From Casetext: Smarter Legal Research

Hosp v. City of Poughkeepsie

Supreme Court, Appellate Division, Second Department, New York.
Jul 18, 2012
97 A.D.3d 756 (N.Y. App. Div. 2012)

Opinion

2012-07-18

In the Matter of VASSAR BROTHERS HOSPITAL, petitioner-respondent, v. CITY OF POUGHKEEPSIE, etc., appellant, et al., respondent.

Van DeWater & Van DeWater, LLP, Poughkeepsie, N.Y. (Cynthia S. Rosenzweig of counsel), for appellant. Teahan & Constantino, Walden, N.Y. (Jacobowitz and Gubits, LLP [John H. Thomas, Jr.], of counsel), for petitioner-respondent.



Van DeWater & Van DeWater, LLP, Poughkeepsie, N.Y. (Cynthia S. Rosenzweig of counsel), for appellant. Teahan & Constantino, Walden, N.Y. (Jacobowitz and Gubits, LLP [John H. Thomas, Jr.], of counsel), for petitioner-respondent.
DANIEL D. ANGIOLILLO, J.P., THOMAS A. DICKERSON, JOHN M. LEVENTHAL, and ROBERT J. MILLER, JJ.

In two related tax certiorari proceedings for the tax years 2008/2009 and 2009/2010, the City of Poughkeepsie appeals from a judgment of the Supreme Court, Dutchess County (Brands, J.), entered June 18, 2010, which, upon an order of the same court dated April 28, 2010, granting the petitioner's motion for summary judgment, in effect, on those branches of the petitions which sought a determination that the subject property is fully tax exempt, denying that branch of its cross motion which was for summary judgment determining that the subject property is only partially tax exempt, and, in effect, denying, as academic, those branches of its cross motion which were pursuant to CPLR 408 for leave to conduct certain depositions and for a hearing to determine the taxable percentage of the subject property, inter alia, determined that the subject property is fully tax exempt pursuant to Real Property Tax Law § 420–a for the tax years 2008/2009 and 2009/2010 and directed the City of Poughkeepsie to enter changes necessary to list the subject property as fully exempt from real property taxation.

ORDERED that the judgment is reversed, on the law, with costs, the petitioner's motion for summary judgment is denied, that branch of the cross motion of the City of Poughkeepsie which was for summary judgment determining that the subject property is only partially tax exempt is granted, the order is modified accordingly, so much of the order as, in effect, denied, as academic, those branches of the cross motion of the City of Poughkeepsie which were pursuant to CPLR 408 for leave to conduct certain depositions and for a hearing to determine the taxable percentage of the subject property is vacated, and the matter is remitted to the Supreme Court, Dutchess County, for further proceedings in accordance herewith on those branches of the petitions which were to review the valuation of the assessment, including a determination on the merits of those branches of the cross motion of the City of Poughkeepsie which were for leave to conduct certain depositions and for a hearing to determine the taxable percentage of the subject real property.

Vassar Brothers Hospital (hereinafter Vassar) is a not-for-profit corporation that owns several parcels of real property in the City of Poughkeepsie. Vassar owns and operates a hospital on one of the parcels. Pursuant to a 1997 “Ground Lease Agreement” (hereinafter the ground lease) with Vassar, Westage Medical Development, LLC (hereinafter Westage Medical), constructed a medical office building and a connecting 699–space parking garage on a parcel of Vassar's property adjacent to the hospital complex. As provided in the ground lease, Vassar leased the medical office building to Westage Medical for use by private physician groups and operated the parking garage, which was used by employees and visitors of the hospital complex. The ground lease permitted Westage Medical, its subtenants, and its subtenants' employees and visitors to use 250 spaces in the parking garage. Pursuant to a subsequent sublease, one of Westage Medical's subtenants was entitled to 40 reserved parking spaces for the exclusive use of its patients. The remaining 210 spaces allocated to Westage Medical are unreserved and available on a first-come, first-served basis.

Subsequently, the parcel on which the medical office building and parking garage were constructed was split into two separate tax parcels, one for each structure, and the medical office building parcel was assessed taxes while the parking garage parcel was granted a full exemption. In 2008 the City withdrew the exemption and assessed taxes against the parking garage parcel for the full value of the property for the tax year 2008/2009, and then again for the tax year 2009/2010.

