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HomeMy WebLinkAbout2001_08_08 Town Board Minutes MINUTES OF THE REGULAR MEETING OF THE TOWN BOARD OF THE TOWN OF MAMARONECK AND THE BOARD OF FIRE COMMISSIONERS HELD ON AUGUST 8, 2001 AT 8:15 PM IN THE COURT ROOM OF THE TOWN CENTER, 740 W. BOSTON POST ROAD, MAMARONECK, NEW YORK PRESENT: Supervisor Valerie M. O'Keeffe Councilwoman Phyllis Wittner Councilwoman Judith A. Myers Councilman Ernest C. Odierna Councilwoman Nancy Seligson ALSO PRESENT: Patricia A. DiCioccio, Town Clerk Stephen V. Altieri, Town Administrator William Maker, Town Attorney Carol A. Acocella, Deputy Town Clerk CALL TO ORDER The regular meeting of the Town Board was called to order by Supervisor O'Keeffe at 8:20 PM, who then pointed out the location of exits. PRESENTATION - Property Revaluation Committee Report Supervisor O'Keeffe introduced George Roniger and members of the Reval Committee who worked with George for over a year. The members introduced were Irving Scharf, Barry Weprin, Richard Mumma, Richard Seltzer, Roger Hotte and Tom Christensen. She stated that they have given of themselves tirelessly. James Fleming and Steve Altieri were also on the Committee. Mr. Roniger said all members of the Committee were in agreement with the report which he was presenting. He outlined the report, then requested several members to explain portions of the report. Supervisor O'Keeffe explained the reasoning behind doing a revaluation was to adjust inequities in assessment which have occurred over the years, newer homes are higher vs. older homes. Board members thanked the Revaluation Committee for their report. (copy of the report at end of minutes) Supervisor O'Keeffe called for a five minute recess. BOARD OF FIRE COMMISSIONERS The meeting was called to order by Commissioner O'Keeffe at 9:20 PM. Present were the following members of the Commission: Commissioner: Valerie M. O'Keeffe Commissioner: Phyllis Wittner Commissioner: Judith A. Myers Commissioner: Ernest C. Odierna Commissioner: Nancy Seligson August 8, 2001 1. Fire Claims: Commissioner Wittner presented fire claims for authorization of payment , thereafter on Commissioner Wittner's motion, seconded by Commissioner Seligson, it was RESOLVED, that this Commission hereby authorizes payment of the following Fire Department claims as approved by the Fire Chief and audited by the Comptroller's Office: AAA Emergency $ 435.00 Atlantic Westchester 180.00 Atlantic Westchester 413.92 AT & T Long Distance 89.19 Brewer Hardware 50.91 Cleaning Systems 294.00 Excelsior Garage & Machine Works, Inc. 923.88 Ikon 7.43 IOS Capital 177.69 J & J Barish 150.96 Metrocom 1,125.00 Metrocom 400.00 Motorola 39.60 Nextel 191.44 Poland Spring 84.29 R & L Computer Consulting 64.63 R & L Consulting 500.00 Saxony Equipment 85.00 Sound Shore Contracting 125.00 State Line Fire 168.19 T.C.D. 142.60 Technical Electronics Inc. 85.00 Technical Electronics Inc. 78.50 Technical Electronics Inc. 60.00 Town of Mam'k Professional Fire Fighters 282.96 Tri City Auto Parts 183.00 United Water New Rochelle 204.08 Verizon 412.55 Westchester Joint Water Works 100.00 TOTAL $ 7,054.88 2. FIRE REPORT FOR THE MONTH OF JULY 2001 Commissioner Wittner read the following report submitted by Michael J. Acocella, Fire Chief, which outlines responses to calls made during the month of July. It summarizes the nature and origin of calls, the number of personal responding and the total times spent at fire calls. NATURE OF CALLS: GENERAL 18 MINOR 15 STILLS 01 OUT OF TOWN 00 MONTHLY DRILL 01 EMS 25 TOTAL 60 TOTAL NUMBER OF MEN RESPONDING: 440 TOTAL HOURS RESPONDING: 13 HOURS AND 54 MINUTES 2 August 8, 2001 There being no further business to come before the Commission, on motion of Commissioner Wittner , seconded by Commissioner Seligson , the Commission unanimously adjourned at 9:30 PM. AFFAIRS OF THE TOWN 1. Authorization - Settlement of Certiorari This matter was held over, no action was taken. 2. Appointment - Town Assessor The Town Administrator said under State Law Section 310 of the Real Property Tax Law, it establishes the term of office of 6 years for Town Assessors in the State of New York. The next term begins for our Town Assessor on October 1, 2001, ending September 30, 2007. He added that Susan Bickerstaff was first appointed Town Assessor in the fall of 1998 and since has worked to change both the character and effectiveness of the Assessor's office. As a full time Assessor, Susan has been more available to the residents of the community to discuss issues of property assessment. In addition, she has assumed full responsibility for all small claims property tax appeals and worked in conjunction with our consultant on certiorari matters. Councilman Odierna asked if the Village of Larchmont contributes to her salary. Mr. Altieri replied not directly but through taxes. Councilwoman Myers asked if Village residents also come in to talk to the Assessor. Mr. Altieri said that they did. Councilwoman Wittner added she thought the Assessor and her office were doing a great job. On motion of Councilman Odierna, seconded by Councilwoman Myers, it was RESOLVED, that the Town Board does hereby appoint Susan Bickerstaff, Town Assessor , to serve a term of office effective October 2, 2001 and terminating on September 30, 2007. The above resolution was put to a roll call vote: Seligson - Aye Odierna - Aye Myers - Aye Wittner - Aye O'Keeffe - Aye 3. Set Public Hearing - Public Housing Agency Administrative Plan Mr. Altieri explained Kathy Kopa, Director of Community Services, had requested this matter be put on the agenda to set for public hearing since HUD requires one be held prior to submission of our Annual Agency Plan for Section 8 Subsidy. The submission deadline to HUD is October 15th and Mrs. Kopa asked that the public hearing be held at the September 8th Board meeting. On motion of Councilwoman Wittner, seconded by Councilwoman Myers, it was RESOLVED, that the Town Board does hereby set the date for public hearing on the Public Housing Agency Administrative Plan for Wednesday, September 8, 2001 at 8:15 PM; and 3 August 8, 2001 BE IT FURTHER, RESOLVED, that the Town Clerk be authorized to publish the notice of said hearing in a newspaper appointed as an official source, and that notice be so posted. The above resolution was put to a roll call vote: Seligson - Aye Odierna - Aye Myers - Aye Wittner - Aye O'Keeffe - Aye 4. Authorization - School District Tax Warrant The Town Administrator said it was necessary for the Board to approve the school tax warrants for the collection of school taxes for both the Mamaroneck School District and for that portion of the Scarsdale School District located in the Unincorporated Town. On motion of Councilwoman Myers, seconded by Councilwoman Wittner, it was RESOLVED, that the Town Receiver of Taxes is hereby authorized to receive and collect from the persons named in the Town assessment roll the sum of the school taxes, as set forth in the tax warrant, for the Union Free School Districts in the Town of Mamaroneck and Village of Scarsdale; and BE IT FURTHER RESOLVED, that the monies collected shall be deposited to the credit of the town of Mamaroneck in the Bank of New York Country Trust Region, Mamaroneck. TOWN OF MAMARONECK SCHOOL TAX WARRANT FOR THE YEAR 2001 STATE OF NEW YORK } COUNTY OF WESTCHESTER} TO: Receiver of Taxes of the Town of Mamaroneck in said County YOU ARE HEREBY COMMANDED, to receive and collect from several persons named in the assessment roll of the Union Free School District in the Town of Mamaroneck, hereunto annexed and herewith delivered to you, the sum of the School Taxes of said School District set opposite their respective names in accordance with provision of Chapter 852 of the Laws of 1948 (Title 16) and the acts amendatory thereof and supplemental thereto including the amendment made by Chapter 386 of the Laws of 1962 and the resolution adopted by the Town Board of the Town of Mamaroneck on August 8, 2001. YOU ARE HEREBY COMMANDED, to deposit all such monies so collected by you in virtue of the warrant, to the credit of the Town Of Mamaroneck, in the Bank Of New York, County Trust Region, Mamaroneck, as provided by said Chapter 852 of Laws of 1948 (Title 16) and the acts amendatory thereof and supplemental thereto including the amendment made by Chapter 386 of the Laws of 1962 and resolution adopted by the Town Board of the Town Of Mamaroneck on August 8, 2001, such taxes being levied 4 August 8, 2001 against the said School District for the year 2001 for the following purposes, viz: APPROPRIATIONS Program Component $ 51,536,496.00 Administration Component 6,669,186.00 Capital Component 13,217,318.00 TOTAL APPROPRIATIONS $ 71,423,000.00 ESTIMATED RECEIPTS Revenue-Other Districts & Governments $ 635,000.00 Revenue from Local Sources 172,000.00 Interest on General Fund Investments 550,000.00 State Aid 4,500,000.00 Refund of Prior Expenses 50,000.00 Appropriated Fund Balance 1,300,000.00 County Sales Tax 725,000.00 TOTAL REVENUES $ 7,932,000.00 TOTAL WARRANT AMOUNT $ 63,491,000.00 LESS AMOUNT TO BE PAID BY STATE (STAR PROGRAM) $ 6,456,026.00 NET AMOUNT TO BE RAISED BY TAXATION $ 57,034,974.00 AND YOU ARE FURTHER COMMANDED, to make and file with the undersigned Supervisor of the said Town, as required by Chapter 852 of the Laws of 1948 (Title 16), and the acts amendatory thereof, and supplemental thereto, including the amendment made by Chapter 286 of the Laws of 1962 and the resolution adopted by the Town Board of Mamaroneck, on August 8, 2001, the reports provided for by said Law. IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of said Town to be hereunto affixed this 8th day August 2001. Valerie Moore O'Keeffe Supervisor Town of Mamaroneck TOWN OF MAMARONECK SCHOOL TAX WARRANT FOR THE YEAR 2001 STATE OF NEW YORK } COUNTY OF WESTCHESTER } TO: Receiver of Taxes of the Town of Mamaroneck in said County YOU ARE HEREBY COMMANDED to receive and collect from the several persons named in the assessment roll of Union Free School District in the Towns of Scarsdale and Mamaroneck, Scarsdale, New York, hereunto annexed and herewith delivered to you, the sum of the School Taxes of said School District set opposite their respective names in accordance with provision of Chapter 852 of the Laws of 1948 (Title 16), and the acts amendatory thereof and supplemental thereto including the amendment 5 August 8, 2001 made by Chapter 386 of the Laws of 1962 and the resolution adopted by the Town Board of the Town of Mamaroneck on August 8, 2001. AND YOUR ARE HEREBY DIRECTED, to deposit all such monies so collected by you in virtue of the warrant, to the credit of the Town of Mamaroneck, in the Bank of New York, County Trust Region, Mamaroneck, as provided by said Chapter 852 of the Laws of 1948 (Title 16) and the acts amendatory thereof and supplemental thereto including the amendment made by Chapter 386 of the Laws of 1962 and the resolution adopted by the Town Board of the Town of Mamaroneck on August 8, 2001, such taxes being levied against the said School District for the year 2001 for the following purpose, viz: APPROPRIATIONS General Support $ 9,452,534.00 Pupil Transportation 2,150,775.00 Community Services 342,825.00 Undistributed Expense 17,269,698.00 Capital Reserves 300,000.00 Instructional Services 47,182,566.00 TOTAL APPROPRIATIONS $ 76,698,398.00 ESTIMATED RECEIPTS Boundary Line Taxes $ 65,500.00 Tuition-Special Education 175,000.00 Prior Year Surplus 765,000.00 State Aid 4,399,008.00 Parochial Health 140,000.00 Interest from Investments 1,243,229.00 Building Use Fees 91,566.00 Miscellaneous 40,000.00 County Sales Tax Distribution 520,000.00 Transfer from Reserve 27,000.00 Transfer from Debt Service Reserve to Capital Reserve 300,000.00 TOTAL REVENUES $ 7,766,303.00 TOTAL WARRANT AMOUNT $ 68,932,095.00 TOWN OF MAMARONECK SHARE $ 3,370,092.00 LESS AMOUNT TO BE PAID BY STATE (STAR PROGRAM) $ 206,804.00 NET AMOUNT TO BE RAISED BY TAXATION $ 3,163,288.00 AND YOU ARE FURTHER COMMANDED, to make and file with the undersigned Supervisor of the said Town, as required by said Chapter 852 of the Laws of 1948 (Title 16), and the acts amendatory thereof and supplemental thereto including the amendment made by Chapter 286 of the Laws of 1962 and the resolution adopted by Town Board of the Town of Mamaroneck on August 8, 2001, the reports provided for by said law. IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of said Town to be hereunto affixed this 8th day of August 2001. 