Tilsac Corp. v. Assessor of Town of Huntington

• Decision Date: 13 November 1967
• Citation: 285 N.Y.S.2d 533,55 Misc. 2d 431
• Parties: Application of TILSAC CORPORATION, Petitioner, v. ASSESSOR OF TOWN OF HUNTINGTON, and the Board of Review of Town of Huntington, Respondents.
• Court: New York Supreme Court

Page 533

285 N.Y.S.2d 533

55 Misc.2d 431

Application of TILSAC CORPORATION, Petitioner, v.ASSESSOR OF TOWN OF HUNTINGTON, and the Board of Review of Town of Huntington, Respondents.

Supreme Court, Special Term, Suffolk County.

Nov. 13, 1967.

Harnett & Powell, Garden City, for petitioner, Adolph Koeppel, Mineola, of counsel.

Leon D. Lazer, Huntington, for respondents.

MEMORANDUM

JOHN P. COHALAN, Jr., Justice.

In this tax certiorari proceeding petitioner Tilsac has attacked its assessment for the tax years 1963--64 and 1964--65 on the double grounds of inequality and overvaluation.

The subject real property, known as 'The Big H' shopping center is situate on New York Avenue, at Huntington, in Suffolk County.It occupies approximately 25 acres, seven of which are unimproved.The latter are separated from the improved portion by a Sears Roebuck store not privy to this proceeding.

For each of the two years under review the assessment is:

Land $75,300.Total $586,800.

The rate of assessment is 17%, which is also the State Equalization rate for the Town of Huntington.This, therefore, imports a full value to petitioner's property of $3,450,000.00 (rounded).

It is axiomatic that a tax assessment is presumed to be correct (In re Melcroft Corp., 256 App.Div. 291, 10 N.Y.S.2d 27) and that the burden of showing an assessment to be erroneous or illegal is upon the petitioner(People ex rel. N.Y.C. & H.R.R. Co. v. Priest, et al., 150 App.Div. 19, 133 N.Y.S. 1087, affirmed206 N.Y. 274, 99 N.E. 547;Application of Putnam Theatrical Corp.(1962)16 A.D.2d 413, 228 N.Y.S.2d 93).

As a preliminary step petitioner made a demand pursuant to Real Property Tax Law (RPTL)section 716, subd. 1 that respondents admit for the purpose of this proceeding that the percentage of full value at which other real property is assessed is 14 1/2%.The demand was refused.

On the issue of inequality the parties failed to agree on the parcels to be appraised.Thereupon, on petition, the court in obedience to section 720, subd. 3(RPTL) selected 16 parcels to be appraised 'without reference to their assessed valuations' from separate lists of 25 parcels submitted by each of the litigants.Eight were selected from each list.

As might be expected the parcels culled from the petitioners' list averaged well below the equalization rate of an assessment ratio of 9.54% To appraised value; those of the respondents well above, to 23.65%.During the trial several mistakes respecting petitioner's parcels were uncovered.An analysis of the sixteen parcels after correction revealed, however, that as to seven of the Town's eight selections and as to four of Tilsac's eight, the parties agreed on valuation.As to these the ratio of assessment to appraised (full) value was 23.19%.And finally, after halving the difference between the parties' appraisals as to the disputed items, these figures reveal that as to all sixteen parcels the over-all ratio was 22.43%.

In People ex rel. Hagy v. Lewis, 280 N.Y. 184, 20 N.E.2d 386(a parcel selection appraisal case) twelve items were submitted to the lower court.The ratio of assessment to full value ran from a low of 33 1/3% To a high of 114 12/25%.As to this disparity the Court of Appeals said at page 188, 20 N.E.2d at page 387:

'When the parties agree on the parcels to be valued it is to be presumed that inordinate diversities have been excluded.In the absence of such agreement the selection is made by the court * * * and then (unless the contrary be shown) it is to be presumed that judicial fairness is a guaranty that the parcels chosen also fairly exhibit a cross-section of the situation that exists throughout a tax district.Thus the idea of the statute appears to be that a sufficiently approximate arithmetical mean can be established by pooling a number of parcels (so selected) and comparing the aggregate of their assessed valuations with the aggregate of their full values.Apparently this was the view of the court below.We cannot say that such a process is inadequate for practical attainment of the rough equality which is all that has heretofore been possible under any system of taxation.* * * As we all know, there are in almost every community peculiar standards of value indigenous to particular locations'.

