Board of Trustees

Town Board Meeting Minutes – March 4, 2014 607 SPECIAL TOWN BOARD MEETING Rutherford Hall Village Hall March 4, 2014 A Special Meeting of the Town Board of Scarsdale was held in Rutherford Hall of Village Hall on Tuesday, March 4, 2014 at 8:00 p.m. Present were Mesdames Eisenman and Brodsky, and Messrs. Lee, Mark, Martin, Stern and Steves. Also present were Acting Village Manager Pappalardo, Counsel to the Town Esannason, Custodian of Taxes McClure, Town Clerk Conkling, Town Assessor Albanese, Assistants to the Village Manager Azrelyant and Goodwin, and Administrative Intern Schnabel. Mr. Steves presided. ******* Minutes The minutes of the Special Town Board Meeting of February 25, 2014 were approved on a motion entered by Trustee Mark, seconded by Trustee Eisenman, and carried unanimously. ******* Public Hearing Mr. Steves stated that he would like to re-open the public hearing with respect to the proposed Local Law to Adopt the Provisions of Section 1903 of the Real Property Tax Law, Commonly Referred to as the “Homestead Tax Option”. This public hearing is a continuation from the Board’s last meeting held on February 25, 2014. Mr. Steves noted for the record that the Board has been given copies of all written correspondence on this topic. Copies of this correspondence are available to the public at the table at the entrance to Rutherford Hall. The meeting will operate under a five minute rule for public comment; those who would like to make a comment are invited to approach the podium and identify themselves and where they reside. In the interest of time and respect for fellow community members, please keep your comments as non-repetitive as possible. Please keep in mind what has already been said and add to the comments rather than repeat them. Factual input would be appreciated. The Board has heard a lot of input - technical input, written input – on this topic. Mr. Steves opened the public hearing at this time. He requested that if there are a number of people who would like to speak, that they should form a line rather than waste time with people moving from their seats. Town Board Meeting Minutes – March 4, 2014 608 Linda Doucette-Ashman, Chair, League of Women Voters Ad Hoc Committee on the Homestead Tax Option. In order to comment this evening, the League prepared a statement and in the interest of time, she read excerpts from the following statement. She stated that the full statement will be provided to the Board and be provided on their website and a more detailed report of their study will be prepared and released in the coming weeks: “On Thursday, February 27, 2014 the League of Women Voters of Scarsdale (LWVS or the League) held an information meeting, open to the public, regarding the adoption by the Town Board of the Town of Scarsdale (Town Board) of the provisions of Section 1903 of the Real Property Tax Law, commonly referred to as the Homestead Tax Option. During the information meeting, I, as Chair of the LWVS ad hoc committee on the Homestead Tax Option (the Committee), presented a brief overview of the Homestead Tax Option, including the purpose of the Tax Option and the effect of its adoption, and panelists John Wolham, Regional Director of the New York State Office of Real Property Tax Services, New York State Department of Taxation and Finances, and Nanette Albanese, Scarsdale Town/Village Assessor, responded to questions from the Committee and the audience regarding the Homestead Tax Option. A consensus meeting of the members of the League immediately followed. Background In municipalities that have not been reassessed in many years, the assessment of residential properties is typically lower compared to their full or market value than other types of property such as commercial property. In these situations, residential properties as a class would bear a larger portion of the tax burden after a reassessment. As a result of the concern for tax-burden shifts to residential homeowners, the law in 1981 provided for the Homestead Tax Option. The Homestead Tax Option requires every property to be classified as either homestead, which includes single-family homes, or non-homestead, which includes commercial property. In addition, condominiums built as condominiums must be included in the homestead class of property. Adoption of the Homestead Tax Option allows the assessing unit to set two different tax rates: a lower tax rate for residential property (homestead) owners and a higher rate for all other property (non-homestead) owners. The tax rate for the homestead owners is based on the share of property taxes paid by the residential class of property owners in the year before the new assessments from the revaluation are used. The purpose of the Homestead Tax Option is to help communities prevent a shift in the tax burden from commercial properties to residential properties at the time of revaluation. Adoption of the Homestead Tax Option is not mandated; it is a choice for the local governing body of the assessing unit to consider at the time of revaluation, typically to insulate residential property owners, as a group, from bearing a larger share of the tax burden after revaluation. A town-wide revaluation has been undertaken in Scarsdale with the new tax assessments to be implemented on the June 1, 2014 assessment roll. If the Homestead Tax Option is to be adopted, the Town Board must adopt a local law adopting the Homestead Tax Option sixty days prior to the Town tentative assessment roll filing date, June 1, 2014. We understand that the Town Board is not looking to adopt the Tax Option for the purpose of preventing a shift in the tax burden from commercial properties to residential Town Board Meeting Minutes – March 4, 2014 609 properties by establishing two separate tax rates1 since the shift in tax burden would be negligible. The Town Board is considering adopting the Homestead Tax Option only to “value and assess certain qualifying condominiums in the same manner as single-family residences,” the result of classifying condominiums, built as condominiums, as part of the homestead class. If the Homestead Tax Option is adopted, the classification of condominiums, built as condominiums, will change the method of valuation for those condominiums from the income approach (the method required by law to be used for all cooperative and condominiums) to the market value approach (the method used for single-family homes, which is essentially based on fair market value or the resale price). Currently, there is one property that contains units that are condominiums, built as condominiums, in Scarsdale, One Christie Place. Adoption of the Homestead Tax Option requires the inclusion of the residential condominium units at Christie Place in the homestead class of property thereby requiring a change in the method of valuation of those units from the income value method to a fair market value method.4 Based on preliminary tax reassessment data provided by Mr. Wolham to the Town Board, this change would result in a 116% increase (versus a 35.48% increase if the Tax Option is not adopted) in share of tax levy to the condominium owners as a class. With the adoption of the Tax Option, single-family homeowners as a class would see a .49% decrease in share of tax