An Assessment Fiasco

This article on the state of assessments in Amsterdam is truly shocking (from Capital News 9). The salient points are:

“I still didn’t come up with the numbers that wouldn’t put the city in jeopardy and that’s something I don’t have the right to do,” Chiara said. Chiara claims he did the work, but he says even after multiple revisions, the new numbers would put some residents in danger of not being able to afford their homes.

I’m flabbergasted that the assessment process requires our assessor to “come up with the numbers”. How can this process be perceived as rational, objective , quantitative as opposed to arbitrary, subjective, and irrational?

The point of assessments is to determine a fair market value of property for the purpose of distributing the tax burden. The process should not be subject to coming up with numbers to fit a preconceived notion of what the tax distribution should look like. The numbers should fall where they may.

I’m not going to question Mr. Chiara’s sincerity in his concern of the impact on a segment of the tax paying population. That said, his position is untenable for several important reasons. First, the responsibility of the assessor is to apply a fair, consistent, methodological process to assessing the value of property in the city. The assessor does not have the right to revise outcomes or withhold the information from the public. Second, the assessor’s statements lead one to conclude that the established assessments are significantly out of line with current valuations. Otherwise, there would not be a tectonic shift in the distribution of of assessments. As a result, this means that the established distribution of assessments is unfair — either too high or too low — for a significant portion of the tax base. The assessor should not have the authority to decide who continues to gain and who continues to lose under the established distribution.

What is going to be most interesting is the political dimension to this issue. If assessments are so out-of-whack that the assessor has refused to release them, it means that the level of change in individual assessments will be quite significant. And the political blowback will be quite significant.

None of the above should matter as the goal of assessments is to provide a fair process so taxes are levies fairly based upon property values. The city bears responsibility for shirking its duties to maintain its assessments as the real estate market has changed dramatically over 10 years and it is because the assessment rolls are so out-of-date that we are now faced with a troubling level of uncertainty as to what our future tax rates will be.

The article also states a dangerous policy to deal with this issue:

His[Chaiara’s] solution is for council members to persuade Albany for a cap on how much assessment can go up in a given period of time.

“I think you should ask for special legislation to cap the percentage assessed values can be raised in a year so you don’t create a panic,” he said.

I think the above is troubling as once again the distribution of taxes will need to be manipulated if a tax cap is meant to be put in place. So again a portion of the population will benefit at the expense of the other.

A final comment concerns an argument that the assessment should be held because it was performed when property values were at their peak. I’m wholly unconvinced as real estate markets are in a constant state of flux — especially now and for the next several years (looking at national trends) — so how are you ever going to time the market to get assessments just right? It’s not possible. As a final point, the City of AMsterdam has one of the highest tax rates per thousand in the Capital District. And the reason: because the tax rate is based upon a 10 year old assessment. if you updated assessments, the assessed value of all properties would rise and naturally the effective tax rate would decline. I’d argue that driving the tax rate down would help property values in the city by making them much more competitive.

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