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New York Property Tax Monitor Property taxation, assessment, valuation by local governments throughout New York State

New York City Apparently Unable to Explain its Own Property Tax Methods

Posted in Property Tax Laws, Property Tax News, Property Tax Trends, Tax Appeals, Valuation

Calculating property taxes and related values is complicated and perplexing in nearly every jurisdiction in the U.S., though perhaps nowhere more than New York City. One of the greatest sources of confusion comes when the City decides to increase an assessed value for certain classes of properties based on market changes (as opposed to physical improvements). This is generally accomplished by phasing in the increase over a period of five years, and results in a new form of assessment that the City calls a “Transitional Assessed Value“.

New York City defines “Transitional Assessed Value” as follows: “Increases to your Assessed Value are phased in at 20% per year (except for physical changes).  Applicable to all Tax class 4 properties and also Tax class 2 cooperatives, condominiums and rental buildings with more than 10 units.”

Perhaps not overly complex on its face, but often enough to make the eyes glaze when considered over a period of several years in which market changes are continually being factored. Moreover, the mechanics by which the City calculates the transitional assessments are less obvious than one might think, and were made incomprehensible when word let out earlier in the year that those methods were being changed.

One of the most prominent providers of New York City tax assessment data and software, Genesis Computer Consultants, Inc., through its President, Jonathan E. Cohen, recently responded to the confusing changes in the methods by which the City calculates Transitional Assessments by submitting a Freedom of Information Request (FOIL) to the Department of Finance requesting a description of the rules under which transitional assessments are calculated. Because a significant number of property owners rely upon Genesis directly or through a representative to understand their taxes, the request was a reasonable means of efficiently disseminating essential information to taxpayers. Indeed, knowing how the government calculates your taxes is a basic right of any owner.

I was provided with a copy of the FOIL request that Genesis submitted to the City in August, which reads as follows:

“A complete written description of the current rules whereby the City of New York, through the Department of Finance, computes the transitional assessments which accompany the actual assessments as issued in the RPAD database.  Specifically, we request the rules for how equalization and physical assessments are phased in or not phased in, how demolitions (i.e., negative physical assessments) are treated, and all other procedures that determine the transitional assessments.  If the existing set of rules is accompanied by specific numerical examples we request that in addition.

We further request the programming techniques that are used to implement these rules in the City’s computer systems.”

On November 6, Genesis finally received the following reply from the Department of Finance:

“Please be advised that I have been informed that Finance has no written documents that are responsive to your request. I am sorry I can be of no further assistance to you in this matter.”

It would appear that New York City cannot, or will not, explain in writing how it calculates figures essential to the formulation of its own tax assessments and the ultimate tax bill an owner receives and is required to pay under threat of penalty or even loss of ownership. It is evident that there must be some process by which Transitional Assessments are computed pursuant to the supposed changes that were announced, yet no one saw fit to document that process or methodology. A mystery. At least to the taxpayer.

Real estate taxes are probably the largest source of revenue for the City of New York, and new assessments for 2014/2015 will be published about a month from now. One would hope that the Department of Finance won’t leave owners in the dark much longer, even if that requires someone to put pen to paper ex post facto.