Petitioners Call for Village to Negotiate a Settlement to the Article 78

Petitioners who filed an Article 78 proceeding to invalidate the 2016 revaluation showed up at the Village Board meeting on Tuesday January 24 to ask the Board of Trustees what action they would take and to request that the Village seek to settle the suit rather than spend tax dollars defending the assessment roll.

The Mayor opened the meeting by saying that since the Article 78 was pending litigation, neither he nor the Village Attorney would comment on it. However, the petitioners repeatedly asked the Board to tell them how they would address the suit.

In the public comments portion of the meeting many spoke out about the revaluation, scolding the board and repeating claims made at prior meetings.

Greg Soldatenko, of Lenox Place, who introduced himself as "Co-chair for the Committee for Fair Assessments" said that "Ryan and Albanese "cooked the books" to arrive at the assessment roll. ... Albanese took good care of formerly and presently elected officials.... This has resulted in an erosion in trust." He then called for the Village to "release all the remaining FOILED emails," saying, "There are no national security issues here ."

Mayra Kirkendall Rodriguez spoke at length, saying, "I am here to implore you not to spend taxpayer dollars. Sit down with our lawyer Robert Bernstein and resolve this amicably." She continued, "I have lost all faith in our process....Clean up Scarsdale government....  this is what residents have written me... I have been witness to horrible injustice since the Ryan reval train wreck came to town. I am an accidental activist. Every time I think I cannot go on I get another phone call...Your fiduciary responsible is to protect everyone-- not those who curry favor." About the petition she said, "I do not know if the court will rule in our favor... Simply because we live in small houses – we are not children of a lesser God."

Phil Moresco said "Don't waste a penny of our hard earned tax dollars. No punitive action is sought. ...Undo a wrong."

Susan Grosz of Carthage Road said "I live on less than ¼ of an acre. There is no bathroom on the first floor. My assessment went up 10% ... Don't contest the Article 78."

Billy Jacobs of 41 Drake Road said he has lived here since 1987 and served on many Village committees and commissions. He said, "I am disturbed that I have to be here tonight. It is time for answers. Why was the reval done? It made no difference to the Village as they collect the same revenue. The Village tried to do the right thing – the Village tried to be fair. But our Village was exploited, harmed. It is now a scandal beyond which I have never seen. In good faith, mistakes are made. That's why there are erasers on the ends of pencils. I am not here to place blame or point fingers. Nothing has been done to solve the problem. This is not acceptable. Many are frustrated by inaction and have taken action against the village. None of us did so with glee or to point blame or to obtain undue rewards. The Article 78 is an extraordinary remedy but it is simple. There is no doubt that what happened was unfair and was a mistake. Since everyone knows that material harm occurred it is time to take action and fix the problem. Either agree to the plaintiff's requests or sit down with our counsel and negotiate a settlement. If you don't do that the Village will become mired in expensive litigation and scandal. Tell us what you are going to do tonight. You are the only people that can solve the problem now. Tell us tonight what you think your choices are and what you will do now to address this."

Brice Kirkendall-Rodriguez said "I have worked in software development for 25 years. It is human nature to over value work we did ourselves. The idea of suing ourselves seemed at first preposterous. Think of it as an intervention.... Scarsdale has weathered significant controversies in its past. We will get through this one too....This was a poorly conceived an executed attempt to improve on the Tyler Revaluation. Find an amicable settlement so that we can move on." (see his full comment below.)

Robert Berg reminded the Board that he urged them not to go through with the Ryan reval. He said, "I begged you to pull the plug while you still had the chance. Now as a taxpayer I am very concerned how you will react. The Village assessment roll is a set of unverified evaluations. I am worried that you will spend tens of thousands defending a roll that can't be defended."

Michael Levine, a mathematician and a statistician who has studied both revaluations pointed out that if the Village did a rollback, people who were unhappy with their assessments in the prior roll would not have had an opportunity to grieve, which is their legal right. He said, "If the Ryan reval is rolled back, some will have been denied an opportunity to grieve. Those over-assessed by Tyler who did not grieve will potentially be affected by a rollback. I don't think that a settlement should deprive people of a right to grieve."

