Tax relief sought

Self Storage owner sues Lloyd over assessment

By Mark Reynolds
Posted 11/18/20

In May 2019 the Lloyd Board of Assessment Review [BOAR] reduced the assessment of the Highland Route 9W Self Storage facility from $7,914,000 to $4,000,000, a decrease of $3,914,000. The following …

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Tax relief sought

Self Storage owner sues Lloyd over assessment

Posted

In May 2019 the Lloyd Board of Assessment Review [BOAR] reduced the assessment of the Highland Route 9W Self Storage facility from $7,914,000 to $4,000,000, a decrease of $3,914,000. The following year, 2020, the assessment went up by a step schedule to $6 million, prompting owner/developer Owen Mark Sanderson to file a tax lawsuit against the town on July 31, 2020.

Sanderson is the same developer who is proposing to build an Assisted Living facility as well as a large retirement community near and up above the storage facility on property located across from the Bridgeview Shopping Plaza.

Sanderson filed an Application For Real Property Tax Exemption For Commercial, Business or Industrial Property on February 2, 2019. He broke out the costs for his two-building, 89,300 sq/ft storage facility $900,000 for the land; $1,122,000 for site work and the buildings at $5,100,000 for a total of $7,122,000. Town Assessor Ann Feo pointed out that the original $7.9 million assessment was calculated by the state in March 2019, with the town providing only the square footage of the facility.

In his May 26, 2019 Complaint On Real Property Assessment submission, Sanderson estimated the market value of his property at $1 million, claiming that it has been “significantly over assessed at $7,914,000.” He pointed out that he had only rented about 87 of his 700 storage units, or 12.5%. He also claimed that he received a business investment exemption that should be reviewed and factored into the tax calculations by the town and the school district.

Documentation shows that Sanderson was willing to submit operating income and expenses to the assessment review board but they never requested it. The board only looked at his vacancy and rent roll, which they determined was sufficient to grant the assessment reduction to $ 4 million. Assessor Feo said the assessment review board deliberated on this matter behind closed doors, no minutes were taken because Sanderson did not appear in person, and she confirmed that the board looked only at his rent roll and vacancies and never requested his operating income/expenses for the facility.

The assessment review board unanimously agreed to lower Sanderson’s assessment to $4 million and the final determination document was signed by Chairman Peter Brooks without any statute being cited or detailed calculations or comparables placed in his file to justify the board’s significant reduction.

In 2020 when the scheduled step increase in Sanderson’s assessment went to $6 million, the assessment board rejected another request from the developer to drop his assessment to $970,000. The board wrote that, “the proof of value you presented was inadequate because the supporting data was insufficient.” The data Sanderson presented was similar to the previous year but his rentals rose to 210 units, or 30%.

In actual dollars, Sanderson paid $29,858 in town taxes for 2020, the first tax roll after the assessment board’s initial reduction decision. In school taxes he paid $95,076 for the 2019-20 school year and $144,659 for the 2020-21 school year (at the $6 million assessment) for a total of $269,593.

The town and school district provided calculations on Sanderson’s property if the assessment had not been lowered but remained $7,914,000. For the 2020 town tax, Sanderson would have paid $52,858; for the 2019-20 school year his tax bill would have been $188,109 and in 2020-21 his bill would have reached $190,805, for a total of $431,772.

Subtracting what Sanderson paid - $269,593 – from the $431,772 he would have paid if his assessment had not been lowered, actually saved him $162,179 in taxes.

After his assessment hit $6 million, Sanderson filed a lawsuit against the Town of Lloyd in July 2020. His attorney Karen Hagstrom stated in her Notice of Petition that the town “arbitrarily and capriciously” raised her client’s assessment based on the “faulty assumption” that the storage facility was 75% rented when only approximately 30% was rented.

Hagstrom pointed out that the town did not request to see her client’s rent roll and/or the profit/loss statements before raising the assessment from $4 million to $6 million. She said the town had no basis for the increased assessment, adding that her client had properly filed a Statement of Protest on the increase, which the town failed to correct and reduce the amount before filing their annual assessment roll. Hagstrom also pointed out that her client’s property did not receive all or a portion of a business exemption and the town failed to provide her client with an administrative review of the assessment in accordance with Real Property Tax Law and Construction Law. Hagstrom believes at $6 million her client would pay a greater amount and proportion of taxes than he would if the assessment had been, “just, fair, equal and correct”.

Hagstrom is also asking the court to have the town pay for her client’s costs for the legal proceeding and related expenses in this case and that her client’s previous “excessive” amount in taxes be refunded with interest, along with any, “additional allowances as the Court shall allow.”

A date for the case in the Supreme Court in Kingston has not yet been scheduled.

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