Two measures designed to lessen the burden on local homeowners could provide property tax relief for year-round residents in Southampton Town, if given the go ahead by state lawmakers.
Members of the Southampton Town Board mulled recommendations by a town-appointed reassessment advisory committee at their work session on August 20. The proposals could see tax savings of as high as $400 a year for year-round residents of the Hampton Bays School District, and increases for ineligible second-home owners as high as $775 in the Eastport-South Manor School District.
The two-pronged approach calls for a cap on reassessments, limiting them to an increase of 5 percent in a year, while a second proposal, a so-called “Homestead Tax,” would offer primary homeowners in the town a $50,000 reduction in their overall property assessments.
According to State Assemblyman Fred W. Thiele Jr., who would carry the request for enabling legislation to Albany, the proposal shifts the tax burden away from primary residents to second-home owners, and to businesses, who would end up paying higher taxes.
Confronted by soaring assessments, last year the Town Board convened the committee with an eye toward finding strategies to lessen the impact on local homeowners. Supervisor Jay Schneiderman noted that some longtime residents may have properties whose market values have surged as the real estate market ramped up — and their tax assessments as well — even though they could be on fixed incomes.
At the same time, the supervisor put a freeze on tax assessment increases while the details were worked out.
“We saw certain areas of town going up very quickly, but a lot of people … they couldn’t sustain large jumps … so we needed to take a pause,” the supervisor said. The town last year placed a two-year freeze on market trend assessments.
Discussing the Homestead Tax strategy, Lisa Goree, the town’s sole assessor, said the group came up with a program similar to the statewide STAR program. The New York State School Tax Relief program provides an exemption from school taxes for owner-occupied primary residences.
In the Homestead program, full-time homeowners could apply for an exemption that shaves $50,000 from their assessment. The committee shared a spreadsheet depicting the savings — or increases — per school district. In Hampton Bays, for example, an average eligible homeowner could see a savings of $408.50 a year, while those who don’t qualify for the exemption would experience an increase of $223.45.
The exemption application process would mirror the process for obtaining a STAR exemption. About 16 percent of the properties in the town are year-round residences that would qualify for the exemption.
The $50,000 reduction is designed to help those with the lowest-value houses, the supervisor explained, but would apply to all primary households.
For the assessment cap, as values soar, properties would continue to be assessed with their new values, but the taxable increase would be no higher than 5 percent from year to year. However, if the house sold, the cap would be lifted for the next homeowner.
Neighboring towns use a state-crafted “equalization rate” to determine assessed value. In Southampton, however, the town uses market trends and a 100 percent assessment. Mr. Schneiderman made clear that there are benefits to using the current system, adding, “We didn’t want to abandon that.”
He wondered if the two measures could be adopted before the two-year freeze expires, then answered, “I don’t know.” The Town Board agreed to make a formal request to Mr. Thiele, asking him to carry the legislation. If the effort is unsuccessful after two years, and the current freeze sunsets, the supervisor said board members would have to decide whether to extend it.
He doesn’t favor extending the freeze, because, he said, “if we don’t lift it, things will get start to get out of whack … they’re already out of whack due to the pandemic.”
Real estate agent and committee member Joe Savio explained that as people came to the East End looking to escape the COVID-19 pandemic in the city, there was an influx of cash, with would-be buyers actually engaging in bidding wars for the limited inventory of homes, causing properties to appreciate at a rapid pace.
“People who came out here during the pandemic actually set the market,” Ms. Goree observed on Monday. “It’s not isolated here, it’s happening all over New York State, and I don’t see it stopping anytime soon.”
Councilwoman Julie Lofstad, who lives in Hampton Bays, said she lives in “an established neighborhood.” If people engage in bidding wars and buy the four houses surrounding hers at inflated prices, “that shouldn’t affect me,” she said.
Due to the bidding wars, people are paying over market values for houses in the $1 million to $4 million range, Mr. Savio said. Sales have increased over 200 percent in that range.
Councilman John Bouvier predicted that the current “artificial value” of homes may drop off after the pandemic. “That remains to be seen,” Ms. Goree countered.
The supervisor related that the committee struggled with zeroing in on the amount for the cap. “We’ve seen appreciation at 10 percent some years, “ he said. He also reported seeing a 50 percent adjustment in a single year of valuation. “That’s too big of a jump,” he asserted.
Ms. Goree advised against waiting too long on the next reassessment. Lifting the freeze could mean a “huge jump,” she said, adding, “We definitely don’t want Hampton Bays, Flanders, and East Quogue seeing a 30 percent jump in two years.”
The town must present a work plan to the state; the last one in 2019 anticipates a full reassessment in 2022.
Looking ahead, Mr. Schneiderman said that as Mr. Thiele introduces the legislation in Albany, the town would go through separate public hearings to adopt the measures. The market trend system, with these two measures in place, he said “might be a right fit for the town.”
Mr. Thiele noted that normally, “these are not easy bills to pass.” However, he offered that they might have a good chance because, while the state policy calls for cyclical reassessments, “Southampton Town is the only town on Long Island I know that does it.”
While Albany lawmakers may be reluctant to pass the measures for other localities, he said they may feel Southampton Town officials are “good guys,” because reassessments have been conducted regularly for many years.
He pointed out the last time neighboring East Hampton reassessed, “Calvin Coolidge was president.” He said passage of the bills might have a chance in 2021.
Whether school districts are asked to “opt in” to the program or whether they would be mandated through legislation, Mr. Thiele said, is a policy question for the town to answer.
The number of second homes and primary residences, plus the cost of the homes, play a part in the savings and increases per district. The more parcels there are in a district, the more people able to put money back into the pot after the exemptions are deducted; that is, the number of parcels outweighs the number of people that qualify for the exemption, Ms. Goree explained.
The committee’s spreadsheet reflects savings or increases for homes with an average assessed value of $500,000. It notes that, based on 2019 assessments and tax rates, 16 percent of properties in the Town of Southampton would benefit from the exemption.
In Sag Harbor, with 5,641 parcels in the school district, homeowners and businesses that don’t qualify for the exemption could see their school taxes increase by just under $17 a year, with those who are eligible for the exemption seeing a savings of $207. In Bridgehampton, with 2,821 properties, the increase is minimal — $1.15 — with the savings estimated at $89.54.
With 2,571 properties, in the Remsenburg-Speonk School District, eligible homeowners would derive $241.52 in savings, while ineligible property owners would pay an extra $22.45. Similarly, in Westhampton Beach, where there are 6,998 properties, the savings are $269.10, with the increase estimated at $27.95. Those with homes in the Riverhead School District could see a savings of $320.77, while second homeowners pay $334 more.
In the Southampton School District, ineligible property owners would be assessed an extra $2.75, with those who qualify for the exemption seeing a savings in their taxes of $99.38.
“I feel encouraged,” Mr. Schneiderman said as the discussion drew to a close. “The board is standing together to try to tweak our system and make it more fair for year round and working class residents.”