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WPCNR QUILL & EYESHADE. News Comment By John F. Bailey. July 29, 2008: As WPCNR reported exclusively last week, (no inside stuff, no informed sources, just reading the certiorari refunds – am I the only person who reads them), the White Plains downtown growth not only has come to a standstill, but the value of its “thriving” business properties in the downtown, if you go by the expert analysis of the Board of Assessment Review awards last week, is in decline. The certioraris totaling over $500,000 off the assessment roll, awarded last week are disturbing.
Though White Plains reports it made its sales tax numbers in the last quarter of 2007-2008, and has topped $45 Million, things are not right.
Hasn’t White Plains been in a Renaissance for five years? Or is Renaissance just a feel-good word? Show me the money.
How can this be?
How can this be?
For the first time a series of anchor block properties were awarded significant reductions in assessments based on their business executed during the White Plains “Renaissance.” The Renaissance officially began when the holy grail, The City Center, was opened in 2003. The assessment reductions to the Mamaroneck Avenue anchor properties were awarded while they were doing business in these “boom years”
This does not make sense to me. If you take the city hall economists and the BID Cheerleaders with their pom-poms for their word, White Plains is in a boom. Everybody’s doing well. Rising tide lifts all boats.
Except for six very big properties sprawling down Mamaroneck Avenue.
In the past, WPCNR has reported on certioraris in detail that have resulted in a property tax drain of millions. But those were in the early years: 2000 through 2004. We thought it was disturbing – but housing was going up up up,
Well the Aches of 08 have arrived. The supply siders have run out of supply, and thanks to the Bush Boys Raiders of the Average Americans’ Ark – are using Treasury dollars to bail out their pals on Wall Street.
But something is dreadfully wrong.
The market value of White Plains real estate has hit $11 Billion as of 2008, up from $7.1 Billion in 2004 – the assessed value of the properties, however has gone down, down down over the last five years from $317.1 Million to $290.2 Million.
What is happening here? Show me the money. Or more to the point, where the money went?
This decline is blamed on the rise in White Plains housing values which are added to the commercial property values, which drives the equalization rate between the two sectors down and drops the assessed value.
Individual properties can bring their books in and challenge their assessments as being too high, pointing out that the property is not as profitable as the city says it was during key tax years covered by the latest certiorari settlements. They have been doing that a lot the last seven years with a flurry of activity the last three years. In 2008, this was the first time in four years assessed value was slightly above last year. Next year will be key. In theory it should go up. In theory. Cross your fingers.
Something the City and the School District both Agree on.
Asked what the primary driver of the certiorari refunds were, Assistant Superintendent for Business Fred Seiler told WPCNR last week,
“Equalization Rate is the primary driver of the certiorari settlements, but some financial records enter into the certiorari mix,” Seiler said.
Paul Wood, the Executive Officer for the City of White Plains, called upon the legislature to wake up and smell the coffee:
“It is unquestionably the equalization rate that is the primary driving force behind the negative situation the City finds itself in with regards to certiorari settlements.
“This is why the Mayor is asking for State legislation to allow the City to have two separate rates for assessment purposes. Because the City is roughly 60% commercial and 40% residential, the equalization rate destroys us.
Mayor Takes Up Crusade
“He (the Mayor) is advocating the two formula application for any City whose property mix is 50-50 or greater. This is not unprecedented. New York City is allowed to assess commercial and residential differently, as is Suffolk County.
Asked if the Mamamaroneck Avenue Certioraris were totally caused by the equalization rate, Wood said, “Absolutely, Yes,” and if the financials of the property owners had nothing to do with the calculation of the certs, he said “They (the financials) had nothing to do with the calculation of the certs.”
I asked what the future held in store, whether properties who previously had received certioraris might be refilling in the next five years. Wood said he hoped not.
Asked if the equalization rate might go up this year (from the 2.75% level, an all-time low), since housing values have fallen about 10%, he was optimistic:
“Yes, you’re right. That’s the unfortunate and absolute absurdity of the equalization rate. As residential properties lose value, the rate will increase therefore putting the City in a better position to defend certs. But the administration also does not want to see our residential property owners hurt by falling values. Again, if we had two rates, we would be forced to pick between two evils.”
How could this happen?
In the past, the city has seen Macy’s, Sear’s, One North Broadway, Nordstrom’s, Verizon, among others receive reduced assessments and large certioraris. We shook our heads in bewilderment. Saw prices that did not seem high enough and assessment reductions that made the buildings look very undesirable. They are not undesirable, of course.
How could these stalwart business buildings sell for less than you would think, make less profit when office rents and retail rents are up about double in White Plains? Office rates for example, as Mayor Delfino pointed have virtually doubled.
