The following documents were filed with the Clerk of the County of Cortland: Notice of petition dated May 10, 2021. Verified petition dated May 6, 2021, with Exhibits A-E. Verified answer (Town of Harford) dated August 12, 2021. Affidavit of Lawrence E. Fitts, sworn to August 11, 2021. Affidavit of Colleen Brown, sworn to August 11, 2021, with Exhibit 1. Answer to verified petition (County of Cortland) dated August 12, 2021, with Exhibit A. Affirmation of Paul T. Sheppard, Esq., dated August 23, 2021 Affidavit of John M. Bernardo, sworn to August 20, 2021, with Exhibits A and B. Affidavit of Virginia G. Curtis, sworn to August 23, 2021, with Exhibit A. 10/20/21, 7:07 AM Creamery Hills, L.P. v Fox (2021 NY Slip Op 21279) https://www.nycourts.gov/reporter/3dseries/2021/2021_21279.htm 9/9 Decision, Order, and Judgment dated October 18, 2021. Petitioner Creamery Hills, L.P. (Creamery) is a limited partnership which owns and operates Creamery Hills Senior Apartments in the Town of Harford, Cortland County (the subject property). Petitioner SEPP, Inc. is the general partner of Creamery. Pursuant to an agreement with the New York State Division of Housing and Community Renewal (the regulatory agreement), Creamery may only rent the subject property to individuals or families whose incomes at the time of initial occupancy do not exceed 60 percent of the area median gross income. Following tax certiorari proceedings commenced in July 2017 (Sup Ct, Broome County, Index No. EFCA2017001704) and September 2017 (Sup Ct, Broome County, Index No. EFCA2016001729), petitioners and respondents Town of Harford and Assessor for the Town of Harford (the Town Assessor) executed a court-approved settlement agreement (the settlement agreement) which provided, in accordance with RPTL 727, that the subject property’s assessment would be maintained at $500,000 through 2020 except, as relevant herein, upon a town-wide revaluation. In 2020, the Town of Harford undertook a town-wide revaluation. The Town Assessor did not use the income capitalization valuation methodology specified for income-based affordable housing properties by RPTL 581-a but, rather, valued the property at its market value. Petitioners contend that the assessor’s failure to use the applicable valuation methodology upon revaluation constituted a clerical error subject to correction pursuant to article 5 of the RPTL. Accordingly, in January 2021, Creamery applied to Laura Fox, the Cortland County Director of Real Property Tax Services (the County Tax Director), for correction of the tax roll pursuant to RPTL 554. On January 29, 2021, the County Tax Director denied the application based on petitioners’ failure to submit income documentation on an annual basis prior to the tax status date, and concluded that the Town Assessor “reasonably assumed that the property was not eligible for the 581-a [methodology] and valued the property at market value” (NYSCEF Doc No. 5, exhibit C to petition [denial of application] at 1). Petitioners commenced this CPLR article 78 proceeding on May 11, 2021, seeking judgment declaring that the denial of the application for correction was arbitrary and capricious and/or an abuse of discretion; reversing such denial and directing respondents to issue refunds commensurate with the reduced assessment; and awarding petitioners the costs of the proceeding. Respondents Town of Harford, the Town of Harford Board of Assessment Review, and the Town Assessor (collectively, the Town respondents) answered and opposed the petition on the grounds that the Tax Director’s denial of Creamery’s application for correction was in all respects correct and proper. The Town respondents also asserted that petitioners’ failure to timely commence a RPTL article 7 tax certiorari proceeding barred them from now seeking a reduction in assessment in this proceeding. Respondents County of Cortland and the County Tax Director (collectively, the County respondents) answered and opposed the petition on the same grounds. The answering respondents also sought an award of attorneys’ fees, costs, and disbursements.1 RPTL 581-a provides that the assessed valuation of residential real property where occupancy of at least 20 percent of the rental units is restricted to low-income tenants shall be determined using the income-capitalization method based upon actual net income, subject to certain specified adjustments (see Matter of Warrensburg Commons LPT v. Town Assessor of Town of Warrensburg, 69 AD3d 1282, 1283 [2010]). Accordingly, regulations promulgated by the Division of Housing and Community Renewal direct owners of qualifying properties to submit the documentation required to assess the property using an income capitalization approach, such as financial statements, to the local assessor on an annual basis prior to the taxable status date (see Division of Housing and Community Renewal Regulations [9 NYCRR] §§9 NYCRR 2656.2; 2656.3). Petitioners concede that they did not submit annual income and expense data to the Town Assessor in 2018, 2019, or 2020, contending that they were not required to do so because the settlement agreement fixed the subject property’s assessed valuation at $500,000 through 2020. Petitioners correctly note that the failure to timely submit income and expense data does not result in loss of the right to compel assessment in accordance with RPTL 581-a. In the first instance, when a landowner timely fails to file the necessary documentation, “an assessor can assume the property no longer qualifies for RPTL 581-a valuation and use another method of valuation, which undoubtedly will result in a higher value (and higher tax)” (Matter of Warrensburg Commons LPT v. Town Assessor of Town of Warrensburg, 69 AD3d at 1284). However, landowners are not left without a remedy. When Matter of Warrensburg Commons LPT v. Town Assessor of Town of Warrensburg was decided in 2010, the sole remedy available to landowners to compel assessment in accordance with RPTL 581-a was timely commencement a tax certiorari proceeding pursuant to RPTL article 7 (see id.) However, landowners were subsequently provided with an additional method of compelling assessment in accordance with RPTL 581-a when the RPTL was amended in 2014 to expand the definition of a “clerical error” that is subject to correction pursuant to RPTL 554 to include “an incorrect entry of assessed valuation on an assessment roll or a tax roll due to an assessor’s failure to utilize the required assessment method pursuant to [RPTL 581-a] in the valuation of qualifying real property” (RPTL 550 [2] [j]). The administrative remedy for correction of clerical errors is the filing of an application for a corrected tax roll with the County Tax Director (see RPTL 554 [2]; Matter of Level 3 Communications, LLC v. DeBellis, 72 AD3d 164, 177 [2010], lv dismissed 14 NY3d 855 [2010]). It is undisputed that the Town Assessor failed to use the income capitalization method of valuation specified by RPTL 581-a in determining the assessed value of the subject property for 2020, that petitioners timely filed an application for correction of the tax roll with the County Tax Director, and that petitioners timely commenced this CPLR article 78 proceeding within four months after the County Tax Director denied the application for correction of the 2020 tax roll. Accordingly, petitioners are entitled to judgment directing that the subject property be assessed using the income capitalization method specified by RPTL 581-a. Based on the foregoing, it is ordered and adjudged that: (1) a clerical error was made in determining the assessment of the subject premises for the 2020 tax year; (2) respondent Town Assessor is directed to correct the clerical error by promptly reassessing the subject property for the 2020 tax year, using the valuation methodology specified by RPTL 581-a; (3) upon reassessment, respondents shall recalculate all real property taxes that were levied based upon the 2020 tax roll and issue appropriate refunds for any overpayments that were made, with such interest as may be required pursuant to RPTL 556; and (4) petitioners’ request for an award of the costs of this proceeding is denied. This decision constitutes the order and judgment of the court. The filing of this decision, order, and judgment, or transmittal of copies hereof, by the court shall not constitute notice of entry (see CPLR 5513). Dated: October 18, 2021
