SUPREME COURT OF THE STATE OF NEW YORK, SUPREME COURT, COUNTY OF ULSTER. BIRCHWOOD VILLAGE, LP, AFFIRMATION IN SUPPORT OF MOTION FOR RENEWAL AND REARGUMENT Plaintiff, ~ against- ASSESSOR OF THE CITY OF KINGSTON, THE BOARD OF ASSESSMENT REVIEW OF THE CITY OF KINGSTON, THE CITY OF KINGSTON, NEW YORK AND THE ULSTER COUNTY INDUSTRIAL DEVELOPMENT AGENCY Index No. 14/3203 RJA. 55-14-1921 Richard Mott, J.8.C, Defendants. -and- KINGSTON ENLARGED CITY SCHOOL DISTRICT, Intervenor- Defendant. DAVID C. WILKES, an attorney duly admitted to practice law in the State of New York, affirms as follows: 1. Tam a member of the law firm of Huff Wilkes, LLP, which now appears on behalf of Plaintiff, Birchwood Village, LP (“Birchwood”), as attomeys of record for all purposes in this action. 2. I submit this affirmation in support of a motion for leave to renew and reargue, under CPLR §§ 2221(d) and 2221(e), in response to the Decision & Order entered on December 5, 2014, which denied Plaintiff's motion for an order directing the arbitrators considering the assessed value of its real property to use the valuation methodology mandated for all such properties pursuant to Real Property Tax Law § 581-a. I am fully familiar with the facts statedbelow based upon my review of the documents in the record and representations made to me by our client, 3. Respeetfillly, the Decision & Order contains both misapprehended and overlooked facts and established law, satisfying the requirements to grant renewal and reargument under CPLR §§ 2221(d) and §§ 2221(e). (See Matter of American Alternative Ins. Corp. v. Pelszynski, 85 A.D. 34 1157 (2d Dep't 2011), Bakhe v Southridge Coop. Section 4, Inc, 70 A.D. 34 988 (2d Dept 2010), Long v. Long 251 2d 631, 675 NYS2d 557 (2d Dep't 1998). ‘The Decision & Order: (2) misapplies the statutory language and legislative intent of RPTL 581-a because it does not recognize that the statute was meant to create uniformity of assessment determinations for low income housing; (b) does not sufficiently or accurately consider one of the primary goals of the statute; specifically, that low income housing facilities must be taxed equitably and in a manner that accounts for their actual operating characteristics vis a vis other properties that enjoy market advantages to remain viable projects throughout the length of their agreement; and (©) incorrectly quotes and misapplies statements provided at the website of the Division of Housing & Community Renewal (SDHCR”) to support the determination of the Decision & Order. RPTL S81-a Applies to All Qualifying Projects, Regardless of Other Benefits 4. Respectfully, while this Honorable Court’s rationale for its application of RPTL 581-a is facially appealing, a more careful and precise review of the extensive legislative history of the statute (which is not cited in the subject decision and does not appear to have been considered beyond a reference to a secondary-source DHCR web site frequently asked questionssection) reveals that the Legislature was presented with the same concerns this Court raised, and yet clearly rejected such reasoning in favor of a blanket application of the law to all qualifying real property. 5. After the Legislature considered various concems brought before it, such as whether low income housing facilities that had already been constructed when RPTL S81-a was implemented, and which would not need to be induced by a further tax benefit, should receive the benefits of RPTL S81-a, the Legislature chose to enact the law anyway and without ‘modification or amendment. Pursuant to the plain language of RPTL $81-a, all properties that meet the 581-a standard (including Plaintiff, Birchwood) enjoy its benefits, according to the Legislature, without exception, 6. In interpreting a statute, the intent of the Legislature is the controlling or most important factor. Matter of Carr v New York State Bd. of Elections, 40 NY2d 556 (1976); McKinney's Cons Laws of NY, Book 1, Statutes § 94. The statute itself does not make any exception to say that the valuation requirements of RPTL 581-a apply only to future project facilities, nor does it exclude projects that already have a PILOT agreement in place. The Governor's Bill Jacket of Senate Bill No. 999-B, includes a discussion of this concem. Richard J. Sinnott, Counsel of the Office of Real Property Tax Services, disapproves of the bill because he believes the change in law should apply only prospectively (to projects not yet built). However, the bill was passed without any provision to add this recommendation, Mr. Sinnott’s concern was rejected in favor of a blanket application of the law to include tax benefits for all qualifying real Property owners as of 2006, whether the real property had already been built or not, and regardless of whether the project had already been induced to be built in some other way, such as was the case with Birchwood.7. A Statute must be applied as it was plainly written, without adding provisions that do not exist in order to make it more logical or appealing. Nor may a statute be applied in a ‘manner that implies terms the Legislature clearly considered and rejected. Itis for the Legislature to determine to modify the law if circumstances warrant and, respectfully, not this Court, unless the statute is found to be unconstitutional, which was not before this Court, Matter of Carr v New York State Bd. of Elections, 40 NY2d 556 (1976); McKinney's Cons Laws of NY, Book ik Statutes § 94 (Legislative intent is controlling.), For the relevant period at issue in this action, RPTL 581-a was not amended or modified by the Legislature and must be applied as written. The statute does not preclude a low income facility from receiving multiple cost contro! incentives, nor does the statute apply to projects that post-date its enactment. Further, as will be shown herein, the DHCR commentary does not state the meaning that this Court applied in its decision. 