By LIZ BUTTON
The city has appealed a county court ruling ordering it to refund thousands of dollars in back taxes to the Rye Town Park Commission, calling for the reversal of the judge’s decision that takes Seaside Johnnie’s restaurant back off the city’s tax rolls.
When it comes to the amount of money the intermunicipal park commission, which runs the park, would recoup for fiscal year 2012, Rye Town Attorney Paul Noto said, “I think it’s around $20,000.”
Rye City and Rye Town, which operates a taxing authority and umbrella government for the villages of Port Chester, Rye Brook and the Rye Neck section of the Village of Mamaroneck, both own and operate Rye Town Park. So when the city’s Board of Assessment Review held the privately-operated restaurant should have its tax-exempt status revoked, it had the effect that the City of Rye was also taxing itself, since the city owns a 48 percent share of Rye Town Park, to the town’s 52 percent.
In June 2011, Rye City Tax Assessor Noreen Whitty declared one of the tax-exempt park’s parcels, which is home to John Ambrose’s beachfront restaurant, should be subject to city, county and school property taxes beginning in 2012.
Rye Town filed a tax certiorari proceeding on Oct. 6, 2011, in Westchester County Court, initiating the case.
Seaside Johnnie’s had been exempt from property taxes ever since opening in 2001. The restaurant sits on what was deemed public parkland by the New York State Legislature in 1907, exempting the property and anything that sat on it, from property taxation. Up until the 2011 revocation of tax-exempt status, the restaurant Seaside Johnnie’s only paid $95,000 in maintenance, rent and trash fees to the commission, which manages the park and is run by leaders from both Rye City and Rye Town.
The City Council directed the city attorney to file the appeal of the June 2013 decision. In a Jan. 23 brief sent to the state Supreme Court petitioning for the reversal of the June 28, 2013, decision of County Supreme Court Justice Bruce Tolbert, the city argues the court erred in holding that Rye Town Park lies within the boundaries of the Town of Rye, when, in fact, Rye Town Park lies wholly within the boundaries of the City of Rye.
The city also argued the court was wrong in ruling that Seaside Johnnie’s meets a public need, since it is an independent, privately-run, for-profit destination restaurant, bar and catering facility. This determination of a public need is necessary by state law for a taxable entity to be considered exempt from property taxes.
Mayor Joe Sack, a Rep-ublican, said it was important that the city appeal the decision for numerous reasons, in particular the financial privation engendered by the state’s 2 percent tax cap on property tax levy increases.
In this economic landscape, he said, it is even more important for the city make sure that for-profit businesses pay their fair share of taxes. “Otherwise the rest of the Rye taxpayers foot the bill,” he said.
Going forward, the prosecution of the appeal will potentially be setting an important precedent with respect to the next situation in which a for-profit enterprise like Seaside Johnnie’s seeks to avoid paying the city its fair share of taxes. The city provides significant services to Seaside Johnnie’s and is entitled to fair compensation, he said.
“It is also fundamentally unfair for one business, because it rents from the Town of Rye, to gain an unfair financial advantage over its competitors,” Sack said.
The town will file its brief this week, after press time, in response to the city’s appeal, which was filed within the statutory six months after the June 2013 decision, Noto said.
“The appeal is focused on addressing each point of [Tolbert’s] decision,” City Attorney Kristen Wilson said. It is more of a legal argument that contains the same position and is based on the same facts as the city’s original motion, she said.
Ambrose, Seaside Johnnie’s owner, owns another restaurant that was affected by the assessor’s 2011 decision: the Tiki Bar and Pier Restaurant, which sits on county land at Playland Park, which abuts Rye Town Park. The building’s tenant, Starfish Grille, Inc., which is the restaurant company owned by Ambrose and business partner Sam Chernin, filed a private suit against the city to return its tax exempt status, according to Ambrose’s lawyer Jonathan Kraut.
Kraut said the Tiki Bar suit is still pending in county court.
Wainwright House, a non-profit retreat which sits on Stuyvesant Avenue, had its tax exempt status revoked as well as a result of the assessor’s 2011 decision, but was soon after reinstated by the city’s Board of Assessment Review.