Real Property Taxation
Brian McLaughlin - Chairperson
December 15, 2005
The Honorable Sheldon Silver
Dear Speaker Silver:
I am pleased to submit the 2005 Annual Report of the Assembly Standing Committee on Real Property Taxation. This was a busy year for the Committee, with a wide range of challenging issues and diverse legislation to consider.
This year, as in the past, the Committee was immersed in the proposed budget negotiations. The two key 2005 budget issues of particular interest to the Real Property Taxation Committee were: STAR Plus and Co-STAR. I am pleased to state that with your leadership and the assistance of Dean Fuleihan, we were successful once again in rejecting both of these budget issues. The STAR Plus and the Co-STAR provisions would have required school districts and municipalities to establish budgets that were subject to strict spending limitations (caps). The cap proposals would compromise the ability of the schools and local municipal leaders to meet the needs of their community and would undermine the authority of school officials to aptly address local educational needs when drafting and implementing the school budget.
In 2005 the Committee met ten times and acted on ninety-seven bills. We reviewed and reported proposed legislation in a variety of areas including, general administration, exemption administration, and jurisdiction specific (local) legislation. In addition to our daily legislative responsibilities, the Committee worked closely with the New York State Office of Real Property Services (NYS ORPS) to promote informed and responsible legislation. Other notable issues that the Committee embarked on this year were in relation to:
In 2006, the Committee will focus on assessment cycles, ascertain a means by which to codify a statewide volunteer fire-fighters/ambulance exemption, and continue to explore viable options to reduce cash-flow problems that are related to real property tax delinquencies and delayed State STAR reimbursement.
I have greatly enjoyed working with the Real Property Tax Committee members. Their knowledge and enthusiasm were instrumental in making this a pleasant and productive year. I look forward to another productive year.
2005 Standing Committee on
Brian M. Mc Laughlin, Chairperson
Members of the Committee
James F. Brennan
Joan K. Christensen
Annette M. Robinson
Aileen M. Gunther
Sandra Lee Wirth - Ranking
Bernard H. Bryan, Legislative Coordinator
Anthony S. Cantore, Legislative Counsel
Karen Smeaton, Legislative Analyst
Anne Rua, Committee Clerk
Mona Carter, Program and Counsel Secretary
|TABLE OF CONTENTS|
|I. PUBLIC HEARING:|
On April 7, 2005 the Assembly Standing Committees on Real Property Taxation, Cities, and Housing held a joint public hearing in New York City to investigate the facts surrounding the substantial real property tax assessment increases for property owners in Harlem and Bedford-Stuyvesant neighborhoods in the City.
Our goal was to examine the circumstances surrounding the significant real property assessment increases and to develop and/or review equitable proposals that could be implemented to modify the assessments in order to ease the fiscal hardship that such sudden and significant assessments increases produce on property owners.
Findings at the hearing confirmed that some of the assessment data obtained by the City for the 2005 assessment roll was based on inaccurate and/or incomplete data. Property owners that were negatively affected by such inaccuracies were urged to go through the normal assessment grievance process (a/k/a the appeals process) to have their assessments adjusted to reflect the true value. However, for the majority of property owners that spoke and/or submitted testimony at the hearing, substantial rehabilitative improvements were made to the properties. The improvements were generally significant (most of the home-owners invested well over $50,000 in rehabilitating their homes) which made these homes more marketable, thereby substantially increasing their assessed value. Nonetheless, for many of the homeowners the significant increase in their real property tax liability was not due solely to the renovation/rehabilitation of their real property, it was a combination of improvements that enhanced market values in the neighborhood and classification changes.
The properties with considerable real property tax increases were now being re-classified. They were no longer class one properties (residential units of three or less) but were now considered class two properties (residential units of more than four). In New York City, the percentage of assessed value used to determine the taxable value of property (referred to as class ratio) is significantly lower for class one than tax class two. The 2005 class ratio for class one is 6%, the class ratio for class two is 45%. Clearly, even without major renovations, simply being treated as a class-two property significantly increased the tax liability for many homeowners. Although the improvements and additional rental unit(s) will allow for greater rental income, it was resoundingly clear that such increases in rental income simply would not be sufficient to overcome the sudden and significant tax liability that these homeowners would be obligated to pay in 2005. Many of the homeowners indicated that they would not have the financial means to meet their new real property tax obligations and would ultimately be delinquent in paying their tax bills and/or have to sell their newly renovated homes.
