Friar’s Head tax refund hit exposes broader assessment challenges in Riverhead

Riverhead property owners got a costly reminder this year that tax certiorari litigation does not end in the courtroom.

The sharp increase many homeowners saw in the “New York State Real Property Tax Law” line on their tax bills, first reported by Newsday, was driven mostly by a court-ordered refund tied to Friar’s Head, the exclusive golf club in Baiting Hollow whose owner, Traditional Links LLC, won a long-running challenge to the town’s assessment of the property.

But the hit to taxpayers this year is about more than one golf course.

It is also the clearest sign yet of a broader problem that has been building in Riverhead for years: a property tax system that leaves the town vulnerable to repeated challenges from major commercial property owners, forces local assessors to defend highly specialized valuations and ultimately shifts the cost of successful lawsuits onto other property owners.

This year, Riverhead was charged back about $7.24 million in tax refunds, with roughly $6 million of that tied to the Friar’s Head case, according to county figures confirmed by Riverhead Assessor Laverne Tennenberg. The county initially pays those refunds, then recoups the money through a chargeback that appears on local tax bills.

Town records show this year’s tax debt charge was by far the highest in at least the past decade. The NYS RPTL debt line on Riverhead’s tax roll totaled about $776,278 in 2014-15, dipped as low as about $391,953 in 2017-18, climbed above $4 million in 2022-23 and then jumped from about $2.78 million last year to $7.24 million this year — an increase of about 160% in a single year.

That makes this year’s spike extraordinary. But the longer trend shows it is not a new problem. The chargeback has swung sharply from year to year for more than a decade, reflecting the recurring and sometimes unpredictable cost of tax certiorari refunds.

For Tennenberg, the Friar’s Head case was not a one-off anomaly but a high-profile example of the pressures her office faces every year in a town with an unusually large and complex commercial tax base.

Riverhead has not conducted a townwide reassessment since 1980, a fact Tennenberg said leaves the town more exposed to challenges as market conditions change unevenly across property types. Residential values may surge, pushing down the equalization rate, while commercial properties tied to leases, income streams and vacancy rates do not necessarily move in step.

“The spike in residential is not happening in the commercial market,” Tennenberg said in a phone interview last week. “Just by virtue of the equalization rate changes, the attorneys are coming in saying, my client’s entitled to a reduction because it’s overassessed.”

That dynamic, she said, is especially difficult in a town like Riverhead, where shopping centers, golf courses, mobile home parks, industrial properties, marinas and other specialized properties make up an unusually large share of the assessment roll.

Unlike houses, many commercial properties are not valued mainly by comparing them with recent sales. They are often valued using the income capitalization approach, which estimates what a property is worth based on the income it can generate.

In simple terms, appraisers begin with projected income, subtract for vacancy, collection losses and operating expenses, and then apply a capitalization rate to convert that expected net income into an estimate of market value. In tax certiorari cases, nearly every one of those assumptions can become a point of dispute.

That is one reason commercial assessment litigation can be hard for the public to follow. These cases are often not about a single obvious mistake. More often, they are fights over appraisal methodology: what rent should be assumed, what vacancy rate is realistic, what expenses should count and what capitalization rate should be used.

“How do you value the aquarium? How do you value a marina?” Tennenberg said. “These are complex properties.”

The story behind the Friar’s Head tax refund

The Friar’s Head dispute shows how high the stakes can be.

In a consolidated tax certiorari proceeding covering tax years 2008-09 through 2014-15, Traditional Links challenged the town’s assessment of the 350-acre property on Sound Avenue. The property includes the golf course and accessory structures, along with a large amount of undeveloped bluff land. Riverhead argued that part of that land had additional value because of its development potential. The property owner argued the course should be valued in its existing condition and use as a golf course.

In 2019, State Supreme Court Justice John J. Leo reduced the property’s valuation for the tax years at issue and ordered the assessment rolls corrected and overpayments refunded. The town appealed, but in February 2024 the Appellate Division upheld the judgment.

The appellate court said the property owner had presented substantial evidence to rebut the presumption that the town’s assessments were correct. The panel upheld the lower court’s ruling reducing the assessments and directing that any overpayments be refunded.

The case turned in part on how to treat what the courts described as the property’s “excess land” — about 85 acres of vacant bluff land overlooking Long Island Sound. Riverhead argued that acreage added significant value because of its development potential, while the property owner argued it should not be valued as a hypothetical residential subdivision. The appellate decision noted that the owner never sought town approval to subdivide the land for residential or other use.

