• Lawyers lowballing challenged property values affects entire system
• 27% of the grievances reviewed came in at 10% or less than assessor value
• 11% came in at between 0 and 1% of assessor value
• Other property owners pick up the tab

What is the value of a seven-bedroom, 13,000-square-foot mansion on 4 acres in Scarsdale’s prestigious Heathcote neighborhood?

The Scarsdale assessor says it’s worth $11 million, which ends up costing Dr. David Matusz about $260,000 a year in property taxes.

Matusz’s attorney, in his 2015 assessment grievance, certified that it was worth $20. At that rate, Matusz’s tax bill would plummet to 47 cents.

READ MORE: See 19 lowball property values

“That’s impossible,” Matusz said when asked about the value. “It’s clearly not worth $20. Maybe that’s part of the process.”

Such assertions are not unusual in the high-stakes world of the Lower Hudson Valley’s property tax battles. In fact, they are fairly common, according to a Tax Watch investigation.

A review of more than 14,000 grievance complaints in Westchester, Putnam, and Rockland counties found that 29 percent of the complaints — more than 4,000 of them — came in at 10 percent or less than the values set by municipal assessors. Eleven percent came in at between zero and 1 percent, like the one filed for Matusz by his attorney, David Wilkes.

Some of the estimated property values can astound someone exploring this corner of the property-tax world:

• The Doral Arrowwood Conference Center in Rye, valued by the town assessor at $47 million, is worth $20, according to Wilkes.
• The office tower at 50 Main St. in White Plains, valued at $61 million by the city, is also worth $20, Wilkes says.
• The office complex at 555-565 Taxter Road in Elmsford, valued at $50 million by the town of Greenburgh, is worth $30, according to Wilkes.
• Scores of homes in Putnam County are worth just $1,000, according to James Burns of Aventine Properties.
• Condominium complexes, such as Harbor Club in Haverstraw, are worth just 10 percent of the value set by the town assessor, according to attorney Robert Wolper.

Municipal assessors say they have been rolling with this practice for years. They say the practice effectively sidesteps serious consideration by their local assessment-review boards — the appointed panels empowered to act on property-valuation issues.

The maneuver sends the cases to state Supreme Court, where residential claims are almost exclusively negotiated behind closed doors within a year. Assessors say commercial cases can drag on for several years, with six-figure settlements regularly paid by governments, and assessments lowered for three years, until a new round of lowball grievances gets filed.

Whatever reductions are granted are paid for by the rest of a municipality's property owners who pick up the tab for any refunds, and bear an increased tax burden in the following years.

All sides weigh in 

The lawyers who certify that multimillion-dollar properties are worth a minuscule portion of what assessors value a property at argue that they are forced to do so by court decisions that say a property owner's assessment can go no lower than the value certified as true on a grievance form.

Wilkes recalled a case he inherited several years ago in which the previous lawyer had estimated the value of a $20 million building at $1 million. But then contamination was discovered as the case proceeded, slashing its value to less than zero.

"You pick a number you are claiming, and you will be bound by that number," said Wilkes. "You have to protect your client."

The system has so infuriated Rye town Supervisor Joe Carvin that he has called the heads of national corporations whose tax lawyers have filed grievances that claim their high-priced properties were worth a pittance.

“The whole system is broken because the lawyers are playing games,” Carvin said. “There’s no sense of fair play. They just make up the numbers.”

"The lawyers manipulate the system as much as possible," said Ossining town Assessor Fernando Gonzalez. "Once you get to Supreme Court, he has a chance of bamboozling the judges. There's a real problem with the system."

Steve Cohen of Briarcliff Manor recalls filing a grievance a few years ago on his home on Magnolia Road. Like many homeowners, he hired a tax representative who found comparable sales and filed for a grievance based on what he thought Cohen's property was actually worth.

Cohen said wouldn’t think of swearing to the truth of a statement that he knew wasn’t true.

“It’s not honest,” said Cohen. “I’m not one of those large property owners with the muscle to have an expensive lawyer looking for an artificially low valuation. They get a reduction and it comes out of my pocket.”

The practice of low-balling puts tax professionals in a bit of a bind. In their roles as advocates,  they zealously work in their clients’ best interests. The grievance complaint, however, requires property owners or their representatives to swear that “all statements made on this application are true and correct to the best of my knowledge and belief, and I understand that the making of any willful false statement of material fact herein will subject me to the provisions of the penal law relevant to the making and filing of false instruments.”

Fact or opinion 

Wilkes told Tax Watch he tells the truth about factual matters on his grievances — the ownership, property type and tax-map number. He said his statement of the Scarsdale mansion’s estimated value, which he indicates is subject to an appraisal, is his opinion about what it’s worth.

Opinions, he said, can’t be characterized as false, even if they may appear to be very far from the truth.

Court decisions have found that a property-owner’s assessment can't be lowered any more than what is asked for on the grievance form. So the tax lawyers say any number will do — and the lower, the better.

Wilkes said he doesn’t know what his clients' buildings are worth when he files a grievance. Obtaining an appraisal at the beginning of the process would be too costly, and time constraints caused by tight filing deadlines make it difficult when offices like his file hundreds of grievances each year. He’ll obtain a professional appraisal later in the process.

Until then, he goes with $20, what he calls a “placeholder.”

“We do it a little tongue in cheek, to highlight the oddball way the law works in New York,” Wilkes said.

Tax Watch asked Wilkes if he believed these opinions of property value were true. He offered this response:

“It’s my opinion of what the law says you have to do to protect your client,” he said. “It’s my opinion of the law, and the law says I need to make a claim.”

