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Tax Assessment & Condemnation Report

Public Information Session Held on the Alternative Veterans’ Exemption

Posted in Exemptions, School Districts

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

We recently posted about the Legislature’s recent amendment to the RPTL 458-a Alternative Veterans’ Exemption. From what we have seen and heard, most school districts statewide have determined not to pass the law by March 1, 2014 so that it would have been effective for the 2014/15 assessment and tax season. The reason for the delay generally is that districts feel they were not given enough time to fully investigate the financial impact of this exemption on other non-exempt property owners or to obtain a true picture of whether a majority of the taxpayers within their district support the exemption and would be willing to foot the tax increase that would likely follow.

The North Syracuse Central School District recently asked us to prepare a presentation for an informational session on the exemption. A copy of the presentation is available at http://www.nscsd.org/files/news/veterans%20exemption%20powerpoint.pdf.  News reports of that presentation can be found on twcnews and 9wsyr.

 

 

 

Is Property Tax Reform Finally Coming to New York?

Posted in Assessments, Valuation

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

In November 2013, Governor Cuomo released the Final Report of the New York State Tax Reform and Fairness Commission regarding tax reform. One week later, the New York State Senate Republican Conference Tax Policy Review & Reform Initiative issued a Preliminary Report regarding the same issue. Among other tax reforms, each report recommended action to reform New York’s real property tax system.

It should come as no surprise that there is widespread agreement that property tax reforms are necessary. The real property tax system in New York ranks among the lowest of the 50 states. For example, New York is among the last remaining states that do not require assessments to be periodically updated and that do not provide a single set of valuation standards to be applied to all properties. Further, New York has almost 1,000 different assessing units - more than other states its size. For these reasons, both reports conclude that New York’s real property taxation system lacks fairness and transparency of administration.

To address the issues of fairness and transparency, both studies propose similar recommendations. First, the legislature must establish a clear, statutory standard for assessment to apply to all properties. Second, assessment updates should be required in no less than five year increments. Third, the legislature should provide for state assessment of complex properties, such as power plants. Such a system, which is already used for special franchise properties such as utilities and telecommunications, would reduce the burden of assessment on local governments.

Each report also contains unique recommendations. For example, the Tax Reform and Fairness Commission proposes modifying state aid programs to promote efficiency, such as the sharing of assessment resources at the county level. The Republican Conference Tax Policy Review & Reform Initiative proposes re-instating STAR rebate checks and making the tax cap permanent, avoiding the possibility of it lapsing in 2016.

In his State of the State address, Governor Cuomo proposed property tax credits for manufacturers and a conditional two-year freeze on homeowner’s property taxes that would transition into a circuit breaker system. To qualify for the property tax freeze, local governments must stay within the 2 percent tax cap in the first year and take concrete steps toward consolidating or sharing services with other local governments in the second year. Cuomo also proposed a refundable property tax credit for manufacturer’s equal to 20 percent of its annual real property taxes. Critics of the Governor’s proposal likened it to “voodoo economics” noting that tax breaks for businesses and the wealthy do not help the middle class and that if the state really wants to reduce property taxes, it should adequately fund schools and municipal services.

Although it is encouraging that these issues are being discussed, it remains uncertain whether there is political will to enact these reforms. Many assessing units may oppose mandated assessment updates because the financial burden would fall on them. In addition, some landowners will oppose an assessment update because such action will shift the relative valuation among similarly constructed properties, perhaps raising their assessment.

We will continue to monitor whether the recommendations in these reports move forward through the legislature.

Part II: Is a Public Hearing Mandatory Pursuant to the Eminent Domain Procedure Law?

Posted in Condemnation/Eminent Domain

Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

Our first installment in this series on condemnation procedures detailed a key element of the process found in the New York Eminent Domain Procedure Law (“EDPL”) – the public hearing. While the condemnation process generally begins with a public hearing, the EDPL provides exemptions that allow the condemnor to bypass the public hearing requirement under certain circumstances.

As we discussed previously, the purpose of holding a public hearing is to inform the public of the details of a proposed project, to review the public use to be served, and to review the impacts of the project on the environment and on the residents of the locality where the project will be constructed. Where a public hearing considering the above listed factors was held to comply with another law, that public hearing may be used to satisfy the EDPL Article 2 hearing requirement and alleviate the condemnor’s need to hold another public hearing.

