City eyeing tax reform after assessor scandal: Bill would allow city to recoup tax loss.

The tax assessor scandal was front and center at a hearing conducted by State Assemblyman Scott Stringer (D-Manhattan) in the Bar Building last week.

Stephen Spinola, president of the Real Estate Board of New York, testified along with several city officials.

Stringer is chairman of the Assembly Real Property Taxation Committee, which is sponsoring a bill that would allow local governments the right to recoup tax revenues lost because of criminal activity. Currently there is no state law allowing the municipal government to recover taxes lost in such a way.

Department of Finance commissioner Martha Stark testified first, encouraging the assembly not to rush to judgment on her entire staff.

"These people were not representative of the Department of Finance," said Stark of the 2,000 staff who work in the department. Stark only took office a few months ago.

She acknowledged that the assessment process is complicated, but in her view "the vast majority of assessments" conducted recently remain accurate.

"And we will regain the public trust," she said.

During the question & answer session that followed, Stringer asked Stark to dissect the process whereby assessments are made, which many consider to be highly subjective.

Stark said that there is little opportunity for "subjective criteria" to seep into the equation and open the assessment up to criticism. She admitted that simplifying the assessment process is needed. Stark refused to comment directly on the DOF's immediate plans the reform the department as the investigation is still underway.

Her comments shed some light on how the DOF operates, suggesting an arcane and understaffed department. She is critical of the DOF's computer systems, which are apparently all outdated.

Asked if she agreed that there is a need for Stringer's bill, Stark had-no comment. And her explanation on how .the city determined that, over the past four years $160 million have been lost, was somewhat vague.

"We have not yet assessed the impact" said Stark.

Stark agreed with Stringer's suggestion that the creation of a joint task force between the real estate industry, tax attorneys and city is needed. Stringer made reference to a task force created with the same mission eight years ago.

"But nothing happened with that," he said, referring to this other task force.

The next to testify was David Weprin, chairman of the City Council's Finance Committee. Weprin agreed that the process of assessing properties must be made more "transparent," so that clandestine practices can be rooted out. He also agreed that Stringer's two-prong approach to recouping back taxes is a good idea since property taxes account for $9 billion of the city's annual revenues.

A tax assessor and the head of the assessors' union testified next, outlining a number of reforms that they claimed would help. Chief among them is better training, which, they claim, current assessors are not required to have. David Moog, vice president of Local 1757, said that if assessors want to take special classes, they aren't even allowed to take time off to pursue these courses.

"The only training is on-the-job training," said Moog.

Their comments offered a brief glimpse at an overworked, understaffed department. They also criticized the state of the DOE computer systems.

Moog contradicted a statement made by Martha Stark earlier in the hearing that any property assessments that vary by 10% above or below last year's assessment were scrutinized by DOF officials. Moog claimed that it is really a 20% differential that draws the attention of DOF officials to examine that assessment for accuracy.

Moog also said that back in 1991, after a dispute with the DOF, assessors were told that they no longer had to certify their assessments.

Steven Spinola testified next, calling the conduct of those involved in this scandal "shameful."

"It is essential that we correct the assessment process. But the fair market value of a property is a subjective issue," said Spinola.

He too said that the process should be more "transparent" as a way to reduce corruption.

Spinola faulted a system where 100,000 appeals by landlords for lower assessments are still waiting to be heard in the courts. He blamed the city's policy under Giuliani whereby these appeals were ignored for years as a way to keep revenues up.

"Let's survey other assessment processes around the nation," he advised, as a way to formulate a better approach to the tricky practice of assessing property values.

Afterwards, Spinola spoke to a number of reporters outside the meeting. He dismissed claims by the city that a total of $1 billion has been lost over thirty years.

"We just don't know how much these buildings were under-assessed," he said.

He speculated that Albert Schussler, the accused ringleader, merely scared his clients into believing that taxes were rising--another reason why they should hire him (as many reportedly did.)

As for the legislation proposed by Stringer, Spinola said that "it makes no sense," due to the complex nature of figuring out the value of properties years ago.

"There's no way to prove what those assessments should have been 7 years ago," he said.

Spinola is also opposed to an idea mentioned during the hearing that would have the mayor appoint a chief assessor.

"The best thing we can do is take away as much discretion as possible from this system," he said.