Nassau County Executive Edward P. Mangano, Presiding Officer Norma Gonsalves and Minority Leader Kevan Abrahams today called on the New York State Legislature to pass a pilot program to establish an escrow fund for commercial property tax challenges. On Monday, the Nassau County Legislature is expected to pass a home rule message in support of state legislation sponsored by Senator Kemp Hannon (S.7705) to permit Nassau County to establish a Disputed Assessment Fund with respect to commercial property tax challenges. This escrow-type fund, in conjunction with the residential settlement program, will end Nassau County’s need to borrow to pay property tax refunds.
County Executive Mangano stated, “This legislation, in conjunction with the residential settlement program, transitions our County entirely to a ‘pay go’ tax refund system by creating an escrow fund to pay claims and eliminate Nassau’s 30-year reliance on borrowing to pay property tax refunds.”
Historically, Nassau County has paid out approximately $80 million annually in commercial property tax refunds and has borrowed approximately $1 billion over the last 10 years to pay mostly commercial refunds. This legislation provides the County with the ability to set aside dedicated funds in escrow until the owner’s dispute is settled or adjudicated. This bill, in conjunction with the present residential settlement program, accomplishes the following:
Establishes a Disputed Assessment Fund to pay commercial refunds on a pay-go basis.
Eliminates the need for Nassau County to borrow to pay refunds.
Will distribute funds from unsuccessful challenges in whole or part to municipalities, such as school districts.
Encourages all commercial property owners who dispute their assessments to present their evidence during the 15-month grievance period, which will allow the Assessment Review Commission to adjust their assessed value prior to the final tax roll being set – thereby eliminating the need for them to pay into the fund.
Functionally, each year the final tax roll will be lowered by the approximate historical average error rate (based on each individual property owner’s claim as determined by the Assessor) with all municipalities receiving their entire tax levy. Commercial property owners will receive a separate escrow invoice which will be held in the Disputed Assessment Fund until settlement or adjudication.
Ensures that the burden of commercial refunds is placed on commercial property owners. Currently, all property owners are responsible for paying tax refunds. This creates an inequity between residential and commercial property owners because commercial property owners generate a vast majority of the refunds.
“It has taken a long time for us to perfect this legislation and I believe this is the best way to stop accruing refund debt and finally reform Nassau’s assessment system,” said Presiding Officer of the Nassau County Legislature Norma Gonsalves. “I urge Albany to prioritize this item on both the Senate’s and the Assembly’s agendas before the end of their session.”
Minority Leader for the Nassau County Legislature Kevan Abrahams stated, “We have been working cooperatively with County Executive Mangano and it has always been our goal to find a way to pay ‘tax cert’ refunds without incurring additional public debt. I’m glad to stand here today with the members of the Democratic caucus and I anticipate its passage on Monday.”
Facts about the Nassau County Assessment System:
Assessment challenges cost an average of $80 million annually.
The residential settlement program has settled 100% of claims prior to setting the final tax roll – thereby eliminating all borrowing to pay residential small claims property tax refunds in 2012/2013 and 2013/2014.
Commercial property tax refunds account for the vast majority of borrowing for tax refunds.
The history of settlements and judgments indicates that commercial properties were assessed, on average, at 8% above settled values. This may also contribute to the fact that, on average, 70% of commercial property owners’ grieve their assessments. Those 70% of commercial property owners represent 90% of the total taxable assessed value of all commercial properties in the County.