WPCNR SCHOOL DAYS. By John F. Bailey. February 7, 2008 UPDATED 4:08 PM WITH
VISUAL AIDS:
The School District Annual Budget Committee met Wednesday evening and was informed by
Superintendent of Schools Timothy Connors and Assistant Superintendent for Business Fred Seiler
that the district faced $16 Million in projected refunds to 209 new certiorari filers over the next two
budget years . Assistant Superintendent Seiler said it was too early to tell how the school district
would handle the outright refunds or replace the lost revenue
School District's Top Ten List of 2007 Petitioners for Assessment Refunds
They said the refunds would ultimately have to be funded by either borrowing, establishing a budget
reserve, or cuts in the budget or increased taxes – revenue that would have to be replaced each year
by the school district going forward in the budget years ahead.
209 In Line. Top Ten List Introduced
Mr. Seiler said as of September 2007 there were 209 new petitioners in 2007 alone (commercial and
residential) seeking reductions in assessments of $82.9 Million that Seiler said would result in an
estimated $9.2 Million in outright refunds by the school district if settled for 25% of the requested
reduction-- the typical historical settlement of such claims.
For the first time in city history, Fred Seiler unveiled a “ Top Ten List of Petitioners” for reductions in
assessments – who filed in 2007. The list includes The Galleria (seeking a $7.3 Million reduction),
Fortunoff (a $6.8 reduction), Bank Street Commons ( $3.2 Million), AT & T (2.8 Million), The Seasons
($2.3 Million), and the condominium owners at Trump Tower at City Center ($2.1 Million).
PILOTED Properties Get Into the Act
Several properties which received Payments In Lieu of Taxes to facilitate their development now seek
reassessments which will result in the school district likely refunding a substantial percentage of
what they paid in their PILOT payments. Bank Street Commons, according to the School District,
paid $2.5 Million in PILOTs to the city, county and school district in 2007-2008, and is seeking in 2007
a $3.2 Million reduction in assessment.
Budget Committee Absorbs a Bit of Bad News
Seiler told the audience of the Budget Committee the district would have to pay this anticipated refund
liability through a combination that could include budget set-asides, budget cutting or borrowing.
Through the course of the evening, the Annual Budget Committee was acquainted with the pressures
on the school district budget which was introduced as $190.7 Million.
Fred Seiler presents the $190.7 Million Budget (as analyzed previously in yesterday's
WPCNR Preview).
Connors and Seiler both said that departments have been asked to look at their budgets, personnel
needs and that a new budget would be introduced to the Committee next week, holding out the
possibility the $190.7 Million figure which – if the assessment roll remains the same—would by
WPCNR estimate raise the school tax rate $55 per $1,000 of assessed value resulting in an $800
increase in the school taxes of a home with a market value of $700,000, and assessed value of
$15,000.
Connors said a new budget would be presented next Wednesday.
Donna Mclaughlin, the President of the Board of Education welcomed the gathering saying 2008-
2009 was going to be “a tough year” and “we have a lot of work to do,” and “we are eager to hear what
you have to say.”
Superintendent of Schools Timothy Connors then took over, saying, “We’ve come to share
with you where we are on the budget,” and that last year, “listening to one another we did a
good job.” He said by “listening and interacting” with the committee, he would craft
a “Superintendent’s Budget,” and made it clear “Your role is advisory.”
Connors then told the committee that Mr. Seiler was going to talk about “the bigger issues that are
coming up,” and that was how assessments were affecting the budget.
Assessments Primary Reason for Escalating Budget.
Seiler launched into a discussion of market value of properties determined by Albany and how that
was affecting the Equalization Rate explaining that as market value of White Plains properties went up,
the lower the equalization rate became, which adversely affected commercial assessments, resulting
in certiorari actions on the part of commercial properties.
PILOT PAYMENTS 2007-2008, showing how much more they pay now than when the
properties were vacant, as presented by Mr. Seiler Wednesday evening.
Seiler showed a list of White Plains PILOT properties showing how they had all produced higher taxes
through PILOTS (Payments In Lieu of Taxes) approved by the city to incentivize development. What
Seiler did not show was what the properties would have paid in taxes if they had been taxed at the full
tax rate on their present assessment. (The present potential assessments of those properties were
not included on the chart, since PILOTED properties are not on the city tax roll, because they are
considered property of the Westchester County Industrial Developmet Agency.)
Seiler noted that two properties were coming off PILOTS (which WPCNR believes are 9 West and
1133 Westchester Avenue) and that while they were on PILOTS they had appreciated in value. The
reason for this is that 9 West applied for a certiorari and had their assessment reduced, thus lowering
their real estate taxes, and 1133 Westchester has received a PILOT recently increasing what they
paid. The building had been in the process of renovation.)
Seiler then introduced his Top Ten List of Petitioners for Assessment Reductions, saying this was
going to cost the district $7 to 8 Million a year for the next three years, in refunds (and the need to
replace the lost school tax revenues.) “There’s not an end in sight, unless the (state) legislators do
something,” Seiler said. Assemblyman Adam Bradley, last fall observed that his bill to have a separate
commerial tax rate for commercial property was not likely to get any support in the State Senate, and
therefore it had not been advanced.
Realtor Observes Decline in White Plains Home Prices
At this point, Mr. Wolff, of Wolff Realty in White Plains, made his remark that the White Plains housing
market and home values were “still soft,” that “the average price of homes in White Plains is down
10%.” He said the “median prices was very misleading.”