Despite the fact that the Village has acknowledged that the 2016 revaluation was poorly executed, the Mayor maintains that the Village Assessor is the only person with the legal authority to file a tax roll, and once it is filed, the Village does not have the legal power to voide it or roll it back to a prior assessment roll. He believes that the legal path to contest an assessment is to file a grievance or initiate a SCAR proceeding.

The 151 petitioners, represeting 2.6% of Scarsdale taxpayers, are requesting that the Village rollback assessments to the prior tax roll. If not, they are requesting that "any property owners in the Town/Village of Scarsdale who paid more than their fair share of property tax as determined by what they would have had to pay had there been a rollback of the assessment roll should be entitled to receive refunds of excess taxes paid." From the draft of the petition it is not clear if all residents or just the participants in the Article 78 would be entitled to refunds -- and for how many years going forward they would receive these refunds. For one year? Or until there is a subsequent revaluation?

We spoke to a few attorneys who were familiar with NYS tax law. One, who favored the petitioners, hoped that a judge would negotiate a settlement that would allow the Village to go back to the adjusted 2014 tax roll and also assign a grievance period for those who wished to dispute their assessments. The legal grievance period is proscribed by NYS law and neither the Village nor the assessor appears to have the power to change these dates.

Another said, "If only the participants in the Article 78 are entitled to refunds these property owners are essentially demanding that the rest of the Village residents "pick up the tab" for changes in their tax bills, even if the reval is not rolled back. Isn't that a what a grievance proceeding is designed to accomplish? If these residents grieved successfully, they have no injury. If they elected not to grieve, or unsuccessfully grieved, they shouldn't be allowed a second bite at the apple. And now they are looking for the Village not to defend this lawsuit and just to settle with them ... i.e., pay them out and afford them special treatment outside of the grievance process."

Looking at the facts, a third attorney suggested that perhaps a court would find that the filing was "arbitrary and capricious," and would order the rollback to the previous assessment roll as adjusted by grievances.

On a practical note, if the court ordered the reinstatement of the adjusted 2014 tax roll, the Village might very well be overwhelmed with lawsuits from those whose tax assessments were higher in 2014. These residents might file appeals and argue that the court decision unfavorably impacted them and ask for rebates for overpayment. The 2014 revaluation was based on market values for luxury homes that were much higher in 2012-13 than what they are today. Rolling back a tax roll might cause years of litigation, uncertainty and chaos in the real estate market.

Other solutions to the assessment question have been discussed in the past year including the formation of an ad hoc committee on revaluation to investigate best practices in property assessment and to make recommendations to the Village on next steps. The Trustees have also considered changes in the staffing of the assessors office – however since this is a personnel matter these meetings were held in executive session and the outcome is unknown. Ultimately the answer might be a third revaluation by a firm that has the trust of the community.

With elections for Mayor and Village Trustees just a few weeks away, it is doubtful whether this Board will move forward on any of these proposals. However, they will be forced to either negotiate a settlement on the Article 78 or litigate to defend the revaluation, both of which will consume man hours and taxpayer funds.

Care to comment? Please include your first and last name.

Comments submitted by Brice Kirkendall-Rodriguez:

I have worked in software development 25 years. Understanding human behavior is a critical part of developing successful products. Stamford Business School Professor Nir Eyal is a renowned leader in this area and has written extensively on building habit forming products and the methods behind the creation of Facebook, LinkedIn, the iPhone, and Google Search.

One of the critical steps in the habit-forming cycle is called "Investment". It is predicated on the idea that we attribute more value to something we have helped create. For example, lotteries sell more tickets when buyers pick their own numbers. IKEA succeeds in part because customers attribute more value to furniture once they have assembled it themselves. In fact, it is human nature to overvalue work we do ourselves relative to the same work performed by others. Thus, even though the contract price for the Ryan reval was only 20% of what we paid for Tyler, we give the Ryal result equal weight because of the investment of time on the project by the current village staff and Board of Trustees.

Yes, there was dissatisfaction expressed following the Tyler reval. It was the first mass appraisal in over 40 years and no one in Village Hall had any benchmark by which to compare the level of media coverage, scrutiny and outrage expressed by the most-impacted residents. It seemed painful and unprecedented and there was a strong desire to seek a remedy.

