Nassau County for the first time is using a computer modeling system that aims to precisely measure the effect of a home's location on its market value — generally increasing values in neighborhoods with higher sales prices and reducing them in less expensive areas.
The system, which is generating concern and criticism among property owners who fear their property taxes will rise, underlies the first countywide reassessment in nearly a decade.
It allows assessors to analyze thousands of recent property sales to generate what essentially are replicas of particular real estate markets throughout the county — sometimes honing in on areas as small as individual blocks and lots.
The model predicts what a home would sell for given a mix of factors such as lot size, the presence of patios and pools and proximity to the Long Island Rail Road.
County officials say the calculations are far more sophisticated than those used in prior years. They measure “the influence of every inventory of every neighborhood and every property,” said Nassau Assessor David Moog.
Moog raised the hypothetical of two homes in Levittown and Port Washington, both with sunrooms that cost relatively the same amount to construct.
“If you’re a buyer, you pay a lot more for that sunroom in Port Washington [over]looking Long Island Sound than the sunroom in Levittown looking at your neighbor’s pool," said Moog.
While the overwhelming number of homeowners will see their market values rise after years of frozen assessments, that doesn’t mean their tax bills will rise by the same percentage, according to Moog.
Tax hikes are more likely for owners who challenged their assessments continuously over the years, driving down their market values, Moog said. Those who will see tax reductions did not grieve, or did not grieve as often.
Larry Clark, director of strategic initiatives at the International Association of Assessing Officers, a professional organization of 7,000 government assessment officials and others, said there are “three things that establish value in real estate: location, location and location. The neighborhood factor is a way of capturing the difference between one neighborhood and another.”
But some homeowners have been expressing concern and confusion after receiving new reports that include "neighborhood adjustment" factors that are raising the values of some properties by tens of thousands of dollars.
When Dan Oppenheimer examined the breakdown of the reassessment of his home in Hempstead Village, he was taken aback by new neighborhood adjustments that boosted the value of his home.
First, the neighborhood factor pushed the value of his three-bedroom home from $457,628 to $497,829.
Then, another adjustment — the "section-block" factor — increased the value by another 27 percent, to $632,736.
“That’s a huge thing saying you live on a nice block, we’re going to throw in another $135,000,” said Oppenheimer, 63, who works at a Hempstead nonprofit and serves as a Hempstead Village representative on Hempstead Town's Industrial Development Agency.
Insurance companies, financial institutions, meteorologists and other professionals all use such statistical methods, which analyze known data points to predict future outcomes.
“This is not intuitive, this is market-based,” said Anthony Arcuri, deputy director of real property tax services and chief of staff of Nassau's assessment department.
“It’s less about what you believe it to be, and more about what the market says it is,” Arcuri said. The modeling reveals "the true market contribution of each variable," he said.
Under the countywide reassessment launched by Democratic County Executive Laura Curran, the neighborhood adjustment factor affects 374,026 properties in 324 geographic areas. There are 386,000 residential properties in Nassau.
In many cases, the adjustment can carry outsize weight because it's applied after most of the home's other characteristics have been considered.
Then, for more than 3,000 properties in 21 smaller areas, a "subarea" factor is applied to particular enclaves. The adjustment, a further fine tuning based on sales, can add or subtract thousands of dollars to a home's value.
Finally, there are further adjustments for 412 sections and blocks that contain 15,000 properties.
The effect of the neighborhood calculations can be significant.
In a section of Manhasset, 775 homes each had 95.8 percent increases, according to county data. In another section of Manhasset, 854 homes rose by 74 percent each.
But in Hewlett, 163 homes had their values reduced by about 38 percent due to the neighborhood factor. In a section including parts of Amityville and Freeport, 608 properties each had their values reduced by about 30 percent.
Assessment experts defend the system as the most accurate reflection of the effect of location on a home's valuation.
Russ Thimgan, is president of Thimgan and Associates in La Junta, Colorado, which was contracted by Standard Valuation Services, a Mineola company working on the Nassau reassessment.
“It’s difficult for the layperson to look at that and objectively say, 'Well, gee, how come I’m getting this big location adjustment?' " Thimgan said.
"Well, the reason is because the local sales in their neighborhood are selling for more than the sales in another neighborhood," said Thimgan. "Those properties with the higher adjustments are selling for more, once we've taken into consideration all of [the] other attributes.”
Jeff Darrow, division director with the Residential Division of the Department of Assessments in King County, Washington, which uses modeling similar to Nassau's, said, "if you don't account for the neighborhood factor, and a lot of the different things, you tend to wipe that variable [from] consideration; you average everything out."
By "not accounting for neighborhoods or local market influences, by painting with a real broad brush, the high end areas would essentially trend downward toward the average, while the low-end areas would trend upward toward the average,” Darrow said.
But some Nassau homeowners who have received their assessment statements say they are perplexed by the adjustment factors.
