In Dramatic Turnabout, New Rochelle Schools Chief Admits “Tax Assessables” Could Drop Dramatically in 2009

Written By: Robert Cox

School Superintendent Richard Organisciak, responding to doubts first raised by Talk of the Sound last March, has admitted that the assessed value of property in New Rochelle could be dramatically lower that projected in final budget to be submitted to voters on May 19th. In a school district video aired on Channel 77 this past Friday, Organisciak called it “entirely possible” that his own projections are way off.

The sort of decline Organisciak envisions would cause a massive tax increase — two to three times higher than the 3.22% increase announced by the District just two weeks ago.

TOS readers will recall that in dozens of community meetings and school board meetings, Organisciak and Schools Finance Chief John Quinn repeatedly defended their assumption that the assessed value of property would remain the same as the year before despite a 25% drop in property values. Reports around the county indicated that tax appeals are up more than 300%.

In response to a firestorm of criticism, the school district grudgingly increased their assumption slightly from 1.41% to 1.76 but nowhere near the 3.0% figure provided to Talk of the Sound by City of New Rochelle Finance Commission Howard Ratner. Property tax experts around Westchester County have scoffed at the school districts projections.

Displaying complete ignorance about the tax assessable process works, Organisciak said “it is entirely possible that three months from now, six months from now, seven months from now that there would be a significant change”. The tax appeals are in June, the new assessables are calculated in August and the results are published in September. Six or seven months from now is November or December, long after the process will have been completed for 2009.

By the way, at the every end you hear the stooge from the League of Women Voters say something about the assessables numbers used by the district is an educated estimate based on historical data. You can hear Organisciak agreeing, saying “Oh yes, yes”. This is entirely BS. Earlier in the “interview” Quinn talks about how they have nothing to do with preparing the number, they get it from the tax assessor. The fact is that they are pulling this number out of Cindy Babcock-Deutsch’s … ummm…ear.

8 thoughts on “In Dramatic Turnabout, New Rochelle Schools Chief Admits “Tax Assessables” Could Drop Dramatically in 2009”

  1. I don’t think this is going
    I don’t think this is going to happen. While property values have dropped dramtically over the last few years, all the City has to do to counter the lost value in our homes is to simply increase the equalization rate.

    For example, my house is assessed at 17,000 and lets say last years equalization rate (the variable used to equate the assessment to fair market value or FMV) was 2.5%. To determine the FMV, you divide the assessment amount by the equalization amount. In this case, the answer is $680,000. As a homeowner, I agreed with this amount.

    Now after a year of market upheaval, finacial stress ect.., I feel my house is worth $500,000 and I’m going to appeal my assessment and have it knocked down to 12,500 ((500,000 (FMV) times .025 (equalization rate)). Sounds good, right? Well think again, the equalization rate is not fixed and fluctuates. Say they raise the equalization rate to 3.5%. At that rate the City values my house at $485,714, just about the amount I thought it was worth and guess what? No assessment reduction!!!

    Lets just hope our Mayor, City Council, City Manager & anyone else involved are smart enough to make this correction, otherwise Bob your right our taxes will go through the roof and its hard to believe Organisciak and Quinn could be so naive about this. Its really quite frightening that they’re handeling a budget of almost a 1/4 billion dollars.

    1. If the City were to increase
      If the City were to increase the equalization rate in the manner you suggested it would effectively be a massive tax increase. If you were to apply for tax relief see the assesed value of you home decline by 25% and then see your property taxes go up, it would be a very bitter pill indeed.

      1. I disagree, the equalization
        I disagree, the equalization rate has nothing to do with the amount of taxes that we pay. Its only used to determine the fair market value.

        So if the city increases the equalization rate as I’m suggesting that they do, homeowners won’t have a justification or reason to have their assessements lowered (because they’ve lowered the fair market value for everyone) and the city assessment roll won’t change so any tax increase you see we be solely based on income and expenses, not the loss of assessments.

      2. That is simply incorrect. If
        That is simply incorrect. If AV = FMV x ER, then ones assessment (tax rate) is driven by a change in FMV or ER. An increase in FMV increases AV which is a tax increase. By the same token an increase in ER also increases AV which is also a tax increase. e.g. If you owned a home with a FMV of $1mn which an annual property taxes of $20,000 and you applied for tax relief. As a result of your appeal the FMV of your house was adjusted to $750,000 which drives the AV lower, you would expect the annual property taxes to fall to $15,000. If the City were then to increase the ER to keep the taxes at $20,000 that would clearly represent a tax increase. You are paying the same tax on an asset that has lost 25% of it’s value. The value of your asset has declined your tax liability has not. If the City were to go down this route, given then huge number of appeals that are taking place this year, it would certainly give Bob alot of material to write about for some time.

      3. I am not sure I am following
        I am not sure I am following this algebraic argument but even I can tell that NR Objectivist kicking this guy’s butt.

      4. You guys are way off on this
        You guys are way off on this and this is important for everyone to understand so I’ll keep hammering away at until everyone understands because I’m on your side.

