In the Matter of the Board of Managers of French Oaks Condominium, Respondent,v.Town of Amherst, et al., Appellants, Williamsville Central School District, Intervenor-Respondent.

Brief

N.Y.March 24, 2014

To be Argued by: CRAIG A. LESLIE, ESQ. (Time Requested: 15 Minutes) APL-2013-00061 Appellate Division Docket No. CA 12-00434 Erie County Clerk’s Index Nos. I 2009-9034 and I 2010-7588 Court of Appeals of the State of New York IN THE PROCEEDING OF THE APPLICATION OF THE BOARD OF MANAGERS OF FRENCH OAKS CONDOMINIUM, Petitioner-Respondent, – against – TOWN OF AMHERST, HARRY WILLIAMS, Town of Amherst Assessor, BOARD OF ASSESSMENT REVIEW OF THE TOWN OF AMHERST, Respondents-Appellants, and WILLIAMSVILLE CENTRAL SCHOOL DISTRICT, Intervenor. REPLY BRIEF FOR RESPONDENTS-APPELLANTS October 8, 2013 PHILLIPS LYTLE LLP Craig A. Leslie, Esq. Paul Morrison-Taylor, Esq. Attorneys for Respondents-Appellants 3400 HSBC Center Buffalo, New York 14203 Tel.: (716) 847-8400 Fax: (716) 852-6100 - i - TABLE OF CONTENTS Page PRELIMINARY STATEMENT ............................................................................... 1 ARGUMENT ............................................................................................................. 3 POINT I THE COMPETENCY AND LEGAL SUFFICIENCY OF PETITIONER’S APPRAISAL ARE PROPERLY BEFORE THIS COURT ............................................................................. 3 POINT II PETITIONER’S APPRAISAL WAS NEITHER COMPETENT NOR LEGALLY SUFFICIENT TO REBUT THE PRESUMPTION OF VALIDITY ....................... 6 A. The Strell Appraisal Lacked Essential Facts Concerning Each Condominium Unit At Issue ............................................ 12 B. The Strell Appraisal Lacked Facts and Figures Concerning the Allegedly Comparable Properties Used to Estimate Rental Income ........................................................................... 13 C. The Strell Appraisal Failed To Make Necessary Adjustments Concerning the Allegedly Comparable Properties Used to Estimate Rental Income ........................................................ 16 D. The Strell Appraisal Lacks Facts, Figures and Calculations Concerning the Per Square Foot Values That It Adopts........... 20 E. The Strell Appraisal Failed to Establish Fair Market Value For Each Of The Condominium Units ...................................... 23 F. The Strell Appraisal Lacked the Facts, Figures and Calculations Required To Support Its Capitalization Rate Conclusion ........................................................................ 25 POINT III MR. STRELL VIOLATED USPAP ......................................... 29 - ii - POINT IV MR. STRELL’S CAPITALIZATION RATE CALCULATION WAS FATALLY FLAWED, AND IS OTHERWISE ENTITLED TO NO WEIGHT .................... 31 POINT V PETITIONER’S ATTACKS ON THE TOWN’S APPRAISAL EVIDENCE ARE UNFOUNDED AND IRRELEVANT ................................................................ 35 CONCLUSION ........................................................................................................ 39 - iii - TABLE OF AUTHORITIES CASES 50540 Realty, Inc. v. Tax Comm. of New York, 136 A.D.2d 699 (2d Dep’t 1997) .......................................................................... 8 Central N.Y. Oil & Gas Co., LLC v. Porto Bagel, Inc., 106 A.D.3d 1152 (3d Dep’t 2013) .................................................................... 8, 9 Champlain Natl. Bank v Brignola, 249 A.D.2d 656 (3d Dep’t 1998) ........................................................................ 34 Chase Manhattan Bank v State of New York, 103 A.D.2d 211 (2d Dep’t 1984) ........................................................................ 34 Cohen v. Hallmark Cards, 45 N.Y.2d 493 (1978) ........................................................................................... 3 Cummins v. County of Onondaga, 84 N.Y.2d 322 (1994) ........................................................................................... 3 Geffen Motors v State of New York, 33 A.D.2d 980 (4th Dep’t 1970) ......................................................................... 18 Gullo v. Semon, 265 A.D.2d 656 (3d Dep’t 1999) ........................................................................ 11 Heary Bros. Lightning Protection Co. v. Intertek Testing Servs., N.A., 4 N.Y.3d 615 (2005) ............................................................................................. 3 Holtslander v C.W. Whalen & Sons, 126 A.D.2d 917, motion for leave to appeal denied as unnecessary 69 N.Y.2d 1016 (1987) .......................................................................................... 3, 5 Johnson v. Kelly, 45 A.D.3d 687 (2d Dep’t 2007) ................................................................ 9, 10, 11 Johnson v. Town of Haverstraw, 133 A.D.2d 86 (2d Dep’t 1987) ............................................................................ 8 - iv - Matter of Bialystock & Bloom v Gleason, 290 A.D.2d 607 (3d Dep’t 2002) ........................................................................ 33 Matter of City of Rochester v. Iman, 51 A.D.2d 651 (4th Dep’t 1976) ......................................................................... 28 Matter of County of Dutchess [285 Mill St.], 186 A.D.2d 891 (3d Dep’t 1992) ........................................................................ 18 Matter of Duchnowski, 31 N.Y.2d 991 (1973) ........................................................................................... 5 Matter of FMC Corp. v. Unmack, 92 N.Y.2d 179 (1998) ................................................................... 4, 17, 25, 31, 35 Matter of Katz v Assessor of Vil./Town of Mount Kisco, 82 A.D.2d 654 (2d Dep’t 1981) .......................................................................... 34 Matter of Thomas v. Davis, 96 A.D.3d 1412 (4th Dep’t 2012) ....................................................................... 35 Matter of Town of Islip, 49 N.Y.2d 354 (1980) ........................................................................................... 3 Matter of White Plains Props. Corp. v. Tax Assessor of City of White Plains, 58 A.D.2d 871 (2d Dep’t 1977), aff’d 44 N.Y.2d 971 (1978) ........................... 11 National Fuel Gas Supply Corp. v Goodremote, 13 A.D.3d 1134 (4th Dep’t 2004) ....................................................................... 34 Niagara Falls Urban Renewal Agency v 123 Falls Realty, 66 A.D.2d 1009 (4th Dep’t 1978), appeal dismissed 46 N.Y.2d 997, lv. denied 47 N.Y.2d 711 (1979) ............................................................................. 34 Niagara Mohawk Power Corp. v. Town of Bethlehem Assessor, 225 A.D.2d 841 (3d Dep’t 1996) .......................................................................... 8 Niagara Mohawk Power Corp. v. Town of Tonawanda Assessor, 233 A.D.2d 920 (4th Dep’t 1996) ..................................................................... 7, 9 Orange & Rockland Utils. v. Williams, 187 A.D.2d 595 (2d Dep’t 1992) .......................................................................... 8 - v - People v. First American Corp., 18 N.Y.3d 173 (2011) ................................................................................... 30, 31 Pritchard v. Ontario County Indus. Dev. Agency, 248 A.D.2d 974 (4th Dep’t 1998) ............................................................... 7, 8, 11 Roth v. City of Syracse, 21 N.Y.3d 411 (2013) ............................................................................... 4, 25, 31 Schoeneck v. City of Syracuse, 93 A.D.2d 988 (4th Dep’t 1983) ......................................................................... 29 State v. Town of Thurman, 183 A.D.2d 264 (3d Dep’t 1992) .......................................................................... 8 Stock v. Baumgarten, 211 A.D.2d 1008 (3d Dep’t 1995) ...................................................................... 24 Tenn. Gas Pipeline Co. v. Town of Sharon Bd. Of Assessors, 298 A.D.2d 758 (3d Dep’t 2002) lv. denied 99 N.Y.2d 506 (2003) .................. 13 Wagman v. Bradshaw, 292 A.D.2d 84 (2d Dep’t 2002) .......................................................................... 28 STATUTES CPLR 5601(a) ............................................................................................................ 5 OTHER AUTHORITIES 22 N.Y.C.R.R. § 202.59 ................................................................................... Passim PRELIMINARY STATEMENT Rather than squarely addressing the issues raised in respondents’ initial brief, petitioner dodges them. Instead of presenting this Court with a principled defense of the Strell Appraisal and its contents, petitioner submits a meandering, disjointed responding brief, urging this Court to ignore: (a) legal issues that are properly before it; (b) the actual testimony in the record (in favor of petitioner’s unsupported reimagining of that testimony); and (c) the fundamental legal requirements that petitioner’s appraiser violated. Unable to defend its own appraiser’s work on the merits, petitioner also attempts to divert attention from the fatal flaws in that work by leveling a series of baseless (and irrelevant) attacks against respondents’ appraisal, appraiser and counsel. Respondents respectfully submit that, as a consequence of these choices, petitioner’s brief does a disservice to this Court. As but one example, petitioner does not directly respond to the core argument raised by respondents – that the Strell Appraisal was fatally flawed because it failed to include the “facts, figures and calculations” required to support both Mr. Strell’s capitalization rate analysis and conclusions as to value – until page 55 of its brief. See Brief for Petitioner-Respondent at 55. Even then, petitioner merely asserts, without citing any supporting authority – or pertinent evidence in the record – that the work of its appraiser was “good enough,” that Section 202.59 of the Uniform Rules for the - 2 - New York State Trial Courts (the “Uniform Rules”) did not require more, and that this Court cannot hold otherwise. See id. at 55-62. Contrary to petitioner’s argument, the competency and legal sufficiency of petitioner’s appraisal, including whether the appraisal complied with the requirements of Section 202.59, are legal issues that are properly before this Court. More importantly, the requirements of Section 202.59 of the Uniform Rules are not mere suggestions to be ignored by an appraiser, or by taxpayers seeking to reduce their tax liability. Instead, those requirements establish an evidentiary standard that requires appraisers to do more than proffer bare, unsupported, and unverifiable opinions. By requiring that appraisers “show their work,” and provide factual support for their opinions, the requirements of Section 202.59 help ensure that taxpayers are treated fairly and equitably, municipalities are able to give due consideration to claims that assessments are erroneous, and New York’s courts are able to meaningfully review such claims. As the dissenting Justices at the Appellate Division recognized, relaxing the evidentiary standard imposed by Section 202.59 would undermine all of these important policy goals. Petitioner simply cannot defend the Strell Appraisal on the merits. The Strell Appraisal was, and is, fundamentally and fatally flawed, did not comply with the requirements of either the Uniform Rules or the Uniform Standards of Professional Appraisal Practice, and did not provide either competent