Nassau County moves to reassess

Real Estate Weekly, March 8, 2000 by Lois Weiss

Nine years after a judge ordered Nassau County to reassess its properties because its system was so unfair, Republican leaders last week agreed to a county-wide reassessment. The move occurs as depositions were to begin in a lawsuit alleging violations of fair housing statutes in the county, and fiscal problems have arisen that could cause a large increase in property taxes just to keep the county afloat.

Charles O'Shea, chairman of the Nassau County Board of Assessors, last year formed the Nassau Assessment Improvement Commission (NAIC) to make recommendations for improving the system. Although an official report has not yet been made, at the end of February, O'Shea called for immediate steps to begin the reassessment process.

"Over the last several weeks, the members of the NAIC have indicated that the overwhelming consensus was that Nassau must modernize and improve the current system," O'Shea stated in a release.

"Nassau County must take action to improve the assessment system and reduce the payment for tax certiorari judgements," said Nassau County Executive Thomas S. Gulotta, reacting to the assessor's call. "While I have traditionally opposed reassessment, the County's financial condition mandates we stop the hemorrhaging and undertake reassessment with procedures that provide maximum protection for our homeowners."

Last week, the Nassau Board of Assessors unanimously adopted a resolution under the Nassau County Charter to begin a revaluation of residential and commercial properties in accordance with Section 305 of the New York State Real Property Tax Law.

The Board will now prepare two requests for proposals, one each for the reassessment of commercial and residential property, that are likely to be approved by the Nassau County Legislature.

Jack Rubenstein, a partner with Meyer Suozzi English & Klein and chairman of the Certiorari and Condemnation Committee of the Nassau County Bar Association, said. "We are for anything that will create a fair and equitable assessment system in Nassau. It's hard to be against it when the last one was in 1938."

In 1980, a state law that also applies to. New York City created a special, assessing unit of four tax classes in Nassau County, which are taxed at a different percentage of full value. This system also transitions-in any increase in assessment over a five-year period.

But it also caps increases in assessed valuation on Class One homes and small condominiums to no more than 6 percent in any year and 20 percent over five years; and caps certain Class II multi-family properties to no more than an 8 percent increase in any year and no more than 30 percent in any five years.

A provision in the Real Property Tax Law discusses revaluation and the obligations of the assessing district.

Generally, in the, event of a revaluation, said M. Allan Hyman, a partner with Certilman Balm Adler & Hyman, any increases would be transitioned-in through a sliding scale over a period of five years. The first year, he said, the difference between the original assessment and the new one is divided by five and added to the old assessment to arrive at the taxable assessment.

"If the year before the assessment is $100,000, and the new valuation is $200,000, that difference of $100,000 is divided by five so the taxable assessment would become $120,000 for the next year," he explained.

The caps on the increases for Class One and some of the Class Two properties could prove troublesome for a reassessment.

"There's been a lot of wrestling to get around that, said Donald F. Leistman, a partner with Koeppel Martone Leistman & Herman. "The jury's still out."

According to a spokesperson for the State Office of Real Property Services, Nassau would need special legislation passed by the State legislature that would override the Class One and Class Two caps in the year of the revaluation. "Or they could set the level of assessment at such a low percentage, it would not override the existing caps," he said.

A consultant to Nassau County, Dolores Fredrich, an attorney with Farell Fritz, said the intention is to reassess all the parcels. "No state legislation is needed," she claimed, because there would be transitional assessments for these classes, which is not the case.

"Nassau is worse than the Balkans," said Leistman. "There are 62 separate school districts, and three towns and two cities, all with their own share of the [tax] pie."

For instance, in Franklin Square, there are only five Class Two rental apartment buildings. "It's not much of a tax base, and they are a separate tax class," explained Leistman. "We have districts with only one Class Two property, and some districts there are just a few commercial properties. It creates gross inequities."

The Republicans had been ignoring the disparity and ununiformity of the assessments, critics charged, because the current system favored its constituents in wealthy white neighborhoods over those in poorer black areas.

That's because most homes are assessed based on 1938 construction costs, without regard to neighborhoods or resale value. Worsening the problem, in 1964, vacant land was reassessed, so any homes constructed since that time on what was vacant land end up with a higher land valuation than those built earlier.