Matter of Aylward v Assessor City of Buffalo

[*1] Matter of Aylward v Assessor City of Buffalo 2018 NY Slip Op 50458(U) Decided on March 28, 2018 Supreme Court, Erie County Walker, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 28, 2018
Supreme Court, Erie County

In the Matter of the Application under Article 7 of the Real Property Tax Law by Diana Sachs Aylward, et al., Petitioners,

against

Assessor, City of Buffalo, and the Board of Assessment Review of the City of Buffalo, County of Erie and State of New York, Respondents.



2009-3366 and 2010-2508



For Petitioner John P. Higgins:

WOLFGANG & WEINMANN, LLP

Peter A. Weinmann, Esq., Of Counsel

For Respondents:

BENNETT, DIFILIPPO & KURTZHALTS, LLC

Joel R. Kurtzhalts, Esq., Of Counsel

Maura C. Seibold, Esq., Of Counsel
Timothy J. Walker, J.

Petitioners commenced these special proceedings, pursuant to Article 7 of the Real Property Tax Law ("RPTL"), seeking to reduce the assessments of twelve (12) real properties located in the City of Buffalo, New York, one of which includes the real located at 121 Park Street, owned by Petitioner, John P. Higgins (the Property").

On March 22, 2018, the Court conducted a non-jury valuation trial, which was limited to the Property.

The following constitutes the Court's Decision and Order, as required by CPLR 4213(b) and Real Property Tax Law ("RPTL") §720(2).

THE APPRAISALS

Darrell R. Lloyd, Jr., of IREM Solutions, prepared the appraisal report submitted by Petitioner (the "Lloyd Appraisal"), and Stephen M. Maraszek, of GAR Associates, LLC, prepared the appraisal report submitted by Respondents (the "Maraszek Appraisal"). Both appraisers valued the Property for the 2009 proceeding, as of December 1, 2008, and for the 2010 proceeding, as of December 1, 2009, pursuant to RPTL §302(1). Lloyd appraised the Property utilizing the sales comparison and income capitalization approaches. Maraszek utilized the sales comparison approach. Neither appraiser valued the Property according to the cost approach.

THE PROPERTY'S SALIENT FEATURES

The appraisers agree that the Property consists of an approximate 0.08 acre site improved with a multi-family home, consisting of approximately 3,626 square feet (above grade), with a stone block basement (the "Home"). Lloyd describes the Home as containing 2.5 stories, while Maraszek describes it as containing three stories. According to Lloyd, the Home was constructed in approximately 1900. According to Maraszek, it was constructed in 1907 or 1908. While the Lloyd Appraisal states that the Home contains fourteen (14) rooms, the Maraszek Appraisal states that it contains twelve (12) rooms.

The Court is not aware as to how either appraiser is able to comment on, and confirm the number of rooms, given that they were precluded from inspecting the Home's interior (see, Matter of Aylward v. Assessor, City of Buffalo, 125 AD3d 1344 [4th Dept 2015]). Nor does the Court, as the trier of fact, have any means of confirming the actual number of rooms.

ANALYSIS

The Assessment is Presumed Valid

It is well settled that the challenged assessment is presumed correct, and Petitioner bears the burden of overcoming such presumption by coming forward with "substantial evidence" to the contrary (Matter of FMC Corp. v. Unmack, 92 NY2d 179, 187 [1998]). Substantial evidence is "evidence grounded in objective data and sound theory" (Niagara Mohawk Power Corp. v. Assessor, 92 NY2d 192 [1998]). In the context of a tax certiorari matter, substantial evidence:

will most often consist of a detailed, competent appraisal based on standard, accepted appraisal techniques and prepared by a qualified appraiser (Id., at 196).

The Comparable Sales Approach to Value

In preparing appraisals of real property, appraisers have traditionally relied on one of three methods of valuation: comparable sales, capitalization of income, and/or reproduction cost less depreciation (Allied Corp. v. Town of Camillus, 80 NY2d 351 [1992]). The comparable sales method of valuation is "generally the preferred measure of a property's value for assessment" (Id., at 356).

Pursuant to the sales comparison approach to value, an appraiser selects one or more properties that he or she deems similar to the subject property and makes adjustments to them to address the differences between them and the subject property (Latham Holding Co. v. State, 16 NY2d 41 [1965])[FN1] ; Matter of Peck v. Obenhoff, 84 AD2d 633 [3d Dept. 1981] [petitioner in a tax [*2]certiorari proceeding was incapable, as a matter of law, of establishing that the subject property was overvalued where his appraiser failed to make necessary adjustments to comparable sales]).

