In the News – NY Real Estate Journal on DAF

The Disputed Assessment Fund : A new challenge for commercial property owners in Nassau County – by Bernie Kennedy

Nassau County is a special place for commercial property owners, with tax rates as high as $9 per s/f.  Now it turns out to be a very special place, with its own legislation created to deal with the current multi-million dollar backlog and multi-year delays in the payment of commercial real estate tax refunds.  Read the full article here.

TRO Against Nassau County’s ASIE Penalties will Continue

Yesterday, Nassau County Supreme Court Justice Thomas Adams signed our Temporary Restraining Order preventing the County from enforcing “monetary penalties and tax liens in any manner whatsoever” pursuant to Nassau County’s ASIE law. This is the 3rd TRO that we have successfully obtained against the County in our pursuit for justice on the County’s egregious ASIE penalties.

We are back in Court on February 8, 2016 for oral argument on the constitutionality on the implementation and enforcement of the ASIE.

Understanding DAF and your increased Nassau County taxes

Nassau County has implemented the Disputed Assessment Fund (“DAF”) as evidenced in your 2016/17 School tax bill and the 2017 General Tax bill.  The 2016/17 School tax bills show that between 10%-20% of the total school taxes were subtracted from the bill for the “Disputed Assessment Fund School.” In essence, your 2016/17 School tax bills were less 10%-20%.

Upon receipt of your 2017 General Tax bill, you noticed that 10%-20% of your General taxes were credited from your General tax bill for “Disputed Assessment Fund General.”  However, your General tax bill was not 10-20% less, but rather the 10%-20% allocated for DAF School and DAF General had been added to General tax bill, making it higher than expected.

DAF was created by Nassau County in an effort to have taxpayers, in essence, fund their own tax refunds resulting from obtaining a reduction in assessment. In theory, the taxpayer is not paying “extra” for DAF, but rather, the County is taking 10%-20% off the School & General bills and allocating that amount into an escrow account designated for tax refunds.  In turn, the County, Town and School Districts are receiving 10%-20% less in taxes.

In light of this potential loss of revenue to the County, Town and School Districts, they have significantly increased their tax rates to recover the difference.  Tax rates have increased as much as 30% in some districts.  This accounts for the drastic increase in taxes this year.

Our firm is reviewing the constitutionality of the enactment and administration of DAF and will be proceeding accordingly on behalf of our clients.  In the interim, we strongly advise you and your tenants to contact your local legislators to voice your opinions on DAF, as well as the ASIE penalties.  The more voices that are heard, the more inclined they will be to do something about it.

Temporary restraining order against Nassau continued

Nassau lawmakers learned Monday that a state court judge has continued a temporary restraining order that bars the county from collecting fines — possibly for years — based on a 2013 law requiring commercial properties to pay hefty penalties if they do not provide timely information to the county assessor about their income and expenses.

The decision creates a $15.8 million hole in this year’s budget and will make it even more difficult for county Executive Edward Mangano to balance next year’s projected budget, which is supposed to be submitted to the legislature Thursday.

Read more

CH&A commences law suit against the East Meadow School District

As of June 2015, the district had eight reserve funds with a total balance of $17.6 million, according to ABLI’s complaint filed in state Supreme Court.

The suit seeks class-action status and to prevent school districts from overestimating budget needs, Harris told The Point. Property taxes alone are responsible for costs of $20 per square foot in East Meadow’s commercial spaces. ABLI members can’t attract or retain businesses at those prices, Harris said.

The suit says, the workers’ compensation reserve fund is $2.8 million and the unemployment insurance reserve totals $1.3 million. Over the last three years, the average annual payouts from these funds were $425,660 and $50,226, respectively.

New York State tax law limits the amount of unexpended surplus funds a school district can retain to no more than 4 percent of the next year’s budget appropriations. ABLI’s suit claims East Meadow’s unrestricted fund balance has been running about 5 or 6 percent for several years.

It would have to be a very rainy day to soak up all that extra money.

Anne Michaud

See original Newsday post.