--- In [email protected], Allan Peterson <[EMAIL PROTECTED]>
wrote:
>
> Correct me if I am wrong
> If I was to buy a condo for 500,000 I would be pay tax on a
value of 500,000 without the abatement. With the abatement I would
be paying tax on a value of 250,000 for that same condo. My home in
asbury is worth $450,000 but I am paying tax based on a value of
100.000. Who has the better deal? Until the town is appraised I
think the current owners make out better. Especially since the tax
per $100 is so high in Asbury.
>
> Am I missing something? Seems to me that this was a needed step
inorder to sell the units Otherwise they would be taxed too high.
>
You are partly correct. The equalization rate in AP is around 50%
(I'm off a little but humor me). That is based upon OLD values at
least, since it is actually much lower. It is unlawful to reassess
on resale (but it is done anyway). For instance in my case I was
reassessed because they finally caught up with the permits/work done
by the former owners. It took 2 years. The assessor simply changed
the depreciation deduction from her estimate. She showed me that she
was well within the AP equalization rate (the truth of the matter is
that my house is still worth several hundreds of thousands more and
if it were assessed at 50% my taxes would double - which they may in
a couple of years.
Now as to the abated condos. Because they are under a PILOT, I guess
there is no prohibition for using sales price, which they are doing.
I don;t know if it would meet the definition of reassessing upon
resale, but the city looked at what they would be getting under
different scenarios. The formula uses the sales prices of the
condos, not an assessment. The city claims under the abatement they
don't lose anything from its share of what conventional taxes would
be. What the abatement does is cut the county out (it only gets 5%)
and the schools (they get 0).
If you pay $500K for a house in AP, it probably has an assessment of
around $150K and maybe pays $7,000 in taxes. The City's analysis
shows that an abated $500K condo closing in 2004 would have
conventioanl taxes of around $13K and the city's share would be
around $7,200. The PILOT is structured so the city gets around
$7,600, more than conventional taxes. The analysis also shows that
if that same condo (same price) closes in later years, the
conventional taxes would be lower (falling ratios) and the city
still collects $7,600. A lot of ifs in my opinion.
So for the moment, it may be equal, but when revaluation comes
around exisitng homeowners are going to get wacked. Because of the
permits, my taxes went up from around $6,800 2 years ago to over
$9K. If revalued at where I think the market really is (depending
upon the ratio) they would be much higher.
The reality is that in lower income areas the taxes are higher.
Crazy ain't it? On LBI, the average tax is around $5,600. I think it
is much higher here on homes.
My firm worked many years ago consulting with NYC on real estate
taxes. The reality is that a municipality figures how much money it
needs. Then it estimates how much revenue it has from other sources.
The remainder is how much they must raise from real estate taxes.
They can reach that amount through any combination of ratios and tax
rates. You can raise/lower/hold steady one or the other independent
from the other according to what you must raise in revenue. The
problem as I pointed out long ago, is that when you have really one
source of revenue (real estate taxes - and primarily residential
real estate taxes) you have a never ending cycle of raising real
estate taxes.
The solution? New sources of revenue (good luck with primary focus
on condos) or cut spending. No rocket science to it - just dollars
and cents, which is why most of us get on the city over the budget.
Anyone do a survey to see how many AP residents are employees of the
city? Makes you wonder if the city government runs to keep people
employed. I wonder how many jobs could be sacrificed? Imagine if we
could find new sources of revenue - say sales taxes? You are never
going to get that with a canyon of condos and no significant
commercial real estate base. Revaluation may kill the AP market if
they don't lower the ratio or tax rate or both. The city budget is
ballooning. You can have revaluation and change the rate and/or
ratio to raise the same amount of taxes as today. Have any new
ratables been delivered from this project's new construction four
years after the plan? No. IN fact, Partners protests any assessment
increases on its property which it bought from us.
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