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New York State Dormitory Authority v. Board of Trustees of Hyde Park Fire & Water District

86 N.Y.2d 72 Court N.Y. Decision date 1995-06-29 English

Delivered by Chief Judge Kaye.

Contents

Majority

p. 72
[653 NE2d 1159, 629 NYS2d 989]
In the Matter of New York State Dormitory Authority et al., Appellants, v Board of Trustees of Hyde Park Fire & Water District, Respondent.
Argued April 27, 1995;
decided June 29, 1995
p. 73
POINTS OF COUNSEL
Corbally, Gartland & Rappleyea, Poughkeepsie (Jon Holden Adams of counsel), and Robert M. Cohen, Ballston Lake, for appellants.
I. The methodology to allocate benefit units was unconstitutuional. (Knickerbocker Vil. v Reid, 256 App Div 973 , 281 NY 861 ; State Univ. v Patterson, 42 AD2d 328 ; Norwood v Baker, 172 US 269 ; Louisville & Nashville R. R. Co. v Barber Asphalt Co., 197 US 430 ; Matter of Hun, 144 NY 472 ; Roosevelt Hosp. v Mayor of City of N. Y, 84 NY 108 ; Matter of O’Hara v Board of Supervisors, 42 Misc 2d 716 , 24 AD2d 843 ; People ex rel. Delaware, Lackawana & W. R. R. Co. v Wildy, 262 NY 109 ; Baglivi v Town of Highlands, 147 AD2d 432 ; Nollan v California Coastal Commn., 483 US 825 .) II. The lands of the Dormitory Authority are exempt from special assessments. (Matter of Symphony Space v Tishelman, 60
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NY2d 33 ; Matter of Association of Bar v Lewishohn, 34 NY2d 143 ; Delancey St. Found, v Board of Assessment Review, 112 AD2d 132 ; Jensen v General Elec. Co., 82 NY2d 77 ; Matter of Di Brizzi [Proskauer] 303 NY 206 ; Matter of Caraballo v Community School Bd. Dist. 3, 49 NY2d 488 ; Wodetzky v Board of Educ., 173 Misc 136 ; Elmwood-Utica Houses v Buffalo Sewer Auth., 65 NY2d 489 ; Matter of Metropolitan Transp. Auth. v Imholz, 121 AD2d 724 ; Town of Cheektowaga v Niagara Frontier Transp. Auth., 82 AD2d 175 .) III. The District’s dual standards violates equal protection. (Foss v City of Rochester, 65 NY2d 247 ; Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d 1 .) IV. The Board of Trustees failed to obtain voter approval to levy benefit assessments. (Mitchell v Town of Shelter Is., 3 Misc 2d 127 , 2 AD2d 712 ; Albany Area Bldrs. Assn. v Town of Guilderland, 141 AD2d 293 , 74 NY2d 372 ; County Sec. v Seacord, 278 NY 34 ; Coconato v Town of Esopus, 152 AD2d 39 ; Gautier v Ditmar, 204 NY 20 ; Matter of Bloomingdale Bros. v Chu, 70 NY2d 218 ; City of Buffalo v Cargill, Inc., 44 NY2d 7 ; Matter of Morse, 189 App Div 803 ; Eckelman v Anderson, 180 AD2d 618 , 79 NY2d 759 .) V. The 1989 allocation of units to the Culinary Institute was arbitrary and capricious. (Capolino Design & Renovation v Assessors of City of Yonkers, 138 Misc 2d 811 ; Elmhurst Fire Co. v City of New York, 213 NY 87 ; Matter of Adirondack Mtn. Reserve v Board of Assessors, 99 AD2d 600 ; Matter of Addis Co. v Srogi, 79 AD2d 856 , 53 NY2d 603 ; Matter of Pepsi-Cola Co. v Tax Commn., 19 AD2d 56 ; People ex rel. Howlett v Mayor of City of N. Y., 63 NY 291 ; Watergate II Apts, v Buffalo Sewer Auth., 46 NY2d 52 .)
