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Irene: Flood victims face tax dilemma

Governments can ignore relief act

Saturday, January 7, 2012
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The ruins of a home on Priddle Road in Esperance on Friday, January 6, 2012.
Photographer: Patrick Dodson
The ruins of a home on Priddle Road in Esperance on Friday, January 6, 2012.

— Four weeks after they gained the option of slashing taxes on property ripped apart by tropical storms, many municipalities still aren’t sure if they want to take that step.

It’s a choice between two bad options, local officials say: make flood victims pay full taxes on homes that may no longer even exist, or cut the assessments and suffer a major loss of tax revenue at a time when expenses are already higher due to the late-summer flooding.

One of the victims being asked to pay up is Bonnie Fewtrell, who returned to her property on Priddle Road in September to find nothing.

Her home was gone, along with a barn where she and her partner kept donkeys and chickens.

All our photos

From the farms of Schoharie County to the streets of the Stockade, our photographers captured the flooding in dozens of photos you can see by clicking HERE

Not long afterward, a school tax bill came in the mail with a deadline for full payment based on the property’s value established months before.

“The land is gone. It’s now creek bed,” Fewtrell said, noting about 45 feet of her yard was washed away by the Schoharie Creek, swollen to historic proportions by Tropical Storm Irene.

“We were paying taxes and there wasn’t anything left. At the end of the year here, we just got our [county] property taxes and I thought this is ridiculous, this is absolutely ridiculous,” Fewtrell said Friday.

Fewtrell is one of hundreds of property owners who could either get some help under a state law or be ignored.

School district and local government boards are facing a difficult decision that needs to be made by next month: they can agree to help property owners with major flood-related losses by changing their assessments or they can ignore the state’s Hurricane Irene and Tropical Storm Lee Assessment Relief Act.

The flood assessment relief act, signed into law Dec. 9, allows schools, towns, counties and other collectors of property taxes to change the assessments for taxpayers whose homes and properties lost at least 50 percent of their value in the storms.

For example, if a $150,000 house was reduced to an empty lot worth $20,000, the homeowner could be taxed on the $20,000 lot, rather than the $150,000 house — if the taxing entity agrees to the change. Otherwise, the homeowner must pay 2012 taxes on the $150,000 house that no longer exists.

As it stands now, people are being taxed based on their property assessments certified back in March 2011.

That was more than five months before places like the Priddle Road neighborhood in Esperance were reduced to piles of broken cinder blocks and skeletons of homes crushed up against trees.

Participation would mean providing a refund to those who already paid their tax bill.

Deadline looms

The law calls for participating entities to pass a resolution expressing their intent within 45 days of the bill’s approval, meaning the deadline is Jan. 23.

The Schoharie Central School District’s Board of Education could make a decision Jan. 18, one that holds repercussions for both flooded district residents and those unscathed, Superintendent Brian Sherman said.

There are about 1,030 district homes above the regular flood plain that could have sustained damage in the flooding, and it’s unclear how many would qualify with a loss in value of 50 percent or more.

A worst-case scenario would mean as much as $1.7 million in tax revenue the district would have to refund, Sherman said, or as little as $500,000.

“Obviously we’re going to lose revenue and we would have to give that money back,” he said.

Officials are already anticipating a massive reduction in taxable value for next year in light of the loss in properties, making this decision particularly difficult because non-impacted residents “would have to pick up the difference,” Sherman said.

The school district might be able to participate, though, if the Board of Education decides to tap into the district’s tax certiorari reserve, he said.

The district has been saving money in the event it loses legal action filed by the Iroquois Gas pipeline company looking to reduce its assessment, and there’s roughly $2.5 million in that account.

“Will it hurt? Absolutely. Is it good for our impacted families? Absolutely. The public’s hurt. It is really hurt,” Sherman said.

At the town level, Schoharie Town Supervisor Gene Milone said the flood assessment relief act is nothing more than “feel-good legislation” for the state government.

“They go and pass these kinds of bills with no financial support. How does the town compensate for the revenue loss? They’re not saying ‘here’s a million bucks,’ ” he said.

“The towns can’t absorb it, they just can’t.”

Milone said he doesn’t have figures that would detail the impact of taking part in the relief act — he believes officials haven’t bothered getting estimates due to the massive financial impact.

“We’ll have to discuss it,” he said.

Relieving taxes for flooded property owners in the village of Middleburgh would mean losing a “sizeable amount,” Mayor William Ansel-McCabe said.

Tax revenue makes up about a third of the village’s $750,000 budget, McCabe said, and giving flooded property owners a break would only mean asking remaining residents to fill in the gap.

“They’re trying to help us any way they can, the ones that are still standing, so to speak,” he said. “If you take anything away, it’s going to increase our tax rate.”

Schoharie County Board of Supervisors Chairman Harold Vroman said he hasn’t yet heard much discussion about taking part in the act; he said he was contacting other supervisors to see if it might be discussed at the county board’s next meeting Jan. 20.

Tough position

Assemblyman Peter Lopez, R-Schoharie, said he agrees the legislation puts hard-hit municipalities in a tough position.

But he said it’s important to emphasize the flood assessment relief act was one of several measures approved Dec. 9 that provide important help for victims of flooding.

Also included in the package signed by the governor was $21 million for small businesses, farms and nonprofits that sustained damage but didn’t get other financial help, as well as another $9 million for county-level flood mitigation and flood control measures.

He said the idea of letting local taxing jurisdictions change assessments mid-year wasn’t well thought-out.

“You say we’ll give local schools and governments the discretion to reassess properties and give money back … but what does that mean for a school or a county or a local government that’s in the middle of their budget year and doesn’t have reserves? It doesn’t have the money to give back. What do you do then? That’s really the issue on this piece,” Lopez said.

Lopez said he’s working on legislation that would require the state to free up some money to help local governments and schools fill in the gaps if they decide to participate in the flood assessment relief act.

“The total package was absolutely vital,” he said of the bill that included the flood assessment relief act.

“But it’s only half of the equation. You give property taxpayers the break. That’s good. But it didn’t finish the job by helping hold harmless schools, towns and villages who have no other revenue and now are given an option that’s really not an option,” Lopez said.

For Fewtrell, who has lived with a neighbor for four months now, it’s all about “belt-tightening.”

“Everybody has had to tighten their belts. We lost everything, absolutely everything but our own lives. So many people in Schoharie, their house may still be standing but they can’t live in it yet. We’re all expected to pay full property taxes when we’re homeless. It just doesn’t make any sense to me when there’s this option,” she said.

 
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