Matter of Markham v Comstock

[*1] Matter of Markham v Comstock 2006 NY Slip Op 52631(U) [21 Misc 3d 1113(A)] Decided on June 23, 2006 Supreme Court, Yates County Falvey, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 23, 2006
Supreme Court, Yates County

In the Matter of the Application of Jerry Markham and Marcia H. Markham, Petitioners,

against

Alan B. Comstock as Assessor, The Board of Assessment Review of the Town of Jerusalem, New York, Respondents.



04-196



Jerry Markham and Marcia H. Markham

pro se

Underberg & Kessler, LLP

(Paul F. Kenally, Esq., of Counsel)

Attorneys for Respondents.

W. Patrick Falvey, J.

Petitioner-owners herein seek a review under Article 7 of the Real Property Tax Law of the Respondent's assessments for the years 2004 (Index No. 04-196) and 2005 (Index No. 05-224) on the petitioners' real property.

A hearing was conducted in Yates County Supreme Court, at Penn Yan, New York on March 6 and 7, 2006, at which time the parties stipulated that 1) the assessed values for 2004 and 2005 were based on an equalization rate of 100% and 2) these cases involved only the issue of over evaluation. The parties were given leave to make submissions and the case was marked submitted on May 1, 2006.

At the commencement of the trial the Court granted the respondents' motion to deem petitioners' 2005 appraisal inadmissible due to the failure of the appraiser to use the correct valuation date, to wit: July 1, 2005 (RPTL §301). Instead, petitioners' appraiser used January 1, 2005 which did not reflect the change in the law, effective December 8, 2004, making the valuation date July first.

The proof presented was therefore limited to the year 2004.

FACTS

Petitioners are the owners of the premises located in the Town of Jerusalem, Yates County, identified and assessed upon the 2004 tax roll as follows:

Tax Map No.: 117.001-0001-005

Road Name:1087 East Bluff Drive

Lot/Acreage:6.2 acres plus or minus [*2]

Assessment:$490,300.00 ($282,900.00 allocated to land and $207,400 for

improvements)

Paul Rowe, a licensed professional civil engineer, experienced in structural engineering testified for the petitioners. Rowe designs bridges, box culverts, retaining walls and other structures. In 2004, the petitioners asked him to prepare an engineering report (see Exhibit 1, Appendix pp. 73 & 74) regarding the subject property. The report was completed April 21, 2005. In order to do this he went to the petitioners' property where he found a house constructed approximately thirty feet above the water level, adjacent to the shoreline and lower than the road (East Bluff Drive). There was a steep embankment from the road to the house as well as from the house to the waterfront.

He noted significant erosion damage north of the property where drainage from the road was eroding the soil conditions to the water level. Also to the south of the property, the property was eroded in that the corner edges of the walls were beginning to be exposed. It was raining at the time Rowe looked at the property and he also observed water running from the road down the driveway causing some additional stress.

As a temporary fix he recommended that the petitioners remove some of the water pressure from the site to help stabilize the soil.

He noted that the existing drainage attempted to minimize some of the water pressure. However, it was not enough to manage major storm events, nor was it directed enough to take care of the drizzle, one of Rowe's concerns. He also noted that behind the bank (in between the house and the shoreline) there were a few collapses that had occurred over time. One collapse even got close to exposing the foundation of the porch. Rowe also stated that although he couldn't be sure, he thought there might be a spring in the hillside independent of any hillside run off.

Rowe recommended that a soil analysis be done, that is, do drillings in order to understand what actual material they were dealing with. He also suggested installing a retaining wall along the lakeshore frontage measuring 140 lineal feet with an average height of 20 feet to secure the property. He estimated that this remediation would cost $80.00 per vertical square foot, for a total of $225,000 to $250,000. However, this was a gross estimate and the final cost would be based on the actual analysis.

Rowe indicated that the petitioners ordered the soil analysis in 2005 but he had not yet placed the order because he had been busy, even though his report of April 2005 made this recommendation. None of the work had been done up to the time of trial.

Even though the petitioners had previously done some work to mitigate the water pressure on top, with Fladd's Creative Stone Construction and Landscaping for a total of approximately $5,000.00, no other work has been done as to the drainage on the property since Rowe was retained.

Rowe observed a ditch on the west side of the road at the top of the lake side parcel. He indicated that there was yard debris in the ditch which could affect the drainage, especially under a catastrophic rain where the debris was significant enough to prevent the water from going through any natural drainage designed by the Town. Therefore, it could cause the water to flow over the road and down the driveway and bank.

Rowe recommended diverting water north and south of the petitioners' property with gravel. This would be an attempt to keep any of the runoff from the road coming down the driveway and the embankment. He had no specific cost estimate, but he did not think it would be that expensive.

He also suggested sculpting the driveway to direct some water to the north, putting in a catch basin giving the water a place to drain and diverting the water to the gully, that is already being created by the drainage north of petitioners' property. Rowe did not have a cost for that as well, but he thought pitching the walkway to direct some of the water north would be minimal. (TT. p. 165)

Mr. Rowe also stated "the saturated soils and the slumping of the soils, and that [*3]embankment of his' house being so close to that embankment was my concern, and the main principal for putting the wall in." (TT. p. 166).

Specifically, Rowe indicated that the drainage issues as to new water coming onto the property could be solved by the work mentioned by Rowe concerning the roadside driveway, walk way, water drainage to the north and water drainage to the south. His remaining concern was simply the saturation of the existing soil.