In comparing and adjusting comparable sales to the subject property, appraisers typically evaluate the following elements of comparison: property rights conveyed; financing terms; conditions of sale; expenditures made after purchase; market conditions; location; the use(s) to which the subject and comparable properties are being made; non-realty components of value; economic characteristics; and physical characteristics (Appraisal Institute: The Appraisal of Real Estate, 14th Ed., p. 390). Physical characteristics, which may require adjustment, typically include:

differences in size, . . . access, . . . quality of construction, architectural style, building materials, age, condition, functional utility, attractiveness, [and] amenities . . . (Id., at 420).

The Income Capitalization Approach to Value

The Property may be considered income producing, because it may be rented, and the income capitalization approach to value is typically used to value such properties (Conifer Baldwinsville Associates v. Town of Van Buren, 115 AD2d 325 [4th Dept. 1985]).

Petitioner is the only party to utilize the income capitalization approach, but he did so for "informational" purposes only, as a check against the sales comparison approach (Lloyd Appraisal, pp. 3 and 41). The Lloyd Appraisal also states that the,

sales comparison approach is the most applicable method of valuing the subject property type. Buyers and sellers in the market rely heavily and almost exclusively on this approach when making a purchase decision (Id., at p. 41).

In this regard, in the table reconciling the value indications for the Property according to the three approaches to value, the Lloyd Appraisal provides, as follows:

3978240147

Income Capitalization Approach:InformationalInformational

Cost Approach:N/AN/A

Sales Comparison Approach:$135,000$135,000

Final Estimate of Market Value:$135,000$135,000(Id., at pp. 3 and 41).

Accordingly, in determining the Property's value, the Lloyd Appraisal gave the income approach no weight. The Court agrees, and also gave it no weight.

Petitioner's Proof

Petitioner's proof at trial was limited to the submission of the Lloyd Appraisal and Lloyd's testimony.

The Lloyd Appraisal makes the following numerous assumptions:

• "The market value estimate is subject to the general contingent and limiting conditions as well as those extraordinary contingent and limiting conditions which follow. It is advised that these items be reviewed so the reader has an understanding of the limitations of this appraisal. Acceptance of this report constitutes an agreement with these conditions and assumptions (Lloyd Appraisal, p. ii) (emphasis added).• Under the heading "Extraordinary Assumptions", the Lloyd Appraisal states, in [*3]relevant part, that "[n]o interior inspection was completed at the request of the client. The interior is assumed to be of quality commensurate with similar homes in the subject neighborhood . . ." (Id., at p. v) (emphasis and italics in original).• Under the heading "Improvement Characteristics", the Lloyd Appraisal states that, inter alia, the Home was built in "1900" and that its condition is "Average (Assumed)" (Id., at p. 3) (emphasis in original).• Under the heading "Improvement Description", the Lloyd Appraisal identifies the "materials" used for each of the interior features of "Floors", "Walls", Trim/Finish", "Bath Floor", and "Bath Wainscot", as "unknown" (Id., at p. 14) (emphasis in original).• Under the heading "Improvement Description", the Lloyd Appraisal also states the following: "Comments on the Improvements: THIS IS AN EXTERIOR INSPECTION ONLY. INTERIOR FEATURES AND AMENITIES ARE NOT KNOWN" (Id.) (emphasis and use of all capital letters in original).• In discussing the comparable sales he used in his sales comparison approach to value (the "Comparable Sales"), Lloyd states that he "analyzed and adjusted [them] for individual characteristics", including, inter alia, "quality", "condition", "finish", and "amenities" (Id., at p. 20). However, it would have been impossible for him to have done so, because he was totally unfamiliar with the Home's interior quality, condition, finish, and amenities, having not permitted to inspect the Home's interior.• With respect to the Home's "Age and Condition", Lloyd states that it "was built in around 1900 with subsequent updates and remodeling" (Id., at p. 24) (emphasis in original). However, having not inspected the Home's interior, it is unknown how he could know whether the Home has been updated and/or remodeled, and if so, the dates and extent of same.• The comparable sales grids in the Llyod Appraisal state that the Home's basement is unfinished (Id., at pp. 22 and 28). Having not inspected the basement, Lloyd would have no way of knowing whether it was finished or unfinished.• With respect to the Home's functional utility, the Lloyd Appraisal states that it "and all comparable sales are similar in terms of functional utility and HVAC and no adjustments were required for these factors" (Id., at p. 25). Having not inspected the Home's interior, and therefore having no idea how the Home is laid out, Lloyd had no basis on which to make any statements regarding the Home's functional utility.• With respect to "Amenities", the Lloyd Appraisal states that the Home "has no extensive amenities as detailed in this report. Each of the sales have a similar level of amenities and were not adjusted" (Id., at p. 26) (emphasis in original). Having not inspected the Home's interior, and therefore having no idea whether the Home has amenities, Lloyd had no basis on which to comment on its amenities, if any.

