MAHOPAC, N.Y.— Condominium and townhouse owners in the town of Carmel are breathing a collective sigh of relief.
At an informational meeting held last week on the town’s three-year-old revaluation project, a majority of the Town Board members indicated that they would not vote for enacting a law known as the Homestead Tax Option, which would have likely nearly doubled the property taxes for most condo owners.
An official vote won’t happen until Feb. 1, but after viewing data presented at the board’s Dec. 14 meeting, all five council members asserted they would not likely vote in favor of the Homestead Option when the time comes.
“The consensus here is that the Homestead Option is off the table,” Councilman Jonathan Schneider said to applause and whoops of approval from the standing-room-only crowd.
According to the state Department of Taxation and Finance, the Homestead Option was created in 1981. Back then, in a number of municipalities, assessments of residential property frequently had been at a lower percentage of market (full) value than other types of property, such as commercial and industrial property. When a town with that situation decided to conduct a property revaluation to achieve correct and fair assessments, the residential properties would bear a much larger share of the tax burden. As a result of the concern for tax-burden shifts to homeowners, the Homestead Option was created.
“It was created to help municipalities deal with onerous or bad shifts in taxes resulting from a reassessment,” said John Wolham of the state’s Department of Real Property Tax Services. “Typically, this happens when a municipality hasn’t done a reassessment in many, many years.” (It’s been 20 years since Carmel has done a reassessment.)
Normally, condominiums are assessed the same as commercial property—based on potential revenue as if they were rental properties (known as an “income approach”). However, when the Homestead Option is enacted, condos and town houses are assessed on a market-value basis (what they would sell for), the same as other traditional residential properties.
The adoption of Homestead is considered after revaluations are complete, so officials can determine whether there has been a significant drop in the number of residential properties that contribute to the tax base, which would add to the tax burden of that segment of taxpayers. (This is known as an assessment-shift analysis). If there is a drop, officials will often enact the Homestead Option, which calls for condos to be assessed the same way as residential properties in order to increase the overall number of residential property owners who contribute to the tax levy. But while that would lessen the burden on each existing residential taxpayer, it would increase Carmel/Mahopac condo owners’ tax bills significantly.
With the revaluations essentially complete, officials were able to present preliminary data at last week’s meeting. It showed that in 2016, residential property made up 78.2 percent of the tax base. That had a barely negligible decrease after the revaluation, to 77.9. Non-residential property also decreased slightly, from 19.1 to 18.7 percent. Condos made up 2.7 percent of the tax base in 2016 and that rose slightly after the revaluation, to 3.4 percent.
“I want to stress that these numbers are still subject to change. We did not include every property in town,” Wolham said. “But we still think this is a reasonable representation of what will happen. Traditionally, the Homestead Option, where it has been adopted, is when municipalities have experienced a notable shift from non-residential to residential, and I would simply offer the observation that doesn’t seem to be occurring in the town of Carmel.”
When it came time for residents to speak, Bob Buckley told the board that even though he owns a traditional residential home, he still opposes the Homestead option.
“I don’t live in a townhouse or a condo. But I do have a lot of friends who live in them,” he said. “They sold their houses because taxes were exorbitant and they moved into a condo where their taxes were substantially less and they budgeted understanding that was going to be their cost. If you enacted Homestead you would put a major financial burden on these people. Some would be in the position where they couldn’t maintain them and would have to go into foreclosure. It could potentially have a major adverse effect in this town. We could become a ghost town and indirectly, it would affect all of us.”
When it came time for the board to speak, members shocked the entire room and sent condo owners home with an early Christmas present as, one by one, they each said that when the time came to cast a vote, they would vote against Homestead.
“You would have increased foreclosures, increased short sales, and increased deeds in lieu,” Schneider said. “Secondary to that...the whole town is going to suffer value-wise. It’s not going to help us on the tax picture, but it will decrease our value. It would only be a 1.6 percent increase in the tax burden for nonresidential, but an 89 percent increase in the tax burden for condo owners.”
Schneider also contended it would discourage development within the town.
“We are changing our code right now to encourage developers to build more multi-family units and if we enact Homestead, I am very concerned about the future of the town for the long-term,” he said.
Councilman Frank Lombardi said he feared there would be a mass exodus of the population from the town if Homestead was adopted.
“Homestead would just be unfair and you would end up with a significant number of empty residences,” he said. “We just went through that whole thing dealing with zombie properties; well, this would be half a zombie town [if Homestead was adopted]. But looking at these pie charts, Homestead is not necessary.”
Supervisor Ken Schmitt said he agreed with Lombardi and Schneider’s stance, as did Councilwoman Suzi McDonough.
“I’ve always been against Homestead and I would not vote for it here,” McDonough said. “I want you guys to stay in Carmel, it’s a beautiful place.”
Councilman John Lupinacci said he was inclined to vote against as well, but expressed concern that the board was not given much time to assess the data more thoroughly.
“Anyone could see that looking at the numbers that it’s probably not a good idea,” he said. “But the analyst in me says I would like to see more numbers. It doesn’t mean I am going to vote for it. We got these numbers literally five minutes before the meeting and we are crunching numbers as the meeting is going on.”
As for the revaluation information for individual property owners, assessor Glenn Droese said they would receive that information in about three months.
“The new assessed values (disclosure notices) will go out by March 1 and will include things such as the prior market value and the new value and the estimated tax change,” he said.
Droese said property owners should review the information in the letters closely and if they feel it is incorrect, they can request a review.
“Follow the directions included in the letter and schedule an informal review,” he said. “Gather information and find out what property is worth.”
The informal reviews will be held March 6 through April 7 by Vision Government Services, the vendor used by the town to conduct the revaluation.
“Use it as a resource to get any inaccuracies corrected,” Droese said. “There is no fee, no need to hire representatives.”
Sue Robinson from Vision Government Solutions said the reviews will be held at various times as a convenience to property owners.
“Hours will be varied; all the instructions will be in that letter,” she said. “You don’t the call assessor’s office; you go to [Vision Government Solutions] to make the appointment.”