or legally - 3 - sufficient evidence of value – whether to rebut the presumption of validity that attached to the Town’s assessment, or to carry plaintiff’s ultimate burden of proof on the issue of value. ARGUMENT POINT I THE COMPETENCY AND LEGAL SUFFICIENCY OF PETITIONER’S APPRAISAL ARE PROPERLY BEFORE THIS COURT To the extent petitioner argues that this Court may not consider the threshold question of whether the Strell Appraisal was competent and legally sufficient to overcome the presumption of validity that attached to the Town’s assessment (see Brief for Petitioner-Respondent at 1 & n.4), petitioner fundamentally misunderstands this Court’s jurisdiction and scope of review on this appeal. This threshold issue is both squarely before this Court and reviewable. The threshold question of whether the evidence presented to a trial court was both competent and legally sufficient to require submission of a factual issue to the trier of fact, is a question of law. See Heary Bros. Lightning Protection Co. v. Intertek Testing Servs., N.A., 4 N.Y.3d 615 (2005); Cummins v. County of Onondaga, 84 N.Y.2d 322 (1994); Matter of Town of Islip, 49 N.Y.2d 354 (1980); Cohen v. Hallmark Cards, 45 N.Y.2d 493 (1978); see also Holtslander v. C.W. Whalen & Sons, 126 A.D.2d 917 (3d Dep’t), motion for leave to appeal denied as - 4 - unnecessary 69 N.Y.2d 1016 (1987). In the context of a tax certiorari proceeding, this threshold question becomes whether the petitioner’s appraisal is both competent and legally sufficient to rebut the presumption of validity that attaches to the municipality’s assessment. See Matter of FMC Corp. v. Unmack, 92 N.Y.2d 179, 187-88 (1998); see also Roth v. City of Syracuse, 21 N.Y.3d 411 (2013). To rebut that presumption, the petitioner in such a proceeding must “provide credible and competent evidence, usually in the form of a competent appraisal, that a valid dispute exists concerning the property’s valuation.” Matter of FMC Corp., 92 N.Y.2d at 191 (emphasis added). Where the competency and legal sufficiency of the petitioner’s appraisal is challenged, the Court must determine, in the first instance, whether the appraisal is based on “‘sound theory and objective data’ . . . rather than on mere wishful thinking.” Id. at 188 (internal citation omitted). Respondents initially moved to strike the Strell Appraisal on the ground that it did not comply with the requirements of Section 202.59, and was neither competent nor legally sufficient to rebut the presumption of validity. R. 967-68. Although that motion was not successful, respondents raised this threshold legal issue at the Appellate Division (R. 1132-33), and have again raised it before this Court. There is, therefore, no question that this issue is preserved for this Court’s review. - 5 - Admittedly, the majority at the Appellate Division declined to reverse the trial court on this threshold issue, and the dissenting Justices focused their opinion primarily on whether petitioner met its “ultimate burden” of proof. However, the dissenting Justices also identified a series of fatal flaws in the Strell Appraisal, which demonstrate that the appraisal was neither competent nor legally sufficient to rebut the presumption of validity. Those flaws included Mr. Strell’s failure to: provide the required factual support for the figures contained in his appraisal; include supporting documents and data concerning his allegedly comparable rentals; make necessary adjustments to the allegedly comparable properties used in his capitalization rate analysis; and break down the adjustments that he did make into specific categories and quantities. See R. at 1137-39. Regardless, however, the Appellate Division’s treatment of this threshold legal issue does not preclude this Court from reviewing it. To the contrary, it is well-settled that, once a jurisdictional predicate exists for an appeal as of right pursuant to CPLR 5601(a), the resulting appeal brings along with it any and all reviewable issues in the case. See Matter of Duchnowski, 31 N.Y.2d 991 (“[O]nce an appeal lies as of right under subdivision (a) of CPLR 5601, all questions properly raised below may be reviewed on the ensuing appeal.”); see also Holtslander v. C.W. Whalen & Sons, 126 A.D.2d 917 (3d Dep’t), motion for leave to appeal denied as unnecessary 69 N.Y.2d 1016 (1987). Accordingly, the - 6 - competency and legal sufficiency of the Strell Appraisal is properly before, and reviewable by, this Court. POINT II PETITIONER’S APPRAISAL WAS NEITHER COMPETENT NOR LEGALLY SUFFICIENT TO REBUT THE PRESUMPTION OF VALIDITY The central issue on this appeal is the significance of the failure of the Strell Appraisal to provide the “facts, figures and calculations” by which the conclusions in that appraisal were reached, as required by Section 202.59 of the Uniform Rules. This issue goes to both the competency and legal sufficiency of the Strell Appraisal – whether to initially rebut the presumption of validity that attached to the Town’s assessment, or to carry petitioner’s ultimate burden of proof on the issue of value. Petitioner would prefer to avoid this issue, as evidenced by petitioner’s decision to forego substantive discussion of it until page 55 of its brief. Even then, petitioner fails to offer any principled defense of the Strell Appraisal, or attempt to demonstrate by citation to the record (as opposed to unsupported and unsupportable assertions in its brief) that the Strell Appraisal contained the required “facts, figures and calculations.” See Brief for Petitioner-Respondent at 55-60. In fact, rather than address these fatal omissions, petitioner implicitly - 7 - admits them, but then urges this Court to consider these omissions as matters that merely to go the “weight” to be accorded to Mr. Strell’s opinions. See id. Petitioner’s argument ignores that Section 202.59 establishes a mandatory evidentiary standard that an appraisal must satisfy before it can be considered competent or legally sufficient evidence to rebut the presumption of validity. Section 202.59(g)(2) specifically provides that appraisal reports exchanged in tax assessment review proceedings “shall contain a statement of the method of appraisal relied on and the conclusions as to value reached by the expert, together with the facts, figures and calculations by which the conclusions were reached.” 22 N.Y.C.R.R. § 202.59(g)(2) (2013) (emphasis added). Section 202.59(g)(2) further provides that, “[i]f sales, leases or other transactions involving comparable properties are to be relied on, they shall be set forth with sufficient particularity as to permit the transaction to be readily identified, and the report shall contain a clear and concise statement of every fact that a party will seek to prove in relation to those comparable properties.” Id. (emphasis added). It is well-settled that these requirements are mandatory – and that a failure to provide the required “facts, figures and calculations” will result in the appraisal being stricken and the proceeding dismissed. See Pritchard v. Ontario County Indus. Dev. Agency, 248 A.D.2d 974 (4th Dep’t 1998); Niagara Mohawk Power Corp. v. Town of Tonawanda Assessor, 233 A.D.2d 921 (4th Dep’t 1996); - 8 - see also Central N.Y. Oil & Gas Co., LLC v. Porto Bagel, Inc., 106 A.D.3d 1152 (3d Dep’t 2013) (holding that petitioner’s appraisal should have been stricken because it lacked the supporting facts, figures and calculations by which the conclusions contained therein were reached); Niagara Mohawk Power Corp. v. Town of Bethlehem Assessor, 225 A.D.2d 841, 846 (3d Dep’t 1996) (holding that petitioner’s appraisal lacked supporting facts, figures and conclusions and was, therefore, legally insufficient to overcome the presumption of validity); Orange & Rockland Utils. v. Williams, 187 A.D.2d 595, 596 (2d Dep’t 1992) (holding that an appraisal that lacks ascertainable or verifiable data to support the appraiser’s conclusions of value violates the requirements of § 202.59(g)(2), and should be stricken); State v. Town of Thurman, 183 A.D.2d 264, 266 (3d Dep’t 1992) (same). Such appraisals are entitled to no consideration, particularly where they also contain inconsistent and unexplained conclusions which are unsupported by facts, figures or calculations. See 50540 Realty, Inc. v. Tax Comm’n of The City of New York, 136 A.D.2d 699, 700 (2d Dep’t 1988); see also Johnson v. Town of Haverstraw, 133 A.D.2d 86, 87 (2d Dep’t 1987) (holding that appraiser’s failure to specify and quantify adjustments “vitiated the probative value of the appraisal,” and required dismissal of the petitions). To the extent that petitioner attempts to distinguish most of these cases, respondents initially note that petitioner fails to even address the Pritchard, - 9 - Niagara Mohawk Power Corp. v. Town of Tonawanda Assessor, or Central N.Y. Oil & Gas Co. cases. With respect to the rest, petitioner’s attempts are strained, at best, and do not seriously dispute the central proposition for which all of these cases were cited by respondents: Section 202.59 requires that appraisers show their work, and include in their appraisal the required “facts, figures and conclusions” to support the opinions they offer. Although no two appraisals are exactly alike, and no two tax certiorari cases are either, Johnson v. Kelly, 45 A.D.3d 687 (2d Dep’t 2007), again illustrates the fatal flaws that will result in an appraisal being stricken for failure to comply with Section 202.59. The appraisal in Johnson valued vacant farmland. See excerpts from the appendix in Johnson, annexed as Appendix A, at pgs. 169- 70.1 The comparables selected by petitioner’s appraiser were spread across a wide swath of the Hudson Valley, and the appraiser claimed to have adjusted for market conditions, locations, tillable land, topography, erosion, and deed restrictions. See id. at 175-76. The appraiser’s comparables had different soil types than the subject property, however, and he did not adjust for that difference. See id. at 59. 