S. S. & K. Realty Corp. v. Finance Administration
| Decision Date | 01 June 1981 |
| Citation | 82 A.D.2d 808,439 N.Y.S.2d 207 |
| Court | New York Supreme Court — Appellate Division |
| Parties | In the Matter of S. S. & K. REALTY CORP., Respondent, v. The FINANCE ADMINISTRATION et al., Appellants. |
Allen G. Schwartz, Corp. Counsel, New York City (Judith R. Greenwald and Leonard Olarsch, New York City, of counsel), for appellants.
Podell, Rothman, David & Schechter, New York City (Donald N. David, New York City, of counsel), for respondent.
Before TITONE, J. P., and RABIN, MARGETT and WEINSTEIN, JJ.
MEMORANDUM BY THE COURT.
In a proceeding pursuant to article 7 of the Real Property Tax Law to review assessments (for purposes of taxation) made on certain real property for the tax years 1974/75 through 1978/79, inclusive, the appeal is from a judgment of the Supreme Court, Queens County, dated September 4, 1979, which reduced the total assessment for each year.
Judgment reversed, on the law, with costs, and new trial granted in accordance herewith.
The subject site is improved with a five-story home for adults, known as the Far Rockaway Manor Home for Adults. On November 15, 1972 a building loan mortgage was recorded between petitioner S. S. & K. Realty Corp. and the National Bank of North America for $3,136,500. On November 22, 1976 petitioner secured from the Manhattan Savings Bank an additional mortgage of $1,063,500. The National Bank of North America mortgage was then assigned to the Manhattan Savings Bank for a total first mortgage of $4,200,000. By April 15, 1974 the structure had been completed and was ready for occupancy.
The assessed valuations in issue are:
YEAR LAND BUILDING TOTAL
------- -------- ---------- ------------
1974/75 $166,000 $1,290,000 $1,456,000
1975/76 205,000 1,470,000 1,675,000
1976/77 205,000 1,470,000 1,675,000
1977/78 205,000 1,470,000 1,675,000
1978/79 205,000 1,470,000 1,675,000
The petitioner commenced the instant proceeding to review the assessments. A trial was held on October 5, 1978. Prior to the commencement of the trial the attorneys then representing petitioner obtained two letters from the general contractor (Arara Construction Corp.). The first letter (dated February 13, 1975) advised that "the construction cost amounted to $667,835.00". The letter provided no breakdown. The second letter, however (dated March 14, 1975), set forth a "trade breakdown" totalling $678,574. The breakdown contained categories such as "Excavation", "Concrete", "Masonry", and "Steel". These letters were annexed as an addendum to the written appraisal of petitioner's real estate expert Sidney Panzer. There was no evidence that he is an architect, engineer, builder or attorney. In that report Panzer stated that he has "adopted the acquisition cost of the land, $235,000, being aware that it is higher than the land assessment." Panzer's report then stated:
.
The breakdown was a duplication of the general contractor's letter of March 14, 1975.
Panzer stated in his report that:
Panzer's report concluded that the fair market value at the times in issue was:
"YEAR LAND BUILDING TOTAL
-------- -------- --------- ----------
"1974/75 $235,000 $680,000 $915,000
"1975/76 235,000 680,000 915,000
"1976/77 235,000 680,000 915,000
"1977/78 235,000 680,000 915,000
"1978/79 235,000 680,000 915,000"
At the trial, petitioner's president, Irwin Steinhauser (not shown to be an architect, engineer, builder or lawyer), testified that the amount stated in the general contractor's letter of March 14, 1975 ($678,574) was in fact paid by petitioner to the general contractor. Steinhauser testified that this was the amount which paid for the total construction of the property; it was the total cost of the construction of the property, exclusive of furniture, carpeting, lighting fixtures, kitchen equipment and such other similar equipment which the State required petitioner to provide to conform to the State code; that this sum ($678,574) represents the cost to construct the building, "just the bare construction" of the building itself. He conceded (on cross-examination) that the cost of landscaping and painting was omitted but claimed that these were the only items missing from the list.
However, petitioner had placed in evidence its applications for correction of the assessed valuations. Annexed to the applications for the year 1977-1978 were petitioner's tax returns for the tax years 1973 and 1974. The returns contained balance sheets. The asset schedules therein revealed the following valuations:
1973 Return
"Beginning of taxable year End of taxable year
(A) Amount (B) Total (C) Amount (D) Total
* * * * * * * * * * * *
" Buildings and
other fixed
depreciable
assets 399,763 2,512,660
" Less
accumulated
depreciation 0 399,763 0 2,512,660".
------------- ------------- ---------- -----------
1974 Return:
"Beginning of taxable year End of taxable year
(A) Amount (B) Total (C) Amount (D) Total
* * * * * * * * * * * *
" Buildings and
other fixed
depreciable
assets $2,512,660 2,540,335
" Less
accumulated
depreciation 0 2,512,660 33,482 2,506,853".
------------- ------------- ---------- -----------
When the above valuations were called to the attention of petitioner's president (on cross-examination), he "explained" that these valuations...
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