Analysis of the Impact

of Nassau County
Assessment Reforms
on Tax Bills and the
County Budget
Prepared by Matt Clark, Newsday Staff Writer

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Foreword
This report describes in technical detail Newsdays methodology for analyzing the effects of the 2010
overhaul of Nassau Countys property assessment system. More general explanations are contained
within each story and in accompanying explanatory boxes in the papers Separate and Unequal series.

Executive Summary
This report describes the methodology and the findings of a series of analyses Newsday conducted to
determine how tax bills have changed and whether taxpayer money was saved after Nassau County
began an assessment system overhaul in 2010. The major overhaul changes implemented early in the
first term of County Executive Edward P. Mangano include a settlement program that awards
assessment reductions to nearly 80 percent of those who ask for one and an assessment freeze of nearly
all other properties. The analyses examined tax bill, tax refund, budget and assessment challenge data
among various groups of property owners and in various areas of the county.

Newsday conducted a separate sales ratio study that examined the reforms impact on the fairness and
accuracy of the countys assessments. A sales ratio study compares the assessments to the sales prices
of properties that have sold in open-market, arms length transactions, which are considered to be the
best evidence of a propertys worth. The sales ratio study is described in a separate report.

The examination of tax bill and other data found...

The policies led to a $1.7 billion shift in taxes between 2011-12 and 2016-17 from those who
obtained assessment challenge reductions to those who did not obtain any. Newsday estimated
the $1.7 billion in savings achieved through appeals by calculating effective tax rates for the
entire county and then multiplying them by the assessed value of appealed properties before
and after they appealed.

Nearly half (45.7 percent or $789.1 million) of the savings went to properties appraised by the
county at $1 million or more for the 2010-11 tax year before their values were reduced through
the program. Though such properties make up less than 8 percent of county property, they
obtained nearly 11 percent of all reductions awarded.

Nearly 11,000 properties worth $1 million or more before their assessments were reduced were
billed less in taxes for 2016-17 than they were seven years earlier, before the program began.
The median tax bills of those who filed an appeal increased $466 by 2016-17, while the median
bills of those who did not file an appeal increased by $2,748.

In some school districts, the gap between those who have appealed and those who have not is
more extreme. In the Syosset School District, the typical property owner that did not appeal by

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 2016-17 saw an increase that was $3,888 greater than those that did appeal. In the East
Williston School District, the increase was $4,330 greater than those that did appeal.

Newsday conservatively estimates taxpayer representation firms have made or will make about
$502 million in fees for assessment challenges they have filed on behalf of property owners
since the settlement program began. The estimate was prepared by calculating what the tax
bills of those who appealed would have been if they did not appeal using a similar method to
the one employed by tax firms. Newsday calculated the fees at the average rates charged by the
firms. For appeals filed by firms specializing in commercial work, which typically charge between
15 percent and 33.3 percent of first-year tax savings, the fees were calculated at 24 percent. For
appeals filed by firms specializing in residential claims, which typically charge between 40
percent and 50 percent, the fees were calculated at 45 percent. The calculation excluded fees
charged on refund interest, but included the principal amount of refunds already paid and those
county officials estimate will be paid in the future.

Saving taxpayer money was among the justifications for the settlement program and
assessment freeze, and the policies have reduced assessment-related budget and refund costs
between 2010 and 2017 by an eight-year total of up to $299.1 million compared to 2009 levels
of spending adjusted for inflation, assuming no commercial property refunds are paid with
money from outside of the recently-implemented Disputed Assessment Fund (DAF). If one
assumes the DAF does not end up paying for any commercial property refunds, then the savings
shrink to $246.9 million. Without adjusting for inflation, which assumes the county would not
have spent more than it spent in 2009, the savings shrink to as little as $115.1 million without
the DAF or $167.3 million with it.

However, taxpayers saw their costs increase in other ways due to the assessment policies.
Newsday estimates they paid more fees to tax firms to file appeals in order to avoid the shifting
tax burden. There is evidence to suggest that the number of appeals filed and won by tax firms
was declining under the old assessment policies. Filings had declined for five years before the
settlement program began, for instance. A large increase in tax savings achieved through
assessment challenges, which was primarily related to the economic recession, had begun to
decline. Finally, the heads of two of the largest residential tax firms told Newsday in 2015 they
would have been forced out of business had the settlement program not been initiated.

Taxpayers paid or will pay about $166.9 million more in tax firm fees for appeals filed since the
settlement program began compared to pre-recession, 2006-07 fee levels, the most recent year
for which a comparison could be made. When subtracted from the budget and refund cut
savings, it suggests the two reforms saved taxpayers a maximum of $132.2 million or, without
the DAF savings or inflation adjustment, actually cost taxpayers $51.8 million.

Newsdays analyses included residential and commercial properties, which the county refers to as
property classes one, two and four, but excluded from the results utility properties in any property class.
The taxable status of utility properties has been the subject of litigation for years, they are not

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representative of typical property owners and county data contained no information on appeals for
them or their exact location.

Up to about 6,400 potentially successful assessment challenges were excluded from the tax savings
analysis for various reasons, including that their tax savings could not be calculated with available data
or it couldn't be determined if their assessed values were affected by an appeal.

Newsday calculated tax bills as closely as they would have been had each property not filed an appeal.
Due to a lack of data, a blanket approach was used to calculate tax exemptions that overestimated many
of them slightly. This resulted in a slight underestimation of tax firm fees.

Tax firm fees for 2006-07 were estimated using tax savings results contained in a 2008-09 Assessment
Review Commission annual report, which contained the most recent data available for a comparison.

Newsday used the median tax bills for each group of properties in its estimate of how tax bills have
changed since the reforms began. This focused on the typical property owner by avoiding the problem
of averages being drawn up or down by properties with wild swings in their tax bills unrelated to
assessment appeals. For the same reason, tax bills associated with properties that were not taxed in any
year since 2010-11 were also excluded as were those that did not exist for the entire seven-year period.

A more detailed explanation of how the calculations were completed follows.

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Introduction
Newsday's examination of Nassau County's assessment system included several analyses of county data
aimed at determining the effects of its settlement program and assessment freeze.

A ratio study of the system, which is described in a separate report, examined the accuracy and fairness
of the system in various tax years from 2002-03 to 2016-17. This document provides a summary of the
findings and a thorough, detailed explanation of how Newsday conducted several other analyses of
county data intended to answer the following questions, among others...

How much money have protesters under the settlement program saved in each year of the program and
therefore shifted onto other homeowners?

How much money have taxpayer representation firms made through the settlement program?

Did the settlement program and assessment freeze save money after any increase in taxpayer
representation firm fees is taken into account?

How have tax bills changed countywide, in various communities and among various groups of property
owners since 2010-11, the year before the settlement program began?