6 August 8, 2001 Valerie Moore O'Keeffe Supervisor Town of Mamaroneck The above resolution was put to a roll call vote: Seligson - Aye Odierna - Aye Myers - Aye Wittner - Aye O'Keeffe - Aye 5. Salary Authorizations - Recreation On motion of Councilwoman Wittner, seconded by Councilwoman Seligson, it was RESOLVED, that as provided for in the 2001 Town Budget that the Town Board does hereby authorize the payment of salary to the following: Brian Padgett, Counselor, Hommocks Playground, $190.00 per week. Cara Weisberger, Lifeguard, Hommocks Pool, $8.00 per hour, retroactive to July 27, 2001. Jennifer Linker, Tennis Instructor, $21 per hour& $16 per hour, retroactive to July 30, 2001. Andrew Lipow, Tennis Instructor, $10 per hour, retroactive to July 30, 2001. Alison Lipow, Tennis Instructor, $12 per hour, retroactive to July 30, 2001. Community Services Office On motion of Councilwoman Seligson, seconded by Councilwoman Wittner, it was RESOLVED, that as provided for in the 2001 Town Budget that the Town Board does hereby authorize the payment of salary to the following Arleen Silverman as an Office Assistant effective August 6, 2001 at an annual salary of $32,845. The above resolutions were put to a roll call vote: Seligson - Aye Odierna - Aye Myers - Aye Wittner - Aye O'Keeffe - Aye APPROVAL OF MINUTES On motion of the Town Board, it was RESOLVED, that the Town Board does hereby approve the Board minutes from the meeting of March 21, 2001 as amended, and; BE IT FURTHER, 7 August 8, 2001 RESOLVED, that the Town Board does hereby approve the Board minutes from the meeting of April 4, 2001 as amended. The above resolution was put to a roll call vote: Seligson - Aye Odierna - Aye Myers - Aye Wittner - Aye O'Keeffe - Aye TOWN CLERK REPORTS - The Town Clerk updated the Board on the parking situation on Vine Street saying letters were sent out to all permit holders in lot number one explaining the extension of the lot onto Vine Street. Supervisor O'Keeffe stated that she noticed an increase in cars illegally parked on Murray Avenue, but this matter would have to taken up with the Police Department. REPORT OF THE COUNCIL Councilman Odierna reported that the concert series was over and wanted to congratulate the Recreation Department as they were very well done. He stated that there were between 200 and 300 people at each event and that residents were making suggestions for next year. He thanked everyone who was involved. He said Camp Monroe had 100 campers, three, four and five year olds and the program worked very well. Murray was also successful with 168 campers and the Hommocks had 391 campers. He urged parents to get applications in early next year. Councilwoman Myers suggested that we increase the number of concerts next year. Councilwoman Seligson noted the children especially enjoyed the concerts and playing in the park. Supervisor O'Keeffe stated that we had a going away luncheon on Monday for Peter Chiodo who was retiring from the Building Department. Peter had worked on a part time basis since 1988. She also reported the retirement of Paulette Gabbriellini after 15 years with the Town. She was an essential person and has decided to change careers and will start teaching high school in the Bronx. The Town will be having a retirement party for her at the Mamaroneck Environmental Resource Center on August 24 and all are invited. The Supervisor also reports on the sad new of the passing of Ben Brush, former Town Councilman, Honorary Fire Chief, member of the Zoning Board and Larchmont Avenue Church. She stated that there would be a memorial service on August 9t" at 11:00 AM. She also mentioned the passing of the daughter one of our firefighter's, William Premuroso. ADJOURNMENT The Supervisor said that the next scheduled meeting would be September 5, 2001. Councilman Odierna asked a question at this time regarding the organic waste recycling program. The Town Administrator stated that he would report to the Board in September. 8 August 8, 2001 On motion of Councilwoman Wittner, seconded by Councilwoman Seligson, at this time the Board adjourned into an Executive Session to discuss certiorari. RECONVENE On motion of Councilwoman Wittner, seconded by Councilwoman Myers, the Board reconvened at 10:10 PM. Approval of Certiorari On motion of Councilman Odierna, seconded by Councilwoman Seligson, it was RESOLVED, that the Town Board does hereby authorize the settlement of the following certiorari as recommended by the Town Attorney, William Maker: Mamaroneck Station Atrium Associates 141 and 149 Halstead Avenue Block: 901 Lots: 59 and 79 Year Assessment Reduced To Amount of Reduction 1993 $62,000 $57,000 $ 5,000 1994 $62,000 $52,000 $10,000 1995 $62,000 $52,000 $10,000 1996 $62,000 $48,000 $14,000 1997 $62,000 $38,430 $23,570 1998 $62,000 $39,000 $23,000 1999 $62,000 $35,000 $27,000 2000 $62,000 $34,000 $28,000 The Town will refund about $2,000. The school district will refund (or not collect) $48,604.89. Jerjo Realty Corp. 2107 Palmer Avenue Block: 601 Lot: 477 Year Assessment Reduced To Amount of Reduction 2000 $19,000 $16,500 $2,500 The Town will refund less than $50.00 for the year at issue. The school district will refund approximately $1,000. F. Harlan Batrus 11 Bruce Road Block: 346 Lot: 094 Town of Mamaroneck Year Assessment Reduced To Amount of Reduction 1995 $95,000 $84,000 $11,000 1996 $95,000 $84,000 $11,000 1997 $95,000 $84,000 $11,000 1998 $95,000 $84,000 $11,000 1998 $95,000 $84,000 $11,000 1999 $95,000 $84,000 $11,000 2000 $95,000 $84,000 $11,000 9 August 8, 2001 2001 $95,000 $84,000 $11,000 The Town will refund approximately $10,000. The taxpayer chose not to pay any taxes during the years that were challenged. Therefore, the taxpayer will be required to pay all of the past due taxes plus penalties before receiving any refunds. The above resolution was put to a roll call vote: Seligson - Aye Odierna - Aye Myers - Aye Wittner - Aye O'Keeffe - Aye ADJOURNMENT On motion of Councilman Odierna, seconded by Councilwoman Seligson the meeting was adjourned at 10:20 PM with the Board going back into Work Session in Conference Room A. Submitted by Patricia A. DiCioccio, Town Clerk 11 CLERKSERVERISERVER 1DocumentslMinutes12001 minf108-08-01 x.doc 10 August 8, 2001 REPORT of the PROPERTY REVALUATION COMMITTEE: CO-OPS AND CONDOS to the TOWN BOARD of the TOWN OF MAMARONECK August, 2001 REPORT OF THE PROPERTY REVALUATION COMMITTEE: CO-OPS AND CONDOS TO THE TOWN BOARD OF THE TOWN OF MAMARONECK Page SUMMARY AND FINDINGS ............................................................ 4 MISSION OF THE COMMITTEE ...................................................... 6 BACKGROUND .................................................................... 7 EXISTING ASSESSMENT LAW AND PRACTICE ................................. 9 1. State law .................................................................................. 9 2. Existing assessment practice ............................................ 9 3. The consequences of existing law and practice ...................... 10 4. Causes of assessment-sales ratio disparities ...... ................... 13 IMPACTS OF REVALUATION ON CO-OPS AND CONDOS................. 15 1. Revaluation without the homestead option .............................. 15 2. Revaluation with the homestead option .................................... 16 TABLES Table 1. Assessment-sales ratios, co-ops: comparisons with co-op median: ................ . 19 Table 2. Assessment-sales ratios, co-ops: comparisons with 1-3 family median ............ 20 Table 3. Assessment-sales ratios, condos: comparisons with condo median.................. 21 Table 4. Assessment-sales ratios, condos: comparisons with 1-3 family median ........... 22 11 August 8, 2001 APPENDIX: THE PELHAM EXPERIENCE ............................................. 23 APPENDIX TABLE: VALUATION AND TAXES OF PELHAM CO-OPS: ....... 24 PRE-AND POST VALUATION INDEX OF TERMS .......................................................................... 25 THE COMMITTEE .......................................................................... 27 MINORITY ADDITION AND COMMENTS .......................................... 28 SUMMARY AND FINDINGS The Property Revaluation Committee/Co-ops and Condos finds the following. • There are considerable inequalities in the relationship between property assessments and the market value of individual co-op and condominium apartment units (Table 1, pg. 19; Table 3, pg. 21). • The inequalities are caused in part by outdated and inconsistent assessments on multi-family buildings (pg. 9). • The average relationship of assessment to value on co-op and condo units tends to be higher on low and moderately-valued units than on higher-valued units (Table 1, pg. 19; Table 3, pg. 21). • With revaluation, the relationship between assessments and property values among owner- occupied apartment units would become more consistent (Pg. 15). • By State law, all multi-family buildings, including residential co-operative and condominium apartment buildings, are assessed as if the buildings were income-producing rental properties (Pg. 9). • Because of the unique basis of assessment of these buildings, most owner-occupied apartments and units are assessed at levels that are lower relative to sales value than are most 1-3 family homes. (Table 2, pg. 20; Table 4, pg. 22). • Revaluation by itself would not change the unique means of assessment of co-op and condo buildings (Pg. 15). • Upon revaluation, the Town Board can, but is not required to, accept the "homestead" option. This option permits the taxing authority to impose a two-tier system of taxation; a lower rate on homestead-eligible properties and a higher rate (within defined limits) on non-eligible properties (Pg. 16). • Under the homestead option, most multi-family buildings and their apartments would be ineligible for homestead treatment. These would continue to be assessed under the existing unique method for multi-family buildings, and would be subject to the higher rate of taxation. (Pg. 16). • However, under the homestead option, residential condominiums that were initially built as condominiums would be assessed on the same basis as 1-3 family homes, that is, on the basis of estimated market value. Furthermore, these condominium apartment units would be taxed at the " homestead-eligible" rate. (Pg. 16). We find the following. • Revaluation would reduce that part of the disparities of assessment-sales ratios among apartment units in co-op and condo buildings that is due to outdated valuations of the buildings. • Under the homestead option, most condominiums built as condominiums would pay higher amounts of tax than would otherwise be the case. • We could not draw conclusions regarding the average impact of revaluation and the homestead option on other apartment units. Based on available information, it is possible that the tax burden on these other residential properties could be either higher or lower. After gathering and analyzing available information regarding revaluation and the homestead option, with special attention to the impacts on co-ops and condos, we recommend the following. • The Town Board should take action to have properties re-assessed for purposes of property taxation. 12 August 8, 2001 • A decision on the homestead option should be made by the Town Board when re-assessment has taken place, as is provided by State law. REPORT OF THE PROPERTY REVALUATION COMMITTEE: CO-OPS AND CONDOS TO THE TOWN BOARD OF THE TOWN OF MAMARONECK Mission of the Committee The Town Board of the Town of Mamaroneck created the Revaluation Committee: Co-ops and Condos on June 8, 2000 and charged it with the following mission: • To investigate the impacts and implications of the current State reassessment law as it applies to the treatment of co-ops and condos; • If warranted, to make recommendations for possible changes to State law on this subject. I. BACKGROUND The property tax is intended to tax owners of real estate according to the market value of their property. However, a full valuation of properties for the purpose of assessment was last undertaken in the town of Mamaroneck in 1968. Properties built after 1968 have been valued at the time of completion of construction but their assessment is then adjusted to 1968 market values and outdated construction costs. Current assessments of properties, therefore, are but a fraction of their current market value. There would be no harm done by a system of fractional assessments if assessments on each unit of property were a consistent fraction of current market value. However, this is not the case, mainly because the values of some properties have risen more sharply subsequent to the last assessment than on other properties. Because the levels of tax on individual properties are based on their assessment, and because these assessments are based on outdated values, the tax burden relative to the current value of individual properties may be different from property to property. The first Revaluation Committee and its conclusions The Town Board appointed a Property Revaluation Committee in February, 1998 to evaluate the need for, and potential impact of revaluation. The Committee produced its report in April, 1999 and found the following. • Property assessment in Mamaroneck needs to be updated. • Some owners (of single-family homes) are taxed at an amount that is more than three times as high in relation to the value of their homes as are other home-owners. • Moderately priced homes, on average, are over-assessed compared with higher priced homes. • The prior revaluation in the Town, in 1968, did not result in permanent equity because there is no process in place to update assessments on a regular basis. • The differences in levels of property taxes paid by owners relative to the value of their properties has been caused largely by differing relative amounts of appreciation in the values of individual properties over the past 30 years. • The different rates of increase are caused among others by 1) differences in location, 2) improvements of properties, and 3) the fact of successful challenges of assessments having been brought by some property owners but not by others. We find that these are not appropriate reasons for differences to exist in the level of taxation to value on individual properties. • Existing inequities have caused a large number of residential property owners to challenge the assessments on their properties initially before the Board of Assessment Review and thereafter in Small Claims Court, and commercial property owners to challenge their assessments in State Supreme Court as is permitted by law. This is a costly, inefficient and inequitable means to approach property taxation. 