Nassau commercial tax protest backlog grows

With tens of thousands of years-old commercial tax protests pending in Nassau, County Executive Edward Mangano has yet to send any to the county legislature for settlement, setting a pace considerably slower than the previous administration.

Only two of those commercial property tax cases have been approved this year, with another three expected to be passed Monday. But those settlements were negotiated by former County Executive Thomas Suozzi's administration.

And their total refund of $1.17 million plus interest barely dents the commercial tax refund backlog, estimated at $164.3 million.

While homeowners make the most complaints about their assessments, the county's biggest burden comes from commercial property tax challenges. Business owners file less than 20 percent of Nassau's tax protests, but they collect more than 80 percent of the refunds, which often take years to resolve. And the longer they drag on, the more the county must pay back.

While Mangano, a Republican, had campaigned on fixing the assessment system, his proposed reforms so far address current and future protests, not the nearly 40,000 pending backlog of commercial cases - with thousands dating back six years or more.

'This is the crisis'

"This is the real nuts and bolts of the problem," said Legis. David Denenberg (D-Merrick), who has led the legislature's questioning of tax settlements.

"This is the crisis in the review process that in the Gulotta years almost bankrupted the county," he said. He was referring to the 1999 fiscal crisis under former County Executive Thomas Gulotta, a Republican, which took Nassau to the brink of bankruptcy.

Brian Nevin, a Mangano aide, blamed the Democratic Suozzi administration for the delay in getting cases to the legislature, which must approve settlements of $100,000 or more.

He said documents required by the legislature had been removed from the county attorney's office, forcing Mangano's staff to comb through court files to retrieve them. Nevin also said there was no computer system tracking settlements, saying one settled case was found "sitting in a box."

"That is absurd," responded former county attorney Lorna Goodman. "We took absolutely nothing away. We recorded all settlements in the computer and they have been there all the time."

Nevin said a "flurry" of cases will go to the legislature soon. "We're going to try to get everything in the pipeline moving."

A decade-long effort to reduce the backlog reversed last year, according to Comptroller George Maragos, who reported last week that Nassau's liability climbed from $138 million at the end of 2008 to $164.3 million by the end of December 2009.

Paying out high interest

According to Denenberg's office, the county legislature approved 93 commercial cases with total refunds of $37.6 million, plus an average 4 percent interest - three times the rate banks pay on savings accounts - in 2008. In 2009, the legislature approved 73 settlements with refunds totaling $21.2 million plus interest - with about half of that already settled by this time last year.

When Mangano took office in January, he asked business owners for a 120-day moratorium on taking their tax protests to court in hopes of settling more cases.

"The idea was to stop the trials to give us an opportunity to negotiate the cases," said commercial tax protest attorney John Terrana. "It's gone a little slower than hoped. We've settled some cases, but I have more left pending than I've resolved."

Asked if she knew the reason no settlements had been sent through, Laureen Harris, a member of Mangano's volunteer Assessment Reform Team and a private commercial protest lawyer, had a one-word answer about the system: "incompetence."

Nevin acknowledged the assessment system is still "dysfunctional," even as Mangano tries to fix it. And, he warned, the $164.3 million backlog "will continue to grow until our reform legislation is approved and implemented."