SIN, Inc. v. Department of Finance of City of New York

• Decision Date: 03 May 1988
• Citation: 71 N.Y.2d 616,528 N.Y.S.2d 524,523 N.E.2d 811
• Parties: , 523 N.E.2d 811 In the Matter of SIN, INC., Respondent, v. DEPARTMENT OF FINANCE OF the CITY OF NEW YORK, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 524

528 N.Y.S.2d 524

71 N.Y.2d 616, 523 N.E.2d 811

In the Matter of SIN, INC., Respondent, v. DEPARTMENT OF FINANCE OF the CITY OF NEW YORK, Appellant.

Court of Appeals of New York.

May 3, 1988.

Peter L. Zimroth, Corp. Counsel (James F. Eller, Glenn Newman and Stanley Buchsbaum, New York City, of counsel), for appellant.

Stephen R. Sugrue and Stephen S. Ziegler, New York City, for respondent.

OPINION OF THE COURT

PER CURIAM.

Petitioner, a corporation engaged in the operation of a Spanish language television network, leased commercial office space in Manhattan in September 1981. The 15 1/2-year lease was the product of extensive negotiations on petitioner's rights and obligations in renovating the premises. The lease incorporates petitioner's agreement to spend approximately $1,000,000 to improve the premises in a provision which reads as follows: "This Lease is made with the understanding and agreement that Tenant will spend approximately $1,000,000 to improve, furnish, equip and/or alter the premises being let hereunder in accordance with plans and specifications to be approved by Landlord, as required under the within lease. It is a substantial consideration of the Landlord in renting the space to Tenant at the rental referred to herein that Tenant expend such minimum sum, and failure to so improve the premises shall be deemed a substantial default on the part of Tenant."

Pursuant to this provision, petitioner expended $1,446,166 in major capital improvements during the tax years June 1, 1980 through May 31, 1983. In January 1984, respondent, Department of Finance of the City of New York, assessed a deficiency against petitioner of $98,503, including back taxes and interest, for failure to pay commercial rent tax on the sums thus expended. At a subsequent hearing to reconsider the determination, petitioner argued that any payments made by a tenant pursuant to a lease for capital improvements to the premises it occupies do not constitute "rent" within the meaning of the commercial rent tax law (Administrative Code of City of New York § 11-701[6] ). Under that local statute, rent is defined as: "The consideration paid or required to be paid by a tenant for the use or occupancy of premises, valued in money, whether received in money or otherwise, including all credits and property or services of any kind and including any payment required to be made by a tenant on behalf of his or her landlord for real estate taxes, water rents or charges, sewer rents or any other expenses (including insurance) normally payable by a landlord who owns the realty other than expenses for the improvement, repair or maintenance of the tenant's premises " (emphasis added) (Administrative Code § 11-701[6], formerly § L46-1.0[6] ).

Respondent, relying on a prior department interpretation of "improvement" expenses, contended that the statutory exclusi refers only to "voluntary expenditures" for "minor, nonstructural improvements" which are not intended to "save the landlord the expense of doing the work itself" (Department of Finance, opn. letter, June 7, 1984, 4 N.Y.Tax.Rep. [CCH] p 400-155). The Hearing Officer, adopting respondent's interpretation of "improvement" expenses, upheld the deficiency assessment. Finding that petitioner's commitment to make improvements was "part of the bargained-for consideration" in the lease and that the improvements entailed reconstruction and major rehabilitation of the building for the primary benefit of the landlord, the Hearing Officer concluded that petitioner's expenditures did not fall within the statutory exclusion. A final determination adopting the Hearing Officer's findings and conclusions was issued by respondent's Commissioner: thereafter, petitioner commenced this article 78 proceeding.

Upon transfer of the proceeding to the Appellate Division, 126 A.D.2d 339, 513 N.Y.S.2d 430, that court annulled respondent's determination, partially on the ground that the "clear language of the statute" (126 A.D.2d, at 344, 513 N.Y.S.2d 430) contravenes respondent's narrow reading of the statutory exclusion. We agree. As the Appellate Division aptly explained, where the language used in a taxing statute is neither special nor technical, but consists of common words of clear import, there is little reason to defer to a contrary interpretation given by the administrative agency. In such cases, the clear meaning of a statutory provision cannot be altered by invocation of special administrative competence or expertise ( see, Matter of Alamo Assocs. v. Commissioner of Fin. of City of N.Y., 71 N.Y.2d 340, 346, 525 N.Y.S.2d 823, 520 N.E.2d 542; Kurcsics v. Merchants Mut. Ins. Co., 49 N.Y.2d 451, 459, 426 N.Y.S.2d 454, 403 N.E.2d 159; American Locker Co. v. City of New York, 308 N.Y. 264, 269, 125 N.E.2d 421; McKinney's Cons Laws of NY, Book 1, Statutes § 232).

Here, the statutory language is unambiguous and nontechnical. Whatever else "rent" may include as defined in the local law, it clearly excludes, without express or implied qualification, "expenses for the improvement, repair or maintenance of the tenant's premises" (emphasis added). Contrary to respondent's contention, this plain...