Nassau reassessment more fair and accurate, analysis shows
Nassau County’s controversial property reassessment has eliminated the wide disparities among homes that developed during former County Executive Edward Mangano’s tenure, a comprehensive Newsday analysis of the project’s results shows.
The analysis found that the new assessments are well within every major professional standard of accuracy and fairness, but because of the margin of error in even the best assessment systems, there are still grounds for many homeowners to win an assessment grievance.
The rollout of the county’s reassessment has been clouded by numerous miscues that critics — including many homeowners and Republican elected officials — have pointed to as evidence that the new assessments themselves are also error-laden. But Newsday’s study comparing the new assessments to more than 10,000 recent Nassau property sales, which experts consider the best evidence of value, found the reassessment has reversed the disparities caused by Mangano’s nine-year overhaul of the tax system, which began in 2010.
Among the most significant findings are:
- Property owners who did not challenge their assessments successfully during the overhaul are now assessed on par with those who did. Those who challenged had benefited from an enormous shift in tax burden to those who did not. The latest Newsday analysis estimates the shift had reached $2.7 billion over eight years. Before the reassessment, those who hadn’t appealed were assessed at a level 29.2 percent greater than those who did, resulting in inflated tax bills. Now, according to the analysis, they are only 0.1 percent higher.
- Homes in predominantly minority communities, which were assessed at levels up to 12.9 percent higher on average than other homes during some years of the overhaul, are now assessed at a level 2.1 percent lower.
- The new assessments would provide significant improvements in the fairness and accuracy even in the first year of County Executive Laura Curran’s proposed five-year phase-in of the assessment changes, which recently won approval in the State Legislature and still needs approval by Nassau legislators.
Getting much better than that is not really feasible.Assessment expert J. Wayne Moore
The assessments for homes examined in the study are those released in January, when the reassessment concluded. As in a normal tax year, the assessments can be modified because of assessment challenges heard through April 2020.
Four assessment experts, each with decades of experience, said in interviews that Newsday’s approach with the study was sound and the results suggest the assessments are about as fair and accurate as an assessor can achieve.
"Getting much better than that is not really feasible," said J. Wayne Moore, who has implemented mass appraisal systems in more than 300 assessing jurisdictions.
"As accurate as you can be is probably about right," said Richard Sanderson, who has 41 years of experience as an assessor, appraiser, consultant and researcher in several U.S. states and foreign countries.
Nonetheless, what an assessment expert sees as a great result may vary from what Nassau homeowners with tax bills often exceeding $10,000 per year might think. Because of the impossibility of knowing exactly what all homes will sell for months down the line, it is impossible for assessors to come close to valuing every property perfectly. The Newsday study found the county’s assessments are off by plus or minus 8.8 percent on average, using an industry standard accuracy measure. This was a result the experts uniformly said was about as good as it gets.
But being on the high side of that error rate could cost homeowners hundreds of dollars on their tax bill. For that reason, concerns over the reassessment have focused on over-assessed homes. Newsday estimates about 1 in 6 are over-assessed by more than 10 percent. However, Newsday also found about as many under-assessed by that amount.
Those who think their assessments are too high have until Tuesday to file a challenge with the county’s independent Assessment Review Commission. Many may be successful. Even at points a decade ago, when Nassau’s assessments were highly accurate, about a third of grievances resulted in assessment reductions.
“They are looking at this thing almost in a laboratory as opposed to the real world that we are confronted with.Nassau County Legislature Presiding Officer Richard Nicolello
During the overhaul by Mangano, a Republican, Nassau awarded essentially automatic reductions to three-quarters of those who grieved their assessments while "freezing" those of nearly all others. That largely reversed years of effort to improve the accuracy of assessments, Newsday found in its “Separate and Unequal” investigative series in 2017.
The result was the massive tax shift from those who appealed successfully and tended to be wealthier to those who did not. A long-promised reassessment that would have rectified the disparities was delayed until late 2015. Curran, a Democrat who ran on a platform of fixing the system, inherited and finished it.
