Vacant Lot Misclassification as Correctable Errors of Description Under NYC Admin. Code § 11-206

Introduction

In Matter of Fordham Hill Owners Corp. v. Soliman (2025 NYSlipOp 01889), the Appellate Division, First Department confronted a series of consolidated Article 78 challenges by owners of vacant or formerly vacant lots in the Bronx. Each petitioner sought to correct what they alleged were clerical or descriptive errors in the New York City Department of Finance’s (“DOF”) building-class and tax-class designations of their properties. The key issue was whether those misclassifications—lots zoned residential with commercial overlays classified as Tax Class 4 (commercial) and Building Class V1—could be corrected under Administrative Code § 11-206 and its implementing regulation (former 19 RCNY 53-02[b][10]) to Tax Class 1 (residential) and Building Class V0. Petitioners argued DOF’s reclassifications were arbitrary, capricious, and contrary to law; DOF defended its determinations on varying grounds. The court’s unanimous decision affirms the lower courts in vacating DOF denials and ordering proper reclassification and tax refunds or credits.

Summary of the Judgment

The First Department affirmed multiple Supreme Court orders granting eight petitioners’ Article 78 petitions. Each order had vacated DOF determinations (dated August 2, 2021; May 6, 2022; or October 7, 2022) denying requests to correct building-class and tax-class errors for vacant Bronx lots. The appellate court held:

DOF’s denials were arbitrary, capricious, and affected by errors of law (CPLR 7803[3]).
Misclassifications of building class and tax class qualify as “errors of description” under City Administrative Code § 11-206 and former 19 RCNY 53-02(b)(10).
DOF must correct the classifications, revert to the prior (proper) classes, and issue refunds or credits for any overpayments.
One petitioner (205 West 262nd St. LLC) was precluded from challenging certain tax years by a prior settlement agreement, but the court upheld the lower court’s partial grant and denial of relief by reference to that agreement.

Analysis

Precedents Cited

Matter of Pell v. Board of Educ. (34 NY2d 222 [1974]): Defines arbitrary and capricious agency action and errors of law under CPLR 7803(3).
Matter of Shore Dev. Partners v. Board of Assessors (82 AD3d 988 [2d Dept 2011]): Holds mixed-zoned vacant lots outside Manhattan should be classified as Tax Class 1, construing “not zoned residential” in taxpayer’s favor.
Matter of Better World Real Estate Group v. New York City Dept. of Fin. (122 AD3d 27 [2d Dept 2014]): Confirms that misclassifications in assessment-roll columns constitute errors of description under Administrative Code § 11-206.
Matter of 3061-63 Third Ave. LLC v. Soliman (223 AD3d 548 [1st Dept 2024]): Previously limited 19 RCNY 53-02 to misdescriptions of physical characteristics; overruled here.
Matter of Oversight Mgt. Servs., LLC v. Soliman (220 AD3d 445 [1st Dept 2023], lv denied 41 NY3d 910 [2024]): Cited in settlement-preclusion analysis.
Matter of Tall Trees Constr. Corp. v. Zoning Bd. of Appeals (97 NY2d 86 [2001]) and Matter of Charles A. Field Delivery Serv. [Roberts] (66 NY2d 516 [1985]): Reinforce that inconsistency with prior agency practice without explanation is arbitrary and capricious.

Legal Reasoning

The court’s analysis proceeded in two steps:

Settlement-Preclusion: 205 West 262nd St. LLC’s prior agreement with the NYC Tax Commission barred review of three early tax years. The court upheld the lower court’s denial of relief for those years and grant for subsequent years.
Merits of Classification Corrections:
- Statutory Framework – Real Property Tax Law § 1802(1)(d)(i) defines Tax Class 1 (“all vacant land” outside Manhattan unless nonresidential and not adjacent to qualifying residential property).
- Regulatory Authority – Administrative Code § 11-206 empowers DOF to correct clerical and descriptive errors; former 19 RCNY 53-02(b)(10) lists “[i]naccurate building class” as a correctable error.
- DOF’s Conduct – The agency applied inconsistent rationales: in some cases disclaiming authority to correct, in others denying on the merits, and in yet others reclassifying without explanation. These practices conflicted with Second Department precedent (Shore) and agency’s own prior classifications.
- Court’s Conclusion – DOF’s inconsistent, unexplained decisions were arbitrary and capricious and infected by errors of law. Petitioners demonstrated entitlement to reversion to Building Class V0 and Tax Class 1 and corresponding tax relief.

Impact

This decision establishes in the First Department:

Broad application of Administrative Code § 11-206 and former 19 RCNY 53-02 to correct misclassifications even where the error is one of statutory interpretation rather than purely physical description.
Alignment with Second Department authority on classification of mixed-zoned vacant lots, promoting taxpayer-friendly construction of ambiguous statutory provisions.
A warning to DOF to apply consistent rationales and adhere to its own historical practice or clearly explain departures to avoid arbitrary and capricious findings.
A potential wave of similar Article 78 petitions by owners of vacant or mixed-zoned properties seeking reclassification and refunds.

Complex Concepts Simplified

Article 78 Proceeding: A special New York procedure to challenge a state or municipal agency’s final decision on grounds such as arbitrariness, capriciousness, or legal errors (CPLR § 7801 et seq.).
Tax Class vs. Building Class:
- Tax Class 1: Residential property (including most vacant land outside Manhattan).
- Tax Class 4: Commercial property.
- Building Class V0: Vacant land zoned residential (non-Manhattan).
- Building Class V1: Vacant land zoned commercial or Manhattan residential.
Clerical Error or Error of Description: A mistake in recorded data (e.g., wrong class entered on an assessment roll) that an agency can correct without commencing a new formal revaluation.
Arbitrary and Capricious: A legal standard under which agency action lacking a rational basis, consistency, or supporting explanation is invalid.

Conclusion

Matter of Fordham Hill Owners Corp. v. Soliman clarifies that misclassification of vacant lots—whether by clerical oversight or statutory misinterpretation—is a correctable “error of description” under NYC Administrative Code § 11-206 and its implementing regulations. The decision reinforces taxpayer-friendly construction of ambiguous zoning and tax statutes, mandates consistent and reasoned agency action, and opens the door for owners of similarly misclassified properties to pursue reclassification and refunds through Article 78. In the broader landscape of New York property taxation, this case serves as a milestone in ensuring fairness, transparency, and adherence to regulatory authority by the Department of Finance.