Petitioner's burdens of proof

The initial 2007 assessment of the petitioner B. Thomas Golisano's newly built residence at 470 Main Street, Mendon, New York. was $6,000,000, which the Board of Assessment Review lowered to $5,000,000. Believing that the assessment should be lowered further, petitioner commenced these individual Real Property Tax Law Article 7 proceedings for the years 2007, 2008 and 2009 respectively.

Since real property assessments are presumed to be correct, the taxpayer must overcome two burdens of proof in Article 7 cases. An initial "threshold showing" requires the petitioner to provide "substantial evidence"^[FN1] sufficient to rebut the presumption that the municipal tax assessment is correct. However, as the Court of Appeals held in FMC Corp v. Unmack 92 NY2d 179, this initial burden only requires "minimal evidence." Once done, the taxpayer must then meet the ultimate burden of proof of over assessment by a preponderance of the evidence.

The petitioner overcame his initial burden of proof by proffering an appraisal prepared by John Rynne and has brought before this court substantial evidence that a valid dispute exists [*2]concerning the current valuation of his property. The Town of Mendon responded with an appraisal by Kevin Bruckner. Both appraisers are state certified and their respective appraisals satisfied the requirements of 22 NYCRR 202.59 (g) (2). Mr. Rynne has experience appraising commercial property and high-end residential property like the subject property. Mr. Bruckner testified that he is a commercial property appraiser who does few residential appraisals.

Assessments and Appraisals

Both appraisers acknowledged that Mendon's assessments of $5,000,000 for each year were too high. Since construction of the subject property was not complete until after March 1, 2007 ^[FN2], Mr. Rynne made an adjustment to his 2007 value for the unfinished work. Mr. Bruckner assumed the property was complete on March 1, 2007, made no adjustment, and thereby over valued the property. The parties stipulated at trial that Mr. Bruckner's error would be corrected and that his value for 2007 would be reduced by $186,760. Mr. Bruckner's value was $3,650,000 for each year, before adjusting 2007 for the unfinished work error. Mr. Rynne's values were $2,440,000 for 2007; $2,740,000 for 2008 and $2,850,000 for 2009.

Evaluation Methods

Appraisers use three methods to evaluate real property: the income approach, the cost approach, and the market approach. The income approach is used for income producing properties and would not be appropriate for this owner occupied single family home.

The respondent town assessor, Michael R. Spiegel, used the cost approach, based on data models supplied by the New York State Department of Real Property, to initially value petitioner's property. Mr. Spiegel testified that the cost approach can be used to value new residential construction, particularly here where he found no comparable sales. However, the cost approach tends to overstate the value of real property and is the least favored method (see, In the Matter of Saratoga Harness Racing vs. City of Saratoga Springs, 91 NY2d 639). It was rejected by the town's appraiser who acknowledged that executive mansions sell at a substantial discount from cost and should be assessed substantially below cost. As with the subject property, many wealthy people want to design and build their own home. However, since many executive home buyers are looking for a "good deal" at the first owner's expense, the cost approach is not appropriate in this case.

Market Approach

The market approach requires the appraiser to research the market to find sales of similar properties for direct comparison to the subject property. Since few people want the upkeep of a property as large as the subject, there is a small market for the resale of these types of properties in upstate New York. Regardless, the appraisers found ample sales to be compared to the subject. Appraisers make adjustments to the comparables they select for direct comparison to the subject property. Through the process of adjusting for differences, similar properties can indicate the value of the subject property. [*3]

Mr. Rynne searched the upstate New York market and found over 50 sales of high-end residential homes with prices over $1 million. Mr. Rynne selected ten sales from the array for direct comparison to the subject. He then aligned the properties on a sales grid to find a common unit of measurement. In his report, he described his sales and explained his adjustments for material differences in condition, financing, age, size, and location. For the most part, the adjustments employed in petitioner's appraisal were sufficiently explained and supported in the record. However, of particular concern is Mr. Rynne's use of six comparable sales in the Towns of Brighton and Pittsford which necessitated negative location adjustments to the subject ranging from 15 to 45 %.^[FN3]

Mr. Bruckner selected six sales for direct comparison to the subject and adjusted them for differences. Although Mr. Bruckner testified that property located nearest to the subject is best, he selected properties from other towns like Pittsford and Brighton and as far away as Erie and Onondaga Counties. Two of Mr. Bruckner's highest sales (on a per square foot basis) were sales of lake front properties on Skaneateles and Canandaigua Lakes. While Irondequoit Creek runs though the subject property, Mr. Bruckner admitted that the creek (which is so narrow one could jump over it) is not comparable to Finger Lake frontage which has some of the most valuable residential properties in the nation. Mr. Bruckner's adjustments to remove the impact of lake frontage were unsupported and, accordingly, unreliable.^[FN4]

