In recent months the Town Assessor, Edye McCarthy, Town Board members and I have met with school, village officials and civic leaders –asking for their input: should the town undertake a reassessment. We had a Town Board discussion with the public and state officials last night. The town (including school district, fire districts) loses about $10 million a year in certiorari refunds---revenue losses to the town. The town, alone, will see our revenues decline by about $5 million this coming year—due to certiorari refunds.
I have asked two highly respected members of the community to provide the Town Board with recommendations: the next steps we should take. This is their letter/suggestions. What do you think?
January 26, 2011
Supervisor and Members of the Town Board
Town of Greenburgh
177 Hillside Avenue
Greenburgh, New York 10607
Re: Town-wide revaluation and reassessment
Ladies and Gentlemen:
As most of you know, the Supervisor has asked the undersigned, Peter Derby and Tom Rothman, to assist the Town in evaluating whether a Town-wide revaluation and reassessment will prudently and fairly address both the burdensome and costly issue of property assessment valuation challenges and their tax refunds and the perceived inequity of the current system of property assessment/taxation in the Town and whether a Town-wide revaluation and reassessment is the most equitable and cost effective method of addressing these issues.
For those of you who we have not had the pleasure of personally meeting, a brief introduction is in order. We are both long-time residents and homeowners in the Town. Peter Derby has served as an internal bank auditor, a bank corporate finance director, is a founder of Troika Dialog, the first investment bank in Russia, CFO and CEO of DialogBank, the first private bank based in Russia to receive an international banking license, was Managing Executive for Operations and Management of the U.S. Securities and Exchange Commission and was a Trustee in Irvington. Tom Rothman is an attorney, has served as a senior counsel for local finance and real property taxation matters to State Comptroller Arthur Levitt, was senior partner for public finance with Willkie Farr and Gallagher LLP, and was a long time member of the Board of Governors of the New York chapter of the Government Finance Officers Association.
We have met with the Supervisor, Town Assessor and others, have reviewed reports and draft legislation prepared by or on behalf of various towns in the County, as well as by those acting on behalf of the County, and have concluded that without the benefit of certain specific information being obtained prior to a determination to undertake a Town-wide revaluation and reassessment any request for proposals to undertake a Town-wide revaluation under the prescriptions of existing law may be counter productive and may not be the most prudent, equitable and cost effective method of addressing these issues.
It appears axiomatic that the passage of in excess of a half-century since the last comprehensive revaluation and reassessment in the Town has created an assessment/taxation system containing certain inequities. It also appears axiomatic that State mandates requiring that residential real property units held in non-condominium ownership be assessed at fair market value whereas residential real property held in condominium ownership must be assessed at a “restricted value”, or a value significantly below fair market value, and the State prohibition on reassessing residential real property following resale or change of ownership results in certain inequities. Before undertaking an initial expense of a Town-wide revaluation, an expense believed to be considerable, as well as the continuing expense of periodic revaluation to assure that the Town does not find itself in the same expensive litigation/tax refund predicament it currently faces again (i.e. see Nassau County) it would be helpful, if not mandatory, to know the likely effect on Town taxpayers of a Town-wide revaluation and whether a “better fix” to these issues may be crafted. Finally, it also appears axiomatic that many purchasers of residential real property have relied upon the Town’s current system and existing assessments in making their decision whether to purchase a home in the Town, and whether that home is affordable. Accordingly, the Town needs to be prudent, fair and equitable in enacting any changes to the existing system of assessment so as not to reap unfortunate and unintended deleterious consequences upon a segment of our community while at the same time attempting to remove other existing inequities that are also hurting a segment of our community.
To this end, we recommend a modest expenditure to retain a suitable professional to determine, among other items as may be added by your body, by utilizing an appropriate and professional scientific sampling methodology, the following:
1. The likely affect on all classes of residential real property taxation in different neighborhoods throughout the Town of a Town-wide revaluation as prescribed under current law.
2. The likely affect on residential real property taxation throughout the Town held in condominium ownership if real property held in condominium ownership were assessed on the same basis as real property held in non-condominium ownership; and the likely effect on real property throughout the Town held in non-condominium ownership if the law were changed to provide that all residential real property were valued, assessed and taxed on the same basis.
3. The likely effect on residential real property taxation throughout the Town if the Town did not undertake a Town-wide revaluation, but residential real properties held in all types of ownership were reassessed after a sale or change in ownership to reflect a sale price of an arms length sale, with non-arms length sales or change in ownership being revalued and reassessed as if they had been on an arms length basis, and all residential properties not sold within any recurring five year period, revalued and reassessed every five years.
4. The likely cost of an initial Town-wide revaluation.
5. The likely cost of a continuing periodic Town-wide revaluation.
6. Based upon the experience and/or knowledge of the expert, and given the recent high, if not unprecedented, number of settled claims and challenges, whether it can be anticipated that assessment valuation challenges and tax refunds will significantly diminish if no action is taken.
7. Based upon the experience and/or knowledge of the expert, recommendations concerning these issues and measures likely to reduce any hardships reasonably foreseeable by a Town-wide revaluation and reassessment, including hardships on those economically at the lowest levels in the Town, on retired senior citizens and on those on pension or fixed income.
8. Based upon the experience and/or knowledge of the expert, will a Town-wide revaluation and reassessment predominantly affect the expensive older homes and the expensive newer homes or will such similarly affecting the middle and lower priced homes as well?
9. Based upon the experience and/or knowledge of the expert, would it be efficient to restructure the property categories into four categories, residential, commercial, condominium/cooperative and utilities?
To eliminate the possible perception of the chosen expert having an economic interest in a determination to undertake a Town-wide revaluation, the Town may consider stipulating that the expert chosen will (may at the Board’s discretion?) be ineligible to undertake any subsequent Town-wide revaluation.
Peter Derby Tom Rothman