Happy Taxable Status Day
From the December 2007.
Each year, many Nassau County Villages lose valuable municipal revenues by failing to assess on-going construction that has occurred during the past calendar year. The purpose of this article is not to be a proponent for increasing assessments, but rather to alert officials of the opportunity and the basis upon which to do so.
All real property within a Village is to be assessed annually according to its condition and ownership as of January 1st, the taxable status date -- New York Real Property Tax
Law (“RPTL”) §400. Many assessing Villages utilize the Nassau County roll as the Village’s base assessment roll. RPTL §1402 allows those assessing Villages to utilize the County’s assessment roll valuations to the extent practicable. Accordingly, these assessing Villages are not bound to accept Nassau County’s valuation for each listed parcel, but may modify individual assessments in compiling the Village’s own assessment roll, assuming there is an underlying rational and factual basis for the change.For those Villages that have terminated their assessing unit status, this option is not available. Those Villages must rely on the Nassau County assessment values for all properties, even if the Village knows that major improvements occurred, which resulted in an increased property valuation that is not reflected in the Nassau County assessment. A non-assessing Village unit is similar to a School District in that it has no responsibility for preparation, maintenance, or defense of the assessment roll, including applicable notice requirements.
How does an assessing Village capture such increases in valuation due to recent construction on its assessment roll? Even with the present real estate market, many of our Villages continue to have on-going construction projects. The Village’s Building Department has records of this activity and estimated costs for construction. Most Building Departments are able to make a reasonable estimation as to the percentage of completion as of January 1st based upon their site inspections. This information is most helpful to the Village Assessor in identifying those parcels where assessments should be reviewed due to new construction.
The most pressing issue that each Assessor must address when reviewing an assessment of a parcel where new construction has recently occurred, is the increased valuation attributable to such construction. Formerly, Nassau County’s assessment valuation for real property was based upon the cost of construction; now it is fair market value. Accordingly, if an assessing Village is using Nassau County valuation as its assessment base, the Assessor should only consider the increase in fair market value of the parcel on January 1st that is the result of the new construction, not solely the cost of the construction. The Assessor must determine if the improvements actually increase the fair market value of the property, which then should be reflected in an increased assessment. For those situations where vacant land is being improved, the increase in property value due to new construction is obvious. The more difficult valuation determination is where interior renovations or repairs are made that require a building permit. In certain cases, the construction may or may not proportionally increase the fair market value of the property. The Assessor should individually review each situation on a case-by-case basis. Guidelines established by an assessing Village for the Assessor to address these situations would be helpful to achieve consistent, fair and legally supportable assessment changes. Ultimately, the Nassau County Department of Assessment will reflect the new construction impact on assessed valuation, based upon the assessing Village filing its Building Department reports with Nassau County. However, there is usually a long delay in this administrative process.
What is an assessing Village to do? First and foremost, an assessing Village must be aware of its ability to increase assessments to accurately reflect increases in property values due to improvements that are not reflected on the Nassau County roll. Whether or not an assessing Village will review its assessment of properties with new construction is a policy decision. If it does, the assessing Village must focus on the increase in fair market value of the property, not just the cost of construction. Finally, the assessing Village must comply with all notice provisions required by the Real Property Tax Law applicable to increases in assessed valuation on a Village’s assessment roll.
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