Audit finds co-op, condo property values inflated

A series of missteps by the Department of Finance (DOF) caused drastic upward swings in co-op and condo property taxes, according to two audits released by the city’s comptroller office.

“The department failed to adequately explain significant changes it was making in the calculation of market values. What’s more, in numerous cases, they assigned arbitrary values to co-ops and condos, and in other cases made flat out errors,” said Comptroller John Liu.
According to a summary report released by the DOF this year, taxes are expected to rise by 7.5 percent for co-op owners and 9.6 percent for condo owners across the city, while owners of single-family homes will see an increase of 2.8 percent. Last year, officials said, some co-op and condo valuations saw astronomical increases as high as 147 percent.

The pair of audits, Liu said, found the agency at fault for causing upheavals in condo and co-op property values — a determining factor in property taxes — when it changed its formula for calculating them in Fiscal Year 2011-12. He also said the agency operated “in the dark” without warning the public of the consequences.

According to Liu, the DOF compounded the increases in market value by sticking many co-ops and condos with questionable values instead of comparing them to equivalent, nearby rental properties. The agency’s faulty computer system, Liu said, also led to flaws in assessments, in which a Brooklyn co-op was wrongfully compared to a parking lot, a Staten Island co-op to an adult care facility and a Flushing condo to a rental property in Far Rockaway.

At least 10 percent of all 859 co-op buildings in Queens received much higher property values than the DOF’s formula should have allowed, the comptroller said, including one co-op in Forest Hills that received a market value 227 percent higher than expected.

The DOF did not return The Courier’s calls for comment. However, according to Liu, the DOF said it ensures properties are valued properly and does not agree that properties were over-assessed or under-assessed. The agency, Liu said, agreed that “continual improvement of the modeling criteria for selection of comparable properties is appropriate.”

Breakdown of affected units by neighborhood: