APPEAL by the petitioner/plaintiff, in a hybrid proceeding pursuant to CPLR article 78, inter alia, in the nature of mandamus to compel the respondents/defendants Anthony V. DeBellis and the City Council of the City of Mount Vernon, among others, to make determinations with respect to its applications pursuant to Real Property Tax Law § 556 for the correction of the assessment rolls of the respondent/defendant City of Mount Vernon for tax years 2003, 2004, 2005, 2006, 2007, and 2008 in connection with certain real property, and the refund of certain real property taxes assessed and paid with respect to that property for those years, and action, among other things, for a judgment declaring that the real property is a special franchise within the meaning of Real Property Tax Law § 102(17), that the assessments made by the New York State Board of Real Property Services with respect to the real property are binding on the City of Mount Vernon, and that the assessments of the real property on the assessment rolls of City of Mount Vernon for tax years 2003, 2004, 2005, and 2006 are unlawful, from an order of the Supreme Court (Rory Bellantoni, J.), dated March 27, 2008, and entered in Westchester County, which denied its cross motion, inter alia, for leave to supplement the petition/complaint, granted those branches of the motion of the respondents/defendants Westchester County Board of Legislators and the County of Westchester which were to dismiss the petition/complaint insofar as asserted against them as time-barred and on the ground that the petitioner/plaintiff failed to exhaust its administrative remedies, denied the petition insofar as asserted against the remaining respondents/defendants as time-barred and on the ground that the petitioner/plaintiff failed to exhaust its administrative remedies, and directed the dismissal of the petition/complaint.
The opinion of the court was delivered by: Dickerson, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
MARK C. DILLON, J.P., DANIEL D. ANGIOLILLO, THOMAS A. DICKERSON and RANDALL T. ENG, JJ.
We are asked on this appeal primarily to determine whether a taxpayer's challenge to a municipality's assessment of the taxpayer's real property was time-barred, and whether the taxpayer's challenge is barred by virtue of its failure to exhaust its administrative remedies prior to seeking judicial review. Since the instant dispute involves the correction of errors in assessment pursuant to RPTL article 5, this proceeding and action is not time-barred, and the taxpayer's claims are not barred by its alleged failure to exhaust its administrative remedies.
The petitioner/plaintiff, Level 3 Communications, LLC (hereinafter Level 3), is a provider of telecommunications services to business, governmental, and institutional customers through an advanced fiber optics network. In 1999 Level 3 advised the respondent/defendant City of Mount Vernon of its intent to install "conduits and fiber optic cables--with the City's permission--as part of its fiber optics telecommunications network." The network was not to provide services to customers located in the City, but was to transmit signals for the benefit of customers and users with facilities located elsewhere. In that regard, Level 3 sought and obtained a street-opening permit dated July 9, 1999, from the City's Department of Public Works, and installed three miles of its fiber optic network in City streets.
The State Board of Real Property Services (hereinafter the State Board) issued tentative and final special franchise tax assessments on the subject property for the tax years 2003, 2004, 2005, and 2006 in the amounts of $20,348, $17,389, $14,534, and $11,805, respectively. In issuing those assessments, the State Board determined that the subject property, i.e., the three miles of "conduits and fiber optic cables," was "special franchise property" as defined by RPTL 102(17) and, thus, within its exclusive assessment jurisdiction. Although the State Board notified the City of the tentative special franchise assessments for each of the years at issue, the City failed to challenge, through an administrative complaint filed with the State Board pursuant to RPTL 610, either the State Board's determination of the value of the property at issue or that the property was special franchise property within the State Board's exclusive jurisdiction.
In October 2000 the respondent/defendant City Council of the City of Mount Vernon (hereinafter the City Council) enacted a comprehensive telecommunications ordinance, codifying procedures for telecommunications providers to obtain permission to utilize City rights-of-way. The ordinance provided that "[n]o person shall use or occupy the streets as a telecommunications provider... without a franchise or revocable license granted by" the City Council (City of Mount Vernon Code § 239-2[A], [D]). Accordingly, a resolution granting or renewing such a license or franchise was required. Contrary to Level 3's contention, Level 3 made no effort to secure the adoption of such a resolution by the City Council granting such a franchise or revocable license. As such, Level 3 remained noncompliant with the City's ordinances.
