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Feb 22, 2012 9:04 AMPublication: The Southampton Press

Southampton Village Taxpayers Foot Bill For Building Department Error

Feb 22, 2012 10:40 AM

Southampton Village taxpayers have, for almost eight years, been footing the bill for more than 100 property owners who improved their homes but saw no corresponding increase in their assessments—or taxes—because of a flaw in the way the municipality’s Building Department was processing permits, village officials have acknowledged.

Mostly in 2004 and 2005, but also in later years, the Building Department was ending its month about three to five days ahead of schedule, meaning that any building permits closed out in the last few days of each month were never entered into the tax assessor’s system. The improvements were never evaluated and the properties were never reassessed, Mayor Mark Epley told the Village Board last month.

Village Administrator Stephen Funsch said recently that a person in a clerical position was found to have run the monthly reports that go to the village tax assessor too early, but village officials could not explain precisely how the error could have continued for as long as it did. The error resulted in other village taxpayers being overtaxed by millions of dollars over the span of seven years.

There was no indication that either the property owners or village officials were aware of the practice.

Now that the error has come to light, village officials said the reports now include the entire month and utilize a sequential numbering system to make sure nothing slips through. The village has also mailed letters to the 108 property owners, informing them of the error and correcting their 2011 tax bills. Since New York State Property Tax Law allows the village to recoup lost taxes for only one prior year, the letter alerted the affected property owners of the applicable tax to be added to their next property tax bills, which will be mailed out on May 31, with payment due by June 30.

The findings came following a recent in-house audit of the village’s building permits in response to a complaint filed with the New York State Attorney general’s office by the Southampton Association, a citizens group in the village, against former Trustee Paul Robinson, who served in that capacity from 2005 until last spring.

According to William McCoy, the village tax assessor, 108 properties—including one owned by Zoning Board of Appeals member James Zuhusky and one owned by Mr. Robinson and his wife, Joan—had omitted assessments totaling $995,310. Most were from building permits issued in 2004 and 2005 that had work subsequently completed. A “small amount” included permits from 2006 to 2009 and one from 1999.

Some properties had more than one building permit, according to an email Mr. McCoy wrote to the mayor. Mr. McCoy later said 95 percent of the permits were filed in 2004 and 2005. A request filed by The Press for the years the permits were filed for each property is still outstanding.

In addition to those properties, there were also four properties that had just demolition work, totaling $19,384 in decreased assessments going forward, Mr. McCoy wrote. The taxes on those parcels should have decreased, but did not.

Village officials said they have not made a report of their findings, nor have they calculated how much other village taxpayers were required to make up over the past several years because of the error. While the village did not lose any tax revenue due to the error, other taxpayers in the village had to share in a larger portion of the tax levy, the total amount of property taxes collected by the village. A request by The Press for the figures that would provide for such calculations was still outstanding this week.

The village has issued approximately 2,300 building permits since 2004, according to Mr. Funsch.

A list of the 108 properties provided by the village includes the corrected 2011 assessment and the original 2011 assessment, as well as the amount of the resulting tax increase. The list does not indicate the dates of the building permits or the work that was done, nor does it go back further than last year.

The amount of both increased assessments and tax increases varied widely, depending, presumably, on the amount of work completed on each house. Tax increases ranged from less than $100 to as much as $20,000.

According to the list, the owner of 5 Squabble Lane, listed as 11968 LLC c/o Gerald Weinstein, will see the highest tax increase, $20,381.02. The property’s original 2011 assessment was $29,340 and its adjusted assessment was $149,304. The current value of the home is $3.7 million, according to village records.

The village uses a different assessment system from Southampton Town; the town uses a 100-percent assessment while the village uses a 4-percent assessment. Assessment figures in the village were essentially frozen in the early 1990s and increase when work is completed on properties.

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What did they do the last 3-5 days of each month? Sit around and eat bon-bons?

By C Law (354), Water Mill on Feb 24, 12 11:30 AM
3 members liked this comment
My heart goes out to Gerald Weinstein of Squabble Lane,,,,I think I will send him a few Dollars,,,,
By Etians rd (543), Southampton on Feb 24, 12 4:18 PM
2 members liked this comment
This is the only building dept on the East End which is helpful and efficient. The village is rich and the school district over spends. Who cares the people not charged were mostly summer residents with no kids in the district using no services. Besides the money would just go towards more 100k a year cops or a 7 million dollar office for incompetant school administrators.
By chief1 (2800), southampton on Feb 27, 12 12:07 AM

A flaw in the system? Were you born yesterday?

Do you think the real estate attorneys' developers, building inspectors, tax assessors knew nothing about that loophole, a profitable one that they can use to their advantage? If you do, then I have this really beautiful bridge in Mahattan I can sell you really cheap.

That's a Southampton insider racket that's the tip of the iceberg as longtime residents know!
By Obbservant (449), southampton on Feb 27, 12 11:21 PM
Headline should read:

"Southampton no different, Taxpayers continue to foot bill for errors of those who are demanding increases in taxes."
By Toucan Sam (7), Southampton on Feb 28, 12 6:42 AM
How much did this "flaw" cost? Was anyone disciplined?
By TianaBob (256), S.Jamesport on Mar 3, 12 5:11 PM