Preparing appeals
Assessment challenge data served as the foundation for many of the analyses Newsday conducted. For
instance, to calculate how much a property owner saved due to an assessment challenge, one must
know what their assessed value would have been had that challenge not been successful.

Each grievance is filed to challenge the countys tentative assessment roll, which is released in early
January each year. Grievances are filed between its release and early March. Most of the grievances will
not be decided until about a year later, before the final assessment roll is released in April. Because
more than a year has passed, another tentative roll will be released before those appeals are decided.

As a result of the lengthy assessment calendar, grievances technically arent challenging the tentative
assessment roll, but what the county refers to as each propertys adjusted tentative assessed value.
This adjusted tentative value incorporates any assessed value changes since the release of the tentative
assessment roll, including any physical changes to the property and any grievances filed for the prior tax
year that were settled after the tentative roll was released. Therefore, the starting point for any tax
savings due to an assessment challenge is the adjusted tentative assessed value, as it would normally
become the assessed value if an appeal were not filed.

Data was obtained from the county's Assessment Review Commission containing the adjusted tentative
assessed value, outcome and updated assessment (what the county said it reduced the property's
assessed value to) for each assessment challenge. A separate data file provided by the Assessment

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Department contained the outcome and updated assessment for each Small Claims Assessment Review
(SCAR) case, which are court cases filed by homeowners to appeal commission decisions.

The commission files were filtered to any claims ending with a status of "reduction," "unilateral" or
"denied." Unilateral refers to a decision by the Assessment Review Commission to lower a propertys
assessed value even though the owner of the property refused to settle the protest at that level of
reduction and could still appeal the decision in court. Typically, the commission does this to reduce the
countys property tax refund liability by preemptively lowering the value. Denied cases were only
included if they resulted in a court settlement after initially being denied by the commission.

After the initial filtering, there were five settled cases with no adjusted tentative assessment and 110
settled cases with an adjusted tentative assessment lower than the final assessed value of the property.
These were discarded. There were also several properties with multiple appeals for the same tax year,
but with different adjusted tentative assessments. In those instances, the lowest of the assessments was
considered to be the starting point for any savings calculations, which may have resulted in an
underestimate of savings for some of those grievances. The assessment department data file was
filtered to SCAR cases with an outcome of "adjudicated" and an updated assessment.

The ending point for any savings calculations was considered to be the assessed value of the property
for the given tax year as listed in tax tables provided by the Assessment Department. Tax tables as
opposed to the countys final assessment roll incorporate all changes made to assessed values before
tax bills are sent out, and therefore include the assessed value that was actually taxed.

Not surprisingly, some of the updated assessments in the appeals data files were different than the
assessed values contained in the tax tables. Here is how those differences were handled:

If the tax table assessed value was higher than the updated assessment listed in the appeals
data files, the appeal was discarded. These 994 cases were nearly all SCAR cases settled after tax
bills were sent out, particularly in the 2011-12 tax year. The assessed value was higher than the
updated assessment because it did not reflect the case being settled after tax bills were sent
out. The assessed value for the following tax year was frequently equal to the updated
assessment. Notably, these reductions are not included in the calculations unless an appeal was
also filed and successful in the next tax year.
If the assessed value was lower than the updated assessment listed in the appeals data files, the
appeal was included. There were 4,468 such cases. This situation could occur for several
reasons, including tax certiorari claims being settled before tax bills are sent out (more on this
later) or prior-year assessment challenges with even lower updated assessments being settled
and carried forward after the current-year case was settled (as in the SCAR situation described
above). In any event, the appeal was described as being successful by the county and tax firms
would bill based on the final assessed value.

A small number of other appeals were also excluded from the analysis. These included 1,402 successful
co-operative apartment building appeals, because data provided by the county could not be used to
estimate the savings they achieved through appeals. Three appeals for three properties that were either

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bisected by a school district or were class four commercial properties with multiple residences were
excluded for the same reason. Another 132 appeals were eliminated due to problems calculating their
exemptions, described later.

Further, four appeals for two parcels were excluded due to an issue calculating their tax savings. The
adjusted tentative assessment listed for the parcels was many times the final assessment, possibly due
to an attempt by the county to move the parcels from class one into class four and then failing to update
the tentative adjusted assessment. As it was not known what the tentative adjusted assessment was,
these parcels were eliminated. A review of any property with a tentative adjusted assessment many
times its final assessment was conducted to identify any other issues. None were found.

There were no successful class three utility property appeals in the data, and these properties were
eliminated from the results of all analyses conducted by Newsday due to them being less representative
of the typical Nassau property and other reasons.

After all of the filtering, 640,179 settled appeals remained.

Information provided by the county for tax certiorari claims, which are court appeals often filed by the
owners of commercial properties, was limited. While the assessment department protest file described
whether the court cases were settled, it did not provide the updated assessment or when the case was
decided. Attempts to join the assessment department data to civil court case data from the Office of
Court Administration, which would have provided a date of resolution for the case, were unsuccessful.

So, appeals where the commission denied a challenge that was later settled in a tax certiorari court
before tax bills were sent out were not included in this analysis (rare). The analysis does, however,
include "unilateral" commission cases that were further reduced in tax certiorari proceedings before tax
bills were sent out, as the analysis includes cases with assessed values lower than the updated
assessments listed in the commission data files (this was described earlier).

It is notable that there are hundreds of properties that saw reductions in their assessed value after the
assessment freeze began in 2012-13 that are not included in these analyses because there were no
successful appeals for that tax year listed in the county data. Most of these properties were reduced due
to property damage or demolition. Others, though, may have been reduced due to the county carrying
forward reductions won in prior-year appeals into future tax years when no appeal was successful. The
fact that these appeals were not included means that the amount of tax savings and tax representation
firm fees calculated by Newsday may be underestimated.

To get an idea of how great the underestimation may be, Newsday examined the 4,748 properties with
reductions since 2012-13 (when freeze began) that could not be associated with an appeal for that tax
year, but may have been associated with a tax certiorari or small claims case settled up to four years
before. Those properties were reduced by $3.7 million in assessed value (compared to $104.8 million
reduced for those years in all), and even if the reductions were due to an appeal they were not included.
As previously noted, up to 994 of them were small claims cases settled after tax bills were sent out.

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The final step in preparing appeals was determining which tax firm handled each appeal or if the appeal
was filed by a property owner "pro se." The tax firm listed on the commission data files was used for this
purpose. In cases where there were multiple appeals filed by different firms for a single property in a
single tax year the appeal was not assigned to a single firm, but was assigned to an "unknown" firm.
Note that this does not include claims that were withdrawn or dismissed, which usually occurs when
duplicate claims are filed. Instead, these are duplicate claims that were both denied and therefore
could have been appealed in court. If they were, the firm was listed as unknown.

