Roosevelt Nassau Operating Corp. v. Board of Assessors of Nassau County
| Decision Date | 31 December 1970 |
| Citation | 326 N.Y.S.2d 628,68 Misc.2d 183 |
| Court | New York Supreme Court |
| Parties | ROOSEVELT NASSAU OPERATING CORP., Petitioner, v. BOARD OF ASSESSORS OF the COUNTY OF NASSAU, Respondents. |
Morris H. Schneider, County Atty., County of Nassau, by Michael R. Martone, Mineola, for respondents.
Koeppel, Hyman, Sommer, Lesnick & Ross, by Bernard Sommer, Mineola, for petitioner.
In this consolidated tax certiorari proceeding the Court is again confronted with the question of valuing part of a large, well known regional shopping center.
In an earlier case (Roosevelt Field, Inc. v. Podeyn, etc., 47 Misc.2d 677, 263 N.Y.S.2d 76), the Court found full values ranging from $12,300,000 in 1958--1959 to $13,900,000 in 1962--1963. The present proceeding involves only a portion of the tax lots that constitute the entire shopping center. The years now under review are 1966 through 1970, both inclusive, and the relevant tax status dates are May 1, 1965, through May 1, 1969.
(Material omitted as not of sufficient interest.)
Each of the lots under review is utilized in a different manner. Lot 1421 (295 in later years) consists of access roads over which petitioner has easements. Lot 292 is a sump, 283 a skating rink and 26 K (26 N in later years) a major portion of the center itself.
Petitioner has utilized the income approach to value as its main theory, and the actual income figures are not in dispute and generally coincide with fair market rental. The principal areas of disagreement involve the vacancy factor to be used and the economic effect of leases made several years prior to the period in question.
Petitioner's experts utilized primarily the rentals in effect upon the property as fair market rental notwithstanding the fact that they had, in many cases, been entered into several years prior to the first year under review. Respondent's expert found that many of the leases did not contain tax escalation and common area maintenance provisions usual in modern leases.
(Material omitted as not of sufficient interest.)
In a tax certiorari proceeding, the Court is required to value property as it existed on the tax status date. The maximum value for real estate taxation purposes is the reproduction cost of the structure less its accrued depreciation added to the value of the land (People ex rel. Manhattan Square Beresford v. Sexton, 284 N.Y. 145, 29 N.E.2d 654).
Respondent's building expert found sound values in each of the years in question for the two improved lots.
(Material omitted as not of sufficient interest.)
Petitioner did not produce a building expert, choosing instead to rely upon the economic approach to value. On cross-examination it was admitted that the enclosure of the mall was probably not completed on the tax status date in 1969, and evidence was introduced showing that the mall was only 62.9% Completed at tax status date. This requires a deduction of $536,000 for the building estimate of that year. Considerable time was also spent in examining respondent's treatment of fixtures depreciation approach which was at the rate of 2% Per year and which was related solely to physical depreciation and not functional or economic obsolescence.
The Court finds from the bulk of the testimony that there is substantial functional obsolescence. However, there is no way to estimate the degree of such factor in valuing the physical structure. This concept of obsolescence will be considered by the Court in its final choice of value herein.
With respect to fixtures the Court is convinced that the appraiser did not value any items of trade fixtures but only those items such as air conditioning units which are attached to the building and which fall within the definition of Real Property as contained in subdivision 12 (par. f) of Section 102 of the Real Property Tax Law. That section, in pertinent part, provides that:
'12. 'Real property', 'property' or 'land' mean and include:
. . . '(f) Boilers, ventilating apparatus, elevators, plumbing, heating, lighting and power generating apparatus, shafting . . .'.
Air conditioning units, of the types involved on this property, must be considered either ventilating apparatus or plumbing facilities. As such, they are taxable as part of the real property regardless of who installed them and regardless of whom would have right of removal or claim in eminent domain. The Court, therefore, adopts respondent's building values with the exception of the $536,000 item for tax year 1969.
With respect to land value, the difficulty of valuing this unique property is compounded by the fact that the entire center is divided into several different tax lots, not all of which are under review. Each appraiser approached the problem somewhat differently.