levy (versus a .23% decrease if the Tax Option is not adopted). The League believes the potential harm this change would create for the One Christie Place residential condominium owners outweighs the potential benefit its implementation may provide at this time. Recommendation The League does not support the adoption of the Homestead Tax Option by the Town Board of Trustees. The League of Women Voters reiterates its long-standing position of advocating for an increased supply of housing that provides residential alternatives for long-term Scarsdalians. The League appreciates the opportunity to comment on this issue. We thank Ms. Albanese for her participation in our information meeting and members of the Village Administration, including Village Manager Al Gatta, Village Clerk Donna Conkling and Ms. Albanese, for the help they have provided the Committee in its preparation and study of the Homestead Tax Option.” At this time Mr. Steves noted that Village Manager Gatta was absent this evening due to an emergency medical procedure from which he is recovering. He will be back at work as soon as he can. Robert Berg, 32 Tisdale Road stated that the residents of Christie Place have passionately argued that the enactment of the Homestead Tax Option would unfairly single them out with a huge property tax increase. They are living in a topsy-turvy world. In the real world, the Christie Place residents have, for up to five years, received a tremendous property tax break paid for by the rest of Scarsdale’s taxpayers. With or without the Homestead Tax Town Board Meeting Minutes – March 4, 2014 610 Option, they will continue to receive a big break on their property taxes. They should be thankful revaluation didn’t come along more quickly and they should thank Scarsdale taxpayers for subsidizing nearly $5 million of their property taxes for the last five years. But removing tax loop holes is a sticky business. That’s why Congress continues to provide large tax breaks to our multinational oil companies, the most profitable companies in the world. Scarsdale government is supposed to be different. The Board has the power and the obligation not to punish the Christie Place residents, but to rather bring them up to the same level playing field as more than 5,000 other residential property owners in Scarsdale who are taxed based on the market value of their property. We as a nation and as a Village operate under the fundamental policy of equal protection under the laws. That means as government officials, you don’t discriminate against one group or another. We treat all residents as equals under the law; at least that is how we are supposed to govern. Now that Scarsdale is finishing its first revaluation in 44 years, the Homestead Tax Option allows the Village to treat the Christie Place residents the same as 5,000 other Scarsdale residential property owners are treated. It is the right thing to do as a matter of public policy and governance. The arguments of the Christie Place residents undoubtedly elicit considerable sympathy on your part. But really, as governmental officials sworn to uphold equal protection under the law, sympathy cannot affect your principled determination that like-valued properties should pay like property taxes. Otherwise, you are discriminatorily creating a very small, protected class of property owners who will be provided with extremely beneficial tax treatment indefinitely in stark contrast to the vast majority of Scarsdale property owners. If there were no Christie Place, how would the Board decide on the Homestead Tax Option? There would still be the proposed condos on 2-4 Weaver Street to consider. Those condos will not be age restricted and they will be luxury condos. Mr. Berg stated that he couldn’t imagine the Board would have to think twice before deciding to adopt the Homestead Tax Option so that those condos and future condos would pay property taxes on the same basis as all other residential homeowners in Scarsdale; based on market values. The inconvenient truth that Christie Place exists and that these residents enjoy the tax break should not change the Board’s analysis. Why are these particular households favored with a massive, permanent property tax break when all of the other similarly situated 55+ homeowners or indeed, property owners of any age in Scarsdale pay full freight? There is simply no principled reason by which you can justify such a “rob Peter to pay Paul” approach to governance in the Village of Scarsdale. While the impact on the Christie Place residents will undoubtedly be harsh and the resulting monetary benefit to the non-Christie Place owners relatively slight, that balancing analysis cannot control your decision here. It is simply not fair to discriminate in favor of one small group, and impose the costs of such discrimination on all other property owners. All residential property owners should be treated equally under the law. Enactment of the Homestead Tax Option eliminates a tax loophole that has unfairly benefited the Christie Place condo owners since sales began in 2008. Residents who feel badly for the Christie Place residents are free to contribute to a “Save the Christie Place Residents Property Tax Subsidy Fund” which they can create, but as Town Board Meeting Minutes – March 4, 2014 611 government officials, you should not impose such an involuntary equivalent upon Scarsdale’s property owners. The bottom line, then, is that you need to be true to the fundamental principles of fairness and equity to all Scarsdale taxpayers. However sympathetic you are to the “plight” of the Christie Place owners, you must not discriminate in favor of a select group of residents. We as a Nation and as a Village believe in equal protection under the laws. You must enact the Homestead Tax Option so that a $1.5 million condo at Christie Place pays the same village and school property taxes as a $1.5 million Tudor in Greenacres, a $1.5 million ranch in Quaker Ridge, and a $1.5 million Colonial in Fox Meadow. Elliott Rosen, 1 Christie Place, stated that he would not want to make the sympathy argument. He noted that he wrote a letter to the Scarsdale Inquirer approximately three weeks ago in which he stated that the ‘fairness’ argument made by the proponents of the adoption of the Homestead Tax Option, is an argument that in his perspective does not hold up. He stated that he thinks the fairness argument is a spurious one. He stated that he feels the fairness argument is a cover for an anti-development argument. He has been a Scarsdale resident for over 35 years and values the Village and his life here. He trusts the Village Board and the Board of Architectural Review and the values of this Village that there will not be runaway development in this Village. The idea that some backdoor method to prevent development under the rubric of fairness from his perspective is ridiculous. He asked the Board to be sympathetic. Robert Selvaggio, 16 Rochambeau Road, disagreed with Dr. Rosen. He does not think that this is not about development, but about fairness and good government. He is a pro development economist and has serious misgivings about the current tax situation and it has nothing to do with development. Until the approval of the Village-wide assessment