Volume 9 - Opinions of Counsel SBEA No. 7
Assessments, generally (income approach to value) (income and expense statements) - Municipal Home Rule Law, § 10; Real Property Tax Law, § 305:
A city, town or village may act pursuant to the Municipal Home Rule Law to adopt a local law requiring the submission to assessors of income and expense statements by owners of income producing property. County assessing units may do so by amendment of their county charter.
In 41 Kew Gardens Road Associates et al. v. Stanley Tyburski and C. et al., 70 N.Y2d 325, 514 N.E.2d 1114, 520 N.Y.S.2d 544 (1987), the Court of Appeals upheld the constitutionality of 1986 New York City Local Law No. 63 [Admin. Code § 11-208.1], which requires owners of income producing property within the City to furnish income and expense statements to the City’s Commissioner of Finance to be used in the determination of real property assessments. We have been asked to explain the decision’s impact on other assessing units.
In Kew Gardens, the Court concluded that the State Constitution grants certain powers to municipalities by self-executing grants which require no further State legislative implementation (N.Y Const., Article IX, § 1), and by indirect grants which require further legislation before a municipality may act (N.Y. Const., Article IX, § 2). The Court also concluded that while the power to levy taxes is vested solely in the State Legislature (N.Y. Const., Article III, § 1; Article XVI, § 1), the Legislature has delegated to its municipal subdivisions the authority to assess and collect their own taxes as authorized by the Legislature. The Court held that Municipal Home Rule Law, § 10(1)(ii)(c)(2) is derived from Article IX, § 2(c)(8) of the State Constitution and expressly grants to cities the authority to adopt local laws relating to “the preparation or making of assessments.” However, this authority is limited because it may not be exercised in any manner inconsistent with the Constitution or any general law of the State (citing Consolidated Edison v. Town of Red Hook, 60 N.Y2d 99,456 N.E.2d 487,468 N.Y.S.2d 596 (1983)).
The Court also found that New York City had exercised its powers in an appropriate manner since the local law requires information which is directly related to the “preparation of assessments.” In making this determination, the Court noted that the income approach has long been considered the preferred method for valuing income producing property (1 Bonbright, Valuation of Property, p. 216; see also, Matter of Merrick Holding Company v. Board of Assessors, 45 N.Y2d 538, 382 N.E.2d 1341, 410 N.Y.S.2d 565 (1978); Food Fair, Inc. v. Board of Assessment of Town of Niskayuna, 78 A.D.2d 335, 435 N.Y.S.2d 378 (3d Dept. 1981)). The Court also noted that this type of income and expense data must be disclosed in an RPTL, Article 7 proceeding (Matter of 749 Broadway Realty Corp. v. Boyland, 3 N.Y2d 737,143 N.E.2d 519, 163 N.Y.S.2d 973 (1957); 22 NYCRR 202.60). The underlying Constitutional and statutory provisions, as well as the valuation methodology, being equally applicable to other cities, in our opinion, other cities may adopt local laws to require the submission of income and expense statements.
The next question is whether the rationale in the Kew Gardens case extends to municipal assessing units other than cities, i.e.; may counties (which have the power to assess real property), towns and villages constitutionally adopt similar local laws? Municipal Home Rule Law, § 10(1)(ii)(d)(1), authorizes a town to adopt and amend certain local laws pertaining to local taxes, including those relating to:
(1) The preparation, making, confirmation and correction of assessments of real property and the review of such assessments subject to further review by the courts as provided by law, consistent with laws enacted by the Legislature.
Also, section 10(1)(ii)(e)(1) of the Municipal Home Rule Law grants the same authority to a village in language identical to that for towns. The language of both sections is identical to section 10(1)(ii)(c)(2) of the Municipal Home Rule Law, which was the basis for the Court’s holding in Kew Gardens, with the addition of the phrase “consistent with laws enacted by the Legislature.” As noted above, in Kew Gardens the Court of Appeals held that the authority granted the City in the Municipal Home Rule Law is specifically limited: no local law involving assessment and related matters may be inconsistent with either the State Constitution or a general law. A local law requiring the submission of income and expense statements would contribute to the preparation of accurate assessments and aid in ensuring compliance with the statutory standard of assessment (RPTL, § 305(2)). Thus, villages and towns have virtually the same authority as the Court of Appeals found that the City of New York has in the Kew Gardens case.
Other factors also must be considered in this analysis. The City of New York is a special assessing unit (Real Property Tax Law, § 1801(a)) and is thus obligated to establish four different classes of real property for tax purposes (§ 1802(1)); however, this does not preclude the application of the principles discussed in Kew Gardens to other assessing units. Since, as the Court held, a requirement for producing income-expense information relates to the “preparation or making of assessments”, such information could arguably be requested by any assessing unit without violating constitutional principles of equal protection and due process. Again, based on the statutes and cases, in our opinion, towns and villages may adopt local laws to require submission of income and expense statements.
There are two counties in the State, Nassau and Tompkins, which assess real property for purposes of taxation, and the next issue is whether these counties may enact a local law requiring the submission of income and expense statements by owners of income producing property.
Section 10 of the Municipal Home Rule Law does not provide a grant of authority to counties to enact local laws relating to the preparation of assessments similar to that provided for towns and villages as discussed above. This is likely due to the fact that only the two aforementioned counties have the authority to assess real property. However, a county may act pursuant to Article 4 of that law to amend a county charter which has been enacted by the Legislature.
The authority of a county to amend its charter is relatively broad, subject to specific limitations provided in section 34 of Article 4. That section specifically prohibits provisions relating to taxation of State lands and exemptions from taxation, as well as a provision that no enactment may supersede any general or special State law relating to the imposition of judicial review or distribution of taxes.
Since the Legislature has not acted to require the submission of income and expense statements, or to prohibit an assessing unit from acting pursuant to the Municipal Home Rule Law to require such submissions, it is our opinion that a county, which is an assessing unit, may amend its charter to add such a requirement. Such an enactment would rationally relate to the function of assessing as discussed in the Kew Gardens case. In fact, the Nassau County Administrative Code already contains a provision requiring the submission of income and expense statements upon demand by the Assessor (§ 6-30.0).
In conclusion, the rationale of the Kew Gardens case appears to allow all assessing units to enact similar assessment information requirements.