The Osborn: theTaxman Cometh
Since 1997, The Osborn, a 56-acre retirement community in Rye, has claimed a 100% exemption from real estate taxes as a charitable organization.
But thats all over now.
The Osborn (the former Miriam Osborn home) will soon be one of the highest taxpayers in Rye.
An Appellate Court has ruled The Osborn is not entitled to a tax exemption, stating that rather than being used primarily for a charitable purpose, the main mission of The Osborn is to cater to the needs of "healthy and wealthy senior citizens" and, therefore, the property is 100% taxable.
Joshua Nathan, President of the Rye City Board of Education, told theLoop, "They will have to pay their taxes just like everybody else."
The announcement below comes from the School District, the majority stakeholder in the tax revenues at issue:
The Appellate Division of the Second Judicial Department of the Supreme Court of the State of New York issued a 27-page decision dated October 12, 2010, finding in favor of the Rye City School District and holding The Merriam Osborn Home (The Osborn) to be 100% taxable and rejecting The Osborn’s claim to a 100% charitable exemption.
In 1997, following a $135 million build-out and changes in the mission of The Osborn, the Assessor for the City of Rye revoked The Osborn’s 100% exemption from real estate taxes. A Board of Assessment Review then granted a partial exemption to The Osborn for the years 1997-2003. The Osborn filed a lawsuit seeking a full 100% exemption from real estate taxes and challenging the City’s valuation of The Osborn property. Given its majority stake in the tax revenues at issue in the case, the School District took the lead in the defense against The Osborn’s lawsuit.
In 2007, the trial court held that The Osborn was only entitled to a partial tax exemption and issued a determination of the value of The Osborn property.
The Appellate Court, in its October 12, 2010 decision, held that The Osborn is not entitled to any charitable use tax exemption because too few of its residents rely on the facility’s charity to support the conclusion that the property is being used principally or primarily for a charitable purpose. The Appellate Court stated that the main purpose of The Osborn is to cater to the needs of "healthy and wealthy senior citizens" and, therefore, the property is 100% taxable.
The Appellate Court found that the total tax value for the years 1997-2001 was correctly assessed but that The Osborn owes the Rye City School District additional tax monies because it was improper for the trial court to grant The Osborn a partial exemption for the property for those years. The Appellate Court also found that The Osborn is owed a refund for overpayment of property taxes for the years 2002 and 2003. (To avoid having to pay interest on the refund it would be required to make if the trial court’s valuation decision was upheld on appeal, The Rye City School District previously paid The Osborn the School District’s portion of the refund The Osborn would be due based on the trial court’s valuation decision.) The Appellate Court remanded the matter to the trial court to calculate the amount of the refund for 2002-2003 and the amount of the taxes owed by The Osborn for the years 1997-2001.
Acknowledging the work of recent Boards of Education as well as those led by former board presidents Jim Culyer, Steve Feeney and Michael Ice in diligently defending the School District against The Osborn’s lawsuit, Nathan stated: "This case has always been about tax fairness. It is gratifying that the Appellate Court has affirmed our position that The Osborn is a taxable entity and is responsible for its fair share of taxes so that other taxpayers in the community are not unduly burdened. This Appellate Court ruling demonstrates that decisions made by this Board and previous Boards were fiscally prudent and appropriate to protect the community. With the Appellate Court’s decision in hand we can move forward from here to resolve the remaining details, as directed by the Court. It is our sincere hope that the School District and the City can now have a positive and stable relationship with The Osborn; the resulting benefits to the community will be long lasting."
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