Opinion
Index No. E2022006072
04-27-2023
IN THE MATTER OF THE APPLICATION UNDER ARTICLE 7 OF THE REAL PROPERTY TAX LAW AND ARTICLE 78 OF THE CIVIL PRACTICE LAW AND RULES TRUSTEES OF THE Masonic Hall & Asylum Fund, Petitioner, v. Assessor for the Town of Henrietta, NEW YORK, BOARD OF ASSESSMENT REVIEW FOR THE TOWN OF HENRIETTA, NEW YORK, AND THE TOWN OF HENRIETTA, NEW YORK, Respondents.
Henry A. Zomerfeld, Esq., Hodgson Russ LLP for Petitioner Peter J. Weishaar, Esq., McConville Considine Cooman & Morin, PC, for Respondents
Unpublished Opinion
Henry A. Zomerfeld, Esq., Hodgson Russ LLP for Petitioner
Peter J. Weishaar, Esq., McConville Considine Cooman & Morin, PC, for Respondents
Daniel J. Doyle, J.
In this combined Article 7/ Article 78 property tax assessment case, the Petitioner, Trustees of the Masonic Hall and Asylum, has challenged the decision of the tax assessor of the Town of Henrietta to deny the tax-exempt status for its property in the Town of Henrietta. The Petitioners have also challenged the valuation of its property.
The primary question herein is the applicability of the exemption established by Real Property Tax Law ("RPTL") § 420-a for property owned by the Petitioner consisting of vacant land located at Erie Station Road, in the Town of Henrietta.
S.B.L. No. 189.02-1-1.1 (Schedule A of the Verified Petition [NYSCEF Docket # 1].)
For the reasons that follow, the Petition is GRANTED, in part, finding that the Respondents' taxable assessment of the property was unlawful.
Findings of Fact
Petitioner was incorporated by state statute in 1864 as a charitable organization. Pursuant to its articles of incorporation, one of its charitable objects is to:
Petitioner has been granted tax exempt status as a public charity pursuant to § 501(c)(3) of the Internal Revenue Code. (IRS Exemption Letter dated June 10, 1997 attached to the Application for Real Property Tax Exemption for Nonprofit Organizations- Mandatory Class I- Organization Purpose, attached as Exhibit A to the Verified Petition (NYSCEF Docket # 2).
to build and maintain a masonic hall or temple in the city of New York for meetings and accommodation of the Grand Lodge or General Assembly of Free and Accepted Masons of the State of New York and its officers, and for the accommodation of other masonic bodies and out of the funds derived from the rent or income thereof and the funds derived by said corporation from all other sources which may be applicable thereto, to build, establish and maintain in the state of New York, an asylum or asylums, homes or homes, with hospital accommodations, a school or schools, for the relief, support and care of worthy and indigent masons, and worthy and indigent wives, widows and orphans of masons and for the free education of children of masons.
State of New York Acts of Incorporation, as amended February 27, 1923, attached as Exhibit A to the Application for Real Property Tax Exemption for Nonprofit Organizations- Mandatory Class I- Organization Purpose.
Petitioner is the owner of real property located in the Town of Henrietta, New York. Petitioner submitted a timely application to Respondent assessor seeking an exemption pursuant to RPTL §§ 420-a and 428 for the property as of a taxable status date of March 1, 2022. (RPTL § 302[1]: "The taxable status of real property in cities and towns shall be determined annually according to its condition and ownership as of the first day of March and the valuation thereof determined as of the applicable valuation date.")
The application explained that the property at issue was acquired by Petitioner to
construct and develop what is referred to as Masonic Care-Henrietta, which will consist of: (i) a Masonic Lodge with offices, conference/event spaces and facilities to serve the regional Masonic community in and around the Henrietta, NY area, (ii) a community center and amenities that will foster community and active lifestyles, (iii) a range of senior living housing and facilities and (iv) a Masonic Park and Memorial, which will honor those who have served in the armed forces (the "Project").
Application for Real Property Tax Emption for Nonprofit Organizations II- Property Use, Question 10. (NYSCEF Docket # 2.)
The application stated that the first phase of the Project was the construction of a sanitary pumping station which was anticipated to begin on the Spring of 2022. The schematic designs and plans of the Project were attached, as were excerpts from the minutes of "the Regular Meeting of the Trustees of the Masonic Hall and Home" held on August 20, 2021 which indicated that Petitioner had engaged the services of architects, interviewed construction managers, sought approval from the New York State Thruway Authority for the pump station project, discussed survey and marketing plans with a vendor, and planned community events to inform the public about the Project.
