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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8 Responses

  1. rug city says:

    Hey, love your site- finally someone who discusses the important issues in A’dam who can actually write w/ intelligence & wit.
    As far as the reval & Mr. Chiara, I hate to say it, but I can sympathize w/his position. Our city is one of the most heavily taxed in the nation and it is a situation decades in the making. Most sections of the city, especially at the core, grew up around factory life and architecture and lots date back to the 19th century. With that comes a number of variables that make it tricky to comp houses, even next door to each other.
    A couple examples. On Guy Park Avenue, there are a number of beautiful Victorians- some kept as pristine single family homes w/updated interiors, others cut up beyond repair inside. Indeed the twin Shuttleworth mansions are seemingly the same- yet one recently sold for between 200 and 300K, while the other will sell for well over 400K.
    On Locust Avenue, there are 3 Queen Anne Victorian estates neighboring each other and, on paper seem like triplets, but one is obviously far crummier than the other two. Throw in the fact that houses in the Van Dyke/Coolidge area sell before they get their signs on the lawn, while those on Bunn Street linger for years, and you’ve got a very subjective picture.
    With this as a backdrop, Mr, Chiara undertook a reval at the peak of the market, and by the time he is to release his numbers, our country is in a housing slump of historic proportions. How could the numbers possibly be accurate? I agree that the vagaries of the market never allow an ideal time for a reval, but I would hope that a swift downturn in the middle of your reval would provoke a common sense response to short circuit the process if necessary.
    You may respond that even if the valuations were a bit high, adjusting the tax rate down accordingly would coompensate for this, but I think it is more complex than this- especially in a city like Amsterdam. Over the past 5-7 years, many folks who care about their homes have gone to great lengths to restore them to their former glory, while others have boarded up the windows and walked away. The calculus of this dynamic is that the responsible homeowners are left to propotionally make up the difference in the tax coffers.
    Again, while I don’t normally sympathize w/Mr. Chiara, and find it scary that a man who keeps his own property in such awful disarray is in charge of property valuation, I think he crunched the numbers and realized they would have hit the very people who are keeping this town afloat.

  2. flippinamsterdam says:

    Rug City,
    Thanks for your note and, may I add, an intelligent note. I agree with some of your points and disagree (respectfully) with others so I’m working to sharpen up some of my arguments which hopefully I’ll post in the next day or so.
    The issue we’re both wrestling with deals with the ‘uniqueness’ of the Amsterdam real estate market and how to best deal with that from a policy perspective.
    I’ll be interested in your thoughts on the next post
    Cheers

  3. metoo says:

    Unless an entire City is revauled there will be no equity…This business of approaching one section of the City at a time is ridiculous and There are better methods of explaining how a property is valued….For example if the home is more square footage or less, if it sits in a Great neighborood, or poorer, if it has finished areas, garages, basements, heat in patios or enclosed decks, if it is brick, or wood, What type of lot, corner, or middle or sit backs or on the edge of property, Is it in a moe residential area or on the corner of an industrial park, is it one floor or 3 floors….Is the foundation whole or damaged, a slab or full basement….and MANY other factors determine the value of a home…not what the assessor “feels” like or believes it should be.
    Perhaps it is time for Mr. C to go back to school….His crown has been knocked off and he probably feels lost…. could be the only explanation for his aimless story of how he arrived at values….

  4. worried in amsterdam says:

    I have made inprovements to my home since I purchased it in 1996. New siding, repaired the front pourch (actually ended up with a new porch) and planted lots of flowers.
    I have the uncomfortable feeling, I will be assessed per flower.
    There should be a consistly applied set of standards for assements. The town I moved from had decided not to assess improvements believing that it was to the towns benefits to have properties maintained. Prior to this decision, many property owners were refusing to paint or make repairs as it would raise the assement (and hense the taxes) on the property. After the towns decision, properties were assed by square footage , number of bathrooms and bedrooms as well as age of the home. It was very fair. When I read that Mr. Chiara was “using his own judgement” I felt this would be an opportunity for unfair cronism.
    I am in an area that is determined to deteriate and have been fighting (with the help of police) this deteriation. So how will my property which is kept up be valued compaired to the property next door owned by an absentee landlord with garbage, noise and drugs? Both properties are similar in size etc.
    Anyone feel the same?

