IN THE MATTER OF THE BOARD OF MANAGERS OF FRENCH OAKS CONDOMINIUM, PETITIONER-RESPONDENT,
TOWN OF AMHERST, HARRY WILLIAMS, TOWN ASSESSOR OF TOWN OF AMHERST, BOARD OF ASSESSMENT REVIEW OF TOWN OF AMHERST, RESPONDENTS-APPELLANTS, AND WILLIAMSVILLE CENTRAL SCHOOL DISTRICT, INTERVENOR-RESPONDENT.
Appeal from an order of the Supreme Court, Erie County (John A. Michalek, J.), entered June 7, 2011 in proceedings pursuant to RPTL article 7. The order, inter alia, determined the value of the French Oaks Condominium after a hearing before a referee.
PHILLIPS LYTLE LLP, BUFFALO (MARC W. BROWN OF COUNSEL), FOR RESPONDENTS-APPELLANTS.
AMIGONE, SANCHEZ & MATTREY, LLP, BUFFALO (B.P. OLIVERIO OF COUNSEL), FOR PETITIONER-RESPONDENT.
PRESENT: CENTRA, J.P., FAHEY, PERADOTTO, CARNI, AND SCONIERS, JJ.
It is hereby ORDERED that the order so appealed from is affirmed without costs.
Memorandum: Petitioner commenced this RPTL article 7 proceeding (first proceeding) seeking review of the real property tax assessments for its condominium complex (complex) for the 2009-2010 tax year. Respondents appeal from an order that determined the value of the complex for tax assessment purposes after a hearing before a referee. We affirm.
We note as background that, after commencing the first proceeding, petitioner commenced a second proceeding seeking review of the complex's real property tax assessments for the 2010-2011 tax year. The parties stipulated that a referee would hear and determine the first proceeding and that the result of the first proceeding would resolve the second proceeding.
The trial relating to the first proceeding was essentially a contest between the respective expert appraisers for petitioner and respondents. At trial, respondents moved to dismiss the first petition on the ground that the appraisal report of petitioner's expert was so fundamentally flawed that petitioner failed to meet its burden of showing by substantial evidence the existence of a valid dispute with respect to the valuation of the complex. The Referee denied the motion and subsequently established a market value for the complex in accordance with the rules set forth in Matter of East Med. Ctr., L.P. v Assessor of Town of Manlius (16 A.D.3d 1119, 1120), and by applying an income approach to valuation (see Matter of South Bay Dev. Corp. v Board of Assessors of County of Nassau, 108 A.D.2d 493, 498). Under the income approach, the market rental value for the 39 units in the complex was estimated and the complex's overhead expenses were subtracted from that figure in order to obtain the net operating income. The net operating income was then divided by a final capitalization rate in order to obtain the value of the complex. The final capitalization rate was determined by identifying a comparable complex or complexes and dividing the yearly net operating income of each comparable complex by its sale price, which yielded a capitalization rate. The capitalization rate, in turn, was then added to a tax factor, which was calculated by multiplying the tax rate by the equalization rate, and dividing the ensuing product by 1, 000. The addition of those figures, i.e., the capitalization rate and the tax factor, yielded a final capitalization rate.
After applying the calculation under the income approach, the Referee valued the complex at $4, 353, 030 and thereafter apportioned that amount between the 39 units in the complex. In calculating the assessed value of the complex, the Referee adopted the calculations of respondents' expert with respect to both the net operating income and the tax factor and adopted the calculation of petitioner's expert only with respect to the capitalization rate. Supreme Court subsequently ordered, inter alia, that respondent Town of Amherst and intervenor, Williamsville Central School District, were to amend the 2009 and 2010 tax rolls with respect to the complex to reflect the determination of the Referee, and that the provisions and restrictions of RPTL 727 shall apply to the Referee's determinations.
With respect to the merits, we reject respondents' contention that the appraisal of petitioner's expert does not demonstrate the existence of a credible valuation dispute regarding the valuation of the complex under the substantial evidence standard. "Our analysis begins with the recognition that a property valuation by the tax assessor is presumptively valid... and thus obviates any necessity, on the part of the assessors, of going forward with proof of the correctness of their valuation'... However, when a petitioner challenging the assessment comes forward with substantial evidence' to the contrary, the presumption disappears" (Matter of FMC Corp. [Peroxygen Chems. Div.] v Unmack, 92 N.Y.2d 179, 187; see Matter of Thomas v Davis, 96 A.D.3d 1412, 1413). "The substantial evidence standard is a minimal standard. It requires less than clear and convincing evidence..., and less than proof by a preponderance of the evidence, overwhelming evidence or evidence beyond a reasonable doubt" (FMC Corp. [Peroxygen Chems. Div.], 92 N.Y.2d at 188 [internal quotation marks omitted]).
" In the context of tax assessment cases, the "substantial evidence" standard merely requires that petitioner demonstrate the existence of a valid and credible dispute regarding valuation' " (Thomas, 96 A.D.3d at 1413, quoting FMC Corp. [Peroxygen Chems. Div.], 92 N.Y.2d at 188; see East Med. Ctr., L.P., 16 A.D.3d at 1120). In such a proceeding, "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 N.Y.2d 192, 196). The requirements for appraisal reports are set forth in 22 NYCRR 202.59 (g) (2).
Here, respondents challenge the sufficiency of petitioner's expert evidence. First, respondents contend that petitioner's expert was not qualified to testify. We reject that contention. The fact that petitioner's expert is not a licensed appraiser is of no moment (see Matter of OCG L.P. v Board of Assessment Review of the Town of Owego, 79 A.D.3d 1224, 1226). Likewise, there is no merit to respondents' contention that petitioner's expert should have been precluded from testifying on petitioner's behalf. To the extent that the acceptance of a fee by petitioner's expert undermines his appraisal, that deficiency goes to the weight to be afforded that appraisal, not its admissibility (see generally National Fuel Gas Supply Corp. v Goodremote, 13 A.D.3d 1134, 1135; Champlain Natl. Bank v Brignola, 249 A.D.2d 656, 657).
Second, respondents challenge petitioner's appraisal on the ground that it lacks information with respect to the interior areas of each of the complex's units. Specifically, respondents contend that the lack of photographs of the interior of the complex's individual units in petitioner's appraisal renders that appraisal insufficient. We reject that contention. Pursuant to 22 NYCRR 202.59 (g) (2), "appraisal reports... may contain photographs of the property under review" (emphasis added), but there is no requirement that an appraisal must contain photographs. Respondents' further contention that petitioner's appraisal lacks evidentiary value because it does not describe the interior of the units is also without merit. Petitioner's expert opined that the differences in the respective interiors of the units did not affect their rental value, and that opinion was a factor for the court to consider in weighing the evidence (see generally Welch Foods v Town of Westfield, 222 A.D.2d 1053, 1054).
Third, respondents' contention that the Referee should have disregarded petitioner's appraisal because it failed to establish the fair market value of each of the complex's units lacks merit. In view of the similarity of the units and the fact that all of the units were constructed at approximately the same time, there is no need here for petitioner's expert to allocate a specific value to the individual units in the complex. Thus, that failure affects the weight of petitioner's expert evidence, ...