Each year we can be assured of two things happening relative to property taxes. The School District will have to work through a long list of Certiorari awards and make budget provisions accordingly and, in doing so, seek out ways to lighten this burden. One or more of these ways may be seen by some as being questionable – for example, the recent brouhaha concerning hiring additional counsel to advise the School Board on certain Certiorari claims.
However, there is another certainty and that would be an yearly Op Ed or Letter to the Editor from former Mayor Alfred Del Vecchio of White Plains who, simply put, strongly opposes any effort to reassess property values throughout Westchester and most likely, in any of its municipalities.
I never paid enough attention to the overall issues or examined in detail his opposition to reassessment. As a former board president of a cooperative, I simply conducted an a search for revenue increases every few years and routinely filed for Certiorari. It always worked out positively and I let it go at that.
However, tough economic times coupled with nagging issues with the Del Vecchio thesis has brought this to the surface; especially with the ever increasing school tax situation in New Rochelle and the seeming unwillingness of the City Administration to follow the example set by a community that I am reasonably well aware of in terms of its administration, our neighbor, Pelham. And, a recent Op-Ed piece by Kimberly Blanchard, a tax attorney in Pelham, has brought this to the fore in an assertive and well-written manner.
Ms. Blanchard is a tax expert and certainly knows what she is talking about. She is a partner with Weil, Gotshal & Manges in New York City and serves as chair of the New York Bar Association Tax Section. Her article should be required reading for every property owner as well as the New Rochelle Mayor’s Office and the School District Board of Directors.
I am not going to take a full pro or con stance on the issue except to say that it appears that Blanchard’s case is more compelling than Del Vecchio’s. However, there are variables, considerations, and concerns that likely appear depending on where you are in this process. Being a mayor of a city is one; and there are likely important points concerning constituent impact that must be understood. After all, with few exceptions, the job of a politician is to be elected or re-elected and we see this daily. Some people; such as John McCain, literally put a lifetime of heroic public service and courageous independent thinking on the line by radically retransforming himself and retrofitting his history. But, he is still a hero in my mind and heart and I can readily understand the need to continue on with his career; after all, I cannot be hypocritical enough to say that, when working, that I would present a business plan and strategy that would lead to my loss of job and career. The same is true of most, maybe all politicians so before throwing stones, we ought to examine ourselves.
But, Blanchard raises critical points and challenges to Del Vecchio. She says correctly that “the property tax is a function of how much government spends, not assessment rates. This is critical to understand because it sets into motion the entire issue and management responsibility to be skillful and strong in financial management and budgeting. And, both Del Vecchio and Blanchard agree that market value increases do not, necessarily correlate to property tax increases. So, what is the contention; what are the major points that property owners must bear in mind before taking a pro and con stand on reassessment. First, we must understand that the overriding consideration that should guide all property assessors and assessments is fairness. That said:
Fairness should lead to the point where my home’s assessed value, when compared to your home’s assessed value, should tell each of us how much of the governing body’s costs we must bear.
Now, lets take it to a logical next step – suppose your home’s assessed value is higher than mine and the governing body’s costs (spending) stays the same (is flat from one tax period to the next), then you should expect a reduction in your tax. Why is this so? — put as simply as I can, aggregate assessed values (the total property tax collection from which much of the school’s revenue is derived) is mathematically proportional. This means you pay a given share according to your assessed value and it is effected by the governing body’s spending and the fairness and equity of the assessed value of each property making up the pool.
This said, Blanchard has offered some important thoughts and points I, frankly, never really considered.
She points out the role of the Assessor. I really never gave enough thought to what she calls the “formula” used to apportion commercial and residential properties. I should have known better having worked hard to defeat the Oppenheimer bill to include cooperatives under a commercial ratio tax. I should have looked more closely at the process a city or county might or does follow in designing the formula between commercial and residential properties. Perhaps tax abatement, for one, while an important strategy for attracting new business, should have taken the apportioning discretion in mind and made better decisions in softening the blow to the community. It also probably points out a reluctance in White Plains and New Rochelle to promote a reassessment of all property and a process to update annually. If this were done, it could lead to increased property tax burdens that could only be offset by more commercial contributions from new business and much, much tighter financial management and budget controls. The plus side is that it would be fair and current, the minus side is that we are so overtaxed as it is that it could be the straw that breaks the taxpayer’s back. So, Certiorari will be with us and even under a consistent, updated system of real time assessment, it will and should exist, but it surely would significantly reduce the taxpayer’s litigation expenses while helping the School District in its budget responsibilities.
