Tax Certiorari Proceeding; The Comparable Sales Method of Evaluation; The Income Capitalization Approach
By: Michael DeRosa | Staff Writer
In accordance with Article 7 of the Real Property Tax Law (“RPTL”), Excelsior (“Petitioner”) commenced a tax certiorari proceeding regarding the 2009-2010 tax year. The purpose of this proceeding was to reduce the overall assessment of the real property located at 3925 Sheridan Drive in the Town of Amherst, New York (“Property”). The dispute arose from Petitioner’s desire to pay lower taxes for the Property. Specifically, Petitioner relied on its low appraisal valuation of the Property. The Property is a high-end medical facility. In this matter, Amherst Central School District (“Respondent”) exercised its right to intervene in the RPTL Article 7 proceeding. Although the Court denied Petitioner’s initial reassessment request, the Appellate Division, Fourth Department, remitted this issue on two grounds. First, the Appellate Court held that without the requisite facts, this Court could not comply with the statute. Second, the Appellate Division determined that this Court could not set an assessment that would exceed the total assessment on the tax roll.
Upon remand back to the lower courts, both parties provided appraisal experts to prepare reports for the 2009-2010 tax year. Petitioner had Anthony Girasole prepare its appraisal report while Respondent had James Szakacs prepare its own appraisal report. Both experts prepared reports in accordance with two approaches to value the Property: (1) the comparable sales approach and (2) the income capitalization approach. The Comparable Sales Method dictates an appraiser to select one or more properties that he or she deems similar to the subject property and makes adjustments along the way to address the differences between the similar properties and the subject property. In contrast, the Income Capitalization Approach attempts to estimate a property’s value based on the income it is capable of producing. Both parties reserved the right to object to any or all portions of the opposing parties’ reports.
Ultimately, the Court determined that Petitioner failed to provide substantial evidence to demonstrate that the presumably valid assessment was false. First, the Court found that Petitioner’s appraisal expert did not include the Common Area Space in determining the value of the property. Such space included a waiting room and conference rooms, which added to the property’s overall functional utility and value. Therefore, this valuation was not in accordance with the comparable sales approach. Second, the Court did not accept the expert’s selected eleven properties to compare to the subject property because the expert only used five out of the eleven properties for his sales comparison analysis. Therefore, this valuation was not in accordance with the comparable sales approach. Lastly, the Court found that Petitioner’s appraiser significantly undervalued the potential rental value of the property. Thus, this valuation was not in accordance with the income capitalization approach.
Accordingly, Petitioner failed to meet its burden because Petitioner failed to provide substantial evidence to reduce the overall assessment of the subject property and the Court ruled against Petitioner. Therefore, Petitioner was ordered to pay additional taxes from 2009 to 2013 in the amount of $7,574,900.
Matter of Excelsior v. Assessor, Town of Amherst, 2016 NY Slip OP 50530(U), 51 Misc. 3d 1210(A), 2/1/2016 (Walker, J.)