New York Law Review

Tag: State Equalization Rate

  • J.A. Green Constr. Corp. v. Assessor of the City of New York, 56 N.Y.2d 370 (1982): Admissibility of State Equalization Rates in Tax Assessment Challenges

    J.A. Green Constr. Corp. v. Assessor of the City of New York, 56 N.Y.2d 370 (1982)

    When statutory law is silent or has expired, common law principles dictate that State equalization rates are admissible as evidence in proceedings challenging property tax assessments, especially when the legislative history reveals a substantive differentiation based on economic impact.

    Summary

    J.A. Green Construction Corp. challenged the assessed valuation of its Brooklyn shopping center, claiming overvaluation and inequality compared to other properties. At trial, Green sought to introduce the State Board of Equalization and Assessment (SBEA) equalization rate to prove inequality. The City objected, citing a statute limiting admissible proof. The trial court initially deemed the amended statute unconstitutional and admitted the SBEA rate, ultimately reducing the assessments. The Appellate Division reversed, upholding the statute’s constitutionality and rejecting the SBEA rate. The Court of Appeals reversed the Appellate Division, holding that because the relevant statutes had expired, common law principles applied, under which the SBEA rates were admissible. The case was remitted to the Appellate Division to determine fair market value and proper assessments.

    Facts

    J.A. Green Construction Corp. owned a shopping center in Brooklyn and initiated a proceeding, along with several lessees, to challenge the property’s assessed valuation for tax years 1971-1972 through 1979-1980. The petitions claimed “overvaluation and inequality,” alleging the property was assessed at a higher rate than other properties in the borough. The challenge focused on whether the assessments were based on a proper valuation and whether the correct ratio between fair market value and assessed value was used.

    Procedural History

    The trial court initially found the amended version of Real Property Tax Law § 720(3) applicable but unconstitutional, allowing the State equalization rates as proof. It reduced the assessments based on those rates. The Appellate Division reversed, dismissing the petitions and sustaining the assessments, relying on its prior holding in Matter of Slewett & Farber v Board of Assessors of County of Nassau, which declared § 720(3) constitutional. The Court of Appeals reversed the Appellate Division’s order and remitted the case for further proceedings.

    Issue(s)

    Whether, in the absence of a controlling statute, state equalization rates are admissible as proof of unequal assessment in a proceeding challenging property tax assessments.

    Holding

    Yes, because when the relevant statutes have expired during the pendency of the appeal, common law principles apply, under which State equalization rates are proper proof of unequal assessment.

    Court’s Reasoning

    The Court of Appeals reasoned that because the amended statute (Real Property Tax Law § 720(3)) barring the use of equalization rates had expired during the appeal, it was no longer applicable. The court noted that the newly enacted version of § 720(3) was explicitly prospective and therefore also inapplicable. With no statutory guidance, the court turned to common law principles, citing Guth Realty v Gingold and 860 Executive Towers v Board of Assessors of County of Nassau. These cases established that State equalization rates are generally admissible as evidence. The court emphasized that the legislative history revealed a substantive differentiation between New York City/Nassau and the rest of the state, based on the economic impact of re-evaluation. The Court stated: “Though the kind of proof admissible to establish value is normally a procedural question to be determined by the law in effect at the time of trial…we think the history of legislation on this issue…so imbues this normally procedural issue with substantive effect that we should not apply the usual rule.” Because the Appellate Division had only ruled on the constitutionality of the statute, the Court remitted the case to that court to determine the fair market value of the property and calculate the proper assessments, based on the State equalization rates.

  • Matter of 860 Executive Towers, Inc. v. Board of Assessors, 43 N.Y.2d 769 (1977): Use of State Equalization Rates in Tax Assessment Challenges

    Matter of 860 Executive Towers, Inc. v. Board of Assessors, 43 N.Y.2d 769 (1977)

    In tax assessment review proceedings, a court-determined state equalization rate can be used as proof of the ratio between assessed value and full value, and such a determination can collaterally estop future challenges to that rate by the county.

    Summary

    This case addresses the use of state equalization rates in challenging property tax assessments in Nassau County, New York. The Court of Appeals held that a prior determination of the applicable state equalization rate could be used as proof of the fractional assessment rate and that Nassau County was collaterally estopped from re-litigating the validity of that rate in subsequent proceedings. The court emphasized that the proceeding is bifurcated, first establishing the assessment ratio and then determining the property’s fair market value. The decision clarifies the procedural effect of determining the equalization rate and its impact on subsequent assessment challenges. This case also addresses the application of legislative changes enacted during the pendency of the appeal.

    Facts

    860 Executive Towers and other property owners in Nassau County challenged their property tax assessments, arguing they were unfairly high compared to other properties. The petitioners sought to use State equalization rates as evidence of the fractional assessment rate used by Nassau County. Special Term found that Nassau County was not required to comply with full valuation and that the applicable ratio between assessed and full value was the State equalization rate. The County challenged the use of the State equalization rates.

    Procedural History

    The case began at Special Term, which found in favor of the property owners regarding the use of State equalization rates. Both sides cross-appealed to the Appellate Division. The Appellate Division affirmed the Special Term’s decision, holding that the State equalization rate was the appropriate ratio. The case then went to the New York Court of Appeals. The Court of Appeals affirmed the Appellate Division’s order as modified, finding the determination of the state equalization rate was correct and operated as an interlocutory judgment.

    Issue(s)

    Whether a court’s determination of the applicable State equalization rate in a tax assessment review proceeding constitutes an interlocutory judgment, thereby allowing petitioners to proceed to prove their property was over-assessed.

    Holding

    Yes, because a tax review proceeding is bifurcated; the first part establishes the applicable ratio of assessment, and the second determines the fair market value of the property. The grant of partial summary judgment fixing the appropriate percentage of full value at the level set by the State Board of Equalization and Assessment adjudicates the issue of ratio and is in the nature of an interlocutory judgment.

    Court’s Reasoning

    The Court of Appeals reasoned that tax review proceedings are inherently bifurcated. The first stage involves determining the appropriate assessment ratio, and the second involves determining the fair market value of the property. Once the court determines the assessment ratio (in this case, the State equalization rate), it operates as an interlocutory judgment. This allows the property owner to then prove that their property was assessed at a higher percentage of its fair market value than the established rate. Furthermore, the Court held that the county is collaterally estopped from challenging the validity of the state equalization rate in subsequent proceedings once its validity has been adjudicated. The Court explicitly references 860 Executive Towers v Board of Assessors of County of Nassau, 53 AD2d 463, 475, stating that its affirmance means “once the validity of the State equalization rate has been adjudicated, the county is collaterally estopped in other proceedings from further challenges of that rate.” The Court also addressed the applicability of a new legislative subdivision limiting the use of state equalization rates, finding it did not apply retroactively to the present proceeding where a hearing had been concluded and an interlocutory judgment had been entered. The Court stated that “[w]hatever may be the current and prospective applicability of new subdivision 3 to other pending proceedings, we hold that in the present proceeding in which the hearing with respect to assessment ratios has been concluded and an interlocutory judgment has been entered determining the rate of fractional assessment in Nassau County for the years in question, new subdivision 3 has no application.”

  • 860 Fifth Ave. Corp. v. Tax Comm’n of City of N.Y., 325 N.E.2d 709 (N.Y. 1975): Admissibility of State Equalization Rate in Property Tax Assessment

    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.’ ”