(Editor's Note: Leon Korobow has been diligently following this issue and has become our local expert.)

Nassau County property owners have been undergoing a reassessment of their homes for tax purposes as a result of a settlement reached by the county in a lawsuit brought by a group of south shore residents. The suit, in which the ACLU represented the plaintiffs, charged that south shore residents were overtaxed because the county's property tax system does not tax the relatively greater appreciation of property values on the north shore and, therefore, does not obtain the increased tax revenues the county should have received. In the consent agreement, Nassau County committed to a reassessment of all taxable property at full market value, some 400,000 parcels, with the tax rolls adjusted to the new assessed valuations by Dec. 31, 2002.

Over the summer, all property owners received from Cole Layer Trumble (CLT), the real estate consulting firm that was hired by the county, a letter indicating the new property appraisal and the new tax that will be due starting October 2003. In a great many cases the estimated market value, which is projected to Jan. 2, 2003, is increased very substantially above the full market value which is implicit in our current tax assessments. In a great many cases, residents of the county believe these new valuations are greatly in excess of what the properties could bring on the open market. Of course, with these increased valuations, property taxes will increase very substantially.

During the past few months during which the public has weighed the impact of the county's reassessment program, several critical issues have emerged with regard to the legality of the entire program as well as its soundness, accuracy and fairness. They are as follows:

1. Section 1805 of the New York State Real Property Tax Law prohibits increases in homeowners' property assessments by more than six percent annually or 20 percent in five years. This law is intended to protect the public from runaway tax assessments. However, Nassau County is attempting to circumvent that statutory limit by creating an artificially low "taxable value" of the property. This is done by taking 1 percent of the new full market valuation and calling that lowered number the assessed value. That is why the assessment letter from CLT actually shows a reduction in assessed value as compared to last year, in many cases. Of course, the tax rate that is applied to the lowered figure is much higher than it would have been had full market value been used to obtain the desired tax revenues.

2. Our present property tax bills indicate that taxable or assessed value is around 2.5 percent of the presently in effect full market valuation. If the county compared the new full market valuations with the old full market valuations, or compared the same 2.5 percent of both the new valuations and the old valuations, the increases in both cases are vastly in excess of 6 percent. By reducing the assessment ratio from 2.5 percent to 1 percent, the county is engaging in an arithmetic sleight-of-hand that may not withstand a challenge in a court of law.

3. Property owners who consulted with CLT discovered in a great many cases that their homes were compared for purposes of valuation with property far from their own neighborhoods, in vastly more expensive areas. Many observers, including county officials, agree that CLT's initial valuations are grossly misvalued in many cases. According to county officials, CLT is in the process of mailing out corrections in a number of cases.

4. The revaluation considers property values only at one point in time. This could be very inaccurate and unfair. Real estate values currently are inflated, just as stock market values were recently before they came crashing down. Many observers believe we are at the peak of a real estate bubble, which is the result of abnormally low interest rates and a flight from the stock market. This situation is likely to reverse in coming years, as the economy recovers and interest rates rise. The county does not seem to have a workable plan as to how the new full market valuations would be updated. It would seem reasonable to adopt some form of averaging.

5. At a public hearing held by Nassau County officials on Dec. 1, 2002, resident after resident explained how their properties were grossly misvalued because of data errors committed by CLT, as well as by out-of-neighborhood comparisons with more expensive homes and properties. Many of these participants foresaw that they will have to sell out and go elsewhere. It was ironic that almost all the participants from the public seemed to come from exactly those low-income communities in Nassau County that reassessment was supposed to help by redistributing their property tax burden. Instead, what they got is a substantially higher tax burden. Many members of the public requested county officials to ask the court to grant a delay, rather than implement the new tax assessment rolls on Dec. 31. The delay would permit the county to correct the severe distortions in the new full market valuations and the State Legislature to pass legislation that is needed to correct various other inequities and hardships that have come to light.

6. Because CLT violated one of the most basic principles of real estate valuation, namely that location is the most important factor, that company's work lacks credibility. The result is a very large number of misclassifications and overvaluations of homeowners' properties. (The chairman of the Assessment Review Commission is anticipating 100,000 grievance applications or 25 percent of all properties that were revalued.) From anecdotal evidence, it appears likely that the proposed new tax burdens will be very regressive, that is, heaviest on low income individuals and families.

Members of the public who are not happy with the new revaluation of their homes and/or believe the county's reassessment program is badly flawed can take several steps to make known their views and to protect their interests. You can write to County Executive Tom Suozzi, 1 West Street, Mineola, NY 11501. You can file an application for a reduced assessment with the Assessment Review Commission. Application forms will be available early in January 2003 at the County Assessors Office, 240 Old Country Road, Mineola. The forms must be filed by early March 2003. The Review Commission is planning a simplified procedure so that private individuals can file the form, but you can still use an attorney to do it for you. Keep in mind, that with 100,000 grievances expected to be filed, you shouldn't expect an early resolution of your problem.

I believe an important issue is the county's possible violation of Section 1805 of the New York State Real Property Tax Law. As reported in Newsday recently, an attorney by the name of Daniel J. Dillon, who is associated with the law firm of Harry Issler, 110 East 59th Street, 29th Floor, New York, NY 10022, is planning to file a lawsuit to compel the county to comply with Section 1805. All members of the public are invited to join the lawsuit for a modest fee.

If the lawsuit is successful, it will have an important effect in easing the burden of any reassessment plan that eventually goes into effect. The State Legislature probably would review Section 1805, and possibly raise the present statutory limit somewhat, to allow reasonable phasing in of any new real estate taxes, instead of the cold turkey impact that Nassau County is presently contemplating.