COMPTROLLER SCOTT M. STRINGER AUDIT FINDS THAT IMPROPER CLASSIFICATION OF VACANT LOTS RESULTED IN AT LEAST $1.7 MILLION IN LOST

   A COMPTROLLER SCOTT M. STRINGER audit finds that the New York City Department of Finance (DOF) improperly classified the tax and building classes of 308 vacant properties throughout New York City, resulting in an annual real estate tax loss conservatively estimated at $1.7 million, according to an audit released today by New York City Comptroller Scott M. Stringer.

“New York City loses out on millions of dollars annually in lost tax revenue when the Department of Finance doesn’t make fair, accurate and up to date property assessments”, Stringer said. “There’s a real need for a change in the way DOF does business when over 300 vacant lots are improperly classified. Moving forward, DOF needs to enhance its procedures to ensure that all vacant lots are correctly evaluated and that their owners are paying the taxes they owe the City."

The Department of Finance is responsible for annually appraising the value of more than one million properties citywide.  DOF applies previously established tax rates to the properties’ assessed value to calculate property taxes and then bills and collects taxes from their owners.

According to the Department of City Planning, approximately six percent of land in New York City is categorized as vacant. The audit found that 281 of the 308 misclassified properties, most of which were used as storage yards or as licensed and unlicensed parking lots, had both an incorrect tax and building classification. Had DOF properly categorized these properties, the comptroller’s office conservatively estimated the City could collect as much as $1.7 million in additional tax revenue. 

The remaining 27 lots examined in the audit had the correct tax classification but an incorrect building classification, which could affect the market value of each property. However, it is not possible to calculate the amount of additional taxes due until DOF determines the correct market values of these lots.

The audit urged DOF to:

1.      Inspect and make necessary adjustments to the assessment rolls for the misclassified properties;

2.      Conduct periodic reviews of the properties with the vacant lot classification;

3.     Consider modifying the annual Notice of Property Value sent to property owners requesting they notify DOF if any permanent improvements or changes were made or determine another way to proactively solicit the correct information; and

4.      Coordinate with the Department of Buildings (DOB) to ensure that any necessary permits are issued for the remaining 27 lots identified in the audit as having the incorrect building classification.

DOF agreed with most of the audit recommendations and stated that of the 308 vacant lots identified, 253 would be reclassified, 37 would remain classified as residential property vacant land and that they would make a determination about the remaining 18 properties after they had been inspected.

To read a copy of the full audit, please click here: http://comptroller.nyc.gov/reports/audit/?r=03-13-14_FM13-120A