13 August 8, 2001 The report also discussed the so-called "homestead" option that is allowed under State law. The homestead option allows a taxing unit to assure that revaluation of properties would not result in a shift of a portion of the tax burden from "commercial" properties (that is, income-producing properties) to most homeowners. The option allows communities that undertake revaluation to prevent such a shift from occurring by establishing a two-tier system of tax rates. The taxing unit may place a tax rate on commercial property that is higher than the tax rate placed on so-called "homestead-eligible" properties. Under the option, certain multifamily buildings and their apartments are eligible for homestead treatment, and other buildings and their apartments are not. The Committee recommended the following. • "A full reassessment of property in the Town should be undertaken in order to reestablish equity in the property tax system. • The homestead option should be given serious consideration ... with particular emphasis on the impact on owner-occupied residences, business properties, and on condominiums and cooperative apartments." After receipt of the report of the Revaluation Committee, the Town Board created the "Revaluation Committee: Co-ops and Condos" to develop further information regarding property valuation and revaluation with regard specifically to residential co-ops and condominiums. We are pleased to present the following report. II. EXISTING ASSESSMENT LAW AND PRACTICE: CO-OPS AND CONDOS 1. State law The State of New York requires that co-op and condo buildings of four or more units be assessed on the basis of the value of the entire building as an income-producing rental property. The treatment of co-operative and condominium buildings as if they were income-producing rental properties has a significant impact on assessments and, therefore, on the tax liability of the co-operators and owners of condominiums. 2. Existing assessment practice In common with assessments on other types of property, assessments on multiple-family buildings generally have remained unchanged from those last set in 1968, or at the completion of construction in cases where construction has occurred after 1968. However, the assessment of multi-family buildings presents several unique difficulties. By State law, assessment of such buildings cannot be based on the value of apartment units as observed by sales. As noted, assessment of such buildings is required to be based on the value of the buildings as income-producing rental property and consistent with the assessment and fractional value of comparable rental properties. Nonetheless, it is difficult or virtually impossible for the Town assessor to identify comparable rental apartment buildings. Moreover, the assessor is required to consider that some rental apartments are rent controlled, some are rent stabilized and some are rented on the open market. These issues increase the probability of disagreement between the assessor and the builder or owner of the building regarding the appropriate assessment. The issue may be settled by negotiation or by court proceedings, further increasing inconsistencies in the relationship between assessment and market value among respective multiple-family buildings The tax burden placed on the building in its entirety is distributed among the co-operative shareholders on the basis of their shareholdings and among the owners of condo units on the basis of the square footage of their units. 3. The consequences of existing law and practice in the Town of Mamaroneck A. Our methods of collection and analysis of data. The Committee collected data on assessments and sales prices of residential co-ops and condos sold in 1999 and early 2000 in order to determine the impact of existing law and assessment practices on these properties. Co-op apartment units sold during 1999 and their sales prices were identified on the basis of sales reported through the multiple listing service of Town brokers. Information on condo sales and also assessments on these units was made available by the Town Assessor's office. The Committee estimated the proportion of the assessment on a co-op building that was the responsibility of individual co-op shareholders who sold their units on the basis of the proportion of 14 August 8, 2001 the shares in the building held by these respective owners. For each co-op unit sold in the Town through a broker in 1999, the Committee calculated the assessment-sales ratio by dividing the calculated assessment of the unit by the sales price of that unit. For condo units sold in 1999 and early 2000, the Committee derived assessment-sales ratios on the basis of sales prices and individual assessments as provided to us by the Town. We used information on 89 co-op and 125 condominium apartment units. B. Our summary tables Tables 1 to 4 (pp. 19-22) show the results of our analysis of the assessment-sales ratios of co-ops sold within the Town of Mamaroneck in 1999 and of condos sold in 1999 through early 2000. The data are grouped according to the sales price and the assessment-sales ratio calculated for individual units. The columns show the price range of the apartment units sold. In Table 1, for example, the data in the columns provide information on the number of co-op apartments sold at prices up to $60,000 (data column 1), above $60,000 through $100,000 (data column 2), etc. The rows in each table, show the number of sales made in which the assessment-sales ratio of the unit fell within a specific range. For example, the top data row shows the number of sales for which the assessment-sales ratio is more than 25 percent higher than the median (i.e., the average calculated as the point at which half the sales are above and half are below). The bottom row shows the number of sales of property for which the assessment-sales ratio is more than 25 percent below this average. Table 1 shows assessment-sales ratios for co-ops centered around the average assessment-sales ratio of these co-ops. Table 2 also shows assessment-sales ratios for these same co-ops, but centered around the average of ratios for 1-3 family homes as estimated for 1999 by the New York State Office of Real Property Services. Tables 3 and 4 show assessment-sales ratios for the condos observed, centered around the averages for these condo and for 1-3 family homes respectively. C. Our findings (1) There is a wide dispersion of assessment-sales ratios. There is a wide dispersion of assessment-sales ratios among co-operative and condominium units. As a result, there is a wide dispersion of property taxes paid indirectly by co-op shareholders and paid directly by condo owners relative to the value of their apartment units. Table 1 provides information on the sales prices and assessment-sales ratios for 89 co-ops units sold in the Town in 1999 and arranged around the average of assessment-sales ratios for these co- ops. There were 28 sales of units on which the assessment was more than 0.03059 of the sales price (row 1). These co-ops bore assessment-sales ratios that were more than 25 percent higher than the average for co-op sales. During this period, there were 29 sales of co-op units showing assessment-sales ratios of under .01835 (row 5). These latter co-ops bore a assessment-sales ratios that were more than 25 percent higher than the average for co-op sales. In other words, 28 units (row 1) sold at assessment-sales ratios that were more than two-thirds higher than those of 29 other sales (row 5). We found, therefore, that the share-holders of 28 co-op units sold paid a rate of tax relative to the value of their apartment units that was more than two-thirds higher than the relative tax paid on 29 other units that were sold. Table 3 shows that there were 9 sales of condo units for which the assessment was more than .0344 (3.44%) of the sales price (row 1). In other words, these condo units bore assessment-sales ratios that were more than 25 percent higher than the average of condo sales. During this period, there were 13 sales of condos showing assessment-sales ratios of under .0206 (2.06%) (row 5). In other words, 9 sales (row 1) showed assessment-sales ratios that were more than two-thirds higher than that of 13 other sales (row 5). We found, therefore, that the owners of 9 condo units sold paid a rate of tax relative to the value of their apartment units that was more than two-thirds higher than the relative tax paid on 13 other units that were sold. Although the range of ratios for condo units was as great as that for co-ops, the proportion of such extreme cases was much smaller for condos than for co-ops. For condominiums, the majority of sales during this period showed ratios close to the average for condominiums because a significant portion of these sales occurred in one new development. (2) Apartment units of low and moderate value are more likely to be over-assessed than are apartments of higher value. The data on co-op and condo units shows an inverse relationship between assessment ratios and property values. In other words, the average ratio of assessment to property value tends to be higher for properties of low and moderate value than it is on properties of greater value. 15 August 8, 2001 For example, Table 1 shows that 54 co-op units were sold at prices below $100,000 (the first two data columns). Of these relatively moderately valued units, 38 showed assessment-sales ratios that were more than 5 percent higher than the average for co-ops (the first 2 data rows of the first 2 columns). We define these units as being over-assessed. In contrast, only 10 units that sold for under $100,000 were under-assessed, that is, they were assessed at a level compared with the sales price that was more than five percent lower than the average co-op assessment-sales ratio. Using the same procedure, Table 1 shows that of the higher-priced units, i.e., those that units sold for over $100,000, 3 were over-assessed and 30 were under-assessed. As noted with regard to condominiums, most units sold showed assessment-sales ratios that were close to the average for condos (Table 3). However, all of the sold units that exhibited high ratios were sold for relatively moderate prices. The overwhelming percentage of units that showed low assessment-sales ratios were sold at relatively high prices. (3) A high percentage of apartments show an assessment-sales ratio below that of 1-3 family homes and also below non-residential commercial properties. Tables 2 and 4 arrange co-op and condo sales around the average assessment-sales ratio for 1-3 family homes as estimated by the New York State Office of Real Property Services. Of the 89 co-op sales observed, 4 were within 5 percent of the estimated average assessment-sales ratio for 1-3 family homes (Table 2, row 3). Of the remaining 85 sales, 66 units show an assessment-sales ratio lower than the middle range for 1-3 family homes and 19 units show a ratio higher than the median for 1-3 family homes. Of the 125 condo sales observed, 7 were within 5 percent of the estimated average assessment- sales for 1-3 family homes (Table 4, row 3). Of the remaining 118 sales, 111 show a ratio lower than the middle range for 1-3 family homes and 7 units show a ratio higher than the middle range for 1-3 family homes. Residential multi-family (more than 3 units) properties of any ownership type are considered to be "commercial" properties for purposes of assessment. Nevertheless, assessment-sales ratios on residential multi-family properties tend to be below those of non-residential properties. Our observations found the average ratio of co-ops sold in 1999 to be .0245 and of condos sold in 1999 and early 2000 to be .0275, while the New York State Office of Real Property Services estimated the ratio for all commercial properties in the Town to have been .0592 in 1999. (4) There is a dispersion of assessment-sales ratios among buildings. We identified 3 co-op and condo buildings with sales of 10 units or more. The median assessment- sales ratio among units sold in these buildings ranged from 2.27 percent to 2.74 percent. Our observations included other buildings in which there were fewer than 10 sales and in which the median assessment-sales ratios were either substantially higher or substantially lower than these figures. Although these additional observations suggest that the range of average assessment- sales ratios for individual multifamily buildings is wide, the limited number of observations does not allow us to reasonably estimate the full range of ratios among these buildings. (5) Assessment-sales ratios vary widely within individual buildings. We looked at assessment-sales ratios within individual buildings. In the building in which sales showed the greatest differences in assessment-sales-ratios ratios, the highest ratio among the units sold was 2.7 times as great as the unit sold with the lowest ratio. In other words, the tax burden on one unit sold in this building was almost three times the burden on another sold unit in the same building. Based on limited data, it appears that there may also be an inverse relationship between sales price and assessment-sales ratios among units within individual buildings, as there is among buildings. In other words, within an individual building, a unit of moderate value may be more likely to bear a relatively high assessment-sales ratio than does a unit of higher value. 