NEWSDAY / NEWS12 Special Report

Separate & Unequal

NASSAU TAX SHIFT

Mangano’s overhaul created $1.7B property tax shift in Nassau

The sweeping tax overhaul Nassau County Executive Edward Mangano began after his election seven years ago has in effect created two different property assessment systems — separate and unequal — and a startling shift in tax burden revealed for the first time through an 18-month Newsday investigation.

One system covers the 61 percent of the county’s residential and commercial property owners who appealed their assessments in this period. The typical tax bill for them has gone up only $466, or 5 percent over the last seven years, with virtually four out of every five appeals successful.

The other covers the 39 percent who haven’t appealed. The typical tax bill for these owners has gone up seven times as much — by $2,748, or 35.7 percent.

These findings are documented in a series of data studies by Newsday that provide one of the most comprehensive analyses of the county’s assessment system ever undertaken. They expose hidden hardships among senior citizens and less affluent residents less likely to appeal and reflect dramatic changes in the countywide distribution of taxes between the highest-valued properties and all others.

The analyses established a shift of at least $1.7 billion in taxes over seven years from those who successfully appealed their assessments to those who haven’t and found that just 10 percent of the victorious properties — those worth $1 million or more before their reassessments — garnered nearly half the benefit. More than $790 million in taxes that would have been paid on these properties was transferred, overwhelmingly to lower-valued parcels, while owners of thousands of the appealed million-dollar homes and office buildings actually pay less in taxes today than they did seven years ago.

The overhaul largely reversed years of effort by the county before Mangano’s election to more equitably distribute the tax burden following a 1997 lawsuit that alleged minority homeowners were being hit with disproportionately high bills. Operating under a 2000 court-supervised settlement requiring high levels of assessment accuracy, officials increased the share of taxes paid by more expensive properties and decreased the share of less expensive ones, regardless of whether their owners were from minority groups or not.

That put the county’s residential assessments into compliance with virtually all of the most widely used professional standards for fairness and accuracy. A Newsday residential property data study conducted with the assistance of two national assessment experts found that it is now out of compliance with all of them.

County officials did not question the results of Newsday’s analyses in responding to inquiries for this story. Mangano defended his reforms as a way to reduce the county’s assessment-system costs and prevent them from ballooning the county’s debt burden. The reforms saved the county $20 to $30 million a year, he estimated.

“Every single taxpayer has benefitted and every future generation as well by not creating that debt,” he said.

In response to evidence that less affluent homeowners filed fewer grievances, county officials said they hold more than 40 workshops a year to explain how to challenge assessments and produced a video describing the process of filing online, which only Nassau County allows.

Robin Laveman, the head of the county’s grievance arbiter, the Assessment Review Commission, said Mangano’s reforms replaced a system that was “a disaster” that caused Nassau to pay massive property tax refunds.

Mangano’s unexpected election was fueled by anger over the tax bills that increased during the years before his victory and his vow to take on a system that, beyond issues of fairness, was under assault by waves of successful assessment challenges that were straining the county budget. Those grievances resulted in enormous refunds Nassau had to pay for taxes billed by nearly 300 towns, school districts and other authorities that relied on county assessments that were reduced by appeals.

The aggressive solution he implemented has saved the county between $115 million and $299 million, depending upon various factors estimated by Newsday, including inflation and the effect of a recently launched program for commercial property refunds. But the savings came at the price of the growing disparities, which were widely predicted as they were being implemented.

The solution involved, first, awarding deeply discounted reductions on far more appealed properties than ever in an effort to save money by settling cases before tax refunds had to be paid and, second, an assessment freeze that locked in those reductions from year to year. Over a six-year period in which most property values increased, 78 percent of the 858,000 grievances filed have resulted in reductions, often in double digits.

Historically around the country, more affluent property owners file appeals with greater frequency than others — something critics had warned of — and the results have been telling in Nassau, where the steepness of the reductions owners could obtain was never fully explained publicly or promoted by the county.

The effects are apparent in all three of the county property classes included in the results of Newsday’s analyses, which excluded a fourth class composed of telephone poles and other utility properties.

In the residential class, which includes private homes and low-rise condo buildings, the gap between appealed and unappealed properties was even larger than among all properties — the median tax bills of appealed properties rose $431 or 5 percent while those of unappealed properties rose $2,738 or 36 percent. The median bills are those of typical property owners, both commercial and residential, whose burden falls halfway between the largest and smallest bills. This article refers to the median bills as the “typical” ones.