As a consequence, Anthony V. DeBellis, the Commissioner of Assessment of the City of Mount Vernon, sued herein as Anthony V. DeBellis, Appointed Assessor for the City of Mount Vernon (hereinafter the City tax assessor), advised Level 3, in response to its filing of an income and expense statement dated May 9, 2002, that Level 3's property was not special franchise property. In that income and expense statement, Level 3 had asserted that it was exempt from filing an income and expense statement in the first instance because the subject property was indeed special franchise property. Specifically, DeBellis stated: "No. You have no Agreement w/the City of M.V. We consider this ordinary real property." Since Level 3 took no action in response to the City tax assessor's determination, its property was assessed as ordinary real property with a value of $425,000 for each of the tax years 2003, 2004, 2005, and 2006. Tax bills for City, school district, and county taxes were issued to Level 3 based on the City's assessment, instead of the substantially lower State Board special franchise assessments, which fixed the value of the subject real property in the amounts of $20,348 for 2003, $17,389 for 2004, $14,534 for 2005, and $11,805 for 2006.
Level 3 paid its real property taxes for tax years 2003, 2004, 2005, and 2006 without protest. Although Level 3 received timely notice of each tax year's City tax assessment, it never filed a grievance with the City of Mount Vernon Board of Assessment Review (hereinafter the Board of Assessment Review), never commenced a proceeding challenging the assessments pursuant to RPTL article 7, never commenced a CPLR article 78 proceeding challenging the methodology of the assessments, and paid its real property taxes without asserting that it was paying them involuntarily or under protest.
In July 2006 Level 3 applied to the Tax Director of the County of Westchester (hereinafter the County Tax Director) pursuant to RPTL 556 for a refund of excess taxes paid during the period 2004 through 2006. Level 3's Senior Manager of Property Taxes, Lisa Akins, asserted, in the application, that the City tax assessor had no authority to ignore the State Board's special franchise assessments merely because Level 3 did not have a franchise agreement with the City. She further stated that Level 3 had contacted the City and was trying to negotiate a franchise agreement.
In a letter dated August 11, 2006, the County Tax Director notified the City tax assessor that "I have determined that a clerical error has occurred. It is therefore my recommendation that the applications be approved pursuant to Section 550[c] of the Real Property Tax Law and corrections be made to the tax rolls accordingly."
Level 3 made another application for tax refunds that December in connection with other taxes paid for tax year 2004, for which the County Tax Director likewise recommended approval in a letter dated December 22, 2006.
The City Council did not take any action on these recommendations, and did not notify Level 3 of any determinations. On or about January 1, 2007, Level 3 received a 2007 tax bill from the City, again based on the City's $425,000 assessment.
The Proceeding and Action
On or about January 9, 2007, Level 3 commenced this hybrid proceeding, inter alia, pursuant to CPLR article 78 in the nature of mandamus and action for a judgment declaring that the City's assessments on its 2003-2006 assessment rolls unlawful, the State Board assessments are binding, and that the City tax assessor and the City are obligated to conform all future assessments of the subject property to the special franchise assessments made by the State Board, that is, they are under a continuing duty to conform all assessment roll entries to the State Board assessments. Level 3 sought to compel all of the respondents/defendants to conform their tax entries to the State Board assessments, and sought refunds of allegedly overpaid taxes for tax years 2004 through 2006, as well as costs and an attorney's fee pursuant to 42 USC § 1988.
The petition/complaint alleged that so much Level 3's network infrastructure as was situated within the City was special franchise property within the meaning of RPTL 102(17), which fell under the exclusive assessment jurisdiction of the State Board pursuant to RPTL 600. It further alleged that the State Board's assessments were articulated in the State Board's determination of market value for the subject ...