Matter of Richmond County Country Club v Tax Commn. of City of N.Y.

[*1] Matter of Richmond County Country Club v Tax Commn. of City of N.Y. 2007 NY Slip Op 52613(U) [24 Misc 3d 1228(A)] Decided on July 18, 2007 Supreme Court, Kings County Pesce, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 18, 2007
Supreme Court, Kings County

In the Matter of the Application of Richmond County Country Club, Petitioner,

against

The Tax Commission of the City of New York and the Tax Commissioner of Finance of the City of New York, Respondents.



90002/06

Michael L. Pesce, J.

Respondents The Tax Commission of the City of New York (The Tax Commission) and The Tax Commissioner of Finance of the City of New York (The Tax Commissioner) (collectively respondents) move, pursuant to CPLR 3212, for summary judgment dismissing the petition of Richmond County Country Club (petitioner).

Petitioner Richmond County Country Club is a tennis club, also known on the Tax Map of the City of New York as Staten Island (borough 5), block 884, lot 1 (Block 884) and Staten Island, block 889, lot 1 (Block 889). At one time, both parcels were classified as Tax Class one (residential property) but, in the 2006/07 tax year, they were reclassified to Tax Class four (all property excluding residential property, most apartment buildings, and utility real property, but including commercial property).

On or about February 27, 2006, petitioner filed two "Applications for Correction of Assessment" with the Tax Commission for Block 884 and Block 889 on the grounds that the subject parcels were misclassified as Tax Class four for the 2006/07 tax year, and should have been classified as Tax Class one. Specifically, the applications alleged that the properties were "zoned residential and therefore should be reclassified." The applications were forwarded to the Department of Finance, which assigned Richard Nieves, a City Assessor, to inspect Blocks 884 and 889. Mr. Nieves visited the parcels on March 20, 2006. Regarding Block 884, he states in his affidavit that:

"a permanent improvement had been built on the lot, specifically, an equipment and tennis shop of over 1,000 square feet. This building is not utilized for residential purposes. [*2]Through the window of the tennis shop I observed tennis racquets, t-shirts, and other items. I also observed that the lot is improved by eight tennis courts."

Mr. Nieves concluded that "because the improvements [were] being utilized for commercial purposes, the property had to be reclassified as Tax Class 4. According to Mr. Nieves, "[a]s designated by the Department of Finance, Tax Class 1 is reserved for one, two and three family residential real property and vacant land residentially zoned." He further states that "[t]he tennis courts, tennis shop and other equipment preclude its classification as Tax Class 1. In general, tennis courts used for commercial purposes are usually classified as Tax Class 4."

Mr. Nieves prepared a "Department of Finance Reclassification Inspection Report for Submission to the Tax Commission on an Application for Correction in 2006," (reclassification report) dated March 21, 2006. Since there were eight tennis courts and an equipment and tennis shop on the premises, and no residential use, he recommended denying petitioner's application for reclassification. After Mr. Nieves' inspection of Block 884, he prepared a "City of New York Department of Finance Property Division Request for Review Worksheet (the Worksheet)," dated March 21, 2006, wherein he indicated that the inspection revealed a new tennis shop and stated, based on that discovery, that the assessed value of the property had to be raised to reflect the new structure.

As to Block 889, Mr. Nieves observed that this lot was improved by two tennis courts. Although the lot had previously been designated Tax Class one, vacant land residentially zoned, he stated that tennis courts were usually classified as Tax Class four, "therefore, the subject lot had to be classified as a Class 4." Mr. Nieves prepared a reclassification report for Block 889, and recommended that petitioner's application for reclassification be denied because there were tennis courts on the lot.

According to the City, upon notification that Block 884 and Block 889 were to continue to be classified as "vacant parcels," petitioner filed the instant petition, alleging that Blocks 884 and 889 are vacant land residentially zoned and therefore should be classified as Tax Class one. Specifically, the petition, filed on or about October, 2006, alleges, among other things, that "petitioner's property has been misclassified as being in class two, three or four instead of the appropriate class for petitioner's property" which "results in an incorrect allocation of the parcel's [sic] assessed valuation between two or more classes . . ."

By letter dated December 11, 2006, petitioner's counsel advised the City that the subject blocks were not income producing. Counsel also contended that the blocks required reclassification under Real Property Tax Law (RPTL) § 1802(d), which provided, "in part, that vacant land outside Manhattan zoned residential shall be classified as class 1 one property."