A separate exemption covers situations where a condemnor is required to submit information concerning the above factors to another governmental agency, board or commission prior to the acquisition of a license, permit, certificate of public convenience or necessity, or other similar approval. Similarly, a condemnor may be exempt from the public hearing requirement if it previously obtained a certificate of environmental compatibility and public need pursuant to the Public Service Law.  Finally, de minimis takings or takings necessary to address an emergency may be exempt from the public hearing requirements.

Our next installment in this series will discuss the use of eminent domain for economic development.

Your Appraisal or Their Appraisal? Applying For Federal Reimbursement May Destroy An Appraisal’s Protected Status

Posted in Condemnation/Eminent Domain

Image courtesy of franky242/ FreeDigitalPhotos.net

In a recent decision by the Appellate Division, Third Department, Lerner v. New York, the Court confirmed that documents prepared in anticipation of litigation, including appraisal reports, would lose their protection as “work-product” if disclosed to a third party. However, the Court went beyond this general rule holding that appraisal reports that were subject to review in connection with federal reimbursement programs were not protected as work-product, even if those reports were not actually provided to a third party.

In Lerner, Claimant filed suit against New York State alleging that the Department of Transportation (“DOT”) trespassed and caused property damage during a highway construction project that received federal funds. Prior to construction, the DOT obtained an appraisal of the parcel at issue. Claimant sought disclosure of the report to support its claim for damages. The issue before the Court was whether DOT’s application for federal funding waived the work-product protection for the State’s appraisal report. There was no dispute that the terms of the federal reimbursement program allowed the Federal Highway Administration (“FHA”) to review the supporting documentation, including appraisal reports. However, it was also undisputed that the FHA did not request or review the appraisal report in this case. In fact, the FHA had not reviewed supporting appraisals for many years.

Reversing the Court of Claims, the Third Department held that Claimant was entitled to disclosure of the appraisal report. The Court reasoned that relying on an appraisal report when submitting a federal reimbursement application waives the work-product protection for that report. The Court did not appear to be concerned that the appraisal report was never provided to the government.

Lurking behind the holding in this case is the fact that Claimant desperately needed the State’s appraisal report to prove its case. Claimant had only three photographs of the property prior to construction and was unable to otherwise obtain documents establishing the property’s pre-construction condition. As a result, the Court noted that, in the alternative, disclosure of the appraisal report was required because Claimant had a substantial need that could not otherwise be satisfied.

Lerner sends a strong message to both sides in eminent domain cases. Government officials must carefully consider the implications of future litigation when making applications for federal funding, even if an appraisal report is not attached to the application for federal funding. On the other hand, claimants should be aware of this potential source of useful information, which can be obtained on a showing of relevance, rather than need. It remains to be seen whether the Third Department’s reasoning will be adopted by other courts in the State.

New York Pagan Phryganium Wins Real Property Tax Assessment Appeal

Posted in Assessments, Assessors, Exemptions

In an unexpected turn of events, the New York State Appellate Division, Third Department recently held in favor of a newly founded pagan religion seeking a real property tax exemption.

In 1999, Rev. Mother Cathryn Platine founded the religion Maetreum of Cybele, which focuses on the obligation to do charitable works and the belief that the divine feminine mother goddess Cybele is present in everything. The Maetreum of Cybele is now recognized by the Internal Revenue Service and the State of New York as a religious organization.

In 2009, the organization filed an application for tax exemption under Real Property Tax Law (RPTL) 420-a that was denied by both the Assessor and Board of Assessment Review for the Town of Catskill. A subsequent challenge under RPTL Article 7 and CPLR Article 78 was denied by the Supreme Court, Greene County.  In November 2013, the Appellate Division, Third Department unanimously reversed the lower court, holding that the Phryganium (the organization’s place of religious worship) was entitled to tax exempt status under RPTL 420-a. Maetreim of Cybele, Magna Mater, Inc. v. McCoy 975 N.Y.S.2d 251. Citing the well-recognized standard for religious exemption, the Court analyzed whether the property was used primarily in furtherance of a religious purpose. The Court concluded that based on the “convent-style living,” the existence of alters in each of the seven priestess’s rooms, the taking in of “spiritual seekers” without the requirement of payment, the celebration of the phases of the moon, and the provision of religious instruction on the property, the property was in fact used for the furtherance of a religious purpose.

The Cybele case confirms that for the purpose of determining entitlement to a real property tax exemptions, judges will look beyond the history and institutionalization of a religion. Instead, the threshold issue continues to be whether there are concrete signs that the property is being used in furtherance of the religion. As the time for further appeal has passed, this case now stands for the proposition that placing alters in rooms and providing religious instruction on a property may be enough to transform a parcel from an inn to an exempt property. In addition, the case adds another step to local assessing units’ calculation when deciding to litigate a religious tax exemption case. In this unanimous decision, the Third Department not only ruled in favor of the Petitioner, but also ordered the Town to pay the costs of the litigation, indicating that local assessing units should strongly consider the merits of an exemption before litigating.