Vassar commenced these two proceedings seeking review pursuant to article 7 of the Real Property Tax Law, challenging the assessment and the valuation of the parking garage parcel. Thereafter, Vassar moved for summary judgment, in effect, on those branches of the petitions which sought a determination that the parking garage parcel is fully exempt. The City cross-moved for summary judgment determining that the parking garage parcel is only partially exempt, pursuant to CPLR 408 for leave to conduct certain depositions, and for a hearing to determine the taxable percentage of the subject parcel. The Supreme Court granted Vassar's motion for summary judgment, denied that branch of the City's cross motion which was for summary judgment determining that the subject parcel was only partially exempt, and, in effect, denied, as academic, those branches of the City's cross motion which were for leave to conduct depositions and for the hearing. A judgment was subsequently entered, inter alia, determining that the subject parcel is fully exempt pursuant to RPTL 420–a for tax years 2008/2009 and 2009/2010. The City appeals and we reverse.

Although RPTL 420–a(1)(a) states that exempt property must be “used exclusively” for exempt purposes, the Court of Appeals has held that the word “exclusively” is not to be read literally ( see Matter of Adult Home at Erie Sta., Inc. v. Assessor & Bd. of Assessment Review of City of Middletown, 10 N.Y.3d 205, 214, 856 N.Y.S.2d 515, 886 N.E.2d 137). Rather, in this context, the word “exclusively” means “principally” or “primarily” ( see Matter of Yeshivath Shearith Hapletah v. Assessor of Town of Fallsburg, 79 N.Y.2d 244, 249, 582 N.Y.S.2d 54, 590 N.E.2d 1182;Matter of Symphony Space v. Tishelman, 60 N.Y.2d 33, 38, 466 N.Y.S.2d 677, 453 N.E.2d 1094). As such, “purposes and uses merely ‘auxiliary or incidental to the main and exempt purpose and use will not defeat the exemption’ ” (Matter of Yeshivath Shearith Hapletah v. Assessor of Town of Fallsburg, 79 N.Y.2d at 249, 582 N.Y.S.2d 54, 590 N.E.2d 1182, quoting Matter of Association of Bar of City of N.Y. v. Lewisohn, 34 N.Y.2d 143, 153, 356 N.Y.S.2d 555, 313 N.E.2d 30). Thus, RPTL 420–a(1)(a) entitles property used principally or primarily for an exempt purpose to a full exemption, including portions of the property that are put to uses reasonably incidental to or in furtherance of the exempt purpose ( see Matter of Yeshivath Shearith Hapletah v. Assessor of Town of Fallsburg, 79 N.Y.2d at 250, 582 N.Y.S.2d 54, 590 N.E.2d 1182;Matter of Miriam Osborn Mem. Home Assn. v. Assessor of City of Rye, 80 A.D.3d 118, 138, 909 N.Y.S.2d 493;Matter of Ellis Hosp. v. Fredette, 27 A.D.2d 390, 391, 279 N.Y.S.2d 925). However, where portions of the property are not put to uses reasonably incidental to or in furtherance of the exempt purpose, those portions of the property are taxable, and the property is only entitled to a partial exemption ( seeRPTL 420–a[2]; Matter of St. Luke's Hosp. v. Boyland, 12 N.Y.2d 135, 141, 143, 237 N.Y.S.2d 308, 187 N.E.2d 769; Matter of Miriam Osborn Mem. Home Assn. v. Assessor of City of Rye, 80 A.D.3d at 138, 909 N.Y.S.2d 493;Matter of St. Francis Hosp. v. Taber, 76 A.D.3d 635, 639, 907 N.Y.S.2d 263;Matter of Ellis Hosp. v. Assessor of City of Schenectady, 288 A.D.2d 581, 582, 732 N.Y.S.2d 659).