4. Causes of assessment-sales ratio disparities There are several reasons for the disparities of assessment ratios among co-op and condo units. Some of these reasons are similar to the causes of disparities among 1-3 family homes, mainly differences in the rates of appreciation among properties since 1968. However, several aspects of the process of assessment and distribution of the overall tax burden are unique to multiple-family buildings. A. Assessment of buildings (1) Complexity of building assessment Assessment of multiple-family buildings is complex. As noted, the market value of multiple-family buildings is not determined simply by observation of the terms of sale of nearby comparable 16 August 8, 2001 buildings as in the case of 1-3 family homes. Rather, their value is determined in part by the estimated income of comparable income-producing rental buildings. This is complicated by the fact that comparable rental buildings generally do not exist. Furthermore, the present value of future income from such an income-producing building must be estimated through the mathematical use of an interest rate that connects future income with present value (see index of terms). (2) Negotiations Negotiations on assessments between builders or owners and assessors yield results that may vary according to the negotiating skills of the parties. A good negotiator representing one building may get a better deal than a poor negotiator representing another (3) Court challenges Assessments on multiple-family buildings are more likely to be subject to negotiation and/or court proceedings than are assessments of 1-3 family homes. Here also, the final determination of the assessment may be affected by the legal skill of the respective sides to the dispute. B. Building owner/management decisions Differences in assessment-sales ratios of individual apartment units may exist because of the system by which the distribution of the tax liability among units within buildings is determined. Furthermore, differences in assessment-sales ratios in a building may be due to changes in the value of individual units within a building. III. IMPACTS OF REVALUATION ON CO-OPS AND CONDOS We emphasize that revaluation would have no affect on the total amount of property tax collected by the Town, school district, or participating villages. The total amount of property tax collected by these public entities would continue to be those amounts required to fund their budgets after accounting for other expected revenues. The average tax bill faced by individual property taxpayers, therefore, would remain unchanged by revaluation. 1. Revaluation without the homestead option Revaluation would bring assessments to 100 percent of property values and, therefore, eliminate fractional assessments. In turn, the rate of taxation would decline by an amount sufficient such that the total of collections of the Town, school district and participating villages would remain unchanged by revaluation. The average tax bill presented by participating municipal entities on the respective properties in the Town, including 1-3 family homes, multi-family residential buildings and commercial properties, would remain unchanged. With revaluation, however, the property tax due from individual taxpayers would more closely conform to the relative value of their properties than is the case at this time. Revaluation would lower taxes on properties that had been over-assessed based on their market values. Revaluation would raise taxes on properties that had been under-assessed. A. Assessment and tax rates of co-ops and condos Revaluation itself would have no impact on the unique treatment of residential co-operative and condominium homes. As before, assessments of multi-family buildings would not be based on the sales value of the individual units. Multi-family buildings would continue to be assessed according to the estimated value of the entire buildings as income-producing rental properties. However, revaluation would provide a consistent method of analysis of the current value of such buildings. B. Impacts The Committee expects that the revaluation would reduce the disparities that we have found in the assessment-sales ratios among apartment units in multiple-family buildings. However, not all the existing differences in assessment-sales ratios among apartment units would be eliminated because revaluation would have no impact on the disparate ratios that exist within buildings themselves. We have noted that the median assessment-sales ratio of the total of income-producing properties, including multi-family residential properties that are assessed as if they were income producing properties, is higher than the average for all taxable properties (i.e., including 1-3 family homes). Revaluation (without the homestead option), therefore, would reduce the average tax bill of such income-producing plus multi-family properties. Although we do not have sufficient evidence to make a definitive determination, the overall reduction in the average of such tax bills might reduce the tax on multi-family buildings. 17 August 8, 2001 We note, however that these impacts would vary from building to building depending on the extent to which individual buildings currently are overvalued or undervalued in relation to their respective market value as rental structures. Finally, we point out that our general expectation is consistent with the results of revaluation in Pelham, where revaluation reduced the estimated market value of co-ops (based on rental value) by 8 percent (see appendix table). 2. Revaluation with the homestead option The homestead option, available to assessing jurisdictions that undertake revaluation, involves a number of complex and contentious issues. It is the option provided by State law that enables municipalities to avoid a shift of municipal and school (but not County) taxes that might otherwise occur from income-producing "commercial" properties to homestead-eligible owner-occupied residences. For example, the New York State Office of Real Property Services estimated that homestead- eligible residential properties accounted for 87 percent of the total market value of taxable properties in the Town in the year 2000, but that such properties accounted for only 78 percent of its taxable assessed value. Without the homestead provision, therefore, revaluation might cause the share of the tax burden of such homestead-eligible properties to increase from 78 percent (as it is currently) to 87 percent of the total tax collected by participating public entities. As a result, revaluation without homestead would shift some of the tax burden now paid by income-producing properties (including multi-family buildings) on to residential properties. The homestead option is designed to permit the Town to undertake revaluation while preventing such a shift from happening in whole or part. Imposition of the homestead option is not intended to increase the existing total tax burden of the non-homestead class. Rather, it permits revaluing municipalities to fix the total share of the overall tax burden paid by such non-homestead properties at the existing level, or to limit the amount of the tax liability that revaluation would otherwise shift to homestead-eligible properties. A. Assessment practice Under the homestead option, State law requires that assessment procedures be changed in the case of certain multiple-family buildings, specifically condominium units that had always been condominiums. There are 10 such buildings of the total of 14 condominium buildings in the Town. Under the homestead option, units in these buildings would be assessed in the same manner as are 1-3 family homes; that is, on the basis of their market value as condominiums, not as rental properties. The Town Board also has the option to place newly converted condominiums (that is, converted from rentals after 1997) into the homestead class. Other multiple-family residential buildings would continue to be assessed as before, i.e., on the basis of the income approach applied to the building as a whole. B. Tax rates The homestead option permits the Town to create a two-tier set of tax rates. One rate would apply to homestead-eligible residences and a second rate to all other property. As noted, the two rates could differ from each other by an amount that would, at their greatest, fix the relative shares of property taxes paid by the homestead-eligible and non-eligible classes at the proportions existing prior to revaluation. However, the Town also may opt to set the relative shares of these classes at a level between that existing prior to revaluation and that which would occur after revaluation were a single rate of taxation applied to all taxable properties. By State Law, the Town may make adjustments of the class shares from year to year. C. Impacts • Homestead-eligible apartment units The homestead option is likely to increase assessments on condominiums built as condominiums. We have determined that the ratio of assessments to sales value of condominiums sold in the Town in 1999 and early 2000 averaged 2.76 percent while the Office of Real Property Services has estimated that the average assessment to sales value of all taxable property in the town was 3.69 percent in 1999. This suggests that applying full market value to condominiums built as condominiums could raise average assessments on these units. • Non-eligible apartments Assessments on other multi-family buildings, including the co-op and converted condo units in them, would be unaffected by the imposition of the homestead option. However these non-eligible properties would be subject to the higher "commercial" rate under a two-tier tax rate system. We can say with certainty that the homestead option would be costlier to co-ops and converted condominiums than would revaluation without the homestead option. This conclusion derives from 18 August 8, 2001 the expectation that homestead would result in the imposition of the higher rate of taxation on properties that are homestead ineligible. However, we cannot be certain about the average impact on these units of revaluation with the homestead option compared with the current situation. We have noted that it is possible, but not certain, that revaluation itself would reduce the average tax cost to co-ops and condominiums. In contrast, the homestead option itself would tend to raise the tax cost for these units. These conflicting propensities would tend to neutralize each other for homestead ineligible properties. But, we cannot say with any degree of certainty what the net result would be on such non-eligible residential properties. The Committee received useful input on the impact of a recent revaluation in Pelham. While we recognize that each municipality is unique and experience from one community will be different from that of another community, we note that co-ops in Pelham experienced an increase in taxes paid of 13 percent between the first year in which taxes were based on revaluation including homestead compared with the prior year. Because municipal budgets in Pelham were increased at the same time, only an undetermined portion of this 13 percent increase was due to the change in assessments and the imposition of the homestead option. * Sales of co-operative apartment units in the Town of Mamaroneck in 1999. Note: Each data item shows the number of sales within the identified price range (column) and within the identified assessment-sales ratio (row). * Sales of co-operative apartment units in the Town of Mamaroneck in 1999. Note: Each data item shows the number of sales within the identified price range (column) and within the identified assessment-sales ratio (row). * Sales of condominium apartment units in the Town of Mamaroneck in 1999 and the first half of 2000. Note: Each data item shows the number of sales within the identified price range (column) and within the identified assessment-sales ratio (row). * Sales of condominium apartment units in the Town of Mamaroneck in 1999 and the first half of 1990. Note: Each data item shows the number of sales within the identified price range (column) and within the identified assessment-sales ratio (row). APPENDIX: THE PELHAM EXPERIENCE The Town of Pelham revalued its property in 1998 for the 1999 tax year and chose to impose the homestead option. Pelham had five co-op buildings and one newly-built and as yet unoccupied two- unit condominium. Prior to the revaluation, the five co-op buildings in Pelham were assessed at $1,103,404 (see following table). Using the equalization rate based on the median assessment-sales ratio for "commercial" properties (including multi-family buildings) as estimated by the New York State Office of Real Property Services, this was equivalent to an estimated market value (for comparable rental buildings, per the State law) of$20,985,303. The property tax paid on this value was $709,905. The Pelham revaluation resulted in a total assessment, of these buildings, equal to their estimated market value as rental buildings of$19,286,632. In other words, the market value placed on these five buildings in 1998 based on the revaluation was 8 percent less than the estimated value on which the buildings were taxed prior to the revaluation in 1997. Had the homestead option not been imposed, the five co-op buildings would have paid a tax in 1999 (the first tax year to use the revalued assessments) totaling $617,686, or 13 percent less than in the prior year. With the homestead option having been chosen, however, the tax on the buildings totaled $801,078, or an increase of 13 percent from the prior year. It should be noted that a portion of this increase, amount undetermined, was due to increased budgets of the taxing authorities. Estimated 1997 market value derived by applying the 1997 Pelham "commercial" ratio of .0554 to the assessed value. 