Carroll v Assessor of the City of Rye (2007 NY Slip Op 52593(U))

Carroll v Assessor of the City of Rye

2007 NY Slip Op 52593(U) [24 Misc 3d 1208(A)]

Decided on March 28, 2007

Supreme Court, Westchester County

LaCava, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

The Petitioner, Edward Carroll ("Carroll"), is the owner of property located at 945 Forest Avenue, Rye, New York, identified on the tax map of the City of Rye (respondent City) as Section 153.15, Block 1, Lot 13 ["the subject property"]. In 1969, the subject property, which consisted of a 1.16 acre lot with approximately 139 feet of frontage on Long Island Sound, was created by the subdivision of a parcel owned by petitioner's father, Frank Carroll. In or about 1972, the Senior Carroll applied for and was granted a building permit to construct a temporary plywood storage shed, which was soon thereafter constructed at a cost of $400 on the subject property. In 1992, the subject property was gifted by deed from Frank Carroll to his son, and in February, 2001, petitioner applied for and was, in March, 2002, granted a building permit to construct a residence on the subject property ("the subject residence"). Thereafter, construction on the subject residence commenced, [*2]which construction continued until approximately October 2004, when a Certificate of Occupancy was issued for the residence. In June, 2003, Carroll gifted the subject property to himself and his wife. The home is approximately 5,000 square feet in size with four bedrooms, four and a half bathrooms, three fireplaces, and a three car garage. The Affidavit of Final Costs (necessary to obtain a Certificate of Occupancy and filed with the City of Rye Building Department) lists the total costs for construction at $1,448,210.

The Assessments by the City of Rye for the subject property were and are as follows:

DateLand AVImprovement AVTotal AV

1987-2002$ 32,500$ 400$ 32,900

2003$ 32,500$ 71,200$ 103,700

2004, 2005$ 32,500$ 87,700$ 120,200

According to respondent assessor, after she was notified by the City's building department that a new home permit had been granted to petitioner for the construction of a new structure on the subject property, she inspected the interior and exterior of the property in May 2003, evaluating not only the status of construction (she estimated it was 60% complete), the quality of the work, and the nature of materials used, but also the apparent intended nature of the home when it was completed (i.e. the number of rooms, including bed- and bath-rooms; the number of fireplaces; the square-footage; and other features). She also consulted the filed building plans to confirm her observations and evaluation. Further, she considered the location of the property, fronting directly on Long Island Sound, as well as the current market values of the land and building, particularly in light of comparable sales of similar properties, to determine the full market value of the property. She then, in recognition of the fact that the property was only approximately 60% complete, in her opinion, established a partial assessment for the 2003 assessment roll.

Respondent assessor also visited the property in May 2004, and although able to inspect the exterior of the subject premises, she was unable to enter and inspect the interior. As in 2003, she evaluated the status of construction. She estimated that the home was now completed, and she recorded the quality of the work and materials used. Finally, she again considered, before establishing an assessment for the 2004 roll, the water front location, and the current market values of the land and building, again weighing comparable sales to determine the full market value of the now-completed property.

Upon being advised of the 2003 assessment, petitioner filed a grievance with the City Board [*3]of Assessment Review (respondent, BAR); this grievance was denied and petitioner filed the instant 2003 petition. Petitioner similarly, and with a similar lack of success, grieved the 2004 assessment, and then filed the instant 2004 petition.

Petitioner now seeks an Order granting summary judgment pursuant to C.P.L.R. § 3212, finding that the subject property was selectively, and thus improperly and unlawfully, assessed by the Respondents. Petitioner argues that any assessment may only take into account the value of new improvements to the subject property citing Colonie Hill v. Boncore,87 AD2d 581 (2nd Dept. 1982). Petitioner distinguishes Markim v. Assessor of Orangetown, 9 Misc 3d(A),(Sup. Ct. Rockland Co. 2005) and 11 Misc 3d 1063(A),(Sup. Ct. Rockland Co. 2006); MGD Holdings HAV, LLC v. Assessor of Haverstraw, 11 Misc 3d 1054(A), (Sup. Ct. Rockland Co. 2006); and Young v. Town of Bedford, 9 Misc 3d 1107(A), 808 NYS2d 921 (Table), 2005 WL 2230399, 2005 NY Slip Op. 51444(U) (Supreme Court, Westchester County, Dickerson, J., 2005), aff'dNYS2d, 2007 WL 530575, 2007 NY Slip Op. 01580 (2d Dept. 2007), in that each of the cases involved new properties that justified their reassessment above the cost of the new improvements. While the "newly created property" argument may be viable where there has been a complete change to the property itself (such as a new subdivision as in Young, or Markim, where one existing property is broken into multiple new properties, or a merging of properties to create one new property, such as in MGD ), here, the property itself was not newly created. It had existed since 1969 on one tax lot, with existing road access, with existing utilities at the street frontage, and with its Long Island Sound waterfront location. The only thing "newly created" was the improvement on the property, the house itself.

