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Volume 6 - Opinions of Counsel SBEA No. 35

Opinions of Counsel index

Equalization rates (state rates)(assessment - use of equalization rate) - Real Property Tax Law, §§ 306, 720; Article 12:

If an assessor, in the first instance, or a board of assessment review, upon review, uses the latest state equalization rate in an attempt to arrive at an equitable assessment, that rate should be applied to the value of the subject property as of the valuation date upon which the rate was determined. Also, the assessor, or the board of assessment review, should take into account any general change in level of assessment on the subject assessment roll.

The use of the state equalization rate by local assessing officers in determining the proper assessment on an individual property differs from the specific use of the rate in judicial review proceedings (Real Property Tax Law, § 720(3)). The primary purpose of the state equalization rate is to convert the aggregate taxable assessed valuation of an assessment roll to the aggregate full valuation for purposes of establishing constitutional tax and debt limitations and certain other statutory formulas requiring the use of the aggregate full valuation of taxable real property. Indeed, the state equalization rate is an after the fact determination of the average percentage of full value at which taxable real property is being assessed.

It is the duty of the assessor to assess all real property at full value as of the appropriate taxable status date (Real Property Tax Law, § 306; Hellerstein v. Assessor of the Town of lslip, 37 N.Y.2d 1, 332 N.E.2d 279, 371 N.Y.S.2d 388, mod., 39 N.Y.2d 920, 352 N.E.2d 593, 386 N.Y.S.2d 406). However, in those assessing units which are not yet in compliance with this statutory standard, each property owner is entitled to be assessed at a percentage of full value which is no more than the average percentage of full value at which all property in the assessing unit is assessed (Wolf v. Assessors of the Town of Hanover, 308 N.Y. 416, 126 N.E.2d 537). Some assessors are under the mistaken impression that they may use the state equalization rate to determine equitable assessments of recently sold properties merely by applying the latest final state equalization rate to the sales prices thereof. This assumption is incorrect; such practice merely creates additional inequities, since the latest state equalization rate usually will have been determined on the basis of a full value standard which predates the recent sale by two or three years. If, prior to filing a full value assessment roll, the assessor files a roll based on fractional assessments, the assessor must index the sale price back to the full value standard upon which the state equalization rate was determined. While this will not result in a perfectly equitable assessment (i.e., since a state equalization rate for the assessment roll in question would not have been determined at that time and the full value standard for such rate would be unknown), it will be less inequitable than the result of the practice described above.

In a judicial proceeding to review an assessment, the state equalization rate determined for the assessment roll containing the assessment under review may be introduced in evidence on the issue as to the average percentage of full value at which property was being assessed on such assessment roll (Real Property Tax Law, § 720). This is a proper use of the rate since it is authorized by statute and is designed to minimize the cost of a judicial proceeding. While it does not necessarily produce perfectly equitable results, it has been found to be far superior to the selected parcel method of proving this issue. The selected parcel method is very expensive, is totally lacking in scientific sampling techniques, and is almost always skewed in favor of the assessing unit (see, Guth v. Gingold, 34 N.Y.2d 440, 315 N.E.2d 441, 358 N.Y.S.2d 367).

The use of the state equalization rate by a board of assessment review upon administrative review presents numerous difficulties. First, at the point in time at which the board of assessment review considers tentative assessments, a state equalization rate for the assessment roll being reviewed will not have been determined. Second, the statute does not limit the proof which may be given as to the issue of inequality (as opposed to the statutory provisions limiting such proof in a judicial proceeding). Third, while the latest state equalization rate may be used by the board of assessment review, inquiry should be made of the assessor (who is required by statute to attend administrative review hearings) as to whether he has made a material increase or decrease in the general level of assessment on the assessment roll being reviewed. If so, the assessor should be required to submit documentation with respect thereto (e.g., information similar to that contained in his annual report to the State Board). Finally, the latest state rate may be totally immaterial in the event of a total revaluation of all real property (see, 5 Op.Counsel SBEA No. 120).

July 8, 1977