County Dollar Corp. v. City of Yonkers

• Decision Date: 17 October 1983
• Citation: 97 A.D.2d 469,467 N.Y.S.2d 666
• Parties: In the Matter of COUNTY DOLLAR CORP., Respondent, v. The CITY OF YONKERS, et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 666

467 N.Y.S.2d 666

97 A.D.2d 469

In the Matter of COUNTY DOLLAR CORP., Respondent, v. The CITY OF YONKERS, et al., Appellants.

Supreme Court, Appellate Division Second Department.

Oct. 17, 1983.

Koeppel Sommer & Martone, P.C., Mineola (Adolph Koeppel, Mineola, of counsel), for appellants.

Bleakley Schmidt, P.C., White Plains (Frederick J. Martin and Hugh D. Fyfe, White Plains, of counsel), for respondent.

Before DAMIANI, J.P., and TITONE, LAZER and GIBBONS, JJ.

MEMORANDUM BY THE COURT.

In consolidated proceedings pursuant to article 7 of the Real Property Tax Law to review assessments for purposes of taxation on certain real property for the assessment years 1962 through 1976, inclusive, the appeal is from so much of a judgment of the Supreme Court, Westchester County, dated June 10, 1981, as reduced the assessments for the assessment years 1963 through 1976.

Judgment affirmed insofar as appealed from, without costs or disbursements.

In our opinion there was ample evidence supporting and justifying the reductions in assessments ordered by the trial court. Further, we are of the opinion that its factual and legal analysis of the evidence in this highly complex case was correct and we would affirm on its opinion (see People ex rel. MacCracken v. Miller, 291 N.Y. 55, 50 N.E.2d 542), except that the trial court's citation and utilization of the case of Caroldee Realty Corp. v. Board of Assessors of County of Nassau, 73 Misc.2d 41, 340 N.Y.S.2d 774, requires some comment and a summary review of the evidence pertaining to petitioner's reliance upon its actual rental income, as stabilized, in its income capitalization process.

The subject of these consolidated proceedings is the Cross County Shopping Center, a regional shopping center located in the City of Yonkers. During the period under review the property was improved with some 21 buildings, with two major department stores (Gimbels and Wanamakers) and numerous satelite stores and offices.

Although both real estate appraisal experts used the income capitalization approach, the city's expert, Roland R. Greco, also utilized a cost approach based upon information supplied by an engineer and upon Greco's own estimated land value. Greco's use of the cost approach was included to augment his income approach valuations. In his report, he stated:

"An increment representing a potential increase in value was selected between the summation and the income value. This increment reflects a judgment that a prudent purchaser would consider with full knowledge of the center's actual and potential gross sales, expenses and market rental".

Petitioner's real estate expert, Theodore J. Powers reported his opinion of the fair market value of the land and improvements for the years under review as follows:

                YEARS    LAND     IMPROVEMENT   TOTAL
                -----  ---------  -----------  -----------
                1962   3,805,000  13,320,000   17,125,000
                1963   4,170,000  13,475,000   17,645,000
                1964   4,540,000  12,855,000   17,395,000
                1965   4,905,000  12,230,000   17,135,000
                1966   5,270,000  11,665,000   16,935,000
                1967   5,635,000  10,590,000   16,225,000
                1968   6,000,000   9,610,000   15,610,000
                1969   6,370,000   8,735,000   15,105,000
                1970   6,735,000   8,140,000   14,875,000
                1971   6,970,000   9,640,000   16,610,000
                1972   7,340,000   9,775,000   17,115,000
                1973   7,705,000   9,855,000   17,560,000
                1974   8,075,000  10,025,000   18,100,000
                1975   8,440,000  11,660,000   20,100,000
                1976   8,805,000  12,510,000   21,315,000
                

Greco testified that the fair market value was, as follows:

                YEARS     LAND     IMPROVEMENT  TOTAL
                -----  ----------  -----------  -----------
                1962   7,740,000   15,110,000   22,850,000
                1963   8,100,000   15,836,000   23,935,000
                1964    8,505,000  16,530,000   25,035,000
                1965    8,930,000  17,003,000   25,933,000
                1966    9,375,000  17,619,000   26,994,000
                1967    9,835,000  17,261,500   27,096,500
                1968   10,335,000  17,345,000   27,680,000
                1969   10,840,000  15,360,000   26,200,000
                1970   11,380,000  15,700,000   27,080,000
                1971   11,815,000  17,765,000   29,580,000
                1972   12,405,000  19,290,000   31,695,000
                1973   13,000,000  19,975,000   32,975,000
                1974   13,825,000  19,215,000   33,040,000
                1975   14,330,000  19,370,000   33,700,000
                1976   15,055,000  19,910,000   34,965,000
                

