In a declining real estate market, Woodstock residents face the prospect of paying a higher share of county and school taxes for years to come unless the town follows the lead of neighboring communities and conducts a comprehensive reassessment of property values, known as a revaluation.
That conclusion emerged from a February 21 interview in which the town assessor, Marc Plate, elaborated on a public presentation that he delivered recently at the Community Center. A townwide revaluation, said Plate, a lifelong local resident who has served as assessor for nearly seven years, would be Woodstock’s first since 2004.
A revaluation would require authorization in the form of a Town Board resolution. If the board were to take such action sometime soon, the revaluation could be implemented in 2014, since the process takes roughly a year to complete. Although the gross cost of the undertaking would be about $38,000, the net cost to the town would be reduced to approximately $14,000 following reimbursement by the state on a per-parcel basis.
“If we don’t do a revaluation, it could cost homeowners hundreds of dollars more in taxes in the first year and thousands more in subsequent years,” said Plate, referring to county and school taxes; town taxes, as established by the municipal budget adopted by the Town Board, are a separate matter. Plate emphasized that his main purpose was not to champion a revaluation, but to inform the public about property assessments and their impact on taxation.
Plate described the town’s situation as follows. The local real estate market has declined steadily since 2006, when the average sales price for a Woodstock house peaked at $458,000, up from $330,000 just two years earlier. The average price thus far in 2012 is $332,000, reflecting a return to the 2004 range and a decrease of $7,000 from last year.
For the purpose of computing property taxes, Woodstock currently assesses properties at 95 percent of their market value, based on comparable properties that sold recently — houses that are similar in terms of factors such as style, square footage, acreage, and the number of bedrooms and bathrooms. Accordingly, a property assigned a market value of $100,000 would be assessed at $95,000.
Maximum equalization rate
A mechanism devised by the state Office of Real Property Services (ORPS), called the equalization rate (EQR), is employed to calculate a municipality’s share of county and school taxes. The EQR is equal to the sum of the locally determined assessed values of all properties sold in a year divided by the ORPS’s estimate of the total full value of those properties.
The EQR is adjusted annually as needed to account for fluctuating sales prices in the municipality — the higher the EQR, the less a town’s total value, and vice versa. As a rule of thumb, said Plate, a change in the EQR produces a corresponding change, in the opposite direction, in the property tax rate; for example, a 2 percent increase in the EQR will lower the property tax rate by 2 percent.
Reflecting the steady decline in local sales prices, Woodstock’s EQR has increased in recent years, from 83 percent in both 2008 and 2009 to 91 percent in 2010, 95 percent in 2011, and 100 percent in 2012. This year’s EQR reflects a total assessed value in 2011 of $1,279,978,091 and an estimated full market value of $1,309,546,963, yielding a ratio (that is, the EQR) of 97.74 percent, according to Plate.
“I added 2 percent to the ratio to claim a 100 percent equalization rate for 2012, to account for a slight downward market trend in 2011,” the assessor noted in a February 29 e-mail. Under state law an EQR cannot exceed 100 percent. Consequently, Woodstock faces a decision: If sales prices continue to fall in 2013, the town will have only one legal recourse — a revaluation — if it wishes to contain its county and school tax payments.
“There are only two ways to lower our assessments: raise the equalization rate or do a revaluation,” said Plate. “Since our equalization rate is already at 100 percent and New York State’s constitution prohibits an equalization rate above 100 percent to account for a town’s decreased value, all we can do is a revaluation.”
In Plate’s view, the time is ripe for a revaluation. “It is always wise to do a townwide revaluation in a declining or stable real estate market because assessments will go down,” he explained. “Property owners desire lower assessments in a ‘down’ market, as opposed to the higher assessments that would result from a revaluation in an ‘up’ market. So it’s easier to do a revaluation when prices are decreasing — assessments will be lower, and that’s what everyone wants.”
The assessor added: “My job is to keep assessments as equitable as possible. I’m very conscientious about that, but all of a sudden our properties are being compared to higher-assessed properties. I want to keep the town’s value in line with recent sales, and also to keep our taxes in line.”
Other towns taking action
The case for a townwide revaluation in Woodstock is made more compelling by the circumstances in neighboring communities. According to Plate, at least ten of the other 20 municipalities in Ulster County, including Olive, the city of Kingston, and Saugerties, plan to conduct a revaluation or an annual reassessment by 2013.
“Their purpose is to change assessments to more accurately reflect current residential sales prices,” said Plate in his presentation. “Since sales prices have been declining, property assessments will go down. As a result of the revaluations, these towns’ full market values will go down. If a municipality’s full market value decreases more than other municipalities’ in a taxing district, its property owners’ share of the county and school taxes will decrease. Towns that cannot adjust their assessments and reduce their town’s value will pay a higher share of taxes.”
According to a recent ten-year study, covering the period 2003 to 2012, Woodstock this year will pay a 7.2 percent share of the total Ulster County tax, an increase of nearly 35 percent since 2004. The share is the third highest among municipalities in the county, after Saugerties, at 9.7 percent, and the city of Kingston, at 8.5 percent. Meanwhile, from 2004 to 2012, Woodstock’s share of the tax levy for the Onteora, Saugerties, and Kingston school districts increased by 6 percent, 18 percent, and 22 percent, respectively.
In relation to neighboring communities, however, Woodstock has been taxed lightly at the town level in recent years. A 2010 comparison of properties with an equal market value of $200,000 in municipalities throughout the county shows that such a property in Woodstock (whose effective EQR at the time was 83 percent) was assessed at $166,000. The owner of that property paid $573.85 in town taxes for the general and highway funds — an amount that was 21 percent less than the countywide average of $692.76 and 144 percent less than the $1,403.08 paid by a comparable property owner in New Paltz, where local taxes were the highest in the county.
The need for a revaluation would be less pressing if the local housing market were to rebound. Since such shifts are hard to predict, however, in Plate’s view it is preferable to choose the safer course by conducting a revaluation than to postpone taking action.
“If the real estate market, which is showing some signs of a rebirth, should come to life and prices were to start steadily increasing, the need to do a town revaluation wouldn’t be as important,” said Plate. “The fear is that if the market were to go down further, Woodstock would be at a disadvantage. We’re not in dire straits at the moment, but it would be better to do a revaluation now, since it takes a lot of preparation.”++