In the first week in July, a series of 14 properties on Mamaroneck Avenue itself were granted over half a million dollars in reduced assessments ($531,000). Two of the blocks are in the middle of Mamaroneck Avenue, prime retail locations. How can these properties not be making enough profit on their space during what has been touted as a boom time in White Plains – the good old White Plains Renaissance? Apparently the Renaissance has not been kind to them. Apparently expenses took their toll.
The Zirconium Halo
If you go over the latest certioraris numbers on these Mamaroneck Avenue jewels, you would have to assume that the City Center had no halo effect on the rest of Mamaroneck Avenue the last five years – at least for these properties. Other than the $11 Million increase in the sales tax since 2003, if you judge the certioraris (court actions claiming the properties were overtaxed), the Board of Assessment Review has settled and the reduced assessments awarded the businesses in the downtown – the halo effect has been a Zirconium Halo.
The numbers on the six properties (costing the city $500,000 off the tax roll) last week are banana cream pies in the faces of the city Common Council, and the Downtown Business Improvement District, the Westchester County Association.
They are slaps upside the head of the Albany legislature that is afraid of all the certiorari specialists who make a fantastic living off these certiorari suits. The legislature has it within their power to stop the certiorari gravy train for commercial property owners, but lack the guts to do so, because of the contributions of you guessed it – the commercial property owners, and the certiorari profiteers.
Equalization Rate Bankrupting the Homeowner
The Suozzi Commission in their Preliminary Report to Governor Patterson on Property Tax Relief somehow completely fails to mention the Equalization Rate tax gimmick that forces the homeowner to subsidize large commercial properties.
The Suozzi Commission on property tax reform came out strongly for a cap on property taxes, a circuit breaker on property tax tied to income, among other measures, but did not come out strongly for a separate commercial tax rate which would eliminate the equalization rate killing us here in White Plains.
The equalization rate bill that Assemblyman Adam Bradley did not introduce in the Senate because, he said, it had no chance of passing, continues to languish. Bradley’s bill would only effect White Plains, allowing us to assess commercial properties differently than residential properties. Why can’t we pass it now? Otherwise financial disaster looms in about three years.
Assemblyman Bradley noted that New York City and Nassau County are the only jurisdictions in the state that have separate tax rates for commercial and residential properties.
Nassau Practice not new. Commercial Tax Rate 2-1/2 X the Residential Rate.
The practices have been in place, though since 1981, according to Karl Lasky, Counsel to the Nassau County Board of Assessors,
“New York and Nassau County are the only assessing units in the state allowed to assess four different classes of properties. They have different tax rates and different equalization rates. It went into effect in 1981. Class 1 is single family homes, Class 2 is condos, coops and apartment houses, Class 3 is the utilities, and Class 4 is all the commercial property. Why they did it, I guess was politics.
“ In terms of treating commercial different from residential, it is done in other places based on The Homestead. Article 19 allows for an assessing unit to have a homestead not homestead distinction and therefore treat commercial differently, and that’s done throughout the state. They have to apply through the New York State Office of Real Property Services.”
In Nassau, he says, the value of residential housing is not added to the Commercial property value. “Commerical and residential are treated separately. In Article 18, they also have justification portions which means that they pay different shares of the overall tax levy. They have different class shares. The residential portion pays a smaller percentage of the over class levy then they would if everything were in one class.”
On average, the tax rate on Nassau County Commerical Properties is 2-1/2 times higher than the tax rate for the residential properties. It is interesting that this tax system did not work it’s way into the Suozzi report since Suozzi is the Nassau County Executive.
When asked this question about killing the equalization rate at a hearing in Tarrytown this past year, the fast-finding panel brushed it aside. Funny, isn’t it?
Equalization Rate Reform Couldn’t Come at a Better Time
Meanwhile now that Governor David Patterson and the bean-counters in Albany have discovered in the last week that the state is losing revenue rapidly this year, don’t you think they might pay attention to the equalization rate problem and give communities like White Plains relief – and extract more revenue from the businesses that have been getting big breaks on taxes, while pushing the shortfall over on the tax payers.
Is it time to do away with the Equalization Rate in the name of relief for the taxpayer?
Let one politician up there in “Alibyin’ Albany” explain why they don’t.
Why won’t they?
Anchor properties Looking at dropping taxes every three years.
The certs in White Plains generate an ominious warning. White Plains is hurt because it is a growing city. The equalization rate kills a city that is growing.
If these big anchors of the great Fifth Avenue of White Plains aren’t generating the numbers that increase the value of their property, what are the rest of the merchants generating? What’s happening in those thriving inner cities of Yonkers, Mount Vernon, New Rochelle and Peekskill? Perhaps their Boards of Assessment Review are tougher than White Plains.
