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Volume 11 - Opinions of Counsel SBRPS No. 16

Opinions of Counsel index

Assessments, generally (value) (vacant and unused property) - Real Property Tax Law, § 305:

Where a parcel is vacant and unused, the assessor may take into account reasonable development potential in establishing value. The projected development must be possible under current, applicable land use regulations (e.g., zoning). Alternatively, the assessor may conclude that the highest and best use of a currently vacant, unused parcel is to remain vacant and value it accordingly.

In 10 Op.Counsel SBRPS No. 45, we concluded that, “[I]n establishing assessments, the assessor must value property in accordance with its current use, rather than its highest and best use. The one exception is for vacant land that is used for no purpose; its value may be based upon highest and best use.” We are now asked if “unused open space,” rather than land suitable for development, may be deemed to be the highest and best use for a particular parcel.

As noted in our above-referenced opinion, the courts have uniformly held that the standard of valuation for assessment purposes is current use. Potential future uses simply may not be considered in the case of most property.

The sole exception is where land is vacant and being put to no use. In such instance the court in Weingarten v. Town of Ossining, 85 A.D.2d 697, 445 N.Y.S.2d 480 (2d Dept., 1981) held, “Although speculation and remote possibilities may not be considered in arriving at the market value of property for tax assessment purposes [citation omitted], zoning and reasonable developmental potential of unimproved land may properly be taken into account...” (85 A.D.2d at 698, 445 N.Y.S.2d at 481).

The property subject to review in Weingarten was zoned for residential use and, therefore, the Appellate Division held that the lower court erred in not receiving evidence as to its value based on residential development consistent with the zoning. It seems likely that in the case of any unused vacant land, the analysis of development potential must be based on the uses allowable under the current zoning (and any other applicable land use regulations).

With respect to “open space,” section 247 of the General Municipal Law authorizes a municipality to acquire interests or rights in property to preserve “open spaces.” When this is done, the assessor is required to “take into account” the limitation on the future use of the land in establishing the assessment (General Municipal Law, §247(3); 3 Op.Counsel SBEA No. 10). Assessing units concerned with preservation of “open spaces” may wish to consider using section 247 to further their goals in that regard.

As a cautionary note, while a grant of “open space” rights or interests may diminish the value of a parcel, it is inappropriate to conclude that such a grant automatically translates into an assessment reduction. In both Adirondack Mountain Reserve v. Board of Assessors, 99 A.D.2d 600, 471 N.Y.S.2d 703 (3d Dept., 1984), aff'd, 64 N.Y.2d 727, 475 N.E.2d 115, 485 N.Y.S.2d 744 (1984) and Ross v. Town of Santa Clara, 266 A.D.2d 678, 698 N.Y.S.2d 90 (3d Dept., 1999), the courts held that granting of conservation easement rights on the particular parcels under review did not reduce their value. Although “open space” rights and conservation assessments are not identical, they are sufficiently similar to point out the need to analyze each parcel on a case-by-case basis.

In conclusion, where a parcel is vacant and unused, the assessor may take into account reasonable development potential in establishing value. The projected development must be possible under current, applicable land use regulations (e.g., zoning). Any value based on a use which would require a change in land use regulation would very likely be deemed too speculative to be sustained in the face of a tax certiorari challenge (RPTL, Art. 7, title 1).

Dependent upon the facts, the assessor could alternatively conclude that the highest and best use of a currently vacant, unused parcel is to remain vacant. An example would be where land use regulations make any potential uses economically unfeasible. That determination should be a factually driven one, not one reached solely to afford “tax relief.”

June 4, 2001

Updated: