SamPratt.com

Doing the math on meters

Once again, a proposal has been floated in Hudson to put parking meters on the lower blocks of Warren Street, i.e. below 3rd. According to a Register-Star’s account today, this would rake in between $25K and $27K in revenue annually.

Let's be generous, and round that revenue up to $30,000. To put that (piddly) amount in perspective in relation of the City’s (giant) 2012 budget:

• That’s just 3/5th of 1% (.006) if computed as a percentage of Hudson's $4,687,618 tax levy;


• That’s just 3/10ths of 1% (.003) if computed as a percentage of Hudson's $9,651,173 in general fund appropriations.


• And that's just 1/4 of 1% (.0025) if computed as a percentage of Hudson's $12,122,801 in total expenses.

Any way you slice it, the savings would be invisible (a lot less than 1%) to pretty much every taxpayer.

And even in a highly-unlikely best-case scenario, in which the entire $30,000 gets applied directly to reduce peoples' tax burden, an average person paying $2,500 in property taxes would save a grand total of $15 a year. If instead, the amount were subsumed into the entire appropriations or expenditures, the personal savings might be more in the $4-$8 range. With that kind of cash, one maybe could afford lunch once a year at Applebee's in Greenport, where parking is free.

Unfortunately, even after paying off the installation costs within 6-12 months, the external costs of metering would likely erase any such savings by causing some area residents to shop less in town, and causing more casual visitors to vow not to come back to Hudson again because they got a ticket.

Meter advocates tend to argue (often without any supporting data) that metering results in more turnover of parking spaces, deterring people from parking in the same spot all day. But at 25 cents per hour, many can easily afford to stay in the same spot all day anyway, or just pay the ticket: the marginal difference between 8 hours at 25 cents and a $6 ticket is all of $4. Unless Hudson begins chalking tires to prevent people buying more than 2 hours at a time, ticketing only really affects those least able to afford parking, and those easily ticked off by tickets.

Meanwhile, as has been pointed out here before, many thriving area towns such Millerton, Rhinebeck and Great Barrington have no parking meters on their main streets. So how is it that these meterless towns are doing as well as their metered neighbors?

$422,000 tax assessment break for Galvan

Four properties linked to developer Eric Galloway were granted tax assessment reductions totaling $422,000 in June by the Hudson Board of Assessment review. Of the five properties grieved by Galvan Partners and the Galvan Foundation, four were granted tax relief.

Nearly 50% of all other grievers got no relief at all from the BAR in this cycle.

Tom Swope, who stepped down as a member of the BAR late last year, is now the director of the Galvan Initiatives Foundation. Those reductions were certified by BAR member Rachel Kappel and chairman Philip Forman on June 13th. 

Public records indicate that the BAR did deny Galvan’s attempt to have 400 State Street (the Library building) declared tax exempt. When last checked with the IRS, Galvan had yet to be approved as a charity, which might explain the BAR’s inability to give Galloway’s operations even more assistance.

According to The Register-Star, the Galvan Foundation awarded $117,000 in local grants earlier this month, including $40,000 to the Hudson afterschool program Perfect Ten, which was founded by Forman’s wife.* Though Perfect Ten began in 2010, it was only incorporated as a nonprofit corporation at the State level in February of this year, and IRS online records do not yet list it as an approved charity as of this week.

According to its Facebook page, Perfect Ten has two full-time staff, Forman and Katherine Moore, a daughter of Hudson Common Council President Don Moore. The elder Moore voted in March to support Galvan’s controversial homeless shelter-cum-police-station at the corner of State and 4th Street.

As previously reported, some of the Hudson BAR’s other major tax reductions in 2012 include a $1.5 million tax reduction for Holcim, and a 35% break for the City’s law firm. 

 

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* Full disclosure: the Formans bought a house from this writer in 2007.

Hudson’s legal aid society

Rapport Meyers, the same firm which represents the City of Hudson on many legal matters, received a tidy 35% reduction in their tax assessment from the local Board of Assessment Review. The lawyers’ local property tax valuation was dropped $320,000 (from $920K to $600K) by the Board of Assessment Review. Hudson Corporation Counsel Cheryl Roberts joined the firm within the past year, and at least one member of the BAR has used the firm for legal work.

As previously reported, Holcim received a $1.5 million tax reduction from the BAR, while nearly half of all other grievers got no tax relief at all.

Hudson hands Holcim a sweet tax deal

Holcim has received a whopping $1,563,000 reduction in its property tax assessment from the Board of Assessment Review in the City of Hudson, according to publicly-available data.

The BAR decision, signed by members Philip Forman and Rachel Kappel, brought Holcim’s assessment down 33%, from over $4.5 million to just $3 million.

The reduction was by far the largest reduction in valuation, in terms of dollars, provided by the BAR this year. Out of some 148 property owners who appealed to the BAR for help this year, nearly half (70) received no reduction at all.