As a result of the April 7, 2005, public hearing and with the support of the City Council, the Department of Finance, the Chairs and Members of the Real Property Taxation Committee, the Cities Committee, and Housing Committee, along with the Assembly members representing New York City, Assembly Bill A. 8723 was developed and enacted (awaiting assignment of a chapter number). This legislation provides a transitional phase-in for improvements/renovations for class two residential dwellings consisting of less than eleven units. Specifically, this legislation limits the initial increase in assessment value attributed to the improvements/renovations to no more than 1/3 and limits future assessment increases on the property to the standard 8% annually and thereafter. [refer to RPTL §1805(6)]
|II. GENERAL ADMINISTRATION:|
A. ASSESSMENTS CYCLE
Chapters 42 and 132 established the "Flood Assessment Relief Act of 2005". This legislation was specifically aimed at providing financial relief to property owners in 21 counties (Broom, Cayuga, Chautauqua, Chenango, Columbia, Cortland, Delaware, Greene, Madison, Montgomery, Niagara, Orange, Otsego, Putnam, Rensselaer, Schenectady, Schoharie, Sullivan, Tioga, Westchester, and Ulster) that were negatively impacted by the enormous rainfall that took place from April 1, 2005 through April 11, 2005.
Chapters 42 and 132 provides the necessary instruments by which municipalities throughout the 21 counties could set aside for assessment purposes the standard taxable status date (generally March first) and reevaluate the current market values of the properties taking into account the damage caused by the April Floods.
Specifically, this legislation authorized the assessment value of properties that were significantly impacted by the floods to be assessed at a value that reflects the property value as of April 15, 2005 for the 2005 assessment rolls. For practical purposes, the assessors within the municipalities that adopted the provisions of Chapter 42 and 132 are permitted to adjust the assessment rolls in the same manner as other clerical error corrections as defined by Section 550 of the Real Property Tax Law and as provided by Title 3 of Article 5 of the Real Property Tax Law.
NOTE: Similar legislation passed through the Governmental Operations Committee. This legislation - referred to as the "North Country Flood Assessment Relief Act of 2005" authorizes taxing jurisdictions within Essex and Warren County to reestablish assessment values for properties that were damaged due to severe weather between June 9, 2005 and June 20, 2005. The assessed property values for these severely damaged properties is to be based on the value of the property as of July 1, 2005 - provided the county adopts said provisions.
Chapter 177 allows taxing jurisdictions within Fulton County to set-aside the March 1, 2005 tentative assessment roll and to re-establish a new tentative assessment roll - no later than July 31, 2005.
This legislation is a direct result of overwhelming concerns by property owners and local government officials - particularly officials in the Towns of Johnstown, Mayfield, and Northville - that believe the recent implementation of new assessment procedures along with the upgrading in software resulted in irregularities in the assessed values of lake front properties.
Chapter 714 requires real property assessment values to reflect the actual rents that are received and/or can be obtained for residential rental property that is subject to municipal, state, or federal rent restrictions.
Prior to the enactment of this legislation, developers who created affordable housing often had the disadvantage of having their properties assessed using the market rents despite the fact that the rents in such units were restricted. Often the actual rents that could be obtained due to rent restrictions were significantly less than the comparable market rates.
It is believed that such inequity in the valuation process discourages developers from building affordable residential units. This bill attempts to alleviate this problem by providing for more realistic valuation and assessment rates on rental property that have restrictive rental income clauses.
Chapter 697 limits the base proportional shift to 1% for the 2005/2006 assessment roll in the Town of Islip - a homestead/non-homestead taxing jurisdiction. Capping the shift allows a modest transition of the tax liability between the two classes and should forestall massive swings in tax obligations for the average homeowner.
