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

Staking a Claim: Why are Tax Grievance Claim Values So Low?

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

A local reporter recently thought he got hold of a tax issue that would sell papers: claimants in New York tax cases often make their opening statement of value extremely low. To the reporter, unbelievably low, and therefore he was outraged and contended something foul was afoot. As is no surprise in much of the arcane world of property tax, the reporter struggled to understand the laws and process that govern, making a mess of it in the process and painting a picture that doesn’t actually exist. I wrote to his paper with the following, to clear up what is indeed a confusing area of the law, but one that is also of no real moment when resolving cases with assessors:

To challenge a property tax assessment one starts by completing New York State Form RP-524, known as a grievance form, and filing it with the Board of Assessment Review (BAR). The form requires basic factual data about the property as well as two items of non-factual information: the claimed market value and the claimed assessment. If one does not specify a claimed valuation the grievance will be dismissed even though the taxpayer is unlikely to have obtained an expert opinion of value at the outset because tentative assessments are released just before the filing deadline while appraisals take months to obtain; what the taxpayer does have is a good faith belief that the assessment is too high.

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State law limits the taxpayer’s options: the claimed value put on the grievance is the lowest possible value one can obtain, even though information may later arise that dramatically changes one’s opinion of value. Form RP-524 requires a value at the outset, even though cases typically run for years before resolution, and appraisals are rarely finalized for trial for quite some time. Severe structural damage, asbestos, an oil leak, a deed restriction, zoning limits, environmental contamination, or a local nuisance may eventually be discovered and require other forms of expert opinion. Taxpayers expect their legal counsel to have foreseen these possibilities and to have preserved their rights to full relief rather than initially claiming a higher value in an effort to appear “reasonable”. Clearly, the law does not always operate logically or efficiently.

As one of our clients observed, the grievance claim is part of the process and is not an expert opinion of value. Assessors know this, and in two decades I have never met an assessor who felt so constrained by our grievance claim that he or she granted our request to the dollar.

            One might ask, “at what point does one know how much to claim?” The answer generally rests with the municipality. In our experience, most grievances are denied by local boards year after year, regardless of the claimed value or how much evidence is submitted. The BAR rarely overrides the assessor to render a fair value. So long as the claim is denied in this manner, it likely goes to court and it is often years before the assessor agrees to a resolution. At that point, any appraisal or other expert opinions obtained at the time the grievance was first filed are outdated and the property owner will incur additional costs for revised reports. This is an unnecessary waste of a taxpayer’s money at the very time they are trying to save it through a tax appeal. In fairness, there are a few municipalities that do not operate this way.

I’m the Chair of the Westchester County Bar Association’s Tax Certiorari Committee, and while I don’t write on behalf of our members, many share my views. Our cases include properties for which the ultimate value turned out to be near-zero, which no one would have suspected at the outset. We afford clients every protection available, which includes preserving their right to address any eventuality in litigation. As local judges have commented, the tax claim is no different from the verified claims made in a range of litigated matters. Change this dynamic for tax cases, and one must change it for all litigation – possibly at the peril of serving clients zealously. If anything needs to be changed, it may be the law that limits relief to the value claimed in the grievance.

The amount of the grievance claim does not spur litigation. A low value claim is no obstacle to setting a fair assessment and avoiding litigation. By the time each tax case reaches the courthouse, the value claimed at the outset is never a point of discussion. There is no support for the notion that that a low value on the grievance has ever burdened a municipality or the legal process in which cases are resolved.

Why would a municipality decide not to reduce an assessment? The vast majority of assessments in some municipalities are carried forward year to year until challenged.
Reducing them at the time grievances are filed would decimate assessment rolls, causing spiking local tax rates to politically intolerable levels. By delaying appropriate reductions, governments “borrow” money interest free because tax certioraris are generally resolved on condition that no interest is paid. Allowing an over-assessment to persist for years permits the municipality to use a taxpayer’s money and then pay it back later without interest.

Some municipalities are now changing course through revaluation, but it may be many years before the property tax process is transparent and efficient throughout the Hudson Valley and, as we have already seen, even revaluations can prove problematic.