Trump-Equitable Fifth Ave. Co. v. Gliedman, 62 N.Y.2d 535 (1984)
A statute granting tax exemptions for construction on “under-utilized land” does not require “substantial” under-utilization; an agency interpretation imposing such a requirement is inconsistent with the statute.
Summary
Trump-Equitable sought a tax exemption under Real Property Tax Law § 421-a for Trump Tower, arguing the land was under-utilized prior to construction. The Commissioner of the Department of Housing Preservation and Development (HPD) denied the exemption, asserting the land wasn’t under-utilized. The Court of Appeals held that the HPD improperly imposed a requirement of “substantial” under-utilization, which is not mandated by the statute. The court found that the land was, in fact, under-utilized and that Trump-Equitable was entitled to the tax exemption.
Facts
Trump-Equitable constructed Trump Tower, a mixed-use building, on land formerly occupied by Bonwit Teller & Company. Trump-Equitable applied for a partial tax exemption under Real Property Tax Law § 421-a, which incentivizes construction on under-utilized land. The Bonwit Teller building was a 12-story department store that operated until 1978. On the relevant date, October 1, 1971, the building used only 66% of its potential floor area ratio and generated $30 million in revenue. The assessed value of the building was roughly half that of the land.
Procedural History
1. HPD initially denied the exemption, claiming the building was not functionally obsolete. This denial was overturned by the Court of Appeals in Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 57 NY2d 588.
2. On remittal, HPD again denied the exemption, asserting the land was not under-utilized based on statutory interpretation and new regulations.
3. Special Term set aside the second determination.
4. The Appellate Division reversed Special Term and upheld the HPD’s denial.
5. The Court of Appeals granted leave to appeal.
Issue(s)
Whether the HPD’s interpretation of “under-utilized land” in Real Property Tax Law § 421-a, requiring “substantial” under-utilization, is consistent with the statute’s intent and language.
Holding
No, because the statute only requires “under-utilization” and the HPD’s interpretation improperly adds a requirement of “substantial” under-utilization, exceeding the scope of the statute.
Court’s Reasoning
The court emphasized that statutory interpretation by an agency is given deference unless it is irrational, unreasonable, or inconsistent with the statute. However, when the statute’s words are clear, the agency’s expertise is less relevant, especially when the interpretation contravenes the statute’s plain language. The court noted that the statute requires only “under-utilization,” not “substantial” under-utilization, citing its prior holding in Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 57 NY2d 588. The HPD’s regulations, which define under-utilized land as “substantially under-utilized,” are therefore invalid. The court found that the Bonwit Teller site was, in fact, under-utilized, considering factors like the floor area ratio (only 66% utilized) and the assessed value of the building compared to the land. The Court directly quoted Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459, stating: “there is little basis to rely on any special competence or expertise of the administrative agency and its interpretative regulations’, especially when the interpretation, as embodied in a regulation, directly contravenes the plain words of the statute”. The Court stated: “Whatever definition respondent may for the future give “under-utilized land,” short of more detailed definition of the term by the Legislature, on the extensive record accumulated by the parties before us the objective criteria establish that the Bonwit’s site was under-utilized, and that appellant is entitled to the exemption.”