While it is unlikely that Lloyd would have inspected the interiors of the Comparable Sales, he would have had access to photographs of their interiors and similar information detailing and depicting their, inter alia, their amenities, functional utility and finishes, as such information is customarily readily available as part of the Multiple Listing Service ("MLS"). Lloyd stated that he relied on information about the Comparable Sales, as made available to him [*4]as part of the MLS (Id., at p. 5)[FN2] .

The Court considers information made available to the public via the MLS to be reliable and to fairly and accurately depict and represent the underlying properties to which the information pertains, because prospective buyers typically inspect properties - inside and out, before considering whether to purchase them. Indeed, Lloyd agrees that the sales comparison approach to value "attempts to reflect the type of analysis done by prospective buyers and sellers of property" (Id., at p. 17).

The Lloyd Appraisal, however, includes no photographs of the Home's interior. Photographs of the Property are limited to a single view of the Home's front exterior (taken from the road) (Id., at p. 4) and two (2) street scenes, which purportedly depict views down the street, in both directions, from the Home (Id., at p. 13). It is unclear whether the Home is depicted in the street scenes. Lloyd confirmed that the sole photograph of the front of the Home's exterior was taken from the road, because he stated that his inspection of the Property was limited to "an exterior (from road) inspection . . . (Id., at p. 2) (emphasis added).

Accordingly, the Lloyd Appraisal consists of a "drive-by" appraisal of the Property.

The aforementioned limiting conditions and assumptions - some of which Lloyd describes as "extraordinary", relate to basic and fundamental elements of the Property. The sheer number and extent of such assumptions and limiting conditions render the Lloyd Appraisal unreliable as any sort of legally sufficient estimate of the Property's value. Such speculative assumptions by expert witnesses are routinely rejected in New York (see Kenford Company, Inc. v. County of Erie, 67 NY2d 257, 262 [1986], where the Court of Appeals stated, in rejecting plaintiff's claim for lost profits, that "the multitude of assumptions required to establish projections of profitability over the life of this contract require speculation and conjecture, making it beyond the capability of even the most sophisticated procedures to satisfy the legal requirements of proof with reasonable certainty"; see also, Cannarozzo v. County of Livingston, 13 AD3d 1180, 1181 [4th Dept 2004], where the Appellate Division, Fourth Department stated, in affirming the dismissal of a claim for personal injuries, that the "affidavit of plaintiffs' expert is inadequate to raise a triable issue of fact because it is speculative and based on assumptions that are not supported by the record"; see also, State v. Slezak Petroleum Products, Inc., 96 AD3d 1200, 1204 [3d Dept 2012], where the Appellate Division, Third Department stated, in connection with the State's action against a convenience store owner for remediation and cleanup costs associated with a gasoline spill, that the expert geologist's affidavit was "unsupported by an evidentiary foundation" where it "contain[ed] only conclusory and speculative assumptions and assertions").

As previously shown (at pp. 5-6, infra), the precatory letter attached to the Lloyd Appraisal states, in relevant part, that,

[t]he market value estimate is subject to the general contingent and limiting conditions as well as those extraordinary contingent and limiting conditions which follow. It is advised [*5]that these items be reviewed so the reader has an understanding of the limitations of this appraisal. Acceptance of this report constitutes an agreement with these conditions and assumptions (emphasis added).

As the reader and evaluator of the Lloyd Appraisal, and as the trier of fact in these special proceedings, the Court does not agree with such numerous conditions and assumptions, which make it impossible for the Court to determine the Property's value.

Accordingly, Petitioner has failed to overcome the presumption that the challenged assessments of the Property are excessive. The Court has not considered the Maraszek Appraisal submitted by Respondents, nor was it required to do so (State v. Town of Thurman, 183 AD2d 264, 269-70 [3d Dept 1992] ["the burden of proving that the presumptively valid assessments were improper is on petitioner, as taxpayer, and respondent was not required to submit an appraisal for any of the years that petitioner did not carry its burden of proof"])

For the foregoing reasons, it is hereby

ORDERED, that the Petition is denied and dismissed in all respects.

This constitutes the Decision and Order of this Court. Submission of an order by the Parties is not necessary. The delivery of a copy of this Decision and Order by this Court shall not constitute notice of entry.

Dated: March 28, 2018

Buffalo, New York

HON. TIMOTHY J. WALKER, J.C.C.

Acting Supreme Court Justice Footnotes

Footnote 1:Latham Holding Co. v. State was decided in the context of a claim following an appropriation of a portion of claimant's real property. While not a tax certiorari case, its holding that comparable sales must be appropriately adjusted applies to tax certiorari proceedings as well as appropriation (and eminent domain) matters.

Footnote 2:Lloyd also stated he relied on information provided to him by "Appraisers and Brokers from the market area", but he failed to identify them by name, or the information he relied on, which makes it impossible for the Court (and Respondents) to evaluate the information he relied on (Id., at p. 5).