SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

1040 

CA 12-00434 

PRESENT: CENTRA, J.P., FAHEY, PERADOTTO, CARNI, AND SCONIERS, JJ. 

 

IN THE MATTER OF THE BOARD OF MANAGERS OF 

FRENCH OAKS CONDOMINIUM, PETITIONER-RESPONDENT, 

V MEMORANDUM AND ORDER

TOWN OF AMHERST, HARRY WILLIAMS, TOWN ASSESSOR 

OF TOWN OF AMHERST, BOARD OF ASSESSMENT REVIEW 

OF TOWN OF AMHERST, RESPONDENTS-APPELLANTS,

AND WILLIAMSVILLE CENTRAL SCHOOL DISTRICT, 

INTERVENOR-RESPONDENT. 

 

PHILLIPS LYTLE LLP, BUFFALO (MARC W. BROWN OF COUNSEL), FOR

RESPONDENTS-APPELLANTS. 

AMIGONE, SANCHEZ & MATTREY, LLP, BUFFALO (B.P. OLIVERIO OF COUNSEL),

FOR PETITIONER-RESPONDENT. 

 

Appeal from an order of the Supreme Court, Erie County (John A.

Michalek, J.), entered June 7, 2011 in proceedings pursuant to RPTL

article 7. The order, inter alia, determined the value of the French

Oaks Condominium after a hearing before a referee. 

It is hereby ORDERED that the order so appealed from is affirmed

without costs.

Memorandum: Petitioner commenced this RPTL article 7 proceeding

(first proceeding) seeking review of the real property tax assessments

for its condominium complex (complex) for the 2009-2010 tax year. 

Respondents appeal from an order that determined the value of the

complex for tax assessment purposes after a hearing before a referee. 

We affirm.

We note as background that, after commencing the first

proceeding, petitioner commenced a second proceeding seeking review of

the complex’s real property tax assessments for the 2010-2011 tax

year. The parties stipulated that a referee would hear and determine

the first proceeding and that the result of the first proceeding would

resolve the second proceeding.

 The trial relating to the first proceeding was essentially a

contest between the respective expert appraisers for petitioner and

respondents. At trial, respondents moved to dismiss the first

petition on the ground that the appraisal report of petitioner’s

expert was so fundamentally flawed that petitioner failed to meet its
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burden of showing by substantial evidence the existence of a valid

dispute with respect to the valuation of the complex. The Referee

denied the motion and subsequently established a market value for the

complex in accordance with the rules set forth in Matter of East Med.

Ctr., L.P. v Assessor of Town of Manlius (16 AD3d 1119, 1120), and by

applying an income approach to valuation (see Matter of South Bay Dev.

Corp. v Board of Assessors of County of Nassau, 108 AD2d 493, 498). 

Under the income approach, the market rental value for the 39 units in

the complex was estimated and the complex’s overhead expenses were

subtracted from that figure in order to obtain the net operating

income. The net operating income was then divided by a final

capitalization rate in order to obtain the value of the complex. The

final capitalization rate was determined by identifying a comparable

complex or complexes and dividing the yearly net operating income of

each comparable complex by its sale price, which yielded a

capitalization rate. The capitalization rate, in turn, was then added

to a tax factor, which was calculated by multiplying the tax rate by

the equalization rate, and dividing the ensuing product by 1,000. The

addition of those figures, i.e., the capitalization rate and the tax

factor, yielded a final capitalization rate.

After applying the calculation under the income approach, the

Referee valued the complex at $4,353,030 and thereafter apportioned

that amount between the 39 units in the complex. In calculating the

assessed value of the complex, the Referee adopted the calculations of

respondents’ expert with respect to both the net operating income and

the tax factor and adopted the calculation of petitioner’s expert only

with respect to the capitalization rate. Supreme Court subsequently

ordered, inter alia, that respondent Town of Amherst and intervenor,

Williamsville Central School District, were to amend the 2009 and 2010

tax rolls with respect to the complex to reflect the determination of

the Referee, and that the provisions and restrictions of RPTL 727

shall apply to the Referee’s determinations.

