Gerry Homes v. Town of Ellicott

• Decision Date: 23 December 2016
• Parties: In the Matter of the GERRY HOMES, Petitioner–Respondent–Appellant, v. TOWN OF ELLICOTT, Assessor for Town of Ellicott and Board of Assessment Review for Town of Ellicott, Respondents–Appellants–Respondents.
• Court: New York Supreme Court — Appellate Division

145 A.D.3d 1652

44 N.Y.S.3d 309

2016 N.Y. Slip Op. 08800

In the Matter of the GERRY HOMES, Petitioner–Respondent–Appellant,

v.TOWN OF ELLICOTT, Assessor for Town of Ellicott and Board of Assessment Review for Town of Ellicott, Respondents–Appellants–Respondents.

Supreme Court, Appellate Division, Fourth Department, New York.

Dec. 23, 2016.

Ferrara Fiorenza, PC, East Syracuse (Katherine E. Gavett of Counsel), for Respondents–Appellants–Respondents.

Phillips Lytle LLP, Buffalo (Craig R. Bucki of Counsel), for Petitioner–Respondent–Appellant.

Timothy G. Kremer, Executive Director, Latham (Jay Worona of Counsel), for New York State School Boards Association, Inc., Amicus Curiae.

Hinman Straub P.C., Albany (Matthew J. Leonardo of Counsel), for Leadingage New York, Inc., Amicus Curiae.

PRESENT: WHALEN, P.J., CENTRA, LINDLEY, DeJOSEPH, AND SCUDDER, JJ.

MEMORANDUM:

Petitioner is a not-for-profit corporation that operates numerous facilities for elderly residents at varying levels of care. Following construction of two facilities, The Woodlands and Orchard Grove Residences (Orchard Grove), on a single tax parcel, petitioner applied for a real property tax exemption pursuant to RPTL 420–a. Respondent Assessor for the Town of Ellicott denied both the 2013 and the 2014 applications, and that denial was upheld by respondent Board of Assessment Review for the Town of Ellicott. Petitioner commenced these CPLR article 78/RPTL article 7 proceedings seeking, inter alia, to challenge those determinations, and both petitioner and respondents moved for summary judgment seeking a summary determination on the petitions. Supreme Court awarded partial summary judgment to petitioner, concluding that the portion of property upon which Orchard Grove is situated is entitled to a real property tax exemption, but the court also awarded partial summary judgment to respondents, concluding that the portion of property upon which The Woodlands is situated is not entitled to a real property tax exemption (see generally RPTL 420–a [2 ] ). We conclude that, although the court properly awarded respondents summary judgment with respect to The Woodlands, the court erred in awarding summary judgment to petitioner with respect to Orchard Grove, and we therefore modify the judgment accordingly.

Real Property Tax Law § 420–a (1)(a) provides, in pertinent part, that "[r]eal property owned by a corporation or association organized or conducted exclusively for ... charitable [or] hospital ... purposes ... and used exclusively for carrying out thereupon one or more of such purposes ... shall be exempt from taxation as provided in this section." It is well established that "to qualify for the exemption, (1) [the petitioner] must be organized exclusively for [the] purposes enumerated in the statute, (2) the property in question must be used primarily for the furtherance of such purposes, ... (3) no pecuniary profit, apart from reasonable compensation, may inure to the benefit of any officers, members, or employees, and (4) [the petitioner] may not be simply used as a guise for profit-making operations" (Matter of Maetreum of Cybele, Magna Mater, Inc. v. McCoy, 111 A.D.3d 1098, 1100, 975 N.Y.S.2d 251, affd. 24 N.Y.3d 1023, 997 N.Y.S.2d 676, 22 N.E.3d 184 [internal quotation marks omitted]; see Matter of Eternal Flame of Hope Ministries, Inc. v. King, 76 A.D.3d 775, 777, 908 N.Y.S.2d 456, affd. 16 N.Y.3d 778, 919 N.Y.S.2d 503, 944 N.E.2d 1142 ). The Court of Appeals has "defined the term ‘exclusively’ as used in this context to connote ‘principal’ or ‘primary’ such that purposes and uses merely auxiliary or incidental to the main and exempt purpose and use will not defeat the exemption" (Maetreum of Cybele, Magna Mater, Inc., 24 N.Y.3d at 1024, 997 N.Y.S.2d 676, 22 N.E.3d 184 [internal quotation marks omitted]; see Matter of Greater Jamaica Dev. Corp. v. New York City Tax Commn., 25 N.Y.3d 614, 623, 15 N.Y.S.3d 738, 36 N.E.3d 645 ; Matter of Association of Bar of City of N.Y. v. Lewisohn, 34 N.Y.2d 143, 153, 356 N.Y.S.2d 555, 313 N.E.2d 30 ).