The concern over the saturated soil and the need to put in a wall in addition to the work regarding the drainage to the north and south, would require a complete soil analysis to determine if the "wall" was actually needed.

Rowe reviewed the reports of Richard Ayers, a Conservation District Technician (Exhibit C) and Thomas Wolanski, a civil engineer with Clough Harbour Associates (Exhibit D). He noted that Ayers also recommended drainage, use of a run-off pipe and a catch basin to divert surface water run-off. Rowe compared Ayers' report and indicated that you don't build a wall unless you really understand what the soil analysis is. Then after the soil analysis comes back, it can be determined if the soil is stable enough to support the structure. That is really the purpose of the wall, to stabilize any impending failures or slides that would occur in the future. However, in the petitioners' case the drainage work above had not yet been done.

Wolanski's report also pointed out the need for a diversion of water and drainage with an anticipated cost of between $20,000.00 and $40,000.00. Rowe did not disagree with this estimate, feeling it was realistic.

However, Rowe stated that a soil analysis (geotectonical investigation) might show that a wall may not be needed to be as high or as long. Therefore, the cost could be 50% higher or lower than $250,000.00. Rowe indicated that this was the gross estimate, but he also felt the petitioners should budget $225,000.00 for the retaining wall.

Rowe indicated that Healy and Aldridge, a Rochester firm, was going to be used to do the soil analysis as they are geotectonical engineers. However Mr. Markham had not paid for it and it had not been done yet. Tentatively they are going to meet on site with Mr. Markham this Spring.

Richard A. Ayers, a Conservation District Technician employed with the Yates County Soil and Water Conservation District for the past eighteen years testified to his experience in offering technical services and recommendations on erosion and drainage matters to individuals, municipalities and farmers. He is certified in professional erosion and sediment control including storm water erosion control regarding slopes and slope stabilization, especially, slopes immediately adjacent to the Finger Lakes.

He was asked by the Jerusalem Town Supervisor to review and comment on the drainage and erosion issues on the petitioners' property. Mr. Ayers went to the petitioners' property and also reviewed the Rowe and Wolanski reports and then issued his opinion (Exhibit C).

Ayers opined that the petitioners' property definitely had drainage related problems and they had made attempts to correct these issues. He noted that modifications to the site have directed drainage to the home site. In terms of the driveway, Ayers was in agreement with Rowe's recommendations of catching and containing the water and diverting the water coming down the driveway away from the home site. He also concurred with Rowe's recommendations that an outlet pipe would carry the run off to a stable outlet somewhere downslope.

While at the property, he noticed yard debris in the ditch located on the west side of East Bluff Drive which he discussed with Mr. Markham at the time. Ayers opined that yard debris in this ditch could affect the drainage erosion with the potential of flooding.

Ayers concurred with Rowe and Wolanski regarding the recommendation of a soil analysis. However, he believed that the soil analysis would show a much better slope stability after the diversion and drainage work was done up slope; making a retaining wall unnecessary. However, he was not an expert in cost estimating, therefore he had no reason to disagree with Wolanski's opinion of a cost of $20,000 to $40,000 to complete the drainage/erosion work and soil analysis. Furthermore, he stated that whether or not the bank is spring fed cannot be [*4]confirmed until a soil analysis is done and the drainage work up slope is completed. He also deferred to an engineer regarding retaining wall construction.

Ayers observed some slope failures on the Markhams' property and that the slopes along parts of East Bluff Drive seem to have a high potential for slope erosion.

John Robert Fladd testified on behalf of the respondents as an expert in drainage and erosion issues. He operates Fladd's Creative Stone Construction and Landscaping, specializing n the construction of retaining walls along beach fronts, mortar and concrete sea walls, site preparation and drainage. In fact, he is familiar with the petitioners' property in that he performed some work there in the past. He opined that the Markhams' property is one of steepest and most difficult properties he has experienced.

Part of Fladd's work includes steep slopes in the Finger Lakes area. This necessarily involves dealing with drainage, because most of the properties are on steep sites or hillsides. However, even if they aren't on steep sites, drainage is an important part of maintaining structural integrity on a project.

About eight or nine years ago, Fladd built a series of retaining walls from the base of petitioners' property. There was a lot of bare soil and he had to stabilize the slope using what he called dry laid border walls. His also planted the hillside with crown vetch, some trees and established walkways down to the beach. Mr. Fladd indicated that this did not work. Petitioners and Fladd also talked about more trees being planted because a lot of trees were removed when the house was built. In August 2003, a landslide from the hillside (Exhibit 1, p.46) occurred. Fladd was called by the petitioners to work on it. Fladd removed the dirt out of the lake and built a retaining wall (Exhibit 1, p. 29). This required the widening of the existing pathway to the lake so equipment could access the area, then excavating for the footings and constructing a mortar wall on the bottom with a couple of dry stacked walls just above, in an attempt to stabilize the bank. Then in 2005, Fladd redid the stonework; replaced some rotting wood at the house and installed a small grate drain halfway down the driveway.

