Council passes tax rate changes.

Property tax bills will be recalculated for the mid-year January billing, since the City Council approved a new tax fixing resolution last Wednesday, August 24th. Payments will be greater than those made for July's first half bills for commercial property owners and less than the first half

Because the city will only tell you what you owe, and is not calculating a second half tax rate, owners who wish to determine their next liability will have to either wait until they receive the bill that is being mailed in late November, or calculate it themselves, based on an overall yearly tax rate.

Most bills will change downward by a little more than two percent. According to Department of Finance spokesperson Eamon Moynihan, the average bill payment changes will be in the neighborhood of $50 to $70.

While Class IV owners will pay more during the second half, the overall yearly rate of $10.608 per hundred dollars of assessment is still less than last year's tax rate of $10.724.

The President of the Real Estate Board of New York, Steven Spinola, noted the Class A building rate is still going down 60 cents a square-foot and the Class B buildings will go down 41 cents a square--foot over the whole year, compared to last year. "It's a decent reduction," he said. "But we would always want more."

Fiscal 94's average tax per square-foot worked out to $7.28 for Class A office buildings. The new rate will bring that figure down to $6.63. Class B buildings paid an average of $4.39 per square-foot last year and will pay about $3.98 per square-foot this year.

The new overall tax rates per hundred dollars of assessment for Fiscal Year 1995 are Class I, $10.694; Class II, $10.552; Class III, $7.702; and Class IV $10.608.

To determine the taxes owed in the second half, first convert the tax rate to the direct per-dollar rate by moving the decimal point two places to the left. So for instance, the Class II rate of $10.552 would become $.10552 per dollar of assessment.

Then multiply the result by your billable assessment to determine your overall yearly payment. (If you have both an actual and a transitional assessment, the billable amount is considered the smaller of the two, but do not confuse either with the assessment on merely the land portion of your property.)

Subtract the overall yearly payment amount from what you already paid in the first half (or first and second quarter billings). The result will be what you will owe for the second half.

For comparison's sake, the tax rates per hundred dollars of assessment for the July 94 FY 95 billing were: Class I, $10.928; Class II, $10.783; Class III, $7.871; and Class IV, $10.38.

The rates for Fiscal Year 94 billed beginning in July 93 were Class I, $10.900; Class II, $10.369; Class III, $7.404; and Class IV, $10.724.

Since changes were made to what are known as the adjusted base proportions, i.e. the share of the tax pie that each class carries, these new class shares reflect a subtle shifting of costs onto small homeowners, who experts agree have avoided paying their fair share of the taxes over the last 15 years.

The new class shares are Class I, 11.9155 percent, up from 11.5631 percent last year; Class II, 31.5709 percent, up from 30.7768 percent; Class III, 5.9836 percent, up from 5.7581 percent; and Class IV commercial properties, 50.53 percent, down from 51.902 percent last year.

The tax rate was changed expressly because the State Board of Equalization and Assessment (SBEA) data created an extreme rise in residential and utility assessments, even while dropping commercial ones. The City Council and State legislature stepped into the fray in June to limit the amount of the SBEA increases to 2.75 percent, but bills could not be passed and signed in time to reduce the July payments. The recalculation and rebilling was permitted by the State legislation that was signed by Governor Mario Cuomo on August 2nd.

Martin Karp, chairman of the Action Committee For Reasonable Real Estate Taxes, said "We are pleased that the state and the City Council acted to rectify the annual inequity caused by the current law, and look forward to a longer term and broader gauge resolution of the tax inequity, which could include proposals made by the Mayor and Speaker [Peter] Vallone."

Spinola explained that the January bills "will state 'you sent us so much in July and now you owe us the following.' But there are a substantial amount of property owners who will be getting a refund on the residential side," he observed. Those property owners will be the ones who paid all the charges in advance.

Attorneys also cautioned that residential owners who escrow payments may want to ensure their mortgagors understand the rate changes and do not over-escrow the accounts, even though the overall rates did rise from last year.

"They should be certain to know what there taxes are and be careful to read anything they get," advised Isaac Sherman, a partner with Moroze, Sherman, Gordon & Gordon, P.C., and a tax certiorari expert familiar with the politics of assessment issues.

Sherman explained the legislation was an attempt by the City to cushion the increase on the residential properties. "This again proves that the doctoring around with tax rates and classes only serves political purposes, but doesn't serve the city because we still don't have a fair system," he said. "If we had a system where we knew there would be a fixed relationship between residential and commercial properties without this constant jockeying, there would be a lot more stability in real estate and a lot more fairness. It's just another example of the silliness that the tax system has wrought."