The Swiss-owned multinational, which has been a constant source of controversy locally over the past 15 years, has been simultaneously suing the City over its taxes. It’s unclear if the reduction will cause Holcim to withdraw its (even greedier) legal complaint, which in 2011 argued it should be assessed at less than $1.6 million. According to some reports, State approval of the City’s deeply flawed Local Waterfront Revitalization Plan has been stalled due to Holcim balking at transfer of some South Bay acreage while that suit was still in court.

This site will be reporting on other notable tax discounts provided by the BAR in the coming days.

On the making of sausage (or: Dave & Don’s weenie roast)

Pretty much everyone has heard the saying (often misattributed to Bismarck but more likely said first by John Godfrey Saxe) about the making of sausage and laws... Namely: that to maintain one’s respect for either, one must avoid seeing how they get made.

That saying seems to apply several times over to the records this site obtained recently via Freedom of Information Law request from the City of Hudson, regarding the 2011-2012 citywide reval of property tax assessments. Here’s another illuminating exchange between Common Council President Don Moore and GAR Associates’ David Bartlett:

In early March of this year, Moore emailed Barnett to ask for a spreadsheet of Hudson property assessments in Excel format, since he was having some trouble with the PDF version. Barnett replies promptly with the Excel version attached, and adds this eyebrow-raising note:

Please do not disclose that this is in your possession. In past projects, spreadsheet numbers have been manipulated and used to paint an inaccurate picture. All of which I know you know.

Moore does not challenge or acknowledge Barnett’s curious request, merely thanking him for the file and asking for another.

Since the data had been made available as a PDF on the City’s website, one naturally wonders why Barnett would caution Moore to “not disclose” its existence as a spreadsheet.

The likely answer is technical, but important to explain... PDFs can be scanned or locked to make it difficult for recipients to export the document’s contents into other programs. With the raw data in hand, a recipient could more readily search, sort and analyze the material in much greater depth. One can compute averages, medians, modes, and changes, or segment results by property class, neighborhood, etc.

So from a citizen’s perspective, it appears that Barnett is concerned someone might use the underlying data behind the assessments to—heavens!—actually check GAR’s work. He’s telegraphing to Moore: “Don't let people know you have this data in this format, because then they can come up with their own conclusions, and maybe challenge ours.”

Tellingly, Barnett seems to assume that any independent analysis would be “manipulated” and “inaccurate,” rather than validating their work. From this, one might add a corollary to the Bismarck/Saxe law: that when selling sausage, it's best not to disclose the ingredients.

 

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POSTSCRIPT: For those interested in the details New York’s Freedom of Information Law, there are a couple of more wrinkles to consider here.

First off, it has been affirmed by State law and well-established in court—for example, in a recent case brought successfully by The New York Times against New York City—that if a government agency has a record in electronic format, the public is entitled to receive copies of that record in its original form.

For example, if a Mayor’s prepared a press release on his computer in Microsoft Word, sent it to his assistant via email, and attached a database of people two whom he wanted it sent, one would entitled to get those three documents in their “native” formats (Word, email, DBF). It would be improper for the agency to reply to the requests by printing them out and scanning them, as important data and capabilities may be lost in that process.

This might seem like picayune stuff, but for reporters and researchers it isn’t trivial at all; it goes to the heart of whether the press and public can hold their leaders accountable by delving into the making of their sausage.

A more pertinent example: Say a newspaper were doing an investigative report on whether a big city police department were profiling residents by race or neighborhood, and requested several years of arrest records in electronic format to prove or debunk such allegations.

If printed, such records could make up hundreds or thousands of pages, at 25 cents per page; whereas in their electronic format they might be sent as relatively small data files. More importantly, if these records are not provided in their original “native” format, the paper would either be stymied in its intent to do a statistical analysis, or else would have to spend a lot of time and money to have someone re-enter the data by hand into a searchable, sortable format.

In short, by not providing records in their original electronic formats when they exist as such, government can hide a lot of truths from the public, or at least make it much more difficult to arrive at those truths.

Predictably, Hudson’s City Attorney, Cheryl Roberts got snippy when these legal considerations were called to her attention, considerations I’d verified first with the indispensable Bob Freeman of the NYS Committee on Open Government. The City’s response to my FOIL came not in their original, native formats, but as scans of newly-made printouts, making them difficult to search, sort and analyze. (Unfortunately for them, I found software which pretty accurately scanned their materials back into searchable form, though no citizen or news outlet should have to go to that trouble.)

The City’s FOIL policy as it stands is to play dumb, drag out the time for responding, segment the process among its various departments, create unnecessary work for the City Clerk by having her scan printouts of electronic records—and then act annoyed when it’s pointed out that this has made things unnecessarily slow, wasteful and irritating for everyone involved.

A second wrinkle is that Barnett’s warning to Don Moore would not likely hold up in court, even if GAR had withheld the database file from the Council President. As a consultant to several government agencies (here, the Assessor’s Office, Mayor’s Office, and Common Council), GAR’s work product would likely be deemed a public record subject to FOIL.

Anyway, there’s still more to come from the GAR files.