revaluation that began in 2012, Scarsdale homeowners had all but lost confidence in the integrity of our own Village’s taxing authority. In the 43 years that had passed since the previous revaluation, massive inequities had developed. There was a real estate ad published a few years back that highlighted a Heathcote Road house on the market for $11 million that was enjoying a $70 thousand annual property tax, which amounts to approximately a $190,000 annual discount from the levy that other Scarsdale property owners were helping to pay for. He stated that while we all hate to see anyone’s taxes rise, there is no good reason for our Village to tax owners of single-family homes on an ad valorem basis and owners of condominiums and cooperative apartments on a separate and much lower rental income basis. As the tax code currently stands, single-family homeowners are paying not only their own property taxes but also about two thirds of the property taxes of our 42 neighbors who live in Christie Place condos. Either all homes in Scarsdale should be taxed on an ad valorem basis or none should be; either all should be taxed on a much lower rental income basis or none should be Either all Scarsdale residents over 55 years without school-age children should receive a tax preference or none should. I am sympathetic to the plight of our seniors on fixed incomes and would have no objection to such a Village-wide tax preference, despite my fear that such a preference would have a damping effect on school budget voter turnout from this important demographic. We as a community may find alternative means of funding Village and school Town Board Meeting Minutes – March 4, 2014 612 operations preferable to the property tax in which case we should have that conversation; but unless and until we find those means we need to ensure that our property taxes are levied across the board in an equitable constant proportion to market value, and we must re-assess market values frequently. He urged the Board to pass the Homestead Tax Option to help restore our citizens’ faith in the equitable distribution of property tax burdens by assessing all property taxes on the same equitable ad valorem basis to the extent of their authority to do so. To do otherwise would be a clear victory for crony capitalism. Village government must not arbitrarily enforce wealth transfers from Scarsdale homeowners, a small group of citizens who happened to buy their homes from those seeking a premium price based on a false promise of a continuing transfer of that wealth. Richard Garwin, 1 Christie Place, noted that he neglected to say at the last meeting that he lived in Greenacres for 55 years before purchasing their unit at Christie Place in 2010. He noted that to be fair, all homes in Scarsdale would be restricted to selling to those with at least one family member over 55 years of age as they are restricted at Christie Place. He stated that he did not think the other property owners would like this restriction on who they could sell their property to. If the condos are taxed the same as the single family properties, the taxes will increase by 116%; even more than that according to the Forum – 200%. The decrease in resale will be approximately $300,000. Not only would Christie Place homeowners have to pay additional tax, but their property values will be reduced as well. If that is true, then there will be 42 grievances filed. One should recognize that the method of taxation of Christie Place is legal under the law. The Village does have the option to adopt the Homestead Tax Option; however, that would pose a substantial burden on the residents of Christie Place. Chester Vogel, 1 Christie Place, felt that this issue is about fairness of value of property and the taking of property. If the Board adopts this legislation which will substantially increase the taxes at Christie Place, they are essentially taking a portion of their property by devaluing it. The Board has an obligation for equal protection of all its citizens, not just those that want fair taxation but also those that want fair protection of their property. He stated that he moved to Scarsdale from Chappaqua and paid more for the Christie Place condo than he sold his home for in Chappaqua. However, the cost of owning the home in Scarsdale including taxes and maintenance was going to be comparable to what they paid in Chappaqua. The condo is 1500 square feet, and gave up a home of 3,000 square feet. They are now living in a multi-family home, not a private resident. He stated that they invested in a garage that provides income to the Village. All of these things need to be considered when thought is given to changing the tax burden on Christie Place. Martin Kaufman, 322 Heathcote Road, stated that with respect to the differences between multifamily housing, condos and single family residences that is all accounted for in the market. The market provides an objective value. The revaluation that has been done is to assure that the comparable market value applies to each property. The basic principle is that markets create efficient valuations, taxation should be based on equivalent values and the object of the revaluation compels the Board to adopt the Homestead Tax Option. Robert Harrison, 65 Fox Meadow Road, noted that he sent a letter to the Board late this afternoon which he would like to refer to. As a 34 year resident of three different homes in Scarsdale and a past Village trustee who voted to spend about $ 1,000,000 to do a full Town Board Meeting Minutes – March 4, 2014 613 revaluation of all properties within Scarsdale to the extent of the laws available, I strongly urge the current Village Board to pass the Homestead Tax Option that would allow current condo owners to be assessed at fair market value reduced by any adjustments as determined by Tyler Technologies, the Village Assessor or the Town Assessment Review Board. Christie Place homeowners have raised the issue that they have a note for parking with $37,500 per year in interest. When the note is paid off, they will own those parking spots free and clear. They are spending approximately $3,273 on average per condo. He stated that he thought it would be fair to have that amount taken into consideration and reduce their assessed value. It has been brought up that at least one homeowner in Christie Place has to be at least 55 years of age. There are no restrictions on children in Christie Place. Someone who is 55 years or older could have a spouse much younger and have a child. There should be some adjustments made in consideration of different restrictions at Christie Place. Passage of the Homestead Tax Option by the Village Board would only effect about 17 % of the current condo owner’s tax bills. The School district would then be allowed to make an independent decision on passing Homestead as it would affect the 65 % of their tax bill for school taxes. Mr. Harrison stated that as it has been said, 57% of Scarsdale residents do not have children in the school system, yet they pay school taxes. Current condo owners will continue to get a tax break on their County tax bill versus other Scarsdale residential properties because the County is not doing a Reval. County taxes represent about 19 % of the condo property tax bill. By