With respect to the merits, we reject respondents’ contention

that the appraisal of petitioner’s expert does not demonstrate the

existence of a credible valuation dispute regarding the valuation of

the complex under the substantial evidence standard. “Our analysis

begins with the recognition that a property valuation by the tax

assessor is presumptively valid . . . and thus ‘obviates any

necessity, on the part of the assessors, of going forward with proof

of the correctness of their valuation’ . . . However, when a

petitioner challenging the assessment comes forward with ‘substantial

evidence’ to the contrary, the presumption disappears” (Matter of FMC

Corp. [Peroxygen Chems. Div.] v Unmack, 92 NY2d 179, 187; see Matter

of Thomas v Davis, 96 AD3d 1412, 1413). “The substantial evidence

standard is a minimal standard. It requires less than clear and

convincing evidence . . . , and less than proof by a preponderance of

the evidence, overwhelming evidence or evidence beyond a reasonable

doubt” (FMC Corp. [Peroxygen Chems. Div.], 92 NY2d at 188 [internal

quotation marks omitted]).

“ ‘In the context of tax assessment cases, the “substantial

evidence” standard merely requires that petitioner demonstrate the
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existence of a valid and credible dispute regarding valuation’ ”

(Thomas, 96 AD3d at 1413, quoting FMC Corp. [Peroxygen Chems. Div.],

92 NY2d at 188; see East Med. Ctr., L.P., 16 AD3d at 1120). In such a

proceeding, “substantial evidence will most often consist of a

detailed, competent appraisal based on standard, accepted appraisal

techniques and prepared by a qualified appraiser” (Matter of Niagara

Mohawk Power Corp. v Assessor of Town of Geddes, 92 NY2d 192, 196). 

The requirements for appraisal reports are set forth in 22 NYCRR

202.59 (g) (2).

Here, respondents challenge the sufficiency of petitioner’s

expert evidence. First, respondents contend that petitioner’s expert

was not qualified to testify. We reject that contention. The fact

that petitioner’s expert is not a licensed appraiser is of no moment

(see Matter of OCG L.P. v Board of Assessment Review of the Town of

Owego, 79 AD3d 1224, 1226). Likewise, there is no merit to

respondents’ contention that petitioner’s expert should have been

precluded from testifying on petitioner’s behalf. To the extent that

the acceptance of a fee by petitioner’s expert undermines his

appraisal, that deficiency goes to the weight to be afforded that

appraisal, not its admissibility (see generally National Fuel Gas

Supply Corp. v Goodremote, 13 AD3d 1134, 1135; Champlain Natl. Bank v

Brignola, 249 AD2d 656, 657).

Second, respondents challenge petitioner’s appraisal on the

ground that it lacks information with respect to the interior areas of

each of the complex’s units. Specifically, respondents contend that

the lack of photographs of the interior of the complex’s individual

units in petitioner’s appraisal renders that appraisal insufficient. 

We reject that contention. Pursuant to 22 NYCRR 202.59 (g) (2),

“appraisal reports . . . may contain photographs of the property under

review” (emphasis added), but there is no requirement that an

appraisal must contain photographs. Respondents’ further contention

that petitioner’s appraisal lacks evidentiary value because it does

not describe the interior of the units is also without merit. 

Petitioner’s expert opined that the differences in the respective

interiors of the units did not affect their rental value, and that

opinion was a factor for the court to consider in weighing the

evidence (see generally Welch Foods v Town of Westfield, 222 AD2d

1053, 1054).

