croton blog for croton-on-hudson new york


Steep Slope [Part 4]: Village Taxes 2008-2009

June 2, 2008

real deal by a.w. leo wiegman

Steep economic slopes lie ahead for Croton and all our surrounding municipalities. A stagnating real estate market combining with across-the-board inflation is bad news, unless we act.

When real estate demand slows down, property values often soften. When property values weaken, property owners often file grievances to seek lower tax assessments. A successful reduction of an assessment results in a lower property tax bill for the applicant, but not for all the other owners!

Any tax relief granted to one owner is spread across all the remaining owners who have to pick up the difference in the next tax year. What is happening here? What can we do about it?


The Big Jump in Tax Relief Cases

Tax relief cases are becoming more common and more sizable since the real estate market softened. The trend in Westchester County is stark: the latest figures show a 34% increase in average number of new tax certiorari cases initiated in 2006 and 2007 over the average of the prior six years. [endnote 1]

Not all tax grievance applicants will be successful. Presenting a well-researched case with ample comparables and recent market value data will help an appeal for lowering an assessment.

Is your assessment fair? If you disagree with your assessment, the state’s helpful “How to File” document advises the following.

To establish the value of your property, the following information may be useful:

  1. Purchase price of the property, if recent;
  2. Offering price of your property, if recently offered for sale;
  3. Professional appraisal of your property;
  4. Cost of construction, if recently built;
  5. Rental information, if property is rented;
  6. Income and expense information, if property is commercial or industrial; or
  7. Purchase price of comparable property recently sold.

Croton’s homeowners may seek reductions by documenting their case for presentation to the Tax Grievance Board, which meets once each year in late February. In Croton, the Village Trustees serve as the Tax Grievance Board and carefully review each case under the guidance of the Village’s assessment officer, who does an excellent job.

Significant commercial properties in the village may also seek tax reductions by appealing for lowered assessments. Indeed, as the Hudson National Golf Course case showed a few years ago, a single commercial property re-assessment can be quite costly for the village, town, and school district. In that case, the courts determined that the village owed Hudson National a c. $600,000 settlement for “over-assessment.” Ouch!

Some tax relief activity is common in any year. If significant numbers of property owners win lowered assessments, the net effect erodes the overall property tax base. In other words, the rest of us are left paying the difference, until we too decide to seek relief. So how can we help bolster the tax base and minimize the risks for inviting relief claims? [endnote 2]

Option 1: Develop Better Property Value
To withstand the boom and bust cycles of real estate, we should foster reinvestment in the non-residential properties. Rising homeowner equity in the past decade has led to our residential renovations far outstripping the renovation and upgrading of commercial property in the village.

If these non-residential properties are redeveloped to higher uses (expanded buildings with more square footage or new, better buildings of same size), the properties will continue to gain in value and rental income for the property owners. More value for property owners means more taxable assets for the municipality. Revitalizing our commercial districts has been a hot topic of late in Croton.

In a time of rising petroleum costs, a commuter hub such as Croton is in a terrific position for attracting redevelopment with its excellent train, bus, and highway connections. To quote a recent Journal News article, “Continued high prices may get residents to think more about where they live, choosing an apartment or smaller place near a train station rather than a home amid sprawl where they must drive to work, to school and even to pick up a loaf of bread, said Tom Wyrick, an economics professor at Missouri State University. In Westchester, development shifted to urban downtowns years ago, and Metro-North Railroad is encouraging more building around its stations with its “transit-oriented development” objective.” [endnote 3]

Right now is a good time to work toward higher, better uses in our commercial zones. Does anyone disagree that we need to stimulate higher use development of existing properties? And that doing so will yield higher property values that strengthen our tax base?

Option 2: Consolidate Tax Assessor Services
Another potential area to examine is whether the village is better off with its own tax roll (as currently the case) or with a tax roll consolidated with the town. Each property in the village has two tax assessments. Village staff prepared one property card in village hall. Town staff prepared a different one in town hall.