passing the Homestead Tax Option now, the Village Board will insure that any future condos built in Scarsdale will be taxed at fair market value and contribute fairly to the cost of running this Village. The Homestead Tax Option can only be passed when a Village wide revaluation is being done. The next Reval might not take place for at least 5 to 10 years subject to home values and Village budgets. With regard to Christie Place Condo owners, 30 were purchased from 2008 to 2010 and have benefited from substantially lower property taxes for 4 to 6 years and 11 were purchased in 2011 and will get 3 years of substantially reduced taxes versus the taxes paid for by all other residential properties. With regard to the future value of Christie luxury Condos with higher taxes, there is a scarcity value for these 42 condos in all of Westchester County. In his opinion, the values of these condos will be maintained even with a higher property tax than they currently have. These 26 condo owners pay a Scarsdale property tax of $10,903 to $12,419 versus a Scarsdale home owner with a similar fair market value paying $30,000 to $46,000 in property taxes per year. Finally the fundamental principle for Reval is to create fairness and equity for all Scarsdale taxpayers. If the Village Board does not pass the Homestead Tax Option, what will the Board say to the 726 Scarsdale homeowners whose taxes will go up over $ 5,000 with Reval versus 42 Christie Condos and any future condos built getting a substantial tax break for Town Board Meeting Minutes – March 4, 2014 614 years to come. Some current single family home owners will have their property taxes go up over $50,000. No special or select group should get special treatment and be subsidized by the rest of Scarsdale property owners. Please pass the Homestead Tax Option Law now with all of your wisdom for fairness and equity for Scarsdale. ******* Mr. Steves thanked everyone in the community who have taken the time to contribute to this issue and this debate. This issue is one that the Board has spent an incredible amount of time on. The Board has been educated on the issue and felt that there was a need to educate themselves and the public on the nuances of this decision. The Board understands its sensitivities. Each of the individual Board members are invited to make comments with regard to their positions that they will take later in a formal vote. He hoped that those present will respect and listen to those positions. This Board has taken this very seriously. Mr. Steves noted that one of the Board members, Mr. Martin, is not present this evening; however, but he is legally permitted to join the meeting and discussion via telephone and he has chosen to do so to the extent that it is technically possible. ******* Action Items Mr. Mark entered a motion to adopt a Proposed Local Law Adopting the Provisions of Section 1903 of the Real Property Tax Law, Commonly Referred to as the “Homestead Tax Option”, seconded by Ms. Brodsky. Mr. Steves requested any discussion from the Board. Before discussion, a call was placed to Mr. Martin for his participation in the discussion before a vote on the proposed local law was taken. Mr. Mark explained to Mr. Martin that if the phone call is lost, the Board appreciates the effort he is making; there is a roomful of people present and the meeting has gone through the public comment section. The law has been proposed on a motion and the motion has been seconded. The Mayor has called for comments from the Board and Mr. Mark stated that he will begin with his comments. Mr. Mark: “I have analyzed the Homestead Tax Option matter before this Board by starting with the basics: what it is intended to do, what it would do in this case, and how residents would be benefited or burdened. In my view, when the numbers are crunched, adopting the Homestead Tax Option will place an enormous dollar burden on the few condominium owners in Scarsdale with only a minimal dollar benefit for most Village residents who are single family residential homeowners. Given the level of public interest in this subject, I would like to explain the reasons for my decision to vote against adopting the Homestead Tax Option. I note that my view derives from the facts and circumstances as they have been presented to us. Town Board Meeting Minutes – March 4, 2014 615 First, some background. Revaluation does not raise additional taxes. It results in a re- allocation of how the aggregate tax revenues to be raised are borne by residents. Example: Assume pre-revaluation two homes: House A is valued at $700,000 and House B valued at $400,000. The amount of taxes to be raised is $60,000. House A pays $40,000 in property taxes. House B pays $20,000 in property taxes. Post-revaluation: House A is still valued at $700,000. House B is now valued at $700,000. The amount of taxes to be raised is still $60,000. However, House B now pays $30,000, a $10,000 increase and House A pays $30,000, a counterbalancing $10,000 decrease. Note that the re-allocation thus accomplished was solely the result of up-dating the values of the two homes. It was not the result of any change in the methodology used to value the homes for property tax assessment purposes. Now, to the Homestead Tax Option. Some have argued that the sense of fairness which motivated the decision to engage in the Village-wide revaluation should also prompt the Village to adopt the Homestead Tax Option. Having considered the matter, I do not believe the two scenarios are comparable and disagree. To put the matter in context it is noted that the primary purpose of the Homestead Tax Option is to allow a municipality to counter one anticipated effect of a village-wide revaluation. Because residential properties may (depending on economic conditions) appreciate faster or in greater amount than other classes of real property (commercial properties, for example) one effect of re-valuation may be to cause a greater proportion of the aggregate real property tax burden to be re-allocated to residential properties as a class than was allocated to that class of properties before the revaluation. Whether that sort of shift occurs at all, and whether it is significant will depend on the mix of different property classes in the municipality undergoing the revaluation. The more evenly divided property classes are between residential and other classes, the greater the potential shift and conversely, if the residential class greatly outnumbers the other property classes, the smaller the shift might be. Therefore the primary purpose of adopting the Homestead Tax Option is to allow a municipality to establish a preferential tax rate post-revaluation for residential properties which would allow that class to limit its aggregate allocated portion of the property tax burden to the pre-revaluation level as against other property classes. In other words, the adoption of the Homestead Tax Option could be used to counteract a reallocation of additional tax burden from non-residential classes of properties to the residential class of properties attributable to a village-wide revaluation. Town Board Meeting Minutes – March 4, 2014 616 That use of the Homestead Tax Option is not relevant to Scarsdale because as residential properties presently