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Oct 03, 2019

Syracuse News: Syracuse’s unfair property tax system hurts poor the most

Willie Jones sits in front of his house at 115 Croly St. in Syracuse, August 1, 2019. Jones said property values on his street have fallen because of crime and drugs.

An article by and  reposted from the Syracuse News’ website.

SYRACUSE, N.Y. – Joyce Love bought her house in the Valley neighborhood of Syracuse for $46,000. She pays more property taxes than some people whose houses are worth up to four times as much.

Love pays higher taxes than two homeowners who bought houses for more than $110,000 in the neighborhood where Mayor Ben Walsh lives. She pays more than several Eastwood residents who bought houses for $120,000 or more. Love even pays more than the owner of a $185,000 duplex near Syracuse University.

“I don’t think it’s fair,’’ Love said.

It’s not fair. Homeowners are supposed to pay taxes based on what their houses are worth. But in Syracuse the system is tilted against the poor, because property assessments on wealthier homeowners are often too light, a Syracuse.com | The Post-Standard investigation finds.

For more than two decades the city has not updated the values of all 32,000 residential properties. Many assessments are out of date.

Who benefits from that neglect? Mostly the rich and middle class.

Houses in prosperous neighborhoods have gained value much faster than homes in poor neighborhoods. Assessments have not kept pace. That means some of the city’s wealthiest homeowners pay hundreds of dollars a year less than they should, year after year.

It’s a hidden tax break for high-end homeowners. Everyone else picks up the slack.

The system is hardest on poor neighborhoods, Syracuse.com’s analysis found. The city is often slow to drop assessments in stagnant or declining areas, leaving owners paying too much. That heaps stress on residents who may already struggle with the tax bill.

Nobody set out to make the system unfair. Indeed, city assessors adjust hundreds of assessments every year trying to fix inequities. But in the 23 years since the 1996 reassessment, Syracuse officials have failed to devote enough money and effort to keep assessments from slipping out of sync with actual home prices.

“If you don’t keep up, it’s really profoundly unfair,” said John Yinger, professor of public administration and economics at Syracuse University’s Maxwell School of Citizenship and Public Affairs. “Because what happens is, you start handing out little benefits every year to the rich folks … and imposing little penalties on the poor folks.’’

Mapping inequity

Three years of data comparing Syracuse home sales to assessments show that wealthier neighborhoods have a concentration of houses that sell for at least 15 percent more than assessed value (green dots). Poorer areas including the South Side and parts of the North Side, have more houses that sell for at least 15 percent less than assessments (red dots). The interactive map also shows homes that sold for within 15 percent of the assessed value (gray dots). Click on a dot to find the buyer, seller, sale price and assessed value.

People complain about property taxes, but there is little public discussion of the assessments that determine who pays what share. Syracuse.com analyzed hundreds of home sales and property assessments from the past three years. The analysis reveals a problem most people don’t know about and city officials have failed to fix.

It’s not just Syracuse. New York state has an erratic system of property assessment that tolerates unfairness. Syracuse is average. The city’s assessments fall short of state standards for accuracy, but just barely. Other cities score much worse, including Binghamton, Utica and Rome.

There are no penalties for getting it wrong. State officials offer guidance, but don’t police the 1,000 towns, cities and villages that conduct assessments. Most states have stricter rules.

New York is one of only five states that do not require periodic assessment revaluations. Eighteen states require revaluation every year. Others typically require it within three to five years.

“We cannot force localities to reassess their properties,’’ said James Gazzale, a spokesman for the state tax department. “That is a local decision.’’

Different tax rates

Syracuse has effectively allowed two tax systems to develop: Discounts for the rich. Full price for the poor.

Love, 63, is on the losing side. She rented for many years before buying a three-bedroom house last year on Milburn Drive.

Love pays $2,500 a year in taxes based on a full-market-value assessment of $82,000. She has complained that the assessment is too high. Regardless, she pays roughly $30 for every $1,000 the city says her house is worth.

Across town near Syracuse University, some property owners effectively pay lower rates.

Bank executive Calvin Corriders and his family paid $185,000 in 2016 for a two-family house on Madison Street. But the property is only assessed at a full market value of $79,000.

Measured against what the family actually paid for the house, the tax bill amounts to $13 per $1,000.

City officials have not reassessed Corriders’ property for at least 12 years. Same with Love’s. It’s possible that neither has been reassessed since the citywide revaluation in 1996, said David Clifford, the city assessment commissioner. The city has no records before 2007.

The value of the Corriders property may have increased in the three years since they bought it. The family recently transferred the house to sole ownership by Corriders’ son, also named Calvin. He was able to take out a $216,000 mortgage, a sign that the property value has risen.

Clifford said his staff this year will review assessments on Madison Street, including Corriders’, because property values in that area have gone up. If the city assessed Corriders’ property at $185,000, the tax bill would more than double – from $2,450 to $5,700 a year.

The elder Corriders said neither he nor his son contacted the city about the assessment. Given the benefit of the existing assessment for his son, there was no reason to, he said.

“Why would he open that can of worms?’’ Corriders said.

Rich vs. poor

New York law says properties must be uniformly assessed based on value. That “value’’ is an estimate of what the property would sell for. What’s the best way to estimate what a house would sell for? Look at what the house — and houses like it — sold for recently.

Syracuse.com reviewed roughly 2,300 home sales since 2016 and found discrepancies that separate rich from poor:

— The most expensive houses sold for prices much higher than the assessment. On average, their owners should have been paying hundreds of dollars a year more in taxes.

Among the roughly 550 houses that sold for $140,000 or more, 87 percent sold for more than the city’s assessment.

On average, those high-end homes sold for 30 percent above assessment. If the assessments matched the sales prices, the owners would pay an average of $1,300 more a year in taxes.

— At the other end of the spectrum, low-priced houses tended to have assessments that were higher than sales prices. Those owners likely were over-taxed.

Of the roughly 550 houses that sold for $70,000 or less, 75 percent sold for less than the assessed value. On average, the sale prices were 20 percent below assessments. If the assessments were reduced by that amount, the owners would pay an average of $395 a year less in taxes.

Clifford acknowledged that some wealthier homeowners benefit because the city cannot keep up with changes in the market.

But he defends the city’s assessments as “pretty tight,’’ especially compared with other New York cities.

“By no means are we perfect, but I think we’re better off than a lot of the municipalities I talk to,’’ Clifford said.

Read full article from the Syracuse News’ website.

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