Nixon, Hargrave, Devans & Doyle, Garden City (Thomas S. D Antonio and Claudia Hinrichsen of counsel), for respondent.
I. Prior final orders foreclose relitigation of appellants’ repetitious claims. (O’Brien v City of Syracuse, 54 NY2d 353 ; Schwartz v Public Adm’r of County of Bronx, 24 NY2d 65 ; De Crosta v Reynolds Constr. & Supply Corp., 41 NY2d 1100 ; American Airlines v Transport Express, 55 AD2d 513 , 42 NY2d 802 ; Gramatan Home Investors Corp. v Lopez, 46 NY2d 481 ; Matter of Newsday, Inc. v Ross, 80 AD2d 1 ; Weiner v Greyhound Bus Lines, 55 AD2d 189 .) II. The benefit assessment methodology adopted by the Board was fair and reasonable. (Matter of Scarsdale Chateaux RTN v Steyer, 52 AD2d 672 , 41 NY2d 1043 ; Baglivi v Town of Highlands, 147 AD2d 432 ; Matter of City of New York [Juniper Ave.], 233 NY 387 ; Matter
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of DWS N. Y. Holdings v County of Dutchess, 110 AD2d 837 ; Matter of Cornell Univ. v Village of Cayuga Hgts., 13 AD2d 1 ; Matter of Kermani v Town Bd., 40 NY2d 854 ; New York Cardiac Ctr. v Kondzielaski, 84 AD2d 746 ; Nollan v California Coastal Commn., 483 US 825 ; Matter of Nolan v Bureau of Assessors, 31 NY2d 90 .) III. The methodology does not violate equal protection. (Shapiro v City of New York, 32 NY2d 96 ; Matter of Catapano Co. v New York City Fin. Admin., 40 NY2d 1074 ; Matter of Long Is. Light. Co. v State Tax Commn., 45 NY2d 529 ; Matter of Gormeley v New York Daily News, 30 AD2d 16 , 24 NY2d 867 ; Atkins v Hertz Drivurself Stas., 261 NY 352 ; People ex rel. Delaware, Lackawana & W. R. R. Co. v Wildy, 262 NY 109 ; Matter of City of New York [Juniper Ave.], 233 NY 387 ; Baglivi v Town of Highlands, 147 AD2d 432 .) IV. The court below correctly found the actions of the Board to be rational, reasonable and based on substantial evidence. (Pell v Board of Educ., 34 NY2d 222 ; Matter of Huntington TV Cable Corp. v State of New York Commn. on Cable Tel., 94 AD2d 816 , 61 NY2d 926 ; Matter of Bockis v Kayser, 112 AD2d 222 ; Matter of Scarsdale Chateaux RTN v Steyer, 53 AD2d 672 ; Matter of Pokoik v Incorporated Vil. of Ocean Beach, 143 AD2d 1021 , 73 NY2d 706 ; Matter of Nolan v Bureau of Assessors, 31 NY2d 90 ; Matter of Gagnon v Board of Educ., 119 AD2d 674 ; Matter of Levine v New York State Liq. Auth., 23 NY2d 863 ; Matter of Bork v Newman, 122 AD2d 329 .) V. Appellant Dormitory Authority is not exempt from local special benefit assessments. (New York Cardiac Ctr. v Kondzielaski, 84 AD2d 746 ; Union Free School Dist. No. 11 v Steuben County, 178 Misc 415 , 264 App Div 945 ; Pajak v Pajak, 56 NY2d 394 ; Boraas v Village of Belle Terre, 367 F Supp 136 , 476 F2d 806 , 416 US 1 ; Town of Cheektowaga v Niagara Frontier Transp. Auth., 82 AD2d 175 ; Matter of Metropolitan Transp. Auth. v Imholz, 121 AD2d 724 .) VI. Special assessments were properly imposed by the District. (Mitchell v Town of Shelter Is., 3 Misc 2d 127 , 2 AD2d 712 .)