In the category that includes cooperatives and high-rise condo buildings, bills for the typical appealed property increased $202 or 4 percent compared to $2,299 or 60 percent for unappealed property. In the final category, covering commercial properties, the gap between the two groups was $588, but that number does not include refunds many of the properties receive after often multiyear court battles.

Those one-year disparities add up over six years. The typical unappealed property tax bill increases exceeded those of appealed properties by $8,959 over that period.

Sometimes the disparities are evident side by side in virtually identical houses. Scott Manes, 62, and Rick Cafiero, 65, own two similar homes right next to each other in Syosset. The bill on Manes’ house is now $88 lower than it was seven years ago after he appealed, while Cafiero’s bill increased $4,327 after he did not appeal.

“I don’t think it’s fair,” Manes said of the system. “There shouldn’t be that large a disparity.”

Tax bills are smaller for a quarter of Nassau properties than they were seven years ago after appealing. Among them are nearly 11,000 valued by the county at $1 million or more before their assessments were reduced, including nearly 8,700 single-family homes.

At the other extreme are 93,560 unappealed properties with increases topping $2,400, including more than 6,400 owned by senior citizens and the disabled with a variety of property tax exemptions.

Altogether, the successful appeals have led to 670,456 reductions and more than $37 billion in county-estimated market value being cut from the tax rolls. This has forced governments to tax the remaining value at a higher tax rate to maintain their budgets.

As those rates increased, the tax bills of those who did not appeal and did not get a reduction jumped far more than those who did. The shift in the first year totaled $137 million. The cumulative total had grown to $346 million the next year, and reached $1.7 billion this year.

Newsday reached this estimate by calculating what the average tax rate of properties would have been had they not appealed and multiplying it by what their assessments were before their successful grievances. This estimate of what they would have paid was subtracted from what they ended up paying.

In minority communities, which were at the center of the court settlement, the tax burden has come full circle, according to one Newsday study of residential properties that used census tract data. It found that homes in those communities were assessed at a level 12 percent higher for the tax year that just ended. That compares to 11.7 percent in the year before the court settlement first affected assessments. The difference had fallen to 7.1 percent in the year before Mangano’s reforms.

Every property owner has a constitutional right to appeal their taxes if they believe they are incorrectly assessed.
– Edward Mangano, Nassau County executive

Paul Henry, who has operated a small tax firm out of Suffolk County for 25 years and was instrumental in the filing of the racial discrimination lawsuit, said the disparities in Nassau’s assessments are usually seen in systems that have not been reassessed for decades, like many others on Long Island.

“There is a very big difference,” he concluded, “in naturally deteriorating tax rolls due to lack of maintenance as opposed to developing active policy which results in the ripping apart of the tax roll.”

Mangano has defended his reforms as successes that streamlined an out-of-control system. He said, “every property owner has a constitutional right to appeal their taxes if they believe they are incorrectly assessed.”

He expressed regret for how long it has taken to end the assessment freeze, which he suggested during his 2009 campaign would last two years but which he announced after taking office would last four. It is now scheduled to end after seven years, a delay blamed on county workers’ time being consumed by superstorm Sandy assessment issues.

The county executive has set in motion two other long-range programs that involve sweeping changes of their own and could affect some taxpayers adversely, raising the prospects of opposition. One proposal would shift the burden of commercial property tax refunds onto all business owners, even if they did not appeal. The other, a reassessment of all county property at full market value, could greatly increase the bills of those who appealed over the past six years, in particular.

But for now, the likely outcome is a tax shift that continues to grow.

Homeowners interviewed by Newsday who did not appeal said the higher taxes are pushing them from their homes and businesses and forcing cutbacks on everything from home repairs to vacations. Senior citizens on fixed incomes say they are particularly squeezed, and those who look into selling learn their properties are worth less due to the tax increases. Almost none of them had any idea why their taxes had surged.

It’s kind of appalling that you would have the county government taking advantage of people this way.
– Joseph Cardali, Babylon resident

Joseph Cardali, 54, lives in Babylon and cares for his 79-year-old mother, Helen Cardali, in Levittown, where the median tax bill of those filing grievances increased 0.6 percent, or $62. Mrs. Cardali pays $3,996 a year more in property taxes than she did in 2010-11, a 66 percent increase.

