Hotel's Tax Grievance Could Cost Rye Town Millions

The Doral Arrowwood hotel is challenging four years of property assessments, and Rye Town officials are livid over the costly process.

The hotel is appealing valuations from 2003, 2006, 2007 and 2008, when the town appraised the 114-acre property at as much as $100 million. Hotel officials are claiming that the actual value is as low as 10 percent of the town's numbers. Town Supervisor Joe Carvin said the claims are "outrageous" and called the move "a horrific legal tactic" that underscores inequities in tax grievance law.

If Doral is successful in its challenge, the town would lose millions of dollars in back-payments, known as certiorari, compounded by state-mandated 9 percent interest for each individual tax year that local governments must pay when they lose a certiorari case. On top of that, the town has already spent tens of thousands of dollars on appraisals and legal fees.

At a Feb. 15 town council meeting, Carvin said that local schools face the biggest negative impact.

"Our school children are having money stolen from them," Carvin said. "Here you have a major corporation in your community basically saying 'I don't care, I'm going to hire my lawyer and do my best to screw the community.'"

He went on to say that "no homeowner would have the chutzpah" to claim that their property was worth only 10 percent of its assessed value.

Bishop Nowotnik, Rye Confidential Secretary, said that current law essentially gives businesses a green light to let certiorari cases languish for years, allowing interest to build up and forcing local governments to agree to costly out-of-court settlements that are never approved by a judge and don't accurately reflect the value of commercial property.

"There's an unfairness and exploitation in the system, which is not available to [residential property owners]. The whole thing is set up in such a way that there is absolutely no risk to the [commercial] property owner," Nowotnik said.

He added that small businesses wind up having to foot the bill for certiorari payments, as they lack the resources to hire teams of lawyers that can sit on grievance cases for years.

Steve Mabus, the general manager of the hotel, said that the town's reaction to the case is the result of Carvin and other officials not being fully informed. He was careful to laud Carvin as a "very dedicated, passionate" official who was only looking out for the best interests of the town.

"I believe that if Mr. Carvin had been properly informed on the specifics of the matter, he would not have reacted the way he did," Mabus said. "All of the information requested by the town has been presented in a proper manner."

Mabus would not provide more specifics, citing the ongoing legal battle.

Nowotnik said that Doral had only provided all of the requested information - including the hotel's total income in recent years - "in the last few days."

Mabus defended the hotel's standing in the community, noting that Doral has been located in Rye Brook for 26 years, and said that many local businesses are challenging property values in order to offset declining revenue due to the recession.

"We hire people, and we give back in a lot of other ways," he said. "We care about this community, and we're simply doing what a lot of other businesses and residents are doing."

"The value of our property has declined and we're looking to get some tax relief," he added.

Both Mabus and Nowotnik said the case would likely go to court in June.

A bill introduced by Assemblyman George Latimer (D-Rye) would require that certiorari cases be settled within one year of being brought against Rye Town. The bill passed the Senate last year, after being introduced by Sen. Suzi Oppenheimer (D-Port Chester), but was met with contention in the Assembly.

According to Latimer, Assembly officials wanted to extend the measure so that it would apply statewide; the Senate, meanwhile, wanted to keep it specific to Rye. The assemblyman said that he expects the bill to pass the Senate again this year, and that he would "sit down with players in the Assembly and try to make a more persuasive argument."