Matter of Hannaford Bros. Co. v Board of Assessment Review of the Town of Schodack
Annotate this CaseDecided on September 29, 2011
Supreme Court, Rensselaer County
In the Matter of the Application of Hannaford Bros. Co., Petitioner,
against
Board of Assessment Review of the Town of Schodack and Assessor of the Town of Schodack and the Town of Schodack, Respondents.
226262
SEGAL, GOLDMAN, MAZZOTTA & SIEGEL, P.C.
(Paul J. Goldman, Esq., of Counsel)
Attorney for Plaintiff
9 Washington Square
Albany, New York 12205
THE LAW OFFICES OF ROBERT L. BEEBE, LLC
(Robert L. Beebe, Esq. and Scott M. Ronda, Esq., of Counsel)
Attorney for Defendant Town
514 Vischers Ferry Road
Clifton Park, New York 12065
McNAMEE, LOCHNER, TITUS & WILLIAMS, P.C.
(David J. Wukitsch, Esq., of Counsel)
Attorneys for the School District
677 Broadway Albany, New York 12207
Michael C. Lynch, J.
By Order to Show Cause (Lynch, J.) initially returnable July 8, 2011, petitioner seeks leave to file an amended appraisal pursuant to Uniform Rule 202.59[h] and an order striking so much of the appraisal filed by respondents based upon the reproduction cost new less depreciation (herinafter RCNLD) methodology (see Matter of General Electric Co. v. Assessor of Town of Rotterdam, 54 AD3d 469,471, footnote 2). Respondents oppose all aspects of the application.
The case background is discussed in a prior ruling by the Court (32 Misc 3d 1215[A]).
Pertinent here, the property consists of a warehouse and distribution facility constructed in three phases of approximately 581,000 square feet, 43% of which consists of freezer or refrigerated space (see Exhibit "B", p. 2). Appraisals were filed by March 25, 2011 and the case is scheduled for a bench trial commencing October 19, 2011.
The Court may authorize the filing of a supplemental report "upon good cause shown" (Rule 202.59[h]). Here, petitioner seeks to file a "supplemental appraisal update" (see Exhibit "A") to (a) add as a comparable sale a June 2011 sales transaction involving a 194,000 square foot manufacturing and warehouse facility in Columbia County, New York, referred to as the "Kaz Facility" and (b) include an analysis of the 2006 sale of the 696,000 square foot former Shop Rite warehouse and distribution facility in Orange County, New York, identified in respondents' appraisal (see Exhibit "B" at pp. 114-115) and the 2010 sale of a portion of the Shop Rite facility included in petitioner's appraisal (see Exhibit "D"). Petitioner supports the application through the affidavits of its appraiser, W. Douglas Alvey, who explains the transactions involve comparable sales relevant to the valuation issue presented, but do not change the final opinion of value or present a new appraisal theory.
While respondents dispute the comparability of the Kaz facility, the Court finds petitioner should be allowed to update the appraisal with this recent transaction, particularly given the adjournment of the trial date into October (see Matter of Town of Guilderland [Pietrosanto], 267AD2d 837, 838; Kashou Enterprises, Inc. v. Assessor of the Town of Union, 26 Misc 3d 1231[A]). The Court reaches the opposite conclusion for the Shop Rite parcel. As noted above, petitioners included the 2010 Shop Rite sale in their appraisal. The proposed [*2]supplemental report states that the 2006 sale was "discovered" after the original appraisal was completed on September 1, 2010 — presumably upon review of respondents' appraisal which included the 2006 transaction (see Exhibit "A" "Update Overview"). "It has been held that inadvertence or oversight is not good cause" (Salesian Society, Inc. v. Village of Ellenville, 98 AD2d 927, citing Matter of Consolidated Edison Co. V. State Bd. of Equalization & Assessment, 83 AD2d 355, aff'd 58 NY2d 710). Given that petitioner included the 2010 transaction in their appraisal, it is difficult to find "good cause" for petitioners failure to also include the 2006 transaction. With the appraisals having been exchanged, respondents understandably complain that petitioner is utilizing the supplemental report as a rebuttal mechanism. As both parties recognize, the 2006 transaction may be addressed through direct and cross examinations of their respective experts. Accordingly, petitioner's application to serve a supplemental report is approved only to the extent of including the June 2011 sale of the Kaz facility — provided such report is served and filed on or before October 7, 2011.
Next, petitioner contends that under controlling Court of Appeals precedent the subject property is not a specialty property and thus respondents are precluded from utilizing the RCNLD methodology (see Matter of Allied Corp. v. Town of Camillus, 80 NY2d 351, 356-357; Matter of Great Atl & Pac Tea Co v. Kiernan, 42 NY2d 236, 240). Respondents counter that the application is premature and that the viability of the appraisal must necessarily await the trial testimony (see Matter of Town of Guilderland [Pietrosanto] 267 AD2d 837, 838).
