May 06, 2019
Contact: Connie Conway
Following a nearly 10% jump in town-wide assessed valuation, Supervisor Jay Schneiderman said today that he is introducing a resolution to freeze assessments for a two-year period while an expert panel evaluates the impacts on people with limited or fixed incomes.
Southampton is one of only two towns on Long Island that uses a system of full valuation to determine each property’s percentage of the total tax collection. Every town adjusts property value based on improvements, but Southampton also updates the tax rolls based on changes in the real estate market. “This trend analysis,” says Supervisor Schneiderman, “creates an unpredictability that can be detrimental to some homeowners on a fixed or limited income.”
For example, 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 their property value increase to a point where their taxes rise by more than they are capable of paying.
Although tax rates have been steadily declining, if a property value goes up significantly, it can erase the reduction in taxes. Schneiderman explained, “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 Department, Ambulance 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 tax burden.
For example, a property assessed at $1,000,000.00 will pay twice the taxes of a property assessed at $500,000.00. The tax rate is simply the fraction multiplied against the property value to determine the amount of taxes due for each property. A lower tax rate will mean lower taxes, unless the property value has been adjusted upward enough to cancel out the savings. The Hampton Bays School District recently announced a 7% reduction in the tax rate based on increasing property values in Hampton Bays.
If approved by the Town Board, the resolution would take effect beginning with the next assessment cycle.
“I think it is clear that our assessment procedures need to be re-evaluated,” said Southampton Town Councilman John Bouvier. “Our current system assesses taxes based on a 100% market rate valuation that creates an undue burden on some residents as a result. I welcome this review.” Mr. Bouvier is a co-sponsor of the resolution along with Councilwoman Julie Lofstad, Councilwoman Christine Scalera and Councilman Tommy John Schiavoni.
The Town will appoint members to the committee that will study the impact of 100% full valuation and the application of market trend analysis. Members of the Committee will include The Town Supervisor or his designee, the Tax Assessor, the Town Comptroller, The Town Attorney or his designee, a representative from the real estate community and real property appraisal expert. The committee will also advise on policies to protect property owners from rapid acceleration in the real estate market.
The resolution will be introduced at the next regular Town Board meeting on Tuesday May 14, 2019 at 1pm.