Thereafter, on March 28, 2007, counsel for respondents visited Blocks 884 and 889. Counsel confirms that Block 884 has a parking lot, multiple tennis courts and a 1145 square foot tennis clubhouse on the premises, which, she states, is a permanent improvement to the [*3]land. Further, her description of the clubhouse comports with that given by Mr. Nieves. In addition, she states that the building also has a bathroom; a basement which houses storage, tables and chairs; a kitchen with a working telephone; and a soda machine. Counsel also viewed Block 889, which, she says, includes tennis courts.

In support of its motion for summary judgment, the City argues that both of the subject parcels are not residential and have been developed for commercial purposes as part of the Staten Island Country Club. The City also states that the main clubhouse for the Staten Island Country Club, Block 888, is classified as Tax Class four and that therefore the appropriate tax class for Blocks 884 and 889 is Class four - commercial property. The City also notes that petitioner's counsel argued in its December 11, 2006 letter that the parcels should be reclassified as a Class one property because they constituted vacant land residentially zoned, under RPTL § 1802(d).

In its memorandum of law, the City further argues that the blocks do not qualify as vacant land residentially zoned pursuant to RPTL § 1802(d), which would permit the land to be reclassified as Tax Class one. In this regard, the City notes that Block 884 consists of tennis courts, a parking lot, and an 1145 square foot tennis clubhouse, the latter of which it asserts is a permanent improvement with a commercial use. The City also states that the parcels are part of, and adjacent to, the Staten Island Country Club, which is a commercial property, and not used as a residence.

Counsel for petitioner opposes, arguing that the tennis courts at the club have existed for thirty years. Further, counsel states that the main clubhouse was once a rooming house and had "commercial application." Moreover, counsel asserts that the subject parcels have always been classified as vacant land - "[t]hey are zoned R1-1 and can only be improved by one family houses in lots of 100,000 sq. ft . . . they cannot be used commercially consistent with the zoning resolution [and] [t]o do otherwise would constitute a public nuisance . . ."

With respect to Block 884, counsel asserts that it is 133,370 square feet, that it contains a 1145.3 square foot building used to store equipment and to manage the tennis courts, and that the tennis courts are of clay composition, are "not of a permanent nature," are only used between April 15th to October 15th, and can be "easily dismantled." With respect to Block 889, counsel states that it has two tennis courts. Counsel also annexes a letter the City sent to petitioner's counsel, dated February 21, 2007, in which the City stated that Block 889 should be reclassified as a Class one property. In addition, counsel asserts that the structure on Block 884 was erected pursuant to plans filed with the New York City Building Department, which did not require a zoning variance. Counsel says that this type of building does not convert R1-1 property into R4 property or require zoning variances. Further, counsel states, albeit absent any decisional or factual support, that tennis courts do not require the filing of plans or an amendment of the certificate of occupancy, and that they are not considered permanent improvements to real estate and are consistent with residential use. [*4]

Petitioner's counsel also states that the tennis courts are not used commercially in that there is no charge by the day or hour to play on them, there is no requirement that the players enter the structure (presumably the building on Block 884) or use any of its appurtenances, that petitioner does not receive any financial benefits from the use of the courts, and that the courts are not necessary to the continued existence and activity of petitioner. Finally, counsel notes that the tax assessments for these blocks would increase by approximately one million dollars per year under the new assessment.

The City replies that petitioner does not dispute that both parcels are improved, and therefore concedes that they are not vacant. The City also asserts that since club members pay dues to become members and because the tennis courts on both blocks are part of a large commercial enterprise (the tennis club), the blocks should be classified as Class four commercial property. The City also notes that its statement in its February 21, 2007 letter - indicating that Block 889 should be reclassified as Class one property - was made in the context of settlement negotiations and does not constitute an admission.

In a letter addressed to the court, dated June 11, 2007, counsel for petitioner asserts that there is no indication that the February letter was sent for purposes of settlement, and that the City said in open court, on March 15, 2007, that it was willing to recommend to the Tax Commission that Block 889 be reclassified as Class one property. Counsel also states that petitioner is not a commercial enterprise, but a voluntary association incorporated under the Membership Corporation Law and is exempt from federal income taxes as a not-for-profit corporation (see Matter of Purpura v Richmond County Country Club, 114 AD2d 460, 461 [1985]). Counsel has also annexed an unsworn letter from an architect and a copy of the Certificate of Occupancy for the clubhouse. The architect states that clubhouse is "permitted in the current residential zone only as accessory to the Non-Commercial Club as per Use Group 4 of the Zoning Resolution [and] . . . all other structures used by the club fall under this zoning rule." The CO states that it is zoned "1" with a "Building Code occupancy group" classification of F-4.

