NYSAA News

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Bill requires big box retail stores to be assessed more fairly

Local cities, towns, and villages have lost millions in property taxes from big box retailers due to a loophole in New York State’s Real Property Tax Law. On Monday, Governor Hochul signed the “Dark Store” bill (A00894C/S05715A) into law, closing the loophole.

New York State allows assessments, and ultimately the property taxes, of open, thriving big box retail stores to be based on comparable sales of closed or “dark” big box retail stores. This “Dark Store” theory appeals to retailers because it lowers the assessments on thriving national chain stores. The NYS Assessors Association (NYSAA) worked with bill sponsors Assem. Kenneth Zebrowski and Sen. James Gaughran to prohibit the use of “dark store” sales and correlating economic data when valuing occupied and open big box retail stores.

James Maloney, an assessor for the towns of Kingston and Ulster, first identified this issue. NYSAA’s Legislative Committee members contacted Assem. Zebrowski and worked closely together to draft a bill that would prevent retail giants from challenging assessments of shuttered box stores. Retailers have challenged their assessments because they believe the value of their open stores are comparable to the value of vacant and abandoned stores - a theory Maloney disputed. Assem. Zebrowski, Sen. Gaughran, their staff, and key NYSAA members met numerous times to discuss the legislation and its impact on commercial properties throughout the state. Unfortunately, Maloney didn’t live to see the bill become law. He passed away on July 11, 2019.

“Jim Maloney brought this issue to our attention, and we pursued it after his death. Jim knew this would become an issue for municipalities in terms of lost property tax revenue, and he was right,” NYSAA President Jeneen Hill, said. “The New York State Assessors Association has been working diligently with Assem. Zebrowski and Sen. Gaughran to eliminate the “dark store” strategy, which unfairly reduces assessments on commercial properties. Their sponsorship of this important bill was key to its passage in both chambers and being signed into law. Thanks to their efforts on behalf of taxpayers and assessment professionals, big businesses will now pay their fair share of property taxes.”

The new law provides clearer guidance to assessors when using the comparable sales, income capitalization, or cost methods. These methods use sales data of similar properties to develop a value. There have been numerous court cases where property owners are challenging their assessment using sales data of properties that are not similar in use, type, or location. The courts have differed with their evaluation of opposing assessments in such challenges due to the lack of guidance in statute. They are forced to make decisions on the validity of assessment reports from the municipality and property owner based on precedent of previous rulings and general practice. This law ensures there are clear and unambiguous guidelines for assessments that use the comparable sales method.

Posted 10/27/21

As many of you already know, the Department of Taxation and Finance released its final solar and wind valuation model on October 14, 2021 and, as an association, we could not be more disappointed in the outcome. 

While the legislation clearly stated that NYSAA was to be consulted in creating the model, the model that was ultimately released by the Department of Taxation and Finance was not provided to our association until the same time it was made final to the public. In our opposition to both the first and second models, we provided multiple bullet points as to why the models were insufficient and resulted in unfairly low valuations. These arguments still hold for the final model and result in even further reductions in values for solar and wind arrays, ultimately, at the expense of taxpayers.

The opposition we set forth was as follows:

• The models do not include in their cash flows all of the subsidies, grants, and incentives that solar and wind developers receive to build their installations.
• The holding period of 25 years is too long, per New York State Case law and the Appraisal of Real Estate.
• The discount rates used are too high in the final model.
• The models are abrogating the statutory duty of assessors to value properties in their jurisdictions at full market value by a method found most appropriate by the assessor.
• The discounted cash flow methodology has not been accepted in New York State as a proper valuation tool for utility property, such as power plants, hydroelectric dams, poles, wires, or fiber optics.
• Municipalities will have no mechanism to enforce the proper and full reporting of installation inventory information and cannot confirm the generation data received by the developers to be used in the model.
• NYSAA was not involved in developing or reviewing the final model, as was mandated by the statutory language allowing for the creation of the models, and the final model should therefore be rejected outright.

Per the NYS Department of Taxation and Finance, the model will be tweaked every year, so NYSAA will continue to advocate for a model that is fairer to taxpayers and does not so heavily favor developers. If the model will negatively impact your town, village, or city, or you have comments or feedback, please contact either Warren Wheeler at wjwheeler@nyassessor.org, or Dylan Harris, NYSAA’s Renewable Energy Task Force chair, at dharris@lewisgreer.com or call 845-454-1200.

Posted 10/27/21