Respondents likewise move for summary judgment pursuant to C.P.L.R. § 3212, arguing that this Court's decision in Young v. Town of Bedford, supra , controls. They argue that the property, during and after construction of the home, should be considered to be newly created property, requiring reassessment at full market value, and not restricted by the costs of the improvements, here, the new house. At the time the house was constructed, the property was vacant except for a temporary shed valued at $400. The construction of the luxury home, therefore, resulted in a wholesale change in the character, condition, and value of the property, which transformed it from an unimproved state to an improved state starting in 2003 and thereafter.

Thus, while both parties acknowledge that Young is pivotal to an analysis of this case, Petitioner argues that Young is distinguishable from the case at bar, while the Respondents urge that it is directly on point and that its principles should control.

In Young, Petitioner's husband was a builder who built five large homes on five of the seven lots which he owned. Four of the five homes were sold, respectively, for $1,830,000, $1,930,000, $2,035,000 and $1,980,000 and assessed, respectively, at $234,000, $224,800, $222,500 and [*4]$213,400. Petitioner and her husband kept the fifth home as their own, and in 2004 that property was assessed at $217,800. Young argued that this value was improperly arrived at because the increase in the assessment [to $217,800] was based on the assessor's determination of the current market value of the property, rather than a determination of the contributory value added by the improvements. The latter, Young asserted, was selective reassessment.

The respondent in Young argued that the parcel was reassessed due to its conversion from an unimproved to an improved state, by assigning a value of $181,400.00, representing the improvement component of the property's assessed valuation, and adding this to the previous $36,400.00 assessment (as vacant land). The result was the $217,800.00 assessment challenged by Petitioner. Respondent argued that such a reassessment was proper. Respondent in Young further urged dismissal as a matter of law since, it was argued, petitioner has sought to challenge only the improved portion of the final assessment.

This Court held that, when the Youngs completed their new home, the property was:

At this point in the assessment process the Assessor took into account-in a partial, but not exclusive fashion-the sales prices of similarly situated properties within the Town of Bedford (including the recent sale of) the home next door to Petitioner's property (which had) sold for $1,980,000 ... because of (his) overriding obligation to determine the true, full market value of the property and, thereafter, to apply a uniform assessment ratio to this value to produce an appropriate assessed valuation. At the conclusion of this process (the Assessor) assigned the figure of $181,400 as the improvement component of the property's assessed valuation and added this to the existing $36,400 assessment. The net result was the $217,800 assessment ... Young, supra , p3.

In analyzing the selective reassessment argument by petitioner in Young, the Court focused on the allegation that reassessments based on more than the value of subsequent improvements to an existing structure might involve selective reassessment. In, for example, Matter of Stern v. City [*5]of Rye, 268 AD2d 482, 483, 702 NYS2d 100 (2d Dept.2000), the Second Department noted "reassessment upon improvement is not illegal in and of itself. Here, the petitioners' properties were reassessed after recent improvements. However, rather than adding the value of the improvement to the prior assessment ... the properties were reassessed to a comparable market value that included the value of the improvement ...").

Further, this Court has also examined reassessments following improvements to existing structures, to determine if the reassessments were proper. For example, in Teja v. The Assessor of the Town of Greenburgh, Index No: 14628/03, (Supreme Court, Westchester County, Rosato, J., Decision May 27, 2004]), the Court found

Similarly, in Carter v. The City of Mount Vernon, Index No: 19301/02, (Supreme Court, Westchester County, Rosato, J., Decision November 25, 2003) the Court held that an assessment increase after a sale, based upon improvements to the property, was invalid, since the assessor had failed to identify or enumerate the specific renovations or improvements upon which he relied to reassess. (Cf. Matter of Villamena v. City of Mount Vernon, 7 Misc 3d 1020(A), (Supreme Court, Westchester County, Dickerson, J., 2005), where, although the Court did not find selective reassessment, it did direct a new assessment, since the reassessment may have exceeded the actual value of the improvements).