In addition, this legislation authorizes the Town of Islip to transition in the required 2% tax shift for the 2004/2005 over a five year (2005 through 2009) period (refer to L. 2004, c. 502). This provision will ensure that the homestead class will have an appropriate amount of time to adjust to the base proportional shift that would otherwise result in significant tax obligation for residential property owners
Chapter 401 permits the New York State Education Department (NYSED) to use the 2004 assessment data when calculating state aid for the Hampton Bays Union Free School District for the 2006/2007 school year. If this legislation were not enacted, the NYSED would not use the 2004 re-evaluation assessment data for an additional year.
NOTE: The Town of Southampton has recently completed a two year town-wide reassessment of all parcels within its jurisdiction and it has shown that properties contained within the Hampton Bays Union Free School District have decreased in value by 8%.
1. Towns of Haverstraw and Stony Point
Chapter 163 authorizes the Towns of Haverstraw and Stony Point to enter into a "payment in lieu of taxes" (Pilot) agreement with Mirant Corporation for properties commonly known as Bowline Point and Lovett Generating Station.
The PILOT agreement must be approved by the Rockland County Industrial Development Agency and cannot exceed eight years. In addition, the agreement must stipulate a specific payment schedule.
Note: For several years, the former and current owners of the Bowline Point and Lovett Generating Station have litigated the assessed value of the properties in question. In addition, the Mirant Corporation is currently in a financial restructuring phase, which has resulted in the non-payment of property taxes. This legislation will provide a means by which to facilitate an equitable real property tax settlement thereby providing stability and predictability in the tax liability of electric generating facilities.
|III. DEPARTMENTAL LEGISLATION|
As a general rule, the New York State Office of Real Property Services (ORPS) will regularly submit legislation (a/k/a departmental bills) that they believe will enhance and/or streamline the assessing process in New York State. This year the Legislature - working closely with the staff at ORPS, passed four departmental bills, they are:
|IV. ADMINISTRATIVE EXEMPTIONS|
|V. SPECIAL ASSESSING UNITS - NEW YORK CITY AND NASSAU COUNTY|
|VI. OUTLOOK FOR 2006|
As the Committee heads into 2006 Legislative Session it will continue to review the plausibility of revising the manner in which municipalities are authorized to handle delinquent real property taxes, search for viable solutions to provide real property tax relief to working families and the elderly and will continue to focus on ways to streamline the real property assessment and taxation process to make it more transparent, especially in the area of favoring a few taxpayers with exemptions at the expense of the many.
2005 SUMMARY OF ACTION ON ALL BILLS REFERRED TO THE
REAL PROPERTY TAXATION COMMITTEE
|FINAL DISPOSITION OF BILLS||ASSEMBLY BILLS||SENATE BILLS||TOTAL|
|Total Referred to Committee||334||55||389|
|Bill Reported -||97||135|
|Bills Having Enacting Clause Stricken||3||0||3|
|Bills Having Committee Reference Change||4||0||4|
|Senate Bills Substituted||23||23|
|Senate Bills Recalled||3||3|
|Bills Held in Committee||230||29||259|
|# of Bills Signed Into Law||60|
|Real Property Committee Meetings = 10|
REAL PROPERTY TAXATION LEGISLATION THAT BECAME LAW
|329A||Tonko||244||Authorizes municipalities within Montgomery County to adopt local legislation that affords volunteer firefighters /volunteer ambulance workers a partial real property tax exemption on their primary residence.|
|630||Stringer||139||Establishes minimal qualification standards for assessors and appraisal personnel for said vocation in New York City.|
|1683||Gunther||189||Authorizes municipalities in Sullivan County to adopt local legislation that affords volunteer firefighters and volunteer ambulance workers a partial real property tax exemption on their primary residence.|
|2039||Calhoun||74||Authorizes municipalities in Orange County to adopt local legislation that affords volunteer firefighters and volunteer ambulance workers a partial real property tax exemption on their primary residence|
|2927A||Cahill||72||Chapter amendment to Chapter 753 of the Laws of 2004, clarifying provisions for persons with school age children maintaining their disability and limited income exemption.|
|3001||McEneny||397||Authorizes the City of Albany to adopt local legislation affording a residential investment exemption for certain owner occupied dwellings.|