Third, respondents’ contention that the Referee should have

disregarded petitioner’s appraisal because it failed to establish the

fair market value of each of the complex’s units lacks merit. In view

of the similarity of the units and the fact that all of the units were

constructed at approximately the same time, there is no need here for

petitioner’s expert to allocate a specific value to the individual

units in the complex. Thus, that failure affects the weight of

petitioner’s expert evidence, not its sufficiency (see generally

National Fuel Gas Supply Corp., 13 AD3d at 1135; Champlain Natl. Bank,

249 AD2d at 657).

Fourth, respondents contend that petitioner’s appraisal is

insufficient because the market rents analysis for comparable
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properties provided by petitioner’s expert is not supported by “a

clear and concise statement of every fact that a party will seek to

prove in relation to those comparable properties” (22 NYCRR 202.59 [g]

[2]). Respondents also contend that petitioner’s appraisal is

insufficient because it did not provide an adequate explanation of how

petitioner’s expert assigned each unit in the complex a specific

rental value within a range of rental values per square foot. 

Pursuant to 22 NYCRR 202.59 (g) (2), “[t]he appraisal reports shall

contain a statement of . . . the conclusions as to value reached by

the expert, together with the facts, figures and calculations by which

the conclusions were reached.” “A major reason for the rule requiring

the disclosure of facts and source materials at the appraisal stage is

to allow opposing counsel the opportunity to effectively prepare for

cross-examination” (Matter of Gullo v Semon, 265 AD2d 656, 657). 

Here, petitioner’s expert applied location and rent concession

adjustments to comparable properties in his appraisal without

specifying the basis for those adjustments, and also assigned a rental

value for each of the units in the complex within a range of expected

rental prices per square foot without explaining the reasons for the

discrepancies in the rental values of those units. With respect to

the adjustments, “petitioner was not required to provide a detailed

narrative in its appraisal explaining each adjustment made in the

report” (Matter of Bialystock & Bloom v Gleason, 290 AD2d 607, 609). 

In any event, the appraisal of petitioner’s expert provided

respondents with “sufficient details necessary to examine the

comparable [rents] used [in reaching the expert’s] conclusions”

regarding the value of the complex (id.). With respect to the rental

values assigned to each of the units in the complex, we conclude that

the appraisal of petitioner’s expert “contained sufficient facts,

figures and calculations regarding [those rental values] so that

respondent[s were] not prejudiced in cross-examining” petitioner’s

expert (Gullo, 265 AD2d at 657).

Fifth, respondents contend that the bases for and the explanation

of the bases for the calculation of the capitalization rate provided

by petitioner’s expert are insufficient. We reject that contention. 

Specifically, respondents contend that, in calculating the

capitalization rate, petitioner’s expert improperly considered

properties that were dissimilar to the complex in his analysis of

comparable sales. As respondents correctly note, the complex was

constructed between 2002 and 2005, and all of the comparable complexes

incorporated in the appraisal of petitioner’s expert were built well

before that time. Additionally, the interiors of the properties

considered as comparable sales (hereafter, comparable sales) were not

described in petitioner’s appraisal. That appraisal, however,

provided the year in which many of the comparable sales were built and

the square footage, size and unit prices of the comparable sales. 

Thus, there was sufficient information provided in the appraisal to

allow respondents to prepare for cross-examination of petitioner’s

expert on any differences between the comparable sales and the complex

(see id.). Respondents also contend that the information regarding

three of the four comparable sales cited in petitioner’s appraisal is

outdated because there was a subsequent sale of those properties that

petitioner’s expert did not consider. Respondents’ attorney, however,
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had sufficient information to address the issue of the subsequent sale

on cross-examination (see id.). Thus, inasmuch as respondents were

provided sufficient information to prepare for cross-examination

regarding the alleged deficiencies in the comparable sales, any

weaknesses in the choice of comparable sales used by petitioner’s

expert goes to the weight to be given his appraisal, not its

sufficiency (see generally National Fuel Gas Supply Corp., 13 AD3d at

1135; Champlain Natl. Bank, 249 AD2d at 657). Moreover, we note that,

with respect to one of the alleged “outdated” comparable sales,

petitioner’s expert testified that he attempted to obtain income and

expense information regarding the most recent sale, but the owners of

that complex would not disclose that information. 