  5. rug city says:

    worried:
    I think much of what you mention underscores the point that this is an inexact science and ultimately does come down to the assessor inserting his own judgement into the calculation. That’s why, again, I don’t understand why we are interpreting certain phrases Chiara uses to mean that he wants to be the partial arbiter of random, unfair, and crooked valuations. Although I most certainly agree that personal animosities could creep into this process, I don’t see how one expects Mr. Chiara to simply plug numbers into a program and spit out valuations. In other words, the judgement of the Assessor, good or bad, is always part of the process. I’d love to see the numbers you’d get if you brought in an impractical Assessor from another part of the country who knows nothing of our quirky neighborhoods, history, and housing stock.
    I think the most troublesome part of this whole process is that revaluations almost always penalize those who take care of their properties.
    How to remedy this system of disincentive? I don’t know, but if it is not solved, old, upstate cities like Amsterdam will continue to deteriorate as disgruntled owners move to newer developments where robots could actually assess your home, as they are always within a few dollars of your neighbor’s twin vinyl McMansion.

  6. metoo says:

    Rug City…The only time any unsubjective opinion should go into the assessing process is when one analyzes the qulaity of the neighborhood. Usually assessors with an understanding of the area, have no problem with this. EVERYTHING ELSE IN AN ASSESSMENT can be measured by standards which are verbally explanatory and measureable: so much for square footage, so much for finished basements, garages, attics etc, type of lot, condition of home, outbuildings, pools, garages etc….
    It is not a mystery in the assessment process even when such as in the City of Amsterdam,most homes are not identical. It is a process much like buying a home…why would one be valued more highly than the other? Why would one pay a premium for one and not the other? All the same values a buyer would place on a property apply to assessed value…It is no mystery, as Mr.Chiara is making it out to be, the only equalizer he is leaving out with his “lets plug in the numbers” is that you cannot do a handful at a time but must value the entire landscape all in one time period, not piecemeal as he would like everyone to believe is legitimate.
    I would highly recommend that an entire revaul be done ( costly but more legitimate than having a disposed king do the asessing who could possibly be influenced by political stings from the past) so standards can be established that the public can question with some confidence.

  7. rug city says:

    I thought this was an entire reval? I’m not sure what you mean.
    Also, “quality of neighborhoods” is a moving target in Amsterdam and “condition of home” can have many interpretations, all of which usually work against the person whose maintained his home or sunk money into it.
    Amsterdam built enough houses (9000+) to house double the population than there is today. Every year more go vacant and unkept, more than half are rentals, while a minority are renovated or maintained meticulously. You can only guess where they have to go to make up the difference in lost valuation, and this has a multiplier effect as years go by.
    You may argue that as it stands some are paying their fair share while others are getting a break. I see that dynamic skewing even more in favor of the deadbeats w/constant updated revals. Are you suggesting that those people who live in the nicer, well-kept houses aren’t paying their fair share? Is $10,000+ not keeping up their end of the bargain? I’m frankly having a hard time trying to figure out who is actually getting off easy right now- it seems most people’s taxes are outrageously high for what they own.

  8. metoo says:

    Yes Rug City you are so right…Some people who care are payng more than their fair share..if you ask me we should be more aggressive and go after the deadbeats who abandon their properties after collecting 3 years worth of rent from tenants and do nothing…but of course that depends on a more astute and active building code enforcement team, more knowlegible Legal assistance and swifter justice. Three years which the State allows for foreclosure is a long time….The signs are there all along while the individual strips the property of its dignity by never making repairs as it deteriorates piece by piece, but nobody pays attention until the housing is boarded up and becomes a burden on the taxpayers.
    No, it was not an entire reval…a few properties were looked at and the rest were adjusted to coincide with them….If there was a real reval data collectors would come by your home and individualy assess if your home was differing from their property cards and new pictures of all properties would be taken…utlity meters counted….and changes noted…….This is what we need as many have added apartments or finished off empty spaces and need to be paying for their square foot usage of living space…Items which can be upgraded without taking out building permits should be ignored, and treated as if they are in the same condition as upgraded properties..This is the only fair way to assess.
    HOWEVER, NO MATTER THE ASSESSMENT OF YOUR PROPERTY…Your taxes per thousand are based on the spending habits of your Common Council, & Mayor who ultimately decide how much money the City should be spending….So never get upset at the assessor …Watch your council as they dole out other peoples money….You can only decide whether they are watching out for the taxpayers interest or their own self interest…
    Additionally, you might want to investigate the two biggest budgets in the City, The Police and Fire departments, and get annoyed the next time they tell you they (police) are too “Busy” to come.

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