State Board of Real Property Tax Services

MINUTES
STATE BOARD OF REAL PROPERTY TAX SERVICES
MEETING OF AUGUST 16, 2011

A meeting of the State Board of Real Property Tax Services was held in Executive Conference Room A (Urbach Room) at the New York State Department of Taxation and Finance at the W.A. Harriman State Campus, Albany, New York. The following members and staff were present:

John Bacheller
Michael Joseph, Jr.
Edgar King

Stephen Beals, Real Property Analyst 2, Valuation Services Bureau
Tom Bellard, Director, Valuation Services Bureau
Joe Gerberg, ORPTS Legal Unit Manager
Geoff Gloak, Office of Communications and Public Affairs
Philip Hembdt, Office of Counsel
Patricia Holland, Director, Equalization and Central Services Bureau
Alan Kresge, Valuation Services Bureau
Kim Lee, Equalization Support Services
Tim Maher, Director, Regional Services Bureau
Darlene Maloney, Assistant to the State Board
Jack Moodie, Valuation Services Bureau
Susan Savage, Assistant Deputy Commissioner and Acting Secretary of the State Board
John Wolham, Director, Southern Region

Also in attendance at the meeting was:  
Larry Farbstein, Consultant, Town of Huntington

NOTE: The minutes are summarized. Detailed staff reports/recommendations to the State Board are available upon request. Resolutions of the State Board and the audio webcast of the meeting are available after the meeting date on the State Board website.

Dr. Bacheller called the meeting to order at 10:30 A.M.

Agenda Item No. I - State Board Administration - Approve minutes of July 27, 2011 Board meeting

On motion of Mr. Joseph, seconded by Mr. King, Dr. Bacheller stated that the minutes of the July 27, 2011 Board meeting stand approved and are, hereby, adopted.

Agenda Item No. II -State Equalization - Final 2011 State equalization rates for localities where complaints have been filed

Dr. Bacheller asked staff to present the issues for the complaints that were filed for the Towns of Lawrence, St. Lawrence County and Huntington, Suffolk County, as reviewed in the staff recommendation, dated August 12, 2011.

Town of Lawrence

Ms. Holland explained that the Level of Assessment (LOA) of 100.00 on the Town's assessment roll was not confirmed; a tentative rate of 94.36 was established. Ms. Holland stated that the Town submitted a letter objecting to Major Types A, B and C but did not provide any analysis or additional data to support its objections. Ms. Holland said that staff recommends no change to the full value estimate and the State equalization rate.

Dr. Bacheller asked if anyone from the Town was present. No one from the Town was in attendance.

Mr. Joseph asked about the assessor's experience and the town's assessment roll. Ms. Holland responded that the Town's roll has been at 100 percent for over 20 years.

On motion of Mr. King, seconded by Mr. Joseph, the Board adopted Resolution No. 11-15 and the recommendations of staff as Findings and Determinations.

Town of Huntington

Mr. Maher explained that he would provide an overview of the establishment of the tentative State equalization rate for the Town of Huntington. Mr. Maher said that the Town claimed a Level of Assessment (LOA) of 0.88 on the Town's assessment roll and ORPTS confirmed the LOA establishing the tentative State equalization rate at 0.88. Mr. Maher explained that the Town is really objecting to the residential class portion.

Mr. Maher reviewed the calculation of the ratio of assessment to market value for the four classes of property. He reported that for the utility class, four properties were appraised resulting in a ratio of 2.21. For the commercial class, 22 properties were appraised resulting in a ratio of 0.99. For the vacant land class, since there were few properties, that class is not reviewed. For the residential class, since the confidence test proved valid for 1,235 sales, one year of sales was reviewed resulting in a 95 percent confidence level (plus or minus five percent). Mr. Maher said that the residential class ratio ranged from 0.74 - 0.76, with a weighted mean of .075. He reported that the information was shared with the Town during the pre-decisional collaboration process. Mr. Maher concluded that since the ORPTS calculated rate of 0.84 and the Town's LOA of 0. 88 are within the five percent threshold, then a tentative State equalization rate of 0.88 was established.

