Share of Nassau homeowners who win reduced assessments nearly doubles

The share of Nassau County homeowners who won and accepted property assessment reductions nearly doubled over the past two years, according to county data obtained by Newsday.

In the current tax year, for 2021-22, 50% of county property owners who challenged their assessments accepted settlements that reduced their valuations, compared with 26% in 2020-21.

In 2021-22, 109,606 of 219,780 property owners accepted settlements that reduced their assessed valuations, county records show.

In 2020-21, the first year of Nassau County Executive Laura Curran's program to reassess all 385,000 residential properties in Nassau, 61,110 of a record 236,372 homeowners accepted reductions.

County officials attributed the jump in accepted assessment reductions largely to a court settlement between Nassau and law firms that each year represent thousands of Nassau property owners who challenge their valuations.

Under the court agreement, first struck in 2011 during the administration of former County Executive Edward Mangano, the law firms each year can demand an analysis of the accuracy of the assessment roll, compared with the marketplace.

If it’s found there was widespread underassessment when the roll was published — typically in January — the county then must negotiate with the firms to set a lower ratio for use in adjudicating assessment challenges.

The idea behind lowering the ratio is to give homeowners who have grieved their assessments as too high the same benefit as those who were underassessed.

For the 2021-22 tax year, published in January 2020 before the boom in the housing market that developed during the coronavirus pandemic later in the year, the county Assessment Review Commission agreed in October to lower a ratio used to calculate assessments by a small fraction.

That enabled ARC, which decides tax challenges, to offer reductions to many who had appealed their assessments — an enticement that led to the increase in the number of property owners who accepted settlements, county officials said.

Generally, "a lower ratio than used by the Assessor leads to greater reductions at ARC," ARC Chairwoman Robin Laveman said in an email to Newsday.

It "led to us giving more [settlement] offers, which then resulted in more accepted offers," Laveman said.

Curran spokesman Michael Fricchione argued the court stipulation, "effectively handcuffs" Nassau, "from being able to accurately determine the … residential ratio" during the grievance process.

"We can’t set a ratio that reflects the true … relationship between actual market values and the assessments set by the assessor," Fricchione said in a statement. "Tax representative firms have collectively been able to use this one-sided agreement to their benefit."

Tim Costa, spokesman for the Fair Assessment Committee, an LLC made up of tax firms, called the court stipulation, "a fancy term for a process certified by the courts and meant to ensure that there is an opportunity for homeowners who have been overassessed to receive a meaningful review of their case."

Costa called the agreement, "crucial both in preventing tax disparity amongst neighbors and preventing most of the county’s potential refund liability."

Beyond the change in ratio, outside assessment and property tax experts suggested other reasons for the increase in successful grievances in 2021-22, such as widespread "sticker shock" over higher assessments and better-documented challenges by taxpayers who realized an era of near-automatic annual reductions was over.

Curran, a Democrat who is seeking reelection in November, said she launched the reassessment in 2018 in an effort to make the tax roll more accurate and fair, and thus less vulnerable to tax challenges.

But Republicans have criticized reassessment as a prime driver of property tax hikes.

Bruce Blakeman, Curran's Republican challenger in the county executive race, has vowed to make reassessment the top issue in his campaign.

Assessment appeals can have a significant effect on both the fairness of the property tax roll and on county finances.

When large numbers of homeowners win challenges through the review commission, more of the overall tax burden shifts to those who don't grieve, boosting inequities.

If homeowners win their court cases after the annual tax roll is set in the fall, Nassau is liable for refunds of all tax overpayments to school districts, towns and other jurisdictions.

In past years, Nassau ran up tens of millions of dollars in debt to cover overpayments of property taxes.

"If the County does not resolve claims before September 1st, County taxpayers have to fund the liability, not just for the County, but for every taxing jurisdiction on the County’s assessment rolls," Fricchione said.

In 2011, Mangano, a Republican, froze the property tax roll as he considered the frequency with which reassessments should occur.

The freeze, which ended up lasting eight years, was accompanied by a mass settlement program that enabled the Assessment Review Commission to resolve grievances before homeowners went to court under the small claims assessment review process known as SCAR.

All told, Nassau County settled 1,003,434 of 1,252,099 cases filed for tax years 2012-13 through 2019-20, or 80%, county data show. (Curran, who took office in 2018, left the freeze in place for 2019-20.)

The average annual assessment reduction was as large as 12.8% in the 2013-14 tax year, when Mangano was in office, county records show.

Under Curran's reassessment, the average reduction was 5.5% in 2020-21 and 6.4% in the 2021-22 tax year.