1 Respondents respectfully request that this Court take judicial notice of the contents of the appraisal and the testimony of the appraiser in Johnson v. Kelly, as set forth in the appendix filed with the Second Department in that case. Respondents are also providing copies of the particular pages relied upon herein as a convenience to the Court. These pages inform the Appellate Division’s decision, and demonstrate the similarities between the fatal flaws in the petitioner’s appraisal in Johnson v. Kelly and the fatal flaws in the Strell Appraisal. - 10 - The appraiser also did not adjust for an easement on the subject property. See id. at 71. With respect to the first of his comparables, the appraiser made a lump-sum adjustment, but did not give any facts, figures or calculations in his appraisal to justify that adjustment. See id. at 73-74. He also included an adjustment for an easement on that property, based upon a sales price that he did not bother to verify. See id. at 75. With respect to the second of his comparables, the appraiser again made a lump-sum adjustment, but did not provide facts, figures or calculations to justify that adjustment. See id. at 77. The appraiser repeated that failure for his third and fourth comparables. See id. at 78. To the extent that he was also required to value buildings to adjust his comparables, the appraiser did so without including any research or data in his appraisal. See id. at 132-36. The appraiser’s capitalization rate analysis similarly lacked basic facts and data required to verify and support his conclusions. See id. at 92-96. Based upon that record, and those flaws, the Appellate Division affirmed the trial court order striking the petitioner’s appraisal for failure to comply with Section 202.59. See Johnson v. Kelly, 45 A.D.3d at 687. Mr. Strell’s Appraisal is even more fundamentally flawed than the appraisal in Johnson v. Kelly. As discussed in respondent’s initial brief, and further discussed below, the Strell Appraisal: lacked even the most basic facts about the subject condominiums; lacked facts and figures concerning the allegedly - 11 - comparable properties that Mr. Strell used to estimate rental income; failed to make necessary adjustments concerning those allegedly comparable properties; lacked facts, figures and calculations concerning the per square foot values that it adopted for the subject condominiums; and lacked the facts, figures and calculations required to support its capitalization rate analysis and conclusions. (See Brief for Respondents-Appellants at 18-33; Points II.A through II.F, infra). These are exactly the type of fatal flaws which require that an appraisal be stricken – particularly given their cumulative effect. See, e.g., Johnson v. Kelly, 45 A.D.3d at 687; Pritchard, 248 A.D.2d at 974. To the extent petitioner nevertheless argues that these flaws do not matter because they did not impede respondents’ cross-examination of Mr. Strell, that argument is without merit. It is true that “[a] major reason for the rule requiring the disclosure of facts and source materials at the appraisal stage is to allow opposing counsel the opportunity to effectively prepare for cross- examination.” Gullo v. Semon, 265 A.D.2d 656, 657 (3d Dep’t 1999) (citing Matter of White Plains Props. Corp. v. Tax Assessor of City of White Plains, 58 A.D.2d 871 (2d Dep’t 1977), aff’d, 44 N.Y.2d 971 (1978)). Although respondents’ counsel was able to cross-examine Mr. Strell regarding the many facts, figures and calculations that were missing from his appraisal, respondents’ counsel was not able to cross-examine Mr. Strell about the substance of the missing fact, figures - 12 - and calculations – and, in particular, was not able to probe their veracity and verifiability – because they were simply not there. Petitioner would have this Court ignore this obvious limitation, however, while also having the temerity to argue both that respondents were not prejudiced in their supposedly “extensive” cross-examination of Mr. Strell, while also characterizing the limited cross-examination that was possible as “less fruitful” than petitioner’s cross-examination of Mr. Newton. See Brief for Petitioner-Respondent at 9.2 Regardless, and contrary to petitioner’s argument, the lack of facts, figures and calculations in Mr. Strell’s appraisal obviously limited the scope of the cross-examination that respondents’ counsel was able to prepare and undertake, and the Strell Appraisal should have been stricken for this additional reason. A. The Strell Appraisal Lacked Essential Facts Concerning Each Condominium Unit At Issue Petitioner does not deny that the Strell Appraisal failed to include a single picture, plan, rendering, or description of the interior of any of the subject condominium units as they existed on the valuation date. See R. 475-77, 549-52, 554-86. Nor does petitioner deny that the Newton Appraisal demonstrated that 2 Respondents, of course, strongly disagree with petitioner’s characterization of both the cross-examination of Mr. Strell and the cross-examination of Mr. Newton. - 13 - each unit was finished differently, and often built-out differently from the original design. See R. 139-344, 797-803. Petitioner does not try and justify these omissions, choosing instead to merely cite to the majority opinion at the Appellate Division, holding that this omission went to the “weight” accorded to petitioner’s appraisal. See Brief for Petitioner-Respondent at 56. That holding unfortunately failed to recognize that sound appraisal practice requires that appraisals contain specific details concerning the property being appraised. In particular, The Appraisal of Real Estate – often referred to as the “bible” by appraisers – instructs that appraisals should contain “specific data,” including “details about the property being appraised”. See Appraisal Inst., The Appraisal of Real Estate at 155 (13th ed. 2008). This requirement has been incorporated into New York law, both by Section 202.59(g)(2) of the Uniform Rules, and by decisions rejecting appraisals that fail to include this critical information. See, e.g., Tenn. Gas Pipeline Co. v. Town of Sharon Bd. of Assessors, 298 A.D.2d 758 (3d Dep’t 2002), lv. denied 99 N.Y.2d 506 (2003). B. The Strell Appraisal Lacked Facts and Figures Concerning the Allegedly Comparable Properties Used to Estimate Rental Income Petitioner’s naked assertion that Mr. Strell “comprehensively reviewed the entire market in the Town for condominiums and other residential - 14 - properties” (see Brief for Petitioner-Respondent at 56), is not only unsupported by any citation to the record, it is flatly contradicted by the record. First, petitioner’s contention that Mr. Strell supposedly conducted a “comprehensive review” rests in large part on a one-page list, identifying 67 rentals, contained in Mr. Strell’s appraisal – a list that is presented without any supporting documentation or verification, much less any analysis to support the opinions that petitioner suggests Mr. Strell may have attempted to draw from it. See R. 595. Mr. Strell admitted, on cross-examination, that he did not make any analysis of the individual rentals on the list, determine whether they were comparable, or make any adjustments to the listed rentals – because the list was merely intended to provide an “overview of the market.” R. 899-900.3 Second, to the extent petitioner otherwise claims that Mr. Strell considered “numerous other comparable rentals” as a part of his supposedly “comprehensive review” (Brief for Petitioner-Respondent at 56), the record also puts the lie to that claim. The Strell Appraisal actually considered only nine allegedly comparable condominium and apartment complexes located within the Town of Amherst (Castlebrook, Oakbrook, Autumn Creek, Boulevard Towers, Windsong Place, Dockside Village, Renaissance Place, Country Club Manor, and 3 The list itself, if offered as evidence of allegedly comparable properties, also violates Section 202.59(g)(2), because it fails to include “a clear and concise statement of every fact that a party will seek to prove in relation to [the] comparable properties.” See 22 N.Y.C.R.R. § 202.59(g)(2) (2013). - 15 - Dannybrook Apartments). See R. 595-623. This was hardly a “comprehensive review,” especially considering that Mr. Strell testified that he has previously represented 35 of the 38 condominium associations located within the Town. See R. at 732. Most importantly, however, even as to the condominium and apartment complexes that he did consider, Mr. Strell’s review was anything but comprehensive. For example, Mr. Strell purported to analyze an allegedly comparable rental at the Castlebrook Condominiums, but provided almost no facts, figures or calculations to support his opinions based upon that allegedly comparable rental – and provided no explanation whatsoever of the thought process that he followed from the scant information in his appraisal to reach his resulting opinions. See R. 596. Indeed, the Strell Appraisal fails to provide even the following basic information about the Castlebrook rental: a) the layout of the apartment; b) the finishes in the apartment; c) the contact information for the landlord or tenant; d) the written lease, lease term, or specific lease language; e) any photos of the interior of the apartment (and only the most general photo of the outside of the complex, in which it is impossible to identify the unit under consideration); f) any specific information about alleged rent concessions; g) the number of bedrooms and bathrooms; - 16 - h) whether appliances or other amenities, such as a fireplace, dishwasher, or washer and dryer – all common to the subject units – are included; and i) whether a garage is included in the rental price. See R. 596. The reader is certainly not given a “clear and concise statement of every fact” petitioner sought to prove in relation to this alleged comparable, as is required by Section 202.59(g) of the Uniform Rules. Without that data there is no way for the Court to determine whether Mr. Strell’s conclusions are realistic, helpful, or supported, or for opposing counsel to cross-examine him effectively – other than by highlighting the absence of such data (which cross-examining counsel did, repeatedly). R. 844, 848, 850-51, 910-11, 914-16, 919-20, 928-29, 947-48, 950. C. The Strell Appraisal Failed To Make Necessary Adjustments Concerning the Allegedly Comparable Properties Used to Estimate Rental Income Respondents demonstrated in their initial brief that the Strell Appraisal failed to make necessary adjustments to account for the substantial differences between the subject condominium units and the allegedly comparable properties Mr. Strell used to estimate rental income for the condominiums. See Brief for Respondents-Appellants at 23-26. Petitioner either misapprehends this argument, or purposefully chooses to ignore it, because it is not addressed in petitioner’s brief. Petitioner instead focuses on the lump-sum adjustments that Mr. Strell did make, and argues that Mr. Strell was not required to provide any facts, - 17 - figures or calculations to support those adjustments because, at least according to Mr. Strell, “such specific adjustments” cannot be made. (See Brief for Petitioner- Respondent at 58). Petitioner cites absolutely no authority in support of this argument, likely because the authority is entirely to the contrary. As this Court has recognized, adjustments are a necessary component of an appraisal: By its very definition, a comparable sale need not be identical to the subject property. A comparable sale need only be “sufficiently similar to serve as a guide to the market value of the [subject] complex, notwithstanding differences between these comparables and the [subject] property.” In fact, and in accordance with the substantial evidence standard, “sound theory and objective data” may be used to adjust evidence of sales of comparable properties in order to more accurately reflect the market value of the subject property. FMC Corp. v Unmack, 92 N.Y.2d at 189 (emphasis added) (internal citations omitted). This Court’s holding in FMC Corp. echoes language in The Appraisal of Real Estate: Ideally, if all comparable properties are identical to the subject property, no adjustments will be required. However, this is rarely the case, especially for nonresidential properties. After researching and verifying transactional data and selecting the appropriate unit of comparison, the appraiser adjusts for any differences. The Appraisal of Real Estate, supra, at 307 (emphasis added). - 18 - As The Appraisal of Real Estate further instructs: “[e]ach important difference between the comparable properties and the subject property that could affect property value is considered an element of comparison.” Id. Because each important difference is a separate element of comparison, and lump-sum adjustments make it impossible to meaningfully probe these separate elements, the dissenting Justices at