8. __Itis authorized and appropriate for this Court to reconsider its original decision on ‘this motion and issue a comected decision and order that applies the correct valuation methodology consistent with the plain meaning of the statute, 9. The Birchwood PILOT agreement merely provides that Birchwood shall be valued identical to the manner in which any similar property would be valued, as the frst step in computing PILOT payments. It is not disputed that any similar property that met the standard would be valued pursuant to RPTL 581-a. 10. The fact that PILOT payments are made for a limited period at a reduced mill rate that is applied to that valuation is a contractual agreement intended to provide a benefit that does not arise under the Real Property Tax Law. Rather, it is solely a function of PILOT administration (not assessment or tax administration). The parties to the PILOT could haveagreed, for instance, to a methodology and payment schedule that specifically excluded other benefits that might be enjoyed at some point during the term of the agreement, but they did not. Indeed, without doubt, all parties to the PILOT agreement were sophisticated and would have been aware of the various bills that were pending with the Legislature in 2005 that were relevant to the Property and could have chosen to limit the potential benefits accruing to Birchwood. ‘They did not do so. There is no legal restriction on the level or extent of economic development and other incentive benefits that it may receive, RPTL 581-a does not read as this Court suggests. 11. If similar properties enjoy the benefits of $81-a valuation, the PILOT provides no more than that Birchwood shall be valued the same as those similarly situated, This is a basic tenet of assessment administration that avoids unconstitutionally selective treatment of Properties. Allegheny Pittsburgh Coal v. Webster County, 488 U.S. 336, 109 S, Ct. 633, 102 L. Ed. 2d 688 (1989). Moreover, the PILOT payment schedule is not a valuation methodology at all; rather, it is an economic development benefit that operates in any such manner as the Industrial Development Agency approves. There is no prohibition on extending economic development benefits to fill a need in the City’s demand for quality low income housing. Much Jess any restriction on an economic development project’s ability to capture benefits that may be provided by the State Legislature, Suroly, the State Legislature was aware of the fact that a great ‘number of low income housing facilities throughout New York State enjoy benefits pursuant to PILOT agreements and yet the Legislature did not include in RPTL 581-a a restriction such as this Court has imposed. 12. Further, the PILOT agreement benefits are of limited duration (and in fact are no longer in effect as of this writing). Yet, ironically, if this Court’s original decision is unchanged, in the long term it will have the effect of punishing Birehwood and putting the complex in anuncompetitive position compared to similar properties because absent the PILOT those other Properties will enjoy the benefit of RPTL 381-a taxes while Birchwood will undoubtedly pay significantly more. 13, This cannot under any credible reading of RPTL 581-a serve the needs of the low income community. Rather, this Court’s Decision will trigger diminished housing conditions at Birchwood by virtue of the fact that adequate security and maintenance cannot be provided Where rents are restricted to below-market levels and the property is taxed higher than its Competitors, Ifthe property is forced to pay higher taxes than its competitors absent the PILOT, it will not survive without cutting services and protections to its tenants, Ultimately, this Court's ruling will result in another Kingston eyesore and a failed attempt at serving the shelter needs of the low income community. The original decision should be reconsidered on this motion and amended to confirm that RPTL 581-a must be applied to Birchwood as a matter of law. RPTL 581-a Applies for the Assessment Years at Issue 14. Birchwood entered into the PILOT agreement in May 2004. RPTL 581-a became effective on October 11, 2005, and was intended to apply to taxable status dates after January 1, 2006, without regard to the date on which the housing facility came into existence. RPTL 581-a; and see Exhibit B. The first year grieved by Birchwood, which was in compliance with the provisions of the PILOT agreement (Agreement, Section 2.02[B][2)), is 2009. The taxable status date for Kingston is March 1 of each assessment: ‘year, and thus the first taxable status date in which 581-a applied in Kingston was March 1, 2006, while the first taxable status date grieved by Birchwood was March 1, 2009. RPTL S81-a was in effect for three full years before the first year at issue in the present matter. As shown above, the Legislature was presented with the ‘concer that existing low income housing projects would enjoy an inducement benefit eventhough they were already induced and yet it determined to make the benefit