General Electric Company v. Town of Salina, 69 N.Y.2d 730 (1987)

When valuing large, integrated industrial complexes for tax assessment purposes, if there is no local market for the property as a whole, it is within the trial court’s discretion to consider regional comparables and to determine whether the property should be valued as a single entity or subdivided, based on its most economically and physically feasible use.

Summary

General Electric (GE) challenged the tax assessments on its large industrial complex in the Town of Salina. The trial court reduced the assessments, finding the property was overvalued. The Appellate Division affirmed. The Court of Appeals affirmed, holding that the trial court acted within its discretion in considering regional comparables and valuing the property as a single entity, given the lack of a local market for such a complex and the integrated nature of the facility. The court emphasized the importance of achieving a fair and realistic valuation, regardless of the specific method employed.

Facts

General Electric owned a large, integrated, multi-building industrial complex in the Town of Salina. GE challenged the town’s tax assessments for the 1982-1983 and 1983-1984 tax years. The buildings within the complex were fully integrated and reliant on a privately owned centralized utility system. GE argued that the town’s assessments were excessive because they did not accurately reflect the property’s market value.

Procedural History

GE initiated a tax certiorari proceeding under RPTL 706. The trial court found that GE met its burden of proving excessive valuation and reduced the assessments. The Town of Salina, Board of Assessment Review, and School District appealed. The Appellate Division affirmed the trial court’s decision. The Town, Board, and School District then appealed to the New York Court of Appeals.

Issue(s)

Whether the trial court erred in considering regional comparables to determine the market value of GE’s industrial complex, and whether the trial court properly determined that the complex should be valued as a single entity rather than subdivided into smaller, locally comparable units.

Holding

Yes, because the trial court has discretion to determine if a local market exists for the type of property at issue, and if not, whether regional comparables can be used; and yes, because the determination of whether to value an integrated multi-building industrial property as a single entity or subdivided is a factual determination based on the most economically and physically feasible use of the complex.

Court’s Reasoning

The Court of Appeals emphasized that the market value method is the preferred approach for assessing property value, especially when a recent sale price is unavailable. Market value can be determined by looking at comparable sales. While local comparables are preferred, the court recognized that for unique properties like large industrial complexes, a local market may not exist. The court stated, “[I]t is for the trial court to determine in the exercise of its sound discretion, whether or not a local market exists for the type of property at issue, and if not, whether there is a broad regional market from which comparables may be selected.”

The court rejected the argument that the property *must* be subdivided for valuation purposes. The court stated, “The determination of whether to value an integrated multibuilding industrial property as a single entity or as an aggregate of several subdivided entities is essentially a factual determination of the most economically and physically feasible use of the complex…”

The court deferred to the lower courts’ factual findings, noting that the Appellate Division affirmed the trial court’s finding that the best use of the GE property was as a single entity, due to its integrated nature and centralized utility system. Because there was evidence in the record to support these findings, the Court of Appeals held that it was beyond their power to review. The Court reiterated the ultimate goal: “[T]he ultimate purpose of valuation, whether in eminent domain or tax certiorari proceedings, is to arrive at a fair and realistic value of the property involved”.