the Appellate Division correctly recognized that New York law does not permit such lump-sum adjustments: To the extent that petitioner’s appraisal contains “lump- sum” adjustments without breaking those adjustments down into specific categories and quantities, we conclude that such adjustments are improper because they do not afford an adequate basis for our review (Matter of County of Dutchess [285 Mill St.], 186 AD2d 891, 892; see also Geffen Motors v State of New York, 33 AD2d 980, 980). See R. 1139. Petitioner has not (and cannot) deny that substantial differences existed between the subject condominium units and the alleged comparables Mr. Strell included in his appraisal – or that Mr. Strell failed to adjust for these differences. For example, with respect to the Castlebrook property, Mr. Strell made no adjustments in spite of the fact: a) the subject units are free standing with land between them (patio homes) – while the Castlebrook units are attached to each other; b) the subjects all have basements – Castlebrook does not; - 19 - c) the subjects were built between approximately 2002 and 2006 – but there is no information about when the obviously older Castlebrook units were built; d) the subjects all have attached two car garages – while it is not clear that garages are available at Castlebrook; and e) the subjects all have designer kitchens, appliances, fireplaces, and 1½ - 2½ baths – while Castlebrook does not appear to have any of these amenities. See R. 124-344. To the extent Mr. Strell made any adjustments with respect to the Castlebrook properties, he did not provide any facts, figures or calculations to explain the two adjustments that he did make – for the “prestigious location” and for “rent concessions in the marketplace.” See R. 596. Other than opining that these adjustments were appropriate, there was absolutely no data or documentation that Castlebrook residents enjoyed any special privileges by virtue of their location, or that any concessions were either offered or employed to rent the Castlebrook units (much less what those concessions, if any, might have been). See R. 596. Remarkably, Mr. Strell was even less forthcoming concerning any adjustments he made with respect to the other allegedly comparable rentals that he relied upon in his analysis. Mr. Strell also made lump-sum adjustments to those remaining rentals, but failed to explain why or how he determined those amounts, or even the reasons why the adjustments were being made. See, e.g., R. 597. - 20 - Again, petitioner has no answer for these arguments, and no authority for its assertion that adjustments were not required to account for the substantial differences between the subject condominium units and the allegedly comparable rentals relied upon by Mr. Strell. Nor does petitioner have any authority to support the contention that Mr. Strell was not required to break-down, explain or support his lump-sum adjustments. D. The Strell Appraisal Lacks Facts, Figures and Calculations Concerning the Per Square Foot Values That It Adopts As demonstrated in respondents’ initial brief, the Strell Appraisal identified a range of allegedly comparable rental values from $0.64 to $1.08 per square foot (see R. 596-622), but then adopted a range of $0.80 to $0.90 per square foot as comparable market rent, without any discussion, explanation, or analysis (see R. 642). The Strell Appraisal then assigned each condominium unit a specific square foot rental value within that range, and calculated an annual estimated market rent for each unit – again without discussion, explanation or analysis. See R. 653-54. These flaws provide yet another basis upon which the Strell Appraisal should have been stricken. See Brief for Respondents-Appellants at 26-27. Petitioner apparently misses this point entirely, and ignores this threshold issue in its brief. Instead, petitioner seems to believe that these flaws were cured by Mr. Strell’s testimony at trial. See Brief for Petitioner-Respondent - 21 - at 58-59. This is, of course, a tacit admission that the required facts, figures and calculations were not provided in the Strell Appraisal. Mr. Strell’s subsequent testimony is irrelevant to the threshold issue of whether the Strell Appraisal complied with the requirements of Section 202.59 and, therefore, was both competent and legally sufficient to rebut the presumption of validity (which it was not). However, even if that testimony could be considered, it is damning to petitioner. Petitioner’s claim that, in determining his range of allegedly comparable per square foot rental values, Mr. Strell relied upon “[m]ore than 65 non-duplicative residential properties in the Town,” is demonstrably false. First, as noted above, the Strell Appraisal includes a list of 67 rentals, apparently obtained through the Multiple Listing Service (“MLS”). See R. 595. That list precedes Mr. Strell’s analysis of “rental comparables,” and was not included in it. See R. at 596 (“In arriving at my estimate of market rent I have included the following rental comparables.” (emphasis added)). That Mr. Strell did not include the properties on the MLS list in his analysis is further confirmed by: (a) the fact that the list contains multiple per square foot rental amounts that fall outside of the range that he selected (as low as $.57 per square foot and as high as $1.21 per square foot) (see R. 595); (b) the range that he selected bracketed the adjusted per square foot rental amounts that he - 22 - actually considered in his analysis of rental comparables (see R. 596-622); and (c) Mr. Strell’s own testimony on cross-examination that he did not rely on the MLS list (see R. 899-900) (Q: “[W]e can take that page and we can remove it from your report because you don’t rely on it, do you?” A: “Absolutely. That just shows you – it points you in the direction of where the market is today.”). Mr. Strell also admitted on cross-examination that he did not make any analysis of the individual rentals on the list, determine whether they were comparable, or make any adjustments to the rentals on the MLS list – because the list was merely intended as an “overview of the market.” See R. 899-900. Mr. Strell’s remaining testimony concerning his analysis of rental comparables further confirms that the Strell Appraisal lacked the necessary facts, figures and calculations to support that analysis. For instance, petitioner claims that Mr. Strell “discussed concessions in the market place,” and included those concessions in his analysis. See Brief for Petitioner-Respondent at 58. With respect to his condominium comparables, however, Mr. Strell admitted that he did not provide any supporting facts or data concerning any alleged concessions available in the market. See R. at 596-97, 911-13. With respect to his apartment comparables, Mr. Strell further admitted that, although his appraisal claimed that rent concessions were available in the market, he neither had – nor included – any supporting facts or data concerning any alleged concessions available at the - 23 - complexes that he included in his analysis. See R. at 923, 928-29. And, perhaps most damning of all, Mr. Strell admitted that, when it came time to assign a particular per square foot rental value to each condominium unit at issue, he provided neither an explanation in his appraisal for the choices he made nor any supporting facts, figures or calculations to support those choices. See R. at 948-49. In sum, both the Strell Appraisal and Mr. Strell’s own testimony amply demonstrate that the Strell Appraisal lacked the required facts, figures and calculations to support its conclusions as to the per square foot value of the condominiums at issue. E. The Strell Appraisal Failed to Establish Fair Market Value For Each Of The Condominium Units Petitioner attempts to dismiss Mr. Strell’s failure to establish a fair market value for each of the subject condominium units as a “red herring.” See Brief for Petitioner-Respondent at 59. Petitioner cites no authority, however, to support its assertion that an appraiser in a case involving the value of individual condominium units may simply calculate an aggregate value for all of the units and then leave it to his or her opponent (or the Court) to determine the fair market value of each individual condominium unit. The authority on this issue is to the contrary. As The Appraisal of Real Estate explains, “individual [condominium] units are not valued by appraising the entirety and then allocating the total value to individual units.” The Appraisal - 24 - of Real Estate, supra, at 639. Instead, the value assigned to each unit must be based upon the particular characteristics of each unit, and New York law recognizes that the failure to individually appraise each parcel at issue renders the appraisal report inadmissible. See, e.g., Stock v. Baumgarten, 211 A.D.2d 1008, 1009 (3d Dep’t 1995) (holding that “22 NYCRR 202.59 (g)(3) requires separate appraisal reports for each parcel appraised”). As discussed in respondents’ initial brief, Mr. Strell apparently recognized that he needed to include an allocation of value to the individual units, since he included an “allocation of value to the individual units” in the Table of Contents to his appraisal. See R. 481. He did not, however, perform such an allocation or include it in his appraisal. See R. 488. Only after Mr. Strell was pressed about this issue on cross-examination did he reluctantly admit that his appraisal did not, in fact, contain an allocation of value for any of the individual condominium units. See R. 867-68. It is respectfully submitted that the trial court, and the majority at the Appellate Division, failed to recognize the significance of this missing proof, and that it was not simply a ministerial mater to allocate a value to each of the 36 condominium units under review – especially since their finished features varied greatly. (As is readily apparent from the Newton Appraisal. See R. 124-344). - 25 - F. The Strell Appraisal Lacked the Facts, Figures and Calculations Required To Support Its Capitalization Rate Conclusion Perhaps the most baffling portion of petitioner’s brief, or perhaps simply the most disingenuous, is petitioner’s response to the failure of Mr. Strell to obtain and provide the facts, figures and calculations that were required to support his capitalization rate conclusion. (For example, this section of petitioner’s brief contains this indecipherable attempt at a sentence: “Petitioner’s Appraisal that the OAR is the so called “cash on cash” yield required by investors or the “Equity Yield Rate” identified by Mr. Newton in the Town’s Appraisal.” See Brief for Petitioner-Respondent at 60).4 Cutting through the bramble of this argument, petitioner asserts, in essence, that the Strell Appraisal was “good enough” for the trial court and the majority for the Appellate Division, so this Court may not hold otherwise. See Brief for Petitioner-Respondent at 61-62. Petitioner’s argument first ignores that the competency and legal sufficiency of the Strell Appraisal is a question of law, which is reviewable by this Court. See Roth v. City of Syracuse, 21 N.Y.3d 411 (2013); FMC Corp. v. Unmack, 92 N.Y.2d 179 (1998). Petitioner’s argument also ignores that the record demonstrates that not only did Mr. Strell not include the 4 On a related note, petitioner’s brief repeatedly refers to the so-called “cash on cash” yield, a concept that was neither raised nor relied upon by petitioner’s