Here, since the City “seeks to revoke a previously granted tax exemption, it bears the burden of proving that the real property is now subject to taxation” ( Congregation Rabbinical Coll. of Tartikov, Inc. v. Town of Ramapo, 17 N.Y.3d 763, 764, 929 N.Y.S.2d 32, 952 N.E.2d 1024;see Matter of Lackawanna Community Dev. Corp. v. Krakowski, 12 N.Y.3d 578, 581, 883 N.Y.S.2d 168, 910 N.E.2d 997;Matter of New York Botanical Garden v. Assessors of Town of Washington, 55 N.Y.2d 328, 334, 449 N.Y.S.2d 467, 434 N.E.2d 703). The City met its prima facie burden by demonstrating that a portion of the parking garage parcel was used by the private physician subtenants of the medical office building, a use of the parking garage that is not reasonably incidental to or in furtherance of the purpose of the hospital ( see Matter of St. Francis Hosp. v. Taber, 76 A.D.3d at 639, 640, 907 N.Y.S.2d 263;Matter of Ellis Hosp. v. Assessor of City of Schenectady, 288 A.D.2d at 583, 732 N.Y.S.2d 659;Matter of Genesee Hosp. v. Wagner, 47 A.D.2d 37, 44–46, 364 N.Y.S.2d 934,affd.39 N.Y.2d 863, 386 N.Y.S.2d 216, 352 N.E.2d 133;cf. Matter of Ellis Hosp. v. Fredette, 27 A.D.2d at 391–392, 279 N.Y.S.2d 925).

In opposition, Vassar failed to raise a triable issue of fact regarding the use of the parking garage parcel. Vassar acknowledged that its lease with Westage Medical permitted up to 250 spaces of the 699–space garage to be used by physicians, employees, and patients visiting the private physician offices in the medical office building. The fact that 210 out of the 250 spaces were not reserved and were only available on a first-come, first-served basis is irrelevant for the purpose of determining whether the garage is actually used for a nonexempt purpose ( see Matter of St. Francis Hosp. v. Taber, 76 A.D.3d at 640, 907 N.Y.S.2d 263). “It is the actual or physical use of the property” that is determinative for the purposes of the “used exclusively” inquiry (Matter of Lackawanna Community Dev. Corp. v. Krakowski, 12 N.Y.3d at 581, 883 N.Y.S.2d 168, 910 N.E.2d 997;see Matter of Trustees of Sailors' Snug Harbor in City of N.Y. v. Tax Commn. of City of N.Y., 26 N.Y.2d 444, 448–449, 311 N.Y.S.2d 486, 259 N.E.2d 910), and a substantial portion of the parking garage is allocated for a use not reasonably incidental to the purpose of the hospital.

Vassar also contends that a consent judgment reducing the assessment of the medical office building parcel for the tax years 2006/2007 and 2007/2008 included the value of the taxable portion of the parking garage parcel. However, Vassar failed to submit any evidence to that effect for the tax years at issue here, 2008/2009 and 2009/2010.

Accordingly, the Supreme Court should have denied Vassar's motion for summary judgment, in effect, on those branches of the petitions which sought a determination that the parking garage was fully exempt and should have granted that branch of the City's cross motion which was for summary judgment determining that the parking garage is only partially exempt. We remit the matter to the Supreme Court, Dutchess County, for further proceedings on those branches of the petitions which were to review the valuation of the assessment and a determination thereafter apportioning the percentage of the parking garage that is tax exempt and the percentage that is not tax exempt. Moreover, since the Supreme Court, in effect, denied, as academic, those branches of the City's cross motion which were for leave to conduct certain depositions and for a hearing on the taxable percentage of the parking garage, we also remit the matter to the Supreme Court, Dutchess County, to decide those branches of the cross motion on the merits.


Summaries of

Hosp v. City of Poughkeepsie

Supreme Court, Appellate Division, Second Department, New York.
Jul 18, 2012
97 A.D.3d 756 (N.Y. App. Div. 2012)
Case details for

Hosp v. City of Poughkeepsie

Case Details

Full title:In the Matter of VASSAR BROTHERS HOSPITAL, petitioner-respondent, v. CITY…

Court:Supreme Court, Appellate Division, Second Department, New York.

Date published: Jul 18, 2012

Citations

97 A.D.3d 756 (N.Y. App. Div. 2012)
948 N.Y.S.2d 403
2012 N.Y. Slip Op. 5644

Citing Cases

Rye Country Day Sch. v. Whitty

tal, educational, or moral or mental improvement of men, women or children purposes, or for two or more such…

Russell Block Assocs. v. Bd. of Assessors of Worcester

The Supreme Judicial Court held that the taxpayer was entitled to a partial exemption for the percentage of…