Two Rights Make War: The Expansion of the Veteran’s Exemption vs The Tax Levy

Posted in Assessments, Exemptions, School Districts

In December of 2013 the Legislature expanded Real Property Tax Law Section 458-a. This revision allows school districts, by local option after a public hearing, to offer veterans a significant property tax exemption. A veteran “qualifies” for this exemption if he or she served in active military, naval or air service during a period of war or received the armed forces expeditionary medal, navy expeditionary medal, marine corps expeditionary medal or global war on terrorism expeditionary medal, and was discharged or released under honorable conditions. The exemption applies only to the qualified veteran’s primary residence. The parents of a deceased qualified veteran may, by a further local option, also be eligible for the exemption on their primary residnce.

The RPTL 458-a exemption has been in existence since the 1980s and there are others like it - including RPTL 458. At the time of RPTL 458-a’s original enactment, however, the Legislature decided that only towns, counties and villages could offer this exemption to veterans living within their districts. School districts were intentionally omitted.

Perhaps the legislature omitted the districts because of the impact this exemption would have on them. Comparatively, this is a rather generous exemption. True, the law caps the value at a certain percentage and/or dollar value and has different levels depending on the veteran’s service and/or disability level, but even so, the benefit to the veteran is substantial. Also, this exemption is applied in addition to the STAR exemption so it is very possible that some veterans may not pay any school tax at all. However, as is typical of these types of exemptions, our schools will receive less STAR money from the state as a result.

Calculating the impact of this exemption on each district (really, on the non-exempt homeowners and businesses in that district) in terms of tax rate hikes and its interplay with the tax cap is a difficult prospect, but for a moderately-sized upstate New York district the impact might be close to $500,000 in tax dollars. The net effect to the district itself will be zero as the levy is the levy regardless of the taxable value of property within the district post-exemption. What this means is that tax rate will simply increase for non-eligible individuals. In fact, this is what happens every time a tax exemption is granted, so nobody should be surprised by this result.

Few exemptions out there seem to be more laudable than giving those who have served this country or gave their lives for our freedom. The good purpose behind this exemption is unquestionable. That said, protecting our tax base and keeping taxes low for everyone is also good. When these two “good goals” collide in the tax world, nobody really wins.

What do you think? What’s your district going to do about this? Leave your comments here.

Part I: Public Hearings in the Eminent Domain Procedure Law – A Sounding Board

Posted in Condemnation/Eminent Domain, Uncategorized

Image courtesy of bigjom/FreeDigitalPhotos.net

Eminent Domain. Condemnation. Taking. Whatever you call it, the acquisition of private property for public purposes by the government, or its agencies, is a highly controversial action. Therefore, it’s important, whether you are a condemning entity or a private property owner, to understand the process that must be followed before private property can be condemned. This post will be the first in series of posts that will introduce you to those procedures set forth in the Eminent Domain Procedure Law (“EDPL”).

 

Article 2 of the EDPL requires a condemning authority to hold a public hearing prior to acquiring private property. The purpose of the public hearing is to inform the public (and the property owners) of the details of the proposed project, the public use to be served by the project and the taking of private property, and the impacts of the project on the environment and the residents of the locality where the project will be constructed. A condemning authority must be careful to build its record at the hearing to justify the proposed taking. This will require the condemning authority to make a presentation and provide written information addressing the key issues. The condemning authority’s presentation, together with comments offered by the public, must be recorded by a stenographer who will produce a transcript of the proceeding for the record.

A condemning authority must satisfy several additional procedural requirements when holding its public hearing. For example, the location of the public hearing must be reasonably proximate to the property to be acquired. If the project impacts a large geographic region, as is common with an underground pipeline or an electric transmission line, it may be necessary to hold more than one public hearing in different locations.

Moreover, the condemning authority must publish notices stating the purpose, time and location of the hearing at least ten but no more than thirty days prior to the public hearing. The number of notices that must be published vary depending on whether the area receives a daily or weekly newspaper. The condemning authority must also serve a notice of the purpose, time, date, and location of the public hearing to each property owner impacted by the proposed taking. Importantly, the notice must inform the public that property owners who may wish to challenge the condemnation of their property via judicial review, may do so only on the basis of issues, facts and objections raised at the hearing.