1998 value based on revaluation. 19 August 8, 2001 1999 tax that would have been due based on revaluation had the homestead option not been adopted. Actual 1999 tax due based on revaluation with the homestead option. Change in estimated full market valuations. Change in taxes that would have been due in 1998 compared with taxes actually due in 1997 prior to revaluation, based on revaluation had the homestead option not been adopted. Change in taxes due that actually occurred after revaluation and the imposition of the homestead option INDEX OF TERMS Assessment: The value placed on property by the municipality for purposes of taxation. Fractional assessment: The condition whereby the assessment of property in a municipality generally is a fraction of its market value. Assessment-sales ratio: The assessment on a property divided by its sales price or estimated market value. Fractional assessment yields an assessment-sales ratio that is lower than 1.00. Homestead option: The option available by State law to a taxing municipality that has revalued properties that allows it to set two distinct rates of taxation on property, one rate on homestead- eligible property and another rate of homestead-ineligible property. Homestead-eligible property: Defined by State law generally as 1-3 family homes and condominiums built as condominiums. Homestead-ineligible properties: All taxable property not eligible for homestead treatment. Commercial property: Income-producing property, but including also by State law for purposes of assessment, multi-family residential buildings with more than 3 units; except that condominiums built as condominiums are not considered as commercial property when revaluation has been undertaken and the homestead option has been enacted. Equalization rate: The average assessment-sales ratio in a taxing jurisdiction as estimated by the New York State Office of Real Property Services. This ratio is termed the "equalization rate" when used to estimate the total value of taxable property in a municipality. It may be used also in legal proceedings and negotiations to reach a settlement on the appropriate assessment of individual properties. Income-producing rental properties: Multi-family buildings containing rental apartments that produce income for the owner. Under State law, however, all multi-family buildings with more than 3 units are treated as if they were income-producing rental property for assessment purposes, except condominiums built as condominiums when revaluation has been imposed and the homestead option has been enacted. Median: The middle point, or the point at which half the observations are higher and half the observations are lower. Present value of future income: The value of an asset that produces future income, based on the amount of income that it is expected to produce in the future. However, estimated future income is discounted using an appropriate rate of interest that is used to estimate the value of future income compared with the value of present assets. Valuation based on: Income: The value of an income-producing property based on the present value of its estimated future income. Sales: The value of a property based on the sales price of comparable properties. Revaluation: The establishment of property values based on the current estimate of its market value. THE COMMITTEE George P. Roniger, Chairman Stephen V. Altieri, Town Administrator Thomas A. Christian James Fleming 20 August 8, 2001 E. Roger Hotte Richard M. Mumma Irving A. Scharf Richard C. Seltzer Wynne B. Stern, Jr. Barry Weprin The Committee appreciates the input, comments and the benefit of their experience provided by to us Susan Bickerstaff, Assessor, Town of Mamaroneck; Nanette Albanese, Assessor, Village/Town of Scarsdale; and Michele Casandra, Assessor, Town of Pelham. MINORITY ADDITION AND COMMENTS The following addition and comment is submitted by Irving A. Scharf. I want to take this opportunity to state that I have no conflict with the Committee's report, but I believe that it is necessary to point out some of the choices the Town Board may consider. 1) If the Board finds that the need to reassess is so profound that it overrides the needs and concerns of the condominium community then it should proceed with reassessment along with adopting the homestead provision. 2) If on the other hand the Board finds that the hardship that will be placed on the condominium owners is too severe, then it needs to seek help in modifying the section of the homestead option that mandates that the assessment procedures be changed on condos built as condos which will no longer be assessed on the income approach. Instead these condos will now be assessed on what a similar condo sells for. It now becomes imperative for the town to correct this unfair practice that singles out condos built as condos for a change in assessing procedures that results in an extensive increase in their assessment. It also is important to look at legislation passed in Albany that gives the assessing unit the option of including newly converted condos in the same group as condos built as condos. What we need is legislation that gives the town the option of not changing the assessing procedures for all condos. A home rule message should be sent to Albany calling for changes in the homestead option. In addition research needs to be done on the possibility of insuring fairness for all and by looking at different kinds of assessment procedures; such as homeowner exemptions, which could eliminate the need for homesteading; and changing the percentage of expenses a commercial property may deduct. We could even look at the possibility of assessing all property on the income approach. We also need a meeting with an expert from Albany who is familiar with the law to advise us on what our options are. 21 REPORT of the PROPERTY REVALUATION COMMITTEE: CO-OPS AND CONDOS to the TOWN BOARD of the TOWN OF MAMARONECK August, 2001 REPORT OF THE PROPERTY REVALUATION COMMITTEE: CO-OPS AND CONDOS TO THE TOWN BOARD OF THE TOWN OF MAMARONECK Page SUMMARY AND FINDINGS ............................................................ 4 MISSION OF THE COMMITTEE ...................................................... 6 I. BACKGROUND ..................................................................... 7 L EXISTING ASSESSMENT LAW AND PRACTICE ....................... 9 II. 1. State law ........................................................................... 9 2. Existing assessment practice ................................................... 9 3. The consequences of existing law and practice ............................... 10 4. Causes of assessment-sales ratio disparities ...... ............................ 13 III. IMPACTS OF REVALUATION ON CO-OPS AND CONDOS........... 15 1. Revaluation without the homestead option ....................................... 15 2. Revaluation with the homestead option ........................................... 16 2 IV. TABLES Table 1. Assessment-sales ratios, co-ops: comparisons with co-op median: ................. 19 Table 2. Assessment-sales ratios, co-ops: comparisons with 1-3 family median ............ 20 Table 3. Assessment-sales ratios, condos: comparisons with condo median.................. 21 Table 4. Assessment-sales ratios, condos: comparisons with 1-3 family median ........... 22 APPENDIX: THE PELHAM EXPERIENCE ............................................. 23 APPENDIX TABLE: VALUATION AND TAXES OF PELHAM CO-OPS: ....... 24 PRE-AND POST VALUATION INDEX OF TERMS .......................................................................... 25 THE COMMITTEE .......................................................................... 27 MINORITY ADDITION AND COMMENTS .......................................... 28 3 SUMMARY AND FINDINGS The Property Revaluation Committee/Co-ops and Condos finds the following. • There are considerable inequalities in the relationship between property assessments and the market value of individual co-op and condominium apartment units (Table 1, pg. 19; Table 3, pg. 21). • The inequalities are caused in part by outdated and inconsistent assessments on multi- family buildings (pg. 9). • The average relationship of assessment to value on co-op and condo units tends to be higher on low and moderately-valued units than on higher-valued units (Table 1, pg. 19; Table 3, pg. 21). • With revaluation, the relationship between assessments and property values among owner-occupied apartment units would become more consistent (Pg. 15). • By State law, all multi-family buildings, including residential co-operative and condominium apartment buildings, are assessed as if the buildings were income- producing rental properties (Pg. 9). • Because of the unique basis of assessment of these buildings, most owner-occupied apartments and units are assessed at levels that are lower relative to sales value than are most 1-3 family homes. (Table 2, pg. 20; Table 4, pg. 22). • Revaluation by itself would not change the unique means of assessment of co-op and condo buildings (Pg. 15). • Upon revaluation, the Town Board can, but is not required to, accept the "homestead" option. This option permits the taxing authority to impose a two-tier system of taxation; a lower rate on homestead-eligible properties and a higher rate (within defined limits) on non-eligible properties (Pg. 16). • Under the homestead option, most multi-family buildings and their apartments would be ineligible for homestead treatment. These would continue to be assessed under the existing unique method for multi-family buildings, and would be subject to the higher rate of taxation. (Pg. 16). • However, under the homestead option, residential condominiums that were initially built as condominiums would be assessed on the same basis as 1-3 family homes, that is, on the basis of estimated market value. Furthermore, these condominium apartment units would be taxed at the "homestead-eligible"rate. (Pg. 16). 4 We find the following. • Revaluation would reduce that part of the disparities of assessment-sales ratios among apartment units in co-op and condo buildings that is due to outdated valuations of the buildings. • Under the homestead option, most condominiums built as condominiums would pay higher amounts of tax than would otherwise be the case. • We could not draw conclusions regarding the average impact of revaluation and the homestead option on other apartment units. Based on available information, it is possible that the tax burden on these other residential properties could be either higher or lower. After gathering and analyzing available information regarding revaluation and the homestead option, with special attention to the impacts on co-ops and condos, we recommend the following. • The Town Board should take action to have properties re-assessed for purposes of property taxation. • A decision on the homestead option should be made by the Town Board when re- assessment has taken place, as is provided by State law. 5 REPORT OF THE PROPERTY REVALUATION COMMITTEE: CO-OPS AND CONDOS TO THE TOWN BOARD OF THE TOWN OF MAMARONECK Mission of the Committee The Town Board of the Town of Mamaroneck created the Revaluation Committee: Co- ops and Condos on June 8, 2000 and charged it with the following mission: • To investigate the impacts and implications of the current State reassessment law as it applies to the treatment of co-ops and condos; • If warranted, to make recommendations for possible changes to State law on this subject. 