|4196||DiNapoli||99||Authorizes the Nassau County assessor and the assessor for the Village of Old Westbury to accept a retroactive nonprofit tax exemption application from the Korean Joong Bu Presbyterian Church for the 2001/2002 assessment roll.|
|4375A||Canestrari||714||Require that the assessed value of residential real property used for rental purposes take into account the impact of any rent restrictions.|
|4973||Sweeney||324||Authorizes certain municipalities to adopt local legislation allowing for the continuance of the volunteer fire fighter/ambulance worker partial real property tax exemption in instances where the volunteer expired in the line of duty.|
|5448A||Magee||667||Clarifies that indoor exercise arenas used exclusively for the training and exercising of horses as part of a commercial agricultural enterprise are eligible for a real property tax exemption.|
|5745||DiNapoli||261||In Nassau County, authorizes school districts to adopt local legislation affording a partial real property tax exemption for certain volunteer firefighters/volunteer ambulance workers.|
|5766||Sweeney||657||Extends the sunset date of the first-time homebuyers real property tax exemption until 2010.|
|6038A||Alfano||358||Authorizes the Nassau County assessor to accept a retroactive real property tax exemption application from the Village of Floral Park for the 2003/2004 & 2004/2005 assessment roll.|
|6069A||Thiele||401||Requires the State Education Department to utilize the 2004/2005 assessment values when determining the 2006/2007 school aid for the Hampton Bays School District.|
|6194||DiNapoli||17||In Nassau County, limits the base proportional class growth to a maximum of 2% for the 2005 tax roll.|
|6404A||DiNapoli||362||Authorizes the Nassau County assessor to accept retroactive real property tax exemption applications from the Great Neck Park District for the 2000/2001 through 2003/2004 assessment rolls.|
|6405A||DiNapoli||363||Authorizes the Nassau County assessor to accept a retroactive real property tax exemption application from the New Hyde Park-Garden City Park Union Free School District for the 2003/2004 and 2004/2005 assessment rolls.|
|6424||Gantt||327||Defers the repayment of STAR monies owed to the State by the Rochester School District until 2007.|
|6444||Weisenberg||20||In Nassau County, limits the Homestead/Non-Homestead class growth rate to a maximum of one percent for the 2005 tax roll.|
|6601||Abbate||500||Authorizes the Commissioner of the New York City Department of Finance to accept a retroactive nonprofit real property tax exemption application from the Muslim American Society for the 2001 assessment rolls.|
|6628A||Kirwan||717||Authorizes the assessor for the Town of Newburgh to accept a retroactive nonprofit real property tax exemption application from the Goldsmith D. & Mary B. Johnes Home for the 2004/2005 assessment roll.|
|6795||Zebrowski||163||Authorizes the Towns of Haverstraw and Stony Point to enter into a PILOT agreement with a certain electricity generating facilities.|
|6833||McDonough||364||Authorizes the Nassau County assessor to accept a retroactive nonprofit real property tax exemption application from the Merrick Jewish Centre for the 2002/2003 and 2003/2004 assessment rolls.|
|6837||Sweeney||691||Authorizes the assessor for the Town of Islip to accept retroactive nonprofit real property tax exemption applications from Hands Across Long Island for the 2004/2005 assessment roll.|
|6878A||Lopez||110||Establishes the Greenpoint - Williamsburg Development Zone and sets eligibility requirements for development projects eligible for a real property tax exemption.|
|7051B||Weisenberg||694||Authorizes the Nassau County assessor to accept a retroactive real property tax exemption application from the Hewlett Bay Fire District for the 2004/2005 assessment roll.|
|7114A||Aubertine||208||Authorizes local municipalities in Jefferson and St. Lawrence Counties to adopt legislation that affords volunteer firefighters and volunteer ambulance workers a partial real property tax exemption on their primary residence.|
|7211||Paulin||270||Authorizes the assessor of the city of New Rochelle is to accept a retroactive nonprofit real property tax exemption application from the Kehilat Chovevel Tzion Congregation for the 2004 assessment role.|
|7367||DiNapoli||373||Authorizes the Nassau County assessor to accept retroactive real property tax exemption applications from the Manhasset Union Free School District for the 2003/2004 and 2004/2005 assessment rolls.|
