Opinion
144624/2011
03-20-2019
In the Matter of the Application under Article 7 of the Real Property Tax Law By NFR Gateway, LLC (Nabisco), Petitioner, v. City of Niagara Falls, Respondent, COUNTY OF NIAGARA, Intervenor. FOR THE REVIEW OF THE 2011-2012, 2012 -2013, 2013-2014, 2014-2015, 2015-2016, 2016-2017 & 2017-2018 TAX ASSESSMENTS OF CERTAIN REAL PROPERTY IN THE SAID CITY OF NIAGARA FALLS
Peter Allen Weinmann, Esq. Wolfgang & Weinmann Attorneys for Petitioner 69 Delaware Avenue, Suite 707 Buffalo, New York 14202 Thomas M. O'Donnell, Esq. Deputy Corporation Counsel Attorney for Respondent City of Niagara Falls 745 Main Street, P.O. Box 69 Niagara Falls, New York 14302 John J. Ottaviano, Esq. Attorney for Intervenor County of Niagara 175 Hawley Street Lockport, New York 14094 James C. Roscetti, Esq. Roscetti & DeCastro , PC Attorneys for Intervenor City of Niagara Falls School District 730 Main Street Niagara Falls, New York 14301
Peter Allen Weinmann, Esq. Wolfgang & Weinmann Attorneys for Petitioner 69 Delaware Avenue, Suite 707 Buffalo, New York 14202 Thomas M. O'Donnell, Esq. Deputy Corporation Counsel Attorney for Respondent City of Niagara Falls 745 Main Street, P.O. Box 69 Niagara Falls, New York 14302 John J. Ottaviano, Esq. Attorney for Intervenor County of Niagara 175 Hawley Street Lockport, New York 14094 James C. Roscetti, Esq. Roscetti & DeCastro , PC Attorneys for Intervenor City of Niagara Falls School District 730 Main Street Niagara Falls, New York 14301 Ralph A. Boniello, III, J.
This case involves a challenge to the tax assessments for an industrial facility and concrete grain silos located at 126 Memorial Parkway and 816 Rainbow Boulevard in the City of Niagara Falls, New York (hereinafter, "City") for the tax years 2011-2012 through 2017-2018 under Index Numbers: 144624/2011, 147597/2012, 150602/2013, 153635/2014, E156399/2015, E159137/2016 and E162180/2017. The parties were unable to reach an agreement and a non-jury trial was conducted.
Initially, the Court notes that the parcels consist of the former Nabisco warehouse located at 126 Memorial Parkway (SBLNo.159.55-1-1) and the former Nabisco plant with concrete grain silos located at 816 Rainbow Boulevard (SBLNo.159.09-3-4.1). The assessed value for the parcels has remained the same for all of the tax years in question. Specifically, the 126 Memorial Parkway property has an assessed value of $2,090,000.00 and the 816 Rainbow Boulevard property has an assessed value of $1,000,000.00. Further, Anthony A. Girasole, MAI, SRA (hereinafter, "Girasole") on behalf of the Petitioner and GAR Associates, LLC (hereinafter, "GAR") on behalf of the Respondent conceded during the non-jury trial that the comparable sales approach is the most appropriate method to utilize in determining the value of the subject properties.
It is well settled that there is a presumption of validity of an assessment by the taxing authority and the burden is imposed on a petitioner to show by substantial evidence that the assessments are excessive (FMC Corp. v Unmack, 92 NY2d 179 [1998]). However, once a petitioner challenging an assessment offers "substantial evidence" that the property is overvalued, the presumption disappears and may not be considered in weighing the evidence Id. Further, the "substantial evidence" standard is minimal and only requires that a petitioner demonstrate the existence of a valid and credible dispute regarding valuation (Matter of Techniplex III v Town & Vil. of E. Rochester, 125 AD3d 1412 [4th Dept 2015]; Matter of East Med. Ctr., L.P. v Assessor of Town of Manlius, 16 AD3d 1119 [4th Dept 2005]). The law is clear that in the context of a proceeding to challenge a tax assessment, substantial evidence consists of a detailed, competent appraisal based on standard, accepted appraisal techniques and prepared by a qualified appraiser (Niagara Mohawk Power Corp. v Assessor of Geddes, 92 NY2d 192 [1998]; Matter of Buscaglia v Assessor, Town of Hamburg, 162 AD3d 1709 [4th Dept 2018]). Further, the value of a property must take into account the cost of remediation concerning any contamination (Commerce Holding Corp. v Bd. of Assessors, 88 NY2d 724 [1996]; Welch Foods v Town of Westfield, 222 AD2d 1053 [4th Dept 1995]).