bear approximately 94% of the Village property tax burden there is not expected to be more than a minimal shifting of the tax burden effecting residential properties as a class, post re-valuation. There seems to be general agreement on this point among the members of the public who have commented on this issue, including a comment to that effect in the Scarsdale Forum Assessment Revaluation Committee Report of January 11, 2014. In fact, data recently prepared by the NYS Department of Taxation and Finance discussed later bears this point out. The data shows that rather than experiencing an increase in allocated tax burden, the residential class is expected to experience an aggregate decrease of less than one quarter of a percent without adoption of the Homestead Tax Option and less than half a percent decrease if Homestead Tax Option were adopted – there being an approximately one quarter of a percentage point difference between the two scenarios – which in either case are immaterial to this discussion. In Scarsdale’s case, if the Homestead Tax Option is adopted, the property class that would be most affected would be condominiums. This would come about because if the Homestead Tax Option is adopted, the methodology for valuing condominiums would change. Under present law (and unless the Homestead Tax Option is adopted), condominiums are taxed using a rental income approach (assuming a hypothetical rental income stream and hypothetical operations and capitalization costs). Multifamily rental apartments and co-ops are taxed the same way. If the Homestead Tax Option were adopted, instead of valuing condominiums as rental properties, they would be valued by using their market value, just as single-family homes are. Adopting the Homestead Tax Option would thus make a fundamental change in how condominiums are valued for purposes of assessing property tax. Multi-family rentals and co- ops would not be affected. Making such a fundamental change only in the case of condominiums is a significant distinguishing factor from how the reallocation among individual residential properties will come about as a result of the Village-wide revaluation. If that significant distinction were the only factor presented, it might not be a basis for not adopting the Homestead Tax Option, in my view. However, while adopting the Homestead Tax Option might have fairness as its purpose, its expected effect should be considered in order to conclude whether or not adoption would be fair. The relative benefits and burdens of adopting the Homestead Tax Option must be taken into account. Based on the particular circumstances existing in the Village, I do not believe that electing the Homestead Tax Option would produce a fair result for the following reasons: 1. There are 47 condominiums presently in the Village, 42 of which are in Christie Place. If the project at 2-4 Weaver Street is ever built there may be 11 to 14 more sometime in the future. In contrast, there are approximately 5,300 single family residential properties in the Village. Town Board Meeting Minutes – March 4, 2014 617 2. The New York State Department of Taxation and Finance has provided an analysis of the expected reallocation of Village and Town property tax attributable to the Village-wide re-valuation in two scenarios—with and without the adoption of the Homestead Tax Option. The analysis is based on preliminary re-valuation data and does not reflect changes that might result from informal hearings with property owners or from formal grievance proceedings. The analysis was presented by John Wolham of the NYS DTF at the Board of Trustees meeting on February 25, 2014 at which time the members of the Board and the public had an opportunity to ask questions about it and to comment generally on this subject. 3. The analysis provided by NYS DTF is in the record of the February 25, 2014 Board meeting and need not be repeated here. However that data did not translate the percentage information it presented to dollar amounts. 4. The expected dollar impact of adopting the Homestead Tax Option brings additional focus to the fairness analysis. In doing the analysis, the dollar amounts of both the Town and School District tax levies for tax year 2013 were used as these were the amounts used by the NYS DTF in its analysis. The School District levy is included because if the municipality adopts the Homestead Tax Option, the School District would then be faced with considering whether or not to adopt the Homestead Tax Option. If the municipality does not adopt the Homestead Tax Option, the School District will not have to consider the matter. Looking at the numbers produces the following results: Without adopting the Homestead Tax Option the Village-wide revaluation will cause: The residential class share of the aggregate tax levies to decline by $364,000 (a 0.22% decrease) and the condominium class share to increase $182,000 (a 0.11% increase). The average dollar decrease per residential property would be $68 and the average increase per condominium unit would be $3,900. With adopting the Homestead Tax Option the Village-wide revaluation will cause: The residential class share of the aggregate tax levies to decline by $761,000 (a 0.46% decrease) and the condominium class share to increase $595,000 (a 116% increase). The average dollar decrease per residential property would be $142 and the average increase per condominium unit would be $12,700. By focusing the analysis on the dollar impact of adopting the Homestead Tax Option, the relative benefits and burdens of doing so become clearer. For the condominium class, a relatively significant dollar burden would result, with a rather minimal dollar benefit to the residential class when looked at on an average per unit/per property basis. As the figures noted Town Board Meeting Minutes – March 4, 2014 618 are averages, it is expected that there will be a range of dollar amounts above and below these averages among individual properties and units. 5. In my view making a fundamental change in the methodology used to assess condominiums that produces a significant tax dollar burden on 47 condominium units and an insignificant tax dollar benefit for approximately 5,300 residential properties is not a fair result. It is not comparable to the re-allocation of tax burden among residential properties that is expected to occur from the Village- wide revaluation where no change in methodology is involved. 6. Further, since we are not considering adopting the Homestead Tax Option for its primary purpose – to re-establish pre-revaluation property tax allocations among residential and other property classes, it would seem that adopting it solely to change the methodology for valuing condominiums has a punitive quality that also strikes me as unfair. 