“Because my mother lives here and she is quiet and unassuming, you are going to take advantage of that?” he asked after describing his mother as the kind of person to trust her tax bills.

Cardali said his mother has not taken vacations in years and is house poor, with the biggest expense from her fixed income being her $10,089 tax bills.

“It’s kind of appalling that you would have the county government taking advantage of people this way,” he said. “There’s got to be a tremendous number of people who are in my mother’s situation who don’t know.”

I don’t feel like I’m getting anything back for staying all these years and taking care of the home and paying the school taxes.
– Jane Esopa, Freeport resident

Jane Esopa, 74, lives in Freeport, one of the communities that were the focus of the racial discrimination lawsuit. Under the more recent reforms, her home’s taxes have risen $4,884, or 75 percent, in five years. Before his death this year, her husband went back to work mowing lawns at 79 while suffering from esophageal cancer to help pay the steep increases.

She fears the loss of her home and continues to work in a medical office, as she has for 20 years, frustrated over a bill that grows and grows. “I don’t feel like I’m getting anything back for staying all these years and taking care of the home and paying the school taxes,” said Esopa, who said she did not file a grievance because she believed she needed to hire a tax appeal firm and did not want to pay the fee.

It’s hard to imagine a more convoluted property tax system than the one in Nassau County, which according to the latest U.S. Census Bureau estimates has the largest average home tax bills of any county in the country. Not only are properties divided into four classes, but each is assessed at a minute fraction of full market value. For instance, residential properties have a rate of 0.25 percent, which assesses a $400,000 home at $1,000. Each class is also billed at a different rate by the nearly 300 taxing authorities using county assessments.

As recently as 15 years ago, assessments had been based on what it cost to build a home in 1938 and land values from 1964. The system ignored the impact a location might have on a home’s value, whether it be on the water or abutting a train track. It also turned a blind eye to the fact that more expensive homes had increased in value faster than others over the decades.

A judicial challenge came in 1997. The late Roosevelt community activist Diana Coleman and four other homeowners represented by the New York Civil Liberties Union brought a suit accusing the county of violating federal civil rights and fair housing laws by systematically under-assessing higher-valued properties, causing poorer, minority homeowners to overpay for government services.

The plaintiffs won the support of the New York Attorney-General’s Office and the U.S. Department of Justice, which conducted a study that found homes in minority communities were assessed at a level 27 percent higher than others for the 1997-98 tax year.

After failing to get the suit dismissed, the county settled and agreed to update its assessment practices and meet industry standards for fairness not only for private homes but for all classes of property.

Before the 2003-04 tax year lawsuit reassessment, the properties of some predominantly minority school districts were overassessed an average of 27 percent, a figure that dropped dramatically to 5 percent or less after the reassessment, according to a study conducted by the county’s reassessment contractor.

But not everyone was happy. To maintain fairness, officials began updating assessments to reflect changes in the real estate market, which was surging at the time. And those assessment increases came on top of tax increases totaling 22 percent pushed through by then-County Executive Thomas Suozzi, who confronted pressing financial issues when he took office.

Unsurprisingly, the substantial hikes were met with ire. The county’s residential tax appeal industry — perhaps the most robust and aggressive in the country — became an outlet. Even though the more accurate assessments the county worked to implement for the 2003-04 tax year were expected to be challenged less, appeals doubled from that point in only two years, from 56,755 to 125,731, with the firms collecting up to half the first year’s savings as a fee when their clients won.

Ensuring that those firms didn’t obtain any unwarranted reductions was an enormously costly endeavor with a lot at stake because of the state law known as the county guaranty. That requires Nassau uniquely to refund not only the taxes it owes property owners who win appeals after they pay their bills, but also to refund the taxes owed by school districts and other taxing authorities that based their taxes on the county’s overturned assessments.

The most recent audited data available from the county estimates it owes $302.6 million for pending appeals and $939 million in unpaid bond debt for past refunds, shackling future generations with the payments.

Mangano’s freeze

Mangano beat Suozzi in 2009 by just 386 votes. A few months later, he ordered the freeze, which Republicans had been pushing for years citing “assessment fatigue” over adjustments made to assessments each year to keep them accurate.