appraiser. Petitioner’s brief is also fond of referring to the supposed “equity yield rate” that petitioner attributes to Mr. Newton, ignoring that Mr. Newton calculated and relied upon a capitalization rate to support his value conclusions. - 26 - required facts, figures and calculations required to support his analysis, he also lied about the basis of that analysis – before being forced to admit that the analysis was, at its heart, based solely upon “forecast financials” that he generated using two pages of incomplete information concerning only two of his four allegedly comparable rental properties. Although petitioner now argues that Mr. Strell used “projected revenues” and “disbursements” in his capitalization rate analysis (see Brief for Petitioner-Respondent at 42, 60), that is not what Mr. Strell claimed at trial. Instead, Mr. Strell initially claimed that he had calculated a “pure” capitalization rate, and that he developed that rate using data from “certified sources”: So, that’s simply how you develop the pure capitalization rate of each of these transactions. The other information is fairly precise, it tells you the building size, different multipliers. I even had the expense analysis available. So, I believe the data was very strong and very good. It came from certified sources. R. at 761. Mr. Strell did not, however, include the underlying data, facts, or figures in his appraisal. On cross-examination, the reason for that omission became apparent. Mr. Strell admitted that he had only “limited historic operating expenses” regarding the four allegedly comparable properties that he used in his capitalization rate analysis, that he did not have “certified information,” and that the information that he relied upon consisted solely of “forecast financials” rather than current, actual income and expense information. See R. 936-38. - 27 - Upon further cross-examination, Mr. Strell also admitted that the only data, facts, or figures that he had to support his “forecast financials” were two pieces of paper in his file. See R. 934-35, 940-41, 1073, 1076. Those two pieces of paper, marked as Exhibits O and Q at trial, pertained to only two of the four allegedly comparable properties, and were otherwise woefully inadequate to support his supposed analysis. See R. 1073, 1076. The first piece of paper, concerning Hidden Village, contained virtually no specific expense information, and Mr. Strell was forced to admit that “virtually no expense information was provided to him for that property.” See R. 973, 1073. The second piece of paper, concerning Stoney Brook, provided limited supporting data in the form of a profit and loss statement, but Mr. Strell admitted that he did not use that information in his report, and instead utilized information that was not included in either his appraisal for his file, and/or used “forecast financials” for Stoney Brook. Cf. R. 1076 to R. 638; see also R. 107. While petitioner has now seemingly decided that the term “projected” revenues and expenses is somehow preferable to Mr. Strell’s use of the term “forecast financials,” this is a distinction without a difference. Petitioner does not – and cannot – dispute that Mr. Strell collected almost no data concerning his allegedly comparable properties, and failed to include any required data or facts concerning revenues and expenses for those allegedly comparable properties in his - 28 - appraisal. Worse, Mr. Strell purposefully hid that he was relying upon his own projections as the supposed basis for his capitalization rate analysis – going so far as to falsely claim at trial that his “pure” capitalization rate was based on good, strong data, from “certified sources.” See R. at 761. Only after he was caught in that lie did Mr. Strell admit otherwise. Mr. Strell’s failure to obtain the necessary facts and figures required to support his capitalization rate analysis, in the first instance, and his failure to include that essential data in his appraisal, in the second, are both fatal flaws. As the dissenting Justices at the Appellate Division recognized: Countless other cases have come before this Court in which conflicting expert appraisers have had no trouble collecting the data and documents necessary to establish an evidentiary foundation for their opinions with respect to a capitalization rate, and we do not see anything remarkable here to excuse petitioner’s appraiser from that task. Moreover, even if extenuating circumstances were present in this case rendering it difficult for an appraiser to develop an evidentiary foundation for an opinion, that fact would not cure the defect in petitioner’s appraisal (see Matter of City of Rochester v. Iman, 51 AD2d 651, 652). Above all, we see no occasion here to take a plain failure of proof and to extrapolate from it a new, relaxed evidentiary standard in tax assessment cases based on the assumption that to do otherwise would stifle petitions challenging tax assessments. Rules of evidentiary foundation are restrictive, and intentionally so (see generally Wagman v. Bradshaw, 292 AD2d 84, 91). R. 1137-38. As the dissenting Justices also correctly recognized, without the required supporting facts and figures, and the supporting documents containing - 29 - them, Mr. Strell’s “unsupported financial figures” were “simply hearsay,” and did not “become admissible upon his bare assertion that he saw them at some point in the past.” See R. 1138. Consequently, the Strell Appraisal again failed to comply with the requirements of Section 202.59(g)(2) of the Uniform Rules, and should have been stricken. See, e.g., Schoeneck v. City of Syracuse, 93 A.D.2d 988, 988 (4th Dep’t 1983) (“[t]he determination concerning the capitalization rate did not comply with the statute as it did not state ‘the essential facts’ upon which the conclusion was founded.”). To the extent that it was not, however, the dissenting Justices correctly concluded that the fatal flaws in Mr. Strell’s capitalization rate analysis meant that is was entitled to no weight, and should have been rejected. See Point IV, infra. POINT III MR. STRELL VIOLATED USPAP Petitioner does not deny that Mr. Strell violated the Uniform Standards of Professional Appraisal Practice. Instead, incredibly, petitioner argues that: (a) compliance with USPAP is not required in New York; (b) USPAP is, in any event, inapplicable to Mr. Strell because he “is not licensed” as an appraiser; and (c) Mr. Strell was, therefore, free to disregard USPAP’s requirements. See Brief for Petitioner-Respondent at 3-4, 20. These arguments are without merit. - 30 - Stated another way, petitioner’s argument is that Mr. Strell is permitted to perform the same function as a licensed appraiser, even though he is not licensed, but is held to a less rigorous standard when doing so. It is incredible that petitioner would take that position before this Court, given that Mr. Strell testified: (a) he is aware that New York law requires that he prepare a self- contained appraisal report when he participates in Article 7 proceedings; (b) he purported to prepare a self-contained appraisal report in this proceeding; and (c) the definition of a self-contained appraisal report is one that complies with the requirements of USPAP. See R. at 839-42. Not only did Mr. Strell so testify, he also expressly stated in his appraisal that it was intended to comply with the requirements of USPAP (R. 479), and certified that his report was prepared in conformity with the requirements of USPAP (R. 480). Given this record, how can petitioner now argue that Mr. Strell was not required to comply with USPAP? The simple answer is that petitioner cannot – and the fact that petitioner has done so speaks volumes about the merits of that argument and petitioner’s willingness to ignore and distort the record throughout its brief. Petitioner’s argument fails for the additional reason that this Court has recognized that compliance with USPAP is required in New York. Although this Court’s decision in People ex rel. Cuomo v. First Am. Corp., 18 N.Y.3d 173 (2011), cert. denied sub. nom CoreLogic, Inc. v. Schneiderman, 132 S.Ct. 1929 - 31 - (2012), did not arise out of an RPTL Article 7 proceeding, this Court’s holding was not so limited as petitioner urges. To the contrary, this Court held that USPAP requires appraisers to “perform assignments with impartiality, objectivity, and independence, and without accommodation of personal interests.” Id. at 176. In this instance, as demonstrated in respondents’ initial brief, Mr. Strell violated USPAP in multiple respects. See Brief for Respondents-Appellants at 34-37. Since petitioner has failed to refute respondents’ arguments on this point, respondents will rely upon their initial briefing on this issue and will not burden this Court by repeating their arguments. POINT IV MR. STRELL’S CAPITALIZATION RATE CALCULATION WAS FATALLY FLAWED, AND IS OTHERWISE ENTITLED TO NO WEIGHT Petitioner’s defense of Mr. Strell’s capitalization rate calculation is, once again, that the Strell Appraisal was “good enough” for the trial court and the majority for the Appellate Division, and that this Court may not hold otherwise. See Brief for Petitioner-Respondent at 61-62. As already noted above, this argument ignores that the competency and legal sufficiency of the Strell Appraisal is a question of law, which is reviewable by this Court. See Roth v. City of Syracuse, 21 N.Y.3d 411 (2013); FMC Corp. v. Unmack, 92 N.Y.2d 179 (1998). In addition, petitioner’s argument ignores that Mr. Strell relied upon dissimilar - 32 - properties as alleged comparables in his capitalization rate conclusion, failed to make necessary adjustments to his alleged comparables, and ignored relevant data that was contrary to his (apparently foregone) opinion as to the applicable capitalization rate. Petitioner addresses none of these issues, other than to claim that they are insulated from this Court’s review. See, e.g., Petitioner-Respondent’s Brief at 44, n.17. Instead of deriving a capitalization rate by examining similar, comparable properties, as required by both New York law and sound appraisal practice, Mr. Strell chose four dissimilar and outdated apartment complexes. See R. 932-33, 944-45. In spite of the marked dissimilarities between the subject condominiums and those four complexes, Mr. Strell failed to make any adjustments to account for the significant differences in age, size, features, finishes, sale dates, and market conditions. See R. 633-39. Mr. Strell also failed to obtain verifiable data on “income, expenses, financing terms, and market conditions at the time of sale” and “make certain that the net operating income of each comparable property is calculated and estimated in the same way that the net operating income of the subject property is estimated.” See The Appraisal of Real Estate, supra, at 501; see also Point II.F, supra. In addition to these unrefuted and fatal flaws, Mr. Strell also ignored that three of the four allegedly comparable apartment complexes he relied upon - 33 - were sold again after the sales that he utilized in his report. See R. 1069-72, 1077- 79, 1082-86. All of the subsequent sales were closer in time to the 2008 valuation date at issue, but Mr. Strell did not examine, or even mention, these later sales in his report. See R. 933-34, 936, 938-39, 943-46. Sound appraisal practice required that he disclose and evaluate these later sales. See The Appraisal of Real Estate, supra, at 141 (stating that sales comparisons are useful