STATE OF NEW YORK
SUPREME COURT : CHAUTAUQUA COUNTY
_____________________________________________

In the Matter of the Application of

NIAGARA MOHAWK POWER CORPORATION,

Petitioner,

-vs- Index #H-9963

CITY OF DUNKIRK ASSESSOR, CITY OF DUNKIRK
BOARD OF ASSESSMENT REVIEW and CITY OF
DUNKIRK, CHAUTAUQUA COUNTY, NEW YORK,

Respondents.
_____________________________________________
HELM, SHAPIRO, ANITO &
MCCALE, P.C. (Mark D.
Lansing, Esq. of Counsel)
for Petitioner
HANCOCK & ESTABROOK, LLP
(John R. Varney, Esq. of
Counsel) for Respondent
DECISION AND ORDER
GERACE, J.


Petitioner brings this Article 7 Tax appeal from the City of Dunkirk's 1994 assessment of its electric power plant. The appeal topically presents substantially the same questions decided by this Court in Petitioner's tax appeal from the City's 1993 assessment and failure to grant exemptions. Petitioner's appeal of this Court's Decision on the 1993 assessment and exemptions is pending in the Appellate Division.
Petitioner's 1994 tax appeal is combined with an Article 78 proceeding for a declaratory judgment on several Federal and State Constitutional grounds; a motion for discovery of the members of the Dunkirk City Board of Assessment Review and Respondents' special counsel.

Respondents have filed cross-motions opposing discovery and for partial summary judgment to dismiss several of the causes of action in the petition.

In this Decision/Order, the Court may refer to Petitioner as "NIMO", and Respondents as "the City", or "Dunkirk".
THE ISSUES

1. Whether Dunkirk's repeat of the 1993 valuation based on an independent appraisal report solely on Petitioner's property violates its constitutional rights.

2. Whether NIMO's newly constructed boat landing dock and the environmental facilities (air pollution control and waste water treatment facilities) are eligible for exemptions.

3. Whether the City has the right to make its own determination whether the environmental facilities are eligible for the exemptions or is limited to determine only whether the property has been certified as eligible by the DEC.

4. Whether the City can make a separate inquiry into the boat landing dock exemption or must accept Petitioner's cost figures.
SUMMARY OF DECISION
The Court bifurcates the exemption claims, grants Petitioner's motion for $34,451,500 in exemptions allowed under Sections 485-b, 477 and 477-a of the Real Property Tax Law, and directs that the assessment of $195,975,000 be reduced accordingly.

The Court hereby stays any determination of the present petition for review of the basic assessment, and the Article 78 proceeding addressed to Constitutional issues, pending the decision of the Appellate Division, or, completion of the Citywide revaluation of all real property plus the SBEA advisory appraisal, whichever occurs first.

THE EXEMPTION ISSUES: POLLUTION CONTROL EXEMPTIONS
In the 1993 proceeding, the Court denied Petitioner's claim for exemptions for environmental improvements on the ground that Petitioner did not establish it had obtained and presented certificates of compliance from the Department of Environmental Conservation as required by law.

In this proceeding, Petitioner addressed this omission by filing the required certificates with the assessors. Respondents refused to grant the exemptions in spite of the certificates, contending it was entitled to compel petitioner to produce additional documentation.

The City did not have the right to put Petitioner through the administrative wringer once DEC issued the certificates. The City assessor lacks the power to make an independent determination whether environmental facilities are eligible for the RPTL 477 exemptions. The assessor is limited to determine only whether the property has been certified as eligible by the DEC.

Once a certificate of compliance is granted, the assessor's determination whether the exemption should be granted is merely ministerial.

The City gave lip service to but did not even apply 5 Op Counsel SBEA NO. 110 which states that the amount of the exemption is not necessarily measured by the value or cost of the new facility, but by the amount by which the value of the property has increased because of the environmental construction. According to that opinion, the assessor should value the property without the new facility, then value the property with the newly constructed facility; the amount of the exemption is the excess or difference in value.

The fact that the City did not even follow that procedure lends credence to NIMO's claim that the City is relying on lex talionis and retaliatory litigation tactics bordering on harassment and bad faith.

THE BOAT DOCK

RPTL 485-b allows a declining 10 year exemption from the increase in assessed valuation of a parcel of real property due to construction, alteration, installation or improvement for industrial, business or commercial purposes. The State Legislature authorized this exemption in order to attract or retain commercial and industrial developments to broaden a community's tax base and create new local jobs and retain existing jobs.

Communities statewide hailed and used the law as an economic development tool to attract new industries and new businesses, and to encourage expansion of existing job producing enterprises. For a community to mindlessly beat down such exemptions is inconsistent with the purpose of the law.

However, unlike the RPTL 477 exemptions, the taxpayer has the burden of proving entitlement and the assessor does have the right to make a detailed inquiry.

In 1993, Petitioner completed construction on the new boat dock at the station, the purpose of which was to facilitate coal acquisition by boat, as opposed to rail. It clearly qualifies for exemption under RPTL 485-b.