The same comparable sales

The appraisers used three of the same sales for direct comparison to the subject property: 4100 East Avenue, Pittsford, New York; 6523 Boston State Road, Hamburg, New York; and 1 Carolina Drive, Mendon, New York. [*4]

1. 4100 East Avenue, Pittsford

Both appraisers considered the sale of 4080 to 4120 East Avenue, sold by Richard Aab to St. John Fisher College. The transaction was for $3,000,000, although assessed for $1,700,000 at the time of sale. It includes 13.7 acres of land in Pittsford. At $625 per square foot, this is the highest sale price per square foot in the luxury home array in Mr. Rynne's report. It is also the highest residential sale price per square foot in Monroe County history.

While using the Aab sale, Mr. Bruckner acknowledged that the sale was affected by the extraordinary motivation of St. John Fisher College to purchase 13.77 acres of rarely available land adjacent to its expanding campus. Because St. John Fisher purchased the property for future expansion of the college, the Aab sale was not a reliable indicator of the value of residential property . Mr. Bruckner testified that a market sale requires equal motivation on the part of the buyer and the seller.^[FN5] Mr. Bruckner made an adjustment of $450,000 due to the motivation disparity. Mr. Rynne reported the Aab sale, but since he felt it was not a fair market sale, he did not give it any weight.

The Aab property also included valuable approved subdivision lots, ready for sale as individual residential development parcels. While the subject property was larger at 38 acres, because of a conservation easement, it could not be subdivided.

2. 6523 Boston State Road, Hamburg

Both appraisers used property at 6523 Boston State Road in Hamburg, New York. Mr. Bruckner reported that Hamburg was inferior to the Rochester suburbs of Mendon, Pittsford, and Brighton. Although Mr. Bruckner made an adjustment of $300,000 to Boston State Road for its "inferior" location, he did not provide any sales data or market studies showing similar houses sell for less per square foot in Hamburg New York (an affluent Buffalo suburb) than properties in Mendon. Mr. Rynne's report showed Mendon sales are lower than sales in the Brighton-Pittsford area.^[FN6]

Although Mr. Bruckner made a $450,000 downward adjustment to the Aab/St. John Fisher sale for owner financing, he did not do so for the substantial owner financing upon which the Boston State Road buyer eventually defaulted. In fact, he did not know the buyer defaulted. Owner financing receives an adjustment from a cash sale because the seller takes on more risk. As is the case of Boston State Road, the financing risk was real for which Mr. Bruckner should have made a downward adjustment.

3. One Carolina Drive, Mendon

[*5]Finally, both appraisers used property located at 1 Carolina Drive in the Town of Mendon (Bruckner comparable No. 6; Rynne comparable # 4). One Carolina Drive is in the same town as the subject, is relatively new construction and has been recently sold. However, significant adjustments were made.

In addition to the base August 5, 2008 sale price of $1,600,000 for 5,548 square feet ^[FN7] of gross living area, the court accepts in toto the following adjustments made by Mr. Bruckner:

1. an additional $811,000 for an additional 4,055 square feet of gross living area;^[FN8]

2. an additional $70,000 for an additional 3,512 square feet of basement;^[FN9]

3. an additional $10,000 for a fifth garage bay;

4. an additional $15,000 for a large open patio;

5. an additional $15,000 for a covered patio; and

6. an additional $332,000 for the additional 33.19 acres of land.^[FN10]

The court agrees in part with the following adjustments made by Mr. Bruckner:

7. an additional $90,450 for a 2,700 square foot two- story barn at $33.50 per square foot ($33.50 is the average of Mr. Bruckner's $45/sq. ft. and Mr. Rynne's $22/sq. ft.).

8. an additional $16,080 for a 480 square foot caretaker's cottage at $33.50 per square foot (again an average of Mr. Bruckner's $45/sq. ft and Mr. Rynne's $22/sq. ft).

