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Blistered by Union:
More 'Transparent' "Using a multiplier was the best method for assuring that our market values are easy to understand, predictable for property owners and fair," she told the Council. But critics of the department continued to slam the new system, which was changed after the agency's 120 Assessors had already used the old method to value rental buildings. David Moog, the president of Assessors Local 1757 of District Council 37, argued that the method has unfairly shifted the tax burden from wealthy areas of Manhattan to regions north of 96th St. and the outer boroughs. During the hearing, Ms. Stark repeatedly claimed that wasn't the case, noting that different GRMs were used to reflect the value of properties in different regions. Queens Down, Bronx Up She pointed out that in Queens the market value for co-ops, condos, and rental buildings was down 1.52 percent in 2007, compared to a 2.78 percent increase for similar properties below 96th St. in Manhattan.
But the rate increased by 9.6 percent in The Bronx, based on figures later supplied by the department. Borough Breakdown According to Finance, the overall percentage increases for the other boroughs based on the new method were: Manhattan, 4 percent; Brooklyn, 1.6 percent, and Staten Island, 1.8 percent. In the past, Finance utilized an income approach, a method widely accepted throughout the nation. That system requires an analysis of each building's income and expenses. Assessors would then calculate a rate of return based on mortgage rates, equity returns and appreciation, as well as the tax rate. Under that method, the building's location, age, condition, and other factors were also analyzed to adjust the overall rate of return. But that income approach was deeply flawed, Ms. Stark testified. The department discovered that under that system taxes as a percent of gross income for some properties ranged from as little as 7 percent to as much as 45 percent. Old Method Flawed "That means before paying debt service, fuel, electricity, and employee expenses, there were some owners paying the city $45 to us for every $100 they earned - a true public/private partnership not," she testified. "That's an inordinate amount of money to be taking from an owner." The best way to "clean that up" is to value properties by using a GRM, she added. That new method was put in place just before the assessment roll - which consists of all the properties within the five boroughs that are subject to real-estate taxes - was completed in January. Before the hearing, Jack I. Freund of the Rent Stabilization Association, which represents 25,000 landlords, said the new method would adversely affect affordable-housing buildings. "It really makes so little sense that I'm hard-pressed to figure out why they would do this," he remarked during a phone interview last month. Seeking More Staff Mr. Moog charged that the system is a crude way of evaluating properties and highly problematic because it doesn't take into account several key aspects of properties. In scathing testimony submitted to the Council, he pleaded with the lawmakers to increase funding to pay for an additional 100 new assessors, noting that the staff has been repeatedly cut over the past five years. "During that time we saw numerous articles on the errors of the tax roll and how many mistakes were being made due to this idiotic policy of not hiring enough Assessors," he said. The new method has created wild gyrations in the tax roll, with some high-end rental buildings in Manhattan actually being reduced by nearly $1 million. The New York Property Division is the most under funded assessment office of any large city in America, which really indicates the priorities of the Mayor's Office, he argued. The union president said he felt "embarrassed" that he has to ask the department to bring staffing levels back to the pre-9/11 headcount of more than 200 Assessors. Evaluating Alone? Mr. Moog noted that soon after Ms. Stark was appointed Finance Commissioner, she vowed during a state hearing to assess the entire tax roll by herself if necessary shortly after a 2002 scandal in which a former Assessor over more than three decades made payoffs to employees to gain reduced valuations for his clients' properties, thus saving them millions in real-estate taxes. The union president also pointed out that at that same State Assembly hearing Steven Spinola, the president of the Real Estate Board of New York, told reporters that assessments should be calculated using only the gross revenues of properties. "It took six years, but those two goals were accomplished and it turns out to be an utter failure in tax policy," Mr. Moog asserted. He urged the Council to formulate a panel to study the city's property tax system, which could review separating the assessment process from the collection system. That commission would be similar to the blue-ribbon panel recently created by Governor Spitzer to study reforming the assessment process for upstate taxpayers. Says Create Panel According to Local 1757, New York City is one of only three large taxing jurisdictions in the country - the others are Washington, D.C. and Detroit - that has the same person collecting and evaluating properties. The proposed panel could also study the possibility of creating a separate Real Property Assessment Commission that would be managed by a board of officials appointed by various lawmakers and city leaders.
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