Consolidated Edison Co. v. City of New York

Decision Date05 June 2007
Docket Number75.
Citation869 N.E.2d 634,8 N.Y.3d 591
PartiesIn the Matter of CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Respondent, v. CITY OF NEW YORK et al., Appellants.
CourtNew York Court of Appeals Court of Appeals
OPINION OF THE COURT

KAYE, Chief Judge.

The issue before us in this tax certiorari proceeding is whether functional obsolescence due to excess construction costs was appropriately considered in fixing the value of certain speciality property. On the particular record before us, we agree with the trial court and Appellate Division that it was.

Petitioner Consolidated Edison Company of New York, Inc. (Con Edison) brought this tax certiorari proceeding pursuant to RPTL article 7 challenging the City of New York's assessments on its Arthur Kill electric generating station for the tax years 1994/1995 through 1998/1999. The generating station is comprised of two steam generating units (installed in 1959 and 1969) and one gas turbine (installed in 1970).

At a bench trial, the parties agreed that, as an electrical generating facility, the subject property is considered a "specialty" and should therefore be appraised using the Reproduction-Cost-New-Less-Depreciation (RCNLD) method of valuation. This method seeks to determine the value of a property by estimating the cost to construct a replica using the same materials and techniques as the subject facility (reproduction cost), less depreciation. The parties differed, however, as to whether functional obsolescence due to excess construction costs could be subtracted from the reproduction cost as a component of depreciation. Functional obsolescence due to excess construction costs is the difference between the property's reproduction cost and the cost of replacing the existing property with a facility of similar productive capacity using modern materials and technology (replacement cost).

Con Edison's expert included the value of functional obsolescence due to excess construction costs, lowering the appraisal for tax assessment purposes. Although the City's expert did not include this factor in his appraisal, which was significantly higher, he conceded on cross-examination that in conducting a reproduction cost valuation, appraisers typically consider functional obsolescence due to excess construction costs. Indeed, the only reason he did not do so in this instance was counsel's instruction that under New York law it would be improper. In his view, an appraisal that allowed for functional obsolescence due to excess construction costs would still be considered a proper reproduction cost appraisal under industry standards, even if it yielded a result consistent with replacement cost.

Supreme Court adopted Con Edison's calculation and a divided Appellate Division affirmed. The City appeals as of right based on the two-Justice dissent. We now affirm.

The valuation of assessed property is, of course, essentially a question of fact, the courts' principal task being to discern the most accurate estimation of value for the specific property before it. Thus, where, as here, "the determinations of value made at nisi prius have been affirmed at the Appellate Division, those valuations must be...

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    • New York Supreme Court — Appellate Division
    • October 12, 2010
    ...that the valuation of assessed property is essentially a question of fact ( see Matter of Consolidated Edison Co. of N.Y., Inc. v. City of New York, 8 N.Y.3d 591, 595, 838 N.Y.S.2d 458, 869 N.E.2d 634;Matter of Saratoga Harness Racing v. Williams, 91 N.Y.2d 639, 646-647, 674 N.Y.S.2d 263, 6......
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    ...in reviewing the relevant evidence as to the specific propert[ies] before them” (Matter of Consolidated Edison Co. of N.Y., Inc. v. City of New York, 8 N.Y.3d 591, 597, 838 N.Y.S.2d 458, 869 N.E.2d 634 ).It is hereby ORDERED that the order so appealed from is unanimously modified on the law......
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    ...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 N.Y.3d 591, 838 N.Y.S.2d 458, 869 N.E.2d 634) since, by definition, there is no market for the property ( see Matter of Niagara Mohawk Powe......
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