OPINION OF THE COURT

Public Authorities Law § 1685 provides that, because "the creation of the [dormitory] authority * * * is in all respects for the benefit of the people * * * the state of New York covenants with the holders of the bonds that the [dormitory] authority shall be required to pay no taxes or assessments

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upon any of the property acquired by it or under its jurisdiction, control, possession or supervision.” The primary issue before us is whether the term "assessment” as used in this provision includes a "special assessment” of the kind issued against appellant Dormitory Authority by respondent Hyde Park Fire and Water District.

The Appellate Division held both that the Dormitory Authority is not exempt from the special benefit assessment under Public Authorities Law § 1685 and that the assessment methodology was valid and proper. Although we agree with the Appellate Division concerning the propriety of the methodology used to assess charges against Hyde Park property owners generally, we conclude that the Dormitory Authority is exempt under Public Authorities Law § 1685, and therefore modify the Appellate Division order.

In 1986, after being directed by the New York State Department of Environmental Conservation to halt discharges of certain compounds from its aging water plant, respondent Hyde Park Water District, an independent entity created by the Legislature before the Civil War, decided to construct a new drinking water treatment facility using the Hudson River as its source. The District’s Board of Trustees considered three financing alternatives for the design and construction of the new facility: ad valorem assessment, benefit assessment and water rate charges. After extensive deliberation and debate, the Board accepted the District Engineer’s recommendation for the benefit assessment methodology, specifically authorized under its Charter, as the most equitable way to apportion the improvement among property owners within the District.

Using this methodology, the District determined that the benefit to be conferred on each parcel was to be calculated according to the property’s actual or projected water needs. All existing residential structures in the District were assigned one to three benefit assessment units based on the District average of 164 gallons consumed, 218 gallons required per day. Larger commercial structures were assigned benefit assessment units based on their actual metered daily consumption. Finally, the District projected the reasonably likely development and resulting water needs over time of undeveloped parcels based on zoning ordinances and approvals as well as factors such as parcel shape, frontage and topography. As part of the SEQRA review process, respondent Board prepared and circulated Environmental Impact Statements describing

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the project and the benefit assessment methodology. After numerous public hearings, the District taxpayers approved a resolution authorizing issuance of up to $20 million in bonds to finance the project. As a result, each year during the period 1988-1990, the District sent special benefit assessment bills to Hyde Park property owners.[1]

After receiving its first assessment in 1990, appellant Dormitory Authority, a public benefit corporation that owns and manages student dormitories throughout the State — including the facility on the campus of the Culinary Institute of America at issue here — filed a grievance challenging its assessment. After a hearing, the District adhered to its initial assessment.

The Dormitory Authority along with six other Hyde Park landowners then commenced CPLR article 78 and RPTL article 7 proceedings challenging the benefit assessment methodology and the resulting assessments as unlawful, irrational and unconstitutional.[2] The Board of Trustees, in turn, sought summary judgment dismissing the petitions on the grounds that the claims were time barred, barred by res judicata, not legally cognizable and unsupported by the record. In the meantime, the District issued its 1991 benefit assessment roll, which was added to the case. After consolidation of all challenges, Supreme Court granted the Board’s motion to dismiss the proceedings and the Appellate Division affirmed ( 206 AD2d 483 ).

We now hold that the Appellate Division erred in concluding that the Dormitory Authority was not entitled to an exemption under Public Authorities Law § 1685.

Public Authorities Law § 1685 was enacted in 1944 (L 1944, ch 524) and last amended in 1949 (L 1949, ch 786). The predecessor to current RPTL 102 (15), where the terms "special assessment” and "assessment” were first defined as corre

1 After the initial 1988 assessment, a constitutional challenge to the enabling legislation was brought by various property owners and ultimately rejected (see, Van Wagner v Hyde Park Fire & Water Dist., 158 AD2d 518 , appeal dismissed 76 NY2d 771 ). A second lawsuit challenging the methodology used in connection with the 1989 benefit assessments was dismissed on the ground that the methodology employed was rationally based and impartially applied (see, Matter of Hy-Sid, Inc. v Board of Trustees, Sup Ct, Dutchess County, Sept. 10, 1989, index No. 89-553). No appeal was taken from that decision.

2 These proceedings thus represented yet a third attempt by Hyde Park property owners to challenge the special benefit assessments.

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spending to separate and distinct concepts,[3] was passed nearly a decade later (L 1958, ch 959 [§ 102]). The Legislature that enacted Public Authorities Law § 1685 therefore plainly did not use the terms "assessment” and "special assessment” as they were subsequently defined in the RPTL. We cannot assume, as respondent does, that a different Legislature, enacting an entirely different section of the law, had the RPTL definitions in mind when passing Public Authorities Law § 1685.

