Wednesday, March 31, 2010

Fairview's 2008 Exempt Percent Understated due to Assessment Blunder

A $120 million blunder by the Town of Poughkeepsie Assessor's office in 2007 caused the Fairview Fire District's official 2008 exempt percent to understate the true exempt percent.  The true portion of Fairview's market value that was exempt from fire taxes in 2008 is not 41.7 percent as I reported, and as confirmed by a Dutchess County official.  The true portion is probably near 47.9 percent, an increase of 6.2 percent.


The Fairview Fire District has the highest fire tax rate of any fire district in Dutchess County, and possibly the highest in New York State.  Until nearly two years ago, a widely-quoted reason given for Fairview's high tax rate is that 70 to 80 percent of Fairview's market value is tax exempt.  My report, Tax Exempt Properties in Fairview posted to my Fairview Fire Tax website on June 18, 2008, showed this reason to be an urban myth.  My analysis showed that for the 2008 fire tax year, only 41.7 percent of Fairview's market value was tax exempt.  This result was later confirmed by Kathleen Myers, Director of Dutchess County's Real Property Tax Service Agency. 

Fairview's 2008 exempt percent had some practical importance.  At the time my report was posted, State Senator Stephen Saland and State Assemblyman Joel Miller were sponsoring bills intended to benefit fire districts with very high exempt percents.  Also, Dutchess County Legislator James C. Doxsey was sponsoring a related resolution.  All these efforts ended after my report was posted, because Fairview would not have been eligible to benefit from any of them. 

41.7 Percent Figure Has Been Unchallenged

There has been no credible challenge to the assertion that 41.7 percent of Fairview's market value for the 2008 fire tax year is tax exempt.  And how could there be?  After all, the 41.7 figure is based on a primary source of data — the 2007 assessment roll for the Fairview Fire District — the same data used in the preparation of 2008 fire tax bills.  Each assessor signs an oath every year certifying that all properties have been assessed at a uniform percentage of market value.  There simply isn't a more authoritative basis for calculating Fairview's exempt percent.  There would seem to have been no reasonable basis for questioning the 41.7 percent figure.

There is now.

There's Been a Mistake

A mistake has been made which substantially affects Fairview's exempt percent for the 2008 fire tax year.  In 2007, the Town of Poughkeepsie Assessor's Office contracted with Queens property assessment consulting firm MJW Consulting to assist it in a town-wide reassessment of properties, including most of the Fairview Fire District.  At the time, various other municipalities in the Hudson Valley had also contracted with MJW Consulting.  The Town of Poughkeepsie and many other municipalities cut ties with MJW Consulting in 2008 following allegations about the firm's performance.  But during the contract MJW Consulting reassessed many properties in Fairview, including a property with parcel ID 134689-6162-09-072632-0000.  MJW Consulting assessed this parcel, which contained a small house and other structures, at $190,500, apparently ignoring the value of these other structures.  What were the “other structures” on this parcel?  These other structures were most of the main buildings of the St. Francis Hospital complex, whose market value the previous year was over $140 million.  Oops!

Town of Poughkeepsie Assessor Kathleen Taber apparently folded MJW Consulting's assessments into the 2007 assessment roll without running a sanity check on the data.  In other words, Taber certified the 2007 assessment roll with most of the assessed value of St. Francis Hospital omitted.  For the next assessment roll, Taber found and corrected the blunder.  But it was too late to correct the 2007 assessment roll.  The blunder only affects analyses of Fairview for the 2008 fire tax year (2007 assessment roll) — both mine and Kathleen Myers'.  It certainly makes sense to adjust these analyses to correct for this blunder.

Correcting for the Blunder

According to Kathleen Taber, a reasonable guess for the assessed value of the main St. Francis property for the 2008 fire tax year is around $120 million — more than 600 times the official assessed value for that year.  Adjusting my 2008 analysis of Tax Exempt Properties in Fairview using this corrected estimate for the main St. Francis parcel shows that 47.9 percent of Fairview's market value was tax exempt for the 2008 fire tax year.  This figure happens to be the same as Fairview's exempt percent for the 2010 fire tax year, and less than half a percent more than Fairview's 2009 figure of 47.5.  In summary, Fairview's exempt percent has held remarkably steady in the last three years, ranging from 47.5 to 47.9. 

The corrected St. Francis assessment also affects the ranking of the tax exempt institutions in Fairview.  My 2008 report Tax Exempt Properties in Fairview listed St. Francis Hospital as the fourth largest not-for-profit institution in Fairview, after Marist College, Dutchess Community College, and Hudson River Psychiatric Center.  After correcting for the assessment blunder, St. Francis Hospital easily moves up to second place, with market value substantially greater than that of Dutchess Community College.

My forthcoming report, The Big Three Fire Districts of Dutchess County, provides more details of Fairview's exempt percent and up-to-date ranking figures.
    Acknowledgment:  I'm grateful to Town of Poughkeepsie Assessor Kathleen Taber for patiently answering a series of email inquiries regarding the main St. Francis parcel.