Even before the bloodless intramural coup in the state Senate last week, Albany lawmakers were under attack from protesters outside the Capitol. The vocal opposition was spearheaded by Westchester”™s two largest business groups, The Business Council of Westchester and Westchester County Association, working separately but bringing the same fight and arguments to Albany in defense of increasingly taxed-out commercial property owners in the county.
The object of their outrage was a bill that quietly passed through the Assembly last month and has been referred to the Senate”™s local government committee. Sponsored by two Democrats in Westchester”™s legislative delegation, Assemblyman Adam Bradley and Sen. Suzi Oppenheimer, the bill would set a commercial assessment ratio for commercial properties that could be applied in court cases, or tax certiorari proceedings, brought by owners challenging their local property assessments. The measure would apply only to Westchester County.
Those court reviews now use the state equalization rate for a taxing municipality to determine whether properties are overassessed and owners should be awarded tax refunds. Bradley, the bill”™s sponsor, said that as residential property values have soared in Westchester in the last few years, state equalization rates, which are set annually and based on the weighted values of residential, commercial and vacant properties and utilities, have dropped drastically, resulting in “artificial” overassessment of commercial property.
The result, according to assessors in the county, has been a glut of tax certiorari filings by commercial owners and many millions of dollars in tax refunds owed by school districts and municipalities. “They”™re almost pro forma,” Town of Ossining Assessor Josette J. Polzella said of those legal challenges by businesses.
Bradley, who first introduced the bill in the Assembly five years ago, said local government and school district officials had asked for the commercial assessment rate. The bill is supported by the Westchester County chapter of the New York State Assessors Association and the Westchester Municipal Officials Association.
Town of Greenburgh Assessor Edye McCarthy said the commercial assessment ratio “will create equity among the property types because you”™re comparing apples to apples,” whereas the equalization rate is “skewed” by the inclusion of other property types in its value calculation. “This will by no means eliminate tax certs,” she said. “It”™s going to mitigate the number of filings, because the properties will be fairly and equitably assessed.”
“The reality is that for years commercial properties have derived a substantial benefit by being lumped in the same assessment rate as residential properties,” Bradley said. “The intentional effect (of the bill) is to help school districts and local governments mitigate the pain they are forcing upon residential taxpayers” as a result of tax certiorari losses on commercial properties. Westchester business leaders, though, said the pain of higher taxes will be unfairly forced upon commercial property owners and tenants if the commercial assessment rate is enacted.
Both the Business Council and WCA said the bill would put the county at a competitive disadvantage with neighboring counties and other states.
“Higher taxes mean higher rent for tenants and another incentive to move out of Westchester,” said Business Council board Chairman Christopher O”™Callaghan, senior director at Cushman & Wakefield of Connecticut Inc. “This will have a ripple effect throughout the Westchester economy.”
Both Business Council President and CEO Marsha Gordon and Albert Annunziata, executive director of The Builders Institute of Westchester, pointed out the damaging impact of the assessment change on co-ops, condos and apartment rental properties, which represent affordable housing in Westchester. Gordon said substantial property tax hikes as a result of the bill will price families out of that affordable-housing market. Annunziata called the bill “a disaster.”
WCA Chairman Alfred B. DelBello said the bill “completely misses the mark” as a protective measure for single-family homeowners. The assessment rate change could drive away businesses from Westchester and deter others from investing here, he and other business leaders said. “This in turn further weakens the overall tax base and the single-family homeowners will be left to fill the gap,” he said.
Though Bradley said Westchester”™s business community was well aware of his long-pending bill, WCA President William C. Mooney Jr. called it “a disgrace” that business leaders here received almost no notice the measure was being voted on by the Assembly. “Coming on the heels of major increases in taxes and fees included in the state budget, the recent imposition of the MTA payroll tax and with the seriously weakened economy that is hurting all businesses, this is unconscionable,” he said.
Westchester County Executive Andrew J. Spano joined the county”™s business advocates in opposing the bill as it moved to the state Senate. In a letter to Sen. Jeffrey Klein, the Bronx Democrat representing parts of southern Westchester, Spano noted the added tax burden the measure would place on “reeling” businesses in the county. He called the bill “wrongheaded at this time” and “a patch on a dysfunctional system.”
Spano said the bill might provide some immediate relief for local governments but likely would add to the stalling of countywide property revaluation, “the root of the problem.”
Both supporters and opponents of the bill agreed it will not solve the deeper problem with the county”™s assessment system.
“It”™s just a temporary measure right now until revaluation is done,” said Polzella, the Ossining assessor. The commercial assessment ratio “is a temporary mechanism to stop the hemorrhaging now.”
Michael R. Pearl, a partner at Rothschild & Pearl L.L.P. in White Plains who represents commercial owners in tax certiorari proceedings, said the hastily introduced bill could have opposite effects of those its sponsors intended. “It would really bite them if the commercial assessment ratio turned out to be lower than the state equalization rate in two years,” he said.
And rather than deter owners from challenging assessments pegged to a likely higher commercial rate, “I think property owners will fight harder and not walk away from cases.”
The bill “is like putting a finger in the dike without looking at the big picture,” Pearl said. “The system is not working well and nobody could argue that it does not need to be remedied. But this kind of Band-Aid is not going to remedy the system.”
At the Westchester County Board of Realtors, CEO P. Gilbert Mercurio said his organization was studying the legislation. “I think there”™s a lot of exaggeration going on as to the negative impact on the commercial sector,” as the bill would not change tax rates and the commercial assessment ratio would apply only in certiorari proceedings, he said. “To say that this bill brings about an increase in taxes for the whole commercial sector, including condos and co-ops, I”™m not sure that”™s true.”
Mercurio said the WCBR favors full-value assessment for the county and all its municipalities. That would largely eliminate “these class-warfare kinds of issues,” he said.
In Albany last week, a 12-member WCA delegation showed up to battle for the county”™s commercial class on the day Senate Republicans and Democratic defectors staged their parliamentary coup. Under fire from business groups, the bill”™s sponsor, Oppenheimer, already had agreed to hold up the bill until Westchester”™s business community was heard.
For now the measure is moribund in the topsy-turvy Capitol. “We”™ll wait and see what happens,” said Amy Allen, the WCA”™s government relations director.