Effective with the school bills of 2012, it halted any change in assessment unless a taxpayer filed a challenge or a property was damaged or renovated. It ended the county’s practice of updating assessments annually for changes in the real estate market, which had been keeping them accurate.

Attempting to resolve challenges before tax bills went out was more complicated. Here, Mangano relied on a proposal that tax appeal firms had been advocating, which the county had fiercely opposed. Instead of having tens of thousands of challenges wend through the system in painstaking fashion, the county would negotiate rates of assessment low enough to induce the tax firms to quickly settle their cases. The rates would be even smaller than the 0.25 percent used for residential properties.

Settling grievances by establishing assessments at those smaller fractions would leave properties with even less of their value taxed. Meanwhile, unappealed properties would remain assessed and taxed at higher fractions, which are referred to in county notices as “levels of assessment.”

Given the number of grievances filed each year the plan ran the risk of creating mass inequities between appealed and unappealed properties, which is why the county had steadfastly opposed the concept. An assessment freeze would lock in the disparities because it carried forward the lower rates used for the appealed properties and the higher rates used for unappealed properties.

Officials have negotiated lower assessment rates with tax firms each year and have used them to settle all claims, even those not filed by the firms. The rates are now so low a $1 million home reduced on appeal for the current tax year was assessed the same as an unappealed home whose county appraisal has been frozen at $680,000 since 2012. Both would also receive the same tax bill if they were in the same school district and shared other similarities.

… in very simple terms, seniors and poorer areas complain less and therefore will end up being over-assessed. 
– Lee Kyriacou, former head of the state’s Office of Real Property Tax Services

Because appeals are unsuccessful only when a property is already severely under-assessed, fully 78 percent of them have been granted reductions, including 27,431 properties reduced six years in a row.

Complain less, pay more

While some experts said the proposed reforms could have benefits in limited circumstances, criticisms and caution flags emerged early and often that the reforms would disproportionately benefit higher value properties. Newsday’s statistical study confirms they were prophetic.

The former head of the state’s Office of Real Property Tax Services, Lee Kyriacou, who criticized the idea of an assessment freeze as “highly imprudent if not illegal” when it was first proposed in 2007, said a study his office completed found low-income property owners were most likely to be negatively affected by assessment-challenge tax shifts.

“We were able to use that analysis to say in very simple terms, seniors and poorer areas complain less and therefore will end up being over-assessed,” he said. “Unless you do comprehensive reassessment every so often, it is a statistical certainty.”

A lot of people just don’t believe it can help them. 
– Paul Henry

County Comptroller George Maragos’ office warned in the first year of the overhaul that the tax burden was shifting back toward middle-class and poorer homes. A 2012 Newsday analysis offered striking figures about the disparities in appeals rates between rich and working-class communities. In North Hills and Port Washington North, 75 percent of property owners challenged. But in East Atlantic Beach, Roosevelt, Uniondale and Glen Cove, the rate only reached 15 percent.

A common reason owners gave Newsday for not appealing was a belief that their properties were already under-assessed, and, in fact, before the freeze county officials had valued properties somewhat below what they were worth to dissuade owners from appealing. But what the owners didn’t realize was that appealed properties are assessed even lower than theirs and that they missed out on the bargain.

Others property owners told Newsday they thought tax firms were scams, didn’t feel qualified to file an appeal on their own or had just put off filing into the future. Henry said his experience has shown him property owners don’t protest due to a lack of knowledge. For instance, some wrongly believe a protest can lead to an increase in their assessments, as can happen in many states other than New York.

“Some people have fear, but a lot of people may just have a lack of knowledge,” Henry said. “A lot of people just don’t believe it can help them.”

County officials have held more education sessions to help homeowners file appeals, but the sessions routinely omit explanations of why it is so advantageous to challenge — that the negotiated assessment rates almost guarantee a reduction. The county’s website contains a recently added video tutorial on how to file an appeal, but the site also contains outdated information. Its online appeal-filing system, which attempts to help applicants value their home, does not account for the lower-negotiated rates and as a result it usually wrongly tells them they won’t receive a reduction if they file their appeal.

