Report blames state law for city assessment woes.

The New York Public Interest Research Group released a study last week showing that nearly one-third of 213 New York City neighborhoods are unfairly assessed for one-, two--and three-family home property tax assessments.

NYPIRG attributed the unfair Class 1 home assessments largely to a state law that makes it difficult for city officials to maintain equitable assessments. The report entitled "A Taxing Problem" reviewed assessments on 638,221 one-, two- and three-family homes in New York City from data supplied by the New York City department of finance, which administers the city's property tax system.

The report found that of the 213 neighborhoods studied 12.2%, or 26 neighborhoods, are over assessed and 18.8%, or 40 neighborhoods, under assessed.

"Tens of thousands of city homeowners are paying more than their fair share of property taxes," said Gene Russianoff, senior attorney for NYPIRG in a prepared statement.

The report failed to mention that the city has been served with 57 lawsuits commenced by taxpayers suing over the alleged bribery scheme where several former city tax assessors have pled guilty to participating in the $10 million collusion that lowered some property owner's tax assessment while increasing others.

The report couldn't come at a better time for attorney Jeffery Golkin, who is representing 1,300 plaintiffs who are suing the city in connection with corruption scandal.

His case is based on the unfair tax shifting from one homeowner to another.

"It's just another indication that there is a tax shift," said Jeffery Golkin, attorney. "The report will be evidence in a whole series of evidence that will make our point."

State law puts a cap on how much the city can increase taxes, but does not limit reductions. This "home assessment cap" law prohibits the city from increasing assessments on one-, two- and three-family homes by more than 20% in five years or more than 6% in one year.

However, even if the city reduces taxes on those deemed unfairly assessed, the city must collect "X" amount of revenue per year in tax assessments, which could lead to the tax burden being shifted to another homeowner, Golkin claims.

The city estimates that $11 billion will be collected in real property taxes this year.

To rectify the problem of a tax shift, the NYPIRG recommended that in the short term the Finance Department lower assessments on over assessed homes, noting this would likely require the city either to adjust the tax rate to make up for $127 million in lost revenue annually--or to forego this revenue.

Longer term, the report recommended that the city make the property tax system more understandable for New Yorkers. Suggested reforms included moving from confusing fractional assessments to full market value assessments; providing homeowners with information on sales of comparable homes in their area; and consideration of replacing the five-year 20% assessment cap with a "circuit breaker" provision linking assessment levels to the family income of homeowners.

The methodology of the report called for comparing the ratios of assessments on homes to their full market value. Russianoff noted that the assessed value of a home is the figure on which the home's property tax is based.

According to the Finance Department data, the actual citywide median assessment for the 638,221 one-, two- and three-family homes in New York City is 5.439% of full market value. Russianoff said that Finance Department materials say they target assessments on homes at 8% of full market value, but "in reality the median assessment is significantly lower.

The tax rate for fiscal year 2003 was $14.16 per $100 of assessed value; so a home with a $10,000 assessment had a yearly tax bill of $1,416 last fiscal year. The median full market value for the 638,221 homes is $258,000, according to the Finance Department data.

NYPIRG last conducted a major review of home assessments in New York City in 1983, when it released a report entitled City of Unequal Neighbors. That report found widespread inequities in home assessments and led to the reassessment of hundreds of thousands of one-, two- and three-family homes in New York City in the mid-1980's.