However, this Court held in Young that the petitioners therein had not been subject to selective reassessment in that manner.

Stated, simply, the Petitioner has presented no authority in support of her position since the cases discussing this form of selective reassessment involve pre-existing homes which were assessed upon completion and then selectively reassessed after sale and/or after improvements were made [See e.g., Stern, supra , at 268 AD2d 482 (involved the purchase of "an improved parcel of real property in the City of Rye for $1,445,100 (to which) $180,000 in improvements (were made)"); DeLeonardis, supra , at 226 AD2d 530 (involved the purchase of "a parcel of real property improved by a one-family dwelling in the City of Mount Vernon for $626,000 (upon which) certain improvements (were made)"); Teja, supra (improved property located in the Town of Greenburgh purchased for $1,175,000 to which $14,513.28 in improvements were made); Villamena, supra , at 7 Misc 3d 1020(A) (the improved property was purchased for $715,000 to which subsequent [*6]improvements were made)]. Young, supra , p9.

Finally, this Court in Young addressed respondent's argument that the Petitioner's challenge was directed solely at the improvement portion of the 2004 assessment, holding:

In addition, and notwithstanding an absence of proof, the Petitioner's R.P.T.L. Article 7 challenge to the subject property's 2004 assessment on the grounds that it attributes too high a figure to the improvement component, i.e., the new home, is without merit as a matter of law for the following reasons...

...First, it is inappropriate within the context of the instant proceeding to selectively challenge the assessment of only one of the component parts [land at $36,400 and improvements at $181,400] of the total assessment of $217,800. R.P.T.L. § 502(3) states, in part, "The assessment roll ... shall provide for the entry with respect to each separately assessed parcel of the assessed valuation of the land exclusive of any improvement, the total assessed valuation, and the full value of the parcel ... Only the total assessment, however, shall be subject to judicial review provided by article seven of this chapter" [R.P.T.L. 502(3) (McKinney's 2000) ]. This mandate has been held "to prohibit review of either the land or the building assessment separately" [ Matter of Shubert Organization, Inc. v. Tax. Comm. of the City of New York, 60 NY2d 93, 96, n 1, 468 NYS2d 594, 595, n 1 (1983)(citing People ex re. Strong v. Hart, 216 NY 513, 519-520, 525 (1916); See also Matter of Connolly v. Board of Assessors of the County of Nassau, 32 AD2d 106, 109, 300 NYS2d 192, 196 (2d Dept.1969) (" any separation of value for land and buildings is purely artificial and hypothetical' ... and the Legislature recognized this by providing judicial review of only the total assessment (Real Property Tax Law § 502, subd. 3)"); C.H.O.B. Assoc., Inc. v. Board of Assessors of the City of Nassau, 45 Misc 2d 184, 193-194 (Supreme Court, Nassau County 1964) ("an improved parcel's actual value relates to the whole and not to the separate ingredients of land and improvements") ].

The Petitioner's challenge of only the improvements component of subject property's 2004 assessment must be rejected as a matter of law.

In affirming Justice Dickerson, the Second Department held that the petitioner therein improperly challenged only a portion of the assessment, and also failed to establish that the property was selectively reassessed just because it was newly constructed.

Other cases cited by petitioner are distinguishable and/or inapposite. For example, People ex rel. Manhattan Square Beresford, Inc. v. Sexton, 284 NY 145 (1940) [involving an apartment building], and Colonie Hill, supra [involving a hotel], which relies on Manhattan Square, both deal [*7]solely with the methodology of commercial assessments. They involve, in particular, the use of reproduction cost [new] less depreciation, as compared with income capitalization analysis. Neither case, however, contrary to petitioner's assertions, sets the value of improvements as the cap in valuation on existing, previously improved, properties.

Even petitioner's citation to ORPS, 5 Ops Counsel No. 116, is contra indicated on this issue, since, notwithstanding that the reference is to a concurring opinion, the cited language regarding the cost of new construction refers to 860 Fifth Ave. Corp. v. Tax Com. of New York, 8 NY2d 29 (1960), which case in turn cites Manhattan Square, supra , and holds that a proper valuation is based on reproduction cost [new] less depreciation, not on the cost of the improvements. And while, as petitioner argues, the Court in Pherbo Realty Corp. v. Board of Assessors, 89 AD2d 923 (2d Dept. 1982), did give weight in its valuation to the cost of construction, it did so solely in the context of affirming the use of the income capitalization method, in assessing the retail commercial property at issue. Finally, White Plains Properties Corp. v. Tax Assessor of White Plains, (NYLJ, June 18, 1976, pp 11-12), aff'd 58 AD2d 871(2d Dept. 1977), aff'd 44 NY2d 971 (1978), also cited by petitioner, merely stands for the undisputed proposition that a property which already is improved by a structure, when subject to additional improvements, may only be reassessed to the extent of the cost of those improvements.

