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In Matter of Chasalow v Board of Assessors of County of Nassau (202 AD2d 499 [2d Dept 1994]), the Court reviewed a determination of the Honorable Leo F. McGinity, J.S.C., that the methodology used by the Nassau County Department of Assessment to assess class I properties (one-, two-, and three-family homes) produced such wide disparities in similarly situated homes so as to constitute a violation of the Equal Protection Clauses of the US and NY Constitutions.
Summary of this case from Transtechnology Corp. v. BoardOpinion
March 14, 1994
Appeal from the Supreme Court, Nassau County (McGinity, J.).
Ordered that the order and judgment is reversed, on the law, with one bill of costs payable by the respondents appearing separately and filing separate briefs, the assessments on the petitioners' properties are confirmed, and the proceedings are dismissed.
In these proceedings, the Supreme Court determined, inter alia, that the method of assessment currently employed by the Board of Assessors of Nassau County to assess Class I residential property is illegal and unconstitutional. We reverse.
Nassau County employs a cost method in its assessment of Class I residential properties. Under this approach, improvements on Class I parcels are valued at their replacement costs, in 1938 dollars. To this is added an amount reflecting the value of the parcel's land. The land valuation is based on the last County-wide assessment which was performed in 1938, updated yearly until 1964, when vacant land was valued at one-third of market value.
The petitioners attempted to show that this system, as applied, caused such gross disparities in the tax burden imposed upon similarly situated taxpayers as to create a constitutional violation under the Equal Protection Clauses of both the Federal and State Constitutions. In support, the petitioners relied on a statistical calculation known as "the coefficient of dispersion" (cf., Matter of Chasalow v. Board of Assessors, 176 A.D.2d 800).
We have previously observed: "Generally, a coefficient of dispersion is a statistical comparison of `the closeness of assessment ratios of individual parcels to each other' ( 9 NYCRR 185-4.2 [b]). A high coefficient of dispersion indicates a high degree of variance with respect to the assessment ratios under consideration. A low coefficient of dispersion indicates a low degree of variance. In other words, a low coefficient of dispersion indicates that the parcels under consideration are being assessed at close to an equal rate (see, 9 NYCRR 185-4.4) " (Waccabuc Constr. Corp. v. Assessor of Town of Lewisboro, 166 A.D.2d 523, 524).
Testimony of one of the petitioners' experts established that the New York State Board of Equalization and Assessment (hereinafter SBEA) determined that, in 1986, the coefficient of dispersion for Class I property in Nassau County was 20.12%. That expert testified that a subsequent study performed with respect to the 1988 tax roll generated a coefficient of dispersion of 16.64%. When the data used in this latter study was adjusted to conform to certain updated parameters, the coefficient of dispersion rose to 18.18%. It should be noted that the County's expert disputed the application of these updated parameters. In his opinion, the appropriate coefficient of dispersion for 1988 should remain the initial figure that was derived — 16.64%.
The rules of the SBEA provide that "[t]he standards for acceptable uniformity are a [coefficient of dispersion] of 10 percent for residential property and 15 percent for all property classes combined" ( 9 NYCRR 185-4.3 [c]). However, the petitioners' expert acknowledged that the SBEA regulations merely provide goals for taxing jurisdictions, and no penalty is imposed for violating the standards in the regulations (see, RPTL 202). Moreover, the County's expert expressed the opinion that the proper standard to apply to a taxing jurisdiction such as Nassau County was 15%.
Significantly, the report prepared by the SBEA with respect to the 1986 data established that in that year, only 7.2% of all assessing units in the State of New York met the SBEA's residential standard for a coefficient of dispersion. Statewide, the report indicated that the coefficient of dispersion was between 19.5% and 19.6%. According to calculations made by the petitioners' expert, in 1986 the residential coefficient of dispersion for the Town of Brookhaven in Suffolk County (the largest municipality in Suffolk) was 22.14%. The coefficient for the Town of Huntington was 17.62% and the coefficient for New York City was 25.84%. Based on a report released by the Federal Government, nationwide the coefficient of dispersion in 1982 was 21.3%. The New York State average coefficient of dispersion was 23.1%.
It is well settled that in the area of real property taxation, rough equality, not complete uniformity, is all that is required (see, Foss v. City of Rochester, 65 N.Y.2d 247; People ex rel. Hagy v. Lewis, 280 N.Y. 184; People ex rel. Warren v. Carter, 109 N.Y. 576; Matter of Mid-Island Shopping Plaza v. Podeyn, 25 Misc.2d 972, affd 14 A.D.2d 571, affd 10 N.Y.2d 966; see also, 5A Warren's Weed, New York Real Property, Taxes and Assessments, §§ 3.04, 5.03 [3d ed]). It has also been held that "gross disparities" in the taxation of similarly situated taxpayers can constitute a violation of the constitutional right to equal protection of the laws (see, Allegheny Pittsburgh Coal v. Webster County, 488 U.S. 336, 338; cf., Nordlinger v. Hahn, 505 US ___, 112 S Ct 2326). As the Court of Appeals has observed, if a classification between taxpayers is palpably arbitrary or involves an invidious discrimination, an equal protection violation will be found (see, Foss v. City of Rochester, 65 N.Y.2d 247, 256-257, supra; see also, Trump v. Chu, 65 N.Y.2d 20; Nash v Assessor of Town of Southampton, 168 A.D.2d 102).
The petitioners' evidence does not meet the rigorous requirements needed to establish a constitutional infirmity (cf., Matter of Krugman v. Board of Assessors, 141 A.D.2d 175). Rather, that evidence merely established a moderate statistical deviation from a hypothetical norm. This deviation was in substantial conformance to both a Statewide and a national average. Moreover, there was no proof that the taxing methodology at issue makes any distinction between owners of Class I property that would constitute disparate tax treatment in a constitutional sense. Rather, the evidence supports the conclusion that reasonably equitable assessments are produced by the County's assessment methodology. Under such circumstances, we conclude that the petitioners failed to establish a constitutional violation in the manner in which Nassau County assesses Class I property (see, Matter of Board of Mgrs. v. Board of Assessors, 197 A.D.2d 620).
The petitioners' challenge to Nassau County's fractional assessment and their remaining contentions are without merit (see, Real Property Tax Law § 305; Stemmer v. Board of Assessors, 97 A.D.2d 979; C.H.O.B. Assocs. v. Board of Assessors, 45 Misc.2d 184, affd 22 A.D.2d 1015, affd 16 N.Y.2d 779; Matter of Mid-Island Shopping Plaza v. Podeyn, 25 Misc.2d 972, supra).
While the petitioners have failed to sustain their claim of a violation of the Equal Protection Clause based upon the coefficient of dispersion, we would note that certain evidence adduced at this hearing signals the possibility of problems in the future. It appears that the treatment by the Board of Assessors of reductions in assessed value achieved by means of judicial review might conceivably be viewed as creating a disparate form of assessment. The record before us is inadequate to make such a determination at this time, but does raise the spectre that continued constitutional challenges to assessments in Nassau County will be forthcoming unless remedial action is taken. Sullivan, J.P., Joy, Friedmann and Goldstein, JJ., concur.