This sent first-time homebuyer Danny Liang, 31, who lives in East Meadow and works as a computer programmer, on a weekslong mission to determine why the home he bought had dramatically higher tax bills than his neighbors, even though the county estimated it was worth less than he paid for it. He started going to county grievance sessions after the online system told him he wouldn’t receive a reduction. He said it did not help.

“I was told over and over again, ‘use the software and if it said you should not challenge, then you should not challenge,’” Liang said.

He finally did challenge after attending a workshop held by a former Assessment Review Commission member, Jeff Gold, but it won’t affect his tax bills for another year.

Hans Thomann, 62, said a major reason his 85-year-old mother, Gerda, reluctantly sold her Syosset home last December after the death of her husband was the 40 percent, $5,169 increase in her property tax bills since 2011.

Thomann, who lives in New Jersey, said the property tax system “shouldn’t be dependent on the savvy of the individual person or having their own faculties or children who can do this for them, to challenge their assessment. It should be done in an equitable way for all.”

It wasn’t until five years after the start of the program that the Thomann family filed an appeal on their property, saving $1,000 on their school tax bill just before selling.

‘Ratio study’ results

To measure the effects Mangano’s reforms had on assessment fairness and tax bills, Newsday embarked on a series of data analyses. Most critical was a statistical “ratio study” that analyzed residential properties, which account for 91 percent of the county’s properties and pay nearly 75 percent of the tax burden. A ratio study is a standard tool used by assessors to judge the fairness and accuracy of their assessments by comparing them to the sales prices of recently sold homes.

In developing the study, Newsday consulted Robert Gloudemans, who has directed or participated in more than 100 assessment projects for government agencies around the world, and Alan Dornfest, the tax policy research supervisor of Idaho State Tax Commission, who has 45 years of experience in the field. Both experts have helped develop some of the standards assessors use to judge the accuracy of their work. They reviewed the study after it was completed to identify any deviations from accepted professional standards. None were found.

Gloudemans, who also served as an expert witness for the plaintiffs in the Coleman case, concluded the study was on “solid ground.”

“Your conclusions are supported by the statistical results,” he said.

Newsday’s study compared the assessments of 42,792 homes sold in various tax years to their sales prices. Using statistical tests accepted as industry standards, Newsday also compared results for non-appealed homes against those that appealed, successfully or not. It also compared homes in predominantly minority communities identified using U.S. Census Bureau data to those sold elsewhere. Following industry standards, the results are accurate at a confidence level of 95 percent or better.

The most extreme disparity the study found was between homes in minority areas that had not filed an assessment challenge and those elsewhere that had, an important figure as homes in minority areas were 30 percent less likely to file an appeal. The unappealed minority area homes were assessed at a level 27.2 percent higher than appealed properties elsewhere, the study’s median assessment level results show. That figure is about the same as the 27 percent disparity experienced on average by minority property owners in 1997-98, according to the Justice Department’s study of that tax year for the discrimination lawsuit.

The consequences of not appealing, the study determined, had a broad effect that reached into the county’s middle class irrespective of race. Across the entire county, typical homeowners who have not appealed are assessed at a level 18.4 percent higher than those who have, the study found.

To measure how those assessment trends have affected property owners in dollars and cents, Newsday examined how tax bills have changed for those who appealed, including those who were unsuccessful, and those who did not.

The most compelling comparisons emerge at the individual school district level. Nassau’s 55 districts account for an average of nearly 70 percent of property owners’ tax bills, but their rates often vary considerably. Thus, the owners in a single district are more likely to face parallel tax pressures, and the disparities of the appeals process become evident in close to an apples-to-apples way.

In the East Williston School District, the median tax bills among the 2,201 taxpayers who appealed went up $131 from the 2010-11 tax year to 2016-17. That amounted to a 0.8 percent increase over seven years. For the 778 taxpayers who did not appeals, the increase was $4,461 or 36.1 percent.

In Jericho, the increase for the 3,794 who appealed was $3,800 or 26 percent, but the median bills of the 1,028 who didn’t appeal increased $6,333 or 51.3 percent.

In Syosset, the increase was $2,033 for the 8,439 who appealed, marking a 14.5 percent tax jump. For the 2,555 who didn’t appeal, the increase was $5,921 or 51.4 percent.

