Fulton County home sales threaten to lower equalization rates

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The New York State Office of Real Property Tax Services (ORPTS) has alerted property tax assessors in Fulton County that a high volume of 2021 residential home sales will likely cause dropping property tax equalization rates throughout the county in 2022.

The combination of low interest rates and eager buyers bidding up prices has widened the gap between what many local properties are assessed for and what the market says they’re actually worth.

The preliminary 2022 Residential Assessment Ratios (RAR) report from ORPTS shows potential double-digit drops to the RAR rates for Gloversville (down 16.88 points), the Town of Bleecker (-16.42), the Town of Broadalbin (-13.72), the City of Johnstown (-13) and the Town of Mayfield (-11.39).

A drop of at least five points was shown for the towns of Caroga, Ephratah, Johnstown, Northampton and Stratford.

“The RAR changes are drastic,” Town of Johnstown Assessor David Walendziak told the Town Board on Dec. 20. “The state doesn’t feel that it’s a trend. It’s, you know, just the way the market is, and so we’re going to have to wait and see what happens. [The Town of] Johnstown didn’t really fare that bad in the residential rate drop [down 6.52 points]. Gloversville won the prize with a 16.88-point drop.”

According to the New York State Department of Taxation and Finance, the RAR scores are a measurement of the overall ratio of the total assessed value of residential property in the municipality compared to the full market value of that residential property.

“The RAR [Residential Assessment Ratio] can be used by homeowners in a Board of Assessment Review [BAR] grievance and in a Small Claims Assessment Review [SCAR] hearing,” reads the state web page — tax.ny.gov.

Gloversville City Assessor Joni Dennie said the big question with the RAR scores is the degree to which they will affect a municipality’s equalization rate.

“Up until this year, I’ve always been able to maintain a 100% equalization rate, but we’re definitely going to take a hit,” she said. “Next year, we’re definitely not going to be at 100% [equalization rate], so, unfortunately, in the city of Gloversville, we are going to pay a higher county [property tax] rate. But, compared to everybody else, we may still have the lowest county rate because we may still have the highest equalization rate at 85, if everyone else is below that.”

The state’s equalization rate formula is the system it uses to try to create a fair system for distributing the property tax levy burden equally across all of the properties in a given municipality. A municipality’s equalization rate attempts to measure the gap between the most recent property tax assessment of a parcel of land and the actual sales prices of comparable pieces of land in the same area. As the gap between property assessment and property sales prices increases, a municipality’s equalization rate goes down, which means it generally needs to shoulder a greater portion of a county’s property tax levy via a higher tax rate.

That’s what happened during Fulton County’s 2022 budget process. Even though Fulton County’s overall property tax levy dropped by $298,638, dropping equalization rates in the towns of Broadalbin, Perth and Johnstown led to more property taxes being paid by the residents of those towns.

In 2022, property tax payers in the Town of Johnstown are set to pay a combined $77,067 more in county property taxes, property owners in the Town of Perth will pay a combined $42,670 more and property tax payers in the Town of Broadalbin will pay an added $23,343.

Meanwhile, the property tax increases for those towns helped fund a $167,375 reduction in property taxes for the residents of Gloversville, which had an equalization rate of 100%.

Dennie said it remains to be seen how much the RAR score will affect Gloversville’s equalization rate for 2022. She said the state allows local municipal assessors to file what’s called an Early “Level of Assessment” (LOA) in mid-February, and that Early LOA only factors in residential home sales, without considering commercial property sales or the sale of vacant properties.

She said filing an Early LOA for Gloversville in 2022 would likely mean the entire 16.88-point drop would be shown in the city’s equalization rate. But, if she waits until later in the year, commercial sales and the sale of vacant properties could be factored in. She’s not sure yet whether that would help or hurt the city’s equalization rate.

“For me, in past years, it has been good to claim an Early LOA because my residential numbers were all in line, to give [Gloversville] that 100%, but this year they’re not, nobody’s is,” she said. “I will have to talk to officials at the ORPTS to see what will most benefit the city of Gloversville, because that’s my job. I have to rely on them to guide me, but my own numbers show that my commercial [assessments] are lower than my residentials, so they may hurt me, in which case we would want to go with that Early LOA.”

Dennie said the sheer volume of residential home sales and the considerable gap in prices compared to property assessments will likely mean that Gloversville’s trend of having 100% equalization rates for the past few years will come to an end.

“Over the years, I’ve been able to maintain that 100%, because there are a certain number of sales that the state allows you to exclude,” she said. “Say, I had a sale in particular neighborhood that sold for $100 per square foot, but everything else sold for $60 per square foot, as long as I have [comparables] to show that that’s the case I could [eliminate that sale from consideration for the equalization rate] because I could say that sale sold above market value, but — with all of the sales coming in now — I don’t have any comps where I can show a property is selling $40 per square foot above everything else.”

Dennie said the hit Gloversville will likely take in its equalization rate in 2022 will likely be permanent until the city decides to do another city-wide revaluation, which it hasn’t done since 2008 when the city tasked her department to do it “in-house.”

“There is no way we could do another re-value in-house,” she said. “Back then there were two full-time people in the office, and it still took three years to do it. That couldn’t be done in-house now. I would need another person to help, and — to take three years — that was crazy.”

ESTIMATED 2022 RARs FOR FULTON COUNTY

Municipality 2021 RAR Estimated 2022 RAR Percentage decrease
Gloversville 100 83.12 (-16.88)
Johnstown (city) 92 78 (-13)
Bleecker 100 83.58 (-16.42)
Broadalbin 74.18 60.46 (-13.72)
Caroga 54.24 48.42 (-5.82)
Ephratah 64.90 59.33 (-5.5)
Johnstown (town) 55.44 48.92 (-6.52)
Mayfield 58 46.61 (-11.39)
Northampton 54.93 47.11 (-7.82)
Oppenheim 47.57 N/A N/A
Perth 42.30 38.24 (-4.06)
Stratford 86.55 77.19 (-9.36)
By Jason Subik

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