Much transpired in 2011 in the fields of tax certiorari, eminent domain and real property tax exemptions. First and foremost was the passage of §3-c of the General Municipal Law also known as the “real property tax levy cap for local governments except the city of New York.” In addition, the courts addressed a variety of issues including the constitutionality of the Real Property Tax Law article 18, the legality of Nassau County’s retroactive reassessment program based upon post tax status date improvements, tax exemptions for a religious art center, an Islamic school and a home for the at risk and homeless, eminent domain proceedings and the highest and best use doctrine.

Game Changer

On June 30, 2011, Governor Andrew Cuomo signed into law the tax cap statute which seeks to “control the ever-rising property tax by limiting the amount by which entities (e.g., schools and local governments) may increase property taxes each year.”1 The statute, §3-c of General Municipal Law, provides, inter alia, that (1) “No local government may increase its property tax levy by more than 2 percent or the rate of inflation (whichever is less), (2) “A local government may exceed the tax levy cap if the governing body enacts, by a two-thirds vote, a local law…overriding the tax levy cap” and (3) “The cap will have limited exceptions.” There are corresponding changes in applicable provisions of the Education Law. The concept of a tax levy cap2 as noted by Governor Cuomo seeks to help taxpayers by imposing:

Discipline, a rigor and a scrutiny to the process… It doesn’t ultimately limit or direct, but it challenges the local governments to find savings. It informs the citizens and it’s working.3

There can be little question that the governor’s tax levy cap program is a game changer in the area of tax certiorari and governmental financing. What exactly transpires remains to be seen.4

Nassau County

In Matter of Seidel v. Board of Assessors,5 the Appellate Division, Second Department, in reviewing the issue of whether Nassau County6 may consider improvements made to real property after the taxable status date in assessing property values for the particular tax year to which the taxable status date applies, noted that the New York State Division of the Budget has asserted that Nassau County has “‘notoriously flawed assessment and assessment review systems.’”7 In this case the county had misconstrued its Administrative Code §6-24.1(e) which required the Board of Assessors to enter newly assessed (post taxable status date) improvements “on the next following tentative assessment roll.”

Somewhat disconcerting to taxpayers who challenged the county’s retroactive assessments was their treatment before the small claims assessment review (SCAR) board whereat the hearing officer “found that he lacked the jurisdiction to rule on the petitioners’ contention that the assessments were illegal” thus forcing the petitioners to proceed to Supreme Court to obtain a proper review. Such treatment clearly defeats the purpose of SCAR which, inter alia, is to encourage aggrieved taxpayers to file small tax assessment claims without an attorney and receive fair and expeditious treatment.

In Supreme Associates v. Suozzi,8 owners of certain commercial properties located in Nassau County challenged the constitutionality of RPTL Article 18 as it relates to them. RPTL Article 18 as amended “creates two so called ‘special assessing units’—New York City and Nassau County—in which commercial and residential properties are divided into four separate classes, each of which may then be permissibly and uniformly taxed based upon different fractional assessment percentages.”9

The Appellate Division, Second Department, dismissed both the due process cause of action and the cause of action based on alleged violations of New York Constitution, article XVI, §2 but sustained the equal protection cause of action. On remittal the Supreme Court, relying, inter alia, upon Tilles Inv. v. Guloota,10 granted summary judgment to defendants finding that the “Legislature [purposely] crafted [Article 18] to stabilize relative property class tax burdens by perpetuating certain legislatively designated class share proportions—irrespective of whether these shares accurately reflected current or ‘actual’ assessed market values in a specific assessing unit.”

Eminent Domain

In Gyrodyne Company of America v. State of New York,11 the Second Department noted that “The measure of damages in a case involving partial taking of real property is the difference between the value of the entirety of the premises before the taking and the value of the remainder after the taking.” The court affirmed a finding of the trial court which rejected the state’s appraisal of $26 million based upon “light industrial” use and found that the highest and best use of the land was “residential development” and hence this justified a value of $98 million plus interest. “New York state must pay about $98 million plus six years of interest.”12

In Matter of Village of Haverstraw,13 claimant AAA Electricians brought an Article 5 proceeding challenging the valuation of its 18.9-acre riverfront property by the Village of Haverstraw. The condemnor village, urging that the highest and best use of the property was “light industrial,” made an offer for the taking of $2.6 million. AAA, based upon the substantial size of the property, its excellent location with superb Hudson River views, and sewer and road access, opined that its highest and best use was as a multi-family residential/condominium development. With a per unit valuation of $47,000, AAA estimated its total valuation to be $16.3 million.