“I was confident that our work was solid. I was confident in the work of our two vendors,” Curran said. “That’s why I never let up despite the rotten tomatoes that were thrown.”
Curran said she discusses the issue with constituents regularly and that they “really are getting the message that we are much closer to accuracy than we were.”
But Curran’s signature program was plagued by a big false start and numerous missteps during its rollout. At first, she adopted a plan to phase in the reassessment’s massive tax bill changes over an indefinite period of time. That would have caused relatively modest tax bill swings. But experts, including then newly appointed County Assessor David Moog, determined it would have actually added to the assessment disparities and led to the $7.4 million project essentially doing nothing to fix the system.
Curran withdrew that plan after the GOP-controlled county legislature endorsed it. The Republicans have criticized her for the decision ever since, in part because they say it circumvents assessment increase limitations in state law.
Republicans have called for Moog’s resignation and recently won county legislature approval for a voter referendum on whether the county assessor should be elected, citing their criticisms of Moog’s tenure, including a failure to hold public forums on the project. Curran has promised to veto the measure, which she must do by May 22.
Legislature Presiding Officer Richard Nicolello (R-New Hyde Park) said the feedback he and other legislators in the majority caucus have been receiving from residents is that the assessments are anything but accurate.
Nassau assessment error rate 2001-2021
Professionals measure the accuracy of a system’s assessments by using an average rate of error. It gauges the percentage that assessments fall above or below what they should be on average. Going back 19 years, Newsday’s study found the rate of error has varied widely but is now well within the industry standard of between 5 percent and 15 percent. The rate is now within the range of what the county achieved after its last reassessment, which followed the settlement of a lawsuit alleging the over-taxation of minority homeowners that was brought by Roosevelt community activist Diana Coleman and four other homeowners
Source: Newsday study. Tentative assessment roll was analyzed for 2020-21.
- Coleman Reassessment
“They are looking at this thing almost in a laboratory as opposed to the real world that we are confronted with,” Nicolello said. Referring to Moog, he added, “If he is that confident and he believes that this roll is that good, he should be holding town hall meetings throughout this county to explain that."
In an interview, Moog said assessment challenges will be the ultimate determination of the assessments’ accuracy, but “the county got its money’s worth out of the contractors and out of our staff. You don’t get these results every day.”
Newsday’s study found that in its first year, Curran’s original plan would have produced assessments with an average error rate of 15.8 percent, nearly double the rate of the new assessments and outside the industry standard for accuracy. The 15.8 percent rate would have been the highest Nassau has experienced in at least 19 years, according to the study, which examined tax years going back to 2001.
The findings of Newsday's study are very similar to two other little-publicized studies produced by a county consultant and state officials last year. They stand in contrast to comments from numerous homeowners and other critics at public hearings who have said Nassau's new values are too high, one of whom has gone to court to try to get more information from the county on its valuation method.
Nicolello said a common refrain he’s heard about the new values is, "if someone will pay me that much for my home, I'll sell it right now."
Rarely mentioned in the meetings, though, is that in the best assessment systems there are always many homes that assessors have significantly overvalued. Newsday’s study, for instance, estimates 5 percent, or more than 16,000, homes may be overvalued by 20 percent or more — and that’s a good result, experts said.
The uproar over Nassau's reassessment and any public misperception of its technical soundness are not a surprise to Larry Clark, director of strategic initiatives for the International Association of Assessing Officers, which sets the standards used by assessors and governments around the world to gauge assessment accuracy.
Clark said it is a given that homeowners will be outraged whenever a reassessment occurs regardless of how it is conducted, especially when it increases their tax bills.
"Well, of course if my tax bill goes up then it's an unfair assessment," Clark said. "That's the usual measure."
In this case, approximately half of taxpayers are expected to see tax bill increases, while half are expected to see decreases — often by thousands of dollars — though the county legislature will soon decide whether to phase in the changes over five years.
The industry’s standards reflect just how difficult it is for assessors to come anywhere close to perfect accuracy. For a system with an older, varied housing stock like Nassau’s, the standards call for the average rate of error not to exceed 15 percent as measured by a technical industry yardstick.
In explaining why perfect accuracy is impossible, Mark Sunderman, who holds the Morris Fogelman Real Estate Chair of Excellence professorship at the University of Memphis, said that rather than being an objective figure, a fair sales price can be within a range, worked out between individual buyers and sellers. Two different buyers may be willing to pay different prices for two identical homes at the same time, making it impossible to perfectly predict what a home is worth.
That human factor in valuing homes is so powerful, he said, that industry standards require assessors to question the validity of any average error rate lower than 5 percent.
Sunderman said when a study gets down to an error rate of 7 percent, “that’s pretty darn impressive.”
“Getting much below that, I begin to think that's almost too good,” he said.
According to the industry’s standards guide, error rates below 5 percent may be an indication that assessors are “sales chasing,” an illegal practice of selectively reassessing properties that have sold at or near their sales price while leaving surrounding or comparable properties’ assessments unchanged. Sales chasing can result in unfair tax bills and invalidates ratio study results.
A county consultant in a September 2018 study found an error rate for Nassau’s new assessments of 8.5 percent.
State officials, in their study of Nassau's new assessments, found an error rate of 7.8 percent, compared to Newsday’s 8.8 percent. For the same tax year, according to state studies only 15 of New York's 50 largest assessment systems scored better than Nassau, and the largest of the 15 had only one-eighth as many properties.
Nassau County’s new assessments also stand out among other large property tax systems across the country.
How Nassau compares
Average error rates of the five largest U.S. cities with studies published in the last two years.
The 8.8 percent error rate Newsday found for Nassau is lower than that for three of the five largest cities for which studies have been completed in the last two years. Those include New York at 17.6 percent, Chicago at 25.1 percent and Philadelphia at 20.2 percent. Houston’s error rate was 7 percent in its most recent study, and Phoenix’s was 8.1 percent.
Newsday’s study found the new assessments are also more accurate than those produced for the county’s last major reassessment in 2003, a far more extensive project that cost more than four times as much. That project achieved an error rate of 9.5 percent, but officials subsequently made significant improvements in the rate that were maintained until the Mangano overhaul began.
Moog said he is satisfied with the results of the reassessment but expects these assessments will also improve in future years, particularly after his department, which shrank by 40 percent under Mangano, is fully staffed.
Experts said one of the biggest challenges with valuing property based on the sales prices of other homes — the widely used and standard approach Nassau has taken — is accurately assessing unique, often high-end properties.
"They are the most difficult just because you don't have a lot of very comparable sales," Clark said. "They are the most difficult, therefore, to value."
Indeed, for homes worth twice the county average, Newsday’s study found an average error rate of 11.8 percent. That’s higher than the rate for all homes by 3 percentage points but is still within standards. And it is a drop from the 13.7 percent error rate found for such homes during the last year of the Mangano overhaul.
High-end home valuations were also a hotly debated issue in Nassau’s 2003 reassessment, which achieved an error rate of 11 percent for such homes, slightly better than Nassau’s latest results.
Overall, Newsday found higher-valued properties benefited slightly from assessment errors on average. But, of course, not all of them did, which might explain why several owners of high-end homes turned out at a county legislature hearing in March on the reassessment.
Speak to any real estate broker on the North Shore. Homes are unsellable now.Eric Berliner, Sands Point homeowner
Sands Point homeowner Eric Berliner is one of a vocal group of residents from that area. The county initially appraised Berliner’s waterfront, 6,000-square-foot home at $9.4 million, which would have increased his taxes by about $40,000 annually, according to his county tax impact notice. Officials later lowered Sands Point values after gaining feedback from residents, bringing Berliner’s to $8.2 million.
But Berliner, who is challenging the new assessment, said he recently had his home appraised at $3.6 million. During one of multiple meetings he had with administration officials, he said Moog told Curran that he couldn’t defend the reassessment’s values for high-end properties, something Democratic Legis. Delia DeRiggi-Whitton, whose district includes Sands Point, said she also heard him say.