Calculating tax savings using tax firm method

The county Assessment Department provided tax table files for tax years beginning in 2001-02 and
ending in 2016-17. However, only files from tax years 2011-12 to 2016-17 could be used to relatively
precisely calculate savings earned on appeal.

Tax savings were determined by calculating what tax bills would have been if the adjusted tentative
assessed value had become the assessed value of each property receiving a reduction on appeal. These
are referred to in this document as the pre-appeal bills as opposed to the post-appeal bills the
property owners were actually sent in each tax year. The methodology Newsday used is similar to the
methodology used by tax firms in calculating their fees.

For background, tax bills are generally calculated by first subtracting any exemptions from the assessed
value of a property to determine the taxable assessed value. The taxable value is then multiplied by
the tax rate for each taxing authority. The tax for each authority is added to any "direct assessments,"
which are charges meant to obtain payment for scofflaw water bills or other services, or "restored
taxes," which are charges used to bill for underpaid taxes in a prior year. Finally, Nassau County had a
senior citizen tax abatement until 2016-17, which was subtracted from the total general tax bill.

It is important to point out that the savings methodology used by tax firms does not account for what
tax rates would have been had no appeals been filed. Had no appeals been filed, tax rates would have
been lower, because governments wouldnt have increased them to make up for the loss in their tax
base. Had tax rates been lower, each appellants pre-appeal tax bill also would have been lower.

Tax firms are essentially billing their clients based on what they would have paid had only that one client
not appealed. Had only one person not appealed, tax rates presumably would not change appreciably.
So, using the post-appeal tax rates is an accurate way of calculating what their tax bill would have
been without an appeal. However, when one is attempting to calculate the total amount of savings
achieved by all appeals in a given year, it would be more appropriate and accurate to estimate what tax
rates would have been had no one appealed, not just one person (more on this other method later).

Newsday tested its methodology by first using it to recalculate what tax bills were after appeals. This
allowed for a comparison to a known value, the actual tax bill appellants received. The test showed
that all school bills were calculated accurately, while general bills were in some cases off by up to 8

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cents below or above what they should have been. This was primarily due to rounding errors involving
properties with numerous taxing districts, and could not be corrected due to data limitations. The total,
absolute difference in general tax bills was $189.06 for an accuracy rate of 99.99997%. Due to the errors
present in the test, which would be carried over into any calculation of pre-appeal tax bills, the bills
calculated for the test were used as the after-appeal tax bills in calculating any savings.

While the test examined the mechanics of much of the calculation, it could not verify whether
Newsday would accurately calculate what exemptions would have been without an appeal. This is a
complicated problem. Some exemptions only apply to certain taxing districts. Some take a fixed amount
off an assessed value. Some take a percentage off the assessed value. Some are limited by maximums.
The STAR exemption has a maximum tax dollar savings amount (maximum abatement) and a maximum
amount of assessed value that can be exempted, making it particularly difficult to calculate. Starting in
2016-17, some STAR savings were not included in tax bills, but were sent as checks after tax bills were
sent out to homeowners, making it necessary to incorporate those savings into 2016-17 tax bills in order
to make them comparable to earlier years.

Something to keep in mind as you review how exemptions were calculated is what effect they have on
tax savings calculations. If a pre-appeal exemption was overestimated, it would result in lower savings,
as it would erroneously reduce what the tax bill would have been before the appeal. If an exemption is
underestimated, it would erroneously increase the estimated savings from the appeal. Therefore, the
ultimate goal in calculating exemptions was to never underestimate them, which would have the effect
of overestimating savings.

Exemptions
STAR property tax exemptions were calculated in the same manner the county calculated them.

Beginning in 2016-17, some STAR recipients began receiving checks from the state for their STAR
abatements rather than a reduction in their tax bill. These STAR check amounts, which were detailed in
county data, were subtracted from the total tax bills in order to make the 2016-17 bills comparable to
other years of data.

On a similar note, the countys Disputed Assessment Fund, which sets aside some of the tax revenue
generated from commercial properties with appeals for use in later paying for their refunds, began
billing in 2016-17. For that year, the fund payments were billed in the general tax bills even though the
payment was for both general and school taxes. The general amounts were included in the general tax
bill totals and the school amounts were included in the school bill totals for 2016-17, in order to ensure
that the tax bill totals incorporated the entire cost to each property owner and were comparable to
earlier tax years.

It was not possible to calculate other exemptions on an exemption-by-exemption basis, because the
data provided by the county did not describe what exemptions apply to each taxing district, only the

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total amount exempt for each property in that particular taxing district (even when multiple exemptions
applied). So, a blanket method for calculating exemptions other than STAR had to be developed. This
was done by first creating a list of all exemptions that applied to properties with successful appeals and
then reviewing how each exemption is calculated by referring to the Assessor's Manual on the state
Office of Real Property Tax Services' website.

Ultimately, it was decided that the best approach would be to increase the size of each exemption by
reversing the percentage decrease in assessed value awarded in each appeal.

For instance, if a property with an adjusted tentative assessed value of $100 was reduced to $90, then it
was discounted by 10 percent. To determine the discount rate, subtract .10 from 1, to get .9 (if you
divide $90 by .9 you get $100). If the property had $9 in assessed value exempted after its appeal,
dividing it by .9 would increase it to $10. If the exemption were set at a percentage of assessed value (10
percent in this case) with no maximum, then this method would calculate it precisely.

However, this would tend to overestimate the size of some exemptions, particularly those set at a fixed
amount of assessed value or that have a maximum assessed value. For instance, one of the most
popular exemptions for 2015-16 was the eligible funds veterans exemption obtained by 6,755
properties. It is calculated at a fixed amount, but is nonetheless increased under this methodology.

Other popular exemptions tend to be calculated accurately using this method when they are set at a
percentage of assessed value. For instance, for 2015-16 appealed properties had 36,789 alternative
veterans exemptions, 6,755 senior exemptions, 3,417 volunteer firefighters and ambulance worker
exemptions, and 1,570 cold war veterans exemptions.

Together with 154,658 STAR exemptions, the total number of exemptions associated with appealed
properties in 2015-16 was 214,325. Newsday reviewed all of them and found only two one for the
homes of clergy and one for agricultural land that could potentially be underestimated with this
method. This is because the clergy exemption is a fixed amount with a maximum so high it is rarely
reached and the agricultural exemption applies to all assessed value in excess of an amount set by the
state. As a result, both exemptions require increasing the size of each exemption by the entire amount
of the reduction awarded on appeal. So, using our example above, if a property valued at $90 after a
$10 appeal reduction had an exemption of $9, then that exemption would need to be increased to $19
to cover the entire reduction that was awarded, not just to $10 this method would calculate.