I leave the rest of what the debate between mayor and tax attorney to you; I confess I am conflicted, knowing the likely outcomes and conditional consequences of countywide and local reassessments. I also know that I am guided foremost by fairness. So, I would probably choose to go in that direction and sharpen my skills in related directions of fiscal management and city planning. Actually, with all of the positive reputation indicators we have gathered, my personal assessment of city effectiveness will be the ability to reconstruct a viable tax base, “green” or otherwise, and sharpen or replace BID, and get our new Stamford guy going on cutting advantageous new commercial and residential deals while cleaning up our non-taxpaying base.
Read the Op-Ed and become educated and, as I am trying to do, be less critical and more helpful. Nothing comes easy in 2010 – we have become a zero sum (win or lose) society and we better learn collaboration skills or perish.
Challenging, Not Advising the Certiorari
I have to say Warren, your latest posts are very compelling. Thanks. Just to be clear though, according to John Quinn (asst super. for finance- NRBof ED) the district is in process to contract counsel to “challenge” (his word, not mine) not just advise the district. Allthough he (Quinn)pointed out the largest share is commercial assessment, he was clear that certiorari challenges would not be limited to commercial property alone. I remember previous posts alluding to this happening but it wasn’t clear where the district was actually going with it. This was all made very clear while Mr Quinn addressed the Confederation of Neighborhood Associations on April 28th. When asked if the district will be using the attorneys to advise or to “challenge” certiorari applications he was direct, forthcoming and concise in acknowledging the latter.
I just wanted to put that out there in case anyone else was as confused as I was about that.
Anyhow, thanks again Warren for all you do.
When in doubt, bring in the
When in doubt, bring in the calvery, I mean lawyers!
Whats this going to cost us to “challenge” the certiorari proceedings handled by the city? Why does the school board think they can do a better job than the Board of Assessments or whoever handles this?
I have to say this is just more wasteful spending by the school board that we can’t afford.
The problem with the current
The
The problem with the current
The problem with the current system is that assessments only go in 1 direction, down. I have yet to hear of an assessment going up. And over time the “average” assessment also goes down so if you never appeal your assessment you’re property is probably over assessed and therefore you’re paying too much in property taxes.
This can’t be considered a fair system so yes a re-assessment is in order, but the problem with re-assessment is most don’t trust city hall to do a fair and equitable job and feel the process could make things worse simply because of the inept at city hall.
The real problem is …..
The real problem is the hundreds of open building permits for additions, bathrooms, kitchens, decks, basements etc. Without final inspection or a complaint these homes are vastly improved and never reassessed. Only at the time of sale if a motrgage is needed can this be rectified. Then we have the issue of STAR cheats who claim STAR exemptions but do not reside at the premises. The city chose not to recoup ill-gotten STAR tax exemption from a mayor appointed official so how can anyone trust the city to be fair when reassessing?
I still beieve certiorari is the best form of reassessment in that if every property eligible filed all properties would be raised to compensate thus achieving fairness over a period of time rather then forcing people out of their homes through the act of reassessment.
But even when open permits
But even when open permits are closed, does City Hall increase the assessment? I don’t think so. I could be wrong, but I don’t think I am. And with all the downtown delelopment and new construction elsewhere, the city’s total assessments hasn’t increased in the 12 years I’ve been here, its only gone down. And so if assessments only go in 1 direction and you’ve never appealed and had your own assessment reduced, then you’re probably over assessed.
Downtown Development heart of problem
For the record the downtown development AKA Avalon, New Roc etc. is a non-entity in that they are TAX ABATED which really goes to the heart of the school district’s problem. Avalon should be paying $2.5 million in school taxes yet they pay $0. Adding insult to injury the taxpayers must suck up the additional burden of educating the children from Avalon which adds and additional $1.2 million for a grand total of $3.7 million which the property owners must subsidize.
Nothing “Fair” about Reassessment
First there is nothing fair about funding education under a property tax system, the only fair tax would be an income tax based on the ability to pay. Second one must decide whether they want to debate the philosophical attributes of reassessment or whether one wants to be community specific. To me all politics is local so I will comment based on the realities in New Rochelle. One fact that no one can dispute is that there is no addition revenue (taxes) collected by performing reassessment. Reassessment just rearranges the amount of taxes paid by taxpayers. The opposite is true in that there is a considerable cost associated with reassessment to the tune of $1,000,000 according to Finance Commissioner Howard Rattner which would equate to a 2% property tax increase to collect the exact amount of taxes before reassessment.