Respondents further contend that the explanation of the

capitalization rate provided by petitioner’s expert is insufficient

because petitioner’s expert used income and expense information

regarding each of the comparable sales that was based on “forecasts,”

rather than on actual income and expenses, and failed to provide the

periods to which that information related. We reject that contention. 

Although petitioner’s expert described the financial information for

each of the comparable sales as “forecast financials” in his

appraisal, there was sufficient information in the appraisal to allow

respondents to explore the absence of historical financial information

for the comparable sales on cross-examination (see Gullo, 265 AD2d at

657). Thus, any weakness in the financial information relied upon by

petitioner’s expert goes to the weight to be afforded his appraisal,

not its sufficiency (see generally National Fuel Gas Supply Corp., 13

AD3d at 1135; Champlain Natl. Bank, 249 AD2d at 657).

Having determined that petitioner met its initial burden of

demonstrating a valid and credible dispute regarding valuation, we now

turn to respondents’ contention that the Referee’s determination with

respect to the final capitalization rate is against the weight of the

evidence. In conducting a weight of the evidence review, we “must

weigh the entire record, including evidence of claimed deficiencies in

the assessment, to determine whether [the] petitioner has established

by a preponderance of the evidence that its property has been

overvalued” (Thomas, 96 AD3d at 1413 [internal quotation marks

omitted]). Viewing the evidence in the light most favorable to

petitioner, the prevailing party, we conclude that the Referee’s

determination with respect to the final capitalization rate is

supported by a fair interpretation of the evidence (see generally

Matter of City of Syracuse Indus. Dev. Agency [Alterm, Inc.], 20 AD3d

168, 170).

“The determination of a proper capitalization rate is a factual

question for the trial court, and the opinion evidence of appraisers

is competent evidence of that rate” (Matter of Greater N.Y. Sav. Bank

v Commissioner of Fin., 15 AD3d 661, 661). Put differently, “[t]he

rate of capitalization itself is a matter for proof and argument . . .

and expert testimony based on the personal knowledge and expertise of

the witness is competent evidence and admissible” (Matter of Addis Co.

v Srogi, 79 AD2d 856, 857, lv denied 53 NY2d 603 [emphasis added]). 

Thus, the court’s determination with respect to the capitalization
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rate should be affirmed if it is “within the range of expert testimony

and is supported by the evidence” (Matter of Schoeneck v City of

Syracuse, 93 AD2d 988, 988-989).

Here, respondents contend that the Referee should have adopted

the capitalization rate of their expert. We reject that contention. 

Significantly, respondents’ expert relied on national statistics

rather than statistics based on the western New York real estate

market. In addition, respondents’ expert failed to discuss the

formula he used to determine the capitalization rate on which he

relied. We therefore conclude that the Referee’s rejection of the

capitalization rate provided by respondents’ expert is supported by a

fair interpretation of the evidence.

Respondents further contend that the court erred in crediting the

capitalization rate of petitioner’s expert on the same grounds that

they challenge the legal sufficiency of petitioner’s appraisal, i.e.,

that it was based on dissimilar comparable sales and flawed financial

data; and ignored more recent comparable sales. Those alleged defects

in petitioner’s appraisal, however, do not render the capitalization

rate proposed by petitioner’s expert incredible as a matter of law. 

Indeed, an appraisal is an “estimation of worth” (Black’s Law

Dictionary 117 [9th ed 2009] [emphasis added]), i.e., an approximate

calculation of worth, and we question the degree of precision that

such a study may achieve. Thus, respondents’ complaints with respect

to the comparable sales data on which petitioner’s expert relied are

unavailing; the Referee knew of the imperfections in that data, but

was justified in relying on petitioner’s calculations despite those

flaws. Moreover, we conclude that the Referee was also justified in

crediting petitioner’s capitalization rate even though that rate was

calculated, at least in part, by using financial information

petitioner’s expert had acquired as a result of his prior professional

involvement with the comparable sales. Although petitioner’s expert

had what appears to have been a partial expense sheet for the one

comparable sale and a profit/loss statement from a second comparable

sale, he acknowledged on cross-examination that he did not have

audited financial statements for the comparable sales when he

calculated the net operating income for those properties, which was in

turn used to calculate the capitalization rate. Notably, unlike sales

data, which is a matter of public record, data regarding the net

operating income of a comparable property is almost always the

exclusive property of private enterprise. We therefore question the

frequency and ease with which an appraiser is able to obtain private

and often proprietary income data with respect to a comparable

property. Respondents addressed that issue at oral argument, and

explained only that one would “get [such information] by calling . . .

