In Matter of General Electric Co v. Assessor of the Town of Rotterdam , General Electric (GE) sought review of the Town of Rotterdam 's property tax assessments for the years 2003 and 2004.
GE owned a 325-acre parcel of land consisting of 43 buildings, 4 of which were plants and facilities for steam-and gas-turbine and generator-development laboratories.
Between 1999 and 2003, GE made $59 million in improvements to the property, including a railroad service, storm sewers, steam plant and tunnels. Next to that property was a smaller parcel of land consisting of 19 buildings used for "research, development, manufacture and marketing of electric turbine generators, steam turbines and gas turbines."
GE 's appraiser, John Coyle, used a "sales comparison" approach, and calculated the market value of GE 's property at $30,850,000. Rotterdam's appraiser, Pamela Brodowski, used the "reproduction cost new less depreciation" approach (RCNLD), and estimated the property's market value at $249 million for 2003 and $251 million for 2004.
While the Schenectady County Supreme Court found Brodowski's assessment too high, it adopted her approach, and set the market value at $126.4 million for 2003 and $129 million for 2004. GE appealed, arguing that the RCNDL analysis was erroneous, and that the comparable sales approach was the "preferred method for valuing large industrial complexes for assessment purposes when evidence of a recent sale price is lacking."
On appeal, the Appellate Division, Third Department, cautioned about use of the RCNDL method because it was most "likely to result in overvaluation" and has "generally been limited to properties deemed specialties." Yet, the court faced a dilemma. Although the properties shared some similarities, a significant portion of the adjoining lot was used for "warehousing, professional and medical offices, ... retail, restaurant purposes ... and 650 residential units." Since Coyle failed to make adjustments in his valuation for those additional uses, the AD3 didn't find his approach an adequate market value guide and the "sole remaining accepted method for valuing property" was the RCNDL approach.
GE wasn't able to bring a good thing to life.
To download a copy of the Appellate Division's decision, please use this link: Matter of General Electric Co v. Assessor of the Town of Rotterdam