City does balancing act on taxes.

The new tentative tax roll for the 1995. fiscal year is down 1.32 percent in overall billables, announced Finance Commissioner Marc V. Shaw last week. Market value dropped 1.46 percent since last year. Class One billable assessments rose 2.04 percent, the only class to see a rise. Total billables equal $77.158 billion against last year's $78.177 billion. Actual assessments equaled $78.007 billion, down 1.65 percent over last year's $79.296 billion.

As predicted by budget director Abraham Lackman a few weeks ago and forewarned by Dept. of Finance officials late last year, the tentative tax assessment roll has dropped by enough to create a potential $300 million hole in the new budget. Over the next few weeks, Mayor Rudy Giuliani will have to make some hard decisions, including whether or not to stand by a pledge to freeze taxes.

Commissioner Shaw, who has only been in office for two weeks, said any reiteration of the property tax rate freeze and-the water and sewer rate freeze would only come in conjunction with the release of the budget on Feb. 1. The Mayor assured a governor's meeting of the Real Estate Board of New York in December that he would continue those freezes. REBNY's president, Steve Spinola, is sure the Mayor will stand by his word, since he was aware of at least a $2 billion gap when he made the statements.

"The Mayor said before us that he not only want to hold the line but wants to cut taxes," Spinola recalled. "I have total confidence with his statements."

The biggest declines in billable assessment were, seen in certain commercial properties. At 55 Water Street, a building with a large vacancy rate, asbestos issues and new ownership, the billable dropped about $16 million, translating into a savings of at least $1.6 million in taxes.

The privately owned building worth the most is the former Pan Am building, now owned by Met Life, which has a market value of $545 million. It could pay taxes on a billable of $245.25 million, down $6.757 million from last year's $252.007 million.

While most downtown buildings dropped billables by a million dollars to two, notable drops include Shearson Lehman, down by $9.9 million; Seven Hanover Square, down $9 million; and 54 Broad, which was reduced by $6.5 million.

The city is also under pressure from the courts to drop assessments to reasonable levels.

Martin Karp, chairman of the Action Committee for Reasonable Real Estate Taxes, said the release of the roll and information provided by the city was useful.

"The good news is that everybody agrees there is an inequality," he said. "We were pleased that in the discussion of the tax roll it was acknowledged that there is substantial inequality in the real estate tax system."

The Action Committee will hold a meeting with all interested owners on Jan. 20 at Two West 64th Street at 7:30 p.m. to discuss legislative strategy and protesting assessments.

An application can be made to the Tax Commission for a reduction in the tentative assessment by March 1 for most properties. One to three family homes and other Class I properties have until March 15 to file their appeal.

Those owners who do not act now cannot protest at a later time, such as when tax bills are actually received in July.

In looking at the roll, Spinola said, "Obviously the taxes are still too high, but the assessors and the Finance Dept. have done an intellectually honest job of reflecting market conditions. There may be individual mistakes that the appeals process will be able to correct."

Attorneys involved with the appeals process were just beginning to check client properties and neighborhoods against the new numbers.

"It's a very interesting roll," said Hubert J. Brandt, a partner with Peter H. & Hubert J. Brandt, a tax certiorari attorney. "I'm seeing a greater sensitivity to individual buildings rather than neighborhood trends."

But he also reported expected decreases in various degrees for certain buildings. "The city for the last couple of years has recognized the market is on the way down," he acknowledged. "But they have lagged behind the depth of despair in the market and I still don't think the city has reached the degree of deterioration. I can only assume that there is a degree of pulling between the need for money and the need not to drive more of these buildings into the drink. It's brinkmanship that we're seeing."

Attorney Isaac Sherman, a partner in Moroze, Sherman, Gordon & Gordon, called the numbers, "A hold the fort assessment roll in the face of values that haven't come down far enough in the past." Sherman said the city assessors tried a little harder with the most egregious places, such as in Downtown.

Sherman decried the inequity of the Class I assessments that he said continue to hobble the city. Since homeowners account for 49.68 percent of market value but only 11.31 percent of billable assessments, they are subsidized by the other classes, including multi-family owners, who pay about 4 percent more than their market value. Co-ops and condos make up about 44.4 percent of Class II actual assessed values.

With all the tremendous buildings and assessments running into the hundred million dollar range, commercial properties, even worse, account for only 16.98 percent of the market value of city property, but pay 49.79 percent of the property taxes.

"In the face of every opportunity, the Dinkins administration punted," said Sherman. "This administration is so beholden to those very homeowners for their election they're wondering what to do with [the inequality issues and the roll.] The city is going to need the money."

With the market stable or declining slightly, there is relatively little difference between billable and actual assessments. Property owners pay on the lesser of the billable or actual, but the actual is often a predictor of the trend for future year phase-in assessments.

Decreases were reported also in factories, vacant land and theaters. Rental property overall in The Bronx declined by 6.68 percent. Commercial condominiums were up across the boroughs by 12.22 percent, while health and education facilities saw an increase of 10.82 percent. Staten Island commercial property increased by 11.48 percent, but Shaw attributed that to the new Staten Island Mall, which is still primarily tax exempt.

Also rising were homes, condos and co--ops in protected classes. Where assessments are allowed to be boosted by 6 percent to 8 percent a year, Finance did so, such as an increase in 2-10 unit condos by 30.4 percent overall. While many in the industry cheered the increase in Class I, saying, "It's about time, but not enough," Others Were concerned.

Jack Freund, acting president of the Rent Stabilization Association said, "Common sense tells you that in the current economic climate in New York

that tax increases on rental properties of any sort or any size are unrealistic and counterproductive."

Freund was very concerned with the increase in delinquencies noted in the fiscal year report, given out at the release of the roll. "The most significant numbers are the very scary growing level of tax delinquencies," he observed. "These buildings are sitting there creating a potential bombshell for the city's budget when the title is vested."

The report shows a citywide delinquency rate of 4.88 percent, with all boroughs seeing increases comparable to the late 1970s. There is a 10.70 percent delinquency rate in The Bronx, Brooklyn is running at 8.29 percent, Queens has reached 4.29 percent and Staten Island is seeing a delinquency rate of 7.15 percent.

The Citizens Budget Commission's senior research associate, Dean M. Mean, said they have a real interest in the budget and the property tax assessments because they predicted the declines begun in 1991 would not be a one-shot deal. At that time, the city pushed off assumptions to out year growth.

"It's next year now and there will be another decrease," Mead said. "We're concerned they will push off their assumptions of growth rather than making same more realistic assumptions about real estate and property tax revenues."