The City denied NIMO's claim for a partial exemption on the boat dock because of an alleged contradiction. The alleged contradiction was clarified by a
July 15, 1994 response from NIMO.

The City's reasons for the denial of the Boat Dock and environmental exemptions stretch the credulity of the Court beyond acceptable judicial limits. It appears to the Court that the City had asked its special counsel to comb the applications in an effort to find nits to pick rather than make a good faith evaluation of the application.
As this Court stated in WELCH FOODS vs TOWN & VILLAGE OF WESTFIELD, NEW YORK, decided July 29, 1994, Index No.
"This Court is convinced the day has arrived to consider alternatives or additional preliminary steps in the sometimes unproductive time and money consuming tax certiorari proceedings that often consist of forensic fencing with all the recognized thrusts, lunges and parries; or, that display shootouts by the 'hired legal guns'. . . ."


To do otherwise results in a cost in money and time

spent in trial, and a cost in good will of and to the

community and industry that can never be recouped no matter

who "wins".

EXEMPTIONS: PROCEDURAL HISTORY

Counsel for both parties submitted extensive correspondence and memoranda of law to support the arguments they made to the Court on April 10, 1995.

The major issue raised in the oral arguments related to Petitioner's claim that Respondents failed to grant exemptions in the 1994 assessment; that Respondents subjected Petitioners to needless demands for voluminous documents. Respondents contended they required documents to determine whether Petitioners are entitled to claimed exemptions.

The central point of disagreement stems from petitioner's complaint that respondent's 1994 assessment repeated its 1993 assessment which was based upon an independent appraisal of $195,975,000 that Petitioners contend is unconstitutional and grossly excessive as set out in their previous appeal to the Appellate Division.

In the hearing on the motions, Petitioners' counsel argued Petitioner was entitled to certain exemptions for 1994 to be charged against and reduce the assessment of $195,975,000 (T. pgs. 52-54).

The claimed exemptions are as follows:
Wastewater Treatment Facility
(T. p. 53) $16,752,000

Sec. 485-b Boat dock (T. p. 54) 1,181,500

Air Pollution Control Unit
(T. p. 54) 6,346,500

Air Pollution Control Unit
(T. p. 55) 10,171,500

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TOTAL $34,451,500
Counsel for Petitioner further stated that if these exemptions are agreed to, Petitioner would withdraw any claim to exemptions for air pollution control units 1 and 4 in the 1994 assessment but reserved its request to raise these in the 1995 assessment.

Respondent's counsel did not dispute the assessments but claimed the City is entitled to receive and review details of cost in support of exemptions and he indicated Respondents' willingness to enter into discussions with the Petitioner and receive proof with a view to granting exemptions.

On the basis of Petitioners' claims for exemptions, the 1994 assessment would be reduced to $161,523,500 ($195,975,00 - $34,451,500).

Some days after the hearing on April 10, 1995 the Court received a letter from Respondents' counsel that the parties were in negotiations to settle the exemptions entitlement.

Since then the Court has been barraged with faxes, letters photocopies and writings from both counsel continuing argumentation of matters that closed with the hearing on April 10, 1995.

The Court declines to be drawn into this ongoing fax and letter debate and concluded from the letters nothing other than the fact that the parties, especially the City, was committed to disagreement.

ORDER

Accordingly, addressing the motions, the court approves the exemptions claimed by Petitioner for which certificates have been granted by the Department of Environmental Conservation on the RPTL 477 exemptions. Respondents' objections to any certificates should be addressed to the Department of Environmental Conservation.

The 485-b exemption is granted on the ground that petitioner has established a prima facie case for entitlement and the reasons given for denial lack merit .

The Respondents are directed to reduce the 1994 assessment by $34,451,500 representing exemptions for which DEC certificates have been issued to the Petitioners and the partial boat dock exemption. In the event petitioner has paid 1994 taxes based upon the assessment of $195,975,000, Respondents are directed to refund any excess resulting from this reduction ordered by the Court on the 1994 assessment.

The remaining questions to be resolved in the 1994 assessment appeal are largely the same questions pending before the Appellate Division in Petitioner's appeals. Petitioner bases its contentions as to the value of its real property on the same estimates that the court rejected in finding it had not proved a prima facie case in the 1993 appeal.

Regarding the problems confronting the Respondents in the 1994 assessment;
a) Respondent has undertaken revaluation of all of the taxable property as suggested by this Court in its 1993 previous opinion, and raised by Petitioner's objections;
b) Respondents have requested SBEA to separately provide an advisory appraisal of Petitioner's property;
c) Respondent has no other reliable assessment data than the contested 1993 appraisal which is subject to satisfaction or revision by the information resulting from (a) and (b).
The matters pending on Petitioner's appeals to the Appellate Division involve the same parties and substantially the same issues raised in the instant case. Moreover, as Warren's Weed New York Real Property, Taxation and Assessment, Sec. 5.03(1 in Judicial Review of Assessment notes: