 [1984]; Matter of Salob vAmbach, 73 AD2d 756, 757 [1979], lv denied 49 NY2d 703 [1980],appeal dismissed 49 NY2d 800 [1980], cert denied 449 US 829 [1980]).Petitioner's reliance on Schlesinger v Town of Ramapo (11 Misc 3d 697 [2006]) ismisplaced. That case involved an effort to inspect the interior of a residential propertywhere the homeowner had not granted permission for entry (see generally Matter of Aylward vCity of Buffalo, 101 AD3d 1743 [2012] [discussing proper procedure whenthere is an issue regarding interior inspection of residential real property where thehomeowner is challenging a tax assessment]).
The fact that Supreme Court did not discuss the reproduction cost method in itsconclusions of law is not indicative of a failure to weigh the entire record. Courts haveexpressed concern about the potential problems with such method (see Matter ofSaratoga Harness Racing v Williams, 91 NY2d at 643), its use is generally limited tospecialty property (see Matter of Allied Corp. v Town of Camillus, 80 NY2d at357), and "it should be 'utilized only in those limited instances in which no other methodof valuation will yield a legally and economically realistic value for the property' "(Matter of Niagara Mohawk Power Corp. v Assessor of Town of Geddes, 92NY2d 192, 197 [1998], quoting Matter of Great Atl. & Pac. Tea Co. v Kiernan,42 NY2d 236, 242 [1977]). The court mentioned in its decision the parties' positionsregarding the reproduction cost method, the appraisers acknowledged giving the leastcredence to such method, there was no determination that this was specialty property, andthe court essentially resolved the proceedings under the income capitalization method.There was thus no need for the court to separately analyze the reproduction cost method.
The remaining arguments have been considered and found unpersuasive.
Rose, J.P., McCarthy and Egan Jr., JJ., concur. Ordered that the order is affirmed,without costs.