IN RE: SKMF VYSE MANAGEMENT LLC (2025)

Order and judgment (one paper), Supreme Court, Bronx County (Mary Ann Brigantti, J.), entered on or about July 10, 2023, which granted the petition in this proceeding brought pursuant to CPLR article 78 to vacate and reverse the October 7, 2022 final administrative determination of respondent New York City Department of Finance (DOF) denying petitioner's application to correct the Building Class of the subject real property from V1 and Tax Class 4 to V0 and Tax Class 1 from fiscal year 2017 to fiscal year 2023, and annulled the determination, declared that the property be assessed and classified as demanded in the petition, and ordered DOF to correct the building and tax classification and provide a tax refund or credit for any overpayment, unanimously affirmed, without costs.

Petitioner applied to have the description of its lot, which was zoned residential with a commercial overlay, corrected and assigned Building Class V0 and Tax Class 1 (former 19 RCNY 53–02[b][10];  see Administrative Code of City of N.Y. § 11–206).  DOF denied the application on the merits.  This denial was arbitrary and capricious and affected by an error of law (CPLR 7803[3];  Matter of Pell v. Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 N.Y.2d 222, 231, 356 N.Y.S.2d 833, 313 N.E.2d 321 [1974]).

Under the Real Property Tax Law, Tax Class 1 includes “all vacant land” in the City except land in Manhattan, “provided that any such vacant land which is not zoned residential must be situated immediately adjacent to property improved with a residential structure ․, be owned by the same owner as such immediately adjacent residential property immediately prior to and since January 1, 1989, and have a total area not exceeding 10,000 square feet” (Real Property Tax Law § 1802[1][d][i]).  The classification of “all residentially zoned property outside of Manhattan ․ as a tax class one residential property ․ is mandatory, not discretionary ․ even with a commercial overlay” (Matter of Block 3738 Constr. Corp. v. Niblack, 234 A.D.3d 955, 957–958, 227 N.Y.S.3d 343 [2d Dept. 2025];  see also Matter of Fordham Hill Owners Corp. v. Soliman, 237 A.D.3d 402, 405, 231 N.Y.S.3d 122 [1st Dept. 2025];  Matter of Shore Dev. Partners v. Board of Assessors, 82 A.D.3d 988, 990, 918 N.Y.S.2d 566 [2d Dept. 2011], lv dismissed 18 N.Y.3d 976, 944 N.Y.S.2d 478, 967 N.E.2d 703 [2012]).

DOF “dealt with the application[ ] on the merits and made findings that were affected by an error of law” by failing to follow Appellate Division precedent interpreting Real Property Tax Law § 1802 (Matter of Fordham Hill Owners Corp., 237 A.D.3d at 406, 231 N.Y.S.3d 122).  As this Court recently held, because all final assessment rolls must include a separate column for the entry of the class designation, “ ‘the error[ ] alleged in the petition[ ]’ — that is, incorrect classification[ ] — ‘constituted an error of description contained in the assessment rolls’ that may be corrected in accordance with Administrative Code § 11–206” (id., quoting Matter of Better World Real Estate Group v. New York City Dept. of Fin., 122 A.D.3d 27, 37, 992 N.Y.S.2d 247 [2d Dept. 2014]).

We have considered DOF's remaining contentions and find them unavailing.