Mr. Markham has discussed possible future work with Fladd, including drainage work at the top section of the driveway because there still is erosion during extreme rain events. This work would involve diverting the water to the north, towards a gully that runs near the property line with a large grade drain at the top of the driveway.Possibly a couple of catch basins would also be located at midway and lower locations in the driveway. (T.T. pp. 210-211)

Fladd felt that the work would, at least on the mouth of the driveway and driveway, help a great deal to relieve the erosion issues. However, he hadn't really done any drawings or specific designs, so he couldn't say that it would completely solve the problem, but at least it was the first place to start.

Fladd opined that once the water was diverted away from the site, as he described, he couldn't see how a retaining wall would help the driveway mouth. However, he couldn't say whether or not a retaining wall on another part of the property would be of any help as he was addressing the driveway mouth drainage problem specifically.

Today's cost for a wall of the type Fladd put in (Exhibit 1, p. 29) is approximately $75.00 to $80.00 a square foot. However, the price would still depend on the site and the amount of excavation and degree of difficulty to access, again noting that the petitioners' property is about as difficult as it could get.

Fladd opined that a cost of between $20,000.00 and $40,000.00 to do the drainage/catch basin work and soil analysis would be reasonable. He also indicated that once the recommended drainage work was completed, there would be no further dryrot on the areas previously repaired by Fladd, to wit, replacement of plywood in the bathroom, and a decorative beam (caused by water off the house).

Thomas Wolanski, a licensed New York State civil engineer, currently employed with Clough Harbour and Associates, was called by the respondents. Mr. Wolanski's expertise is in the area of erosion, storm water/sediment control and the handling of water on property with slopes and steep topography; including the design of solutions for steep terrain on residential and [*5]commercial sites.

Wolanski testified that in the design of any sloped type project, he attempts to collect and minimize the sheet flow of drainage coming down any hillsides as much as possible; especially from areas that have been disturbed by collecting the water upstream of those disturbed areas, piping it and conveying it to a stabilized point in which one can dissipate the energy created by the water and take it to a stable environment.

Wolanski was hired by respondents to inspect the plaintiffs' property. His report (Exhibit D) was based on review of the Ayers and Rowe reports; conversations with the building inspector, Fladd and observations of the site from both the road and Keuka Lake.

When he looked at the property, he observed yard debris in the ditch in the right-of-way to the east side of East Bluff Drive. He stated that this debris could tend to block up the pipe going under the roadway, potentially allowing the water to travel over the road onto the property, instead of going through the pipe system to the outfall. This situation could have a potentially negative impact on any downstream area due to the uncontrolled water coming over the roadway.

He felt that the Ayers and Rowe reports were generally consistent with his observations in that there was a need for drainage improvements to control the overland flow of drainage over the property. Wolanski agreed there is a need to make those improvements and try to minimize any sheet flow or surface flow of water over the areas of construction.

He also agreed with the Rowe and Ayers' assessments that the work to be performed should include the diversion of surface water runoff from both the driveway, landscaping and roof drains. This would include reference to the New York Standards and Specifications for erosion and sediment control that any drainage collected should be taken to a stable bed and bank situation; and in this case, due to the slope, the water would be taken to the bottom of the slope and to the lake or as close as possible to the lake by means of an enclosed pipeway drainage system, rip-rap channels or other structural stabilization methods.

He opined that the impact of the current site drainage is likely the largest contributing factor to the existing slope instability in that it is one of the paramount issues one needs to control as quickly as possible on any site, prior, during and after construction. Therefore, maintaining those diversions to minimize water coming across any areas that have been moved due to any construction activities is extremely important.

Wolanski opined that once the surface drainage issue is resolved, including controlling any concentrated damage from pipes discharging on the side of the hill, the future slope instability will be minimized or resolved because the variables will have been minimized thus resulting in a very good chance that any additional retaining wall structures or remediation methods would be unlikely. However, the drainage remediation should be implemented as soon as possible.

Once done, the drainage should be monitored on a regular basis by the homeowner and possibly an engineer on a yearly basis.

Wolanski also testified that if there were some future embankment problem or need for a retaining wall, one would first need to go through a geotectonical analysis of the site to determine where the most stable bedrock, or in this case shale (from the Ayers report) exists and where soil layers exists on top of them. The geotectonical analysis would indicate what is a stable slope with that soil characteristic on the site. Then it could be determined what areas, if any, are in need of remediation, and a design to specifically address that area could be implemented.

Wolinski opined that the cost estimate for the drainage improvements and soil analysis (geotectonical investigation ) would be between $20,000.00 to $40,000.00.

Wolanski opined that if a retaining wall was required he notes Rowe's report indicates an estimate of $80.00 per vertical foot. However, Wolanski also pointed out that there are a number of different ways to build retaining walls and there are several different retaining walls, shapes or types for the plaintiffs' property, to wit: everything from a timber or a stone laid up wall; a mortared stone laid up wall; pre-cast units, or the best version, reinforced concrete. The later runs in the neighborhood of $60.00 to $70.00 a square foot. [*6]

Wolanski felt that Mr. Rowe's cost estimate of $80.00 per vertical foot was a bit high since, for example, uni-lock walls run between $30.00 to $40.00 a square foot.

He also felt that Rowe's estimate of the length and height of the wall seemed somewhat arbitrary and did not provide any facts relative to a plan, in view of where it is required. Wolanski could not "fathom" the need for that size of a retaining wall on the site, once the recommended water control and testing was performed. Finally, he opined that there was insufficient evidence to justify the need, size or placement of a retaining wall; and it fact, there were more efficient and economical means of slope stabilization in existence which should be utilized.

