44 Misc.2d
1020, 255 N.Y.S.2d 565
In the Matter of Longport Realty Corp. et al., Petitioners,
v.
William M. Eklund, as Assessor of the Town of Rye, et al., Respondents
Supreme Court, Westchester County
November 13, 1964
CITE TITLE AS: Matter of Longport Realty Corp. v Eklund
HEADNOTES
Taxation--assessments--in
compiling capitalization rate to determine assessed value, actual tax rate must
be adjusted by ratio of appraised to assessed value--so computed, actual
assessment is less than proper assessment; property has not been overassessed; petition dismissed.
(1) In compiling the capitalization rate to determine
assessed value, the actual tax rate of 6.20% should be adjusted by the 59%
ratio of appraised to assessed value, reducing it to 3.66%. If the full tax
rate were used, it would have the effect of adding in a tax expense based upon
the tax rate as applied to appraised value rather than the tax rate as applied
to assessed value.
(2) Using such formula, the actual assessment for the
property is less than the proper assessment, and the property has not been overassessed either by reason of
overvaluation or inequality. The petition is dismissed.
APPEARANCES OF COUNSEL
Schupp & Buckley for petitioners. Irving Wein, Town Attorney (Stephen Davis of counsel), for
respondents.
OPINION OF THE COURT
Hugh S. Coyle, J.
Motion by respondents, Town of Rye and Village of Port Chester, for a reargument is granted, and upon such reargument
the decision of this court confirming the Referee's report, dated July 2, 1964,
is withdrawn and substituted therefor is the
following decision:
The Referee, in compiling his capitalization rate (sometimes referred to as a
"built up" capitalization rate) for his tax component should have
used the figure of 3.66% in place and stead of 6.20%, the actual tax rate. The
Referee found that the relation of assessed to appraised value in the assessing
unit for the years in litigation was 59%. Accordingly, the Referee should have
adjusted the tax rate so that it would be 59% of the actual *1021 rate of 6.20%, or 3.66%.
(See computations of Mr. Justice Hogan in Matter of Cedar Park Terrace [Board
of Assessors of County of Nassau], N. Y. L. J., May 20, 1964, p. 19, col. 2.)
By capitalizing income, market value or appraised value is sought to be determined. If the full tax rate were used, it would have the
effect of adding in a tax expense based upon the tax rate as applied to
appraised value rather than the tax rate as applied to assessed value. By
adjusting the tax rate by the 59% ratio of appraised to assessed value, it then
has the effect of adding into the built-up capitalization rate the item of tax
expense based upon assessed value. The latter is the proper formula.
Consequently, paragraph "18" et seq. of the Referee's report should
be modified to reflect such change in the tax component of the built-up
capitalization rate as follows:
Income
Apartments (fully rented) $292,000
Garages (fully rented) 9,960
Total $301,960
Vacancies,
Etc.
Apartments 7% $20,440
Garages 40% 3,984
24,424
$277,536
Other income (machines, etc.) 3,000
Total Income $280,536
Total Expenses 66,000
Net income (before taxes, interest, amortization $214,536
and/or depreciation)
Land appraisal $1.50 sq. ft. 120,000 square feet $180,000
Adjusted tax rate (per $100 of assessed value) 3.66%
Land return 7.00%
10.66%
Return on land investment ($180,000 x 10.66%) 19,188
Residual amount of net income applicable to building $195,348
value (net income less return on land investment)
Adjusted tax rate (per $100 of assessed value) 3.66%
Building return 7.00%
Depreciation 2.00%
Capitalization rate for building (built-up 12.66%
capitalization rate)
Value of building $195,348 divided by 12.66% $1,543,033
Add land value 180,000
Total value of land and buildings $1,723,033
Since the Referee found that the relation of assessed value to appraised value
in the assessing unit was 59%, the proper assessed value of land and building
should be computed as follows:
Proper assessed value of land (appraised value of $180,000 x 59%) $106,200
Proper assessed value of buildings (appraised value of $1,543,033 x 910,389
59%)
Total Proper Assessment $1,016,589
Since the actual assessment for the years in litigation was $54,000 for land,
and $900,000 for buildings, making a total of $954,000, the property which is
the subject of these proceedings has not been overassessed,
either by reason of overvaluation or inequality. Under the circumstances, the
petition should have been dismissed and a final order entered in favor of
respondents and against petitioners.
Submit final order on notice, which order shall be in accordance with this
decision and shall vacate the prior order of this court, granted
Copr. (c) 2008, Secretary
of State, State of
N.Y.Sup. 1964.
MTR. OF LONGPORT REALTY v. EKLUND
END OF DOCUMENT