when similar properties have recently been sold). Remarkably, petitioner’s only defense of Mr. Strell’s failure to do so is that he used the prior sales because he did not have financial information for the subsequent sales. See Brief for Petitioner-Respondent at 42. In other words, Mr. Strell failed to follow sound appraisal practice because (allegedly) he only had financial information for the prior sales and had not done his homework for the subsequent sales. (It is telling, of course, that Mr. Strell had trepidation about using “forecast financials” to plug other critical gaps in his research, knowledge and analysis). On this record, the dissenting Justices at the Appellate Division correctly concluded that Mr. Strell’s capitalization rate analysis was, as a matter of law, entitled to no weight: We cannot agree with the majority’s conclusion that the failure to adjust for such relevant, marketable characteristics as age and size (see generally Matter of Bialystock & Bloom v Gleason, 290 AD2d 607, 608) is - 34 - simply a matter of “weight to be given [petitioner’s] appraisal.” We recognize that “[t]he suitability of comparable sales is a matter resting within the sound discretion of the trial court” and that differences in properties may be accounted for by adjustments (Chase Manhattan Bank v State of New York, 103 AD2d 211, 222; see Niagara Falls Urban Renewal Agency v 123 Falls Realty, 66 AD2d 1009, 1010, appeal dismissed 46 NY2d 997, lv denied 47 NY2d 711). Nor do we question the general principle that “ ‘[comparability] does not . . . connote . . . identity’ ” (Matter of Katz v Assessor of Vil./Town of Mount Kisco, 82 AD2d 654, 658). Contrary to the majority, however, we conclude that the degree of comparability “becomes a questions of fact” only where the differences between a subject property and comparable properties have been explained and adjusted for value (Niagara Falls Urban Renewal Agency, 66 AD2d at 1010). Inasmuch as the record does not reflect any adjustment for the age and size of the comparable properties’ units by petitioner’s appraiser, any consideration of those factors by the Trial Referee or Supreme Court, or any basis for this Court to make its own adjustments, we are compelled to conclude that the purportedly comparable properties are incomparable as a matter of law. In other words, if weight of the evidence is the standard to be applied (see National Fuel Gas Supply Corp. v Goodremote, 13 AD3d 1134, 1135; Champlain Natl. Bank v Brignola, 249 AD2d 656, 657), we conclude that petitioner’s appraisal should be accorded no weight. R. 1138-39. Respondents respectfully submit that the dissenting Justices at the Appellate Division were right in every respect. - 35 - POINT V PETITIONER’S ATTACKS ON THE TOWN’S APPRAISAL EVIDENCE ARE UNFOUNDED AND IRRELEVANT Unable to defend the Strell Appraisal, petitioner instead attempts to deflect attention from its fatal flaws by leveling (and then repeating) a series of baseless and disingenuous attacks on the Town’s appraisal, appraiser, and counsel. See Brief for Petitioner-Respondent at 5-8, 34-37. Respondents submit that petitioner’s attacks are irrelevant, for reasons discussed below, and are otherwise without merit. Initially, petitioner’s attacks have no bearing on the two central issues on this appeal: (1) whether the Strell Appraisal was both competent and legally sufficient to rebut the presumption of validity; and (2) if this Court concludes that it was, whether the Strell Appraisal, and petitioner’s remaining evidence, was both competent and legally sufficient to meet petitioner’s ultimate burden of proof on the issue of valuation. If the Strell Appraisal is rejected on the threshold issue, the presumption remains intact. See FMC Corp. v. Unmack, 92 N.Y.2d at 188. On the other hand, if this Court concludes that the Strell Appraisal survives scrutiny on the threshold issue, but was neither competent nor legally sufficient to meet petitioner’s ultimate burden, petitioner receives the benefit of the value set forth in the Newton Appraisal – but is not entitled to any further relief. See, e.g., Matter of - 36 - Thomas v. Davis, 96 A.D.3d 1412 (4th Dep’t 2012), lv. denied 21 N.Y.3d 860 (2013). As to the latter point, petitioner seems to forget that it did not appeal the trial court’s decision and order. Accordingly, petitioner has not challenged the trial court’s decision to adopt all aspects of the Newton Appraisal other than its capitalization rate (including Mr. Newton’s estimate of the gross income the condominiums could generate, the expenses associated with the condominiums, the net operating income that the condominiums could generate, and the tax factor used to calculate the overall capitalization rate). See R. 27-30, 419. Petitioner also has not challenged the trial court’s determination that the condominiums have an aggregate value of $4,353,030.00. See R. 29. Petitioner is, therefore, wasting both ink, and this Court’s time, by arguing that any alleged deficiencies in the Newton Appraisal require a reduction of the Town’s assessment to $4,183,000.00. See Brief for Petitioner-Respondent at 63. Given that petitioner’s attacks on the Newton Appraisal, Mr. Newton, and respondent’s counsel are irrelevant to the issues presently before this Court, respondents are hesitant to further address them. However, respondents feel compelled to do so, at least summarily, because petitioner’s attacks not only ignore the record, they affirmatively misstate it. - 37 - Petitioner would, for instance, have this Court believe that its counsel mounted a “withering” cross-examination of Mr. Newton (see Brief for Petitioner- Respondent at 5, 62) – when nothing could be further from the truth. Petitioner’s entire support for that contention consists of a list of supposed “testimony” given by Mr. Newton, which is repeated twice in petitioner’s brief. See id. at 5-8, 34-37. The list is not a list of “testimony,” however, it is a disjointed list of assertions made by petitioner based upon a fevered reimagining of Mr. Newton’s testimony. Petitioner apparently believes that this Court will neither appreciate that distinction, nor take time to review the record cites provided for each assertion – which do not support them. For example, petitioner asserts that Mr. Newton “testified” that: “(xvi) he was unable to justify either financially or economically not including borrowing costs (interest expense) in the determination of projected net operating income of the property as residential rental property (1035-43).” See Brief for Petitioner-Respondent at 8. A review of those pages of the record, however, offers no support for petitioner’s assertion. Mr. Newton instead testified that interest expense is not considered an expense item for the purpose of establishing the appraised value of a property. See R. 1038. It is also notable that petitioner fails to disclose that his own appraiser did not consider interest expense as a part of his own calculation of net operating income for the condominiums. See R. 62. - 38 - The latter point is also telling because petitioner does not attempt to explain why, exactly, any of the assertions on its list in any way call into question the core opinions and conclusions offered by Mr. Newton (whether in his appraisal or at trial). The reason is: they do not. Ultimately, unlike Mr. Strell, Mr. Newton showed his work, included copious details concerning the condominiums that he was valuing, identified relevant comparables, provided supporting facts for those comparables, and made appropriate and detailed adjustments as required. See R. at 124-473. In sum, to the extent that this Court deems it either necessary or appropriate to consider petitioner’s attacks on the Newton Appraisal, Mr. Newton, or the Town’s counsel, respondents respectfully submit that the Court should see those attacks as what they truly are – a further attempt to dodge the legal issues that are actually before this Court, and to divert attention from the fatal flaws in the Strell Appraisal. CONCLUSION The requirements of Section 202.59 of the Uniform Rules playa necessary and important role in maintaining equity among real property taxpayers in New York, and in ensuring that challenges to tax assessments throughout the state are decided based upon facts, figures and calculations set forth in each party's appraisal - not on unsubstantiated or unsupported opinions from appraisers who attempt to shield their work from meaningful scrutiny by refusing to show that work. This is precisely what Mr. Strell did in this case, and respondents respectfully submit that his appraisal should have been stricken as a result. At a minimum, however, the fatal flaws in his capitalization rate analysis require rejection of that analysis, as well as Mr. Strell's capitalization rate based upon it. Dated: Buffalo, New York October 8, 2013 Doc #01-2712030.3 ::LLIP[TLE L Craig A. esli Attorneys for Respondents One HSBC Center, Suite 3400 Buffalo, New York 14203 Telephone No.: (716) 847-8400 - 39- APPENDIX A Excerpts From Appendix in Johnson v. Kelly, 45 A.D. 3d (2d Dep't 2007). NEW YORK STATE UNIFIED COURT SYSTEM CERTIFICATE OF AUmENTICITY APPLICATION: RECORDS AND BRIEFS - 24X This is to certify that the microphotograpbs appearing on this FILM FILE are accurate and complete reproductions of tbe subject file microfilmed in the regular course of operations for pbotograpbing according to establisbed routiDe departmental policy and procedures. ~ n:I.ARATION AND INTENT If .uJo hL);J employed by West Court RecQrd Services do bereby declare tbat the records microfilmed berein are actuaOy records of the rll7d AppeilateiUoified Court System created during its Dormal course of business. aud tbat, it is the express intent and purpose of this Department to destroy or otberwise dispose of tbe original records micropbotograpbed berein, and that. tbe destruction or disposition of tbe records micropbotograpbed on this FILM FILE is only to accomplisbed after inspection of the microfilm to assure completeness of coverage, and that, it is the policy of tbis Department to micror"m and dipose of original records in accordance witb 22NYCRR Part 104 or as part of the planned organizational operating procedures. Preparation Clerk: ~-l::.;+....J.,,~#.I.~~~~ __ Camera Operato'''·L--::2:.J,....a..I..I/....4:::.~....p.z:;~~~!1:::::L. Microfilm Supervisor: Date: ~~~~~I:U.~5;;~ Date: 3-/J -() f3 Date: <3 /3 -(]' ,! Date: ,'d-Ii -() B PEFORMED IN ACCORDANCE WITH STANDARDS FOR MICROFILMING APPROVED BY THE NATIONAL BUREAU OF STANDARDS VENDOR: WEST COURT RECORD SERVICES 5301 TACONY STREET, BUILDING #210-3 PHILADELPHIA, PA 19137 PHONE 215-535-7790 OR FAX 215-535-7808 O{'l2'9 1 r: 'v 1..1 Supreme Court State of New York Appellate Division - Second Department In the Malter oflhe Application of 2006-05660 WILLIAM and ALICE JOHNSON Pelitf"ners-Appellants. against EILEEN KELLY, Assessor of the Town of Goshen, Respondent-Respondent. ==============OC=m T 11 2007 APPENDIX JAMES G. SWEENEY,P.e. Attorney for Petitioners-Appel/ants One Harriman Square P.O. Box 806 Goshen, New York 10924 (845) 291-1100 JACOBOWITZ & GUBITS, LLP Attorneys for Respondent-Respondent 158 Orange Avenue P.O. Box 367 Walden, New York 12586 (845) 778-2121 Orange Counly Clerk's Index Nos. 5077/99,4254/00,4939/01, 5208/02, 4678/03, 5184/04 THE REPoRTER COMPANY (800) 252-7181 (204817) • • • 1 2 3 4 5 A-59 Hubbell - Petitioner - Cross find the property as a value in use? A Value is active farmland. Q A Q Value in use is what you are looking for? Yes. Black dirt, you've talked about black dirt. 6 Does the subject property have any black dirt on it? 7 8 9 A Q A 10 subject. 