If the legislature does not do something about the Equalization Rate they will drive residential homeowners into bankruptcy. Because certioraris nabbed once will come back in just a few short years.
Low 2.75% Equalization Rate bodes WP tax disaster in Three Years.
The Equalization Rate in White Plains hit nadir last fall when it dropped to 2.75%. Three years from now in 2011-2012, the White Plains Legal Department, Corporation Counsel Edward Dunphy predicts White Plains will face another around of certioraris to lower current assessments even more on commercial properties. He expects many of the big cert winners over the last five years to reapply. The effect? More shift of taxes to the residential homeowner.
You do not want to be a Suprintendent of Schools or the Mayor of White Plains in 2011 when the second wave of certioraris start to come home to roost, vulturing the tax roll.
But what about the new properties just opening? Will they “Cert” the City, too?
Could this be the beginning of a rush-to-certiorari of the other big new blocks in White Plains – The Ritz Carlton, One City Place, not to mention The Westchester, The Westchester Pavilion, the Walmart complex, The Galleria (gasp!) down the road say in 2009? Will they all file for certs based on 2007-08,08-09,09-10,10-11? They can come back every three years for certiorari relief.
It is a scary thought. Think of the staggering increases in expenses the retailers, the office space landlords and assorted building owners face this year: the utility increases, the fuel/delivery increases, the slow shuttering of stores. East Post Road is starting to die a slow death: ANL Sports has shuttered, there is no rental yet to replace Border’s in the Pavilion, 180 East Post Road is empty, Frozen Ropes has left.
If this vision of new certioraris comes to be, who is paying the taxes that the commercial owners will not be paying?
Ask not whom the taxman’s bell tolls, individual homeowner, it tolls for thee.
The burden of the taxes is being born by the homeowner in this city, while the commercial property owners keep having their property assessments lowered by reflex by this administration . The Board of Assessment Review continues to cave. And, no one seems to care to see what it is doing.
Commercial property owners point to the sales tax increases development has brought. Despite City Hall’s touting the sales tax as paying more into the city budget than the property tax from homeowners and commercial property owners, city hall overlooks the $19.5 Million generated by the most efficient revenue-generating operation next to the Port Authority, the White Plains Department of Parking. If you throw that in the resident is being squeezed to park.
Like it or not, the Common Council which has not paid any attention at all to this assessment drain, is going to face this head-on in the next two to three years. The continued deluge of certioraris when the commercial property owners return for another round in the Board of Assessment Review Game Show is going to really hurt.
WP Homes Selling for Less.
Depending on what realtors will admit to you, the big ticket homes are moving very slowly. For less than expected. Many will only move with significant price cuts. Some may even sell for less than homeowners recently bought them for. This may be particularly true of the multi-million condominiums recently sold in the city. Are they “flip-able?” Who knows?
But if I’m an owner of a condominium I bought for $1 Million and I’m assessed at that price, and I cannot sell it – I can make a case I am over-assessed. If I sell it for less than I bought, the tax roll plummets, and there have been a lot of condominiums sold the last two years in the city.
Now, since assessments are dropping on commercial properties every year thanks to the Board of Assessment Review refusal to fight, and the city failure to enact surcharges on something (anything!) to get the revenue back, and since home values are dropping in White Plains, the perfect conditions might be ripe for a revaluation.
Revaluation a politician’s poison pill.
In such a revaluation, the commercial properties could be assessed at higher than they are now, and homes incredibly under-assessed could be raised. The older posh homes which have not been remodeled in years, will pay more – making their taxes more reflective of their actual market value. The newer homes which are assessed more accurately since they are newer, could be assessed more in tune with today’s market which may be lower than the price they paid.
The commercial property owners will fight the revaluation tooth and nail, so it probably will never happen.
The owners of those lovely big homes from the 40s and 50s in the South End will fight it because their homes are assessed at what they were bought for years ago – if they have not remodeled – and they are paying taxes way lower than they should be.
Go on the city website and see what those big old places in the Highlands and in the Gedney area are paying in taxes, and you will see what I mean.
It’s touchy – but with both commercial assessments and home prices dropping, revaluation may be a way to make commercial property owners pay their fair share without going to certiorari relief cases where our city is the big pushover.
But, I do not think reval has a chance of happening.
The Issue No Politician Touches
However, in the coming Mayoral campaign, this certiorari “license to lower taxes” shifting the burden of commercial taxes right over to the homeowner should be a big issue. What will the candidates for Mayor do about it? It is up to the citizens to ask the questions, and don’t take generalities for answers.
Will our legislators get some sense of reality and stop pandering to the commercial owners and lawyer pals who make money off the cert cases, and say “no” to the equalization rate tyranny in White Plains? After all, it is just in White Plains that we are asking for this.
