Assessment 101: The facts behind the United Riverhead Terminal settlement

Even though it is still summer vacation and school is out, perhaps it is time for a lesson in Assessment 101.

Opinions and accusations can be rampant and misguided.  That happens when facts are not in the public domain. 

With regard to the United Riverhead Terminal settlement, the facts of the case are this:

When the terminal was purchased in 2012 for just over $24 million, the town was forced to settle based on the sale price.  When that happened, the assessments were reduced to conform to the settlement, using the equalization rate at that time.

An equalization rate is a percentage of full market value a town is assessing at if they are not conducting annual reassessments at 100% of market value.  The equalization rate is determined by the State of New York, based largely, but not entirely, on the sales of residential homes in a given period.  As home sale prices increase, the equalization rate decreases.  Buyers and sellers are making the market… assessors are not. 

The Town of Riverhead has not conducted a town-wide reassessment since 1980 when it brought all values to 100%.  Since 1980, market values have increased, meaning that the 1980 assessments have gotten further and further away from current market values.  What was once 100% of market value is down to just below 8% of market value.

When the terminal properties’ assessments were equalized using a 15% + ratio to reflect the sale price back in 2012, they were never changed after that.  Since the Town of Riverhead does not conduct reassessments, assessments in the town generally remain static unless there are physical changes to a property.  The $24 million market value of the terminal in 2012 ballooned to a current market value of $49 million, without any change to their assessments, due solely to the drop in the equalization rate to less than 8%.  The equalization rate’s plummet caused the market value (not the assessed value) of the terminal to move in the opposite direction — again, without any changes to the assessments.   Below is a sample of the increase to United Riverhead Terminal’s market value over the last seven years.

Appraisals on both sides further reinforced the reality that the terminal’s properties were not worth $49 million.  Hence the settlement.

Every property owner is entitled to a fair and equitable assessment, such that they should only pay their fair share of taxes to support the public fisc.  United Riverhead Terminal is entitled to that same equity.  Many homeowners are solicited by companies and attorneys to lower their assessments, and many have availed themselves of that process.  United Riverhead Terminal is no different. 

Property tax refunds are initially funded by Suffolk County, and the monies expended by the county are then charged back to the town on a separate line item on tax bills.  It is no different in Riverhead than any other town in Suffolk County, which also have refunds, some in the tens of millions of dollars.

The assessors are basically municipal appraisers, estimating the value of properties.  We do not raise your taxes, we do not create tax rates, we do not send tax bills, we do not collect taxes or determine refunds.  We are not the Tax Assessor.  Our job is to assess property and maintain physical inventory, approve or deny exemptions, maintain property ownership records, and produce assessment rolls.  The Assessors’ Office is the fiscal underpinning of municipal entities, but the least understood department.  

Hopefully, this primer gives the reader a better understanding of the process and background of the United Riverhead Terminal case.