Those two exemptions were held by 4,072 properties (2 percent of total exemptions) for 2016-17. The
method does not underestimate them very frequently or by very much. An examination of how much it
underestimates each exemption in each tax year found that the total underestimated was $242,484 in
assessed value for 132 appeals from 2011-12 to 2016-17. These appeals were eliminated from the tax
savings analysis, as described earlier in the section on preparing appeals.

Newsday also reviewed how much it is overestimating exemptions. The largest overestimation is likely
with the eligible funds veteran exemption at about $1.4 million in assessed value. The alternative
veterans exemption for school taxes, introduced in the 2015-16 tax year, is almost always maxed out by

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homeowners and therefore gets overestimated pre-appeal using this method. Further, the home
improvement and business investment exemptions are both based on fixed amounts like the eligible
funds veterans exemption. When those three exemptions are included, the total overestimation climbs
to $2 million and that accounts for the bulk of the overestimations. For comparisons sake, $104.8
million in assessed value has been reduced by the Assessment Review Commission alone since the
settlement program began.

Tax firm revenue

Once exemptions were determined, the rest of the process of calculating savings achieved through
appeals was relatively simple and was done the same way it is done by the county. For each taxing
district, the assessed value minus any exemptions was multiplied by tax rates to determine the tax bill.
Abatements and STAR checks were subtracted and direct assessments and restored taxes were added.

Notably, restored taxes were not recalculated, even when an appeal in a prior year resulted in them
being lower than they otherwise would have been. However, not doing this, which reduces the savings
calculated using this method, has a small effect. Restored taxes totaled no more than $5.8 million in any
year of the settlement program and added up to $24.9 million for the period of the settlement program,
and they would not have increased substantially had the impact of appeals on them been calculated.

The results of calculating the pre-appeal tax bills were then compared to the post-appeal bills Newsday
recalculated using its methodology to ensure the small difference in the calculations did not impact the
savings amounts. This determined the first-year tax savings for each appeal, a figure that totals $1.2
billion, of which $1.1 billion was achieved through appeals filed by taxpayer representation firms.

There are generally two types of taxpayer representation firms. One group primarily handles
commercial properties and often appeals Assessment Review Commission decisions in Supreme Court.
Another group primarily represents homeowners and sometimes appeals commission decisions in Small
Claims Assessment Review court.

Both types of firms charge their clients based on the first year of tax savings achieved through
assessment challenges. Commercial firms charge a wide range, from 15 percent to 33.3 percent of
savings, while residential firms charge from 40 percent to 50 percent of savings. To account for the
variances, Newsday estimated each groups fees at the average of the range of their fee structures. For
commercial firms, fees were estimated at 24 percent. For residential, fees were estimated at 45 percent.

The appeals were divided into the two groups. All class 2 and 4 appeals were considered to have been
filed by commercial firms. Challenges for property class 1 that were appealed in Supreme Court were
also assigned to commercial firms. Finally, any challenge filed by a firm that has at least a third of its
business in commercial challenges or appealed in Supreme Court for at least a third of its challenges
were also placed into the commercial firm group. All other appeals were assumed to have been filed by
a residential firm, and its savings were charged at that higher rate.

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Newsday also obtained details of property tax refunds the county has paid from the County Treasurers
Office and details of refunds it estimates it will pay in the future from the Assessment Review
Commission. The estimated refunds were current as of Dec. 31, 2015. For 2016-17 appeals, refund
principal amounts were not available, so they were estimated to be at 2015-16 levels.

The small amount of small claims refunds paid since 2011-12 were assumed to have been obtained by a
residential firm, and all Tax Certiorari refunds were assumed to have been obtained by a commercial
firm. A small number of pro se refunds are included in the totals.

Tax firm fees calculated using this method added up to $502 million, including $302.7 million in
residential fees and $199.2 million in commercial fees.

Fees calculated using this method were compared to fees listed in a sample of tax firm bills obtained
from various sources. In all but a few cases where a tax firm appeared to miscalculate the savings,
Newsday underestimated the fees charged by the firms.

Cumulative savings the tax shift

As stated earlier, the tax firm method of calculating savings does not take into account how tax rates
might change if no one filed an appeal. If no one filed an appeal, tax rates would be significantly lower.

So, to estimate how much was saved by all those who appealed and therefore the tax burden that
was shifted onto other property owners it is necessary to estimate what tax rates would have been
had the appeals not been filed.

It was not possible to estimate what tax rates would have been for each taxing authority and property
class with the data obtained from the county.

Even if the data necessary to recalculate all of the hundreds of tax rates was obtained, it would have
been a tremendous challenge. Perhaps the most difficult part would be determining class shares, or
the portion of each authoritys levy that is paid by each property class. Each year, if 20 percent of the
taxable value of properties is in class 4, that does not mean it will pay 20 percent of the levy. Instead, a
complicated calculation using historical shares of taxes paid by each class is used to determine what
percentage will be paid by each class. Changes in the class shares are limited each year, and this further
complicates calculating them. Ultimately, thousands of calculations would be involved.

Class shares, of course, are not the only thing that can affect a tax rate. Rates are determined by dividing
the taxes to be levied upon each property class by the taxable assessed value in the class. Therefore,
when values go up, tax rates go down and vice-versa if they go down tax rates go up. When tax levies go
up, the tax rate follows and when they go down, so, too does the rate.

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There are a myriad of factors that can affect the taxable value of properties, including assessment
appeals, physical changes to properties and the application or removal of exemptions. Tax levies change
both when government budgets do and when property class proportions are modified.

Rates are affected proportionally to changes in taxable value or a tax levy. So, if taxable value declines
10 percent, the tax rate will go up 10 percent. Or, when a tax levy increases 10 percent, the tax rate will
go up 10 percent. If taxable value goes up 10 percent and the tax levy goes up 10 percent, the tax rate
would remain the same as it was before the changes, because they cancel each other out.

Based on this knowledge, Newsday developed a method for getting around the challenge of class shares
in determining how much tax money was saved (and shifted onto others) by those who had their
assessments reduced through a grievance. The method examined taxes and assessed values countywide
for all taxing authorities and property classes at once thereby going above the issue of class shares.

Newsday calculated an effective tax rate for the county as a whole by dividing the assessed value of all
taxable properties (including class 3 properties for this portion only) by all of the taxes levied across the
county in each year of the settlement program. This would become the post-appeals tax rate to be used
in determining the savings achieved through grievances.

Then, Newsday calculated how much assessed value there would have been in each year had no appeals
been filed by adding it back onto the countywide assessed value in each year. The percentage difference
from before-and-after the appeals was calculated, and this percentage was used to reduce the
countywide post-appeals tax rate in estimating what the tax rate would have been without appeals.

