Owners await new tax bills.
Thanks to a deal struck last June by the legislature, the city and the State Board of Equalization and Assessment (that will be known as the Office of Real Property Services as of January 1, 1995), residential owners are for the most part celebrating lower real estate tax bills.
Although commercial owners are paying a larger amount for the second half, they are also enjoying a reduction in the tax rate over the entire fiscal year.
But right now, many property owners are complaining bitterly because their tax bills are much higher than what they expected to pay. Certiorari attorneys are reporting their clients are not only angry, but scared, because some cannot pay these higher bills.
The replacement tax bills for thousands of properties whose owners agreed to reductions in assessment after the roll closed in mid-May are not reflecting the lower amounts, even though the city has had in some cases more than six months to make the changes. Additionally, a Tax Commission official says Finance has the information it needs to make the changes.
But the Department of Finance says it has made changes in those bills where information was received from the Tax Commission before the replacement bills were sent out in the beginning of December.
The Tax Commission is now in the process of mailing formal notices of assessment reduction to tax certiorari attorneys for the majority of the changes made since the end of May. The majority of those notices were to be mailed late this week, officials told the head of the Real Estate Tax Review Bar Association and REW.
Nevertheless, Glenn Borin, counsel to the Tax Commission, said, "Finance has everything it needs to make tax bill changes for January 1st bills."
Finance spokesperson Eamon Moynihan said "The great majority of the people who got a reduction have been captured and the amount is reflected in their bill."
The city is not sending out lower property tax bills so it can use the money, some owners groups are charging, but others dismiss the problems as administrative and not calculated.
The real property tax payments are the largest single source of the city's revenue and sources said it is likely that hundreds of millions of dollars are at stake.
Arnold I. Mazel, president of the Tax Review Bar Association and a tax certiorari partner with Goldberg Weprin & Ustin, said "I don't know what that will mean in terms of getting corrected tax bills for this year."
Moynihan said those taxpayers who had reductions that were not captured in the replacement billing will be able to get a new bill at City Collector.
But Finance is not pro-actively sending out replacement bills.
Said Moynihan, "If it happens they get a remission notice and [the change] was not captured on the bill they have to pay in January, people often chose to pay less and do their own calculations as if the bill had captured the remission and then pursue the credit for the July bill [overpayment]."
Taxpayers cannot subtract the credit for the July overpayment and must still apply for a refund.
Of course, Moynihan noted, if they pay less than the billed amount and it turns out they calculated wrong or the Tax Commission revoked the remission, "they would have a problem."
Mark Moss, vice president of the Real Estate Board of New York, says Finance has treated the issue appropriately. "If their reduction is not data entered they can recalculate the tax bill and pay on the lower amount," he said. "But owners need to be very careful in recalculating so they don't wind up with a delinquency."
Taxpayers who used tax certiorari attorneys and don't pick up replacement bills should confer with counsel before making any changes to amounts due.
Since January 1st falls on a Sunday, and Monday is a post office and city holiday, the Department of Finance is accepting payments postmarked by Tuesday, January 3rd, or the taxpayer may pay in person that day at the City Collector's office.
Small property owners in particular live from rent collection to rent collection and are constantly on a precipice before the specter of losing their building to the city - also known as going "in rem."
Last Thursday, the State Assembly Committees on Housing and Cities headed by Assemblymembers Victor J. Lopez and Hector Diaz convened a meeting in Manhattan to hear testimony on issues surrounding the 30,000 dwelling units in nearly 3,000 buildings where owners have failed to pay real estate taxes and the city has taken over their operation.
Protesting assessed valuations that are too high is one way owners can keep some control over rising costs. For Fiscal Year 1995, 51,576 applications for review of the tentative assessment were filed.
Those owners that did not accept the Tax Commission offers filed 24,000 petitions with the court in October. It is likely that a small percentage of owners gave up fighting the assessment because of the court filing fees. Borin declined to disclose or even ballpark the number of properties waiting for remission notices.
Tax Commission data from its 1993/94 annual report discloses about 53,000 applications were reviewed that year and about 16,500 accepted offers. Since the lion's share of the hearings are held from the end of May until October, it is likely that more than 10,000 owners received reductions this year after the roll closed.
These owners need corrected tax bills so they can pay the reduced second half bill. They also need these corrections to obtain a refund for the first half (July) and in some cases the second quarter (October) overpayments.
Martin Karp, president of the Action Committee for Reasonable Real Estate Taxes, said "The city is already behind in refunds for prior years' settlements. At a minimum, the least they could do for taxpayers is to reflect the agreed upon assessment in current bills. There is absolutely no excuse for this kind of delay."