Thus, the public hearing is an important first step in the condemnation process. Both the condemning authority and property owners should be well prepared to cover all issues and build a record to support their case.

Our next installment in this series will describe exceptions to the public hearing requirement.

Locating Utilities – When Municipal Consent is Not Enough

Posted in Condemnation/Eminent Domain, Settlement, Utilities

Image courtesy of Simon Howden / FreeDigitalPhotos.net

Over the last decade, there have been numerous class actions regarding telecommunication companies’ use of railroad easements. In many of those cases, the telecommunication companies obtained permission from the railroad companies to locate their facilities, but failed to seek permission from the owners of the land upon which the railroad easements ran. These lawsuits have often been decided in favor of landowners. For example, last year Sprint, Qwest, and WilTel Communications settled a nation-wide class action lawsuit filed in the Northern District of New York regarding the companies’ use of railroad easements to lay fiber-optic cable. Vormwald, et al. v. Sprint Communications Company, L.P., et al., No. 5:11-cv-00329-LEK-DEP. The settlement required the telecommunication companies to pay the landowners for the use of their property without their consent. The Vormwald settlement reminds us that landowners retain the right to control the use of their property, even if the property is burdened by existing easements or rights of ways.

Will utility companies be the next to make headlines? Will the location of their facilities come under scrutiny? Should utilities head the warnings of Vormwald and obtain the consent of the underlying fee owner(s) before using public or private easements.

This is true even when trying to locate utilities within public roads. Under the law, if a municipality holds a prescriptive easement over the land for roadway purposes by use or location of the roadway on an official map, the municipality only acquires a limited easement or right to use the property for “street purposes”. Ferguson v. Producers Gas Co., 286 A.D.2d 521, 523 (4th Dep’t 1955). The right to use property for “street purposes” does not include the right to grant others permission to run facilities such as transmission or distribution pipelines when such pipelines are unconnected with the public’s use of the streets. Id. See also Ashland Oil & Refining Co. v. State, 26 N.Y.2d 390, 394 (1970). That’s not to say franchise agreements are of no value to utility companies. Franchise agreements necessarily memorialize municipal consent to the utility companies’ “shared” use of the roadway rights of way with the public. However, utility companies must still negotiate the purchase or condemnation of the initial right to use the underlying property for utility purposes from the underlying landowner(s) before proceeding.

Superstorm Sandy Downstate Tax Relief

Posted in Assessments, Assessors, Valuation

Time is running out for eligible counties and municipalities to provide tax relief to property owners affected by Superstorm Sandy. On October 22, 2013, Governor Cuomo signed the Superstorm Sandy Assessment Relief Act (“Assessment Relief Act”). The Assessment Relief Act aims to provide property tax relief to property owners that are still trying to recover from the effects of Superstorm Sandy by allowing municipalities to lower their 2012-13 tax assessment of properties that lost at least 50% of their structural value due to the storm. Assessment relief for property owners whose buildings and other property improvements lost less that 50% value will be available only where eligible municipalities elect to offer such relief.

Since the deadline for the affected assessing units to finalize assessments and determine tax bills has expired (which has the effect of prohibiting them from altering assessments administratively), the Assessment Relief Act creates an out for property owners in storm-affected areas to lower their tax assessments so that they are not based on pre-Sandy values. To take advantage of this legislation, eligible counties, municipalities and school districts must pass a local law, ordinance or resolution (for school districts) electing to provide assessment relief by December 6, 2013 (45 calendar days after the act was signed by the Governor). Eligible counties are those counties covered by President Obama’s declaration of a major disaster for the State of New York (FEMA-4085-DR): Greene, Nassau, Orange, Putnam, Rockland, Suffolk, Sullivan, Ulster, and Westchester. Property owners in participating municipalities will have until January 1, 2014 (90 calendar days after the act was signed by the Governor) to apply for assessment relief in a written request to their local assessor using form RP-5849-APP. After review, the assessor will classify the loss into one of the ranges in the table below.

Loss of Improved Value Reduction in Taxable Assessed Value of Buildings, etc.
At least 10% but less than 20%

15% (by local option only)

At least 20% but less than 30%

25% (by local option only)

At least 30% but less than 40%

35% (by local option only)

At least 40% but less than 50%

45% (by local option only)

At least 50% but less than 60%

55%

At least 60% but less than 70%

65%

At least 70% but less than 80%

75%

At least 80% but less than 90%

85%

At least 90% but less than 100%

95%

100%

Reduced to 0

(Many thanks to Christopher W. Shishko, Esq. at Guercio & Guercio, LLP for providing his assitance with this post).