On cross-examination, Wolinski disagreed with Rowe's report concerning the steep slope which required a retaining wall of the size recommended. Wolanski stated that Rowe "had no basis, and no engineering and he even states in his report, it would require a full engineering and geotectonical analysis to determine what is actually required" (T.T. p. 376). On the other hand, Wolinski's report states that the design of well-engineered drainage systems will mitigate the potential of future slope instability. However, he could not state with certainty that his drainage fix would solve all the problems, but based on his experience taking away the drainage relative to sheet flow; collecting to conveying the drainage water over the slopes would definitely reduce and mitigate potential future slope instability. Even though the bank will still be exposed to moisture from rain and absorption, the angle of the front bank is significant and he had observed the presence of previous retaining walls and a slump in the bank.

Edward C. Trenholm, a certified general appraiser, testified on behalf of the petitioners and with respect to his appraisal of the subject premises (Exhibit 1).

He walked the property and noted that the respondent's appraiser, James A. Legrett, found less acreage than Mr. Trenholm. He described the foundation of the house as poured concrete. He noted the cedar siding and wood framing, double hung windows, and that the roof consisted of a series of interconnected gables with wood joists. The basement, consisted of 1,474 square feet with 667.25 square feet of below grade finished area. The finished basement rooms include a sitting room, recreation room, wet bar, bedroom and bathroom. Basement furnishings include ceramic tile, finished floor, walls and ceilings. He did not include the finished basement area in his calculations of gross living area because it is below grade. There are 440.50 square feet with 8' concrete block sidewalls in the garage, serviced by an automatic garage door opener. Insulation consists of R-19 fiberglass sidewalls insolation, R-30 fiberglass ceiling insolation and R-19 un-faced insolation in the basement floor joist area. There is heating and central air conditioning, a 200 amp 3 phase service, domestic plumbing. The kitchen consists of oven/range, refrigerator, dishwasher and disposal. There is no clothes washer or dryer. The upper level consists of 574 square feet of gross living area which consists of a sitting room, two bedrooms and one bathroom. (see Exhibit 1 pgs. 31-33).

In assessing the over-all condition of the subject building improvements, Mr. Trenholm considered the condition of the structure and mechanical components, aesthetics and the utility of the property. He states that the subject is not an "estate" type property or high level property, in that: 1) It lacks future expansion potential due to topography of the subject and surrounding terrain; 2) it lacks essential utilities since it has no sewer, no public water, no natural gas, no well, or fresh water source. The only running water is that which is pumped untreated directly from Keuka Lake; 3) the driveway is unpaved, having a dirt and gravel surface; 4) the property lacks amenities such as guest changing rooms, boat house, ample sleeping space (only 3 bedrooms); 5) the subject kitchen has average cabinetry and Formica counter tops and the subject has no formal dinning area. Therefore, he rates the over-all condition of the building as average/fair. But, on cross examination, he admitted that the Markham's house size of 2000 square feet was within the range of the typical 1500 to 2500 square foot size of year round homes in the Town of Jerusalem. (Transcript p. 108).

Topographically, the parcel is deeply slopped from East Bluff Drive approximately 25 feet to a small level area in the central portion of the parcel where the house is situated. The lake [*7]frontage is reached by 86 steps leading from the house to lake frontage. The topography from the road to the house to the frontage is steeply sloped at a 75 degree plus or minus angle, dropping approximately 50 feet to a stone surfaced narrow frontage (5 feet to 6 feet in depth). The utility of the lake frontage is poor due to the steep slope from house to frontage and the 50 foot drop from house to frontage.

The slope frontage to the lake has been professionally landscaped which contributes to the value of the subject property. However, the landscaping has suffered excessive damage (therefore value diminution) due to surface and sub-surface erosion. The cost to cure the damage caused by erosion is $225,000.00, according to the engineering survey provided by Paul J. Rowe. Other damage related to the erosion and its value diminution is discussed in the "physical/functional and external obsolescence" portion of Trenholm's appraisal (T.T. pp. 48-50). Mr. Trenholm observed the effect of erosion but he was not present when it occurred.

The six plus acres located on the west side of East Bluff Drive are steeply sloped east to west with gullies and ravens, with dense underbrush and heavy forestation. Trenholm opined that this back land has little or no utility for residential or recreational purposes, nor does it have potential for future expansion due to its topography, dense underbrush, heavy forestation and inadequacy of public utilities. However, on cross- examination, he admitted that subdivision would be possible under the Town of Jerusalem Zoning Ordinance. (T.T. p. 105)

Mr. Trenholm points out a minor difference in the frontage found by him versus Mr. Legrett with Trenholm finding 215 feet and Mr. Legrett saying 211 feet. Additionally, in measuring the interior and exterior, his measurements differed somewhat from Mr. Legrett's (T.T. pp. 44-46).

Trenholm's analysis is that the petitioners' house is approximately ten years old, it is not custom built but has good quality construction while Legrett said it was of very good quality. Trenholm also noted that the only access to the basement and the below grade rooms was from an outside door.

When inspecting the first floor (T.T. pp. 56-57) he observed the living room had a slight ripple on the wood floor indicating moisture problems. In the master bath there was a substance bleeding up from the bottom of the carpet. However, he had no photographs showing either the rippled wood floor, or the carpet rot. (T.T. p. 113). The kitchen fixtures were average.