See Board Minutes, attached to Application for Real Property Tax Emption for Nonprofit Organizations II- Property Use.
Additionally, attached to the application were the municipal sanitary pump station plans which establish that the pump station project was in development.
Id.
The assessor denied the application and the property was assessed as taxable property for the 2022-2023 tax year, principally on the ground that
the projects referred to as supporting documentation to this application, or a version thereof, have been presented on numerous occasions over the years and, as such, are not considered in good faith. Again, the intended future use of a senior living facility cannot be considered to be contemplated in good faith due to the lack of an approved site plan, issued building permits or detailed business description showing the senior living facility as eligible for a non-profit use category.
Correspondence dated May 9, 2022 from Town of Henrietta Assessor to Petitioner, attached as Exhibit B to the Verified Petition (NYSCEF Docket # 3).
Thereafter, Petitioner timely filed a grievance with Respondent Board of Assessment Review for the Town of Henrietta, which was denied.
Verified Petition at ¶¶ 10-15; Answer of Respondents (NYSCEF Docket # 11) at ¶¶ 10-15.
Petitioner thereafter timely initiated the instant action by filing a Verified Petition alleging that the assessment was unlawful as the Petitioner was entitled to an exemption under RPTL § 420-a.
Petitioner also alleged that the property was entitled to an exemption pursuant to RPTL § 428, and that petitioner's assessment is excessive, and unequal.
Respondents served an Answer raising four objections in point of law: (1) relief under Article 78 is not appropriate; (2) the property at issue was deriving revenue from a lease between Petitioner and Howlett Farms, Inc.; (3) the Petitioner's plans for its project were not "concrete and definite plans"; and (4) the special use permit eventually granted for the property was granted to "TTMH Henrietta Holdings, LLC" and not Petitioner.
Answer of Respondents (NYSCEF Docket # 11).
Conclusions of Law
Real Property Tax Law § 420-a(1) provides for exemptions from taxation for "real property owned by a corporation or association organized or conducted exclusively for religious, charitable, hospital, educational, or moral or mental improvement of men, women or children purposes, or for two or more such purposes, and used exclusively for carrying out thereupon one or more of such purposes either by the owning corporation or association or by another such corporation or association"
RPTL § 420-a(1).
Paragraph 3 of § 420-a provides a mandatory exemption for real property taxation for certain vacant real property owned by a charitable organization. It states:
3. Such real property from which no revenue is derived shall be exempt though not in actual use therefor by reason of the absence of suitable buildings or improvements thereon if (a) the construction of such buildings or improvements is in progress or is in good faith contemplated by such corporation or association or (b) such real property is held by such corporation or association upon condition that the title thereto shall revert in case any building not intended and suitable for one or more such purposes shall be erected upon such premises or some part thereof.
There is no dispute that the Petitioner is an organization that falls under the rubric of RPTL § 420-a(1)(a). (See gen. Greater Jamaica Dev. Corp. v. New York City Tax Comm'n, 25 N.Y.3d 614 [2015]; Merry-Go-Round Playhouse, Inc. v. Assessor of City of Auburn, 24 N.Y.3d 362 [2014].) Nor is it in dispute that the intended use of the property (the Project) would satisfy the criteria for exemption under RPTL § 420-a(1)(a). ("The test of entitlement to tax exemption under the "used exclusively" clause of the statute is whether the particular use is "'reasonably incident[al]' to the [primary or] major purpose of the [facility]" (see, Matter of St. Luke's Hosp. v. Boyland, 12 N.Y.2d 135, 143, 237 N.Y.S.2d 308, 187 N.E.2d 769). Put differently, the determination of "'whether the property is used exclusively for the statutory purposes depends upon whether its primary use is in furtherance of the permitted purposes.'" (Matter of Genesee Hosp. v. Wagner, 47 A.D.2d 37, 44, 364 N.Y.S.2d 934, affd. 39 N.Y.2d 863, 386 N.Y.S.2d 216, 352 N.E.2d 133 quoting Gospel Volunteers v. Village of Speculator, 33 A.D.2d 407, 411, 308 N.Y.S.2d 785, affd. 29 N.Y.2d 622, 324 N.Y.S.2d 412, 273 N.E.2d 139)". Hapletah v. Assessor of Town of Fallsburg, 79 N.Y.2d 244, 250 [1992].)
Because the real property consisted of vacant land, Petitioner is entitled to an exemption from real property taxation if (1) "the construction of such buildings or improvements is in progress or is in good faith contemplated by such corporation or association..." and (2) Petitioner is not "deriving revenue" from the vacant land.