In response to a question from Dr. Bacheller about the Town's complaint not objecting to the tentative equalization rate, Mr. Maher confirmed that the Town is not asking for a different State equalization rate. Mr. Gerberg added that, under the statue, there is no language that addresses that specific question. This complaint is a complaint against one of the components, i.e., the residential class, used in the determination of the tentative State rate. Mr. Gerberg said that the Town is using the complaint process to object to the residential assessment ratio (RAR).

In response to Dr. Bacheller's question, Mr. Gerberg said that one reason for the Town complaining is that the higher the RAR, the lower the exposure in Small Claims proceedings.

Mr. Farbstein thanked the Board for the opportunity to be heard on behalf of the Town of Huntington. Mr. Farbstein validated that the complaint is a complaint with respect to one component of the State equalization rate and the residential assessment ratio. Mr. Farbstein provided a history of how the RAR was calculated and how it is calculated now. He said that the current process provides that the data used in the calculation of the State rate is what is used in the calculation of the RAR. He said that there is no formal process to bring a complaint to the State Board against the RAR.

Dr. Bacheller responded that the State Board does not establish official rules; the Rules are established by the Commissioner of the New York State Department of Taxation and Finance. Mr. Gerberg clarified that, actually, the authority is in statute not Rules; the Commissioner does not have the authority to amend the statute with regard to RAR's.

Mr. Farbsein said that he feels the State Board has the power to establish State rates and RAR's where a complaint was filed tangentially against the data used in the determination of both ratios.

Dr. Bacheller asked Mr. Gerberg about the State Board's authority. Mr. Gerberg responded that since the statute was amended in 2008, ORPTS has not declared that complaints against rate the RAR were prohibited. Mr. Gerberg said that the statute does not give the Town explicitly the right to challenge the RAR. Before the law was amended there was a process to for those to challenge the RAR; there is no longer a process to directly challenge a RAR. He said that to allow the challenge of a RAR seems to be analogous to allowing one Town to file a complaint against another Town's rate which would not be fair.

Dr. Bacheller stated that the question on the Board's authority is: In the absence of a request to change the whole (the overall State rate), may the State Board review the individual components (the classes used in the establishment of that rate)?

Mr. Gerberg said that ORPTS established a tentative State equalization rate of 0.88 which is the Town's LOA. He said that in effect, the Town conceded that the issue is whether the rate was correct or not. He explained that this is "a pick and choose situation" and it is not within the statutory framework.

Mr. Joseph expressed concern with establishing a precedent.

Mr. Farbstein said that there will be the review of the complaint against the City of Mount Vernon, similar to the complaint before you today.

Dr. Bacheller said that the Board has not received a supportive answer from Counsel and he said that he is not sure what the correct answer is. Dr. Bacheller referenced the statute and said that he believes that the Board needs to be on firm ground before it proceeds. And since the Board is not being asked to review the State rate, the grounds are not clear.

Mr. Gerberg responded that the purpose of the rate complaint is to challenge the rate complaint. If there is an issue with the data, the Board does not have direct authority over the RAR.

In response to a question from Mr. Farbstein, Mr. Gerberg stated that the statute does not provide for review of a RAR; the method to object is an Article 78 proceeding.

Dr. Bacheller asked if it made sense to postpone the matter to a future meeting.

Ms. Savage asked if the Board would hear the information from staff. Dr. Bacheller expressed concerns with doing so in that it would imply that the Board does have jurisdiction in this case.

Mr. Gerberg responded that he believes it would be consistent for the Board to hear from staff and then decide about the Board's position and jurisdiction. Mr. Gerberg suggested that if the Board decides that it does have jurisdiction, it could address the substantive issues.

The Board agreed to reserve judgment on the jurisdictional issue of the complaint.

Mr. Farbstein presented the Town's complaint. Mr. Farbstein stated that there are over 60,000 residential parcels and the number of sales used by ORPTS was not proportionally adequate to the total number of parcels.

Dr. Bacheller interjected that he was bothered with the analysis and the ratio of the sales to the assessment price. Dr. Bacheller said that the data presented is a weighted mean of ratios and the scattergram suggested that there was considerable inequity and it would be difficult to "strike a trend line". Further, Dr. Bacheller said that it appears that the Town is not assessing equitably. He said that ultimately the ratio being reviewed is the total assessed value to total full value - and that there could have been a better presentation of the data.

