Syracuse's Property Tax System Hurts Poor the Most
In Syracuse the system is tilted against the poor, because property assessments on wealthier homeowners are often too light, a Syracuse.com | The Post-Standard investigation finds.
(TNS) - Joyce Love bought her house in the Valley neighborhood of Syracuse for $46,000. She pays more property taxes than some people whose houses are worth up to four times as much.
Love pays higher taxes than two homeowners who bought houses for more than $110,000 in the neighborhood where Mayor Ben Walsh lives. She pays more than several Eastwood residents who bought houses for $120,000 or more. Love even pays more than the owner of a $185,000 duplex near Syracuse University.
“I don’t think it’s fair,’’ Love said.
It’s not fair. Homeowners are supposed to pay taxes based on what their houses are worth. But in Syracuse the system is tilted against the poor, because property assessments on wealthier homeowners are often too light, a Syracuse.com | The Post-Standard investigation finds.
For more than two decades the city has not updated the values of all 32,000 residential properties. Many assessments are out of date.
Who benefits from that neglect? Mostly the rich and middle class.
Houses in prosperous neighborhoods have gained value much faster than homes in poor neighborhoods. Assessments have not kept pace. That means some of the city’s wealthiest homeowners pay hundreds of dollars a year less than they should, year after year.
It’s a hidden tax break for high-end homeowners. Everyone else picks up the slack.
The system is hardest on poor neighborhoods, Syracuse.com’s analysis found. The city is often slow to drop assessments in stagnant or declining areas, leaving owners paying too much. That heaps stress on residents who may already struggle with the tax bill.
Nobody set out to make the system unfair. Indeed, city assessors adjust hundreds of assessments every year trying to fix inequities. But in the 23 years since the 1996 reassessment, Syracuse officials have failed to devote enough money and effort to keep assessments from slipping out of sync with actual home prices.
“If you don’t keep up, it’s really profoundly unfair,” said John Yinger, professor of public administration and economics at Syracuse University’s Maxwell School of Citizenship and Public Affairs. “Because what happens is, you start handing out little benefits every year to the rich folks ... and imposing little penalties on the poor folks.’’
Three years of data comparing Syracuse home sales to assessments show that wealthier neighborhoods have a concentration of houses that sell for at least 15 percent more than assessed value (green dots). Poorer areas including the South Side and parts of the North Side, have more houses that sell for at least 15 percent less than assessments (red dots). The interactive map also shows homes that sold for within 15 percent of the assessed value (gray dots). Click on a dot to find the buyer, seller, sale price and assessed value.
People complain about property taxes, but there is little public discussion of the assessments that determine who pays what share. Syracuse.com analyzed hundreds of home sales and property assessments from the past three years. The analysis reveals a problem most people don’t know about and city officials have failed to fix.
It’s not just Syracuse. New York state has an erratic system of property assessment that tolerates unfairness. Syracuse is average. The city’s assessments fall short of state standards for accuracy, but just barely. Other cities score much worse, including Binghamton, Utica and Rome.
There are no penalties for getting it wrong. State officials offer guidance, but don’t police the 1,000 towns, cities and villages that conduct assessments. Most states have stricter rules.
New York is one of only five states that do not require periodic assessment revaluations. Eighteen states require revaluation every year. Others typically require it within three to five years.
“We cannot force localities to reassess their properties,’’ said James Gazzale, a spokesman for the state tax department. “That is a local decision.’’
Different tax rates
Syracuse has effectively allowed two tax systems to develop: Discounts for the rich. Full price for the poor.
Love, 63, is on the losing side. She rented for many years before buying a three-bedroom house last year on Milburn Drive.
The Madison Street assessment of $62,000 implies that the property would sell for $79,487. The Milburn Drive assessment of $64,200 indicates the house is worth $82,308 on the market. Syracuse assessments in 2019 represent 78 percent of market value.
Love pays $2,500 a year in taxes based on a full-market-value assessment of $82,000. She has complained that the assessment is too high. Regardless, she pays roughly $30 for every $1,000 the city says her house is worth.
Across town near Syracuse University, some property owners effectively pay lower rates.
Bank executive Calvin Corriders and his family paid $185,000 in 2016 for a two-family house on Madison Street. But the property is only assessed at a full market value of $79,000.
Measured against what the family actually paid for the house, the tax bill amounts to $13 per $1,000.
City officials have not reassessed Corriders’ property for at least 12 years. Same with Love’s. It’s possible that neither has been reassessed since the citywide revaluation in 1996, said David Clifford, the city assessment commissioner. The city has no records before 2007.
The value of the Corriders property may have increased in the three years since they bought it. The family recently transferred the house to sole ownership by Corriders’ son, also named Calvin. He was able to take out a $216,000 mortgage, a sign that the property value has risen.
Clifford said his staff this year will review assessments on Madison Street, including Corriders’, because property values in that area have gone up. If the city assessed Corriders’ property at $185,000, the tax bill would more than double – from $2,450 to $5,700 a year.
