Binghamton doesn’t assess properties at 100% for its tax rolls: Why it matters

When Broome County released its 2021 property assessments earlier this summer, Binghamton residents confirmed the latest calculation — an equalization rate that increased by 3% from the year before.

While the rate balances fluctuating home values, some officials are worried the scales are tipped unfairly.

The city last completed a full reassessment in 1993, said attorney Paul Sheppard, chair of Hinman, Howard & Kattell’s real property tax assessment and condemnation practice group, and he said the effects of revaluation gaps on the community are significant.

“The biggest problem with that is that as property values rise and fall in different sectors, the assessments basically don’t change,” said Sheppard, who added that New York is one of just five states that do not require periodic assessment revaluations, and the issue isn’t unique to Binghamton.

“The Town of Union didn’t even do it in 1993,” Sheppard said. “They haven’t done it ever.”

In Binghamton and other municipalities with equalization rates, over- and under-assessments result in a greater tax burden for owners of lower-value homes.

However, there are no plans or discussion in the mayor’s office or among city officials to pursue a full property reassessment.

“If we look at the overall changes that have occurred in the city, and in particular the downtown area, we know that major shifts have occurred,” Councilwoman Angela Riley said. “Reassessment will allow us to fairly tax and assess based upon where we are today.”

Who wins, who loses with Binghamton’s assessment

Since people with lower incomes purchase properties at lower market values, they are hit the hardest by the annual equalization rates.

“Those tend to be more stable in terms of their value,” said Larry Clark, director of strategic initiatives at the International Association of Assessing Officers. “They don’t increase as dramatically as the homes in the upper market levels, the upper price levels, and then the tax burden tends to shift from those upper market levels down to the lower.”

Owners whose property values have increased exponentially since earlier reassessments see the greatest benefits of the system.

“As the relationship between the assessed value and the actual market value decreases, their share of the property tax burden also decreases in proportion,” Clark said.

Councilman Joe Burns said this is why some Binghamton residents are afraid of a full reassessment.

“They think that if you reassess, that their taxes are going to go up, and it’s not necessarily true,” Burns said. “The everyday business owner, the everyday homeowner, their taxes possibly could go down. I would think that a third of the people’s taxes would go down if we reassessed.”

Riley said many, especially longtime residents, may not understand that even though the value of their homes may have increased, the tax rate may go down.

How Binghamton’s equalization rate works

Although residents can appeal assessments, whether they think they are over-assessed or under-assessed, they are more likely to do so if it’s the former.

“There’s lots of folks flying under the radar,” Sheppard said. “And at the same time, there’s still lots of people who are paying more than their fair share.”

Sheppard explained:

If a property was assessed in 2006 at $100,000 at a 100% equalization rate, then 15 years later, the property is still assessed at $100,000. However, with a 79% equalization rate in 2021, the city says the property is worth $100,000 divided by .79, elevating the property’s worth to $126,582.

“In reality, that property might be worth $150,000,” he said. “The city has not gotten back in annually to look at the different properties. They’ve just kept that same number that they’ve had on the books since 1993 and left them there.”

Sheppard said a solution is to add more value to properties when there are significant changes, including additions of swimming pools or garages, and compare how the properties were assessed to what they are worth. But Binghamton’s failure to do that results in inconsistencies.

Equalization rates, Sheppard said, don’t truly balance tax rolls because only consistent reassessments would accurately set a baseline each year.

The coefficient of dispersion, a statewide statistic determined by the New York State Department of Taxation and Finance, which evaluates the consistency of assessments, shows a disparity of 25% in Binghamton, Sheppard said.

“That’s a bad number,” he said. “A 25% coefficient of dispersion means that any particular property could be 25% above or 25% below its market value on average.”

How Binghamton business tax rates are determined

For commercial properties in the city, the Homestead Rule imposes different tax rates on residential and commercial properties.

“The commercial properties are losing big time,” Sheppard said. “They are paying taxes at a much higher rate than the rest of the city is. In fact, the city’s tax rate on commercial properties is, if not the highest in the state, one of the highest in the state.”

Sheppard said the two-tiered tax system pushes commercial properties away from the city and is driving market values down even lower.

“It’s a cycle that keeps repeating itself as those values go down, but the taxes stay the same,” he said. “You get fewer and fewer people who are willing to make that investment in the city.”

Ron Sall, owner of Sall-Stearns, a men’s clothing store on Court Street, said the higher taxes on commercial properties is the city’s way of saying businesses can help more.

“You ask a business if they’re supposed to help out or not, and the answer is yes, of course we want to help out the community. Do I want to pay this much taxes? No,” Sall said. “It’s a double-edged sword as a retailer and a business owner.”

Sall also said the system is not bad right now.

“I don’t know if anybody’s losing their building or going out of business,” he said. “We expect to pay our fair share. We have to be the leaders in the community if it helps the community.”

Why won’t Binghamton complete a full reassessment?

“(Reassessment) is an expensive process,” Sheppard said. “They would have to go out and hire a company that does evaluations. Probably would take a year or two to complete that and probably cost hundreds of thousands of dollars, if not more than that.”

Cost, according to Binghamton Mayor Richard David, is one of several reasons.

“I think this is actually the worst time to do a reassessment because of the current condition of the housing market,” David said. “By the time you’re complete, I’m sure that those values would have dropped.”

Both Burns and Riley believe a reassessment would benefit the whole city.

And with rapid and increasing changes throughout Binghamton, Riley said reassessing more often would allow for further improvements to the city.

“I’m hoping if we are able to recoup some of the losses, balance out the taxation, so people aren’t overly taxed, then we can use some of the money to continue to assist in maintaining, creating and supporting low-income housing and neighborhoods that have been impacted by bad landlords.”

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