available to all qualifying projects, regardless of whether they were in existence or not on the date the law became effective. Itis not for this Court to apply the law contrary to the Legislature’s mandate, whether or not that mandate makes logical or policy sense to this Court. The DHCR Website is Incorrectly Quoted and Interpreted 15. The Court states that “DHCR placed on its web site its interpretation that RPTL 581-a did not apply to rental property already subject to a PILOT agreement” (emphasis added) ‘See, nyshre.orp/publications/housinginformationseriestealpropertylawqa-htm. Crucially, however, the Court has incorrectly quoted and/or overlooked or misapprehended operative Jenguage in the secondary source website and left out additional information, thus changing its intent and meaning. The DHCR website accurately reads as follows: “Q. May the owner of a residential rental property that is subject to a PILOT (payment-in-lieu of taxes) agreement that went into effect before section S81-a became effective request that the property be valued pursuant to section 581-a? A. RPTL, section 581-a, does not address existing PILOT agreements. The specific terms of a PILOT agreement must be negotiated by the parties to the agreement.” (emphasis added) 16. Whether a statute applies to a pre-existing agreement is not analogous to whether a statute addresses a pre-existing agreement. The Court overlooks and/or mistakes the use of the ‘word “apply” to make it seem as though the DHCR never intended for parties with PILOT agreements to be assessed by means of RPTL 581 . However, the DHCR’s use of the word “address” means that, on its face, RPTI. $81-a does not make any comment in regards to PILOT agreements. (Indeed, as shown above, the Legislature considered concems over other inducements and chose to omit any such restrictions.) Instead, the very next statement on the DHCR website, which the Court’s Decision omits, is that the parties themselves are to negotiatethe specific terms of the PILOT agreement. In the instant case, the parties had decided that the property would be appraised “in the same manner as other similar properties” and thus RPTL, 581-a should apply according to the letter and spirit of the law itself, as well as the cited website by the Court. ‘The Purpose of RPTL 581-a is to Create Uniformity and Promote Such Projects 17, The Decision & Order of the Court states that this statute has “an underlying goal of encouraging developers to build affordable housing” (Warrensburgh Commons LPT’ v Town Assessor of Town of Warrensburg, 69 A.D.3d 1282, 893 N.YS.2d 381 (3 Dep't 2010), However, the Court overlooks the fact that affordable housing projects not only need to be built and initially used for qualified purposes, but they must remain with at least 20% low income housing for a specified extended amount of time and in many instances for up to 30 years (See, Square Peg, Round Hole article, Exhibit B, pg 15). Without the relief of RPTL 581-a, affordable housing projects are burdensomely taxed at rates that far excced what their actual rental ineomes can bear (See, State Senator Dean G. Skelos letter to Governor Pataki, Exhibit B), 18, As shown in many of the letters to Governor George Pataki in support of this bill, 4 justification for 581-a was to ensure that projects such as Birchwood’s would last throughout their term. As shown above, if this Court’s decision allows Birchwood to lose favorable tax ‘treatment as intended by the Legislature, expenses for critical items such as security and maintenance will necessarily need to be scaled back, thus jeopardizing the safety of its residents and their quality of life. It is authorized and appropriate for this Court to apply RPTL 581-a to Birchwood so that the facility avoids the fate of much other housing in the City of Kingston. 19. The Decision and Order notes that “application of RPTL §S81-a in the circumstances of the present case unreasonably relieves Plaintiff of its contractual, taxobligations while it unjustifiably burdens Defendant with less revenue”. The Plaintiff respectfully disagrees with this statement and continues to contend that valuation by way of RPTL § 581-a mitigates some of the harm caused by the actions of the City. ‘The assessment of this property at the commencement of the PILOT agreement wes $1.6 million and was thereafter raised to $8.4 million, an exorbitant increase of over 500%, in 2008. The City essentially stripped away any PILOT or other benefit Birchwood could have received by grossly increasing the assessment without any just reasoning, Birchwood had no choice but to challenge the assessment at that time and simply seeks to be treated as any other taxpayer in a similar situation, The City has since recognized it had overstepped its bounds and reduced the assessment down to approximately $4 million, which is still a great increase compared to their assessment when the PILOT began. This dispute never would have arisen to the level of litigation had the City not acted in bad faith in the first place, The only way that Birchwood can receive the proper ‘treatment and be taxed equitably is if RPTL §581-a is applied and the Defendants would stil receive their fair share of taxes. WHEREFORE, movant respectfully requests that an Order of this Honorable Court be issued allowing renewal and reargument, together with such other and further relief as this Court ddcems just, proper and equitable, Dated: Tarrytown, New York January 20, 2015 David C. Wilkes