New York Has Worst System for Property Assessments, State Official Says

New York should set uniform standards for reassessing properties and consider their market value when determining assessments, a property tax official said during a public discussion Thursday.

John Wolham, Regional Director of the New York State Office of Real Property Services, spoke about property tax reform during a League of Women Voters Issues Forum at Rye Free Reading Room.

A group of about 20 people, some of whom are facing declining home values, attended the discussion.

Wolham said New York is one of only three states, including New Jersey and Pennsylvania, that doesn't set statewide standards for how properties are valued.

"New York's system for assessment is arguably one of the worst in the country," he said.

Wolham said a big problem is that many municipalities have not reassessed properties for decades. Westchester County, the highest taxed county in the country with a median property tax of $8, 890, is way behind in maintaining up to date assessments, he said.

About 65 percent of municipalities in the state have done reassessments since 2005, but many are beginning to reassess properties every year. The Town of Rye did its initial reassessment in 2004 and now is reassessing annually, while Rye City has not done a reassessment in more than 35 years, Wolham said. In Westchester, with the inclusion of Rye Town, only Pelham and Bronxville are assessing properties every year.

Wolham said that infrequent reassessments result in some property owners being under taxed while others are overtaxed, even though their property values may be similar.

Another issue is that New York has more assessing units—or municipalities that assess properties—than other states. Typically, there are less than 100 assessing units at the county level per state, Wolham said, but in New York there are more than 1,000, which sometimes results in the same parcel of land being assessed twice.

"Property owners should only pay their fair share, no more or no less, based on property values," Wolham said.

Wolham said municipalities that don't conduct frequent reassessments have seen an increase in property assessment challenges. As real estate prices fall, many areas, including the city and town of Rye have experienced an increase in grievances and certiorari claims.

According to RealtyTrac, the median home value in Rye is about $1.1 million, a 7.5 percent drop from last year. There are currently 29 foreclosures in the city. For the Town of Rye, which includes Rye Brook, Port Chester and the Rye Neck section of Mamaroneck, the median home value is about $403,000, a 12.3 percent drop from last year. The area had 204 foreclosures.

Both municipalities have experienced an increase in grievances and certiorari claims. In the Town of Rye residents filed 800 grievances in 2009 compared to 500 in 2008. The town is currently dealing with 200 certiorari filings, which are court challenges by property owners who claim the town has incorrectly assessed their properties. The City of Rye has experienced a 50 percent increase in assessment challenges, from 198 complaints filed in 2008 to 293 complaints in 2009. Property owners are allowed to file grievances after both the city and town of Rye file their tax rolls in June of every year.

Howard Lim, a Rye Brook resident, said he successfully challenged the Town of Rye's assessment of his home by showing the Assessor's Office a 2002 bank appraisal that valued his home at $590,000, way less than the town's $826,000 assessment in 2004.

"He lobbed tens of hundreds of thousands of dollars off the assessment when I was able to show him a document from a professional appraiser," said Lim, whose assessed value was dropped to $665,000.

But Lim said his experience was likely unique and that getting appraisals weren't a surefire way for owners to lower their assessed value.

"If people got appraisals expressly for the purposes of challenging an assessment, I don't know if they'd be as successful," he said.

A representative from the Assessor's Office said Friday that the Town of Rye used a consultant for its reassessments and held hearings allowing property owners to challenge their assessments if they had evidence—which included bank appraisals and other documentation—that their assessed value should be lowered.

However, these appraisals typically have to be done close to the time of the reassessment to reflect that property values are up-to-date. The Assessor's Office said it couldn't comment on Lim's individual case because it used a consultant to handle the process.

City of Rye Assessor Noreen Whitty, who attended Thursday's forum, said her department has factored in declining market value when conducting individual assessments. Whitty said the Assessor's Office uses a ratio that considers declining market value at a rate of 10 percent across the board.

"Certainly different values and different homes were impacted differently, but it's an average," Whitty said.

The cost of doing a citywide reassessment would be at minimum $1 million, significantly less than the $20,000 in legal expenses the City of Rye pays to handle property assessment challenges, Whitty said.

Council member Peter Jovanovich said it may be a bad time to do a reassessment in the city, considering most people's home values have declined.

"Perhaps this is a historically inappropriate time to do that given that we've just come out of the worst recession in 75 years," Jovanovich said.

Wolham said it would take two to three years for the City of Rye and any other municipality to do a reassessment if they decided to proceed with one now. Municipalities would need that amount of time to collect sales data for properties in the area, he said.

Still, Wolham said, taxing entities in New York should begin regular assessments.

"If you don't have periodic reassessment, some parcels are going to pay too much and some are going to pay too little."