Here, the Petitioner established that it was in "good faith contemplation" of proceeding with the Project. ("An application for a special use permit may well be a factor in determining good faith. A zoning authority may look to other criteria to determine if in fact a public benefit improvement is contemplated and is the subject of concrete or definite plans. The inquiry necessarily is fact-specific." Legion of Christ, Inc. v. Town of Mount Pleasant, 1 N.Y.3d 406, 412 [2004].)
At the time of the application, Petitioner had engaged in extensive efforts to proceed with the Project. The application submitted to Respondents contained extensive site plans for the first phase of the project (the sanitary pump station), and board meeting minutes where Petitioner discussed architectural plans for the overall project, updates on approvals from governmental entities, and community outreach.
Furthermore, Petitioner has submitted the Affidavit of G. Michael Morris, a trustee of the Petitioner. Mr. Morris averred that the Respondent Town of Henrietta has since granted a special use permit for the Project , and that the Petitioner has expended over $7 million dollars on the Project. Although the Respondents object to the Court considering this information, the Court can consider information not provided to Respondents at the time of the initial application. As the Appellate Division, Third Department held in Eternal Flame of Hope Ministries, Inc. v. King (76 A.D.3d 775 [3rd Dept. 2010], aff'd, 16 N.Y.3d 778 [2011]):
See Affidavit of G. Michael Morris dated March 13, 2023 (NYSCEF Docket # 16) at ¶¶ 5-10; see also Exhibit B to the Affidavit (NYSCEF Docket # 18).
Although the Respondents argue that this fact should not be considered as the Special Use Permit was granted to TTMH Henrietta Holdings, LLC, the permit was clearly for the Project contemplated by Petitioner. (See Exhibit A to the Affidavit of G. Michael Morris [NYSCEF Docket # 17].) Indeed, it states it was "for the construction of a Multiple Dwelling Senior Living Facility associated with the Masonic Care Community comprising of 200 units on a 88.87 acre parcel with a density of 2.3 units per acre on property at or about Erie Station Rd., Tax Map No. 189.02-1-1.1 ". (Emphasis added). The special use permit was approved by the Town of Henrietta Council on June 9, 2022. (Id.) Relevant to the issues herein, the Resolution authorizing the special use permit notes that "public hearings were held on May 11, 2022 and June 9, 2022 at Town Hall, at which time feedback and concerns from neighbors, residents, and Town Board members were heard and considered..." (emphasis added). A fair reading of the evidence would establish that at the time the Assessor denied the Petitioner's RPTL § 420-a exemption (see Assessor letter dated May 9, 2022), the special use permit for the Project was being considered by the Town and its residents.
We reject respondents' contention that this Court may not consider any of the evidentiary submissions in the record that were not supplied to the Town in connection with petitioner's application for the exemption. First, as petitioner notes, there is no requirement that an application be filed to obtain an RPTL 420-a exemption (compare RPTL 420-a[11], with RPTL 420-b[7]). Moreover, an RPTL article 7 or CPLR article 78 proceeding commenced to challenge the denial of a mandatory exemption is, in essence, a challenge to the taxing authority's jurisdiction over the subject property (see Hewlett Assoc. v. City of New York, 57 N.Y.2d 356, 363-364, 456 N.Y.S.2d 704, 442 N.E.2d 1215 [1982]; see also Troy Towers Redevelopment Co. v. City of Troy, 51 A.D.2d 173, 175-176, 380 N.Y.S.2d 89 [1976], affd. for reasons stated below 41 N.Y.2d 816, 393 N.Y.S.2d 397, 361 N.E.2d 1045 [1977]). Thus, contrary to respondents' argument, courts are not limited to the record adduced before "the agency" in such proceedings (see Matter of Word of Life Ministries v. Nassau County, 191 Misc.2d 110, 111-112, 115, 740 N.Y.S.2d 837 [2002], affd. 309 A.D.2d 760, 769 N.Y.S.2d 378 [2003], affd. 3 N.Y.3d 455, 787 N.Y.S.2d 705, 821 N.E.2d 130 [2004]; see also Matter of Tap, Inc. v. Dimitriadis, 49 A.D.3d 947, 948-949, 853 N.Y.S.2d 214 [2008]; cf. Matter of World Buddhist Ch'an Jing Ctr., Inc. v. Schoeberl, 45 A.D.3d 947, 951, 846 N.Y.S.2d 392 [2007]). In any event, an RPTL article 7 proceeding, such as the instant proceeding, "is in the nature of a trial de novo" (Matter of Town of Pleasant Val. v. New York State Bd. of Real Prop. Servs., 253 A.D.2d 8, 14, 685 N.Y.S.2d 74 [1999] [internal quotation marks and citation omitted]; see People ex rel. MacCracken v. Miller, 291 NY 55, 60, 50 N.E.2d 542 [1943]).(Id. at 776-777.)