Those two countywide tax rates, which are estimates of tax rates before and after appeals, were then
multiplied by what the assessed value of appealed properties was before they appealed and after they
appealed. This produced an estimate of their tax burden with which to calculate savings.

One particularly complicated part of the analysis was calculating what the pre-appeal assessed value of
the properties would have been. This is not as simple as assuming the adjusted tentative assessed value
for each appeal would have become the assessed value for that property. This is because the adjusted
tentative assessed value needs to be carried forward into future years. However, if the property
underwent a physical change in the following year and had a corresponding change in its assessed value,
which could occur even during the freeze, what would the assessed value be then?

In establishing what the assessed value of appealed properties would have been in each year had it
never appealed, Newsday used the adjusted tentative assessed value from their first appeal, and carried
it forward whenever the propertys assessment did not appear to change for any reason other than an
appeal. This was done by comparing the adjusted tentative assessments and the assessed values of each
property year-over-year. If any changes occurred that could not be definitely linked to an appeal, then
the adjusted tentative assessed value was not carried forward.

For example, if a property received a reduction from an adjusted tentative assessed value of $100 in
2013-14 to an assessed value of $90, that $100 adjusted tentative assessed value was also used to

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calculate the "original," pre-appeal tax bill for 2014-15 so long as the adjusted tentative assessment
and/or assessed value in 2014-15 equaled the assessed value of the prior year. If, instead, the adjusted
tentative assessed value in 2014-15 jumped to $150 due to a physical improvement made to the
property, the prior adjusted tentative assessed value would not be carried forward.

The assumption that all changes in assessed value not listed in county protest data files were not
associated with an appeal is in some cases incorrect. As noted earlier, potentially thousands of appeals
were not included in the analysis, particularly in the early years of the settlement program when small
claims cases were still commonly settled after tax bills were determined. As such, this underestimates
savings, because those appeals would have led to cumulative savings throughout the program.

The total savings calculated using this method was $1.7 billion, and represents an approximation of the
amount shifted onto other taxpayers due to the first six years of settlement program appeals.

Testing cumulative savings calculation

To verify the validity of the method used to calculate the tax shift, Newsday used it to produce estimates
of several known values, making it possible to test the methods accuracy. The comparisons generally
showed the method to be accurate, with no more than a 5.7 percent overestimation in any year of
comparison and at least a 0.3 percent underestimate over the first five years of the settlement program.

Only some of these tests were updated to include 2016-17 tax year numbers once they became
available, and it is noted within each test what years are included.

Comparison to Prior-Year Tax Levies

By making one more change to the countywide tax rates for a change in the tax levy, it is possible to use
the method to calculate tax levies for prior years. As tax years from 2012-13 to 2015-16 had less
assessed value than the year before, calculating what their tax levies are using each succeeding years
countywide tax rate and the amount of assessed value reduced is similar to calculating before-and-after
tax bills of appealed properties. It is even possible to do it over multiple years.

For instance, there was a 2.6 percent reduction in assessed value from 2014-15 to 2015-16 and a 1.5
percent reduction in the tax levy (yes, the countywide tax levy actually went down). So, by reducing the
countywide tax rate for 2015-16 by 2.6 percent and then another 1.5 percent, it is possible to estimate
what the 2014-15 tax rate was. This tax rate, once multiplied by the assessed value for 2014-15
produces an estimate of what the tax levy was in that year. The results are below.

Year Calculated Prior-Year Levy Difference to Actual Prior-Year Levy Accuracy

2012 $ 5,309,226,497.48 $ (3,466,142.54) 99.93%
2013 $ 5,446,143,375.06 $ (2,249,485.93) 99.96%
2014 $ 5,555,937,185.69 $ (3,162,870.68) 99.94%
2015 $ 5,687,575,132.38 $ (4,124,752.68) 99.93%
2016 $ 5,843,615,656.52 $ (1,305,814.26) 99.98%
2016to2012 $ 5,430,849,511.02 $ (17,543,349.97) 99.68%

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The chart shows Newsdays tax shift method of calculating savings is highly accurate at predicting what
the prior-year tax levy is. Even when going from 2016 back to 2012 the accuracy is 99.7 percent.

Comparison to Prior-Year Tax Bills of Random Groups of Properties

However, calculating the prior-year tax levy of the entire county is one thing, calculating the prior-year
tax bills of random groups of properties is another. As stated earlier, one of the key challenges in
calculating pre-appeal tax rates is the challenge of class shares, because they shift the tax burden
around depending upon how taxable value changes. These class shares would affect properties in each
taxing district differently. So, the method has to work on random groups of properties.

To test the effectiveness of the tax shift method, Newsday selected random groups of 15,000, 25,000,
50,000 and 75,000 appealed properties and used the countywide tax rates calculated in the above
comparison to calculate their prior-year tax bills. The results of this random sample testing are below.

Accuracy Results Min Accuracy Max Accuracy Avg Accuracy

15,000 Random 88.4% 98.2% 92.3%
25,000 Random 89.3% 96.8% 92.2%
50,000 Random 90.6% 94.4% 92.3%
75,000 Random 90.9% 93.3% 92.3%
All Samples 88.4% 98.2% 92.3%

As you can see in the chart, the method underestimated their prior-year tax bills by an average of 7.7
percent, with the lowest accuracy being 88.4 percent. The underestimation is likely due to the appealed
properties seeing a smaller reduction in assessed value than the county as a whole or seeing a smaller
change in the size of their tax bills than the county as a whole.

However, both of these comparisons fail to estimate what the tax bills of appealed properties would be
if they had not appealed. Both estimates calculated what their values were before by simply calculating
how they changed from one year to the next.

Comparison to Actual Post-Appeal Tax Bills of Appealed Properties

Perhaps the most obvious comparison would be to the post-appeal tax bills of appealed properties. As
described earlier, the method estimated what their tax bills were by multiplying their post-appeal
assessed value by the calculated countywide tax rate of taxable properties.

The method would tend to overestimate the post-appeal tax bills whenever the effective tax rate of the
appealed properties was lower than the countywide effective rate. This would primarily occur when
more commercial class 4 properties appealed than class 1 residential properties, because residential
properties are taxed at a higher effective rate. Here are the results of the test

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Year Estimation Actual Accuracy
2012 $ 1,358,998,825.68 $ 1,317,852,898.54 103.1%
2013 $ 1,832,602,161.94 $ 1,794,453,499.51 102.1%
2014 $ 2,079,759,168.21 $ 2,070,037,196.68 100.5%
2015 $ 2,432,893,128.73 $ 2,449,403,156.53 99.3%
2016 $ 2,682,547,765.32 $ 2,734,828,861.30 98.1%
2016 $ 2,889,303,774.01 $ 2,989,736,504.23 96.6%
Total $ 13,276,104,823.89 $ 13,356,312,116.79 99.4%

As can be seen in the chart, the method overestimated the tax bills in the early years of the settlement
program by up to 3.1 percent, but underestimated them through the end of the program by 0.6 percent.
This is primarily due to the fact that commercial properties received a greater share of the reductions
awarded in those years than their share of the total countywide assessed value.