6 I. BACKGROUND The property tax is intended to tax owners of real estate according to the market value of their property. However, a full valuation of properties for the purpose of assessment was last undertaken in the town of Mamaroneck in 1968. Properties built after 1968 have been valued at the time of completion of construction but their assessment is then adjusted to 1968 market values and outdated construction costs. Current assessments of properties, therefore, are but a fraction of their current market value. There would be no harm done by a system of fractional assessments if assessments on each unit of property were a consistent fraction of current market value. However, this is not the case, mainly because the values of some properties have risen more sharply subsequent to the last assessment than on other properties. Because the levels of tax on individual properties are based on their assessment, and because these assessments are based on outdated values, the tax burden relative to the current value of individual properties may be different from property to property. The first Revaluation Committee and its conclusions The Town Board appointed a Property Revaluation Committee in February, 1998 to evaluate the need for, and potential impact of revaluation. The Committee produced its report in April, 1999 and found the following. • Property assessment in Mamaroneck needs to be updated. • Some owners (of single-family homes) are taxed at an amount that is more than three times as high in relation to the value of their homes as are other home-owners. • Moderately priced homes, on average, are over-assessed compared with higher priced homes. • The prior revaluation in the Town, in 1968, did not result in permanent equity because there is no process in place to update assessments on a regular basis. • The differences in levels of property taxes paid by owners relative to the value of their properties has been caused largely by differing relative amounts of appreciation in the values of individual properties over the past 30 years. • The different rates of increase are caused among others by 1) differences in location, 2) improvements of properties, and 3) the fact of successful challenges of assessments having been brought by some property owners but not by others. We find that these are not appropriate reasons for differences to exist in the level of taxation to value on individual properties. • Existing inequities have caused a large number of residential property owners to challenge the assessments on their properties initially before the Board of Assessment Review and thereafter in Small Claims Court, and commercial property owners to 7 challenge their assessments in State Supreme Court as is permitted by law. This is a costly, inefficient and inequitable means to approach property taxation. The report also discussed the so-called "homestead" option that is allowed under State law. The homestead option allows a taxing unit to assure that revaluation of properties would not result in a shift of a portion of the tax burden from "commercial" properties (that is, income-producing properties) to most homeowners. The option allows communities that undertake revaluation to prevent such a shift from occurring by establishing a two-tier system of tax rates. The taxing unit may place a tax rate on commercial property that is higher than the tax rate placed on so-called "homestead- eligible" properties. Under the option, certain multifamily buildings and their apartments are eligible for homestead treatment, and other buildings and their apartments are not. The Committee recommended the following. • "A full reassessment of property in the Town should be undertaken in order to reestablish equity in the property tax system. • The homestead option should be given serious consideration ... with particular emphasis on the impact on owner-occupied residences, business properties, and on condominiums and cooperative apartments." After receipt of the report of the Revaluation Committee, the Town Board created the "Revaluation Committee: Co-ops and Condos" to develop further information regarding property valuation and revaluation with regard specifically to residential co-ops and condominiums. We are pleased to present the following report. 8 II. EXISTING ASSESSMENT LAW AND PRACTICE: CO-OPS AND CONDOS 1. State law The State of New York requires that co-op and condo buildings of four or more units be assessed on the basis of the value of the entire building as an income-producing rental property. The treatment of co-operative and condominium buildings as if they were income-producing rental properties has a significant impact on assessments and, therefore, on the tax liability of the co-operators and owners of condominiums. 2. Existing assessment practice In common with assessments on other types of property, assessments on multiple-family buildings generally have remained unchanged from those last set in 1968, or at the completion of construction in cases where construction has occurred after 1968. However, the assessment of multi-family buildings presents several unique difficulties. By State law, assessment of such buildings cannot be based on the value of apartment units as observed by sales. As noted, assessment of such buildings is required to be based on the value of the buildings as income-producing rental property and consistent with the assessment and fractional value of comparable rental properties. Nonetheless, it is difficult or virtually impossible for the Town assessor to identify comparable rental apartment buildings. Moreover, the assessor is required to consider that some rental apartments are rent controlled, some are rent stabilized and some are rented on the open market. These issues increase the probability of disagreement between the assessor and the builder or owner of the building regarding the appropriate assessment. The issue may be settled by negotiation or by court proceedings, further increasing inconsistencies in the relationship between assessment and market value among respective multiple-family buildings The tax burden placed on the building in its entirety is distributed among the co-operative shareholders on the basis of their shareholdings and among the owners of condo units on the basis of the square footage of their units. 9 3. The consequences of existing law and practice in the Town of Mamaroneck A. Our methods of collection and analysis of data. The Committee collected data on assessments and sales prices of residential co-ops and condos sold in 1999 and early 2000 in order to determine the impact of existing law and assessment practices on these properties. Co-op apartment units sold during 1999 and their sales prices were identified on the basis of sales reported through the multiple listing service of Town brokers. Information on condo sales and also assessments on these units was made available by the Town Assessor's office. The Committee estimated the proportion of the assessment on a co-op building that was the responsibility of individual co-op shareholders who sold their units on the basis of the proportion of the shares in the building held by these respective owners. For each co-op unit sold in the Town through a broker in 1999, the Committee calculated the assessment- sales ratio by dividing the calculated assessment of the unit by the sales price of that unit. For condo units sold in 1999 and early 2000, the Committee derived assessment-sales ratios on the basis of sales prices and individual assessments as provided to us by the Town. We used information on 89 co-op and 125 condominium apartment units. B. Our summary tables Tables 1 to 4 (pp. 19-22) show the results of our analysis of the assessment-sales ratios of co-ops sold within the Town of Mamaroneck in 1999 and of condos sold in 1999 through early 2000. The data are grouped according to the sales price and the assessment-sales ratio calculated for individual units. The columns show the price range of the apartment units sold. In Table 1, for example, the data in the columns provide information on the number of co-op apartments sold at prices up to $60,000 (data column 1), above $60,000 through $100,000 (data column 2), etc. The rows in each table, show the number of sales made in which the assessment-sales ratio of the unit fell within a specific range. For example, the top data row shows the number of sales for which the assessment-sales ratio is more than 25 percent higher than the median (i.e., the average calculated as the point at which half the sales are above and half are below). The bottom row shows the number of sales of property for which the assessment-sales ratio is more than 25 percent below this average. Table 1 shows assessment-sales ratios for co-ops centered around the average assessment- sales ratio of these co-ops. Table 2 also shows assessment-sales ratios for these same co- ops, but centered around the average of ratios for 1-3 family homes as estimated for 1999 by the New York State Office of Real Property Services. 10 Tables 3 and 4 show assessment-sales ratios for the condos observed, centered around the averages for these condo and for 1-3 family homes respectively. C. Our findings (1) There is a wide dispersion of assessment-sales ratios. There is a wide dispersion of assessment-sales ratios among co-operative and condominium units. As a result, there is a wide dispersion of property taxes paid indirectly by co-op shareholders and paid directly by condo owners relative to the value of their apartment units. Table 1 provides information on the sales prices and assessment-sales ratios for 89 co-ops units sold in the Town in 1999 and arranged around the average of assessment-sales ratios for these co-ops. There were 28 sales of units on which the assessment was more than 0.03059 of the sales price (row 1). These co-ops bore assessment-sales ratios that were more than 25 percent higher than the average for co-op sales. During this period, there were 29 sales of co-op units showing assessment-sales ratios of under .01835 (row 5). These latter co-ops bore a assessment-sales ratios that were more than 25 percent higher than the average for co-op sales. In other words, 28 units (row 1) sold at assessment- sales ratios that were more than two-thirds higher than those of 29 other sales (row 5). We found, therefore, that the share-holders of 28 co-op units sold paid a rate of tax relative to the value of their apartment units that was more than two-thirds higher than the relative tax paid on 29 other units that were sold. Table 3 shows that there were 9 sales of condo units for which the assessment was more than .0344 (3.44%) of the sales price (row 1). In other words, these condo units bore assessment-sales ratios that were more than 25 percent higher than the average of condo sales. During this period, there were 13 sales of condos showing assessment-sales ratios of under .0206 (2.06%) (row 5). In other words, 9 sales (row 1) showed assessment-sales ratios that were more than two-thirds higher than that of 13 other sales (row 5). We found, therefore, that the owners of 9 condo units sold paid a rate of tax relative to the value of their apartment units that was more than two-thirds higher than the relative tax paid on 13 other units that were sold. Although the range of ratios for condo units was as great as that for co-ops, the proportion of such extreme cases was much smaller for condos than for co-ops. For condominiums, the majority of sales during this period showed ratios close to the average for condominiums because a significant portion of these sales occurred in one new development. (2) Apartment units of low and moderate value are more likely to be over-assessed than are apartments of higher value. The data on co-op and condo units shows an inverse relationship between assessment ratios and property values. In other words, the average ratio of assessment to property value tends to be higher for properties of low and moderate value than it is on properties of greater value. 