After a thorough analysis, the court rejected the village’s methodology, conclusions, and comparable property evaluations and adopted AAA’s highest and best use conclusion. However, finding the number of units that claimant’s expert determined would be approved to be “speculative,” it declined to value the parcel on a “per unit” basis, opting instead for a “per acre” valuation as more appropriate in this case, and utilizing claimant’s comparable properties, but with modifications to a number of its adjustments, arrived at a final conclusion of value of $6.5 million.

The court also rejected the village’s alternate theory that valuation by the owner at “highest and best use” for tax purposes was established by prior tax settlements with the town and village in which full market value was set at $1.2 million. The court refused to use an older assessment stipulation as its basis for evaluation, since the basis for the property’s appraisal and its actual condition for tax purposes was unclear from the record.14

Real Property Tax Exemptions

Religious Art and Holy Water. The Court of Appeals in Matter of Eternal Flame of Hope Ministries15 determined that petitioner, as a religious organization, was entitled to a real property exemption for the property pursuant to RPTL §420-a[1][a]. The subject property consists of an “art studio on a 46-acre parcel of real property designed to resemble a chapel and adorned with religious art. The art studio is used for the creation of religious art, spiritual talks and prayer, and the entire property is used regularly for spiritual retreats. Mass and prayer services are an integral part of the events at the property, and are held when visitors are present.” In addition, a shrine was erected to Our Lady of Mount Carmel, and a “holiness trail” dedicated to the 14 stations of the cross has been completed. Visitors fill bottles with water from a nearby natural spring. The water is then blessed and taken home as “holy water.”

High Risk and Homeless. In Matter of Association for Neighborhood Rehabilitation,16 the Appellate Division, Third Department, found all 11 of petitioner’s properties tax-exempt since as a not-for-profit corporation it had, as one of its primary missions, to provide housing to people who are at high risk of becoming homeless including, among others, the mentally infirm or disabled, people who are drug- or alcohol-dependent, domestic violence victims, and low-income individuals, and petitioner had proved that the single-room occupancies (39 units in three properties) were used exclusively for charitable purposes.

Islamic School. In Matter of Al-Ber,17 petitioner, a not-for profit organization exempt from federal taxation, provided religious, charitable, and educational services to the Islamic community.

In 2001, it entered into a 99-year lease agreement with Clio Realty with respect to the subject property for the purpose of operating an Islamic school. Pursuant to the lease, petitioner agreed to pay all real estate taxes on the subject property. Petitioner also entered into a purchase option contract with Clio providing it with the exclusive option to purchase the property until April 1, 2016. In 2005, petitioner applied for a real estate tax exemption on the property.

The application was denied with the Second Department noting that “Real property owned by a corporation or association organized or conducted exclusively for religious, charitable, …educational…purposes…shall be exempt from taxation as provided in this section” (emphasis added). Thus, the court reasoned, the party seeking the exemption must hold legal title to the subject property, and petitioner, as lessee, has yet to acquire title.

Partial Rabbinical Exemption. In Matter of Altman,18 petitioner voluntarily resigned her position as associate rabbi and accepted employment as associate dean of the Hebrew Union College and director of its Rabbinic School. Her application for a new partial exemption was denied by the Nassau County Assessment Review Commission which reasoned that such exemptions are granted for “clerical leaders of congregations” and not for those in primarily administrative positions.

Supreme Court disagreed, finding no basis to the ARC’s “strained construction,” and finding that in her new position, she is directly involved with the pastoral training of students enrolled to become rabbis, is an integral part of the daily worship services, delivers sermons to the student congregation, and has discussions and critiques with students regarding their sermons.