Dr. Bacheller asked about the Town of Huntington's central tendencies and a trending table. Mr. Farbstein explained the relationship of the tables. Dr. Bacheller commented that the sample size within each given month is too small.

Mr. Farbstein argued that ORPTS staff uses the weighted mean and in certain cases use of it as the statistical measure is not appropriate. Mr. Farbstein remarked on the use of the weighted mean and what happened to result in a declining ratio in the Town of Huntington between 2009 and 2010.

Mr. Joseph read the statement in the staff recommendation which stated:

The Town objects to the residential assessment ratio of 0.75 and submitted a sales ratio study of its own with 42 additional sales to support a residential ratio of 0.792. Staff reviewed the submitted sales ratio study and found that in addition to the 42 inserted sales, the town removed 1,165 sales from ORPTS 3,689 usable sales. Staff analyzed the submitted sales ratio study and found that the study employed methodology that is not supported by the IAAO (International Association of Assessing Officers), or any other known authority on mass appraisal or sale ratio practices.

Mr. Joseph asked for a reaction to that statement.

Mr. Farbstein explained the documentation.

Mr. Maher responded that ORPTS staff worked with the Town in the Pre-Decisional collaboration process. He introduced Mr. Beals who reviewed the complaint.

Mr. Beals distributed a chart entitled "Measured Roll AV/SP Ratio". He said that in addressing the normality issue, he verified that the Kolmogorov-Smirnov (K-S) test and the Shapiro-Wilk (S-W) test indicate the ratios in the Town are not normally distributed. He said that these two tests are known to be flawed when data sets are large, such as Huntington's, and can lead to a conclusion that the ratios are not normally distributed when other measures would indicate they are normal.

Mr. Beals reviewed the characteristics of a normal distribution. He referenced and explained the statistical analysis of the chart. He explained that the chart indicates the data are normal. He said that although the mode is slightly off center it is within appropriate levels. He said that the median and weighted mean are converging at .0076 and .0075 respectively. He said that the data is close to normal to justify relying on the weighted mean which is the measure that ORPTS staff used.

Mr. Beals spoke on the number of sales used in the establishment of the rate under the premise that the larger sample size renders more reliability.

Dr. Bacheller interjected that the valuation date is July 1, 2010 so you want to know what property is worth at the point in time.

In response to a question from Mr. Joseph, Mr. Maher explained that every sale has to be adjusted to a certain point in time. He said as you go farther back in time, each individual adjustment may be less reliable. This adds another variable in the sales adjustment which would reduce the reliability.

Mr. Beals reported that the one-year study results passed the 95 percent confidence level test. He said that if the two or three year results were used, the same conclusions of median and weighted mean result. Mr. Beals added that the sales were reviewed and the weighted mean estimate of .75 percent was determined.

Mr. Beals explained that the sales file that was used in the Town's complaint was inaccurate. He said that Town did not provide any confidence measures for its concluded level of .0092. and there was no known authority (such as with the IAAO) to validate the Town's methodology used in the complaint.

Mr. Beals said that in summary he determined that the ratios were normal and that the other tests show that the weighted mean is the correct measure to use at 0.75. He said that ORPTS use of sales for a one year period of time was appropriate and reliable. He said that staff recommends no change to the full value estimate.

In response to a question from Dr. Bacheller, Mr. Beals responded that ORPTS uses the IAAO recommended inter-quartile technique for trimming a data file which the Town does agree with as correct. Mr. Beals explained the trimming methodology.

Mr. Joseph moved Resolution No. 11-16 establishing the Town of Huntington's final State equalization rate at 0.88. Mr. King seconded the motion. All voted aye.

Mr. Joseph asked that the authority for State Board of review of this type of complaint be investigated by staff. Mr. King agreed. Mr. Gerberg responded that he would so report on the issue at the next Board meeting on November 8, 2011.

On motion of Mr. King, seconded by Mr. Joseph, and there being no further business to discuss, the Board concluded its meeting at 11:39 A.M.

Respectfully submitted,
Susan E. Savage
Acting Secretary of the State Board

A signed set of minutes, complete with attachments, can be obtained by writing or contacting:

Darlene Maloney at 
NYS Department of Taxation and Finance
W.A. Harriman Campus
Office of Counsel, Building 9, Room 161
Albany, NY 12227

Updated: January 12, 2012