LACKAWANNA
State Appeals Court issues tax ruling
A Ridge Road building leased by the nonprofit Lackawanna Community Development Corp. to a business is subject to property taxes, the state’s highest court ruled Thursday.
The ruling by the State Court of Appeals “ensures that all businesses pay their fair share, regardless of who owns the underlying property,” said attorney Daniel F. Spitzer, who represented Lackawanna Assessor Krank E. Krakowski.
The $150,584.23 owed by the development agency includes back city and school taxes, as well as interest and penalties. Beginning in 2010, the annual city tax bill will be approximately $19,200, according to Krakowski.
The 24,000-square-foot structure at 100 Ridge Road, which houses Now-Tech Industries, had been the subject of a three-year legal battle between the development agency and city. It was built in 1994 by the agency, whose business offices are located elsewhere on Ridge Road.
“We’re extremely disappointed,” said attorney Michael F. Perley, who represented the development agency.
“We are evaluating what options we have, but this decision, to my way of thinking, imperils the ability of [development corporations] statewide to provide for economic development.”
“It materially affects our ability to provide below-market rent,” Perley said.
Though the site has been leased to businesses for years, its exemption status wasn’t challenged until the citywide revaluation in 2005.
Before that, assessments were last updated in 1988.
At the time of the 2005 revaluation, the city looked at several properties owned by the development agency and their exemptions, Krakowski said. It was determined the Ridge Road exemption was not applicable.
The development agency began legal proceedings in 2006, when the property was put back on the tax rolls. Though the agency won its initial challenge in State Supreme Court, the city won its appeal in the Appellate Division.
Thursday’s ruling affirmed the Appellate Division’s order.
Chief Judge Jonathan Lippman wrote, in part:
“Generally, the burden of proof lies with the taxpayer who is seeking to have real property declared tax exempt.” But when a municipality seeks to withdraw a previously granted exemption, “the municipality bears the burden of proving that the real property is subject to taxation.”
“The Lackawanna tax assessor has satisfied his burden,” Lippman wrote.
The five other judges concurred.
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