the individual associations, the individual apartments.” We conclude

that, under these circumstances, disturbing the order based on the

failure of petitioner’s expert to provide “hard” data with respect to

all of the comparable sales used in his capitalization analysis would

stifle the ability to challenge a tax assessment. In any event,

“opinion evidence of appraisers is competent evidence of [a

capitalization] rate” (Greater N.Y. Sav. Bank, 15 AD3d at 661; see

Addis Co., 79 AD2d at 857), and under these circumstances the use of
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opinion evidence to establish a capitalization rate is appropriate. 

All concur except PERADOTTO and CARNI, JJ., who dissent and vote to

modify in accordance with the following Memorandum: We respectfully

dissent because, in our view, the conclusion of petitioner’s appraiser

with respect to his capitalization rate is legally and factually

flawed, and each flaw is independently fatal to petitioner’s case. We

thus conclude that petitioner failed to meet its ultimate burden of

establishing that the subject property is overvalued, and we would

therefore adopt the value set forth in respondents’ trial appraisal

and modify the order accordingly (see Matter of Thomas v Davis, 96

AD3d 1412, 1414).

The legal flaw underlying the capitalization rate analysis of

petitioner’s appraiser is that he relied on his “personal exposure” to

at least three of the four comparable properties to justify the

financial figures that he used to calculate his capitalization rate. 

Although we agree with the majority that “opinion evidence of

appraisers is competent evidence of [a capitalization] rate” (Matter

of Greater N.Y. Sav. Bank v Commissioner of Fin., 15 AD3d 661, 661;

see Matter of Addis Co. v Srogi, 79 AD2d 856, 857, lv denied 53 NY2d

603), we conclude that such opinion evidence must still be supported

“by factual data supporting such rate” (Kurnick v State of New York,

54 AD2d 1098, 1098). An appraiser cannot simply list financial

figures of comparable properties in his or her appraisal report that

are derived from alleged personal knowledge; he or she must

subsequently “prove” those figures to be facts at trial (22 NYCRR

202.59 [g] [2]; see Matter of Niagara Mohawk Power Corp. v City of

Cohoes Bd. of Assessors, 280 AD2d 724, 727, lv denied 96 NY2d 719). 

Petitioner’s appraiser, however, failed to offer any factual support

for the great majority of his figures. Thus, there was no way for

respondents’ counsel to conduct an adequate cross-examination of

petitioner’s appraiser with respect to those figures (see Matter of

Niagara Mohawk Power Corp. v Town of Bethlehem Assessor, 225 AD2d 841,

843). In the absence of any documentary or tangible evidence,

respondents’ counsel could not determine whether petitioner’s

appraiser accurately reported the financial figures of the allegedly

comparable properties, nor can we make such a determination.

Appraisal is not a novel or emerging profession; its

methodologies are not mysterious either in general or to this Court. 

Countless other cases have come before this Court in which conflicting

expert appraisers have had no trouble collecting the data and

documents necessary to establish an evidentiary foundation for their

opinions with respect to a capitalization rate, and we do not see

anything remarkable here to excuse petitioner’s appraiser from that

task. Moreover, even if extenuating circumstances were present in

this case rendering it difficult for an appraiser to develop an

evidentiary foundation for an opinion, that fact would not cure the

defect in petitioner’s appraisal (see Matter of City of Rochester v

Iman, 51 AD2d 651, 652). Above all, we see no occasion here to take a

plain failure of proof and to extrapolate from it a new, relaxed

evidentiary standard in tax assessment cases based on the assumption

that to do otherwise would stifle petitions challenging tax
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assessments. Rules of evidentiary foundation are restrictive, and

intentionally so (see generally Wagman v Bradshaw, 292 AD2d 84, 91). 