11 Q No. So none whatsoever? Black dirt has nothing to do with the And yet in your approach you rely heavily 12 upon black dirt information or sales or rentals? 13 14 A Q That's correct. Page 22 you say here under the income 15 approach, the last sentence of that paragraph, "This 16 approach is generally applicable only to investment 17 real estate expected or capable of producing money 18 income"; is that correct? 19 A Thatls correct. 20 Q Do you consider this property investment real 21 estate? 22 A Certainly. In the aspect that it's part of a 23 larger farm operation. The farmer would or any farmer 24 25 that would look to acquire this property and incorporate it into their larger farming operation is 36 smg • • • 1 2 3 4 5 6 7 8 9 10 11 Q A A-71 Hubbell - Petitioner - Cross strike you can do that but let's hear what the witness has to say. THE WITNESS: It goes back to the valuing of the subject property based on agricultural use only. Whereas with an agricultural exemption it can be pulled out of that at any time and developed with payment of a rollback. So So what I did was compare apples to apples. 12 It's a farm restricted to farm use; here are other 13 14 15 16 17 18 19 farms restricted to farm use by agricultural easement. 11m saying they are comparable, no adjustmen~s warranted. Q But agricultural exemption you can terminate it at will, right? A Q Yes. In other words, with an agricultural 20 exemption, you have a buy-back privilege, right, you 21 can by it back and say hey, do you want to sell it to 22 the developer, whatever, here is the money, I'm done. 23 With conservation easement you don't have that 24 25 privilege, it's gone? A That's right. 48 smg . . .1 • • • 1 2 A Q A-77 Hubbell - Petitioner - Cross No. How about you have a figure here, a downward 3 adjustment, $20,000 dollars. That's a conclusion on 4 your part, isnft it? 5 A That's based on sales of building lots in 6 that area of washington county. 7 Q It"s a conclusion on your part, sir? 8 A Sure. I make conclusions and estimates all 9 the time. 10 11 12 13 14 Q THE COURT: .Let him finish please. ~~atever the facts, figures or calculations th~t you use are not in the appraisal? A That is correct. Q Washington County, where is Washington 15 County? 16 17 18 19 20 21 22 23 24 25 A It's north of and east of Albany. It borders vermont and so it has Lake Champlain, Lake George. It's north of Renselear County. Q Would that have a different growing season for farmland than in Goshen or Orange County would have? A Q Yes, it would be a bit shorter. I know you have no value for that type of a thing but the growing season? A Well, In dairy farm production where you are 54 smg • • • -,;:t' A-78 Hubbell - Petitioner - Cross 1 going corn and alfalfa, they have developed a variety 2 of, varieties that are geared to the length of days 3 that they have to grow. So what farmers do is they 4 will purchase the variety of corn say for instance it 5 matches the length of days that they have for their 6 area. So, while \-lashington County maybe five days 7 shorter than Orange County, the crop scientists have 8 developed varieties of corn that grow equally as well 9 in Washington County as it would be in Orange County. 10 Q Okay. But in other words, there is a 11 difference in the growing season between a piece of 12 property that's in Orange County and a piece of j3 14 15 property that"s up in Washington County? A Q Yes, there would be. Sale number three, you have a deduction here 16 of $40,000 dollars from the selling price and again, 17 that's a conclusion on your part, is it not? . 16 19 A Q Similar to sale oner yes . In your appraisal report you don't give the 20 facts, figures and calculations by which you arrived 21 at that number? 22 23 24 A No, I don't. Q Sale number four, you state in here that this property is encumbered by a trail easement, am I 25 correct? 55 smg • • • A-92 Hubbell - Petitioner - Cross 1 Q Then on Page 32 just below your grid you say 2 lease one is characterized by the tenant as low 3 quality muck soils lacking irrigation and adequate 4 drainage generally renting at the lower end of the 5 range. Is that correct? 6 A Correct. 7 Q Now the subject is not muck land; correct? 8 A Correct. 9 Q And the only identification :chat I find in 10 your appraisal where you g;t this infonnation from is 11 a local farmer some place on Loehr Road in the Town of 12 13 14 Waywayonda; is that correct? A CorrecL Q You don't give an~ore inforsation as to who 15 the individual might have been or a bet~er locatj~n? 16 17 18 19 20 21 22 23 24 25 P. ~ .. o, not in the report ~ Q So we don't have a name or address or anyone we can contact to verify? A Not in the report. Q And you also say on Page 33 at the bottom of the paragraph entitled capitalization rate derivation, rents are based on convers~~~ons and estimates with persons kno~~edgeable of black dirt rentals, correct? A Q Correct. That's the same thing ~ow, subject is not 69 • • • A-93 HUbbell - Petitioner - Cross 1 black dirt. You've chosen to confine your information 2 basically to black dirt farming, correct? 3 l\ That was for the capitalization rate 4 derivation not for the market rent for the subject 5 property. 6 Q Lease number two, same thing. You say it.' s a 7 local farmer located in the Town of Waywayonda and you 8 don't give any specifics about who it was you spoke 9 to? 10 11 12 13 14 A Q A What page are you on? r'm on Page 31, your rental number two. No, but that was the Elvery Farm operation that rented that land. Q In your appraisal though, there is no way for 15 me to know how to verify this information, right? 16 You don't give it? 17 18 l\ Q No. l\nd I could ask you that question basically 19 about all 14 of them, right? 20 A Other than the ones that are the results of 21 surveys conducted by the U.S.D.A. 22 Q Let's go then, that's your lease number four, 23 survey of local farmers by the local Cornell 24 25 Cooperative Extension Service Farm Agent, correct? A Right. 70 smg • • • 1 2 3 4 5 6 7 B Q survey? A A-94 Hubbell - Petitioner - Cross Where in your appraisal do you have this I don't have it- It was a verbal survey. We talk to Joyce Joaner, who is the extension agent. Q But there is nothing in your appraisal that tells you that? A Q No. You talk about a survey; I flip to the back 9 and there is no survey_ There is no way to verify 10 that. And the same thing for lease number five, 11 that's some sort of a verbal survey, the same verbal 12 survey, correct? 13 14 A Q Correct. Now you say lease number nine, this is on 15 Page 32, lease number nine is from the U.S.D.A land 16 value and cash rent summary, August 2004. Is that 17 contained in your appraisal? 18 19 20 21 22 23 24 A Q I don't believe so. So it's not in your appraisal. There is no way for me to verify that, right? A No. Q Lease number eleven, I'm sorry, lease nine, lease ten is from the U.S.D.A. Land Value Cash Rent Summary, I guess it's from the same summary, is that 25 it? 71 smg • • • 1 2 3 4 5 Q A Q A-95 Hubbell - Petitioner - Cross There are three surveys done on the different That's not in there either? No, the actual survey is not. Lease eleven is the survey from the Orange 6 County Executive Director U.S.D.A., that's not 7 contained-- 8 9 A Q That's a verbal survey. Not contained in your appraisal. And you 10 don't say in your appraisal it's a verbal survey. 11 When you read that, I just read it to you. 12 Did we do lease twelve or is that the one we 13 14 15 16 17 18 19 just did, lease twelve? A That was verbal survey for the same source. Q And again, all of these people, there is no way from reading your appraisal fGr me to understand who you were speaking with or where the background is from? A Well, I was speaking with the Executive 20 Director of Orange County for the U.S.D.A. but there 21 is no name. 22 Q But it didn·t say you were speaking with the 23 Orange County Executive Director, it says you had a 24 survey, you are talking about a survey from that 25 agency, I guess. 72 srog • • • A-96 Hubbell - Petitioner - Cross 1 Lease fourteen, same thing, correct? This 2 is from this verbal survey? 3 4 A Q Yes. So again, I move that the farm rentals, all 5 the farm rentals be stricken. There is no way to know 6 where this stuff comes from. There is no way for me 7 to cross-examine something that's not in the 8 appraisal. It's just replete, the whole thing. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Sweeney? THE COURT: Any objection, Mr. MR. SWEENEY: To the motion? THE COURT: Yes. MR. SWEENEY: Indeed. I think the materials that are contained at Page 32 of the appraisal are sufficient to reach the rule. The rule says that the lease identification shall be with particularity and I think there is enough particularity between the grid and the identification in the paragraph on that to satisfy the rule. THE COURT: Any rejoinder? MR. THOMAS: No, your Honor. THE COURT: We'll reserve on this motion and consider it after the submission of post trial memoranda. 73 srog • • • 1 2 3 A-132 Hubbell - Petitioner - Cross improvements; isn't that correct? A Q Would you -- In other words, you didn't go out and try to 4 value an improvement and say that I could compare this 5 improvement with the improvements, with these 6 improvements that you are talking about? 7 A What I did was I looked at, say, for 8 instance, if we are using sale twelve -- 9 Q Correct. 10 A I looked at the improvement on sale twelve 11 and I said, we have a 2,500 square foot, two-story 12 13 Color i.al on a five acre site. I looked at other similar sorts of homes on five acre sites in the Red 14 Hook area to get me to an allocated value for that 15 house and it's prime sight. 16 17 18 19 20 21 22 23 24 25 Q But those sales that you looked at are not containe,d in your appraisal? A No. Q So there is no way for anybody to know that this number that you've come up with is correct or not? A Q They are not in the appraisal. The same one, each one of these things here like the one, the sale here you have of the farm equipment -- 109 smg • • • 1 2 3 A Q A A-133 Hubbell - Petitioner - Cross Farm equipment was from the grantee. That's on sale number nine, right? The grantee stated to me that the farm 4 equipment had $50,000 dollars_ 5 Q But, in other words, you didn't do any sort 6 of an independent appraisal of that that you would 7 have put in the appraisal? 8 9 10 11 12 13 tax A Q A Q on A No_ Do you list what the farm equipment is? No_ Do you know if anybody, the buyer, pays sales this equipment? I don't know. Well, it was -- no, he didn't 14 because it was part of the overall price. 