2003-03-29 / Columnists

The Rockaway Irregular by Stuart Mirsky

Tax Time Once Again
The Rockaway Irregular by Stuart Mirsky Tax Time Once Again

It’s that time of the year again, when the City of New York’s Department of Finance notifies us of our annual property tax assessments and gives us the opportunity to respond. This year, of course, the Mayor and City Council have promised to increase our tax rate by 18% (God bless ‘em), to help meet the City’s ongoing budget deficit. So it’s especially important to look carefully at what Finance has sent us. Unfortunately I put my own review off until the last minute (what else is new?) since I hate the effort required to troll through the data to see if they’ve got it right this time or not.

In past years I used to find lots of discrepancies and even managed to get them to lower my assessment a couple of times. But more recently, as they have become computerized, it has ceased to be easy to find the obvious errors (one of the advantages the City gets from automation, I suppose). Moreover, some of the old data I used to rely on, e.g., the records of actual sales, are not readily accessible at the on-line site and no longer seem accessible in the agency’s "bricks and mortar" locations. Well, I suppose we ought to be grateful that the city is becoming more efficient in some areas at least. But shouldn’t we also ask ourselves what this new "efficiency" conceals?

We already know that real estate taxes will be raised this year as per our Mayor and the City Council. But that is only the tip of this iceberg. Since taxes are calculated based on the value of one’s home, the Finance Department can also increase the City’s take by marking up real estate values . . . a double whammy. In my own case I note that they have assumed my property’s market value has gone up by 79% since 1999! That came as a shock to me since it also represents a 22% increase from last year’s estimated market value alone. I find it hard to believe real estate values have increased by this level in the present punk economy.

Since I happen to live on a block where there are about 16 other houses with roughly the same size and configuration as mine, I took a look at how these other properties fared, to see if my increase was an anomaly. (You can check this out yourself by going to the Department of Finances’ website and reviewing the "Assessment Roll" by searching your house’s block and lot number.)  To my surprise some of these other homeowners have done a heck of a lot worse than I have, in terms of the taxable mark-up being estimated for them by Finance. The average percentage increase since 1999 for all these homes (including mine) was 84%, with seven showing an increase above 90% and one of these at 100%! In essence, Finance is estimating that our houses roughly doubled in value over the last five years since 1999. As noted, I find this hard to swallow in light of current economic conditions.

But it gets worse. We are not actually taxed on the market value of our homes, of course, but on something called "assessed value." Finance calculates this, based on the estimated market value already referenced. This "assessed value" is the true tax base, the one they actually use in calculating what we owe. Of course, the higher the market value, the higher they can place your assessed value! So it pays for them to mark up our homes’ market values on paper, doesn’t it?

Now to those "assessed values." State law limits assessment increases for properties with ten or fewer units to no more than 6% in one year or 20% over five. Among the seventeen homes of comparable size and type on my block, I was able to find data re: assessment values going back to 1999 for sixteen. The average five-year increase for these actually turned out to be 23.1%, reflecting two homes which saw increases of over 50% and three with increases in excess of 20%, the legal cut-off. As it happens, my own home fell into the over 20% grouping by a factor of 0.6%.

So. Finance appears to be out of compliance with the law in many of these estimates and should roll them back to the legal maximum. But do they do this if the homeowner doesn’t call it to their attention? I suspect they have no mechanism for such routine auditing, especially when the results will not work in their favor. So the onus is on each homeowner to make his or her own case. But why is it important to roll these levels back, even if the excess amount is marginal (as in my situation)? Because future tax increases get factored onto the existing base. While Finance can, in principle, reduce our taxes by reducing assessments and market value estimates, what are the chances they will actually take the initiative to do this? Their job is to pull in revenue for the City so their bias is to build up the taxable base as much as they can. And, because of the limitation on how much they can increase our assessed values each year, it pays for them to get our numbers up as often as they can since a higher base yields even higher increases in the future!

Homeowners have the ability to appeal to either Finance or the City Tax Commission for review of the assessments. But this is no longer as easy as it was in past years when recent property sales data was more accessible (since you need that kind of information to make a serious case). And the window of opportunity closes for this by mid-March. Given how much research is often involved, it is not always easy to find the time to contest Finance’s claims.

In past years, I’ve noted substantial divergences between actual selling prices for homes comparable to mine and the estimated market values presented by Finance. And I’ve found
Finance carrying inaccurate data about my home which, when called to their attention, prompted a reassessment and lowering of my taxes for that year.

But, like Sisyphus pushing the rock up the hill in the old Greek myth, I feel as though I am in a losing battle. Every year they come back at me with increases that wipe out prior years’ gains. They seem to have a never-ending incentive to kick up my home’s value in good economies and bad. You’d think they got a percentage of the take!

Now we are all pleased when we hear that our equity in our homes has increased. But what good is an increase you can’t really capture in the marketplace but which you have to pay up on year after year? I certainly wouldn’t complain if I thought I could get what they are estimating my house is worth in an actual sale. But since it seems unlikely, it irks me to have to pay taxes based on such inflated numbers! Now no one should object to paying his or her taxes since without these we’d have no government (now there’s an idea)! But that same government should not be in the business of overcharging us, year after year, whether it is encountering fiscal difficulties or not.

Instead of continually raising our taxes, by law and by subterfuge, the City should be finding ways to live within its means . . . and ours. Government efficiency is a good thing and I am the first to support it. But efficiency has to work both ways. The City needs to become as efficient in spending our money as it is in grabbing it.

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