Petitioner's first expert (Powers) valued the entire 118--acre tract and found unit values ranging from $2.30 per square foot on May 1, 1965, to $3.50 in 1969. He then valued those parcels which were Not included in this proceeding comprising some 18 acres and improved with structures serving the prime tenants of the area. For example, in 1969 he found the full value of the entire 118-acre tract to be $18,000,000 from which he deducted $10,775,000 as the value of the land not under review. He divided the resultant $7,225,000 by the 4,356,000 square feet under review and arrived at a unit value of $1.66 for May, 1969. In this manner he found unit and total land values as follows:
INDICATED
TAX STATUS SQUARE FOOT TOTAL ACREAGE
DATE UNIT VALUE VALUE VALUE
May 1, 1965 1.13 4,900,000 49,000
May 1, 1966 1.25 5,400.000 54,000
May 1, 1967 1.35 5,900,000 59,000
May 1, 1968 1.50 6,500,000 65,000
May 1, 1969 1.66 7,200,000 72,000
Petitioner's second expert (Heymann) also added the parcels not under review to the 100 acres under review, valued the entire tract and deducted the values of the nonincluded parcels. He found an overall value of $3.25 per square foot for the 118 acres and an overall land value of $16,700,000. He deducted $11,800,000 for the value of nonincluded land and found a value of $4,900,000 for the subject parcels in May of 1965. He then increased this value by 2% Per year.
(Material omitted as not of sufficient interest.)
Respondent's expert (Adelsberg) valued the major shopping lot
.
Accordingly, he found different acreage values for each parcel under review.
(Material omitted as not of sufficient interest.)
The areas under review are the major shopping center structure (26 N or 26 K,) a skating rink (283), recharge basin (292) and southerly access road (1421 or 295). Not included in this review are structures utilized for Macy's, Gimbels, Franklin National Bank, a restaurant, Century Theatre, Macy's Auto Center, Van's Car Wash and water district well sites.
It is impossible to value a portion of this center in a vacuum, and all appraisers have agreed, as evidenced by their approaches, that consideration must be given to the total operation. Their treatment of the allocation, however, is much different. Petitioners deduct the value of the desirable and nonprotested portions while respondent finds that it is the subject parcels which generate the enhanced value of the 'out' parcels.
While both approaches have conceptual merit, the enhancement approach of the respondent is most difficult to translate into mathematical compulation. On this record, the Court believes that the value of the parcels under review can best be valued under the petitioner's theory in general and the analysis of the expert Powers in particular. However, the Court emphatically does not agree with his statement that 'the subject parcel can be thought of as nothing else than an interior piece (appraisal p. 50)'. This is a totally integrated, fully independent shopping center with its own system of roads. It has frontage not only on Old Country Road and Stewart Avenue, both of which are major, wide east-west arteries, but also enjoys direct access to and egress from Meadowbrook Parkway, a north-south limited access highway. There is nothing 'interior' about this parcel at all.
There are several problems in the appraisal itself. For example, in subtracting the parking lot of the Franklin Bank, he deducted $4.50 per square foot which must be compared with his conclusion that the subject parcels are worth $1.66 in 1969. While bank property may be more desirable than commercial property in general due to the desirable nature of the tenant, bank parking lots should not be almost three times more valuable than adjacent land. Petitioner's expert has been most liberal in allocating value for the 'out' parcels. He has been correspondingly conservative in fixing value for the subject parcels.
The Court finds that petitioner's $1.66 values is a good indication of value not in 1969 but rather for the first year under review. Translating that unit into an acreage value results in an indicated land value of $72,300 for the first year. The Court accepts respondent's increment of 10% Per year.
The Court further finds that these values apply to each part of the shopping center under review, including roads, the sump and the skating rink. The Court finds the following land values:
TAX STATUS UNIT VALUE TOTAL MARKET
DATE PER ACRE VALUE
May 1, 1965 72,300 7,230,000
May 1, 1966 79,530 7,953,000
May 1, 1967 87,483 8,748,300
May 1, 1968
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