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Volume 10 - Opinions of Counsel SBRPS No. 81

Opinions of Counsel index

Assessment review, Board of (powers and duties) (apportionment of assessment between land and total); Assessment roll, form (land and total assessed values) (administrative review) - Real Property Tax Law, §§ 502, 525:

Boards of assessment review may adjust the apportionment between the land and total assessments of the parcels subject to their review, provided that the total assessments finally determined do not exceed the total assessments as they appeared on the tentative assessment roll.

We have been asked for our opinion concerning the authority of a board of assessment review to adjust the apportionment between land and total assessment at the same time it is reducing the total assessment of the parcel. That is, a particular parcel had a $20,000 land and a $100,000 total (i.e., land and buildings) tentative assessment. The board of assessment review reduced the land assessment to $10,000 but “raised” the building assessment so that the final total assessment determined by the board of assessment review was $95,000. The question is whether this change was authorized. We believe so.

Section 502(3) of the Real Property Tax Law provides, in part, “The assessment roll shall contain a column for the entry with respect to each separately assessed parcel of the assessed valuation of the land exclusive of any improvements, followed by a column for the entry of the total assessed valuation. *** Only the total assessment, however, shall be subject to judicial review provided by article seven of this chapter.”

When the RPTL was recodified (L.1958, c.959), section 502(3) was derived from former section 21(3) of the Tax Law. {1}  That provision was itself derived from former section 21-a (added L.1911, c.117) which applied only in cities. The provision was thereafter moved to section 21 (L.1916, c.323) and made applicable to all assessing units (L.1934, c.416).

In Schubert Organization, Inc. v. Tax Commission of City of New York, 60 N.Y.2d 93, 456 N.E.2d 485, 468 N.Y.S.2d 594 (1983), the Court of Appeals construed section 502(3) and held:

In the process of the review of the total assessments the courts are authorized and may be expected to make separate factual determinations as to the value properly to be assigned to the land and value properly assigned to the building [citation omitted]. These are factual findings to be made on the basis of the proof in the record. Either value may be above or below or the same as the value fixed by the board of assessors; the only restriction on the judicial determination is that the total assessment it fixes cannot exceed the total assessment under review. Within the figure for total assessment, however, the components of value for land and improvement may be freely adjusted as warranted by the evidence. (60 N.Y.2d at 97, 468 N.Y.S.2d at 595-96)

In a footnote to its decision, the Court provided the historic rationale for section 502(3): {2}

In People ex rel. Kemp Real Estate Co. v. O’Donnel, 198 N.Y. 48, 91 N.E. 276 [1910], the court, as did the Appellate Division in the case at bar, held that the assessed value of the land component was the maximum land value which could be assigned to the land in calculating total value despite a factual finding of higher land value. A year later in 1911 the Legislature amended section 21-a of the Tax Law (now Real Property Tax Law, § 502, subd. 3) to provide that “[t]he total assessment only can be reviewed” (L.1911, ch.117). It was said that the purpose of this legislative enactment was to overturn the ruling in the Kemp Real Estate case (see People ex rel. Morse Dry Dock & Repair Co. v. Purdy, 100 Misc. 580, 167 N.Y.S. 69 [1917]). In any event the amendment has been held to prohibit review of either the land or the building assessment separately (People ex rel. Strong v. Hart, 216 N.Y. 513, 519-520, 525, 111 N.E. 56 [1916]). (60 N.Y.2d at 96, 468 N.Y.S.2d at 595)

The exhaustion of administrative remedies (i.e., filing a complaint with the board of assessment review) is a necessary prerequisite to obtaining judicial review of an assessment (RPTL, §§ 706(2), 730(1)(a)). The authority of a board of assessment review is to determine the final assessed value of each parcel brought before it for review (RPTL, § 525(3)(a)). “The final assessed valuation or taxable assessed valuation of real property may be the same as or less than the original assessment” (RPTL, § 525(3)(b)). {3}

Given the State’s highest court’s holding in Schubert and the nexus between administrative and judicial review of assessments, and noting too that section 502(3) does not even mention Article five of the RPTL, in our opinion, boards of assessment review may adjust the apportionment between the land and total assessments of the parcels subject to their review. The total assessment finally determined by such a board, however, may not exceed the total assessment as it appeared on the tentative assessment roll. In the factual presented here, that is indeed the case.

July 7, 1998

{1}  Note that the last sentence of section 21(3) simply stated, “The total assessment only can be reviewed.”  The reference to Article seven was added in the recodification, but no substantive change was intended (see, RPTL, Art. 20; Kilmer, Introduction to McKinney’s Real Property Tax Law (1960)). Of course, the independent board of assessment review was not created until 1970 (c.957) which may explain why the 1958 recodification referenced only the judicial review provisions of Article seven.

{2}  Note that the Governor’s bill jacket collection (i.e., a principal source for determining legislative intent) for the era in which former section 21-a was first enacted were lost in a fire at the State Capitol many years ago.

{3}  Boards of assessment review were originally empowered to increase assessments subject to their review, as well as to reduce them or leave them unchanged, but the authority to increase assessments was eliminated in 1981 (c.994).