Northville Industries Corp. v. Board of Assessors of Town of Riverhead

• Decision Date: 08 August 1988
• Citation: 531 N.Y.S.2d 592,143 A.D.2d 135
• Parties: In the Matter of NORTHVILLE INDUSTRIES CORP., Respondent-Appellant, v. The BOARD OF ASSESSORS OF the TOWN OF RIVERHEAD, Appellant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 592

531 N.Y.S.2d 592

143 A.D.2d 135

In the Matter of NORTHVILLE INDUSTRIES CORP., Respondent-Appellant, v. The BOARD OF ASSESSORS OF the TOWN OF RIVERHEAD, Appellant-Respondent.

Supreme Court, Appellate Division Second Department.

Aug. 8, 1988.

Smith, Finkelstein, Lundberg, Isler and Yakaboski, Riverhead (Francis J. Yakaboski, of counsel), for appellant-respondent.

David G. Koch, Mineola, for respondent-appellant.

Before THOMPSON, J.P., and BRACKEN, EIBER and SPATT, JJ.

MEMORANDUM BY THE COURT.

In consolidated proceedings pursuant to Real Property Tax Law article 7 to review the real property tax assessment of nine parcels of real property owned by the petitioner for the tax years 1981/82 through 1985/86, (1) the Board of Assessors of the Town of Riverhead appeals from an order and judgment (one paper) of the Supreme Court, Suffolk County (Canudo, J.H.O.), entered October 8, 1986, which reduced the assessments; and (2) the petitioner cross-appeals from so much of the same order and judgment which did not further reduce the assessments to the fair market value found by the petitioner's real estate appraiser, as limited by the maximum ceiling of value found by the petitioner's engineering appraiser as adjusted by the State Board of Equalization and Assessment ratios stipulated to by the parties, less the value of the "cost to cure" in the amount determined by the court and the value of the off-shore platform determined by the court to be an illegal assessment.

ORDERED that order and judgment is reversed, on the law, without costs or disbursements, and the matter is remitted to the Supreme Court, Suffolk County, for a new determination in accordance herewith.

The petitioner owns approximately 263.3 acres of real property in the Town of Riverhead. The property, which has frontages on both Sound Avenue and the Long Island Sound, is zoned for industrial and agricultural use. The petitioner operates a bulk oil storage terminal facility on the northern section of the property which has a loading dock on the Long Island Sound as well as an offshore platform which is located approximately one and one-half miles offshore in the sound. The storage terminal is located on nine separately designated tax lots in sections 6, 7 and 20 of the tax map and the off-shore platform, which is built upon an easement granted by the State, is located in section 1 of the tax map. This latter section has no special, school or fire district. The petitioner commenced a proceeding for each tax year from 1981/82 through 1985/86 seeking to reduce the assessments on the nine tax parcels located on the mainland. The petitions alleged that the total land assessments of $2,820,000 combined with the improvements, totaling assessments of $27,741,100 were erroneous on the grounds of overevaluation, inequality, misclassification and illegality. The illegality specified was that the subject property and all other real property in the assessing unit were not assessed at a uniform percentage of value. The proceedings were consolidated and subsequently tried before a Judicial Hearing Officer.

During the trial both parties called experts who utilized the reproduction cost and market data approaches to value to arrive at conflicting conclusions concerning the fair market value of the subject premises. The appraisal and testimony of the experts for the Board of Assessors of the Town of Riverhead (hereinafter the board) were characterized by several evidentiary deficiencies which vitiated the probative value of the evidence of value adduced by the board. Both of the board's experts violated the cardinal principle of valuation that real property should be valued according to its condition on each tax status date (RPTL § 302[1]; Matter of Adirondack Mountain Reserve v. Board of Assessors of Town of North Hudson, 99 A.D.2d 600, 471 N.Y.S.2d 703, affd. 64 N.Y.2d 727, 485 N.Y.S.2d 744, 475 N.E.2d 115). In addition these experts who separately valued the land and the improvements by the market data approach also failed to make necessary adjustments when comparing the subject parcel to the comparables ( see, Latham Holding Co. v. State of New York, 16 N.Y.2d 41, 45, 261 N.Y.S.2d 880, 209 N.E.2d 542; Matter of Habern Realty Co. v. Tax Commission of the City of New York, 102 A.D.2d 302, 306-307, 478 N.Y.S.2d 868). Where adjustments were made, the board's experts failed to sufficient account for the adjustments by the requisite facts, figures and calculations in either the appraisal or trial testimony (see, 22 NYCRR 202.59[g][2] ). Furthermore, the real estate appraiser who testified concerning the reproduction cost approach was not qualified to do so as he was neither an architect, engineer nor builder ( see, Matter of Semple School for Girls v. Boyland, 308 N.Y. 382, 384, 126 N.E.2d 294; Matter of S.S. & K. Realty Corp. v. Finance Admin. of City of N.Y., 82 A.D.2d 808, 811, 439 N.Y.S.2d 207). For these and other evidentiary deficiencies the trial court should have granted the petitioner's motion to strike the board's appraisal (see, 22 NYCRR former 678.1[e], now 22 NYCRR 202.59[h]; Matter of Rusciano and Son Corp. v. Roche, 118 A.D.2d 861, 500 N.Y.S.2d 347; Matter of County Dollar Corp. v. City of Yonkers, 97 A.D.2d 469, 467 N.Y.S.2d 666, lv. dismissed, 61 N.Y.2d 603, 472 N.Y.S.2d 1027, 406 N.E.2d 1360 and 61 N.Y.2d 759, rearg. denied, 61 N.Y.2d 905, 474 N.Y.S.2d 1027, 462 N.E.2d 1205; Matter of Stoneleigh Parkway v. Assessor of Town of Eastchester, 73 A.D.2d 918, 423 N.Y.S.2d 246, lv. denied, 49 N.Y.2d 705, 427 N.Y.S.2d 1026, 405 N.E.2d 237).

