Governor Cuomo has appointed our partner, Scott Becker, to the New York State Board of Real Property Tax Services. The five-member Board determines final special franchise values and assessments, railroad ceilings and State equalization rates where a complaint is filed. The Board also hears and determines reviews relating to determinations made by county equalization agencies and appeals from property owners pertaining to STAR eligibility. Becker’s seven-year term ends in 2023.
We asked Scott to help us better understand his appointment and his experience in this area.
The New York State Board of Real Property Tax Services – what is it and what does it do?
Becker: It was created by the New York Legislature as a separate and independent board within the Department of Taxation and Finance. It’s made up of five members appointed by the Governor, and each member has an eight-year term. The Board has several functions. It determines special franchise assessments (based on the value of utility property located in all public rights of way in New York State), railroad ceilings (based on the value of all railroad property in the State) and State equalization rates where complaints are filed.
What are State equalization rates?
Becker: Property taxes in New York are local taxes, set, raised and spent locally, to fund local government and public schools. Equalization rates exist, among other reasons, to assure equitable tax allocation among the nearly 4,000 taxing jurisdictions in the State and to insure the proper allocation of state aid. Not all municipalities assess property at the same percentage of market value. Some assess at 100% of market value, some at less than 1% of market value. It’s all locally determined. Most of the State’s school districts obtain their tax revenue from parts of several municipalities, many of which have different levels of assessment. Equalization is designed in part to make sure that everyone is paying their equitable share of taxes.
It sounds complicated.
Becker: It sounds complicated, but it really isn’t as a practical matter. The important thing for a taxpayer to be aware of is the percentage of market value that their municipality uses to assess property. For example, let’s say a taxpayer owns some rental property assessed for $1 million and that the taxpayer thinks that the property is really worth $2 million. The taxpayer might look at his tax bill and think that he or she is getting a good deal because the property’s being assessed on the basis of a million dollars when it’s worth twice as much. But that assumes that the municipality is assessing the property at 100% of market value. If assessments are made at, say, 33% of market value, that same million dollar assessment really reflects a value of over $3 million ($1 million divided by 33%). The property in that case would be way over-assessed, because if the true market value is $2 million and if properties in the municipality are assessed at 33% of value, the assessment should be $660,000 ($2 million times 33%).
So your advice to this taxpayer is?
Becker: When you look at your assessment, look closely at your tax bill. It should contain both the percentage of full value the municipality uses as well as the full value indicated by the assessment. Those numbers are the ones to look at.
What else does the Board do?
Becker: It hears and determines reviews relating to determinations of county equalization agencies as well as appeals from property owners who are dissatisfied with the Tax Department’s final determination of STAR eligibility.
What is STAR?
Becker: STAR is shorthand for the New York State School Tax Relief program. It’s essentially a school tax rebate program aimed at reducing the school district portion of the property tax on the primary residences of New York residents.
Who is eligible for the STAR program?
Becker: There are two programs: basic STAR and enhanced STAR. Taxpayers who own their home and use it as their primary residence are eligible, subject to income limits, for the basic STAR program. The enhanced STAR exemption is available to those 65 or older, again, as long as the home is the taxpayer’s primary residence, subject to income limits. All the taxpayers need to do to get this exemption is file a form with their assessor’s office. They should contact their assessor directly for more information.
Tell us about your background in this area of the law.
Becker: Well, Kavinoky Cook was my first (and only) job right out of law school. I took the bar exam and started two weeks later as part of the firm’s general litigation department, while also working on tax assessment cases. Gradually over the past twenty plus years, it became a larger part of my practice. I’ve given seminars on topics in this area and was chair of the Erie County Bar Association’s Committee on Eminent Domain and Tax Certiorari for a number of years. I’ve had hundreds of these cases over my career. A small portion of them go to trial, but most of them settle at some point.
What kind of clients do you typically represent?
Becker: All kinds. If an individual or a company pays real estate taxes, odds are we’ve represented someone like them on multiple occasions. On the business side, we’ve represented major, national retail discount stores, property developers and plaza owners, regional supermarkets and fast food chains, apartment complexes, small and large, mobile home parks, regional hotel chains, elder care facilities, banks, commercial, industrial and warehouse properties – the list goes on and on. Also, property taxes are often paid by tenants as part of net leases. So, even if a business owner only rents commercial property, they still may be entitled to protest the assessment. We’ve represented countless tenants as well as owners.
So, to sum up, what kind of company would you say would benefit most from your experience?
Becker: It benefits anyone who’s in business. There’s only two ways to increase profits: increase revenues or decrease expenses. If a company is paying more than its fair share of property taxes because the assessed value of its property is higher than it should be, a reduction in that annual expense goes right to the bottom line. Sometimes it can make a surprisingly sizable difference.