A recent report on local government efficiency had the following to say about local tax assessment:

“New York’s assessing arrangement is among the most fragmented in the nation. New York currently has 1,128 individual assessing units, 981 city and town assessing units, two county assessing units, and 145 villages which assess property for village tax purposes (a duplicative function in that the towns in which these villages are located assess the same parcels).” [endnote 4]

If the Town of Cortlandt and Village of Croton shared property tax assessment services and unified the tax rolls, each parcel of land in the village would have one-not two-local assessments.

In the vast majority of cases, the separate assessments that the town and village reach are quite close in dollar value. But when the resulting valuations conflict, these differences can be significant. Those inadvertent gaps are an open invitation for property owners to seek a reduction from whichever local government gave them the higher valuation.

There is ample precedent for consolidation. For example, our school districts already use town assessments in levying school taxes. And ten of the twenty villages in Westchester have given up their separate tax rolls to use a town or county assessment roll: Ardsley (1991); Briarcliff Manor (2000); Harrison (village and town are coterminous); Hastings-on-Hudson (1990); Ossining (1989); Pelham (1992); Pelham Manor (1998); Port Chester (2004); Rye Brook (2004); Scarsdale (village and town are coterminous). Tellingly, no village has reversed that consolidation. [endnote 5]

One immediate benefit of unifying tax assessments may be reducing the risk of “close the gap” grievance cases. Of course, doing so should not sacrifice the excellent, personalized local service that village residents experience with the Village Engineer’s Office, which is often singled out as exemplary.

Another benefit may lie in reducing operating costs for duplicating staff time on assessments. Such savings in staff time would have to be examined carefully and weighed against any drawbacks of centralizing the assessment. (The Village would have to compensate the Town for time spent on producing the village’s copy of the annual rolls.)

A third benefit may be that village staff currently involved in assessment and grievance may well be freed up to do work that is not duplicated by town personnel.

There may be good reasons to stay with the current, double village-and-town assessment system. But how will we know, unless we look more carefully at the alternatives?

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Endnote 1: We may seek property tax reductions two ways: administrative review via the grievance process conducted locally, and judicial review via a Supreme Court trial (tax certiorari) or Small Claims Assessment Review. In order to pursue judicial review, a taxpayer must first go through administrative review. Only those property owners who sought judicial review in the Supreme Court after a prior, unfavorable grievance result in the administrative or small claims process show up in this chart. The actual number of property owners who seek local administrative relief is much higher than listed in the chart.

Endnote 2: Keep in mind that many of the biggest relief cases take five years or more to be settled in the court process. Even if the number of tax cert cases becomes smaller next year, the bump from 2006-2007 will show relief that will have to be paid for by all the rest of us in 2011-2012.

Endnote 3: (Source Journal News, May 27, 2008, www.lohud.com/apps/pbcs.dll/article?AID=/200805270230/NEWS01/805270349)

Endnote 4: Source: 21st Century Local Government, Report of the New York State Commission on Local Government Efficiency & Competitiveness, April 2008, www.nyslocalgov.org (accessed 05-02-2008).

Endnote 5: Source: www.orps.state.ny.us/legal/localop/village.htm (accessed 05-24-2008).

Leo Wiegman

Editor’s Note: The author is a former Village of Croton-on-Hudson Trustee who served three terms from 2001 to 2007.

On June 3, 2008 10:55 AM, Leo Wiegman said:

Mortgage Tax Revenue also Likely to Decline Croton, like all municipalities, gets a share of the mortgage transfer tax when a property is sold. This revenue puttered along modestly until the recent real estate boom. However, once the final numbers are in for 2007-2008, the mortgage tax revenue will likely fall below its level of recent years. The village traditionally projects thisrevenue in quite conservative terms and always as lower than it turned out to be. In four out of the last five years, mortgage tax revenue averaged $220,000 more than budgeted. That extra cash helped build up the village’s general fund balance, even during steep over-runs for litigation costs and the like. But the mortgage tax “bonus” may disappear for the time being, until the real estate market stabilizes in both volume and price.

Revenue to Village (FY) Actual Mortgage Tax Collected 1998-1999 $80,912 1999-2000 $73,954 2000-2001 $131,753 2001-2002 $108,179 2002-2003 $235,508 2003-2004 $75,000 2004-2005 $402,788 2005-2006 $284,743 2006-2007 $296,608

Source: Village Budgets 2000-2001 to 2007-2008



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