IN RE: RITE AID CORPORATION (2012)

Appeal from an order and judgment of the Supreme Court (Sheridan, J.H.O.), entered October 31, 2011 in Saratoga County, which granted petitioner's applications, in three proceedings pursuant to RPTL article 7, to reduce the 2008, 2009 and 2010 tax assessments on certain real property leased by petitioner.

Petitioner is the lessee under a 20–year triple net lease of a free-standing retail pharmacy located near Exit 11 of Interstate 87 in the Town of Malta, Saratoga County. A local developer purchased the parcel upon which the pharmacy is situated in 2004, entered into a build-to-suit arrangement with Eckerd Corporation—petitioner's predecessor in interest—and thereafter constructed the 13,813–square–foot building at a cost of roughly $2.5 million. In August 2005, the developer sold the property to an income investor for approximately $3.6 million and, insofar as is relevant here, the property was assessed at $3.95 million for tax years 2008, 2009 and 2010.

Beginning in July 2008, petitioner commenced these proceedings pursuant to RPTL article 7 to challenge the assessment imposed for each of the tax years at issue. A nonjury trial ensued, at which the parties stipulated that they would limit their proof to the 2008 proceeding and, further, that the outcome of that proceeding also would govern the 2009 and 2010 proceedings. After considering the competing written appraisal reports and related testimony,¹ Supreme Court credited petitioner's proof and granted the petitions. This appeal by respondents ensued.

The law governing tax certiorari proceedings is well settled and may be succinctly stated. Although a municipal tax assessment enjoys a presumption of validity, that presumption may be overcome by producing “substantial evidence that [the] property has been overvalued” (Matter of Niagara Mohawk Power Corp. v. Assessor of Town of Geddes, 92 N.Y.2d 192, 196 [1998]; see Matter of Regency Realty Assoc., LLC v. Board of Assessment Review of the Town of Malta, 75 A.D.3d 950, 951 [2010]; Matter of Rite Aid of N.Y. No. 4928 v. Assessor of Town of Colonie, 58 A.D.3d 963, 964 [2009], lv denied 12 N.Y.3d 709 [2009] )-a burden often satisfied by the submission of “a detailed, competent appraisal based on standard, accepted appraisal techniques and prepared by a qualified appraiser” (Matter of Niagara Mohawk Power Corp. v. Assessor of Town of Geddes, 92 N.Y.2d at 196, 677 N.Y.S.2d 275, 699 N.E.2d 899; accord Matter of PNL Stillwater, LLC v. Board of Assessors of Town of Stillwater, 94 A.D.3d 1401, 1402 [2012]; Matter of Regency Realty Assoc., LLC v. Board of Assessment Review of the Town of Malta, 75 A.D.3d at 951, 905 N.Y.S.2d 710; see Matter of Corvetti v. Winchell, 75 A.D.3d 1013, 1014 [2010], lv denied 16 N.Y.3d 701 [2011] ). Once the presumption of validity has been rebutted, Supreme Court “must weigh the entire record, including evidence of claimed deficiencies in the assessment, to determine whether [the] petitioner has established by a preponderance of the evidence that its property has been overvalued” (Matter of FNC Corp. [Peroxygen Chems. Div.] v. Unmack, 92 N.Y.2d 179, 188 [1998]; accord Matter of Rite Aid of N.Y. No. 4928 v. Assessor of Town of Colonie, 58 A.D.3d at 964, 870 N.Y.S.2d 642; see Matter of Corvetti v. Winchell, 75 A.D.3d at 1014, 906 N.Y.S.2d 172). Upon appellate review, our inquiry “distills to whether Supreme Court's determination is supported by the weight of the evidence” (Matter of Eckerd Corp. v. Gilchrist, 44 A.D.3d 1239, 1240 [2007], lv denied 10 N.Y.3d 707 [2008]; accord Matter of Brooks Drugs, Inc. v. Board of Assessors of City of Schenectady, 51 A.D.3d 1094, 1095 [2008], lv denied 11 N.Y.3d 710 [2008]; see Matter of Corvetti v. Winchell, 75 A.D.3d at 1014, 906 N.Y.S.2d 172).

Here, respondents do not dispute that petitioner tendered substantial evidence to rebut the presumption of validity; rather, they contend that Supreme Court erred in disregarding the 2005 sale of the subject property as the best indicator of value. Although the proper valuation of stand-alone, national retail pharmacies with long-term leases has been the subject of six prior appeals to this Court (see Matter of Eckerd Corp. v. Burin, 83 A.D.3d 1239 [2011]; Matter of Rite Aid of N.Y. No. 4928 v. Assessor of Town of Colonie, supra; Matter of Brooks Drugs, Inc. v. Board of Assessors of City of Schenectady, supra; Matter of Eckerd Corp. v. Gilchrist, supra; Matter of Eckerd Corp. v. Semon, 44 A.D.3d 1232 [2007]; Matter of Eckerd Corp. v. Semon, 35 A.D.3d 931 [2006] )-and much debate-it is well settled that “[t]he best evidence of value ․ is a recent sale of the subject property between a seller under no compulsion to sell and a buyer under no compulsion to buy” (Matter of Allied Corp. v. Town of Camillus, 80 N.Y.2d 351, 356 [1992]; see Matter of Rite Aid of N.Y. No. 4928 v. Assessor of Town of Colonie, 58 A.D.3d at 966, 870 N.Y.S.2d 642; Matter of Brooks Drugs, Inc. v. Board of Assessors of City of Schenectady, 51 A.D.3d at 1095–1096, 856 N.Y.S.2d 304; Matter of Eckerd Corp. v. Gilchrist, 44 A.D.3d at 1240, 843 N.Y.S.2d 871).

As noted previously, the subject parcel sold in August 2005 for approximately $3.6 million and, despite petitioner's protestations to the contrary, the record reflects that this indeed was an arm's length transaction. Additionally, the price paid by the purchaser in this matter was consistent with the value of the property as determined by respondents' expert (subject to market trends) (see Matter of Brooks Drugs, Inc. v. Board of Assessors of City of Schenectady, 51 A.D.3d at 1095–1096, 856 N.Y.S.2d 304). Under these circumstances, Supreme Court's decision to credit the appraisal offered by petitioner was against the weight of the evidence (compare Matter of Rite Aid of N.Y. No. 4928 v. Assessor of Town of Colonie, 58 A.D.3d at 966, 870 N.Y.S.2d 642 [recent arm's length sale], and Matter of Brooks Drugs, Inc. v. Board of Assessors of City of Schenectady, 51 A.D.3d at 1095–1096, 856 N.Y.S.2d 304 [same], and Matter of Eckerd Corp. v. Gilchrist, 44 A.D.3d at 1240, 843 N.Y.S.2d 871 [same], with Matter of Eckerd Corp. v. Burin, 83 A.D.3d at 1242–1243, 920 N.Y.S.2d 824 [no recent sale], and Matter of Eckerd Corp. v. Semon, 44 A.D.3d at 1234, 844 N.Y.S.2d 468 [same], and Matter of Eckerd Corp. v. Semon, 35 A.D.3d at 934, 829 N.Y.S.2d 238 [same] ). Accordingly, Supreme Court's order and judgment is reversed and the underlying petitions are dismissed.

ORDERED that the order and judgment is reversed, on the law, without costs, and petitions dismissed.

EGAN JR., J.

ROSE, J.P., SPAIN, MALONE JR. and GARRY, JJ., concur.