The court also rejected the way the town valued the golf course itself. The town’s appraiser testified that he used the income capitalization methodology to determine the value attributable to the real estate alone, by using a rental approach, which examines how much the property would rent for and then capitalizing the net income t o a value, similar t o valuing other commercial property. The court ruled that the property had to be valued using a methodology based on greens fees charged at public-access golf courses, even though Friar’s Head does not operate as a daily-fee course.

Traditional Links still has tax certiorari cases pending for subsequent tax years.

“There were still years outstanding that we’re trying to settle rather than try again and get an adverse decision. We already know the methodology. We already know the outcome,” Tennenberg said. “We’re doing our best to reach a fair settlement that will satisfy the petitioner, but also be a fair assessment for the town. But again, we’re limited to the methodology.”

MORE COVERAGE: Exclusive private golf club in Baiting Hollow has property tax bill slashed by court

Besides the Traditional Links cases, tax certiorari cases are pending in state Supreme Court seeking review of assessments on dozens of commercial, industrial and other income-producing properties across town. Many involve large parcels in the Route 58 corridor, but others include properties such as +United Riverhead Terminal, condominium communities, Calverton Addiction Center and downtown parcels including the Suffolk Theater.

MORE COVERAGE: More than 300 tax grievance lawsuits are filed against Riverhead every year. Here’s what it means to you at tax time.

Under New York law, assessment challenges do not begin in court. Property owners first file administrative grievances challenging their assessments before the Board of Assessment Review. Only if they are not satisfied may they then bring a proceeding in state Supreme Court.

The assessor’s office provided RiverheadLOCAL with a document listing 830 parcels for which grievances were filed for the 2025-26 tax year. Not every grievance becomes a lawsuit, but the list offers a window into the scale of potential exposure facing the town each year.

And in Riverhead, Tennenberg said, the commercial side of that exposure carries outsized weight. Of the 830 parcels, 339 were commercial properties, 16 were recreational properties and 11 were industrial properties. Grievances were filed for 296 residential properties.

The number of residential assessment challenges is even greater, she said, because many homeowners pursue review through small claims assessment review proceedings.

The state has told her in the past, Tennenberg said, that Riverhead’s commercial segment makes up a larger share of the assessment roll than in any other Suffolk town. That matters because commercial properties are not only more complex to value, but also more likely to generate litigation with large financial consequences.

“It is a whole industry,” Tennenberg said of the property tax grievance business. She described a steady flow of challenges brought by specialized firms that solicit property owners, often on a contingency-fee basis, meaning the owner owes no fee unless the challenge succeeds.

Some cases have merit, she said. Others do not. But all of them require time, expertise and money to defend.

“We have to defend everything,” she said.

When commercial owners and their lawyers rely on the income capitalization approach, as is typical, a grievance can become a fight over nearly every input.

If a property is owner-occupied, there may be no lease to examine, forcing both sides to estimate market rent. Then come disputes over vacancy rates, collection loss, operating expenses and capitalization rates — the percentages used to convert income into an estimate of value.

“Where’d you come up with that rental income?” Tennenberg said, describing the kinds of questions that arise in these cases. “Do you have comparable leases? Did you do a market study?”

And in a town that has not reassessed property townwide in 46 years, those fights play out against an increasingly uneven backdrop.

Tennenberg said Riverhead’s equalization rate has been driven down in recent years by sharp increases in the residential market, particularly after the pandemic. But commercial property values do not necessarily rise at the same pace.

“If the residential market is increasing 8% a year and the landlord is only getting a 3% increase in his rent every year, he’s not seeing an appreciation of his income relative to the market,” she said.

That mismatch can leave commercial owners arguing that their properties are overassessed even as home values across town continue to climb.

The result, Tennenberg said, is that Riverhead is effectively forced into reassessing some properties one case at a time — and mostly downward.

“We can’t increase assessments, but we can decrease assessments,” she said. “So honestly, we’re reassessing property one or two properties at a time, here, there, but only downward, when we go to court.”

That, in turn, shifts the burden onto everyone else.

For most taxpayers, those appraisal fights remain invisible until the bill arrives.

A townwide reassessment would not eliminate tax certiorari litigation, Tennenberg said, but it would bring assessments closer to actual market conditions and reduce some of the disparities that accumulate over decades without a revaluation.

Tennenberg said the roughly $1.2 million in this year’s tax debt line not tied to Friar’s Head was not unusual for a town of Riverhead’s size and commercial makeup. The real shock this year was the size of the Friar’s Head refund on top of the town’s normal tax certiorari exposure.

Correction: This article was amended to correct the characterization of the methodology used by the town’s appraiser to valued the golf course.