It is undisputed that the subject properties were previously owned by and used as a production facility for the Nabisco Company in the manufacture of its shredded wheat products. It is also undisputed that under the current zoning the subject properties can no longer be utilized as an industrial facility. When the current owner purchased the property in 2003, the subject properties were "shuttered" manufacturing facilities in poor to fair condition and have remained vacant for approximately eighteen (18) years. On July 24, 2009, the City adopted new zoning laws affecting the subject parcels. The zoning is now D1A-Downtown District which limits its use to commercial and residential purposes. However, the Petitioner received a special use permit from the City and the former Nabisco warehouse located at 126 Memorial Parkway has been leased to a third party from 2015 through 2018 as storage space.
Based upon the testimony of the Petitioner's witnesses and a review of the documentary evidence and submissions, including expert reports, the Court finds that the presumption of validity of the assessments as to both 126 Memorial Parkway and 816 Rainbow Boulevard was overcome in this case by the appraisal report of Anthony A. Girasole submitted by the Petitioner along with the testimony of Mr. Girasole, Raj Chopra, President of CEM, an environmental consulting company and James F. Williams, President of Ontario Specialty Contracting, Inc., an environmental remediation company (hereinafter, "OSC"). Mr. Girasole, a certified commercial real estate appraiser, utilized accepted methodologies and painstakingly set forth his historical data, calculations and relevant similarities and differences of the properties used for comparison. Specifically, Mr. Girasole testified in detail concerning the history of the properties and surrounding area, the current economic conditions and environmental factors affecting Niagara Falls, New York in general and the subject properties in particular, all of which have a direct impact on the market value of the subject properties.
The property located at 816 Rainbow Boulevard (SBL# 159.09-3-4.1) consists of the former Nabisco plant with concrete grain silos totaling approximately 199,000 square feet of industrial space. The Petitioner submitted uncontroverted evidence of environmental contamination on the property. Mr. Girasole's report included a hazardous materials inventory report prepared by CEM. Ray Chopra, the president of the company, testified that the site contains asbestos, lead, mold, a variety of industrial waste (PCB filled light ballasts, computer equipment and peripherals, fire extinguishers, industrial drums, and transformers) and two 25,000 gallon diesel fuel tanks. Many of these items are either designated as hazardous waste products or contain hazardous materials. Mr. Chopra estimated the total cost of remediation at $1,310,200.00. In addition, the Petitioner hired OSC, an environmental remediation company. OSC prepared a cost estimate for the demolition and removal of the existing concrete silo structures and the associated multi-story buildings. The cost of demolition is estimated to be $5,538,005.00 including additional allowance options for asbestos abatement. Mr. Girasole opined that the "highest and best use" of the subject property because of re-zoning, location and other factors, is limited to a commercial use. Based upon the sales comparison approach, Mr. Girasole estimated the value of the property to be at $500,000.00. However, when considering the cost of remediation of $1,310,200.00, the value for assessment purposes results in a negative value. Thus, Mr. Girasole went onto conclude that 816 Rainbow Boulevard had a net value of $0.00.
