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WPCNR ALBANY ANALYST. By John F. Bailey. May 21, 2007: Assemblyman Adam Bradley’s Equalization Rate Relief Bill has been reported out of Committee in the Assembly. It will be voted upon either this week or next by the body, according to Justin Smith, Mr. Bradley’s Legislative Director. Should the Assembly approve the bill, which applies only to Westchester County, it stands a very good chance of passing in the Senate, according to State Senator Suzi Oppenheimer, the Bradley bill sponsor in the Senate.

The New York State Assembly Chamber, Albany.
The bill is tailored exclusively for Westchester County property tax relief from the equalization rate effect that, by its nature, creates the certiorari tax relief suits that have ravaged the White Plains and other Westchester city and town assessment rolls.
The Bill establishes a separate commercial assessment ratio only for Westchester County for major type B commercial property for counties over 923,000, but less than 924,000 in population. Under this narrow population range, Westchester County is the only county qualifying for that relief, allowing a separate commercial assessment ratio, according to State Senator Suzi Oppenheimer, who feels the Senate majority in Albany would “have no trouble” passing the bill because it is a local measure only affecting Westchester.


State Senator Suzi Openheimer, and Assemblyman Adam Bradley.
Exclusive to Westchester County
Oppenheimer said, “Since it is limited to Westchester, I don’t think we’ll have much trouble. We’re the only one that fits in (to the population restriction). We’d have greater trouble if we’re trying to pass something statewide, because you run into conflicting opinions upstate, downstate, suburban, urban, rural. But, I think because it’s limited I don’t think there should be too much trouble. We’re right now in discussion with the majority.” She said she felt that Governor Eliot Spitzer would have no trouble signing it if it were passed by both houses.