I doubt it.
The certiorari settlements, the logic and numbers of which are never detailed or vetted on a case by case basis – should be a major issue. There should be public hearings on the merits of each certiorari. Enough of this “your people and my people in a room, we all know each other” stuff.
In the present “never met a certiorari we didn’t like” climate in the city, which the Democratic Common Council has not said anything critical about, the middle class homeowner is being squeezed.
If the Democratic leadership in this city and county, and I use the word “leadership” sarcastically, doesn’t address this – the tax base is going to collapse.
Forget about affordable housing. It is a dead issue. How about “Stay-in Housing?”
Number one, here in “booming White Plains,” (the city developers couldn’t wait to get a piece of just a scant 12 months ago) – you have 7 projects that are not going to build any time soon – The Windsor Place Condo, Hale Avenue, the Hamilton and Church condominiums, the Maple Avenue assisted living, the North Street Community, and the DeKalb Condo project, and 55 Bank Street is in jeopardy. (We do not know whether the Robert Weisz hotel project overlooking Maple Moor Golf Course stands right now.)
They were eager to build, the council approved, now the developers can’t find the money. Those sites are live site plans – effectively blocking development while they hold for better times.
The Council now keeps granting site plan extensions de facto. In the future, it might be prudent to explore the legal ramifications of not renewing site plans – or at least requiring a finance bond to be posted with stiff penalty if you do not build within a year. This developer habit of coming in, pushing a project through getting an approval – then not doing anything – strangles city growth and is a form of speculation that hurts the city. It may be smart business. But, it is dumb or maybe not so dumb government.
And what developer gets in trouble in this city? The guy who builds – Louis Cappelli.
Arguably, the City Center and the Ritz have definitely helped greatly. But, no one else in the city is helping. Did I hear one peep out of the council, except for Rita Malmud – when 55 Bank Street defaulted and wants to change the deal? No.
Meanwhile, the man who gets financing for his projects, most recently $700 Million for his Concord project, has been run out of town for erecting a stone monument on a traffic island and not yet building his affordable housing when it was the Common Council that told him not to build it, they wanted the Pinnacle developers to build it.
The 7% Progression:
If you still have a mortgage in this economy and tax environment you are in huge trouble. Your taxes are going up 7% a year in White Plains. Your utilities, as also reported by WPCNR at the beginning of June, are going up 300% — from 8 cents a kilowatt hour six months ago to 13 cents in January, 19 cents per kilowatt hour in June, to 24 cents a kilowatt hour this month – according to Con Edison this week. In June Con Edison predicted 28 cents in June to WPCNR, but apparently have been able to gradually move up to that.
The city and county taxes are the bottom feeders. The school district in this city, to keep feeding a $10 Million a year budget increase habit, is going to take a lot more every year. It will make $5.03 a thousand dollars of assessed value look like a bargain next year. $200 Million next year, just watch! $215 Million by 2010-11. $230 Million by 2011-2012 – that’s with 7% increases.
You’ve got to give the teachers 5% to keep them happy after the administrator giveaways this year. You’ve got utility costs out of control. You’ve got the bond to pay for. This was the year to do some serious cutting over at 5 Homeside Lane and it did not happen.
Where is the money going to come from?
Ask not the obvious.
The individual homeowner does not have the lawyers to fight their tax down like the commercial property owners have their certiorari lawyers.
It’s going to come from you, the homeowner.
Have we been in a Renaissance for five years or a New Deal for Commercial Property Owners program?
Yesterday, Governor Patterson said “Next year’s budget process starts now.”
But it really should start for every government from the bottom to the top.
Perhaps the City School District, the Common Council, the City Budget and Management Committee and the City Commissioner of Finance and the City Assessor should meet and do some numbers-crunching now.
I have not even mentioned the never-never-land of government budgeting, Westchester County Government, that perhaps should start cutting now, instead of sticking the cities and towns for next year’s massive county tax increase. They should start cutting now.
(Where is Andy Spano these days anyway, vacationing with Gary Kriss?)
Who knows what pain lurks ahead?
Who knows what the state is going to lay on the city and county due to the Wall Street losses (the poor, pathetic whiners).
May we remind you of the Carl McCall mess not so long ago?
Expect high, heavy hitting increases in state pension fund contributions from the school district and the city, less educational aid, and probably a property tax cap – just when the school district is going to need a 15% increase in the budget, and is having trouble getting the teachers to settle.
If I can figure this out, why can’t our brilliant elected officials?
It’s frightening to think the City of White Plains runs no deficit and appears better run financially than the state and county and federal government put together.
But they have not made wise decisions either.
Ask not for whom the taxman’s bell tolls, individual homeowner, it tolls for thee.