The property located at 126 Memorial Parkway (SBL# 159.55-1-1) consists of the former Nabisco warehouse totaling approximately 162,000 square feet of industrial space. The location of the property is east of the downtown area of Niagara Falls along the Buffalo Avenue corridor. Traditionally, this area was heavily industrial and contained several manufacturing plants (Hooker Chemical/Occidental, Moore Business Forms, E.I. DuPont, Olin Corporation Washington Mills and many others). The current zoning prohibits industrial use and limits use to commercial, residential and/or mixed use. The property is a "non-conforming" use as it currently exists. Mr. Girasole testified that the property is in poor condition and is obsolete from the viewpoint of functionality. Further, the re-zoning by the City prohibits the property from being utilized as originally designed as an industrial facility. Based upon the sales comparison approach and after factoring in all adjustments for the differences among the comparables and general condition, Mr. Girasole opined that the value to be at $975,000.00 for all of the tax years at issue.
In response, Respondent submitted an appraisal prepared by GAR. Walter R. Allen, Senior Executive Appraiser at GAR, characterized the Nabisco warehouse as being in fair condition as short term improvements were made so as to allow its use as a rental storage facility. Mr. Allen opined that the retrospective market value of the parcels which he combined as a single taxable parcel as of July 1, 2010 was $3,890,000.00 increasing each year to $4,430,000.00 for July 1, 2016. Mr. Allen's "retrospective" market values (without adjustment for the equalization rate) are in excess of the assessed value when adjusted for the equalization rate, the Court may not set an assessment in excess of the total assessment on the tax roll (see, Shubert Organization, Inc. v Tax Com. of New York, 60 NY2d 93 [1983]; Matter of Excelsior v Assessor, Town of Amherst, 132 AD3d 1339 [4th Dept 2015]). Further, Mr. Allen provided no calculations or explanation for valuing the two properties as a single taxable parcel nor in allocating 65% of the total value to the Nabisco warehouse and 35% of the total to the manufacturing facility and concrete grain silos. Moreover, Mr. Allen did not consider nor make adjustments for environmental contamination and remediation.
The law is clear that environmental contamination depresses a property's value and must be considered in determining property tax assessment (Commerce Holding Corp. v Bd. of Assessors, supra; Welch Foods v Town of Westfield, supra). As a result, the Court finds that the Respondent expert's conclusions to be invalid and/or unreliable. The Court further notes that while Mr. Allen testified as to various re-uses of the properties, such opinion as to future uses is purely conclusory and speculative. The property must be assessed according to its condition on the taxable status date without regard to future potentialities or probabilities and may not be assessed on the basis of some use contemplated in the future (see, Real Property Tax Law §302; Farone & Son, Inc. v Srogi, 96 AD2d 711 [4th Dept 1983]; Addis Co. v Srogi, 79 AD2d 856 [4th Dept 1980]). Therefore, the Court shall adopt the values set forth in the report prepared by Mr. Girasole.
Accordingly, the Court finds the fair market value of 816 Rainbow Boulevard, Niagara Falls, New York (SBL 159.09-3-4.1) as follows: Taxable Years 2011-2012, $500,000.00; 2012-2013, $500,000.00; 2014-2015, $500,000.00; 2015-2016, $500,000.00; 2016-2017, $500,000.00; and 2017-2018, $500,000.00. However, when taking into consideration the cost of remediation for 816 Rainbow Boulevard, the value for assessment purposes must be reduced to zero dollars ($0.00) for the above referenced tax years (see, Commerce Holding Corp. v Bd. of Assessors, supra; Welch Foods v Town of Westfield, supra). Further, the Court finds that the fair market value for 126 Memorial Parkway, Niagara Falls, New York (SBL 159.55-1-1) as follows: Taxable Years 2011-2012, $975,000.00; 2012-2013, $975,000.00; 2013-2014, $975,000.00; 2014-2015, $975,000.00; 2015-2016, $975,000.00; 2016-2017, $975,000.00; and 2017-2018, $975,000.00.
The signing of this Decision and Order shall not constitute entry or filing under CPLR 2220. Counsel is not relieved from the applicable provisions of this rule with regard to filing, entry and Notice of Entry.
This Decision constitutes the Order of this Court and shall be filed as such. __________ RALPH A. BONIELLO, III. Supreme Court Justice Dated: March 20, 2019 Niagara Falls, New York