860 Executive Towers, Inc. v. Board of Assessors

• Decision Date: 12 July 1976
• Citation: 385 N.Y.S.2d 604,53 A.D.2d 463
• Parties: 860 EXECUTIVE TOWERS, INC., Respondent, v. The BOARD OF ASSESSORS OF the COUNTY OF NASSAU, Appellant (two cases) (and 19 other captioned proceedings). MAJESTIC DEVELOPMENT CORP., Respondent, v. The BOARD OF ASSESSORS OF the COUNTY OF NASSAU, Appellant (and 14 other captioned proceedings). 960 BROADWAY CO. et al., Respondents, v. The BOARD OF ASSESSORS OF the COUNTY OF NASSAU, Appellant (and 22 other captioned proceedings). In the Matter of CERRO CORPORATION, Respondent, v. The BOARD OF ASSESSORS and the Board of Assessment Review of the County of Nassau, Appellants.
• Court: New York Supreme Court — Appellate Division

Page 604

385 N.Y.S.2d 604

53 A.D.2d 463

860 EXECUTIVE TOWERS, INC., Respondent, v. The BOARD OF ASSESSORS OF the COUNTY OF NASSAU, Appellant

(two cases) (and 19 other captioned proceedings).

MAJESTIC DEVELOPMENT CORP., Respondent, v. The BOARD OF ASSESSORS OF the COUNTY OF NASSAU, Appellant

(and 14 other captioned proceedings).

960 BROADWAY CO. et al., Respondents, v. The BOARD OF ASSESSORS OF the COUNTY OF NASSAU, Appellant

(and 22 other captioned proceedings).

In the Matter of CERRO CORPORATION, Respondent, v. The BOARD OF ASSESSORS and the Board of Assessment Review of

the County of Nassau, Appellants.

Supreme Court, Appellate Division, Second Department.

July 12, 1976.

James M. Catterson, Jr. (Leon Friedman, Mineola, of counsel), County Atty., Mineola (Kaye, Scholer, Fierman, Hays & Handler, Milton Kunen, Stanley H. Fuld, Sidney Kwestel and Vincent J. Syracuse, Special Counsel, New York City), for appellants.

Koeppel, Sommer, Lesnick & Martone, P.C., Mineola (Adolph Koeppel, William D. Siegel, Irving I. Lesnick, Bernard Sommer and Saul R. Fenchel, Mineola, of counsel), for respondents in the first, second, third and fourth above-captioned proceedings.

Santemma, Costigan & Murphy, Mineola (George B. Costigan, Jr. and Abraham Brinn, Mineola, of counsel), for respondent Cerro Corp.

Before HOPKINS, Acting P.J., and MARTUSCELLO, RABIN, SHAPIRO and TITONE, JJ.

HOPKINS, Acting Presiding Justice.

In Ed Guth Realty v. Gingold, 34 N.Y.2d 440, 358 N.Y.S.2d 367, 315 N.E.2d 441, decided in June, 1974, it was held, upon an analysis of the 1969 amendment to section 720 (subd. 3) of the Real Property Tax Law, that the State equalization rate may be utilized as the sole basis for determining ratio in tax certiorari proceedings for the years 1970 forward. All of the within appeals by the appellant Board of Assessors (the County) are basically premised upon the County's contention that the Guth decision is limited to its own facts and does not foreclose it from challenging the methodology and underlying data employed by the State Board of Equalization and Assessment (SBEA) in promulgating the State equalization rates and, further, that utilization of the State rates as the sole basis for determining ratio in Nassau County is totally unjustified. As a practical matter, acceptance of the County's arguments would undermine the basic holding in Guth. This we decline to do.

The first above-captioned proceeding (860) actually encompassed 20 separate certiorari proceedings, covering the years 1966 through 1973, which were consolidated for purposes of a joint trial on the issue of ratio. That is, the petitioners were challenging their real property assessments on grounds of inequality--claiming that the assessments of the subject properties had been made at a higher proportionate valuation or ratio than the assessments of other real property on the same tax roll. For example, a specific claim might be that a subject property was assessed at 35% Of its full value while other properties on the roll were assessed at only 30% Of full value. If true, the petitioning taxpayer would be paying more than his due share of the aggregate tax.

Although inequality can be shown, theoretically, only by establishing that the subject property has a higher rate of assessment than All other properties in the taxing district, the Legislature has, over the years, prescribed various procedures to shorten trials in inequality cases. Until 1969, the use of the selected parcel method was mandatory under section 720 (subd. 3) of the Real Property Tax Law, with taxpayers having the additional option of introducing evidence of the State equalization rate and actual sales of real property. The selected-parcel method requires the parties to mutually agree upon a selection of 'sample' parcels. Failing such agreement, the court is to select the parcels. Each side must then employ expert appraisers to determine the market value of such sample parcels, with the court being the final arbiter of such value. The rate of assessment or ratio would be found by dividing the aggregate sums of the assessed value of all sample parcels by the aggregate sums of their market value.

