With Southampton Town’s tax base jumping in value by 10 percent from $72.5 billion over the previous year and more than 30,000 property owners finding greetings in their mailboxes from the assessor in April telling them the value of their properties had gone up, Supervisor Jay Schneiderman and the Town Board are starting to rethink the town’s pioneering policy of reassessing all its 52,000 taxable parcels every year at 100 percent of their market value.
“I understand the argument that 100-percent assessment is equitable,” Mr. Schneiderman said on Tuesday, “but there are societal consequences” to the policy. It can cause “fairly rapid valuation changes” in assessed value that can hurt senior citizens and others on fixed incomes who have lived in the same house for years, he said.
“When your income goes up and you pay more in income taxes, you have more money to pay those taxes,” the supervisor said. But when the value of a home jumps 50 percent in one year — which Mr. Schneiderman said happened to “somebody I know” — there’s not necessarily any more income to pay a higher property tax bill, he explained.
Mr. Schneiderman will introduce a proposal at the next Southampton Town Board meeting at 1 p.m. on Tuesday, May 14 in Town Hall to freeze for two years the “market trend analysis” process that the assessor’s office uses to estimate annual values most years. Meanwhile, a panel to be named by the Town Board will “evaluate the impacts on people with limited or fixed incomes,” Mr. Schneiderman said.
All four-council people have signed on as cosponsors of the proposal, which will be the subject to a public hearing at a date to be set next week. The moratorium would not affect reassessments made as a result of sales, additions, improvements or renovations.
“I think it’s clear that our assessment procedures need to be reevaluated,” commented Councilman John Bouvier in the press release announcing the proposal, which Mr. Schneiderman issued on May 6. Both Mr. Bouvier and the supervisor are up for reelection on the Democratic line this year. “Our current system assesses taxes based on a 100-percent market valuation that creates an undue burden on some residents as a result,” Mr. Bouvier added. “I welcome this review.”
More than 30 years ago, facing litigation from wealthy, recently arrived waterfront property owners who said the town’s policy of reassessing only when property changed hands or underwent improvement hurt newcomers and benefited long-term owners — often older, local people — the town began to move toward reassessment in the late 1980s, recalled then-town attorney Fred W. Thiele Jr., who is now the region’s state assemblyman.
The reassessment process was completed, and the policy of updating the tax rolls every year at 100-percent of market value was instituted, when Mr. Thiele was town supervisor in the early 1990s. Southampton and the town of Shelter Island are the only assessing units in New York State that reassess annually and at full value.
Taxpayers were assured at the time by town officials that an increase in a property’s assessed valuation does not necessarily mean the owner’s tax bill will rise. If all the town’s properties go up in value proportionately and local government does not increase spending, tax rates must drop accordingly, and tax bills would remain unchanged. But if values of different kinds of property rise or fall at different rates, the tax bills for one kind might rise more than those for another.
Because of the town’s use of “market trend analysis” to determine values, “One really can see fairly rapid valuation changes,” Mr. Schneiderman said, especially when the town’s driving economic force — the second-home real estate market — is hot, as it was in late 2017 and early 2018. That’s the period of sales on which the latest reassessment is based. The market has since cooled significantly, although values appear not to have started down yet.
“The essence of the problem is there’s no limit on the delta factor,” the possible rate of change, Mr. Schneiderman said. “I think that’s what we are lacking — protections against rapid changes” that can hurt people on fixed and limited incomes. “We’ll looking for mechanisms to protect people of average and moderate income,” he said, and studying how “slices of the pie are shifting” as a result of the annual use of market trend analyses to set values.
“I’m not ready to make any permanent decision” on the future of the town’s reassessment policies, the supervisor said, “but at least let’s give people a two-year breather so they don’t have to fear” another letter from the assessor’s office anytime soon.