Generally, the question "whether property is used ‘exclusively’ for purposes of [Real Property Tax Law] section 420–a is dependent upon whether the ‘primary use’ of the property is in furtherance of permitted purposes" (Greater Jamaica Dev. Corp., 25 N.Y.3d at 623, 15 N.Y.S.3d 738, 36 N.E.3d 645 ). We note, however, that RPTL 420–a (2) also provides that, "[i]f any portion of such real property is not so used exclusively to carry out thereupon one or more of such purposes but is leased or otherwise used for other purposes, such portion shall be subject to taxation and the remaining portion only shall be exempt." Courts and assessors may thus parse up a single tax parcel for purposes of determining whether any portion thereof is exempt from taxation (see Matter of ViaHealth of Wayne v. VanPatten, 90 A.D.3d 1700, 1701–1702, 936 N.Y.S.2d 466 ; Matter of Miriam Osborn Mem. Home Assn. v. Assessor of City of Rye, 80 A.D.3d 118, 138–139, 909 N.Y.S.2d 493 ).

It is well settled that " ‘[t]ax exclusions are never presumed or preferred and before [a] petitioner may have the benefit of them, the burden rests on it to establish that the item comes within the language of the exclusion’ " (Matter of Charter Dev. Co., L.L.C. v. City of Buffalo, 6 N.Y.3d 578, 582, 815 N.Y.S.2d 13, 848 N.E.2d 460 ; see Matter of 677 New Loudon Corp. v. State of N.Y. Tax Appeals Trib., 19 N.Y.3d 1058, 1060, 955 N.Y.S.2d 795, 979 N.E.2d 1121, rearg. denied 20 N.Y.3d 1024, 960 N.Y.S.2d 60, 983 N.E.2d 1244, cert. denied ––– U.S. ––––, 134 S.Ct. 422, 187 L.Ed.2d 280 ; Eternal Flame of Hope Ministries, Inc., 76 A.D.3d at 777, 908 N.Y.S.2d 456 ). The tax exemption statute will be " ‘construed against the taxpayer unless the taxpayer identifies a provision of law plainly creating the exemption’ ... [, and] the taxpayer's interpretation of the statute must not simply be plausible, it must be ‘the only reasonable construction’ " (Charter Dev. Co., 6 N.Y.3d at 582, 815 N.Y.S.2d 13, 848 N.E.2d 460 ; see Matter of Al–Ber, Inc. v. New York City Dept. of Fin., 80 A.D.3d 760, 761, 915 N.Y.S.2d 309, lv. denied 16 N.Y.3d 712, 2011 WL 1675259 ). Moreover, a determination "that a taxpayer does not qualify for a tax exemption should not be disturbed ‘unless shown to be erroneous, arbitrary or capricious' " (677 New Loudon Corp., 19 N.Y.3d at 1060, 955 N.Y.S.2d 795, 979 N.E.2d 1121 ). Contrary to respondents' contention, on a motion for summary judgment, the court is "not limited to the record adduced before ‘the agency’ " and may thus consider affidavits and other evidence submitted on the motion (Eternal Flame of Hope Ministries, Inc., 76 A.D.3d at 777, 908 N.Y.S.2d 456 ).

Contrary to petitioner's contention, the court properly concluded that petitioner failed to establish that respondents' determination with respect to The Woodlands was erroneous, arbitrary, or capricious, and that respondents were entitled to summary judgment dismissing the petitions insofar as they challenged their determination with respect to that portion of the property. The Woodlands provides independent living to seniors and operates at a profit. It is well settled that "renting homes to elderly people who are not poor is not a ‘charitable’ activity" (Matter of Adult Home at Erie Sta., Inc. v. Assessor & Bd. of Assessment Review of City of Middletown, 10 N.Y.3d 205, 214, 856 N.Y.S.2d 515, 886 N.E.2d 137 ), and petitioner's provision of housing to middle-income seniors at The Woodlands does not constitute "a charitable activity" (id. at 215, 856 N.Y.S.2d 515, 886 N.E.2d 137 ; see Matter of Greer Woodycrest Children's Servs. v. Fountain, 74 N.Y.2d 749, 751, 545 N.Y.S.2d 79, 543 N.E.2d 722 ; Matter of Pine Harbour, Inc. v. Dowling, 89 A.D.3d 1192, 1194, 932 N.Y.S.2d 239 ; Matter of Quail Summit, Inc. v. Town of Canandaigua, 55 A.D.3d 1295, 1296–1297, 864 N.Y.S.2d 609, lv. denied 11 N.Y.3d 716, 874 N.Y.S.2d 5, 902 N.E.2d 439 ). Moreover, petitioner's use of the property to operate The Woodlands is not " ‘merely auxiliary or incidental’ " to the use of the property to operate Orchard Grove (Maetreum of Cybele, Magna Mater, Inc., 111 A.D.3d at 1100, 975 N.Y.S.2d 251 ; see Greater Jamaica Dev. Corp., 25 N.Y.3d at 630–631, 15 N.Y.S.3d 738, 36 N.E.3d 645 ; but see Matter of Merry–Go–Round Playhouse, Inc. v....