Rosbroc Associates v. Assessor and Board of Review of the City of New Rochelle

In 1972, Rosbroc Associates (Rosbroc) (plaintiff) purchased land in the city of New Rochelle (city) (defendant) for $3 per square foot. The land constituted a full city block in a business district subject to an urban-renewal project. In 1974, Rosbroc constructed a 10-story building on the land, with six stories as a hotel and four as leased office space. A dispute arose regarding the fair market value (FMV) of the land and building for purposes of assessing taxes in 1975 and 1976. The dispute prompted Rosbroc to file suit against the city, challenging the city’s valuations. At trial, both Rosbroc’s expert and the city’s expert relied on comparable sales to determine the land’s FMV. Rosbroc’s expert relied on six land sales, five of which were urban-renewal sales, with sale prices between $3 to $6 a square foot. He concluded that Rosbroc’s land had an FMV of $4 a square foot. The city’s expert concluded that the land’s FMV was $6 a square foot, reasoning in part that the urban-renewal sales were not based solely on market value and therefore needed to be adjusted upward. Regarding valuation of the building, the experts utilized different approaches. The city’s expert used the cost approach, basing the building’s value on the cost of reproducing the building. Rosbroc’s expert argued that method was inappropriate because the urban-renewal project was struggling and no one would currently reproduce such a large building. Instead, Rosbroc’s expert relied on an income approach, calculating the building’s actual income and expenses based on its occupancy rates in 1976, which were consistent with or higher than occupancy rates for other hotels and office spaces in the renewal area. The city considered an income approach but concluded the calculation should be based on projected data, not actual income and expenses. The projected data assumed higher occupancy rates. The court considered the parties’ arguments.