SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

1406 

CA 15-00558 

PRESENT: SMITH, J.P., PERADOTTO, LINDLEY, WHALEN, AND DEJOSEPH, JJ. 

 

IN THE MATTER OF CANANDAIGUA NATIONAL BANK & 

TRUST COMPANY, PETITIONER-RESPONDENT,

V MEMORANDUM AND ORDER

MARK R. BROWN, ASSESSOR, AND BOARD OF ASSESSMENT 

REVIEW, CITY OF CANANDAIGUA, 

RESPONDENTS-APPELLANTS.

 

LACY KATZEN LLP, ROCHESTER (JOHN T. REFERMAT OF COUNSEL), FOR

RESPONDENTS-APPELLANTS. 

FORSYTH, HOWE, O’DWYER, KALB & MURPHY, P.C., ROCHESTER (DUNCAN W.

O’DWYER OF COUNSEL), FOR PETITIONER-RESPONDENT. 

 

Appeal from a judgment (denominated order) of the Supreme Court,

Ontario County (John J. Ark, J.), entered January 6, 2015 in

proceedings pursuant to RPTL article 7. The judgment, among other

things, determined that the assessments of properties owned by

petitioner are erroneous by reason of overvaluation. 

It is hereby ORDERED that the judgment so appealed from is

unanimously reversed on the law without costs and the matter is

remitted to Supreme Court, Ontario County, for further proceedings in

accordance with the following memorandum: Petitioner commenced these

proceedings pursuant to RPTL article 7, seeking to challenge the tax

assessments on three contiguous parcels of real property that contain

several adjacent or adjoining buildings and a parking lot. The

buildings were constructed at different times, and several were

extensively remodeled, during a period of more than 100 years

preceding the assessments at issue. Petitioner used the majority of

the space in all of the buildings for its offices and a bank branch,

but leased some of the space to other entities for retail and office

use. For reasons that are not clear from the record, petitioner

challenged the assessment for the 2010 through 2012 tax years on two

of the subject parcels, but challenged the assessment for the third

parcel, at 56 South Main Street, only for the 2010 and 2012 tax years. 

The matter proceeded to trial, where both petitioner and respondents

submitted expert appraisals of the subject properties. Petitioner’s

expert primarily relied upon the income capitalization method of

appraisal, using estimates for the rental values of the properties

because the buildings are primarily owner-occupied, although he also

used sales of comparable properties as a check on his results. In his

appraisal, petitioner’s expert valued the subject properties at an
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aggregate of $1,255,000 for 2010, $1,197,000 for 2011, and $1,182,000

for 2012. At the close of petitioner’s case, respondents moved to

dismiss the petitions on the ground that petitioner failed to submit

substantial evidence establishing a prima facie case of overvaluation. 

Supreme Court denied the motion. 

 In his appraisal, respondents’ expert valued the subject

properties at an aggregate of $3,522,000, $3,522,000, and $3,622,000,

for each of the three applicable tax years, respectively, primarily

using a sales comparison method based on sales of several properties

scattered throughout various counties, with upward and downward

adjustments based on the expert’s evaluation of, inter alia, square

footage, use, and location. Respondents’ expert also calculated a

value for the properties using the income capitalization method, as a

check on his valuation, although he used different assumptions than

petitioner’s expert concerning, among other things, the rental income

that would be generated by the properties, the expenses of the

properties, the value of the basement areas of the properties, and the

square footage of the interior spaces.

The court concluded, quoting Matter of Niagara Mohawk Power Corp.

v Assessor of Town of Geddes (92 NY2d 192, 196), that petitioner

submitted a “ ‘detailed, competent appraisal based on standard,

accepted appraisal techniques and prepared by a qualified 

appraiser,’ ” and that the appraisal was sufficient to meet

petitioner’s initial burden of rebutting the presumption of validity

that attaches to respondents’ valuation of the properties (see

generally Matter of FMC Corp. [Peroxygen Chems. Div.] v Unmack, 92

NY2d 179, 188). The court further concluded, however, that the

variances in the experts’ opinions were “more a result of advocacy

than objectivity, thereby compromising their credibility,” and that

neither expert’s appraisal was completely acceptable owing to the

unique nature of the joined parcels. The court also noted “[t]he

inherent difficulty” of using the income capitalization method to

evaluate an owner-occupied building because of the “speculative nature

of both the income and expenses” used in the valuation, and the

speculative nature of the comparison with purportedly comparable

leases. Consequently, the court determined a value for the properties

by applying the sales comparison method to several properties that

both experts deemed comparable, with adjustments for, inter alia, use

and square footage of the various areas within the subject parcels. 

After determining a value per square foot for the properties, the

court applied that value to arrive at a final value for the parcels of

$2,320,000 for the subject tax years. The court then calculated the

total overvaluation of the subject parcels to be $3,390,000 for the

three tax years combined, and awarded judgment in favor of petitioner

by, inter alia, directing that the overpayment be refunded with 9%

interest. We now reverse.

Contrary to respondents’ contention, the court properly denied

their motion to dismiss the petitions at the close of petitioner’s

evidence, and properly declined to strike petitioner’s appraisal. 