Mr. Trenholm stated that the existing use on the January 1, 2004 valuation date was single family residential, which is the property's highest and best use.

Mr. Trenholm used the sales comparison approach. To reach his conclusion of a value of $268,000 as of January 1, 2004, he applied the grid sales comparison approach, (T.T. p. 54) by using three comparables, all on East Bluff Drive, located in the same township, all with lake frontage, all fairly close to the petitioners'. Each property had the same or similar external value, similar impacting factors and similar topography of slope and frontage. He visually inspected the comparables and he adjusted the sale prices of the comparables since they were sold after January 1, 2004 and he adjusted for time value (Exhibit 1 pp. 56 & 75, T.T. pg. 73). He found between 2003 and 2004 there was an increase in the median price of approximately 27.7 %. However, the actual percent of increase or appreciation is 27.3%. Using 27.7% Trenholm's adjustment for comparable number 1, sold at $591,000.00, on September 3, 2004, was a negative adjustment of $118,200.00; comparable number 2 sold November 8, 2004 for $410,000, was a negative adjustment of $102,500.00 and comparable number 3 sold for $360,000.00 on May 13, 2004, was a negative adjustment of $37,400.00.

Mr. Trenholm made an adjustment of minus $35,600 due to "improvement obsolescence", i.e., the age and condition of the subject premises. (Exhibit 1, pg 49). He also deducted $225,000.00 for the cost to cure the slope erosion from each comparable. The indicated subject value based on comparable 1) was $244,800.00; comparable 2) $264,300.00; and comparable 3) $293,500.00. His final conclusion was that the subject property was worth $268,000 (averaged comparables is $267,533.00) as of January 1, 2004. (Exhibit 1, page 71). It [*8]is noted that the assessed value for 2004 was $490,000.00 and without the $225,000.00 deduction for the cost to cure slope erosion the petitioners' average value was $492,533. The average value without deducting for erosion cure and "improvement obsolescence" would be $528,133.

On cross-examination, Mr. Trenholm indicted that he assumed no hidden or unapparent conditions of the property when doing his appraisal (Exhibit 1 pg. 2, the penultimate paragraph). Nor did any of his comparables have land on both sides of the road.

Mr. Trenholm is not a licensed engineer and he did not speak with Rowe, Ayers, Wolanski or Fladd regarding cost to cure, but based his opinion as to the cure for erosion of $225,000.00 on Mr. Rowe's report and he did not consider lesser remediation costs or methods. Trenholm also stated that if it was shown that the work needed to fix the erosion problems on the property only cost $20,000 to $40,000, he would increase the value of the subject premises accordingly. (T. T. pp. 129-130).

Respondents asked James Legrett, a New York State certified residential real estate appraiser to appraise the petitioners' property and estimate the market value as of January 1, 2004. In order to do this, he inspected the property, gathered data and information relative to the subject premises as it pertained to the information contained within the Town's assessment of $490,000. He gathered comparable sales in the Town of Jerusalem over a two year period. He verified the data and the terms of sale by getting information from area realtors, brokers, and the town assessor. He did a drive by of the Markhams' property, took photos, made notes relative to the comparability to the subject property with the comparables and then analyzed the data gathered to estimate the value of the subject premises. He also entered the grounds and the house.

In performing his analysis Mr. Legrett used two approaches, the cost approach and the sales comparison approach. Based on the sales comparison approach he estimated the market value of petitioners' property was "well supported" at $620,000.00 (Exhibit H, pg 1) and by his cost approach he valued the property at $646,000.00 as of January 1, 2004 (T.T. pp. 259-263). The average of Legrett's four comparables would be $655,925.

Mr. Legrett indicated that the market approach is the best method of evaluation given an active market for residential waterfront property, but he also used the cost approach (T.T. p. 39). He did not agree with Mr. Trenholm (Exhibit 1, pg. 8) that the cost approach should be disregarded. Legrett thought the cost approach is very applicable for a home of the age of subject property and the cost approach is extremely relevant in providing additional support to determine the market value estimate.

Legrett noted that none of the realty located on the southern portion of East Bluff Drive has access to public water or sewer, which is typical of this section of Keuka Lake and other Finger Lakes and for homes on a steep bank, sewage normally must be pumped, even in areas with a public sewer. (T. T. p. 243; Exhibit H, p. 16). Legrett used comparable sales with similar topography to the subject. He also determined that this was an R-1 use district, resident lakeshore area.

Lake properties in the R-1 zone in Jerusalem must have 75 feet of frontage along the shoreline. When a home is constructed below the road grade level, a total area of 20,000 square feet is required. However, this site area requirement can be fulfilled with land across the road. If a house is going to be constructed across the road, only 50 feet of lake frontage would be required. Therefore, with this configuration and the size of petitioners' property, the petitioners could subdivide their property and convey a building lot to a purchaser. (T.T. pp. 245-246).

Legrett spoke of the site improvements (Exhibit H p. 20; T.T. pp. 247-248) and also indicated the bank appears sufficiently stable to support the site and the building improvements. He specifically remarked of the view amenity which is "spectacular", if not "very good". He said that this is a property with a high bank setting, with different terrace levels. He opined that in his experience, it is not uncommon to be faced with a general degree of maintenance in relation to the stabilization of the bank. However, there is no adverse affect on the marketability due to the [*9]high bank setting of the subject. He agrees with the Wolinski report regarding the estimate of between $20,000.00 and $40,000.00 to remediate any water issues existing on the site (T.T. p. 249).