Petitioner acknowledges that Young is controlling, but argues that the instant property was unlike and, therefore, distinguishable from that in Young. The property, which had already been improved with the temporary storage shed, was subdivided when the Senior Carroll gifted the property to petitioner, whereas in Young the property was not improved upon at all until after the subdivision. Therefore the property here should not be determined to be newly-created. Thus any reassessment must be based solely on the cost of improvements. Regarding the RPTL 502 (3) issue, petitioner quite properly notes that his petitions set forth challenges to the entire 2003 and 2004 assessments, although in one respect petitioner does claim that the reassessment as it relates to the improved value of the property was not proper. [*8]

Upon a summary judgment motion, the movant bears the initial burden of presenting evidence, in competent form, establishing entitlement to judgment as a matter of law, and tendering sufficient evidence to eliminate any material issues of fact from the case" (Way v. George Grantling Chemung Contracting Corp., 289 AD2d 790, 793 [3rd Dept., 2001]). Unless and until that initial burden is met, there is no need for the non-movant to come forward with "evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" (id.; see also Rodriguez v Goldstein, 182 AD2d 396, 397 [1st Dept., 1992]).

In Celardo v. Bell (222 AD2d 547 [2d Dept., 1995]), the Court stated:

It is axiomatic that summary judgment is a drastic remedy which should only be granted if it is clear that no material issues of fact have been presented. Issue finding, rather than issue determination, is the court's function (Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395 (1957) . If there is any doubt about the existence of a triable issue of fact or if a material issue of fact is arguable, summary judgment should be denied (Museums at Stony Brook v Village of Pachogue Fire Dept., 146 AD2d 572 (1989)

The Court finds, regarding petitioner's motion, that, at the outset, petitioner has not met the initial burden, and has thus failed to show entitlement to judgment as a matter of law.

This Court, in, inter alia, Young, as set forth above, and the Second Department, in its affirmance of Young, have held that, while an already improved property may only be reassessed, in the absence of a municipality wide reassessment, based on the cost of improvements made to the property, newly created property, such as that at issue in Young, may be reassessed to full market value based upon a variety of factors, including the sales prices of comparable properties.

Here, prior to 2003, the only improvement to the property was a $400 temporary storage shed. Thereafter, a elegant home, built for approximately 1.5 million dollars was constructed on this prime, waterfront property, changing its nature from basically undeveloped property into a luxurious homestead. This was the functional equivalent of new development of an existing undeveloped property. The existence of the $400 utility shed in and of itself did not transform the property to an improved or developed status, which would require that any further improvements trigger the limitation of the assessments to the value of the new improvements. The property herein, like the property in Young, was not "already improved", but rather became "newly created" with the addition of the subject residence. As such, it may therefore be reassessed to full market value based upon the factors enumerated above. [*9]

Put another way, the seminal or determinative factor in this case is not petitioner's argument that there must be a complete change in the nature of the property itself, such as the new subdivision in Young, or the breaking up or merging together of properties as in Markim or MGD, but rather that a metamorphosis occurred to an existing property whereby it evolved from fallow acreage into a residential waterfront estate.

Regarding respondent's cross-motion, the Court finds that, at the outset, respondent has met the initial burden, by showing entitlement to judgment as a matter of law. However, when viewing petitioner's properly submitted proof in a light most favorable to it, and upon bestowing the benefit of every reasonable inference to it (Boyce v. Vasquez, 249 AD2d 724, 726 [3d Dept., 1998]), the Court finds that there are material issues of fact to preclude summary judgment as to the tax years at issue here.

Among other things, there are material issues of fact regarding the accuracy of the assessments conducted herein by the respondent assessor. The Court notes, regarding the 2003 assessment, that the assessor describes the property (on the property card) as an "estimated 60%" complete, which is conclusory in that she provides the Court with no description of the factors which she considered in formulating the estimate, nor has she has pointed to anything in her professional qualifications (such as building or construction experience) which would lead the Court to believe that she has the expertise to accurately evaluate the completeness of the project as alleged.

