As we dig out from under an unusually cold and snowy winter, we can’t help but ponder the efficacy of our statutory freeze provision, especially in light of two 2015 Appellate Division cases that seem to have completely opposite holdings on the subject.

Take the Real Property Tax Law (“RPTL”) mandate that taxpayers must commence separate tax assessment proceedings for each and every assessment per tax year that such taxpayer desires to challenge (see, RPTL §§ 702, 704 and 706).  And even when tax assessment litigation is commenced, in the Third Department at least, the property owner must continue to file a grievance and petition for each and every year on that same property until the case is resolved – even though under RPTL § 727 post-judgment assessment reductions are “frozen” for three years. This is part of what makes assessment litigation an expensive endeavor when one adds up the attorney time to prepare the documents, court filing fees and costs associated with service of process.  On January 29, 2015 the Third Department affirmed this general practice in Highbridge Broadway, LLC v. Assessor of the City of Schenectady, reversing a decision that would have required the Schenectady City School District to pay an additional $8,000 in refunds had it not been upheld.

Specifically, in Highbridge Broadway, LLC, the property owner/developer filed a tax assessment challenge in July 2008 for the 2008 assessment year only.  The challenge alleged that the property was entitled to a RPTL § 485-b tax exemption. (RPTL § 485-b provides a real property tax exemption for real property that is “constructed, altered, installed or improved . . . for the purpose of commercial, business or industrial activity.”)  The RPTL § 485-b exemption requires a single application.  This means that once granted the exemption lasts for ten years, no annual recertification or renewal is required.  Relying on this statutory provision within the exemption statute, the developer determined that challenges to assessment roll years 2009, 2010, and 2011 were unnecessary even though the exemption had not been applied in those years, either.

In 2011, the Supreme Court ruled that the developer was entitled to the RPTL § 485-b exemption in 2008 through 2011 and ordered refunds to be paid by the town, county and school district for each of these years.  However, Intervenor-respondent Schenectady City School District refused to pay refunds for assessment roll years 2009 through 2011 because the developer did not file separate proceedings in those years, so the District appealed the Supreme Court’s decision.

In January, the Third Department held in favor of the School District stating that no refunds were required for 2009, 2010, or 2011.  The Court stated a property owner must preserve their right to an assessment reduction by filing repeated challenges each year.  Moreover, the Court determined that RPTL § 727’s “freeze” provision could not save the developer. This technical deficiency saved the school district approximately $8,000 in refunds, and reiterated the burden that befalls all taxpayers to file repeated challenges until the case is “closed.”

The practical implications of this decision could not be more clear. Under this line of cases, a petitioner must file an assessment challenge each and every year until the case is resolved; moreover, RPTL § 727’s “freeze” cannot circumvent this requirement.

But wait, there’s more…see our post later this week for a decision out of the Fourth Department that holds onto the meaning of the word “frozen”… and perhaps there will be some clarity later, in the summer.