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Buffalo's tax assessments to finally catch up with booming housing values

The majority of Buffalo homeowners will see their property assessments spike later this month when the city completes its first large-scale reassessment since the boom in home sale prices.

Housing prices have soared in neighborhoods from Allentown to Hertel. Buyers regularly face off in bidding battles for desirable homes. But property assessments – the city’s official estimate of a home’s value and a primary factor in calculating city and county taxes – have not been widely updated since 2010, when average home values in the region stood a fifth below their current levels, according to the Federal Housing Agency’s quarterly price index.

State records indicate Buffalo property values have diverged sharply from earlier assessments, particularly since 2015. So the new assessment notices, scheduled to post this Labor Day, could both jolt some city homeowners and prompt questions about the long delay between reassessment efforts.

Officials say they will also illustrate, for the first time, the full extent of Buffalo’s housing market boom.

“The whole city has seen tremendous growth in terms of property valuation,” said Joseph Emminger, president of the real estate appraisal and consulting firm that conducted the assessment. “There are very few pockets in the city that have not seen increases in value.”

Much of that increase relates to the recent surges in Buffalo’s housing market – a story local homeowners know well. Citywide home prices have risen steadily since late 2011, propelled by low mortgage rates, a strengthening regional economy and new development in historically undervalued areas.

In some neighborhoods, including Allentown and North Buffalo, average prices for single-family homes jumped more than 50% between 2008 and 2018, according to the Buffalo Niagara Association of Realtors. On the West Side, home prices have more than tripled. Sarah Wooton, a researcher at the Partnership for the Public Good, estimates that some individual properties in those areas could see their assessments increase by as much as 500% – the result of new demand and development.

But while the expected jump may reflect a strengthening economy, assessment experts say it’s also due, in part, to the unusually long delay since Buffalo last conducted general assessments. The city last updated property values for selected neighborhoods in 2010 and had not completed a city-wide evaluation since 2000.

New York State recommends cities wait no more than six years between evaluations, and the International Association of Assessing Officers, an industry group, encourages annual assessments. Most states mandate them every four to six years, according to the Tax Foundation, a bipartisan national think tank.

“The logic is that values change and the market changes, and it changes in different ways,” said Larry Clark, the director of strategic initiatives at the IAAO. “So we recommend an annual reappraisal, just to be sure you keep up with that.”

Buffalo’s schedule, Clark added, is “not typical.”

But many municipalities in New York also lag the four- or six-year schedule, said Buffalo Commissioner of Assessment and Taxation Jason Shell. In Erie and Niagara counties, just 10 of the region’s 43 tax districts have conducted reassessments in the past six years, according to state records.

The city conducted rotating neighborhood-based assessments until 2009, Shell added, as part of a program in which every parcel was evaluated at least once every six years. But the program was paused out of concern that regular assessments were both costly and unnecessary at a time when housing prices changed little from year to year.

While the city did respond to early signs of market growth by launching this assessment in 2015, Shell said, “standard” delays – many related to digitizing old permits and deeds – pushed the process past its original notification deadline of July 2016. As a result, homes were only reassessed if and when their owners made changes to their property.

The state now estimates that Buffalo is assessed at only 64% of its true market value, a sharp drop from 97% five years ago. City officials emphasize the new reassessments will not only close that gap but ensure homeowners don’t pay too much or too little in taxes relative to the value of their homes.

Notably, higher assessments do not necessarily signal higher tax bills. Thanks to the formula that determines tax rates, as well as a state cap on annual levy increases, next year’s tax rate could actually fall as citywide property values grow.

“This is an equity project to redistribute the tax levy burden uniformly, fairly and equitably amongst all property owners,” Shell said. “Everyone should only want and be expected to be liable for their fair share of the tax levy.”

Community groups say they’ll nevertheless be watching the new assessments closely, particularly in growing neighborhoods with large shares of low- and fixed-income homeowners. While the full tax implications of the new assessments won’t be clear until the Common Council approves its budget for the 2020-21 fiscal year next summer, PPG and a coalition of other organizations are already lobbying for an exemption to protect low-income residents.

Shell, meanwhile, encourages homeowners to appeal their assessments if they believe they’re not accurate. Assessment notices will include information on a series of “informal review sessions,” scheduled for September, when homeowners can meet with assessors to share photos, independent appraisals and other evidence of their home’s market value.

Notices will also include estimates of each household’s 2020 tax bill. Those estimates are based on the 2019 budget, however, so are subject to change.

Decisions from the informal review sessions will come down in November, Shell said. The first affected city and sewer tax bills will be mailed in July 2020.

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