Matter of Clara Welch Thanksgiving Home v. Board of Assessment Review for the Town of Otsego, County of Otsego, State of New York

State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: December 18, 2014 518290
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In the Matter of CLARA WELCH
THANKSGIVING HOME,
Appellant,
v MEMORANDUM AND ORDER

BOARD OF ASSESSMENT REVIEW
FOR THE TOWN OF OTSEGO,
COUNTY OF OTSEGO, STATE OF
NEW YORK,
Respondent.
________________________________

Calendar Date: October 6, 2014

Before: Lahtinen, J.P., McCarthy, Egan Jr., Devine and
Clark, JJ.

__________

Gozigian, Washburn & Clinton, Cooperstown (Edward Gozigian
of counsel), for appellant.

Whiteman Osterman & Hanna, LLP, Albany (Jonathan P. Nye of
counsel), for respondent.

__________

Egan Jr., J.

Appeal from an order of the Supreme Court (Dowd, J.),
entered June 17, 2013 in Otsego County, which dismissed
petitioner's application, in a proceeding pursuant to RPTL
article 7, to reduce the 2010 tax assessment on certain real
property owned by petitioner.

Petitioner is the owner of a 26-unit adult home located in
the Village of Cooperstown, Otsego County. While undergoing a $4
million planned renovation in 2003, the property was destroyed by
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fire and thereafter was rebuilt in March 2004 at a cost of
approximately $8.3 million. In addition to the 26 private rooms
for residents, administrative offices, kitchens, dining room and
laundry facilities, the home includes a conference room, library,
exercise/wellness center, meditation room, art studio, beauty
parlor and massage room. An elevator connects all levels of the
home, and exterior access is aided by a heated ramp.

Although the home apparently had been listed on the
relevant tax rolls as nontaxable for decades, the local assessor
determined that petitioner's property was not eligible for such
status in 2009 and, in 2010, tentatively assessed the property at
approximately $4.2 million. Petitioner filed a complaint and
respondent reduced the assessment to approximately $3.6 million.
Still believing its property to be significantly overassessed,
petitioner commenced this proceeding pursuant to RPTL article 7
seeking a further reduction in the assessment. At the conclusion
of the nonjury trial that followed, Supreme Court found the
taxable valuation of the subject parcel to be $3,605,200,
prompting this appeal by petitioner.

We affirm. Although a municipal tax assessment is deemed
to be presumptively valid, "[a] property owner may overcome this
presumption by proffering substantial evidence that the
assessment is erroneous, which is often accomplished by [the]
submission of a detailed, competent appraisal, based on standard,
accepted appraisal techniques and prepared by a qualified
appraiser, demonstrat[ing] the existence of a genuine dispute
concerning valuation" (Matter of Highbridge Dev. BR, LLC v
Assessor of Town of Niskayuna, 121 AD3d 1324, 1325-1326 [internal
quotation marks and citation omitted]; see Matter of Board of
Mgrs. of French Oaks Condominium v Town of Amherst, 23 NY3d 168,
174-175 [2014]; Matter of Adirondack Mtn. Reserve v Board of
Assessors of Town of N. Hudson, 106 AD3d 1232, 1234 [2013]). "If
the taxpayer satisfies this threshold burden, the presumption
disappears and the court must weigh the entire record, including
evidence of claimed deficiencies in the assessment, to determine
whether [the] petitioner has established by a preponderance of
the evidence that its property has been overvalued" (Matter of
Board of Mgrs. of French Oaks Condominium v Town of Amherst, 23
NY3d at 175 [internal quotation marks and citation omitted]; see
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Matter of Rite Aid Corp. v Otis, 102 AD3d 124, 126 [2012], lv
denied 21 NY3d 855 [2013]). Here, petitioner tendered a detailed
report prepared by a qualified and certified appraiser who, in
turn, utilized the income approach – a recognized and accepted
method of valuation – in order to arrive at a valuation figure of
$1.3 million. Such proof, in our view, was sufficient to meet
the "minimal threshold" required to "demonstrate the existence of
a valid and credible dispute" as to valuation (Matter of
Adirondack Mtn. Reserve v Board of Assessors of Town of N.
Hudson, 106 AD3d at 1234 [internal quotation marks and citation
omitted]), thereby triggering review of the entire record.

In this regard, Supreme Court was confronted with two
distinct valuation methodologies that produced two significantly
different valuation figures. As noted previously, petitioner's
expert utilized the income approach to yield a valuation figure
of $1.3 million, while respondent's expert employed the
comparable sales approach to arrive at a valuation figure of
approximately $3.7 million. Neither approach was immune to
criticism.

As petitioner's expert acknowledged in his written report,
"the income approach bases value on the income a property is
capable of producing. This valuation involves two major
components: net operating income and an appropriate
capitalization rate." Here, petitioner had "produced a negative
cash flow for several years," with "[a] large portion of [its]
operating expense[s] . . . covered by contributions and income
from the home's endowment," and petitioner's expert conceded that
this negative cash flow, when utilized in conjunction with the
income approach to valuation, could "reflect an artificially low
value" for the property. Respondent's expert, on the other hand,
utilized the comparable sales approach based upon sales of three
properties – one located in the Village of Cooperstown and two
located in the Town of Vestal, Broome County. The property
located in Cooperstown, however, admittedly was "inferior" to
petitioner's property in a number of respects, and the two
comparable sales in Broome County – although deemed to be "very
comparable . . . in age and amenities" – involved substantially
larger facilities. As a result, each appraiser had to make
various adjustments to the respective valuations.
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"Where, as here, conflicting expert evidence is presented,
we defer to the trial court's resolution of credibility issues"
(Matter of Lowe's Home Ctrs., Inc. v Board of Assessment Review
and/or Dept. of Assessment Review of Tompkins County, 106 AD3d
1306, 1307 [2013]). Upon reviewing the competing valuations
offered and considering the various adjustments made thereto,
Supreme Court deemed the valuation figure adopted by respondent's
expert ($3,710,000) to more accurately reflect the value of
petitioner's property ($3,605,200), and we discern no basis upon
which to disturb Supreme Court's determination. Petitioner's
remaining contentions, to the extent not specifically addressed,
have been examined and found to be lacking in merit.

Lahtinen, J.P., McCarthy, Devine and Clark, JJ., concur.

ORDERED that the order is affirmed, without costs.

ENTER:

Robert D. Mayberger
Clerk of the Court