Cromwell Towers Redevelopment Co. v. City of Yonkers

• Decision Date: 02 December 1976
• Citation: 41 N.Y.2d 1,390 N.Y.S.2d 822,359 N.E.2d 333
• Parties: , 359 N.E.2d 333 In the Matter of CROMWELL TOWERS REDEVELOPMENT CO., Appellant, v. CITY OF YONKERS et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 822

390 N.Y.S.2d 822

41 N.Y.2d 1, 359 N.E.2d 333

In the Matter of CROMWELL TOWERS REDEVELOPMENT CO., Appellant, v. CITY OF YONKERS et al., Respondents.

Court of Appeals of New York.

Dec. 2, 1976.

Phil E. Gilbert, Jr., Elihu Inselbuch and Howard Ives, New York City, for appellant.

Eugene J. Fox, Corp. Counsel, Yonkers (William N. Carroll, Yonkers, of counsel), for City of Yonkers, respondent.

GABRIELLI, Justice.

In this article 78 proceeding the Cromwell Towers Redevelopment Company, a limited partnership organized pursuant to article 5 of the Private Housing Finance Law, seeks reimbursement for and relief from taxes assessed in alleged violation of a contract executed pursuant to a resolution of the Yonkers City Council. Special Term and the Appellate Division held the action to be untimely and dismissed the petition. We reverse.

In 1971 the Redevelopment Company was formed for the purpose of constructing low and moderate income housing developments in the City of Yonkers with federally aided mortgage financing. In order to obtain this funding, the Redevelopment Company was required by the Federal Housing Administration to obtain tax abatement from the city for the term of the mortgage. Section 125 of the Private Housing Finance Law provides that a local legislative body may '-by contract agree with any redevelopment company to exempt from local and municipal taxes' all or part of the value of property which represents an increase over its valuation at the time of its acquisition. The Redevelopment Company applied to the Mayor and City Council of Yonkers for a tax exemption; and on July 6, 1971 the city council adopted Resolution No. 323--1971 which provided, in pertinent part: '1. That upon completion of the construction of the project * * * and pursuant to the provisions of Section 236 of the National Housing Act and Regulations thereunder * * * the aforesaid premises in the redevelopment project to the constructed * * * be exempt from local and municipal taxes other than assessments for local improvements to the extent 100% Of the value of the property included in such project (except as aforesaid (the portion allocated for commercial use)) which represents an increase over the assessed valuation of the aforesaid real property, both land and improvements, acquired for the aforesaid project at the time of its acquisition by the Redevelopment Company, pursuant to Section 125 of Article V of the Private Housing Finance Law of the State of New York as amended, and pursuant to the terms and conditions of this resolution; Such tax exemption to operate for so long as the Redevelopment Company's 'federally aided mortgage' (as said term is defined in Section 102 of Article V of the Private Housing Finance Law of the State of New York, as amended), On said project is outstanding, but in no event for a period of more than 40 years from the date on which the benefits of such exemption first became available and effective.' (Emphasis added.)

On August 25, 1971 the city and the Redevelopment Company entered into a contract which provided that:

'1. The City of Yonkers hereby grants to the Housing Company (the Redevelopment Company) an exemption from all local and municipal taxes, other than assessments for local improvements, to the extent of one hundred (100%) per cent of the value of the Real Estate (land and improvements thereon) included in such Housing Project which represents an increase over $79,300 (the assessed valuation of the Real Estate, both land and improvements, acquired for such Housing Project at the time of its acquisition by the Housing Company) * * *

'2. Such tax exemption shall operate for so long as the Housing Company's 'federally aided mortgage' (as said term is defined in Section 102 of Article V of the Private Housing Finance Law of the State of New York, as amended) on the Housing Project Is outstanding, but in no event for a period of more than forty (40) years from the date on which the benefits of this tax exemption first become available and effective.' (Emphasis added.)

For tax purposes the city acts not only on its own behalf but also on behalf of the county and, thus, the resolution and contract affect county as well as city taxes.

Armed with the necessary tax exemption spelled out in the contract, the Redevelopment Company pursued the anticipated mortgage and on November 29, 1971, it entered into a commitment contract for $12,275,000 with the Government National Mortgage Association, guaranteed by the Federal National Mortgage Association. On December 20, 1971 the Redevelopment Company issued a mortgage note and construction began.

Despite the resolution and the contract granting tax exemption, the partially completed project was assessed at $904,300 for the fiscal year July 1, 1973 to June 30, 1974, an increase of $825,000 over the assessed value prior to construction. A tax of $64,915.31 was levied and paid under protest. Subsequently the property was assessed at $2,765,700 for the fiscal year 1974--1975 and a tax of $199,720.68 computed, which tax has not been paid. County taxes were also assessed on the basis of these valuations. The Redevelopment Company petitioned city council, pursuant to section C8--5 of the City Charter, which authorized the council to 'correct, cancel or remit' any tax erroneously assessed. The Redevelopment Company asserted that these taxes were invalid as violative of their contract. The council failed to act on the petition and this proceeding was brought seeking (1) review of the actions of the City of Yonkers in imposing these real property taxes, (2) an injunction restraining respondents from attempting to collect such taxes, (3) a declaration that the Redevelopment Company is partially exempt from these taxes, (4) an order compelling respondents to recompute the taxes in accord with the contract, and (5) return of the excess taxes paid under protest.

This action was challenged as time-barred under CPLR 217 because it was not commenced within four months after city council confirmed and assessed the taxes. Additionally the respondents contend that petitioner is guilty of laches and is not entitled to relief. We find neither of these arguments dispositive of the action before us and, therefore, need not consider them.

When a tax assessment is attacked as a violation of a city resolution and a valid contract, it may be challenged in a plenary action for moneys had and received (Matter of First Nat. City Bank v. City of New York...