Argued May 3, 2005; decided June 9, 2005

Matter of Town of Riverhead v New York State Bd. of Real Prop. Servs., 7 AD3d 934, affirmed.

Graffeo, J.

We are asked in this case to determine whether a town that is part of a school district may contest the segment special equalization rate set by the State Board of Real Property Services for another municipality in the same school district. Based on our review of the relevant [*2]statutes, we conclude that the{**5 NY3d at 39} Town of Riverhead lacks capacity to bring this proceeding and therefore affirm the dismissal of the petition.

The levy and collection of school taxes for the support of public school districts is governed by the Real Property Tax Law. Where the boundaries of a school district are coterminous with a municipality, school authorities levy taxes based on the valuations of real property from the latest assessment roll of that city or town (see RPTL 1302 [1]).^[FN1] But most of the school districts in New York State include all or portions of several municipalities. Hence, these school districts collect taxes from municipalities or segments of municipalities that may have varying levels of assessments. To effectuate the fair allocation of taxes among these municipalities, the State Board of Real Property Services is required annually to establish a state equalization rate for each municipality in the state (see RPTL 202 [1] [b]).^[FN2] The state equalization rate is the ratio of the locally-determined assessed value of taxable real property within a municipality to the State Board's estimate of the true market value of that property (see RPTL 102 [19]; 1202 [1] [a]). In other words, the state equalization rate represents the percentage of true market value at which a municipality assesses its real property.

In order to apportion tax levies for a school district encompassing more than one municipality, the Real Property Tax Law directs a district superintendent to determine the full valuation of real property for each segment of the municipalities included in the school district by dividing the taxable assessed valuation of the real property in that part of the municipality by the state equalization rate established for the entire municipality (see RPTL 1314 [1] [a]). Where a municipality's state equalization rate does not accurately reflect the level of assessment within a particular segment of a school district (thereby resulting in a disproportionate tax burden), the [*3]State Board is authorized to calculate a special equalization rate for that segment (see RPTL 1226, 1314 [2]). The State Board may undertake such an adjustment{**5 NY3d at 40} only where there would "be at least a 10 percent change in the share of the levy of at least one segment of the taxing jurisdiction as the result of the use of the segment special equalization rate in place of the equalization rate which would otherwise be used for purposes of apportionment" (9 NYCRR 186-5.5 [a]).

In this case, the Riverhead Central School District is comprised of portions of the towns of Riverhead, Southampton and Brookhaven. In May 2002, the Town of Southampton applied to the State Board for a segment special equalization rate.^[FN3] In its application, Southampton indicated that residential property in other parts of the town had been assessed at a significantly lower percentage of market value than residential property in the Riverhead school district segment. This disparity occurred because market values in the segment had not increased as dramatically as values in other parts of the town since Southampton's previous reassessment in 1992. Southampton further explained that it was planning to conduct a reassessment for its 2004 assessment roll and that the requested segment special equalization rate would be a temporary measure to ensure equitable apportionment of school taxes until the reassessment process was completed.

The State Office of Real Property Services (ORPS) analyzed the application and agreed with Southampton, finding that "the ratio of assessed value to sales price for the residential property in the Riverhead School District segment of the town is significantly higher than the ratio in the town as a whole."^[FN4] Recognizing that the state equalization rate for [*4]Southampton was 2.37% in 2001, ORPS recommended that the State Board establish a segment special equalization rate of 3.01% for that portion of Southampton in the Riverhead Central School District.{**5 NY3d at 41}^[FN5] ORPS found that application of the new segment special equalization rate would reduce the share of the tax levy for the Southampton segment of the school district by 17.9%, thereby satisfying the 10% threshold. Concomitantly, the new rate would increase the revenue share to be raised from the Brookhaven and Riverhead portions of the school district by 4.3%. After providing Brookhaven and Riverhead with notice and an opportunity to be heard at State Board meetings held to consider Southampton's application—during which Riverhead offered testimony and written submissions—the State Board approved the 3.01% special equalization rate for the Southampton segment.

