Background
Attorney Michelle Storm represents the owner of a parcel of land containing a 10,000 SF office building (maritime center) and a 14,550 SF boathouse (rowing center). The property was purchased in 2016 with a purchase price of $550,000.00. At the time of the purchase, the boathouse (rowing center) portion of the property was subject to a 50-year ground lease set to expire in 2049. Despite the purchase price of $550,000.00, the property was assessed by the Town and taxed at a value of $2,360,910.00.
The Lawsuit
As a result of the substantial discrepancy between the purchase price and the tax assessed value of the property, Ms. Storm’s client commenced a legal action pursuant to Real Property Tax Law (RPTL) Article 7 alleging that the Town’s tax assessments of the subject premises for $2,360,910 for three years following the purchase were unequal, excessive, and unlawful.
At trial in 2021, Schenectady County Supreme Court granted Ms. Storm’s client’s applications for a reduction of tax assessment for three years on certain real property.
The Appeal
The Town filed an appeal of the trial court’s decision with respect to the reduction of the three years of tax assessments.
Ms. Storm responded to the Town’s appeal arguing that, consistent with case law, a property is assessed for tax purposes according to its condition on the taxable status date, without regard to future potentialities or possibilities and may not be assessed on the basis of some use contemplated in the future.
Notably, the boathouse structure, in addition to being subject to the 50-year ground lease, is a pole barn type structure without heating, cooling, plumbing or other typical amenities. Its intended use is simply to store row boats and oars. Ms. Storm offered the opinion of an expert appraiser who valued the property in fee simple, which involved valuing the rowing center and the land. With this expert support, Ms. Storm demonstrated that the pole barn structure should not be valued at the same rate as the maritime structure, which is a standard large structure with insulation, heating, cooling, plumbing, and the like. Ms. Storm also argued that the purchase price of the property should be a guide as to the appropriate value of the property.
The Town offered its own expert appraiser, whose opinion differed from Ms. Storm’s expert, in particular, arguing that the boathouse structure should be valued at the same rate as the maritime structure, despite its differences, and that comparable leases are usually 3-5 years, therefore the longer lease on the rowing center is unique and is an encumbrance to the appraisal.
The Decision
The Appellate Division found that Ms. Storm’s client is not using the lease to depress the value of the rowing center – or even as a basis for calculating actual value as respondents attempt to argue – but is instead analyzing how the lease affects the market value of the subject premises – which is the goal in a tax assessment valuation. The Appellate Division deferred to the underlying Supreme Court’s credibility determinations and found that the court’s determination is supported by the weight of the evidence.
About Michelle Storm
Michelle A. Storm litigates matters for individuals, local businesses, and national corporations primarily in the real estate, professional services, hospitality, food, beverage and retail, and manufacturing industries. She has spent many years practicing both plaintiff and defense litigation and, having looked at the law from both sides of the table, she is able to offer her clients a unique perspective and powerful representation. Michelle’s clients find her prepared, committed, and driven to advancing their cases with the best strategy for a successful outcome. She can be reached at (518) 855-3535 and mstorm@mclclaw.com.
About Monaco Cooper Lamme & Carr, PLLC
MCLC is a law firm dedicated to providing exceptional legal services and unparalleled value while building rewarding and lasting relationships with our clients. Our team includes seasoned trial and transactional attorneys who are nationally recognized industry and legal authorities in a wide range of practices and are supported by a remarkable professional support staff. For more information on our firm, visit mclclaw.com or contact our Marketing Director, Stacy A. Smith at ssmith@mclclaw.com.