Property Taxes 101

With local property tax assessments likely to be a frequent topic here for a while, this seems like a good moment to pull from my file a run-down of how those assessments work, which I wrote up for several email lists a few years ago.

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Property taxes in New York State are levied as slices of an overall pie... that pie being the combined budgets of your town, county, school, fire, and any other taxing districts.

If one person's slice gets smaller, the rest all get proportionally bigger to make up the difference in that year's overall budget.

So a crucial thing to realize with assessments is that the dollar number assigned to your house (or building) can be less important than that figure's relation to those of your neighbors.

In theory, the goal should be to make assessments accurate not only for any given property, but also fair in relation to similar properties nearby. Otherwise, even when your assessment is 100% correct, you could wind up paying more than your fair share anyway—if your neighbors' assessments are artificially low.

For the sake of example: Say that all of the 10 buildings in Nowheresville, U.S.A. are two- family residences, all built at the same time, all in the same condition, all with 3,000 square feet of useable space and all with the same acreage. There are no other residential, commercial, industrial or other taxable properties in town, and the town's annual budget is $200,000.

The assessor determines that these houses, being identical, are all worth the same amount— $100,000—and assesses them all at that level.

Dividing the town's budget in ten equal slices, since all the homes are "comparable," each home owner pays $20,000 in property taxes annually. The total assessed value of the town is therefore $1,000,000, and the "mil rate" (the amount of tax paid per $1,000 of assessed value) is 20 cents.

This situation remains unchanged for a long time. But then several people decide they desperately want to live in Nowheresville, and since houses there rarely go on the market, a bidding war ensues. One of thes buyers eventually purhcases the only available house for $200,000.

Now the assessor faces a dilemma: What to do about this big sale?

At this point, the assessor often mistakenly raises the just-bought home to its full purchase price of $200,000, while leaving the others' assessments untouched at $100,000. Assuming the Town budget remains the same, this means that the new home owner effectively pays 2 shares of the town tax levy, or $36,363, while the other nine home owners pay 1 share each, or $18,181.

The new owner is now paying double what his neighbors pay, even though they all own identical houses and properties. This is what's known as the "Hello, stranger!" policy, which was struck down many years ago by the Supreme Court, but which remains rampant in areas with influxes of new residents.

Instead, the assessor could decide that the recent sale price was a fluke, and keep all the ten homes at their $100,000 assessment, ignoring the recent sale. Doing so would leave everyone's local tax bill the same as before ($20,000).

However, while that course of action might seem more fair, it also could have unforseen consequences. New York State could come in to tell the assessor that he was undervaluing property, since the recent purchase price had demonstrated that Nowheresville property values were going up.

The State would then tack on what is called an "equalization rate" to Nowheresville assessments, in this case perhaps as high as 200%. That equalization would not raise anyone's Town taxes, since everyone locally would still have equal assessments. But if the town shares County and School services with a neighboring municipality, it would bump up everyone in Nowheresville's non-Town taxes by that rate, so that Nowheresville as a whole became “equalized” with its neighbors.

Alternatively, the assessor could choose a third course of action: Raise everyone to the most recent sale price for a similar home (i.e., everyone in Nowheresville), $200,000. This would not change anyone's town taxes, since the Town budget is still $200,000 -- so everyone's share remained equal in relation to each other. But it would increase those residents share of County and School taxes if assessments don't also double in nearby municipalities sharing those services.

Finally, there is a fourth path--the one I think is most sensible, but which rarely seems to actually happen.

Namely: The assessor decides that while the recent sale does indicate that houses in Nowheresville are becoming more valuable, the bidding war was unusual, and that drastic changes should not be made based upon isolated incidents.

The assessor thus might choose to raise all ten houses somewhat (let's say to $125,000) including the recently-sold one. Everyone's share of the Nowheresville tax pie stays the same, and equal to their neighbors with comparable houses, while their County and School taxes may go up slightly if values have increased faster in Nowheresville than in neighboring towns. With hope, the State will agree that this is a reasonable course, and keep the equalization rate at 100% rather than bumping it way up based on one sale.

This in microcosm is the situation being faced in small towns and cities and every town in the Hudson Valley... only the calculations are much more complicated, since there are many classes, ages and sizes of property in many different conditions with varying acreage.

The basic dilemma remains the one posited above: Assessors need to keep up with changing times (both upward and downward) while making sure that changes are reflected in all "comparable" properties, not just tacking on additional value to only the most recently-sold homes.

If a Nowheresville property owner disagreed with their new tax assessment, their first course of action would be to schedule a time to “grieve” their taxes with the local Assessor. If the Assessor did not agree to lower it, the taxpayer then would have the chance to go before the local Board of Assessment Review (BAR), an appointed body which has the power to adjust the Assessor’s work. (The State has little police power over municipalities, beyond adjusting the aforementioned Equalization Rate.)

