Tuesday, April 5, 2011

Evidence in Tax Grievances

Tax Grievance Day for many Suffolk county municipalities is coming up. The Town of Brookhaven’s Tax Grievance Day will be on Tuesday, May 17th, 2011 (always on the third Tuesday in May). Here is some important information concerning Commercial Properties for those of you choosing to file a grievance on such.

Note that villages sometimes use different dates and if you do live in a village that law governs, so check their website or call to find out.

Nassau County Grievances are filed with the Assessment Review Commission and can be filed during January 3rd to April 23rd by mail or on the website.

New York State Tax Certiorari proceedings are governed by the Real Property Tax Law (RPTL) Article 7. However, these are also in the purview of CPLR 408 discovery rules.

Disclosure is generally only allowed by leave of the Court. The only two devices that are allowed without leave of court under CPLR 408 are CPLR 3123 Notice to Admit facts, and the admission of ratio under RPTL 716. This allows petitioner to serve upon the respondent a demand to admit the ratio at which other real property in the assessing unit is assessed. This is also referred to as the equalization rate or the level of assessment. Standard rules apply to this Notice to Admit, so if the respondent does not deny that the ratio is correct within 15 days, it is deemed admitted for trial, as long as it is not in excess of 95%, in which case it is not allowed.

Information not normally subject to disclosure in tax certiorari cases is business information and related financial information because it is generally not directly related to the value of the realty. Also excluded is information relating to the petitioner’s business plans and production figures for factories, as well as studies prepared in connection with past, current, or future development, alteration, and demolition. This information has been denied as immaterial, because the courts decided it was not relevant to the present valuation. “Valuation of property is determined by its condition as of a valuation status date pursuant to local and state law---not a future contemplated use.” NYS Bar Journal, Discovery, and its Absence, in Tax Certiorari Proceedings, May 2010 (David C. Wilkes and Nicholas J. Connolly).

Depositions are subject to the same rules under RPTL Article 7 and are therefore not allowed without a court order. Rarely are they allowed in order to ensure there was a competent valuation. In fact, it has been held that to subject these assessors to EBTs would severely impede the proper performance of their statutory duties. Id. EBTs have been allowed for the limited purpose of deposing the State Board of Equalization and Assessment (SBEA), but only for the limited purpose of information concerning the allegedly voluminous and complex facts forming the basis of the agency’s assessments so as to simplify the issues for trial in the interests of judicial economy. Id. Not discoverable are the mental processes and formulas used in arriving at their determinations. Id.

Also undiscoverable are the formulas, policies, and mental processes by the assessors that were used by either the petition or the respondent. On that same note, discovery is not allowed for computation sheets, guidelines, or reports showing fractional assessment rates used by assessors.

One thing that is allowed, even required, pursuant to Court Rule 202.59(g) is an appraisal by both parties. The appraiser’s reports must include a statement in which they give information regarding the method of appraisal relied on as well as the conclusions reached, “together with the facts, figures, and calculations by which the conclusions were reached.” This report also needs to include photographs of the properties and photographs of the comparable property that is relied on in making the report.

In conclusion, most discovery in tax certiorari cases is not permitted without leave of court, and is not encouraged. The most important piece of information, that is allowed, and even required, is appraisal reports.