Nassau County Executive Edward P. Mangano signed two executive orders on Wednesday, April 7, aimed at reducing $250 million in wasted spending due to assessment errors and refunds.
Taking the first steps in fulfilling a campaign promise to fix the County's broken property tax assessment system, the two executive orders Mr. Mangano signed require commercial property owners to file a certified appraisal by October 1 in order to challenge their assessment, and all property owners will be assessed every four years instead of annually.
In the case of the commercial property owners, the requirement to file a certified appraisal - which is required during the litigation phase anyway - expedites the process and discourages frivolous challenges, so that the County is not stuck with paying excessive refunds for the County's portion as well as all the other taxing jurisdictions. If the County corrects the assessment before the April 1 final roll, it is not liable for refunds. Commercial property owners will be fined $5,000 for failing to file by the October 1 deadline.
In the case of residential property owners, moving to a four-year cycle stabilizes the system, frees up the Assessment office to get the assessments right. Significantly, if homeowners see their assessment as fair, they are less likely to challenge.
Raising or lowering the assessed value does not in itself raise or lower property taxes, since the assessment is really the property owner's share of a total tax pie. If all the property owners in a district see an increase of 20 percent in their assessed value and the taxing jurisdiction does not raise taxes, their tax will not change.
Still, the actions the County Executive is taking are intended at reducing the 100,000 tax grievances filed each year, as well as over $100 million in refunds annually due to errors in the system. the debt service on the County's $1.3 billion of debt accumulated to settle prior tax certiorari cases costs taxpayers another $150 million each year, for a combined annual cost of $250 million.
"Nassau County taxpayers are in a state of emergency," Mr. Mangano said at a press conference to announce the changes and sign the executive orders. "That's exactly why today I am ordering a major change in the way our county assesses property."
While an annual reassessment to fair-market value is considered an "ideal" situation, in Nassau County's case it is simply impractical.
"History has shown, that Nassau County is unable to properly assess on annual basis… The cost is $250 million a year on a $2.6 billion budget - last year, the amount exceeded 10 percent of budget… More disturbingly, it is creating insurmountable debt… Nearly half of Nassau County's indebtedness (over $1 billion) is simply to repay interest and interest on errors.
"It just becomes clear that in Nassau County – with 418,000 parcels of property - an annual accurate reassessment is unachievable," Mr. Mangano said.
In fact, he said, two thirds of the assessing jurisdictions in New York State - 685 of 983 - use a cyclical system.
Peter Schmitt, Presiding Officer of the County Legislature, went further to comment that the annual assessment process "has been bankrupting" the County. "The price of continuing over next 10 years will be bankruptcy."
“This marks the end of the billion dollar experiment," Mr. Schmitt said. "Annual re-assessment has been a dismal failure.”
He said that the county will continue to "tinker with the system and fix it, and create taxpayer certainty, and we begin to right-size this county."
The actions taken by the County Executive still must be codified by the Nassau County Legislature as well as the New York State Legislature, which must issue a "home rule" message to authorize the change, but Mr. Mangano has given immediate instructions to the County Assessor, Ted Jankowski, to cease preparing a 2012 roll (which would have been due Jan. 1), and focus instead on correcting errors in the 2011 roll.
While the actions do not directly impact property taxes, reducing the County's cost ultimately is paid for from property taxes>
"That $100 million is paid back by every tax payer," Mr. Mangano said. "It is reflected in budget and indebtedness... This will save dollars, at its simplest form, it saves at least 80 percent on dollar, because Nassau County refunds all the other tax jurisdictions when an error is refunded. It will help the fiscal condition of Nassau County significantly."
By shifting to a four-year assessment cycle from an annual reassessment, he said, the Assessor's office can direct its effort to getting the assessments correct in that year, avoiding the refund, avoiding the 80% extra, and avoiding the interest associated with the lengthy time it takes to settle cases.
Mr. Mangano said that annual changes will still be made to reflect expansions, improvements, permits, and property owners will still have the ability to grieve their assessment each year.
The new rules will go into effect for the 2011 tax year and the next reassessment would take place in 2015.
Mr. Mangano said that these changes - addressing the errors that result in wasted expenditure - offer "a light at the end of the tunnel" but are just the beginning of changes to the assessment system.
Recommendations from the Assessment Reform Team that Mr. Mangano established are due in June.