Even if we were to accept petitioner’s appraiser’s recitation of

the financial figures regarding the comparable properties based on his

prior professional involvement with those properties, it is evident

that the numerous precise, unrounded figures for, inter alia, gross

annual income, effective gross income, and net operating income that

he used came not from his memory, but rather from documents. At the

very least, those documents should have been included in his appraisal

and in the record before us (see generally Matter of Northern Pines

MHP, LLC v Board of Assessment Review of the Town of Milton, 72 AD3d

1314, 1316; Star Plaza v State of New York, 79 AD2d 746, 747). 

Without such an evidentiary foundation, we conclude that the

unsupported financial figures used by petitioner’s appraiser are

simply hearsay and that such figures do not become admissible upon his

bare assertion that he saw them at some point in the past (see

generally Wagman, 292 AD2d at 86-87). 

We further conclude that the capitalization rate of petitioner’s

appraiser is factually flawed inasmuch as he did not make appropriate

adjustments to the comparable properties used in calculating that

rate. The subject property’s units were built between 2003 and 2005,

while the four comparable properties were built in 1959, 1969, 1973,

and 1978, respectively. Additionally, most of the units in the

comparable properties were smaller than the units in the subject

property, some were even half the size of the subject property’s

units. Petitioner’s appraiser, however, failed to make any

adjustments for the marked differences in age, condition, and size

among the comparable properties’ units and the subject property’s

units. 

We cannot agree with the majority’s conclusion that the failure

to adjust for such relevant, marketable characteristics as age and

size (see generally Matter of Bialystock & Bloom v Gleason, 290 AD2d

607, 608) is simply a matter of “weight to be given [petitioner’s]

appraisal.” We recognize that “[t]he suitability of comparable sales

is a matter resting within the sound discretion of the trial court”

and that differences in properties may be accounted for by adjustments

(Chase Manhattan Bank v State of New York, 103 AD2d 211, 222; see

Niagara Falls Urban Renewal Agency v 123 Falls Realty, 66 AD2d 1009,

1010, appeal dismissed 46 NY2d 997, lv denied 47 NY2d 711). Nor do we

question the general principle that “ ‘[comparability] does not . . .

connote . . . identity’ ” (Matter of Katz v Assessor of Vil./Town of

Mount Kisco, 82 AD2d 654, 658). Contrary to the majority, however, we

conclude that the degree of comparability “becomes a question of fact”

only where the differences between a subject property and comparable

properties have been explained and adjusted for value (Niagara Falls

Urban Renewal Agency, 66 AD2d at 1010). Inasmuch as the record does

not reflect any adjustment for the age and size of the comparable

properties’ units by petitioner’s appraiser, any consideration of

those factors by the Trial Referee or Supreme Court, or any basis for

this Court to make its own adjustments, we are compelled to conclude

that the purportedly comparable properties are incomparable as a
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matter of law. In other words, if weight of the evidence is the

standard to be applied (see National Fuel Gas Supply Corp. v

Goodremote, 13 AD3d 1134, 1135; Champlain Natl. Bank v Brignola, 249

AD2d 656, 657), we conclude that petitioner’s appraisal should be

accorded no weight.

To the extent that petitioner’s appraisal contains “lump-sum”

adjustments without breaking those adjustments down into specific

categories and quantities, we conclude that such adjustments are

improper because they do not afford an adequate basis for our review

(Matter of County of Dutchess [285 Mill St.], 186 AD2d 891, 892; see

also Geffen Motors v State of New York, 33 AD2d 980, 980). 

We would therefore modify the order by reducing the aggregate

assessment to $5,080,000 and adopting respondents’ apportionment of

values among the subject units. 

Entered: February 1, 2013 Frances E. Cafarell

Clerk of the Court