Bill to spur contracts for home upgrades

Real Estate Weekly, Sept 1, 1993 by Lois Weiss

One product of this year's New York State legislative session is a law that allows communities to phase-in the increase in assessed value after a home improvement. The concern over the increased assessment and the subsequent increase in property taxes was thought to have prevented many homeowners from improving their properties.

The new bill grants a 100 percent exemption on the increase in the first year and decreases the exemption by 12.5 percent in each of the next seven years. The law does not apply to New York City where a similar exemption is already in place for one- and two-family homes under the 421-b program.

The new section, 421-f of the Real Property Tax Law, was sponsored by Sen. Owen Johnson, a Babylon Republican who serves as Majority Whip and Assemblyman Joseph Pillittere, a Niagara Falls Democrat. Johnson had tried to obtain passage for a similar bill targeted to Suffolk County for several years.

The provisions, however, will not take effect until after the adoption of a local law, which Babylon is already preparing to do. The county and certain school districts are able to opt out and the law does not apply to cities where the population is more than 1 million.

The measure also limits the increase in market value to no more than $80,000 or less than $5,000, divided by the Class I ratio or state equalization rate if less than 95 percent.

"They are not losing any money," explained the legislative director for Senator Johnson, Bruce Geiger. "We're not giving an exemption for something they are already getting."

Geiger notes that property taxes are so high the residents are either not improving their property or not going to the towns to obtain the building permits.

"They are just adding the deck and the swimming pool and the town is not getting the revenue," Geiger said. "If we give them a break, it will release activity into the open and the school districts and towns and counties are given the extra revenue in the future."

"I don't think it's fair," complained Dale Young, president of Property Tax Savers, which represents homeowners in the appeal of their taxes. "There's no teeth in the law. The local communities can do whatever they want."

Young thinks all assessments should be current and up-to-date and does not like laws set up to create inherent in equalities. "We should stop instituting procedures that are subsidized by other residents," she said. "If somebody is spending $70,000, it will cost them roughly $1,600 in Scarsdale in new taxes. Why should his tax burden be picked up by other people?"

Home contractors, however, are delighted by the prospect of spurring more work. Jerome J. Zacharia Jr., general manager of Remodeling Consultants in Mamaroneck, believes the law will help his firm tremendously. "Just about everyone wants to know how much more they will be paying in taxes," he said.

If people don't register the jobs, he noted, they are not getting proper inspections for plumbing and electrical work and could end up having problems later on. "What they think they are saving money on usually ends up costing them more when they have to repair it," he said. "The local politicians should be made aware of the law," he added.

Mitchell Pally, vice president for legislative and economic affairs for the Long Island Association, the regional chamber of commerce for Long Island, said, "We strongly supported the bill. We lobbied extensively for the bill and are pleased the governor signed it into law."

Pally said the group believes the law will benefit not only the remodeling industry but many other businesses because the homeowners must buy everything from wallpaper to stereos to furnish their new rooms.

He said the Nassau and Suffolk County administrations expect to opt into the program and they will be urging the communities and school boards to do so as well.