Discussion

Pursuant to RPTL § 102(1), an "assessing unit" means "a city, town, or county with the power to assess real property, unless the city, town or county is part of a consolidated assessing unit." A "special assessing unit" is defined as an "assessing unit with a population of one million or more" (RPTL § 1801[a]). "New York City is a special assessing unit' within which all real property is divided into four classes" (Kew Gardens Rd. Associates v Tyburski, 70 NY2d 325, 330 [1987]; RPTL § 1802 [1]). The four classifications are: class one, one-, two- and three-family homes; class two, most apartment buildings; class three, utility real property; and class four, all other real property (City of New York v NY State Div. Of Hous. & Cmty. Renewal, 97 NY2d 216, 224 [2001], citing RPTL § 1802[1]). The classes are defined as follows:

"(a) all one, two and three family residential real property, including such dwellings used in part for nonresidential purposes but which are used primarily for residential purposes, [*5]except such property held in cooperative or condominium forms of ownership other than (I) property defined in subparagraphs (b) and ( c ) of this paragraph and (ii) property which contains no more than three dwelling units held in condominium form of ownership and which was classified within this class on a previous assessment roll; and provided that, notwithstanding the provisions of paragraph (g) of subdivision twelve of section one hundred two of this chapter, a mobile home or a trailer shall not be classified within this class unless it is owner-occupied and separately assessed; and

(b) residential real property not more than three stories in height held in condominium form of ownership, provided that no dwelling unit therein previously was on an assessment roll as a dwelling unit in other than condominium form of ownership; and

( c ) residential real property consisting of one family house structures owned by the occupant, situated on land held in cooperative ownership by owner occupiers, provided that; (I) such house structures and land constituted bungalow colonies in existence prior to nineteen hundred forty; and (ii) the land is held in cooperative ownership for the sole purpose of maintaining one family residences for members own use; and

(d) all vacant land located within a special assessing unit (I) which is a city other than such land in the borough of Manhattan south of or adjacent to the south side of 110th street, provided that any such vacant land which is not zoned residential must be situated immediately adjacent to property improved with a residential structure as defined in subparagraphs (a) and (b) of this paragraph, be owned by the same owner as such immediately adjacent residential property immediately prior to and since January 1, 1989, and have a total area not exceeding 10,000 square feet; and (ii) which is not a city, provided that such vacant land which is not zoned residential must be situated immediately adjacent to real property defined in subparagraph (a), (b) or ( c) of this paragraph and be owned by the same person or persons who own the real property defined in such subparagraph immediately prior to and since January 1, 2003;

Class two: all other residential real property which is not designated as class one, except hotels and motels and other similar commercial property;

Class three: utility real property and property subject to former section four hundred seventy of this chapter;

Class four: all other real property which is not designated as class one, class two, or class three." [*6]

Here, petitioner alleges that the blocks at issue should be reclassified because they constitute "vacant land outside Manhattan zoned residential." However, petitioner does not dispute that Block 884 contains a building and eight tennis courts and that Block 889 contains two tennis courts. As such, the subject blocks do not constitute "vacant land" and thus cannot be properly classified as Class one property under RPTL § 1802(1)(d). In addition, counsel for petitioner does not argue, nor does the record support a claim that the subject blocks qualify as residential property under RPTL § 1802(1)(a), (b), or ( c ). Moreover, contrary to petitioner's contention, Block 884 does not constitute vacant land because the building on that parcel is only used to store equipment and to manage the club, and because the tennis courts are clay, are used only part of the year, and can be dismantled. Similarly, Block 889 contains two tennis court, and therefore, it is not vacant land. Further, even assuming petitioner is not a commercial venture, while Class four includes commercial properties (New York Tel. Co. v Nassau County, 267 AD2d 629, 630 [1999]), "class four covers all other real property not included in the foregoing categories" (Matter of O'Shea v Board of Assessors of Nassau County, 8 NY3d 249, 254 [2007]; City of New York v NY State Div. of Hous. & Cmty. Renewal, 97 NY2d 216, 224 [2001]; Parker 86th Associates v New York, 93 AD2d 388, 391 [1983], affd 59 NY2d 986 [1983]). Finally, the City's offer to reclassify Block 889 has no bearing on this court's ruling as the offer, made during negotiations, does not constitute an admission (see Dermatossian v New York City Transit Authority, 67 NY2d 219, 225 [1986]).

In sum, the subject blocks were not misclassified as Tax Class four property.

In view of the foregoing, the motion for summary judgment is granted and the petition is dismissed.

This constitutes the decision and order of the court.

E N T E R

J. S.C.