|7450A||Weisenberg||271||Clarifies that it is the 2003 real property tax and the 2002-2003 school tax for which the Nassau County assessor is authorized to accept a retroactive nonprofit tax exemption application from the Shiloh Baptist Church.|
|7451A||Weisenberg||272||Authorizes the Nassau County assessor to accept a retroactive nonprofit real property tax exemption application from Young Israel of Hewlett for the 2004/2005 assessment roll.|
|7467B||Thiele||273||Authorizes the assessor for the Town of Brookhaven to accept retroactive nonprofit real property tax exemption applications from the Independent Group Home Living Program for the 2002 through 2005 assessment rolls (property located at 159 Montauk HWY).|
|7468||Thiele||454||Authorizes the assessor for the Town of Brookhaven to accept retroactive nonprofit real property tax exemption applications from the Independent Group Home Living Program for the 2002/2003 and 2003/2004 assessment rolls (property located at 59 Frowein Rd).|
|7469B||Thiele||455||Authorizes the assessor for the Town of Brookhaven to accept nonprofit real property tax exemption applications from the Independent Group Home Living Program for the 2002/2003, 2003/2004, and 2004/2005 assessment rolls (property located at 332 Old Country Rd).|
|7549A||Weisenberg||417||Authorizes the Nassau County assessor to accept retroactive real property tax exemption applications from the Village of East Rockaway for the 2001 through 2004 assessment rolls.|
|7625A||Cahill||42||Establishes the "Flood Assessment Relief Act of 2005" applicable to 14 counties that may have experienced significant weather damage in April of 2005.|
|7634A||Eddington||739||Authorizes the assessor from the Town of Brookhaven to accept retroactive real property tax exemption applications for five properties owned by the Evangelical Lutheran Emanuel Church of Patchogue for the 2003/2004 through 2005/2006 assessment rolls.|
|7728||McLaughlin||275||Expand the eligibility requirements for New York City’s J-51 program by removing the value/purchase cap of $40,000.|
|7847A||Ortloff||695||Authorizes the Town of Chaplain to issue an additional real property tax bill related to Sewer and Water Benefit Area Number 1.|
|7857A||Saladino||370||Authorizes the Nassau County assessor to accept retroactive nonprofit real property tax exemption applications from the Bethel Christian Church for the 2002/2003 and 2003/2004 assessment rolls.|
|7869||McLaughlin||743||Streamlines the equalization process for special franchises properties (ORPS Departmental # 161).|
|7870||McLaughlin||215||Increase from $150,000 to $450,000 the maximum "equalized value" of property eligible for the small claims assessment review process (ORPS Departmental #150).|
|7871||McLaughlin||742||Simplifies and clarifies the renewal process for the Enhanced STAR exemption (ORPS Departmental #130).|
|7872||McLaughlin||216||For a limited amount of time, provides additional financial aid to taxing jurisdictions that enter into agreements to share assessment resources (ORPS Departmental Bill # 116).|
|8120||McLaughlin||279||Expands eligibility for the J-51 real property tax exemption program, allowing said entities to qualify for the exemption even in cases where public monies are received.|
|8137A||Christensen||419||Authorizes local municipalities within Onondaga County to adopt local legislation that affords volunteer firefighters/volunteer ambulance workers a partial real property tax exemption on their primary residence.|
|8229A||Raia||745||Authorizes the assessor for the Town of Huntington to accept a retroactive real property tax exemption application from the Greenlawn-Centerpoint Historical Association for the 2002/2003 assessment roll.|
|8248A||Acampora||721||Authorizes the assessor for the Town of Brookhaven to accept a retroactive nonprofit real property tax exemption application from Middle Island Caring for Kids for the 2004/2005 assessment roll.|
|8269A||McDonough||461||Authorizes the Nassau County assessor to accept retroactive real property tax exemption applications from the North Bellmore Fire District for the 2003 through 2005 assessment rolls.|
|8330||Fields||697||In Suffolk County, limits the homestead/non-homestead class base proportional shift to no more than one percent for the 2005/2006 assessment roll.|
|8342||Ramos||670||Authorizes the assessor for the Town of Islip to accept retroactive nonprofit real property tax exemption applications from the Gospel Tabernacle Church for the 2001/2002 through 2005/2006 assessment rolls.|
|8356||McLaughlin||*||Expands New York City’s CEP program to include sections of the Garment District and modifies eligibility requirements.|