Typically, the best ways for you to convince an Assessors or BARs that your tax assessment is too high are to (A) show that some of their underlying data, such as square footage or amenities, is incorrect; and/or (B) show that comparable houses in the neighborhood or muncipality are not being assessed as highly as your own. In selecting comparables, you want to find properties that are of a similar size, acreage, age and condition as your own, preferably as close as possible.

Such information is publicly available either from your local Assessor, or from your County Real Property Department. You can even request it on a disc if you want to do a more thorough analysis or search for “comps.”

If the BAR doesn’t give satisfaction, the only remaining option is to go to court, which in these parts is a real longshot proposition. Judges around here seem to have little aptitude or patience with the excruciatingly detailed and wholistic analysis necessary to make tax assessments truly fair.

ENDNOTE: There is an additional problem worth mentioning, the tendency of local politicians to raise their budgets in relation to rising assessment values.

Just because assessed values are going up does not mean that a town's budget can just be jacked up accordingly. But it is very rare for budgets to stay flat or even below cost-of-living/inflation rates. Town leaders often look at the total increase in assessed values as a measure of how much they can boost their budget without too many people complaining. The Mayor or Supervisor or Board or Council will seize this chance to increase revenue while simultaneously bragging that they didn’t increase the tax rate—and hope that only a few people realize the consequences of that key distinction.

In the first scenario above, the total assessed value of Nowheresville would go up to $1,100,000 -- allowing the Mayor to boost the town's budget while claiming in the press that s/he'd "held taxes constant" by keeping the "mil rate" unchanged. The reality would be that the new homeowner would effectively be picking up the entire new increase in Town taxes.

Behind the scenes with Dave & Don

For home owners, there a few things more stressful than dealing with an incorrect property tax assessment. The process can feel intimidating—trying to understand the law, gathering data and “comparables,” meeting with a local assessor, “grieving” before the Board of Assessment Review—because those in power hold so much sway over one’s financial future.

In our region, BARs are known often to give grievers token reductions (so they don’t feel they went away empty-handed) while protecting the Assessor’s underlying position overall. Meanwhile, citizens often suspect that their elected officials may have some kind of special “in” when it comes to the whole assessment process.

Recently, I spent several weeks quizzing City of Hudson officials and their attorney Cheryl Roberts over a Freedom of Information Law (FOIL) request for documents related to a citywide assessment performed by GAR Associates, as part of a $170,000 contract. That contract was awarded by the Hudson Common Council and monitored by its President, Donald Moore. The documents eventually coughed up by the City show that Moore had extensive interactions with GAR, some in person and some via email.

In emails from the Fall of 2011, Moore can be seen going back and forth with GAR’s David Barnett about their ongoing work for the City—peppering him with questions about parcel counts, notifications, taxpayers conferences with GAR. All of these questions were seemingly relevant to the public task at hand.

Moore then addresses an email blast sent by local resident and politician Ellen Thurston, in which she urged constituents to double-check GAR’s new measurements and stats for their houses, since they had bungled hers badly. On September 16th, Moore addressed a host of other assessment topics in an email message before coming around to Thurston’s email:

I wish Alderman and soon to be County Supervisor Ellen Thurston hadn’t gone broadcast yesterday but she did. But I wish even more that your appraiser had not have [sic] missed her house completely.

More remarkably, the Council President then veers off into discussing his own property with the City’s assessment consultant:

Further, I need to measure my house. I am not sure you got my dimensions correctly. But I will get back to you today on that.

Barnett replies with some boilerplate instructions on how his firm calculates “dimensions and square footage” using each house’s external dimensions. If Moore indeed “got back to” Barnett about the topic as he promises above, it must have been by phone or in person, because that does not appear in the emails.

Now, Moore here does not ask explicitly in writing for any property tax reduction. And like every taxpayer, he has every right to check that GAR had his particulars correct.

But the process for doing so should be the same one that all “ordinary” taxpayers have to go through—not via direct messages within the context of managing a $170,000 contract. An implied reminder from the Common Council President to the City’s consultant about his own status as private property owner, overtly raising a potential concern about the stats which undergird his own home’s assessment, has no place in official communications.

This at minimum raises an appearance of impropriety, whether legal or not. In governmental ethics, appearances count because they can undermine public trust in the entire process.

Moore could point out that in the end his own tentative assessment for 2012 went up modestly, from $212,300 to $238,000, a 12% increase. But a look at all the 14 properties listed on the same block as Moore which are in the same class (210 Residential, meaning a single family) shows that the overall increase there was higher (18%) as was the average (20%). Moore’s house is tied for the 3rd lowest out of those 14 houses.

Two similar homes on the block were raised 49% each, and another was bumped up a whopping 80%, making 12% look very reasonable by comparison.

More nuggets sifted from the FOIL request will be forthcoming here over the next week or so.

Can Assessors be removed?

(Or, The myth of the helpless mayor)

 

Umpire ejects Atlanta manager Bobby Cox

 

When complaints about a local assessor reach critical mass, the inevitable question arises for elected officials: Why don’t you fire him (or her)?

