O'Shea v. Bd. of Assessors of Nassau County

• Decision Date: 13 February 2007
• Docket Number: 20.,19.,21.
• Citation: 864 N.E.2d 1261,8 N.Y.3d 249
• Parties: In the Matter of John J. O'SHEA, Appellant, v. BOARD OF ASSESSORS OF NASSAU COUNTY et al., Respondents. In the Matter of Jack Minkoff et al., Appellants, v. County of Nassau et al., Respondents. et al., Respondents. In the Matter of Harry Briffel et al., Appellants, v. County of Nassau et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

864 N.E.2d 1261

8 N.Y.3d 249

In the Matter of John J. O'SHEA, Appellant, v. BOARD OF ASSESSORS OF NASSAU COUNTY et al., Respondents.

In the Matter of Jack Minkoff et al., Appellants, v. County of Nassau et al., Respondents. et al., Respondents.

In the Matter of Harry Briffel et al., Appellants, v. County of Nassau et al., Respondents.

19.

20.

21.

Court of Appeals of New York.

February 13, 2007.

John J. O'Shea, Manhasset, appellant pro se in the first above-entitled proceeding.

Fred N. Perry, Dix Hills, for appellants in the second above-entitled proceeding.

Daniel J. Dillon, Lido Beach, for appellants in the third above-entitled proceeding.

Lorna B. Goodman, County Attorney, Mineola (Dennis J. Saffran of counsel), for respondents in the first, second and third above-entitled proceedings.

OPINION OF THE COURT

READ, J.

The thousands of petitioners in these three proceedings are owners of residential real property in Nassau County. As a result of a countywide revaluation mandated by a stipulation of settlement in Coleman v. County of Nassau (Sup Ct, Nassau County, Mar. 29, 2000, Winslow, J., Index No. 97-30380), the appraised or full market value of their homes soared, often at least doubling. Petitioners complain that respondents County of Nassau, Board of Assessors of Nassau County and Nassau County Assessment Review Commission (collectively or individually referred to as the County) thus violated Real Property Tax Law § 1805(1), which limits increases on assessments on residential property in Nassau County to not more than six percent per year and 20% over any five-year period. Supreme Court dismissed the petitions, and the Appellate Division affirmed, with two Justices dissenting. Petitioners appealed as of right, and we now affirm.

I.

This appeal takes us back three decades to our decision in 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 (1975), which became "something of a cause célèbre for critics of the property tax" (Beebe and Sinnott, In the Wake of Hellerstein: Whither New York? Part One, 43 Alb. L. Rev. 203, 204 [1979]). In Hellerstein, we considered whether the Town of Islip's long-standing practice of assessing real property at some fraction of its full or fair market value was valid in light of the statutory mandate that all real property in New York State be assessed at full market value and taxed at a uniform rate within a single taxing jurisdiction (see former RPTL 306). We held that it was not. We recognized the potentially disruptive effects of our decision, however, and so refused to invalidate the specific assessment roll at issue. We gave the Town until December 31, 1976 to conform to the statute, allowing it to continue its existing practice of fractional assessment in the interim, and declaring that any ensuing "tax levies, liens, foreclosures or transfers based on such assessments" were immune from challenge for failure to comply with the law (37 N.Y.2d at 14, 371 N.Y.S.2d 388, 332 N.E.2d 279).

Because of the ubiquity of fractional assessment, our decision in Hellerstein reverberated throughout the state. Under a hodgepodge of fractional assessment regimes that had proliferated over the years, localities routinely assessed commercial and industrial property at higher ratios (assessed value over market value) than residential property. But as a result of Hellerstein, all real property would be subject to the same effective tax rate, or taxes per dollar of full market value. As reflected in the extensive newspaper coverage of the time, there was widespread fear that, without ameliorative legislative action, Hellerstein would force an unwelcome shift of a significant portion of the property tax burden from businesses to homeowners (see e.g. Kaiser, Issue and Debate, Assessing Real Estate for Taxation at 100 Percent of Full Market Value, New York Times, Mar. 10, 1976, at 32; Shaman, Revaluation's Impact on the Homeowner, New York Times, Apr. 15, 1979, at LI1). At the same time, Nassau County, which valued its residential property using 1938 construction costs less depreciation plus the land's market value as of 1964, faced an onslaught of tax certiorari suits brought by commercial and industrial property owners. In these suits, the petitioners challenged their property tax assessments on the ground of inequality, claiming that the County had assessed their properties well above the state equalization rate while assessing homes well below it; they sought refunds of back taxes potentially costing the County hundreds of millions of dollars (see e.g. 860 Executive Towers v. Board of Assessors of County of Nassau, 53 A.D.2d 463, 385 N.Y.S.2d 604 [2d Dept.1976], affd. sub nom. Matter of Pierre Pellaton Apts. v. Board of Assessors of County of Nassau, 43 N.Y.2d 769, 401 N.Y.S.2d 1013, 372 N.E.2d 801 [1977] [reaffirming that state equalization rate may be used as sole basis for determining ratio of assessed value to full value in an assessment challenge on the ground of inequality]).