The court does not agree with Mr. Bruckner's unsupported $250,000 "site amenities" [*6]adjustments for the creek, bridge, pond and driveway. The creek ($75,000) and pond ($50,000 for essentially an excavated low spot for drainage) were in existence when the land was purchased and are included in the base land value. They are potential hazards, require security and, like a swimming pool at a suburban home, arguably diminish the value of the property.^[FN11] The covered bridge ($75,000) although decorative, requires upkeep and is of minimal, if any, utility. The heated driveway ($50,000) is functional although expensive to use and maintain. Regardless, the court attributes $10,000 value each to the pond, bridge and driveway for a total of $30,000. No additional value is attributed to the preexisting creek.

Mr. Bruckner gave 1 Carolina Drive a $320,000 additional "view" adjustment, even though it was on a 5 acre parcel, opposite Mendon Ponds Park. When asked, Mr. Bruckner testified that his "view" adjustment was just his opinion and that he had no support.^[FN12] Appraisers often provide support through "paired sales" analysis, where they show similar properties sold at different prices, because a feature like "view" was different. Mr. Bruckner's failure to provide support for a large "view" adjustment is problematic.

Mr. Bruckner acknowledged that while he made a major adjustment for "view", he was aware that petitioner has two average residential houses adjacent to his property. Since the "view"from 1 Carolina Drive, and the other comparables, may well be better than having a view of average quality homes, the court attributes no additional value to the subject parcel's "view" of $320,000.

Mr. Bruckner's remaining sale at 350 Ambassador Drive, Brighton

While accepting and adjusting Mr. Bruckner's Carolina Drive (#6 ) sale, as detailed above, this court disregarded Mr. Bruckner's sales #1, #2, #3, and #4. Mr. Bruckner's remaining sale #5 is located at 350 Ambassador Drive in the Town of Brighton, just 200 meters from Mr. Rynne's sale #1 also in the Town of Brighton at 220 Sandringham Road. Mr. Bruckner made no location adjustment for his comparable sale # 5 whereas Mr. Rynne made a "generous" 40% downward adjustment for location to his comparable sale #1 in Brighton. The court's adjusted value of 350 Ambassador Drive, including a less "generous" 30% instead of a 40% downward adjustment for location, is $2,857,450.^[FN13] [*7]

Comparable sale at 20 Windham Hill, Mendon

The final comparable to consider is also the only other sale in the Town of Mendon used by either appraiser, Mr. Rynne's sale #9 at 20 Windham Hill.The court's adjusted value of 20 Windham Hill is $2,828,850.^[FN14] [*8]

The court determines 1 Carolina Drive is the most relevant comparable sale ^[FN15].

Accordingly, the value of the subject parcel on or about July 1, 2008 ^[FN16] for tax year 2009 is $2,989,450 and the real property assessment is corrected to $2,989,450.

Although Mr. Bruckner's comparable sales' dates ranged from April 7, 2005 through July 2, 2009, he assumed the market was flat for these four years. Claiming that market prices before and after each of the valuation dates were not materially different, he made no adjustments for time. Contrariwise, Mr. Rynne, by analyzing three "paired sales" showing the sale and resale of the same property during the four year period, was able to determine market fluctuations. Mr. Rynne increased the value of the property by 4% per year based on his detailed analysis of the market. Accordingly, the 1 Carolina Drive comparable should be reduced 4% per year retrospectively from July 1, 2009. As a result, the value of the subject parcel on July 1, 2007 for tax year 2008 is $2,869,949 and the real property assessment is corrected to $2,869,949. The value of the subject parcel on July 1, 2006 for tax year 2007 is $2,568,450 and the real property tax assessment is corrected to $2,568,450.^[FN17]

Dated: July 9, 2010______________________

Rochester, New YorkJohn J. Ark

Comparable sales summary

property 1 Carolina Drive 350 Ambassador 20 Windham Hill location adj. sale 1600000 1080000 1316250 add'l sq. footage 811000 645000 640000 add'l basement area 70000 50000 50000 add'l garage bay 10000 20000 20000 open patio 15000 15000 15000 covered patio 15000 15000 15000 additional acreage 332000 372000 322000 [*9]barn 90450 90450 90450 caretaker cottage 16000 offset by pool 16000 site amenities 30000 30000 30000 view open/park view 360000 320000 adjusted price 2989450 2857450 2828850 adjust sale date Aug. 5, 2008 39230 Jan. 27, 2006 2009 adjusted price 2989450 2971748 3059684

Time adjusted valuation summary Court value

Tax year	2007	2008	2009
Assessed value	$5,000,000	$5,000,000	$5,000,000
Bruckner value	$3,463,000	$3,650,000	$3,650,000
Rynne value	$2,440,000	$2,740,000	$2,850,000
$2,568,000	$2,869,000	$2,989,530