The officals’ answer is typically mumbled, and murky. “It’s complicated,” comes the sheepish reply. “Our hands are tied,” they dissemble. “Gee, we’d love to help, but the assessor has [X] years left on his/her term.”

But what is the truth of the matter? Can an assessor be removed, if their (mis-) conduct warrants it?

Hudson’s experience is instructive. Ever since the moderate and well-liked Al Kritzman (R.I.P.) retired, Hudson has had a string of controversial assessors, irate taxpayers coming before the Board of Assessment review (B.A.R.) and a long list of assessment lawsuits. These typically either get settled out of court, or tossed by a judge on some spurious “standing” ground which never addresses the substance of the issue.

Some mayors, most memorably Rick Scalera, have seemed to enjoy having things both ways: a tax assessor who sticks “those people” (i.e. the so-called newcomers and merchants) with inflated and unfair property taxes, plus plausible deniability. The message is: “Gosh, I sympathize, but my predecessor appointed the assessor... So there’s nothing I can do until his/her term expires. Sure wish I could help!”

Many Aldermen meekly accept this dodge, without looking into the details. In Hudson, the City Code provides a means for the Mayor to remove an Assessor, and State guidance appears to support that power—though with an added procedural layer to avoid its abuse.

Morever, in addition to legal means, there are also political methods within City Hall to achieving the same end, though again these may be abused. Lastly, there is the power of the purse, which in Hudson ostensibly resides with the Common Council.

On the legal side of the question, Article C4-4 of the Hudson City Charter deals with “Appointive officers and terms.” The Assessor is one of the officers listed (at Part A[1]) as someone who shall be appointed by the Mayor “for six years.” Mayors such as Scalera have cited this (often with backup from pay-to-say City attorneys) that this ends the debate: You just have to wait until the term expires.

However, the same section of the Charter then addresses, just two items down at C4-6, the Mayor’s “Power of Removal.” Section C4-6 states in full:

The Mayor may remove any person appointed to any City officer or position at his discretion. [emphases added]

Like the sweeping protection of free speech embedded our Constitution’s 1st Amendment, this portion of the City Charter is admirably concise, clear and emphatic. It does not distinguish between type of appointees. It doesn’t care whether they have terms of office or not. It includes “any person appointed” to “any” City office or position.

The Assessor’s position is clearly appointive, as it appears in the Charter’s own list of appointees. This terse, declarative, and unambiguous section on Power of Removal thus gives the Mayor the power to remove the Assessor “at his discretion,” regardless of term of service.

As it happens, our State has addressed this very question already. Counsel for New York’s Department of Taxation and Finance issued an advisory opinion (see this link) on “whether an assessor who has been appointed to a six-year term may be removed from office by the town board during the six-year term for reasons other than “dereliction of duties.”

Tellingly, the State did not conclude that you can’t remove an assessor appointed to a six-year term, or any length of term for that matter. Rather, relying on Subdivision 7 of Section 1522 of the Real Property Tax Law, which begins:

An assessor may be removed from office for just cause by the appointing authority after a hearing upon notice.

Again, State Law says that that assessors may be removed, only with the caveat that there has to be some oversight to ensure that removals don’t happen capriciously, say for partisan reasons. Without that caveat, every time you had a Mayor of a different political stripe, they’d summarily remove their predecessor’s appointee just because they could. The State continues to explain that

... if an appointing authority makes a determination to remove an appointed assessor from office, its determination is subject to an administrative review by the State Board of Equalization and Assessment. The statute provides the State Board with the authority to affirm, reverse or modify the determination of the appointing authority.

The “appointing authority” in Hudson’s case would be the Mayor, per the City Charter. If the State upholds the removal, the removed assessor could appeal in court (seek “judicial review” via an Article 78 proceeding). The State further explains that

Assessors are thereby protected from capricious removal or capricious disciplinary action by the appointing authority. However, exactly what would constitute “just cause” would have to be developed in each individual situation. 

Nevertheless, generations of local mayors (and the legislators who ennable them) have punted when asked what they plan to do about punitive, out-of-control assessors, even though they have the legal power to act.

Meanwhile, there is another, more political method that mayors sometimes deploy to squeeze out, rather than fire, unwanted appointees.

Any executive officer has ways of making an appointee sweat, whether in the press, or in meetings, or during the day-to-day course of their City Hall duties. A mayor more than most has the bully pulpit, and can make a lot of noise in the local press which dutifully and usually acritically reports whatever the Mayor says. He (or Council members) can demand that the Assessor appear at public meetings to explain his or her decisions, and if they don’t show, make more hay of it.

The Mayor also the ability to make an appointee uncomfortable, by moving someone to a smaller office, or require them to punch a clock, or (as Kritzman often alleged Scalera had tried with him) threaten to curtail their benefits). The goal in such cases is to get the appointee to jump over the cliff, rather than having to push them. Anyone who has seen even a couple noir films should be familiar with this routine, though again it can be used for evil ends as well as good.

