Board of Managers of Acorn Ponds v. Board of Assessors, 83 N.Y.2d 1033 (1994)

When a municipality adopts rent stabilization under the Emergency Tenant Protection Act (ETPA), Real Property Tax Law § 581 requires assessors to value condominium units as if they were rent-stabilized apartments.

Summary

This case concerns the proper method for assessing the value of condominium units for property tax purposes in a village that has adopted rent stabilization under the ETPA. The Board of Assessors argued that the condominiums should be valued without considering rent stabilization, while the Board of Managers contended they should be valued as if rent-stabilized. The New York Court of Appeals affirmed the lower court’s decision, holding that Real Property Tax Law § 581 mandates that condominiums be assessed as if they were rent-stabilized rental properties in municipalities with rent control. This means disregarding the condominium status and assessing the property as a rental, subject to existing rent regulations.

Facts

Two adjacent condominium complexes were established in the Village of Lynbrook in 1968. One complex contains 70 units, and the other contains 60 units. In 1975, the Village of Lynbrook adopted rent stabilization under the ETPA, regulating rents for residential buildings with six or more units. The Board of Assessors used the “income capitalization” method to assess the condominiums for tax years 1981-1988, without considering rent regulation guidelines. The condominium owners challenged these assessments, arguing that the rent stabilization laws should be considered.

Procedural History

The Supreme Court initially ruled that the properties should be assessed no higher than equivalent rent-stabilized apartment buildings. The Appellate Division affirmed this decision. The Board of Assessors appealed to the New York Court of Appeals, which granted leave to appeal and ultimately affirmed the Appellate Division’s order.

Issue(s)

Whether the Village of Lynbrook’s adoption of rent stabilization under the ETPA requires assessors to value condominium units, under Real Property Tax Law § 581, as if they were rent-stabilized?

Holding

Yes, because Real Property Tax Law § 581 mandates that the condominium status of the subject properties be disregarded for tax assessment purposes, and that the properties be assessed as if they were rental properties subject to existing rent regulations.

Court’s Reasoning

The Court of Appeals based its decision on the plain language of Real Property Tax Law § 581, which states that condominiums should be assessed “at a sum not exceeding the assessment which would be placed upon such parcel were the parcel not owned * * * on a condominium basis.” The court interpreted this to mean that condominiums should be assessed as if they were conventional apartment houses with rent-paying tenants. Since all rental apartment buildings in the Village of Lynbrook with at least six units are subject to rent regulation under the ETPA, it follows that the condominiums should also be assessed as if they were rent-stabilized. The court reasoned that disregarding the condominium status necessarily implies considering the impact of rent stabilization, as that is the regulatory environment for comparable rental properties. The court cited Matter of South Bay Dev. Corp. v Board of Assessors, 108 AD2d 493, 500, which correctly construed the statute to mean that “condominiums and cooperatives [should] be assessed as if they were conventional apartment houses whose occupants were rent paying tenants”. By affirming the lower court, the Court of Appeals reinforced the principle that tax assessments should reflect the actual economic conditions affecting the property’s value, including rent regulation. This ensures fairness and consistency in property taxation within municipalities that have adopted rent stabilization.