He measured 2,065 gross square feet of living area in the home and he indicated that it was complex to measure due to all of the angles involved with the house. But his measurements and Mr. Trenholm's are not that different. He indicated the lack of zone heating had no affect on marketability (T.T. p. 255), nor would the access to the finished part of the basement from the outside (T. T. p. 256) or the fact that there was no formal "changing room" (T.T. p. 252-253) adversely affect marketability.

Legrett rated the property improvements as "very good" and the condition of the property as "good" (T.T. p. 257). He spoke of the physical obsolescence mentioned in the Trenholm report (T.T. pp. 257-258). However, he did not see the carpet stain, water in the basement, warped living room floor, rotting or decaying exterior veneer, or any evidence of patio shift during his inspection (compare Exhibit 1, pg. 43).

It was his opinion that the highest and best use for the property is consistent with the current existing use of the property with respect to the taxable valuation date of January 1, 2004 (T.T. p. 259). He determined that the demand for lake front property in the Town of Jerusalem was very strong as of January 1, 2004. In this regard, he also felt that the property would have sold very quickly if put on the market on January 1, 2004. This is supported by the recent trends of development, especially in the southern portion of East Bluff Drive on mid to high bank settings. In his market analysis, he examined four lake front comparables, three on East Bluff Drive, and one on West Bluff Drive, all in the Town of Jerusalem. (See Exhibit H, p. 51). The Court notes that Legrett's comparable No. 2 is the same property as Trenholm's sale No. 3

(Exhibit 1, p. 54) to wit: 445 East Bluff Drive; and of all the properties reviewed by both appraisers, respondents' comparable No. 1 is the closest in distance to petitioners' premises.

Respondent's comparable No. 1 sold November 12, 2004 for $805,000. Legrett made no adjustment for time of sale for this, or any other of his comparables. Comparable No. 2 sold on May 13, 2004 for $360,000; comparable No. 3 sold on October 22, 2004 for $378,000; and comparable No. 4 closed on November 24, 2003 for $599,900.

Legrett in his analysis made adjustments for topography, the amount of lake frontage and total site area. (Exhibit H., p. 51). The view amenity and the availability of utilities were lumped together in arriving at a "site adjustment" (T.T. p. 67; Exhibit H, p. 51). He calculated the price per foot for lake frontage using a two tier approach: The first 100 feet, $1,600.00 per foot; with the remaining 111 plus or minus feet, at $1,100.00 per foot. In his opinion the "excess frontage" doesn't have the same price per foot as the initial 100 feet of shoreline (T.T. pp. 267-268) while Trenholm used $1,441.00 per foot for each foot of lake frontage.

As to the comparison of 445 East Bluff Drive, Trenholm made no adjustment for it being a modular home (Exhibit E), while Legrett adjusted for gross living area $75.00 per square foot. (Exhibit H. p. 51); a figure extracted from what appears to be the cost approach. As for the construction of petitioners' home in general, Legrett opined that the petitioners' house is of very good quality and would be in strong demand if placed on the market as evidenced by current listings at the time of the appraisal.

On cross-examination Legrett did agree that 6.2 plus or minus acres using the tax map and 211 plus or minus feet of lake frontage, was different than what Trenholm found. He also erred in stating that a private well was the water source, when actually the lake is the water source. (T.T. p. 292). He also did not walk the acreage on the west side of East Bluff Drive, and as to the lakeside, he looked from the road in relation to the tax map. He did thoroughly inspect the .6761 acres on the lake side of the road. But he only observed a slight degree of erosion in the gravel driveway which is typical when you have a driveway that extends below a road. However, it was not enough to effect marketability. In making his appraisal, he relied on his field notes for measurements. He saw Rowe's report before rendering his opinion, but made no [*10]adjustment for slope erosion based on Rowe's report. Nor did he make any adjustments based on Wolinski's report, although he did indicate that if it was determined that the site had a bank problem, there would be some adjustment necessary to the market value estimate (T. T. p. 306 ).

As to the structural stability of the embankment, Legrett indicated that the bank appears to be sufficiently stable to support the site and building improvements (Exhibit H., p. 20, T.T. p. 310) .

Legrett did not use the median sale chart (Exhibit H, p. 75) as Trenholm did to adjust for time of sale. Legrett stated that there was no way to know if the 53 sales used to create the median price were comparable with the petitioners' property. (T. T. pp. 348-349).

LAW

The only issue before the Court is the question of whether or not petitioners' property was over valued for tax assessment purposes. Petitioners' appraiser based his appraisal upon a market data approach using three comparable sales all adjusted to the subject premises. No consideration was given to cost or income approaches in his appraisal.

Petitioners' appraisal of the subject premises as of the January 1, 2004 valuation date, was $493,000 less the cost to cure erosion damage of $225,000.00 leaving a value of $268,000.00, without a stated allocation for land and improvements. Trenholm values all the lake frontage at $1,441 per foot while Legrett valued the first 100 feet at $1,600 per foot and only $1,100 per foot for the balance. And petitioners' appraiser does not consider the fact that the subject property is capable of being divided into another lot.