In addition, in Hudson the Common Council maintains the power of the purse at its disposal. But in the case of GAR Associates’ $170,000 contract—which now has taxpayers up in arms again—the Council appears to have abdicated its right to make sure their consultant didn’t stray off the reservation.

By allowing the Mayor to “negotiate” a contract without added stipulations specifying a continued role for the Council, they lost the ability to rectify gross errors except by getting on their knees and pleading. Their only specified role after forking over the $170K was to received “monthly reports,” though according to the City Clerk there are no such records on file in her office. Council President Don Moore has yet to reply to this site’s FOIL request which covers those reports. Do those monthly reports not exist, or did they not mention that they were going to turn the local bed-and-breakfast industry upside down, or did no one read them? 

At this point, there is still some $20,000 left on GAR’s contract; will the City Council refuse to pay it, if GAR and/or Assessor Garth Slocum refuse to undo the B&B switcheroo?

And oddly, the contract alludes to an expectation that the serving Assessor would not finish out his term, with GAR demanding additional time and money if they have to get up to speed with someone new.

In the end, the final GAR contract appears to be boilerplate provided by the consultants themselves, with only one obvious change: The exemption of unspecified Waterfront parcels, presumably those held by the mining company Holcim, from further review. (Interesting negotiating skills, Rick: give the consultant everything they ask, with just one special favor for a corporation with whom you’ve been closely allied. This exemption raises the question whether the City’s reval is inherently and fatally-flawed, if a single major taxpayer was given special treatment not available to others.)

In summary, the City appears to have at least three means of avoiding more nonsense with its consultants and the Assessor: (1) removal, (2) pressure, and (3) the power of the purse. Instead, even "progressive" aldermen have kowtowed to the conventional wisdom which was speciously invented by previous Mayors to provide plausible deniability for headaches some seem to enjoy inducing in the citizenry.

You gotta serve nobody

 

Does the firm hired to reëvaluate Hudson property tax assessments, or even the local Assessor himself, answer to anyone?

And, was there a tacit understanding among the Aldermen that Sole Assessor Garth Slocum would be resigning or removed soon after they approved GAR’s $170,000 contract?

The answer to the first question would appear to be “no,” and to the second “well, maybe.”

The abrupt and unheralded switch of all the City’s bed and breakfasts from residential to commercial classification became publicly known earlier this week via citizen complaints to their Aldermen, rather than via discussion or disclosure by GAR or the City itself. A storm of protest immediately (and not at all surprisingly) followed, with City officials and politicos expressing concern or even outrage of their own:

“We are behind all of the B&Bs. This won’t stand,” wrote Hudson City Democratic Chair Victor Mendolia.

“I am equally concerned about this potential change or designation/declassification,” said Mayor Bill Hallenbeck, adding that “I am in constant communication with the Council President on this matter.”

“[A]s an alderman whose ward includes many of the City’s B&Bs, I’m trying to get to the bottom of this,” said one of the 3rd Ward’s two Council representatives, John Friedman.

But it is unclear that the above have many (if any) legal or legislative cudgels with which to compel GAR or the Assessor’s office to change or moderate their stance, besides asking nicely (or meanly). There is no immediately obvious way for the Mayor, Council President, Aldermen, or the Hudson Democrats who hold every seat on the Council to compel a reversal, because they appear to have forfeited that power when they turned the negotiations over to former Mayor Scalera, resulting in a $170,000 GAR contract.

To help answer these questions, this site submitted a Freedom of Information Law (FOIL) request on Wednesday to the City requesting a copy of the contract with that firm, GAR Associates, and any other records pertaining to its contractual obligations. Tracy Delaney, the consistently helpful City Clerk, quickly provided access to the contract to the City’s website by uploading it to their site, at this link.

The contract refers generally to “the City” as its client, but mentions no one but the Sole Assessor with whom they would be actively working. The Council members appear to have retained no ability to steer GAR’s work when approving the funding, only to receive “monthly progress reports.” Thus far, no such reports have been forwarded at this point by the City in response to the FOIL request, but a specific request has been made, if they exist.

There is one interesting passage in the contract which may suggest why the Council may have agreed to take a passive role in this highly-charged, high-stakes process:

The CITY and the CONTRACTOR acknowledge that changes in the City’s assessment staff, specifically the City Assessor during the term of the Project could impact the timing of meeting Project milestones and providing Project deliverables. In the event that the City Assessor as of the date of this Agreement is no longer actively working on the Project during the term hereof, the parties acknowledge that there may be additional costs for the time spent on transition to substitute personnel for the City. In such event, the parties hereby agree to reasonably negotiate [to] adjust the price… [emphases added]

In other words, the GAR contract specifically signalled that the firm had been warned that the City might be changing assessors. GAR clearly was mindful enough of this likelihood to make sure that they would not be held responsible for any delays which resulted, and compensated for any additional costs.

The Aldermen may have viewed this as a sign that they were getting rid of the controversial Assessor* in exchange for funding GAR’s work. In speaking with people who attended or participated in the deliberations, there are some indications that the Council was led to believe this was the deal. However, others might view the contractual language above as insurance against Slocum’s resignation or removal—since it could incur more delay and cost involved with the reassessements. 