In November 2002, the Town of Riverhead and Edward Densieski, an owner of real property in the Riverhead segment of the school district, commenced a CPLR article 78 proceeding in Supreme Court seeking to annul the State Board's segment special equalization rate determination. The court dismissed the proceeding for lack of subject matter jurisdiction, concluding that the proceeding should have been initiated in the Appellate Division in accordance with RPTL 1218.^[FN6]

Riverhead and Densieski then brought this article 78 proceeding in the Appellate Division. The State Board and Southampton opposed the petition, arguing that Riverhead lacked both capacity and standing to sue, and that Densieski lacked standing. The Appellate Division [*5]agreed and dismissed the proceeding. We granted Riverhead leave to appeal.^[FN7]

Capacity to sue is a threshold question involving the authority of a litigant to present a grievance for judicial review. The issue of capacity often arises when a governmental entity seeks to bring suit (see Matter of Graziano v County of Albany, 3 NY3d 475, 478-479 [2004]). "Being artificial creatures of statute, such entities have neither an inherent nor a common-law right to sue. Rather, their right to sue, if it exists at all, must be derived from the relevant enabling legislation or some other concrete{**5 NY3d at 42} statutory predicate" (Community Bd. 7 of Borough of Manhattan v Schaffer, 84 NY2d 148, 155-156 [1994]). An express grant of authority is not always necessary. Rather, capacity may be inferred as a necessary implication from the powers and responsibilities of a governmental entity, "provided, of course, that there is no clear legislative intent negating review" (id. at 156 [citation and internal quotation marks omitted]).

Relevant to this controversy, section 1218 of the Real Property Tax Law, the sole statute authorizing judicial review of equalization rates, provides, in part:

"A final determination of the state board relating to state equalization rates may be reviewed by commencing an action in the appellate division of the supreme court in the manner provided by article seventy-eight of the civil practice law and rules upon application of the county, city, town or village for which the rate or rates were established."

Contrary to Riverhead's contentions, we conclude that RPTL 1218 applies not only to state equalization rates but also to segment special equalization rates. Section 1218 broadly authorizes review of State Board determinations "relating to" state equalization rates. Segment special equalization rates are a subset of state equalization rates—both reflect the percentage of full value at which real property situated in a given locale is assessed. Furthermore, the statute contemplates review of "the rate or rates" established for a specific municipality. Inasmuch as each municipality is assigned a single state equalization rate, the reference to "rates" evinces an intent that section 1218 apply to all species of state equalization rates, including segment special equalization rates (see Matter of Town of Rye v New York State Bd. of Real Prop. Servs., 5 AD3d 783 [2d Dept 2004]; Matter of City of Oswego v New York State Bd. of Real Prop. Servs., 280 AD2d 99, 101 [3d Dept 2001], lv denied 96 NY2d 711 [2001]). [*6]

Because RPTL 1218 specifically limits the capacity to challenge the State Board's determination to the municipality "for which the rate or rates were established," Riverhead necessarily lacks capacity to challenge the State Board determination granting Southampton a segment special equalization rate.^[FN8] "[W]here a law expressly describes a particular act, thing or{**5 NY3d at 43} person to which it shall apply, an irrefutable inference must be drawn that what is omitted or not included was intended to be omitted or excluded" (McKinney's Cons Laws of NY, Book 1, Statutes § 240, Comment, at 411-412; see also Community Bd. No. 4 [Manhattan] v Board of Estimate of City of N.Y., 88 AD2d 832, 833 [1st Dept 1982], affd for reasons stated 57 NY2d 846 [1982]). In light of the express limitation set forth in RPTL 1218, the necessary implication doctrine advanced by Riverhead is not applicable.

Inasmuch as we conclude that Riverhead lacks capacity to challenge Southampton's segment special equalization rate, we have no need to address whether Riverhead has standing under the facts and circumstances of this case.

Accordingly, the judgment of the Appellate Division should be affirmed, with costs.

Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt, Read and R.S. Smith concur.

Judgment affirmed, with costs. [*7]