Lawyers routinely make lowball offers in oral negotiations, said Professor Bruce Green, the Stein Chair of Law and Ethics at Fordham University. But certifying to a statement they know is untrue can run afoul of legal ethics.

“It’s a convention that should be an embarrassment to the bar, when they deliberately lie in their filings, and certify them to be true,” Green said. “If the statements are not true and correct, and false to his knowledge and belief, the lawyer shouldn’t be signing it.”

Ossining's assessor said there is no chance properties are worth as little as some attorneys claim.

"It offends anybody who looks at the grievances," Gonzalez said. "It's like me claiming that my brand new truck worth $45,000 is only worth $4,500. It's just ridiculous."

White Plains Assessor Lloyd Tasch said that, in his 29 years in the field, he has never seen the valuation on a real-estate parcel decline by 90 percent through the grievance process. In Westchester, he said, a parcel’s land value — without a building — comprises at least 20 percent of its total value.

Spreading the word 

Wilkes is considered an authority in this niche of the legal world. In 2015, he filed grievances on properties valued by Lower Hudson Valley assessors at more than $1 billion. Last year in Brooklyn, he was invited to make a presentation about property tax law to judges from across the state.

He also plays both sides. In New Rochelle, where Wilkes files no cases, he defends the city in assessment matters. His firm, Huff Wilkes, has made $555,000 from the city since 2013, documents show.

His cover story in Westchester Lawyer, published in March by the county Bar Association, instructed local attorneys to make lowball estimates, just in case something is discovered while the case is pending that could lower its value.

“There is no downside to this practice (other than frequently miffed feelings on the part of the assessor) and your client is well protected,” Wilkes wrote.

Miffed they are.

“It would be easier to settle cases if the lawyers were being reasonable,” said White Plains' Tasch. “Honesty would be a good start. But you can’t put honest and lawyer in the same sentence. They have to be good actors to do it with a straight face.”

Options 

Orangetown Assessor Brian Kenney, who also serves as Philipstown’s assessor, suggested that the lowball practice would vanish if state law were changed to require that petitioners prove the value they assert on their complaints.

“The original number should be their realistic number,” he said. “Put down something that’s correct and, if you can’t prove it, you are out.”

Former Eastchester Assessor Rich O'Donnell retired from his public job a few years ago and opened his own property grievance firm to represent property owners looking to lower their assessments.

O'Donnell's estimates rarely dip below 50 percent of the value set by municipal assessors, and his grievances typically include an appraisal, which includes comparable sales on which he bases his complaint. While he understands that others may submit lowball estimates because they have no idea what their client's property is worth, he does the legwork before he files his complaint.

"You are supposed to submit evidence that is accurate and true," he said. "I don't submit any false information."

The lowball estimates of value abound throughout the region. Those include dozens of commercial properties represented by attorney Jeff Rodner, including Trump National Golf Course in Briarcliff Manor. Rodner routinely certifies that the values of his client’s properties are 10 percent of a municipality’s value.

Did Rodner actually believe the golf club was worth just $1.4 million, as he certified in his grievance for Trump?

“I’m sure it’s worth more, no question about it, ” he said.  "We just put in these low values to protect our clients."

James Burns, a former hedge-fund manager, files scores of grievances throughout the metropolitan region, claiming that the homes he represents are worth $1,000. It sets the floor for his subsequent negotiations.

"To protect my client, I underestimate the value," he said. "Maybe the property was a toxic-waste site. Why would I state other than the minimum value?"

Many condominium challenges, such as the Harbor Club in Haverstraw, come in at 10 percent of assessed value. So do commercial establishments like the Putnam Nursing and Rehabilitation Center in Kent.

Valhalla attorney Robert Wolper, who represents Harbor Club, likens the grievance system to the television show The Price is Right, for which you have to guess the retail price, but not go over it, to win.

Swearing to low values provides what Wolper calls “insurance” for his clients. His valuations get spit out by a computer program that’s usually set for about 10 percent of what an assessor says it's worth.

“It’s prophylactic, to protect the client, in case something happens,” he said. “It’s only put there because it’s required by law. Am I bothered by it? I’m more bothered if I didn’t get enough relief for my client.”

But Pace Law School Professor Bennett Gershman said the lowball values aren't true, and lawyers should not be certifying such statements.

“No person in their right mind would believe that statement,” said Gershman. “I don’t care what you call it — it’s false. Lawyers are obligated to a higher ethical standard, and a lawyer’s ethic is to be honest and responsible in their representation.”

For state Supreme Court Justice Alan Scheinckman, chief administrative judge of the 9th Judicial District, the claims of Wilkes and his colleagues are no different from the disparate claims made by attorneys in a recent case that came before his court. He had to decide between the value of a business: one attorney said $3 million while the other asserted $50 million.

“We have a system where the parties are expected to go at it vigorously and the truth will emerge,” he said. “The reality is that the (district attorney's) office is not going to view this as perjury and they have more pressing things to prosecute. And I’m sure that the attorney will conjure up a good-faith belief, the same as someone does when they sue for $10 million in a personal-injury case.”

A spokesman for Westchester County District Attorney Janet DiFiore declined comment. In Rockland, a spokesman for District Attorney Thomas Zugibe said such issues should be worked out in the court process. Putnam District Attorney Adam Levy said he would prosecute such a case if someone indicated there was probable cause that a crime had been committed.

While the lowball asertions concern him, state Supreme Court Justice Bruce Tolbert, who oversees commercial assessment grievances in Westchester, said attorneys never press for the extremely low valuations by the time the cases comes before him.

“By then, the issues are fairly focused on reality,” he said.