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Liu Releases Audits on DOF's Valuation Process for Co-ops and Condos

Investigation found that agency made errors in assessments and failed to notify public of changes in methodology.

The city comptroller’s office released two audits Friday which found that the Department of Finance failed to explain changes it made to its market value calculations that resulted in , especially co-op and condo owners.

Comptroller John Liu said his investigation discovered that the agency assigned questionable values and made errors when figuring out assessments for the units.

He also said the city caused “shock” and “confusion” by not giving timely warning to co-op and condo owners of the skyrocketing market values of their units.

“While real estate taxes are an important source of revenue for the city, homeowners should not have to endure the stress of being unable to anticipate their property taxes year to year,” Liu said. “The DOF’s recent arbitrary decisions will affect many families for years to come and raise serious questions. Even after enormous public outcry, there is still no explanation behind many of the agency’s measurements of market value.”

The Department of Finance could not immediately be reached for comment.

In the comptroller’s audit, the DOF responded that it “already ensures that properties are valued properly and does not agree that properties were over-assessed or under-assessed simply because there is a change in value from year to year.”

According to the audit, homeowners were subjected to during a time when home prices remained stagnant.

Bob Friedrich, president of Glen Oaks Village and one of the leaders of the President’s Co-op and Condo Council, said an estimated 800 to 1,000 northeast Queens residents packed into North Shore Towners Thursday night to talk with the comptroller about his audit.

“The bottom line is that everything we said was happening last year with the DOF’s fantasy numbers has been confirmed by the comptroller’s office,” Friedrich said. “It’s a sham. At the end of the day, co-op owners are paying property taxes that are pushing out the middle class. We’re hopeful this audit will bring about change to the city’s way of doing business.”

Warren Schreiber, president of the Bay Terrace Community Alliance and also a President’s Co-op Council leader, said the audit is “shedding light on a system in need of change.”

“It validates that the DOF was doing things in an arbitrary manner and using a computer system with flaws,” he said. “There were flaws in the way they were analyzing data. There was no consistency in their valuations.”

Liu said his office was prompted to undertake the audits following numerous complaints of large spikes in residential tax bills.

The audit found the DOF’s decision to change its methodology for assessing property values in Fiscal Year 2008 to 2009 resulted in market value and tax volatility.

In Fiscal Year 2011 to 2012, the agency switched back to its original method, which then resulted in further volatility, the audit found.

Queens co-op and condo owners saw the largest spikes, Liu said. Nearly 30 percent of co-ops’ valuations rose by more than 50 percent, driving tax bills significantly higher.

The investigation found that as much as 10 percent of the borough’s 859 co-op buildings received much higher property values than the DOF’s formula should have allowed.

In the recommendations section of the audit, Liu calls on the city to make its property valuation process more transparent, ensure that its computer system selects appropriate comparable properties for assessments and notify the public of changes is valuation methods.

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