Keeping in mind that the analysis omits potentially thousands of successful appeals, the overestimation
of the post-appeals tax bills in the early years would carry over into the pre-appeal estimated tax bills, so
long as the total amount of assessed value reduced for them was larger than the total amount of
assessed value reduced for residential properties. There is a way to verify whether this is occurring.

Comparison to Newsdays Estimate of Savings Using the Tax Firm Method

As stated earlier, tax firms estimate savings using the tax rates as they exist after appeals have been
settled. Newsdays method of estimating the tax shift can be used to calculate a comparison to those
figures, as well, by multiplying the before-and-after assessed values of the appealed properties by the
countywide, post-appeal tax rate of taxable properties. The results are shared in the below chart.

Year Tax Shift Method Recalculation of Tax Bills Accuracy

2012 $ 189,852,342.62 $ 179,542,097.52 105.7%
2013 $ 279,614,193.50 $ 287,436,793.34 97.3%
2014 $ 160,575,116.36 $ 196,383,935.75 81.8%
2015 $ 139,704,187.70 $ 168,262,847.12 83.0%
2016 $ 134,142,278.69 $ 160,142,971.20 83.8%
2017 $ 164,581,614.37 $ 193,961,549.66 84.9%
Total $ 1,068,469,733.25 $ 1,185,730,195.59 90.1%

By multiplying the assessed values by the post-appeals tax rate, the tax shift method comes very close to
estimating the tax firm savings calculated by Newsday through the recalculation of tax bills. The
accuracy rate is 90.1 percent overall, and the only overestimation is in 2011-12, when commercial
properties had more assessed value reduced than residential properties. This would suggest, then, that
even with the overestimation of post-appeal tax bills, the tax shift method is still underestimating the
size of the tax shift overall in all but one year, 2011-12, by 5.7 percent.

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It is worth noting that the tax firm savings estimate prepared by Newsday is itself an underestimation
due to the overestimation of hundreds of exemptions. This would suggest the tax shift is
underestimated more than is reflected in the above chart.

Comparison to Savings Listed in Commissions 2008-09 Annual Report

The commissions annual report lists estimates of tax savings for the 2006-07, 2007-08 and 2008-09 tax
years, allowing for Newsday to use its tax shift method to produce a comparison.

To do so, Newsday isolated appeals listed in county data files for those years as being settled with a
status of unilateral, or reduction and had a final assessment smaller than an adjusted tentative
assessment. Any duplicates after that filtering were eliminated, and the assessed value listed on tax rolls
was considered to be the outcome of each appeal.

The countys report lists some reductions for class 3 properties that are not contained in the protest
data files provided by the county. So, only the savings listed in the report for class 1, 2, and 4 properties
were compared to the savings estimates prepared by Newsday. The results are below.

2007 2008 2009

Estimated Savings: $ 102,522,850.85 $ 120,242,681.48 $ 133,050,704.96
Actual Savings From Report: $ 115,676,179.00 $ 124,034,850.00 $ 150,218,108.00
Accuracy: 88.6% 96.9% 88.6%

Newsdays tax shift method of estimating savings underestimated the savings listed in the county report
in all years. It appears that the underestimation is somewhat the result of appeals included in the report
that were not included in the protest data files provided by the county. While 99 percent of the data
files appeals were included in this analysis, the report indicates there are 166 more appeals in 2006-07
than were included in this analysis, 19 more in 2007-08 and 435 more in 2008-09.

Policy savings analysis

Among the stated justifications for the assessment freeze and settlement program were to save
taxpayer money, particularly through a reduction in the county's annual property tax refund liability.

Due to a law known as the county guaranty, the county is required each year to refund property taxes
overpaid not just to itself but to all of the nearly 300 taxing jurisdictions that use its assessment roll. The
refunds are owed whenever an assessment challenge isnt settled until after tax bills are sent out. By
settling the claims before court, the county intended to avoid refund costs.

The county also saved money by laying off about a third of the county's Assessment Review
Commission, Assessment Department and County Attorney's office staff as they would not be as
necessary under a system where property assessments are not adjusted annually and many assessment
challenges are settled before they need to be argued in court.

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Newsday calculated the savings achieved through the budget cuts by using the actual amount spent or
amount budgeted for each department in each fiscal year from 2009 to 2016, according to county
budget documents and analyses prepared by the county Legislative Office of Budget Review.

As the financial documents do not list the cost of fringe benefits for the departments, these had to be
estimated. The countywide cost of fringe benefits amounts to about 50 percent of salary costs. As such,
Newsday estimated the fringe benefit costs at 50 percent of the actual or budget salary costs for each
department and fiscal year included in the analysis.

The 2009 level of spending was used as a baseline, and was adjusted for inflation from 2010 to 2017
using the New York-Northern New Jersey-Long Island, NY-NJ-PA (1982-84 = 100) consumer price index
for all urban consumers. The 2016 inflation factor was used as an estimate of the inflation for 2017.

The total 2009 baseline level adjusted for inflation was $388.4 million. The total actual and budgeted
amounts for 2010 to 2017 were $300.5 million. This represents a savings of $87.9 million.

If the 2009 baseline level is not adjusted for inflation, which assumes the county would not have
increased the cost of the departments had it not implemented its reforms, then the baseline level
decreases to $359.1 million and the savings decline to $58.6 million.

To calculate savings achieved through reductions in refunds, Newsday obtained data files from the
county detailing how much it has paid in refunds for appeals filed since 2009 and how much it estimates
it will pay for any unsettled appeals dating back to 2009. As it is not known what the ultimate cost in
interest will be for the unsettled appeals, the analysis compared the total principal amounts owed for
appeals in each tax year.

Again, 2009 was used as a baseline level for the refund calculations, and in this case it was adjusted for
inflation by increasing it by the percentage increase in taxes billed from 2010 to 2017. The
implementation of the Disputed Assessment Fund for 2016-17 presents a challenge for estimating
refund principal for appeals filed for that tax year. In general the 2016-17 principal amounts were
estimated at whatever level the county estimated 2015-16 refund principal amounts would be.
However, two different scenarios were prepared. In one scenario, no class 4 refund costs are assumed,
because they would be paid out of the DAF. In the second scenario, it is assumed that 2016-17 class 4
refund costs will be the same as the county estimated for 2015-16. This presents a range of savings
depending upon the success of the DAF, which is expected to be challenged in court.

The 2009 baseline level of refund principal paid and estimated after inflation adjustment was $753.8
million. The 2010 to 2017 cost with the DAF was $542.6 million, representing a savings of $211.2 million.
Without the DAF, the savings are $159 million.

