Relates to assessment reduction in Westchester county

BILL NUMBER:A8896

Title of bill

An act to amend the real property tax law, in relation to assessment reduction

Purpose or general idea of bill

The purpose of this bill is to allow Westchester County to limit the maximum allowable assessment reduction in Small Claims Assessment Review (SCAR) proceedings for properties that are worth over one million dollars.

Summary of specific provisions

Section one amends paragraph (c) of subdivision 1 of section 730 of the Real Property Tax Law to allow assessing units in Westchester County to pass a local law that would limit the amount by which an assessment could be reduced in SCAR proceedings for properties worth over one million dollars. The limitations prescribed would be:

a. 25% of the threshold assessed value, plus

b. Five percent of the amount by which the challenged assessed value exceeds the threshold assessed value.

For the purposes of this section "threshold assessed value" means the assessed value that equates to an equalized value of one million dollars.

Justification

The initial intent of Small Claims Assessment Review (SCAR) was to provide to homeowners seeking small refunds an informal and inexpensive venue for tax grievances. SCAR provides an alternative to Supreme Court, mitigating the need for legal representation and adherence to higher standards of disclosure and evidence. Due to the informal nature of SCAR and its intent to provide modest refunds, it originally had a maximum tax refund limit of $750. This tax dollar refund limitation was later eliminated and replaced by the current limitation of 25% of the assessed valuation for properties worth over $450,000.

Over the past several years, Westchester County has seen a tremendous increase in the number of SCAR filings. Many of these filings represent high-end homes. High-end properties, while still residential, often are more complex to valuate than a typical one, two or three-family residence. The complexity of their valuation and the minimum supporting evidence required in a SCAR proceeding, make it difficult to properly adjudicate such claims. In many cases the maximum reduction allowed, 25% of the assessed value, is sought and granted without sufficient justification - some with corresponding tax reductions as high as $50,000. Because SCAR does not provide the opportunity for a municipality to appeal a ruling, municipalities are at a disadvantage when it comes to defending their assessed values, even when high refunds are at stake.

This has not gone unnoticed by property tax representatives, who have benefited from the SCAR process. In the year 2008-09 it is estimated that 95% of SCAR cases in the Towns of North Castle, Scarsdale and the Cities of While Plains and Rye were filed by tax representatives. As a result of the increase in the total number of SCAR reductions, especially for high-end properties, many Westchester municipalities

find their tax base decreasing and their ability to provide adequate services in jeopardy.

This bill would provide an additional limitation on the maximum reductions allowed in SCAR proceedings for properties worth over a million dollars. In doing so, Small Claims Assessment Review would, as originally intended, provide homeowners seeking modest refunds an easy and expeditious grievance venue. Large sum reductions would be arbitrated in tax certiorari proceedings. Homeowners of high-end properties could still utilize SCAR; they simply would be limited in the amount of a reduction they could receive.

Prior legislative history

This is a new bill.

Fiscal implications

None to State

Effective date

Immediately