7. There are other points to be made as to why adopting the Homestead Tax Option would be unfair and I leave it my fellow Trustees to raise those points if they find them persuasive. However, because of what I perceive as a material lack of comparability between the Village-wide re-valuation and its expected impact, and what the expected effect of the adopting the Homestead Tax Option would be, I do not believe that fairness compels the adoption of the Homestead Tax Option and intend to vote against doing so at this time.” Ms. Eisenman: “This has certainly been one of, if not the hardest decision which I have had to make since joining the Board four years ago. I have listened to all the arguments and read all the communications and will share the reasons for my decision. On the face of it, the fairness issue which says that we should all be taxed in the same manner after Reval and that condos should be taxed in the same way private homes are sounds right. As we have seen it is likely that approximately one third of homes will have their taxes raised, one third will stay about the same, and one third will be lowered. This appears to be a fair break down, however this is not the case with the very few condos that we have in Scarsdale. Fairness in applying the law is not always equivalent to fairness to individual persons. In this case the law evenly applied to all would not impact all equally. Condo owners would share an unequal burden of economic change and endure a great financial burden when these rules are implemented. The 42 condo units would see an enormous jump in their taxes, an increase which could force a number of them to sell their units and go elsewhere, and the sale prices would very likely be less than what the owners paid for their units. This seems very unfair to me. The condos in Scarsdale are a distinct minority of homeowners who have the right to protection from a burdensome tax option which I cannot believe was intended to work in such a way as to triple their tax burden. These owners, unlike home owners, had no inkling that Reval could so drastically change their lives. Frankly I don’t know if anyone was aware of this, or saw it coming, because it was never part of the discussion about Reval, which I recall was very thorough and extensive. No one ever Town Board Meeting Minutes – March 4, 2014 619 mentioned the homestead tax as an option otherwise it would have become part of the discussion from the get-go and we might have had these talks several years ago instead of now. Were we to enact Homestead, I believe we would be changing the rules in the middle of the game for condo owners who were working under a different set of assumptions than were house buyers or owners. Applying the Homestead Tax Option changes the rules and expectations in place at the time each owner purchased their condo, rules that influenced their financial calculations and the decision to invest in the purchase of their homes. This seems to me inherently unfair and a game changer for those owners. Taxpayers deserve to know on the front end what their tax obligations will be and not be surprised by sudden changes. The law does not allow for a compromise position, for a modest increase. It only allows for an all-or-nothing situation, one that may place great economic hardship on some of the condo owners. The Board can revisit homestead when we update our assessments, which can be done every five years or so, but to force that increase on top of the overall reassessment right now seems to me an inherently unfair act. My vote was cast because I could not in good conscience decide to do something that, while permissible under the law, feels morally corrupt and a poke in the eye to people who had every right to expect that they purchased their homes in an open and fair process. Fairness in applying the law is not always equivalent to fairness to individual persons.” Ms. Brodsky: “The Town Board has heard and read arguments in support of and against the Homestead Tax option over the last several months. On both sides of the issue, the various advocates have invoked the concept of fairness in support of their particular position. As with many vigorously contested issues, there are strengths on both sides. I will be voting against adoption of the Homestead Tax option for the reasons that I am about to explain. The critical and only relevant basis to consider the Homestead Tax in Scarsdale is the possibility of reclassifying condominium apartments as residential properties and basing the real estate taxes of the condos on market value. In this particular respect, the fact that the law treats condominium apartments that were originally developed as condos differently from co-ops and differently from condominiums that have been converted from another form of ownership, or from rental status, is a significant inconsistency that I take into account in deciding whether it would be fair to apply the Homestead Tax Option here. That significant inconsistency in the underlying legislation is one of the reasons that gives rise to my decision to vote against Homestead. Proponents of Homestead argue that because the Reval process is designed to eliminate real estate tax disparities among comparable properties, the Homestead provision must be adopted as it would be unfair and irrational to continue to tax differently a condo that has a market value similar to the market value of a single family house. As anyone who has followed this debate knows, the adoption of Homestead will not eliminate disparities since co-ops will continue to be taxed using the income based valuation Town Board Meeting Minutes – March 4, 2014 620 method whether or not the Homestead provision is enacted. Because the Homestead law allows only the possibility of revaluing condos using market value, it creates a disparity in the real estate valuation method and consequent real estate tax treatment of condos versus co-ops, and it creates this disparity even though condos and co-ops are properties that are arguably significantly more comparable to each other than a condo is to a house. I recognize fully the different types of ownership between a co-op and a condo and I still do not find there to be a rationale basis for the Homestead Tax Option to treat the two differently. Another reason that supports my decision is the degree of uncertainty regarding the valuation process that would be applicable to the condos should the Homestead Option be adopted. The Town Assessor has stated that the only properties comparable to the residential Christie Place units are the 42 units themselves. And has also said based upon conversations with some brokers in Scarsdale, she believes there will be a market for the properties even at exponentially higher tax rates. I am very concerned about the defensibility of property valuations where there is no data that supports what the market value would be for a highly taxed condo unit. Put another way, with the Homestead Option, we would be proposing to increase property taxes on the condos some 100 to 200% based upon assumptions about market conditions that we have not previously had and have no experience with in Scarsdale. My concerns about the valuation process are underscored by the age restrictions limiting Christie Place condominium ownership, which affect the universe of buyers eligible to purchase a unit. Given the serious shortcomings in the law and the uncharted territory of the prospective condo valuation, I would need a compelling reason to vote in favor of the Homestead Option at this time. Every member of the Town Board, including me, is the owner of a single family residence, we all pay taxes based upon the market value of our homes, and we would all benefit economically from adopting the