When not adjusting for inflation, the savings with the DAF decline to $108.7 million and without the DAF
they decline to $56.5 million.

Altogether, including both budget and refund cuts, the county saved between $115.1 million and $299.1
million depending upon whether the 2009 levels are adjusted for inflation and DAF savings are realized.

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Increasing cost of tax firm fees
However, those savings were not the total impact of the settlement program and assessment freeze to
taxpayers. To determine whether taxpayers saved money, it is also necessary to consider whether they
ended up paying more in fees to tax firms than they did prior to the settlement program, which
necessitated them filing an appeal if they wished to avoid large increases in their tax bills. Since it was
known that the vast majority of claims were filed by tax firms prior to the implementation of the
settlement program, it would only be reasonable to assume taxpayers would continue to file them using
tax firms after the program was implemented. This is what occurred.

Nonetheless, it is obviously not known how many appeals would have been filed or settled or what the
reductions would have been had the settlement program and assessment freeze not been implemented.
So, a comparison year needs to be established that reasonably represents what might have happened.

Due to limitations with the data provided by the county, it is not possible to calculate tax savings for the
years before 2011-12 in a way that would allow for determining tax firm fees. To do so, the tax savings
need to be divided by property class, which is not possible with the tax shift analysis method.

The most recent data obtained by Newsday for which a comparison of tax firm fees can be made comes
from the 2008-09 Assessment Review Commission annual report. That report provides data on tax
savings achieved through appeals settled by the commission from 2002-03 through 2008-09. It also
provides data on savings due to small claims cases from 2001-02 to 2006-07 (data for 2007-08 listed in
the report is incomplete because small claims cases were largely unsettled at that time).

So, the most recent year for which a comparison could be made to the tax savings calculated by
Newsday for commission and small claims appeals would be 2006-07.

How representative is 2006-07?

According to the commission's annual report and an analysis of county protest data files, there were
more appeals filed in 2006-07 than in any year between 2005-06 and 2013-14. After 2006-07, the
number of appeals dropped each year until 2012-13, the year after the settlement program began.
Further, the amount of tax savings achieved through commission and small claims reductions in 2006-07
was larger by up to $38 million than in any year since 2002-03.

However, after 2006-07, the commission began awarding larger reductions in assessed value. At first,
the reductions increased from $21 million in 2006-07 to $25 million in 2008-09, when the commission
tried to avoid refund liability by awarding numerous small reductions for residential properties,
according to a report prepared by the countys last appointed assessor, Ted Jankowski.

In the next year, 2009-10, the commission awarded $35 million in assessed value reduction, and this
huge increase was due to the recession, according to Jankowskis report. According to the 2009 report,
the commission awarded larger reductions in that year due to assessments being based on 2007 sales,
before the real estate crash had begun, for a tax year that would essentially end when the worst of the

19
recession had passed. This is due to the length of the countys assessment calendar, which uses sales
from three years before the last tax bills are sent out to establish assessments in each tax year.

In the next year, 2010-11, when assessments were based on sales from the worst year of the recession
(2008), the commission reversed course and awarded a smaller amount of assessed value reduction, but
at $29.7 million it was still 39 percent larger than was awarded in 2006-07. The next year was 2011-12
when the settlement program began and reductions rose again.

Notably, the 2011-12 tax years assessments were based on 2009 sales, and 2009 was the end of the
worst years of the recession. This makes it not unreasonable to assume that reductions would have
continued to decline in that year and beyond had the settlement program not been initiated, given the
more accurate assessments coming out of the recession and the continually-declining number of
appeals. It is possible, even, that the amount of assessed value reduced in 2011-12 might have been as
low as it was in 2006-07 had the settlement program not been initiated. This suggests the 2006-07 tax
year was representative of what might have happened in the years since 2011-12 had the new
assessment policies not been adopted.

Calculating the amount of revenue generated by tax firms, though, also requires considering how
representative the amount of refunds paid for court claims in 2006-07 was. As it turns out, 2006-07 was
a particularly low year for refunds. For 2006-07, the county has paid or estimates paying a total of $70.6
million in refunds. This is lower than in any year before, going back to 2002-03 and any year after up to
2012-13, when the freeze began. The highest year of refunds after 2006-07 was 2010-11, at $106
million. The large increase in refunds for 2010-11 was primarily due to county officials hastily settling a
large number of commercial appeals in response to the economic recession, according to interviews
with tax appeal firm attorneys and county records. The 2010-11 program became the inspiration for the
settlement program that began in the next year, when the refund amount declined to $85 million.

Had the refund amount declined in the next year, 2012-13, by a similar amount without the settlement
program, it would have reached $70 million, or less than 2006-07. Assuming, again, that successful
efforts would have been made to reduce the refund liability in the following years without the
settlement program, the amount would have continued to decline. This also suggests the 2006-07 tax
year is not wholly unrepresentative when it comes to refunds paid and estimated.

There is one more important factor to consider in comparing 2006-07 and earlier years to later years of
appeal, and it is the number of filings made by the property owners themselves. This is important both
because pro se filers do not pay fees and because it was not possible for Newsday to isolate savings
achieved by pro se filers for the 2006-07 tax year listed in the county report.

Because Newsday was not able to isolate pro se filings for 2006-07, this will inflate the amount of tax
firm fees paid. Assuming all cases are filed by tax firms provides a conservative approach to estimating
any savings in tax firm fees occurring during the settlement program and assessment freeze.

As it turns out, 2006-07 was a particularly good year for pro se filers, with 15 percent of all reductions
granted by the commission going to them, compared to an 11 percent average in any year since.

20
It is also important to point out that the heads of two of the largest residential tax firms told Newsday
they would have gone out of business had the county not become more forgiving in settling assessment
challenges. Those statements alone suggest that the number of claims filed by tax firms would have
declined had the settlement program and assessment freeze not been initiated.

Finally, the savings listed in the countys report were not calculated using the tax firm method of
calculating savings. That is, they were calculated by determining what tax rates would have been had
the appeals not been filed. This would result in a lower calculation of tax firm fees for 2006-07 than is
accurate, and would therefore suggest a larger increase in tax firm fees than is accurate.

However, the savings figures listed in the report also include numerous appeals not included in
Newsdays estimate of tax firm fees for the first six years of the settlement program. The savings in the
report would include appeals Newsday eliminated due to data limitations, those associated with co-
operative apartments and those associated with exemptions that could not be overestimated. They also
include savings for pro se appeals, as noted earlier.

Pro-se and cooperative apartment appeals accounted for $2.8 million in assessed value reduction in
2006-07. At the countywide effective tax rate Newsday calculated for its tax shift analysis, that amount
of assessed value would have saved $16.2 million. The savings amounts in the report also include
another $596,688.31 in refunds for small claims cases filed pro se, according to the countys refund file.

