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Volume 9 - Opinions of Counsel SBEA No. 60

Opinions of Counsel index

Special assessing units (transition assessment) (change in classification) (correction of inventory error) - Real Property Tax Law, § 1805:

Where the assessment of a class four property in a special assessing unit has been increased due to a classification change or a correction of any inventory error, the property is entitled to transition assessments that will phase in the increase over a five-year period.

We have been asked whether the assessment increases of two different class four properties in Nassau County are subject to a transition assessment. In one case, the assessment was increased as the result of a change in the classification of the property from class one to class four. In the other, the increase was the result of a correction of an inventory error.

Subdivision 3 of section 1805 of the RPTL requires that increases in assessments of properties in class four in special assessing units be phased in over a five-year period. The only exception to the transition assessment requirement is set forth in subdivision five of section 1805, which states, in pertinent part:

Nothing in this section shall prevent placing on the assessment roll new property, additions to or improvements of existing property or formerly exempt property or the full or partial removal from the roll of property by reason of fire, demolition, destruction or new exemption and such increase or decrease in value shall not be included in the computation of the limitations prescribed by this section.

As to an assessment increase resulting from a classification change, it has been explicitly held that such an increase is not within the scope of subdivision five (Nuzzolese v. Board of Assessors, County of Nassau, 172 A.D.2d 611, 568 N.Y.S.2d 149 (2d Dept. 1991)). Such an increase must therefore be phased in over five years using transition assessments, as provided by subdivision three.

As to an assessment increase resulting from the correction of an inventory error, the issue is whether the inadvertently omitted inventory may be considered “new” property. If so, the increase could be implemented immediately. However, for purposes of section 1805(5), “[r]eal property is ‘new’ when it appears on the tax rolls for the first time” (Niebuhr v. Board of Assessors, 143 A.D.2d 989, 533 N.Y.S.2d 773 at 775 (2nd Dept. 1988),, 73 N.Y.2d 706, 536 N.E.2d 628, 539 N.Y.S.2d 299 (1989)). Since the parcel in question was previously assessed, albeit incorrectly, the omitted inventory cannot be considered “new”, and, therefore, the assessment increase must be phased in with transition assessments, pursuant to subdivision three of section 1805.

It should also be noted that when an assessment increase is attributable partly to physical changes and partly to “equalization” changes (see, 8 Op. Counsel SBEA No. 48), the different components of the increase must be separated and treated differently. Specifically, the portion of the increase attributable to the physical changes may be entered immediately, while the portion of the increase attributable to the equalization changes must be phased in over a five-year period (Meadowbrook Plaza Associates, Inc. v. Board of Assessors of the County of Nassau, 174 A.D.2d 744, 573 N.Y.S.2d 876 (2d Dept. 1991)).

November 28, 1989
Revised July 20, 1992