Golf Course Income Approach Confirmed by Second Department

In a decision issued December 18, 2007, In re Mill River Club v. Board of Assessors (click link below), the Second Department has confirmed some of the methodology issues involving golf course valuation that have become familiar ever since the trial level decision in In re New Country Club of Garden City v. Board of Assessors was rendered in 1991. While Mill River is not a slam dunk for the petitioner and turns much on the trial court's refusal to add a tax-loaded cap rate (because it was assumed the property would be leased triple net....a dubious and case-by-case assumption), the Second Department confirms that, in the context of a golf club, the income capitalization method "is widely recognized as a valid method to determine the market value of income-producing property".

As an aside, on the tax-load issue, my thought is that it's somewhat irrelevant, or at least it should be: the idea is that we're supposed to value the course as if it's operating for a profit (in which case the tax exempt status of many municipal owned/leased courses should not be considered, in my view, though the AD seemed troubled on this point); if it's leased NNN then the lessee will pay the owner less rent because the lessee must pay the taxes, and if it's a gross lease the lessee will pay a higher rent but the owner must bear the tax burden. The bottom line effect to the owner in net revenue should be about the same because the operator needs to run things at a profit and not according to some mechanical formula. Seems like the AD got bogged down in a non-issue. To read the new decision, click on this link: http://taxcert.googlepages.com/MillRiverClubDecision.pdf

To read a few of the other recent trial level decisions from Long Island that affirm the valuation formula stated in New Country Club, click on these links:
http://taxcert.googlepages.com/CreekDecision.pdf
http://taxcert.googlepages.com/NorthShoreCCDecision.pdf
http://taxcert.googlepages.com/RockvilleCCDecision.pdf

Upcoming Cert CLE - Your Input Needed

We are currently working on putting together a short certiorari CLE program through the WCBA. This might be either a lunch or dinner program of, say, a couple of hours, that will focus primarily on our local Court's rules and will include discussion/explanation of things like the application of the Court Rules (22 NYCRR 202.59 etc.), as well as ways of expediting the negotiation or mediation of stagnant cases.

All suggestions for topics of interest and best times to hold the program, as well as venue, are welcome. Either post to this blog or contact Jeff Rodner, Paul Richmond, or myself.

David

Valuation Date Changes in Westchester - Beware!

Ossining, Pelham, and Rye Town have changed their valuation date to July 1 of the year preceding the assessment roll. The change is effective as of the 2007 roll, such that properties on that roll will be valued as of July 1, 2006. This is particularly important if you are preparing trial appraisals that, of course, must value the property as of the correct date.

Interestingly, because the change occurs only as of 2007, if you have appeals pending that span 2006 and 2007, the property for those two years will be valued only a month apart: the 2006 AV will be valued on the old system, as of June 1, 2006, and the 2007 AV will be valued on the new system, one month later, as of July 1, 2006.

In one of my cases, the property spans Ossining and another town, and the other town is still using the valuation date of June 1 of the AV year, so our appraisal must conclude two values for the same assessment year. As most of you know, the change is similar to the valuation date change that was made in most other jurisdictions of New York State. If anyone hears of other Westchester munis that follow suit or has more information or experiences concerning this, please post!