These same factors weigh at least as heavily with regard to the May 2004 reassessment. As set forth below, respondent assessor admittedly altered the property card by erasing her previous estimation that the home was 60% complete, and writing over the erasure that it was "incomplete". This notation appears next to the date 5/03, not the date that she attests that the alteration was made by her. She also asserts that, when she visited the property in May, 2004, it was complete, and that she so noted same on the property card, despite the fact that she also apparently made (without disclosing in her affidavit that she had made) the above alteration to the prior record. Further, she concedes that she was only able to inspect the exterior of the premises at that time, not the entire premises as in 2003. (Cf. Schlesinger v. Town of Ramapo, 11 Misc 3d 697, 807 NYS2d 865 [Supreme Court, Rockland County, Dickerson, J., 2006]:

"In the event an assessor is unable to accurately appraise a parcel of real property without an inspection of the property, and access to the property is denied by the taxpayer, the assessor would nevertheless have to arrive at an appraisal value which most nearly reflects the probable value of the property. Such an appraisal of residential real property could be based on the improvements found in similar homes, an estimate of the interior of a home by third persons who have been there, or any other reasonable method calculated to aid the assessor under these circumstances".) [*10]

There is no evidence that respondent assessor took those steps, or in fact any other steps, here to reach her valuation.

In addition, petitioner asserts in opposition to the motion that the premises was not complete in May 2004, which has at least some support in the failure of respondent to issue a Certificate of Occupancy for the dwelling until five months later. Petitioner also argues that either the 2003 or 2004 assessment must be in error, since the initial notation that the premises was 60% complete does not match the relationship of the 2003 and 2004 improvement assessments. Respondent assessor asserts that, but does not explain how or why, she had originally determined the assessed valuation in 2004 to be $118,166, a figure which is significantly higher than the corrected assessment of $87,700, which lower value was recalculated based on "available market data".

Finally, it is necessary to take note of the proffered affidavit of the respondent assessor as it relates to the alteration made on the property card. Soon after receiving notice of the 2003 reassessment, as set forth above, petitioner grieved the matter to the respondent Board of Review. At that time, as set forth above, the property card reflected that the subject premises was, according to the assessor, "est[conceded to be an abbreviation for "estimated"] 60% complete". Following denial of the grievance, petitioner filed the instant 2003 petition. Respondent assessor concedes that, while the 2003 petition was pending, she altered the notation on the card to remove the abbreviation "est" and "60%" by erasing them, and replacing them by writing the word "incomplete" over the erasure.

Petitioner asserts that this was an improper alteration of a municipal record. Respondent assessor denies any impropriety, asserting that it is her "practice" to erase outdated information. In her affidavit in opposition to petitioner's motion, and in support of respondent's cross-motion, respondent assessor states that the 60% notation was merely removed when the subject premises was completed; it was, she avers, "an update of the property card to reflect the property's current condition". However, such an explanation is clearly inconsistent with the replacement of the word "incomplete" on the 2003 card at such time as the home was clearly not completed, rather than next to the 5/04 notation when she states the project was deemed completed.

In sum, while the Court holds herein that the City indeed may properly reassess newly-created or developed property by reference to market value, the precise manner in which the two reassessments occurred here is a matter suitable for resolution at trial. As this Court held in Markim v. Assessor of Town of Orangetown, 11 Misc 3d 1063(A), supra , under certain circumstances an initial reassessment following construction may properly be viewed as a partial assessment; subsequently, the taxing authority may again reassess upon completion, but not beyond the remaining, unfiled portion of the assessment (i.e. to bring the assessment equal to 100% of value), along with the cost of any subsequent improvements. As set forth above, there are indeed questions of fact with respect to the percentage of market value which the 2003 and 2004 reassessments represented, which issues should also be resolved at trial. [*11]

Based on the foregoing, it is hereby

ORDERED, that the petitioner's motion for summary judgment pursuant to CPLR 3212 is denied, and it is further

ORDERED, that the respondents' cross-motion for summary judgment pursuant to CPLR 3212 is likewise denied.

The foregoing constitutes the Opinion, Decision, and Order of the Court.

Dated: White Plains, New York

HON. JOHN R. LA CAVA, J.S.C.

Watkins & Watkins, LLP

By: John E. Watkins, Jr. ,Esq.

Attorney for Petitioner

175 Main Street

White Plains, New York 10601

Kevin J. Plunkett, Esq.

Corporation Counsel

City of Rye- City Hall

1051 Boston Post Road

Rye, New York 10580