“Speak to any real estate broker on the North Shore,” Berliner said. “Homes are unsellable now.”
Moog disputed Berliner and DeRiggi-Whitton’s account of his comments at the meeting. He said he told Curran that it will be difficult to defend some of the values developed for high-end homes because of the challenges of assessing them accurately.
“But not every high-end property,” Moog said, “just some high-end properties.”
Berliner and other homeowners won’t feel the full effect of the reassessment for five years under the phase-in proposal Curran championed that recently won state legislative approval.
Newsday’s study found the phase-in, which is to be implemented through a property tax exemption that reduces assessments before they are taxed, would still improve the accuracy and fairness of tax bills, even in its first year.
The average error rate would be 12.3 percent, down from 14.7 percent the year before, but still distant from the 8.8 percent that would have been reached immediately without a phase-in, Newsday found.
When comparing those who appealed successfully during the overhaul to those who did not, the phase-in’s first year would lead to significant improvements. Those who did not appeal successfully would drop from being assessed at a level 29.2 percent higher to 20.3 percent higher, leading to much less inflated tax bills. Homes in predominantly minority communities would go from being assessed at a level 4.3 percent higher to 2.5 percent higher — a 43.9 percent drop.
That’s a vast improvement over Curran’s original plan, with its 15.8 percent error rate. Nonetheless, her new plan would still leave about half of homeowners continuing to pay a disproportionate share of the tax burden, most often because they did not win challenges during Mangano’s overhaul.
It's not really fair at all, especially since they've been underpaying all this time.Tom Codignotto, Bellmore homeowner
Absent Curran’s proposed phase-in, Bellmore homeowner Tom Codignotto would have seen his taxes go down about $9,000 in one year, according to his county tax impact notice. Instead, his bill will only go down about $2,700 the first year.
Codignotto, like many other taxpayers interviewed by Newsday, said he never challenged his assessment because the county’s notices and website suggested he didn’t need to and did not disclose that challengers were being assessed at much lower levels. After paying tens of thousands of dollars more in taxes than he otherwise would have, he said he finds it unfair that others will continue to pay less than their fair share.
“It’s not really fair at all, especially since they've been underpaying all this time,” he said. “I could have been going on a nice family vacation for the last six years.”
Behind Newsday’s study
Newsday’s analysis of Nassau’s new assessments is known as a “sales ratio study.” It’s the primary way assessors, researchers and the courts gauge the accuracy and fairness of a group of assessments.
At a simple level, sales ratio studies compare assessments to sales prices. If a $1 million home is assessed at $900,000, it has a “sales ratio” of 90 percent. Using hundreds or thousands of ratios as a sample of a whole system or group of homes—such as those in predominantly minority neighborhoods— assessors can gauge the accuracy of all assessments in the larger group that may not have sold recently.
Expert Richard Sanderson, who has 41 years’ experience in the field, said that aside from being based on sales prices, which are considered the best evidence of property values, ratio studies are also relied upon because they are objective, scientific analyses that can be reproduced by others.
"I could be hired next week to go into Nassau County, look at that ratio time period and come up with the same result," Sanderson said. "It's reproducible. It's not being fabricated out of the air."
Newsday’s results are very similar to two other studies of Nassau’s new assessments that were conducted by a county consultant and state officials.
Assessors analyze the ratios using various statistical measures, including averages, medians and other technical tools that detect errors hidden by simpler yardsticks. They then compare those measures to standards set by state governments or the International Association of Assessing Officers.
For instance, Newsday found Nassau’s average rate of error, which is the statistical measure known as the coefficient of dispersion, is 8.8 percent, well within the 5 percent to 15 percent standard set by the association. It found Nassau’s new assessments were also within all other major standards.
The approach taken with the study was nearly identical to the method used for the study in Newsday’s “Separate and Unequal” 2017 investigation of former Nassau County Executive Edward Mangano’s overhaul. That study was developed in consultation with three national experts. The new study’s approach was shared with an additional four experts, all of whom said it was a reasonable approach.
For the complete details of how Newsday conducted the study, click here.