Under reassessment, Michael Chartan’s home in Great Neck is valued at $1,052,126. The neighborhood adjustment boosted the total by 19 percent, from $883,392.
“We have a reputation for good schools, good parks, a good library, proximity to New York City, and as far as the LIRR is concerned, the best of the lines. So when you take all of that into account, people are going to want to buy … houses in the Great Neck area for those reasons," said Chartan, 62, a former Nassau deputy county attorney who defended Nassau against tax challenges.
"So it’s the interplay of the buyers and the sellers that are setting the prices for homes in Great Neck, and to then add on another adjustment factor for neighborhood, it just seemed to be ridiculous, because the neighborhood has already been accounted for in the sales price,” Chartan argued.
“If they’re using the comparables and they’re using comparables in Great Neck to begin with, there’s no reason to make that adjustment,” he said.
Elena Villafane said homes near hers in Sea Cliff on larger pieces of property have sold for more than $1 million, and her home should not have had the same adjustment factor. Her home, on 7,500 square feet of land, was valued at $921,753. The neighborhood adjustment had increased the total by 38.36 percent.
Million-dollar sales on much larger lots are “not going to influence [the value of] my house," she said.
Nassau should have “dug a little bit deeper and not tried to effectuate this reassessment through computer modeling and big data,” said Villafane, an attorney who is also a candidate for village trustee.
The Nassau County Legislature's presiding officer, Richard Nicolello (R-New Hyde Park), said generally of the adjustment factors: "Some of it looks completely arbitrary. "We don't understand where this comes from. How do they determine these numbers?"
Bruce Kennedy, Sea Cliff's village administrator, said village residents have some of the highest adjustment factors in the county. In Sea Cliff, the value of 258 properties increased by 78 percent each because of the neighborhood adjustment, county records show.
“They’re taking a property and increasing its value by 78 percent, [with] no explanation,” Kennedy said. “None of the variables are all that concerning until you get to the third to last, the neighborhood factor, and then all of a sudden, boom, your assessed value increased 78 percent.”
Neal Peysner, director of residential certiorari with SVS, said the neighborhood adjustment may seem "high, only because … it may be down on the list where it’s multiplying a higher number."
Said Moog: “I truly believe we have a very accurate tax roll, going forward, much more accurate than any prior tax roll, and I’m proud to own that. … "
He argued that, "there's always going to be outliers. There's always going to be people who come forward saying 'This is not right.' We have lots of people coming forward saying 'my house wouldn’t sell for this amount,' but meanwhile the analysis shows we did value it properly.”
THE NEIGHBORHOOD FACTOR IN SUFFOLK
Unlike Nassau, which has a county assessor, the 10 towns in Suffolk County each perform their own assessments. Many haven't conducted a reassessment in decades; generally, assessments only change to reflect new construction.
“It will almost never come to the value that they paid for it," Jeanne Nielsen, chair of assessors in East Hampton, said of town assessments.
Valuations take into account a variety of factors, such as “who’s the builder, what do they charge per square foot, are they builders to the stars?” she said.
In Babylon, the last townwide reassessment was in 1954. Islip's last revaluation was in 1979, while Riverhead's most recent reassessment came in 1980.
In Huntington, assessments were computed decades ago, said Roger Ramme, town assessor.
"Where they came from I don’t know," Ramme said.
“To the extent that a property is located within a certain area, we would take location," he said. Assessment changes rely on "specific sales prices, … so the sales price itself takes the neighborhood or the location into account, so we don't make a further adjustment for neighborhood.”
Babylon Town uses a manual that dates back to 1954, said Assessor Joan Ball. Assessors use changes in construction to "conform to assessed values of the area." Officials don't want to "have one [home value] popping out, unless it's warranted.”
Southampton Town and Shelter Island conduct reassessments annually.
In Southampton, assessors review sale prices in individual communities and adjust assessments up or down based on market trends.
The town uses "neighborhood adjustments" and computer assisted mass appraisals for the town's 52 neighborhoods, said Assessor Lisa Goree.
But Southampton applies neighborhood factors differently than Nassau. Property record cards list the neighborhood adjustment as a dollar figure that is used as a step in the calculation.
As examples, Goree cited a property in Water Mill with a $5.6 million neighborhood adjustment, and a property in Hampton Bays with a neighborhood factor of $5,433. Valuations also depend on factors such as whether the property has waterfront.
“A half-acre property in Water Mill is not going to be the same price as it would as a half-acre property in Hampton Bays, so that’s where we apply neighborhood adjustments," Goree said.
On Shelter Island, with only 3,500 parcels and 2,400 homes, homes are appraised individually.
In valuing a property, Shelter Island assessors typically consider three nearby homes that sold during the past three years and use them as comparables. Also, town officials increase or decrease assessments by a percentage based on market conditions.