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Volume 3 - Opinions of Counsel SBEA No. 57

Opinions of Counsel index

State equalization rates (generally) (method of establishment) - Real Property Tax Law, Article 12:

It is legal for the State Board of Equalization and Assessment to set an equalization rate in excess of 100. The calculation of the rate involves market value surveys which take approximately two years to complete, a factor which can result in such a rate.

Our opinion has been requested as to the legality of the State Board of Equalization and Assessment determining a state equalization rate in excess of 100 in view of the State Constitution prohibition against assessment in excess of full value. (N.Y.Const. Art. XVI, § 2)

Article 12 of the Real Property Tax Law requires the State Board to conduct market value surveys at least once every five years to sample the ratio of assessments to market values for each major type of taxable real property as of the same date or period of time in all cities, towns and villages. State equalization rates are determined annually on the basis of one or more of such market value surveys.

These surveys consist of classifying assessment rolls according to the types of properties represented on such roll, and randomly selecting parcels representing at least 80 percent of the assessed valuation of each assessment roll, which randomly selected parcels are appraised by State Board personnel. The appraised values are compared with the assessed values of such properties to indicate the percentage of full value at which these properties are being assessed. Also, the State Board receives reports of transfers of real property together with information as to the indicated sales prices and, after confirming such sales, the sales prices are compared with the assessed valuations to indicate the percentage of full value at which such properties are being assessed.

As indicated above, the appraisals are made as of the market value survey date which is uniform throughout the State. Since it takes approximately two years to complete a survey, the market value date is usually two or three years prior to the date the assessment roll for which rates are determined was prepared. Therefore, if a locality conducted a revaluation program and assessed all real property at full value as of January 1, 1973, the most recent complete survey would have been conducted as of January 1, 1970. In such a situation, the comparison of assessments made at full value as of January 1, 1973 with market values as of January 1, 1970, would probably result in a ratio exceeding 100 percent.

Since state equalization rates are used to convert the total taxable assessed valuation of an assessment roll to the total full value thereof for purposes of apportioning state aid and apportioning certain local taxes, it is necessary that all full values be determined as of a uniform market value standard.

It has been held that an assessment which exceeds full value is not illegal but that the owner of property so assessed would be entitled, pursuant to Article 7 of the Real Property Tax Law, to a reduction in his assessment (see, In re New York, , 47 Misc.2d 754, 263 N.Y.S.2d 50; Mid-Point Apartments, Inc. v. Town of Poughkeepsie, 59 Misc.2d 846, 300 N.Y.S.2d 973; Western Printing and Lithographing Co. v. McCandlish, 57 Misc.2d 247, 292 N.Y.S.2d 312).

March 20, 1974