Two recent Freedom of Information (FOIL) requests to the Town of Sweden government show conclusively that the left hand doesn’t know what the right hand is doing in the town government. The Town Clerk says one thing, and the Town Assessor says exactly the opposite. No wonder the Town of Sweden can’t stay under the tax cap.
In response to a FOIL about which properties in the Village of Brockport are assessed using the income approach, Sweden Town Clerk Karen Sweeting replied “All commercial properties are valued by income, except for churches and schools.” However, that response conflicts directly with the information provide by Sweden Town Assessor Tony Eaffaldano in response to a different FOIL request from a different Brockport resident.
The Brockport resident who submitted that FOIL request asked the Assessor to supply a complete list of all the rental properties in the Village of Brockport (excluding apartment houses such as President’s Village) including the address, the owner, the property use, and the number of units and bedrooms in each rental property. Assessor Eaffaldano responded by sending the Brockport resident a 166 page list of the 367 rental properties in the Village of Brockport. That list tells an entirely different story from what the Town Clerk said. It clearly shows that all commercial properties are NOT valued by income.
According to Uniform Assessment Standards published by the New York State Department of Finance and Taxation, “The income approach is the preferred approach for income-producing property.” However, in order to use the income approach Sweden Town Assessor Tony Eaffaldano would have to classify the student rental properties as commercial properties (Class 400). But Assessor Tony Eaffaldano doesn’t do that.
The 166 pages of data provided by Assessor Eaffaldano show that only 117 (31.88%) of the income-producing rental properties in the Village of Brockport are classified as commercial properties. On the other hand, 246 (67.03%) of the income-producing rental properties in the Village of Brockport are classified as residential properties. There are also 4 income-producing rental properties (1.09%) that are classified as other, (including n/a and failed).
Only 31.88% of the 367 income-producing rental properties in the Village of Brockport are classified as commercial properties.
There are 102 income-producing rental properties classified as a One Family Year-Round Residence (class 210). There are 115 income-producing rental properties classified as a Two Family Year-Round Residence (class 220). There are 26 income-producing rental properties classified as a Three Family Year-Round Residence (class 230). There is one income-producing rental property that classified as a Residential – Multi-Purpose/Multi-Structure (Class 280).
Think about it. How many of those 243 income-producing rental properties are actually Year-Round Family residences? The answer is not many. A police call last week to the rental house at 11 Brockway, which is classified as a One Family Year-Round Residence (class 210) showed that it actually was being rented as a single-family residence. But that is the exception in Brockport rather than the rule.
Most of those 243 income-producing rental properties are student rentals, which are really commercial properties, and they should all be assessed and taxed like the 117 other income-producing rental properties that are already assessed as commercial properties.
That information is readily available to the assessor because each year every landlord in the Village of Brockport is required to fill out and submit a Rental Registration form to the Village. The landlord has to identify whether the building is classified as residential (210, 220, 230) or commercial (411, 418), list the number of tenants in each unit, and also state whether the tenants are related to each other.
The information is readily available to the assessor, but he doesn’t use it. If a property is classified as a One Family Year-Round Residence (class 210) or a Two Family Year-Round Residence (class 220), but year after year it is rented to college students who are not related to each other, then it is not being used as a residential property and it should be reclassified for what it really is – a commercial property.
In 2010, during the last dissolution attempt, a Brockport resident asked Assessor Eaffaldano, “What is the actual formula for calculating the assessment of a “commercial property?” Assessor Eaffaldano answered that the formula is: “IRV. Income, Divided, by Rate = Value” and the in 2010 the capitalization rate was 0.13500. You determine the income by subtracting the landlord’s expenses from the total annual rent for the property.
For example, one college landlord in Brockport advertises online that the rent is $2,000 per semester for each of the units in a house he owns that is classified as a Two Family Year-Round Residence (class 220). That’s $4,000 a year per tenant, or $24,000 a year for six tenants. So the landlord takes in $24,000 a year from that property. Other landlords charge more per semester, so their gross is higher. If we assume that the landlord spends $3,000 a year to repair the property that means his income from that one property is $21,000 annually. When you divide $21,000 by the capitalization rate of 0.13500 you get an assessed value of $155,555.56.
However, that particular property is only assessed at $69,400. That means the property is under assessed by $86,155.56. As a result every single-family home owner in the Town of Sweden has to pay higher taxes to make up the difference.
This also means is that the landlords of the 246 income-producing rental properties that are classified as residential properties are paying less than their fair share of taxes to the town, the village, the county and the school district. That’s because commercial properties are taxed on their income, and residential properties are taxed on their resale value.
Because these 246 income-producing rental properties are not classified as commercial properties, the single-family homeowners have to pay higher taxes to the town, the village, the county and the school district.
The New York State Department of Finance and Taxation uses these words to describe how income-producing properties should be assessed, “The value of a parcel is determined by capitalizing rental income potential.” So why isn’t Sweden Town Assessor doing that? Because if he did, it would reduce the tax burden on the single-family home owners would in the Village of Brockport and the entire Town of Sweden.
Sweden Town Clerk Karen Sweeting’s reply would have been accurate if she had replied “All properties that are currently classified as commercial properties are valued by income, except for churches and schools.” But you have to cut her some slack.
According to James Gazzale, a Public Information Officer with the New York State Department of Finance and Taxation, the town assessor is the person who makes the determination of property classification and the capitalization rate. Gazzale also said that the town assessor is the only person who has the power to change either the property classification of a property or the capitalization rate.
So if Sweden Town Assessor Tony Eaffaldano fails to follow the guidelines published by the New York State Department of Finance and Taxation, then the Town Clerk’s hands are tied. Some landlords will pay the higher commercial tax rate and some landlords will not. The only person who can correct this gross injustice is the Sweden Town Assessor Tony Eaffaldano; and he is the person responsible for this mess in the first place.
The interesting thing is that the landlords who own many of the 246 income-producing student rental properties that are classified as residential properties are the same people who are leading the effort to dissolve the village: Rhett King, Francisco Borrayo, Linda Borrayo, Karen Maynard, and Fred Webster