Assuming arguendo that the Court were to limit the evidence to the financial expenditures made by Petitioner prior to the taxable date of March 1, 2022 (and exclude evidence of the special use permit application and approval), at that time Petitioner had expended over $3.5 million on the Project, including over $460,000 in professional services, and over $100,000 in site development. (NYSCEF Docket No. 18.)
Thus, Petitioner has clearly established a good faith contemplation to develop the Project on the real property as of March 1, 2022.
Respondents seem to concede that this information would be sufficient to determine "good faith" as the Assessor avers in her affidavit: "Based on what was known as of the following next taxable status date of March 1, 2023, I am likely to approve petitioner's exemption for the next tax year, assuming a timely application was submitted."
Additionally, Petitioner has established that as of March 1, 2022 it was not deriving revenue from the real property. Mr. Miller averred that a previous lease between Petitioner and Howlett Farms, Inc. expired on March 31, 2021 and that Petitioner received no revenue from Howlett Farms after that date. Petitioner also submits the affidavit of Bruce E. Howlett, owner of Howlett Farms, in which he avers that the lease did expire on March 31, 2021 and that the Petitioner did not receive any payment from Mr. Howlett pursuant to that lease (or for any other farming activity) after September 16, 2021.
Id. at ¶¶ 5-6.
Affidavit of Bruce E. Howlett dated November 29, 2022; see also Answer at ¶ 77; Exhibit B to Answer (NYSCEF Docket # 13).
Thus, Petitioner was not deriving revenue from the real estate as of the taxable date of March 1, 2022.
Mr. Howlett also explained that he planted a "cover crop" of soybeans on the property to minimize soil erosion but did not intend to harvest the crop. Respondents dispute this (see Affidavit of Michell Nicodemus, Assessor dated March 16, 2023 [NYSCEF Docket # 19]), averring that Howlett informed the assessor that he was going to harvest the soybeans in 2022 but changed his mind. However, the intention of Howlett is immaterial. The salient question is whether Petitioner would derive revenue from the real estate after the taxable date of March 1, 2022. Petitioner has established that it did not, and Respondent has not rebutted same.
Therefore, Petitioner has established that it is entitled to the exemption in RPTL § 420-a.
The alternative ground for relief sought by Petitioner, that RPTL § 428 would apply to the vacant real property, is inapplicable. That section is designed to shield income from taxation derived from real property of a fraternal organization that is used exclusively for charitable purposes. (See Masonic Hall v. Town of Frankfort, 289 A.D.2d 947 [4th Dept. 2001]; People ex rel. Trustees of Masonic Hall & Asylum Fund v. Miller, 279 NY 137 [1938]; In re Syracuse Masonic Temple, 270 NY 8 [1936]; 1970 NY Op. Att'y Gen. No. 38 [Jan. 14, 1970].)
As the Court is finding for the Petitioner on its first cause of action in the Verified Petition, the Court dismisses as moot the alternative grounds sought by Petitioner challenging the assessment of the property.
Based upon the forgoing, and upon the papers herein , the Court having determined that no testimony is necessary to resolve the issues herein (see RPTL § 720[2]), it is hereby
Petition with exhibits (NYSCEF Docket #s 1-5); Answer with exhibits (NYSCEF Docket #s 11-13); Memorandum of Law in Reply; Affidavit of Bruce E. Howlett (NYSCEF Docket # 15); Affidavit of G. Michael Morris with exhibits (NYSCEF Docket # 16-18); Letter with sur-reply of Affidavit of Michell Nicodemus (NYSCEF Docket # 19).
ORDERED ADJUDGED AND DECREED that the Verified Petition is GRANTED, in part, and the assessment of Petitioner's real property (S.B.L. No. 189.02-1-1.1) as of March 1, 2022 as taxable by Respondents was unlawful; and it is further
ORDERED that that the Petitioner's real property is subject to the exemption under Real Property Tax Law § 420-a(1) and (3) and the Respondents are required to enter same on the roll of exempt properties for the 2022-2023 taxable year; and it is further
ORDERED that any overpayment of taxes by Petitioner to Respondents shall be refunded, with statutory interest; and it is further
ORDERED that Petitioner is awarded the costs and disbursements of this action.