The current and past administrations decided not to reassess probably due to the political backlash. This situation was compounded in that 75% of the tax base has shifted from commercial to residential taxpayers. This is the argument currently used to justify reassessment. If New Rochelle reassessed, commercial property taxes would increase drastically. This would stifle major development which New Rochelle can only achieve through tax abatements currently thus decimating sales tax revenue which New Rochelle sold its soul to attain.
The basic principal is that under reassessment 1/3 of properties will increase, 1/3 will go down and 1/3 will remain the same. A three family house in the west end with almost every senior exemption possible pays approximately $11,000 in total property taxes. The homeowner, a senor citizen, resides on the first floor and rents the second floor and attic apartments. The rents are modest in light of the fact that this area has become blighted due to spot-zoning, illegal housing, over population, lack of parking and general filth. So the attic apartment almost covers the taxes leaving the second floor apartment to subsidize the senior’s social security check to live on and maintain a 100 year old house. The taxes on this home would greatly increase under reassessment and possibly double. A new McMansion built by wealthy individuals paying in excess of $25,000 would probably go down or at worst remain the same. What is fair about this?
It makes no sense to spend money to conduct reassessment and not gain any revenue. Certiorari is the most basic form of reassessment and no one has suggested a form of reassessment which would protect seniors or multiple generations living together to maintain ownership of their homes. If the McMansion is successful filing certiorari the other 20,000 property owner’s pick-up the difference so the people who would be decimated by reassessment will be increased but incrementally as opposed to being devestated.
Pelham has performed reassessment and I have come across no one who believes it was beneficial. A friend of mine sold his home shortly after reassessment in Pelham. He had to accept nearly $100,000 less then the asking price because the taxes he was paying would nearly triple for the prospective buyers.
Here is my rub with reassessment in New Rochelle. Many years ago, New Rochelle enacted legislation which requires all multi-dwelling homes of four units or more to register and file information revealing income from their properties. New Rochelle labeled these parcels; income producing properties and their taxes would be reassessed based on income. Many property owners in this category did not comply and to date no income producing property has be reassessed and $0 has been collected. Why should New Rochelle reassess when they don’t enforced current legislation?
One thing is certain, this debate will continue!
very useful dialogue on reassessment
I have learned a great deal from the correspondents in this blog piece. While I am still conflicted, it is becoming clearer to me that the issue is more the application of a regressive system of property taxation than it is questions around parity, equity and fairness. Some points simply smack you in the gut; Anthony points out massive breakdowns in the administration of a settled statute, 5th Avenue guy indictates that Certiorari (reassessments) are a “one way street” — properties are devalued, never upscaled and so, it is easy to understand why someone might suggest that the only workable form of reassessment is via Certiorari. However, that will crash at some point with a sonic boom as only those in the know or familiar with how the system works will apply and, as pointed out, it is expensive for the school district, the city and who knows what the cost is to the taxpayer given the legal charges we see nowadays. Martin educates us about the likely disparities we get from neighborhood to neighborhood and Ann Joseph puts a point on the pencil when she labels it as a real dilemma.
Anthony Galletta is correct in implying and stating in part that the system is really broken. And this suggests to me that it needs to be fixed and fixed likely outside of the existing property tax model. the current system; especially with its direct relationship to school taxes and its potential for abuse or inefficiency within the statutes and administration of the assessment process is indeed broken, unreliable and unfair. I cannot envision any Certiorari approach working over time for the reasons I cited as well as the mysteries and lack of consistency in Assessors Offices on so called ratios and codes that govern so much of what is paid by whom. Few people have even a basic understsnding of any of this. There is no relief, no equity, no fairness and it is damned expensive to the school district, the city (another point of education from Mr Galletta). the separation of district and city is thus, dysfunctional but no doubt intended as keeping the illusion of separation between the two entities gives plausbile deniabilty to one or the other when citizens howl and complain.
So, why don;t we have enforcement of a municipal code, why aren’t additions to property reported? It requires WILL not a tacit acceptance of Certiorari as arrangement that, although somewhat pricey and very inexpert and expensive is better than the alternative of merging taxing bodies, enforcing the statutes and seeking out and taking to task those who file for property change and improve their holdings accordingly.
Don’t count on any growth in the commercial base; in fact it may be serendipity to expect other than an application of past abatement practices. Don;t count on the growth of a middle class small business cluster midtown. They close as fast as they open, but non-profits grow and prosper and even seek to expand into housing iniiatives. I see no evidence from any planning application that we plan to decentralize any vital city service especially police, to make the streets safer and more open to close in residential foot traffic.