11 For example, Table 1 shows that 54 co-op units were sold at prices below $100,000 (the first two data columns). Of these relatively moderately valued units, 38 showed assessment-sales ratios that were more than 5 percent higher than the average for co-ops (the first 2 data rows of the first 2 columns). We define these units as being over- assessed. In contrast, only 10 units that sold for under $100,000 were under-assessed, that is, they were assessed at a level compared with the sales price that was more than five percent lower than the average co-op assessment-sales ratio. Using the same procedure, Table 1 shows that of the higher-priced units, i.e., those that units sold for over $100,000, 3 were over-assessed and 30 were under-assessed. As noted with regard to condominiums, most units sold showed assessment-sales ratios that were close to the average for condos (Table 3). However, all of the sold units that exhibited high ratios were sold for relatively moderate prices. The overwhelming percentage of units that showed low assessment-sales ratios were sold at relatively high prices. (3) A high percentage of apartments show an assessment-sales ratio below that of 1-3 family homes and also below nono-residential commercial properties. Tables 2 and 4 arrange co-op and condo sales around the average assessment-sales ratio for 1-3 family homes as estimated by the New York State Office of Real Property Services. Of the 89 co-op sales observed, 4 were within 5 percent of the estimated average assessment-sales ratio for 1-3 family homes (Table 2, row 3). Of the remaining 85 sales, 66 units show an assessment-sales ratio lower than the middle range for 1-3 family homes and 19 units show a ratio higher than the median for 1-3 family homes. Of the 125 condo sales observed, 7 were within 5 percent of the estimated average assessment-sales for 1-3 family homes (Table 4, row 3). Of the remaining 118 sales, 111 show a ratio lower than the middle range for 1-3 family homes and 7 units show a ratio higher than the middle range for 1-3 family homes. Residential multi-family (more than 3 units) properties of any ownership type are considered to be "commercial" properties for purposes of assessment. Nevertheless, assessment-sales ratios on residential multi-family properties tend to be below those of non-residential properties. Our observations found the average ratio of co-ops sold in 1999 to be .0245 and of condos sold in 1999 and early 2000 to be .0275, while the New York State Office of Real Property Services estimated the ratio for all commercial properties in the Town to have been .0592 in 1999. (4) There is a dispersion of assessment-sales ratios among building We identified 3 co-op and condo buildings with sales of 10 units or more. The median assessment-sales ratio among units sold in these buildings ranged from 2.27 percent to 2.74 percent. Our observations included other buildings in which there were fewer than 10 sales and in which the median assessment-sales ratios were either substantially higher or substantially lower than these figures. Although these additional observations suggest that the range of average assessment-sales ratios for individual multifamily buildings is 12 wide, the limited number of observations does not allow us to reasonably estimate the full range of ratios among these buildings. (5) Assessment-sales ratios vary widely within individual buildings. We looked at assessment-sales ratios within individual buildings. In the building in which sales showed the greatest differences in assessment-sales-ratios ratios, the highest ratio among the units sold was 2.7 times as great as the unit sold with the lowest ratio. In other words, the tax burden on one unit sold in this building was almost three times the burden on another sold unit in the same building. Based on limited data, it appears that there may also be an inverse relationship between sales price and assessment-sales ratios among units within individual buildings, as there is among buildings. In other words, within an individual building, a unit of moderate value may be more likely to bear a relatively high assessment-sales ratio than does a unit of higher value. 4. Causes of assessment-sales ratio disparities There are several reasons for the disparities of assessment ratios among co-op and condo units. Some of these reasons are similar to the causes of disparities among 1-3 family homes, mainly differences in the rates of appreciation among properties since 1968. However, several aspects of the process of assessment and distribution of the overall tax burden are unique to multiple-family buildings. A. Assessment of buildings (1) Complexity of building assessment Assessment of multiple-family buildings is complex. As noted, the market value of multiple-family buildings is not determined simply by observation of the terms of sale of nearby comparable buildings as in the case of 1-3 family homes. Rather, their value is determined in part by the estimated income of comparable income-producing rental buildings. This is complicated by the fact that comparable rental buildings generally do not exist. Furthermore, the present value of future income from such an income- producing building must be estimated through the mathematical use of an interest rate that connects future income with present value (see index of terms). (2) Negotiations Negotiations on assessments between builders or owners and assessors yield results that may vary according to the negotiating skills of the parties. A good negotiator representing one building may get a better deal than a poor negotiator representing another building. 13 (3) Court challenges Assessments on multiple-family buildings are more likely to be subject to negotiation and/or court proceedings than are assessments of 1-3 family homes. Here also, the final determination of the assessment may be affected by the legal skill of the respective sides to the dispute. B. Building owner/management decisions V. Differences in assessment-sales ratios of individual apartment units may exist because of the system by which the distribution of the tax liability among units within buildings is determined. Furthermore, differences in assessment-sales ratios in a building may be due to changes in the value of individual units within a building. VI. 14 VII. III. IMPACTS OF REVALUATION ON CO-OPS AND CONDOS We emphasize that revaluation would have no affect on the total amount of property tax collected by the Town, school district, or participating villages. The total amount of property tax collected by these public entities would continue to be those amounts required to fund their budgets after accounting for other expected revenues. The average tax bill faced by individual property taxpayers, therefore, would remain unchanged by revaluation. 1. Revaluation without the homestead option Revaluation would bring assessments to 100 percent of property values and, therefore, eliminate fractional assessments. In turn, the rate of taxation would decline by an amount sufficient such that the total of collections of the Town, school district and participating villages would remain unchanged by revaluation. The average tax bill presented by participating municipal entities on the respective properties in the Town, including 1-3 family homes, multi-family residential buildings and commercial properties, would remain unchanged. With revaluation, however, the property tax due from individual taxpayers would more closely conform to the relative value of their properties than is the case at this time. Revaluation would lower taxes on properties that had been over-assessed based on their market values. Revaluation would raise taxes on properties that had been under-assessed. A. Assessment and tax rates of co-ops and condos Revaluation itself would have no impact on the unique treatment of residential co- operative and condominium homes. As before, assessments of multi-family buildings would not be based on the sales value of the individual units. Multi-family buildings would continue to be assessed according to the estimated value of the entire buildings as income-producing rental properties. However, revaluation would provide a consistent method of analysis of the current value of such buildings. B. Impacts The Committee expects that the revaluation would reduce the disparities that we have found in the assessment-sales ratios among apartment units in multiple-family buildings. However, not all the existing differences in assessment-sales ratios among apartment units would be eliminated because revaluation would have no impact on the disparate ratios that exist within buildings themselves. We have noted that the median assessment-sales ratio of the total of income-producing properties, including multi-family residential properties that are assessed as if they were income producing properties, is higher than the average for all taxable properties (i.e., 15 including 1-3 family homes). Revaluation (without the homestead option), therefore, would reduce the average tax bill of such income-producing plus multi-family properties. Although we do not have sufficient evidence to make a definitive determination, the overall reduction in the average of such tax bills might reduce the tax on multi-family buildings. We note, however that these impacts would vary from building to building depending on the extent to which individual buildings currently are overvalued or undervalued in relation to their respective market value as rental structures. Finally, we point out that our general expectation is consistent with the results of revaluation in Pelham, where revaluation reduced the estimated market value of co-ops (based on rental value) by 8 percent (see appendix table). 2. Revaluation with the homestead option The homestead option, available to assessing jurisdictions that undertake revaluation, involves a number of complex and contentious issues. It is the option provided by State law that enables municipalities to avoid a shift of municipal and school (but not County) taxes that might otherwise occur from income-producing "commercial" properties to homestead-eligible owner-occupied residences. For example, the New York State Office of Real Property Services estimated that homestead-eligible residential properties accounted for 87 percent of the total market value of taxable properties in the Town in the year 2000, but that such properties accounted for only 78 percent of its taxable assessed value. Without the homestead provision, therefore, revaluation might cause the share of the tax burden of such homestead-eligible properties to increase from 78 percent (as it is currently) to 87 percent of the total tax collected by participating public entities. As a result, revaluation without homestead would shift some of the tax burden now paid by income-producing properties (including multi-family buildings) on to residential properties. The homestead option is designed to permit the Town to undertake revaluation while preventing such a shift from happening in whole or part. Imposition of the homestead option is not intended to increase the existing total tax burden of the non-homestead class. Rather, it permits revaluing municipalities to fix the total share of the overall tax burden paid by such non-homestead properties at the existing level, or to limit the amount of the tax liability that revaluation would otherwise shift to homestead-eligible properties. A. Assessment practice Under the homestead option, State law requires that assessment procedures be changed in the case of certain multiple-family buildings, specifically condominium units that had always been condominiums. There are 10 such buildings of the total of 14 condominium buildings in the Town. Under the homestead option, units in these buildings would be 16 assessed in the same manner as are 1-3 family homes; that is, on the basis of their market value as condominiums, not as rental properties. The Town Board also has the option to place newly converted condominiums (that is, converted from rentals after 1997) into the homestead class. Other multiple-family residential buildings would continue to be assessed as before, i.e., on the basis of the income approach applied to the building as a whole. B. Tax rates The homestead option permits the Town to create a two-tier set of tax rates. One rate would apply to homestead-eligible residences and a second rate to all other property. As noted, the two rates could differ from each other by an amount that would, at their greatest, fix the relative shares of property taxes paid by the homestead-eligible and non- eligible classes at the proportions existing prior to revaluation. However, the Town also may opt to set the relative shares of these classes at a level between that existing prior to revaluation and that which would occur after revaluation were a single rate of taxation applied to all taxable properties. By State Law, the Town may make adjustments of the class shares from year to year. C. Impacts • Homestead-eligible apartment units The homestead option is likely to increase assessments on condominiums built as condominiums. We have determined that the ratio of assessments to sales value of condominiums sold in the Town in 1999 and early 2000 averaged 2.76 percent while the Office of Real Property Services has estimated that the average assessment to sales value of all taxable property in the town was 3.69 percent in 1999. This suggests that applying full market value to condominiums built as condominiums could raise average assessments on these units. • Non-eligible apartments Assessments on other multi-family buildings, including the co-op and converted condo units in them, would be unaffected by the imposition of the homestead option. However these non-eligible properties would be subject to the higher "commercial" rate under a two-tier tax rate system. We can say with certainty that the homestead option would be costlier to co-ops and converted condominiums than would revaluation without the homestead option. This conclusion derives from the expectation that homestead would result in the imposition of the higher rate of taxation on properties that are homestead ineligible. However, we cannot be certain about the average impact on these units of revaluation with the homestead option compared with the current situation. We have noted that it is possible, but not certain, that revaluation itself would reduce the average tax cost to co- ops and condominiums. In contrast, the homestead option itself would tend to raise the 17 tax cost for these units. These conflicting propensities would tend to neutralize each other for homestead ineligible properties. But, we cannot say with any degree of certainty what the net result would be on such non-eligible residential properties. The Committee received useful input on the impact of a recent revaluation in Pelham. While we recognize that each municipality is unique and experience from one community will be different from that of another community, we note that co-ops in Pelham experienced an increase in taxes paid of 13 percent between the first year in which taxes were based on revaluation including homestead compared with the prior year. Because municipal budgets in Pelham were increased at the same time, only an undetermined portion of this 13 percent increase was due to the change in assessments and the imposition of the homestead option. 