The contract also specifies that GAR is an “independent contractor,” firmly stating that “no principal-agent or employee-employer relationship is created by this agreement.” In other words, we deliver the results, you pay for them, and that’s it. It does mention at several points that the firm would “work with” or provide information at the request of the Assessor, though these seem to refer to straightforward information exchanges, rather than policy decisions like changing all the B&Bs’ tax classification. A letter was issued by Slocum in April 2011 largely mirroring information also issued by GAR.

Moreover, if the contract’s payment schedule has been adhered to, by this point GAR has been paid all but $23,000 of the $170,000 they were promised. That’s not chickenfeed, but it further reduces the City’s leverage if they wanted to try to bring GAR to heel.

Attached in the contract is a letter from GAR Vice President F. Cindy Bare to Council President Moore dated October 11, 2010, which indicates that they had met face-to-face, and further lays out GAR’s case for being hired for $170,000. There is no further indication that Moore retained a role for himself in overseeing their work once it was funded. The letter offers to provide the City Attorney a “contract template” to work from.

In short, even if City officials were genuinely surprised and concerned about this sudden threat to a vital component of its economic engine, it is not at all certain that they can do anything except plead with GAR to change its position. As this site reported earlier in the week, the practice the firm has adopted in Hudson is not common to the rest of the County: five out of six B&Bs outside Hudson that were spot-checked are classified as residences, not commercial property. The simplest solution, and maybe the only one still available to City officials, is to persuade GAR or Garth to change the classifications back to avoid having an unhappy client. Problem is they don’t have to, and it’s debatable how unhappy some officials really are about it.

One other interesting tidbit gleaned from the contract: GAR and the City (represented by Rick Scalera) agreed to leave one part of Hudson out of the revaluation process: “Hudson Deep Water Port.”** Deeming that area “Unique or Highly Complex,” they agreed to leave it alone unless the City agreed later to additional fees—without specifying which parcels would be exempted. One assumes however, that the major property holder there—Holcim—was left out of the reval process.

At least one other question remains: What power does the Mayor’s office have over the Assessor? That has been a longstanding local debate, one which will have to wait for a separate post...

 

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* Anecdotally, various taxpayers claim that Slocum has made his personal distaste for new property owners in general, and at least one B&B owner in particular, quite plain to them.

** Note: Legally, Hudson has no “Deep Water Port,” as it does not qualify for that classification under Federal law. But Holcim and its backers prefer this terminology, and continue to use it even after citizen protest caused it to bestruck from the Waterfront Plan.

The $170,000 Question

$170,000: That’s the value of the contract awarded by the Hudson Common Council last year to GAR Associates to reassess properties Citywide. (Evidently Sole Assessor Garth Slocum either wasn’t up to, or could not be trusted with, that task.)

Underwritten by local taxpayers, that six-figure pricetag is payment for the privilege of having the City’s own consultant launch a surprise offensive against one of its most dynamic and essential industries—its constantly-booked bed and breakfasts. City leaders profess to have been blindsided by GAR’s decision, which may have far-reaching consequences.

The $170,000 question then is: How could GAR’s move catch the City unawares—if indeed that move was a surprise? Put another way: Who is minding the Hudson store?

When GAR was originally hired, Council President Don Moore painted a Panglossian picture of how well that $170,000 might be spent. The March 15th, 2011 Council minutes report Moore as saying:

President Moore [...] stated after an extensive process they had settled on GAR Associates Inc. which were highly recommended and impressive in terms of the programs they had presented. President Moore said “in so far as property taxation is an issue of both financial revenue but also of fairness and concern throughout the city that we need to do everything we can as a city government to make sure that we have this objective and fair professional job of appraising and assessing property of the city as possible”.

But as first reported by Carole Osterink at Gossips of Rivertown, this unilateral and sweeping change of all local B&Bs from residential to commercial classification may cause each of those home-based businesses a sudden financial and legal hardship. It would likely incur new mortgage costs (or even invalidation of existing mortgages).

And, more alarmingly, it might turn B&Bs in residential districts into non-conforming uses, potentially forcing them to close while they try to obtain a variance from the Zoning Board of Appeals. Lastly, it appears that GAR based its revaluation of these properties based on B&Bs outside the City, claiming no such sales occurred locally to use as comparables (“comps”). That claim ignores the fact that at least one residence within the City Limits was sold in the past year to an existing B&B to expand its operations.

A spot check of five B&Bs around the County at the Real Property Department indicated that all of them are classified as residential properties, not commercial. Bed-and-breakfasts in Chatham, Copake, Hillsdale, Kinderhook and Taghkanic were found to be classified on the tax rolls as residential dwellings, either single or multi-family.

As it happens, GAR did the resassment in Taghkanic. And a spot check of a sixth B&B there reveals an inconsistency in their approach, as this one is classified as commercial. Moreover, GAR’s work in Taghkanic was brought to the attention of Moore and other Aldermen around the time their contract was approved because problems had arisen there.

