Scarsdale revaluation hits high-end homes hardest

Legendary New York Times foreign correspondent Seymour Topping, who bought his 13-room Scarsdale manse for $80,000 in 1967, paid a visit to his banker in June.

The assessment on his home with a pool on two acres at 5 Heathcote Road had more than doubled to $4.2 million as part of Scarsdale's long overdue revaluation project. A letter from the town-village of Scarsdale had announced that his property taxes would leap from $43,415 to $85,704 to reflect the increased taxable value.

"I was in absolute shock," said Topping, 92, who lives with his wife, Audrey, 86, a photographer and author. "We looked forward to living out our last years here. Now it has become impossible to live here unless I borrow money to pay the taxes."

Tales of hardship brought on by reassessment – never a popular move for politicians – are expected but Scarsdale's experience with updating its property values for the first time since 1969 shows it's not the modest homeowners who are most vulnerable to increases in their tax bills but those on the higher end.

While Topping's lament has echoed throughout Scarsdale's well-appointed neighborhoods, others in the less tony sections of this very tony town have quietly celebrated the good fortune that comes with an assessment reduction – and the possibility of lower property taxes in 2015.

Natasha and James Rose have waited patiently for tax relief. They've lived for 41 years at 10 Ridgecrest East in a six-room home with 2,280 square feet of living space. Their assessment plunged 15 percent, to $834,000.

"I didn't realize we were overassessed," Natasha Rose said. "I just paid the bill. At least we'll be getting a break now from paying so much."

The revaluation has shaken up Scarsdale, arguably Westchester's pre-eminent suburb, with a reputation that goes far beyond the county's borders and its highest median household income, at $231,000. Adding to its allure are the 32-minute commute to Grand Central, one of the nation's finest school districts and mansions that sprawl over several acres in densely populated southern Westchester. Those large tracts were laid out over a century ago; deed covenants in Topping's Heathcote neighborhood prohibit many owners from subdividing the land, adding to its desirability.

Town planners in the 1920s even designed neighborhoods, like Edgewood, for what could be called "affordable housing." Those modest homes on small lots now go for at least $600,000. Over the first seven months of 2013, the median sales price for 138 single-home sales in Scarsdale was $1.5 million, said Lewis Arlt, Scarsdale branch manager for Houlihan Lawrence.

"The demand for Scarsdale remains extraordinary," Arlt said. "It's hard to beat."

Scarsdale in late July had 120 single-family homes on the market, ranging from a two-bedroom on Saxon Woods Road for $549,000 to the palatial estate at 2 Cooper Road on 3.7 acres with almost 15,000 square feet of living space and a $16.5 million price tag. In 2013, Scarsdale's outdated rolls pegged 2 Cooper Road's value at $5.3 million. The 2014 revaluation jacked its taxable value to $11.4 million, fattening the tax bill by $137,000, if the new assessment withstands homeowner Renee Berger's challenge.

A Tax Watch analysis of 500 Scarsdale homes – 250 valued at more than $3.5 million and 250 valued at less than $1 million – found that the property-value increases were not evenly distributed across town.

Assessments on homes valued at more than $3.5 million rose 29 percent – more than double the overall town growth – and added $302 million to the town's tax base. Under current tax rates, every $1 million added to a home's value results in an estimated $22,400 in property taxes, which means the assessment increases would shift almost $7 million in tax burden to these 250 homes.

Assessments on the 250 homes valued at less than $1 million rose a blip – 0.5 percent – and added just $958,000 in taxable value. The property-tax bills for many of the lower-priced homes reviewed are expected to remain stable or even decline.

Overall, the revaluation added $1.1 billion in value to the tax rolls. That's a 13 percent increase, according to Scarsdale's 2014 tentative assessment roll, which is being challenged by Topping and 956 other property owners who have cases before the village Board of Assessment Review. If homeowners are dissatisfied with the review board's ruling, they can seek relief in state Supreme Court, which can grant reductions of up to 25 percent.

"What they did to the high end is wrong," said David Bunzel, president of the Heathcote Association, whose assessment at 2 Sherbrooke Road rose $1 million, to $4.1 million. "When these cases come to court, the town is going to get crushed."

