Attorneys win tax refund for Ed Sullivan Theater

Real Estate Weekly, Jan 19, 1994

David Letterman and his bosses at CBS aren't the only smiling faces associated with the Ed Sullivan Theater these days. The building's former owners are pretty happy too, and their euphoria has nothing to do with TV ratings. They're about to receive a tax refund of more than $720,000 from the City of New York.

Certiorari attorneys Podell, Rothman, Schechter & Banfield successfully proved before New York State Supreme Court Judge Stanley Parness that the building's prior owners had, over the years, paid too much in property taxes. Represented by Podell, Rothman, the owners, 19 New York Properties Ltd. Partnership, had filed tax certiorari petitions challenging the city's assessment of the property for each year from 1985 through 1991.

According to firm partner Bill Banfield, the City attempted to defend is assessment based on the property's potential use, and the theoretical income the building was therefore capable of generating.

But Judge Parness rejected the City's valuation, stating in his decision, "The law is quite clear that valuation for tax assessment purposes must reflect the existing use of the property, and potential development to a higher and better use may not serve as the basis for assessment." He added, "In the real world, tax bills are paid out of actual income, not hypothetical value."

The site where Ed Sullivan produced his variety show for 19 years, the theater was listed as a Protected Theater under the Zoning Resolution, and had its interior landmarked in 1988. The theater was purchased earlier this year by CBS for $4 million and renovated for Letterman's "Late Show."