## Facts

- In 1972, Rosbroc Associates (Rosbroc) purchased a full city-block parcel in the City of New Rochelle’s business district for about $3 per square foot.
- The parcel was located within an urban-renewal project area.
- In 1974, Rosbroc constructed a 10-story building on the site, consisting of six hotel floors and four floors of leased office space.
- A dispute arose over the fair market value of the land and the building (improvements) for the 1975 and 1976 tax years, and Rosbroc challenged the City’s assessments in a tax assessment review proceeding.
- Land valuation proof at trial relied on comparable sales:
  - Rosbroc’s appraiser analyzed six land sales (five within the urban-renewal program) with prices ranging from $3 to $6 per square foot and concluded a land value of about $4 per square foot.
  - The City’s appraiser concluded a land value of about $6 per square foot, reasoning that urban-renewal sales were not purely market-driven and should be adjusted upward.
- The parties’ building valuation proof used different methods:
  - The City’s appraiser emphasized a cost approach, valuing the improvements based on the cost to reproduce the building.
  - Rosbroc’s appraiser contended that cost-based valuation overstated market value because the urban-renewal project was struggling and the market would not support reproducing such a building; Rosbroc relied on an income approach using the property’s actual income and expenses and its actual occupancy experience in 1976.
  - The City considered an income approach but relied on projected income and expenses and assumed higher occupancy than the property’s actual performance.

## Issues

1. Whether sales of land within an urban-renewal program may be used as comparable sales evidence of fair market value for assessment purposes, and whether a blanket upward adjustment is justified without market proof.
2. Whether a cost-to-reproduce (cost) approach may control the valuation of a newly constructed hotel/office building when market conditions show substantial economic or functional obsolescence and the structure would not be reproduced in the current market.
3. Whether, in applying an income approach, actual rents, expenses, and occupancy from the subject property should be credited over projections that assume materially higher occupancy.

## Decision

- The court weighed the competing appraisal proof and determined value based on the evidence most tied to actual market behavior in the urban-renewal area.
- On land value, the court treated the urban-renewal sales relied on by Rosbroc as usable market evidence and did not accept an unsupported across-the-board upward adjustment simply because the sales occurred within the renewal program.
- On the improvements, the court was not persuaded that a reproduction-cost figure, standing alone, reflected what a willing buyer would pay where the area’s renewal effort was not succeeding and substantial economic/functional obsolescence affected the property’s earning power.
- The court credited the income-based analysis that relied on the property’s actual operating experience (including leases/rents and occupancy) and rejected valuation premised on projections assuming higher occupancy not shown by the property’s performance or the area market.
- The court granted assessment relief consistent with its findings that the City’s valuation assumptions overstated fair market value under the conditions shown at trial.

## Legal Principles

- In a tax assessment review proceeding, once the taxpayer presents substantial valuation proof, the court determines fair market value from the record rather than deferring to the assessment.
- Comparable sales remain a primary indicator of land value; sales occurring in an urban-renewal setting are not automatically excluded, and adjustments must be supported by evidence tied to market effects.
- For income-producing property, actual, recent leases of the subject property are strong evidence of rental value, and actual income and expenses are highly probative when they reflect stabilized market conditions for the area.
- A cost approach may be given reduced weight when it fails to account for significant economic or functional obsolescence and therefore does not reflect market value.
- Income projections used in valuation must be supported by market data; projected occupancy that exceeds demonstrated performance may be rejected as speculative.

## Conclusion

The New York Supreme Court (Westchester County) resolved Rosbroc’s assessment challenge by favoring valuation proof anchored in real transactions and operating results: it treated urban-renewal land sales as valid comparables absent supported adjustment evidence, and it valued the hotel/office improvements based on actual rents, expenses, and occupancy while recognizing substantial obsolescence that made reproduction-cost and optimistic projections unreliable measures of fair market value for the 1975 and 1976 assessments.


Rosbroc Associates v. Assessor and Board of Review of the City of New Rochelle, New York Law Journal, November 3, 1976, pp. 16–17