Dobbs Ferry community sues state AG, aiming to pay less in taxes
Akiko MatsudaThe Landing at Dobbs Ferry, a residential complex, has filed an Article 78 lawsuit against Attorney General Barbara Underwood and her staff for allegedly abusing their power to stifle the community's effort to change its status from a single-family-home community to condominiums.
The lawsuit, which was filed with the state Supreme Court in White Plains on Aug. 20 , seeks the court's intervention in order for The Landing unit owners to find savings on their property taxes.
Prompted by a Journal News Tax Watch article published Nov. 19, 2017, the 103-unit waterfront townhouse community has taken steps to change its tax status from a single-family-home community governed by a homeowners association into a condominium community governed by a condo association, according to court papers.
The status change could result in about a 40 percent savings in property taxes for unit owners, or about $1 million in total because condominiums are taxed differently from single-family homes, according to the lawsuit.
The Landing hired a law firm, Elefante & Persanis LLP, which had successfully shepherded the Fairway Green Condominiums in Mamaroneck through a similar process in 2016.
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The law firm, on behalf of The Landing, requested the Attorney General's Office issue a "no action" letter, which would confirm that the conversion process won't call for offering plans. Offering plans, which spell out all the unit details, are typically required when rental apartments are converted into condos or co-ops.
In case of Fairway Green, the state agency promptly issued a "no action" letter, but for The Landing, the agency requested additional information and ultimately denied the request on April 23, according to court papers.
Timing matters
The Landing's goal was to finish the conversion before May 1, the taxable status date in the town of Greenburgh, which conducts property assessment for Dobbs Ferry.
Facing the deadline, the law firm determined that the conversion should be completed by filing a condo declaration notice with the Westchester County Clerk's Office. The declaration was filed April 30.
Still, The Landing needed the Greenburgh town assessor to issue a tax-lot certificate that recognized the change, but the assessor requested the state agency's "no-action" letter to issue the certificate.
The lawsuit alleges that the state agency is cooperating with local officials with the village of Dobbs Ferry and the town of Greenburgh in their effort to prevent The Lansing's conversion to maintain their property tax base.
Rachel Shippee, spokeswoman for the Attorney General's Office, denied the allegation.
"Our role here, as in all cases, is to ensure that homeowners understand the benefits and risks involved with any conversion to a condominium — so that homeowners are aware of all potential impacts (from insurance to mortgages, ownership, and more) before making such a critical decision," Shippee wrote in an email statement. "It's a shame that the association is trying to muddy the waters by involving us in its dispute with the town. We reject their claims and will continue to fulfill our statutory responsibility to protect New Yorkers."
No local officials are named in the lawsuit.
The Landing's suspicion, according to the lawsuit, stemmed from a video-taped Greenburgh Town Board work session on April 24, during which Dobbs Ferry Village Administrator Charlene Indelicato spoke about the village's concerns over The Landing's conversion effort.
She told town officials that when The Landing developer sought zoning variances to build the community more than two decades ago, village officials approved because the development would be beneficial to the village as those homes would be taxed as single-family homes.
The conversion, if it moves forward, could have a cascading financial impact on the rest of village, Indelicato said, as taxpayers would have to pay more as other master-planned communities are considering conversion. She indicated that she has been in touch with the state agency to check in on The Landing's conversion status.
Hot button
The conversion from single-family status to condos has been a contentious issue in New York because the state's tax law requires condominiums to be assessed at its rental-income valuation, while single-family homes are assessed on their fair market value.
As a result, condos tend to pay less in taxes compared to single-family homes, and many homeowners associations have started taking advantage of the savings.
Aiming to address the issue, the state Assembly passed legislation that would give municipalities the option of barring condos from getting the tax break for those units built after 2021. The bill failed to clear the state Senate before the legislative session ended.
The conversion isn't an issue in several municipalities in the region — including Sleepy Hollow, Pelham and Rye town in Westchester, Southeast in Putnam, and all Rockland County towns except Ramapo as well as the village of Piermont — because they've adopted the Homestead Tax Option program, which values condos as single-family homes.
Greenburgh has taken a different path, passing a resolution on June 13 that would prohibit homeowners associations from taking advantage of the condo tax break if they are converted to condominium ownership. Pleasantville has also recently adopted a local law to prevent the tax-shifting conversion.
Because the Greenburgh's law was adopted after The Landing's condominium declaration on April 30, if the court decides in favor of The Landing, the unit owners could still take advantage of the tax break.
Single-family homes vs condos
Under New York State's tax law, condominiums, along with cooperatives and rental apartments, are assessed based on the rental income that would generate, even when they are owner-occupied.
Single-family homes are supposedly assessed based on their fair market values. Condo and co-op owners rationalize their relatively lower tax payments compared to single-family homes because they use less services provided by municipalities and pay maintenance fees or common charges.