Petitioner correctly asserts that the RCNLD methodology is generally limited to the valuation of properties deemed "specialties" (see Matter of Saratoga Harness Racing v. Williams, 91 NY2d 639, 645; Matter Lehigh Portland Cement Co. v. Assessor of Town of Catskill, 263 AD2d 558, 560). The Court of Appeals has defined a "specialty" property as one "which is uniquely adapted to the business conducted upon it or use made of it and cannot be converted to other uses without the expenditure of substantial sums of money" (Matter of Great Atl. & Pac. Tea Co. v. Kiernan, supra 42 NY2d at 240 [citations omitted]). In Allied Corp., the Court of Appeals further explained as follows:
"There are generally four criteria for determining whether a specialty
exists: (a) the improvement must be unique and must be specially built for the
specific purpose for which it is designed; (b) there must be a special use for
which the improvement is designed and the improvement must be so specially
use; (c) there must be no market for the type of property and no sales of property
for such use; and (d) the improvement must be an appropriate improvement at
the time of the taking or assessment and its use must be economically feasible [*3]
and reasonably expected to be replaced " (see Allied Corp. v. Camillus, supra.
at 357).
In their memorandum of law, respondents have misquoted the third component of the Allied Corp., criteria quoted above, by describing the standard as "no easily ascertainable market" (Allied Corp., supra at 357). The problem with this argument is that respondents omitted the last word from the quote. The sentence actually reads as follows: "Such properties, because of their use, have no easily ascertainable market value" (Id, emphasis added). The point made is that for a property to be considered a "specialty" "there must be no market for the type of property and no sales of property for such use" (Id).
More recently, in Matter of General Electric Co. v. Assessor of Town of Rotterdam (54 AD3d 469), the Third Department has "deemed the use of the RCNLD method to be at best, suspect' when there is data available to support a sales comparison approach" (Id at 473 [citations omitted]). The Court further explained that "we have countenanced the use of the RCNLD method even for properties that are not specialties if there is insufficient market information, other methods have been rejected as reliable and Supreme Court has taken appropriate cautionary measures to avoid overvaluing the property" (Id).
Petitioner's application is essentially a motion in limine (Matter of PCK Dev. Co., LLC v. Assessor of Town of Ulster, 43 AD3d 539). Citing to the above authority, petitioner points out that respondents' appraisal includes a valuation based on a sales comparison approach — an approach which petitioner maintains is legally inconsistent with the RCNLD method. As described by respondents, petitioner's appraisal includes 5 comparable sales, with ten supplemental sales (see Memorandum of Law of Robert Beebe, Esq. at p. 4). A review of respondents' appraisal shows that their appraiser, Pamela Brodowski, was able to complete two sales comparison approaches: one for large warehouse/distribution sales, and a second for smaller freezer/refrigerated warehouse sales (see Exhibit "B", p. 102). The appraisal also includes a cost approach valuation. In the reconciliation of the two methods, Ms. Brodowski explained that "In that there are no truly comparable properties to the subject, this approach was only used to provide an alternative method of valuation (see Exhibit "B", p. 157). She previously observed that "the perfect comparable for the subject does not exist in the market" (Exhibit "B", p. 102). By comparison, the appraiser opined that "the Cost Approach was considered an excellent indication of the property's market value" (Id).
While it is evident respondents' appraiser preferred the cost approach, that is not the governing standard. That both appraisers were able to complete a [*4]valuation using comparable sales confirms, by definition, that the subject property is not a "specialty" property (see Matter of Niagara Mohawk Power Corp. v. Assessor of Town of Geddes, 92 NY2d 192, 197). Moreover, the standard is not whether there are "truly comparable properties" as stated in the reconciliation or whether a "perfect comparable" exists. As explained by the Court of Appeals in Matter of FMC Corp. [Peroxygen Chems Div.] v. Unmack, 92 NY2d 179, "[b]y its very definition, a comparable sale need not be identical to the subject property. A comparable sale need only be sufficiently similar to serve as a guide to the market value of the [subject] complex, notwithstanding differences between these comparables and the [subject] property" (92 NY2d at 189 [internal quotation and citations omitted]). Here, both appraisers identified sufficiently similar comparables in formulating a valuation.
Given the above, the Court hereby grants petitioner's application and precludes respondents from presenting evidence at trial based on the RCNLD valuation (see Kashou Enterprises, Inc. v. Assessor of the Town of Union, supra 26 Misc 3d 1231[A]).
This Memorandum constitutes the Decision and Order of the Court. This original Decision and Order is being returned to the attorney for petitioner. The below referenced original papers are being mailed to the Rensselar County Clerk. The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the provision of that rule regarding filing, entry, or notice of entry.
DATED:September 29, 2011
Albany, New York
______________________________________Michael C. Lynch, J.S.C.
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