On the issue of inequality Tilsac availed itself of that part of Section 720, subd. 3(supra) which reads that:

'the parties shall be limited in their proof on the trial of such issue to such (appraised) parcels * * *, except that evidence may be given by either party as to (1) actual sales of real property within the assessing unit that occurred during the year in which the assessment under review was made * * *'('Appraised'supplied).

The parties stipulated that as far as the ratio portion of this case is concerned the Court's determination as to the 1963 ratio will determine that of 1964 as well, but did not make the same stipulation as to value.An accord was reached, also, on the question of value as imported by documentary stamps on deeds.Based on 55 cents for each $500.(or fraction thereof) of sale price, it was agreed that the apparent price so shown would be reduced by $250. in each instance.In so stipulating, the Town did not for one moment agree that the total of the stamps shown was in any manner a true indication of the actual sale price.

The greater part of the evidence adduced by Tilsac dwelt on the statutesubdivision recited above.The statistics introduced as background material either at the trial itself or on motions of a preliminary nature disclosed that in the years under review Huntington had a total population of about 150,000 and that in 1960(latest available statistics) there were 47,117 real property units of all types and descriptions on the town tax roll.

In the calendar year 1963, 6649 deeds were recorded with a total of 10,191 grantors listed.

In what was described as a random sampling procedure, Tilsac produced figures from the County Clerk's records concerning about 1800 of the total sales.After a great deal of evidence from both sides as to the bona fides of the sales and the accuracy of the figures, a hard core remainder of several hundred undisputed items resulted.Undisputed, that is, only in the sense that respondents made no direct attack on the items remaining, maintaining, however, the overall objection that the procedure itself was improper and inconclusive.

As to the hard core remainder the ratio of current assessment to sales price on a dollarwise basis came out to 12.85% And to 13.35% On an average of ratio basis.

There was a wide disparity between the high and low assessments so produced.In the first batch of 900 (uncorrected) 622 items showed a ratio of assessment to sales of 16% Or less; 194 were above 17% And the remainder (84) were over 16% And under 17%.Of the first 900 so totaled only 16 sales were for a purchase price of more than $50,000.The second batch produced somewhat similar results.

The reason the court segregated sales indicating an assessment/price ratio of over 16% And less than 17% Lies in the circumstance that in the applications for correction of assessed valuation of real estate (protests) lodged with the Town for the two years under review Tilsac claimed its assessment should be $277,400.00 based on an actual land and improvement cost to it of its real property of $1,722,000.00.This works out to be an assessment of 16.11%.In the same two protests petitioner considered its property to be worth $1,660,000.00 with the same proposed assessment, which would result in a ratio of 16.7%.The amount of fire insurance carried was said in the protests to be $3,000,000.00.

In passing the court expresses its mystification at the figures furnished to the Town Authorities, for Tilsac's own books of account disclose a total initial cost for land and improvement of $3,800,337.25 for its real property which was acquired as vacant land in 1959 for $413,192.74 and not fully improved until well into the year 1963.This development the court construes to be an admission against interest.

The then Town assessor was called upon to testify as to his modus operandi in arriving at assessments.He explained that inasmuch as June 1st of each year is the cut-off date for determining taxable status (Suffolk County Tax Act, Sec. 5;L.1920, ch. 311, as amd.) every effort is made prior to that date to bring in more tax revenue by adding partial improvement assessments to the tax roll, 'a laudable objective).

To this end and with the permits issued by the Building Department as a guide, he and his staff would continue to make inspections throughout the town as close to the deadline as possible.He then fixed a more or less arbitrary figure (he called it a flat assessment) on foundations and on rough unfinished structural work which may or may not have worked out to the 17% Formula.

As to finished products it was his custom (and allegedly good assessment procedure) to use three criteria for assessments.These were (1) the State Equalization rate, (2) the value of adjoining or comparable properties, and (3) replacement costs less depreciation.If he could not fit the property comfortably into this tri-partite Procrustean bed, then he would cut the body accordingly by giving weight to two of the three indicated criteria.

Obviously, with his limited staff, it was a physical impossibility to do more than drive by the long established neighborhoods to view long improved properties; hence, in the absence of a complete review such assessments were carried from year to year without change.

From his explanation it would follow that if a person starts upon the construction of a residence after June 1st of any given year he may be enjoying the full fruits of his home by October 15th, although his assessment will continue as if the property was still unimproved, until the following year, for an overall period of some fifteen months.Thus, a...