Respondents are correct that, “[i]n an RPTL article 7 proceeding, a

rebuttable presumption of validity attaches to the valuation of
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property made by the taxing authority . . . Thus, a petitioner

challenging the accuracy of a tax valuation has the initial burden to

rebut the presumption by introducing substantial evidence that the

property was overvalued” (Matter of Roth v City of Syracuse, 21 NY3d

411, 417). It is also well settled, however, that “[s]ubstantial

evidence is a minimal threshold standard that simply ‘requires that

[a] petitioner demonstrate the existence of a valid and credible

dispute regarding valuation’ ” (Matter of Adirondack Mtn. Reserve v

Board of Assessors of the Town of N. Hudson, 106 AD3d 1232, 1234,

quoting FMC Corp., 92 NY2d at 188). Furthermore, “[t]he fact that

some aspects of [the expert]’s valuation methodology may be subject to

question goes to the weight to be accorded the appraisal and not to

‘the threshold issue of whether petitioner produced substantial

evidence to rebut the presumption of validity’ ” (Matter of OCG L.P. v

Board of Assessment Review of the Town of Owego, 79 AD3d 1224, 1226;

see FMC Corp., 92 NY2d at 187-188).

Here, the court properly concluded that petitioner met “this

burden through submission of ‘a detailed, competent appraisal based on

standard, accepted appraisal techniques and prepared by a qualified

appraiser’ ” (Matter of Gran Dev., LLC v Town of Davenport Bd. of

Assessors, 124 AD3d 1042, 1044, quoting Niagara Mohawk Power Corp., 92

NY2d at 196). Contrary to respondents’ contention, petitioner’s

expert “articulated a plausible reason for his failure to use the type

of comparables adopted by” respondents’ expert and “put forth a

persuasive case for [his own] . . . valuation[]” (Matter of Rite Aid

of N.Y. No. 4928 v Assessor of Town of Colonie, 58 AD3d 963, 966; see

Matter of Rite Aid Corp. v Haywood, 130 AD3d 1510, 1517, lv denied 26

NY3d 915; Matter of Myron Hunt/Shaker Loudon Assoc. v Board of

Assessment Review for Town of Colonie, 6 AD3d 953, 954-955). 

Contrary to respondents’ further contention, the court’s refusal

to completely follow either appraisal was an acceptable exercise of

its discretion inasmuch as, “ ‘in an assessment review, the court is

granted great discretion in evaluating the appraisals presented by

each party’ ” (Matter of Sun Plaza Enters. Corp. v Tax Commn. of City

of N.Y., 304 AD2d 763, 766, lv dismissed 3 NY3d 689). Consequently,

after petitioner’s “initial burden was met, the presumption

disappeared, and the court properly considered the entire record in

order to arrive at a fair and realistic value for the subject

propert[ies]” (Matter of Jay Dee Tomfor Transp. v Board of Assessors,

288 AD2d 475, 475; see generally Gran Dev., LLC, 124 AD3d at 1044;

Stone Mtn. Prime LLC v UICC Holding LLC, 122 AD3d 1114, 1115, lv

denied 24 NY3d 917). Based upon our review of the record, and

affording great deference to the court’s credibility determinations

(see Gran Dev., LLC, 124 AD3d at 1046), we conclude that the court

relied upon comparable sales that were “ ‘sufficiently similar to

serve as a guide to the market value of the [subject] complex,

notwithstanding differences between these comparables and the

[subject] propert[ies]’ . . . , [and then the court used] ‘sound

theory and objective data’ . . . to adjust evidence of sales of

comparable properties in order to more accurately reflect the market

value of the subject propert[ies]” (FMC Corp., 92 NY2d at 189). Thus,
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CA 15-00558 

we conclude that the court used an appropriate method in an attempt to

ascertain the market value of the subject properties. 

Although we reject respondents’ challenge to the method that the

court used to arrive at a fair and reasonable value for the subject

parcels, we conclude that the court erred in its calculations. The

court concluded that the value of the subject properties remained the

same for each tax year, a conclusion with which we agree, but the

court reduced the valuation for the 56 South Main Street parcel for

all three tax years despite petitioner’s failure to challenge the

assessment on that parcel for one of the applicable years. In

addition, we are unable to ascertain which tax years are covered by

the judgment, inasmuch as the court reduced the assessments for the

2009 through 2011 tax years, but the petitions sought reductions on

two parcels for the 2010 through 2012 tax years, and the 56 South Main

Street parcel for only the 2010 and 2012 tax years. The judgment is

also internally inconsistent with respect to the valuation of the 72

South Main Street parcel, inasmuch as the “Conclusions of Law” section

of the judgment indicates that the parcel should be valued at

$1,605,100, but the decretal paragraph values the parcel at

$1,905,100. Furthermore, the court erred in its calculation of the

amount of taxes that were overpaid.

 We also agree with respondents that the court erred in assessing

interest at a rate of 9%. As petitioner correctly concedes, the

governing statute unequivocally states that, when a court orders a

taxing authority to pay interest in an action pursuant to RPTL article

7, the “rate of interest shall be the overpayment rate set by the

commissioner of taxation and finance pursuant to subsection (j) of

section six hundred ninety-seven of the tax law and such interest rate

shall not be greater than nine percent per annum” (RPTL 726 [2]). 

Section 697 of the Tax Law sets that rate at “the sum of (i) the

federal short-term rate as provided under paragraph three of this

subsection, plus (ii) two percentage points” (§ 697 [j] [2] [A]). The

parties correctly agree that the rate is 3% for 2010 and 2% for 2011

and 2012, which are the tax years challenged in the respective

petitions. 

Consequently, we remit the matter to Supreme Court to state the

parcel, tax year, and valuation date to which each part of its

judgment applies, to recalculate the assessment for each tax year with

respect to each challenged parcel, to recalculate the amount of

overpayment for each challenged parcel and tax year, to recalculate

the total amount of overvaluation, and to award interest for each

parcel and tax year pursuant to RPTL 726 (2) and Tax Law § 697 (j) (2)

(A). 

Entered: March 18, 2016 Frances E. Cafarell

Clerk of the Court