After six years of fits and starts, legislative moratoria and studies and task force reports, the Legislature overrode a gubernatorial veto to enact chapter 1057 of the Laws of 1981. This statute repealed section 306 of the Real Property Tax Law, the provision that had required full value assessment; added a new section 305(2) to specify generally that "[a]ll real property in each assessing unit shall be assessed at a uniform percentage of value (fractional assessment)"; and, as relevant here, added a new article 18 to apply to special assessing units, by definition limited to New York City and Nassau County (see RPTL 1801[a]).

Article 18 allowed special assessing units to apply different fractional assessment percentages to each of four classes of property: one-, two- and three-family residential property (class one); all other residential property except hotels and motels and other similar commercial property (class two); utility property (class three); and all other (class four) (see RPTL 1802). Article 18 was "designed to maintain the stability of relative property class tax burdens" (Budget Report on Bills, at 1, Bill Jacket, L. 1981, ch. 1057).¹ In general, article 18 authorized a special assessing unit to fix class shares using the tax roll for the 1981-1982 levy, with leeway to increase or decrease shares in subsequent years up to five percent to accommodate changes in the roll or new construction (former RPTL 1803); and to increase individual assessments for class one property as limited by section 1805(1), which states that

"[t]he assessor of any special assessing unit shall not increase the assessment of any individual parcel classified in class one in any one year, as measured from the assessment on the previous year's assessment roll, by more than six percent and shall not increase such assessment by more than twenty percent in any five-year period."

Further, the statute eliminated the use of the state equalization rate as evidence of inequality in future tax certiorari proceedings against special assessing units (see former RPTL 720[3][b],[c]; see also, RPTL 720[3]).

The bill subsequently enacted as chapter 1057 was extremely controversial. It was the subject of extensive debate upon its initial adoption, and also upon its reenactment by two-thirds vote after the Governor's veto. Members of the Assembly and Senators expressed the sentiment that, despite its imperfections, this bill was "the only ball game in town" to prevent a dramatic shift of real property taxes from businesses to homeowners, and provide a high degree of stability in the relative tax burdens of these categories of taxpayers (see N.Y. Assembly Debate on Senate-Assembly Bill S7000-A, A9200, Oct. 28, 1981, at 12,797, 12,799, 12,801, 12,803; Dec. 3, 1981, at 13,474, 13,483-13,484; NY Senate Debate on Senate-Assembly Bill S7000-A, A9200, Oct. 28, 1981, at 7,505-7,506, 7,516-7,519, 7,549-7,550; Dec. 3, 1981, at 8,107, 8,111).

The County's representatives in the Legislature sought certain specific assurances from the bill's advocates in both houses. The following colloquy took place between Assemblyman Parola and Assemblyman Hochbrueckner, the bill's champion in the Assembly:

"MR. PAROLA: . . . [M]y questions really relate directly to Nassau County and its unique situation. Will, under this bill, 7000-A, if the Governor signs it into law, will it reverse the present court order requiring Nassau County to reassess its real property?

"MR HOCHBRUECKNER: In response to your question, yes, it will. "MR PAROLA: Second question[.][U]nder the language of 7000-A will Nassau County be able to continue its present method of assessing all real property based on construction costs as it has in the past?

"MR. HOCHBRUECKNER: Yes, again" (N.Y. Assembly Debate on Senate-Assembly Bill S7000-A, A9200, Oct. 28, 1981, at 12,837-12,838).

Similarly, in the Senate debate on October 28, 1981, Senator Levy asked Senator Anderson, the bill's main proponent in the upper chamber, if he would yield to two questions from him and three colleagues, which they were "asked to present" by the Chairman of the Board of Assessors of Nassau County "for purposes of establishing legislative intent":

"SENATOR LEVY: The first question is, will Senate 7000A if signed into law by the Governor reverse the present court order requiring Nassau County to reassess its real property?

"SENATOR ANDERSON: Yes. And the reason is that we are repealing Section 306 by the very act before us.

"SENATOR LEVY: Thank you Senator. The second question is, under the language of 7000A, will Nassau County be able to continue its present method of assessing real property based on construction cost?

"SENATOR ANDERSON: Yes" (N.Y. Senate Debate on Senate-Assembly Bill S7000-A, A9200, Oct. 28, 1981, at 7,510).

Subsequently, Senator Levy broadened his question by asking whether the County would "be able to continue its present method...