The Nassau County records examined by Newsday suggest reassessment already has had a dramatic effect: In the first two years of the program, 170,716 challengers won assessment reductions, compared with 338,609 in 2018-19 and 2019-20, the final two years of the freeze.

Nonetheless, tax challenges remain a stubborn problem, county records show.

The number of grievances has inched up — to a total of 456,152 for 2020-21 and 2021-22, compared with 420,730 for 2018-19 and 2019-20.

Also, the number of assessment reductions granted by the county climbed by 48,496 between 2020-21 and 2021-22, while the proportion of assessment challenges resulting in reductions jumped from 26% to 50%.

Larry Clark, director of strategic initiatives for the International Association of Assessing Officers, based in Kansas City, Missouri, said, "a massive number of appeals the first year following a reassessment" is common, "especially if it’s been a long time since the county or jurisdiction has reassessed."

With property values increasing — sometimes dramatically — there is "sticker shock," and large numbers of challenges "may continue again for a couple of tax cycles," Clark said.

Kevin Clyne, an attorney with Herman Katz Cangemi Wilkes & Clyne in Melville who represents property tax appellants in Nassau, said the Assessment Review Commission was "a little less dug in" about grievances this year.

"I think they became a little more flexible in year two; there was a little less pressure to defend the reassessment," Clyne said.

Mark Sunderman, a University of Memphis professor who specializes in real estate and property taxes, said Nassau taxpayers who had become used to annual reductions during Mangano's administration may have taken more care with their tax challenges this year.

"It may be the fact that the taxpayers had assumed in the past that 'I can throw anything at the assessor, and it will automatically get me a reduction,'" said Sunderman, holder of the Morris Fogelman Real Estate Chair of Excellence in the university's Fogelman College of Business and Economics.

Nonetheless, Daphne Kenyon, a resident fellow in tax policy at the Lincoln Institute of Land Policy, a nonprofit focused on land use and equitable tax systems in Cambridge, Mass., said the proportion of Nassau County homeowners who file grievances "is amazing to me."

In many other states, Kenyon said, "reassessments and massive appeals are just not an issue."

Among Nassau residents who grieved their taxes for 2021-22 is Christopher Kaiteris, 86, of Syosset, a retired engineer who worked for Northrup Grumman. A settlement reduced Kaiteris' valuation from $639,000 to $622,000.

Kaiteris said although he got only about a 3% decrease, it was "better than I expected."

The system is "confusing," said Kaiteris, who has grieved his taxes regularly since 2007.

But "it’s no sweat on my brow," Kaiteris said. "If you don't grieve it’s going to go up!"

Debra Leone, 57, of Massapequa, a former bookkeeper, was denied a reduction when she challenged her 2020-21 valuation of $1.656 million, according to county records.

For the 2021-22 tax year, the Assessment Department raised her home's value to $1.718 million. Leone grieved, and the review commission agreed to cut the assessment to $1.52 million, county records show.

But Leone's property taxes still are more than $40,000 a year, and she believes her home is overassessed.

She says she will continue to challenge her assessment because she disagrees with the "taxable value" assigned to her home, one of the figures used to determine her property taxes.

"I think they just did a small reduction just to appease us, but it’s not helping us," Leone said.

The effect of the settlements on residents' tax bills won't be known until the fall, after the roll is published and bills are distributed, generally in October.

Nassau County Legis. Steve Rhoads (R-Bellmore) said the jump in the number of valuation reductions for taxpayers this year showed reassessment has failed in its mission to curb successful challenges.

Rhoads noted that Nassau County offered to settle 125,954 assessment challenges in 2021-22.

The situation, "kind of underscores what our fears were — it’s pretty much an acknowledgment when you look at the number of settlement offers that have been made, the roll’s not defensible," Rhoads said.

"When we’re making an offer of settlement, it's an acknowledgment of the fact that we can't defend the roll," Rhoads said. "We're trying to entice someone to accept the offer."

Laveman defended the assessment review process.

The Assessment Review Commission's purpose, Laveman argued, "is to give the opportunity for a homeowner to question or provide information that [the Department of Assessment] might not have had" in valuing a property.

"That's the whole point of this before the roll goes final," she said." I don't think the fact that we're offering settlements or there are any reductions is an indication of anything."

Legis. Debra Mulé (D-Freeport) also defended Nassau's reassessment.

"The reductions that are happening now are happening because there is in a fact a need to change the value of the home," Mulé said.

"People have the right to grieve if they feel they're not being taxed fairly," Mulé said. "It’s something that’s going to happen even with the most accurate tax roll."

By Scott Eidler

scott.eidler@newsday.com@ScottEidler

Scott Eidler covers Nassau County government and politics for Newsday. Scott has worked at Newsday since 2012 and previously covered municipal government and education.