Could Have Grave Fiscal Implications for the City

Lillian Roberts, Executive Director of District Council 37, and David Moog, President of Local 1757 NYC Assessors, Appraisers and Mortgage Analysts today announced the results of a study commissioned by the local that finds income producing properties are being underassessed by percentages that could amount to billions of dollars a year in uncollected tax revenues.

The study was conducted by Joshua Kahr, a real estate industry expert with the highest credentials in the field. The study looked at over 13,000 tax class 2 and 4 income producing properties that sold in 2003 throughout the Bronx, Brooklyn, Queens and Manhattan. The target ratio set by the Deparment of Finance on these two types of properties is 45% of their market value. This is the first step in determining how much tax would be levied on the property owners. However, on average, these properties are being assessed at only 25% of their market value.

Here are three examples:

1. The General Motors Building, 761 Fifth Avenue, sold for $1.4 billion. 45% of market value would be $630 million. It is assessed for $284 million.
2. The Colgate Palmolive Building, 300 Park Avenue, sold for $378 million. 45% of market value would be $170 million. It was assessed for $74 million
3. 1185 Sixth Avenue sold for $321 million. 45% of market value would be $144 million. It was assessed for $94 million.

There is also a significant difference in the ratio assessment of these types of properties in the various boroughs: The Bronx is 33%; Brooklyn is 20%; Queens is 16%; and Manhattan is 19%. The study points out that these disparities and irregularities occurred in the 2004-05 tax roll and have affected the city's tax base. It is the result of understaffing in the Department of Finance, losing skilled workers to higher salaries in the suburbs, and reliance by management on computers that are not correctly valuing properties in the city.

From 2002 to 2004 the city lost over 40 assessing personnel through attrition and layoffs. DC 37 and Local 1757 warned at the time that the monies saved from reduced staffing levels would be a mere pittance compared to the revenues lost from the 980,000 properties that the assessors value. Less than a dozen properties underassessed due to lack of staffing would have cost the city more than the $2 million supposedly saved by this layoff. To prove its point, Local 1757 commissioned this study which shows that the problem goes even deeper and is more widespread than previously anticipated.

"We need to hire more assessors and we need to do it right now," said DC 37 Executive Director Lillian Roberts. "These experienced city workers are needed more than ever to see that every penny of tax revenue due to the city is identified. DC 37 is one of the watchdogs of the city's fiscal policies because our members are on the front lines in providing city services and in collecting city revenues. We have shared this very credible study in a responsible fashion with the city, the State Assembly, and the City Council. We are awaiting a response."

Local 1757 President Moog said, "I am proud that our hard-working, dedicated members contributed to this study which has grave fiscal implications for the city. For the city to balance its books, it must maximize its potential income by having an accurate and equitable property tax roll as part of its revenue stream. We must have more assessors to restore the assessor ranks to an appropriate working level where we can do the job the city requires and our citizens deserve. In 2000 we had 185 assessors at the Dept. of Finance. Today we have 140. I believe we need a minimum of 195 to do the job right. Without that, as this study makes clear, the city will lose billions of dollars it cannot afford to lose in unrealized tax revenues."

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