Although the Judicial Hearing Officer did not grant the petitioner's motion to strike the board's experts' testimony, it did not give credit to their conclusions as to value. Instead, the Judicial Hearing Officer relied upon the petitioner's experts' unadjusted range of value of $2.19 to $3.90 per barrel for the comparable oil-storage facilities to arrive at a $3 per barrel or $15,308,427 fair market value for the subject premises. Because the value selected by the Judicial Hearing Officer was based upon the unadjusted comparables and was in excess of the adjusted range of comparable market values of $1.80 per barrel to $2.79 per barrel found by the petitioner's experts, it cannot be sustained. It is a settled principle that "sales of other parcels, where used as a criteria in the evaluation of the subject property, need to be adjusted to differences between one another and between each of them and the subject property" (Latham Holding Co. v. State of New York, supra, 16 N.Y.2d at 45, 261 N.Y.S.2d 880, 209 N.E.2d 542; see also, Matter of Habern Realty Co. v. Tax Commission of the City of New York, supra ). In view of our holding that the board's evidence of value lacked probative value, the conclusion of value reached by the petitioner must be given full weight. Given the adjusted range found by the petitioner's experts, we find the $2.50 per barrel or $12,757,023 value proposed by the petitioner's experts to be the fair market value of the subject premises ( see, Matter of City of New York [Reiss], 55 N.Y.2d 885, 449 N.Y.S.2d 18, 433 N.E.2d 1266; Matter of Dennison Holding Corp. v. Finance Administrator of City of New York, 105 A.D.2d 700, 701, 481 N.Y.S.2d 139; Matter of City of New York [Jormar Real Estate Corp.], 94 A.D.2d 724, 462 N.Y.S.2d 260, affd. 61 N.Y.2d 843, 473 N.Y.S.2d 963, 462 N.E.2d 140).

The record establishes that during the tax years under review, the subject property was not in compliance with Suffolk County Sanitary Code article 12, and the petitioner correctly asserts that the full cost of compliance should be deducted from each of the tax year's assessments on the subject property. It is axiomatic that in assessment review proceedings, the value at which real property may be taxed has been equated with market value ( W.T. Grant Co. v. Srogi, 52 N.Y.2d 496, 510, 438 N.Y.S.2d 761, 420 N.E.2d 953; Matter of Hellerstein v. Assessor of Town of Islip, 37 N.Y.2d 1, 371 N.Y.S.2d 388, 332 N.E.2d 279, mod. on other grounds 39 N.Y.2d 920, 386 N.Y.S.2d 406, 352 N.E.2d 593). Given this principle, it is reasonable to assume that a knowledgeable buyer who desired but is not compelled to purchase the property would have been unwilling to do so unless either the work necessary to comply with the code was done or there was an abatement in the purchase price ( cf., Karch v. State of New York, 52 A.D.2d 1044, 384 N.Y.S.2d 571). Consequently, we find that the Judicial Hearing Officer should have deducted the full cost of compliance from each annual assessment. Furthermore, inasmuch as an assessment fixes value as of each taxable status date and each annual assessment is separate and distinct from each other, the full cost of compliance should be deducted from the total assessments for each of the tax years under review ( see, Matter of F.W. Woolworth Co. v. Tax Commission of City of New York, 20 N.Y.2d 561, 285 N.Y.S.2d 604, 232 N.E.2d 638; People ex rel. Hilton v. Fahrenkopf, 279 N.Y. 49, 17 N.E.2d 765; ...