But Village Assessor Nanette Albanese maintains the methodology used to compute new values will withstand scrutiny by the village review board – and the courts. The 2014 roll will be finalized by Sept. 15.

"There is statistically a solid basis for the values," she said.

Scarsdale paid Texas-based Tyler Technologies $800,000 for its data collection and analysis. It spent an additional $400,000 for software upgrades and personnel costs.

The results of Scarsdale's revaluation mirror those in Mamaroneck in 2013. High-end homes in that Sound shore community tended to be underassessed and got hit with huge increases while lower-priced homes tended to be overassessed and saw reductions. In practical terms, that means owners of lower-priced homes have subsidized those at the top end – for years.

"Some homes that haven't been reassessed since 1969 have perhaps been getting a good deal, and they are facing increases they are not happy with," Arlt said. "You can look at them as if they will be getting socked with higher taxes in 2015, but if you look at the last 30 years, there's something of a sense that they had a discount because of the lack of revaluation."

But defenders of the Scarsdale well-to-do say the village went too far.

"It ended up being a fleece-the-rich operation," said real estate broker Doug Leone, of Claire Leone Associates.

It remains to be seen how reassessment will play out in Westchester municipalities with more middle-class demographics. Projects are underway in Greenburgh, Ossining and Yonkers. But those remain the exception, as 15 of 25 Westchester municipalities have not reassessed their real estate in at least 40 years, and nothing compels them to do so.

In Putnam County, four of six towns are up to date, and Carmel has begun work on updating its rolls after 18 years. In Rockland, Haverstraw revalued its property in 2006 while the county's other four towns last updated their rolls in the 1980s, state records show.

Unlike Connecticut and Massachusetts, New York does not require municipalities to update their property values regularly. Instead they rely on the imperfect state equalization rate to try to reconcile outdated assessments with current market values.

Among those fighting their new assessment in Scarsdale is Joseph Sarachek, a bankruptcy lawyer who saw the value of his 22 Harvest Drive home jump from $3.3 million to $4.8 million. He came before the Scarsdale Board of Assessment Review on June 17, armed with an appraisal that pegged his home's value at $3.7 million. He argued that his assessment was way too high, noting neighbors with a swimming pool or tennis court got lower values.

But he did acknowledge that premium finishes burnish his 2007 home's interior.

"At the end of the day, no one looking to buy is paying anywhere near that tentative assessment," Sarachek said.

The explosion in taxable value in the village was fueled by the proliferation of Scarsdale tear-downs, in which purchasers pay top dollar for a perfectly good home, then raze it to build their dream house, as Sarachek did.

Topping shook his head as he strolled along Heathcote Road, where several mansions from his day had been replaced by spanking new ones.

"It's not the old Scarsdale anymore," he said.

Tyler Technologies cited 64 tear-downs over the past three years, including 32 in Topping's neighborhood. One on 4.9 acres at 3 Sherbrooke Road sold for $6.5 million. According to Tyler's calculations, Scarsdale land is worth twice as much as currently valued.

Homeowner Michael Levine has assailed Tyler's methodology, which he said was applied inconsistently throughout Scarsdale.

"I identified situations in which a lower-valued property has greater land value, more living area, better overall condition, better bath quality, more bedrooms and more baths than a higher-valued property," he wrote to the village board. "I am not asserting unequivocally that any particular identified situation is unfair. But I'm saying that there are too many to be ignored, and all warrant review."

The number of bedrooms was not a factor in Tyler's mathematical formula, regional manager Paul Flynn said. The square footage, construction grade and the quality of interior finishes were better signs of value.

"You don't want two things telling you the same thing," he said.

Without a townwide revaluation, municipalities are prevented from raising assessments on individual homes unless an owner does a renovation or addition. Former Scarsdale Mayor Carolyn Stevens, who began the revaluation drive during her term from 2009 to 2011, saw it as a way to capture the taxable value that current law keeps off assessment rolls.

"If you have a $2 million home, and you add a wing, a master bedroom suite and a new kitchen, you could capture up to $300,000 in construction value, but not the fact that it increased the home's value to $2.8 million," she said.

@davidmckay415