860 Fifth Ave. Corp. v. Tax Comm’n of City of N.Y., 325 N.E.2d 709 (N.Y. 1975)

The state equalization rate, when supported by statistical data and expert testimony, can serve as the sole basis for determining the ratio of assessed value to fair market value in property tax assessment cases, especially after the 1969 amendment to Section 720 of the Real Property Tax Law.

Summary

This case addresses the admissibility and weight of state equalization rates in proving property tax assessment inequality. The petitioner challenged property tax assessments from 1964-1970. The trial court, impressed by the statistical backing of the equalization rate, based its findings solely on those rates. The Appellate Division modified, holding that the equalization rate could be the sole basis only for 1970 and some evidence for prior years. The Court of Appeals affirmed, holding that the 1969 amendment to Section 720 allowed the equalization rate to be the sole basis for determining the ratio, provided it is supported by sufficient evidence.

Facts

860 Fifth Ave. Corp. challenged its property tax assessments for the years 1964 through 1970. The property in question was located at 323 South Salina Street in downtown Syracuse. The petitioner presented three types of evidence: selected parcels, actual sales, and the state equalization rate. The petitioner provided witnesses to explain the statistical methodology by which the equalization rates were derived and supported this with computer printouts. The city argued that the computer printouts were inadmissible and that the equalization rate was not designed for individual assessment cases.

Procedural History

The trial court based its findings solely on the state equalization rates for all years in question. The Appellate Division modified, ruling that the equalization rate could only be the sole basis for 1970 and could only be used as some evidence for the preceding years. The Court of Appeals granted cross-appeals by both parties.

Issue(s)

1. Whether the state equalization rate can serve as the sole basis for determining the ratio of assessed value to fair market value in property tax assessment cases.
2. Whether computer printouts supporting the state equalization rate are admissible as evidence under the business entry rule.

Holding

1. Yes, because the 1969 amendment to Section 720 of the Real Property Tax Law permits parties to rely solely on evidence of the state equalization rate, provided that the party who seeks to use the rate will be put to his proof that such use is justified in that case.
2. Yes, because compiling and feeding data into a computer is a routine function that falls under the business entry rule (CPLR 4518), and the “voluminous writings” exception to the best evidence rule applies.

Court’s Reasoning

The court reasoned that the 1969 amendment to Section 720 was intended to overrule the holding in Matter of O’Brien v. Assessor, 20 N.Y.2d 587 (1967), which gave little weight to equalization rates. The court noted that the equalization rates are now expertly derived and objectively arrived at and would simplify and narrow the scope of these proceedings. The court also addressed the constitutionality argument raised in the amicus brief, stating that unless stipulated to, the equalization rate would not be automatically applied in all cases. The party seeking to use the rate would need to justify its use, as the petitioner did in this case by producing expert testimony and computer printouts. The court stated, “Nowhere does the city or Nassau County argue that this evidence, which was fully open to impeachment attempts, was not relevant or probative.” The court also held that computer printouts are admissible under the business entry rule (CPLR 4518), stating, “Certainly, compiling and feeding data into a computer in the context we have before us would seem to be as routine a function as could be imagined and should be included under CPLR 4518.” The court emphasized that the taxing authority can always challenge the equalization ratio’s appropriateness to the taxing unit, the category of property involved, or the particular property. The court quoted the memorandum in support of the measure submitted by the State Board of Equalization and Assessment, “ ‘This is so because the state rates are based upon larger appraisal samples than those presented to the court under present law. Also state rates are based upon samples of representative classes while the parcels in a parcels proceeding are not intended to be representative.’ ”