As The Desmond Hotel & Conference Center was gearing up for it’s New Year’s Eve celebration, on December 31, 2014, the Appellate Division (Third Department) handed down a decision in  Village Square of Penna, Inc. v Board of Assessment Review/Town of Colonie. This decision stemmed from the trial court’s September 2013 order granting Petitioner’s (aka, The Desmond Hotel & Conference Center) application to reduce its property tax assessments, as well as a trial court order that granted the hotel’s motion to amend its Article 7 Petition post-trial.

During the nonjury trial before the trial court, Petitioner’s appraiser testified that he used the income capitalization approach to establish the value of the hotel property. Petitioner’s appraiser relied primarily upon the actual financial performance of the hotel. The Respondents’ appraiser also relied upon the income capitalization approach, but he relied more heavily on market expectations and performance as opposed to the actual performance of The Desmond.

Ultimately, the trial judge found the testimony of Petitioner’s appraiser (who used actual income data) to be more persuasive than Respondents’ use of market data and, so, adopted Petitioner’s valuation. But here’s the twist: the values that the Court adopted were below the values Petitioner alleged in its BAR Complaints and Article 7 Petitions.  Under the rule of RPTL 720(1), Respondents moved to modify the trial Court’s judgment, arguing that it was an error to reduce the assessment below Petitioner’s grieved/petition values. In response, Petitioner moved to amend its Article 7 Petitions to conform with the proof  adduced at trial. The trial court granted Petitioner’s motion to modify the Petitions.

The Respondents’ appealed. On appeal, the Appellate Division was loathe to set aside the Trial Court’s determination that the hotel property was over-assessed and went through a detailed analysis as to why Petitioner’s actual income, occupancy rate and expenses, as opposed to market expectations and competitor hotels performance, was a rational method of valuing the hotel property.

Notwithstanding, the Appellate Division modified the Trial Court’s judgment to the extent that it valued the subject property below the amount requested in the grievances and Article 7 petition.  So, to answer the question, “How Low Can You Go?”: even if the proof at trial establishes that the subject property is over-assessed, a petitioner’s reduction in it’s assessed value is limited to what is set forth in its Article 7 Petition under RPTL 720(1).