Next Stop: The Senate. The New York State Senate Chambers. Albany.
The effect of the legislation takes residential real estate out of the formula currently used to assess commercial properties – a situation that lowers commercial assessments as housing market values increase – dramatically raising residential property owners’ share of real estate taxes. It is particularly onerous in counties like Westchester, where housing values are going up faster than commercial property values. The bill if passed by the assembly and senate would provide realistic assessment of commercial properties, stabilizing and neutralizing future certiorari tax relief suits.
One assessor WPCNR interviewed recently explained the bill to us.
WPCNR: What is the Equalization Rate?
Assessor: The Equalization Rate is a measurement of the municipality’s value. It is used in 43 different formulas across the state of New York to determine state aid and school aid and as a device by which municipalities value property at a percentage of market value. It’s also used to equalize the assessments into a full market value, and also used for apportionment of county taxes, and establish bail bond amounts. All these factors in the overall picture are very important, but the most important use of Equalization Rate is to equalize assessments.
Property taxes are an ad valorom tax, meaning you pay taxes on the face value of your property, nothing else. As municipalities assess property at a percentage of market value for commercial property, that percentage is known as the equalization rate.
WPCNR: There are two different formulas?
Assessor: For that matter, the percentage applied to residential properties is known as the Residential Assessment Ratio. Both rates (Equalization Rate and Residential Assessment Ratio) are established by the New York Office of Real Property Services annually to measure the value of the municipality.
WPCNR: How are the two rates determined?
Assessor: The Residential Assessment Ratio is simply created by comparing residential assessments to residential sales. The complexity and inequity is found in the establishment of the equalization rate (applied to commercial properties).
WPCNR: How does the inequity occur?
Assessor: The Equalization Rate is again determined by the NYSORPS. The Equalization Rate applied to commercial properties takes into consideration all properties within a municipality (including residential). The derivation is comprised of the market value of 4 components:
1. Residential Property
2. Commerical Property
3. Vacant Land
4. Utility properties.
Each category is measured by comparing the estimated full value by their categorical assessments. The ratio is calculated for each component. All four are weighted and an equalization rate is established.
WPCNR: And the problem?
Assessor: As we are all aware, all property values have increased significantly over the last 10 years. However, some residential properties have increased at significantly higher rates than the other three categories: commercial property, vacant land and utility properties. This situation affects the weighting of the categories resulting in so much weighting to residential that it is lowering the equalization rate and that’s bad.
WPCNR: How so?
Assessor: The Equalization Rate works conversely. As market value increases, it is indicative that the Equalization Rate decreases, and vice-versa.
Because a lot of Westchester municipalities have a significant amount more residential properties and the residential properties are increasing at a faster pace, the Equalization Rate is skewed, leaning more towards the residential constituent.
In English, because of the above, the Equalization Rate exhibits the commercial properties as increasing in value much more than they actually are. This is a direct result of the Equalization Rate.
Due to the Equalization Rate, commercial properties tend to be over assessed, resulting in certiorari proceedings, resulting in property tax refunds, resulting in increases in property taxes, ultimately resulting in creation of more inequitable assessment rolls.
WPCNR: How would Assemblyman Bradley’s bill stop the bleeding?
Assessor: This inequity, higher than actual commercial assessments, could be rectified by municipal revaluations of properties. But this is not palatable to politicians.
Assemblyman Bradley has introduced through legislation an alternative that would in fact – mitigate a significant amount of these certiorari proceedings.
WPCNR: How does the Bradley bill work?
Assessor: In the legislation, Assemblyman Bradley proposes to create a Commercial Assessment Ratio that measures the value of commercial properties only, instead of weighing all properties together, as is done by the legislation for the residential properties, known as the Residential Assessment Ratio.
WPCNR: How does this affect the Commercial Property owners?
Assessor: To allay commercial property owners’ concerns of increased property taxes, the property taxes should, according to the Real Property Tax Law, be established based on the face value of the (commercial) property.
The difference this component will make in the current situation is that the value of commercial properties will now be accurate and equitable.
It will create equity in property taxes. Commercial properties will pay what they’re paying now. It will result in a redistribution of taxes down the road. It will eliminate a lot of the certs.
WPCNR: Please explain how market value is determined on commercial properties, as it contributes to certiorari proceedings.
Assessor: Market value is determined on Commercial properties by the vacancy rate, the expenses, and the return on investment, the capitalization rate. When income goes up, one would assume the value goes up. The problem comes in when expenses have increased more than the ability of the property owners to increase rents. So what happens is, rents stall, expenses go up, capitalization rates go down, but residential properties increase in value, but lower the Equalization Rate, resulting in higher assessments of the commercial properties. This can result in certiorari proceedings.
The Assessor gave this hypothetical example of the way the Assemblyman’s bill eases the tax pain:
Assessor: In the present commercial Equalization Rate Formula the following components are included:
Property % of Tax Roll x Ratio
A.Residential 75% x 3.52
B. Commerical 20% x 2.80
C. Vacant 4% x 2.65
D. Utility 1% x 2.80
Weighting results in an Equalization rate of 3.40% ( a weighted average of the “Ratios” in the above example).
Equalization Rate is weighted by taking a percentage of property classifications, resulting in a higher assessment for commercial properties, because the greater proportion of Residential Properties inflates the value of the commercial properties, driving up the Equalization Rate.
Under the Bradley Bill, the Residential Property Value is removed in calculating the Value of the Commercial Property, resulting in a much more realistic number. The Assessor provided the following example:
Present Formula The Bradley Formula
Full Value $1,500,000 $1,500,000
Rate 3.4% 2.8%
Assessment $45,000 $42,000
Property Taxes $28,905 $26,978
It should be noted that this will not immediately stop certiorari claims now in progress. The City of White Plains and the other Westchester cities facing current certiorari claims will still have to settle them. The enactment of the bill will stop the certiorari bleeding in future years.
WPCNR: One last question, could you explain how condominiums affect the value of a residential condominium building?
Assessor: Condominiums are assessed at a percentage lower than the typical value due to Section 339y and 581 of the Real Property Tax Law. As a result, Condominium owners receive property tax relief on the backs of all other property owners of 40 to 55%. If you’re a homeowner of a $1 Million home, you pay a property tax in Westchester of $20,000. If you own a million dollar condominium to pay only $8,000 to $9,000 in taxes.
Boykin Research Demonstrates Condo Inequity.
WPCNR observes, according to Councilman Benjamin Boykin in a recent White Plains Times interview, the 200 or so condominium owners in Trump Tower, are paying $1.6 Million taxes where the average price of a condo is $1 Million, that works out to about $8,000 per unit.
Joann Polcella, the Ossining Town Assessor said the new separate commercial rate “would make it so commercial properties could not get a reduction (in taxes)based on another class of property owners (residential).” She said that should Mr. Bradley’s bill become law, commercial property owners would not get an automatic reduction based on the equalization rate as they do now. They would only be taxed based on their own class, she said. Their taxes would not necessarily go up either.
Polcella said the separate rate for commercial classes that Bradley’s bill would enact was aimed at removing the incentive for filing certiorari suits based on the residential value now included in the tax rate. She said it established a commercial property ratio based solely on commercial property values.
The Oppenheimer Prognosis:
White Plains State Senator Suzi Oppenheimer observed, “We have the bill that Adam Bradley is going to calendar bill this week, and we are speaking with the majority in the senate hoping to advance the same bill that is being sought by the Westchester County Municipal Officials Association, well, like forever, as well as the Westchester Assessors Association. We feel it is an important bill to advance. We don’t like those certiorari cases that the businesses are always winning because of the escalation of the residential properties. It is something we support and hopefully move with the approval of the majority of the senate and hopefully get it done this year.”
Oppenheimer said the senate had 4 weeks to pass the home rule equalization rate relief before adjourning for the summer. Senator Oppenheimer told WPCNR, she saw little problem with the population specificity: “A lot of the bills we draw continue on into the future even though tghe populations change in the areas inj which they are enumerated. I’ll ask council to see if there’s any doubt, and if so, we’ll just write Westchester instead of the population.”
In the future, our assessor we interviewed on the bill, who wished their name not be used, said the bill could be amended to reflect any increases in the Westchester County population.