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Volume 8 - Opinions of Counsel SBEA No. 35

Opinions of Counsel index

Assessment review (tax certiorari proceeding) (stipulation as to methodology) - Real Property Tax Law, § 720:

The assessor must annually determine the value of property by whatever method(s) he or she considers appropriate. A court may not limit or restrict the use of a particular valuation methodology beyond the years at issue in the tax certiorari proceeding.

We have been asked about the propriety of a stipulation with respect to assessment methodology, as part of a settlement of a tax certiorari proceeding (Real Property Tax Law, Article 7, title one) commenced by the owners of a mobile home park. Pursuant to the agreement, the petitioner’s assessment complaints for two prior years were settled and, for all future years, the town consented to utilize the income method of valuation in determining the assessment of the petitioner’s property.

In 5 Op.Counsel SBEA No. 23, we concluded that a town’s agreement to “freeze” an assessment for a specific time period, as part of a settlement of a certiorari case, was “ultra vires” and unenforceable. This conclusion is based on Article 16 of the State Constitution and case law holding that a municipality may not contract away the power to tax, which necessarily includes the duty of an assessor to assess all property according to the statutory standard of assessment (People ex rel. NYC & HR RR Co. v. Mealey, 224 N.Y. 187, 120 N.E. 155 (1918); Troy Union R.R. Co. v. City of Troy, 227 A.D. 351, 238 N.Y.S. 577 (3d Dept., 1929), aff’d, 253 N.Y. 597, 171 N.E. 798 (1930)).

In the situation presented, there is no provision for a specific assessment; rather, a particular methodology is to be required. However, this does not alter the issue of whether the Town has thereby contracted away the power to tax.

We recognize that the so-called income method of valuation has been held to be the preferred method of valuing income producing property (G.R.F. Inc. v. Board of Assessors, Nassau County, 41 N.Y.2d 512, 362 N.E.2d 597, 393 N.Y.S.2d 965 (1977); Food Fair, Inc. v. Board of Assessment Review of Town of Niskayuna, 78 A.D.2d 335, 435 N.Y.S.2d 378 (3rd Dept., 1981)). Since the parcel which was the subject of this litigation is now income producing real property, the use of an income methodology should be appropriate at this time (Merrick Holding Corp. v. Board of Assessors, 45 N.Y.2d 538, 542, 382 N.E.2d 1341, 410 N.Y.S.2d 565, 567).

However, the stipulation in this case purports to bind the assessors forever. At some future date, the use, condition or economic circumstances of the property may change, at which time the income approach to value would be wholly inappropriate.

Moreover, it is not correct to conclude that each and every property is susceptible to an accurate estimate of value by application of a single method of valuation. In both the G.R.F., Inc. and Merrick Holding Corp. cases, the Court of Appeals required consideration of all available and appropriate valuation information and techniques. Indeed, in the latter case, the Court rejected a traditional income approach, concluding that “categorization must yield to more exact means of arriving at value. Since other factors may tend to qualify the reliability of actual income as a sole measure of value . . .,” the traditional income approach was modified in establishing the value of a shopping center.

Accordingly, just as each year is a new and separate determination by the assessor (Brooklyn Union Gas Company v. State Board of Equalization and Assessment, 97 A.D.2d 897, 470 N.Y.S.2d 462 (3d Dept., 1983)), so in each year the assessor must determine the value of the property, by whatever method or combination of methods he or she considers appropriate. We do not believe that a court may require and limit valuation methodology beyond the years at issue in the proceeding over which the court has jurisdiction.

April 23, 1984