18 TABLE 1. ASSESSMENT-SALES RATIOS: CO-OPS* Number of sales by ratio relative to the co-op median and by sales price ----------------Assessment-Sales Ratio----------------- ------------------Sales Price ($ thousands) ------------------- Total Sales Actual Relative to co-op median $0 - $60 Over $60 Over $100 Over $150 Over $200 .02447 to $100 to $150 to $200 More than .03059 More than 25% higher 12 14 2 0 0 28 More than .02570 More than 5% higher 6 6 1 0 0 13 to .03059 to 25% higher .02325 Between 5% lower 0 6 2 0 0 8 to .02570 and 5% higher Less than .02325 More than 5% lower 1 3 6 0 1 11 to .01835 to 25% lower Less than .01835 More than 25% lower 2 4 11 6 6 29 Total sales 21 33 22 6 7 89 * Sales of co-operative apartment units in the Town of Mamaroneck in 1999. Note: Each data item shows the number of sales within the identified price range (column) and within the identified assessment-sales ratio (row). 19 TABLE 2. ASSESSMENT SALES RATIOS: CO-OPS* Number of sales by ratio relative to the 1-3 family median and by sales price --------------Assessment-Sales Ratio----------- ------------------Sales Price ($ thousands) ------------------- Total Sales Actual Relative to 1-3 $0 - $100 Over $100 Over $150 Over $200 Over $300 family median (.0343) to $150 to $200 to $300 More than .0429 More than 25% higher 11 0 0 0 0 11 More than .0360 More than 5% higher 8 0 0 0 0 8 to .0429 to 25% higher .0326 Between 5% lower 3 1 0 0 0 4 to .0360 and 5% higher Less than .0326 More than 5% lower 16 2 0 0 0 18 to .0257 to 25% lower Less than .0257 More than 25% lower 16 19 6 4 3 48 Total sales 54 22 6 4 3 89 * Sales of co-operative apartment units in the Town of Mamaroneck in 1999. Note: Each data item shows the number of sales within the identified price range (column) and within the identified assessment-sales ratio (row). 20 TABLE 3. ASSESSMENT-SALES RATIOS: CONDOS* Number of sales by ratio relative to condo median and by sales price ----------------Assessment-Sales Ratio----------------- ------------------Sales Price ($ thousands) ---------------------- Total Sales Actual Relative to condo median $0 - $100 Over $100 Over $150 Over $200 Over $300 .0275 to $150 to $200 to $300 More than .0344 More than 25% higher 5 3 1 0 0 9 More than .0289 More than 5% higher 1 2 5 0 0 8 to .0344 to 25% higher .0261 Between 5% lower 6 29 36 12 1 to 2.89% and 5% higher 84 Less than .0261 More than 5% lower 1 1 1 2 6 11 to .0206 to 25% lower Less than .0206 More than 25% lower 0 1 5 6 1 13 Total sales 13 36 48 20 8 125 * Sales of condominium apartment units in the Town of Mamaroneck in 1999 and the first half of 2000. Note: Each data item shows the number of sales within the identified price range (column) and within the identified assessment-sales ratio (row). 21 TABLE 4. ASSESSMENT-SALES RATIOS: CONDOS* Number of sales by ratio relative to the 1-3 family median and by sales price ----------------Assessment-Sales Ratio----------------- ------------------Sales Price ($ thousands) ---------------------- Total Sales Actual Relative to single - $0 - $100 Over $100 Over $150 Over $200 Over $300 family median (.0343) to $150 to $200 to $300 More than .0429 More than 25% higher 2 0 0 0 0 2 More than .0360 More than 5% higher 3 1 1 0 0 5 to .0429 to 25% higher .0326 Between 5% lower 1 4 2 0 0 7 to .0360 and 5% higher Less than .0326 More than 5% lower 6 29 39 12 1 87 to .0257 to 25% lower Less than .0257 More than 25% lower 1 2 6 8 7 24 Total sales 13 36 48 20 8 125 * Sales of condominium apartment units in the Town of Mamaroneck in 1999 and the first half of 1990. Note: Each data item shows the number of sales within the identified price range (column) and within the identified assessment-sales ratio (row). 22 23 APPENDIX: THE PELHAM EXPERIENCE The Town of Pelham revalued its property in 1998 for the 1999 tax year and chose to impose the homestead option. Pelham had five co-op buildings and one newly-built and as yet unoccupied two-unit condominium. Prior to the revaluation, the five co-op buildings in Pelham were assessed at $1,103,404 (see following table). Using the equalization rate based on the median assessment-sales ratio for "commercial" properties (including multi-family buildings) as estimated by the New York State Office of Real Property Services, this was equivalent to an estimated market value (for comparable rental buildings, per the State law) of $20,985,303. The property tax paid on this value was $709,905. The Pelham revaluation resulted in a total assessment, of these buildings, equal to their estimated market value as rental buildings of $19,286,632. In other words, the market value placed on these five buildings in 1998 based on the revaluation was 8 percent less than the estimated value on which the buildings were taxed prior to the revaluation in 1997. Had the homestead option not been imposed, the five co-op buildings would have paid a tax in 1999 (the first tax year to use the revalued assessments) totaling $617,686, or 13 percent less than in the prior year. With the homestead option having been chosen, however, the tax on the buildings totaled $801,078, or an increase of 13 percent from the prior year. It should be noted that a portion of this increase, amount undetermined, was due to increased budgets of the taxing authorities. 24 APPENDIX TABLE: VALUATIONS AND TAXES OF PELHAM CO-OPS: PRE-AND POST REVALUATION --------------Pre-revaluation ------------- -------------Post-revaluation---------------- -----------(1997)------------- --(1998)-- ----1998--- ------------1999 Tax------------ Assessment Equalized Value a' Tax Valuebl No Homestead" With Homestead $1,103,404 1 $20,958,303 1 $709,905 $19,286,632 $617,686 1 801,078 ------------------------ Change: Pre-revaluation to post-revaluation ------------------------------- --- Value---'/ -----------------Tax------------------- No Homestead With Homestead (-8%) (-13%) 1 +13%) a/ Estimated 1997 market value derived by applying the 1997 Pelham "commercial"ratio of.0554 to the assessed value. b/ 1998 value based on revaluation. ei 1999 tax that would have been due based on revaluation had the homestead option not been adopted. d/ Actual 1999 tax due based on revaluation with the homestead option. ei Change in estimated full market valuations. f/ Change in taxes that would have been due in 1998 compared with taxes actually due in 1997 prior to revaluation, based on revaluation had the homestead option not been adopted. 9/ Change in taxes due that actually occurred after revaluation and the imposition of the homestead option. 25 INDEX OF TERMS Assessment: The value placed on property by the municipality for purposes of taxation. Fractional assessment: The condition whereby the assessment of property in a municipality generally is a fraction of its market value. Assessment-sales ratio: The assessment on a property divided by its sales price or estimated market value. Fractional assessment yields an assessment-sales ratio that is lower than 1.00. Homestead option: The option available by State law to a taxing municipality that has revalued properties that allows it to set two distinct rates of taxation on property, one rate on homestead-eligible property and another rate of homestead-ineligible property. Homestead-eligible property: Defined by State law generally as 1-3 family homes and condominiums built as condominiums. Homestead-ineligible properties: All taxable property not eligible for homestead treatment. Commercial property: Income-producing property, but including also by State law for purposes of assessment, multi-family residential buildings with more than 3 units; except that condominiums built as condominiums are not considered as commercial property when revaluation has been undertaken and the homestead option has been enacted. Equalization rate: The average assessment-sales ratio in a taxing jurisdiction as estimated by the New York State Office of Real Property Services. This ratio is termed the "equalization rate" when used to estimate the total value of taxable property in a municipality. It may be used also in legal proceedings and negotiations to reach a settlement on the appropriate assessment of individual properties. Income-producing rental properties: Multi-family buildings containing rental apartments that produce income for the owner. Under State law, however, all multi- family buildings with more than 3 units are treated as if they were income-producing rental property for assessment purposes, except condominiums built as condominiums when revaluation has been imposed and the homestead option has been enacted. Median: The middle point, or the point at which half the observations are higher and half the observations are lower. Present value of future income: The value of an asset that produces future income, based on the amount of income that it is expected to produce in the future. However, estimated future income is discounted using an appropriate rate of interest that is used to estimate the value of future income compared with the value of present assets. 27 Valuation based on: Income: The value of an income-producing property based on the present value of its estimated future income. Sales: The value of a property based on the sales price of comparable properties. Revaluation: The establishment of property values based on the current estimate of its market value. 28 THE COMMITTEE George P. Roniger, Chairman Stephen V. Altieri, Town Administrator Thomas A. Christian James Fleming E. Roger Hotte Richard M. Mumma Irving A. Scharf Richard C. Seltzer Wynne B. Stern, Jr. Barry Weprin The Committee appreciates the input, comments and the benefit of their experience provided by to us Susan Bickerstaff, Assessor, Town of Mamaroneck; Nanette Albanese, Assessor, Village/Town of Scarsdale; and Michele Casandra, Assessor, Town of Pelham. 29 MINORITY ADDITION AND COMMENTS The following addition and comment is submitted by Irving A. Scharf I want to take this opportunity to state that I have no conflict with the Committee's report, but I believe that it is necessary to point out some of the choices the Town Board may consider. 1) If the Board finds that the need to reassess is so profound that it overrides the needs and concerns of the condominium community then it should proceed with reassessment along with adopting the homestead provision. 2) If on the other hand the Board finds that the hardship that will be placed on the condominium owners is too severe, then it needs to seek help in modifying the section of the homestead option that mandates that the assessment procedures be changed on condos built as condos which will no longer be assessed on the income approach. Instead these condos will now be assessed on what a similar condo sells for. It now becomes imperative for the town to correct this unfair practice that singles out condos built as condos for a change in assessing procedures that results in an extensive increase in their assessment. It also is important to look at legislation passed in Albany that gives the assessing unit the option of including newly converted condos in the same group as condos built as condos. What we need is legislation that gives the town the option of not changing the assessing procedures for all condos. A home rule message should be sent to Albany calling for changes in the homestead option. In addition research needs to be done on the possibility of insuring fairness for all and by looking at different kinds of assessment procedures; such as homeowner exemptions, which could eliminate the need for homesteading; and changing the percentage of expenses a commercial property may deduct. We could even look at the possibility of assessing all property on the income approach. We also need a meeting with an expert from Albany who is familiar with the law to advise us on what our options are. 30