While thousands of Southampton Town residents saw the assessed value of their properties plummet in the wake of last year’s deep nationwide recession, steep increases in assessment for many residents have highlighted the dichotomy of the East End real estate market—and borne out the shortcomings of the town’s annual assessment process put in place in 2003.
Most hamlets west of the Shinnecock Canal saw an overall collective decline in property value, ranging from just 1 percent in Westhampton, Speonk and Remsenburg to 6 percent in East Quogue, 7 percent in Flanders and Riverside, 8 percent in Hampton Bays, and more than 10 percent in Eastport. Some scattered individual properties in those areas, primarily along the waterfront, did experience increases, and the Village of Quogue saw an overall climb in its assessed value of just over 2 percent.
But east of the canal, assessments climbed in spite of—or, possibly, because of—a market that for nearly six months was essentially stagnant, with very few sales going to close. The increases were generally small, between 1 percent in Tuckahoe and 7 percent in the popular Southampton and Bridgehampton markets. But in the wealthy enclave of Sagaponack, assessments have shot up an average of 23 percent, sparking outrage by residents there and closer scrutiny of the process by which the assessments were formulated.
The town uses two criteria to assess a property’s value each year. One is based on physical improvements made to a property, such as additions of living space or accessory features such as swimming pools and garages. The other is equalization, a process by which the town looks at homes that were sold in the area, compares the sale prices to what the house was previously assessed at, and then extrapolates an average under- or over-assessment that can be applied to other houses with similar features, on similarly sized lots, in similar neighborhoods.
The larger the number of houses sold, the larger the data set, the more accurate the estimates. But last year’s real estate market on the East End, as any real estate agent could likely attest, was defined not by dropping prices but by inactivity.
“In years past, you saw consistency in the numbers—they would flow positively or negatively with recession or prosperity,” Southampton Town Assessor Ed Deyermond said. “But this market in the last two years has been extremely fickle. It’s harder to gauge in a particular district, or even neighborhood, because you get a lot more outliers. It takes more time to get a picture of the area.”
In the picture that the town took in Sagaponack with this year’s assessments, residents are not smiling. The average overall assessment increase in the village is estimated at about 23 percent. But the estimated value of some properties jumped by more than a third.
“Obviously, we’re dismayed at the overall assessment,” said Sagaponack Village Mayor Don Louchheim, who is the former publisher of The Southampton Press. “They’re taking a cookie-cutter approach that doesn’t work. My assessment was raised 25 percent, and I don’t think my assessment is more than my house is worth—but I don’t think that is true for all.”
Mr. Louchheim said the tax impact on individual residents isn’t clear yet, but since assessments are going down for many more residents townwide, they are likely going up even more than the assessments for Sagaponack residents. Overall, tax bills in the village are generally low compared to other areas, because by maintaining a tiny school district, residents avoid paying into the gargantuan school budgets that other districts must shoulder. But village officials are still saying the new assessments mean it pays an inordinately high share of the town bills for its small population.
“Overall, our tax burden compared to someone in Eastport? No, we don’t deserve any sympathy,” Mr. Louchheim said. “But in terms of town taxes, to be hit 25 percent or more for the same services is making people angry on principle.”
In Sagaponack, some 685 properties had their assessments hiked through equalization; just 56 homes had their assessments lowered for the same purpose. The adjustments were based on the sales of just 21 properties in the area in 2009. But 90 percent of those houses went for more—many, a lot more—than what their assessments had them valued at.
The village’s most infamous resident, Ira Rennert, did not initially see his assessment increased—because of a computer glitch, Mr. Deyermond says—but was hiked by $22 million, to $240 million, after the oversight was discovered.
Mr. Deyermond admits that some properties probably are caught up by the system and may not actually have seen their values jump by as much as represented in the reassessments, which is where the grievance process comes into play. Next Tuesday, May 18, is the town’s official Grievance Day, during which individual residents can come to the town and challenge the value of their assessments. The complaints are heard by a grievance board, which then takes the evidence presented by the homeowner back to the assessors, who conduct a more detailed analysis.