Respondents' appraisal of the subject premises as of January 1, 2004, is $620,000.00, without a stated allocation for land and improvements. Respondents' appraiser used the cost approach and market approach in rendering a market value estimate of $646,000.00 by the cost approach and $620,000.00 by the market approach. Respondents' appraiser indicated that the market approach best reflects reactions of buyers and sellers in the market place. In using the market approach he used four comparable sales, all adjusted to the subject premises. In addition, this witness gave consideration to the cost of replacement approach to support his market data analysis (Exhibit H, p. 55).

However, the respondents' appraiser did not consider the cost to cure the erosion because the proper soil tests had not been performed to determine if the cost of $225,000 was accurate. Even Legrett agreed with the various experts that remedial work could be done for between $20,000 -$40,000 . Trenholm agreed that raising or lowering the cost to cure would affect the appraised value. But, Legrett did not agree that "material obsolescence" was a factor, because the petitioners' appraiser never observed the actual conditions of the comparables, but only took the word of others to determine if there was an "age and condition" factor.

Use of the cost of reproduction less depreciation method of valuation is predicated on proof that the improvements are a speciality or unique; that the buildings are designed for unique purposes or to produce income only in connection with the business conducted in them, so that rebuilding is the sole method by which the owner can assess similar property Matter of Great Atl. & Pac. Tea Co., v. Kiernan, 42 NY2d 236; Xerox Corp. v. Ross, 71 AD2d 84. Furthermore, as an exception to the market value standard, the cost approach does not necessarily produce the true market value of the property and is usually an approach of last resort. Warren's Reed on the New York Law Real Property, Vol. 13, Tax Certiorari Valuation, §132.23.

Here, there is no proof that the subject premises or the improvements are a speciality or unique. Therefore, the Court rejects the cost approach as used by respondents' appraiser.

Petitioners' appraiser in comparing the subject premises to three parcels of Keuka Lake property recently sold in 2004, adjusted each comparison for the time of sale, location, size and shape of lots, topography, improvements, utility, zoning, age and condition (maintenance) and deducted from each subtotal $225,000 as a cost to cure erosion damage (Exhibit H, pp. 53-71). [*11]However, the Court rejects the time of sale in that the median figure of 27.7% was not accurate and no competent proof was presented that the sales used to arrive at the median figure were comparable to the petitioners' premises.

Petitioners' appraiser does state that if it were not for the erosion damage to the subject property and the $225,000 cost to cure, the subject's appraised value in his report would be nearly identical to the 2004 assessment of $490,300.

The problem with the tax assessment in the petitioners' view is that the assessed value does not consider the value diminution caused by the erosion. Petitioners consider the erosion problem as extraordinary obsolescence and argues the cost to cure extraordinary obsolescence devalues the subject property dollar for dollar (Exhibit H, p. 59).

The range of the adjusted market value based on petitioners' appraisal analysis, before deducting $225,000 for cost to cure erosion, was from $469,800 to $518,500. And after cost to cure erosion was deducted $244,800 to $293,500 (Exhibit H, p. 54).

Respondents' appraiser similarly made adjustments for proximity to the subject premises, site/view, location, type of construction, gross living area, garage, porches/patio, lake frontage. Although he made adjustments for age of the premises, he did not adjust for condition of the premises (Exhibit H, p. 51). The sales all occurred within one year after January 1, 2004, except for the fourth comparable which closed November 24, 2003.

Respondents did not adjust for time of sale nor did they adjust for cost to cure erosion damage. However, there was testimony that the respondents' expert indicated that drainage issues could be remediated at the top of the property near the road by diverting water runoff for a cost of between $20,000 to $40,000. If this were done, it would be very unlikely that there would be a need to spend the monies curing erosion damage as petitioners suggest by putting walls, etc. below the house. Legrett found a range of market value from $608,400 to $772,800 (Exhibit H, p.51) or an average of $655,925.

Petitioners' appraiser, through Rowe's report, agreed that there may not be a need for building a wall if the remedial work above was done at the estimated cost of $20,000 to $40,000. The engineers of both parties agreed that a soil geological survey should be performed to determine the soil composition which had not been done at the time of trial.

The main thrust of petitioners' argument is that the assessor failed to take into account the cost of the erosion repair in determining the value of the petitioners' property, for the value of the petitioners' property without the cost to cure the erosion damage was $492,533 as compared to the assessed value of $490,300 for 2004.

The Court determines that it may consider the cost of erosion repair in determining the value of petitioners property, but before doing so the Court must be assured that the proof of such repair is not based on speculation.

In the case of Guilderland Center Nursing Home Inc. v. Town of Guilderland Board of Assessment Review, et al, 195 AD2d 902 the petitioner was unable to explain the basis for the figures upon which he relied or to supply any independent confirmation of their accuracy, as might be provided by someone familiar with local buildings costs. The Supreme Court concluded that petitioner's evaluation evidence was speculative and thus, insufficient to demonstrate that the assessor's evaluation was erroneous.

RPTL §302(1) provides that the condition of the premises on the taxable status date shall be used to determine the taxable status of a parcel.

"The cardinal principle of property valuation for tax purposes, set forth in the State Constitution, is that property [a]ssessments shall in no case exceed full value' (NY Const., art XVI, § 2; see W.T. Grant Co v Srogi, 52 NY2d 496, 512, 438 NYS 2d 761, 420 NE 2d 953). As this court has stated, the ultimate purpose of valuation *** is to arrive at a fair and realistic value of the property involved' (Matter of Great Atl. & Pac. Tea Co., v Kiernan, 42 NY2d 236, 242, 397 NYS 2d 718, 366 NE ed 8080." Commerce Holding Corp v Board of Assessors of the Town of Babylon, 88 NY2d 724, 729. (1996).