Homestead provision. Nonetheless, I do not believe that there is a compelling reason to adopt Homestead based upon the argument that everyone's property must be valued the same way because fairness requires the elimination of a disparity between the taxes paid by condo owners and owners of single family residences. The problem that I have is that the very same provision creates a disparity between condos and co-ops. We, the Town Board, simply lack the power to treat all owners of property the same way; therefore, to my way of thinking, the analysis to support the Homestead option must go deeper than broad assertions of fairness. At one of our committee meetings in February, I asked John Wolham if, among the very small number of communities that had already adopted Homestead, were there any that did so for the same rationale that is relevant in Scarsdale -- the revaluation of condominium units. Mr Wolham could think of only one, where condominium ownership equals approximately 10% of the residential ownership in the community. That high a percentage of condo ownership could involve a significant realignment of tax burdens among condo owners and owners of single family residences. Christie Place equals less than 1% of the ownership in Scarsdale. Assuming that 2-4 Weaver Street is developed and marketed as condos, the total number of units will still fall below 1% here. If we were to adopt Homestead in Scarsdale, the average combined tax saving per residential household is so small (in the vicinity of $142) and the average combined increase in real estate taxes for the 42 residential condos is so great (in the vicinity of $12,700) that this shift in tax burdens does not amount to the compelling reason that would move me to favor the Homestead Option. Town Board Meeting Minutes – March 4, 2014 621 Some argument was made that by failing to adopt Homestead, we would be opening the barn door for condo development in the Village. Since we are 98% built out, that concern seems to be insubstantial. But assuming that at some point in the future, the face of Scarsdale changes dramatically and many condominiums suddenly appear on the scene, perhaps the economics of the Homestead Tax Option would become compelling. But that is not where we are today. Although the Reval process will not be finalized for another month or so, we have had the benefit of the data to date and even if the Homestead Option is not adopted and the income based methodology remains in effect for condos, the taxes on the great majority of the Christie Place condos will rise substantially, mitigating to some extent the disparity that concerns the proponents of Homestead. I want to thank Mr. Wolham, Nanette Albanese, the Village staff, and the many residents who engaged in the dialogue about Homestead whether in person or in writing. Your thoughts and concerns were extraordinarily helpful in this process.” Mr. Lee: “We all understand that the whole point of the Reval was to put all of the residences in Scarsdale on an equal footing, paying their fair share of the real property taxes based on the fair value of their homes. So it is quite troubling to consider that in the absence of our adopting the Homestead Tax Option condominium owners at Christie Place will benefit from a method of calculation that undercuts the equal footing concept. Even more troubling is that if the Homestead Option is not adopted condominiums built in the future in the Village will benefit from this different method of calculation and thus underpay what their taxes ought to be. Yet, in spite of these concerns, what ultimately governs my vote – which will be to vote against adopting the Homestead Option – is that I believe there is a principled reason for singling out the residents of Christie Place. In my view the residents of Christie Place had a reasonable expectation that their property taxes were correctly calculated and would not double or triple in size within a very short number of years. They were buying newly constructed property and could justifiably believe that the newly computed assessments on their property was reasonably accurate and not subject to huge swings in the near future. I distinguish their situation from that of a buyer of an old home with a low assessment who is now subject to a dramatic swing higher in taxes. That buyer either knew or with only a modest amount of discussion on the subject would have known he or she was simply enjoying the good fortune of an outdated assessment. He or she has little to complain about when the situation is righted. I also distinguish the Christie Place resident’s situation from that of a buyer of a new single family residence. In that case, the assessment is going to be reasonably accurate and the swing in his or her taxes due to Reval will be much more modest than what the Christie Place residents would incur. Town Board Meeting Minutes – March 4, 2014 622 I am not willing to say that the Christie Place residents should have done their homework better to discover the existence of the Homestead Tax Option. That’s quite a bit more obscure a point than that faced by the buyer of an old home with a low assessment. Holding the Christie Place residents to that standard – you knew or should have known that the methodology used to value your home could be changed in the case of a Village-wide reassessment – isn’t fair in my judgment. Nor am I willing to say that if they have a complaint it is with the developer to whom they overpaid for their apartment or it is with their real estate attorney who failed to advise them of this possibility. Those options are in my view not going to lead anywhere positive for those owners. When legislators - such as this Town Board – see that a law or policy that they have adopted (I’m referring here to the adoption of the revaluation plan to put all Village residents on an equal footing) – see that the adopted plan will be harshly inequitable when applied to certain constituents, it is their right and I think obligation to carve exceptions to that plan so as to avoid the injustice. I believe that an exception must be made in this case to prevent an injustice. I do not say that the equities will always be this way. It may well be that down the road, the length of time where the Christie Place residents benefit from a below-market tax bill will be long enough to change the balance of the equities. But for now, I see the balance tipping in their favor.” Mr. Stern: “I have listened to all of the comments both pro and con, and I must say that one of the things I don’t agree with is that the Christie Place home values will be diminished by any change in their real estate taxes. I believe in a very efficient market, especially in real estate; I have a lot of experience in that and I think it’s the price of a willing seller to a willing buyer. Given the real estate prices in Manhattan has somewhat of an influence of prices in Scarsdale in the sense that you could buy a magnificent house in Scarsdale for the same price you would pay for a two bedroom co-op or condominium in Manhattan. To quote one of those in favor of passing the Homestead Tax Option, “no special or select group should get special treatment”, and I agree with that. However, I disagree that the Christie Place condos