Letter to the Town Board: All of Chappaqua Crossing must be fee simple
With 11 COMMENTS since Friday
November 5, 2010
by Rob Greenstein
Dear Town Board members,
A few weeks ago we heard that Chappaqua Crossing developer Summit Greenfield agreed to tax the 60 townhouses as single-family dwellings in fee simple instead of being taxed as condominium units.
Town Supervisor Barbara Gerrard was right to insist on this change. But it’s not enough. Chappaqua Crossing must be a fee simple project. Our Town Board must insist that any residential rezoning is limited to fee simple ownership.
Logical argument made for fee simple over a year ago
Mark S. Tulis served as Town Supervisor of the Town of New Castle, Chair of the Town of New Castle Board of Assessment Review, Westchester County Legislator, United States Bankruptcy Trustee and practiced real estate tax law for 30 years. On 07/10/2009 he wrote a letter to the editor titled “Summit Greenfield tax revenue projections misleading; age restriction dubious.”
Mr. Tulis stated “I would urge the Board to require fee simple ownership.” He stated “any projection by the developer as to future taxes is both misleading and non-verifiable.”
The differences between fee simple taxation and condominium taxation
In order to appreciate Mr. Tulis’s concerns, it is important to understand the differences between how fee simple residences and condominiums are taxed. Fee simple residences are typically taxed based on their value, either in comparison to similar properties or what it would cost to replace an existing structure.
Condominiums, on the other hand, like commercial property, are taxed based on the possible rental income that could be generated by the condominium. This valuation technique is based on a myth, mandated by state law, that the entire project, regardless of ownership, is a rental project. In other words, the market value of a property is based upon hypothetical rentals and hypothetical expenses, which are based on current rental market conditions.
Mr. Tulis stated, “A failure to insist by the Board that the Reader’s Digest Project be a ‘fee simple’ project will result in huge reductions in assessments in the future.” He stated “you must also analyze the potential negative impact of millions of dollars of refunds in taxes for this Project within five to ten years, which is the usual time frame for these types of reductions.”
In fact, based on information obtained through a Freedom of Information Law request, over the past 5-7 years, condominium developments in the town of New Castle have received well over a million dollars in tax refunds. This is true in both good and bad economic conditions. Chestnut Oaks received an 8.3% reduction from 2005-2009, a $156,158 refund. Pheasant Run received 20.6% reduction from 2003-2008, a $469,849 refund. Ledgewood Commons is currently seeking a $688,800 refund.
Just yesterday, the Town of New Castle uploaded to their website “An Impact Study on the Possible Results of a Reassessment Project” for the town. The report indicates, “Condominiums are enjoying a tax benefit of 40% to 60% based on the restriction in the methods used to value them.” This study clearly shows the disproportionate benefits condominiums receive. To view the study, click http://www.newcastlenow.org/images/uploads/Impact_Study_New_Castle.pdf
Let me be clear, I do not blame the condominium associations for filing tax grievances. They are merely asserting their rights under current state law.
Summit Greenfield, an aggressive tax griever
Not surprisingly, Summit Greenfield/Reader’s Digest has been the most substantial tax griever. In 2001, they lower their assessed value from $18,500,000 to $14,040.00. In 2002, they lower their assessed value from $18,500,000 to $11,845,600. In 2003, they lower their assessed value from $18,500,000 to $10,587,200. And, again in 2004, they lower their assessed value from $18,500,000 to $11,132,800. Summit Greenfield also filed tax certiorari proceedings in 2008 and 2009, and a tax protest (prelude to a formal certiorari challenge) for 2010 requesting 50% reductions in assessed value for each of these three years. If granted, that would represent a 70% reduction from the original 2001 assessed value.
And this is exactly what Summit Greenfield/Chappaqua Crossing will continue to do in the future. As Mark S. Tulis wrote “even if the current developers of the Project do not protest the Project’s assessments, I can assure you that the future owners of the individual units will do so. The tax certiorari bar certainly can’t wait to seek reductions of millions of dollars from the Town and School District.”
For example, this web site, http://www.condowestchester.com, boasts “that if you buy a condo instead of buying a house in the White Plains, Hartsdale and Scarsdale area you will save about half of the real estate tax which you have to pay if you own a house.” And what’s the very first “Important Link” provided on this web site, a link for a “Property Tax Grievance” firm.
Community is being asked to bear the risk of reduced tax revenues
This serious question about the projected tax revenues from this high-density condominium development is a significant long-term risk that our community is being asked to bear. Other significant long-term risks associated with this high-density condominium development are the negative impact on our school system and the character and rural atmosphere of our neighborhoods, increased traffic, lower property values and a permanent reduction in our commercial base. And it’s because of these significant long-term risks that the overwhelming majority of residents following this issue are vehemently against residential rezoning.
Just look at the competing petitions. The petition to stop the current proposal for residential rezoning at Chappaqua Crossing—
http://www.ipetitions.com/petition/fighttostop/signatures has 854 on-line signatures, plus 36 paper signatures. 890 people are willing to contribute time and/or money in order to stop the current proposal for residential rezoning at Chappaqua Crossing. That’s about half the number of people who typically vote in the Town Board elections. And, no doubt, these 890 people will be voting at the next Town Board election.
On the other hand, the petition in support of the Chappaqua Crossing project, which is found on the developer’s web site www.ChappaquaCrossing.com, has seven signatures. That is not a typo, seven signatures!
Town board must insists that all residential ownership by in fee simple
Our Town Board must insist that any residential rezoning be limited to fee simple ownership. Summit Greenfield can build more fee simple townhouses instead of condominiums. The only condominiums should be the 20 affordable units. If Summit Greenfield is not willing to abandon their current high-density condominium development, they can use the property as it’s currently zoned for commercial use and build twenty-one single-family residences. If Summit Greenfield doesn’t think they would have an adequate return on their investment without a high-density condominium development, they need to sell the property, take their loss and move on.
Although it remains to be seen whether the Trump Organization is serious about “stepping in should Summit Greenfield fail in their attempt to rezone and develop the property,” former Chappaqua resident Hal Goldman of the Trump Organization was absolutely correct when he said last week “the Summit Greenfield project is appalling.” We need a plan that “would preserve one of our historic icons and at the same time give Chappaqua and its high school a benevolent neighbor and not a traffic nightmare.” http://www.newcastlenow.org/index.php/article/new_trump_representative_suggests_interest_in_chappaqua_crossing_prope
As Mr. Tulis stated “as a former Town Supervisor, it is somewhat awkward for me to get involved in a Project review such as the Reader’s Digest proposal. Notwithstanding, my concerns for the future economics of the Town as well as our lifestyle force me to put in this response.”
It would be a mistake for the Town Board to ignore Mr. Tulis’s concerns. It would be a mistake for the Town Board to ignore the legitimate concerns of their constituents. Our Town Board must insist that any residential rezoning be limited to fee simple ownership.
Editor’s note: The author is the organizer of the FightToStop petition.