The disparity grows when the results are parsed further to account for the disproportionate shift of benefit to wealthier properties. In the Hewlett-Woodmere district, for example, a straight-up comparison of those who appealed to those who didn’t appeal reveals a dramatic shift — those who appealed saw a median tax bill increase of only $468, or 3.3 percent, while those who didn’t absorbed an increase of $3,993, or 40.2 percent.

But tax bills actually dropped over the first five years of the overhaul for owners of the most valuable 10 percent of Hewlett-Woodmere properties that were appealed, those worth $1 million or more, according to their county appraisal at the start of Mangano’s program. Their median tax bills went down $2,289 after appealing, leaving a gap between them and all those who didn’t appeal of more than $5,000.

In Bellmore, the median bills of owners who appealed among the most-expensive 10 percent of homes went down $2,455, while less valuable properties not appealing went up $3,096. In Lynbrook, bills of the top 10 percent dropped $1,121, while bills of less valuable properties not appealing went up $3,385.

Among the five cities and towns in Nassau County, similar dichotomies emerged. Typical property owners filing a grievance in Glen Cove, which does not bill for school services through the county assessment system, saw small decreases in their tax bills, compared to a $208 increase for those who didn’t appeal. In Oyster Bay, the median tax bill of those who appealed went up $880, while the bills of those who did not appeal went up $3,379.

Eighty-two percent of the properties appraised at $1.4 million or more in North Hempstead before the overhaul began (the top 10 percent) filed an appeal, with the median bills of that group going up just $788, compared to a $3,058 increase for less-valuable properties not appealing.

Out of compliance

Many states, including New York, have adopted the fairness and accuracy standards set by the assessment professions’ core education and research society, the International Association of Assessing officers. Newsday’s ratio study shows the county’s assessments have come out of compliance with all of them.

Among the association’s guidelines is one rule stipulating that in the aggregate an assessors’ appraisals must come within 10 percent of what properties are worth. The median Nassau County property was appraised at 90.8 percent of its value in the year before Mangano’s reforms. That fell to 69.1 percent in 2016-17, according to Newsday’s study.

The association also has developed a standard for the average assessment error rate, a yardstick known as the Coefficient of Dispersion that measures how frequently and by how much individual assessments are inaccurate. The figure should not exceed 15 percent for a system like Nassau’s.

The county guaranty has been the biggest impediment to eliminating a wasteful and unfair system.
– Acting Assessor James Davis

According to Newsday’s study, Nassau’s error rate was 7.6 percent in 2010-11, but more than doubled to 15.3 percent by 2016-17, exceeding the standard with two more years of the freeze to go.

Finally, there are standards on whether higher-valued properties are being under-assessed in comparison to lower-valued properties. If they are, then lower-valued properties would be overtaxed, making the system regressive — something that would be expected under Mangano’s reforms given how higher-valued properties were more likely to appeal.

Nassau has come out of compliance with the two most widely used standards for regressivity. The most modern measure recommends assessment levels stay within 5 percent of each other even as property values double. In 2010-11, Nassau’s levels shrank by 3.5 percent as values doubled on average, but by 2016-17 they had fallen outside the standard, with the rate of shrinkage shooting to 6.5 percent, nearly twice what it used to be.

Newsday’s study was also shared with other experts, the heads of tax firms and county officials. Thomas Hamilton, the Gerald Fogelson Distinguished Chair of Real Estate at Roosevelt University in Chicago, said the findings drew coherent conclusions “based on reasonable acceptable methods.”

Acting Assessor James Davis said the true measure of an assessment system’s accuracy is how much it generates in property tax refunds.

“Had the program not been implemented,” Davis said, “the burden to repay property tax refunds would have been ‘shifted’ to all residential and commercial taxpayers alike by virtue of the county guaranty. The county guaranty has been the biggest impediment to eliminating a wasteful and unfair system.”

Reforms in question

Several additional Mangano reforms that could stabilize the tax system are in the early stages of being implemented. Their future is in question given the uncertainty of whether he will run for re-election in the wake of his federal corruption indictment, which is unrelated to his tax policy, and talk of legal challenges.

“Will the assessment system be improved? Absolutely,” Davis said. “The goal of the administration and the Department of Assessment has been and will always be to establish values on properties that are defendable and, most importantly, fair and equitable for all property owners.”

Meanwhile, seven years in, the price of his reforms continues, unevenly distributed, and often paid most by those least able to afford it.

