Trump-Equitable Fifth Ave. Co. v. Gliedman, 69 N.Y.2d 350 (1987)
When a building qualifies as a “multiple dwelling” under Real Property Tax Law § 421-a, the tax exemption applies to the entire building, including commercial units, up to the statutory limit, and is not to be applied on a unit-by-unit basis.
Summary
Trump-Equitable sought a tax exemption under RPTL 421-a for its mixed-use condominium building. The city only granted the exemption to residential units, assessing the commercial units separately. The Court of Appeals held that the exemption should be applied to the entire building, including commercial units, up to the statutory limit (12% of aggregate floor area), because the statute applies to ‘multiple dwellings’ regardless of whether they are rented or owned as condominiums. The Court reasoned that the city’s interpretation would effectively exclude all condominium property from the tax exemption.
Facts
Trump-Equitable owned a newly constructed 32-story mixed-use condominium building with 223 residential units and 5 commercial units (parking garage, drug store, fruit/vegetable store, bakery/cafe, children’s clothing store). The commercial space was less than 12% of the building’s total floor area. Trump-Equitable sought a RPTL 421-a tax exemption, claiming the entire building should be assessed at the pre-construction value of $757,000. The City only applied the exemption to the residential units, assessing the building at $1,621,691 by apportioning the pre-construction assessment and adding the value of the commercial units.
Procedural History
Trump-Equitable filed an Article 78 proceeding to annul the city’s determination and compel assessment at $757,000. Special Term granted the petition. The Appellate Division affirmed based on the Special Term opinion. The Court of Appeals reviewed the decision.
Issue(s)
Whether a tax exemption under RPTL 421-a for a “multiple dwelling” should be applied to the entire building, including commercial units within the statutory limit, or solely to the residential units.
Holding
Yes, because RPTL 421-a applies to “multiple dwellings” regardless of the form of ownership (rental, cooperative, or condominium), and the 1975 amendment to the statute expressly recognizes that commercial uses are entitled to a limited exemption based on floor area ratio.
Court’s Reasoning
The court reasoned that the statute’s plain language requires that the exemption be applied to the building as a whole, up to the specified commercial use limit. The court stated, “We are obliged to read the words of the statute in their natural and most obvious sense…and when we do so it appears that the Legislature intended all properties, regardless of the type of ownership, to receive the benefit of the exemption.” The Court dismissed the City’s argument that the primary purpose of the statute (encouraging residential building) would not be furthered by applying the exemption to commercial condominiums. The Court emphasized that the statute’s purposes were broader, including construction, employment, and stabilizing the city’s tax base. Granting a limited exemption to commercial space was consistent with the intent to incentivize development by allowing developers to maximize the value of the ground floor. The court found that the 1975 amendment to RPTL 421-a explicitly recognized that commercial uses are entitled to the exemption. The court stated, “…far from disqualifying commercial uses from the benefit of the exemption, the Legislature expressly recognized their limited entitlement to it by the 1975 amendment.” The Court also rejected the argument that this interpretation was inconsistent with Real Property Law § 339-y or RPTL 580 and 581, which deal with taxation of individual condominium units. The purpose of those laws was to ensure fair taxation and separate tax accounts for each unit, not to alter the application of the RPTL 421-a exemption at the building level. The Court noted that if its application offered an unfair tax advantage to commercial condominiums over other business properties, the New York City Council could restrict, limit or condition the eligibility of benefits. The court stated that because the statutory language is clear, the court must implement it as written and may not defer to an interpretation made by the agency charged with enforcement of the statute. The Court concluded that the city’s interpretation would effectively excise buildings held in condominium ownership from the statute and apply the exemption differently depending on the type of ownership, which was not the legislature’s intent.