The elder Corriders said neither he nor his son contacted the city about the assessment. Given the benefit of the existing assessment for his son, there was no reason to, he said.
“Why would he open that can of worms?’’ Corriders said.
Rich vs. poor
New York law says properties must be uniformly assessed based on value. That “value’’ is an estimate of what the property would sell for. What’s the best way to estimate what a house would sell for? Look at what the house -- and houses like it -- sold for recently.
Syracuse.com reviewed roughly 2,300 home sales since 2016 and found discrepancies that separate rich from poor:
-- The most expensive houses sold for prices much higher than the assessment. On average, their owners should have been paying hundreds of dollars a year more in taxes.
Among the roughly 550 houses that sold for $140,000 or more, 87 percent sold for more than the city’s assessment.
On average, those high-end homes sold for 30 percent above assessment. If the assessments matched the sales prices, the owners would pay an average of $1,300 more a year in taxes.
-- At the other end of the spectrum, low-priced houses tended to have assessments that were higher than sales prices. Those owners likely were over-taxed.
Of the roughly 550 houses that sold for $70,000 or less, 75 percent sold for less than the assessed value. On average, the sale prices were 20 percent below assessments. If the assessments were reduced by that amount, the owners would pay an average of $395 a year less in taxes.
Clifford acknowledged that some wealthier homeowners benefit because the city cannot keep up with changes in the market.
But he defends the city’s assessments as “pretty tight,’’ especially compared with other New York cities.
“By no means are we perfect, but I think we’re better off than a lot of the municipalities I talk to,’’ Clifford said.
Assessments often do not reflect recent sales prices.
‘I think we can do more’
Clifford cautioned that comparing individual house prices to assessments can be misleading. For example, he defended the assessment on Love’s house, which far exceeds the $46,000 she paid for it, because Love bought the house from a deceased person’s estate. Estate sales are not good indicators of market value, he said.
Despite those caveats, assessors rely on recent home sales to appraise properties. Syracuse officials concede they could do a better job keeping assessments current, especially for high-end homes.
The assessors can’t keep up, Clifford said.
“It’s a matter of us not doing our job to catch up with some of these,’’ Clifford said. “I think we can do more. The market changes faster than we can react, so I think we really have to do more to try to catch up.’’
Although the city doesn’t do a full reassessment annually, the four residential assessors tinker around the edges, changing about 1,500 to 2,000 assessments each year, Clifford said.
About half those changes are based on building improvements, demolitions or other physical changes. The other half represent changes based on market price.
‘Exactly what you’d expect’
Willie Jones, a 74-year-old retiree from Lockheed Martin, said he told his grandchildren to sell his house on Croly Street after he dies, not live in it. He said his two-block-long street has deteriorated because of crime, noise and drug use.
Michael Greenlar | mgreenlar@syr
Willie Jones. of 115 Croly St., said property values on his street have been depressed by crime and drugs in the neighborhood. Behind him is the Parkside Commons apartment complex.
The house he has lived in for more than 40 years, directly across from a sprawling housing project, has not gained value like his friends’ houses in more affluent areas, he said.
Jones said he was knocked to the ground and robbed in his driveway a few years ago, despite two security cameras mounted on his house.
“All kinds of drug activities going on over there,’’ Jones said, nodding toward the Parkside Commons apartment complex. “I don’t like it, because it lowered the value of our house.’’
Jones’ house is assessed at a full market value of $67,000. He’s not sure if he could sell it for that much. One block down Croly Street, a house twice the size of his sold in 2016 for $30,000.
He’s taxed the same as houses in more desirable neighborhoods.
On Mildred Avenue, a well-manicured middle-class street in Eastwood, there’s a house larger than Jones’ that sold for $107,500 in 2014. It sold again in 2017 for $120,000.
But it’s assessed at $64,000, lower than Jones’ house. The city’s estimate of the value has not changed in at least 12 years, Clifford said.
Out of 13 houses on Mildred Avenue that sold during the past three years, all 13 sold for more than the assessed value. Nearby streets were the same. That neighborhood has one-third the poverty rate of the Croly Street area.
Among some real estate professionals, the problem is an open secret.
The nonprofit Greater Syracuse Land Bank has acquired hundreds of properties in distressed neighborhoods after the city seized them for back taxes. (The land bank owns two parcels on Croly Street, for example.)
After inspecting newly acquired properties, the land bank routinely asks the city to lower the assessments. This year, the city cut the assessments on 108 land bank properties by an average of 42 percent. The reductions don’t require a fight.
“We just email the information over to the assessment office,’’ said Katelyn Wright, the land bank’s executive director.
Property assessments are too high on many poor streets, Wright said. Four years ago, her organization collected real estate data across all neighborhoods in Syracuse and compared assessments to home values.
“It’s exactly what you would expect,’’ Wright said. “The middle-class neighborhoods were being under-assessed and in the low-income neighborhoods, they’re being over-assessed.’’
Who pays too little?