Freeport homeowner Mathilde Brathwaite, 79, who is black, remembers when the county settled the Coleman lawsuit. A retired bank employee, she listened from the doorway of her one-story Cape Cod in a middle-class portion of the village as she learned about the overhaul for the first time. A window by the door was broken. Other things needed to be fixed first, she said.

“We had to cut back terrible,” Brathwaite says of how her family has paid the tax bill, which increased $3,530, or 42 percent, in seven years.

You feel that instead of them being out there to help you, they are out there to get you
– Shant Boudakian, Syosset resident

Brathwaite said she and her husband were told by county officials years ago their assessment couldn’t be reduced because of the large size of their backyard and believed that was still the case today. They finally decided to file a challenge at the start of 2016, but it won’t reduce their bills until October 2017.

“When we tell people how much we pay in taxes they just can’t get over it,” Brathwaite said. “They really can’t get over it.”

In more affluent communities, the effect has been experienced, as well. Shant Boudakian, 53, who moved from Atlanta back home to Syosset in 2014 to care for his 97-year-old father, said he was jolted by the tax bill on the 1,800-square-foot house — $16,309, a $4,707, or 41 percent, increase since 2011-12.

Boudakian said his father would not be able to carry the increase without investments that supplement his pension. He said he would file a grievance for him next year.

“You feel that instead of them being out there to help you, they are out there to get you,” Boudakian said. “And that shouldn’t be that way.”

Inside Newsday’s analysis of tax-appeal firms’ revenue

To establish how much more revenue tax-appeal firms took in after County Executive Edward Mangano implemented his assessment reforms, Newsday undertook a two-part analysis. It established an estimate of how much revenue the firms took in during the six years since the program began, and what the firms would have earned had the program not been implemented. The difference amounted to a conservative estimate of how much in additional revenue the firms earned under the reforms.

Tax firms have two main revenue streams: fees they charge to property owners who received a refund and fees charged for property owners whose tax bills were reduced without the need for a refund. The fees are charged as a percentage of first-year tax savings coming off any assessment reduction. To conservatively estimate these fees, Newsday used the average of the range of rates typically charged by the two major types of firms, 45 percent for those primarily handling residential cases and 24 percent for those primarily handling commercial claims.

To establish the revenue the firms took in after the program was implemented, Newsday first used a method similar to what the tax firms use to recalculate what the tax bills of those who appealed would have been if they had not appealed. By comparing those recalculated bills to what they ended up paying, savings were determined. Fees were then charged against those savings. Tax firms’ fees were also charged against refunds taxpayers have already been paid and to those the county projects it will pay out in the future. The total was $502 million.

As a comparison, Newsday prepared a similar estimate of how much firms would have made before Mangano’s reforms using savings amounts listed in an Assessment Review Commission report for the 2006-07 tax year, the most recent data available for a comparison and one that preceded the tumultuous years of the Great Recession. Multiplied by six to produce a comparison to the six-year program, the total was $335 million, $167 million more than Newsday estimated was generated under Mangano’s reforms.

Newsday also estimated how much the reforms have saved the county. The reforms both cut the costs of refunds and the cost of operating the three county departments involved in the assessment process. Mangano estimated his overhaul saved the county $20 million to $30 million annually primarily due to a reduction in refunds.

A range of estimates for what all of the cuts saved the county were generated, and they varied depending upon whether an inflation adjustment was used or whether savings expected from a recently implemented commercial property tax refund program are fully realized. The program could lead to significant savings for the county, but there are strong indications it will be challenged in court, putting a cloud over whether those savings will be realized.

To produce the estimates, Newsday used figures in county financial reports to compare what was spent or budgeted from 2010 to 2017 to what was spent in 2009, the year before Mangano took office. Property tax refund data was used to compare what refunds the county has paid or estimates it will pay for appeals filed for tax year 2008-09 to every year through 2016-17. Refunds for 2016-17 were estimated at 2015-16 levels. To make them comparable to the eight years of Mangano’s administration, the 2009 costs were either multiplied by eight or adjusted for inflation by up to 12 percent using a regional Consumer Price Index (for workforce costs) or 24 percent using the growth in the countywide tax levy (for refund costs). This table identifies the range of savings depending on whether the various factors were included or not.

Design: James Stewart, Matthew Cassella Production: Tara Conry