In prior litigation concerning this shopping center the Court of Appeals, in the case of Matter of Atlas Realty Inv. v. Lennox, 34 N.Y.2d 780, 358 N.Y.S.2d 773, 315 N.E.2d 813, affg. 38 A.D.2d 739, 329 N.Y.S.2d 378 on mem at App.Div., determined that the sale of the property in question on January 28, 1960 for the approximate sum of $22,500,000 was an arms-length transaction and evidence of " 'the highest rank to determine the true value of the property as that time' " (38 A.D.2d 739, 740, 329 N.Y.S.2d 378, quoting Matter of Woolworth Co. v. Tax Comm. of City of N.Y., 20 N.Y.2d 561, 565, 285 N.Y.S.2d 604, 232 N.E.2d 638). Accordingly, at bar, Special Term considered the $22,500,000 price of the property at its sale in 1960 as evidence of the highest rank for the assessment years 1962, 1963 and 1964 and accorded it "some weight" against the values found by the court's income approach for the 1965 assessment year. The court fixed the 1965 value at $21,000,000. Utilizing the income approach for the remaining years, Special Term concluded that the values were:

                1966  20,000,000
                1967  18,000,000
                1968  17,500,000
                1969  16,800,000
                1970  16,700,000
                1971  18,715,000
                1972  17,800,000
                1973  20,200,000
                1974  20,030,000
                1975  20,150,000
                1976  21,315,000
                

Applying petitioner's ratios, Special Term sustained the assessment for the assessment year 1962 but granted reduction for the other years. The original assessment under review, the parties' indicated assessments, and Special Term's findings of assessment and reductions were:

                                                    Petitioner's  Appellant's
                                        Court's     Indicated     Indicated     Court's
                Assessment   Assessed   Finding of  Assessed      Assessed      Reduction in
                Years         Value     Assessment  Value         Value           Assessment
                ----------  ----------  ----------  ------------  ------------  ------------
                1962        12,403,350  12,825,000   9,761,250      13,024,500
                1963        12,436,450  12,150,000   9,528,300      12,924,900       286,450
                1964        12,553,950  11,925,000   9,219,350      13,268,550       628,950
                1965        12,553,950  10,710,000   8,738,850      13,225,830     1,843,950
                1966        12,553,950  10,200,000   8,636,850      13,766,940     2,353,950
                1967        12,553,950   9,180,000   8,274,750      13,819,215     3,373,950
                1968        12,553,950   8,925,000   7,961,100      14,116,800     3,628,950
                1969        12,553,950   8,400,000   7,552,500      13,100,000     4,153,950
                1970        12,553,950   7,515,000   6,693,750      12,186,000     5,038,950
                1971        12,553,450   7,673,150   6,810,100      12,127,800     4,880,800
                1972        12,513,250   7,120,000   6,846,600      12,678,000     5,393,250
                1973        12,650,400   7,878,000   6,848,400      12,860,250     4,772,400
                1974        12,650,400   7,144,701   6,456,270      11,785,368     5,505,699
                1975        12,650,400   6,893,315   6,876,210      11,528,770     5,757,085
                1976        12,651,600   6,893,271   6,893,270      11,307,681    5,758,327
                

On this appeal the appellant City of Yonkers claims that reversal is required because the actual income, as allegedly stabilized by petitioner's expert and as utilized by him and by Special Term, was not reflective of the rental market, that it was, in fact, submarket, and that a capitalization process using the actual income (and expense) could not and did not result in ascertainment of the true value of the shopping center. It is contended that Special Term totally disregarded the teaching of Matter of Merrick Holding Corp. v. Board of Assessors of County of Nassau, 45 N.Y.2d 538, 410 N.Y.S.2d 565, 382 N.E.2d 1341. We conclude, however, that Special Term's reduction in the assessments should be upheld.

Special Term's decision correctly noted:

"Both Mr. Powers [petitioner's expert] and Mr. Greco [appellants' expert] used an income approach to valuing the property. Both appraisers determined the actual gross income of the property as a starting point. They basically agreed as to the actual gross income of the property although their numbers were slightly different for some of the years under review, that difference being insignificant. Mr. Powers then proceeded to 'stabilize' the actual gross income and Mr. Greco disregarded the actual gross income and on the premise that the property had been mismanaged and that there was significant future developmental potential to the property, he estimated what he considered to be an economic gross rental value of the property based upon numerous leases within and without the shopping center itself."

Special Term further stated:

"It is elementary that 'if contract rent is to be ignored, it must be demonstrated by clear, convincing evidence that the contract rent is below the true market.' Caroldee Realty Corp. v. Board of Assessors of the County of Nassau, 73 Misc.2d 41, 44 . The burden of proving this is on the party asserting it. Matter of E.L. Nezelek Development Corporation v. City of Binghamton, 61 A.D.2d 1108 ."

As we have noted, Special Term's utilization of the Caroldee Realty Corp. case (supra ) raises some questions relative to the weight to be given actual rents in the income capitalization approach. People ex rel. Gale v. Tax Comm. of City of N.Y., 17 A.D.2d 225, 233 N.Y.S.2d 501, is probably the most famous case dealing with the subject and it contains the following language (p. 230, 233 N.Y.S.2d 501):

"Of course, an outstanding bona fide lease and the rental income established thereby are matters to be considered in determining 'the full value' of the whole property, land and improvements. Value arrived at by capitalization of the fair...