Following a nearly 10-percent jump in Southampton’s town-wide assessed valuation, the town board said it would support Supervisor Jay Schneiderman’s resolution to freeze assessments for a two-year period on May 14, while an expert panel evaluates the impacts on people with limited or fixed incomes, looks at how reassessment positions school districts for state aid, and finds where the market is growing.
The committee, which will be made up of appointed members including the supervisor or his designee, the town attorney or his designee, the comptroller, tax assessor, a representative from the real estate community, and a property appraisal expert, will also advise on policies to protect property owners from rapid appreciation of their property.
Southampton is one of only two towns on Long Island that uses a system of full valuation to determine each property’s share of the total tax levy. While other towns adjust property values based on improvements, Southampton also updates the tax rolls based on changes in the real estate market.
“This trend analysis creates an unpredictability that can be detrimental to some homeowners on a fixed or limited income,” Schneiderman said. “If your income increases, you expect to pay higher income taxes and you have the means to do so. But if your property value goes up significantly, it doesn’t mean you have the ability to pay the higher property taxes.”
A property tax bill consists of tax lines for various entities including the town, fire district, ambulance service, library, and other special districts. The local school district is typically the largest tax line. Each entity determines the budget necessary to run its operations. The taxes are then collected based on each property’s proportional share of the town’s total assessed value.
Although tax rates have been steadily declining, if a property’s value goes up significantly, it can erase the reduction in taxes.
Also, if a homeowner has made no changes to a property for decades, but the neighborhood has become highly desirable for vacation homes, the homeowner can see his or her property value increase to a point where taxes rise by more than what he or she is capable of paying.
“I think it is clear that our assessment procedures need to be re-evaluated,” Councilman John Bouvier said. “Our current system assesses taxes based on a 100-percent market rate valuation that creates an undue burden on some residents as a result. I welcome this review.”
Bouvier is a co-sponsor of the resolution, along with Councilwomen Julie Lofstad and Christine Preston Scalera, and Councilman Tommy John Schiavoni.
The supervisor added this doesn’t mean reassessments will freeze altogether though.
“If somebody builds a pool or an addition, or does a major renovation, those kinds of things we will still capture, but if, just simply, the market changes and an area becomes more valuable, they will have the predictability that we won’t touch that,” Schneiderman said. “Conversely, if for some reason the market goes negative, a homeowner can still grieve it and have their property taxes lowered, but we won’t have the ability to increase it for that two-year period.”
He’s hoping that in two years the town will have a much better sense of what to do moving forward.
“We’ll have a decision to make, whoever is here two years from now, to go back to full valuation or drop market trend analysis, or maybe put some mechanisms in place to protect people, like limit it to a 2 percent delta in a given year,” Schneiderman said. “I say 2 percent because that’s in the spirit of the tax cap.” Preston Scalera added the town will be looking into the legality of what it can do, too.
The supervisor added the town does receive some state aid — currently $160,00 every two years— because it is at full value. Schneiderman said he doesn’t necessarily know if the town is going to lose that, if the market were to stay flat over two years, but added that because market trend analysis does drain staff resources, there should be some savings.