15 16 Q A But it was a sale of equipment, wasn't it? Here is how it worked. The sale price of the 17 property was $325,000 dollars_ 18 19 20 21 22 23 24 25 Q THE COURT: Which one are we looking at -- MR_ THOMAS: Sale number nine_ THE COURT: Let me get that_ I'm saying, in other words THE COURT: It's $375,000 dollars was the, 325,000 was the price for the farm. THE WITNESS: And it sold what we 110 smg • • • 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q A-134 Hubbell - Petitioner - Cross call lock, stock and barrel. It came with some equipment and it came with a house and a barn and some labor housing. As part of the overall purchase price of 325, the farmer told me he allocated 50,000 total equipment, irrigation pumps, pruners, then when it came to the improvements then I did my, I looked at similar sorts of properties in the area based on the house that was there and based on the other improvements and also what I typically do at times is ask the farmer himself how much would you place on the improvements. In other words, you didn1t do any sort of an independent study that was put in this appraisal? There is no way to know what that it is, what was involved here? A There wasn't any need to because I was looking at it through the eyes of the value. That's the value he placed on those elements of value. Q Turning to your sale number one, this was a sale in 1998, am I correct? A Q Yes. And you are using that to value property on 25 January 1, 2002; isn't that correct? III smg • • • 1 2 3 4 A Q A Q A-135 Hubbell - Petitioner - Cross Yes. You make no adjustment for the time? No adjustments would be warranted. You make no adjustments whether or not the 5 value of this easement increased over the four year 6 period? 7 A There is no reason to because the sale is a 8 '98 sale. 9 Q I'm just saying, you didn't do a time 10 adjustment for that sale to bring it to 2002? 11 12 13 14 15 16 11 18 19 20 21 22 23 24 25 A There is no reason to do a time adjustment because based on the agricultural land has not increased based on what we use, the State Board of Real Property Services in their analysis of farmland. If you look at page, we have a table on Page 24 where we took the soil group types represented on the subject property and using the value from the Office of Real Property Services, we printed each of those types and essentially there was minimal indicated price change for time. Q But in your own appraisal, you indicated an increasing value in the year 2002, you are at twenty seven, four; 2004, you are at forty-four, one. So your own appraisal shows that there has been an increase in the value of this photo, isn't there? 112 smg • • • 1 2 3 A-136 Hubbell - Petitioner - Cross A For a time adjustment that's what we used but if you look at the reason that it was increasing, it was the fact that the cap rate was declining over 4 those s~me years. The rent didn't increase but the 5 cap rate declined and then if we are using a 5D/50 6 weight that would tend to bring the values up. 7 Q But your sales approach though first year is 8 24,000, second year is 25, 5, third year is $40,000 9 dollars? 10 A You've got different sales in there, too. 11 Q So that means over time the values of the 12 farmland t:as gone up. There is no cap rate involved 13 14 with your sales approach? A What we used for the time adjustment was as I 15 explained earlier from the Office of Real Property 16 Services and we didn't feel that from one year to the 17 next that there was a reason to increase an increase 18 in value. Because one sale sold a little more than 19 20 21 22 23 24 2S the other, that's an indication that properties are increasing. Q Well you did not include in your appraisal any sort of a valuation approach for these conservation agricultural easements; isn't that correct? A I'm sorry? 113 smg A-169 Johnson Pl"Operty May 23,2005 Page 18 including a supennarket plaza, fast food restaurants and service stations east of the freeway. The exit has recently been revamped to improve safety and traffic flow. . Westgate-Goshen Business Park, on the west side of Route· 17/\, is a 135 acre park and is in its ninth year of development. Nearly 300,000 s.f. of buildings are occupied by companies including Blaser USA (Switzerland), Minolta (Japan), Von Roll, Inc. (Switzerland), Interstate Battery, Pace Membership Clnb, General Foods, Suresky and Son and Westgate Office Park. There is additional land available for commereial expansion along the Route 17 A corridor at the Goshen' Cloverleaf. Exit 123 is north of the village, in a lightly populated suburban residential area. The Orange County Agricultural Economy' Vegetable Crop Production: Orange County' s 14,000 acres of muck soil, know locally as "black dirt" is famous for its vegetable crops, particularly onions, letfuce, radishes, sweet com, and pumpkins. There a.re 70 black dirt onion farms producing more than half of the state's onions on approximately 5,200 acres. There are over two dozen commercial vegetable farms on upland soils including numerous organic fanm. Greenhouse. Nursery. Turf: More than 45 greeohouses growing bedding and other traditional crops are located in the county with over 1,000,000 square feet under glass or plastic cover. Approximately 2,500 acres of sod are produced in tbe black dirt region. Wholesale arid retail nurseries grow and sell trees, shrubs, and perennial flowers. Christmas tree farms provide "You Cut" products for residents. lbere is a marked trend toward "farm entertainment" as a marketing· niche for horticultural enterprises. Over 200 professional businesses offer landscaping services . .Ql!i!:t;. Orange County is home 10 over 100 dairy and field crop farms. A trend towards fewer farms and larger herds will continue into the future. 1be average dairy farm milks between 65-80 cows. Livestock I BouiiIe: The.countY's diverse horse industry is gmwing and changing. Recreation and pleasure horse activities have gmwn while the racing stock: breedipg farms continue to maintain a . respectable profile. The county offers over 20 regional.equine aSsociations and clubs, including 3 which offer riding for the handicapped programs. Close to 40 indoor riding arenas are in operation in the county. DFSCRIPrION OF SUBJECT PROPERTY Site Data: The suhject is an irtegular shaped parcel of land containing 59 acres (60± acres less I acre prime site) located on Durland Road and Route 17A. It is located in the Town of Goshen, Orange County, New York:. The property has 1,410 feet of road frontage on the southeast side of Durland Road and 1,670 feet on the southwest side of Route 17 A. There is additional access is via Orehard Hill Vista cul-de sac. The site enlails generally rolling to sloping topography witb wooded portions. The property is currently used for com and alfalfa pmduction and pasture for heifers. The 'Onnge County CooleD Coopentive ExlenriOll; web sile lJU88EILRE.A.LTY SERVICES. INC. i , .. I v· , Ie: I I A-170 Johnson Prop~rty May 23, 2005 Page 19 property is not in a flood zone or designated wetlands as per community panel 360614 00 15 B, April 30, 1986; The soils contained on the subject are comprised of: Crop land - Marden gravelly silt loam, ranging from 3% to 25% slopes, with severe limitations for building and septic system development due to wetness, slow peculation and slopes. Woodlands - are of the same soil type as the crop land. Pasture land - Nassau shaley silt loam, 15% to 25% slopes; Halsey silt loam, level; and Hoosic gravelly sandy loam, 0-3% slopes; all with sever limitation other than the Hoosic soils which have slight limitations for septic system development. Crop yields are as follows: Marden 18-12 tons corn silage/acre, 5.5-4.5 tons alfalfa hay/acre Nassau pasture only at 2.5 AUM*/acre Halsey 2.5 tons grass-legume hay/acre Hoosic 18 tons corn silage/acre, 4 tons alfalfa hay/acre *animal units per month The property is approximately 55% percent tillable (33 acres). Zoning: The subject is currently HR; Hamlet Residential, minimum lot size 8,000 square feet with possible reduction to 6,000 square feet if 20% of the land zoned HM andlor HR is maintained as common or publicly accessible open space such as a green, park, or stream side traiL Prior to June 10, 2004 the subject was zoned SR-8; suburban/residential, 30,000 square foot minimum lot size without water and sewer. Permitted uses of the current zoning regulations include single-family dwellings, two-family dwellings, agriculture, etc. The subject currently has portions of lands located in the Scenic Road Corridor Overlay District. This district is intended to preserve the attractive rural quality of the Town. There was a temporary moratorium in the Town of Goshen suspending further development of any subdivisions coutaining more than 2 lots that occurred from April of 2003 to June of 2004. The maps specifics to the subject and related information of the zoning ordinances, soils, etc. that applies are found in the addenda. Tax & Assessment Data and· Analysis: The subject property is identified as Town of Goshen, Section 20, Block I, Lot 18 with an ass'essed land value of$1-,' ,500. The 2002 equalization rate is 100%, the 2002 combined tax '.l< 'or the town, county, highway, part town and fire district is $7.63; the 2002 Florida schoollli," J tax rate is $23.97 per $1,000 of assessed value. The overall estimated tax burden forthe ~l1hiect (land only) of$5514 (prior to any agricultural exemptions) The ai;rituIi ure distric1 cxcmptiontotakd $159.159 1'01' 2002. The 2003 equalization rate is 85%, the 2003 combined tax rate for the town, county, highway, part town and fire district is $8.31; the 2003 Florida school/library tax rate is $25.44 per $1,000 of HUBBELL REALTY SERVICES. INC. Year 1998 1999 2000 2001 2002 2003 2004 2005 A-175 Iohnson P,H.lperty May 23,200S Page 24 ORPS AmruJlurai Assessmen. Values Per Acre- Soil Group 2a Soil Group 4b Value Pee Acre %Cbange Value Per Acre %OIange $506 L4O% S330 1.54% $476 -S.93%· S310 ~.06% $485 1.89% $316 L94% $492 1.44% $321 1.58% $S13 4.27% $334 4.0S% $529 3.12% $344 2.99% $519 ·1.89% $338 -1.74% $489 -5.78% $319 -5.62% Based on the annual review of the value per acre of Mineral Soil Group 2a and 4b, market value conditionS warrant no adjustment as there has been DOminal increases to slight decrease in values. Which holds true through all three years of this analysis. 2002 Location: The location adjustment takes into eonsideration the neighborhood and its environmont, including such things as the relative closeness to primary agricultural matt:ers, farm input I supply marlcets, price ranges of competing agricultural regions, and general agriculruraJ amenities of the neighborhood in relationship to other similar and competitive areas. Sales 2, 3 & 7 are inferior, located in W"ltington County at the upper regions of the Hudsou Valley north of Albany, farther remove from access to the Green Markets and popular farm markets in the New York City region with a positive adjustment indicaled. The balance of the sales are J'omparable. Land Size: This adjustment is quantitative in naturebased upon the differences in land size between the subject and the sale properties. h represents either an addition or subtraction of a percent amount based on the premise that larger sized properties lend to seD for less per unit of comparison than smaDer sized properties. Thus, a positive adjustment is required for sale I, 5, 7 as these land sales are much larger than the subject. Zoning: llis adjustment is qualitative in nature based on the overall differences in zoning and the density of allowed development between the sales and the subject. All sales are restricted by agricultural conservation easements with limitations tbat far out weight anything zoning would require, there for the sales are considered eomparable. % tillable: llis adjU3tment is based on the proportional differences in amount of tillable land between the sale properties and the subjecl Sale 2 and 3 are inferior the tiDahle percentage at 0% with~ positive adjustments indicated. Sales 4 & 7 are superior with a greater percentage of tiDable land and therefore received negative adjustments. The balance of the sales are comparable. HUBBEURMLTY SERI'lCES INC. ., I I . I I~ I L I l- t; .~- i~ i I I I