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The growing property tax assessment reduction industry is causing major fiscal headaches in New York’s wealthy Westchester County.The county saw tax grievances nearly quintuple between 2008 and 2010 as homeowners sought relief from skyrocketing property taxes, the New York Times reports today.
The increase is largely driven by a growing number of assessment reduction companies that look to reduce homeowners’ property bills for a cut of the savings.
Via the NYT:
“For companies whose work is based on volume, the profit potential is enormous. Dale Young was a partner in her husband’s construction company in 1990 when she called an assessor in Scarsdale to question the valuation of one of their homes. The assessor spoke condescendingly to her, she said.
Insulted, Ms. Young replied that she saw a “great business opportunity.” Within two years, she said, she was earning $250,000 in fees. (She now limits herself to 200 tax appeals a year.)”
The cottage industry began in Nassau County in the 1980s and has since expanded up the Hudson River to other New York City suburbs, which have some of the highest tax rates in the country.
The onslaught of appeals has exacerbated fiscal difficulties in local communities, which are already suffering from lower tax revenues and the loss of state aid. In some cases, refunds are draining municipal reserves, prompting fears of credit downgrades.
The tax grievance craze isn’t limited to New York’s tony bedroom communities. Across the country, falling home values are leading homeowners to question their assessments. In Maui County, Hawaii, about 3,500 appeals were filed in 2010; the county never saw more than 500 a year before 2006. A 42% spike in appeals in Hernando County, Fla., added $1.5 million to the county’s deficit.