Enter John Ryan. He offered a solution that was anticipated to fix the problems of the first reval without disrupting what had worked with Tyler. It was described as a "tweak". The Assessor, Village Manager and Board of Trustees then began to invest themselves in the endeavor. There were vendor negotiations, public hearings, and private meetings. This collaborative investment by village officials served to negate the impact of dissent by NY State ORPTS and some residents, because certainly those engaged in making Ryan a reality couldn't ALL be wrong. The Ryan reval became a village habit.

Right up until June of last year we could have quit. However, this became a whole lot harder when the release of the tentative role created at least 1,000 beneficiaries, those who saw a 10% or more drop in their Assessed Values. This also gave reason for the Board of Trustees to feel more invested in final acceptance. What could you possibly say to these homeowners? We heard the Village Attorney cite 40-year-old case law that gave the impression that the Board of Trustees had no legal authority to kick the habit. Scarsdale had become a Ryan Junkie. Those 1,000 beneficiaries were now an existential threat and on more than one occasion it was suggested that doing the right thing and invalidating Ryan was not only without legal precedent but would invite legal challenge.

During my months of effort of examining the Ryan model and its impact on our community, I have met hundreds of Scarsdale homeowners. Not all detractors of Ryan were hurt by Ryan. I have met some homeowners that had a million dollars removed from their home valuations. They have told me privately that they know the number is wrong, but shrugged and considered it a random life perk like the Monopoly card stating "Bank error in your favor, collect $200". Others were hurt by Ryan but felt they couldn't contest it legally because they are public figures or have a relationship with the village that might create a conflict of interest. The point is that support for the Article 78 action to invalidate Ryan extends well beyond the official list of litigants. At this point, I doubt any informed person in Scarsdale whether or not she benefited from Ryan now believes that he acted in Scarsdale's interests. To suggest that there is legal jeopardy to invalidating Ryan is probably a straw man argument and a sign of a habit that has veered into the territory of self-destructive or in this case village-destructive behavior.

Those of us participating in the Article 78 proceeding against the village did not engage in this lightly. The idea of suing ourselves seemed at first to be preposterous. However, consider this an intervention! The Board of Trustees and Village management are so invested and so hooked on the outcome of Ryan, that it has become blinded to the reality. We have learned in this very hall that there is no available mathematical evidence to support the valuations allegedly created by Ryan. The Article 78 filing provides ample exhibits documenting arbitrary changes made to component multipliers to alter home values when they did not suit the objectives of Ryan's model. Some of the exhibits include the Assessor's own emails suggesting that some public officials were accorded special treatment to receive a more favorable assessment of their own homes.

Last summer, the Board was told you have no legal foundation on which to invalidate Ryan. Problem solved...now you do. Article 78 presents you with the legal foundation you were previously missing. We should not delude ourselves into thinking that invalidating Ryan puts the matter of fair home valuation to rest. However, it does return us to a set of valuations that proportionally hold up better under scrutiny and have already been tested through two rounds of grievances.

The 2015 role is a much better foundation from which we can now have a frank Village-wide conversation about the way we value homes and levy taxes. We should consider all of the issues raised by both Tyler and Ryan. Does a dramatic increase in a tax assessment lead to a reduction in property value? Probably. Should we advocate changes in Albany to modernize state assessment standards and oversight? Most definitely. Can we achieve the right balance of taxes and services in this village, such that we don't drive homeowners away after children have left the nest? I hope so.

Scarsdale has weathered significant controversies in its past. We will get through this one too. I believe in the talents of our residents and the passion of our volunteers in public service. I do think we attract capable people to our school and village payrolls. I believe in the promise of Scarsdale and do think we have it within us to be a model of good governance and transparency. Let us recognize this Ryan episode for what it is, a poorly conceived and executed attempt to improve upon the Tyler reval that instead, became a cure worse than the disease. Support for it, has become a destructive habit, and those still addicted to its endorsement have been victimized by the psychology of the investment effect gone wrong. I urge the Board of Trustees to break the habit of support for Ryan and find an amicable settlement to Article 78, such that we can move on to rebuild confidence in our government and village.