SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
1002
CA 11-00277
PRESENT: SCUDDER, P.J., SMITH, LINDLEY, SCONIERS, AND GORSKI, JJ.
IN THE MATTER OF NEW YORK MILLS REDEVELOPMENT
COMPANY, LLC, AND LIBERTY AFFORDABLE HOUSING,
INC., PETITIONERS-APPELLANTS,
V MEMORANDUM AND ORDER
TOWN OF WHITESTOWN, AND ITS ASSESSOR, DIANN
GERLING, RESPONDENTS-RESPONDENTS.
---------------------------------------------
NEW YORK MILLS UNION FREE SCHOOL DISTRICT,
INTERVENOR-RESPONDENT.
BYRNE, COSTELLO & PICKARD, P.C., SYRACUSE (JOHN R. BRENNAN OF
COUNSEL), FOR PETITIONERS-APPELLANTS.
FERRARA, FIORENZA, LARRISON, BARRETT & REITZ, P.C., EAST SYRACUSE
(BRIAN J. SMITH OF COUNSEL), FOR INTERVENOR-RESPONDENT.
GORMAN, WASZKIEWICZ, GORMAN & SCHMITT, UTICA (WILLIAM P. SCHMITT OF
COUNSEL), FOR RESPONDENTS-RESPONDENTS.
Appeal from an order of the Supreme Court, Oneida County (Samuel
D. Hester, J.), entered May 26, 2009 in a proceeding pursuant to RPTL
article 7. The order, inter alia, granted in part the motion of
respondents Town of Whitestown, and its assessor Diann Gerling, to
dismiss the petition.
It is hereby ORDERED that the order so appealed from is
unanimously modified on the law by denying that part of the motion of
respondents to dismiss the petition insofar as it challenged the
assessed value of the property and granting petitioners’ motion for
leave to amend the petition upon condition that the amended petition
is served within 20 days of service of a copy of the order of this
Court with notice of entry and as modified the order is affirmed
without costs, and the matter is remitted to Supreme Court, Oneida
County, for further proceedings in accordance with the following
Memorandum: Petitioners own and operate a senior living facility
located in the Village of Whitestown (Village), which is within
respondent Town of Whitestown (Town) and intervenor New York Mills
Union Free School District (School District). Petitioners commenced
this proceeding pursuant to RPTL article 7 challenging an increase in
the assessed value of their property and a determination that the
property is no longer tax exempt. Supreme Court granted that part of
petitioners’ cross motion seeking summary judgment with respect to the
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CA 11-00277
taxable status of their property, and the court remitted the issue to
respondents to conduct a hearing on that issue. We note that
petitioners have abandoned any further challenge to the tax status of
the property (see Ciesinski v Town of Aurora, 292 AD2d 984). We agree
with petitioners, however, that the court erred in granting that part
of respondents’ motion to dismiss the petition insofar as it
challenged the assessed value of the property. More specifically, we
conclude that the court erred in determining that petitioners failed
to commence this proceeding in a timely manner, i.e., “within [30]
days after the final completion and filing of the assessment roll
containing such assessment” (RPTL 702 [2]).
Prior to purchasing the property from the Village in October
2006, petitioners entered into a payment in lieu of taxes (PILOT)
agreement with the Village. Pursuant to the PILOT agreement, the
property was exempt from “municipal” and School District taxes and, in
lieu of taxes, petitioners agreed to pay to the Village 3% of “Shelter
Rents,” but not less than $5,000 annually. On May 1, 2008 respondents
sent written notice to petitioners that the assessed value of the
property had been increased from $120,000 in 2007 to $2,769,000 in
2008. At that time, the property was listed as exempt on the Town’s
tax rolls, as it had been since 2003. When the new tax roll was filed
on July 1, 2008, however, the property was no longer listed as exempt.
Petitioners learned of the change in taxable status of their property
on August 14, 2008, when their attorney was so informed by the
attorney for the School District. Respondent Town Assessor thereafter
denied petitioners’ request to remove the property from the tax rolls,
and petitioners commenced this proceeding on September 17, 2008.
