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Central Hudson Gas & Electric Corp. v. Assessor of Town of Newburgh

May 18, 2010

IN THE MATTER OF CENTRAL HUDSON GAS & ELECTRIC CORPORATION, RESPONDENT-APPELLANT,
v.
ASSESSOR OF TOWN OF NEWBURGH, ET AL., APPELLANTS-RESPONDENTS.



In proceedings pursuant to Real Property Tax Law article 7 to review real property tax assessments for the tax years 2001 through 2004, the Assessor of the Town of Newburgh, the Board of Assessment Review of the Town of Newburgh, and the Town of Newburgh appeal, as limited by their brief, from (1) so much of an order of the Supreme Court, Orange County (LaCava, J.), dated March 2, 2007, as, in effect, granted the petitioner's motion to strike that portion of the trial appraisal report of the Assessor of the Town of Newburgh, the Board of Assessment Review of the Town of Newburgh, and the Town of Newburgh, concerning certain easements held by it, and (2) so much of a judgment of the same court dated December 23, 2008, which, after a non-jury trial, granted the petitions to the extent of awarding a reduction in the tax assessments for the years 2001 through 2004, and directed that the assessment rolls be corrected and any tax overpayments be refunded with interest, and the petitioner cross-appeals from the same order and the same judgment.

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.

PETER B. SKELOS, J.P., LEONARD B. AUSTIN, SHERI S. ROMAN SANDRA L. SGROI, JJ.

(Index Nos. 4903/01, 4521/02, 4800/03, 4530/04)

DECISION & ORDER

ORDERED that the cross appeals are dismissed as abandoned; and it is further,

ORDERED that the appeal from the order is dismissed; and it is further,

ORDERED that the judgment is reversed, on the law, the petitioner's motion to strike that portion of the trial appraisal report of the Assessor of the Town of Newburgh, the Board of Assessment Review of the Town of Newburgh, and the Town of Newburgh, concerning certain easements held by it is denied, the order is modified accordingly, and the matter is remitted for further proceedings in accordance herewith, and thereafter for a new determination on the petitions; and it is further,

ORDERED that one bill of costs is awarded to the Assessor of the Town of Newburgh, the Board of Assessment Review of the Town of Newburgh, and the Town of Newburgh.

The appeal from the intermediate order must be dismissed because the right of direct appeal therefrom terminated with the entry of judgment in the action (see Matter of Aho, 39 NY2d 241, 248). The issues raised on the appeal from the order are brought up for review and have been considered on the appeal from the judgment (see CPLR 5501[a][1]).

The petitioner, Central Hudson Gas and Electric Corporation (hereinafter CHGE), commenced these proceedings pursuant to Real Property Tax Law article 7 against the Assessor of the Town of Newburgh, the Board of Assessment Review of the Town of Newburgh, and the Town of Newburgh (hereinafter collectively the Town), to review real property tax assessments for the years 2001 through 2004 of, inter alia, tax parcels consisting of gas and electric transmission lines, three substations, and a switching station. The petitions alleged that the Town's assessments of its properties were illegal, unequal, and unconstitutional, resulting in overvaluation of its properties. A non-jury trial was held, after which the Supreme Court, having found that the properties were overvalued, directed that the assessment rolls be amended in accordance with the fair market values it had calculated based on the evidence at trial, and that any overpayments of taxes be refunded with interest. The Town appeals from this judgment as well as from a pre-trial order striking the portion of its trial appraisal report concerning certain easements held by CHGE.

While a locality's tax assessment is presumptively valid, it may be overcome by a petitioner's submission of substantial evidence demonstrating overvaluation (see Matter of Niagara Mohawk Power Corp. v Assessor of Town of Geddes, 92 NY2d 192, 196; Matter of FMC Corp. [Peroxygen Chems. Div.] v Unmack, 92 NY2d 179, 187). Substantial evidence "will most often consist of a detailed, competent appraisal based on standard, accepted appraisal techniques and prepared by a qualified appraiser" (Matter of Niagara Mohawk Power Corp. v Assessor of Town of Geddes, 92 NY2d at 196). "[I]n answering the question whether substantial evidence exists, a court should simply determine whether the documentary and testimonial evidence proffered by petitioner is based on sound theory and objective data' rather than on mere wishful thinking" (Matter of FMC Corp. [Peroxygen Chems. Div.] v Unmack, 92 NY2d at 188, quoting Matter of Commerce Holding Corp. v Board of Assessors of Town of Babylon, 88 NY2d 724, 732).

On appeal, the Town argues that CHGE failed to rebut the presumption of validity of the subject tax assessments. In support of that argument, it asserts that CHGE's expert appraisal of the depreciation of the subject properties employed flawed methodology. The opinion of CHGE's expert appraiser as to depreciation was reached by (1) applying the age-life approach using average service lives independently calculated after review of regional and national depreciation statistics databases, CHGE own reported average services lives contained in submissions to the Federal Energy Regulatory Commission, and the opinion of an expert professional engineer who inspected the subject properties as to the useful lives of the subject properties, and (2) deducting for negative net salvage. This is a "recognized appraisal method" (Matter of Century Realty, Inc. v Commissioner of Fin., 15 AD3d 652, 653; see Matter of Niagara Mohawk Power Corp. v Town of Moreau Assessor, 46 AD3d 1147; Matter of Niagara Mohawk Power Corp. v City of Cohoes Bd. of Assessors, 280 AD2d 724), based upon "sound theory" that was employed using "objective data" (Matter of FMC Corp. [Peroxygen Chems. Div.] v Unmack, 92 NY2d at 188 [internal quotation marks omitted]) and, thus, yielded substantial evidence of overvaluation (see Matter of Niagara Mohawk Power Corp. v Town of Moreau Assessor, 46 AD3d 1147; Matter of Niagara Mohawk Power Corp. v City of Cohoes Bd. of Assessors, 280 AD2d 724; see also Matter of Century Realty, Inc. v Commissioner of Fin., 15 AD3d at 653).

Further, contrary to the Town's contention, CHGE did present qualified expert testimony to rebut the presumption of validity. While the Town is correct that a working knowledge of construction costs and methods is essential to calculating reproduction cost (see Matter of Tennessee Gas Pipeline Co. v Town of Sharon Bd. of Assessors, 298 AD2d 758, 759; Matter of Guilderland Ctr. Nursing Home v Town of Guilderland Bd. of Assessment Review, 195 AD2d 902, 903; Matter of Northville Indus. Corp. v Board of Assessors of Town of Riverhead, 143 AD2d 135, 137), the testimony of CHGE's expert, Charles Jerominski, whose qualifications the Town challenges, was not relied upon by the Supreme Court ...


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