This is the year for assessment reductions.

Unquestionably, commercial property owners would be well advised this year to consider filing for an assessment reduction.

Steep, recessionary declines in market values followed the record high income property assessments in the 1980s, and that decline has not, as yet, been reflected in many assessments.

Under the law, owners of income properties must file by March 1 of the year the tentative assessment is issued. Specifically, these assessments, issued in January, and an application to lower those assessments must be filed with the city Tax Commission by the March 1 deadline to be considered for a reduction.

The city has emphasized that it has recently reduced assessments. But real estate has experienced a long period of hyper inflation. Sales were made at the higher values, and assessments in the city soared along with inflated market prices.

Clearly, economic conditions have changed dramatically. Many office buildings, retail properties and luxury apartment buildings have had substantial vacancy rates for several years.

In addition, in the past year or so, many smaller rent-regulated multi-family properties have developed vacancy patterns. Even if fully leased, such properties containing high-turnover units often are being rented at below the allowed regulated rents.

Owners of regulated apartment properties may find themselves in a tighter situation even than owners of other types of income property. Specifically commercial property owners were able to offer leases that permitted them to pass through certain operating costs such as higher tax, fuel and utility expenses. But owners of regulated residential properties have had to wait for Rent Guidelines Board increases to be compensated for such higher costs, and the Board's authorized increases too often aren't adequate.

The fact is that many assessments, which during the inflationary period were increased substantially, have not been reduced to a commensurately low level. In fact, assessments sometimes bear little resemblance to today's lower market values. Underscoring this phenomenon is the fact that assessment-reduction filings with the Tax Commission are up some 75 percent compared to a half dozen years ago.

While the city undoubtedly should lower assessments in line with the recession impacting New York, there are pressures on the city that preclude that. These pressures provide insight into why many assessments still are too high, why they are not likely to be reduced adequately by the city, and why owners should be prepared to take the city to court on the issue of assessments.

Last year, the city announced that total actual real estate assessments had declined by 16.3 percent since the height of the market. But because of the transitional assessment mechanism, by which changes in actual assessment are phased in over five years, billable assessments only first declined last year - and by a meager percentage at that.

This means the city will lose hundreds of millions in property taxes at a time when the city Administration is trying to cover a tremendous budgetary shortfall. One can sympathize with the city's plight: It counts on real estate for some $8 billion of its revenues. Nevertheless, real estate market values have fallen more than the decline in billable assessments, and assessments should have come down much more. City assessment reductions are like band aids given to a man having a hemorrhage.

The importance to the city of maintaining real estate tax revenue may also help explain why in the early 1990s, the city still was hiking so me assessments even while businesses leasing office space here were cutting back on their office space requirements.

The City Tax Commission is the first stop on the way to asking for an assessment reduction. But the review if often made not by the Tax Commissioners, but by hearing officers who frequently are former city property assessors. Even with the best of professional intentions, they tend to look at cases based on their experience as former assessors. As a result, we sometimes have the feeling that they are not fully conversant with market realities. Perhaps reflecting this, the backlog of lawsuits aimed at achieving assessment reductions rose some 12 percent in a year, according to one estimate.

Could your building be overassessed? The odds are you will need professional help to determine this. Though your building may look like another property whose assessment was - or was not-reduced, the key is not in appearance but in the comparable income profiles. It may take an expert to determine this. However, when assessment reduction is pursued aggressively, the rewards can be substantial: Recently, the courts reduced assessments 45 percent going back several years and the tax rebate came to many millions of dollars.

(Podell, Rothman, Schechter & Banfield is the largest law firm in New York City specializing in real estate assessment reduction work.)