MONEY MIX-UP: City mistake costs taxpayers thousands, mayor received benefit

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BINGHAMTON (WBNG) — From 2014 to 2018, Broome County tax records show Binghamton Mayor Rich David received more than $4,000 in tax benefits he was not eligible for.

During this time period, the mayor received what is known as a STAR exemption, which stands for School Tax Relief exemption, for his primary residence in downtown Binghamton. A common tax break, the mayor was ineligible for STAR because he owned the property through an LLC, which is impermissible according to state guidelines.

The man responsible for determining who qualifies in the city for the benefit, Binghamton Tax Assessor Scott Snyder, said he did not previously know it mattered how you own the property to qualify for the STAR exemption, and that he made an honest mistake.

“This LLC or incorporated thing was something that I didn’t recognize through the years,” Snyder told 12 News. “It was brought to my attention, I reviewed it, and removed those exemptions.”

The mayor is not the only one to improperly receive these benefits. One of the city’s attorneys, Sharon Sorkin, told the public at a city council meeting back in April that four total properties received this benefit incorrectly.

The mayor categorically denied knowing anything was improper about the exemption, and said he took action as soon as he learned of the issue.

“Soon as I was notified, I immediately made the change that day,” Mayor David said. “Called my lawyer, told her to make the change and the next day moving forward everything was in compliance.”

The money that the mayor and the others received came out of city residents’ pockets. The city collects a flat amount of property tax each year, and creates a tax rate to determine how much everyone needs to pay to collect the necessary funds. When someone receives an exemption, he or she contributes less in property taxes, but because the city has to collect the same amount of money regardless, the other taxpayers have to carry the burden.

County tax records show the mayor has owned the property since 2006, but did not apply for the tax exemption until after he became mayor in 2014. He said he found out about the program from Snyder.

“Shortly after I took office, the city assessor made me aware I was eligible for an exemption that I wasn’t receiving, and did I want to receive it,” Mayor David said.

Mayor David said it’s not necessary to pay the money back as the state and county advised the city to change its procedures moving forward, but not retroactively seek repayment, and because he himself made no mistake, it wouldn’t be fair to “penalize” him. The state could not confirm any conversations it had with the city, but the Broome County Director of Real Property confirmed he spoke with the city about the situation, but denied ever discussing whether the money should be paid back.

12 News sent a list of questions to the city’s attorneys about the properties, and you can find their responses in full below:

1. How and when was the problem of the LLC-owned properties receiving STAR exemptions discovered?

The Office does not maintain a record of who may have first raised the question; however, Councilman Taylor asked the question in writing on February 19, 2019. See below.

2. What are the four properties that received this exemption illegitimately?

Just to be clear, there is no allegation that any of the property owners did anything illegitimate. The City Assessor made an error by only addressing the issue of primary residency, without considering the form of ownership. For example, the NYS STAR Assessor’s Guide, provides, in part:
Question: May a commercial property that contains a residence (for example, a ground level store with the owner’s living quarters upstairs) receive a STAR exemption?
Answer: Yes. As a result of an amendment enacted in 2000, the STAR exemption can be granted to a portion of a “mixed-use” property that serves as the primary residence of the owner although the property is not primarily residential in character. For example, STAR may be granted to a two-story commercially-zoned building consisting of a ground level and the owner’s living quarters upstairs…

3. How was it determined that only four properties in the entire city fall into this category? Was every single STAR application in the city checked?

An electronic search was made of the City’s tax roll for LLC’s and Corporate owners with STAR exemptions.

4. On 4/3 at the city council business meeting, it was said only four properties on this particular year’s roll violated the exemption. Are there other properties who received this erroneous exemption in previous years not included in this count of four properties?

The electronic review was limited to current records.

5. Will the city receive back the money given out to the owners of these properties?

The question is incorrect. The City did not give the property owners any money. The question is whether the authority collecting real property taxes will seek reimbursement based on the Assessor’s error? Broome County collects the real property taxes. This Office understands that Broome County decided not to seek reimbursement. The City assumes Broome County’s decision is based on this unique situation, i.e., if the property owners had been told they did not qualify for the STAR exemption at the time of application based on the form of ownership, they could have changed the form of ownership because each property otherwise qualified for STAR as a primary residence.

6. What was the day the city notified the state (and which state office in particular) of the problem? Is there any proof of communication for this?

The Assessor sought the State’s input on the question on February 19, 2019 (the same day the question sent to my office). The State responded later that day. The State’s response is below. Note that the State’s response is incorrect. Once again the question/focus is on primary residence rather than ownership (same as above).

7. On 4/3 at the city council business meeting, you said the program was administered by the county. How can this be a “county program” if the city’s assessment office is the one reviewing and approving all applications?

The City provides assessments for real property; Broome County collects real property taxes for the City, County, and School District (based on local assessments); and NYS currently administers the STAR program. The errors in question apparently pre-date the State’s administration of the STAR program.

8. Besides initially letting the state know of the issue, has the city taken any substantive steps to fix the issue and/or recoup the money?

As previously stated, NYS now administers the STAR program. Since the error was by the Assessor and the owners could have qualified for the STAR exemption if they had been advised of the issue, Broome County has not sought reimbursement.

(Author’s note: The Broome County official in question, real property director David Hamlin, told 12 News the county never discussed reimbursement with anyone in the city)

Josh Rosenblatt

Josh Rosenblatt

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