In fact, the statutory language makes it clear that Public Authorities Law § 1685 and RPTL 102 (2) use the term "assessment” differently, with Public Authorities Law § 1685 referring to a form of taxation from which the Authority is to be excused, while RPTL 102 (2) refers instead to an estimate of property value upon which a tax is ultimately based (see, RPTL 102 [2] [defining "assessment” as determination made by assessors of valuation of real property]). If the word "assessment” in Public Authorities Law § 1685 is to be interpreted in accordance with the definition provided in RPTL 102 (2) to refer to an estimate of property value, the provisions of Public Authorities Law § 1685 are rendered legally meaningless. The Legislature did not exempt the Dormitory Authority from an estimate of property value. Using the current RPTL definition of "assessment” to limit Public Authorities Law § 1685 would thus contravene principles of sound statutory construction.

The court in Town of Cheektowaga v Niagara Frontier Transp. Auth. ( 82 AD2d 175 , 179-181), construing an analogous provision in Public Authorities Law § 1299-0, perceived that the Legislature instead used the word "assessment” in its other, more "generic” sense as "a tax, fine or other special payment” which would include a "special assessment” of the kind at issue here (Town of Cheektowaga, at 179-181). Black’s Law Dictionary, for example, explains that the word "assessment” is "popularly used as a synonym for taxation in general * * * but * * * only taxation for a special purpose or local

3 RPTL 102 (2), for example, currently defines the term "assessment” as "a determination made by assessors of (1) the valuation of real property, including the valuation of exempt real property and (2) whether or not real property is subject to taxation or special ad valorem levies.” "Special assessment,” in turn, is defined in RPTL 102 (15) as "a charge imposed upon benefited real property in proportion to the benefit received by such property to defray the cost, including operation and maintenance, of a special district improvement or service.”

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improvement, local taxation, as distinguished from general taxation” (Black’s Law Dictionary 150 [4th ed 1968]). Under "special assessment,” Black’s Law Dictionary simply refers the reader to the above-cited definition for "assessment” (id,., at 1569). (See also, Cummins v U. S. Life Tit. Ins. Co., 40 NY2d 639 [using terms "assessment” and "special assessment” interchangeably]; Matter of Nolan v Bureau of Assessors, 31 NY2d 90 [same]; 3 Powell and Rohan, Real Property 495 [1] [1994] [same]).

The fact that the Legislature amended Public Authorities Law § 1299-0 in 1982 after the Appellate Division’s ruling in Cheektowaga to specify that special benefit assessments were no longer exempted under the provision applicable to the Niagara Frontier Transportation Authority (L 1982, ch 836) is not sufficient to overcome the Legislature’s intent with respect to the Dormitory Authority and Public Authorities Law § 1685. When the Legislature has intended not to exempt a particular public authority from special benefit assessments, it has said so explicitly (see, e.g., Public Authorities Law §§ 1299-qq, 1316, 1341 [exempting other public authorities from payment of all taxes "except special benefit assessments”]).

If, as respondent argues, it is more desirable that local municipalities such as Hyde Park not be swept into a wider net of exemption for local improvements that benefit the public authorities within their borders, such a policy determination must be made by the Legislature, not the Court. Public Authorities Law § 1685 granted such an exemption and we cannot take it away by judicial interpretation.

Finally, even assuming that principles of res judicata/ collateral estoppel do not bar the challenges asserted by the other Hyde Park property owners, we agree with the Appellate Division that the special assessments imposed, fully authorized by the District’s voters, were valid and constitutional. The record reveals that a detailed study was performed by the Board of Trustees before implementation of the assessment methodology and, in the absence of a showing to the contrary, the assessment is presumed valid. In any event, these taxpayers failed to offer sufficient proof that the amounts of the special assessments levied against them were substantially in excess of the undisputed benefits they will ultimately receive as a result of the new water treatment plant.

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Accordingly, the order of the Appellate Division should be modified in accordance with this opinion, without costs, and, as so modified, affirmed.

Judges Simons, Titone, Bellacos a, Smith and Ciparick concur; Judge Levine taking no part.

Order modified, etc.

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