The State equalization rate has a varied history. Prior to 1949 the rate was of very limited use, since only small amounts of State aid were apportioned on the basis thereof, and local taxing and borrowing powers were based upon the Assessed valuation of taxable real property. Moreover, since the State had no significant interest in equalization rates, little effort was expended upon their establishment. They were not scientifically developed; they were substantially out of date; and they did not even purport to reflect the ratio of assessed value to market value within the tax district. Rather, aiming only for a just apportionment of taxes in joint taxing districts, the State equalization rate was intended to measure merely the value of taxable property within each district (People ex rel. Yaras v. Kinnaw, 303 N.Y. 224, 101 N.E.2d 474; Koeppel, Inequali In Real Property Tax Review, 19 Buffalo L.Rev. 565, 568--569).

In 1949 the State Constitution was amended so as to relate local taxing and borrowing powers to the average full valuation of taxable real estate, which was defined as constituting the Ratio of the assessed valuations of taxable real estate to the full valuations thereof for the last completed assessment roll and the four preceding rolls (art. VIII, § 10). At the same time, the Legislature created a temporary commission, known as the State Board of Equalization and Assessment, with the power, Inter alia, to review and revise State equalization rates. It was during that period that the practice of periodic statistical surveys was begun. In 1960 the SBEA was reconstituted as a permanent agency and, pursuant to article 12 of the Real Property Tax Law, it was required to sample the ratio of assessments to market values for each major type of taxable real property at least once in every five years, and to ascertain, as nearly as it could, the percentage of full value at which taxable real property was assessed.

In 1961 the Legislature amended section 720 (subd. 3) of the Real Property Tax Law to allow the parties in an inequality proceeding to introduce in evidence the State equalization rate established for the roll containing the assessment under review. In 1967 the Court of Appeals held that the amended statute did not eliminate, but rather continued, the requirement that the parties employ the selected-parcel method of proving inequality; and that the State rate was entitled to 'little weight' and could not, standing alone, sustain a claim of inequality (Matter of O'Brien v. Assessor of Town of Mamaroneck, 20 N.Y.2d 587, 596, 285 N.Y.S.2d 843, 849, 232 N.E.2d 844, 848). The court observed (pp. 596--597, 285 N.Y.S.2d p. 850, 232 N.E.2d p. 849) that the State rates served an entirely different function from the establishment of inequality in litigation between a property owner and a tax district; the State rates were arrived at by processes quite foreign to those employed in juridical determinations, since, for example, the SBEA may, in establishing rates pursuant to section 1202 (subd. 2) of the Real Property Tax Law, 'avail itself of all information appearing in its office'; and the State rates are arrived at as an administrative decision, which is not reviewable at all by the taxpayer and reviewable by the taxing district only under the limited scope of an article 78 proceeding.

In 1969 the Legislature again amended section 720 (subd. 3) to overcome the holding in O'Brien. This time, it expressly provided that the State equalization rates could be admitted in evidence whether or not the selected-parcel method was employed; and an accompanying legislative memorandum emphasized that eliminating the necessity of undergoing a selected-parcel proceeding would particularly benefit the owners of small properties by lessening the expense of proving inequality. Judicial approval for the use of the State rate as the sole determinant of ratio came in 1974 in Ed Guth Realty v. Gingold, 34 N.Y.2d 440, 358 N.Y.S.2d 367, 315 N.E.2d 441, Supra, where both the appellant and respondent 860 Executive Towers, Inc. appeared as Amicus curiae.

As it refers specifically to the appellant's amicus brief, we quote at length from the opinion in Guth, written by Judge Gabrielli for a unanimous court, as follows (pp. 449--451, 358 N.Y.S.2d p. 372, 315 N.E.2d p. 445):

'Our chief concern is whether that analysis of the 1969 amendment is correct. We find that it is and that it provides a solution to a situation fraught with problems over the years. As we see in this case the selected pracel and actual sales methods not only create discouraging and enormous expense for the taxpayer, but promote the search by both sides for samples which are at the extreme ends of the spectrum--the same egregious problem we seem always to find in expert valuation testimony in condemnation cases. Utilization of the equalization rate which is objectively arrived at, and which today is expertly arrived at, would tend to greatly simplify and narrow the scope of these proceedings.

'Application of the equalization rate as the sole basis for ratio for the year 1970 is easily justified in this case. First, the intent of the 1969 amendment rather clearly was to overrule the holding in O'Brien. The memorandum in support of the measure submitted by the State Board of Equalization and Assessment (N.Y.Legis. Annual, 1969, p. 439) emphasizes that the equalization rates today reflect more accurately the ratio of assessed value to full value than the ratio produced by either the actual sales or selected parcels methods. "This is so because the state rates are based upon larger appraisal samples than those presented to the court under present law. Also state rates are based upon samples of representative classes while the parcels in a...