        Unfortuantley NR Objectivist is wrong by stating ones assessment is their tax rate. That’s just a complete misunderstanding of how things work. The amount of taxes you pay is your assessment multiplied by the tax rate (usually given in dollars per thousand). The equalization rate (called the Uniform Percentage of Value on your tax bill) is listed but has nothing to do the amount of tax you pay.

        The tax rate is determined by the amount of expenditures (less any State/Fed aid) divided by the total of all City assessments. So if value of all City assessments falls then the tax rate has to go higher to compensate for the lower value of all the assessments. Conversely, if the value of all assessments goes up then the tax rate will go down.

        For example, say the school district needs to raise $200M from property taxes. If the total assessments were $300M, then you’d have a tax rate of $666.67 per thousand dollars of assessed value. If your individual assessment is 17,000, you owe 11,333.33 in school taxes. Now lets use the same equation, but lets say 100 property owners get their assessed values lowered by a total of $5M so that our total value of assessments is now $295M (a reduction of 1.67%). To determine the tax rate here, divide 200,000,000 by 295,000 (remember the tax rate is per 1000 dollars). I get $677.97 per thousand or if my individual assessment is 17,000 I owe $11,525.49 (1.67% higher).

        The equalization rate has nothing to do with the tax rate. It only converts your assessement into a Full Market Value as of a particular date. As far as I can tell, it looks kinda made up, but it certainly does not change your property’s assessment and how you are taxed. I don’t think New Rochelle assessments have change in 40 or 50 years, nor do I advocate for reassessment, and just because the Fair Market Value of your home increases or decreases doesn’t mean that your actual assement changes because it doesn’t. Its fixed for the most part. Thats what the equalization rate does, account for market fluctuations- up or down. And its an inverse relationship. As the equalization rate goes down, the value of your property (according to the city) has gone up. If the equalization rate goes up, then the value of your property has gone down (according to the city).

        BTW, the equation to determine the city’s full market value of your property is AV/EQ Rate = FMV. I don’t know if they’ve released or issued a new equalization rate for 6/1/09, but the rate was 2.44% as of 6/1/08 which if you use the equation above gives you the full market value (according to the city) as of 6/1/08 and not today’s value which of course should be lower.

        That being said, in order for us oridinary citizens not to see massive tax increases due to a dramactically lower total of all the City’s assessed values (which occurs when property owners appeall/greive the assessed value of their property to have them lowered), they need to increase the equalization rate which (remember from above) will lower the Full Market Value of everyone’s property. By lowering everyones Full Market Value, the City will take away the most compelling reason most people would use to appeal/greive their assessments; the lower value of their homes due to the bust in the real estate market.

        If you disagree or can’t figure this out, please comment & I’ll rephrase until it sinks in. This is not basic math, but I want it to be clear. We can’t offer suggestions to problems if we don’t understand the issues which are complex in their own right.

    2. they are not going to make
      they are not going to make the correction or the connection. city is one of the municipalities that is not eager to go through the state/county recommendation for reassessment. you probably can figure out why. as far as the district is cocnerned, they are more venial than naive. they know the ramifications involved. what you point out very well indeed is the existence of a 222 million dollar budget, a possibility of reducing it further by only a fraction $330,000 if they had to employ the alternative budget. If you read their rationale it is alarmingly sinister — they produce non-existing facts on matters that don’t exist (like a cap), they fail to disclose any pertinent expense management actions, they claim that voting down the budget would threaten them in the debt market (poor bull — do the math), they claim that it would negatively impact labor negotiations — not so, the contract is very likely signed and sealed awaiting delivery and you can find this trivial amount (330K) from many sources not in the contract — starting with so-called “contractual” increases for non-bargaining unit personnel, related administrative expenses in the non-classroom area. As far as the State imposing its will on the district if it resorts to an alternate budget, once again, the scare tactic — all the state will do if anything is to insist that no cuts are made in core programs or anything affected by no child left behind, etc..

      So tell your neighbors and friends to vote down this monster and thank you for the education on home value. Bob, is this ok?

  2. it is inconceivable that the
    it is inconceivable that the passage of critical information of this nature should suddenly emerge a week or so before election date as a “miscalculation.” If this is the case voters should demand (1) a explicit report on the on-going formal arrangements between the city and the school district. this is something i am on record as being needed for years; it is called a formal working relationship given the nature and composition of the tax base. it is also physical evidence of what bloomberg has done and what our new secty of education has called for nationwide — mayoral control over districts.

    since we don’t have either a circuit breaker or a tax cap imposed by legislation in nys, all voters, pro or anti school board, must commit to freeze tax levels at the preannounced rate 3.225 and, if approved, do the hard work in cutting expenses to make it work. it certainly cannot and should not go to the debt market to borrow to pay operating expense.

    if this is so, this is the sort of event that requires the resignatiion of the superintendent and his financial staff, a complete reordering of how the board handles oversight, reopening negotiations, yes reopening negotiations with FUSE to get them to share the pain, a demand that the city forswears its hands-off attitude and be held accountable for its share of the debacle and the election of new people with new mandate on the board.

    noam bramson, the council, and the voters must for the first time realize that a tax expense base of this magnitude warrants new organizational arrangements of the sort promoted by new york city and supported by the department of education.

    this is inexcusable period

    warren gros

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