Neighborhoods with the fastest-rising home prices benefit the most from outdated assessments. Topping that list is the student rental neighborhood along Euclid Avenue, east of Syracuse University. Other examples are common in upscale residential areas.
University area: A three-unit rental property on Lancaster Street sold last year for $525,000. It’s still assessed as though it were worth half that much. That saves the out-of-town owner as much as $8,000 a year on his tax bill.
Strathmore: Onondaga County Executive Ryan McMahon sold his house on Carlton Road last year for $170,000. It remains assessed at a full value of $135,000.
Winkworth: Among recent sales on Austin Avenue, where Mayor Walsh lives, five out of five sold for more than their full-value assessment, by an average of about $26,000. (Walsh’s house is not among recent sales. He bought it in 2006 for $139,000 and it’s assessed at a full market value of $160,000.)
Sedgwick: A single-family home at 7 Brattle Road sold for $675,000 in 2017. The city still values the property at $378,205, nearly $300,000 less than the purchase price.
East Side: Allen Street, which features large Victorian homes, recorded 12 sales since 2016. In each case, the sales price exceeded assessed value, by an average of more than $40,000. One house sold for $240,000 but is valued by the city at $128,000.
Higher priced homes in Syracuse are often under-assessed.
Tiptoeing toward equity
Syracuse assessors often take it easy on homeowners who are in line for big assessment hikes. Clifford said his informal policy is to limit most increases to 20 percent or less.
“We don’t like to double somebody’s assessment in one year just because market values have gone up in their neighborhood,’’ Clifford said. “That’s not really a very fair way to do it. We’ll increase it some, and then look at it again in a few years.”
That approach appears to ignore state law, which requires all properties to be “uniformly” assessed based on current value. The law says nothing about phasing in assessment hikes. But Clifford said it would be unfair to sharply hike assessments unless all homes are subjected to revaluation.
The city’s informal policy is another sign that reassessments should not be delayed: The longer city assessors wait to revalue homes, the more likely some properties will need shocking assessment hikes to get back in line with market prices.
When assessments are uneven, the best solution is to reappraise every property at 100 percent of market value, according to state tax officials and other experts. Walsh’s administration is considering that option. It’s expensive.
A citywide revaluation would cost an estimated $2 million, plus extra money each year afterward to keep assessments current, Clifford said. But it would improve the accuracy and fairness of taxes.
Revaluations are often politically unpopular, especially among people who are likely to face assessment increases. The previous two mayors, Stephanie Miner and Matt Driscoll, also considered revaluation but ultimately decided against it, Clifford said.
“Selling it might be difficult,’’ he said.
In the near term, city officials are trying to improve their technology to make assessments more accurate. City data specialists are working with Johns Hopkins University, through Bloomberg Philanthropies’ What Works Cities program, to develop a new computer model they hope will help Syracuse assessors track changes in property values more efficiently, said Sam Edelstein, chief data officer.
Each assessment change requires a site visit from one of the city’s four residential property inspectors. The new model is intended to help assessors better target which properties have gained or lost value. City officials hope to use the software for the 2021 assessment roll, Edelstein said.
‘Who has the ability to pick up and leave?’
Wright, who worked as a city planner before joining the land bank, said it’s time for the city to do a comprehensive revaluation to make assessments fair.
“Too much time has passed, and everything’s gotten out of alignment,’’ she said.
But there are risks, she said. The city should seek authorization to phase in the new assessments, to avoid alienating well-to-do owners and depressing property values, she said. Otherwise, the result could hurt the city as a whole.
“Let’s say you do a comprehensive revaluation of all the properties. The taxes are going to go down in the low-income neighborhoods and up in the middle-class neighborhoods, and that’s going to be more fair,’’ Wright said.
“But who has the ability to pick up and leave because they’re pissed off their taxes went up? And is that going to create a ripple effect and let the pendulum swing back, when suddenly the market is flooded with homes for sale?”
Revaluation does not increase tax revenue for the city. It merely reapportions how the burden is shared among taxpayers. There’s only one reason to spend money on revaluation: fairness.
Yinger, the Maxwell School professor, said that’s a strong enough reason. If assessments slip too far out of alignment, cities risk losing the trust of their residents.
“One of the things I worry about is that perceptions of unfairness are going to undermine faith in local government,’’ Yinger said. “Why should I be paying one rate while my neighbor is paying half the rate? Or the rich guys across the city are paying half the rate? It’s just not a good recipe for well-functioning local government.’’
Jacqueline Rudisell, a child care worker, said she doesn’t believe her house on Bertram Place would sell for the $57,500 she paid for it in 1990. Nearly three decades later, the city values it at $73,700.
She recently bought the house next door for $35,000. The city pegs the market value of that home at $61,500. That difference represents about $800 more in city, school and county property taxes each year.
Rudisell said she had never thought about the difference between the sales price and the taxable value. And she has never asked the city to lower the amount.
“I will now,” she said after reviewing the numbers with a reporter. “I’ll go down there on Monday.”
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