"In view of this market-oriented definition of full value, the assessment of property value [*12]for tax purposes must take into account any factor affecting a property's marketability." Id., 729.

The Commerce Holding case was concerned with an industrial property that was environmentally contaminated, and subject to CERCLA, "Comprehensive Environmental Response, Compensation and Liability Act of 1980". The Town argued that the lower Court erred in reducing the assessment to account for environmental contamination, and that if such should be taken into account, the method employed by the petitioner was incorrect.

The Court of Appeals ruled that contamination should be considered in valuing the property for assessment purposes, and the method employed to account for such contamination was proper. This method involved deducting from the value of the property in an uncontaminated state the total remaining cleanup costs in each year, as compared with the actual amount expended in each year.

In view of the Court's ruling in Commerce Holding, it makes sense that valuation of the petitioners' property in the instant case would entail adjustments, to the extent proven by the petitioners, for the precarious and fragile condition of the improvements, due to the steep slope and lack of erosion control on the site. Certainly, as in Commerce Holding, such condition of the premises would effect the market value.

While the Court must determine the market price in a tax certiori proceeding, there is no fixed method for determining that value. Mtr of Allied Corp v Town of Camillus, 80 NY2d 351.

"Generally, where environmental contamination depresses a property's value, that contamination must be considered in a property tax assessment, and a flexible approach to valuation is permitted during the trial of such cases." Landau v Town of Carmel, 236 AD2d 403, 403-404 (citations omitted) (2nd Department, 1997).

It should be noted that the condition must have existed as of the taxable status date. Spiegel v Board of Assessors, 161 AD2d 627.

Turning to the facts presented herein, there is a disagreement between the parties' experts as to the extent of the problem posed by the topography of the petitioners' parcel. Petitioners' expert suggests that a retaining wall is necessary, because he suspects that besides the obvious run off issues, readily observable by examination of the surface of the land, there is also a problem posed by the lack of the soil on the slope to absorb and retain water, and increased water on the property due to hidden springs. These problems are suspected, but can not be confirmed without a soil analysis. As of the date of trial, no such soil analysis had been performed, for reasons unclear from the proof presented.

Regardless, both petitioners' and respondents' experts agreed that a soil analysis would be of value to determine the extent of the problem, if any, and the extent of any remedies needed to fix the problem.

Given the state of the proof presented, the Court concludes that other than the work recommended by respondents' expert to guide the surface run off in a less damaging manner, any other suggested work is merely speculation. Therefore, the Court will not include such work in its consideration of the value of the petitioners' premises for 2004.

The Court must first decide if the petitioners have overcome the presumption of the validity of the tax assessment, by offering substantial evidence to the contrary. F.M.C.

Corp. v. Unmack, 92 NY2d 179. The substantial evidence standard is a low threshold, requiring the petitioners to offer evidence based on sound theory and objective data rather than on mere wishful thinking.

Upon consideration of the appraisals and testimony at the hearing, and all the proof presented, the Court finds that the petitioners have overcome the presumption of correctness of the assessor's valuation and assessment of the subject premises, by coming forward with proof to the contrary in petitioners' market data analysis. (People ex rel. Manhattan Ry. Co. v. Baker, 146 NY 304; Mobile Oil Corp. v. Tax Commissioner of City of New York, 60 AD2d 910; People ex rel. Wallington Apartments v. Miller, 288 NY 31). But, due to the foregoing the Court does not adopt the basis, adjustments, and calculations of petitioners' appraiser as the market value of the subject premises on January 1, 2004. [*13]

Based on all the evidence presented concerning the 1087 East Bluff Drive property, the Court rejects petitioners' appraiser's downward adjustment for cost to cure erosion, age and condition.

The Court finds that respondents' appraiser's evaluation of the subject premises based on the market approach is the best proof of the value of the petitioners' premises, with adjustments for the cost of diverting the water run off in the amount of $40,000.

The Court also finds that the market value of the subject premises (1087 East Bluff Drive) as of January 1, 2004 was $580,000 but since the respondents assessed the property at $490,300 the Town is bound by the assessed amount. 24B Carmody-Wait 2d §146:139, citing People ex rel. City of New York v. Voris, 237 NY 569; Board of Ed. of Central School Dis. No. 1 of Town of Ontario v. Parsons, 61M2d 838; Village of Pelham v. NYS Bd. of Equalization and Assessment, 208 Misc. 201.

Upon the foregoing findings of fact and conclusions of law, the Court determines that the 2004 value of the subject premises on the taxable status date of January 1, 2004 was $580,000 and because said premises was assessed on January 1, 2004 for $490,300 the Town is bound by that amount.

The entry on the 2004 assessment roll of $490,300 for the petitioners' property did not exceed the full value of said property and said rolls should not be changed. Respondents to have judgment with no costs and disbursements of this action.

Any motions upon which the Court reserved decision during the trial herein, not consonant with these findings of facts and conclusions of law are denied.

The foregoing constitutes the Opinion and Decision of this Court.

Counsel for Respondents to submit judgment.

Dated: June 23 , 2006.

________________________________

W. Patrick Falvey

Acting Justice Supreme Court

Yates County