I am not even overly sanguine on the State providing relief via caps on school taxes or circuit breakers on city taxes. School taxes, whether capped or not, will still be regressive. Anthony’s example of the senior citizen with tenants is important — I see it less of a fairness issue between him and McMansion but more of an issue that the small homeowner is likely paying taxes for children who are grown as well as for tenants who are not paying taxes at all and on a user basis, who knows how many children are using the system as is their right and our obligation.
I think the answer must come from a total redirected tax system — whether a flat tax to cover all state and beow exigencies such as city and school budgets, or some graduated tsx base that exemplifies current relations between federal and state reports. I think this is doable and non-regressive at least I hope it is and here, I do have the audacity to hope.
thanks again bloggers for a spirited and well designed set of feelings. It is complicated indeed!
Warren Gross
very useful dialogue on reassessment
I have learned a great deal from the correspondents in this blog piece. While I am still conflicted, it is becoming clearer to me that the issue is more the application of a regressive system of property taxation than it is questions around parity, equity and fairness. Some points simply smack you in the gut; Anthony points out massive breakdowns in the administration of a settled statute, 5th Avenue guy indictates that Certiorari (reassessments) are a “one way street” — properties are devalued, never upscaled and so, it is easy to understand why someone might suggest that the only workable form of reassessment is via Certiorari. However, that will crash at some point with a sonic boom as only those in the know or familiar with how the system works will apply and, as pointed out, it is expensive for the school district, the city and who knows what the cost is to the taxpayer given the legal charges we see nowadays. Martin educates us about the likely disparities we get from neighborhood to neighborhood and Ann Joseph puts a point on the pencil when she labels it as a real dilemma.
Anthony Galletta is correct in implying and stating in part that the system is really broken. And this suggests to me that it needs to be fixed and fixed likely outside of the existing property tax model. the current system; especially with its direct relationship to school taxes and its potential for abuse or inefficiency within the statutes and administration of the assessment process is indeed broken, unreliable and unfair. I cannot envision any Certiorari approach working over time for the reasons I cited as well as the mysteries and lack of consistency in Assessors Offices on so called ratios and codes that govern so much of what is paid by whom. Few people have even a basic understsnding of any of this. There is no relief, no equity, no fairness and it is damned expensive to the school district, the city (another point of education from Mr Galletta). the separation of district and city is thus, dysfunctional but no doubt intended as keeping the illusion of separation between the two entities gives plausbile deniabilty to one or the other when citizens howl and complain.
So, why don;t we have enforcement of a municipal code, why aren’t additions to property reported? It requires WILL not a tacit acceptance of Certiorari as arrangement that, although somewhat pricey and very inexpert and expensive is better than the alternative of merging taxing bodies, enforcing the statutes and seeking out and taking to task those who file for property change and improve their holdings accordingly.
Don’t count on any growth in the commercial base; in fact it may be serendipity to expect other than an application of past abatement practices. Don;t count on the growth of a middle class small business cluster midtown. They close as fast as they open, but non-profits grow and prosper and even seek to expand into housing iniiatives. I see no evidence from any planning application that we plan to decentralize any vital city service especially police, to make the streets safer and more open to close in residential foot traffic.
I am not even overly sanguine on the State providing relief via caps on school taxes or circuit breakers on city taxes. School taxes, whether capped or not, will still be regressive. Anthony’s example of the senior citizen with tenants is important — I see it less of a fairness issue between him and McMansion but more of an issue that the small homeowner is likely paying taxes for children who are grown as well as for tenants who are not paying taxes at all and on a user basis, who knows how many children are using the system as is their right and our obligation.
I think the answer must come from a total redirected tax system — whether a flat tax to cover all state and beow exigencies such as city and school budgets, or some graduated tsx base that exemplifies current relations between federal and state reports. I think this is doable and non-regressive at least I hope it is and here, I do have the audacity to hope.
thanks again bloggers for a spirited and well designed set of feelings. It is complicated indeed!
Warren Gross
The increased taxes for commercial property is important here
Many politicians have commented that the real reason for reassessment is to equalize (or raise) the tax rates for commercial property including condos and coops. This is a complex problem.
Good Assessment
Your analysis is well-thought out. I think at the end of the day, education and courage is what our city leaders need. To continue to operate in the manner that we have for a couple of generations seems inadequate given our times. Let us hope your suggestions and that of Ms. Blanchard are considered. The mayor certainly needs to have the backbone to verbalize it in public instead of continuosly making a neutral, neuter comment.