Altogether, the savings in the report contain at least an estimated $16.8 million that would not have
been counted by Newsdays estimate of savings using the tax firm method. This represents 14.53
percent of all savings in the report for 2006-07, and still does not account for various other savings
Newsday would not have included. By calculating an estimate of what 2006-07 savings would have been
using the tax firm method, it was determined that this margin of overestimation exceeds what savings in
the report would have been if calculated using that method, which Newsday estimates would have
increased the savings by only 14.49 percent. The next section describes the results of the analysis, which
contain margins far in excess of those that could be accounted for due to the varying methods of
calculating savings from appeal reductions.

Estimating the difference in firm fees

To estimate the 2006-07 tax firm fees, Newsday started by adding together all of the commission
savings and small claims savings listed in the commission's 2008-09 annual report. The small claims
savings included both small claims reductions and refunds paid for small claims. Though the report lists a
small number of pending small claims, the county's protest files show that those claims were still
pending as of 2016. Finally, the figures in the report were added to the total amount of refund principal
listed in the county paid and estimated refund data files, with the exception of any SCAR refunds already
accounted for in the report.

The savings were divided among the two tax firm groups, commercial and residential. Commission
savings attributed to class two and four properties and refunds for tax certiorari claims were attributed
to commercial firms and charged fees at 24 percent. Commission class one appeals and SCAR savings

21
and refunds were attributed to residential firms and charged fees at 45 percent, even though some of
these claims may have been handled by commercial firms. Again, this overestimates the fees in the
earlier years and will result in a lower estimate of increased tax firm fees.

Tax firm fees estimated for 2006-07 totaled $335.1 million when multiplied over six years to serve as a
baseline for 2011-12 to 2016-17. Tax firm fees estimated for 2011-12 to 2016-17 totaled $502 million.
The excess amount of tax firm fees paid for 2011-12 to 2016-17 versus 2006-07 baseline levels was
$166.9 million.

When comparing the tax firm fee increases to the budget and refund cut savings estimates, the savings
shrink substantially. Compared to the inflation-adjusted estimate with the DAF, the savings shrink to
$132.2 million or about $18.9 million per year. Compared to the inflation-adjusted estimate without the
DAF, the savings shrink to $80 million or about $11 million per year.

Overview Analysis
Newsday also examined how the settlement program and assessment freeze have impacted tax bills
countywide, in towns and cities and in school districts. The tax bills were further broken down by
property class, whether they are for properties in minority communities, whether they are for
properties that appealed and whether they are for properties in the top 10 percent or top 25 percent of
property values in each area.

As with the other analyses, STAR rebate check amounts were subtracted from school tax bills for those
2016-17 tax year properties receiving a check to ensure they were comparable to other years. Further,
the full cost of the school and general tax bills for 2016-17 were included, including the amounts that
would be seconded into the Disputed Assessment Fund for each of the school and general tax bills even
though those amounts were billed in the general bills for 2016-17.

Newsday determined whether each property was in a predominantly minority community by using
parcel location data contained in the county's property inventory data files and parcel shapefiles (digital
tax maps). The location of each property was then compared to shapefiles of Census tracts, which were
joined to data from table P9 of Census 2010 to determine which tracts had majority Hispanic and non-
Hispanic black populations. A total of 830 properties, all but two of which were utility properties in class
four, could not be located using county data. These properties were excluded from the analysis.

To determine whether properties were in the top 10 percent or top 25 percent of properties by value,
Newsday used the county's estimate of market value from its 2010-11 assessment roll. The 2010-11
values were used because they are more accurate, according to Newsday's ratio study.

As with all other analyses, class three properties were excluded from this analysis, in this case because
the objective was to examine how typical property owners' bills have changed during the years of the
settlement program and freeze. For the same reason, properties that were not taxable in any year from
2011-12 to 2016-17 were excluded as were properties that did not exist from 2010-11 to 2016-17.

22
To examine how tax bills have changed, Newsday used tax bills from 2010-11, the year before the
settlement program began, as a baseline. The median of the tax bills for each property group was used
to describe the typical tax bill for that area. This was done to avoid problems with average tax bills being
impacted by outlier properties that, say, see a 300% increase in their taxable value in a single year or a
90 percent drop in a single year due to physical improvement or destruction or exemption changes.

Since tax bills can be affected by a wide range of factors other than assessment reductions, Newsday
examined the impact of those other factors to identify any situations where they may impact one group
of properties more than other, comparison groups. For instance, if appealed properties gained more
exemptions during the five-year period, it would have the effect of suggesting they received more of a
benefit from the settlement program than they actually did.

Newsday reviewed the impact of other factors by focusing on the tax bills of appealed and non-appealed
properties in each school district, the smallest single geographic unit analyzed.

First, the percentage increase in the levies of their taxing authorities were compared, and it was
determined that the differences between the two appeal groups were extremely small in each school
district, an average of 0.06 percentage points difference with only one district exceeding 0.5 percent,
Island Park, with 1.4 percent.

Second, the impact of changes in exemptions and changes in assessed value for reasons other than
appeals were considered simultaneously. The focus was on appealed properties that gained more
exemptions or lost more assessed value for reasons other than an appeal beyond whatever exemptions
were gained or assessed value lost for non-appealed properties.

There were only two districts where appealed properties gained more exemptions or lost more assessed
value than non-appealed properties such that it exceeded a quarter of what the appealed properties
lost in taxable value due to appeals. Island Park did not meet that threshold, even after accounting for
the levy discrepancy above.

Appealed properties in the Bethpage School District saw their assessed values reduced by 9.4 percent
due to appeals, but they also held onto more of their exemptions than non-appealed properties, such
that 2.5 percent was shaved off their taxable values in excess of taxable value reductions seen by non-
appealed properties. After adjusting for the change in the levy between the two groups, the reductions
attributable to the appeal group that were not due to challenges went down to 2.4 percent. That means
that 26 percent of the reduction in their tax burden could have been attributable to factors other than
appeals.

In the Uniondale School District, appealed properties had their assessed values reduced by 7.3 percent,
but they also had their taxable values reduced by 2.2 percent more than non-appealed properties due to
non-appeal reductions and exemption changes. After adjusting for the change in the levy between the
two groups, the reductions attributable to the appeal group that were not due to challenges went down
to 1.8 percent. That means 25 percent of the reduction in their tax burden could have been attributable
to factors other than appeals.

23
Seeing as how both of the largest discrepancies discovered amount to no more than 26 percent of the
difference in the change of the burdens of the two groups, it is safe to say appeal reductions are the
primary reason for the differences.

Some of the results of the overview analysis are shared in the executive summary of this report.

24