191024 NFR Tax Story 3

Old Nabisco plant at the corner of Rainbow and John B. Daly boulevards.

With their legal options "exhausted," members of the Falls City Council reluctantly voted to approve what is expected to be a more than $875,000 property tax refund to NFR Gateway LLC, a subsidiary of Niagara Falls Redevelopment.

The development company, owned by New York City billionaire Howard Milstein, currently controls 400 parcels of prime South End property in the Cataract City.

"All the appeals have ben exhausted," Mayor Robert Restaino told the council members Wednesday night.

Restaino said any further delays in refunding the $771,721.99 in property taxes, that State Supreme Court Justice Ralph A. Boniello ruled had been paid based on an improper assessment of two NFR Gateway properties, would only add to more than $104,000 in interest that has been accruing on the refund. 

Boniello has also ordered the Niagara Falls School District and Niagara County to refund property taxes, as well as interest, to NFR Gateway.

The reduction in property taxes, dating back to the 2011-2012 tax year, resulted from Boniello's decision to slash the property tax assessments for two landmark Falls properties from almost $3.1 million to $975,000, including an assessment of zero for one of the properties.

NFR Gateway had challenged the assessments of 126 Memorial Parkway, a former Nabisco warehouse and 816 Rainbow Blvd., the former Nabisco plant and grain silos. The company claimed the properties were over assessed from 2011 through 2018.

They have continued to claim the over assessment through 2021, while the city, the school district and the county appealed Boniello's decision.

In issuing his initial decision in March 2019, Boniello determined that the properties could no longer be used for manufacturing as a result of a zoning law change in 2009. That change limits the properties to commercial and residential uses only.

In testimony at a non-jury trial before Boniello, experts for the city and NFR submitted wildly different independent appraisals of the properties values. The city's appraiser set the values of the plant, silos and warehouse at between $3.8 million and $4.43 million.

The NFR appraiser found the value of the plant and silos to be no more than $500,000 and the value of the warehouse to be $975,000.

Boniello characterized the NFR commissioned appraisal as painstakingly detailed, setting forth "historical data, calculations and relevant similarities and differences of (other) properties used for comparison (of assessments)."

But the justice took issue with the city's independent appraiser, claiming he provided "no calculations or explanations" for reaching his assessed value. Boniello further criticized the appraiser for not considering or making adjustments "for environmental contamination and remediation."

"The Court finds the (City's) expert's conclusions to be invalid and/or unreliable," Boniello wrote in his ruling.

In his decision, Boniello said NFR had shown "uncontroverted evidence of environmental contamination at the plant and silo property." Citing an estimate that the cost to clean up the contamination would be more than $1.31 million, the justice said the NFR appraiser set the value of that Nabisco property at zero and agreed with that assessment.

He also adopted the NFR appraisal of the warehouse at $975,000.

Council Member Frank Soda questioned how a facility used to manufacture Shredded Wheat cereal could be environmentally contaminated. Despite Boniello's reference to "uncontroverted evidence of environmental contamination," he provided no specific citation of that evidence in his ruling.

Soda suggested that if NFR feels the grain silos and plant are worthless, the city should offer to acquire them for "one dollar."

It's strange that (NFR) paid $3.2 million for that property in 2003, and now they believe it's worthless," Soda added. 

The city appealed Boniello's ruling to the state's Appellate Division Fourth Department. The five judge appeals court unanimously upheld the ruling offering no rationale beyond a reference to Boniello's original decision. 

A request to appeal to the state's highest court was denied.

Trending Video

Recommended for you