Another question that Finance has not answered is what kind of billing information is being supplied to the banks. It is unclear if the lenders will be paying tax bills for their escrow clients based on an updated or an old assessment. For co-ops and condominiums and small properties with mortgage escrow accounts, this may become a major issue.
The Tax Commission is just beginning to send the remission notices that officially communicate the correction of the assessment. Without the issuance of these dated remission notices, it is unlikely a corrected tax bill can be generated by the City Collector.
Earl Andrews, Jr., president of the Tax Commission, insisted "We're moving as much paper out of here as fast as we can." His agency lost several key staffers and Andrews himself just took office in mid--September.
In fact, the Finance document that discloses the history of the assessed valuation - known as an "AV HS" - already reflects the new reduced assessments, supporting Borin's claim that Finance already has the information it needs to generate new bills.
An Office of Management & the Budget official denied there was any high level scheme afoot to delay the bills. But for Dan Margulies, executive director of the Community Housing Improvement, an owners' group, the responses are just not good enough.
"It's outrageous," fumed Margulies. "The settlements have been accepted and it's a matter of them pushing the buttons and spitting out the orders and credits. It seems to be a conscious effort to over-collect. The city will receive the interest on the money until we can make claims for refunds."
In fact, should owners pay based on the old assessment, they will have to provide canceled checks and other documentation to the Department of Finance to receive a refund. The earliest any of these owners would be likely to see a refund check from the city is April or May, experts say.
But this past May - as in previous years - the city was under such financial stress that refunds did not start to get mailed on a large scale basis until September. Owners and certiorari attorneys are now reporting that once again refund checks are being held up.
Effectively, that means if an owner agreed to a settlement reduction of an assessed valuation between the end of May through October of 1994, they may not see a refund of their overpayment until September of 1995 or later.
Without some push by taxpayers, this fiscal triaging is likely to continue each year around the time taxes payments are due, so the city can enjoy the interest rate float and the use of the free-of-interest "borrowed" money.
Charles R. Rappaport, president of the Federation of New York Housing Cooperatives, relayed the story of a member who was recently told the number on his refund check by an individual at Finance early this month. But the member was also told the check was not being mailed out.
"If I knew the check was ready I would have somebody go down to the Department of Finance and pick it up and scream loud and long when they won't give it to you," said Rappaport.
Rappaport, and many others who are tired of this money management game, are also clamoring for interest on the money, as is paid in other jurisdictions.
"If the money is not paid within 30 days, the city should have to pay interest," insisted Rappaport. "They can hold it for two years and you don't get a penny of interest. I'll settle for half the interest they would make someone who is delinquent pay - which is 18 percent."
Jeffrey Golkin, a certiorari partner with Herzfeld & Rubin and a Professor of the Real Estate Institute at New York University, said "The commercial property owners are clearly agitated. The city does not pay interest on settlement reductions and therefore, has no inducement to pay the refund in any timely fashion."
Nevertheless, the city is quick to charge 18 percent interest to those who pay their property taxes late. There are many owners still catching up with installment payments for taxes paid late on back years.
"This means the industry will be making a loan to the city for at least the first few months of the year," said Margulies. "This is really an unauthorized borrowing from the taxpayers."
If the system is to be fair and equitable, Golkin said, attention has to be given to a more timely issuance of remission orders so there isn't an extreme time lag between a Tax Commission settlement and the actual benefit to the taxpayers.
"Many taxpayers experience such significant delays that the turnaround on an actual refund can be anywhere from a year to 18 months," he said. "In addition, where there is an exemption or condominium form of ownership, the delay can be longer."
He believes attention has to be given to a timely administration of the remission orders as well as the relationship between Tax Commission and Finance.
Golkin says he is confident the new administration will focus on this problem and improve the situation.
"There has to be a reasonable turn-around time, and I would put that time frame from no more than six months from accomplishing a settlement to getting the refund in hand. By virtue of the settlement, the taxpayer waives his right to interest," continued Golkin. "It is assumed under such circumstances the city agencies will do everything in their power to expedite the refund, as the taxpayers have foregone interest. In my experience this has become a significant problem."
Meanwhile, the Department of Finance has decided the tentative assessment roll for the 1995/6 fiscal year will be released on Tuesday, January 17th.
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|Title Annotation:||replacements to reflect lower assessments, New York City|
|Publication:||Real Estate Weekly|
|Date:||Dec 14, 1994|
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