Buffalo is about to start its first property reassessment since 2010, likely documenting what is widely believed to be a surge in housing prices in certain city neighborhoods – and also likely leading to tax increases for some residents and businesses.
But the tax hike will not reflect the full increase in the city’s property values.
The reassessment process is expected to be completed in mid-2017 for the 2017-2018 tax year.
City assessment officials estimate Buffalo’s taxable value increased by some 19 percent since 2010. The assessment will determine if that’s true.
But whatever the number turns out to be, a property tax cap the state imposed on all municipalities limits to 2 percent the amount Buffalo’s tax levy can increase in any year, city officials said.
In addition, Buffalo’s four-year plan anticipates city spending increasing by less than 1 percent annually over the next few years, with the total tax levy – including property taxes – projected to increase less than 1.7 percent in each of those years.
“When we do the reval citywide, the tax levy will only increase 2 percent, and then it will be spread among more people,” Finance Commissioner Donna J. Estrich told the Common Council, adding: “Our anticipation is the tax rate per $1,000 will go down.”
“The reval process is to make sure people are paying their fair share,” Mayor Byron W. Brown added. “Some tax bills will be go up, some will go down. The market will determine that. But tax bills will not increase at the level that property values have gone up.”
The assessment process begins July 1, and continues into next year. In July 2016, residents will be notified of their new assessments. There will then be a seven-month long process, through February 2017, when property owners can challenge their assessments, with informal hearings held with the assessor’s office, and then formal hearings before the city’s Assessment Review Board. The new assessments will then be used for July 2017 tax bills, said Assessment Commissioner Martin F. Kennedy.
While the overall tax levy for 2017-18 is limited by the state to 2 percent above the 2016-17 tax levy, the actual change in the individual property tax bills also will be based on the new tax rate and how much an individual’s property increased or decreased compared with other properties in the city. So while the average increase will likely be less than 2 percent, the actual increase for individuals could be above or below the average.
Houses on the upper West Side, for example, where sale prices have spiraled upward, might see an above-average increase while properties on some East Side streets, where prices have been flat or dropping, might see a lower than average increase, or even a drop.
The tax calculation could also reflect a larger tax base, assuming more residential and/or commercial taxable property in the city now than in 2010.
“Our plan is to have a bigger tax base – more people and more businesses, and to further drop the tax rate and spread it among more residents,” Brown said.
The reassessment process will be different this time than in the past, primarily because of techniques now available that are designed to make the process more accurate and more transparent for property owners, Kennedy said.
A process called “pictometry,” which basically overlays what a property looked like when it was last assessed with a current digital image, will be used, he said. Also as part of the process, information used to determine assessments will be available to property owners, giving them more information to help determine if they want to challenge their assessments.
Brown froze city assessments since 2010, while also cutting the city’s tax rate, in an attempt to attract more residential and commercial development to Buffalo. Property taxes on a $100,000 house dropped by $300 and commercial taxes on a $100,000 property dropped by $1,000 since he first took office in 2006, Brown said. Buffalo’s tax rate, he said, is substantially lower than rates in Rochester, Syracuse and Albany.
“We were able to give property owners, over time, a tax reduction in the city,” Brown said. “What we need to do now is capture some of the growth taking place in the city, to meet demands for increased services. When you have more people, more businesses, you need more services.”
The city’s taxable assessed value was pegged at $6.32 billion in the 2010-2011 fiscal year. Since then, without the benefit of a reassessment, the city assessment office has done annual estimates of city property values based on a sampling of sales. Those estimates have been approved by the state tax office, and used to set Erie County taxes for city property owners. The estimated assessment crept up every year, reaching $6.7 billion in the 2014-2015 fiscal year. The city’s 2015-2016 estimate was pegged at $7.5 billion.