The court properly determined that the notice sent to petitioners
on May 1, 2008 was sufficient pursuant to RPTL 510 (1). That statute
requires a municipality to provide written notice to a property owner
of an increased assessment for real property “not later than [10] days
prior to the date for hearing complaints in relation to assessments .
. . .” By neglecting to notify petitioners of the change in the
property’s taxable status, however, respondents failed to comply with
RPTL 510-a, pursuant to which petitioners were entitled to written
notice of the change in taxable status. In the absence of such
notice, petitioners had no reason to know that the increased
assessment would affect their tax bill. Because petitioners did not
learn of the change in taxable status of their property until mid-
August 2008, they did not commence this proceeding to challenge the
assessment within 30 days after the filing of the assessment roll on
July 1, 2008, as required by RPTL 702 (2).
Although not directly on point, the Court of Appeals’ decision in
Matter of Adventist Home v Board of Assessors of Town of Livingston
(83 NY2d 878) is instructive. In that case, the petitioner taxpayer
filed a timely grievance with the respondent Board of Assessors
(Board) after the Board determined that the subject property no longer
qualified for a charitable exemption (id. at 879). The Board rejected
the challenge but failed to notify the petitioner of its decision
pursuant to RPTL 525 (4). Although the tax roll filed in July of the
year in question reflected the increased assessment, the petitioner
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did not learn of the Board’s decision until it received its tax bill
in December of that year (id.). The petitioner thereafter commenced a
combined hybrid CPLR article 78 proceeding and declaratory judgment
action seeking review of the Board’s determination to deny the
petitioner tax exempt status (id.), and the Board moved to dismiss the
action/proceeding on statute of limitations grounds. The Court of
Appeals concluded that the four-month statute of limitations pursuant
to CPLR 217 (1) did not begin to run until the petitioner received
“actual notice” of the Board’s determination, i.e., when the
petitioner received its tax bill with the increased assessment (id. at
880). The Court stated that, “[t]o hold, as [the Board] urges, that
the limitations period commences with publication of the assessment
roll--whether or not the taxpayer has been given the required
notice--would eviscerate” the notice requirement of RPTL 525 (4)
(id.).
Here, based on the rationale of Adventist Home, we conclude that
the 30-day limitations period set forth in RPTL 702 (2) did not
commence until petitioners had actual notice that respondents sought
to increase the assessed value of the property (see generally Matter
of Sisters of Resurrection v Daby, 129 Misc 2d 879, 883-884).
Petitioners did not have actual notice of that increase until August
20, 2008, when the Town Assessor formally rejected their request to
remove the property from the tax roll as exempt and stated that any
further communications should be directed to the Town’s attorney.
Thus, this proceeding was timely commenced on September 17, 2008.
Respondents correctly note that RPTL 510 (1) and 510-a (2) each
provide that the failure to provide a property owner with proper
notice pursuant to the statute “shall not prevent the levy, collection
and enforcement of the payment of . . . taxes on such real property.”
As the Court of Appeals stated in Adventist Home (83 NY2d at 881),
however, “the validity of the assessment is not at issue here. We are
concerned only with the timeliness of the proceeding.”
We further conclude that the court erred in denying petitioners’
motion for leave to amend the petition to include a challenge to the
assessment for tax year 2009. Leave to amend pleadings “shall be
freely given” (CPLR 3025 [b]), and we discern no prejudice to
respondents from the proposed amendment.
We therefore modify the order by denying that part of
respondents’ motion to dismiss the petition insofar as it challenged
the assessed value of the property and granting petitioners’ motion
for leave to amend the petition, and we remit the matter to Supreme
Court for further proceedings on the petition or amended petition, if
applicable. Finally, we decline to address petitioners’ remaining
contention that the assessed value of their property should be
determined pursuant to the income approach set forth in RPTL 581-a.
That issue should be determined in the first instance by the court
upon remittal.
Entered: October 7, 2011 Patricia L. Morgan
Clerk of the Court