Several months before the Hudson contract was authorized, The Register-Star reported in December 2010 that GAR “paid the town [Taghkanic] a hefty refund” only after local Democrats noticed that only $4,000 worth of work was performed despite their having received a $20,000 retainer:

Councilman Larry Kadish said any remaining money should be returned to the cash-strapped town’s coffers.

“It’s our money and it should be sitting in our account,” Kadish said. “I don’t accept this as a reasonable way to do business.”

Kadish also said he was troubled by the fact that the town’s taxpayers appeared to have paid considerably more for assessing services than residents of neighboring towns.

But learning from others’ experience and heeding advice is not much in fashion in Hudson politics, so Moore and the Council raced ahead with approving the $170,000 to GAR.

Further inspection of the Council minutes from March 2011 [PDF] does not indicate that the Aldermen retained for themselves any formal oversight of GAR’s activities once the $170K was approved. The terse resolution passed that night without opposition delegated the authority to then-Mayor Rick Scalera “to enter into a contract with GAR Associates Inc. for professional service for a citywide reassessment of the City to be completed for the 2012 assessment roll.”

The answer to the $170,000 Question thus may lie in the contract negotiated by Scalera with GAR. Would GAR report to the Mayor’s office, or to the Council, or to the Sole Assessor? Would any elected officials retain the ability to monitor and correct GAR’s work, or did the City abrogate its own power to undo such abrupt, unilateral moves like the assault on the B&Bs?

A copy of the GAR contract and any related correspondence or amendments has been requested from the City, and its contents will be reported here assuming it is responsive.

Real property: What Galvan actually owns

Q: How many properties does the Galvan Initiatives Foundation actually own in the City of Hudson?

A: Just one—the Hudson Library building.

Assessed at $528,300, the current Library building at 400 State Street was transferred for $0 to the Foundation as a donation from a for-profit limited liability corporation, Galvan Partners LLC, less than two weeks ago.

Assuming that GIF is eventually approved as a charitable organization by the IRS, that $528,300 will presumbably be written off the LLC’s taxes, with Library building staying off the local tax rolls since GIF is listing the address as its offices. (Where the Library will wind up remains an open question.)

RP-5217 form for Galvan transfer

I had posed the above question to GIF’s newly-minted director, Tom Swope, in a public online forum last week. Mr. Swope—who previously oversaw numerous applications by Galvan to the Historic Preservation Commission and also millions in property tax grievances brought before the Board of Assessment Review—either did not know the answer, or was too busy to reply, or perhaps did not wish to share this public information.

So I researched it myself at the Columbia County Real Property Department, performing both a computer search and a hand-review of transfer forms (RP-5217s) since December 2011, when the Foundation was incorporated at the State level by Eric Galloway and Henry Van Ameringen.

The for-profit Galvan LLC still owns 35 other buildings in town, according to these records, including one home purchased in late December. Unless the Foundation and LLC have neglected to file their real estate paperwork in a timely way, the number of holdings of the latter is, again, just one.

The question and answer was interesting, among other reasons, because Hudson Mayor Bill Hallenbeck had alluded to what he termed “facts in regards to the Galvin [sic] Foundation and properties which have been purchased renovated, and provided to a lot of important City entities.” The Mayor also stated that he “happen[s] to appreciate what the foundation has accomplished here in Hudson.”

However, the facts on file at the County Real Property Department do not actually support that allusion. The Foundation has acquired a grand total of one building, and has yet to accomplish much except issue a press release, make a controversial proposal, and attack the integrity of three aldermen. One can only assume the Mayor was confusing the for-profit Galvan Partners LLC’s activities, rather than the Foundation’s. Either way, many locally have expressed reservations about or even opposition to the supposed “accomplishments” of either entity.

Tomorrow I expect to have some other real estate news gleaned in the course of this research.

Taxed

Thanks to the sharp eyes of a Claverack resident, I just became aware of this amazing, searchable database at the Times-Union’s website—which allows you to track what people are paying for property taxes throughout the state.

Here’s the link just for Columbia County, showing the top taxpayers in descending order. It starts with the Top 50, but you can continue as far as you want from there. 

One thing to bear in mind—some of the taxes listed are hypothetical, in that the Property Tax Tracker includes nonprofits, but does not identify them as such. For example, I don’t believe the Fireman’s Home in Hudson pays $600,000+ in property taxes (nor should it); that's just the amount they would pay based on their assessment, if it were a for-profit entity.

(Also, it’s not clear whether in all cases the taxes paid by the owner of multiple but unconnected parcels are linked; for example, if you owned a house in Kinderhook and a building in Hudson, would the taxes be combined for ranking purposes?)

Assembling this data must have cost the T-U thousands, maybe tens of thousands (though some counties, such as Dutchess, charge far less for assessment data than others; I once paid $5 for the complete Dutchess County residential rolls on a CD, info that would cost hundreds in Columbia). I’ll be doing some sifting of it over the next week or two.