fall into that category for a very simple reason. They represent about 21% of fungible apartments and what I mean by that is that a co-op and a condo are fungible in the sense that they both provide a similar type of living space, a similar type of arrangement, except the ownership is different of course. There are some advantages to condos, and there may be more advantages to condos than co-ops, but still they are fungible living spaces. Therefore, if we pass this Homestead Tax Option law, we are discriminating against 21% of our residents who live in this type of fungible housing and giving a pass to 79% of residents that live in this type of housing. I asked the Assessor about this and she responded that they have been up against the State in having this inequity resolved because the State does not want to change the way co-ops are assessed. Therefore, in fairness, the only way to vote on this is to turn down the Homestead Tax Option; I’m going to vote against it.” Town Board Meeting Minutes – March 4, 2014 623 Trustee Martin: (via conference call) “I want to thank everyone who was involved with this lengthy process; all the public hearings, the time my fellow Trustees and the Mayor spent on this, the Forum people and the report that they wrote. I am particularly impressed and thankful for former Mayor Peter Strauss who brought in a perspective as to what went on at the time the deal was done with Ginsburg; I thought that was very helpful. Doug Ulene’s comments were very helpful, most of which I agreed with. Especially relative to the point of the deal getting done at all – I’ve been in the real estate business for most of 40 years and have been a real estate investor for all of that time, and I am absolutely convinced this deal never would have happened if the people had not been able to purchase those condos under the income method valuation – I’m convinced the deal would have never gotten done. In conclusion, what was very persuasive to me is for the tremendous harm to the valuation of those condos the Homestead Tax Option would do, the Town gets very little. I want to thank Mr. Mark and the rest of the Trustees for the time and effort they put into it.” Mr. Steves asked Mr. Martin, in the interest of time and his convenience, to leave for the record his vote on this matter which will be recorded at this time. Mr. Martin stated that his vote is against adoption of the Homestead Tax Option. The conference call with Mr. Martin was ended at this time. Mr. Steves: “I share Ms. Eisenman’s comments about this being one of the hardest decisions that I’ve had to make because the arguments on both sides were for the most part thoughtful and well-articulated. My decision this evening, which will be not to vote in favor of adopting Homestead is based primarily if not solely on the immediate materially disproportionate impact adoption would have on a very, very small percentage of the community. An impact that I think is blatantly inconsistent of what the efforts of Reval were, and in particular, what the goals of the Homestead Tax Option are, and I will talk about that in a moment. In part what we were faced with is that sometimes the law gives you a sledge hammer when a scalpel would be more appropriate. I do not want to leave any impression that my decision was any more complex than that concern about the immediate disproportionate impact. I had no history with Christie Place; I wasn’t involved with what people are calling deals or arrangements. Quite frankly I didn’t find any of that discussion relevant to my decision. I respect to the extent that it may have been anyone else’s. I think what we have is a situation where we have a law that said, “Okay, Village, you have an opportunity to reduce the impact of this whole process on your residences, and you can do that by in fact discriminating. You can tax higher your commercial property and those commercial properties are owned by individuals, people who have rights. But the law recognized that there were certain circumstances under which that rebalancing was inappropriate and gave the Village the authority to do that. And I think it’s important to understand that nothing that was done before was illegal or done with subterfuge or done Town Board Meeting Minutes – March 4, 2014 624 with backdoor deals. It’s kind of sad in a way that there is only one Christie Place and we’re focusing on that issue when the issue is a bit broader than that in my judgment. But the methodology we used to evaluate these properties was used primarily across that State of New York except perhaps in a handful of places that adopted the Homestead Tax Option. This was a methodology that was consistent with law and consistent with appraisal ethics. So the discussion of people getting away with things, and being subsidized, and that we have been helping people with their taxes; I think is an overly emotional appeal here that is irrelevant. On the other end, the fact that you may not have children in Christie Place, there are a lot of people in Town that don’t have children in their houses. We have to be careful about setting different kinds of demographics against each other in this process. To me it boils down to a very simple thing: there were perhaps inequities in the law, the only resolution we have in time and place is, as I pointed out, a sledgehammer, where we need something a little more subtle. Perhaps if we had that we would have done something different. Conjecture will get us nowhere. In my fundamental view, I don’t believe that adopting the Homestead Tax Option for this provision only is not at all consistent with what Homestead is about. At the risk of repeating myself because it is so fundamental to my decision, is that we are dealing with a piece of legislation, the primary purpose of which is a recognition when you do a Reval, things may get a little out of proportion and there are reasons to try to dampen that so that no residential owners get too out of proportion and that safeguard or safety net is another class of owners. I think my decision is one I hope that is understandable. More important I think in this whole process, I had a boss, God rest his soul, who used an expression, “the tail wagging the dog”. Although it may be obvious what that means, it simply means that the small part is taking over the big part. And this to my mind is a very, very small part of an effort to bring fairness, openness, transparency to the property valuation process in this Village. And my one hope is that this issue does not over shadow the good that will come from the revaluation process.” Mr. Steves called for a vote on the Local Law Adopting the Provisions of Section 1903 of the Real Property Tax Law, Commonly Referred to as the “Homestead Tax Option”, previously moved by Mr. Mark and seconded by Ms. Brodsky, which was defeated by the vote indicated below: AYES NAYS ABSENT None Ms. Brodsky None Ms. Eisenman Mr. Lee Mr. Mark Mr. Martin (via teleconference) Mr. Stern Mr. Steves ******** Town Board Meeting Minutes – March 4, 2014 625 There being no further business to come before the meeting, the meeting was adjourned at 9:22 P.M. on a motion entered by Mr. Mark, seconded by Ms. Brodsky, and carried unanimously. _________________________ Donna M. Conkling Town Clerk