Wolff said he doubted that total reassessment of properties in White Plains was the answer, because
homes built in the 1940s would be assessed dramatically higher, he estimated that if your home had
an assessed value of $12-13,000 dollars now it could go as high as $20,000 in assessed value.
Such a jump in assessment, WPCNR notes, would result in an instant increase in school taxes alone
of $3,000 a year if a $13,000 assessed home were to be reassessed up to $20,000.
Bill Pollak of the School Board observed how the equalization rate had declined from 7.4% in 2000 to
2.69% today. (Actually this was adjusted upward by the state to 2.75% in response to city pleas.)
Pollak observed that reassessment might divide the community.
Capital Project Moving Ahead
Seiler then shifted to brighter matters – the $69 Million Capital Project to build the new Post Road
School, and renovate the Mamaroneck Avenue School. He said the project was under budget and had
opened Mamaroneck Avenue School project for bids, and that the Post Road School so far had
received 44 bids on the construction. He said the Post Road School schedule was optimistic. (It is
scheduled to be completed in the fall of 2009.) Asked by a member of the audience if the district would
refinance previous loans due to the lower Federal Reserve Rate, Connors said they were going to look
at that. Financing for the Post Road School would be put out in June, Seiler said.
The effect of Assessments Reductions on PILOT-ed properties.
Fortunoff (The Fashion Mall Partners LP) paid $1.3 Million in PILOT Payments in 2007-2008, and
seeks a $6.8 Million reduction in assessment. Should Fortunoff for example settle their assessment
reduction claim for 25% of what is asked for, (a typical historical settlement, according to Seiler)
WPCNR calculates such a 25% on the dollar settlement would result in a $1.7 Million reduction in
Fashion Mall Properties assessment. Should that turn out to be the case, the school district would
have to refund Fortunoff $755,000 for 2006, more than 75% of what the school received ($901,778)
from Fashion Mall Properties in school taxes in 2006.
Bank Street Commons is another intriguing adventure in math. Bank Street seeks a $3.2 Million
reduction in their assessment. If the historical settlement of 25% is reached, this would result in the
school district having to pay back $351,000 of the $1,667,340 Bank Street paid in taxes to the school
district in 2007-08. The developers of Bank Street Commons, LCOR recently received land from the
city at a reduced price and were granted a PILOT going out fifteen years in a second development on
Bank Street for affordable housing, resulting in $29 Million in tax relief according to the city, and $39
Million in tax relief according to the Westchester County Industrial Development Agency, depending on
how the tax relief is defined. The justification for the 55 Bank Street deal according to the city was to
build a rental development that included 20% of the units as “affordable.”
The Pressure Stays On
Seiler also noted that once these certioraris were settled, the pressure would not be off.
The equalization rate nosedive this year to 2.75% would most certainly produce another round of
certioraris for years to come (as first reported by WPCNR weeks ago). Organizations receiving
certiorari relief and assessment reductions cannot reapply for reassessment for three years after
receiving assessment relief, Seiler said. WPCNR notes that the anticipated $21 Million drop in the
assessment roll resulting from these settlements – the largest cumulative hit the district has ever taken
will result in a $9,200,000 drop in school revenues -- which in and of itself would require one time only
refunds but replacement of the $9.2 Million in revenues a year.
Superintendent of Schools Timothy Connors (Left),said the decline in assessments in
previous years was the primary factor driving the school budget. Jackqueline Mackin of the
Budget Office is seated. Mr. Seiler is at the podium to the right.
Speaking to Mr. Seiler Thursday I asked if the refunds anticipated to be $8 Million a year the next two
years, would have to be replaced by an increase in school tax rates to equal the amount of the lost
revenue. Seiler said it was too early to tell, and that the school district would be deciding whether to
replace it with a reserve for these certioraris or to finance them. He did indicate that that would have to
be dealt with.
$21 Million Assessment Drop? Holy Wallet, Batman!
In 2007-2008 The City Assessment Roll available to the school district stood at $291 Million of Total
Assessed Valuation. A $21 Million erosion of assessments (if the $82 Million in requested
reductions is settled at the historical 25% rate) without any assessment replacement somewhere by
the city would drop the roll to about $270 Million of Assessed Value in 2008-09 or 09-10 .depending
on the timing of the settlements.
This means when those reassessments take effect the school district would need
to replace the revenue lost by that $21 Million assessment decline. By WPCNR calculation, the 7%
drop in the assessed value represented would increase the school tax rate $33, should the revenue
have to be made up by White Plains taxpayers.
This added to the $474 per thousand tax rate in effect this year would automatically increase taxes to
$503 per thousand, without the 9.5% increase called for in the $190.7 Million budget.
WPCNR preliminary analysis of the $190.7 Million Preliminary Budget indicated White Plains
taxpayers faced a $55 tax rate increase outright to pay for the budget increase, even if assessments
as of March 1, remain the same or are slightly higher as the city assessor Lloyd Tasch predicts.
In 2009-2010, the Deluge.
The big assessment hit whatever it turns out to be will come when preparing the 2009-2010 school
budget when these new certiorari settlements impact the assessment roll.
Put another way, based on this year’s numbers the $21 Million anticipated drop in assessed values
over the next two years will mean a $33 increased per thousand in assessed value to the White Plains
School Taxpayer, before the year to year inflationary impacts are felt on the school budget expenses.
Simple math shows that these assessments now introduced that the school expects to settle will in
addition to the year by year budget increases could result in an increase in the tax rate of $75 to
$100 per $1,000 of assessed valuation in the next two years ($550 to $575/$1,000 of accessed
valuation as opposed to the $475/$1,000 this year.