Thomas A. Dickerson is an associate justice of the Appellate Division, Second Department, and formerly presided over the Tax Certiorari/Condemnation Part of the Ninth Judicial District. John R. LaCava is an associate justice of the Appellate Term, Ninth and Tenth Judicial Districts, and presides over tax certiorari, condemnation and exemption cases in Westchester County and the Ninth Judicial District. John Mechmann, Principal Law Clerk to LaCava, assisted in the preparation of this article.


1. Governor’s Program Bill 2011 (Program Bill #1 Revised).

2. There may have been some confusion initially about exactly what was to be capped, i.e., the tax levy or the individual homeowner’s tax bill. It is clear that the individual homeowner’s taxes will not be capped. See “Harrison OKs 4.713 percent tax rate hike” at (Dec. 19, 2011) (“Local property owners will see their town tax rate go up again—this time by 4.713 percent…the Republican-amended version which was ultimately passed stayed within the state’s 2 percent cap on tax levy increases”). It is also clear that some municipalities may not abide by the statute.

See “Tax cap springs leaks: Towns call law unsustainable amid capital projects, pension hikes” at (Dec. 5, 2011).

3. “Coumo defends ‘rigor’ of tax-levy cap; few towns plan to override it” at (Nov. 7, 2011).

4. See Spector, “Most keep plans under 2% tax cap,” The Journal News, Dec. 25, 2011, at p. 1 (“More than 80 percent of local governments across the state are sticking under the state’s new property-tax cap”).

5. Matter of Seidel v. Board of Assessors, 88 AD3d 369, 931 NYS2d 623 (2d Dept. 2011).

6. See Hadrick, “Showdown over Nassau property tax refunds,” Newsday, March 7, 2012 (“Attorneys representing Nassau businesses and homeowners owed $102 million in property tax refunds are going to court…to try to force the cash-starved county to pay up…(Justice) Adams has ordered (County officials) to explain why the court should not order Nassau to immediately pay the tax refunds which usually cover multiple years, with interest”).

7. Budget Report on Bills, Bill Jacket, L 2002, ch 401, at 4.

8. Supreme Associates v. Suozzi, 65 AD3d 1219, 886 NYS2d 430 (2d Dept. 2009).

9. Supreme Associates v. Suozzi, 932 NYS2d 835, 838-839 (Nassau Sup. 2011).

10. Tilles Inv. v. Gulotta, 288 AD2d 303, 304-305, 733 NYS2d 438 (2d Dept. 2001) (“Nassau County treats similarly-situated taxpayers uniformly for the purpose of imposing county taxes”).

11. Gyrodyne Company of America v. State of New York, 89 AD3d 988, 2011 WL 5865845 (2d Dept. 2011).

12. Pierson, “Panel Rules Against State in Eminent Domain Case,” New York Law Journal, Nov. 29, 2011, p. 1.

13. Matter of Village of Haverstraw, 2011 NY Slip Op 52218(U) (West. Sup. 2011, J. LaCava).

14. For other interesting eminent domain cases on the issue of valuation see Matter of Metropolitan Transportation Authority, 86 AD3d 314, 927 NYS2d 67 (1st Dept. 2011) (valuation of air rights); Matter of City of New York (No. 7 Subway Extension), 33 Misc.3d 1202(A) (N.Y. Sup. 2011) (discussion of the “project influence doctrine…[A] condemnee is only entitled to compensation for what it has lost, not what the condemnor has gained”); Matter of City of New York (Grantwood Retention Basin), 33 Misc.3d 586, 929 N.Y.S.2d 478 (N.Y. Sup. 2011) (restriction diminishing value of property, speculative value of property, subjective component of valuation).

15. Matter of Eternal Flame of Hope Ministries v. King, 16 NY3d 778, 2011 NY Slip Op 01322 (2011), aff’g 76 AD3d 775 (3d Dept. 2010).

16. Matter of Association for Neighborhood Rehabilitation v. Board of Assessors of the City of Ogdensburg, 81 AD3d 1214 (2011).

17. Matter of Al-Ber, Doing Business as El-Ber Islamic School v. New York City Department of Finance, 80 AD3d 760 (2011).

18. Matter of Altman v. Assessment Review Commission of the County of Nassau, 2011 NY Slip Op 32419(U) (Nassau Sup. 2011, J. Adams).