He said that the County is now looking to identify all the outstanding claims in litigation, in cyberspace. "There is presently no one place where you can hit a button and get an accurate total on outstanding liabilities.
Under the new rules, a commercial property owner would have to submit a certified appraisal in order to file a grievance; the penalty for failing to provide the appraisal is $5,000 fine.
"This will discourage frivolous filings," Pat Foy, the Deputy County Executive commented to the Great Neck News, "but the other effect is to put the county in the position of correcting commercial assessments in a timely way, and limit the county's liability."
Mr. Mangano said, "Property owners will have to produce the appraisal anyway, we are just speeding that up. But many said the mere fact they have to pay more taxes and wait five years for justice, hurts their competitiveness with Suffolk County borders. They are paying a higher square footage to rent space than they need to be. This is an uncompetitive situation with those in close borders. This will help commercial property owners – providing certainty, predictability in the rates they charge."
Commercial real estate is also the lion's share of the tax refunds shelled out each year. “Businesses collected $110 million of the $136 million paid out in refunds and accumulated interest last year," Mr. Mangano said. By signing this Order, we begin to stop the tens of millions in tax dollar waste while providing businesses an opportunity to correct their taxes before they are forced to overpay."
“The cost of perfection has resulted in near bankruptcy for Nassau taxpayers," Mr. Mangano said. "At a time when families are doing all they can to make ends meet, government must do all it can to reduce spending. For this reason, Nassau County will join the majority of other municipalities statewide in reassessing on a cyclical basis and begin to reduce the $250 million in annual tax dollar waste.”
Karen Rubin, Long Island Populist Examiner
Comments
Dissect this problem: 1.) People use the right to appeal this taxation; 2.) About 75% of them succeed in showing their assessment was too high; 3.) They get back money they OVERPAID to the towns, school districts and county...why?...because the assessors placed TOO HIGH a value on their buildings and land...why did assessors do that? Either a.) they are incompetent; 2.) they don't have the resources to determine correct values; or 3.) they are pressured by their bosses to unethically, immorally and illegally do it so the assessment role is too high and the tax rates seem low. My bet? It's number 3. Simple as that.
But...appraising properties is a VERY inexact art (not a science) full of opinion, not all facts. So, throughout the US (and most of the world) we all use a 5,000 year old local-tax system that is imperfect yet the fairest of them all. To help solve this, have assessors assess the properties CORRECTLY...w/o outside influence!
Two other thoughts:
1.) Do the towns also have to submit an appraisal to show definitively how they came up with their value? Or do they just get to say "This is the value...we're not going to show you in any detail how we came up with it"?
2.) I agree with the four-year cycle for reassessments (a/k/a town wide revaluations)...almost all over states in the US use a "once every 3, four, or five year" program. Currently NY "rule" doesn't mandate revals anytime. This benefits only one class of homeowners: the rich owners of the older $1,000,000+ homes. All assessors will readily admit this (though most won't say it in public for fear of upsetting their bosses and the "power elite" in town).
3.) The people who benefit most from the inequities of our system are the Town/City/Village Attorneys, especially those who are paid hourly. The kah-ching of money rolling into their firms from a 1-5 year, deliberately-dragged-out, property tax appeal is deafening. Another dark secret of towns
"Annual reassessment was a dismal failure"
Every time another Director of ORPS comes along, policies change, the focus shifts, and the Taxpayer pays.
When I am appointed Executive Director (the Legislature will soon end Mr. DeWitts drive to abolish the State Board) The only change in focus will be to free all NY'rs of the burden of the property tax.
I find very few Taxpayers understand the implications of the State agency changing its name from 'Equalization & Assessment' to 'Office of Real Property Services' Soon the agency will get back to the limited scope it was intended for and all the other tasks we have taken on will be eliminated. The belt tightening starts here. We will lead by example.
Only thing keeping me here is the schooling for my children. Everyone knows these pieces of dog crap get overpaid to do nothing.
Nassau’s leadership from both parties knows exactly what needs to be done but they are not willing to go there. Small businesses and homeowners are nothing large/valuable commercial properties owners receive most of the refunds. NYC and other NYS assessment offices deny challenges that do not disclose financial information annually, why doesn’t Nassau do the same? The more valuable the property the less they have to loose by illegally withholding their income. Actually the more they have to gain because their lawyers go to court and are rewarded huge settlements. Just another tax cut for the rich after all there the ones creating all the jobs….if you live in China.
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