Are Property Tax Grievances Pillaging the Village?

Grievance deadlines have come and gone, and this year Scarsdale is facing a mind-bending pile of applications from homeowners who wish to lower their property taxes – 756. 

That's a 484-percent jump from the number of grievances filed in 2005, just five years ago, and a 333-percent hike from 2008, the year Lehman collapsed and the onslaught of Wall Street job losses began.

In past years, appeals of the Village's property tax bills were in the lower hundreds, at most just passing the 200 mark.

But the first spring after the collapse of the financial markets, which left so many of Scarsdale's residents and homeowners more hard-up than anyone could have imagined, the Village spiked with 551 applications for tax reassessments, a record, back then.

Now we are in 2010, and the earliest count by Village Assessor Nanette Albanese puts the official number at 756 applications turned in between June 1 and 15, when the offices were open for grievance submissions.   

Tonight, Village Hall's finance committee will again ponder the question of whether to pursue a Village-wide property revaluation, as neighboring communities such as Bronxville have done. 

The purpose of a revaluation would be to create a new set of "base assessments" for property values, which are currently determined for tax collection purposes by using a complicated methodology that starts with a home price figure that was determined from a 1969 revaluation. Because values weren't updated regularly and kept current, the county comes up with an "equalization rate" for each community, and the assessor's office is able to determine taxation based on the figure derived from that.

"Our equalization rate was 1.76% in 2009 - so we are assessing all propeties at 1.76% of original fair market value," explained Nanette Albanese, Village Assessor. But not all equalization rates are made, well, equal. A lot of it has to do with when that (admittedly archaic) base assessment was made.

"Each municipality started at different times for differing reasons," notes Albanese, talking about village-wide revaluations that have been done locally. "It's a costly process, and it's controversial, but it's better than the existing assessment system." 

Since property tax revenues account for 74 percent of the Village's income, it's of great interest to the Village trustees that the municipality recapture some of these disappearing assets.

A countywide committee, made up of town and village managers in Westchester, had been urging the county government to pay for at least some the efforts of such a revaluation, but at a recent Scarsdale Forum meeting, County Executive Rob Astorino made it abundantly clear that the county could not participate in such a cause. "We just don't have the money," he said.

Bronxville did their own recent revaluation in 2007 but prior to that, had been relying on base values from 1968. 

"Ultimately we're going to have to weigh the cost of doing it versus not doing it," said Mayor Carolyn Stevens, following an April 27 Finance committee meeting.

"Aside from the equity issue, we have to look at the tangible issue. We're trying to figure out now, what things should we look at to make that determination?" 

Among those costs that might be incurred? Hiring someone permanently for the assessor's office to deal with the influx of new grievances. Last year, the Village spent $55,000 just in the administrative costs of dealing with the reassessment grievances.

But Stevens says there's always a fear by residents that a revaluation will only impact them, personally, in a negative way. Compared to the current system, it would at least be something experienced by people across the board, and could potentially lower the overall tax burden. (A tax burden now so heavy that it clearly characterizes the town in real-estate listings.) 

Currently, "If one person's tax rate goes down, everybody else's in the Village goes up. If my assessment drops down by $1,000, that $1,000 still has to be paid," she pointed out.

"What winds up is everyone elses tax rate goes up; that's what folks need to understand, and that's a difficult concept to accept," she said.

Village Manager Al Gatta says he doesn't think it even occurs to those who file grievance applications what even the short-term impact – short term being the Village's next fiscal year – of a grievance is.

"I don't think that's in the lexicon of thoughts at all. 'Our assessed value went down,' that's correct, but I really don't think many people get up in the morning and think about how taxes are going to go up if people who appeal their taxes prevail.  I don't  think that's one of the thoughts they have at all."

He suggested that some people apply for the obvious reason: their property is not correctly assessed for today's market, but that most apply because, in the face of neighbors' grievances and a nonstop deluge of advertising from reassessment specialists, they don't see the harm in trying.

"Many of them apply because their tax representatives present it as something that will get their taxes lower, and save them a few hundred dollars. That's sometimes very difficult for people to object to," he said.

Roughly 95 percent of the grievances in Scarsdale are filed by tax representatives, he says. One representation firm alone was responsible for filing 15 percent – 120 grievances – of the applications against the Village this past year.

Asked about the nature of these new firms, or if people hire their own accountants to do this, he commented it was seldom accountants, rather it seemed to emerge from a whole new cottage industry.

"This has become boutiquey in the last four or five years," he noted. "I get them at my home in White Plains, I get fliers all the time and phone calls." 

Anyone in town can attest to the pile of fliers and postcards that mount in the letterbox with promises of lowering their property taxes, but a even these representatives say there's an obvious trend of disgruntled homeowners out there, and those numbers of grievances may not just disappear after revaluation occurs, or jobs and incomes pick up.

Anthony Sarro, of Priority Appraisal Services, says that a Bronxville-style revaluation may simply result in a bevy of new grievances by people whose tax burden may have increased in the wake of a full revaluation.

As a personal practice, he pretty much only takes cases he's quite sure will be successful at a grievance application. (For the record, he also says he doesn't spend much money on advertising, so don't blame him for those fliers!)

"Not everyone is overassessed, but if I take a case, 99 percent of the time I am successful because I have the appraisal background and I can pre-screen my clients," he says.

"Over the last few years the volume for my business has definitely increased. The values aren't the same, but the taxes are," he said.

Scarsdale isn't alone in being flooded with grievances; it's everywhere in Westchester. 

"Everyone's overwhelmed from what I can see, it's been a record year at the assessment offices," he said. But bad economy and fluttering home sales aside, he said a revaluation may just create more initial reason for homeowners to complain. 

"Hypothetically - if they reassessed all of the Village of Scarsdale there will be people who are going to fight that reassessment, and if the market goes up or down in a  few years, people are going to fight that one in a few years.

"I really don't know what the wisest decision would be," he said, but added, "it could be a waste of time and money."

Tonight the Board of Trustees will hear from John Wolham, Regional Director of the New York State Office of Real Property Services at Village Hall.

[Original publish date: June 22, 2010 5:30 p.m.]