GAR Associates, a New York State real estate consulting and appraisal firm, recently finished collecting data on all of the properties in the city of Troy. The company was hired by the city to reevaluate property values for a reassessment project that started in 2010. The last time there was a citywide assessment was in 1973.
“This needs to be done for equity purposes,” said Sharon Martin, an assessor for the city of Troy. “The city needs this to happen to get on a level playing field.”
If a municipality values all of its properties at 100 percent of the market value, based on recent assessments, that is known as an equalization rate of 100 percent. The website of the New York State Department of Taxation and Finance states that the value of a property on a tax bill in a municipality with a 100 percent equalization rate should be “roughly its market value (the price for which you could sell your property).” If the equalization rate is less than 100 percent, the “overall property in the town is assessed less than market value.”
“This year the equalization rate is 14 percent,” said Martin. Which means that, in some cases, the city of Troy used a property value that was determined in 1973 and divided that number by 14 percent to assign a tax levy. The 1973 assessment would not reflect improvements such as additions, garages, or major renovations unless they were reported to the city.
“Eight years ago, we bought a fixer-upper in Troy that had been gutted,” said Erika Groff. “We replaced the flooring, the electrical, and the all of the plumbing.” Each time Groff and her husband filed a work permit, she said the value on their property, and their taxes, went up. “We’ve gone before the assessment board twice now,” she said. “We were successful both times; the assessment went up but not by as much as [the city] first said it would.”
Groff said that she supports Troy’s reassessment project because she felt that the prior process seemed unclear and imbalanced. “We need to create a system that will make it fair for all of us,” she said. “I know there are people who do work without work permits, but my taxes went up because I’ve been improving the [property] and I filed the permits.”
“It’s going to be equitable,” said Martin. “Two ranches valued at the same amount of money should be paying the same amount.”
But some residents, such as Tina Urzan, are not looking forward to finding out the results of the citywide assessment. Urzan has owned the Olde Judge Mansion (3300 Sixth Ave.), a bed and breakfast, for the past 13 years. When she bought the building, the last owner had used the property as a funeral home.
“We put in a ton of work,” said Urzan, who paid $75,000 for the property. “The second-floor walls had been knocked down, the kitchen was in the basement, and there was a lift from the cellar to the first and second floors.” In addition to being her business, this address is Urzan’s primary residence.
“On our block there are houses that are either abandoned, boarded up, or city-owned,” she said. “There are vacant lots and plenty of burned out houses still sitting there. My taxes are a little over $6,000 [per year]. I pay that much to live in this environment. My taxes per month are higher than my mortgage, they are driving us right out of the city.”
Urzan is involved in her neighborhood association, and is a board member with Troy’s Industrial Development Authority. She expressed concerns that her taxes would increase to Harry Tutunjian, the former mayor of Troy. “He said, ‘Maybe yours will go down.’ I said, ‘I don’t think you’d be doing an assessment if they’re going to go down. You’re looking to get money to the city,’” recalled Urzan.
“In February or March, letters will go out with the new values,” said Lynn Kopka, president of Troy’s City Council. “Don’t panic. We won’t really know until everything is done and finalized.” She noted that the city expected “one-third of the properties will go up, one-third will stay the same, and one-third will go down.”
Troy Council Member (At Large), Rodney Wiltshire said that even if the values do go up, the likely effect on the tax bill will be “nominal.” In a “handful” of cases, Wiltshire said that some residents “might have a rude awakening.”
“We’re talking people who’ve been paying $500 a year versus people paying $5,000 a year, for a similar property,” he said. “What we gain is fairness for residents and businesspeople who might be wondering if they are being treated fairly. It also allows our city to be judged and evaluated by credit agencies, bonding agencies, realtors, and investors more accurately. We don’t know the value of this city, it has been woefully unmeasured and undervalued.”
Assigning property values and appropriate tax levies without a recent assessment has cost the city of Troy money. According to Martin, 56 percent of all Troy properties are “wholly exempt,” and when the city has tried to assess larger, nonexempt commercial properties for tax purposes in the past, those companies have responded that the values are “unfair.”
“We have a lot of court cases that happen from those commercial properties,” said Martin.
“The court will tell us that we can’t dispute it because we don’t have the current information,” said Wiltshire. “It costs us to fight the lawsuit and then we lose revenue from the taxes we thought we should have gotten.”
“One of the plans I have for the city is to implement a different form of tax valuation,” said Wiltshire. He would like to utilize the practice of land value taxation, which he said, “values unimproved land in a city higher than improved land.”
Under land value taxation, vacant lots, but not parks or gardens, would have the highest tax rate of all, and as owners built on the property, the tax rate would decrease. Wiltshire said that the process would motivate buyers to develop their properties, which in turn would enrich the city.
“Instead of being penalized for improving a property, you’re actually rewarded in terms of tax decrease,” he explained. “On the contrary, if you are a slumlord or fall derelict, your taxes go up. This prevents demolition by neglect.” Wiltshire noted that this process is not designed for farming communities or for the suburbs, but that it “works in cities.”
By March 2013, taxpayers of Troy can expect to receive their new property values in the mail. There is a process to dispute the findings.
“[GAR Associates] will handle the first round of grievances,” said Wiltshire. “You have a month after you get your tax bill to file with GAR. After that, if you still feel unsatisfied, then you go to the city assessor’s office.”
Kopka said that while she has fielded some concerns from residents, so far the reassessment process “was going well.”
“There always has been a grievance process,” said Kopka. Because of the impending changes, she anticipated that 2013 will be different from years past.