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Falling Values Send Tax Rates Soaring

Valuation reductions on commercial properties are leaving residents across Nassau County with unexpectedly high school tax rates increases. 


District figures show the school tax rate for Westbury homeowners increasing by 5.01 percent. Carle Place homeowners face a rate increase of 7.11 percent. 


While not as big a jump as last year—Westbury residents saw approximately a 19.2 percent increase in 2012 and Carle Place residents saw a 7.9 percent increase—the latest figures from both districts show tax rates far exceeding what was expected when voters passed school budgets in spring. 


The school tax rate does not depend solely on the school’s tax levy, but it does play a part. The school’s tax levy is passed by the public during budget votes in May. For Westbury, the school tax levy was 1.67 percent, in Carle Place it was 2 percent. These tax levy increases can only go up so much because of a state mandated tax levy limit. 


The other percentage of the school tax rate is derived from the county assessor’s office. Many owners have challenged their assessments through the Assessment Review Commission (ARC), an independent agency which reviews the valuation set by Nassau County. If it finds a property excessively overvalued, the ARC reduces the assessment, which lowers the taxes—and sometimes includes huge rebates—for that individual property owner. This year, many commercial properties were given lower property valuations, and the county assessor granted assessment reductions to 87 percent of claimants county wide. 


The sharp increase is caused by lower property valuations, especially of the commercial properties. But the school budget calls for a specific amount of tax revenue; if the value of taxable land  falls, then the tax rate must rise to bring in the same amount. Thus, those lower property values are forcing another year of dramatic rise in school tax rates. 


The extra 3.34 percent increase in Westbury, and 5.11 in Carle Place outside of the school tax levy is controlled by the County, due to the reduced assessments and the increased adjusted base proportion (ABP). ABP is how much of the overall tax burden will be paid by property tax owners which depends on Nassau County’s tax class system, which segregates different types of properties.  Classes 1 and 2 include properties that are primarily residential. Class 3 consists of utility company equipment and special franchises. Class 4 contains all other property, including commercial, industrial and institutional buildings, and vacant land. Each class contributes a different percentage of the overall tax bill, called the “adjusted base proportion” or “ABP.” Those rates were changed last year, too, by the county, raising the portion of taxes paid by residential homeowners.  


 Owners in every class are eligible to challenge their assessments. But the impact on revenue of revaluing a home—worth about $400,000 on average countywide—is negligible next to the impact of revaluing a commercial property—worth well into the millions in Nassau county. And when one taxpayer wins a reduction, the rest must make up the difference.School officials are saying that hefty commercial property reductions are a major driver of the latest rate hike for residents. 


“People challenged their assessments, and those assessment challenges were upheld by the county. The county is saying they are not increasing taxes, and the school districts are not asking for more than 2 percent, but because of the assessed values and adjusted base proportions, many homeowners have to pay more than they expect,” says Carle Place superintendent Dave Flatley.


“A shopping center or medical office that’s worth $10 million or $30 million … Think of what a 5-percent reduction on a $30 million building would be—how much more people who own houses are going to pay.” says Ronald Friedman,

Superintendent of the Syosset School District. “You didn’t even do anything as a homeowner to change the value of the house but you’re getting a change. Why? Because 300 office buildings and six strip malls got reductions.” 


On top of that huge imbalance, there’s a difference in how much of the burden each class of taxpayer carries. 


“The change in the ABP added an additional 1.2 percent to Class 1,” says Victor Manuel, Jericho’s Assistant Superintendent for Business Affairs. “And assessment reductions added an additional 3.82 percent to bring the tax rate increase for Class 1 to 8.15 percent.”


When the Department of Assessment issued homeowners their 2012-2013 tax roll disclosure notice last year, Nassau properties had been given the lowest possible assessed values, according to the department. 


“The lowest possible value was chosen because of our commitment to keep the assessments at a reasonable level that is fair and equitable to all property owners,” said Gregory Hild, chairman of the Department of Assessment’s transition team at the time. 


However, these lower property taxes have caused school tax rates to rise, making up for, and in some cases far surpassing, the money saved on property taxes.


“County officials encourage homeowners to challenge their assessment and then proudly announce that 87 percent of the assessment review claims are granted,” says Joseph Dragone, Roslyn School District’s assistant superintendent for business. 


Many people might place blame for a high tax bill on the school district, however, school budget increases are relatively small due to the state mandated tax cap. More than from the school district, changes in school taxes comes from changes in assessed value—both of people’s homes and of commercial properties.


“There’s a very clear control in place with the tax cap. It’s not because of out of control spending on our part. But the notion that the tax bill looks higher than the two percent is not under our control, thats the County Assessor’s Office who’s making those determinations. We don’t know those factors when we’re putting the budget together,” Flatley said.