|8530||Sweeney||432||Extends the time frame by which a school district that crosses Nassau and Suffolk County lines may request a special segment rate.|
|668||Authorizes the assessor for the Town of Islip to accept a retroactive real property tax exemption application from Touro College for the 2003/2004 assessment roll.|
|132||Amends the Flood Relief Act of 2005 by including additional counties and stipulating the manner by which assessment adjustments are to be administered.|
|*||Limits the allowable increase in assessed value for renovations/rehabilitation and/or improvements to class two dwellings (in NYC)|
|733||Authorizes the bonding and repayment of certain judgment expenses associated with assessment grievances related to utility type properties (e.g. Mirant); bonding cannot exceed thirty years.|
|177||Authorizes an alternative tentative assessment date (not to exceed July 31, 2005) for municipalities within Fulton County for the 2005 rolls.|
|178||Limits the base proportional adjustment in New York City to no more than 2% for the 2006 assessment roll.|
|712||Authorizes municipalities in Saratoga County to adopt local legislation that affords volunteer firefighters / volunteer ambulance workers a partial real property tax exemption on their primary residence.|
* Denotes that the bill was sent to the Governor in September 2005 but that no chapter number had been publicly assigned at the time this report was written.
2005 REAL PROPERTY TAXATION LEGISLATION
PASSED THE ASSEMBLY ONLY
|A. 393||Gunther||Would require the petitioner to send notification of the filing of a small claim assessment grievance petition to the assessor of said taxing jurisdiction|
|A. 568||Magee||Would include the Board of Fire Commissioners among the municipal governmental entities required to receive notification of real property assessment challenges|
|A. 575||Stringer||Would authorize the Finance Commissioner in the City of New York to commence civil actions to recover lost tax revenue related to the diminution of property assessments in instances where such losses were due to criminal or fraudulent activity|
|A. 618||Stringer||In assessment review proceedings the Dept. of Finance would be required to disclosure to the petitioner the assessment methods and formulas used (to include capitalization rates) to determine the assessed values of properties named within said petition (applies to NYC).|
|A. 3114||Sweeney||Would establish a "Commercial Assessment Ratio" in Suffolk County|
|A. 3154B||Karben||Would authorize Rockland County to reduce the waiting period from five years to two years for tax exemptions for volunteer firefighters and volunteer ambulance workers|
|A. 3755||Sweeney||Establishes a permanent cap on equalization rates in Suffolk County - establishing that the equalization rate cannot differentiate by more than 2% from the equalization rate that was established in 2003/2004.|
|A. 4360A||Weprin||Establishes that a home owned by individuals where said owners would qualify for either the senior citizen exemption or the persons with disability exemption may select the exemption most beneficial and have said exemption apply.|
|A. 5627||McLaughlin||Would require that at least one member of the New York State Board of Real Property Services be a current resident of New York City and familiar with the City's assessing practices.|
|A. 5635A||McEneny||Would authorize - at local option - a partial real property tax exemption for volunteer firefighters and volunteer ambulance workers in Albany County.|
|A. 5936||Tokasz||Would clarify that in the City of Buffalo - when property is foreclosed due to nonpayment of real property taxes any surplus funds received from the sale of said properties will remain with the City of Buffalo - even in instances where the City did not take title prior to the public sale.|
|A. 6128B||Paulin||Would require the New York State Board of Real Property Services to calculate a special equalization rate for the Tuckahoe Union Free School District in Westchester County.|
|A. 6657A||McEneny||Would authorize the assessor of the City of Albany to accept a retro-active nonprofit tax exemption application from the Capital District Irish American Association for the 2004 assessment roll.|
|A. 6690||Sweeney||Would authorize localities to adopt legislation affording a partial real property tax exemption on newly purchased pre-owned homes; the exemption is for five years - starting a 50% and decreasing by 10% annually.|
|A. 7919||Hoyt||Creates a capital improvement exemption for the City of Buffalo.|
|A. 8664||(Rules) Canestrari||Expands the 421-h real property tax exemption to cities with a population of more than 15,000 but less than 23,000.|