Final tax roll released by city

Real Estate Weekly, June 3, 1998 by Lois Weiss

Under the City Charter, the tax fixing resolution is supposed to be voted on by June 5th. Last year, it was passed on June 6th after budget mavens agreed to send tax bills at the 1997 tax rates and make the changes in rates and payments for the January 1998, second-half billing.

At that time, to keep Class One homeowners from suffering a $30 or so rise in tax if the legal 5 percent cap on class shares was allowed to be implemented, a 2.5 percent cap was agreed to by City Hall and the City Council, and eventually signed into law in Albany.

With Albany set to "go out of business" on June 18th, the number for a tax class cap has become just one of several pawns being worked around the city's budget table. These pieces also include the personal income tax surcharge and the Yankee Stadium resolutions, and as was mentioned by Office of Management and the Budget Commissioner Joseph Lhota, the co-op and condo abatement plan.

This year's final tax roll includes results on 11,000 properties with completed hearings, and for the first time in many years, the adjudication at the Tax Commission level of all buildings assessed at $12 million or more - in the past it was $20 million. The roll also includes a sprinkling of other property types whose owners requested a hearing "on the papers," including "walk-in" hearings at borough offices, and decisions on those properties requesting tax exempt status.

At a speech before the National Realty Club last Thursday, Tax Commission President James DeCuzzi said he did not see any reason to make the owners of properties awaiting such exemptions pay taxes this year, especially if they were going to be exempt.

The Department of Finance sets assessments and the Tax Commission acts as an independent arbiter, DeCuzzi explained at the luncheon, which was held at the Williams Club.

The final tax roll shows 1998/99 billable assessments that are up in every class and in every borough over last year's final roll (except for utility property that lost value in Brooklyn), reflecting the overall economic buoyancy of the city.

Billable assessments total $77,698,705,378, up from final billables of $76,014,120,527 for 1997/8, and down about $1 billion from the tentative January roll of $78.6 billion. Class Two has gained $700 million in billable assessments over last year, while Class Four has gained $950 million, about $800 million of that in Manhattan.

Each $100 million of taxable assessment nets the city a little more than $10 million, based on an average tax rate of about $10.366 per thousand dollars of assessment.

At the Class Two and Class Four tax rate of over $11 per hundred of assessment, the city could collect an additional $192.5 million in property taxes on the added billable assessed value alone.

The tax rate for last year's 1997/98 roll was Class I $.10849; Class II tax rate $.11046; Class III $.08282 and Class IV $. 11046, and the new rates are not expected to decrease.

The overall levy is expected to rise to about $8.102 billion, while the levy for the 1997/8 tax year was $7.89 billion.

DeCuzzi said the assessments were set by Finance using income and expense methodology. During recent Tax Commission hearings, property owners and attorneys generally persuaded the agency to discount the high ticket sales, particularly when the real estate investment trusts were the purchasers, noting these sales were not indicative of true values, but driven by investors seeking future returns.

The Giuliani administration is pursuing new legislation that would take away the recently restored ability of taxpayers to use sales when challenging their assessments. Sales are currently allowed to be introduced into evidence to prove (or disprove) the city equalization ratio, which in recent years has been presumed by the city to be 45 percent of value for Class Two and Four, and 8 percent for Class One.

Attorneys contend the true ratio to be much less for apartment buildings and commercial properties, citing the current higher sales as part of the proof, which would result in a lower overall ratio and lower assessments for those challenging their tentative assessment.

If a building is valued at $1 million, the assessment would be $450,000 under the city's methodology, but perhaps $300,000 if the city ratio were to actually be 30 percent, for instance, they say.

Under the city proposal, homeowners and those outside the City of New York would continue to be able to use sales to prove inequality of ratio.

Commissioner DeCuzzi said taxpayers can continue to show all proof, including sales, before his agency, but it was unlikely they would set any administration policy, which is something the Law Department or the courts would decide.

A memo requesting the sales methodology be disallowed portends possible ramifications, including a billion dollar tab to the city in refunds to taxpayers.

Attorneys believe that amount is excessive, but use it as evidence the city must be setting assessments unequally if it is worried about the ramifications. Shouldn't the taxpayers who have been harmed be made whole, and not legislated away, they ask?