Nassau owed $39.1 million in estimated residential property tax refunds by the end of last year despite County Executive Edward Mangano’s repeated public statements that he had reduced Nassau’s residential liability to nearly zero since instituting a tax challenge settlement program in 2011, a new report shows.
A tax refund liability chart prepared by Nassau’s Assessment Review Commission for the county’s outside auditors shows that Nassau had accumulated an estimated $10.7 million in residential refund liability by Dec. 31 of last year on top of $28.4 million in projected tax refunds already owed to Class 1 property owners. Class 1 includes all one, two and three-family houses as well as condominiums of three stories or less.
The review commission, whose members are appointed by the county executive, projected that, altogether, the county had a $316.4 million backlog of residential and commercial property tax refunds, according to the chart obtained by Newsday.
Assessment officials attribute much of the residential liability to a settlement program that began last year and resolved several years of challenges by low-rise condominium complexes.
Successful challenges to Nassau’s countywide assessments have cost the county an average of $100 million a year for decades, contributing significantly to county budget deficits. An average of $20 million of the annual tab was to refund overpaid residential taxes.
Republican Mangano and his Democratic predecessor, Thomas Suozzi, said their reforms would fix the assessment system. But the estimated tax refund backlog has nearly doubled since 2009, Suozzi’s last year in office, and County Comptroller George Maragos recently projected it will grow to $327 million this year.
2011 initiative to settle bills
In 2011, Mangano instituted a “Residential Tax Grievance Negotiation and Settlement Program.” He said the initiative would allow the review commission to consider and settle every residential assessment challenge before tax bills were issued, thus eliminating the $20 million in annual residential refunds.
Mangano announced in 2012 that the county had settled all residential protests from 2011 while his 2013 budget boasted the program produced “ZERO residential debt liability.” His 2013 budget said “all” residential challenges had been resolved, while Mangano spokesman Brian Nevin in 2015 said “every residential challenge” was corrected before the tax roll became final.
In Nassau’s 2015 and 2016 budgets, the county inserted “small claims” into the description of the settlement program and said Nassau had resolved “all residential small claims grievances” before tax bills went out.
Small claims refers to the “small claims assessment review” process used by most homeowners who continue their challenge in small claims court if they lose at the county level. However, lawyers representing small condominium complexes and high-end estate homes often choose to file their continuing challenges in state Supreme Court because the small claims review limits assessment reductions to 25 percent.
County officials said most of the near $40 million in estimated residential liability comes from Supreme Court challenges.
County numbers challenged
Legis. Laura Curran (D-Baldwin) called the county’s changing language “purposely deceptive.”
“It looks like they’re trying to pull the wool over peoples’ eyes by saying the problem is fixed when certainly it’s not fixed,” she said. “If you’re playing with semantics, even if by some formula you’re not lying, it’s disingenuous. And that erodes trust in government.”
Nevin responded, “Laura Curran couldn’t understand the assessment system if it smacked her in the face. The numbers speak for themselves. The taxpayers have saved millions and millions of dollars.”
Assessment Review Commission chairwoman Robin Laveman attributed much of the increase in residential refunds to a condominium settlement program she began last year that resolved six-to-eight years of challenges from 23 complexes. Refunds needed to pay those settlements boosted the county’s liability, she said.
“We’re doing a good thing but doing that makes the numbers look higher,” Laveman said. The past backlog estimates did not include these small condo challenges, she said.
Laveman said about 7,800 residential challenges went on to the state Supreme Court in 2015 — about 80 percent for condominiums and 20 percent from highly valued homes — which also increased the projected residential liability.
After Newsday filed a Freedom of Information request on July 22 for the chart of tax refund liability, the review commission responded on Aug. 1 that it needed until Sept. 6, 2016, “to analyze your request” — even though Maragos’ office already had confirmed that the chart obtained by Newsday was the same chart the commission had provided to the county’s outside auditors last spring for their 2015 “Comprehensive Annual Financial Report” filed last month.
Laveman on Friday explained Assessment Review Commission’s response by saying her office “was under the gun” to provide its changes to the county’s assessment department by Aug. 1 to be used for the October school tax bills. “I just couldn’t pull them off what they were doing,” Laveman said of the staff needed to get the chart to Newsday.
Laveman provided Newsday with the 2015 and requested 2014 chart Monday. The 2014 report shows the county also added $10.2 million in estimated residential liability in 2014 on top of $24.1 million in projected prior residential tax refunds.