Matter of FMC Corp. v. Unmack, 92 N.Y.2d 176 (1998)
A property owner challenging a tax assessment needs only to present “substantial evidence” of overvaluation to overcome the presumption of validity; this requires credible and competent evidence of a valid dispute concerning the property’s valuation.
Summary
FMC Corp. and South Slope Holding Corp. separately challenged their property tax assessments. Both claimed overvaluation. FMC presented comparable sales data for its industrial complex, while South Slope argued that community opposition depressed its land value. The New York Court of Appeals held that both petitioners presented sufficient “substantial evidence” to overcome the initial presumption of valid tax assessments. The court clarified that “substantial evidence” in this context is a minimal standard, requiring only credible evidence of a genuine dispute regarding valuation, not proof of overvaluation by a preponderance of the evidence. The cases were remitted for further proceedings.
Facts
FMC Corp. challenged tax assessments on its chemical processing plant for 1992-1994, offering market sales data of seven comparable properties. South Slope Holding Corp. challenged assessments for 1989-1990 on properties bought for a subdivision, arguing that community opposition created a “value-depressing cloud” affecting marketability. South Slope presented an appraisal detailing the history of opposition and its impact.
Procedural History
In FMC Corp., the Supreme Court lowered the assessment but not to the level FMC requested. The Appellate Division reversed, finding FMC failed to overcome the presumption of validity. In South Slope, the Supreme Court sustained the petitions. The Appellate Division reversed, stating South Slope’s appraiser lacked objective data to support the “blight” claim. The New York Court of Appeals granted leave to appeal in South Slope and heard both cases together.
Issue(s)
1. Whether FMC Corp. presented “substantial evidence” to overcome the presumption of validity of the tax assessments on its industrial complex.
2. Whether South Slope Holding Corp. presented “substantial evidence” to overcome the presumption of validity of the tax assessments on its land, based on the claim of a “value-depressing cloud”.
Holding
1. Yes, because FMC presented a formal appraisal report detailing comparable sales, which constituted credible evidence of a valuation dispute.
2. Yes, because South Slope presented an appraisal report outlining the history of community opposition and its potential impact on the property’s market value, which constituted credible evidence of a valuation dispute.
Court’s Reasoning
The Court emphasized that a tax assessor’s valuation is presumptively valid. However, this presumption disappears when a petitioner presents “substantial evidence” to the contrary. The Court clarified that “substantial evidence” in this context is a minimal standard, requiring less than a preponderance of the evidence. It merely requires the petitioner to demonstrate a valid and credible dispute regarding valuation, based on “sound theory and objective data.” The court stated: “In the context of tax assessment cases, the ‘substantial evidence’ standard merely requires that petitioner demonstrate the existence of a valid and credible dispute regarding valuation.”
In FMC Corp., the court found that the appraisal report, which used the comparable sales method and detailed attributes of comparable sites, met this threshold. “The appraisal report here was sufficient to meet petitioner’s initial burden to come forward with substantial evidence of a different yet credible valuation of its property and overcome the presumption of validity of respondent’s assessment.”
In South Slope, the court acknowledged that some evidence was anecdotal. However, the appraisal report, which examined the history of community opposition and its impact, was deemed sufficient. The court noted, “Clearly, objective data exist indicating opposition to development of the land. Additionally, it is well within the realm of possibility that such organized resistance played some role in devaluing the land.”
The Court reiterated that once the petitioner overcomes the presumption of validity, the court must weigh the entire record to determine if the petitioner proved overvaluation by a preponderance of the evidence. The cases were remitted to the Appellate Division for further consideration.